EarthLink this week announced a $440 million deal to create a joint venture with Korean mobile communications company SK Telecom.
The new company will be called SK-EarthLink. In the summer the company plans to launch advanced wireless data and voice services through multiple mobile virtual network operator (MVNO) relationships.
The joint venture will take advantage of MVNO relationships EarthLink already has with Sprint and RIM. SK-EarthLink will be a non-facilities-based wireless provider and will depend solely on other carriers’ mobile networks in the U.S.
SK-EarthLink will reveal details about its services within the next couple of months. The company says the offerings will be based on 3G-Code Division Multiple Access (CDMA) and Wi-Fi wireless technologies.
EarthLink has been selling wireless services to its 5.4 million Internet access customers for a couple of years. The ISP’s 30,000 wireless customers will be migrated to the joint venture along with other assets associated with EarthLink’s MVNO wireless services, including 30 employees.
EarthLink is also expected to put $180 million toward the joint venture over the next three years. SK Telecom is expected to put $220 in cash toward the new company over the same time period.
EarthLink’s founder, Sky Dayton, will remain on the board of directors at EarthLink and will be CEO of the joint venture. Dayton is also founder and chairman of Boingo Wireless.
SK Telecom has 18 million wireless customers in South Korea. The deal is opening the door to the U.S. for SK Telecom for the first time. EarthLink’s president and CEO, Gary Betty, says the company teamed up with SK Telecom because of SK’s experience with 3G technology, cutting-edge applications and handsets, and its extensive research and development experience.
The deal is subject to regulatory approval, but both companies say they expect it to close in March.
The joint venture expects to gain 3 million subscribers and post revenues of $2 billion by 2009.
