Prospects of KT-Daum Deal
Prospects of KT-Daum Deal
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  • 승인 2005.07.01 12:01
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Prospects of KT-Daum Deal Many observers contend that it makes sense for KT to take over a Web portal to prepare for convergence in landline-wireless services in competition with its archrival, SK Telecom, Korea's top wireless carrier. "KT has its eyes on a futuristic cocktail of offerings like WiBro, and to ensure the early take-off of the service, it is very important to have a wireless portal full of content," Jung said. "That is the reason why KT is jockeying to obtain a Web portal on top of its existing Internet subsidiary KTH and the embattled Daum is the most attractive target for the firm." WiBro is the homegrown portable Internet, which enables people on the move to access to the Web at the speed of the current fixed-line broadband. KT will commercially launch the service next April. Daishin Securities economist Kang Lok-hee concurs that Daum is the only viable M&A goal for KT between Korea's top three Internet entities - NHN, Daum and SK Communications. "It will cost up to 600 billion won to snap up NHN, which has a market capitalization of 1.65 trillion won. By contrast, 100 billion won would be enough for Daum. SK Communications is not an option for KT since it is a subsidiary of SK Telecom, KT's bitter rival," Kang said. Kim Kyung-mo, an analyst at Mirae Asset, said KT is now under immense pressure to follow the suit of SK Telecom, which has been aggressive in buying content makers. "KT is likely to scoop up Daum because of concerns that the firm may lag behind fast-moving SK Telecom in the battle to secure content and to strengthen its wireless portal status," Kim predicted. SK Telecom acquired local entertainment company IHQ in March and swallowed YBM Seoul Record last month to obtain music content. As far as the wireless portal is concerned, the carrier also has an established player in SK Communications that runs the Nate portal and the famous CyWorld. But there remain roadblocks before KT can conclude a deal, such as Lycos, in which Daum invested $95 million last year to acquire but failed to financially stabilize, as well as expected opposition from the trade union. "KT seems to want to avoid shifting the burden onto Lycos. Also, KT must persuade its recalcitrant trade union to accept a potential deal, which might lead to massive layoffs in KTH, whose business realms generally overlap with those of Daum," Kang said.

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