NEW YORK-SK Telecom Co. Ltd., South Korea’s primary cellular and paging carrier, sold $230 million in Yankee notes April 24, partly to finance its Code Division Multiple Access digital cellular rollout.
Seoul-based SK Telecom, whose stock is listed on the London and Korea stock exchanges, changed its name March 21 from Korea Mobile Telecommunications Corp. It has a 90 percent market share in cellular services and nearly a 50 percent market share in paging.
The company said it had nearly 2.3 million analog cellular subscribers and nearly 6.6 milling paging subscribers at the end of 1996. SK Telecom announced April 23 that its digital cellular subscriber based was nearly 1.1 million as of that date.
The wireless carrier is in the early stages of a large-scale commercial deployment of CDMA-based digital cellular services. It anticipates having 1,700 cell sites operational for its CDMA network by the end of this year, compared with 698 up and running by the end of last year.
Merrill Lynch & Co. Inc., New York, was lead manager of the issue of seven-year Yankee notes, which were priced to yield 7.83 percent at maturity. The maturity date was shortened to seven years from the 10-year duration envisioned in a preliminary prospectus for the deal, which was registered as a public offering with the Securities and Exchange Commission. Yankee notes are denominated in United States dollars and sold in this country by foreign issuers.
Moody’s Investor Service Inc. and Standard & Poor’s Corp. accorded the issue investment grade ratings of A1 and A+, respectively.
“SK Telecom’s revenues and profitability have increased significantly in recent years amid rapid growth in paging and cellular subscriptions,” said Diasuke Fukutomi, a telecommunication analyst for Standard & Poor’s, Tokyo. “The company’s heavy capital spending requirements are funded mostly by its strong internal cash flow as well as by interest-free deposits from new subscribers; as a result, interesting-bearing debt is maintained at low levels.”
Moody’s said that a successful implementation of CDMA is anticipated to permit SK Telecom to meet fast-growing demand for cellular services. However, the rating agency also noted that competition is emerging in the tightly regulated South Korean telecommunications marketplace.
“As the government continues gradually to liberalize the cellular market, competition will take away market share from SK Telecom,” said Takahiro Morito, vice president of ratings for Moody’s, Tokyo. “However, Moody’s expects the company to remain the dominant player, considering its close relationship with the government, as well as its well-developed network coverage and marketing capabilities.”
Besides CDMA deployment, some of the proceeds raised by the Yankee note sale also will be used toward SK Telecom’s $150 million purchase this year of a 20 percent ownership interest in WCS, a new cellular licensee in Thailand. WCS plans to launch digital cellular services within several months.
