SKT pledges 5 trillion won amid controversial dealTop wireless carrier SK Telecom unveiled on Wednesday a plan to invest 5 trillion won ($4 billion) over the next five years into media-related businesses should the company’s proposal to acquire CJ HelloVision, the nation’s largest cable television operator, go as planned.
The announcement came as controversy brewed in the telecom industry over the planned acquisition, with competing operators crying foul over the proposed deal.
Major telecommunications operators KT and LG U+ are working together to derail SK Telecom’s proposal, saying the combination of the top TV service provider and the telecommunications operator with a broadband subsidiary under its belt could violate fair business practices.
SK Telecom decided to acquire a controlling 53.9 percent stake in CJ HelloVision from its parent group, CJ, for 1 trillion won. SK Telecom plans to merge CJ HelloVision with its broadband Internet subsidiary, SK Broadband, which operates IPTV services along with its landline business.
“We will diversify the range of content offered to subscribers and become more competitive in our customer service,” said Lee Hyung-hee, who heads SK Telecom’s mobile network business, in a press briefing on Wednesday.
The company is awaiting approval from regulators after it submitted the proposal on Tuesday. Three government bodies - the Fair Trade Commission, the Ministry of Science, ICT and Future Planning, and the Korea Communications Commission - are reviewing the deal, and SK Telecom hopes to complete the process by April 2016.
Lee said that the investment will go towards improving networks and building additional platforms to present different types of digital content.
Besides the strategy for the future, Lee devoted the most time to addressing controversial issues surrounding the potential deal.
Once the deal is done, SK’s combined number of paid video-streaming subscribers is expected to reach over 7 million. KT now has 8.12 million subscribers in its paid TV service.
LG U+ and KT accused SK Telecom of trying to pull CJ HelloVision subscribers into its wireless and landline services by providing bundled products at cheaper prices. Such moves would compromise quality and push out smaller competitors, the two companies said in a spate of press releases on Wednesday.
SK Telecom has defended the legitimacy of the move.
“The deal complies with legal requirements,” Lee said.
BY PARK EUN-JEE [firstname.lastname@example.org]