Merger and acquisition (M&A) rumors about KT, Korea's dominant telecom operator, are reverberating through the Korean stock markets in time with its imminent leadership transfer. Local newspapers reported yesterday that KT plans to take over Daum Communications, the nation's second-largest Web portal, and sell its stakes in KTF, KT's mobile unit, overseas to secure funds to merge with it. KT denied the media reports but experts point out large-sized amalgamations will take place for KT, which is required to find new revenue sources. "In order to remain competitive, KT needs to come up with next-generation growth engines other than its conventional portfolio of fixed-line phone service or high-speed Internet business," Woori Securities analyst Stan Jung said. Jung said KT wants to create new business models in the mobile segment via M&As and such moves will accelerate by the incoming president Nam Joong-soo, an expert of the wireless sector as the current chief executive of KTF. KT's two major businesses of landline call services and broadband offerings have reached a saturation point, squeezing the expansion of its top line. As a result, KT's sales growth rates have been almost at a standstill over the past several years from 11.7 trillion won in 2002 to 11.6 trillion won in 2003 and 11.9 trillion won last year. In this climate, newly designated CEO Nam, who will take the helm of KT in August after getting shareholders' approval, is trying to find new cash cows to prop up the ex-monopoly. KT now controls 93.8 percent of the country's 22 million fixed-line telephone users and accounts for more than half of the 12 million broadband Internet subscribers.