Korea Hanaro 3G consortium wins little support

date: 14th February 2001, source by: reuters.com

The quest by South Korea's Hanaro Telecom for a 3G mobile phone licence may get derailed by big-name local companies' lack of interest, company officials and analysts said on Wednesday.

Hanaro had said Samsung Electronics would join its 3G consortium, but Samsung said later on Wednesday that its participation would be less than one percent.

Analysts said Samsung's offer represented little more than symbolic support and that could make it more difficult for Hanaro to lure a meaningful investment from Verizon Wireless, the largest U.S. mobile telephone company.

Verizon Wireless is a joint venture of Vodafone Group Plc and Verizon Communications, the leading U.S. local telephone company,

Although it is not clear whether Verizon would take part, Hanaro, the organiser of the consortium, also said on Wednesday that Qualcomm Inc and other foreign firms would take 30 percent of the consortium.

Analysts said Verizon's participation was vital in the quest for the last licence for 3G mobile phones in Korea as the U.S. company had the money and technology the low-profile Hanaro needed badly to shore up its qualifications.

VERIZON DECISION EXPECTED

``Samsung's name in the consortium is only symbolic,'' said Yang Chong-in, analyst at Dongwon Economic Research Institute. ``Chances of attracting Verizon's investment and obtaining the licence look as remote as before.''

Officials at Hanaro said they expected Verizon would make its position clear by the weekend.

Hanaro executives said earlier in the month Verizon was expected to give an answer by around February 6.

Hanaro said in a statement after a meeting with members of the consortium that Samsung and other large Korean firms would have a combined 20 percent, while Hanaro would be allocated a 10 percent stake.

Local small and venture companies would have 30 percent and the Korean public would have the remaining 10 percent.

The Korean government in mid-December awarded two licences for mobile phones using W-CDMA technology to consortia led by state-run Korea Telecom and SK Telecom, Korea's largest mobile carrier.

But the government would also give another licence for next-generation mobile phones based on Qualcomm's cdma2000 by mid-March as the country pioneered the commercial application of the technology and has the largest number of mobile phone users with that technology in the world.

KOREANS LOVE MOBILES

More than half of South Korea's 46 million people use mobile phones based on cdma2000 technology.

But about 80 percent of mobile phone markets were dominated by W-CDMA technology mostly used by European manufacturers and cdma2000 users were now in a losing battle, analysts said.

The pending launch of 2.5G mobile phones, called cdma2000 1X EV DO (evolution data-only), by Korea Telecom and SK Telecom would be a main drag on potential growth of cdma2000 services.

``Business prospects for Hanaro, even if it gets the licence, look pretty murky,'' said Yang Byung-tae, analyst at Shinhan Securities.

High licence fees, valued at 1.15 trillion won ($918 million), were another obstacle, company officials and analysts said.

The Hanaro consortium is now appealing to the government to cut the licence fees to as low as 220 billion won.

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