Puzzled Samsung and LG

That SK Telecom might be a majority shareholder after the subscription to buy KT shares is making a stir.

SK Telecom is trying to calm the critical public opinions on the large amount of subscription like `a surprise`. On the contrary, LG and Samsung look perplexed, as they failed in securing an outside director recommendation right due to their equity less than 3 percent.

SK Telecom stressed, “we applied for the total 5 percent stake in order to prevent a certain company from holding the managing right. It is inevitable choice for the survival of the company. ”

Shin Young-Churl chief of public information division in SK Telecom said, “SK Telecom’s holding the managing right of KT was impossible from the first. Participation of SK Telecom would ensure the management by professional manager for KT by separating ownership and management. ”

However, competing companies like Samsung and LG look prostrated. Citing that SK Telecom has been in a negative attitude toward the bid so far, Samsung and LG criticized, “we are worried about SK Telecom’s strengthened controlling power over the market and influence on the management of KT”

The Ministry of Information and Communication (MIC) and KT also are surprised at the unexpected result. Min Won-Ki chief of communication division in MIC said, “it is more desirable for privatized KT to have many shareholders holding less than 5 percent stake. ”

A senior official of KT said, “it was advantageous for SK Telecom that LG and Samsung made public how much they would buy. They can nothing but expect for diminished subscription for exchangeable bonds (EB) by SK Telecom. ”

Tae-Han Kim Chang-Won Kim freewill@donga.com shangkim@donga.com