Given the saturated wireless network market, Korean mobile carriers have been shifting their focus to pay TV in an effort to secure new revenue sources.

Pay TV services including Internet Protocol TV or cable TV are among those areas where the network providers have been competitively trying to increase their presence in recent years.

The latest move was made earlier this week by SK Telecom, the largest mobile carrier in Korea in terms of subscribers, when it announced that it would take over cable TV company CJ Hellovision.
 

The planned acquisition was “part of SK’s initiatives to beef up its media content businesses,” SKT explained.

SKT also said it would try to create synergies by combining the cable TV services of CJ Hellovision and the IPTV services of its subsidiary SK Broadband.

The combined number of subscribers will reach 7.6 billion -- 3.4 million for IPTV and 4.2 million for cable TV service, posing a challenge against KT, which has 8.2 million subscribers for its TV services -- 2 million for satellite TV service Skylife and 6.2 million for IPTV service olleh TV.

Critics and competitors denounced SKT, saying the wireless carrier is trying to extend its dominance in the mobile network market into the both cable TV and IPTV sectors.

“The takeover, if approved by the telecommunications and broadcasting authorities, would inevitably affect other IPTV firms,” an industry official said.

KT said in a press release that “the planned acquisition by SKT, which operates nationwide IPTV businesses, run against the initial purposes of cable TV businesses -- to promote local broadcasting industries and help to form public sentiment in local communities.”

The acquisition deal will also allow SKT run news channels, which is only permitted for cable TVs among subscription-based TVs. 

“The conglomerate could wield a powerful influence on public opinion,” KT said.

KT earned 429 billion won ($372 million) in sales with the IPTV services in the third quarter while SK Broadband’s IPTV business raked in 151 billion won in the second quarter this year. The third-quarter earnings of SK Broadband have not been announced yet.

An LG Uplus executive, meanwhile, cast a somewhat negative outlook on the acquisition plan of SKT.

“There are still a series of hurdles, including legal issues, for SKT to overcome before getting permission for the take-over from the authorities,” said Ahn Sung-jun, head of LG Uplus’ converged home business division, also raising concerns over a single firm operating both nationwide IPTV and local cable TV businesses.

By Kim Young-won(wone0102@heraldcorp.com)