Mobile Internet: Korea

Transcription

www.ipacificpartners.com
www.seri.org
www.etri.re.kr
Market Research
June 2001
Mobile Internet : Korea
Mobile business & investment report
Sangchae Choi
+82-2-2191-5446
reichoi@ipacificpartners.com
Jaeyun Kim
+82-2-3780-8297
jyk@seri.org
Hanjoo Kim
+82-42-860-6529
joo@etri.re.kr
This report outlines the efforts by several renown organizations in their attempt to
comprehensively cover the Korean mobile telecommunications industry including,
but not limited to, the market performance and business strategies of Korean
mobile service providers, communication terminal manufacturers and venture startups in the highly dynamic market mechanisms of the most lucrative industry in the
country's history.
The Korean telecommunications standard for future 3G service has been officially
announced in 1999 with a successful commercial 2.5G service already launched in the
Korean domestic market. The Korean mobile Internet service is widely expected to
enter the growth stage during the years in 2001 to 2003 following the initial market
entry in 1999 and 2000. The issues on packet-based pricing, commercial distribution
of Java-based terminals and widespread of corporate mobile services in Korea will
be the most debated issues in 2001.
For foreign investors and industry participants, this report also provides a detailed
summary of 1) operating performance and investment status of mobile Internet
start-ups during operating year in 2000, and 2) description of major venture
capitalists in Korea.
iPACIFIC partners, Inc.
As the investment arm of the Kolon Group of companies, iPACIFIC partners ("iPACIFIC")
represents a leading business accelerator and developer in the highly prospective markets for
mobile Internet and B2B e-commerce in Korea. With vast business and financial resources
available within the company and additional resources pooled through the Kolon's extensive
network of companies, iPACIFIC brings exceptional value to growing start-ups and growth
stage entrepreneurs. As the lead advisor and manager of new business investments within
the Kolon Group, iPACIFIC provides comprehensive value-added services to 24 partner
companies in its current US$20 million portfolio that include, but not limited to, financial
planning, business and technology advisory, marketing, business strategy formulation, and
human resources management.
Samsung Economic Research Institute (SERI)
Established in July 1986 as a Samsung’s private research center, the Samsung Economic
Research Institute (SERI) firmly positioned itself as the leading research organization in Korea
over the past 15 years. Currently, about 100 researchers, industry analysts, and experts are
actively engaged in numerous research and analytical activities within and outside the
country. Over the past two decades, the institute’s study and research focus has expanded to
include areas that cover economics, management, social and governmental issues. SERI’s
major services revolve around macroeconomic researches and analysis on domestic and global
economies around the globe and marketing, strategy, and management consulting services
to organizations in both private and public sector in Korea through functional studies and
analysis of major Korean corporations and government bodies. Through these independent
studies, SERI formulates and suggests innovative solutions to many of the strategic and
structural problems faced by the organizations. SERI publishes value-added research papers,
periodicals, journals, reports, and online publishing with major target readership in each
industry’s opinion leader groups.
Electronics and Telecommunications Research Institute (ETRI)
Established in 1976, ETRI has been at the forefront of technological excellence for more than
25 years. ETRI successfully developed information technologies such as TDX-Exchange, High
Density Semiconductor Microchips, Mid-Range Computer (TICOM), and Digital Mobile
Telecommunication System (CDMA). As a recognized leader in the information and
telecommunication research institutes in Korea, ETRI is striving to be the best in creating
knowledge and technology crucial for the construction of future information and
telecommunication society. ETRI-IT Management Research Institute, on of ETRI's Sub-Lab,
carries out research mainly focused on the area of information and telecommunication policy,
and techno-economics. ETRI - IT Management Research Institute is playing a major role of a
national think tank of telecommunication policy and strategy.
iPACIFIC partners, SERI, ETRI
2
TABLE OF CONTENTS
Executive Summary
4
1. Korean Economy
20
2. Global Mobile Internet Market
27
Global Market
28
Northeast Asia: Japan and China
29
3. Overview of Korean Telecommunication Market
Government’s Policies and Organizations
36
Major Telecommunication Services
37
Internet Services
39
4. Korean Mobile Communication Market: Status and Industry Players
42
Overview of Mobile Subscribers
43
3G service Licensing
44
Mobile Service Market
48
Mobile Terminal Market
50
Infrastructure Market
54
Mobile Data Services
57
Summary
60
5. Valuation of Korean Mobile Companies
62
Listed Companies: Major Operators and Manufacturers
63
Unlisted Start-up Companies
81
Appendix
35
88
Mobile Internet-related Organizations in Korea
89
Korean Venture Capital Market
92
Korean Mobile Start-up Companies
96
3
Executive Summary
Executive summary
Korean economy: swift recovery from the financial plunge
The Korean economy, which had sustained a remarkable annual GDP growth of more than 6% since the
1960’s, faced a severe financial crunch at the end of 1997 that resulted in a negative growth of 6.7% in
1998. However, the tormented economy immediately bounced back to a higher-than-expected real
economic growth rate of 10.7% in 1999, enabling Korea to recuperate from the crisis faster than other
Asian countries going through similar setbacks.
Figure 1
Real GDP growth rate
Source: WEFA, Asian Monthly Monitor (2001)
During the economic crisis in 1997, a rapid transition took place within the Korean economy, from the
traditional industrial structure centering around heavy industries to a new industry paradigm based on IT.
In years between 1998 and 2000, the IT industry’s gross production grew at an average annual rate of
44.1%, compared to mere 5.7% growth for the traditional brick-and-mortal industries over the same
period of time. As for the investments on facilities, the IT industry expanded its investment spending
each year by 8.1% while traditional industries recorded negative average growth rate of 21.2% over the
same period of time. Among the major sectors within the IT industry, the semiconductors and cellular
phones displayed the steepest growth both in production and export volume. The Korean CDMA phones
dominate the global market with a total market share of 52%, while semiconductor export grew at an
annual growth rate of 40% till the first half of 2000.
Figure 2
Major economic indices of Korea: 1999
Korea
GDP (US$ bil.)
Growth rate of GDP(%)
Per capita GDP (US$)
Population (mil.)
Unemployment rate(%)
Trade balance (US$ bil.)
Penetration rate of PC(%)
Penetration rate of mobile communication(%)
Penetration rate of Internet use(%)
469
10.7
8,680
46.9
6.3
24.5
18.2
50.0
23.2
OECD(selected)
Japan
USA
4,349
0.2
34,377
126.5
4.7
106.9
28.7
44.9
14.5
9,299
4.2
33,666
276.2
4.2
337.4
51.1
31.2
39.8
Source: OECD (2000)
5
Executive summary
Major telecommunication services
Recent developments in the Korean telecommunication market can be summarized into rapid expansion
of cellular service and the growth of data communication services using the Internet. Generally, the
Korean telecommunication industry was largely divided into wired and mobile services. However, such a
clear distinction of provided services is expected to diminish in the future as Korea Telecom has recently
been awarded the IMT-2000 license.
Figure 3
Market size and growth rate of major telecommunication services in Korea
CAGR (%)
(2001-2005)
Provided Service
1999
(US$ mil.)
2000
(US$mil.)
2005
(US$mil.)
Local calling
2565.4
2658.1
2911.8
1.6%
Long-distance calling
1111.5
949.8
720.4
-4.4%
International calling
544.4
626.1
673.7
1.4%
Leased line
864.8
968.1
1196.8
3.5%
11.3%
Wired Communication Service
Broadband Internet access service
125.4
746.1
1536.4
7598.0
9431.2
13550.0
4.3%
458.7
75.7
5.3
-35.1%
TRS
13.4
18.8
27.5
5.5%
Mobile data
21.7
30.6
21.3
-7.2%
Wireless Communication
Mobile phone
Service
Paging
Source: Korea Association of Information & Telecommunication (KISDI)
Highest Internet usage in Asia
According to the Korean Ministry of Information and Communication, Internet users in Korea increased
by 9 million from 1999 to reach 19.04 million as of December 2000. Since the number of users already
exceeded over 40% of the entire population, the rate of Internet user growth in Korea is expected to
eventually level-off in the future.
Figure 4
Internet users in Korea
Source: Ministry of Information and Communication of Korea (MIC)
When comparing the Korean Internet user base with other countries around the world, Korea was
ranked 18th among OECD nations in 1998, but leaped to 10th in 1999. In terms of per capita GDP to the
number of Internet users, Korea has a substantially higher number of Internet users than most of other
industrialized nations given the level of the country’s per capita GDP.
6
Executive summary
Figure 5
Comparison between per capita GDP and Internet usage (1999)
Source : Based on data from OECD
Rapid diffusion of mobile communication in Korea
Since the first cellular service commenced in 1984, the Korean cellular market expanded at an average
annual growth rate of about 100% to record 26.81 million users by end of 2000. Although the growth
rate has leveled off since 2000, the current user base consisted of more than 58% of total Korean
population is among the largest in the world.
Figure 6
Number of cellular subscribers in Korea
Source : The MIC
Data from 1999 ranks Korea in the 7th place among OECD members in terms of number of cellular
subscribers. Comparing the country’s per capita GDP against the cellular phone user base (number of
subscribers per 100 persons), Korea ranks even higher among heavy users of cellular services in the world.
7
Executive summary
Figure 7
Number of cellular service subscribers against per capita GDP - OECD member countries (1999)
Source: Based on data from OECD
Undoubtedly, Korea is a global leader in telecommunications services market, including the Internet and
cellular phone communications, in terms of their domestic market size. The Korean market holds
advantages in the upcoming mobile Internet market based on their strong foundations in the Internet
and cellular communications. Although Korea is ranked in the middle among OECD nations based on the
1999 data, the country’s user base is expected to rank higher in the top of the leader group when the
year 2000 numbers are added. The higher rate of market growth in Korea negates the need for
considering the size of growth in competing OECD countries during 2000 for the purpose of this analysis.
Figure 8
Comparison of cellular service subscribers against Internet users (1999)
Source: Based on data from OECD
8
Executive summary
Mobile service markets : voice and data services
The number of mobile phone subscribers in Korea by the end of 2000 was recorded at 26.7 million, an
increase of about 3.4 million since 1999. In terms of service providers, the three PCS providers are more
actively promoting their mobile Internet services than their cellular service counterparts. For instance, SK
Telecom and SK Shinsegi have a combined mobile phone market share of 54%, whereas their market
share in the mobile Internet services is merely reaching 35%. In contrast, the PCS providers, KT FreeTel
and KT M.com, are leading the cellular service providers in the mobile Internet services market by
dominating over 43% of the market share in the emerging market based on their 31% market
dominance in the mobile phone services market.
Figure 9
Market shares of mobile operators in Korea
Source : The MIC (2000)
The foundation for Korea’s mobile Internet services was laid by the service providers’commencement of
mobile Internet service in the second half of 1999. Since the first service began in May 1999, the number
of Korean mobile Internet service subscribers has swelled to 15.78 million users (including about 6.96
million ISMS users) by December 2000, based on the number of terminal devices sold. The service
subscriptions were divided into WAP/ME with 13 million subscribers (87%), and SMS service attracted 2
million subscribers (13%) over the same period.
9
Executive summary
Figure 10
Mobile Internet service users of Korean mobile service providers(Dec. 2000)
Category
SKT
SKS
KTF
KTM
LGT
Total
Subscribers
(thousand users)
ISMS
1,955
WAP/ME
2,857
Sub Total
4,812
ISMS
Market share(%)
Type of
mobile gateway
WAP
30.5
(Ericsson)
-
WAP/ME
735
Sub Total
735
ISMS
2,433
WAP/ME
2,280
Sub Total
4,713
ISMS
1,098
WAP/ME
1,043
Sub Total
2,141
ISMS
1,479
WAP/ME
1,906
Sub Total
3,385
ISMS
6,965
4.7
WAP
(Phone.com)
ME
29.9
(Microsoft)
ME
13.6
21.4
WAP/ME
8,820
100
Sub Total
15,785
15,785
(Microsoft)
WAP
(Phone.com)
Mark-up
language
Voice call fee / data call fee
WML
1.8/17
HDML
1.8/16
M-HTML
1.5/17
M-HTML
1.5/16
HDML
1.6/16
(¢/10 sec)
Source: The MIC (2000)
In spite of the large number of wireless Internet terminal devices already delivered to the market, the
end-users are still not fully utilizing the service as an average user uses mobile Internet services for about
10 minutes a day (KISDI). As of the end of 2000, the combined wireless Internet service revenue of all five
service providers in the year 2000 was disappointingly at US$65 million, or merely 1% of total voice call
revenue of US$6.4 billion. Considering that there are over 16 million users with wireless Internet-ready
terminals, such a poor sales performance represents immaturity of the market. From the service
perspective, although mobile financial services usage that includes securities transaction and Internet
banking is increasing, the current service remains at a primitive level with limited B2C services offered,
such as phone bell downloads and simple games.
Figure 11
Mobile Internet market cycle in Korea
Revenue
Sales profit
Consumer type
Competition
Price competitiveness
Product quality
Advertisement
Promotional factor
Introduction Stage
Growth Stage
Maturity Stage
(1999-2000)
(2001-2003)
(2004-2005)
Minimal
Loss
Users preferring New Products
Limited
Low
Basic service
Spending high
Service recognition
Increasing
Maximum
Pioneer users
Increasing
Increasing
Improved service
Decreasing
Service selection
Slow
Decreasing
Majority
Maximum
Maximum
Expanded service
Minimal
Brand recognition
Source : iPACIFIC partners
On its product life cycle, the Korean mobile Internet industry entered the growth stage following its
introduction stage in 1999 to 2000. The Korean market is anticipated to become profitable during this
stage based on resolved issues related to the activation of IS-95C (144~384Kbps) packet-based services
and HDR (High-speed Data Rate, 2.4Mbps) along with successful implementation of Java technology and
stable billing systems for mobile Internet contents services.
10
Executive summary
Mobile handset markets
The Korean mobile terminal device industry went through an industry-wide correction in 2000 due to the
stockpiling inventories of service providers and problems related to parts procurement. The sales revenue
of the terminal manufacturer further declined in June of 2000 following the government’s
announcement that banned the purchaser subsidy on new terminal purchases. The market plunged with
average monthly device terminal sales falling from 1.8 million units in May to 400,000 units in June. A
significant recovery was made in the fourth quarter of 2000 with the total output of 14 million units
based on factory output quantity during the entire year.
Beginning in 2000, the mobile Internet commonly emerged as the most talked-about topic among
telecommunications companies around the globe. Korea was no exception and the year 2000 marks the
actual first year of mobile Internet service launch in the country, given the balance of supply and demand
for the service and terminal devices. In addition, SK Telecom is expected to drive up the current IS-95C
service, which commenced in October 2000, to a full-fledged mobile Internet service by the second half of
2001, providing a solid foundation for practical and worthwhile data services.
The growing mobile Internet market has brought several changes to the terminal device market.
Although Samsung maintains its position as the market leader, LG was first to the wireless Internet
market with its release of new terminals equipped with web browsers. During the operating year in 2000,
around 47 to 48% of all terminal devices manufactured in Korea were mobile Internet-ready devices,
which equates into about 7 million units. LG Electronics, the second largest terminal manufacturer in
Korea, ranked as the number one manufacturer of Internet-ready terminals with 2.6 million units,
followed by Samsung with 1.85 million units.
Figure 12
Terminal device output in Korea
Samsung
LG
Motorola
Hyundai
Other
1Q
217.4
124.8
50.1
33
78.8
504.1
2Q
191.2
86.7
17.6
24.9
85.5
405.9
3Q
84 .0
35.6
11
14.4
28.4
173.4
4Q
135.2
79.2
36.5
14.2
67.1
332.2
Total
627.8
326.3
115.2
86.5
259.8
1415.6
Market Share
44%
23%
8%
6%
18%
100%
Total(10,000 units)
Source: Manufacturers (Dec.2000)
The large demand for terminal products in Korea is expected to revive in the months to come as new
product releases are planned for the soon to be booming mobile Internet service market. However, there
remain a few anticipated obstacles in the way, with the product pricing as the most important issue.
Devices equipped with a camera or color LCD are expected to cost more than US$500 to US$600 at this
stage. Along with the banned purchaser subsidy from service providers, the pricing issue will be a major
concern.
11
Executive summary
Mobile operators
SK Telecom
SK Telecom (SKT) is the largest mobile operator in Korea with 14.1 mn cellular subscribers. The company
is slowly losing its earnings momentum on the back of slower subscriber growth and rising cost. Given
limited mobile subscriber growth, SKT’s future growth will heavily depend on wireless data growth. To
drive its wireless data strategy, SKT expects to push aggressive 2.5G network rollout based on Qualcomm’
s CDMA2000 1x technology and packet-based tariff system.
Results & forecasts
Valuation
EPS
%ch.
Yr to
Dec
10902
177
2000
3934
88
1999
151
2090
29
114
1621
360.3
205.6
RP
(W b)
NP
(W b)
1,636 1360.9
951
289
472.8
304
3545.2
494
393.8
1997
3512.0
584
168.5
1996
2676.0
471
1995
1322.5
212
Yr to
Dec
Sales
(W b)
2000
5760.9
1999
4284.9
1998
OP
(W b)
EPS
(W)
EV/sales
(X)
199
8
3.4
2.8
621
20
4.5
3.9
1998
1,249
14
5.5
9.3
(53)
1997
1,664
3
5.5
10.1
237 3415.0
104
1996
798
15
7.2
12.5
114.0 1673.7
2
1995
1,657
31
14.7
18.3
Share data
Price (MM/DD/YY)
189,000
Total no of shs (m)
89.2
Mkt cap.(US$m)
52 week price range
12,/26
P/BVPS
(X)
EV/EBITDA
(X)
P/E
(X)
Price chart
Book NAV(W)
Net debt/equity
Free float (%)
406,000~165,000
684
18
10.2
59
Price performance
Over last
1M
3M
12M
Absoulte
-7.8
-31.8
-27.6
Relative to KOSPI
-3.4
-20.9
-0.2
Relative to KOSDAQ
-3.7
-25.1
84.0
Major shareholders
SK Group
Signum IX
19.6%
14.5%
SOURCE: IPACIFIC partners estimates
Company profile
SKT is the largest mobile operators in Korea with 14.1 mn mobile subscribers along with its affiliate SK
Shinsegi. SKT was the world’s first to launch commercial 2G CDMA network in February 1996 as well as
2.5G CDMA 2000 1x service in October 2000. SKT also wass granted with a license to provide the nextgeneration 3G mobile services based on W-CDMA technology platform. Besides its core mobile cellular
service, the company operates Korea’s largest paging network, broadband service using cable modem,
and owns majority stake in SK Teletech (handset manufacturer), SK Telelink (International Simple
Reseller), Netsgo (ISP), and Happy2buy (e-commerce).
KT Freetel
KT Freetel (KTF) is the second largest mobile operator in Korea with subscriber base of 8.59 mn
(combined with KTM.com). With first posted net earnings in 2000, KTF posted strong FY00 results as
sales and EBITDA grew 23.1% and 132.6% YoY in 2000. KTF is focused on increasing its wireless data
service that totalled W51 bn in FY00 (1.8% of total sales). At end of 2000, the 45% of KTF subscribers fell
under 30 years age braket that expects to drive wireless Internet usage while some 55% of KTF
subscribers own Microsoft Mobile Explorer browser-enabled handsets. The company is looking to launch
2.5G service in May and targets 700,000 subscribers by end of 2001 with 2.5G ARPU expected to increase
by roughly 18% to W45,000 from current ARPU of W38,000.
12
Executive summary
Results & forecasts
Yr toDec Sales(W b)
OP(W b)
RP(W b)
NP(W b)
Valuation
EPS(W)
EPS%ch.
Yr to Dec
P/E(X)
EV/EBITDA(X) EV/sales(X) P/BVPS(X)
2000
2780.3
250.0
168.4
116.0
812,8
(254.0)
# 2000E
336
13
2.4
1999
2258.8
16.2
(95.6)
(59.0)
(527.8)
(62.5)
# 1999
(661)
31
3.0
5.6
1998
1431.8
(64,8)
(141.2)
(141.2) (1,406.0)
45.3
# 1998
(276)
114
4.7
14.4
1997
144.6
(123.2)
(96.2)
(96.2)
(967.7)
n.a.
# 1997
(405)
(63)
46.3
9.6
1996
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
# 1996
n.a.
n.a.
n.a.
n.a.
1995
n.a.
n.a.
n.a.
n.a.
n.a
n.a.
# 1995
n.a.
n.a.
n.a.
n.a.
Share data
Price chart
Price (MM/DD/YY)
39,000
Total no of shs (m)
142.7
Net debt/equity
61.3
Mkt cap.(US$m)
4,202
Free float (%)
61.3
52 week price range
5.0
Book NAV(W)
7761,2
89,000~32,400
Price performance
Over last
1M
3M
12M
Absoulte
1.7
-12.2
-44.9
Relative to KOSPI
6.6
1.8
-24.2
Relative to KOSDAQ
6.3
- 3.5
39.9
Major shareholders
Korea Telecom
38.7
Company profile
KTF was established in January 1997, and successfully launched commercial service in October 1997. The
company signed more than one million subscribers within their first six months of operations. After 18
months of service, the company has more than 3 million subscribers. As of March 2001, KTF has over 5.59
million subscribers. And, with its merger with KTM.com in May 2001, the company has increased its
subscdriber base to 8.59 mn and controls 32.5% of Korean mobile market. In September 1999, KTF
became the first cellular operator to launch IS-95B wireless Internet service. This service expanded
nationwide in February 2000. KTF plans to launch the commercial service in 2001. Besides its PCS license
in 1800 MHz bandwidth, the company also holds 15% stake (together with KTM.com) in KT’s 3G mobile
consortium - KT Icom.
LG Telecom
With 3.83 mn subscribers, LG telecom(LGT) is the smallest mobile operator in Korea. With a cut in
marketing costs and improved quality of its subscriber base, LGT posts first quarterly net profit in 1Q
2001. LGT has a highest percentage of wireless data subscriber base among Korean operators as well as
highest data ARPU on the back of its strong platform/contents such as JAVA and WAP. LGT may face
financial difficulties in filling the gap for its partner, British Telecom, which recently announced its plan
to withdraw from the Asian market.
13
Executive summary
Results & forecasts
Yr to Dec Sales(Wb) OP(Wb)
RP(Wm) NP(Wm)
Valuation
EPS(W)
EPS%ch.
Yr to Dec
P/E(X)
EV/EBITDA(X) EV/sales(X)
P/BVPS(X)
2000
1851
(269)
(376)
(442)
(2.3)
174
2000
(10)
.02
1.2
4.3
1999
1438
(107)
(234)
(162)
(0.8)
4
1999
(28)
.04
1.6
1.2
1998
1092
(77)
(155)
(155)
(0.8)
659
1998
(29)
.01
2.1
0.5
1997
37
(32)
(20)
(20)
(0.1)
n.a.
1997
(223)
.03
61.9
1.2
Share data
Price chart
Price (MM/DD/YY)
4,500
Book NAV(W)
1053
Total no of shs (m)
190.7
Net debt/equity
695.0
Mkt cap.(US$m)
52 week price range
657
Free float (%)
47.2
16,600~3,490
Price performance
Over last
1M
3M
12M
Absoulte
9.4
-29.4
#N/A
Relative to KOSPI
14.6
-18.2
#N/A
Relative to KOSDAQ
14.3
-22.5
#N/A
Major shareholders
LG Electronics
28.1%
BT
24.1%
Company profile
Having acquired its PCS business license in June 1996 on behalf of LG Group, LGT launched its commercial
PCS service in October 1997 as one of the three PCS carriers in Korea. However, due to recent
consolidation of Korean mobile market, LGT became the smallest mobile operator with 3.83mn
subscribers and market share of 14.4%. Through a strategic alliance, Bristish Telecom (BT) currently holds
a 24.1% stake in LGT from its investment of W521.9 bn in 1998. Despite its small subscriber base, LGT has
been able to establish a nationwide single-network system and is offering one of the most advanced
wireless data service in Korea with first WAP service in 1999 and mobile JAVA service in 2000.
Mobile device vendors
Samsung Electronics
With their focus on DRAM, Samsung Electronics, Co,Ltd. (SEC) is diversifying its business to non-DRAM
memory, TFT-LCDs and telecom. The total telecom revenues are estimated to have reached W7.6 tn in
2000 compared to W7.5 tn in 1999. The key to handset growth is in the handset exports, where SEC
expects to increase its volume by 37% YoY to 21.8 mn units. SEC is intensifying its research for both 3G
handsets and equipment development. SEC is currently considered as a world’s leading CDMA 2000
vendor.
14
Executive summary
Results & forecasts
Yr to Dec
Valuation
Sales(W b) OP(W b) RP(W b) NP(W b) EPS(W) EPS%ch.
P/E(X)
EV/EBITDA(X)
EV/sales(X)
2000
34,284
7,435
7,947
6,015
34
90
2000E
62
1
0.2
3537.6
1999
26,118
4,482
4,294
3,170
18
912
1999
118
1
0.4
4269.1
1998
20,084
3,100
441
313
2
154
1998
1,191
2
0.6
6793.7
1997
18,465
2,856
156
124
1
(25)
1997
3,020
2
0.6
6405.8
1996
15,875
1,447
224
164
1
(93)
1996
2,272
2
0.4
6824.0
1995
16,190
4,282
3,036
2,505
14
n.a.
1995
149
-
-
4618.5
Share data
373,000
Price (MM/DD/YY)
176.3
Total no of shs (m)
23,286
Mkt cap.(US$m)
52 week price range
Yr to Dec
P/BVPS(X)
Price chart
Book NAV(W)
105.4
Net debt/equity
11.0
Free float (%)
63.9
388,000~156,000
Price performance
Over last
1M
3M
12M
Absoulte
10.7
23.5
116.2
Relative to KOSPI
2.4
36.1
31.5
Relative to KOSDAQ
-6.0
-9.2
30.4
Major shareholders
Samsung Life Insurance
6.0
Company profile
While DRAM chips are still the core of its semiconductor business, SEC has developed a global number
one position in SRAMs, and a top-ten position in flash memory. Its future plans are to diversify further
into non-memory products, such as systems LSI chips. In addition, SEC has developed successful businesses
in TFT-LCDs and cellular handsets over the past four years. While SEC’s short-term earnings are still
largely vulnerable to the volatility in DRAM prices, these diversification measures provide a stronger base
for SEC’s long-term profitability potential.
At the heart of company’s diversification plan is telecom business. Under the vision of“Anywhere,
anytime communications”
, SEC is well on its way to become world’s top-tier telecom business. From one
of the world’s best selling mobile phones manufacturer to a provider of comprehensive systems and
networks for mobile communications, SEC has earned its recognition as a one-stop provider of digital
communications technology.
LG Electronics
LG Electronics(LGE) is a leading manufacturer of an array of consumer electronics products including
digital displays, digital appliance, and digital media. The merger between LGE and LG Information
Communication(LGIC) in September 2000 has added a telecom division as a core unit to LGE. However,
the addition of telecom business is not going to be a major profit contributor to LGE over the next few
years in our view given a lower margin for telecom equipment during 2001-2002. Although the company
leads the development of 3G WCDMA technology, the delays in deployment of 3G network may nullify
company’s competitive advantage in 3G technology development.
15
Executive summary
Results & forecasts
Valuation
Yr to Dec Sales(W b) OP(W b) RP(W b) NP(W b) EPS(W) EPS%ch.
Yr to Dec
P/E(X)
2000
14,275
981
797
502
3,527
(78)
2000E
23
3.0
0.4
0.6
1999
10,546
684
2,588
2,005
15,859
1,392
1999
6
3.8
0.5
0.5
1998
9,853
753
167
112
1,063
23
1998
105
3.1
0.6
0.8
1997
9,240
798
116
92
862
42
1997
129
3.5
0.6
0.8
1996
7,502
571
13
65
606
(21)
1996
182
4.6
0.7
0.8
1995
6,592
521
113
79
767
(29)
1995
149
5.3
0.9
0.9
Share data
Price (MM/DD/YY)
11,800
Total no of shs (m)
Mkt cap.(US$m)
52 week price range
Price chart
Book NAV(W)
20,352
174.2
Net debt/equity
132
1,481
Free float (%)
60
34,000~11,150
Price performance
Over last
1M
3M
12M
Absoulte
-14.5
-28.5
-62.3
Relative to KOSPI
-10.4
-16.0
-45.2
Relative to KOSDAQ
-10.6
-21.9
-7.8
Major shareholders
LG Chemical
5.4
Company profile
LGE produces a wide range of consumer electronics product, from traditional white appliances to
audio/visual multimedia applications. Through its recent merger with LGIC, LGE is now the second-largest
cellular handset producer in Korea, as well as various telecommunication systems. The company has
introduced the world’s first commercialized CDMA handsets and system equipment. The company is also
engaged in the the development of various personal mobile communication devices and optical
switching systems as LGE is currently the second largest manufacturer of cellar handsets, as well as various
telecommunication system, in Korea.
