SK Broadband agrees to merge with t-broad
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South Korea’s SK Telecom has arranged to merge its fixed broadband subsidiary SK Broadband with the nation’s second largest cable TV operator t-broad to help both companies weather rapid changes in the pay TV market.
Under the proposed merger, which still requires government approval, SK Telecom would take a 74.4% stake in the combined company.
Meanwhile t-broad’s parent company Taekwang Industrial would take a 16.8% stake in the company, with the remaining held by financial investors, treasury stock and others.
The merger ratio has been set at 75:25 based on corporate valuation analysis, the companies said. The two companies have also attracted additional investment of 400 billion won from financial investor MiraeAssetDaewoo.
As of June 2018, t-broad had around 3.14 million subscribers. Adding SK Broadband’s IPTV subscriber base of 4.54 million recorded at the same period, the combined entity would become a media company with around 8 million subscribers.
But the two companies could face difficulty securing competition regulatory approval for the merger due to this figure.
Questions & Answers
Q.What is the primary reason given for SK Broadband and t-broad merging?
What is the primary reason given for SK Broadband and t-broad merging?
The merger aims to help both companies navigate the fast-changing conditions within the pay TV market. This strategic move is intended to strengthen their position against market shifts and challenges.
Q.Who will own the majority stake in the combined company after the merger?
Who will own the majority stake in the combined company after the merger?
SK Telecom, the parent company of SK Broadband, is set to hold a 74.4% stake in the newly merged entity. T-broad's parent, Taekwang Industrial, will own 16.8%.
Q.How many subscribers would the merged company have based on the latest figures?
How many subscribers would the merged company have based on the latest figures?
The combined entity would have approximately 8 million subscribers. This figure is based on t-broad's 3.14 million subscribers and SK Broadband's 4.54 million IPTV subscribers as of June 2018.
Q.What is one potential challenge highlighted for the merger's approval?
What is one potential challenge highlighted for the merger's approval?
Securing competition regulatory approval may be difficult due to the large combined subscriber base. This significant market share could raise concerns about fair competition.
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