Tuesday, January 20, 2009

KT Corp to buy the rest of KT Freetel


KT Corp - the biggest phone and Internet company in South Korea - plans to buy the remaining shares it does not own in its mobile arm KT Freetel Co.

KT Corp currently owns 54 per cent in KT Freetel, while NTT Docomo owns 11 per cent.

According to company's filing to the local bourse, the offer is valued at 28,554 won a share, or 2.46 trillion won (US$1.8 billion) in total.

KT Corp like most phone companies with huge fixed-line assets, are facing declines in revenue as customers are migrating from fixed to mobile.

The merger is expected to be completed on May 18.

Analysts expects the merger to create synergies and would help the company to save costs. However, not all analyst are convinced.

“It is difficult to see where the positive synergies will come from,” Jeff Kahng, an analyst at Credit Suisse Group AG, wrote in a Jan. 8 note. “We are not convinced on the merger having positive impact on bottom-line.”

Interestingly, the proposal, pending shareholders and regulatory approvals, is opposed by SK Telecom and SK Broadband, fearing that it may hurt competition in the market.

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