[Newsmaker] SKT mulls ADT Caps takeover to empower artificial intelligence, internet of things

South Korea’s top mobile carrier SK Telecom is preparing for another significant acquisition, buying security firm ADT Caps from private equity firm Carlyle Group as part of its strategy to strengthen its internet of things business.

According to industry sources Friday, SKT is taking serious moves to acquire a 100 percent stake in ADT Caps at an as of yet undecided price in partnership with Australia’s Macquarie Infrastructure and Real Assets. 

Washington-based Carlyle Group has reportedly chosen the SKT-Macquarie consortium as a preferred bidder.

The telecom giant said Thursday in a regulatory filing that it is considering the deal, but nothing has been set in stone.

Rumors circulating in the market hint that the deal could be around 3 trillion won ($2.8 billion), possibly marking one of biggest M&A deals this year.

SKT is said to finance about 600 billion on the acquisition, according to market speculations.

“It is true that the company is moving forward for the deal, but it’s too early to talk about the price yet,” said an SKT official.

SKT CEO Park Jung-ho on Tuesday told a local newspaper that it is not desirable to set the price higher than market valuation regarding the ADT Caps deal.

At a press conference held at the Mobile World Congress in Barcelona, Spain last month, Park said security is the most important factor in the era of the fifth-generation network.

The company also announced its acquisition of Switzerland-based quantum cryptographic business IDQ at the time.

To combine the 5G network with new artificial intelligence and internet of things businesses for seamless and stable telecom services, SKT is placing more weight on both the physical and digital security sectors.

The mobile operator bought midsize security business NSOK in 2014, but no significant cooperation between the security unit and telecom giant has been achieved so far.

“SKT is likely to seek synergy between NSOK and ADT Caps after buying the new firm,” an industry official said. “ADT Caps has solutions based on big data that will help strengthen SKT’s AI and IoT services.”

ADT Caps is the second-biggest security firm in Korea, providing central monitoring, access control, video surveillance and other security services. SKT rival KT owns third-largest security business KT Telecop.

Carlyle Group bought ADT Caps from US-based Tyco International for about 2 trillion won in February 2014. It was put up for sale late last year as Carlyle decided to retrieve its investment.

If SKT’s consortium successfully takes over ADT Caps, competition for secure 5G services in the telecom market will get fiercer, industry watchers say.

KT Telecop last year launched a new security platform running on its parent mobile carrier’s cloud and IoT systems.

By Song Su-hyun (song@heraldcorp.com)