KT CEO says merger with mobile unit KTF desirable

The head of KT Corp (030200.KS: Quote, Profile, Research), South Korea's top fixed-line and broadband firm, has said full integration with its mobile service unit KTF Co Ltd (032390.KS: Quote, Profile, Research) would be "desirable", a KT spokesman said on Wednesday.

Investors and analysts have long expected KT to absorb KTF, the country's No. 2 mobile carrier and 53-percent owned by KT, to better compete with rivals and lead the market with services bundling fixed-line and mobile communications.

KT chief executive Nam Joong-soo made the remark in a recent company event, spokesman Lee In-won said.

"We are still considering it and no decision has been made on details such as timing," Lee added.

Analysts say, however securing approval for a full merger from anti-trust authorities might turn out difficult should KT go ahead with the plan.

KT, which has 90 percent of South Korea's fixed-line market and 44 percent of broadband customers, has been suffering dwindling fixed-line phone calls and intensifying competition in the saturated home market.

KT and KTF are offering products combining mobile services with landline, broadband and Internet TV, but similar products will be soon available from top domestic mobile firm SK Telecom Co Ltd (017670.KS: Quote, Profile, Research), which took control of No. 2 local broadband operator hanarotelecom inc (033630.KQ: Quote, Profile, Research).

KT shares ended up 1.44 percent at 42,200 won before the news, lagging the wider market's 1.96 percent gain. KTF shares fell 1.11 percent to end at 26,650 won.