SK Telecom to buy Hana Card stake for 400 billion won

SK Telecom Co., South Korea’s largest mobile-phone operator, will buy a stake in Hana Financial Group Inc.’s credit-card unit for 400 billion won ($343 million) to expand its wireless payment business.
SK Telecom plans to buy 57.6 million new shares in Hana Card Co and will hold 49 percent of the credit-card company after the purchase, which is subject to approval by the nation’s financial and antitrust regulators, the company said.
The investment gives Hana Card access to SK Telecom’s more than 24 million customers as it seeks to become one of the country’s top three card companies in five years. The stake also gives SK Telecom the ability to offer more mobile financial services as revenue growth stalls in a market where more than 95 percent of people own a handset.
“This is a boost to Hana’s weak card operation,” said Lee Jin Woo, a fund manager at KTB Asset Management Co. in Seoul, which manages $8.6 billion in assets. “It provides a very good opportunity for Hana Card to attract faithful customers.”
“Cooperation with Hana Card will help us expand next- generation payment services,” SK Telecom Chief Executive Officer Jung Man Won said in a statement. The company plans to introduce mobile-phone-based credit-card payment services in the second quarter next year, according to the statement.
SK Telecom previously attempted to set up its own credit- card business. In 2002, the wireless carrier said it would invest in a card venture to be formed from the spinoff of Jeonbuk Bank’s credit-card unit and had planned to raise its stake to more than 80 percent within a year. The plan never materialized because of South Korean rules that prohibit card companies from changing their major shareholders for three years after their establishment.
Hana Card was spun off from Hana Financial’s banking unit on Nov. 2 and has a market share of less than 4 percent. Hana Financial is South Korea’s fourth-biggest financial company.
The domestic market for wireless payments via handsets is estimated at 1.7 trillion won and is forecast to grow an average 21.5 percent annually for the next three years, according to Yang Jong In, an analyst at Korea Investment & Securities Co.
SK Telecom still needs to seek alliances with other card issuers to attract customers, Yang wrote in a Dec. 10 note.
The carrier will need approval from the Financial Services Commission to be a major shareholder in Hana Card, the company said today.