Decision on Overseas Firms Boosts Telecom Ownership

The government said Tuesday the percentage of foreign ownership that classifies a corporation as a foreign entity would be increased to promote the privatization of state-owned telecommunication corporations.

Large corporations classified as foreign cannot invest in key telecommunication companies, which can be no more than 49 percent foreign-owned. A company was considered foreign if 50 percent of its stock was owned by foreign investors.

That limit was raised from 50 percent to 80 percent in a cabinet meeting presided over by President Kim Dae-jung.

The revision, which the government said would take effect this month, opens the way for large firms and banks that are more than 50 percent owned by foreigners, such as Samsung Electronics and Pohang Iron and Steel, to invest in the nation's backbone telecommunications firms, such as Korea Telecom and Powercomm.

Because 58 percent of Samsung's shares and 59 percent of Pohang's were owned by foreigners, these two blue-chip firms could not purchase the shares of the telecommunications firms whose foreign ownerships already were near the 50-percent cap. For example, Samsung and Pohang could not buy shares of SK Telecom, 49 percent of whose shares were already held by foreigners.

by Ha Ji-yun