[THE INVESTOR] Korean telecom carrier LG Uplus is resuming talks to buy CJ Hello, the nation’s largest cable TV operator, according to industry sources and news reports on Oct. 19.
Their talks that started early this year were stalled due to a leadership reshuffle at LG Group following former Chairman Koo Bon-moo’s death in June. Sources say the deal is expected to be completed within the year.
“The two firms are highly likely to announce their merger in the fourth quarter,” said Choi Nam-gon, an analyst at Youanta Securities.
Currently, CJ Hello’s market cap is worth about 700 billion won (US$620 million).
The analyst added the two firms have already been working on a new business strategy that may combine e-commerce, ads and contents running on Google’s Android OS platform. Of the nation’s three telecom carriers, including SK Telecom and KT, LG Uplus is the only one operating the Android OS in its IPTV set-top box.
LG Uplus, a distant No. 3, is in dire need to elevate its market share in the nation’s saturated paid-TV market, while its bigger rivals are seeking merger deals to further strengthen their market position.
LG Uplus and CJ Hello have 3.79 million and 4.29 million subscribers, respectively. The merged entity could outpace KT, the No. 1 IPTV operator with 7.67 million users.
LG Uplus is estimated to post 3.3 trillion won in revenue and 217 billion won operating profit in the third quarter this year, up 1.6 percent and 2.8 percent, respectively, from a year ago.
By Lee Ji-yoon (email@example.com)