VK FOLDS owing £1m

South Korea’s VK Mobile has gone into administration after it failed to repay debts of 1.78bn won (£1m). It was the third time in 10 days that it had failed to honour promissory bills.

VK, best known for its pink VK530 handset, has supply deals with Vodafone and Woolworths in the UK. According to reports, it was about to ink an ODM deal with Motorola.

“The bankruptcy of VK shows how tough the global mobile phone market is for second-string makers both at home and abroad,” said Greg Roh, an analyst at Korea Investment & Securities. “Even if creditors clear away debts, VK is not likely to be profitable in the face of challenges from global giants like Nokia and Motorola on top of Samsung and LG.”

Roh added: “It testifies to the international consensus that only a few cell phone vendors will eventually stay alive. Mid-sized manufacturers will not be able to compete with the powerhouses because the development of new phones costs too much.”

VK Mobile’s turnover jumped from £108m during 2003/4 to £216m during 2004/5. Profits then were £68m. But it recorded losses of £37m last year, and was £5m in the red for the first quarter of 2006.