Merger of 3 LG Telecom Units Approved in Korea
The nation's top telecom regulator approved the planned merger of three telecom units of LG Group, Monday.
But the Korea Communications Commission (KCC) plans to slash policy benefits as the local share by the single entity has already exceeded 13 percent ― the level which is regarded as one of a dominant market player, KCC said in a statement.
"We gave the green light for the merger as it will benefit consumers and it is highly unlikely the merger will limit competition in the local telecom market," a KCC spokesman said.
"As a result of the merger, the nation's three telecom players including SK Telecom and KT are expected to equally compete with their own fixed- and wireless-based products," the official added.
LG Telecom, the nation's smallest mobile operator, will absorb fixed-line operator LG Dacom and Internet service provider LG Powercom by Jan. 1.
The merger is aimed to enable LG's telecom units to compete more effectively with their larger domestic rivals and gain business synergy and efficiency to improve profitability.
Nevertheless, the merged entity will still be the smallest in the highly-saturated Korean market.
As for measures for fair competition and to protect customers from any illegal activity, KCC plans to suggest LG Telecom introduce a second-by-second-based billing system, which is already used by SK Telecom.
The Fair Trade Commission (FTC), the nation's antitrust watchdog, has already clarified that it will continue monitoring the market conditions and would take strict actions if any illegal activity by the LG telecom units were detected. It also gave the go-ahead for the merger.
The telecom regulator said Korea Electric Power Corp. (KEPCO), the nation's state-run power company, is to be asked to sell its 38.8 percent stake in LG Telecom by 2012, to soothe concerns that KEPCO's stake may give LG preferential treatment over other telecom companies.
"Our policy for LG Telecom will shift to supporting mobile virtual network operators (MVNO) and content-related businesses as the combined LG unit will rank as one of the dominant market players," Shin Yong-sup, an official at KCC's media policy bureau, told reporters in a briefing, referring to LG's market share in 2008.
Meanwhile, the KCC asked LG to meet its earlier investment target for its Internet-based TV business or IPTV, while the government agency has also suggested it expand telecom networks in rural areas.
The nation's biggest fixed-line operator welcomed KCC's decision to persuade KEPCO to sell its stake in LG Telecom, hoping it will contribute to fair competition between telecom players in smart-grid businesses.
``We hope LG Telecom will expand network investment in rural areas and step up efforts to open its wireless Internet lines,’’ KT said in a statement.
In contrast, SK Telecom representatives declined to comment.
Shareholders of the three telecommunications units under the LG Group approved a plan last month to merge in a bid to improve their profitability and their ability to compete with their larger rivals.
LG is set to see annual sales of more than 7.7 trillion won and an operating profit of over 690 billion won, once the merger is completed.
But the Korea Communications Commission (KCC) plans to slash policy benefits as the local share by the single entity has already exceeded 13 percent ― the level which is regarded as one of a dominant market player, KCC said in a statement.
"We gave the green light for the merger as it will benefit consumers and it is highly unlikely the merger will limit competition in the local telecom market," a KCC spokesman said.
"As a result of the merger, the nation's three telecom players including SK Telecom and KT are expected to equally compete with their own fixed- and wireless-based products," the official added.
LG Telecom, the nation's smallest mobile operator, will absorb fixed-line operator LG Dacom and Internet service provider LG Powercom by Jan. 1.
The merger is aimed to enable LG's telecom units to compete more effectively with their larger domestic rivals and gain business synergy and efficiency to improve profitability.
Nevertheless, the merged entity will still be the smallest in the highly-saturated Korean market.
As for measures for fair competition and to protect customers from any illegal activity, KCC plans to suggest LG Telecom introduce a second-by-second-based billing system, which is already used by SK Telecom.
The Fair Trade Commission (FTC), the nation's antitrust watchdog, has already clarified that it will continue monitoring the market conditions and would take strict actions if any illegal activity by the LG telecom units were detected. It also gave the go-ahead for the merger.
The telecom regulator said Korea Electric Power Corp. (KEPCO), the nation's state-run power company, is to be asked to sell its 38.8 percent stake in LG Telecom by 2012, to soothe concerns that KEPCO's stake may give LG preferential treatment over other telecom companies.
"Our policy for LG Telecom will shift to supporting mobile virtual network operators (MVNO) and content-related businesses as the combined LG unit will rank as one of the dominant market players," Shin Yong-sup, an official at KCC's media policy bureau, told reporters in a briefing, referring to LG's market share in 2008.
Meanwhile, the KCC asked LG to meet its earlier investment target for its Internet-based TV business or IPTV, while the government agency has also suggested it expand telecom networks in rural areas.
The nation's biggest fixed-line operator welcomed KCC's decision to persuade KEPCO to sell its stake in LG Telecom, hoping it will contribute to fair competition between telecom players in smart-grid businesses.
``We hope LG Telecom will expand network investment in rural areas and step up efforts to open its wireless Internet lines,’’ KT said in a statement.
In contrast, SK Telecom representatives declined to comment.
Shareholders of the three telecommunications units under the LG Group approved a plan last month to merge in a bid to improve their profitability and their ability to compete with their larger rivals.
LG is set to see annual sales of more than 7.7 trillion won and an operating profit of over 690 billion won, once the merger is completed.
By Kim Yoo-chul, Korea Times
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