Strong won and a mature domestic market are pushing Korean conglomerates out into the world markets in order to continue to prosper. Earlier this year I noted Doosan’s blockbuster acquisition of the Bobcat construction-equipment manufacturer as a harbinger of the coming wave of outbound M&A transactions.
Around the same time, our firm’s partner Mr. Sang-Il Park was mysteriously taken to Uzbekistan for some kind of project for Korea Telecom. I didn’t quite understand what was up, but it sounded exotic—Uzbekistan! And it seemed that Mr. Park’s trips could be related to this second “Korean Wave” I’d been forecasting. That has proved to be correct.
Yesterday Korea Telecom announced that in consortium with Sumitomo Corporation of Japan, the Korean phone company has acquired 51% of East Telecom, an Uzbek wireline service provider, and 60% of Super-iMax, a wireless service provider. Total transaction value has been reported at US$70 million.
KT’s legal adviser was none other Hwang Mok Park P.C.’s own Mr. Sang-Il Park. Mr. Park was assisted by HMP partner Mr. Kyung-Ho Park for specialist telecoms advice (I’ve worked with Kyung-Ho Park on telecoms regulation matters too). The Uzbek side did not use its own legal adviser. This is strange, given the amount of money involved, but certainly not unusual—we see this kind of thing with the less-internationalized Korean companies and rich individuals too.
The consortium’s plan for these companies is to upgrade their networks for improved high-speed Internet service in 12 urban areas including Tashkent and Samarkand. Uzbekistan is a growth play for KT: The country only has 10,000 high-speed Internet service susbcribers today (with 250,000 on dial-up no doubt clamoring for faster service), but a population of over 26 million and an economy growing at 7% per annum.
The Uzbek play will also leverage the momentum of the Korea-developed WiMax wireless broadband standard, which has just received approval by the International Telecommunications Union (ITU) as a global standard for 3G/4G networks. The bad news of that is we may never see the back of WIPI (Wireless Internet Protocol for Interoperability), the only-in-Korea “global standard” for handset-based Internet services, because the conquering advance of WiMax blinds the Ministry of Information and Communications to how the market has passed WIPI by.