Mergers and acquisitions (M&A) of multiple system operators (MSOs) remain sluggish, but this may change as connected government ministries have indicated that they are trying to improve the clarity and efficiency of their review processes.
The Ministry of Science and ICT is reviewing mobile carrier KT Skylife’s acquisition of Hyundai HCN, industry sources said on Monday (February 8). The ministry is collecting opinions on the possible approval as part of a follow-up evaluation.
A consultative body has been formed to share data and accelerate the screening process after the reviewing of M&As of MSOs was criticized as inefficient because it requires approvals from three separate organizations: the Fair Trade Commission, the Ministry of Science and ICT, and the Korea Communications Commission.
Insiders said that the ministries had tried to improve efficiency by creating a “fast track” system. “There is a possibility that this will shorten the current timeline, which takes more than a year to obtain an approval from each organization,” one said.
However, an acquisition of MSO by a mobile carrier is categorized as a “very concentrated market,” based on the Herfindahl-Hirschman Index, a commonly used measure of market concentration, so it is likely to receive only conditional approval.
Much industry focus is on whether fast track systems could ease the burden on small and medium-sized sole operators (SOs) rather than M&A deals that include MSOs.
With mobile carriers overhauling their processes, the reshuffle of major companies is approaching the finish line. Among nine individual SOs, Nam Incheon Broadcasting, Areum Broadcasting Network and JCN Ulsan Jungang Broadcasting, which have adequate size and profitability, have been mentioned as possible targets for sales.
“Mobile carriers are focusing on improving digital transformation and artificial intelligence services, while giving signs of change through sales of their subsidiaries or reorganizations,” said an industry source.
“The effectiveness of the system may affect each SO’s attempt for an M&A if interests of a seller and an acquirer coincide.” (Reporting by Ar-rum Rho)