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Foreigners Allowed 100% Stake in Telecommunications

The Ministry of Science, ICT, and Future Planning (MSIP) announced that the revised Telecommunications Business Act, which passed the National Assembly last month, was made public after discussions at the cabinet meeting Tuesday.

The revised Act enables the government or individuals of free trade agreement (FTA) signatories with Korea, including the United States and European Union countries, to acquire up to 100 percent of Korea’s facility-based telecommunication businesses (excluding KT and SK Telecom) through indirect investment.

Previously, if the largest shareholder of a Korean company was a foreigner holding a stake of no less than 15 percent, the company was regarded as a “foreigner”, and the company was restricted from owning a stake of more than 49 percent in the telecommunication businesses.

However, the revised regulation does not apply to LG Uplus and cable television system operators.

Under the revised Act, EU operators do not need the MSIP to approve agreements with domestic common carriers on using international digital leased line service for broadcasting.

The MSIP expects the deregulation to benefit users by enhancing facility investment in telecommunications and encouraging competition.

Under the amended Act, that the expiration of SK Telecom’s mobile network lease to mobile virtual network operators (MVNO) shall be extended from September 2013 to September of 2016.

The Act also includes measures to diversify the mobile phone distribution network. These measures enable sharing of information for stolen or missing devices between mobile carriers, prohibiting damages or manipulation of international mobile equipment identities and ordering facility-based telecommunications businesses to provide telecommunications information to manufacturers.

The Act will also support the use of telecommunication services by the hearing impaired and dyslexic individuals and deregulate international roaming service by changing the system from approval-based to notification-based. Measures regarding FTAs will take effect immediately after public announcement, and the other measures will take effect six months after public announcement.

Source Text

Source: Yonhap News (Aug. 13, 2013)

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