KT Nears Completion of Hyundai HCN Acquisition... Fair Trade Commission Likely to Grant 'Conditional Approval' Next Month

[Asia Economy Reporter Joselgina] KT Skylife's acquisition and merger of Hyundai HCN has entered the final stage. The Fair Trade Commission is expected to make a decision next month, with a 'conditional approval' being the most likely outcome.

According to industry sources on the 26th, the Fair Trade Commission sent a report on the corporate merger review agenda to KT Skylife last week. This is essentially the final procedure before submitting the review results to the plenary session. The Fair Trade Commission plans to gather opinions from KT Skylife, IPTV, cable broadcasters, and other stakeholders and present the final review results to the plenary session. Typically, it takes about a month from the sending of the review report to the plenary session.

Considering past cases such as LG Uplus's acquisition of LG HelloVision and SK Broadband's acquisition of T-Broad, there is speculation that the Fair Trade Commission will also conclude with conditional approval for this merger. Conditions are expected to be attached to minimize KT Group's paid broadcasting dominance over the eight Hyundai HCN cable regions and the transfer of KT's high-speed internet dominance.

Once KT Skylife's acquisition of Hyundai HCN is completed, KT affiliates' market share in the paid broadcasting market will reach 35.46% (as of the second half of 2020). This will be the first time since the abolition of the combined regulation that prevented any single operator's share from exceeding one-third of the total. The gap with competitors LG Uplus affiliates (25.16%) and SK Broadband (24.65%) will exceed 10 percentage points.

If the Fair Trade Commission approves the merger, the Ministry of Science and ICT will also immediately form a committee to review the change of the largest shareholder and accelerate subsequent procedures. The Ministry of Science and ICT has stated its intention to conduct the review as quickly as possible and reach a conclusion within two weeks. Accordingly, the merger review is expected to be finalized by September.

KT Skylife was selected as the preferred negotiator for the sale of Hyundai HCN by Hyundai Department Store Group on July 27 last year and subsequently applied for a corporate merger review with the Fair Trade Commission in November of the same year.