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LG to merge Korean telecom operations

Robert Clark
12 Oct 2009
00:00

The LG Group is planning to merge its three Korean telecom service providers into one company to give the company more heft in competing with larger rivals.

The combination of mobile operator LG Telecom, fixed-line provider LG Dacom and ISP LG Powercom would create an operator with $6 billion in sales and $773 million in operating profit, Korea Timessaid.

LG Telecom is Korea’s smallest mobile operator, with 8.5 million subs. In August it reported its biggest profit decline in six quarters

Korea’s biggest carrier KT merged with wireless unit KTF earlier this year, and industry analysts expect mobile leader SK Telecom to absorb its ISP, SK Broadband, some time in the next year.

“LG has been seriously considering a consolidation of its fixed-line and wireless telecommunications business. There has been talks in the markets about a merger between two of the units, but we believe combining the three is a more effective solution, considering cost or in generating synergy,’’ LG said in a statement.

“We expect to become more competitive in the market by converging mobile service subscribers and retail networks from LG Telecom, and other network services from LG Dacom and LG Powercom,” it said.

LG Group owns 37.4% of LG Telecom and 30% of LG Dacom, while Dacom has a 40.9% holding in LG Powercom. Korea Electric Power Corp. (KEPCO) owns a 38.8% of Powercom.

LG will also set up a separate retail arm to support the new, larger telco.

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Tags:
  • LG
  • Korea
  • Merger and acquisition
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