LG Uplus seeking to sell payment gateway business

By Jun Ji-hye

LG Uplus is pushing to sell its payment gateway (PG) business amid falling operating profit and intensifying competition, the mobile carrier said Wednesday.

A payment gateway refers to a merchant service that authorizes credit card or direct payment processing for e-commerce companies and online retailers.

Three companies ― KG Inicis, LG Uplus and NHN KCP ― have dominated the domestic PG market, with their combined market share tallied at about 70 percent in total.

LG Uplus has been placed at the No. 2 position in the market after KG Inicis.

“We have considered selling our PG business unit, but nothing has been decided yet,” an LG Uplus official said.

The PG market has grown consistently on the back of expansion of online shopping malls, but from the telecom firm's point of view, its PG business unit has been unable to make a sufficient synergy effect with its telecommunication business.

The company has apparently decided to sell its PG business in order to focus more on its core businesses such as internet protocol television (IPTV), industry sources said.

Plus, one of its major clients, Naver, has been pushing to implement its own PG business, while an increasing number of other IT companies such as Kakao are making inroads into the market.

This has led to a fall in the operating profit of the mobile carrier's PG business unit.

According to the firm's earnings report for the January-March period this year, the operating profit of the PG segment fell 4.4 percent from the previous year and 9.4 percent from the previous quarter.

Sources said LG Uplus is also apparently preparing funds for acquiring CJ Hello, the nation's largest cable television operator, as the telecom firm signed a deal earlier to purchase CJ ENM's 50 percent plus one share stake in CJ Hello for 800 billion won ($678 million).

LG Uplus is currently waiting for the Fair Trade Commission to approve the deal.

The selling value of the mobile carrier's PG segment is estimated at 400 billion won.

“LG Uplus seems to have decided to concentrate on nurturing businesses that can be the firm's future growth engines,” a source said.