Establishment Of 4th Mobile Telecommunication Business Is Still In The Process
Establishment of 4th mobile telecommunication business is having a difficulty. It is predicted that if a reserve business (consortium) does not find largest shareholder, it will not be easy for them to receive approvals from South Korean Government.
According to mobile telecommunication industry, it is heard that all of reserve businesses are having difficulties in finding largest shareholders and organizing major shareholders.
Largest shareholders have to invest $174 million to $261 million (200 billion KRW to 300 billion KRW), and major shareholders have to invest about $17.4 million (20 billion KRW), which is 5% of amount (predicted to be about $348 million (400 billion KRW)) that is used to establish 4th mobile telecommunication business. However no business has yet to secure a largest shareholder.
Large businesses with enough funding are hesitant in investing funds because they are not confident in business values of 4th mobile telecommunication businesses. Majority of global business investors such as Softbank and others also do not find practicality in their businesses.
“Government looks at whether largest shareholders and major shareholders have the abilities to raise funds and whether they actually have the willingness to invest as its major standards of giving approvals. Although some reserve businesses have said that they have secured investors that are willing to invest $43.5 million (50 billion KRW), it is not an enough amount to receive an approval from government.” said one person affiliated with one of the reserve businesses.
It is also known that there are no businesses that had requested guarantee insurances to Seoul Guarantee Insurance Co. that can replace deposits for frequency allotment 226. Government had told reserve businesses that they need to replace 10% of early frequency cost ($143 million (164.6 billion KRW)) with guarantee insurance when they are requesting for permission.
Approval for guarantee does not usually take long if a solid largest shareholder or major shareholders with enough funding are secured. However considerable amount of time is required for screening if major shareholders are not secured. Nevertheless, no reserve business has yet to register for guarantee insurance.
It seems that establishment of 4th mobile telecommunication business will practically be difficult if reserve businesses do not find largest shareholders by end of this week. If shareholders are organized, procedures such as commitment of investment, notarization and others take place afterwards and these take at least 2 weeks to process. It cannot be helped that South Korean Government, which had been supporting these businesses by making them easier to enter into this business, is feeling hopeless from this situation.
“If we do not secure largest shareholders, meeting for a board of directors will take place shortly to see if we are going to give up or continue on. Since there is a possibility that reserve businesses decide to work together, we are going to wait and see a little bit more.” said few reserve businesses.
Meanwhile, deadline to turn in an application to become a 4th mobile telecommunication business is October 30th.
Staff Reporter An, Hochun | hcan@etnews.com