South Korea's SK Telecom will acquire a 6.6% stake in China Unicom by converting $1 billion in China Unicom's bonds it bought last year, the two companies said on Tuesday.
The conversion makes SK the second-biggest shareholder in China Unicom, the No. 2 mobile operator in China.
SK, South Korea's top mobile operator, bought China Unicom's $1 billion zero-coupon convertible bonds in July 2006, hoping to secure an entry into the world's biggest mobile market by subscribers.
SK, which controls half of its home market, is looking to overseas markets such as China and the United States as expansion becomes more difficult at home, where 88% of the population already has a mobile phone.
"It would be better for SK Telecom to be a shareholder than remaining as a creditor in order to solidify its foothold to enter the Chinese market through a stronger strategic partnership with China Unicom," SK Telecom said in a statement.
With the stake acquisition, SK Telecom will take part in China Unicom's management by naming one member to its board.
China Unicom said it would issue 899.75 million new shares to SK Telecom at HK$8.63 per share. Shares of China Unicom have risen 6.7% so far in 2007 to end at HK$12.16 on Monday.