SK Telecom, the South Korea-based mobile operator, is set to buy 49% stake in Hana Financial Group’s credit card unit for about $350m, reported Reuters. The deal is expected to expedite the integration of banking and telecom services in South Korea, where smartphone usage is on a growth curve.
Reportedly, SK Telecom, which runs Mobile Money Ventures with Citigroup, has been on the look out to find a new source of revenue, to diversify its business operations from the saturated domestic telecom market.
Against this backdrop, combining telecom networks with financial transactions such as mobile banking and settlement will give a foothold to SK Telecom in the nation’s $400 billion credit card market.
On the other hand, Hana Financial also intends to strengthen its non-banking business and stay ahead of competition with rival banks and card only firms by taking advantage of SK Telecom’s 24 million mobile phone users.
Daniel Jin, an analyst at Shinhan Investment Corporation, said: “With the increasing popularity of smartphones, SK Telecom is aiming to create a new (growth model) by venturing into the credit card business in links with wireless data services.”
However, Choi Nam-gon, an analyst at Tong Yang Securities, said: “Business-wise it is a good model with some obvious synergy. You can issue credit cards to phone users and offer telecom fee discounts to credit card holders. But since the card market is fully matured and competitive, the partnership doesn’t necessarily make them a winner. You need a new business model that others can’t offer,” reported the news agency.
