NHN to establish mobile subsidiary
By Cho Mu-hyun
NHN, operator of the country’s most popular website Naver (
), is planning to form a subsidiary dedicated to developing services for the mobile Internet.
According to industry officials Wednesday, the company will form the subsidiary by March and transfer employees to it from portal and game divisions working on mobile-related projects. About 200 of its 3,000 employees are expected to move to the new company.
NHN said in a filing to financial regulators on Dec. 27 that nothing has been decided on creating a subsidiary. For the Jan. 28 filing, it is highly likely that it will make the intentions of forming the mobile subsidiary public.
Korean portal triumvirate NHN, Daum and SK Communications are all working to expand in the lucrative mobile platform as their revenue from advertising on desktop-orientated search services continues to decline.
NHN has been the most successful so far in shifting to the new platform thanks to a stellar hit, its free mobile messenger Line. The service overtook Kakao Talk, which was launched first, and is closing on securing 100 million subscribers.
The Internet giant has been releasing mobile-exclusive services starting in the second half of last year, such as social networking service Band and map service Knowledge-iN Here.
Analysts expect its fourth-quarter margin to be around 170 billion won, a slight decline year-on-year but an improvement from last year’s quarters.
“NHN has worked hard by releasing games on Line in collaboration with its related division Han Game to increase traffic,” said KB Securities analyst Choi Hoon. “There will a lot of focus this year in transferring its advertising power on portals on to its mobile platforms, especially Line.”
Revenue from games available on Line will be around 150 billion won this year and 200 billion won the next, according to analysts. The majority of subscribers using the messenger are based overseas, which will also help the company expand globally.
“NHN had spectacular success in increasing the traffic of its mobile service last year. This year the focus will be to reap profits from the increased traffic,” said KDB Daewoo Securities analyst Kim Chang-kwean by telephone. “It has the best outlook among portal operators.”
NHN is probably convincing its many shareholders for clearance in forming the subsidiary as it has a relatively small amount of shares as the majority holder, said the analyst.
If the company is formed, it will also signify a move by NHN to transform itself into a holding company. “It is part of NHN’s initiative to streamline its business operations through restructuring to increase efficiency,” said Kim. “Much like its planned separate management of Han Game by making it a subsidiary, the separation of the mobile division means NHN is trying to give more drive to its growth engines, games and its mobile business.”
Company spokeswoman Lee Won-mi said, “We are always reviewing a possible division of our operations but nothing has been officially decided.”