Seoul to lift telco foreign investment cap

Dylan Bushell-Embling
28 Aug 2013

South Korea has agreed to remove its foreign ownership cap on the nation's telecom sector - but not for the nation's three incumbent mobile operators.

To honor South Korea's free trade commitments with the US and the EU, the foreign ownership cap on most telecom providers will be lifted from 49% to 100%, the Wall Street Journal reported.

One condition is that foreign investors must set up an investment vehicle in South Korea to own the stake in the telecom company.

The raised cap will also not apply to SK Telecom KT or LG Uplus, only to smaller telecom service providers. This could limit the effectiveness of the change in policy.

South Korea's decision comes the month after the Indian government approved a proposal to remove the 74% foreign direct investment cap for fixed or mobile service providers.

In India's case, the new policy marks an attempt to draw new funding into the struggling telecom sector. Ernst & Young estimates that the policy change could attract $10 billion in fresh investments.

Any investment that would take a foreign company's direct ownership into a telecom company beyond 49% will require the approval of India's Foreign Investment Promotion Board.

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