No. 2 Indian phone maker seeks stake in Pantech

India’s No. 2 mobile phone manufacturer, Micromax, is eyeing a stake in Korean phone maker Pantech as part of its drive to expand overseas and go upmarket, according to industry sources yesterday.

Korea’s No. 3 smartphone maker, Pantech, is in the second round of a debt-restructuring program after suffering six consecutive quarterly losses due to fierce competition from Apple and Samsung, despite the company’s high-end technology.

“Many foreign companies have expressed interest in buying a stake in Pantech, and Micromax was one of them,” said one source closely connected to Pantech who declined to be named.

Micromax is a smartphone vendor that sells low-cost smartphones priced between $60 and $80 and is the No. 2 company in India in terms of market share after Samsung Electronics.

In the global market, it is the 10th-largest company, offering 2G phones, 3G Android smartphones, tablet PCs and LED TVs.

A Pantech spokesman said the company has discussed the investment with Micromax but said the talks shouldn’t be blown out of proportion.

“Micromax has been eying the Korean smartphone vendor since the end of last year and talked with Pantech, but the company has not yet discussed it with creditors,” said the source.

Pantech is currently owned by nine creditor banks that hold a combined 37 percent of its stock, Qualcomm, which has a 12 percent stake, and Samsung Electronics, which holds 10 percent.

Since its establishment in 1991, Korea’s No. 3 mobile phone maker has focused solely on smartphones and secured related technologies.

It is the only company that has the technology to manufacture an LTE-A smartphone besides Samsung Electronics and LG Electronics. It has filed 14,488 patents and secured 4,886 as of the end of last September.

But, in recent years, Pantech has struggled against competition from Samsung Electronics, LG Electronics and Apple.

The industry sources say that the ailing company entered a second corporate workout program not because of a lack of technology or the quality of its products but because of external factors such as a lack of capital.

“Considering that the competition in the smartphone market is expected to be intensified further in the future, sale of the company is more likely than revival,” said a market analyst at a local securities firm.

“Currently, overseas companies, especially those in China and India, have been trying to contact Pantech’s creditors. Although they have not yet reached the discussion phase, their interests in taking over the stakes are very high, as Pantech is one of a few companies that can produce a premium smartphone in the U.S. market and these companies can acquire Pantech’s technologies as well as secure patents.”

BY KIM JUNG-YOON [kjy@joongang.co.kr]