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LG operators to merge in South Korea
27 November 2009
Three operators in the LG group in South Korea are to merge in December to strengthen their competitive position against Korea Telecom and SK Telecom
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[LG]
[LGT]
[LG Telecom]
[LG Dacom]
[LG Powercom]
[KT]
[Korea Telecom]
[SK Telecom]
[SKT]
Comment: Consolidation, consolidation, consolidation: that's increasingly the story from across the world as smaller operators unite to put a stronger message together with which to challenge the powerful operators in each market.
South Korean mobile-phone operator LG Telecom will merge with two other operators in the group, LG Dacom and LG Powercom. The move is an effort to speed up competition against two strong rival operators, Korea Telecom and SK Telecom.
LG Telecom, along with LG Dacom and LG Powercom, has received approval from its shareholders for the merger that is scheduled to close by December.
The integration will create a company with annual sales of about $6.9 billion. LG Telecom is looking to attract customers by packaging high-speed internet with wireless and fixed-line phone services.
At the same time the company announced plans to nominate Lee Sang-Chul, a former CEO of KT, as a director and is expected to make him CEO of the combined group from January. Lee will replace Jung Il-Jae, the current CEO of LG Telecom. Lee is also a former information minister in the South Korean government. Jung has been CEO of LGT since 2006.
Seoul-based LG Telecom is also expecting the merger to help cut down costs, including marketing expenses, by 0.8% to 2% of revenue from next year through to 2014.
The merger can be cancelled if the value of shares that LG Telecom, LG Dacom and LG Powercom have to repurchase from opposing shareholders exceeds a combined $686.8 million. Shareholders can request the companies to buy back their stock until December 17. GTB
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