Mobile start-up companies
The elements that constitute mobile Internet industry continue to evolve as diversity and dynamism is
strongly emphasized in the industry. Such a diversity and dynamism in the industry requires an analytical
tool with which investors and industry analysts may systematically classify industry players and identify
viable opportunities to invest on a managed level of risk. In this report, we have attempted to provide a
meaningful categorization of numerous mobile start-ups in Korea based on their current activities and
performance in the marketplace.
An objective and concurrent valuation of majority of privately-held mobile Internet venture companies is
a very difficult task due to lack of readily available stock market information. Two of the best indices to
assess market performance of mobile Internet ventures are revenue and the amount of investments
already attracted. Accordingly, we have surveyed each company’s revenues and most recent investment
amounts as of end of 2000. The figures should provide a sense for the approximated company value as
well as future market potentials of each of the industry category.
Currently, over 500 mobile Internet-related companies are estimated to operate in Korea. Due to lack of
available information on these companies and fluctuations in the number of companies in the recent
years, the company survey was fairly a difficult task. We have surveyed about 300 companies through the
Internet and obtained data from 68 of them.
16
Executive summary
We are fully aware of the fact that responding companies might not represent the general mobile
Internet industry in Korea. However, many organizations are curious as to how much revenue did mobile
Internet ventures generated as of 2000 and what kind of values are these companies placed with by the
financial market. We have placed a great meaning on our survey results, despite its imperfections, as an
important initiation of such type of works to be followed in the future and as a partial answer to the
burgeoning questions on the industry.
The 68 Korean mobile Internet venture companies that responded to the survey are conducting their
businesses respectively in the 150 specific mobile Internet industry categories. The average company had
about 29 employees with about US$1.66 million of paid-in capital. The aggregate amount of investments
attracted by all 68 companies from venture capitalists amounted to US$92.3 million, or US$1.38 million
per company. As of the end of 2000, their combined revenue was US$75.67 million, or an average of
US$1.13 million per company. When counting only 55 new start-ups established since 1999 out of the 68
surveyed (81% of the total), the combined revenue was US$40.15 million, from US$0.73 million
contributed from each company on an average. Hence, it is difficult to assume that the aggregate and
average revenues of companies surveyed all came from the mobile Internet businesses alone. Rather, the
figures should be understood as general characteristics of venture companies in the mobile Internet
industry.
Figure 13
Mobile Internet industry classification
Mobile
Internet
services
(A)
Contents
Code
Personal information
services
Mobile portal
A11
n-Top, mobile Yahoo!, mobile Lycos, Daum
Entertainment
A12
Information services
A13
Downloading service, (character, music,
displaying mode), chatting service
Basic information service (news, stock price alerting,
weather), guide service, advertising service
Games
A14
Personal commerce
A15
Banking, stock trading, reservation, purchasing
Mobile enterprise solution
A21
Mobile office, mobile ERP, inventory management
Business commerce
A22
Mobile EDI, mobile SCM
Customer management
A23
Mobile CRM, mobile DM
Business information services
Others
Mobile
Internet
solutions
(B)
Mobile
Internet
infrastructure
(C)
Business examples
Type
Technical solutions
Java-based game, betting
Location-based service
A31
Fleet management, navigation, asset tracking
Telemetry service
A32
Remote control, remote measurement
Mobile agency
B11
Mobile site building, contents converting tool
Security solution
B12
Security, authorization
Commerce solution
B13
Advertising, billing, payment, auction etc
Streaming solution
B14
Mobile streaming for PDA and smart-phone
Value-added solution
B15
Voice recognition solution, location-based solution
Business solutions
Education, consulting
B21
Business consulting, market analysis
Hardware
Device manufacturer
C11
Smart-phone, PDA with mobility, Data-communication device
Software
Network
Device components
C12
Battery, display, memory, antenna, bluetooth
Mobile modem
C13
Modem for notebook PC or PDA (ex. CDMA modem)
Mobile peripherals
C14
Cable, hands-free peripherals, input & output accessory
Systems
C15
Base stations, switches, relay systems, etc.
OS platforms
C21
OS, applications for OS platform
Brower
C22
Mobile Browser ex) WAP, ME
Access services
C31
Network service provider ex) SK Telecom
Facility providers
C32
Network rental service, network maintenance
Source: iPACIFIC partners
17
Executive summary
Figure 14
Current status of mobile Internet venture companies in Korea
Total
Average
Maximum
Minimum
68
No. of companies
149
2.19
3
1976
29.06
100
6
110.89
1.66
18.60
0.13
Investments attracted (US$ mil.)
92.27
1.38
10.00
0
Revenue (US$ mil.)
75.67
1.13
9.17
0
Mobile Internet business areas
No. of employees
Paid-in capital (US$ mil.)
1
Note : The analysis for this survey was conducted based on data collected from companies during the iPACIFIC Partners survey period (Feb. 2001),
and zeros were used for companies with no investment/revenue. Please take caution in proper interpretation of the presented data.
As for the business areas of companies surveyed, 50% of the 68 companies were conducting mobile
Internet business as their primary business, 29% of them were engaged in the mobile Internet solutions
business, and 21% said that they were focusing on the Internet infrastructure business. Because the
market is in its initial stage, most companies were conducting businesses in two or more areas.
Figure 15
Distribution of Korean mobile Internet venture companies by industry areas
Category
No. of companies
No. of mobile Internet business areas
Number
Mobile Internet services
34
Mobile Internet solutions
20
Mobile Internet infrastructure
14
Total
68
74
44
31
Total
149
Source: iPACIFIC partners’ survey
Because the mobile Internet market itself is in its initial stage, the companies had very short histories.
82% of the 68 companies surveyed were established on or after 1999.Out of the 68 respondent
companies, 55 succeeded in attracting outside investors and 13 had failed to receive any investments.
Out of the 55 investee companies, the largest number of companies were successful at attracting an
investment of anywhere between US$0.5 and 1 million, followed by a range between US$1 and 2 million.
Overall, about US$1.38 million per company was invested into the Korean mobile Internet companies.
18
Executive summary
Figure 16
Distribution of Korean mobile Internet venture companies by invested amount
As for revenue generation, 13 companies (19%) had yet to see any as of the end of 2000. Among the rest
with revenue, the largest number of companies generated US$0.5 to 1 million, followed by US$1 to 2
million and US$2 to 5 million. The total revenue generated by the industry as a whole was about US$76
million, or an average of US$1.13 million per company.
Figure 17
Distribution of Korean mobile Internet venture companies by sales amount
19
1. Korean Economy
Korean economy
1. Korean economy
1.1 OECD country comparison
Geographically, the Korean peninsula is situated between Japan and China with total land area of
approximately 99,400㎢, or 1/100th the size of total land mass of the U.S. (9,363,000㎢) or 1/4th of Japan
(337.8㎢). The country’s population census reached 46.9 million by 1999 to rank as the 9th most
populous OECD country, following Italy. The country’s unemployment rate stood at 6.3%, which ranks in
the middle of OECD nations despite the effects of foreign currency crisis in 1997. However, the
unemployment rate has begun to decline to 3 to 4% range in 2000.
The national GDP of Korea was estimated at US$406.7 billion in 1999, or 1.6% of aggregate GDP of all
OECD member countries, to rank 10th among the leading countries. However, the per capita GDP was
merely at US$8,680, far below the average of the OECD countries at US$22,432. Despite the economic
slump during the financial shakedown in 1997, Korea was among the fastest growing nations in the
world with 10.7% annual growth rate recorded in 1999 to rank the country at the top of all OECD
member countries. Such a spurred growth shows the Koreans’ability to overcome the obstacle to once
again return to its glory of unprecedented high growth of the 80s and early 90s.
The total Korean export output in 1999 was recorded at US$143.7 billion, which equaled to 3.5% of the
aggregate export of all OECD nations combined and 10th largest export volume among the member
countries. The Korean imports, in contrast, stood at US$119.8 billion, or 2.8% of total OECD import
volume. Evidently, the Korean economy depends heavily on its exports as the country’s reliance on
overseas trade is estimated at 65%, which is much higher than the OECD average. In 1999, the country
recorded a trade surplus of US$24.5 billion, placing the country at the top of OECD ranking in the
category. With the help from the country’s continued trade surpluses, the country was able to
accumulate a foreign currency reserve of US$74.1 billion by the end of 1999, despite the draining foreign
currency crisis in 1997, which is the third largest reserve in the world after Japan and Germany.
Figure 18
Major economic indices of Korea: 1999
KOREA
GDP (US$ bil.)
Growth rate of GDP(%)
Per capita GDP (US$)
Population (mil.)
Unemployment rate(%)
Trade balance (US$ bil.)
Penetration rate of PC (%)
Penetration rate of mobile communication(%)
Penetration rate of Internet use(%)
469
10.7
8,680
46.9
6.3
24.5
18.2
50
23.2
OECD(selected)
Japan
USA
4,349
0.2
34,377
126.5
4.7
106.9
28.7
44.9
14.5
9,299
4.2
33,666
276.2
4.2
-337.4
51.1
31.2
39.8
Source: OECD (2000)
The major Korean industries include steel, automobile, electronic home appliances, and shipbuilding. In
the recent years, the Korean semiconductor and mobile telecommunications manufacturers earned a
worldwide recognition as global leaders in their respective industries through product innovations and
technological excellence.
The total crude steel production by Korean manufacturers reached 41.042 million tons by 1999, which
equals to 8.9% of total OECD output and fourth largest production volume in the world following the
U.S., Japan and Germany. As for automobile production, Korea manufactured 2.843 million vehicles to
become the 7th largest manufacturer of automobiles among OECD member countries, or 5.7% of total
21
Korean economy
OECD production. Finally, the Korean shipbuilders built 9.481 million G/T of ships, dominating 39.4% of
total OECD output and firmly placing Korea behind Japan as the second largest shipbuilding country in
the world.
The developments in IT industries and market in Korea is truly remarkable. For instance, through rapid
developments in the high-tech sector, Korea’s Samsung Electronics became the world’s largest DRAM
manufacturer. Also, the Korean manufacturers were recorded as the first to commercialize CDMA
technologies in the world. These developments in technology and industry infrastructure, in turn, fueled
the IT markets in Korea to grow at a tremendous pace. For instance, the number of Korean cellular
phone subscribers per 100 people rose from mere 7.0 in 1996 to 50.0 in 1999, and every 5.5 people own
one computer in Korea. More amazingly, the number of Internet users per 100 increased from 3.6 in
1997 to 23.2 in 1999, over a span of merely two years.
1.2 Status of Korean economy: swift recovery from the financial plunge
The Korean economy, which had sustained a remarkable annual growth of more than 6% since the 1960’
s,
faced a severe financial crunch at the end of 1997 that resulted in a negative growth of 6.7% in 1998.
However, the tormented economy immediately bounced back to a higher-than-expected real economic
growth rate of 10.7% in 1999, enabling Korea to recuperate from the crisis faster than other Asian
countries going through similar setbacks.
Figure 19
Real GDP growth rate
The rapidly recovering economy, however, faced another challenge in the middle of 2000 with NASDAQ’
s
massive correction that triggered similar corrective patterns in the Korean stock market, especially in the
KOSDAQ market. Once again, the Korean companies faced another major financial turmoil since the
devastating credit crunch in 1997. As bubbles of economic prosperity started to burst, both consumer
and corporate economic activities began to wane drastically. Despite a real economic growth rate of 9%,
the money market and corporate production froze on the news of another possible economic
readjustment. Furthermore, the declining unemployment rate since 1997 began to climbed back as a
result of nation-wide corporate restructuring efforts.
Although these changes in economic activities have not been as severe or abrupt as those experienced
during the 1997 financial crisis, the general business and economic conditions felt by most of economic
sectors are stagnant.
22
Korean economy
Figure 20
Industrial production and unemployment rate
Stable growth expected hereafter
Beginning in 2001, the Korean economy is slowly coming back with signs of recovery showing in many
places. For instance, despite the unfavorable export climate and unstable economic situation in the U.S.,
the Korean corporation’s financial conditions improved with the Korean financial market coming out of
the worst financial crunch in the country’s history. After experiencing a decline for two consecutive
months, production is on the rebound with 1.0% increase in January 2001. The declining operation rate
and the inventory ratio in the manufacturing sector has improved. The rock-bottomed foreign currency
reserve, which was the major culprit that initiated the IMF bailout program in 1997, is steadily increasing.
Considering these and other economic indicators, the general consensus is that the Korean economy will
not suffer an abrupt downturn in the near future.
Economic analysis reports by WEFA and S&P anticipate the Korean economy to steadily grow at an
annual rate of 5%. Industrial production is expected to maintain its 1997 level, and the consumer price
index to stabilize at around 4%. Again, based on these reports, there is only a remote possibility that the
Korean economy will experience any rapid decline in market or industrial activities that the economy
witnessed during the foreign currency crisis in 1997.
FIGURE 21
Korean economic outlook
1997
1998
1999
5.0
-6.7
10.7
6.8
-8.2
24.4
4.5
7.5
0.8
2000E
2001E
2002E
Real GDP (%)
WEFA
S&P
9.1
6.1
6.3
8.9
5.4
4.6
16.6
9.7
6.8
Industrial production
S&P
Consumer prices (%)
WEFA
S&P
1.6
3.3
4.3
2.5
3.6
4.2
Current account balance (bil. USD)
WEFA
S&P
40.4
24.5
19.6
23.1
16.0
40.6
25.0
8.8
2.5
-5.9
159.2
148.7
137.1
136.6
122.4
118.5
951
1401
1189
1142
1196
1163
1121
1175
1229
5.0
External debt (bil. USD)
WEFA
Exchange rate (KRW/$)
WEFA
S&P
Source: WEFA, Asian Monthly Monitor(Jan. 2001), Standard & Poor’s DRI Country Outlook (4Q, 2000)
23
Korean economy
Industrial transition centering around IT
During the economic crisis in 1997, a rapid transition took place within the Korean economy, from the
traditional industrial structure centering around heavy industries to a new industry paradigm based on IT.
In years between 1998 and 2000, the IT industry’s gross production grew at an average annual rate of
44.1%, compared to mere 5.7% growth for the traditional brick-and-mortal industries over the same
period of time. As for the investments on facilities, the IT industry expanded its investment spending
each year by 8.1% while traditional industries recorded negative average growth rate of 21.2% over the
same period of time. Among the major sectors within the IT industry, the semiconductors and cellular
phones displayed the steepest growth both in production and export volume. The Korean CDMA phones
dominate the global market with a total market share of 52%, while semiconductor export grew at an
annual growth rate of 40% till the first half of 2000.
An important aspect of the new economy worth mentioning here relates to the emergence of new
ventures, as well as other small and medium-sized corporations, as serious contenders to the traditional
conglomerates, which have been the dominating force in the country’s economy over the past several
decades. Despite their insignificant impact on the Korean economy in terms of gross production and the
financial difficulties during the recent economic downturn, the newly emerging ventures clearly marks
the beginning of the country’s important transition toward the new economy centering around the IT
industries.
1.3 Country risk
The inadequate foreign currency reserve and untimely resolution of maturing foreign debt resulted in an
emergency financial bailout by the IMF in 1997. However, the Korean government is successfully
resolving its external debt problems with continued debt repayments. As of January 2001, the total
external debt of Korea was estimated at US$133.4 billion. The amount has been consistently decreasing
for the past six months, and the current level is the lowest figure since the IMF relief in 1997. Most
significantly, short-term foreign debts and current foreign liabilities are at their lowest levels since late
1997, making up 44.3% and 58.5% of the total foreign debt, respectively.
Figure 22
Korea’
s external liabilities (in US$100 mil.)
Total external liabilities(net receivables)
Foreign currency holding
(Short-term foreign Debt ÷Foreign currency holdings)
1997
1998
1999
1592
1487
1371
2000.9
1405
(-541)
(-202)
(83)
(220)
88.7
485.1
740.5
927.0
(7.15)
(0.63)
(0.53)
(0.51)
Source: Samsung Economic Research Institute (SERI, 2000)
According to the S&P standard, Korea has been maintaining an“A”rating on its long-term local currency
rating and a“BBB”rating on long-term foreign currency since November 1999. Moody’s has also
upgraded Korea’s credit rating by one level from the lowest investment grade of Baa3 to Baa2 in
December 1999. Comparatively, Fitch IBCA has upgraded Korea’s rating from BBB- to BBB+, giving the
country a rating of one level higher than the Moody’s rating in March 2000. The credit ratings on Korea
by major credit organizations are expected to maintain the current level despite the recent decline in
ratings for Japan and other Southeastern Asian countries.
24
Korean economy
Figure 23
History of S&P credit ratings for Korea
Local currency rating
Foreign currency rating
Long-term/Outlook/Short-term
Long-term/Outlook/Short-term
Nov. 11, 1999
A/ Positive/ A-1
BBB/ Positive/ A-3
Jan. 25, 1999
A-/ Positive/ A-2
BBB-/ Positive/ A-3
Jan. 4, 1999
BBB+/ Positive/ A-2
BB+/ Positive/ B
Feb. 18, 1998
BBB+/ Stable/ A-2
BB+/ Stable/ B
Jan. 16, 1998
BBB-/ CW-Dev./ A-3
B+/ CW-Dev./ C
Dec. 22, 1997
BBB-/ CW-Neg./ A-3
B+/ CW-Neg./ C
Dec. 11, 1997
A-/ CW-Neg./ A-2
BBB-/ CW-Neg./ A-3
Nov. 25, 1997
A+/ CW-Neg./ A-1
A-/ CW-Neg./ A-2
Oct. 24, 1997
AA/ Negative/ A-1+
A+/ Negative/ A-1
Date
Source: http://www.standardpoor.com/RatingsActions/RatingsLists/Sovereigns/index.html
WEFA also releases short and long-term risk indices according to countries’economies and politics.
Based on WEFA’s risk analysis, Korea is at an average short-term risk and is expected to have a more
stable economic environment in the long-run.
Figure 24
WEFA: risk analysis of Korea
(1=Least risk, 10=Highest risk)
Short term (2001-2002)
Long term (2003-2006)
1. Economic growth
4
4
2. Price stability
6
5
3. Interest rates
5
5
4. Exchangerates
5
4
5. Domestic financial stability
6
5
6. Public finance
6
3
7. External debt
6
5
8. Labor relations
5
4
9. Business confidence
5
4
10. Government intervention
6
6
11. Social stability
5
4
12. Political stability
4
4
Stock market (KOSDAQ)
The over-the-counter KOSDAQ market began trading in July 1996 and currently lists 612 enterprises in
Korea including several venture companies. With the adoption of policies designed to promote the
market in May 1999, the number of companies listed on the KOSDAQ and total trading volume increased
at a tremendous rate. The KOSDAQ index, which began at 100 on January 3, 1997, continued to rally
sharply and surpassed 200 in July 1999, reaching its peak at 283.44 on March 10, 2000. However, due to
the NASDAQ’s descent and prevailing bubble theories on venture companies, the KOSDAQ index began
to falter. On December 26, 2000, the index plummeted to 52.58, a record low. Since then, the index
rebounded and remains to lurk at a 70-point level.
25
Korean economy
Figure 25
KOSDAQ index movement trend
In conjunction with KOSDAQ’s decline, mobile Internet stocks remain at substantially low prices. As the
following table shows, most mobile Internet stock prices increased after their IPO, some increasing by 30
to 500% at peak times.
26
2. Global Mobile Internet Market
Global mobile Internet market
2. Global mobile Internet market
2.1 Global market
Among the Computer Economics’list of top ten changes expected over the next five years, the expected
large increase in number of Internet users connecting through mobile terminal devices, such as PDAs and
cellular telephones, is considered the most significant change. According to the same study, around 25%
of the 350 million Internet users worldwide are expected to access Internet services through mobile
devices over the span of next five years. By 2004, more Internet users around the world, except in the US
and Africa, are expected to connect to online services through mobile devices in lieu of traditional wired
equipment.
Figure 26
Expected Internet and mobile data penetration per capita in 2005
Source: ARC Group (2000)
Another study by ARC Group forecasts the number of mobile Internet users worldwide to grow from 183
million in 2000 to 1,187 million in 2005. By then, the percentage of mobile Internet users out of the total
population in Western Europe, Japan, and the U.S. is expected to reach up to 91%, 90% and 83%,
respectively. The market growth prospective for the Asia/Pacific region (excluding Japan) is also
considered very high with the expected user penetration rate to improve from 1% in 2000 to 8% in 2005.
Figure 27
Worldwide mobile Internet users and penetration rate
Category
U.S.A
Users(mil.)
Penetration(%)
Japan
Users(mil.)
Asia/Pacific
Penetration(%)
Users(mil.)
WesternEurope
Penetration(%)
Users(mil.)
OtherCountries
Penetration(%)
Users(mil.)
Total
Penetration(%)
Users(mil.)
Penetration(%)
2000
2001
2002
2003
2004
2005
20
44
78
120
170
224
7
16
29
44
63
83
26
21
41
33
57
45
79
62
101
80
113
90
29
1
65
2
109
3
151
4
215
6
282
8
101
23
7
0
183
3
199
45
18
1
367
6
268
60
41
2
553
9
324
72
64
4
738
12
363
81
113
7
962
16
409
91
159
10
1,187
20
Source: ARC Group (2000)
28
The mobile Internet usage is likely to expand through cellular phones rather than PDA devices. The
global market size for cellular services is estimated at US$329 billion as of end of 2000. (Ovum 2000)
Figure 28
Global market size for cellular services in 2000
Total revenues(US$ mil.)
329,241
64,371
North America
22,580
South & Central America and the Caribbean
117,715
Western Europe
9,682
Central and Eastern Europe
Central Asia
30,988
Asia-Pacific
70,102
Middle East and Africa
13,803
Note: Estimated figures as of 2000 / Source: Cellular revenue forecasts, Ovum, (2000)
As the global market for cellular services (2G+3G) is entering the maturity stage on its life cycle, the
highly accelerated market growth in the past several years is expected to eventually level-off.
Nevertheless, Ovum (2000) predicts a constant growth rate in the years to come based on the market
expansion of mobile Internet and introduction of IMT-2000. The global cellular market size is forecasted
to increase from US$329 billion in 2000 to US$520 billion in 2002 and US$700 billion by 2004.
By major global regions, the Western Europe is emerging as the largest market for cellular services with
total market size of US$117 billion in 2000, which further expects to grow to US$183 billion by 2004. The
North American market follows the lead with US$52 billion market volume in 2000 to US$129 billion in
2004. Finally, the Asia/Pacific region’s current market of US$58 billion in 2000 is expected to double to
US$115 billion by 2004.
Figure 29
Forecasted global market size for cellular service
2000
2001
2002
2003
2004
329,241
426,770
519,828
615,899
700,760
64,371
22,580
77,800
34,017
92,243
49,011
111,503
62,566
129,359
73,318
117,715
145,563
163,590
174,581
183,192
9,682
15,740
22,316
30,630
38,604
Central Asia
30,988
49,405
70,114
91,330
107,439
Asia-Pacific
70,102
83,005
92,646
103,649
115,278
Middle East and Africa
13,803
21,240
29,908
41,640
53,570
Year
Total revenues(US$ mil.)
North America
South & Central Americas,Caribbean
Western Europe
Central and Eastern Europe
Source: Ovum (2000)
2.2 Northeast Asia: Japan and China
The service and technology gap in the mobile telecommunication market between Japan and Korea
ranges anywhere between 12 to 18 months with an evident pattern of Korean market to closely emulate
leading Japanese benchmark models in mobile Internet contents, pricing strategy, network standards and
terminal device specifications. Such a close pattern between the industries of the two neighboring
countries is significant as the impeccable success of NTT Docomo’s i-mode service is predicted to serve the
Korean mobile telecommunication market as an important benchmark.
Similarly, the Korean mobile telecommunication market also commands 24 to 28 month technology lead
over the emerging Chinese market. With strong technology base in CDMA, the Korean terminal device
and system suppliers are continuing to tap the fast growing Chinese market. The Korean
telecommunication technology companies are expected to place more emphasis on the Chinese market as
the number of mobile telecommunication subscribers in China already surpassed the total number of
subscribers in Japan during 2000 and the number continues to mound at a significant rate.
29
Figure 30
Number of cellular service subscribers in the Asia/Pacific region
Source: Gartner
Japan
The total number of cellular service subscribers in Japan is more than twice the number of subscribers in
Korea as the number of subscribers in Japan has swelled to anywhere between 55 to 60 million users by
the end of 2000, compared to 27 million in Korea. Evidently, the number of mobile Internet service users
using mobile phones in Japan is also estimated at twice the number of mobile Internet users in Korea,
with more than twice the value-added created from the mobile services in the country.
Figure 31
Mobile telecommunication subscribers in Japan
Source: NIKKEI COMMUNICATIONS (2000)
The number of mobile Internet service subscribers in Japan at the end of 2000 is tallied at 26,792,000, of
which 17,161,000 (64%) are i-mode subscribers.
30
Figure 32
Mobile Internet subscribers in Japan (as of end of 2000)
Service plan
Subscribers
Mobile service provider
ｉ-mode
17,161,000
NTT DoCoMo Group
Ezweb
5,168,900
J-sky
4,462,400
Total
26,792,300
Au Group (End of Nov. 2000:4,282,300)
Tu-Ka Group (End of Nov. 2000:886,600)
J-Phone Group
Source: TCA, Japan (2001)
As of the end of March 2001, merely two years from the first service launch in March 1999, NTT DoCoMo’
s
i-mode service recorded more than 20 million subscribers. This was a near four-fold increase in the
number of subscribers from a year ago. For the company’s initial target to attract ten million
subscriptions in three years, the current success of i-mode is considered an exemplary achievement even
by the telecom giant.
Figure 33
i-mode service evolvement
Source: Strategies Group
NTT DoCoMo’s i-mode service represents the success of mobile Internet service in Japan and is often cited
as the role model for other service providers around the globe. Experts are attributing the success of the
i-mode service to the following factors: NTT DoCoMo acting as a usage fee collection agency for contents
providers, selecting of HTML-based standards for timely content developments, lowered service fee with
a new price scheme based on the amount of data used and NTT DoCoMo’s stable market dominance.
31
China
The number of cellular phone subscribers in the Chinese market is estimated to have reached anywhere
between 75 to 80 million by the end of 2000. The Chinese cellular service market exceeded the market in
Japan in terms of market size in the latter half of 2000 and continues to exert an upward motion into
high growth stage. Despite the massive market size in China, the mobile Internet service using mobile
phones has not evolved into the same level of maturity in Japan as the first trial service is planned for the
end of 2001 with target commercial launch in the year that follows.
The new open market policy adopted by the Chinese government in the 1980s opened many doors for
the Chinese telecommunication industries. As a first step toward building internationally competitive
industries, the government lifted or eased numerous restrictions on importing foreign technologies and
products to help the local telecom companies to freely import technologies and equipment needed to
further develop their industry. Such a radical reform has resulted in the timely introduction of new
services to the local market and improvement of services and products in terms of both market volume
and product quality. Coming into the 90’s, the booming telecom industry in China fueled the growth of
the Chinese economy and per capita income, which in turn, generated larger demand for
communications services. The successful industry development created a productive cycle in which the
generated revenues are fed back into the industry as resources for further growth.
The industry responded to the huge increase in demand by appropriating larger investment resources in
building mobile telecommunication networks. In terms of investment amount, the total investment in
the industry increased by whooping 565% over the course of three years from US$3.27 billion in 1996 to
US$21.76 billion in 1999. The percentage of total investments appropriated for mobile communications
sector also jumped from 24.6% in 1996 to 46.67% in 1999.
Figure 34
Mobile telecommunication investments in China
Source: Xinhua News Agency (2000)
In the year 2000, the Chinese telecommunications market emerged as the second largest mobile
telecommunication market in the world, following the U.S., and replaced Japan as the most active
market in Asia. During the initial growth stage of the market in 1990 to 1996, the Chinese market was
undoubtedly the fastest growing market in the world at more than 4.5 times the annual cumulative
average growth rate of the combined world market for telecommunications products and services, and
consistently outperformed growth rate expectations each year. By October 2000, the total subscriber
base in China increased to 65 million to exceed the market size in Japan in terms of absolute number of
service subscribers.
32
Figure 35
Mobile telecommunication subscribers and switch capacity of China
Source: China’s Ministry of Information and Industry (MII)
The exponential growth rate of the Chinese telecommunications market is clearly evident in the
increasing subscriber base. From the inception of the telecommunications service in China in 1987, the
industry grew at an annual average growth rate of anywhere between 80 to 300%. The first 3,200
subscribers in 1987 exploded dramatically to over 43.24 million by the end of 1999.
As of June 2000, the 59.29 million subscriber base in China is divided into two major service providers:
China Mobile with 48.16 million (82.2%) and China Unicom with 11.13 million (18.8%). In terms of
technology standards used, around 92% of all services are provided on GSM and the rest occupied by
outdated analog services.
Figure 36
Service subscribers and market share by service providers in China
Service Providers
China Mobile
China Unicom
Total
End of 1999
June 2000
38.0
48.2
(88.0%)
(81.2%)
5.2
11.1
(12.9%)
(18.8%)
43.2
59.3
Subscriber (mil.)
