Korea Telecom, SK Telecom Win Korea Mobile Phone Licenses
By Ian King
Seoul, Dec. 15 (Bloomberg) -- Groups led by Korea Telecom Co. and SK Telecom Co., the country's largest fixed line and land line telephone companies, won licenses to provide new mobile phone services allowing greater mobile access to the Internet.
The Ministry of Information and Communication rejected bids by groups led by the LG Group and Hanaro Telecom Inc., potentially leaving them out of the future of Asia's third-largest mobile phone market.
Korea Telecom shares rose as much as 5.3 percent to 71,900 won, while SK Telecom shares rose as much as 4 percent to 286,000 won minutes after the government announcement. LG Telecom Co. and Hanaro Telecom fell by their 12 percent daily limit.
Korea is the latest country to offer licenses for high-speed mobile Internet services. The government is selling three permits for 1.3 trillion ($1.1 billion) each instead of auctioning them, as was done in Germany and other parts of
Europe this year.
In August, Germany auctioned licenses for EU50.52 billion ($44 billion). Japan, by contrast, awarded permits to what it judged as the best candidates.
Korea opted for a combination of the two methods, and has reserved the option of awarding only two of them now.
Korea will now hold a second competition in the first three months of next year for a third license that it did not award this time. The government mandated that all proposals for licenses must come from groups of companies.
Bids by Korea Telecom, SK Telecom and LG specified that they will use a technology called Wide-band code division multiple access developed by Nokia Oyj and Ericsson AB, meaning LG's proposal received a lower grade than its larger rivals.
In September, the government ruled that at least one of the three licenses would go to a service provider using a rival technology, CDMA2000, backed by Qualcomm Inc.
Hanaro Telecom, Korea's second-largest high-speed Internet service provider, submitted a bid specifying CDMA2000, hoping to win by not having to compete against financially stronger rivals with experience in the mobile industry.
Its proposal fell short of the minimum requirements for technical expertise, strength of finances and plan for a new service.
The change of policy -- it had previously stated that it would leave the choice to ``the industry'' -- came after lobbying by Samsung Electronics Co. and other local equipment makers.
Samsung, Hyundai Electronics Industries Co. and others told the government they would lose orders to overseas competition as they have concentrated on CDMA2000 developments and are as much as two years away from
introducing WCDMA equipment.
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