SK Telecom and LG Uplus engaged in a verbal duel last week about the former’s planned acquisition of CJ HelloVision, the nation’s No. 1 cable TV operator.

On Thursday, LG Uplus CEO and vice chairman Kwon Young-soo publicly criticized the deal, saying: “The deal would hurt fair competition. The government should put the brakes on it.”

SKT responded immediately. “Even after the merger, there would be no drastic change in our market share. Instead, we can offer more diverse options to consumers,” the company said in a statement. 


The heated war of words come as the nation’s top three telecom carriers ― SKT, KT and LG Uplus ― are seeking new growth engines while struggling from rapid saturation in the telecom market.

Especially the pay TV market has become the latest battlefield as they jump into content distribution via their own Internet TV businesses.

And the planned merger between the nation’s top telecom and cable TV operators is expected to pose a direct threat to diverse market players, especially the two runners-up KT and LG Uplus.

In November, SKT, which dominates almost 50 percent of the telecom market, announced it would acquire CJ HelloVision for 1 trillion won ($823 million), becoming the second-largest pay TV operator.

Currently, SKT, KT and LG Uplus have 3.35 million, 8.44 million and 2.2 million IPTV subscribers, respectively. With the merger with CJ, SKT’s market share in the combined pay TV market would more than double to 26 percent from 11.6 percent.

Industry watchers say it is a matter of time before SKT catches up with KT by taking advantage of its strong customer base in the telecom market.

KT and LG Uplus are fiercely resisting the deal, citing monopoly concerns and possible price hikes for consumers. But SKT has pledged to go ahead with the deal, calling it crucial for its survival in the future.

The Korean authorities are scheduled to decide on their approval as early as in February.

Netflix, the world’s largest online video streaming service, is another big player that is closely watching the SKT-CJ deal. Possibly due to the stalled talks with local partners, including the three telecom carriers, the company has recently launched its Korean service via its website only.

“We have gone through the background of this issue,” said Netflix’s chief streaming and partnerships officer Greg Peters, adding that the talks with Korean partners were still ongoing.

“Initially they fear (working together), but more and more, especially in markets where we have been longer, those operators see us as a great source of content.”

Considering telecom companies are keen on the Netflix partnership to differentiate their services, SKT, which has partnered with CJ, a major force in the soaring K-pop content production and distribution, seems to have secured an upper hand, according to sources.

“SKT is likely to drop the bid, while its rivals KT and LG Uplus further up the ante,” said an industry source declining to be named.

Seeking to expand its presence in the Asian market, Netflix has also showed willingness to distribute and produce K-pop content for the global audience.

By Lee Ji-yoon (jylee@heraldcorp.com)