Growth Rate(%)
10.1
26.6
0.6
113.6
16.1
37.1
Source: The MII
Currently, the China Unicom receives substantially more government subsidies than the China Mobile,
allowing them to provide services at 10% below the government-set price guideline. The government’s
effort to increase China Unicom’s market share has paid off as the company’s market share expanded
from 12% at the end of 1999 to 19% by the end of June 2000. Further expansion of China Unicom’s
market share is expected to result in heighten competition between the service providers to lower
consumer price and improve service quality.
Looking at the next decade, the Chinese mobile telecommunication market will not see the triple digit
growth seen in the past decade. However, the market is expected to continue to grow steadily at an
annual growth rate of around 20% to reach the 100 million mark in 2002, 200 million in 2005 and 300
million by 2010.
33
Figure 37
Forecasted number of mobile telecommunication subscribers in China
Year
2000
2002
2005
2010
Mobile communication subscribers(mil.)
73
130
240
330
Annual growth rate(%)
70
30
20
10
Source: CCIDNET (2000)
34
3. Overview of Korean
Telecommunication Market
Overview of Korean Telecommunication Market
3.Overview of Korean telecommunication market
3.1 Government policies and organizations
Introduction of competition
Until the mid-1980s, the general notion in Korea on providing telecommunication services to the public
was in the public domain controlled by the government, and hence the monopolistic supply structure was
strictly maintained within a protective wall of public and government policies. The governmentcontrolled market, however, tumbled within the new business environment under the provisions of
World Trade Organization. The Korean telecommunication industry faced radical changes in business
setting where constant pressure for adoption of open market policies, grant of new service licenses,
modification of regulations and mitigation of market restrictions was exerted from within and outside
the country. In essence, the deteriorated profitability and lackluster performance in technological
innovations within the monopolistic setting has eventually resulted in the government’s call for market
liberalization and privatization of government-owned enterprises.
Since the mid-1980s, the Korean government prepared its telecommunication industry for the eventual
opening of the domestic market to foreign competition through three major strategies: heightening of
market competition, privatizing government-owned companies and adopting new services. The changes
took place with a main objective to strengthen the competitiveness of the Korean telecommunication
industry by gradually introducing competition prior to full market entry by foreign competitors. The
market liberalization measures taken by the Korean government for its telecommunication market can
be summarized as follows:
1982 to 1990 Market Formation Stage. Established Korea Telecom mainly to separate business functions
from public policy setting functions of the government
1982
Decided to bring mild government-controlled competition into the data communications
market through adoption of oligopolistic market structure
1984
New business license was granted to establish second mobile service provider, KMT
1990 to 1996 Market Privatization Stage. Initiated the privatization of the state-owned Korea Telecom
1990
Introduced oligopolistic market structure to the international calling service market
1994
Privatized mobile telecommunications service providers and adopted oligopolistic market
structure (market entry by STI)
June 1996
Added competition through selecting three additional mobile telecommunication service
providers
1997
Introduced oligopolistic market structure to the domestic calling service market
1998
Added competition in the international calling service market
Governing bodies
The Korean government mainly intervenes in the telecommunication market through the promotion of
market competition, alleviation of market restrictions and establishment of policies on fair competition.
The major governing bodies that administer the adopted telecommunication policies include the Ministry
of Information and Communication (MIC), Korea Communications Commission (KCC), and Fair Trade
Commission.
The MIC is the main governing body with major responsibilities of proposing, adopting and administering
policies on every aspect of industry affairs. The ministry’s other major administration functions include
the approval and maintenance of new licenses for mobile telecommunication services. KCC carries out
independent reviews, investigations, and arbitrations on conflicts, service user protection, and
interconnections. The Fair Trade Commission is a general agency for promoting fair competition and is
responsible for overseeing illegal practices of service providers and renders strategic policy decisions and
judgments on various mergers and acquisitions issues based on the antitrust legislations. In 2000, the Fair
Trade Commission delivered the final decision on the merger of SK Telecom and Shinsegi Telecom(STI).
36
Depending on the facilities owned and the type of services provided, companies providing various
telecommunication services in Korea are classified into three major Service Provider categories, each
requiring different registration requirements as follows: Facility-based Service Providers with needed
government approval, Value-added Service Providers with notification requirement and Special Service
Providers with registration requirement. In order to provide a Facility-based Service in Korea, the
prospective candidate company meeting certain prerequisites must apply for a license over a certain time
period. The service provider is selected through careful review of business plans and the extent to which
the applicant is willing to contribute to the R&D funds. The Facility-based Service Providers must also
apply for separate licenses to operate in multiple business areas as a measure to restrict business
competition. However, such restrictions are not imposed on Value-added and Special Services Providers.
3.2 Major telecommunication services
Recent developments in the Korean telecommunication market can be summarized into rapid expansion
of cellular service and the growth of data communication services using the Internet. Generally, the
Korean telecommunication industry was largely divided into wired and mobile services. However, such a
clear distinction of provided services is expected to diminish in the future as Korea Telecom has recently
been awarded the IMT-2000 license. The following tables summarize the Korean telecommunications
market:
Figure 38
Market size and growth rate of major telecommunication services in Korea
Wired communication service
CAGR (%)
(2001-2005)
1999
(US$ mil.)
2000
(US$mil.)
2005
(US$mil.)
Local calling
2565.4
2658.1
2911.8
1.6
Long-distance calling
1111.5
949.8
720.4
-4.4
International calling
544.4
626.1
673.7
1.4
Leased line
864.8
968.1
1196.8
3.5
11.3
Provided service
125.4
746.1
1536.4
7598.0
9431.2
13550.0
4.3
458.7
75.7
5.3
-35.1
TRS
13.4
18.8
27.5
5.5
Mobile data
21.7
30.6
21.3
-7.2
Wireless communication
Mobile phone
service
Paging
Source: KISDI (2000)
Figure 39
Wired and wireless communication subscribers in Korea
Provided Service
Wired communication service
Local calling
Service provider
No. of subscribers
(As of Dec. 2000)
Korea Telecom
21,559,316
1.7
21,931,651
100
Korea Telecom
1,719,675
44.5
Hanaro Telecom
1,104,802
28.6
Thrunet
760,774
19.7
Dream Line
152,327
3.9
Dacom
91,423
2.4
SK Telecom
32,256
0.8
3,861,257
100
Total
Total
98.3
372,335
Hanaro Telecom
Market share
(%)
37
Provided service
wireless communication service
Mobile service
Service provider
No. of subscribers
(As of Dec. 2000)
10,934,852
40.8
KT Freetel
5,285,166
19.7
LG Telecom
3,947,903
14.7
SK Shinsegi
3,517,831
13.1
KT M.com
3,130,646
11.7
SK Telecom
26,816,398
100
372,133
65.5
Seoul Mobile Comm
85,858
15.1
Happy Telecom
19,657
3.4
Others
90,577
16
568,225
100
Total
Paging service
Market share
(%)
SK Telecom
Total
As can be seen in the tables above, the Korean telecommunication service market is dominated by the
local calling and mobile cellular services, in terms of revenue and the number of subscribers. The two
major services each represents the wired and mobile services offered in Korea.
s effort to introduce more competition into the market, the state-owned Korea
Despite the government’
Telecom still occupies dominant market position in the wired communications market. However, the
leading market position in the mobile service market is occupied by SK Telecom (with SK Shinsegi) with a
53% market share, which is higher than the Korea Telecom’s (KTF+KTM) market share in the emerging
market.
Figure 40
Local calling and mobile cellular service market share in Korea
38
3.3 Internet services
An increasing number of Koreans are going online over the past several years, bringing many important
changes in the way businesses are conducted and affecting general lifestyles of ordinary people. In terms
of the number of Internet users, network infrastructure and the market size of e-commerce in the
country, the Korean Internet industry ranks at the top in the world with many industrialized nations.
Internet users
As of Dec. 2000, there were 19.04 million Internet users in Korea (44.7% of total population over the age
of seven) and is expected to reach the 20 million mark in the first quarter of 2001. The number has
grown from about 3 million in 1998 to over 10 million in 1999, and 19 million in 2000. Over the last two
years, the total Internet population in Korea exploded at a six-fold increase.
Figure 41
Growth trend of Korean Internet user base: 1994~2000
Global Internet users
Rank
Country
1
U.S.A.
135700
2
Japan
26900
3
Germany
19100
4
U.K.
17900
5
China
15800
6
Canada
15200
7
Korea
14800
8
Italy
11600
9
Brazil
10600
10
France
9000
No. of Sub.(Unit: 1000)
Source: eTForecasts (2000)
The Internet domain written in characters represents actual Internet addresses (IP addresses) expressed in
s
numbers for better recognition by non-expert users. In analogy, IP address can be compared to a person’
social security number, whereas domain name could be the person’s actual name.
Any domain that ends with .kr is the national domain for Korea, which is registered and managed by the
Korea Network Information Center (KRNIC). The total number of.kr domains registered with KRNIC
increased from 207,023 in 1999 to 517,354 by Dec. 2000. The IP (Internet Protocol) addresses used in
Korea are regularly assigned by APNIC according to the status of previously assigned addresses in Korea.
Currently, Korean ISP’s are mostly assigned with C-class IP addresses. As of Dec. 2000, the country
possesses 18,921,984 IP addresses of which 73,914 are the C-class addresses.
The Internet Service Providers (ISP) are the business organizations that provide Internet access services to
individual and organizationals through leased lines or PPP/SHELL connections and register IP addresses
and domains with KRNIC. The number of ISPs in Korea increased from 25 in 1998 to 83 at the end of Dec.
2000.
Figure 42
Major Internet statistics in Korea : domains & IP addresses
2000
1998
Number of .kr domains
Number of IP addresses*(Unit: 1000)
Number of ISP
1999
1Q
2Q
3Q
4Q
26,166
207,023
359,892
470,544
501,534
517,354
8,174
10,402
12,237
14,334
16,301
18,922
25
54
57
70
77
83
Note: No. of IPs = No. of C-class addresses * 256 (No. of hosts that can be attached to a C-class address) / Source: KRNIC (2000)
39
The total number of broadband Internet subscribers in Korea was tallied at 3.87 million by the end of
2000. By major service providers, the Korea Telecom leads the pack of service providers with 1.73 million
subscribers, followed by Hanaro Telecom at 1.1 million, Thrunet at 0.76 million, and 0.41 million for
Dreamline, Dacom, Onse, and SK Telecom combined. In terms of connection method, 2.07 million
subscribers use ADSL, 1.38 million uses the cable TV network, and 0.53 million subscribers access Internet
through LAN built within apartment complexes. Recently, the LAN service in apartment complexes is
gaining popularity among Korean users as the service is provided at lower cost to the users using
inexpensive Korean-made equipment. From these figures, it is estimated that one out of every four
households in Korea are subscribed to a broadband service. When assuming the fact that most
subscribers are home users, approximately 28% of all Korean households use at least one of the several
broadband services offered. Further assuming that there are two or more users in each household, we
can safely conclude that more than 8 million, or about 40% of total 20 million Korean Internet users are
using the broadband services from home.
Figure 43
Major Internet statistics in Korea : broadband subscribers
ISP
No. of
Subscribers
Market
Share (%)
Korea Telecom
1,728,711
44.7
Hanaro Telecom
1,104,802
28.5
Thrunet
760,774
19.7
Dream Line
152,327
3.9
SKT
32,256
0.8
Dacom
91,328
2.4
3,870,198
100
Total
Source: MIC, 2000
Korean Internet industry
Recently, the Internet business in Korea is growing at a respectable rate as the gross revenue of the
Internet industry in 2000 was estimated at US$33 billion, which is expected to further expand to US$46
billion in 2001. Using a modified version of the e-commerce Research Center’s (University of Texas)
Internet Commerce Categorization method, Korean Internet businesses can be largely categorized into
three major industry categories: Internet Infrastructure, Internet Solutions, and Internet Services.
Internet infrastructure
Includes organizations in the business of forming industry infrastructure to facilitate the advancement
of individuals and corporations into the Internet business. Includes hardware, software and network
services.
∙Hardware: terminal device, network equipment
∙Software: system and Internet application software development
∙Network service: Internet backbone, Internet access,equipment operation/service
Internet solutions
Includes organizations that support Internet application operations of Internet companies in the form
of technical and business support services.
∙Technical solutions: system construction, security solution, e-commerce solution
∙Business solutions: Internet consulting, market research, online advertisement
40
Internet services
Includes actual Internet companies that provide existing or new products and services through the
Internet. Includes application services, contents provision, and e-commerce services.
∙Application Service: ASP, portal service, VoIP
∙Contents: Internet media, entertainment, professional information service
∙E-commerce: B2C/B2B, relay/commerce, Internet banking
The gross market output of the Korean Internet industry in 2000 was estimated at U$33 billion,
equivalent to 4.4% of combined gross revenue from mining & manufacturing, wholesale & retail, and
service industries and 30% of total output of the Korean IT industry. By specific industry sector, the
Internet Infrastructure industry pumped out more than 70% of the gross Internet industry output in
Korea.
The total industry output in 2001 is forecasted at US$46 billion based on the historical output from the
Korean Internet industry, which increased each year at an average annual growth rate of 51% during the
years between 1991 and 2001. More specifically, the annual growth rate during the period between
1999 and 2000 was estimated at 62%, which is expected to drop to about 41% in the years between 2000
and 2001. The estimated growth rate assimilates the forecasted growth rate of the Internet industry in
the US in 2000 at 58% as estimated by the e-commerce Research Institute at the University of Texas.
Figure 44
Internet market size in Korea
Figure 45
Korean market size by Internet industry category
41
4. Korean Mobile Communication Market
: Status and Industry Players
Korean mobile communication market: status and industry players
4. Korean mobile communication market: status and industry players
4.1 Overview of mobile subscribers
The number of mobile phone subscribers in Korea by the end of 2000 was recorded at 26.7 million, an
increase of about 3.4 million since 1999. Such a high growth achieved in 2000 came as a surprise since
initial forecasts estimated a dampened growth for the year due to market saturation and the 50%
combined market share limitation placed on SK Telecom and Shinsegi by the regulator as a condition
precedent for the two cellular service providers’merger. The unexpected growth performance came
mainly from the demand for new mobile Internet terminal devices and the realization of hidden demand
from the banning of purchaser subsidy for terminals by the government in early June. Other factors
affecting the market growth included the increased PCS service subscriptions as a result of the market
share limitation placed on the cellular service providers that forced SK Telecom to reduce marketing and
cancel delinquent subscriber accounts. The banning of purchaser subsidy for mobile phones that
temporarily resulted in the dampened market growth, however, is taken positively by the industry as a
landmark event to turnaround the service providers’long-term profitability.
In terms of the distribution of subscribers’age, the percentage of teenage subscribers increased
substantially from 1 to 3% in 1999 to 6 to 11%, while the percentage of subscribers in their 20’s have
somewhat declined. The figures indicate a dramatic increase in the number of young subscribers,
especially 19 and 20 years old, regardless of the polling methods and criteria used by the surveyor. This
reflects the fact that mobile communication is quickly transforming from a premium service to a general
service with teenager group as a new target market focused by the service providers. Another target
market for the eager service providers is in the new demand for mobile phones coming from parents who
want to remotely monitor their children. Currently, however, the demand for prepaid services is
comparatively lower than in other countries.
A notable change in the Korean mobile phone market is in the significant increase in the proportion of
female subscribers. Currently, over 40% of all KT Freetel and KT M.com and 30% of all SK Telecom
subscribers are women, forcing each service provider to reinforce marketing efforts targeted at women,
which includes the promotion of phone terminals designed specifically for women and advertisements
targeted at the emerging user group.
Figure 46
Number of subscribers for mobile communication by service providers
Source : Gartner, Dataquest (2000)
43
Figure 47
Forecasted subscriber distribution by service type
Source : Gartner, Dataquest (2000)
According to Dataquest, the number of Korean mobile communication subscribers is expected to grow at
an average annual rate of 4.2% to reach 34.6 million mark by 2004, of which 12.24 million will be
corporate subscribers and the rest filled by private users. The combined mobile communication service
revenue is expected to increase from U$7.15 billion in 1999 to U$10.68 billion in 2004.
4.2 3G service licensing
In the bidding for IMT-2000 business licenses in December 2000, the Korean Ministry of Information and
Communication (MIC) granted two licenses for WCDMA (Wideband Code Division Multiple Access) service
to SK Telecom’s SK IMT and Korea Telelcom’s KT IMT. As for the cdma2000 3x license, which the
government approved only one license, Hanaro Telecom bid as the sole applicant but failed to meet the
minimum requirements on some criteria. MIC has decided to hold a re-bid for the cdma2000 3x service
license. Despite the complications in the process of selecting a service provider, the license bidding was
recorded as the milestone event alerting the beginning of the country’s third-generation communication
service launch.
Among numerous issues surrounding the IMT-2000 service launch, three major issues related to
scheduling of service, selecting number of service providers and technical standards turned out to be
controversial. The main culprit for the continued conflicts on these issues, despite the fact that the
selection process was a government-led open bid, was that the government did not clearly state its
position in a timely manner, leading the public opinion toward the postponement of the service to a
later date. Unlike the lucid selection process for CDMA service years ago that pre-selected SK Telecom
and Korea Telecom as the two service providers to avoid any conflicts during the actual selection process,
there were lack of clear policies in place before the selection process began, causing a turmoil in selecting
the licensees for the most lucrative potential business in the history. In this chapter, these and other
important issues will be re-examined to assist the readers with better understanding of the business
mechanism of the Korean Telecommunications industry.
44
IMT-2000 service schedule
The initial IMT-2000 service schedule proposed by the MIC on July 27, 1999 was as follows:
∙June 2000: Determine the number of service providers and the selection scheme
∙Sept 2000: Announce service frequencies and begin accepting business license applications
∙Dec 2000: Select service providers and allocate frequencies
∙May 2002: Launch commercial service
The schedule was drawn up under the premise that the commercial service would begin during the World
Cup Soccer competition in late May 2002. The unrealistic goal, however, was pegged down by many
problems including the consideration for the time needed to develop and install necessary equipment,
network optimization and service stabilization.
The lack of government’s concrete guideline on selecting technology standard and the methodology on
eventual distribution of data frequencies to each selected service provider delayed the entire selection
process to leave insufficient time for the applicants to work on their business proposals. More time was
wasted during the debate on the auctioning method for selecting service provider. Initially, the
frequency auctioning method was seriously considered based on the prior success of 3G business license
auction in Europe’s 3G project and consideration for prior controversies that surrounded faulty PCS
service provider selection in Korea. The considered method was abandoned on the basis of several
potential problems, which included adverse public sentiment on auctioning of national resources,
lessened competitive strength of the telecommunication industry from excessive entry cost and potential
auction invalidation with the limitation of the maximum bid. At the end, the government selected a
compromised version of the method that combines the methodologies of conventional auctioning with
that of beauty contests, requiring prospective service providers to pay an endowment of 1.3 trillion won.
To negate any negative sentiment toward the new service that does not provide any distinctive services
in the short run, and which further requires a massive investment along with the current investment on
the 2.5 generation service, the profitability of the entire business must be carefully analyzed. In response
to such a concern, Korea Telecom has appealed a statement that calls for the service delay to allow the
new service providers with ample time to prepare a service that is distinguished from the current service.
As a response to Korea Telecom’s proposal, the MIC stepped down from its initial stance and indicated
that each service provider can determine the date of service commencement. However, the other service
provider, SK Telecom and an equipment supplier, LG Electronics, have taken reserved or negative stances,
reflecting their competitive advantage in the business. Although the proposed service delay may provide
additional time for the development of Korean-made equipment and solve the problems related to
redundant investments, it carries the potential for weakening global competitiveness of Korean service
providers and possibly strong opposition from equipment suppliers who have been developing network
equipment based on the existing schedule. A consensus from all parties involved in the business is
necessary to adjust the service launch date, including the prospective cdma2000 3x service providers.
Most realistically, however, the actual commercial launching of the service is expected to coincide with
the schedules of the first company to initiate the service. Accordingly, other service providers will be
persuaded by the market force to adjust their schedules.
Currently, the biggest obstacle faced by the WCDMA service providers is in the development of a new
network that must be interoperable with the existing network currently in use. Since the development
of a dual-mode terminal device that can simultaneously support WCDMA and CDMA would be very
difficult and terminal manufacturers are not willing to commit to the development of such a risky
product, the WCDMA service providers are placed with a serious disadvantage against their competitors
who will be providing services in cdma2000 3x.
45
Number of service providers
The ITU (International Telecommunications Union) has allotted a 60MHz frequency for Korea’
s IMT-2000
service. Generally, the minimum bandwidth required by a service provider to offer multimedia
communications service ranges from 15 to 20MHz. Other countries have assigned their allotted
bandwidth to their selected service providers based on the similar criteria. Japan, for instance, modified
their initial plan to split the total available bandwidth by 20MHz per service provider to 15MHz to follow
the footsteps of other countries, such as the U.S., U.K., Finland and Sweden, that selected 15MHz
bandwidth allocation to each of their providers. The U.K., however, has selected five providers, assigning
10MHz to three and 15MHz to two. Similarly, Germany has decided to go with 4 or 5 providers and
Finland locked-in with four. Unlike their predecessors, the Koreans initially opted for 3 to 4 providers,
considering the country’s relatively small geographical service area, concerns on redundant investments
and potential monopoly in case lesser number of providers is selected. At the end, the Korean IMT-2000
service adopted three service providers.
However, during the selection process, there was a nationwide debate on whether the number of
providers should be three or four as the issue was of a great concern for those preparing to acquire the
service rights, especially those newcomers into the telecommunication industry. If the government were
to grant the license to four companies, considering various circumstances, it was very probable that at
least one of them would go to a newcomer. The general expectation was that the government would
grant favorable consideration to Korea Telecom and SK Telecom, whose position in the industry was
uncontested. As such, other companies seeking to enter the market tended to support four service
providers to minimize entry barrier, although that would mean less market share for each provider.
Nonetheless, a general opinion supporting three-service provider scheme in Korea gained popularity as
the advocates of such a claim reasoned high-quality multimedia service and sound market competition in
the future are possible with lesser number of service providers. Given the expected demand and variety
of multimedia services to be offered, it is true that even a 20MHz bandwidth is not sufficient to provide
the kind of video streaming service depicted in the original service objective, and there is a serious
shortcomings with the number of subscribers that a base station could handle. According to the 1999
Research on IMT-2000 Frequency published by the sub-committee on IMT-2000 frequency of the Korea
Radio Wave Resource Utilization Consultation Committee, the Korean IMT-2000 frequency bandwidth
requirement exceeds ITU’
s recommended parameter by 20%. The large requirement is due to several
reasons including relatively high demand for medium and high-speed multimedia services, high call
attempts during busy hours, and long multimedia service durations during busy hours. These and other
research outcomes on data communication frequency render expectations that there will be a drastic
increase in demand for high-speed mobile service beginning on around 2005. The Korean
telecommunications authority has seriously considered the importance of securing sufficient bandwidth
from the early stage of service to implement practical data communication services as the expected
increase in high-speed data service demand will eventually exert pressures on the bandwidth resources.
Another reason for limiting the number of providers to three was that amid the restructuring of
telecommunications sector worldwide, including five existing mobile telecommunication companies in
Korea, a major concern for redundant investment and excessive competition surfaced, forcing Koreans to
adopt fewer service providers.
National standard
Originally, the IMT-2000 sought a common global standard for future telecommunications worldwide.
However, the detrimental differences in regional market characteristics and bases, and sharp conflicts of
interests between equipment suppliers and service providers forced the convention to abandon a global
standard and regional standards were allowed. Currently, IMT-2000 technology standards are divided
into four types according to the request of OHG (Operator Harmonization Group) as follows:
i) System configuration based on the existing synchronous network (where the MC-41 radio access
network technology is based on cdma2000 MC (Multi-carrier) and the core network is based on ANSI-41),
ii) System configuration based on the existing asynchronous network (where the DS-MAP wireless access
network technology is based on WCDMA and the core network is based on GSM-MAP),
iii) Synchronous wireless access network and asynchronous core network (where the MC-MAP wireless
access network technology is based on cdma2000 MC (Multi-carrier) and the core network is based on
GSM-MAP), and
iv) Asynchronous wireless access network and synchronous core network (where the DS-41 wireless access
network is based on WCDMA and the core network is based on ANSI-41).
46
Figure 48
System analysis on proposed standards
Category
MC-41
DS-MAP
DS-41
Global market trend
Potential markets with 2G systems
based on existing cdma2000.
Expected large markets centered
around Japan and Europe.
Potential markets with networks
based on existing ANSI-41
To some extent
To some extent
CDMA technology utilization
High
IPR Negotiation
Multiple selections would be advantageous in negotiations.
Service scalability
Restrictions on expansion to
systems over 3x
Minimal restriction
Minimal restriction
Implementation
Easy
Difficulties in
GSM-MAP development
Some overhead concerning
Hook and Extension
developments
Technology utilization
Restricted to synchronous
systems
Restricted to asynchronous
systems
DS-41 can be initially applied
and DS-MAP can be used later.
Technological competitiveness
Wireless access network:
Competitive
Core network:competitive
somewhat competitive
core network:oot competitive
somewhat competitive
core network:competitiv
Technological competitiveness
Competitive
Core network:competitive
Somewhat competitive
core Network:not competitive
Somewhat competitive
core network:competitive
Existing resource utilization
Excellent utilization of resources
on existing wireless access and
core network systems
None
Some utilization of resources
on core network
Development duration
Short
Long
Moderate modem technology is
the key to the wireless access
network, and a little overhead is
expected for hook & extension
Source: Korea’s radio Promotion Association (1999)
The various IMT-2000 standards can be grouped into two modes: WCDMA led by Europe and Japan, and
cdma2000 led by the U.S. Since over 70% of the global market is expected to adopt WCDMA as their
standard, the availability of contents and equipment based on the technology standard will be better
than the relatively small market for cdma2000. However, implementing WCDMA service in Korea brings
concerns on inevitable replacement of major network equipment and the possibility of market
dominance in the Korean domestic market by foreign equipment manufacturers with advanced
equipment and technology. Unlike the disadvantageous technology standard, the Korean companies are
well prepared for cdma2000 3x service and have accumulated more core technologies based on the less
popular standard.
Despite the difficulties in accurately measuring advantages and disadvantages of each option and the
overall impact on the industry, the government should have made the decision early enough to allow the
service providers and equipment suppliers ample time to plan their investments, so as to prevent any
fatal redundant investments. The equipment suppliers needed to consider future exports and required
various provisions for different standards, but the government’s indecisiveness made it difficult for them
and service providers to set investment priorities. Consequently, prospective participants faced problems
in maximizing their available investment resources and returns because most of them have had to focus
their development on cdma2000 3x service based on the CDMA of existing mobile service providers while
simultaneously developing their WCDMA service.
In the end, all organizations exhibiting interest in the IMT-2000 service, including consortiums led by LG,
SK and Korea Telecom, announced their choice as WCDMA service. However, the Korean government
could not ignore the effect on the international trade balance and Korean industry given the clear
advantages of the country’
s cdma2000 3x service. Despite disapproval from numerous organizations, the
government took the desperate measure of granting one out of the three licenses to a cdma2000 3x
service. In any case, unlike in the initial stages of the CDMA market, the Korean companies are faced
with the heavy burden of developing system and terminal device equipment in a short period of
available time as well as competing against dominant foreign players.
47
4.3 Mobile service market
Overview
In the Korean market, SK Telecom recently acquired the other cellular service provider, Shinsegi Telecom,
and KT Freetel has acquired a PCS service provider, Hansol M.com, which will each complete their full
merger into single entities within a few months. The newly formed SK-Shinsegi merger will create the
largest mobile telecommunications company in Korea followed by the new combined company of KT and
Hansol. LG Telecom is considered the weakest player of all in terms of the subscriber base and sales
volume, but not to underestimate its 3.9 million subscriber base, nationwide service coverage, new
revenue source from its strong mobile Internet service and the abolition of the purchaser subsidy for
terminals. However, since LG’s failure to participate in the new 3G business will undoubtedly weaken its
market presence in the long-term, the company is at a verge to make a critical decision to either take the
option of applying for the cdma2000 3x business bidding or abandoning its telecommunications business
altogether.
Figure 49
Current market share of Korean mobile communication service providers
Network
No. of Subscribers(‘000)
Market Share (%)
SK Telecom/SK Shinsegi
CDMA800
14,398
53.8
KT Freetel/KT M.com
CDMA1700
8,415
31.4
LG Telecom
CDMA1700
3,948
14.8
26,761
100.0
Total
Source : The MIC
Since the government’s announcement of IMT-2000 service license grant, among other changes, the
Korean companies are quick to establish alliances and collaborations with foreign partners in many areas
of business including co-investments. SK Group and Korea Telecom are already involved in active
negotiations respectively with NTT Docomo and Singtel. Aside from the IMT-2000 service, service
providers need large scale investments in existing networks. Unlike IS-95B, the IS-95C services need
hundreds of millions of dollars of investment for each provider to cover major cities. Furthermore, 3G
service appointees, SK and Korea Telecom, face immense financial responsibilities, including an
endowment of 1.3 trillion won (however, payable in installments), over US$1.6 billion in network
construction, and about US$5.8 billion over the next 6-7 years for operation and other expenses. The
Korean companies are actively seeking financial alliances and even selling their shares to foreign partners
to tap into the next-generation global market for their developing telecommunications technologies and
services and seek new business potentials through global partnerships.
