LG Negotiating with Foreign Companies to Form IMT-2000 Consortium

LG Telecom (LGT)’s negotiation with foreign companies to form IMT-2000 consortium seems to create turbulence. Nam Yong, president of LGT, announced yesterday that it will go ahead with the synchronous business by forming consortium in which foreign companies, as well as small- and medium-sized companies, participate.

According to industry sources, the planned consortium will be merged into LGT sometime soon. The sources argued that the plan runs counter to the government policy which obligates the consortium to include a large number of companies.

LGT is negotiating with three foreign companies from the U.S., Canada, and Japan to form IMT-2000 consortium. LGT explained that participation of these three foreign companies in the IMT-2000 consortium was desirable as a part of a global strategy. These three companies are currently offering ‘code division multiple access’ (CDMA) services in the U.S.

The companies have not reached to an agreement on specific equity investments in the consortium. Nam Yong, president of LGT, said that `foreign company will not be the majority shareholder.`

However, related business circle is opposing to this plan by arguing that LGT plan is an attempt to form a de facto sole consortium. LGT plans to allocate equities of the IMT-2000 consortium to companies participating in LGT`s capital increase according to their stakes. Hence, LGT will take a dominant role in the consortium as it pursues the IMT-2000 business.

An official of Hanaro Telecom, which has endeavored to form the `CDMA` 2000 consortium, said, `We will not participate in the sole IMT-2000 consortium controlled by LGT.`

One official also pointed out that `the plan may also spark a controversy of impartiality with SK Telecom and Korea Telecom, which already planned for the grand consortium in which a large number of companies could participate.` LGT’s plan also runs against the Ministry of Information and Communication`s policy which does not approve monopoly of one particular Chaebol company.

In response to such a concern, LGT official showed a flexible position on the plan by saying, ``If the ministry does not approve the plan, we will not insist on it.``

Moon Kwon-Mo africa7@donga.com