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Report cites SKT merger doubts

SK Telecom said that its merger plan with CJ HelloVision, a cable TV network, could falter due to government regulations, marking a shift in tone regarding the takeover.

The telecommunications provider denies the deal is in jeopardy, however. The 1 trillion won ($854 million) deal is currently undergoing a review process by government bodies.

“The acquisition and subsequent merger are subject to certain closing conditions, including obtaining regulatory approval from the relevant authorities,” the company said in a business report filed last month to the New York Stock Exchange, referring to the merger proposal between CJ HelloVision and SK Broadband, a wholly-owned subsidiary of SK Telecom.

“We may be delayed in, or fail to, obtain the necessary regulatory approvals and in such case, we may not be able to complete the acquisition and subsequent merger as planned,” the report said.

The company did not raise the possibility of a cancellation in meetings with local analysts and investors.

SK Telecom said that the report merely lists a set of potential risk factors.

“The New York Stock Exchange requires companies to cite every little possible risk in the report,” an SK Telecom spokesperson said Tuesday. “And it is very usual for a company to note that upcoming mergers and acquisitions may fail.

“So the report should not be read as SK Telecom acknowledging or anticipating a cancellation of the deal.”

The spokesperson added that its competitors like KT state exceptional conditions even though it is unlikely to happen in the near future.

“KT, for example, cites a war with North Korea as a factor that could possibly hamper their business,” the spokesperson said.

“That’s just one of countless potential risks, and this doesn’t necessarily mean that they believe the war should come around soon.”

The report came out at a delicate time when regulators, including the Korea Communications Commission, is deliberating on the legality of the proposed merger.

The proposal triggered antitrust concerns, as it combines the nation’s largest wireless carrier with the top cable TV network.

The Korea Communications Commission unveiled guidelines last month to ensure that the proposed controversial merger between SK Telecom and CJ HelloVision is in the public interest.

The reason for the emphasis on public interest is because CJ HelloVision distributes ready-made broadcasting content and makes programs outside of Seoul.

The country’s broadcasting regulator will also focus on whether the deal meets investment feasibility plans.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]