UPDATE 2-SK Telecom eyes investment in Blockbuster -source

* Says looking at Blockbuster, other overseas opportunities

* Analysts question synergies from potential deal

* SK Tel shares down 0.31 pct in a wider market up 0.76 pct

By Hyunjoo Jin

SEOUL, March 30 (Reuters) – SK Telecom , South
Korea’s top mobile carrier, is considering investing in bankrupt
U.S. video rental chain Blockbuster Inc , an official
with the operator said on Wednesday.

Blockbuster in February agreed to sell itself to a group of
creditors for $290 million in a “stalking horse bid,” used as a
starting bid or minimally accepted offer that other interested
bidders must surpass if they want to buy the company.

“We are considering investing in Blockbuster as we are
looking at many opportunities overseas. But no details have been
decided,” an official at SK Telecom said on condition of
anonymity, as she was not authorised to talk to the media.

A company spokesperson declined to comment.

SK Telecom, which controls around 50 percent of the nearly
saturated domestic market, has been looking for opportunities to
invest overseas to generate new revenue streams.

But the news about the potential Blockbuster investment,
previously reported by the New York Post, came as a surprise to
some analysts who raised doubts about the outlook for the movie
rental business.

“We are slightly perplexed by (SK Telecom’s interest)
because no immediate synergies come to mind and the required
restructuring of the company could be very costly,” David Lee,
an analyst at CLSA said in a report.

“A consummated Blockbuster deal would be quite negative due
to the large size of the company and its declining business,” he

Blockbuster, which has 2,500 locations, filed for bankruptcy
in September after years of struggling to keep up with
competition from Netflix Inc and online offerings.

Byun Sung-jae, an analyst at Daewoo Securities, said the
potential purchase could help SK diversify its content sourcing,
adding that the price could be lower than $290 million.

Shares in SK Telecom were down 0.31 percent in a broader
market that was up 0.91 percent at 0405 GMT.

The carrier’s overseas investments so far have produced few
tangible results, analysts say.

The operator exited the U.S. market in 2008, selling its
struggling mobile unit Helio to Virgin Mobile USA, and sold back
its stake in China Unicom for $1.3 billion in 2009.

(Editing by Jonathan Hopfner)

UPDATE 2-SK Telecom eyes investment in Blockbuster -source