SKM & Bell Labs in Post-4G Pact

• By Zacks Equity Research
• On 1:46 pm EDT, Monday October 19, 2009

South Korea’s largest wireless carrier SK Telecom (NYSE: SKM - News) has reportedly inked an agreement with Bell Laboratories, Inc. to jointly pursue research and development in next-generation telecommunication technologies including the development of post-4G wireless technologies.

Bell Laboratories (also called Bell Labs), formerly a part of AT&T (NYSE: T - News), is the R&D unit of France-based Alcatel-Lucent (NYSE: ALU - News). The company specializes in fixed-line, wireless and converged telecommunications hardware, software and related services for enterprise and government customers.

The agreement focuses on defining and designing future wireless technologies that are beyond the current 4G networks which carriers are developing globally. Moreover, the companies may also focus on developing self-optimizing networks which will be capable of bringing greater network efficiency.

SK Telecom continues to lead the Korean wireless market with approximately 51% share. The company also leads the domestic 3G wave as its WCDMA technology based 3G network footprint has already reached more than 10 million 3G customers. Moreover, SK Telecom has chosen Long-Term Evaluation (LTE) as the base technology standard for its 4G network advancement initiative for which service deployments are expected in 2010.

However, SK Telecom contends with a highly mature Korean wireless market given the high level of wireless penetration (approximately 96%). Additionally, competition has increased in the Korean mobile market following the merger of KT Corp (NYSE: KTC - News) and its wireless unit KT Freetel in June 2009. As such, SK Telecom faces greater challenges in retaining wireless market share moving forward.

By joining forces with Bell Labs in the next-generation R&D projects, SK Telecom is expected to benefit on several fronts. In addition to strengthening capabilities in emerging wireless technologies, the collaboration will develop core technologies (such as virtualization and network automation) to streamline network transmission while reducing operating cost. This will further reinforce SK Telecom’s leadership in the domestic wireless space.

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