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Battle for Thrunet hots up

13 Dec 2004

Two of South Korea’s alternative network providers – Hanaro and Dacom – are believed to be considering making bids in excess of KRW500 billion for bankrupt high speed internet company Thrunet, exceeding market expectations by up to KRW150 billion. The rising valuation reflects both companies’ belief that the acquisition is key for long term survival; having a portfolio of both broadband and mobile operations is deemed vital for any telco in South Korea. Thrunet, which serves 1.29 million subscribers and boasts a 10.9% share of the country’s high speed internet market, would complement both Hanaro and Dacom’s existing service portfolio.

For Dacom acquiring Thrunet is virtually imperative if it wants to remain a credible player in the broadband market, given that in October it withdrew its interest from WiBro, a locally developed mobile internet service. As such it lacks any meaningful presence in the broadband market, a factor its principal shareholder the LG Group is keen to correct as soon as possible. Hanaro on the other hand, is also keen to purchase Thrunet, but will have to keep a sharp eye on the price, as it is already committed to investing KRW1.2 trillion over the next five years into WiBro. Indeed, in a separate but related story it was revealed that Korean telcos Hanaro – along with Korea Telecom and SK Telecom – will invest KRW3 trillion (USD2.82 billion) into WiBro, with a commercial launch scheduled for mid-2006.

Thrunet creditors, led by the Korea Development Bank, plan to pick the preferred bidder tomorrow and decide on the final winner by early next year. Thrunet has been under court receivership since March 2003.

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