International Firms Show Interest in Synchronous IMT-2000 License
By Nho Joon-hun
Staff Reporter
For the first time ever, an international company may become the largest shareholder in a
consortium put together for securing a domestic telecommunications service license.
In a surprising change of policy, sources at the Ministry of Information and Communication
hinted yesterday that it will probably disregard the national origin of the largest shareholder in
the consortium that seeks the synchronous IMT-2000 (international mobile
telecommunication) license.
``We understand that Hanaro Telecom is currently negotiating with an international company
that is interested in securing as much as 40 percent of the company's shares,'' a senior MIC
official said.
Should the negotiations be successful, the government may consider awarding the
synchronous license regardless, even if a Korean company does not have the single largest
stake.
However, the MIC said in an official announcement that it is not up to the government to give
out the license since it has to be deliberated by an independent committee. The
announcement did not say that foreign companies would not be allowed to lead the
consortium.
Asked to comment on the change in the government's position, Hanaro said any easing of
regulations concerning the awarding of the synchronous license would be welcome.
``However, the international company in question is just one of a number of potential partners
that we are talking to and it is too early to tell what will eventually happen,'' a Hanaro official
said.
While confirming that the company operates out of North America, he was careful not to be
specific because of a previous instance when some corporate negotiations broke down when
details became public.
Hanaro had been in talks with Verizon of the United States, one of the world's largest mobile
communications operators, but it unilaterally terminated the negotiations, complaining that its
identity should not have been made public.
Even as the talks continue there is still a long way to go. International partners are demanding
at least two preconditions for participation in the consortium.
For one thing, they have been asking for a drastic reduction in the contribution that licensees
have to make for securing the right to provide IMT-2000 services. Currently contributions
stand at about 1.15 trillion won.
``We have proposed that the contribution be reduced to 220 billion won but the government
has thus far said no and there is no indication that it will change its mind,'' the Hanaro official
said.
The government has said it will make a number of concessions, including extending the
installment timeframe but it has stood firm on the amount, arguing that asynchronous
licensees have already committed themselves to as much as 1.3 trillion won.
``Our argument is that as a single synchronous platform operator, will need to make huge
investments in new facilities while asynchronous service providers will be able to use them,''
he said.
Aside from the monetary contribution, the Hanaro official said that potential international
partners have also demanded that a prominent Korean corporation be a part of the
consortium.
``Where this issue is concerned, it is a well-known fact that we are making concerted efforts
to attract the participation of companies like LG and POSCO (Pohang Iron and Steel Co.),''
he said.
Unfortunately, both LG and POSCO have said that they are not interested in the synchronous
license and there is no indication that they will change their minds unless the government
decides to provide additional benefits.
The government in fact has made efforts to make it more attractive for companies to
participate in the project and recently made it possible for those which are part of the
consortiums for asynchronous services to join Hanaro as well.
This means that POSCO is free to secure a majority stake in the bid for the synchronous
license even though it already has over 12 percent in the consortium led by SK Telecom.
However, POSCO has confirmed up until most recently that it is not interested in the new
consortium.
``There are numerous possibilities and we are confident that we will be able to secure up to
30 percent in foreign equity. We have a final business proposal on hand and it is just a matter
of fixing the consortium partnership,'' the official said.
Among the foreign companies that Hanaro is talking to is Qualcomm, the name that is on
every single mobile CDMA (code division multiple access) hand set.
While Qualcomm has committed itself to some type of equity participation, it has similarly
said that the amount depends on factors like who the majority shareholders on the Korean
side will be.
jakenho@koreatimes.co.kr
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