LG Telecom, Hanaro in rivalry over IMT-2000 control
The rivalry between LG Telecom (LGT) and Hanaro Telecom over which will control the
consortium bidding for a cdma2000 standard IMT-2000, or 3G telecom, license shows
no signs of abating.
Shin Yun-sik, president of Hanaro, met with Information and Communication Minister
Yang Seung-taik yesterday and demanded that the LG-led IMT-2000 consortium
include one vice president and two executive directors recommended by Hanaro.
Also, following Shin's meeting with Minister Yang, Hanaro presented four demands
related to the registration of the IMT-2000 consortium as a new corporate entity,
including the control of the consortium's formation, the main body to draft business
plans and management cooperation.
LGT plans to incorporate the IMT-2000 consortium into the company by allocating its
equities only to those participating in the company's capital increases. On the other
hand, Hanaro wants the consortium to be registered as a new corporate entity.
In addition, LGT is allowing companies belonging to the Hanaro-led committee,
promoting the organization of an IMT-2000 consortium to bid for a cdma2000 license,
to participate in the LGT-led consortium on an individual basis.
However, Hanaro wants LGT to take part in the committee as a large shareholder,
taking a 20 to 30 percent stake.
Each company has also set up separate IMT-2000 business plans to be presented to
the government.
Additionally, Hanaro is asking LGT to guarantee its position as co-manager by
appointing one vice president and two executive directors at its recommendation, while
LGT is insisting that Hanaro become one of its shareholders.
While both sides jockey for authority, the tide is gradually turning in favor of LGT.
LGT has been receiving applications to participate in its IMT-2000 consortium since
May 22, and about 400 companies including 20 big enterprises have applied as of
yesterday.
Before Shin's meeting with Minister Yang, Hanaro appeared to be making a final
decision on whether or not to give up the IMT-2000 business yesterday, but after the
meeting, the company merely tried to bring up new issues.
A high-ranking Hanaro official said, "We will seek a compromise through negotiations
with LGT."
However, LGT scoffed at Hanaro's demand, saying they were not worth considering.
Industry watchers considered Hanaro's move an attempt to buy time by making
various demands during Shin's meeting with Minister Yang, and to secure a greater
influence in the LGT-led consortium.
(hsshine@koreaherald.co.kr)
2001.05.31
koreaherald.co.kr
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Hanaro Demands Co-Management of IMT-2000 Consortium
With LG
By Kim Deok-hyun
Staff Reporter
Hanaro Telecom President Shin Yun-sik said to LG Telecom yesterday that LG would
have to guarantee a degree of management control for his company before Hanaro
decides to join the LG-led 3G mobile network consortium,
In a closed meeting with Information and Communication Minister Yang Seung- taik,
Shin delivered Hanaro's stance on the 3G consortium, which is at the center of pending
issues in the telecom industry.
What's more, he allegedly signaled that Hanaro Telecom is likely to pull out of the
running for a 3G license if LG Telecom continues to take efforts to take a leading role
in the consortium.
Shin's request is seen as a last-ditch resistance against the government's support of LG
Telecom. Ministry spokesman Kim In-shik declined immediate comment but said that
the ministry would issue a statement.
Minister Yang has said that LG Telecom is the most favorable bidder for the 3G license
because the company has both infrastructure and business know-how for
CDMA-based mobile phone operation.
However, Shin's action probably won't affect the government's support for LG
Telecom, analysts said. Hanaro Telecom, the second-largest broadband Internet
service provider, has sounded like it could successfully launch its own 3G service, but
few market watchers see that as realistic.
The company has struggled to escape from its money-losing business and is mired in
snowballing debts. The result of the 3G race will decide Hanaro's corporate fate,
analysts said.
For that reason, they said Hanaro is not a competitive player for 3G services which
need huge initial investments.
After the meeting, Hanaro's senior managing executive Lee Jong-myong said that
president Shin expressed his intention that LG Telecom should also hire one chief
technology officer and several technicians dispatched by Hanaro as part of
guaranteeing co-management.
``An LG-led consortium would be a coup against the government's policy to nurture
small- and medium-sized local companies because it moves to form the consortium by
offering shares,'' Lee said.
He accused the government of unequal refereeing during this third, and final, 3G race,
saying that it has discouraged Hanaro's bidding plan.
Hanaro said it will form its own consortium for the 3G race or else not bid at all, ruling
out participation in an LG Telecom-led consortium.
Should Hanaro bid on its own, it will encourage small- and medium-sized companies to
participate in its consortium.
If Canadian telecom operator Telesystem International Wireless (TIW) joins the
LG-led consortium as expected, Lee said Hanaro would leave the license competition.
Hanaro first bid for the first 3G license auctioned off last December.
Despite being the sole bidder, the government rejected its offer on the grounds that it
lacked resources and experience.