These movements, along with the abolition of purchaser subsidy policy, resulted in a reduction of the
marketing departments of service providers and strengthening of their planning divisions responsible for
corporate M&As and business strategies. These overall examinations of corporate condition and profit
structure may be viewed positively in that a high rate of increase in new subscribers can no longer be
expected, and hence, new opportunities must be created out of the traditional profit model focused on
voice service. The Korean telecommunications industry can no longer afford to be excluded from the ongoing global telecommunications restructuring
Provided services
Korea’s mobile network and service is one of the most advanced in the world. In late 1999, Korea
started offering IS-95B service, which supports an actual service rate of 57 to 60 Kbps, and in October
2000, SK Telecom first commenced the IS-95C service.
However, regarding the commencement date for commercial service, there are several outstanding
issues, which must be scrutinized in the light of investment efficiency. Starting with SK Telecom in July
1999, every service providers, with the exception of Shinsegi Telecom, announced their commencement
of IS-95B service. However, no one was able to provide actual service until December. In addition to
many external problems, including system upgrades and delayed supply of IS-95B terminal devices
48
equipped with Qualcomm’
s MSM3000 chip, there were other problems related to the lack of distinctive
data service and billing. Also, since the IS-95B is not a completely new service and rather it assigns a part
of the voice channel to data transmission, the service had a problem of restricting traditional voice
service. Detrimentally, the service providers are faced with the dilemma of not being able to expand the
IS-95B service to match the rapidly increasing number of subscribers. Finally, since IS-95B is a modified
form of circuit-based packet data service, actual individual billing was very difficult, presenting a major
obstacle for full-scale mobile data service. Given these facts, the year 2000 can be regarded as the de
facto first year of the mobile Internet/data service.
SK Telecom was the first in the world to begin the IS-95C service starting in October 2000. The
investment for the service, which included comprehensive reconfiguration of the entire network at the
cost of US$700 to 900 million per service provider to cover major cities, began merely a year from the
point where investments in IS-95B was completed. Although the capacity problem was brought up as the
main reason for the early investment, such a major new investments at a point where existing
investments have not been fully recovered does not seem very prudent. Despite the speedy investment
efforts, more time is needed to secure system reliability, resolve the issues on lacking supply of IS-95C
terminal devices and billing issues, and develop contents that fully take advantages of IS-95C. With all
these pending issues, the actual service is likely to begin some time towards the second half of 2001.
KT Freetel and KT M.com use Microsoft’s ME (Mobile Explorer) and the rest of the providers use WAP as
their mobile Internet web browsers. Based on the number of wireless Internet-ready devices sold, the
market has more than 15 million mobile Internet users. However, the number of subscribers that
regularly use wireless Internet service is very limited, and the resulting revenue, aside from SMS revenue
(Short Message Service interconnected to the Internet gateway, which is different from traditional SMS
service), is miniscule. Because most wireless Internet services are text-based and their user interfaces are
inconvenient, the services fall far below user expectations. Other factors that impede market expansion
include difficulties in billing due to the circuit mode used that makes subscriber usage difficult to
tabulate, and the fact that there are no clear profit sharing and collaborative schemes between service
and content providers.
However, the wireless Internet market is expected to exhibit dramatic activities starting in the second half
of 2001 with the integral advent of IS-95C service. Also, introduction of new terminal devices with larger
color LCD, multimedia functions for easy wireless Internet use, various input devices, diverse contents and
billing solutions will play important roles in triggering the wireless Internet market.
Effects of IMT-2000 market on service providers
Until now, service providers held leading and unchallenged positions in all aspects of mobile
telecommunication businesses, including network operations, service development and customer
management. They have conducted customer relation affairs through their own offices or distributors,
and played the central role in proposing and providing services over the network. However,
developments in new technologies, along with changes in service contents and distribution methods,
have brought about a need to rearrange the roles and positions of various participants in the mobile
telecommunications market.
● Changes in current profit model
As shown in Fig.2, the mobile service providers currently derive the majority of their revenues from the
fixed monthly fee and per-minute voice communications charges collected from the users. However,
once 3G service begins, the charges on voice communication will be considered as one of several profit
elements, and data service will be established as an independent rather than additional feature to the
voice service. Although the voice service will remain as the largest revenue source for the service
providers, the multimedia service will gain increased usage and interest once the 3G service stabilizes and
begins providing diverse applications. As a result of the increased usage in multimedia service, the
overall call frequency and profit per call will increase as well. In response to the expanded service,
however, pressures on lowering service charge on voice service will gain its momentum as more people
begin to recognize mobile voice communication as simply another element or replacement of the basic
social infrastructure, such as regular phone service, and not a premium service as it has been recognized
thus far.
49
Figure 50
Revenue structure of mobile operators
Source : Dataquest
● Changes in operator’s roles
Until now, the planning and offering of mobile communication services remained solely in the premises
of the service providers, mainly due to the nature of switch-level service offering and the closed network
structure. The service providers have been very sensitive to keep their network closed to protect their
major asset and profit interests. Inevitably, such a unique business nature turned out to be the major
limitation as all business operations must dependently carried out around the network and other
business elements, such as the billing system and subscriber data must also be shared with the network.
In contrast, the next-generation mobile communication no longer emphasizes the quantity of services,
nor their mobility. Rather, it tries to appeal to users’individual interests and needs. The networks will
transform into open structures with different elements connected through IP switching, embrace the
infinite and open information sources on the Internet and actively accept numerous external services.
Service providers will remain as the core business participant centering the network, but the emphasis on
their major role will shift from the dominance in the current system to a facilitator role in a horizontal
cooperative network, filling as the liaison between content providers and subscribers. Consequently,
content developers will have opportunities to independently develop diverse applications, and users will
be able to choose from a wide variety of services.
4.4 Mobile terminal market
Overview
The Korean mobile terminal device industry went through an industry-wide correction in 2000 due to the
stockpiling inventories of service providers and problems related to parts procurement. The sales revenue
of the terminal manufacturer further declined in June of 2000 following the government’s
announcement that banned the purchaser subsidy on new terminal purchases. The market plunged with
average monthly device terminal sales falling from 1.8 million units in May to 400,000 units in June.
Shortly after the ill-fated government announcement, the monthly sales bounced back to a million units
with PCS providers recognizing the market share limitation placed on SK Telecom and Shinsegi Telecom
as an opportunity, and strengthened their new sales through terminal replacements and promotional
sales. The sales level, however, has not fully recovered from the level in 1999 as claims were made by the
Fair Trade Commission. A significant recovery was made in the fourth quarter of 2000 with the total
output of 14 million units based on the factory output quantity during the entire year.
50
Figure 51
Estimated domestic terminal device output in 2000 (in 10,000 units)
Samsung
LG
Motorola
Hyundai
Other
Total
1Q
217.4
124.8
50.1
33
78.8
504.1
2Q
191.2
86.7
17.6
24.9
85.5
405.9
3Q
84
35.6
11
14.4
28.4
173.4
4Q
135.2
79.2
36.5
14.2
67.1
332.2
Total
627.8
326.3
115.2
86.5
259.8
1415.6
Market Share
44%
23%
8%
6%
18%
100%
Source: Manufacturers
Although Samsung maintains its position as the market leader, LG was first to the wireless Internet
market with its release of new products equipped with web browsers. LG aggressively went after market
share early last year by releasing new models such as the MP3 phone at lowered price, and shifted to
wireless Internet terminals in the second half of the year. Motorola, on the other hand, has had
difficulties retaining its market share due to delays in releasing new models. However, their new V-series
released in the second half of the year with enhanced design and functions has been helping Motorola to
rise again. Hyundai, despite its aggressive advertising and marketing efforts with new products, could
not achieve more than 6% market share.
Of other manufacturers, SK Teletec, a joint venture between SK Telecom and Japan’s Kyocera, has a
conspicuous market share of about 5%. Due to its unique relationship to SK Telecom, however, the
company faces the problems related to limited market exposure. Nevertheless, an increasing number of
service providers have been collaborating with device manufacturers from the early product planning
stage in order to facilitate specialized services and functions and secure the constant supply of high
quality terminals.
Telson, once a major OEM supplier to Motorola, has joined with Nokia in an attempt to transform its
corporate identity as a world-class manufacturer. Sewon has acquired Maxon Electronics after much
difficulty and has begun to emphasize its GSM terminal device business. Generally, small and mediumsized companies are coming to recognize the limited market size of the CDMA market and turning to
GSM devices for further expansion. However, their production is mostly geared towards OEM or low-tier
products as difficulties in effective market penetration is foreseen.
Another important issue, which has not surfaced yet, relates to the foreign manufacturers’eventual
entry into the Korean market. Some foreign makers such as Sony and Sanyo invested operations in Korea
without much avail. However, top-notch players in the industry, Nokia and Ericsson, have been preparing
extensively to enter the Korean market and are expected to stir the market once they make the predicted
entry. Although their initial impact on the market will not be great due to limited product offerings and
lack of consumer recognition, their global competitiveness in product quality, design and marketing
capabilities will eventually place them as significant market players. Unlike in the current CDMA market
in Korea, the market competition between the domestic and foreign manufacturers in the thirdgeneration terminal device market is expected to be fierce as the foreign manufacturers are armed with
superior technologies and applications in the area against their Korean counterparts. As an exception,
Ericsson has recently announced its plan to discontinue its terminal manufacturing operations, making its
Korean debut uncertain. Finally, although not prominent in the current market, the Japanese companies
leading the WCDMA market must be noted. With geographical proximity, advanced design and
technology, and marketing capabilities, their attempts to penetrate the Korean market will be a large
deviation factor.
Unlike the stagnant domestic market, the export by Korean manufacturers exploded at an accelerating
rate, beginning with a mere US$450 million in 1996 to US$850 million in 1997, US$1.43 billion in 1998,
and US$3.65 billion in 1999. The large growth continues through 2000 with estimated year-on-year
growth rate of 50.5% from 1999.
The rapid growth in exports comes mostly from the new and expanding CDMA markets in Central/South
America and Australia, increased GSM sales by new participants, and aggressive marketing activities of
existing manufacturers. Nokia’s TMC factory and OEM export to Motorola were also significant
contributing factors. Nokia ranked first in revenue among foreign companies in Korea. However,
51
despite China’s rapid market expansion, Korea’s mobile terminal device export to China was dormant
due to problems caused by over 30% of exports being routed through Hong Kong and the Chinese
government’s ban on Korean mobile telephones in retaliation for the garlic trade conflict early last
summer.
Figure 52
Monthly export of Korean mobile communication terminals in 2000
Source : Korean International Trade Association
The exports to the U.S. and Hong Kong accounted for 52% of total output from the country in 1999, and
the relatively large proportion of export concentration to the two countries remain high in 2000. The
Korean manufacturers must diversify its export markets to free itself from such high dependence on
specific markets.
Mobile data service and terminal device
Beginning in 2000, the mobile Internet commonly emerged as the most talked-about topic among
telecommunications companies around the globe. Korea was no exception and the year 2000 marks the
actual first year of mobile Internet service launch in the country, given the balance of supply and demand
for the service and terminal devices. In addition, SK Telecom is expected to drive up the current IS-95C
service, which commenced in October 2000, to a full-fledged mobile Internet service by the second half of
2001, providing a solid foundation for practical and worthwhile data services.
The growing mobile Internet market has brought several changes to the terminal device market. During
the operating year in 2000, around 47 to 48% of all terminal devices manufactured in Korea were mobile
Internet-ready devices, which equates into about 7 million units. LG Electronics, the second largest
terminal manufacturer in Korea, ranked as the number one manufacturer of Internet-ready terminals
with 2.6 million units, followed by Samsung with 1.85 million units.
One of several changes took place within the telecommunications industry includes the product
evolvement of semiconductor chips for the terminal devices. On a perspective, the development of
CDMA services over the course of its service life is closely interconnected with the roadmap of
Qualcomm’s CPU developments. For instance, the IS-95B service requires terminals equipped with
Qualcomm’s MSM3000 chip, and IS-95C requires MSM5000 or higher. Detrimentally, the product releases
of new terminals are highly dependent on Qualcomm’s timely chip supply, not to mention the provision
of a significant portion of the manufacturers’revenue as royalty payments to Qualcomm. In response to
Qualcomm’s market dominance in core technologies, several manufacturers began to turn to other
compatible chips, or as in Samsung’s case, design their own proprietary chips. For example, Samsung
released an IS-95C terminal based on its own chip as a part of the company’s strategic move to cope with
Qualcomm’s belated supply of MSM5000 chip. However, because of Qualcomm’s distinctive advantages
52
in core technology, timely product and application support, and price advantage, Qualcomm’s market
control is not likely to be seriously affected. Another important change taking place within the industry
includes the prominent changes in product design. Last year, LG Electronics led the mobile Internet
device market with new product concept that employs large LCD screens and modified fonts to display as
much information as possible on a single screen. Starting on or about the second quarter of this year,
manufacturers are expected to release devices with color LCD screens. Currently, Shinsegi is marketing
the only color LCD model, which is supplied from Sanyo on an OEM basis. Because of its diverse display
capabilities, the adoption of color LCD is expected to be the hottest issue in the market this year.
The large demand for terminal products in Korea is expected to revive in the months to come as new
product releases are planned for the soon to-be booming mobile Internet service market. However,
there remain a few anticipated obstacles in the way, with the product pricing as the most important
issue. Devices equipped with a camera or color LCD are expected to cost more than US$500 to US$600 at
this stage. Along with the banned purchaser subsidy from service providers, the pricing issue will be a
major concern. Unless the manufacturers slash prices as a part of a predatory practice, matching the
historical pricing without the subsidy in place would not be practical for most of the manufacturers.
IMT-2000 market preparation and forecast
Although voice service will continue to remain as the mainstream service, the proportion of non-voice or
data communication service based on the mobile Internet will substantially increase. As stated earlier,
the Korean manufacturers, along with their Japanese counterparts, was the first in the world to
introduce high-speed data communication terminal devices to their respective markets. The advanced
terminals support 2.5th generation IS-95B service and leads the mobile Internet market. However, the
market is still insignificant since services provided are still text-based with lack of support for color and
graphics. The IS-95C full packet data service will take off at the end of this year with market introduction
of terminal devices equipped with cameras and color LCD.
A consortium led by the Korea Electronics and Telecommunications Research Institute is currently
developing the general technical implementation of IMT-2000 terminal devices with individual companies
also investing significantly. Although Samsung and LG have introduced prototypes for cdma2000 3x and
W-DMA devices, it seems that actual commercial products will not be out in the market any time soon.
For W-DMA service providers, the government requires their service to be compatible with existing
services. In reality, the system compatibility between the two standards is difficult as no manufacturer
has yet to show any interest in developing dual-mode terminal devices that support both services. If this
condition is strictly enforced, there is a good possibility that the commencement date for the entire
service will be delayed for a considerable amount of time.
Types and functions of IMT-2000 terminal devices
As briefly mentioned above, there will be important changes in future for terminal devices in terms of
product design and function. Various types of devices that will be available can be largely categorized
into two types; ones that focus on voice communication and those that emphasize visual aspects. At any
rate, products will be diversified according to the characteristics of developers and the purpose of use.
Because the market will be large enough to adopt various products, many new attempts at product
innovations are expected.
The three major types of developers and manufacturers of the various terminal devices are PDA
manufacturers, mobile terminal device manufacturers, and joint ventures of the first two. Recently,
Korean venture companies and PDA manufacturers have been introducing new products with mobile
communications modules that provide extended and integrated functions aside from the traditional
voice functions, such as optical disks, small printers, card readers, POS (point-of-sales), etc. Along with
active developments in mobile computing solutions fitted with the new hardware, the future for IMT2000 looks prospective. The mobile terminal device manufacturers are also seriously considering
developing the products with their own resources or through alliances with PDA manufacturers.
Samsung and LG hold advantages in the market with vast prior experiences in marketing Smart Phones
and potential synergies from their already strong home appliance business.
In terms of product design and function, IMT-2000 terminal devices are being developed based on
current mobile Internet devices. Following are some of major changes expected in future products:
53
Enlargement of display screen size. Although the size of LCD screens on many new terminals have
significantly enlarged to fit more information on a single screen, it is still within the range of traditional
devices and is still inadequate for efficient data input, application usage, Internet surfing, and other
multimedia services. However, enlarging the LCD screen poses other problems as the size and weight of
the devices must inevitably be increased. In addition, software implementation and power supply
problems become more complicated as more data is displayed. Currently, most of users are generally
contempt with current device size, weight, and battery duration. Nonetheless, subscriber expectation and
usage of mobile Internet and multimedia services will quickly expand, and with rapid technological
developments, various types of devices shall appear in the near future.
Adoption of color LCD screens. Current devices, which only display text, were bound to have limitations
in providing mobile Internet services. Despite the immediate needs for color LCD screens, actual
commercialization of products employing color screens has been delayed due to several technical
problems, including those related to power supply, screen resolution and product cost. However, thanks
to many developments in efficient low-power chips, organic LCD screens and initial success of color
display devices in Japan, it became only the matter of short time to resolve these problems to introduce
color display devices in Korea. As a matter of fact, Samsung and LG have already completed
developments in TFT-LCD for terminal devices, which will be released at the end of 2001.
Increased demand for innovative input devices. With improvements in user interface for various
data/schedule management and Internet/multimedia services, the demand for easier and faster input
methods is increasing. While changing the size or layout of the traditional keypad is limited by
portability requirement, other alternative input schemes, such as touch-screen, portable keyboard, and
voice recognition, are being actively implemented. For input of Hangul (Korean characters), terminal
manufacturers are scrutinizing the use of different keypad layouts.
Advent of Smartphones. Considering the limitations imposed by weight and portability requirements,
Smartphones currently available in the market are not considered a viable replacement for existing voice
terminal devices in the short-run, despite its potential for quick market expansion in the future. For
instance, Samsung and LG have already released models targeted mainly at export markets, which still
remains in their product infancy. Nevertheless, the Korean terminal manufacturers continue to develop
various product offerings, either through their own research resources, as in the case of Samsung or LG,
or forming alliances with other PDA manufacturers.
The mobile terminals for multimedia and Internet data communications require various functions that
are integrated into a single product package. Hence, large electronics companies, including Samsung and
LG, possess comparative advantages in the manufacturing of these integrated terminal devices, backed
by their years of experience in consumer and home appliance manufacturing, extensive manufacturing
facilities, ample financial resources and capable manpower. Evidently, small and medium-sized
manufacturers in Korea are up against a tough competition without a target market, focused product
concept, and efforts to specialize in a certain market niche.
4.5 Infrastructure market
Overview
The Korean suppliers that manufactures mobile communications equipment and system can be divided
into total solutions providers that offer a complete system, including switches (e.g. Samsung and LG), and
sub-system suppliers, which mainly manufactures repeaters and base stations. Since the construction of a
nationwide network that covers the entire country is already completed, the current revenue source for
the manufacturers comes mostly from expansions and upgrades of existing equipment, rather than new
orders. Unlike the upgrade to IS-95B system, which cost only about U$4.2 million per service provider,
the new orders for IS-95C upgrades that began last year require an extensive overhaul of network,
costing up to several millions of dollars in investment by each service provider. The new revenue stream
is expected to restore vitality into the mobile communications equipment and systems market.
However, the biggest market expectation still lies with the upcoming IMT-2000 market, with more than
U$1.7 billion encumbered for facilities investment by each service provider along with related consulting
54
and other miscellaneous costs, forming a gigantic market. However, a major question remains to be
answered for the Korean corporations’relative stance in the competitive market setting with strong
foreign competition expected. Thus far, all prospective 3G service providers have indicated in their
proposals to MIC their commitment to adopt Korean-made equipment. In actuality, the service providers
currently prefer domestic equipment over their foreign equivalents for the reasons of convenient
maintenance and viable system upgrade. To penetrate the Korean market in the early stage of market
entry, the foreign competitors are likely to localize their operations through alliances with Korean
companies that are particularly strong in their home market. As for the export by the Korean companies,
the entire nation’s total export output in 2000 was little more than U$120 million, a disappointing
performance by the self-claimed global leader of CDMA. For the latter half of this year and years
following, the Korean manufacturers, especially Samsung, are looking forward to enter the opening
Chinese market, where CDMA is currently being considered as the technology standard for their nextgeneration service.
Figure 53
IMT-2000 market outlook in Korea (Dec. 2000)
Category
2nd Gen.(CDMA)
3rd Gen.(IMT-2000)
2001
2002
2003
2004
2005
23,831
24,031
24,216
24,337
24,410
System(US$ mil.)
5,190
5,814
6,395
6,907
7,321
Terminal Device
3,866
4,601
5,382
6,190
7,119
No. of Subscribers(1,000)
-
643
729
1,604
3,868
System(US$ mil.)
-
244
428
735
4,090
Terminal Device
-
623
1,093
1,486
4,349
No. of Subscribers(1,000)
Source: Korea’s Electronics and Telecommunications Research Institute(ETRI)
Let’s take a closer look at the two Korean forerunners of the mobile communications industry: LG
Telecom and Samsung Electronics.
LG Telecom
Year 2000 was recorded as the worst year for LG Information & Communications (LGIC) with the failure
of its attempted acquisition of Maxon Electronics and the merger with LG Electronics. Most
devastatingly, the entire LG group of companies was excluded from the participation in the upcoming
IMT-2000 as a service provider as the group detrimentally failed to attain a WCDMA license, a solid source
of revenue. At any rate, LG has set two business objectives for this year in an effort to overcome its
expected disadvantages for a failed bidder. The first is to maximize profit by strengthening their
overseas businesses, including proactive involvement in the developing markets that are showing
interests in CDMA, namely China, Taiwan and Indonesia. The other grandiose plan includes the
company’s ambition to become the first mover in the market for IMT-2000 equipment and systems. As a
first move, LG held a product showcase in 1999 to first introduce its completed cdma2000 3x and WCDMA
systems to the market. While other manufacturers focused on the development of cdma2000 3x systems
on a national project basis and working on a similar schedule, LG focused on WCDMA systems. These
efforts enabled LG to be competitive in the WCDMA market and attempted to reinforce their market
leading position through a comprehensive alliance with Ericsson, a global leader in wireless systems. The
distinctive advantage of LG in the WCDMA market provided the company with a firm ground to object to
the proposed service delays by the competitors.
Strengths
Weaknesses
Opportunities
∙Long experience with wired ∙Relatively weak in turn-key ∙Recognized as a strong
CDMA company
solutions
networks
∙Early WCDMA preparation
∙Lack of experience in the
∙Successful foundation in
than other Korean suppliers
global mobile communithe CDMA market
cation market
∙Competitive digital switch
∙Relatively weak project
manufacturing capability
financing capability compared
to foreign companies
Threats
∙Relies largely on LG Telecom
for revenue
∙Needs to improve application
development and timely offering
of additional functions
55
Samsung Electronics
Samsung leads the existing CDMA market and the export markets with sales of U$90 million worth of
CDMA systems to Shanghai in China and the installation of a CDMA network for Australia’s Hutchison.
For investments on IMT-2000, Samsung commenced the project in 1997, and in October 1999, it was the
first in the industry to announce the successful development of a product line that includes a cdma2000
3x base station, switching equipment, data terminal device, video mobile phone, and core chips.
Samsung was also selected by Sprint, the largest PCS provider in the U.S., as their main supplier of IMT2000 test equipment. As Samsung was faced to the service provider’s preference for the WCDMA service,
the company has relocated many of its cdma2000 3x research staff to the WCDMA division. The service
providers’ recent movements in delay of the 3G service launch gives Samsung enough time to perpare for
the business.
Strengths
Weaknesses
∙Long experience with wired ∙ Lack of experience with
turn-key solution provision
networks
∙Successful foundation in the ∙ Lack of experience in the
global wirless infrastructure
CDMA market
systemmarket
∙ World-renowned CDMA
terminal device manufacturing company
Opportunities
∙ Recognized as a strong
CDMA company
∙Active overseas advancement
and experience among
Koreancompanies
Threats
∙Heated Competition
∙Needs to improve application
development and timely offering
of additional functions
IMT-2000 and market outlook
The IMT-2000 network must connect through one or more wireless routes to a wide variety of services
provided by numerous communications networks, including fixed networks and the Internet. The
services to be provided through the new system must provide a wide range of new and innovative
services, which were not offered in the existing system setup. Some of major features of IMT-2000
systems are as follows:
- Provides multimedia services in circuit and packet mode
- Globalized services
(device mobility, user mobility, service mobility, etc.)
- Globally common system design
- Service compatibility with fixed networks
- High-quality audio, data and video services comparable to fixed networks
- Adapt to various system operating environments including during transitions from high-speed to lowspeed and from outdoors to indoors.
Innovations in many aspects of network structuring is expected in the new IMT-2000 system to satisfy the
general expectation for its technological superiority over the current network capabilities to provide new
and enhanced functions that are not available in the current systems. The current networks are
configured with base and control stations subordinately attached to the central mobile switching system.
The new system, in contrast, will be built as a lateral system in which the configuration of flexible and
active networking is possible through various network elements horizontally attached to the central
Internet Protocol (IP) switching system. Furthermore, a new networking model with ATMs attached to
the IP network will be utilized to increase processing speed and enhance network stability. The switching
systems will also evolve into more open and software-based systems by active implementations of
innovative solutions, such as modular and SDR (Software Define Radio) systems, to enhance network
efficiency and flexibility.
An accurate market forecast for overall mobile systems market size is fairly difficult to estimate with
many uncertainties still looming around the industry. For instance, the delay for WCDMA service seems
unavoidable at this point of time, detrimentally affecting the operations of many service providers and
equipment suppliers who have invested heavily based on the original service schedule. As for the nation
as a whole, the delay will fatally affect Koreans’relative first mover advantages expected with early
launch of the largely awaited service.
56
Figure 54
System evolvement of current network
Source : Gartner
Considering the fierce competition and small geographic area to cover, the prospective 3G service
providers currently have aggressive plans to complete their nationwide network coverage within 2 to 3
years from the initial investment. The aggressive investment strategy, however, will impose a serious
financial burden on each service provider, given the investment efficiencies from the current network in
place. The service providers must devise flexible planning schemes to flawlessly migrate into 3G service
and network. From the system supplier’s perspective, a large portion of investment must be made in the
initial stage regardless of service provider scenarios as market success in the later stage depends largely
on the first mover advantage secured in the initial market entry.
4.6 Mobile data services
The foundation for Korea’s m-commerce was laid by the service providers’commencement of mobile
Internet service in the second half of 1999. Since the first service began in May 1999, the number of
Korean mobile Internet service subscribers has swelled to 15.78 million users (including about 6.96 million
ISMS users) by December 2000, based on the number of terminal devices sold. The service subscriptions
were divided into WAP/ME with 13 million subscribers (87%), and SMS service attracted 2 million
subscribers (13%) over the same period.
57
Figure 55
Mobile Internet service user of Korean mobile service providers
December 2000
Category
SKT
SKI
KTF
KTM
LGT
Total
Subscribers
(thousand users)
ISMS
1,955
WAP/ME
2,857
Sub Total
4,812
ISMS
Market share(%)
30.5
-
WAP/ME
735
Sub Total
735
ISMS
2,433
WAP/ME
2,280
Sub Total
4,713
ISMS
1,098
WAP/ME
1,043
Sub Total
2,141
ISMS
1,479
WAP/ME
1,906
Sub Total
3,385
ISMS
6,965
4.7
29.9
13.6
21.4
WAP/ME
8,820
100
Sub Total
15,785
15,785
Type of
Mobile gateway
WAP
(Ericsson)
WAP
(Phone.com)
ME
(Microsoft)
ME
(Microsoft)
WAP
(Phone.com)
Mark-up
language
Voice call fee / Data call fee
WML
1.8/17
HDML
1.8/16
M-HTML
1.5/17
M-HTML
1.5/16
HDML
1.6/16
(¢/10 sec)
Source: The MIC
All Korean mobile carriers provide mobile portal services, and the average number of partnered contents
providers (CP) per service provider has increased consistently to about 200 as of the end of December
2000. Of the total number of CP’s, 20.9% charges a user fee on their services, which amounted to
approximately US$11.5 million of cumulative revenue.
Figure 50
Average number of mobile Internet CP’s partnered with mobile operators
Source: The MIC
58
The most popular contents for mobile phone subscribers include game /broadcasting/sports/entertainment
(35.7%), followed by e-mail (33.0%), news/stock quote/weather/community information (16.3%), and food
guide/search/transfer (6.3%). The most frequently visited homepages include news/weather/sports
(26.7%), followed by e-mail (23.7%), entertainment (14.7%), banking/stock/exchange rate (7.3%), and
hobby/leisure (7.3%).
