SEOUL, South Korea — Microsoft agreed on Saturday to buy a $500 million stake in Korea Telecom, giving it an Internet foothold in the world's most wired market.

Microsoft and Korea Telecom, which is controlled by the government, said they had agreed on what officials here described as a "strategic alliance" under which Microsoft is buying 3.2 percent of Korea Telecom's shares in convertible bonds with warrants to buy stock in the company. The deal calls for Microsoft to pay a 38 percent premium above the listed price of the shares on the Korea Stock Exchange.

Korea Telecom, which provides 98 percent of Korea's conventional telephone service, has come to dominate the broadband market in the past two years, with 3.65 million customers subscribing to lines needed for fast online connections. Korea has the highest broadband penetration rate of any country in the world.

Although Microsoft and other foreign investors are still excluded from any role in the management of the company, Gates predicted that Korea Telecom, Microsoft and other partners would be able "to deliver dynamic solutions and services to this globally connected community."

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Korean officials saw the deal as a significant turning point in an often frustrated effort to privatize Korea Telecom.

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