Who is to be crowned third communications group?

“Who will be the third wired and wireless integrated communications group?”

With the Ministry of Information and Communication (MIC)`s announcement Monday that it would readjust the future communication market into three comprehensive business groups, attention has focused on the identity of the third player in this scenario.

Scenario 1, Comeback of LG:

LG, which owns both the wireless business LG Telecom and the wired business Dacom, is regarded as the right candidate to take up this responsibility. The government also hopes that LG, which has a wealth of experience in the communications business, will take up the axis of the tripartite system. Mired in a business slump since its disqualification from the next-generation International Mobile Telecommunication (IMT)-2000 project, LG could thus turn a corner in its recovery efforts.

Since its exclusion from the IMT-2000 project, LG Group has shown signs of leaving the communications field, saying, “We cannot push a business which makes no money.” However, some officials at LG Telecom have expressed their intention to remain in the market. With the month-end deadline approaching, LG has to make a final decision as to whether to bid for the multi-carrier (MC)-type business.

A ranking official at Cheong Wa Dae said, “LG has sufficient resources and experience. But it seems to have no firm will to be the third comprehensive communication group, as attested by the conflicting stances of company officials in the process of pursuing the IMT-2000 project.”

Scenario 2, Entry of POSCO:

Pohang Iron and Steel Co. (POSCO) has emerged as a strong candidate as it has sufficient funds and keen interest in the communications business. As a part of its restructuring efforts, it can also consider advancing into the communication market in the advanced technology field. If POSCO comes out aggressively, it could emerge as a participant in the MC-type IMT-2000 business, now being pushed by Hanaro Telecom. In the event it takes over Powercomm, which favors privatization, POSCO is expected to compete with Korea Telecom on equal footing in the wired field.

However, it should take over bad loans resulting from excessive competition in return for advancing into the market. For instance, POSCO should have to assume responsibility for a cash-strapped super-speed business enterprise in order to take over Powercomm, In the event it enters the MC-type IMT-2000 business in partnership with Hanaro Telecom, Dacom, and LG Telecom, it would have to shoulder a debt burden of over 5 trillion won. POSCO chairman Yoo Sang-Boo recently said, “We have no interest in the IMT-2000 business.” If POSCO continues to show little interest in the IMT-2000 project, the possibility that it will become the third participant is slim.

Scenario 3, A third enterprise suited for the project:

MIC’s policy could be interpreted as a strategic move to select the MC-type IMT-2000 business. Accordingly, market analysts anticipate that the third participant in the triumvirate will be the holder of the MC-type business. The outline for the readjustment of the communications market is likely to be unveiled in mid-March at the earliest. The status of LG and POSCO, promising candidates to be the third communications group, will be decided and the future courses of leading companies like Powercomm and Hanaro Telecom are likely to be laid out in accordance with the results of the selection of the MC-type business.