South Korean multiple system operators (MSOs) up for sale are expected to face a turning point soon, with a final round of bidding for Hyundai HCN slated to take place in mid-July.
The final round of bidding to acquire Hyundai Department Store Group’s cable TV and broadband services arm Hyundai HCN is expected to be held on July 15, according to sources on June 22. The bidding date may change depending on the speed of due diligence and requests from potential buyers but market insiders expect the seller to receive binding offers and select its preferred bidder after mid-July.
Against this backdrop, South Korea’s big three mobile carriers – SK Telecom, KT and LG Uplus – now have a wider range of options. A sale process of D’Live, which has been at a standstill for years, could restart after creditors hired a new lead sale manager and Central Multi Broadcasting (CMB)’s owner has recently hinted at the possibility of selling CMB.
Investment banking industry participants are moving fast to win the mandate to sell CMB. The seller reportedly wants to sell the company for approximately 500 billion won ($415 million).
While there is no further progress in the sale process of D’Live after the seller received potential buyers’ letters of intent earlier this month, market insiders’ attention is shifting to the sale of Hyundai HCN. Bidding prices and funding plans that potential buyers will submit in Hyundai HCN’s final round of bidding may affect its competitors’ sale process.
Market insiders are busy estimating the value of target MSOs. Data including market share, average revenue per user (ARPU) and the number of eight-level vestigial sideband subscribers are used to calculate their valuation.
CMB has more than 1.5 million subscribers, commanding a 4.58% share in the cable TV network as of the second half of 2019. D’Live has approximately 2 million subscribers with a 5.98% share while Hyundai HCN has about 1.3 million subscribers, commanding a 3.95% share. CMB has ARPU of 6892 won, lower than D’Live’s 10,522 won and Hyundai HCN’s 12,778 won.
Potential buyers are expected to start distinguishing between good and bad in July when the final bid for Hyundai HCN takes place. Narrowing the gap in valuation between the seller and potential buyers is likely to be the key to a successful sale. Mobile carriers which are not in a hurry to acquire MSOs are likely to have stronger bargaining power in pay-TV deals. The current situation with multiple target companies being put up for sale is also creating a seller’s market.
“It is difficult to predict the possibility of the sale right now as there are so many variables,” said an industry source. “We will find out which potential buyer is interested in which target after July.” (Reporting by Ar-rum Roh)