IMT-2000 Companies Will Disappear Within the Year

‘We haven’t provided the service even once.’

As a new company of the next generation mobile communication IMT-2000, KTICOM and SK IMT will soon disappear within the year. Appeared through obtaining the asynchronous IMT-2000 business in December 2000, these companies haven’t yet started providing the service, but would be merged into a mother company.

According to the communication industries on August 5, as the Ministry of Information and Communication (MIC) agrees to the service merger of the affiliates of SK Telecom and KTF IMT-200 service, there are active merging movements.

Lee Sang-Cheol, the minister of MIC said “We will support the 3D (IMT-2000) affiliates amalgamation of the existing 2D companies revising the related regulations.” His statement aroused the amalgamation discussion. The frequency utilization right cannot be transferred to other companies within 3 years of the business approval under the current propagation law. So the IMT-2000 Corporation of the existing companies is hardly merged early.

Being aware of the tribunal of public opinion, KTF and SK Telecom established this fact of the amalgamation. Hong Yeong-Do, the head of finance, KTF said “We will plan to complete the amalgamation with KT ICOM within the year.” Also, one executive of SK Telecom said “If there is no problem in the law, we don’t need to delay the amalgamation of IMT-2000 Corporation until the next year.”

SK Telecom and KTF considerably reduced the investments of IMT-2000 Corporation which was scheduled against the amalgamation.

KT ICOM planed to invest KRW 740 billion for IMT-2000 business this year but reduced to KRW 200 billion. SK Telecom has postponed the investment on the asynchronous IMT-2000 business being concerned about the overlapping investment with 3D service (EEV-DO) using the existing frequency band.

The amalgamation period will be adjusted considering the trend of the stock price recovery. It is because the amalgamation costs increase as a stock options exercise of shareholders increase in the status of the low stock price. Gim, Wo-Seok, the vice price of KTF said “Because the issue price of KT ICOM shares is KRW 1,8000, the stock price of KTF must be over KRW 4,5000 and so KTF must maintain the investment expense of the initial investors of KT ICOM.”

As the mobile phone market was reorganized as the competition system of 3 companies such as SK Telecom, KTF and LG Telecom according to the amalgamation movement, it was likely to return into a former situation before the selection of IMT-2000 business. It is forecasted that the period for 2㎓ band IMT-2000 Service Commercialization will be delayed. Accordingly, experts indicated that IMT-2000 business selection policy of the government was actually failed.

freewill@donga.com