UPDATE 3-SK Tel sells back China Unicom stake for $1.3 bln

* SK Telecom pulls out after Telefonica-Unicom boost ties

* S. Korean firm set to focus on new related businesses

* SK Tel stock up 2.9 pct, bucks fall in wider market

* China Unicom shares fall in line with broader market

SEOUL/NEW YORK, Sept 28 - South Korea's top mobile firm SK Telecom sold back its stake in China Unicom for $1.3 billion, underscoring its lack of success in a market it had once pinned high hopes on.

This followed a recent move by China's second-largest mobile operator and Spain's Telefonica to deepen ties.

Telefonica and SK Telecom unexpectedly emerged as bedfellows in China's No. 2 mobile carrier after an overhaul of China's telecom industry this year, which saw the country's four main carriers reduced to three.

"Although SK still has some investments in China, they are on a relatively small scale," said Daniel Jin, an analyst at Shinhan Investment Corp. "They are essentially collecting their investment back (with this deal)."

Jin said the move was in line with other priorities within the SK group, which currently include the launch of a credit card joint venture with the country's No. 4 lender Hana Financial Group.

SK Telecom, which tried for years to establish itself in the Chinese mobile market, said in a statement on Monday the sale followed a "change of strategy" and proceeds would be used to strengthen its financial base and tap new business opportunities.

It said it planned to develop viable business models in China by cooperating with various operators, including China Unicom.

SK Telecom and China Unicom said China Unicom would buy back a 3.8 percent stake from SK Telecom at HK$11.105 per share, for a total of about HK$10 billion ($1.29 billion).

Shares in SK Telecom ended 2.9 percent higher compared to a 0.9 percent drop in the wider market.

Under China's telecom reform, Unicom sold its CDMA network to China Telecom. Since SK Telecom specialises in CDMA (code division multiple access) technology, the tie-up made less sense than an alliance with Telefonica, which uses GSM and WCDMA standards.

CLSA analyst Francis Cheung in Hong Kong said the split with China Unicom could eventually set up a strategic tie-up with China Telecom, although China Telecom may not be in a hurry to get an outside investor anytime soon.

A spokeswoman for SK Telecom said the company currently had no plans in China outside China Unicom.

SK Telecom bought $1 billion worth of bonds in China Unicom in 2006 and later converted the investment into shares in the Chinese carrier for HK$8.63 per share.

The repurchased shares will be cancelled and total shares of China Unicom reduced to about 22.868 billion from 23.768 billion, it said.

"After the share repurchase, China Unicom will be pleased to maintain the sound cooperation partnership with SKT," China Unicom Chairman Chang Xiaobing said.

SK Telecom exited the U.S. market last year when it sold struggling mobile unit Helio to Virgin Mobile USA.