Korean telcos KT Corp and LG Uplus will work together to oppose rival SK Telecom’s proposed acquisition of pay-TV provider CJ Hellovision.
According to a Korea Times report over the weekend, the two operators claimed the deal, announced in early November, has the potential to harm fair competition by combining the country’s dominant telco and TV players.
"Sometimes, an enemy becomes a friend. The term frenemies will be used to describe the relationship between KT and LG Uplus to take on the SK-CJ issue," said an unnamed KT Corp official, in the report. "KT is fighting LG Uplus in the local telecom market; however, the SK-CJ deal may hurt common interests."
The proposed transaction will see SK Telecom initially pay 500 billion won (€398.2 million) for a 30% stake in CJ Hellovision currently held by CJ O Shopping. The deal allows it to acquire CJ O Shopping’s remaining 23.9% stake in CJ Hellovision at a later date through call and put options.
The deal is expected to close in April 2016. Upon completion, SK Telecom will push for a merger between CJ Hellovision and its fixed-line unit SK Broadband via a stock swap.
Once the dust settles, SK Telecom will own 75.3% of the combined entity, and CJ O Shopping will own 8.4%.
The deal requires the approval of the Ministry of Science, ICT and Future Planning (MSIP).
According to the Korea Times, as well as lobbying the MSIP, KT Corp and LG Uplus may also team up with other pay-TV companies.
"More details about future collaboration will be coming out," said KT Corp, in the report.
Meanwhile, SK Telecom told the newspaper that acquiring CJ Hellovision will enable both companies to compete more effectively with the likes of Netflix.
"Korea needs to realise economies of a scale in the media content business to compete with international rivals," said SK Telecom, in the report.
