Market analysts have speculated on a number of different firms poised to purchase the struggling telecom company.
When analysts talk about Hanaro, the theme is not about whether or not it will be sold, but about when and how much. Last week in Seoul, market analysts predicted that the time was matured enough for Hanaro to negotiate the amount of money with candidates.
Some watchdogs rushed to say that the negotiation was already underway and had almost reached an agreement. The candidates so far are unknown. However, some names have been put forward. According to rumors, some foreign and domestic communication companies and hunters met with their counterparts in Hanaro. Hanaro strongly denied any kinds of speculation on a merger or acquisition.
SK Telecom is said to be a strong fisherman in this market. The reason is that SK Telecom needs Hanaro for its business portfolio. A mobile communication service provider, SK Telecom has no wired communication service. This is a weak point for a company which has to fight back in the jungle of the combined communication service era that begins in July this year. The Combined Communication Service Initiative is the Korean government's move to vitalize the competition in communication services. Thanks to the initiative, a mobile communication service provider is permitted to sell its own business service combined with other services, for example wire communication services, internet services and Video on Demand.
But SK Telecom denied any rumors that it would buy the struggling Hanaro. "Despite the rampant rumors, SK Telecom has no intentions or plans to buy," said Lee Kyo-hyuk, an official at SK Telecom's public relations team.
In this point of view, SK Telecom, a leading mobile service provider in Korea, has a strong need to purchase Hanaro. Stock market analysts did not hesitate to say that SK Telecom has not hidden its intention to buy Hanaro. Perhaps SK is just waiting until the price bottoms out.
The next candidate could be the LG Group. As is well-known, the LG Group has a line-up of mobile and wired communication services -- LG Telecom, LG Dacom, and LG Powercom. If the LG Group swallows Hanaro it can obtain 3.6 million users of the high-speed internet service and 1.8 million wired phone service users. Critics say that Hanaro will give LG Group a new springboard to jump on top of the communication providers list. Even though LG Dacom and LG Powercom are also internet service providers, the numbers of users are far smaller than Hanaro.
Some new candidates from abroad were named last week, a brand new development shaking the merger and acquisition market.
Nothing less than STT, a Singapore-based communication service provider, has been eyeing the Korean company. The name leaked out in an interview with Park Byung-mu, CEO of Hanaro, conducted by the Korea Economic Daily, a leading economic newspaper in Korea. Park also revealed that Hanaro chose Goldman Sachs as a strategic adviser. Goldman Sachs will manage the sale, citing sources privy to the deal.
As a matter of fact, major shareholders of Hanaro are appearing to sell their shares at a proper price. AIG-Newbridge Capital, the largest shareholder, is likely eager to leave Seoul with their investment back.
They have stayed here for more than three years because the price of their shares have dropped rapidly and trapped them. AIGNewbridge Capital, in a consortium, invested US$1.1 billion in Hanaro Telecom to become its largest shareholder in September 2003. It currently holds a 39 percent share in the company.
The share price of Hanaro is up and down around 10,000 won. Last year the price dived to 2,000 won, the worst price in the company's history. "If AIG-Newbridge Capital ever decided to leave, now is the time," said an industry watchdog. However, only time can tell what will happen to the Korean ISP.
