Bell Canada International Inc. and New York-based insurance and financial services firm American International Group Inc. agreed to invest a combined $265 million to purchase a 39.4-percent interest in South Korean personal communications services operator Hansol PCS Co. Ltd.
The agreement calls for BCI to acquire 23.6 percent for $159 million, and AIG to invest $106 million for a 15.8-percent stake in Hansol. AIG has partnered with BCI on a several other ventures, including Yantai Bell and Shandong Bell in China, and Tata Communications in India.
“Our government welcomes BCI and AIG’s investment in Hansol PCS,” said Korea’s Minister of Information and Communications Bae Soon-hoon. “This investment also is the first major foreign investment in Korea’s telecommunications industry, and we hope it will encourage future foreign investments in Korea.
Hansol was awarded its PCS license in June 1996 and launched services in October 1997. Today the company has more than 900,000 subscribers, said BCI. The company was founded in 1965 as a paper manufacturing member of the Samsung Business Group. Hansol separated from Samsung in 1991.
Hansol PCS, one of three operators in South Korea, was formed in March 1996. It is a consortium owned about 57 percent by a group of 240 small and medium-sized businesses. Hansol Group owns approximately 27 percent, Dacom has a 6-percent stake, and the remaining 10 percent is owned by three other groups, holding approximately 3 percent each.
Terms of the agreement call for BCI initially to acquire a 9.75-percent interest through common stock, and to increase its stake to 18.2 percent through the purchase of convertible preferred shares in October. In January 1999, BCI will acquire the rest of its interest in the form of convertible bonds.
BCI said it will place several key executives at Hansol, including the deputy chief executive officer and chief financial officer, who will play an active role in operating the company.
“Our investment in Hansol is a key component of our diversification strategy-almost doubling the size of BCI in terms of subscribers-and presents a tremendous opportunity to increase the value of our company,” said Derek Burney, chairman and CEO of BCI.
“We believe that the Korean economy remains fundamentally strong, the wireless market holds great potential, and Hansol has proven itself a successful marketer,” Burney added.
Hansol President Chung Yong-moon said BCI and AIG’s “investment of capital, people and expertise will strengthen the competitiveness of the company, revitalizing our financial network and the quality of our services, and improving our overall operations.”
