Industry officials see the move could lead to fiercer competition among the three giant telecom companies, KT, SK Telecom, and LG Uplus. The fierce competition can open the possibility of employing unfair marketing practices deceiving customers.
Given such uncertainties, growing calls for the government to strengthen regulations on illegal marketing practices are expected from the regulators. The move could also lead companies to seek additional mergers to increase their market shares.
The Ministry of Science and ICT’s conditional approval of the merger indicates that the merged company should comply with fair business practices, concluded an eight-month review of the merger involving the mobile carrier and the cable TV operator.
The pronouncement also came a day after the Korea Communications Commission gave conditional approval.
Industry officials expect the recent merger to restructure the country’s pay-TV industry allowing three of the local telecom giants to acquire around 80 percent of the market.
With 31.3 percent share, KT leads the sector, seconded by LG Uplus, reaching 24.5 percent share after obtaining CJ Hello, Korea’s no.1 cable TV provider.
The merger will increase SK Telecom’s market share from 14.66 to 23.9 percent, with only a 0.6 percent difference from LG Uplus.
Through its partnership with Netflix, LG Uplus increased its competitiveness advancing the company’s augmented reality (AR) and virtual reality (VR) content.
Market observers expect the merger between SKT and t-broad to generate fiercer competition in the over-the-top (OTT) media services with the expansion of the Wavve platform. Meanwhile, to better target the market, KT launched an upgraded version of the OTT platform Seezn.
To further increase their presence in the pay-TV market, the three telecom giants are expected to beef up their efforts to obtain additional cable TV operators such as Central Multi Broadcasting (CMB) Co., D’Live, and Hyundai HCN Co.
SK Telecom announced that the merged entity would officially launch in April of this year.