SK Telecom and Kakao enter share exchange for 5G partnership

SK Telecom is set to own a 2.5% stake in Kakao, while the chat giant will own a 1.6% stake of South Korea's incumbent telco.

Business people use global communication phones in the 5g system

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SK Telecom and Kakao will exchange company stakes with each other for a strategic partnership that will see the two companies develop new 5G-based services and technology.

The two companies said the partnership is bigger than your average memorandum of understanding as it involves the sharing of stakes. SK Telecom will sell 300 billion won ($256 million) worth of itself to the chat giant and Kakao, in turn, will issue new shares to the telco. The exchange will result in SK Telecom owning a 2.5% stake in Kakao, while Kakao will own a 1.6% stake in SK Telecom.

SK Telecom is South Korea's leading mobile carrier while Kakao runs the country's most popular chat app.  

Beyond the exchange of shares, the partnership will see them collaborate for business and services, as well as research and development, the companies said.    

The two will develop services that utilise 5G networks for commerce, shopping, and digital content. 

In the long-term, they also have plans to create technologies, such as artificial intelligence and Internet of Things, and provide financing for completely new services.

SK Telecom has been expanding its footprint for in the content creation space ever since 5G networks were deployed in South Korea earlier this year. The company formed an eSports joint venture with US media giant Comcast earlier this month.

The telco is also involved in various 5G projects for smart cities, smart hospitals, smart offices, and self-driving infrastructure.

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