SK Telecom to Buy Stake in Hynix

The purchase would make the South Korean telecom giant the largest shareholder of the memory chipmaker. Upon finalization, the deal would represent SK Telecom’s biggest acquisition to date. The transaction would introduce opportunities of growth in the chip market and diversify the company’s fixed-line and wireless businesses globally, helping it overcome the limited prospects in the domestic wireless market.

The computer-memory chips

Along with the computer-memory chips, we believe strong smartphone offerings, 3G network, advanced 4G Long Term Evolution expansions and the cloud computing business will fuel growth at SK Telecom. In addition, the company is poised to benefit from the growing Wi-Fi and data femtocell services.

However, chip production might increase SK Telecom’s spending furthermore. Plus, the company continues to spend heavily on improving its network visibility to contain customer churn amid stiff competition from its rivals. The increased spending might strain the company’s financials.

Further, SK Telecom’s aggressive smartphone rollout plan connotes higher marketing expenses, which may put pressure on the bottom line in the nearly term.