04/13 23:49
LG Telecom Fails to Sell Most Shares; BT Doesn't Buy (Update1)
By Renee Kim
Seoul, April 14 (Bloomberg) -- LG Telecom Co., a South Korean mobile phone company, said it received bids for only one-third of the new stock in a sale that closed yesterday, as shareholder British Telecommunications Plc didn't buy in.
BT, LG's second-largest shareholder, decided not to increase its stake because of internal issues, LG said in a release, without being more specific. BT spokesman Harry James declined comment on why the U.K.'s second-largest telecommunications company chose not to buy in.
LG Electronics Inc., the phone company's biggest shareholder, and other existing stockholders were the only buyers who participated in the rights offering. LG was hoping to raise 300 billion won ($227.9 million) to pare debt and raise money to buy new system equipment.
LG Telecom will hold a board meeting Thursday to discuss what to do about the shares it failed to sell, said Lee Jong Hwan, a company spokesman. ``We're very disappointed with BT's decision,'' the LG release said.
BT's Asia Strategy
BT has previously indicated it may exit some Asia investments, although it hasn't decided how and when. The company is coping with its own debt problems after paying almost 10 billion pounds ($14.6 billion) for high-speed mobile phone licenses in Europe.
Even as it looks to pare assets in some foreign markets, BT has acquired an option to buy stakes of about 5 percent in each of Japan Telecom Co.'s three mobile phone units for 68 billion yen ($547.5 million).
``It's no secret BT is looking at its investments in Asia to realign value,'' said James, the BT spokesman. ``One option is to sell shares (in some companies), but there are many other options as well.''
Any decision on LG will be driven by BT's overall strategy in Asia, not a specific concern about the Korean company, he said.
LG Dwarfed by Rivals
LG Telecom missed out on a round of consolidation in Asia's third-largest mobile phone market last year, leaving it with less than half as many subscribers as its smallest rival.
The company's strategy is in question as it has yet to decide whether it will bid for a third license the Korean government wants to sell for providing high-speed mobile Internet access and other services.
Two licenses were awarded in December to groups led by Korea Telecom Corp. and SK Telecom Co., which, like LG, said they will use a standard called wideband code division multiple access. The third permit must go to a group that says it will use an alternative technology, CDMA2000.
LG said last month it would consider applying under CDMA2000 if the Korean government lowers the price. Terms of the previous auction specified that the government will charge between 1.1 trillion won and 1.3 trillion won for the license.
If LG decides to form an investment group and bid for a phone license, BT wouldn't take part, James said earlier this year. |
