Drifting Cable TV M&A... Prolonged Deliberation by the Three Major Telecom Companies

CMB·D'Live Sale Slows Down
Subsidiary IPO and Restructuring Take Priority

[Asia Economy Reporter Koo Chae-eun] The three major telecom companies have entered a period of deliberation over the acquisition battle for cable TV providers D'Live and CMB, which are currently up for sale through mergers and acquisitions (M&A). KT and SK Telecom, once considered the leading potential buyers, are prioritizing group restructuring and subsidiary initial public offerings (IPOs), showing cautious consideration toward the cable TV acquisitions that require massive capital.

According to industry sources on the 8th, D'Live, which is in talks with KT for a sale, has yet to reach an agreement, and CMB, which had signed non-disclosure agreements (NDAs) with SK Telecom, KT, and LG Uplus, is also experiencing delays in decision-making without significant progress.

D'Live has reduced its size by selling its subsidiary IHQ to expedite the sale, but it still has not reached a consensus with KT on the final acquisition price. Currently, KT, the sole potential buyer, is unlikely to aggressively pursue M&A until the personnel changes and organizational restructuring within its affiliates, expected to continue until early this month, are completed. As CEO Koo Hyun-mo has emphasized a "performance-oriented affiliate restructuring," the focus remains on the ongoing group reorganization for now.

CMB has been conducting behind-the-scenes negotiations with SK Telecom, KT, and LG Uplus but has also failed to narrow differences over an appropriate price range. Last year, SK Telecom, a strong potential buyer, even negotiated a stock swap payment method but did not reach a final agreement. In particular, SK Telecom is currently burdened with preparations for transitioning to an intermediate holding company and the IPO of SK Broadband, making it difficult to accelerate M&A activities.

A cable industry insider said, "Both SK Telecom and KT, who had the strongest acquisition intentions, are prioritizing subsidiary listings and corporate value reassessments, so their motivation to actively engage in M&A?which requires more than three months of government review?is weakened."

The rise of online video services (OTT) is also an obstacle to pouring massive funds into cable TV M&A. As the three telecom companies are focusing on partnerships with global OTT platforms like Netflix and Disney Plus, their enthusiasm for acquiring cable TV providers, which is crucial for maintaining market share, is waning. Currently, the three telecom companies are fiercely competing behind the scenes to secure exclusive partnerships with Disney Plus, which is set to launch in the domestic market next month.

A telecommunications industry official said, "The paid market landscape is rapidly shifting from IPTV to OTT, which is also affecting deal negotiations," adding, "Ultimately, the key will be how much cable companies can reduce their size and lower their price levels to reasonable standards."

Meanwhile, KT, including Skylife and HCN, holds a dominant first place in the paid broadcasting market with a 35.47% share. LG Uplus and LG HelloVision (24.91%) and SK Broadband and T-Broad (24.17%) closely follow. The market shares of D'Live and CMB, currently up for sale in the M&A market, are 5.98% and 4.58%, respectively. Their market values are estimated at around 900 billion KRW and 400 billion KRW, respectively.

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