South Korean telco KT Corporation, which has edged closer to acquire cable TV service provider Hyundai HCN Co Ltd through its subsidiary KT Skylife Co Ltd, will have to navigate regulatory hurdles before it can close the deal.
Hyundai HCN said in a regulatory filing on July 27 that it named KT Skylife as the preferred buyer for the company. KT Skylife has been given about a month to finish negotiations before signing a share purchase agreement.
The acquisition is subject to approvals by the Korea Communications Commission and competition watchdog the Korea Fair Trade Commission (KFTC). If recent deals are to be any guide, KT could overcome regulatory hurdles with less effort than in the past, industry watchers said.
In 2018 KT’s attempt to take over cable TV company D’Live failed due to antitrust concerns. The domestic pay TV market, however, has since seen continued consolidation led by big telcos.
In February 2019, LG Uplus Corp announced a deal to acquire CJ Hello which is now known as LG HelloVision Corp. Two months later SK Telecom Co Ltd also struck a deal to merge Tbroad Co Ltd into its pay TV subsidiary SK Broadband Co Ltd.
In March last year LG Uplus filed a request with the KFTC to obtain approval for the business combination. Meanwhile, SK Telecom filed an informal request for a review of its combination with Tbroad before signing a deal; it filed a formal request in May after getting a tentative nod from the KFTC. The move was based on lessons it learned after its deal to buy CJ Hello collapsed due to antitrust issues in 2016.
After months of examination, the KFTC finally gave its approvals for LG Uplus’ acquisition of CJ Hello and SK Broadband’s merger with Tbroad in November. But the approvals were conditional on a few items.
“(The KFTC) approves these business combinations to help broadcasting communications service providers respond in a timely manner to a rapidly changing environment and technology,” the antitrust watchdog said at the time. It added that the approvals included conditions “to preserve competition and protect consumer choice” in the pay TV market.
Among the conditions were that an increase in subscription fees should be less than inflation and the number of TV channels should not be reduced. (Reporting by Hee-yeon Han)