Bell Canada International Inc. said it will acquire 29 percent of South Korean personal communications services operator Hansol PCS Co. Ltd. for $180 million.
Hansol is one of three PCS operators in South Korea that launched service in October. The consortium is led by the Hansol Paper Group and a number of other South Korean investors, including Dacom, Hanwha Group, Ssangyong Group, Gohap Group, Youngpoong and Jindo. Analysts have indicated Hansol would need stronger financial backing as competition becomes fierce in South Korea. Five mobile-phone operators now compete for market share in South Korea.
Despite the economic problems facing South Korea, Canada’s largest telecommunications company said it believes the market holds great potential. Analysts have speculated South Korean carriers would hit difficult times this year as consumers are expected to limit their spending. That was the case in January, when the country’s carriers added only a fraction of the subscribers they had been accustomed to adding every month, but numbers rebounded in February and March.
“January was a cold month, but recent news is that people are ignoring the crisis,” said one South Korean analyst. “Everyone was scared about what was going to happen. Now, people are going out and spending again. Fundamentally, the economy still hasn’t changed.”
The country’s three PCS operators-Hansol, Korea Telecom Freetel and LG TeleCom Ltd.-each quickly are approaching 1 million subscribers. SK Telecom Co. Ltd., the country’s largest and oldest cellular operator, still holds the bulk of the country’s market share with about 6 million total subscribers, though its subscriber additions are slipping. Shinsegi Telecomm Inc., South Korea’s other cellular operator, has not fared well with the competition. Its subscriber additions have fallen sharply since the three PCS carriers introduced service. Shinsegi has about 1.2 million subscribers.
Still, the number of corporations filing for bankruptcy is at record levels, and the unemployment rate is expected to continually increase. The high subscriber growth isn’t likely to last, say many analysts.
