Japan’s DoCoMo in talks with KTF

Rumors that the Japanese telecommunications giant NTT DoCoMo Inc. is in negotiations to acquire a stake in KTF Co. were confirmed yesterday by the Korean firm’s chief financial officer. “NTT DoCoMo is in talks to acquire a stake in KTF to help it tap Korea’s 16.6 trillion won ($16 billion) cell phone market,” Hong Young-do told Bloomberg News. “We’ve been in talks for a long time now, but there are so many variables that could change.” Reuters reported that DoCoMo would buy 10 percent of KTF for around 60 billion yen ($500 million) and that the deal would be announced as early as this week. DoCoMo had previously tried to buy shares in SK Telecom, but the deal fell through in 2001. Asked to comment on the bid, Nam Joong-soo, KT Corp.’s chief executive officer, declined to comment. KT owns a 49-percent stake in KTF Co. Echoing DoCoMo’s moves, KT also plans to expand its investments and alliances with other service providers. Korea’s biggest telecommunications company yesterday announced that it would spend 3 trillion won next year, its largest investment since being privatized in 2002, to bolster growth in high-tech sectors. “Of our investments in 2006, 1 trillion won will be set aside for budding businesses such as WiBro, IP-TV and digital contents as we expect a ‘big bang’ in digital convergence to take place around 2010,” Mr. Nam said. He was speaking at a press meeting yesterday at the Press Center, central Seoul. The company, which serves about 95 percent of Korea’s 21 million fixed-line telephone customers, invested 2.5 trillion and 2.3 trillion won, respectively, for this year and 2004. WiBro, or wireless broadband, is a mobile Internet service that is to start operation in the Seoul metropolitan area in the first half next year. Mr. Nam said that WiBro will receive 500 billion won of funding in 2006. In addition, 300 billion won has been earmarked for Internet-Protocol TV, or IP-TV, a multimedia service connecting televisions to a high-speed Internet network that allows viewers to choose exactly what shows are broadcast to their sets. Mr. Nam said KT would hold a demonstration of the new service this month. Mr. Nam, who has only 100 days’ experience as the head of the telecom service operator, said that despite the drop in operating profits over the past few years, KT is seeking medium and long-term growth rather than quick fixes to its problems. In a bid to cement its foothold in the mobile telecommunications sector, the company will spend an additional 77 billion won next year on securing high-quality content for its digital entertainment businesses through acquisitions or partnerships with other companies. In response to rumors that the government is considering renationalizing KT, Mr. Nam said that such a move “would be unprecedented across the world and the government’s credibility would be hit hard.” by Seo Ji-eun