Is It Time to Sell Off Hanaro Telecom?
By Kim Tae-gyu Staff Reporter
Hanaro Telecom, Korea's second-largest fixed-line telecom carrier, is expected to go on sale this year, as its foreign owners appear to get ready to sell off the company.
A consortium headed by American International Group (AIG) and Newbridge Capital, which has a 39.6-percent share in Hanaro, reached a deal of late with Goldman Sachs, the global investment bank.
Under the contract, Goldman Sachs will reportedly put the Seoul-based Hanaro on auction during the first half of this year with rumors on several candidates to acquire Hanaro swirling at the Seoul bourse.
Included in the widely-cited hopefuls are SK Telecom, Korea's top mobile telephony service provider, and LG Group, the nation's No. 3 conglomerate that has three telecom operators under its wing.
Also, such foreign companies as Singtel, Southeast Asia's largest telephone company, or AT&T, the major telecom corporation of the United States, are talked about.
Hanaro Telecom confirmed that Goldman Sachs recently was hired as a strategic advisor to the AIG and Newbridge consortium.
However, Hanaro officials said they don't know whether the funds are to dispose of their stocks in Hanaro or if Goldman Sachs will take charge of the process.
By contrast, observers said Hanaro will be sure to be on market in the near future.
``Market consensus is that AIG and Newbridge will attempt to sell Hanaro through Goldman Sachs soon,'' said Stan Jung, an analyst at Woori Securities.
``It remains to be seen whether any company would be willing to take over Hanaro stocks, though, as the prices would be pretty high,'' he said.
Any potential buyer would have to channel at least 1 trillion won because the 39.6-percent share is priced at about 880 billion won and the premium would be considerable, according to Jung.
Kim Kyung-mo, an economist at Mirae Asset, projected that the auction would fail to produce a successful bidder when only local players participate in the event.
``Should SK Telecom and LG Group compete to acquire Hanaro, the auction would fall apart. But things may be different if foreign players throw their hats into the ring,'' Kim said.
Hanaro is Korea's second-largest broadband service provider with 3.65 million subscribers. It also has 1.8 million customers in the landline telephone service markets.
The AIG-Newbridge consortium spent roughly $500 million to buy a total of 182.8 million Hanaro stocks in October 2003 when the firm struggled to stay alive due to heavy debts.