South Korean mobile operator SK Telecom (SKT) is preparing for the possibility that its bid to take over the country’s largest cable TV company, CJ Hellovision, may be blocked by the government.
In a filing with the New York Stock Exchange in April, SKT acknowledged that it may not succeed in completing the acquisition as the deal may not be approved by the government, Yonhap news agency reported.
The filing comes as a surprise as SKT has reassured investors by saying it didn’t think the deal would be scrapped, Yonhap said.
Market leader SKT announced in early November plans to acquire CJ O Shopping’s 30 per cent stake in CJ Hellovision for KRW500 billion ($440 million). CJ O Shopping’s remaining stake (23.9 per cent) in CJ Hellovision can be later acquired by SKT through call and put options between the two firms.
The country’s number two and three mobile operators – KT and LG Uplus – teamed up in late November to oppose SKT’s plan. The two operators argued the deal would hurt market competition given SKT’s dominant position in the mobile sector.
The acquisition needs approval from three government agencies: the Ministry of Science, ICT and Future Planning, the Korea Communications Commission (KCC) and the Fair Trade Commission (FTC).
With no decision after more than five months, speculation is rising that the deal is facing obstacles. The FTC originally planned to complete its deliberation by the end of March but has indicated it needs more time, Yonhap said.
KCC chairman Choi Sung-joon said it is reviewing decisions made by its overseas counterparts before approving the takeover deal, the Korea Times reported.
The Times quoted an LG Uplus representative as saying: “The Korean government is expected to take more time before making its own decision over the deal, considering such a sensitive M&A landscape in the telecom industry.”
The person noted that given the growing concerns over the deal, expectations are that SKT may voluntarily withdraw its decision to take over the cable TV firm.