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Technology Stocks : Samsung and Wireless -- Ignore unavailable to you. Want to Upgrade?

To: Eric L who wrote (53)	5/14/2002 1:10:01 PM
From: Eric L	Read Replies (1) \| Respond to of 374

re: Samsung eyes KT Stake >> Samsung Group Says Units May Buy KT Stakes Lee Chang-ho Reuters 10 May 2002 Korean conglomerate mulls US$4bn stake buy amid union opposition. South Korea's largest conglomerate Samsung Group said on Friday it might take stakes in KT Corp, just days after KT's union threatened to strike if a $4 billion stake sale this month gives control to a conglomerate. Key to a privatisation drive gaining speed in an election year, the KT stake sale is sensitive as the union, and even the government, try to avoid a sale that might give a single company management control. Telecom firms and regulators are wary of a single firm controlling telecom leader KT, which has a near monopoly - 96 percent market share - in South Korea's local call market. "Our financial units may acquire stakes in KT," Chung Won-jo, an official at Samsung Group's restructuring division, told Reuters. Samsung Group Chairman Lee Kun-hee was quoted in the Korea Economic Daily Newspaper on Thursday as saying that Samsung had no interest in buying shares in KT. Analysts said Samsung's intentions highlighted the allure of KT, but it was premature to say whether its move signaled a return to the heady days before the Asian financial crisis, when conglomerates expanded their line-up of subsidiaries focusing more on size than quality. "We are not interested in management rights," Chung said. "We have several financial units and in their perspective, they could do it if they feel there's investment value." The units include Samsung Securities Co, Samsung Fire & Marine Insurance Co, unlisted Samsung Card and Samsung Life Insurance. Chung said Samsung Electronics, the world's biggest memory chipmaker, was not involved. KT shares ended down 2.9 percent on Friday at 54,000 won ($42.34) versus a main index that closed down 2.47 percent. Possible Backlash "The reality of the situation is that the telecoms sector requires players with cash," said Shim Kyu-sung, a telecoms analyst at Meritz Securities. "It would be a throwback to past business practices if companies with little relevance to the telecom sector dive in to the KT privatisation process," he said. "But if the process is undertaken in a fair and competitive manner, the resulting situation may be favourable." Other analysts said they would take a wait-and-see attitude. "At face value, Samsung has said its possible participation would be as individual, not strategic, investors," said Ban Young-won, a telecoms analyst at Good Morning Securities. "It would be premature to pre-judge what Samsung intends to do," he said. On Friday, over 200 unionists rallied in front of the Information and Communication Ministry in downtown Seoul, demanding a lower lid on the size of stakes powerful conglomerates could take. The 38,000-member union has threatened to strike if a business conglomerate takes control. Korea's conglomerates, called "chaebol", were blamed for exacerbating the 1997-98 Asian financial crisis as their aggressive expansion and thin profits left them vulnerable. The collapse of the Daewoo Group in the wake of the crisis sent shockwaves through South Korea and led to the reform of a banking system that for decades had assisted conglomerates with soft loans. The dilemma for the government is KT's 49 percent foreign ownership ceiling has been reached. It now must sell its remaining 28.4 percent stake in KT at home, and conglomerates are the obvious candidates for selling shares worth $4 billion. The government has set a 15 percent ceiling on corporate bidders, five percent in shares and 10 percent in exchangeable bonds. It plans to sell stakes to strategic investors, institutions and employees as well. << - Eric -