SK Telecom to be a Majority Shareholder of KT

All the stocks offered in the public subscription for the privatization of KT (former Korea Telecom) were completely sold out by the companies like SK Telecom, LG Electronics, Samsung Life Insurance, and Industrial Bank of Korea.

The Ministry of Information and Communication announced on the 18th that the competition ratio at the subscription for the 14.53 percent stake in state-run KT Corp. marked 2.37:1. The sale amounts to total 4 trillion and 780 billion won (28.36 percent, 88.57 million shares) including 13.83 percent of exchangeable bonds (EB) to be issued during 20th and 21st, which is the largest sale in the history of domestic stock market.

The companies applied for subscription to buy the 5 percent shares allotted to strategic investors (major firms) are SK Telecom for 5 percent, LG Electronics for 1 percent, Samsung Life Insurance for 1 percent, Daelim Corp for 0.61 percent, Industrial Bank of Korea for 1 percent and Hyosung for 0.95 percent, and the average competition ratio posted 1.91:1.

Especially, SK Telecom applied for the total shares of 5 percent (1trillion and 612.1 billion won) allotted for the strategic investors that it can be the majority shareholders holding almost 10 percent of total shares including EB.

However, Samsung Life Insurance, Hyosung Consortium, and the Industrial Bank of Korea, which are classified as institutional investors, failed to secure a certain amount of equity due to the large amount of subscription of SK Telecom. The order of allotment for strategic investors is corporation, individual, and institutional investors in order.

Hence, 5 percent of KT stake is likely to be allotted for SK Telecom by 3.78 percent, LG Electronics 0.75 percent and Daelim Corp. 0.47 percent.

Samsung group failed to secure the priority for EB, which is offered twice as many as the shares bought, that it could buy just the EB other firms give up to buy.

Meanwhile, the rate of subscription by individual investors posted 4.53:1 at the 7 security firms including Samsung, LG and Hyundai securities.

The government plans to complete the domestic disposing of KT shares after the subscription for EB by priorities on the 20th, by individuals on the 21st.

Chang-Won Kim changkim@donga.com