Lee Sang-chul,
former information and communication minister |
By Kim Tong-hyung
Staff Reporter
LG Group is tapping a former high-tech policymaker to head a combined company of its three telecommunications business units, taking a leaf from the book of industry giant KT.
LG's three telecommunications affiliates agreed Thursday to allow LG Telecom, currently the mobile telephony affiliate, to absorb fixed-line operator LG Dacom and broadband Internet provider LG Powercomm.
Lee Sang-chul, who served as the minister of information and communication under the Kim Dae-jung government and the head of KT before that, was named as chief executive of the bulked-up LG Telecom. After getting approval at a shareholders' meeting on Nov. 27, the new LG Telecom will debut on Jan. 1 next year.
The combining of LG's three telecommunications units follows the merger between KT, the country's biggest telephone company and Internet provider, and its wireless unit, KTF, earlier this year.
Industry watchers expect the wave of mergers in the telecommunications industry could only be concluded with SK Telecom, the No. 1 mobile telephony operator, merging with its fixed-line telephony and broadband unit, SK Broadband, sometime next year.
By swallowing LG Dacom and LG Powercomm, LG Telecom becomes a company with around 7.7 trillion won (about $6.6 billion) in revenue, 685 billion won in operating profit and about 13.6 million subscribers.
``The convergence between fixed-line and wireless communications is advancing quickly and gaining more diversity in services, and to effectively respond to consumer demands and generate new growth engines for the future. We concluded that combining the three companies will generate most synergy,'' LG said in a statement.
LG Telecom has been the smallest of the country's three mobile telephony carriers, with SK Telecom controlling more than 50 percent of the market and KT having a 30-percent-plus share after its merger with KTF.
However, with telecommunications companies competing to produce next-generation services that blur traditional boundaries, such as Internet protocol television (IPTV) and fixed-mobile telephony, collaboration and consolidation between them are strengthening.
The combined companies, in addition to reducing cost by achieving economy of scale, could also have further freedom in introducing more bundled packages that offer fixed-line, wireless, Internet and IPTV to customers under a single bill at discounted rates.
``The marketing process becomes more effective, and the three companies could reduce the overlaps in investment by combining under a single company. The improvement in profitability will be evident,'' said an LG Telecom spokesman.
Lee, in taking the helm of LG Telecom, will find himself competing with another man with whom he shares a last name and a line in his resume. KT also has a former information and communication minister, Lee Suk-chae, calling the shots as chairman.
The LG Group will decide on the new roles of current LG Telecom CEO Jung Il-jae, as well as LG Dacom CEO Park Jong-eung and LG Powercomm's Lee Jeong-shik in a personnel move it plans at the end of the year.
thkim@koreatimes.co.kr
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