FTC files against KT, puts brake on K bank majority ownership review

South Korea’s Fair Trade Commission said Thursday that it has filed a report with the prosecution against KT over alleged violations of antitrust law, a move that puts the telco’s plans to increase its stake in the internet-only K bank on indefinite hold.

The FTC imposed fines totaling 13.38 billion won ($11.54 million) on Korea’s four major telecom-cable companies -- SK Broadband, KT, LG Uplus and Sejong Telecom -- for collusion in a government-led business project. Calling KT the central perpetrator, it said it planned to refer KT to the prosecution for further action.

The news prompted the Financial Services Commission, the country’s financial regulator, to confirm that it would wait to review KT’s application to increase its stake in K bank until the investigation concludes, trials are held and verdicts are reached.

The development deals a major blow to K bank’s capital procurement plans, which centered on the expansion of KT’s stake, for which KT had recently sought approval from the FSC. It had planned to raise 592 billion won ($522 million) via a rights offering this week.

But the FSC recently decided to halt its review of KT’s application until the fair trade regulator could finish its investigation and decide on further action.

K bank’s shareholders have been reviewing alternative action plans, one of which is to raise some fresh capital by issuing new convertible shares while maintaining the bank’s common shares at the current level. They are also looking to bring in new corporate entities as shareholders, the branchless bank said.

By Sohn Ji-young (jys@heraldcorp.com)