Korea's 3G race seen to broaden foreign investment
By Nam In-soo
SEOUL, Nov 1 (Reuters) - South Korean telecom companies' bids for a next-generation
mobile licence are expected to widen foreign investment as they seek foreign partners to
raise their chances of winning, analysts said on Wednesday.
Korea's four telecom companies -- SK Telecom , Korea Telecom , LG Telecom and Hanaro Telecom (NasdaqNM:HANA
- news) -- entered a competition on Tuesday to obtain one of three 3G licences which the government plans to award by the
end of this year.
The four contenders all formed consortia, which would include foreign telecom companies, to boost their chances and to help
finance the operation of services and the licence fee.
Each successful bidder is expected to pay between 1.0 trilllion won ($880.6 million) and 1.3 trillion won for the licence. The
3G operators are also expected to spend at least two trillion won each for initial investment in their services, analysts said.
``It would be natural for foreign telecom companies to show interest in Korea's 3G services,'' said Brian Yang, a telecom
analyst at Shingyoung Securities. ``They want some stake in Korea's next-generation mobile market.''
SK Telecom, the nation's largest mobile carrier, said it would take up a 48.6 percent stake in a consortium and some of this
would be shared with a foreign strategic partner.
SKT said it had negotiated with several foreign telecom companies for a stake sale, including Japan's NTT DoCoMo , but
those talks were suspended until Korea finished the selection of 3G service providers.
An SKT official said in late October talks with DoCoMo would resume soon as ``there were issues to be decided on the
technology side.''
Local media have said DoCoMo could take a five to 15 percent stake in SKT.
Talks with DoCoMo languished as South Korea demanded that two technologies be adopted for the third-generation mobile
phone service in a bid to appease competing interests among service providers and equipment makers.
TWO TECHNOLOGIES FOR 3G SERVICES
Except for Hanaro, the remaining three candidates said they would adopt W-CDMA technology, developed by Nokia and
Ericsson , saying it had a wider global subscriber base.
Manufacturers of telecom equipment, including Samsung Electronics , have lobbied heavily for Qualcomm's
(NasdaqNM:QCOM - news) cdma2000 standard, which Hanaro chose for its technology platform.
State-run Korea Telecom, which will jointly offer the 3G service with its affiliate KT Freetel and KT M.com , also said it
would join hands with foreign telecom companies.
A company official said on Wednesday it was in stake sale talks with three foreign companies -- Australian telecom giant
Telstra Corp Ltd (Australia:TLS.AX - news), Singapore Telecommunications Ltd (SingTel) and Hong Kong's Pacific Century
CyberWorks (PCCW) .
``We are always interested in the Korea market,'' said Joan Wagner, PCCW's spokesperson.
Korea Telecom said it was talking to two or three other global telecom giants over stake sales.
As part of its privatisation efforts, Korea Telecom has said it will sell a 15 percent government stake to foreign telecom firms
by early next year.
It also said it would sell a 15 percent stake in KT M.com, which it acquired in June.
LG Telecom, Korea's fourth largest mobile carrier, said it has been in talks with its second largest shareholder, British
Telecommunications Plc (quote from Yahoo! UK & Ireland: BT.L), to secure fresh capital by the end of this year.
``We hope BT will show more interest in Korea's 3G services,'' said a company spokesman.
He said LG has already forged strategic ties with Japan Telecom Co for the new mobile service.
Hanaro Telecom, which made a surprise bid on the last day of application on Tuesday, said a maximum of 20 percent of its
3G consortium could be represented by foreign partners.
A Hanaro spokesman said it had negotiated with KDDI , Japan's second-largest carrier, and Singapore Technologies
Telemedia (STT) for participation in the consortium.
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