Hanaro-Powercomm-LG TeleCom to Compose Third Major Telecom Player
etienglish.com
By Jo, Shi-ryong & Kim, Sang-ryong
Thursday, May 17, 2001
It has been confirmed that the third general information and
telecommunication company, which will make up a system of
three strong players in the domestic telecom market along
with Korea Telecom and SK Telecom, is being created in the
structure of Hanaro Telecom-Powercomm-LG TeleCom.
Besides, in order to help the third player gain
competitiveness, strong asymmetric regulations will be taken
against market-dominant telecom operators including Korea
Telecom and SK Telecom. Accordingly, Korea's information
and telecommunication service market is expected to
transform swiftly into a competition system in which three
strong players will consolidate their positions, from the age
when telecom operators were created in order to boost
competition in various telecom service areas during the
1990s.
During a breakfast meeting held in the Westin Chosun Hotel
and hosted by the 21st Century top managers club (chaired
by Lee Kyeong-shik), Minister of Information and
Communication Yang Seung-taik specifically named Hanaro
Telecom, Powercomm and LG TeleCom as the late comers
that will create synergy effects arising from the business
structure by taking advantage of the selection of a IMT2000
operator. He also said that the ministry will support the birth
of the third general information and telecommunication
operator through a union (or alliance) of these late comers.
Minister Yang also vaguely made relevant statements in a
press conference on May 11 that "I understand that the late
comers are not only participating in a grand consortium for
CDMA-based IMT2000, but also are implementing an
industrial reorganization, including strategic alliances and
mergers and acquisition between operators by themselves."
Minister Yang also said that those later comers, which are
poorly equipped with capital and manpower have been
making investment beyond their ability in order to directly
compete with Korea Telecom and SK Telecom, and thereby
revealed their structural weakness. He added that the third
general information and telecommunication operator could be
established centered around operators that will have synergy
effects in their business organization.
Regarding the operators for the reorganization, Minister
Yang specifically said the combination of Hanaro Telecom
(high-speed Internet + local call service, exclusive lines),
which retains wired network targeting local areas, and
Powercomm, Korea Electric Power Corporation's information
and communication subsidiary that is armed with a optic fiber
cable network focused on inter-city lines across the country,
is most desirable.
Minster Yang explained that, if after LG TeleCom, which is
equipped with a nationwide mobile communications wireless
network, joins to the combined organization of Hanaro
Telecom and Powercom, and the three companies join forces
centering on CDMA-based IMT2000, they could constitute
the third general information and telecommunication operator
with competitive edge.
"If the union of three late comers including Hanaro
Teleocm-Powercomm-LG TeleCom were established, and
came to compete with Korea Telecom and SK Telecom, the
nation's telecom market will set up a competing structure
among operators in real sense," Minister Yang added.
Regarding the stable settlement of the third player in the
market, Minister Yang also said "We initially have to adjust
the late comer's market share to some extend," adding that
"Until now, the government has been implementing
asymmetric regulation officially, but it will implement policy
measures targeting the adjustment of market share this time."
Hanaro Telecom President Shin Yun-shik said "The scheme
to establish the third general information and
telecommunication operator has already passed the research
stage, and is in the materialization stage." He added that,
"Discussion is being held about the industrial reorganization
that will create synergy effects, centered around the late
comers mentioned by Minister Yang."
"It is most desirable that the scheme for the third general
information and telecommunication operator be carried out
through the structure of Hanaro Telecom with local networks,
Powercomm with inter-city network, and LG TeleCom with
mobile network," President Shin said. He added that
"Whatever form it may take, there will be an industrial
reorganization, though there should be detailed discussions
over whether it will be carried out through strategic alliances,
including exchange of stakes, M&As, or simple business
partnerships." |
