The LG Group will combine its three telecommunication subsidiaries to lead the way in the telecommunication industry
IN early October, LG Group announced that it will combine its three telecommunications subsidiaries, LG Telecom, LG Dacom and LG Powercomm, into one unified company under the name of LG Telecom by the close of the year. The LG Group expects the unified player to be more competitive, and therefore, be able to run faster in a race with its telecom archrivals, KT and SK Telecom.
A big change has been facing the Korean telecommunication market. Earlier this year, KT merged with KTF to take the lead in the telecommunication sector. Before the marriage, KT was the frontrunner in the Korean wired telephone service market while KTF was the second-ranked player in the Korean mobile phone service market. Furthermore, SK Telecom, the wireless telecom market leader in Korea is expected to take over SK Broadband, a provider of wired telephone and high-speed Internet services, next year to move ahead in the Korean telecom race.
The three companies will hold their general shareholders meetings to approve the merger on November 27. According to the schedule, the unified LG Telecom will be officially inaugurated on January 1, 2010. The LG Group decided on the merger in an attempt to cope with a trend in the telecommunication industry to pursue wired and wireless service convergence, as well as to cater to varying customer needs and create a new future growth engine.
The unified company will be able to capitalize on the strong retail power of LG Telecom and the competitiveness of LG Dacom and LG Powercomm in the business and home markets, while maximizing growth synergies in the package and new business sectors. In addition, the combined company will be able to reduce overlapped costs via efficient marketing and realizing the economy of size.
The LG Group is planning to appoint Lee Sang-chul as skipper of the combined telecom company. Lee served as the minister of information and communication under the Kim Dae-jung government and also as the head of KT.
In addition, LG Telecom recently announced that it will strengthen its mobile shopping service. Via this new service, LG Telecom subscribers can order all goods from G-Market, a major Internet shopping mall in Korea, and enjoy a 30% discount on books at Kyobo Bookstore. In addition, they can also enjoy discount coupons for family restaurants.
The new mobile shopping service charges 900 won a month but is offered to Oz Service users free of charge. The Oz Service is LG Telecom’s wireless Internet service for mobile handsets. LG Telecom will expand its mobile shopping service further by adding the Oz Gift Service around the end of this year. Via the Oz Gift Service, people can give various gifts.