Communication Market `A Third Strong-Player` Is Visible

A diastrophism has begun in Korea¡¯s communication market. In almost every field of the communication market including cable and wireless, express internet business, and IMT-2000 Time Division Multiple Access (TDMC) System, a trend of reconstruction has appeared.

SK Telecom Co. (SKTC) announced to give up its cable communication business. On the other hand, Korea Communication Co. (KCC) decided to accelerate its cable communication business saying, ``The last 1 km is cable``. LG Telecom Co. (LGTC) is aiming to regain a lead by strategically uniting with Hanaro Telecom , Inc. (HTI) to secure the IMT-2000 TDMA business license. In the express internet business field, the HTI is leading the market reconstruction movement by trying to take over the late-starter companies such as Dreamline Co. (DC). As the quota sale of Powercom Co. (PC), a future major communication carrier, approaches, a reconstruction of the market is becoming visible.

# An already begun diastrophism = Declaring to take over the PC, the HTI is moving fast. Since the SKTC and the Posco, both 5 percent stock holders of the PC, decided not to bid for the PC, the HTI is likely to buy the PC.

The KCC, a state-run company, has taken steps to become a private company by selling the stock-share of 30 percent of the PC., its subsidiary company. The communication business circle is observing the sale of PC stock-share as a `deciding factor` of the market reconstruction. For the `third player`, the PC, equipped with a first-class infrastructure that can match that of the KCC, is a must-buy item.

At the same time, the HTI admitted that they are negotiating with the DC and the SKTC to take over the express-internet business. If the HTI buys the two companies¡¯ express-internet business division, its current market share of 25 percent will increase to 30 percent threatening the KCC. And the SKTC is negotiating with LG to sell the 7.48 percent stock share of the HTI.

# Scenario of the reconstruction = To rearrange the communication market as a `three strong-players` system is a dream-come-true for the Ministry of Information and Communication (MIC). The MIC also has a plan to create a `third communication carrier` by combining the TDMA consortium led by the LGTC, and the late-starters such as the HTI and the PC.

Minister of the MIC Yang Seung-Taek is strongly supporting the ministry¡¯s plan by saying, ``If the nationwide network of the PC and the customers of the HTI are united, there would be a lot of synergy effect.`` Shin Yun-Sik, the president of the HTI is claming, ``If the two companies are combined, the new merged company can save 2 trillion dollars of investment cost. It is a big advantage for even our country.``

# Stumbling blocks = There are many stumbling blocks to see the `third carrier`. The HTI has a plan to take over the late-starters including the PC through a joint bid with the LGTC and a foreign company as a consortium. However, there is a slim chance for the plan to be actualized since the HTI and LGTC both are out of funds. Some experts are even skeptical whether the `minor players` in the communication market can earn a strong synergy effect.

freewill@donga.com