SK Telecom (NYSE:SKM) announced that it signed an additional consulting agreement and a LOI with Kulacom Broadband Investment Company (Kulacom or KBIC), a UAE based telecommunications services company that operates high-speed wireless internet service and VoIP in the Middle East.
On May 20, SK Telecom Executive Vice President Young-Chan Nam and Kulacom CEO Michael Penner attended the signing ceremony held in Amman, Jordan to sign a USD 4.38 million consulting agreement and a USD 2.18 million LOI. The companies agreed to actively cooperate in Kulacom’s WiMAX business in the Middle East and Eastern Europe.
In May 2008, SK Telecom signed a USD 2.55 million partnership agreement with Kulacom to provide consulting on WiMAX technology. Under the agreement, SK Telecom took actual charge of commercializing WiMAX technology by sharing its knowhow and expertise on WiMAX such as network design and optimization as well as service operation and planning.
SK Telecom entered into the additional agreement with Kulacom thanks to the successful business relationship it built with the company over the past year.
Building on this USD 4.38 million partnership agreement, SK Telecom will focus on providing support in Jordan’s WiMAX project as well as developing new business opportunities in other emerging markets. In particular, SK Telecom plans to send technology and marketing experts to Kulacom headquarters located in Dubai, UAE to provide support in business development and management.
Furthermore, the two companies signed a LOI, under which SK Telecom will invest USD 2.18 million in Kulacom to seek WiMAX business opportunities in the emerging markets including the Middle East and Eastern Europe.
Meanwhile, SK Telecom announced that it successfully exported Korea’s Wibro technology to Jordan at the WiMAX service launch ceremony held on the same day at Kulacom Jordan headquarters located in Amman, Jordan.
WiMAX can be divided into fixed WiMAX(802.16d) and mobile WiMAX(802.16e). Most countries including Jordan are applying mobile WiMAX technology. Wibro – an acronym for wireless broadband - is the Korean service name for mobile WiMAX.
The ceremony was attended by See-Jung Choi, Chairman of the Korea Communications Commission and leading figures from both companies including Kulacom CEO Michael Penner, Kulacom Jordan CEO Hazim Alaeddin, SKC Chairman Shin-Won Choi and SK Telecom Executive Vice President Young-Chan Nam.
SK Telecom agreed to Kulacom Jordan’s request for cooperation in building the WiMAX network and service last year after Kulacom Jordan acquired a WiMAX license in Jordan.
Kulacom Jordan received 3.68GHz band (15MHz channel bandwidth) and 3.65GHz (10MHz channel bandwidth) in 2008 and completed building base stations and transmission networks in early 2009. As it begins providing commercial WiMAX today, it also announced its plan to secure 2.5 million customers by 2012.
SK Telesys, a Korean Wibro equipment company, also joined the project as the equipment provider, which carries a meaning in that the two Korean companies – a service operator and its equipment vendor – entered the overseas market together. SK Telecom offered pre-consulting service to optimize WiMAX system in Jordan based on its extensive operational capabilities in telecommunications infrastructure and helped commercializing the equipment, thereby realizing a mutually beneficial partnership between a service provider and an equipment company.
With its success achieved in Jordan, the company will focus on seeking exporting opportunities in the Middle East and Eastern Europe where WiMAX-based broadband internet service holds great promise.
SK Telecom Executive Vice President Young-Chan Nam said, “After two years of partnership, SK Telecom and Kulacom achieved tangible results. The two companies worked together closely in an effective manner to commercialize WiMAX technology and realize WiMAX business model suggested by SK Telecom. Building on this success, SK Telecom will continue the export of Korea’s Wibro technology to emerging markets.”
Kulacom CEO Michael Penner said, “The investment demonstrates the validity of our business model of entering emerging markets as a competitive WiMAX-based operator. SK Telecom share in our strategy and ambition for tackling these exciting market opportunities together. We look forward to strengthening this partnership further and building on the already successful collaboration of our teams.”
Established in Dubai in 2006, Kulacom is a WiMAX-based communications services company. It is currently expanding its business in the MENA region and Northern Europe and diversifying its product offerings to include VoIP, IPTV and games. As for its WiMAX project in Jordan, the company formed a subsidiary named Kulacom Jordan and opened commercial service on May 20.