Troubled handset maker signs deal to supply LG Telecom

Pantech Group, an embattled Korean handset manufacturer, said yesterday that it has signed a deal to supply handsets to a local mobile service carrier. The deal signed with LG Telecom Ltd., the nation’s smallest mobile service operator, will help the company sustain its business amid an ongoing debt restructuring program, its spokesman said.
However, the company did not disclose the terms of the contract, including the value and the number of handsets to be supplied.
The supply deal comes more than a month after Pantech Group ― Pantech Co. and Pantech & Curitel Communications Co. ― asked for a debt resolution program from its creditors in the face of mounting debt and tough competition.
The creditor banks led by the state-run Korea Development Bank agreed to stop debt repayments from the two mobile phone makers for as long as three months, allowing them to avoid bankruptcy. At the end of September, Pantech and the affiliate had a total of 2 trillion won ($2.1 billion) in liabilities, according to the two firms.
On Jan. 10, Pantech Group signed a similar deal with KTF Co. to provide nine handset models to the nation’s second-largest mobile service carrier within this year. The company, the third-largest mobile phone maker in terms of combined sales of its two units, said that it sold 3.1 million to 3.2 million handsets locally last year, lower than its goal of 3.5 million. It represents around 20 percent of the local market, where 16 million handsets were sold last year, it said.
Korea’s mobile phone makers are facing tough business conditions at home and abroad as the local market nears saturation and competition overseas intensifies. In July, VK Corp., a small handset maker, collapsed under heavy debts, dealing a blow to the country’s already struggling midsize handset makers.