SK Telecom in talks with Virgin Mobile

SEOUL (Reuters) - SK Telecom Co (017670.KS: Quote, Profile, Research), South Korea's top mobile operator, said on Wednesday it was holding preliminary discussions with Virgin Mobile USA (VM.N: Quote, Profile, Research) over SK's U.S. mobile business Helio.

SK on Tuesday downplayed speculation about a possible deal with the U.S. operator, saying no specific negotiation was underway.

"(SK Telecom) is currently exploring strategic opportunities for Helio and has engaged in preliminary discussions with Virgin Mobile USA with respect to such an opportunity," SK said in a clarification statement.

"Discussions are at an early stage, however, and there can be no assurances that these discussions will lead to any transaction."

SK Telecom declined to comment on whether it aims to buy Virgin Mobile's business or whether it is thinking of selling its loss-making Helio, which is 69 percent owned by SK and 28 percent owned by EarthLink Inc (ELNK.O: Quote, Profile, Research),

Recent blog reports have said talks have included scenarios such as SK buying Virgin Mobile USA and combining it with Helio.

SK is looking to overseas markets such as China and the United States as expansion becomes more difficult at home where more than 90 percent of the population have a mobile phone.

"SK telecom has an aggressive stance on expanding its operation in the United States," said Lee Shi-hoon, an analyst at Hyundai Securities. "They have money to invest. It could be that SK changed its focus to Virgin Mobile after the deal with Sprint Nextel did not work out."

In November last year, SK Telecom said it had approached Sprint Nextel Corp (S.N: Quote, Profile, Research) with several cooperation measures. Sources said Sprint Nextel had rejected a $5 billion investment by a group including SK.