[Aju News DB]
South Korea's anti-trust watchdog has rejected SK Telecom's bid to become a media giant through the acquisition of a major cable TV operator, saying it could hurt market competition, the top mobile carrier said Tuesday.
In an effort to bolster next-generation businesses for sustainable growth in the saturated and competitive domestic market, SK Telecom, the flagship of South Korea's third largest conglomerate, SK Group, has offered to buy a 53.9 percent stake in CJ HelloVision with a plan to merge it with SK Broadband.
The Fair Trade Commission (FTC), however, has put the break on the proposed merger, citing concern about the merged entity's dominant market position, SK Telecom said in a statement. "We're shocked by the FTC's decision," the company said, adding it would send its own opinion to the watchdog later.
CJ HelloVision , a unit of retail giant CJ Group, also expressed regret and described the FTC's provisional decision as "the worst review outcome" that did not take the future of the cable TV industry into consideration.
SK Telecom shares fell 1.14 percent Tuesday to close at 216,500 won (187.4 US dollars). CJ HelloVision tumbled 13.33 percent to 10,400 won.
The one trillion won deal was sent to the FTC for screening on December 1 last year. The watchdog, however, has been cautious due to complaints from other firms that the merger would be anti-competitive.
CJ HelloVision has about 4.2 million subscribers while SK Broadband has some three million IPTV subscribers. South Korea's top TV platform provider KT Corp. has eight million subscribers.
The merger had been seen as a game changer in South Korea's media industry as it will help SK Telecom expand its business portfolio into mobile networks and entertainment content together.
Rivals KT Corp and LG Uplus have called foul over the deal, insisting it would allow SK Telecom to increase its dominant position in the mobile network industry. LG Uplus has argued the merger would cost more for consumers when they watch SK's pay-TV programs.
SK Telecom has insisted the merger would help it compete better with global content players.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
