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EarthLink, SK Telecom Join in Mobile Venture

Internet service provider EarthLink today announced a joint venture deal with South Korean mobile operator SK Telecom . The $440 million dollar agreement will market a number of different wireless data and voice services in the United States.

SK-EarthLink will be a non-facilities-based U.S. mobile virtual network operator. Each partner will have a 50 percent ownership stake, and the six member board of directors will be comprised of three members appointed by each partner.

"The joint venture will take advantage of SK's systems and handsets for emerging 3G and Wi-Fi networks in the U.S., [allowing] mobile network operators to provide services that are only available in places like Asia," Garry Betty, EarthLink president and CEO, said in a conference call this morning. "Customers of the EarthLink, SK joint venture will have the power to listen to music; the gaming capabilities of a GameBoy; the ability to stream e-mail and video; find their friends with location-based services; and many other things."

Sky Dayton, founder and director of EarthLink, will serve as CEO of SK-EarthLink.

"The wireless and Internet worlds are colliding, and neither will be the same again," said Dayton. "Utilizing emerging 3G networks and harnessing the explosive growth of Wi-Fi, SK-EarthLink will take the wireless experience in the U.S. to a new level."

Under the terms of the deal, each party will contribute $220 million in cash and other assets, with EarthLink contributing $180 million in cash, its current wireless subscribers, 30 employees and other assets valued at $40 million.

The definitive agreement is expected in March 2005, and it will initially focus on data applications that it will expect to launch in summer 2005 under brand names to be determined.

The companies hope the joint venture will generate approximate revenues of $2 billion by 2009 and have 3 million subscribers.

Asia has been a hotbed of joint venture activity recently in the next generation space. Earlier this week Nortel made a joint venture deal with South Korea-based LG Electronics. And last week, Nortel struck a joint venture deal with China Putian.



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