May 6, 2011 / 3:01 AM / 7 years ago

UPDATE 2-KT Corp to sell Russian unit to Vimpelcom for $346 mln

* Deal will help Vimpelcom secure subscribers in eastern Russia -KT

* KT says looking at overseas investment opportunities

* KT reports 62 pct jump in operating profit for Q1

* KT shares gain over 2 pct in broad market that was down 1.8 pct (Add analyst and KT comments, results, share price)

By Hyunjoo Jin

SEOUL, May 6 (Reuters) - KT Corp , South Korea’s top fixed-line and No.2 mobile phone company, announced a $346 million sale of its Russian unit and a jump in quarterly profit on Friday, boosting its shares more than 2 percent.

KT said in a statement it has agreed to sell its entire 79.96 percent stake in mobile operator New Telephone Company (NTC) to Russian operator Vimpelcom for $346 million.

Last month, KT CEO Lee Suk-chae told Reuters that the carrier was in talks to sell the Russian unit, without elaborating. [ID:nL3E7FM01O]

KT said the acquisition would help Vimpelcom, Russia’s No.3 mobile phone operator, secure a subscriber base in eastern Russia, where NTC is focused.

“KT concluded that it would be better for a nationwide operator to acquire and grow...NTC,” KT said in a statement.

KT bought then loss-making NTC for $22 million in 1997 and turned around the Russian unit in four years, it said. NTC posted $25 million in net profit and $110 million in sales last year and has 1.5 million subscribers, KT said.

“I was doubtful of the NTC sale because NTC was making good money. But KT is expected to use the proceeds to invest in expansion in overseas markets such as Africa,” Kim Hoi-jae, an analyst at Daeshin Securities, said.


NTC has been one of the few successful overseas acquisitions by South Korean mobile carriers, which have tried to expand abroad as the domestic market nears a saturation point.

KT said it would continue to look for overseas investments, including acquisitions and alliances, especially in emerging markets such as Africa and South and Central America.

Mobile TeleSystem (MTS) , Russia’s top mobile company, also said in February it had bid for KT’s stake in NTC. [ID:nLDE71D297]

KT, South Korea’s major seller of Apple Inc’s ‘s iPhone, reported a 62 percent jump in operating profit for the first quarter, helped by solid gains in smartphone subscribers. [ID:nL3E7G6014]

KT shares advanced 2.2 percent in a wider market that was down 1.75 percent as of 0143 GMT. (Editing by Jonathan Hopfner and Muralikumar Anantharaman)

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