The rumor about SK Telecom’s take-over of Sprint Nextel, which was said to be aborted due to Sprint Nextel’s refusal is going around again.

On Tuesday, foreign news agencies reported talks between SK Telecom and Sprint Nextel for the takeover deal are underway. Suffering from the plummeting stock price and customers churn, Sprint Nextel is holding negotiations with a number of carriers, according the agencies.

Neither SK Telecom nor Sprint has made any official comment about the rumor.

If Sprint is considering M&A to overcome the crisis, it is obviously a great opportunity for SK Telecom. The question is how to arrange the funding. Even though a consortium is organized as SK Telecom suggested last year, it will hardly be able to secure the funding enough for the whole process of the takeover.

Therefore, Telecoms Korea expects SK Telecom might sell its shares in China Unicom to finance the acquisition. Such an assumption is possible because SK Telecom acquired its shares in China Unicom to create synergy in its CDMA service in China, but the recent telecom market reshuffle in China has diminished the chance. In addition, SK Telecom will gain more than expected from selling the stake in China Unicom.

If SK Telecom succeeds in buying Sprint Nextel, the South Korean mobile carrier will be able to play this as a strong card against China Telecom, China’s new CDMA service provider and take advantage of this in establishing a CDMA belt connecting the US, China and Korea.

However, SK Telecom has a long way to go, because the possible takeover requires not only the agreement between the two companies, but also the permission from the US telecom authority. 

Source:telecomskorea