Figure 57
Most frequently used wireless Internet services
Source: ETRI
In spite of the large number of wireless Internet terminal devices already delivered to the market, the
end-users are still not fully utilizing the service as an average user uses mobile Internet services for about
10 minutes a day (KISDI). As of the end of 2000, the combined wireless Internet service revenue of all five
service providers in the year 2000 was disappointingly poor at US$65 million, or merely 1% of total voice
call revenue of US$6.4 billion. Considering that there are over 16 million users with wireless Internetready terminals, such a poor sales performance represents immaturity of the market. From the service
perspective, although mobile financial services usage that includes securities transaction and Internet
banking is increasing, the current service remains at a primitive level with limited B2C services offered,
such as phone bell downloads and simple games. Nevertheless, the market condition is deemed to have
improved beginning in 2001 with increased investments in the development of non-voice Internet data
communication by the service providers, desperately searching for alternative revenue sources. The nonvoice services are expected to slowly replace the waning voice services.
Figure 58
Mobile Internet market cycle in Korea
Introduction stage(1999-2000)
Growth stage(2001-2003)
Maturity stage(2004-2005)
Revenue
Minimal
Increasing
Slow
Sales profit
Loss
Maximum
Decreasing
Consumer
TypeUsers preferring new products Pioneer users
Majority
Competition
Limited
Increasing
Maximum
Price competitiveness
Low
Increasing
Maximum
Product quality
Basic service
Improved service
Expanded service
Advertisement spending
High
Decreasing
Minimal
Promotional factor
Service recognition
Service selection
Brand recognition
Source: iPACIFIC partners
59
On its product life cycle, the Korean mobile Internet industry entered the growth stage following its
introduction stage in 1999 to 2000. The Korean market is anticipated to become profitable during this
stage based on resolved issues related to the activation of IS-95C (144~384Kbps) packet-based services
and HDR (High-speed Data Rage, 2.4Mbps) along with successful implementation of Java technology and
stable billing systems for mobile Internet contents services.
The Korean wireless Internet service market is expected to initiate its major activities beginning on 2001,
inspired by developments in core and primary technologies, active investments, and addition of Internet
banking and securities transaction services on mobile devices. Other major factors will include the
introduction of Java-based services, m-CRM, and m-commerce enablers.
In the personal information services sector, the appearance of abundant Java-based contents, games and
advertisements will invigorate the market, and more orders for reservations and small purchases are
expected to be placed using mobile phones. As for the business information service sector, PDA devices
will be the major terminal equipment for the corporate services, such as mobile office, and mobile
handset devices are expected to be the major tools for the mobile CRM market. Along with the
advancements in wireless Internet services, the mobile Internet software infrastructure market is also
expected to grow at a similar rate. Notably, mobile agency, mobile advertising enablers, and mcommerce enablers will receive major attention.
4.7 Summary
The Korean mobile communications market is at another crossroad. In terms of network infrastructure,
major telecommunications companies in Korea are disbursing large investments related to the
technology transition from the current circuit network to packet network. From the service perspective,
vast investments are spent on developing non-voice services. Active and frequent corporate transactions,
such as SK Telecom’s acquisition of Shinsegi and KT Freetel’s acquisition of Hansol M.com, became
mundane activities within the industry. Since the Korean government’s selection of qualified IMT-2000
service providers was officially announced, there have been many calls for a industry-wide restructuring
that includes all wired and wireless communications companies. Debates among different opinion
groups are persisting on many issues related to the recent controversies surrounding the selection process
for service providers’business rights and redefining the future of the gigantic industry. The
government’s protectionist policies on the industry will eventually cease to exist and the industry must
look for ways to survive on its own in the competitive global business settings. The companies in the
industry must cope with fierce foreign competition through active financial and business maneuvers
aimed at business alliances and resource sharing.
The key success factor is in the type and method of services to be offered based on the new technology
standard, rather than the technological finesse of the IMT-2000. A lack of support from any of the
market constituents, whether it is the service providers, terminal device manufacturers or system
suppliers, the realization of the successful service market would be difficult, if not impossible. In these
regards, the 3G service, which is planned to commence in time for the 2002 World Cup, is bound to be
severely restricted. In particular, if the government upholds its policy requiring WCDMA services to be
compatible with existing CDMA networks, there is a possibility that the service might be delayed to 2004
or later.
The m-commerce market, which will be created by combining the Internet and mobile communication,
will ultimately bring every corporation many opportunities as well as changes and challenges. The service
providers are expected to take majority of their mobile communications services and transform them into
Internet-based services. Each service providers will also focus on securing as many high-quality content
providers as possible and encourage them to develop contents based on their service platform through
offering of development tools for both the developers and general users. Eventually, the service
providers will increasingly rely on the contents developers to secure the supply of high-quality contents
and minimize their own efforts in development as they have been in the past.
Unlike in the CDMA market, IMT-2000 terminal device manufacturers will have to compete with foreign
companies with advanced products and technologies. They must quickly find ways to develop
applications for the integrated devices and maintain the lead in the domestic Korean market.
60
The market analysis and forecast in a rapidly changing technology and market environment is
undoubtedly a difficult task as relying on a premature prediction of the future market based on a single
success in the current market or a product is deemed too risky. More efforts to carefully analyze the
general market trend and to scrutinize the historical implications of the technology and market trend are
essential. The overall effect and implication of the IMT-2000 on the market and the entire national
economy is nevertheless, tremendous. It is obvious to expect those who prepare in advance to maximize
their market value and take the initiative in the market as unchallenged industry leader.
61
5. Valuation of Korean
Mobile Companies
Valuation of Korean mobile companies
5.Valuation of Korean mobile companies
5.1 Listed companies : major operators and manufactureres
(1) SK Telecom (17670.KS/1767 KS)
- SK Telecom (SKT) is the largest mobile operator in Korea with 14.1 mn cellular subscribers.
- The company is slowly losing its earnings momentum on the back of slower subscriber growth and rising
cost.
- Given limited mobile subscriber growth, SKT’s future growth will heavily depend on wireless data
growth.
- To drive its wireless data strategy, SKT expects to push aggressive 2.5G network rollout based on
Qualcomm’s CDMA2000 1x technology and packet-based tariff system.
Results & forecasts
Valuation
EPS
%ch.
Yr to
Dec
10902
177
2000
199
8
3.4
2.8
3934
88
1999
621
20
4.5
3.9
151
2090
29
1998
1,249
14
5.5
9.3
114
1621
(53)
1997
1,664
3
5.5
10.1
360.3
237 3415.0
104
1996
798
15
7.2
12.5
205.6
114.0 1673.7
2
1995
1,657
31
14.7
18.3
RP
(W b)
NP
(W b)
1,636 1360.9
951
289
472.8
304
3545.2
494
393.8
1997
3512.0
584
168.5
1996
2676.0
471
1995
1322.5
212
Yr to
Dec
Sales
(W b)
2000
5760.9
1999
4284.9
1998
OP
(W b)
EPS
(W)
Share data
Price (MM/DD/YY)
189,000
Total no of shs (m)
89.2
Mkt cap.(US$m)
52 week price range
12,/26
P/E
(X)
EV/EBITDA
(X)
EV/sales
(X)
P/BVPS
(X)
Price chart
Book NAV(W)
Net debt/equity
Free float (%)
406,000~165,000
684
18
10.2
59
Price performance
Over last
1M
3M
12M
Absoulte
-7.8
-31.8
-27.6
Relative to KOSPI
-3.4
-20.9
-0.2
Relative to KOSDAQ
-3.7
-25.1
84.0
Major shareholders
SK Group
Signum IX
19.6%
14.5%
Company profile
SKT is the largest mobile operator in Korea with 14.1 mn mobile subscribers along with its affiliate SK
Shinsegi. SKT was the world’s first to launch commercial 2G CDMA network in February 1996 as well as
2.5G CDMA 2000 1x service in October 2000. SKT was also granted with a license to provide the nextgeneration 3G mobile services based on W-CDMA technology platform. Besides its core mobile cellular
service, the company operates Korea’s largest paging network, broadband service using cable modem,
and owns majority stake in SK Teletech (handset manufacturer), SK Telelink (International Simple
Reseller), Netsgo (ISP), and Happy2buy (e-commerce).
Operation summary
Despite relatively strong FY00 results on YoY basis, the company is slowly losing its earnings momentum
on QoQ basis with the company’s earning that looks to have peaked in 3Q00. The core of the slowing
earnings growth is a flat revenue growth for next 2-3 years with higher mobile penetration ratio. Even
after the company escapes FTC’s 50% market share restriction in June 2001, we do not expect the
company’s growth to replicate that of last few years. As such, it is likely for SKT’s revenue growth to
remain flat with slower subscriber growth and downward price pressure from government and consumer
63
groups. Further, with higher investment in 2.5G and broadband services as well as higher marketing
costs from 2H01, it will be difficult for SKT to continuously lower operating costs to maintain its
previously high EBITDA growth rate.
Future strategy
SKT’s future growth heavily depends on wireless data service. Although mobile subscriber growth will
remain relatively flat, the company’s wireless data subscriber base (deployed handset basis) is expected to
soar from 4.8 mn in FY00 to 7.9 mn and 9.3 mn in FY01-02. We also expect data ARPU to jump from
W3,783 per month in FY00 to W5,000 and W7,000 in FY01-02 on the back of 2.5G service launch and
introduction of packet-based tariff.
To drive its wireless data strategy, SKT expects to push aggressive 2.5G network rollout based on
Qualcomm’s CDMA2000 1x technology. The company already reported 15,000 subscribers with Samsung
and LG’s CDMA2000 1x handsets under limited coverage. At data transmission speed of 144kbps, SKT
expects to cover 79 cities with 88% population coverage by end of 2001 and improve the coverage to all
major highways by end of 1H02. The company’s total capex for CDMA2000 1x is expected to reach
W2.0-2.5 tn in the same period.
Upon full commercial rollout of 2.5G network, SKT has finalised its packet-based tariff. Based on 512 byte
per packet, text-based wireless data service will be charged at W6.5 per packet while multimedia based
wireless data service will be charged at W2.5 per packet. Compared to NTT Docomo’s packet data tariff
of around W17.6, the announced tariff is 63% cheaper for text-based content and 86% cheaper for
multimedia-based content. The tariff is lower even compared to initial price level of W12 per packet
discussed around the industry when SKT begun negotiating with Korean government. Nevertheless, once
multimedia handsets equipped with colour display and stereo sound systems are available for mass
market distribution, the company hopes more users to transmit multimedia contents that will likely to
increase usage and revenue.
However, with the decision to push 2.5G network rollout, SKT is likely to delay its 3G service based on
WCDMA network from previously planned launch in May 2002 to possibly 2003-2004. Given its massive
rollout cost of 2.5G network, the company believes that its 3G rollout must be delayed until significant
portion of 2.5G network investment in recuperated. Further, with global delays in 3G infrastructure and
handset development, there is a internal concern within SKT whether there is a full commercial system
ready for service in May 2002.
Besides its core mobile business, SKT is looking to become a platform provider and financial enabler by
leveraging its core cellular business. Currently, SKT is providing mobile platform for cellular handsets but
will be increasing its platform service to PDA and vehicle mounted terminals and eventually expand its
mobile platform to included fixed platform. The company expects mobile platform market to reach
W2.83 tn in 2003 at 3-yr CAGR (2000-2003) of 203%. SKT also expects strong growth as a financial
enabler that will focus on providing payment infrastructure based on internally developed solutions. The
company expects financial enabler market to reach W1.38 tn in 2005 at 4-yr CAGR (2001-2005) of 13.5%.
Figure 59
SK Telecom: balance sheet
Year-end 31 Dec(W bn)
Sales
Sales growth(%)
Operating costs
Wages & salaries
Depreciation
Leased line
Interconnection expenses
Commission to dealers
Handset subsidy
Operating income
EBITDA
Non-operating income(loss)
Recurring profit
Earnings before tax
Net income
EPS (Won)
EPS growth (%)
1998
1999
2000
2001F
2002F
2003F
3,542.2
0.9
4,284.9
20.9
5,760.9
34.4
5,843.1
34.4
6,271.4
7.3
6,686.0
6.6
(3,051.08)
(191.16)
(917.72)
(212.84)
(60.50)
(240.55)
(770.66)
(3,996.18)
(174.09)
(701.94)
(198.63)
(140.17)
(483.92)
(1,572.98)
(4,124.77)
(190.01)
(911.38)
(207.16)
(624.57)
(521.80)
(666.85)
(4,124.47)
(178.51)
(1,048.63)
(194.72)
(637.98)
(630.85)
(210.20)
(4,656.62)
(190.25)
(1,079.88)
(235.74)
(645.31)
(676.53)
(496.94)
(4,978.47)
(205.75)
(1,171.30)
(268.04)
(673.95)
(727.93)
(497.29)
494.1
1,411.8
(100.3)
288.7
990.6
184.1
1,636.1
2,547.5
(275.2)
1,715.6
2,764.2
(251.0)
1,614.8
2,694.6
(190.9)
1,707.5
2,878.8
(157.3)
393.8
283.1
151.3
472.8
401.6
304.2
1,360.9
1,360.9
950.6
1,464.6
1,464.6
1,010.6
1,423.8
1,423.8
982.4
1,550.3
1,550.3
1,069.7
2,090.3
29.0
3,933.5
88.2
10,901.8
177.2
11,338.0
4.0
11,022.5
-2.8
12,001.4
8.9
64
1998
1999
2000
2001F
2002F
2003F
Current assets
Cash and cash equivalent
Marketable securities
Inventories
Trade receivables
1,376.9
269.4
475.7
2.6
579.8
1,619.4
80.2
470.2
1.4
1,035.2
2,252.2
228.3
1,002.8
3.4
981.9
1,661.8
170.0
550.0
4.2
958.3
1,819.6
180.0
605.0
4.9
982.8
1,768.8
90.0
592.0
5.2
1,000.0
Investment assets
Fixed assets
Other assets
Total assets
576.6
2,107.3
0.0
4,060.8
2,108.4
2,485.3
1.0
6,213.1
3,271.6
3,3,29.9
2.0
9,053.6
4,551.6
3,731.4
3.0
9,944.8
5,006.7
4,156.8
4.0
10,983.2
5,757.7
4,470.9
5.0
11,997.4
Current liabilities
Short-term borrowings
Current LT debt
Trade payable
1,212.5
305.0
492.1
226.5
1,451.2
345.0
270.3
568.0
1,893.8
10.0
589.9
644.1
1,567.7
10.0
462.3
576.5
1,559.6
10.0
431.7
566.7
1,814.7
10.0
650.8
551.5
Long-term liabilities
Bonds
Long-term borrowings
Total liabilities
1,379.0
1,008.3
169.6
2,591.5
1,018.5
764.0
100.2
2,469.7
1,277.3
1,097.6
85.1
3,171.2
1,328.0
1,169.7
89.6
2,859.7
1,447.7
1,110.9
86.8
3007.2
1,191.1
808.4
82.8
3,005.8
Shareholders’equity
1,469.2
3,743.3
5,966.0
7,049.1
7,975.9
8,991.6
Gross debt
Net debt/equity (%)
2,127.0
94.1
1,554.0
26.8
1,837.9
10.2
1,749.2
14.6
1,639.4
10.7
1,551.9
9.7
Source: Company data
(2) KT Freetel (32390.KQ/3239 KS)
- KT Freetel (KTF) is a second largest mobile operator in Korea with subscriber base of 8.59 mn
(combined with KTM.com).
- With first posted net earnings in 2000, KTF posted strong FY00 results as sales and EBITDA grew 23.1%
and 132.6% YoY in 2000.
- KTF is focused on increasing its wireless data service that totalled W51 bn in FY00 (1.8% of total sales).
At end of 2000, the 45% of KTF subscribers fell under 30 years age braket that expects to drive wireless
Internet usage while some 55% of KTF subscribers own Microsoft Mobile Explorer browser-enabled
handsets,
- The company is looking to launch 2.5G service in May and targets 700,000 subscribers by end of 2001
with 2.5G ARPU expected to increase roughly 18% to W45,000 from current ARPU of W38,000.
Results & forecasts
Yr toDec Sales(W b)
OP(W b)
RP(W b)
NP(W b)
Valuation
EPS(W)
EPS%ch.
Yr to Dec
P/E(X)
2000
2780.3
250.0
168.4
116.0
812,8
(254.0)
# 2000E
336
13
2.4
1999
2258.8
16.2
(95.6)
(59.0)
(527.8)
(62.5)
# 1999
(661)
31
3.0
5.6
1998
1431.8
(64,8)
(141.2)
(141.2) (1,406.0)
45.3
# 1998
(276)
114
4.7
14.4
1997
144.6
(123.2)
(96.2)
(96.2)
(967.7)
n.a.
# 1997
(405)
(63)
46.3
9.6
1996
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
# 1996
n.a.
n.a.
n.a.
n.a.
1995
n.a.
n.a.
n.a.
n.a.
n.a
n.a.
# 1995
n.a.
n.a.
n.a.
n.a.
Share data
Price chart
Price (MM/DD/YY)
39,000
Total no of shs (mil.)
142.7
Net debt/equity
61.3
Mkt cap.(US$mil.)
4,202
Free float (%)
61.3
52 week price range
5.0
Book NAV(W)
7761,2
89,000~32,400
Price performance
Over last
1M
3M
12M
Absoulte
1.7
-12.2
-44.9
Relative to KOSPI
6.6
1.8
-24.2
Relative to KOSDAQ
6.3
- 3.5
39.9
Major shareholders
Korea Telecom
38.7
65
Company profile
KTF was established in January 1997, and successfully launched commercial service in October 1997. KT
Freetel signed more than one million subscribers within their first six months of operations. After 18
months of service, the company has more than 3 million subscribers. And, as of March 2001, KT Freetel
has over 5.59 million subscribers. With its merger with KTM.com in May 2001, the company expects to
increase its subscriber base to 8.59 mn and control 32.5% of Korean mobile market. In September 1999,
KTF became the first cellular operator to launch IS-95B wireless Internet service. This service expanded
nationwide in February 2000. KTF plans to hold CDMA2000 1X trials service by the end of 2000 with
commercial service available in 2001. Besides its PCS license in 1800 MHz bandwidth, the company also
holds 15% stake (together with KTM.com) in KT’s 3G mobile consortium - KT Icom.
Operation summary
KTF posted strong FY00 results. Sales and EBITDA were up 23.1% and 132.6% YoY to W2.78 tn and W501
bn. The company has also posted positive net earnings for first time with net profit of W 116 bn. The
company also fared well on QoQ basis. Sales were up 21.3% on the back of strong PCS and
Interconnection revenue while EBITDA were up 6.9% to W183 bn.
The company’s core PCS service revenue jumped 27.3% YoY to W1.50 tn on the back of strong subscriber
growth and rising ARPU. KTF added 1.02 mn subscribers to total FY00 subscriber of 5.29 mn and increased
market share from 18.2% in FY99 to 19.7% in FY00. Despite a 5.3% tariff cut in April 2000, KTF ARPU
are rising on the back of strong MOU growth. Average ARPU rose from W31,319 in 1Q00 to W33,944 in
4Q00 while average MOU rose from 106 minutes per subscriber in 1Q00 to 132 minute per subscriber in
4Q00.
With government’s ban on handset subsidy in May 2000, the acquisition cost per subscriber declined
from W307,000 per new subscribers in FY99 to W250,000 and W126,000 in 1H00 and 2H00. The company
expects downward trend to continue in FY01 with ban on handset subsidy to remain throughout FY01.
Future strategy
Although the company has fared well in 2000, KTF will to likely face similar growth slowdown in 20012002. As such, the company is also focused on increasing its wireless data service that totalled W51 bn in
FY00 (1.8% of total sales). At end of FY00, the 55% of all KTF subscribers now own Mobile Explorer
browser enabled handsets (vs. 26% for SKT). Higher proportion of younger generation subscribers also
puts company in a very good position to take advantage of exploding growth in wireless data. With 83%
of its wireless data subscribers fall under age of 30, 45% of KTF subscribers are currently under the 30
years old (vs. 28% for SKT).
In terms of 2.5G rollout, the company seems less aggressive than SKT. In terms of capex, the company is
only looking to invest W400-500 bn covering only 7 major metropolitan cities rather than full nation wide
coverage. With launch of KT’s 3G consortium - KT Icom, KT seems to be more focused than SKT to
rollout 3G WCDMA network earlier. However, depending on market reception and technology
development to 2.5G/3G, KTF can always adjust its capex to provide most suitable wireless data service.
Nevertheless, under the current plan, the company is looking to launch 2.5G service in May with
introduction of color handsets and targets 700,000 subscribers by end of 2001. The company will also
introduce packet-based tariff for 2.5G and expects 2.5G ARPU to increase roughly by 18% to W45,000
(compared to current ARPU of W38,000).
Besides its CDMA2000 1x network rollout, the company is looking to introduce HDR to complement 1x
network in 4Q00. With HDR, KTF can increase its data transmission rate up to 3G-like 2.4 Mbps in a
standard 1.25 MHz channel bandwidth. Optimized for packet data services, HDR incorporates a flexible
architecture based on standard Internet Protocols (IP). HDR’s IP-based architecture allows flexible
implementation of the wireless system in higer performance and cost-efficiency. As a complementary
solution to voice networks utilizing operator’s existing cell sites, towers, antennas and network
equipment, HDR technology allows KTF to leverage its current invested infrastructure.
66
Figure 60
KT Freetel: balance sheet
Total sales
Growth (%)
1998
1999
2000
2001F
2002F
2003F
1,431.8
890.0
2,258..8
57.8
2,780.3
23.1
3,719.3
33.8
3,686.7
(0.9)
4,417.8
19.8
(1,496.6)
(20.1)
(123.4)
(63.7)
(26.6)
(16.6)
(50.2)
(55.7)
(302.2)
(2,242.6)
(46.3)
(199.2)
(93.0)
(40.6)
(22.9)
(55.7)
(99.1)
(836.1)
(2,529.8)
(63.1)
(250.6)
(157.0)
(309.8)
(34.2)
(72.0)
(205.1)
(582.6)
(3,234.5)
(87.5)
(428.9)
(189.1)
(284.0)
(43.8)
(96.9)
(224.8)
(285.8)
(3,032.1)
(102.2)
(502.7)
(203.4)
(303.6)
(53.5)
(114.5)
(211.9)
(212.2)
(3,933.7)
(115.8)
(571.4)
(209.6)
(316.3)
(61.0)
(127.6)
(265.9)
(288.1)
Operating icome
EBITDA
Non-operating items
Interest received
Interest expense
(64.8)
58.6
(76.4)
12.6
(125.9)
16.2
215.4
(111.8)
15.2
(171.5)
(250.5)
501.1
(82.1)
3.9
(85.9)
484.7
913.6
(172.2)
10.1
(153.7)
654.6
1,157.3
(142.9)
30.0
(133.4)
484.1
1,055.5
(116.8)
45.0
(111.3)
Pretax profit
Income taxes
Net profit
(141.2)
0.0
(141.2)
(95.6)
36.6
(59.0)
168.4
(52.5)
116.0
312.5
(96.2)
216.2
511.7
(157.6)
354.1
367.3
(113.1)
254.2
Cost of sales
Wages & salaries
Depreciation
Leased Line expenses
Interconnection charge
Rent
Advertising expenses
Commissions
Handset subsidy
Inventories
Accounts receivable
Other current assets
Current assets lESS cash
1998
1999
2000
2001F
2002F
2003F
52.7
256.9
155.0
29.0
391.8
575.8
31.2
55.9
298.9
36.0
116.4
451.3
2.9
27.4
408.7
57.1
240.0
705.9
(182.1)
57.9
428.0
44.3
553.1
1,025.4
(176.6)
89.7
404.0
41.5
528.2
973.7
(272.2)
157.0
453.9
53.9
512.8
1,020.6
Long term investments
Net PP&E
Total fixed ASSETS
Total assets
218.3
1,204.0
1.450.8
2.336.2
360.0
1,580.5
1,953.9
2,492.4
345.7
2,221.6
2,580.6
3,316.8
596.1
2,432.7
3,043.6
3,944.7
665.7
2,520.0
3,192.0
4,078.8
754.1
2,498.6
3,270.5
4,220.9
ST borrowings
Current LT debt
Total current liabilities
449.4
14.8
0.0
1695.2
5.0
27.3
0.0
379.5
50.0
849.7
0.0
1,541.2
100.0
1,085.8
0.0
1782.9
150.0
66.0
0.0
794.8
150.0
261.0
0.0
1,014.8
Bonds
LT borrowings: Korean Won
LT borrowings: For. Curr.
Total long term liabilities
857.4
354.1
149.9
1.369.1
967.5
102.0
43.7
1,121.0
543.2
115.4
0.0
668.3
300.0
4.0
130.5
447.5
1,000.0
4.0
123.8
1,140.7
600.0
4.0
114.3
733.7
271.8
991.9
1,107.2
1,714.3
2,143.3
2,472.4
Total shareholder’s equity
Source : Company data
(3) LG Telecom (32640.KQ/3264 KS)
- With 3.83 mn subscribers, LG telecom(LGT) is the smallest mobile operator in Korea.
- With a cut in marketing costs and improved quality of its subscriber base, LGT posts first quarterly net
profit in 1Q2001.
- LGT has highest percentage of wireless data subscriber base among Korean operators as well as highest
data ARPU on the back of its strong platform/contents such as JAVA and WAP.
- LGT may face financial difficulties of its partner, British Telecom, recently announcedits plan to
withdraw from the Asian market.
67
Results & forecasts
RP(Wm) NP(Wm)
Valuation
EPS(W)
EPS%ch.
Yr to Dec
P/E(X)
P/BVPS(X)
2000
1851
(269)
(376)
(442)
(2.3)
174
2000
(10)
.02
1.2
4.3
1999
1438
(107)
(234)
(162)
(0.8)
4
1999
(28)
.04
1.6
1.2
1998
1092
(77)
(155)
(155)
(0.8)
659
1998
(29)
.01
2.1
0.5
1997
37
(32)
(20)
(20)
(0.1)
n.a.
1997
(223)
.03
61.9
1.2
Price chart
Share data
Price (MM/DD/YY)
4,500
Book NAV(W)
1053
Total no of shs (m)
190.7
Net debt/equity
695.0
Mkt cap.(US$m)
52 week price range
657
Free float (%)
47.2
16,600~3,490
Price performance
Over last
1M
3M
12M
Absoulte
9.4
-29.4
#N/A
Relative to KOSPI
14.6
-18.2
#N/A
Relative to KOSDAQ
14.3
-22.5
#N/A
Major shareholders
LG Electronics
28.1%
BT
24.1%
Source : iPACIFIC partners estimates
Company profile
Having acquired its PCS business license in June 1996 as a part of LG Group, LGT launched its commercial
PCS service in October 1997 as one of the three PCS carriers in Korea. However, due to recent
consolidation of Korean mobile market, LGT became the smallest mobile operator with 3.83mn
subscribers and market share of 14.4%. Through a strategic alliance, Bristish Telecom (BT) currently holds
a 24.1% stake in LGT from the investment of W521.9 bn in 1998. Despite its smallest subscriber base, LGT
has been able to establish a nation wide single-network system and is offering one of the most advanced
wireless data service in Korea with first WAP service in 1999 and mobile JAVA service in 2000.
Operation summary
Portion of sales to SK Telecom still high in 2000E
As a third-largest mobile phone service provider, LGT has yet to post full fiscal yest of net earning. LGT’s
FY00 net loss widened to W442 bn in 2000 from a loss of W162 bn in 1999. While LGT’s sales increased
29% YoY to W1.8 tn, the cost of sales jumped 39% to W2.1 tn. Amidst the market consolidation and
strong subscriber growth particularly strong in 1H2000, LGT spent heavily on marketing and discounts to
attract subscribers. LGT increased its subscriber base by 28% to 3.94 million from 1999 to 2000, but spent
W614 bon won on marketing in 2000, up from W550 bn in 1999. The total cost of its core cellular service
increased 50% to W1.7 tn. The cost of handset sales increased 6% to W397 bn.
Nevertheless, on the back of government’s decision to prohibit handset subsidies from 2H2000, LGT has
reduced its marketing cost significantly during 1Q2001 (YoY decline of 65%) and posted first positive pretax profit. Besides reduction in marketing cost (i.e., handset subsidies), LGT has improved quality of its
subscriber base by cutting 80,000 delingvent subscribers (over 2% of total subscribers) during 1Q2001. As
a result, LGT’s monthly ARPU (including interconnection) has increased 18.5% YoY from mere W28,389
in 1Q2000 to more respectable W33,655 in 1Q2001.
Future strategy
Although the recent growth rate seems to be lower than its peers, LGT has a highest percentage of
wireless data subscriber base among Korean operators as well as highest data ARPU on the back of its
strong platform/contents such as JAVA (first mobile JAVA service in the world) and WAP (first wireless
data service in Korea). Among 3.86 mn total mobile subscribers at end of February 2001, LGT had 2.16
mn deployed wireless data handsets (56.0%). The company’s data ARPU of W2,251 in January 2001 is the
highest among Korean mobile operators. Nevertheless, given LGT’s higher wireless data subscriber
portion and younger subscriber base (44% of its subscriber under age of 30), LGT is still struggling to
generate strong wireless data service that will offset weaker voice ARPU, when compared to its peers.
