Saturday, February 16, 2008

South Korea - SK Telecom acquires Hanarotelecom

SKorea regulator OKs $1.2B telecoms deal

South Korea's Fair Trade Commission has approved — with conditions — the proposal by wireless operator SK Telecom Co. to buy a large stake in the country's second-largest broadband service provider for $1.15 billion.

The deal is still subject to final approval by the Ministry of Information and Communication, which is scheduled to deliberate Wednesday on the commission's recommendation.

Analysts say the acquisition would allow SK Telecom to bundle mobile with fixed-line services, helping it retain mobile market leadership while extending its influence into fixed-line and broadband turf.

The conditions the trade commission imposed are intended to discourage a monopoly in the mobile, fixed-line and broadband service markets.

"SK Telecom's acquisition of Hanarotelecom is expected to limit competition in the telecommunications market," the antitrust regulator said in a statement late Friday. "So, we decided to order measures to address such issues."

KT Freetel Co. and other South Korean telecommunications companies had called for a rigorous government review of the market leader's proposed takeover of Hanarotelecom, saying the acquisition could hurt fair competition.

SK, South Korea's largest wireless operator by revenue, is seeking a 38.9 percent stake in Hanarotelecom. If it goes through, the deal will bring SK Telecom's stake in Hanarotelecom to 43.6 percent, making it the largest shareholder in Hanarotelecom, which also offers fixed-line services.

Under the trade commission ruling, SK and Hanarotelecom must continue to offer unpackaged services and should not force their sales staff to sell bundled services for the next five years upon information ministry approval. SK also must offer its mobile service for other operators' packaged products on the same terms as it offers them with service through Hanarotelecom, the antitrust regulator said.

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