KT 'to sell 3.2% stake to Microsoft'


State-controlled carrier KT provides fixed line, mobile and Internet services

SEOUL, South Korea (CNN) -- The Korean government has decided to sell a 3.2 percent stake in state-controlled telco KT Corp to Microsoft, the domestic Yonhap news agency reported Monday.

It quoted a finance and economy ministry official, who said the decision was made at a recent meeting of the committee overseeing privatisation of state-owned firms.

KT, 40.1 percent owned by the government, is the former Korea Telecom. It changed its name last week.

The sale of a stake to Microsoft has been mooted for some time, going back to June when the information and communication ministry said KT was talking to the U.S. software giant.

Last month Korean media reported Microsoft would buy a 5 percent stake for about $600 million as part of the privatisation plan. KT has a market capitalization of $12 billion.

Selldown by June 2002

The government is committed to selling its stake in KT by the end of June 2002. Last week KT said it would buy back from the government a tranche of 11 percent and sell it to non-Korean investors in the form of convertible bonds.

Such a move would alleviate concerns about a possible stock overhang depressing the company's share price. KT has previously said it would issue new shares in February 2002 amounting to five percent of the company.

KT is Korea's largest fixed-line carrier. Its subsidiary KT Mobile competes in the mobile market with SK Telecom, which is merging with Shinsegi Telecom on January 5 to create Korea's largest cellphone company with almost 15 million subscribers..

KT held a 13.4 percent stake in SK Telecom until it sold 3 percent in November for about $525 million. In June KT raised $2.24 billion from the sale of American Depositary Receipts at $20.13.

Shares in KT traded 0.3 percent higher at 50,100 won in Seoul in Monday morning trade.