Korea's anti-trust watchdog approves KT-KTF merger

SEOUL, Feb. 25 (Yonhap) -- South Korea's anti-trust watchdog approved on Wednesday KT Corp.'s proposal to merge with its mobile affiliate without any conditions, paving the way for the telecom giant to secure firmer footing in the saturated communications market.

The final decision for the merger with the nation's second-largest mobile
carrier, KTF Co., is in the hands of the Korea Communications Commission (KCC),
the nation's tech and broadcasting industry regulator
"We decided to allow the proposed merger after finding no competition-limiting
impact from the takeover," the Fair Trade Commission (FTC) said in a statement.
"Still, we will continue to monitor the market and take stern measures in case
the merged company attempts to block competition by using its dominance in the
fixed-line telecom sector," it added.
The endorsement came after KT submitted its official proposal on the takeover to
the KCC, which later asked the watchdog to review whether it could hamper fair
market competition. The tech regulator is expected to make the final decision
around March 20.
"The opinion by the FTC will be reflected in the KCC's final decision. However,
the FTC's decision is not an absolute criterion, and the KCC will further review
the decision," a KCC official said, requesting anonymity.
Market analysts expect the KCC is likely to approve the merger on the condition
of allowing multiple telecommunications operators to use connections from the
utility poles and line system owned by KT, once a state-run company. The company
was privatized in 2002.
"It is necessary to settle the issue of the neutralization of KT's telephone
equipment so all competitors can achieve a win-win situation," said Choi Si-joong
earlier Wednesday at a parliamentary briefing.
KT currently controls some 90 percent of the country's fixed-line telephony
market and has over 12 million broadband Internet users, while KTF commands a
third of the nation's mobile service market.
The merger is expected to create a communications giant that can compete with No.
1 mobile carrier SK Telecom, which also raised its business profile by acquiring
No. 2 broadband operator Hanarotelecom Inc. last year.
KT officials praised the decision of the anti-trust watchdog to allow the merger,
saying is decision was "right and proper," as the merger between the
parent-daughter companies is only a reorganization within the KT group.
Rival companies SK Telecom Co. and LG Telecom Ltd. said they are disappointed
with the decision, claiming the merger could hamper fair market competition, as
KT's market dominance in the fixed-line communications sector could spill over
into the mobile sector.
"The merger will allow unfair allocation of radio frequency bands, as well as
unnecessary marketing competition in the nation's telecommunications market,"
said LG Telecom in the statement.
South Korea is one of the world's most wired nations, with more than two-thirds
of homes connected to high-speed Internet and more than nine out of 10 people
owning a mobile phone.
As the nation's telecom market becomes increasingly saturated, companies are
trying to promote combined fixed and mobile services to cut costs and woo
customers from rivals.