68
In terms of its 2.5G CDMA2000 1x rollout, LGT is targeting nationwide service as early as April/May 2001.
With its major shareholder LG Electronics providing software based upgrade for CDMA2000 1x upgrade,
LGT’s total capex expects to reach only W210 bn between 2000-2002 compared to W2.0-2.5 tn for SKT
and W450 bn for KTF. Although the company argues that its CDMA2000 1x network is fully capable of
supporting all of LGT’s 3.83 mn subscribers, it is still uncertain whether or not LGT can achieve such
increase in data capacity given such lower level of capex.
For 3G, LGT is now moving toward accepting Korean government’s proposal to head 3G CDMA 2000
consortium that may include Hanaro Telecom and POSCO. Under the assumption that Korean
government provides enough incentives, such as a cut in license fee, LGT can obtain additional
bandwidth for CDMA 2000 service.
Other issues
The company faces other challenges. It’s second largest shareholder, BT, has announced in November
that it will shed all its overseas investments outside Europe and Asia and has recently rejected LGT’s
request to participate in the latest rights issue. Although there is a little operational synergies generated
from having BT as strategic partner and second largest shareholder, its pull out could potentially cause
financial difficulties.
Figure 61
LG Telecom: balance sheet
Year-end 31 Dec(W mn)
1997
Sales
Growth rate
1998
1999
2000
36,601
na
1,092,101
2883.8%
1,438,411
31.7%
1,850,641
28.7%
(68,603)
(32,002)
-87.4%
(1,168,741)
( 76,640)
-7.0%
(1,545,546)
(107,134)
-7.4%
(2,119,555)
(268,914)
-14.5%
74,296
11,601
28,403
(1,573)
418,293
(78,351)
(49,596)
(106,917)
64,054
(126,552)
22,346
(168,994)
97,139
(107,483)
9,466
(156,219)
Recurring profit
(20,402)
(154,991)
(233,686)
(376,397)
Pretax profit
Income taxes
(20,402)
7
(154,991)
0
(233,686)
(72,028)
(376,397)
65,965
Net profit
(20,408)
(154,991)
(161,658)
(442,362)
Cost pf sales
Operating costs
Operating margin
EBITDA
Non-operating items
Interest received
Interest expense
Trade receivable
Inventories
Total current assets with cash
1997
1998
1999
2000
240,628
562,163
1,626
81,963
22,000
20
75,227
337,875
139,360
40,782
458,819
1,201,124
198,787
38,675
28,780
267,868
190,311
42,274
125,428
443,976
201,065
600,429
31,971
833,465
1,171,340
308,049
1,163,541
20,762
1,492,352
2,693,476
530,759
1,377,836
6,461
1,915,057
2,182,925
378.570
1.426,300
10.994
1,815,864
2,259,841
ST borrowings
Current LT debt
Trade payable
Bonds
LT borrowings
Allowance of liability nature
Total long term liabilities
124,966
1,415
313,215
457,280
151,816
174,070
1,128
327,405
111,315
82,416
500,758
774,694
840,826
216,944
2,798
1,063,894
82,017
260,004
241,074
679,779
632,880
124,871
5,159
766,689
152,000
621,000
391,287
1,338,368
370,623
333,811
4,463
720,693
Paid-in capital
Capital surplus
Retained earnings
Capital adjustment
Total shareholder’s equity
400,000
5,047
(18,392)
0
386,654
653,500
374,861
(173,383)
(89)
854,888
953,114
0
(286,057)
69,400
736,457
953,500
0
(728.418)
(24,302)
200,779
Long term investments
Net PP&E
Inangible fixed assets
Total fixed assets
Total assets
Source : Company data
69
(4) Samsung Electronics (05930.KS/0593 KS)
- With a business focus on DRAM, Samsung Electronics(SEC) is diversifying its business to non-DRAM
memory, TFT-LCDs and telecom.
- The total telecom revenues are estimated to reach W7.6 tn in 2000 compared to W7.5 tn in 1999. The
key to handset growth will be handset exports, where SEC expects to increase its volume by 37% YoY to
21.8 mn units.
- SEC is intensifying its research for both 3G handsets and equipment development. SEC is currently
considered as a world’s leading CDMA 2000 vendor. Recently the company relocates many of its
cdma2000 3x research staff to the WCDMA division, ready to compete against its WCDMA leaders.
Results & forecasts
Yr to Dec
Valuation
Sales(W b) OP(W b) RP(W b) NP(W b) EPS(W) EPS%ch.
Yr to Dec
P/E(X)
EV/EBITDA(X)
EV/sales(X)
2000
34,284
7,435
7,947
6,015
34
90
2000E
62
1
0.2
3537.6
1999
26,118
4,482
4,294
3,170
18
912
1999
118
1
0.4
4269.1
1998
20,084
3,100
441
313
2
154
1998
1,191
2
0.6
6793.7
1997
18,465
2,856
156
124
1
(25)
1997
3,020
2
0.6
6405.8
1996
15,875
1,447
224
164
1
(93)
1996
2,272
2
0.4
6824.0
1995
16,190
4,282
3,036
2,505
14
n.a.
1995
149
-
-
4618.5
Share data
373,000
Price (MM/DD/YY)
176.3
Total no of shs (m)
23,286
Mkt cap.(US$m)
52 week price range
P/BVPS(X)
Price chart
Book NAV(W)
105.4
Net debt/equity
11.0
Free float (%)
63.9
388,000~156,000
Price performance
Over last
1M
3M
12M
Absoulte
10.7
23.5
116.2
Relative to KOSPI
2.4
36.1
31.5
Relative to KOSDAQ
-6.0
-9.2
30.4
Major shareholders
Samsung Life Insurance
6.0
Company profile
Samsung Electronics (SEC) has transformed itself from its previous perception as a pure DRAM maker,
with a second-tier consumer electronics division. While DRAM chips are still the core of its semiconductor
business, SEC has developed a global number one position in SRAMs, and a top-ten position in flash
memory. Its future plans are to diversify more deeply into non-memory products, such as systems LSI
chips. In addition, SEC has developed successful businesses in TFT-LCDs and cellular handsets over the past
four years. While SEC’s short-term earnings are still largely vulnerable to the volatility in DRAM prices,
these diversification measures provide a stronger base for SEC’s long-term profitability potential.
At the heart of company’s diversification plan is telecom business. Under the vision of“Anywhere,
anytime communications”, SEC is well in its way to become world’s top-tier telecom business. From one
of the world’s best selling mobile phones, to entire systems and networks, SEC is now a one-stop supplier
of digital communications technology.
Operation summary
SEC’s 2001 net profits will decline 29% to W4.4 tn. The key to weakening profitability is in the declining
in DRAM price. While we forecast a strong 60% increase in bit growth to 1.1 mn 64 MB-equivalent units,
we expect that DRAM profitability will weaken, given the average 52% price decline in synchronous
chips.
On the telecoms side, the total telecom revenues including handsets are estimated to reach W7.6 tn in
2000 compared to W7.5 tn in 1999. The key to handset growth will be handset exports, where we
forecast a 37% increase to 21.8 mn units. Out of total, domestic handset shipment is expected to reach 6
mn while CDMA exports are expected to reach 7.6 mn and GSM exports are expect to reach 8.2mn.
70
Future strategy
In terms of 3G development, the company is intensifying its research for both 3G handsets and
equipment development. SEC is currently considered as a world’s leading CDMA 2000 vendor. It
currently controls 100% of domestic CDMA 2000 1x infrastructure equipment order and is the first to
market 1x handsets. Based on advanced CDMA 2000 technology, however, the company is believed to be
ready against its global competitors in the WCDMA development in near future.
For future earnings growth, semiconductor (minus TFT-LCD) will still be the key driver behind SEC’s
profits. Our latest forecasts indicate that the division will generate some 65-70% of SEC’s overall
recurring profits during 2001-02F. While the general profitability of other key divisions pales in size
(individually) compared to the semiconductor business, the TFT-LCD and cellular businesses are important
in that the profitability swings in the emerging divisions could sighificantly impact overall profitability.
The consumer electronics and PC peripherals division provide SEC with a smaller, but less volatile,
earnings stream.
Figure 62
Samsung Electronics: balance sheet
FY98
FY99
FY00
FY01
FY02
Total current assets
Cash and shot-term investments
Receivable and othere current
Net fixed assets
Land and other non depreiable assets
Gross fixed assets
Less: depreciation
Capital work in progress
Other assets
Associates & other LT investments
Total assets
5,968.1
1,286.2
4,682.0
2,502.7
1,274.4
13,344.0
7,680.2
564.5
1,030.8
6,274.4
20,776.1
6,197.2
1,412.6
4,784.6
9,822.3
1,708.8
11,550.7
4,380.9
943.7
1,326.6
7,367.7
24,709.8
7,756.4
2,650.1
5,151.3
12,324.4
1,778.5
16,102.7
6,799.9
1,243.1
443.6
6,370.6
246,895.0
6,207.6
754.1
5,453.5
16,704,6
1,910.0
23,107,7
9,938.1
1,630.0
713.9
6,750.6
30,376.7
6,546.3
837.1
5,709.2
19,678.0
2,050.0
29,102.7
13,414.7
1,940.0
947.7
7,190.6
34,362.6
Total interest bearing liabilities
Total other LT liabilities
3,112.4
10,218.7
475.0
5,384.5
5,745.3
248.4
6,251.3
4,061.1
389.9
6,544.2
3,000.2
340.0
6,769.4
1,252.2
500.0
6,970.0
623.9
6,226.7
119.5
0.0
13,331.6
756.1
12,456.0
119.5
0.0
16,192.8
762.2
15,311.2
119.5
0.0
20,382.3
762.2
19,500.6
119.5
0.0
25,841.0
762.2
25,959.3
119.5
0.0
20,776.1
24,709.8
26,895.0
30,376.7
34,362.6
Total equity
Share capital
Total reserves & surplus
Preferred capital
Minority interest
Total liabilities
Net sales
Cost of goods sold
Gross profit
FY98
FY99
FY00
FY01
FY02
20,084.2
13,975.7
6,108.4
26,117.8
17,661.8
8,456.6
32,283.8
21,993.
12,290.4
36,952.4
27,946.4
9,006.0
43.315.7
31.681.7
11,634.0
3,100.0
1,454.0
2,110.7
6,664.7
4,481.5
2,371.9
367.4
7,220.8
7,435.2
2,581.0
520.0
10,526.2
3,841.7
3,138.3
600.0
7,579.9
5,812.3
3,476.6
640.0
9,928.9
313.5
116.0
23.7
-1,300.2
-695.8
-1,542.8
1,116.3
1,116.3
188.5
240.7
39.2
-76.3
141.8
533.9
721.2
721.2
147.2
363.9
9.3
518.4
-183.7
855.0
343.4
343.4
144.3
340.0
0.0
570.0
0.0
1,054.3
274.5
274.5
58.4
320.0
0.0
630.0
0.0
1,008.4
170.4
170.4
Ordinary Profit
Total extraordinary gains(loss)
440.9
-30.0
4,294.2
-266.3
7,946.8
153.6
4,621.5
0.0
6,650.3
0.0
Pre-tax exp(gains)
Income tax exp/(gains)
410.9
97.6
4,028.0
857.6
8,100.4
2,085.9
4,621.5
1,063.0
6,650.3
1,529.6
Net income after taxes
313.2
3,170.4
6,014.5
3,558.6
5,120.7
EBIT
Depreciation*
Amortization*
EBITDA
Interest income
Net investment income/ (loss)
Dividend income
Net other non operating gains/(loss)
Net forex translation/transaction gains/(loss)
Total non-oper. Income
Interest expenses
Total non-oper. expenses
Source: Company data.
71
(5) LG Electronics (02610.KS/0261 KS)
- LG Electronics(LGE) is a leading producer of an array of consumer electronics products including digital
displays, digital appliance, and digital media.
- Ther merger of LGE with LG Information communication(LGIC) from September 2000 has added a
telecom division as a core unit to LGE.
- However, the addition of telecom business is not likely to be a major profit contributor over the next
few years given lower margin of telecom equipment for 2001-2002.
- Although the company leads in the development of 3G WCDMA technology, the delays in deployment
of 3G network may nullify company’s competitive advantage in 3G technology development.
Results & forecasts
RP(Wm) NP(Wm)
Valuation
EPS(W)
EPS%ch.
Yr to Dec
P/E(X)
P/BVPS(X)
2000
1851
(269)
(376)
(442)
(2.3)
174
2000
(10)
.02
1.2
4.3
1999
1438
(107)
(234)
(162)
(0.8)
4
1999
(28)
.04
1.6
1.2
1998
1092
(77)
(155)
(155)
(0.8)
659
1998
(29)
.01
2.1
0.5
1997
37
(32)
(20)
(20)
(0.1)
n.a.
1997
(223)
.03
61.9
1.2
Share data
Price chart
Price (MM/DD/YY)
4,500
Book NAV(W)
1053
Total no of shs (m)
190.7
Net debt/equity
695.0
Mkt cap.(US$m)
52 week price range
657
Free float (%)
47.2
16,600~3,490
Price performance
Over last
1M
3M
12M
Absoulte
9.4
-29.4
#N/A
Relative to KOSPI
14.6
-18.2
#N/A
Relative to KOSDAQ
14.3
-22.5
#N/A
Major shareholders
LG Electronics
28.1%
BT
24.1%
Company profile
LGE produces a wide range of consumer electronics products, from traditional white goods to
audio/visual multimedia applications. Through its recent merger with LGIC, LGE is currently the second
largest manufacturer of cellular handsets, as well as various telecommunication’s Systems, in Korea. The
company has introduced the world’s first commercialized CDMA handsets and system equipment. And is
also in the the development of various personal mobile communication devices and optical switching
systems as LGE parepares for the advent of a wide-area total information communications network.
Operation summary & forecast
LGE’s total annual revenue topped W10.5 tn in 1999 and was estimated to grow 40.3% in 2000 to
evaluated 2000 sales of W14.8 tn. Operating profit will also likely to increase from W1.22 tn in 1999 to
W1.75 tn in 2000. However, LGE is likely to face difficult time in 2001-02 with slower revenue growth of
11.4% and 9.8% in 2001-2002 with the global economic slowdown, which will have direct impact on the
company’s core consumer electronics division.
LGE will also experience a significant weakening in operating profit margins over the next two years from 6.2% in 2000 to 5.1% and 4.5% in 2001 and 2002, respectively. The margin erosion is mainly due to;
1) cyclical impact: weakening global economy, 2) expected spin-off of profitable CRT business, and 3)
addition of lower-margin telecommunication revenues.
In terms of telecom division, revenues are estimated to total W1.07 tn in 2000 (only the portion ascribed
to LGE revenue after the merger with LGIC). Considering the ex-LGIC revenues, the total telecom
revenues would have reached W2.78 tn in 2000 compared to W2.76 in 1999. Handset revenues led all
telecom revenue in 2000 with W1.5 tn, followed by mobile equipment (W584 bn), switching &
transmission (W417 bn), and information network equipment (W278 bn).
72
Future strategy
We expect that LGE will be the future holding company for the various technology assets within the LG
Group, given the previous announcements to this end made by the LG Group. Following the example of
TFT-LCD and the upcoming CRT spin-off, we believe that LGE will attempt to form JVs with global
partners in other key businesses, including telecommunications products and other key next-generation
products including plasma display panels (PDP).
For telecom business, LGE is heavily betting on the development of 3G WCDMA technology to allow the
company to have a significant competitive advantage. Compared to its major domestic rival SEC, LGE is
believed to have a minimum 6 month lead in the development of commercial WCDMA network.
However, with potential delays of WCDMA roll-out from May 2002 to anytime between 2003 and 2004,
LGE’s expected advantagse in WCDMA may evaporate without no avail.
Figure 63
LG Electronics: balance sheet
1998
1999
2000
2001
2002
A/R & notes receivable
Inventory
Total current assets
Investments & other assets
PP&E
Intangibles
Construction in progress
Total fixed assets
Deferred assets
289.4
53.1
634.3
441.1
790.3
2,208.2
3,187.2
2,711.2
21.8
114.5
2,847.5
467.0
97.6
31.2
480.7
550.4
374.4
1,534.4
4,725.6
2,648.3
106.1
78.0
2,832.4
0.0
177.6
1.9
799.6
1,191.9
569.5
2,740.4
4,710.1
3,118.4
1,092.5
218.7
4,429.6
0.0
125.0
45.0
1,222.3
1,156.2
519.3
3,067.8
6,048.5
2,642.2
26.0
50.0
2,718.3
0.0
165.0
50.0
1,449.7
1,395.3
557.6
3,617.6
6,162.7
2,514.5
29.0
322.0
2,6865.5
0.0
Total Assets
A/P & notes payable
S/T borrowings
Current portion of borr.
Other current liabilities
L/T debt
Bonds
Allowances for liabilities
Other L/T liabilities
Total L/T liabilities
Deferred liabilities
TOTAL lIABILITIES
Paid-in capital
Capital surplus
RE
Capital adjustment
Total equity
Total liabilities and se
8,710.0
740.6
507.0
1,380.0
694.6
3,322.6
573.3
2,562.2
409.8
8.4
3,553.7
0.0
6,876.4
632.1
878.9
302.0
20.7
1,833.7
8,710.0
9,092.3
981.3
129.8
1,366.1
1,494.8
3,972.0
398.0
1,399.0
128.7
8.3
1,934.0
0.0
5,906.4
632.1
862.9
1,440.7
250.3
3,186.3
9,092.3
11,880.1
1,390.9
658.4
1,663.7
1,583.0
5,296.0
543.0
1,848.2
171.2
4.0
2,576.5
0.0
7,872.5
1,031.1
2,354.5
1,674.2
-1,052.2
4,007.6
11,880.1
11,834.5
1,370.9
303.4
1,137.9
1,286.0
4,098.2
834.4
1,517.1
248.4
0.0
2,600.0
0.0
6,698.2
871.1
2,349.2
2,370.3
-454.2
5,136.4
11,834.6
12,645.8
1,621.8
295.4
997.1
1,425.6
4,439.9
886.3
1,514.1
275.0
0.0
2,675.4
0.0
7,015.3
871.1
2,349.2
2,864.5
-454.2
5,630.5
12,645.9
Sales
COGS
Raw materials
Labour
Depreciation
Other
Gross profits
SG&A
Labor
Depreciation
Others
Operating income
EBITDA
Non-Oper income
Interest income
Other no income
9,852.8
7,809.2
5,183.8
616.8
389.9
1,618.6
2,043.6
1,290.3
248.5
57.4
984.5
753.3
1,834.5
1,496.1
158.8
1,337.4
10,546.1
8,356.1
5,785.5
639.1
291.3
1,640.2
2,190.0
1,506.0
208.3
79.5
1,218.2
684.0
1,476.5
3,223.8
87.6
3,136.2
14.835.7
11.820.8
8,251.3
698.8
356.6
2,514.0
3.014.9
2,093.8
314.3
143.6
1,635.9
921.1
1,791.3
1,041.7
66.9
974.8
16,517.2
13,871.7
9,745.2
860.0
392.5
2,874.0
2,645.5
1,806.9
275.0
9801
1,433.8
838.6
1,790.0
879.9
49.9
830.0
18,121.2
15,369.8
10,836.5
940.0
362.2
3,231.1
2,751.4
1,929.7
305.0
90.5
1,534.2
821.7
1,645.0
987.5
67.4
920.0
73
Non-oper express
Interest exp
Other no exp
Recurring income
Extraord income
Extraord losses
EBT
Income taxes
Net income
1998
1999
2000
2001
2002
2,082.3
792.7
1,289.6
167.1
0.0
12.3
154.8
42.8
112.0
1,319.9
509.3
810.6
2,587.9
0.0
0.0
2,587.9
582.9
2,005.0
1,234.3
436.9
797.4
728.5
0.2
0.0
782.7
226.5
502.2
1,040.6
510.6
530.0
677.8
0.0
0.0
677.8
149.1
528.7
1,085.9
437.9
645.0
726.2
0.0
0.0
726.2
159.8
566.4
Source: Company data.
(6) Pantech (25930.KS/2593 KS)
- Pantech is a mobile handset producer for Motorola on an OEM/ODM basis since Motorola injected a
20% equity investment into Pantech in 1998.
- Pantech’s profitability is estimated to fall in 2000 due to a contraction in the domestic handset market
as well as Motorola’s loss of global market share in handsets.
- The company expects to come back strongly in 2001 on the back of higher volume sales and better
contract terms from its recent negotiations with Motorola.
- The key long-term issue with Pantech is the uncertainty of its relationship with Motorola, given that
Motorola has a significant production base in China and Taiwan.
Results & forecasts
Valuation
Yr to Dec Sales(Wb) OP(Wb) RP(Wm) NP(Wm) EPS(W) EPS%ch.
Yr to Dec
P/E(X)
2000
287
5
(4.9)
(2.2)
(11)
(103)
#2000
(1,989)
10
06.
2
1999
227
17
9.6
3.0
338
(179)
#1999
1,490
7
0.7
1.2
1998
36
(6)
(7.8)
(21.7)
(430)
(264)
#1998
(206)
(41)
4.5
1.6
1997
76
6
3.8
4.5
262
n.a.
#1997
993
17
2.1
1.8
Share data
Price (MM/DD/YY)
4,470
Total no of shs (m)
Mkt cap.(US$m)
52 week price range
P/BVPS(X)
Price chart
Book NAV(W)
3713.5
20.4
Net debt/equity
90.2%
68.9
Free float (%)
59.7
16,000~4,150
Price performance
Over last
1M
3M
12M
Absoulte
-0.7
-27.9
-69.5
Relative to KOSPI
4.1
-16.4
-58.0
Relative to KOSDAQ
3.8
-20.8
-22.5
Major shareholders
BY Park
20.3%
Company profile
The company’s full-scale export of mobile phones through Motorola mitigates the adverse impact of
declining domestic handset market.Besides CDMA phones, the company has made number of technical
breakthroughs with development of GSM, and PHS handsets. And, as a part of business diversification
plan, Pantech will enter into contents business through its affiliates - Pantech Media and Pantech Net.
Operation summary
The company expects sales of W290 bn (+28.3% YoY) and net losses of W2-3 bn in 2000 - in sharp
contrast to the initially aggressive targets of W500 bn in revenues and W22 bn in net profit (made at the
end of 1999). Two key reasons for the disappointing results are: 1) a contraction in the domestic handset
market following the elimination of handset subsidies from service providers; and 2) the general
74
weakness of Motorola’s handset business, which lost global market share in 2000. On a volume basis,
Pantech states that it will have provided roughly 1.43 mn handsets for Motorola (0.58 mn for the
domestic market and 0.85 mn for exports), 30% YoY growth compared to 1.1 mn units in 1999. Again, it
is less than 50% of the 3 mn unit that Pantech initially targeted in early 2000.
The key reason for the losses at Pantech is the inflated volume expectations in 2000. Pantech doubled its
theoretical handset capacity to 4.8 mn units last year in anticipation of strong volume sales. When the
volumes weakened, the result was an increased cost burden to Pantech. As expected, domestic volumes
carry higher average selling prices (ASPs) - while the volume mix is expected to be 59% exports in 2000,
the revenue mix is expected to be 55% domestic. In particular, Pantech provides low-end models for
Motorola’s exports, which carry much lower ASPs - US$110 for exports versus W245,000 for domestic
sales.
Despite the difficulties in 2000, the company is looking for strong growth in 2001 on the back of higher
volume sales and better contract terms from its recent negotiations with Motorola. Overall, Pantech
expects revenues of W760-800 bn and Pre-tax profit of W30 bn in 2001. Pantech expects to sell 5.3 mn
units to Motorola - 0.84 mn units for domestic-use and 4.5 mn for exports. While this number is a threefold increase from 2000, the company believes that it reflects the outsourcing trend at Motorola. It states
that the domestic volumes are primarily for IS-95C handsets (thereby implying a back-loaded volume
expectation during 2H01). For export volumes, Pantech states that it has 2.0 mn volume allocation for the
US market during 2001 and a 2.5 mn unit order for the Latin American market between May 2001 to
April 2002, as Motorola is not satisfied with the product quality at its Brazil facility.
Future strategy
Pantech’s future strategy is to grow as an OEM/ODM handset manufacturer with volume and R&D
capability. Pantech internally aims to increase its capacity to 10 mn units over the next few years with a
belief that economies of scale are the key driver under the low profit margin scheme. PANTECH also
hopes to develop about 20 new handset models - thus gradually moving from a largely OEM to ODM
producer. In particular, the company notes that its Latin American volumes will come from models
developed by Pantech. With this objective in mind, Pantech plans to increase its R&D force from 200 to
300 by year-end. The company also formed an alliance with Yogan Co. of Japan, which provides W-CDMA
software and solutions for the NTT Docomo for development of 3G handsets.
Nevertheless, it is vital for Pantech to maintain its long-term relationship with Motorola to secure its
future growth. Motorola’s GSM handset production has been outsourced to Taiwan and China where
cost-effective production is a key driver in the areas. While the closure of Motorola’s US facilities may
have a positive effect on 2001 revenues at PANTECH, it is quite unclear what the long-term relationship
with Motorola will be beyond 2.5G CDMA handsets.
75
Figure 64
Pantech: balance sheet
1997
1998
1999
2000
Net Sales
COGS
Gross Profit
SG&A
Operating Profit
EBITDA
Labor
Non-Operating Income
Interest Income
Non-Operating Express
Interest Expenses
Recurring Profit
Pre-tax profit
Income taxes
Margins (%)
Gross profit
Operating profit
Recurring Profit
EBITDA
Net profit
76.3
63.7
12.5
6.3
6.2
9.3
4.3
1.4
6.6
3.7
3.8
4.1
0.6
3.5
4.6%
16.4
8.1
5
12.1
4.5
35.8
35.3
0.5
6
-5.5
-3.9
4.2
2.5
6.5
2.8
-7.8
-7.8
0
-7.8
-21.8%
1.4
-15.4
-21.7
-11
-21.7
226.6
200
26.6
9.6
17
23.1
5.9
1.9
13.3
4.5
9.6
10
3.6
6.9
3.0%
11.7
7.5
4.3
10.2
3
287.1
260.8
26.3
21.3
5.0
16.0
11.0
2.0
20.9
7.3
-4.9
-4.9
2.6
2.2
-0.8%
26.3
5.0
-4.9
16.0
-2.2
1997
Cash & deposits
Accounts receivable
Others
Inventory
Current assets
Fixed assets
Total assets
Accounts receivable
Other other current liabilities
Current Liabilities
Allowance for liab. nature
Other LT liabilities
Total liabilities
Paid-in capital
Capital surplus
Retained earnings
Capital adjustment
Total stockholder’s equity
Net debt-to-equity
1998
1999
2000
12.7
0.7
8.5
2.9
31.5
56.4
34.4
90.7
7.9
12.1
3.3
23.2
15.5
0.6
0.7
16.7
40
7.2
32.3
10.7
0.6
50.8
16
0.1
4.7
5.9
32.5
59.1
39.4
98.5
3.3
11.5
2.4
17.2
24
0.5
0
24.4
41.6
9.7
47.9
3
-3.7
56.8
18.8
10.2
15.2
3.4
51.7
99.2
50.2
149.4
20.7
30.2
6.4
57.3
14.4
0.6
0
15.1
72.4
9.7
58.1
8.6
0.6
77
13.2
5.9
39.9
14.7
65.5
193.2
109.6
248.8
76.4
64.3
10.3
151.0
22.9
0.3
0.0
23.3
174.3
10.2
58.1
6.3
-0.1
74.5
28
34
20
90.2
(7) Sewon Telecom (36910.KQ/3691 KS)
- Sewon Telecom is a second-tier cellular handset producer in Korea.
- Sewon heavily depends on domestic market.
- The company’s long-term strategy differs with other second-tier manufacturers. Compared to Telson
and Pantech who have chosen to be OEM/ODM producers for global vendors, the company’s‘stand
alone’strategy is considered as an aggressive but risky strategy.
- 2000E is the company’s own estimates
76
Results & forecasts
Valuation
Yr to Dec Sales(Wb) OP(Wb) RP(Wm) NP(Wm) EPS(W) EPS %ch.
Yr to Dec
P/E(X)
P/BVPS(X)
2000
404
20
9.3
8.5
409.1
(28)
#2000
436
6
0.7
1.4
1999
150
11
8.4
8.4
565.0
1029
#1999
443
17
1.9
1.8
1998
32
2
1.4
0.6
50.0
(65)
#1998
6.200
53
8.9
7.6
1997
32
3
1.5
1.5
143.0
n.a.
