KT's low-priced acquisition of HCN affects D'Live
Hyundai HCN Logo
By Kim Hyun-bin
The amount paid by KT Skylife to acquire the broadcasting arm of Hyundai HCN fell short of the market's expected price range, which many industry watchers believe will have an impact over the sales of other pay TV operators namely D'Live and CMB, the bidding procedures for which are expected to start in the near future.
KT Skylife is the satellite broadcasting affiliate of the country's telecom giant KT.
All three major telecom companies SK Telecom, KT and LG Uplus took part in the bidding and the fierce competition was widely expected to hike the price of Hyundai HCN.
In a regulatory filing Tuesday, KT Skylife said it will acquire Hyundai HCN's broadcasting business for 491.1 billion won ($427.4 million) by July 30, 2021. Initially, KT valued Hyundai HCN at between 445.2 billion won and 543.1 billion won.
KT Skylife will acquire 100 percent of Hyundai HCN whose 1.3 million subscribers are apparently valued at 357,000 won each.
When KT Skylife was selected as the preferred bidder, Hyundai HCN's value was estimated at between 500 billion won and 550 billion won after all three major telecom heads expressed an interest in acquiring the company during a meeting with Science and ICT Minister Choi Ki-young in July.
Hyundai Department Store Group allegedly asked for 600 billion won, but many market watchers expected the price to be lowered to the low or mid-500 billion won range after negotiations.
The final price of 491.1 billion won was below market expectations attributed to the three major telecom companies' dominance in the local TV market. SKT, KT and LG Uplus have been conducting acquisitions of other pay TV businesses taking up nearly 90 percent of the market collectively.
Last year, LG Uplus acquired CJ Hellovision, while SK Broadband bought t-broad. After the acquisitions, and due to their pure dominance within the market, competition has become tougher for other pay TV businesses. D'Live and CMB has become less attractive as the three telecom companies have procured most large pay TV businesses.
Hyundai HCN's final trading price is expected to have an effect on the sale of D'Live and CMB as Hyundai had a stronger market share. Currently, SK Telecom and LG Uplus are said to be interested in the two.
The Hyundai HCN deal is now subject to approval from government agencies, including the Korea Fair Trade Commission and the Ministry of Science and ICT.
If the deal gets the green light from the government, KT will strengthen its lead in the country's pay TV sector. As of end of last year, Hyundai HCN held a 4 percent market share and KT's acquisition will put its market share at 35.5 percent, followed by LG HelloVision at 24.9 percent and SK Broadband at 15.2 percent.
Now SKT and LG are likely fight over D'Live and CMB to narrow the gap within the IPTV sector.