KT-Shinhan Bank tie-up eliminates overhang concerns for telco Lender replaces NTT Docomo as second largest shareholder in Korean telco

Translated by Ryu Ho-joung 공개 2022-01-20 08:11:22

이 기사는 2022년 01월 20일 08:08 더벨 유료페이지에 표출된 기사입니다.

KT Corp’s strategic partnership with Shinhan Bank has helped the South Korean mobile carrier eliminate overhang concerns, with the lender taking over NTT Docomo’s all shares in KT as the Japanese mobile service provider needed to offload them due to local financial regulations.

As part of their tie-up for digital transformation, announced on Monday, KT and Shinhan Bank agreed to buy 437.5 billion won ($367 million) worth of shares in each other’s companies. KT accordingly will own a 2.08% stake in Shinhan Financial Group, the bank’s parent company.

Shinhan Bank also said on Monday that it bought 5.46% of the telco from NTT Docomo via a block deal. The stake represented the entire 14,257,813 shares in KT held by the Japanese firm.

The transaction has made Shinhan Bank the second largest shareholder of KT, replacing NTT Docomo.

The partnership between KT and NTT Docomo began in 2005 when the Japanese firm made a strategic investment in KTF – which in 2009 merged into its parent company KT– to work together in the areas of fixed mobile convergence, international roaming and network technologies. After the merger, NTT Docomo’s stake in KT was adjusted to 5.48% and it has kept the shares ever since.

However, Japan’s revised corporate governance rules led NTT Docomo to reevaluate its holdings and portfolio strategy, and it ultimately decided to dispose of its stake in KT.

As a new strategic partner for the South Korean telco, Shinhan Bank appeared just in time to help NTT Docomo exit its investment in KT without resulting in a significant market impact.

“With KT’s stock price moving higher recently, (NTT Docomo) offloaded its KT shares to Shinhan Bank via a block trade with little impact on the market price,” an industry insider said.

Relationship remains strong

KT and NTT Docomo have collaborated with each other in diverse areas for the last 18 years. In 2011, the two mobile carriers and China Mobile Communications signed a Strategic Cooperation Framework Agreement (SCFA) to expand their business cooperation in Asia.

In 2017, KT and NTT Docomo launched a task force to collaborate in artificial intelligence. They also won a contract to provide in-car infotainment services for Renault Samsung vehicles in 2019.

They are expected to maintain a strong relationship with each other even after NTT Docomo’s stake sale. The two companies and China Mobile agreed to extend their partnership to 2027 in November last year.

“We will continue cooperation with NTT Docomo after its stake sale,” an official at KT said. (Reporting by Jang-jun Lee)
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