A 3G mobile network allows dramatically faster mobile applications than those
currently possible, including video communication using mobile phones and high-speed
Internet access.
kdh@koreatimes.co.kr
ÀԷ½ð£ 2001/05/30 17:12
hankooki.com
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LG's 3G Consortium Attracts 300 Companies
LG Telecom said yesterday around 300 local companies submitted their requests to join
its third-generation (3G) consortium, including 20 large conglomerates.
``The number of participating companies is expected to increase as the deadline comes
up,'' said LG Telecom's Senior Managing Executive Lee Sang- min.
The smallest mobile phone operator has been receiving applications through its website
since early last week.
Of the conglomerates, Powercomm, a unit of state-run Korea Electronic Power Corp.,
Hyundai-Kia Motor and Hanjin group all expressed their intention to join the
consortium.
However, Samsung Electronics is unlikely to participate in the consortium, people close
to the situation said.
``Specific terms _ such as how much shares would be distributed in the consortium _
were not decided,'' Lee said.
LG Telecom plans to start to form its 3G consortium with 300-500 billion won of paid-in
capital after wrapping up its negotiations to find a foreign partner.
``We are still in talks with several foreign firms to form the consortium, but no visible
results have been made so far,'' Lee said.
Three foreign firms _ KDDI of Japan, Telesystem International Wireless (TIW) of
Canada and Verizon Communications of the United States _ are reported to be in the
talks.
He also denied some speculations that foreign companies would take a leading role in
the 3G consortium, saying that an international partner should be positioned as the
second-largest shareholder.
With regard to Hanaro Telecom's announcement that it will take make-or- break action
if LG Telecom continues to form its own consortium, Lee said it isn't worth a comment.
``However, we will welcome it, any time, if Hanaro Telecom wants to join our
consortium,'' he said.
On the same day, Hanaro Telecom president Shin Yoon-shik met with Information and
Communication Minister Yang Seung-taik to extensively discuss its stance on the 3G
auction.
The 3G mobile network, also known as IMT-2000, offers high-speed audio, video and
data information to mobile phones and other portable devices.
Last December, the government awarded two asynchronous-mode 3G licenses to SK
Telecom and Korea Telecom.
The third and last ticket, based on Qualcomm's synchronous-mode cdma2000
technology, is likely to go to LG Telecom which failed to obtain a license earlier.
kdh@koreatimes.co.kr
ÀԷ½ð£ 2001/05/30 17:08
hankooki.com
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Last Backlash of Hanaro Telecom
By Cho, Shi-ryong
Wednesday, May 30, 2001
While the confrontation between LG Telecom and Hanaro Telecom over the
business right of the synchronous IMT2000 is lasting, the intention of the
Ministry of Information and Communication(MIC), the licensor of the business,
draws the attention of telecom industry.
Especially, after the inauguration of Yang Seung-taek as the new Minister of
Information and Communication, MIC is troubled by the confrontation of the
both sides as it has pushed ahead with its plan on the condition that the
synchronous consortium would be formed under mutual agreement with a late
comer and it is planning to provide every supports, including a reduction in
license fee, if and only if the condition is met.
MIC stands on the condition, even in expediting the licensing procedure of
synchronous IMT2000 business, so it is questioned whether it can expedite the
public announcement of business right regardless of the recent confrontation of
Hanaro Telecom and LG Telecom.
The intention of the government over the synchronous consortium is supposed
to be disclosed on May 30, because Shin Yoon-shik, the CEO of Hanaro
Telecom is scheduled to meet Yang Seung-taek, the Minister of Information and
communication, to discuss the business right of the synchronous IMT2000 in
the morning on the day.
The scheduled meeting of Shin is, according to Hanaro Telecom, to make
certain of the intention of the government over the business right of the
synchronous IMT2000 and to determine the future course of the synchronous
IMT2000 business which will be implemented by Hanaro Telecom.
The overall matters about the synchronous IMT2000 business, including the
constitution of a grand consortium, - which gave rise to the recent conflict with
LG Telecom - government policies related to the grand consortium, and the
establishment of the third general information and telecommunication operator
planned by the government, will be discussed in the meeting between the CEO
Shin of Hanaro Telecom and the Minister Yang.
Hanaro Telecom who has been leading the establishment of the cdma2000
grand consortium, a consortium for the synchronous IMT2000, with PICCA has
opposed the recent attempt by LG Telecom to form an independent consortium
and suggested a unification of the consortium on the equal status of both sides.
Especially, the results of the meeting will be directly linked to the future course
of the synchronous IMT2000 business because Shin is to abandon the
IMT2000 business if the government admits the LG-led consortium and
otherwise to compete with LG over the business right.
Contrary to the standpoint of Hanaro Telecom, LG Telecom will enforce the
formation of an independent consortium.
LG Telecom said, "300 companies, including 20 conglomerates, want to
participate in a consortium with LG as of May 29" as it has offered a
participation in consortium on its homepage, and, suggesting its intention to
enforce an independent consortium, "The formation of a consortium whose
capital will range from 300 to 500 billion won will start when the offer of
participation is closed on June 6 and the negotiation with overseas operators is
completed.
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