#1997
2,480
66
8.9
8.2
Share data
Price chart
Price (MM/DD/YY)
3,720
Total no of shs (m)
20.8
Net debt/equity
Mkt cap.(US$m)
58.6
Free float (%)
52 week price range
Book NAV(W)
2696.0
368%
53.5
16,100~2,890
Price performance
Over last
1M
3M
12M
Absoulte
5.7
-20.0
-71.2
Relative to KOSPI
10.8
-7.3
-60.3
Relative to KOSDAQ
10.4
-12.2
-26.7
Major shareholders
SB Hong
16.5%
*2000E is the company’s own estimates
Company profile
Sewon Telecom is a mobile handset manufacturer. Unlike its peers, Telson Electronics and Pantech,
Sewon does not have a dominant ODM/OEM relationship with a global handset manufacturer. Formerly a
manufacturer of credit card verification machines and fax modems, Sewon began producing CDMA
handsets for SK Telecom in 1999 on an OEM/ODM basis. As a result, Sewon has heavily depend on
domestic market with 86% of total handsets shipped to the domestic market (60% to SKT) during 2000.
In addition to mobile handsets, Sewon manufactures MP3 players (2.7% of total sales in 1999) and TRS
handsets (7.4%).
Operation summary
Sewon estimated that total FY00 revenues reached W404.2 bn (+170% YoY), with operating profit of
W29.3 bn (+174%) and net profit of W8.6 bn (+3%). While top-line growth was strong, net profit margin
contracted by 3.5% to 2.1% from 5.6% in 1999 due to high interest expenses. Roughly 86% (1.19 mn) of
the 1.38 mn total shipments were for domestic-use, with the 820,000 shipment to SK Telecom comprising
the lion’s share. The other destinations for domestic shipments were LG Telecom (280,000 units) and
KTM.com (90,000). The bulk of exports were sent to Vitelcom (total 173,000 units - 110,000 CDMA units,
63,000 GSM units), with the remaining 20,000 GSM units sent to Ningbo Bird (China). In 1999, all 332,000
unit sales were CDMA units sent to SK Telecom.
Sewon’s 2000 estimates lag far behind its initial forecasts of W743 bn in revenues (3.5 mn unit sales)
made in early 2000. In 2001, the company’s iuitial target is quite aggressive. The company aims to
increase revenues by 2.5 times to W1.04 tn in sales, with 50% increase in local volumes to 1.8 mn units
and 10-fold increase in export volume to 2.9 mn units (900,000 in CDMA and 2.0 mn in GSM). According
to the company, the huge export forecasts are justified already contracted more than 2.0 mn units for the
export market - 1.0 mn to Vitelcom and 550,000 units each to Ningbo Bird and Eastern Communications
(Eastcom).
Future strategy
Sewon’s current strategy can be clearly differentiated from other second-tier handset makers with its
adoption of‘stand alone’strategy. The management of with the company the company believes that it
cannot secure acceptable profitability by being an OEM/ODM producer. Therefore, it is seeking sales
partnerships with telecoms, especially in South America and China, for its long-term survival.
Since OEM production generally yields low-margin output, the company’s strategy makes sense for
longer-term. However, given global handset market’s consolidation to a group of top-tier producers, the
company’s strategy is aggressive but risky. In particular, with two of three Korean service providers
adopting a de-factor global 3G standard - WCDMA, there will be a less room for smaller, specialised
handset producers to thrive in both domestic and export market.
77
In terms of balance sheet, Sewon has a high debt-to-equity ratio of 415% as at 3Q00. This was mainly due
to borrowings for its acquisition of Maxon Electronics, a producer of GSM handsets with annual unit
capacity of 4 mn, in 2000. Nevertheless, the high-debt level could be potentially troublesome, particularly
given a year of declining margins for handset producers (amid already low margins for Sewon).
Figure 65
Sewon: balance sheet
1997
1998
1999
2000
Net Sales
COGS
Gross Profit
SG&A
Operating Profit
EBITDA
Interest Income
Interest Expenses
Recurring Profit
Pre-tax profit
Income taxes
Net profit
Margins (%)
Gross profit
Operating profit
Recurring Profit
EBITDA
Net profit
32.1
26.2
5.9
2.7
3.2
4.3
0.1
0.1
1.2
0.7
2.1
2.1
0.6
1.5
4.7%
18.4
10.1
6.6
13.4
4.8
31.8
27.2
4.6
2.8.
1.8
5.4
2.5
0.4
3
2.5
1.4
0.7
0.1
0.6
1.9%
14.4
5.7
4.3
16.9
2
149.8
129.9
19.9
9.2
10.7
16.7
4.3
0.5
6.5
5.4
8.4
8.4
0
8.4
5.6%
13.3
7.1
5.6
11.1
5.6
404.0
361.4
42.6
13.7
28.9
46.9
10.3
3.3
30.1
15.8
9.3
9.3
0.8
8.5
2.1%
42.6
28.9
9.3
46.5
8.5
1997
1998
1999
Cash & deposits
Accounts receivable
Others
Inventory
Current assets
Fixed assets
Total assets
Accounts receivable
Current Liabilities
Total liabilities
Paid-in capital
Capital surplus
Retained earnings
Capital adjustment
Net debt-to-equity (%)
2000
2.9
0
9.5
0.4
4.5
17.3
8.9
26.2
4.3
3.9
2.2
10.4
5.9
0.3
0.1
6.2
16.7
3.9
3.7
2
0
9.5
16.4
0
19.8
1.1
6.4
43.6
19.8
63.3
5.6
28.8
1.9
36.3
16.5
0.4
0
16.9
53.2
3.9
3.7
2.6
0
10.2
6.1
0
25
4.7
37.6
73.4
60.3
133.8
10
47.4
3.8
61.3
26.2
0
2.1
28.2
89.5
10
21.8
11.4
1.1
44.2
8.2
0.0
55.2
22.0
107.5
192.9
149.0
341.9
42.8
116.0
-374.4
215.6
59.1
0.2
3.2
62.5
285.7
10.4
25.2
18.3
2.3
56.2
71
284
153
368
78
(8) Telson Electronics (27350.KQ/2735 KS)
- Telson Electronics is a second-tier mobile handset producer, linked largely with Nokia from 2001.
- Telson’s 2000 results are expected to be weak due to the slowdown in domestic demand as well as the
termination of its relationship with Motorola in early 2000.
- The company expects to almost double total volumes in 2001 to reach 2.3 mn units on the back of
strong order from Nokia.
- Although its relationship with Nokia is still unclear, its partnership with Nokia is positive for Telson in
the short-to-medium term given Nokia’s growing global market share and its plan to expand in Korea
to utilize the country as the telecom giant’s Asian production base.
Results & forecasts
Valuation
Yr toDec Sales(Wb) OP(Wb) RP(Wm) NP(Wm) EPS(W) EPS%ch.
Yr to Dec
P/E(X)
P/BVPS(X)
2000
287
13
6.9
6.1
234.4
(60)
#2000
862
7
0.6
1.1
1999
400
19
15.5
11.2
584.0
(1108)
#1999
450
6.14
0.4
1.5
1998
75
11
1.7
(0.9)
(58.0)
(133)
#1998
(5,600)
10.17
2.3
3.9
1997
75
7
2.8
2.1
176.0
n.a.
#1997
2,400
15.21
2.3
6.1
Share data
Price chart
Book NAV(W)
Price (MM/DD/YY)
5,040
Total no of shs (m)
26.0
Net debt/equity
35%
Mkt cap.(US$m)
99.1
Free float (%)
69.6
52 week price range
445.1
(16,400~4,350)
Price performance
Over last
1M
3M
12M
Absoulte
-3.1
-44.0
-59.8
Relative to KOSPI
1.6
-35.1
-44.7
Relative to KOSDAQ
1.3
38.5
2.0
Major shareholders
DY Kim
17.0
Company profile
Founded in 1992, Telson used to manufacture cordless phones and pagers. The company began to
provide mobile handsets for Motorola on an OEM basis from end of 1998. However, the relationship with
Motorola was not a alliance linked with equity investment and the relationship was terminated in early
2000. Since then, Telson has concluded a strategic alliance with Nokia for CDMA handsets on an ODM
basis in June 2000. Telson plans to launch Nokia CDMA handsets for the domestic market sometime in
2001.
Operation summary
Telson estimates that its 2000 revenues closed at W287.4 bn (-28% YoY), with net profit of W6.1 bn (46%). The weak results can be attributed to the slowdown in the domestic market following the
elimination of handset subsidies from June 2000 as well as the impact from the termination of the
Motorola contract. The company’s total volume sales decreased to 1.26 mn units in 2000 from 1.7 mn
units in 1999. Although Telson provided roughly 940,000 handsets for the domestic market (760,000 units
for KT Freetel and 180,000 units for LG Telecom), it was the significant shrinkage in export volume - from
1.6 mn units in 1999 to 320,000 units in 2000 - that resulted in the weak volume shipment. All of its
export volume was shipped to Motorola, which extinct after the end of its contract with Motorola.
Telson believes that the start of its shipment to Nokia will lead to a significant increase in total volume
sales in 2001. Although details of the contract is not released, the company indicates that its 2001
revenue target is W500 bn, based on a 2.3 mn volume target. The guidance suggests that the company
expects to provide 450-500,000 units for KT Freetel, with virtually all remaining volume assumed to be
Nokia-related output (for both domestic and export market). The one thing to note here is that the
Nokia volumes were expected to launch last November/December - but the schedule was delayed due to
issues with product development and testing.
79
Future strategy
While Telson is hoping to become a large-scale producer for Nokia, it is still hoping to retain some
independence. For instance, even for Nokia handsets, Telson emphasises that the relationship is on an
ODM basis - not an OEM basis. The company maintains that it will continue to be responsible for the
design and production functions, while Nokia will focus on the marketing and sales end of the CDMA
handsets.
If the Nokia relationship can lead to meaningful sustainable volumes, it should have positive impact for
Telson. While other global competitors are suffering from loss of market share, it is becoming
increasingly clear that Nokia is becoming global brand leader in mobile handsets. With Nokia shipment
expects to grow 250% to 1.0 bn units by 2004, Telson is aligning itself with a strong partner. Nokia’s
shipment target also implies a need to increase production capability.
Other issues
In January 2001, Telson announced a merger with its affiliate, Telson Information & Communication
(1818 KS). Telson Info & Comm (TIC) is a producer of FRS, LMR handsets, which are cordless phones for
industrial and consumer uses, as well as small volume of CDMA handsets. TIC is estimated to have posted
a net profit of W2.4 bn on revenues of W86.1 bn in 2000. Given similar business lines, the companies
expect to reduce cost (especially SG&A) as a direct result of the merger.
Figure 66
Telson : balance sheet
1997
1998
1999
2000
Net Sales
COGS
Gross Profit
SG&A
Operating Profit
EBITDA
Interest Income
Interest Expenses
Recurring Profit
Pre-tax profit
Income taxes
Net profit
Margins (%)
Gross profit
Operating profit
Recurring Profit
EBITDA
Net profit
75.3
59.8
15.5
8.8
6.7
11.3
3
0.6
6.8
3.4
2.8
2.5
0.4
2.1
2.8%
20.5
8.8
3.8
15
2.9
74.7
54
20.8
10.2
10.6
16.9
3.9
0.9
12.8
6.3
1.7
-0.4
0.4
-0.9
-1.2%
27.8
14.2
2.3
22.6
-1.2
399.5
361.8
37.8
18.9
18.9
28
12.8
2.8
16.2
7
15.5
14
2.7
11.2
2.8%
9.4
4.7
3.9
7
2.8
287.4
246.6
40.8
27.9
12.9
26.1
11.5
4.2
17.5
11.2
6.9
6,946
0.8
6.1
0.02
40.8
12.9
6.9
26.1
6.1
1997
1998
1999
2000
Cash & deposits
Accounts receivable
Others
Inventory
Current assets
Fixed assets
Total assets
Accounts receivable
Current Liabilities
Total liabilities
Paid-in capital
Capital surplus
Retained earnings
Capital adjustment
8.1
0.2
28
1.9
6.4
44.5
24.4
68.9
9.1
15.8
5.4
30.3
16.7
0.5
0.1
17.2
47.5
4.5
10.8
6.1
0
21.4
5.7
0.2
27.7
15.8
20.2
69.6
35.6
105.2
30.1
20.8
3.6
54.5
16.5
0.5
0.1
17.1
71.5
6
21.2
5
1.5
33.7
67.9
5.1
43.7
15.1
25.7
157.5
75.1
232.6
89.7
9.5
9.3
108.5
37.9
0
0.2
38.1
146.6
10.8
59.3
14.4
86.1
1.6
4.0
0.3
25.0
46.2
23.2
98.7
167.4
266.1
35.5
25.1
5.5
66.1
64.3
0.0
19.8
84.2
150.3
13.0
89.4
19.5
6.1
115.8
Net debt-to-equity (%)
113
93
-30
35
80
5.2 Unlisted companies
Mobile Internet taxonomy
The elements that constitute mobile Internet industry continue to evolve as diversity and dynamism is
strongly emphasized in the industry. In turn, the industry continues to attract more ventures with
virtually limitless opportunities for the investors. Such a diversity and dynamism in the industry requires
an analytical tool with which investors and industry analysts may systematically classify industry players
and identify viable opportunities to invest on a managed level of risk. In this report, we have attempted
to provide a meaningful categorization of numerous mobile start-ups in Korea based on their current
activities and performance in the marketplace (refer to the table following).
In order to fully understand the current market conditions and derive at a meaningful statistics of the
mobile Internet industry, an operational definition of the Internet industry must be identified first.
Existing definitions and classification schemes tended to differ based on each organization’s unique view
of the industry. In our scheme, we have attempted to classify the industry into Technological
Infrastructure, Supporting and Applications industry categories.
The classification is based on the purpose and method of mobile Internet utilization, and shares similar
classification criteria currently used by other organizations attempting to do the same. The Technology
Infrastructure category in the mobile Internet industry shares a common corporate objective of providing
mobile Internet services. The Applications industry category includes those corporate entities utilizing
mobile Internet as a tool and method for conducting their corporate activities and generating revenues.
The Supporting category supports the activities of the first two categories through various services and
products.
Figure 67
Mobile Internet industry classification
Mobile
Internet
services
(A)
Contents
Code
Personal information
services
Mobile portal
A11
n-Top, mobile Yahoo!, mobile Lycos
Entertainment
A12
Information services
A13
Downloading service, (character, music,
displaying mode), chatting service
Basic information service (news, stock price alerting,
weather), guide service, advertising service
Games
A14
Java-based game, betting
Personal commerce
A15
Banking, stock trading, reservation, purchasing
Business information Services
Mobile enterprise solution
A21
Mobile office, mobile ERP, inventory management
Business commerce
A22
Mobile EDI, mobile SCM
Customer management
A23
Mobile CRM, mobile DM
Location-based service
A31
Fleet management, navigation, asset tracking
Telemetry service
A32
Remote control, remote measurement
Mobile agency
B11
Mobile site building, contents converting tool
Security solution
B12
Security, authorization
Commerce solution
B13
Advertising, billing, payment, auction etc
Streaming solution
B14
Mobile streaming for PDA and smart-phone
Value-added solution
B15
Voice recognition solution, location-based solution
Business solutions
Education, consulting
B21
Business consulting, market analysis
Hardware
Device manufacturer
C11
Smart-phone, PDA with mobility, Data-communication device
Device components
C12
Battery, display, memory, antenna, bluetooth
Mobile modem
C13
Modem for notebook PC or PDA (ex. CDMA modem)
Mobile peripherals
C14
Cable, hands-free peripherals, input & output accessory
Systems
C15
Base stations, switches, relay systems, etc.
Others
Mobile
Internet
solutions
(B)
Mobile
Internet
infrastructure
(C)
Business examples
Type
Technical solutions
Software
Network
OS platforms
C21
OS, applications for OS platform
Brower
C22
Mobile Browser ex) WAP, ME
Access services
C31
Network service provider ex) SK Telecom
Facility provider
C32
Network rental service, network maintenance
Source : iPACIFIC partners
81
Current status of mobile Internet start-up companies
An objective and concurrent valuation of majority of privately-held mobile Internet venture companies is
a very difficult task due to lack of readily available stock market information. Two of the best indices to
assess market performance of mobile Internet ventures are revenue and the amount of investments
already attracted. Accordingly, we have surveyed each company’s revenues and most recent investment
amounts as of end of 2000. The figures should provide a sense for the approximated company value as
well as future market potentials of each of the industry category.
Currently, over 500 mobile Internet-related companies are estimated to operate in Korea. Due to lack of
available information on these companies and fluctuations in the number of companies in the recent
years, the company survey was a fairly difficult task. We have surveyed about 300 companies through the
Internet and obtained data from 68 of them.
The 68 Korean mobile Internet venture companies that responded to the survey are conducting their
businesses respectively in the 150 specific mobile Internet industry categories. The average company had
about 29 employees with about US$1.66 million of paid-in capital. The aggregate amount of investments
attracted by all 68 companies from venture capitalists amounted to US$92.3 million, or US$1.38 million
per company. As of the end of 2000, their combined revenue was US$75.67 million, or an average of
US$1.13 million per company. When counting only 55 new start-ups established since 1999 out of the 68
surveyed (81% of the total), the combined revenue was US$40.15 million, from US$0.73 million
contributed from each company on an average. Hence, it is difficult to assume that the aggregate and
average revenues of companies surveyed all came from the mobile Internet business alone. Rather, the
figures should be understood as general characteristics of venture companies in the mobile Internet
industry. (Please refer to the footnote for data gathering and analytical methodologies used.)
Figure 68
Current status of mobile Internet start-up companies in Korea
Total
No. of companies
Average
Maximum
Minimum
68
149
2.19
3
1976
29.06
100
6
110.89
1.66
18.60
0.13
92.27
1.38
10.00
0
Revenue (US$ mil.)
75.67
1.13
9.17
0
No. of employees
1
Note : The analysis for this survey was conducted based on data collected from companies during the iPACIFIC Partners survey period (Feb. 2001),
and zeros were used for companies with no investment/revenue. Please take caution in proper interpretation of the presented data.
Figure 69
Current status of mobile Internet start-ups in Korea established since 1999
Total
No. of companies
Average
Maximum
Minimum
55
123
2.20
3
1
No. of employees
1418
25.32
83
6
71.60
1.30
5.83
0.13
61.55
1.12
9.00
0
Revenue (US$ mil.)
40.15
0.73
5.07
0
Source : iPACIFIC partners’ survey
As for the business areas of companies surveyed, 50% of the 68 companies were conducting mobile
Internet business as their primary business, 29% of them were engaged in the mobile Internet solutions
business, and 19% said that they were focusing on the Internet infrastructure business. Because the
market is in its initial stage, most companies were conducting businesses in two or more areas. Among
the 149 business sectors, the largest number of companies were involved in the mobile Internet services.
82
Figure 70
Distribution of Korean mobile start-ups by industry areas
Category
No. of companies
No. of mobile Internet business areas
Number
34
20
14
Total
68
74
44
31
Total
149
Because the mobile Internet market itself is in its initial stage, the companies had very short histories.
82% of the 68 companies surveyed were established on or after 1999.
Figure 71
The commencement for Korean mobile start-up companies
Out of the 68 respondent companies, 55 succeeded in attracting outside investors and 13 had failed to
receive any investments. Out of the 55 investee companies, the largest number of companies were
successful at attracting an investment of anywhere between US$0.5 and 1 million, followed by a range
between US$1 and 2 million. Overall, about US$92 million was invested into the Korean mobile Internet
industry, which breaks down to US$1.38 million per company. As for revenue generation, 13 companies
(19%) had yet to see any as of the end of 2000. Among the rest with revenue, the largest number of
companies generated US$0.5 to 1 million, followed by US$1 to 2 million and US$2 to 5 million. The total
revenue generated by the industry as a whole was about US$76 million, or an average of US$1.13 million
per company.
83
Figure 72
Distribution of Korean mobile start-ups by invested amount
Figure 73
Distribution of Korean mobile start-ups by sales amount
84
Figure 74
Business areas of privately-held Korean mobile start-ups
1
ADDIGITAL
2
AINET
3
AIRI
4
ALEX TECHNOLOGY
5
ANYBIL
6
ANYONE WIRELESS
7
BITEK SYSTEM
8
CARMAGIC
9
CASUH
10
CECRAFT
11
CESSCOM
12
CYPUS
13
DIGIMATE
14
EHEALTH CONSULTING
15
ELECTRIC ISLAND
16
EPITAL HOLDINGS
17
FEELINGK
18
FUTURE TECH
19
GEONSPACE
20
GLOBALWEB
21
HAPPYNET TECHNOLOGIES
22
HNT
23
IMPACTRA
24
INFOART
25
INFOBANK
26
INFOHAND
27
INSIDEKOREA
28
INTROMOBILE
29
ISOFT
services
Network
Software
Mobile Internet
infrastructure
Hardware
Business
supporting
Mobile Internet
solutions
Technical
solution
Location-based/
telemetry
service etc.
Business
information
service
Company name
Personal
information
service
85
30
KISE
31
KSIGN
32
MANASTONE
33
M-COMMERCE
34
METAMEDIA
35
MISTREAM
36
MJOYNET
37
MOBILE C&C
38
MOBILEIT
39
MOBILESTORM
40
MOCOCO
41
MOCONS
42
MOINVALLEY
43
MSTAGE
44
MUSETEL
45
NAZCA
46
NEOMTEL
47
NEOSTEPS
48
NETPLE
49
NETZ COMMUNICATIONS
50
NSLASH.COM
51
NIT SOFT
52
OPENTOWN
53
OVYTZ
54
PALMPALM TECHNOLOGY
55
POINTI.COM
56
PRISM INFORMATION SYSTEM
57
RCHANTECH
58
RUMEX
services
Network
Software
Mobile Internet
infrastructure
Hardware
Business
supporting
Mobile Internet
solutions
Technical
solution
Location-based/
telemetry
service etc.
Business
information
service
Company name
Personal
information
service
86
59
SPREAD TELECOM
60
TOYSOFT
61
U2U4
62
UNIWIS
63
VEGA INFOTEK
64
VERYTECH
65
WIDERTHAN.COM
66
WINK
67
WISENGINE
68
XCE
services
Network
Software
Mobile Internet
infrastructure
Hardware
Business
supporting
Mobile Internet
solutions
Technical
solution
Location-based/
telemetry
service etc.
Business
information
service
Company Name
Personal
information
service
87
Appendix
Appendix
A. Mobile Internet-related organizations in Korea
A.1 IT-related government organizations and research institutes
Ministry of Information & Communication (MIC)
www.mic.go.kr
Ministry of Commerce, Industry and Energy
www.mocie.go.kr
Electronics and Telecommunications Research Institute (ETRI)
Established in 1976, ETRI is a Korean national telecommunication research institute. ETRI has been
responsible for the development of various technologies and products, such as electronic switching
systems (TDX), VLSI chips (DRAM), super mini-computers (TiCOM), and digital mobile communication
systems (CDMA)
82-42-860-6114, www.etri.re.kr
Korea Information Society Development Institute (KISDI)
KISDI is a national research institute that leads telecommunication policy research projects including the
general IT industry of Korea, communication, broadcasting, fair competition, and postal administration.
82-2-570-4114, www.kisdi.re.kr
Radio Research Laboratory (RRL)
RRL is responsible for developing the overall radio wave research plan, mediation, mobile
equipment/electronic communication device certification, testing and management.
82-2-710-6404, www.rrl.go.kr
Korea Electronics Technology Institute (KETI)
KETI is an important national research institute engaged in numerous technical development projects for
electronic and IT industries. KETI also helps small and medium-sized component companies with
technical developments and guidance.
82-31-6104-000, www.keti.re.kr
National Computerization Agency (NCA)
NCA is a national research institute responsible for policy and system research for expediting information
services, information resource management support for national/public organizations, and
development/distribution of IT-related statistics.
82-331-260-2114, www.nca.or.kr
Korea Information Security Agency (KISA)
KISA seeks to establish orders in IT industries by developing information protection policies/systems for
secured information flows.
82-2-3488-3000, www.kisa.or.kr
Korea Radio Station Management (KORA)
KORA develops and distributes radio wave technologies, researches and collects information related to
mobile communication; and is also responsible for mobile base station inspections.
82-2-3141-0001, www.koraa.or.kr
Korea Institute of Multimedia Content and Software (KOMS)
KOMS supports Korean software venture companies and the multimedia contents industry. KOMS
provides marketing, equipment development and technical supports, and also conducts various projects
related to software protection and security.
82-2-3469-1500, www.software.or.kr
Korea Network Information Center (KRNIC)
KRNIC is a key contributor to Korea’s Internet development. Major functions include establishing
management system for the Internet addresses, managing Internet address allotments, and participating
in the various international activities to secure Internet-related interests of Korea.
82-2-2186-4500, www.krnic.net
89
Appendix
Korea Advanced Institute of Science and Technology (KAIST)
KAIST is a world-renown research-oriented academic institution focused on nurturing outstanding
students in science and technology. The organization is also actively engaged in R&D of core
technologies in different areas of research with a primary mission to enhance the country’s technology
base.
82-42-869-2210, www.kaist.ac.kr
Information and Communication University (ICU)
ICU is a graduate school established to prepare distinguished students for technical advancements in IT.
82-42-866-6014, www.icu.ac.kr
A.2 Major IT-related associations
Electronic Industries Association of Korea (EIAK)
Established in 1976, EIAK is the largest association representing Korean electronic and IT industries. EIAK’
s main objective is to gather industry opinions to offer suggestions to appropriate government bodies to
help develop the Korean electronic industry, provide information about the industry and technologies,
and instigate industry promotional activities through various exhibitions.
82-2-553-0941, www.eiak.org
Korea Association of Information & Telecommunication (KAIT)
KAIT consists of 138 member companies and helps develop policies on promoting the use and expanding
telecommunication networks and related businesses.
82-2-580-0601, www.kait.or.kr
Korea Radio Promotion Association (RAPA)
RAPA is the representative organization for the Korean radio industry and seeks development of
effective utilization of radio resources and related technologies. RAPA also operates a testing center for
radio device standards certification registration.
82-2-775-0819, www.rapa.or.kr
Telecommunication Technology Association (TTA)
TTA researches/collects/examines information on the developments in latest IT technologies and
standards, and distributes them to the IT industry for actual applications. The organization also carries
functions related to the standardization of the IT industry technologies and applications.
82-2-723-7071, www.tta.or.kr
Korea Software Industry Association (KOSA)
KOSA is Korea’s largest software-related association, consists of 830 member companies. The
organization’s main founding objective is to promote developments in Korean software and IT industries
and collaborations between related industries.
82-2-586-3411, www.sw.or.kr
Korea Telecommunication Operators Association (KTOA)
KTOA is the representative telecommunication service providers association founded to promote 82-2765-5480, www.ktoa.or.kr
Promising Information & Communication Companies Association (PICCA)
PICCA is an association of small and medium-size IT companies for proficient collaborations and
cooperation in technology exchanges.
82-2-3424-6155, www.picaa.or.kr
Korea Internet Corporations Association (KInternet)
KInternet is a non-profit organization consists of Internet-related Korean companies for promoting
cooperation and information exchange among its members.
82-2-528-0832, www.kInternet.org
90
Appendix
Federation of Korean Information Industries (FKII)
FKII conducts examinations and comparative studies on the Korean computer industry, and seeks
international cooperation among the information industries in many different countries. The
organization also sponsors and holds educational seminars.
82-2-480-0201, www.fkii.or.kr
Korea Entertainment System Industry Association (KESA)
KESA conducts studies to systematically analyze latest trends and information in the domestic and
international game industries to help promote developments in the Korean game industry.
82-2-558-5180, www.game.or.kr
Korea CALS/EC Association (KCALS)
KCALS is a cooperative organization formed with participations from the industry, academia and
government with objectives in promoting and developing technologies utilizing the CALS/EC concept.
82-2-551-1455, www.kcals.or.kr
Korea Internet Association (KRIA)
KRIA is a non-profit organization consists of professionals in Internet-related industries with founding
objective to persistently develop Korea’s Internet industry environment.
82-2-3436-9323, www.kria.or.kr
CommerceNet Korea (CNK)
CNK is the Korean partner association of International CommerceNet, the global leader in development
of international standards.
82-2-771-8558, www.cnk.or.kr
A.3 Major Mobile Internet-related associations
Korea Internet Wireless Institute (KIWI)
KIWI’s organizational objectives are in the establishment of mobile Internet technical standards through
co-development of related technologies and protection of service provider rights. KIWI consists of 300
member companies including mobile Internet technology/solutions providers, mobile telecommunication
service providers, mobile handset manufacturers, and contents providers.
82-2-420-9155, www.kiwi.or.kr
Korea Association of Wireless (KAWT)
KAWT is led by mobile-related technology companies and seeks to cooperate among the members in
joint developments in new technologies, expanding marketing activities and technical alliances, and
attracting overseas investments in numerous business areas that include mobile Internet, m-commerce,
satellite communication, LAN, mobile devices, and IMT2000 equipment.
82-2-6440-0100, www.kawt.org
Wireless Community
Wirelesscommunity is primarily for mobile Internet developers and holds related forums and seminars.
82-2-419-8378, www.wirlesscommunity.org
Daesang Information Technology Forum (DITF)
DITF provides the latest information on mobile Internet, such as WAP, WML, HDML, IMT-2000 and
Bluetooth.
