Hyundai HCN Listed for Sale... Why Are the Three Major Telecom Companies in Wait-and-See Mode?

[Asia Economy Reporter Seulgina Jo] Hyundai HCN, the 5th largest cable TV operator set to accelerate the restructuring of the paid broadcasting market, has appeared as a public sale item, but the three major telecom companies, initially expected to actively engage in mergers and acquisitions (M&A), are taking a wait-and-see stance. This is due to growing concerns about an economic downturn caused by the novel coronavirus (COVID-19) and the high likelihood of multi-trillion won investment conditions being attached during the government review process if an acquisition takes place.

According to the industry on the 7th, the companies most likely to acquire Hyundai HCN, which holds a 4.07% market share in the paid broadcasting market, are currently the three telecom giants: SK Telecom, KT, and LG Uplus. This is because they can firmly establish synergy as TV platforms through bundled discount systems linking Internet Protocol Television (IPTV), mobile phones, and internet telephony.

However, the three telecom companies are currently taking a stance of observing the Hyundai HCN acquisition battle. This is based on the judgment that it is difficult to move hastily given that the average revenue per user (ARPU) per subscriber in the cable TV industry is lower than that of IPTV and concerns about an economic downturn due to COVID-19 are increasing.

SK Telecom appears to be focusing on completing the launch of the merged entity of SK Broadband and T-Broad, expected by the end of this month, rather than acquiring Hyundai HCN. This means there is no capacity to consider acquiring another company before the T-Broad merger is finalized.

KT, which recently launched a new CEO regime under Koo Hyun-mo, also holds a skeptical view regarding the acquisition of Hyundai HCN. Although Kim Cheol-soo, the newly appointed CEO of KT Skylife last month, hinted at M&A by stating in public that "it is necessary to grow in scale," KT is more likely to focus on D'Live, the 3rd largest operator expected to be back on the market soon. KT had previously participated in the due diligence of D'Live but had to abandon the acquisition due to the National Assembly’s paid broadcasting consolidation regulations.

LG Uplus is also taking a wait-and-see approach regarding the Hyundai HCN sale. Since it devoted all efforts to acquiring CJ HelloVision last year, it is evaluated as lacking the capacity to acquire an additional paid broadcasting operator. LG Uplus is reportedly reviewing the synergy effects by examining the broadcasting areas held by the existing LG HelloVision and Hyundai HCN, as well as the existing and Hyundai HCN-operated businesses.

However, since the paid broadcasting market is expanding into a power struggle among the three telecom companies, there is a possibility of last-minute variables emerging. Depending on whose hands Hyundai HCN, with a 4.07% market share, falls into, the market rankings could also fluctuate. As of the first half of last year, the market shares were ▲ KT and KT Skylife 31.31% ▲ LG Uplus and LG HelloVision 24.72% ▲ SK Broadband and T-Broad 24.03%. If LG Uplus and SK Telecom proceed with additional M&A, they could solidify 2nd place and threaten 1st place.

This content was produced with the assistance of AI translation services.