The sale of Thrunet, the nation's third-biggest broadband operator, is expected to bring significant changes to the domestic telecommunications industry, especially after Dacom said on Monday that it would concentrate on acquiring Thrunet while giving up on the portable Internet business.

Dacom, the nation's second-largest fixed-line operator, said that it would not seek a license for the WiBro service, or mobile Internet service, due to concerns over fierce competition and large initial investment.

Rather, the company will focus on taking over Thrunet to strengthen the convergence of its business divisions by integrating its broadband Internet service, Internet phone service and broadcasting service.

Thrunet, which is now under court receivership and is to be put up for sale from next month, will receive letters of intent from Nov. 8 and accept bids from Dec. 13.

Hanaro Telecom, the nation's second-biggest high-speed Internet operator, is also expected to make a run at Thrunet as part of efforts to bolster its market share in the broadband market.

Analysts say that acquisition by either Dacom or Hanaro would signal a major restructuring attempt in the local telecom industry.

"Next year will see major changes in the industry with the sale of Thrunet and the distribution of licenses for the WiBro service," Ko Yeon-jung, an analyst at Daehan Investment & Securities, said.

"For Dacom and LG Group, it will be a litmus test for whether they can maintain their telecommunications businesses. By giving up on WiBro, there will be a lot of uncertainty in LG Group's future telecom business if Dacom fails to acquire Thrunet," Ko added.

"But if Dacom manages to snatch up Thrunet, it will not only increase its market share in the broadband market, but also make LG Group more aggressive in expanding its presence in the telecom industry," Ko pointed out.

Sung Kyung-ho, an analyst at Sejong Securities, said that a combination of Dacom, Powercomm, Thrunet and LG Telecom would enable LG Group to push ahead with its so-called Triple Play Service by providing high-speed Internet services and Internet phone and broadcasting services.

"Since over 99 percent of Thrunet's customers use cable modems for their broadband services, it will be easy to penetrate into the Voice over Internet Protocol, or VoIP, business," Sung said.

Hanaro would also be able to increase its market share to compete with KT in the high-speed Internet service market. Thrunet currently has 1.3 million subscribers for a 10.9 percent market share, while Hanaro has 2.8 million for 23.6 percent. Dacom has a market share of 1.6 percent.

"Hanaro can also generate a synergy effect with customers in its fixed-line business," said Ko.

"But there are concerns that Hanaro will probably get the WiBro license, which could put pressure on the firm's financial strength due to big investments," Stan Jung, an analyst at LG Investment & Securities, said.

"It is uncertain whether the portable Internet business can generate profit right away. In addition, unless Hanaro finds a clear profit model from Thrunet, the acquisition will not bring improved profitability in the short-term," he said.

WiBro, also known as 2.3GHz portable Internet, allows people to remain connected to the Internet even when traveling at speeds of up to 60 kilometers per hour

The government is scheduled to distribute three licenses and will complete the distribution by February next year.

LG's price target for Hanaro Telecom is 3,400 won to 3,800 won with a neutral recommendation, while that for Dacom is 5,000 won, also with a neutral recommendation.