Telecom rivals clash over SKT’s merger plan

Korea’s three major telecom firms -- SK Telecom, KT and LG Uplus -- clashed again over SKT’s controversial merger and acquisition plan Wednesday.

SKT announced last year that it would take over CJ HelloVision, a CJ Group subsidiary that runs mobile virtual network operator, broadband and cable TV businesses, and merge it with the firm’s wholly owned subsidiary SK Broadband, a broadband and an IPTV services firm.

The announcement sparked a backlash from the mobile and pay TV markets. KT and LG Uplus and advocate groups opposed the proposed two-fold M&A plan, arguing it goes against fair market practices and would ultimately disrupt the mobile and pay TV markets.

“The M&A deal would allow SKT’s dominance in the mobile network sector to spread into the pay TV market,” said Kim Hee-su, a senior vice president of KT, at the public hearing. 

He also claimed that the combined entity would lower pay TV services fees in the beginning in order to beat other rivals but eventually increase the fees, putting financial burden on consumers.

Some critics anticipate that SKT would also offer some bundles of Internet, pay TV, and mobile services at lower prices than other competitors’, wreaking havoc on the industries.

SKT is currently the largest mobile network operator with almost half of the entire market share, at 49 percent, followed by KT and LG Uplus with around 30 percent and 20 percent, respectively.

If the planned M&A deal is approved, SKT would top the MVNO market with a 30-percent market share, or 1.7 million subscribers, and take the second spot in the pay TV market with a 26-percent market share, or 7.5 million subscribers, after KT, which holds 29 percent in market share.

In the broadband sector, the merged company would come in at second place with 30 percent in market share, or 5.87 million subscribers, after KT with a 41-percent market share.

The meeting was the last of its kind before the Ministry of Science, ICT and Future Planning makes the final decision on the proposed M&A plan this month.

Present at the hearing were executives from the three network operators, high-rank officials from the ministry, professors, and representatives of civic groups.

Lee Sang-heon, a senior vice president of SKT, argued that the M&A proposal would take the entire pay TV market to the next level, asking for support for the plan.

Expressing complaints over the lack of efforts so far by mobile network and IPTV operators, except SKT, to boost both cable TV and IPTV industries, CJHV senior vice president Tark Young-seok said “Those opponents just want to maintain the status quo in which cable TV operators suffer from the massive migration of subscribers to IPTV services and sinking profits.”

He said the M&A is highly necessary in the face of fierce competition with global media platform operators.

Kang Hye-ran, a representative of a civic group, said “In the long term, the M&A could have negative ramifications on the market and consumers so the regulator should thoroughly review the issue and make all the approval processes transparent and relevant data available to the public.”

By Kim Young-won (wone0102@heraldcorp.com)