Serious Discord among Samsung, SK and LG over `KT’s Stake Sales`

Sentimental conflicts among major companies caused by the process of KT (former Korea Telecom)`s stake sales for privatization are getting serious.

Samsung group, which failed in the bid, is openly showing its antipathy against SK Telecom, which became majority shareholder of KT through a surprise action. Guarding against sudden leaping of SK, LG Telecom plans to do its best to take over Powercom, though it gained some profits from the bid.

Stressing that what they did at the bid was inevitable for its survival in the communication field, SK tries to appease Samsung, but the aftermath seems to last long.

▽ Flaring Samsung = Executives meeting of Samsung group often becomes a indignation rally against SK.

An official from Samsung stressed, “without an intention to secure some stakes in KT, Samsung participated in the bid by the persuasion of the government which hoped for the golden section of KT stakes. We cannot understand what SK says it was inevitable to guard against Samsung. ”

Samsung lays emphasis on that SK has developed by taking over public enterprises, and that its dependence on domestic consumption rather than on exporting does not do much for national economy. Samsung, in addition, plans to cooperate with other companies to guard against SK.

And Samsung is likely to keep distance from Federation of Korean Industries (FKI), in which SK Group Chairman Son Kil-seung is influential. Some people doubt whether the FKI chairpersons’ golf meeting for the harmony of financial circles scheduled on the 15th will succeed.

▽ Soothing SK = SK is trying to soothe the censure of Samsung saying it is a delusion of persecution. SK is not pleased with the stir going on, as it achieved expected results, and was already criticized by public opinion for the change of attitude. SK Chairperson Son on the 29th gave affiliated companies a special instruction `not to stimulate Samsung with any comments or actions`. It reflects such current that Chairperson Son and Chey Tae-won, chairman of SK Corp. stressed, “we have a mind to turn over the 1.9 percent stakes in KT achieved as exchangeable bonds (EB) to Samsung, ” and “we took over the stakes in KT not for the management rights but for survival. ”

An official of SK said, “we are nervous with the misunderstanding that SK tries to get higher rank in the financial circles. We have no intention to guard against Samsung, and raised a white flag. ”

However, SK is firm to secure its top rank in its staple business.

▽ LG both relieved and worried = LG gained 2.27 percent stakes in KT from the bid, but there is a worry for LG. LG got enough profits not only because it gained expected amount of KT stakes, but also because it may be able to recommend outside director with the stakes less than 3 percent.

However, being cowed by SK Telecom in the wireless communication market, LG is preparing measures to watch over SK, which became the majority shareholder of KT the most powerful in cable communication. LG decided to do its best to secure the stakes in Powercom possessed by Korea Electric Power Corp. through its affiliated Dacom.

Yeon-Su Shin shkwon@donga.com ysshin@donga.com