British Telecommunications plc announced plans to acquire a 23.49 percent stake in South Korean mobile operator LG Telecom.
The company said it will spend about $392.1 million for the stake. BT said the acquisition is in line with its commitment to the Asia Pacific region. BT earlier this year said it would acquire a 33.3 percent stake in Binariang, a fixed a mobile services provider in Malaysia.
The transaction is expected to be completed within a month and requires the approval of LG’s shareholders. BT will become the second-largest shareholder in the company behind LG Group.
“This deal will give us strong momentum in attracting foreign investment,” said Lee Moon-Ho, chief executive officer of LG Telecom and president of the LG executive committee on corporate restructuring. “We are trying to strengthen our international competitiveness through strategic partnerships with first-class global players. We are strongly motivated by the success of the LGT-BT partnership.”
Subscribe now to get the daily newsletter from RCR Wireless News
Foreign investment in Korean companies “is a trend that Korea desperately needs to see continue,” said Ed Paisley, editor of Global TechVentures, a magazine that covers technology companies in Asia. “Koreans have opted to follow the [International Monetary Fund’s] policy prescription to rescue their battered economy. An integral part of that is direct investments into Korea’s debt-laden corporations.”
Another Korean telecom firm, Hansol PCS, last month closed on a $260 million investment from Bell Canada International Inc. and Asia Infrastructure Fund. Bell Canada acquired a 23.6-percent interest in the Korean personal communications services provider. As part of the agreement, investment funds sponsored by the American International Group Inc. also will acquire about 15.8 percent of the company, said Bell Canada.
However, “negotiating equity stakes in Korean companies can prove to be very tricky because of Koreans’ reluctance to sell to foreign investors,” said Paisley.