SK Telecom’s (SKM) overseas expansion binge continues as the South Korean wireless ace is reportedly acquiring a stake in Malaysia’s leading mobile broadband operator Packet One Networks (“P1″). The carrier plans to invest $100 million to secure a 25% stake in the firm with a deal expected in June 2010.
 
P1, a subsidiary of Malaysian wireless R&D firm Green Packet Berhad, is the country’s first and largest WiMax (a mobile broadband technology) service operator with 175,000 subscribers. The company has strategic collaborations with technology heavyweights like Alcatel-Lucent (ALU), Intel Corp. (INTC) and Oracle Corp. (ORCL) for rolling out its WiMax services to consumers and businesses. P1 is currently involved in a large-scale commercial deployment of its WiMax services (offered as “P1 W1MAX”) in Southeast Asia.
 
Despite being the leader in the domestic wireless market with a 50.5% share, SK Telecom is facing greater challenges in retaining market share. Competition has increased in the Korean wireless market following the consolidation of archrival KT Corp. (KT) and its wireless unit KT Freetel in June 2009 and is further exacerbated by the iPhone launch by KT.
 
SK Telecom is pursuing business opportunities in emerging markets given limited growth prospects in the highly matured domestic wireless market. The company holds a controlling stake in SLD Telecom in Vietnam that offers S-fone, one of the leading mobile phone networks in the country. SK Telecom has also invested in SkyTel, the second largest carrier in Mongolia, providing CDMA-based mobile services.
 
The Malaysian venture follows SK Telecom’s recent expansion into the lucrative Indonesian market, the largest in Southeast Asia. The Korean operator has also forged a deal worth KRW12.5 billion (US$10.5 million) with Indonesia’s largest wireline and wireless operator PT Telekomunikasi (TLK) to operate digital content and business-to-business (B2B) services.
 
The Malaysian telecommunication market offers significant potential for growth for SK Telecom given a mere 31% residential broadband penetration. P1’s WiMax services (the fastest mobile broadband in Malaysia) are playing a vital role in expanding broadband adoption in Malaysia to achieve the nation’s target of 50% penetration by end-2010.
 
An investment in P1 bodes well for SK Telecom’s overseas B2B service expansion initiatives. Wireless broadband network (such as WiMax) offers the basic infrastructure support for rolling out B2B services. Besides creating significant synergies, the deal will further strength
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