82-2-3408-0354, mobile.daesang.co.kr
Mobile Internet Service Provider Forum
An open forum that focuses on the cooperation among 24 companies dedicated to the mobile Internet.
82-2-555-1742, www.neomtel.co.kr
91
Appendix
Mobile Venture Consortium (MVC)
MVC seeks co-development of mobile-related technologies between Korea and Japan. MVC possesses
technologies in SI, PDA, EDI and Intranet.
82-2-3430-6807
Korea Digital Content Forum (DCForum)
DCForum has 21 participating organizations, including MIC, for research, examination and provision of
technology standards related to digital contents.
82-2-318-5050, www.dcforum.or.kr
Mobile Internet Terminal Association (MITA)
MITA is an association formed by mobile Internet terminal device manufacturers, software and
application development companies for co-purchase of device components and technology alliances.
82-2-3473-8114 (ex.101), www.koreamita.org
Korea Mobile Internet Service Provider (KMISP)
KMISP is a cooperative organization consists of small-sized and ventures companies with mobile Internet
technologies desiring to become mobile ISPs. KMISP’s objective is to develop and distribute mobile
Internet service, contents and solutions.
82-2-590-4900, www.kmisp.net
B. Korean venture capital market
B.1 Overview of Korean venture capital market
Along with the blazing KOSDAQ market in the recent years, Korean venture capital investments
increased rapidly in 1999 and 2000 in terms of the number of newly established venture investment
companies and invested amount. According to venture capital regulations and the nature and extent of
investment operations of each company engaged in the business, Korean venture investment companies
can be categorized into 3 major categories: New Technology Business Financing companies (NTBF), Small
and Medium-sized Business Venture Capital (SBVC), and Corporate Venture Capital (CVC). The venture
capital companies in Korea were established on the enacted legislations of the‘Small and Medium-sized
Business Support Law’in 1986. The number of venture capital companies in Korea increased from 11 in
1986 to 60 in 1997, 71 in 1998, 94 in 1999, and 148 at the end of 2000. Such a rapid increase in number
of VC’s operating in Korea came in the back of KOSDAQ’s unprecedented success as a major trading
platform for venture companies, and the government’s strong will to nurture and support the
establishment of venture start-ups and institutional support granted to VC’s to promote venture
incubation. In addition to the VC’s, traditional financial institutions (banks, securities firms, investment
companies), conglomerates, major corporations, and small and medium-sized companies have actively
invested in venture operations and start-ups. In the years 1999 and 2000, a substantial amount of funds
were invested in venture companies with major investment objectives of securing new business
opportunities and large return on investments.
Aside from investments made by NTBF and SBVC’s, an exact assessment of total venture investment
amount is difficult, especially the investments by traditional financial institutions and corporations.
Based only on available information, the total amount invested by the NTBF and SBVC’s alone increased
by two-fold from US$1.26 billion in 1996 to US$2.7 billion in Sept. 2000. As shown in the following table,
there have been exceptional increases in investments made by NTBF’s with the privatization of KTB
Network in Feb. 1999 that shortly followed with aggressive venture investment activities.
92
Appendix
Figure 75
Venture capital investments in Korea: 1996~2000 (in US$ mil.)
1996
New Technology Business Financing Companies (NTBF) *
1997
1998
1999
Sep. 2000
218
384
363
871
845
Small and Medium-size Company Venture Capital (SBVC)**
1031
1240
1098
1238
1857
Total Venture Investment
1249
1624
1461
2109
2702
Note: Venture investment amount is the residual of the total invested amount; and the amount for NTBF’s is the total amountinvested by four companies.
Since 1999, there has been a substantial increase in venture investments by the traditional financial
institutions and major corporations. Since late 1997, companies have reinforced their investments in
venture operations and start-ups in a search for new business opportunities and revenue sources amid
the devastating nation-wide restructuring that largely deteriorated profitability of traditional businesses.
Foreign companies have also been increasing their investments in Korean venture companies, recognizing
their growth potential in the IT and Internet fields.
In terms of total venture capital investment in Korea by each type of investor, KTB Network led the NTBF
investments, with the giant VC that was privatized in March 1999 contributing over 65% of total NTBF
investments. Initially, KTB Network was established in 1981 as a state-run VC that specialized in VC
investments in technology and small-to-medium sized companies. The total amount invested by four
NTBF’s in Korea amounted to US$863 million by 2000, or about four times the total in 1996 that
amounted to US$218 million.
Figure 76
Venture investments made by new technology business financing companies
Total investment balance (US$ mil.)
1999
2000 2Q
KTB Network
507.8
567.8
KDB Capital
221.8
117.6
TG Venture
117.5
118.3
K-TAC
24.2
59.4
Total
871.3
863.1
Source: Internal data contributed by each firm
Aside from their venture investment operations, NTBF’s perform a variety of financial services to their
investee and client companies. The SBVC’s, in contrast, mainly focus on their VC investment operations.
The number of SBVC’s registered with Korean Small and Medium Business Administration doubled from
72 in 1998 to 148 in Oct. 2000. As of Oct. 2000, there are 267 investment unions created and operated by
these companies. Unlike the traditional U.S. VC’s that are created in the form of partnerships, Korean
venture companies are required by law to be incorporated as corporations, with a required minimum
initial capital injection of approximately US$8.3 million. Accordingly, investment resources of Korean
venture capital companies derive mainly from their internal funds (capital, etc.) and investment union
funds. As of Oct. 2000, total venture investments were US$2.1 billion on 4,778 transactions, or an
average of US$0.45 million per invested company and US$14.7 million per venture capital company.
93
Appendix
Figure 77
Investments made by small and medium-sized business venture capital companies: 1998 to 2000
No. of VC companies
No. of VC funds
No. of professionals (Executives)
No. of new VC funds raised
Total venture investment resource (US$ mil.)*
Newly created venture investment funds (US$ mil.)
Total venture investment (US$ mil.) **
New venture investment (US$ mil.)
Total No. of investments
1998
1999
Jun. 2000
Oct. 2000
72
95
135
148
92
144
210
267
n.a.
213
288
324
35
46
58
75
n.a.
4,552
5,124
5,539
750
1,045
1,299
1,576
1,098
1,238
1,748
2,136
181
792
1414 ***
1,782
2,457
3,692
4,778
Average investment per VC company (US$ mil.)
n.a.
n.a.
13.9
14.7
Average investment amount per investment (US$ mil.)
n.a.
n.a.
0.47
0.45
Note: * Total Venture Investment Resource is the sum of company’s internal funds and investment union funds.** Based on
balance amount. *** As of Dec. 2000. / Source: KVCA (2000, 2001) SMBA (2000)
B.2 Overview of Korean VC’s investment in 2000
In 2000, Korean venture capital companies invested US$1.4 billion into 2,530 companies, an increase of
78% from 1999. Korea’s venture investment was 0.35% of its GDP (US$402 billion in 1999), ranking third
in the world in terms of percentage of GDP invested in ventures, behind the U.S. with 0.53% and Israel.
However, in terms of investment amount, the top 20 companies took more than 50% of the total
investment, signifying a wide gap between companies in their fund gathering and operating capabilities.
Moreover, following the fall of technology stocks worldwide in the late 2000, the crashed KOSDAQ
market brought the investment activities of the VC’s to a near halt. Since IPO’s through KOSDAQ have
been and are the primary method for Korean VC’s to retrieve their investments, the sluggish KOSDAQ
performance naturally led the VC’s to take a conservative stance in venture investments.
Figure 78
Percentage of investment amount by small and medium-sized business VCs
Total amount invested (US$ mil.)
% of the overall investment (%)
Top 10 Companies
509.8
36.1
Top 20 Companies
744.7
52.7
Top 30 Companies
911.6
64.5
Category
Source : SMBA, KVCA
n 2000, the Korean VC’s made the largest investments in IT areas including Internet and software with
US$905 million (64.0%), followed by US$174 million (12.3%) in device/material, US$110 million (7.8%) in
bio-medical, and US$224 million (15.8%) in other areas.
94
Appendix
Figure 79
Areas of investments made by small and medium-sized business VC’s: 2000
Source: SMBA, KVCA
The fall of technology stocks worldwide that started in 2000 has seriously affected investments in Korean
venture companies. Since the first quarter of 2000, Korean venture capital investment is at a stalemate.
KOSDAQ took a dive along with NASDAQ, and it has become difficult for Korean VC’s to retrieve
investments, making them reluctant to make large investments. According to a recent study, Korean VC’s
are planning for investments in 2001 at a level equal to or less than the amount they invested in 2000.
Figure 80
Investments made by major Korean venture capital companies in 2000
2000 Investment(US$ mil.)
2000 Investment(US$ mil.)
1
KTB Network
416.67
20 IBK Capital
20.58
2
Samsung Venture Investment
115.17
21 Hansol Capital Investment
19.17
3
Korea Technology Investment
90.25
22 Koram Open Technology Investment
17.67
4
Terasource Venture Capital
85.25
23 iPACIFIC partners
17.08
5
KDB Capital
74.17
24 Pacific Ventures
16.83
6
STIC Netword
57.42
25 Tongyang Venture Capital
16.42
7
TG Venture
47.42
26 Postech Venture Capital
14.58
8
Kookmin Venture Capital
45.25
27 Pacific Ventures
12.83
9
LG Venture Investment
44.75
28 Millennium Venture
12.75
10 Astec Venture Capital
42.33
29 Insite Venture
8.08
11 UTC Venture
41.50
30 Saturn Venture Investment
9.17
12 Shinhan Venture Capital
41.50
31 Shinsegi Ventures
6.25
13 IMM Venture Investment
36.92
32 Platinum Ventures
5.67
14 Wooree Technology Investment
36.25
33 Hanvit Venture Capital
5.33
15 Next Venture Investment
34.17
34 Wooshin Financing
5.00
16 Mirae Asset
29.67
35 Hansol-I Ventures
3.83
17 Hyundai Venture Investment
28.92
Total
18 Bokwang Venture Capital
24.33
Average Investment per VC
19 Sinbo Investment Capital
23.92
1507.08
43.06
Source: inews24 (2001), SMBA (2000)
95
Korean Mobile Start-up Companies
Korean mobile start-up companies
AdDigital
Founding Date
10-Aug-1999
Industry Category
(Code)
Mobile Advertisement Agency (A13)
Mobile Games (A14)
CEO
Jung, Yun Sung and Ahn, Jong Bae
# Employees
35
Address
216-3, Nonhyun-Dong,Kangnam-Ku, Seoul,
135-010 Korea
Phone: 82-2-3443-1533, Fax: 82-2-3443-1539
www.addigital.com
1. Mobile Advertisement Solution and Service
We provide powerful mobile advertising technology
such as personal customized banner Ad, game
associated Ad, animation Ad, motion image Ad. We
were selected as partner of SKT’s IMT 2000 Project.
Business Description
2. Digital Webcasting, Mobile Games, On-line Game
We are developing on-line and off-line games and
service Tvnet which is an interactive live broadcast
technology that enables synchronous TV/internet
broadcasting
Major Clients
Posco, LG-Capital, SBS, Compaq, Wowbook,
Korea Telecom Public Telephone, BMW
Strategic Partners
SBS, MBC cable, DMA Korea, Ace VR, J&A PR,
Seoul Digital University, Mae-Kyung Economy
Key Investors
KITC
Date
Fund Raisings
Major Investors
1-Jan-2000
KITC
Total Capital (US$ mil.)
Round Amount
(US$ mil.)
0.84
Total Sales (US$ mil.)
Financial Status (Dec 2000)
0.958
0.84
Note) US 1$ = 1,200 Korean Won
97
Ad Telecom
Founding Date
4-Apr-2000
Industry Category
(Code)
Advertising solution (A21)
Customer management (A23)
Mobile agency (B11)
CEO
Lee, Jae Won
# Employees
6
Address
2N366 D, Inha University, 253, Young Hyun-Dong,
Nam-Gu, Inchon, 402-751 Korea
Phone: +82-32-860-7382 Fax: +82-32-863-4244
www.AdTelecom.com
1. Ad Wizard
A totally new concept of advertiser-driven mobile
Internet advertising tool. An advertiser, on a PC
connected to Ad Wizard installed on a web server, just
inputs the advertising content which is automatically
converted into one of WML, mHTML, HDML, or cHTML
contents automatically. Suitable for small to medium
CRM applications.
Major Clients
Shopping Card Companies, Bank,
Industry & Commercial, Service and Government
Small to medium businesses
Strategic Partners
Compaq Korea
Key Investors
Under seeking
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
98
AINet
Founding Date
Jun-2000
Industry Category
(Code)
Mobile Portal (A11)
Customer Relations (A23)
Mobile Agency (B11)
CEO
Lee, SangWoo
# Employees
56
Address
5th Floor, Hae-Sung2 Bldg. Daechi-Dong, Kangnam-Ku,
Seoul, Korea 135-280
Phone: 82-2-560-9317 Fax: 82-2-567-4639
www.ainet.co.kr
1. Mobile Internet Service Providing
AINet provides diversified and complete wireless Internet service
such as web mail, web diary, PDM, character & melody
download, mobile homepage, banking, stock, etc as well as
simple information including news and location, and the number
of provided contents is more than 500.
2. Mobile Internet Solution Providing
Currently, AINet has eighteen wireless Internet solutions of its
own such as stock, banking, PDM, mail, diary, game, etc. and has
been updating the solutions, developing new solutions. AINet
exported the wireless Internet total solution to GoNext, a mobile
communication company, to successfully provide the service in
Israel in 2000. The significant advantage of AINet wireless
Internet solution is to cover all wireless Internet protocols
released currently and browser-ME, WAP, UP, I-Mode and
ANYWEB, and solve the security problem which is the biggest
problem in WAP to guarantee end-to-end security.
AINet provides customized total solution and accompanied H/W,
consulting, etc. so that foreign mobile communication companies,
phone makers, and service providers can provide services wanted
by customers according to their own market environments
Major Clients
Mobile Communications Carriers:
SK Telecom, Korea Telecom Freetel, SK Shinsegi
KT M.com, LG Telecom
Phone Maker:
Samsung Electronics,Hyundai Electronics
Strategic Partners
The Goldman Sachs Group Samsung Electronics
Mobile Communications Major carriers (SK Telecom, LG
Telecom, and Korea Telecom Freetel)
Key Investors
The Goldman Sachs Group, Hyundai Securities,
Tongyang Venture Capital, Kookmin Venture Capital
Fund Raisings
Round Amount
Date
Major Investors
20-Jun-2000
The Goldman Sachs Group
5.0
3-MAY-2000
Hyundai Securities
2.0
24.MAY-2000
Tongyang Venture Capital
2.0
(US$ mil.)
1.515
5.073
99
AirI
Founding Date
11-Nov-1999
Industry Category
(Code)
Mobile portal (A11)
Entertainment (A12)
Mobile agency (B11)
CEO
Seong, Gyu-yeong
# Employees
53
Address
6th Floor, Seo-il Bldg. 222, Chamsil-Dong,
Songpa-Ku, Seoul, 138-220 Korea
Phone: 82-2-424-4945 Fax: 82-2-425-4944
www.airi.co.kr
1. Wired & wireless combination portal site“AirI”service
Wired & wireless combination portal site composed of 6
categories of e-mail, PIMS, community, meeting & chatting
and information targeting the younger generation. Listed as
an independent portal site in Korean mobile carriers’menu.
2. Killer contents service.
AirI provides m-cartoon service, ringing music download
service, character download service, meeting&chatting service
and m-advertisement service.
M-cartoon service reached more than 20 million view pages
as of Feb. 2001.
And AirI has more than 20 licenses of characters and more
than 2000 of ringing music.
3. Mobile Solution & SI (System Integration) Service.
AirI provides solutions for wired & wireless combination
portal site, voice portal site and mobile intranet & extranet
portal sites. We have constructed anyweb portal site of
Samsung Co., Ltd. and exported information contents (ex.
information service of stock, weather, movie, ranking, etc.) to
Japan.
Major Clients
Mobile carriers: SK Telecom, Korean Telecom Freetel
LG Telecom
Terminal Handset Manufacturer: Samsung Co., Ltd.
Contents Provider:MTI Ltd., Japan
Strategic Partners
31 partners of mobile carriers(5), Contents Providers(16),
Terminal Handset manufacturer(2), PC
Communication(Information Provider : 1), ISP wired
portal (2), partners in abroad(2) and etc.
Key Investors
Daishin securities Inc., The Korea Development Bank
Fund Raisings
Date
Major Investors
Round Amount
Mar-2000
Daishin securities Inc.
0.875
Apr-2000
The Korea Development Bank
0.816
(US$ mil.)
Total Capital (US$ mil.)Total Sales (US$ mil.)
4.777
100
Alex
Technology
Founding Date
20-Jul-2000
Industry Category
(Code)
Personal Commerce(A15)
Information Services (A13)
CEO
Lee, Sun-rim
# Employees
43
Address
9F, Inyoung Bldg 44-11 Youido-Dong, Yongdungpo-Gu
Phone: 82-2-2129-3400 Fax: 82-2-2129-3410
http://www.alextech.co.kr http://www.ezsignal.co.kr
1 Cyber Stock Trading Center Service
2 ASP Service (Financial, Stock Trading, Mobile Trading etc.)
3 Financial Solution
(Internet Banking, Internet insurance etc.)
4 PDA Solution Development
Mobile Trading Service
Real-Time update information
SMS Alert
Instant Message Service
5 Internet Betting Solution Development
Major Clients
The security corporation
The futures corporation
Distribution Industry
Internet users
Strategic Partners
EasyM Co., Ltd, Jtel Co., Ltd, Metis Co., Ltd
Korea Herald and Naeway Economic Daily,
Cyber Petrol Co., Ltd
I mobile Computing Inc, Korea Daily News
Key Investors
Individuals, STI Fund Management Co., Ltd
Business Partners, Employee
Date
Fund Raisings
Major Investors
(US$ mil.)
9-Oct-2000
-
US$0.23Mil
14-Dec-2000
-
US$0.09Mil
18-Jan-2001
-
US$0.05Mil
1-Feb-2001
-
US$0.09Mil
19-Feb-2001
-
US$0.09Mil
Round Amount
US$0.96Mil
US$2.92Mil
Note) US 1$ = 1,200 Korean won
101
Anybil
Founding Date
11-Feb-2000
Industry Category (Code)
Mobile agency (B11)
CEO
Kim, Sang Bok
# Employees
14
Address
5th Floor, Dong-Joe Bldg. 63-70 Hangang-Ro 3-Ka,
Yongsan-Ku Seoul, 140-031 Korea
Phone: 82-2-797-6491 Fax: 82-2-797-6493
www.anybil.com
1. AnyBuilder 2001
AnyBuilder2001 is an authoring tool for building mobile web
sites supporting all current markup languages, including
WML, HDML, mHTML and cHTML. Both personal and
enterprise versions are offered, at $46 and $330 respectively.
InsungDigital is the domestic distributor and a Japanese
version is slated for launch this March. ersonal : $46
2. Mnuri.co.kr
Munuri is a web site that lets the average user build their
own mobile internet homepages. We offer bulletin boards,
address book, Q&A, and mail service. We support WML,
HDML and mHTML. We offer mobile homepage hosting at
http://www.mnuri.co.kr/ID that can be accessed with a
mobile phone.
Major Clients
Education: Hitel Information Educational institute,
Young-Jin College
Contents Providers & Personal Users: Kynax, ShesClick,
Tas21, Mypartners, NeoVision Korea, MovingNet
SI companies : Samyang Data System
Strategic Partners
Samyang Data System (System Intergration)
Opentown (Mobile Portal)
NoeMtel(Image Compression for mobile moving picture)
Insung Digital (Software Channel)
Key Investors
Iwha Electronic
Samyang Data System, Samyang Corporation, U-click
Fund Raisings
Date
Major Investors
Round Amount
24-Feb-2000
Iwha Electronic
0.250
10-Aug-2000
Samyang Data System
(US$ mil.)
0.267
0.767
0.02
102
ANYONE
WIRELESS
Founding Date
1-Jan-1999
Industry Category
(Code)
Mobile agency (B11)
Device components (C12)
Mobile Enterprise solution (A21)
CEO
Jung, Jerry
# Employees
45
Address
5th Floor, Namseoul Bldg. 1304-3, Seocho-Dong
Seocho-Ku, Seoul 137-074, Korea
Phone: 82-2-6440-0185 Fax: 82-2-6440-0199
www.aow.co.kr
1. Wireless Internet Protocol Conversion Gateway
Any One Wireless has contents converting solutions
and wireless networking solutions. MobileNexus is a
contents converting gateway that supports all wireless
internet protocols used in most countries.
2. Wireless Networking Devices
WLAN module and wireless router follow the standard
IEEE802.11b and it supports 11Mbps speed. WLAN
and wireless router are essential for the broadband
wireless network system. Any One Wireless supplies
wireless network solutions.
Major Clients
Domestic: Samsung Electronics, KTIDC,
Overseas: Omron corp., Furukawa Electronic Co.
Strategic Partners
Samsung SDS, Unisoft Co., Compaq, Koei Electronics
Co., CSK Electronics
Key Investors
Jerry Jung(CEO), KDB Capital, Sevit Venture, Skylove Co.
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
31-Jul-2000
Sevit Venture, Skylove Co.
0.525
15-Jan-2001
KDB Capital
0.417
1.595
3.202
103
Bitek System
Founding Date
8-Jan-1988
Industry Category
(Code)
Mobile Enterprise solution(A21)
Value-added solution(B15)
Mobile agency(B11)
CEO
Lee, Baik Yong
# Employees
65
Address
Rm. 804, Trade Tower Korea World Trade Center,
Samsung-Dong, Kangnam-Ku, Seoul, 135-797 Korea
Phone: 82-2-551-2040 Fax: 82-2-551-2021
www.bitek.co.kr
1. Mobile*Office2.0
BITEK Mobile*Office2.0 is a complete mobile
connector for IBM Lotus Notes/Domino, Microsoft
Exchange Server and any other groupware/intranet
systems including KMS. Users can access, retrieve, and
print corporate data anywhere, anytime.
Mobile*Office supports various mobile devices like
WAP phone, Mobile Explorer Phone, Palm and the like
Major Clients
Contents Providers, Personal Users, SI Companies
KIST, Fire & Marine Insurance (LG, Daehan, Shindongah)
KL-NET, Hansol CSN, CAR123 etc.
Strategic Partners
SK Telecom, L&H Korea
Key Investors
KTB(Korea Technology Banking Corporation)
KDBC(Korea Development Bank Capital Corporation)
IBK Capital(Industrial Bank of Korea Capital Corporation
SK Telecom , SK Corporation
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
Jun-1997
KTB etc.
0.67
Aug-1999
KDBC
IBK Capital etc.
2.50
Apr-2000
SK Telecom
SK Corporation
1.25
5.42
9.17
104
CarMagic
Founding Date
23-Feb-1999
Industry Category
(Code)
Telemetry service (A32)
CEO
Lee, Wooyeol
# Employees
18
Address
5th Floor, Sam-Hyeong Bldg. Seocho-Ku Seoul,
137-887 Korea
Phone: 82-2-3463-5396 Fax: 82-2-3463-5359
www.carmagic.co.kr
1. Contents (Car information)
Carmagic content consists of information about the
status and history of a given car. The content is
currently being provided to the major mobile carriers.
2. mCRM Solution
A mini CRM solution for personal business user who
need customer relation such as car dealers, car
equipment shops, insurance agents, and video rental
shops. And it includes SMS(Short Message Service),
DM, and E-mail messenger.
3. Interface telemetry control / car condition scanning
An interface for drivers and repairmen. This interface
connects the car’s ECU(Electronic Control Unit) with a
computer, PDA, or Mobile phone through bluetooth.
It offers easy scanning of car conditions, remote
starting, and auto thief prevention.
Major Clients
Strategic Partners
Car Maker (KIA motors, DAEWOO motors, HYUNDAI motors)
Mobile Carrier (SKT, KT, LGT)
Mobile Portal (Ainet, Chollian, Nownuri)
Used Car Auction (Seoul Auto Aution)
Car Magazine (Cartech)
University-industry collaborated institute (The Automobile HighTechnology Research Institute (AHTRI),Chonbuk National
Univercsity)
Key Investors
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.5
0.3
105
CASUH
Founding Date
09-Sep-2000
Industry Category
(Code)
Mobile Modem (C13)
Device Components (C12)
Mobile Peripherals (C14)
CEO
Ryu, Seung-Moon, Ph. D.
# Employees
8
Address
C-528, Sigma II Officetel, 18, Gumi-Dong, Pundang-Ku,
Songnam-Shi, Kyungki-Do, 463-741, Korea
Phone: 82-31-713-5748, 713-0386 Fax: 82-31-713-5752
www.casuh..com
1. PW/CDMA
Our own technology that offers low cost, high speed
wireless data transmissions by removing mutual
interference among nearby users. We offer our own
wireless receiver/transmitter modules and software
and application systems for the module. We also offer
high quality wireless multimedia data
receiver/transmitter, multi-channel
microphone/headset for broadcasting, mp3 player,
key-phone system, security system and home alliances
control system.
Major Clients
Strategic Partners
Llutec Co., Ltd. L.C Tek Co., Ltd. EZ Digital Co.,Ltd.
Seenode Co., Ltd. Next Chip Solution Co., Ltd.
GS Teletech Co., Ltd.
Key Investors
iPACIFIC partners Inc.
Date
Fund Raisings
30-Oct-2000
Major Investors
iPACIFIC partners
Round Amount
(US$ mil.)
0.5
0.437
106
CECRAFT
Founding Date
Aug-1998
Industry Category
(Code)
Games (A14)
Mobile agency (B11)
CEO
Park, Beom-seo
# Employees
20
Address
3rd Floor, Han-duck Bldg. 66-3, Nonhyun-Dong,
Kangnam-Ku Seoul, 135-010 Korea
Phone: 82-2-548-4634 Fax: 82-2-511-7286
www.cecraft.com
1. Entertainment software for PDAs (including O/S,
firmware, and application)
Developed PalmGolf, the world’s first golf game for
WinCE2.0
Developed iGolf, a 3D golf game for Multi-platform
with Online features
Developing various game for PDA (Cecraft Pinball,
Lupin’s Diary for PDA)
2. Mobile CP Business
Dentertainment contents for wireless Internet based
on WAP and JAVA
Providing game contents for LG ez.JAVA
Scheduled to provide contents for n-TOP, magicⓝ
3. SI Business
Converting wired contents into wireless contents
Major Clients
Contents Distributors
www.handango.com, www.pocketgear.com in US
www.kpda.co.kr in Korea
Personal Users
Strategic Partners
Samsung Corporation, Internet TV Networks,
Semosoft SI support, LG Telecom
Key Investors
iPACIFIC partners
Date
Fund Raisings
21-Jul-2000
Major Investors
iPACIFIC partners
Round Amount
(US$ mil.)
0.833
1.061
0.108(2000/7~2000/12)
107
Cesscom
Founding Date
14-Aug-1998
Device Manufacturer (C11)
CEO
Chun, Byung Yeup
# Employees
20
Address
15th Floor, Dong-hwa Bldg. Seosomun-Dong, Jung-Ku
Seoul, 100-110 Korea
Phone: 82-2-750-8600 Fax: 82-2-750-8699
www.cesscom.com
1. Wireless PDA
We introduced our wireless PDA product March this year.
Our product will be an innovation in mobile computing
with its versatility and multi-media features as well as its
access to the Web.
2. Wireless Solution
We are Korean distributor of Extended Sytems’s product.
Extended Systems is the best know company for mobile
device sync server and technologies. Now we find
enterprise site to adopt wireless PDA with solutions.
Mobile Commerce Solutions,
Mobile Contents service Solutions,
Mobile Enterprise Solutions.
3. Semi-conductor B2B Service
We already launch web site for semi-conductor ecommerce.
Major Clients
Wireless PDA
Korea Telecom Freetel
Strategic Partners
Korea Telecom Freetel, Hitel.net, Yahoo! Korea
Mitsubishi, Casio, Palm
Key Investors
Fund Raisings
Round Amount
Date
Major Investors
Apr-1999
Angel, employer
1.791
Jun-1999
LG Venture Investment
Ibest Venture Investment
0.510
Dec-2000
Shinhan Bank
KDB Capital
Mitsubishi Corporation
2.345
(US$ mil.)
2.504
0.999
108
Cypus
Founding Date
15-Jan-2000
Industry Category
(Code)
Mobile portal (A11)
Mobile agency (B11)
CEO
Kim, Myoungsoo
# Employees
13
Address
Suite 302, Yulam Buld. 127 Nonhyun-Dong
Gangnam-Ku Seoul, 138-823 Korea
Phone: 82-2-3442-2818 Fax: 82-2-3442-2830
www.cypus.com
1.eZiFind (Alphanumeric Domain Search Engine)
eZiFind improves the quality of mobile telecom services. Users
locate target URLs promptly through any wireless internetenabled devices such as mobile phones and handheld
computers. CYPUS eZiFind makes mobile website searches
easy and fast. Just press the number keys corresponding to
the domain name
2. Alphanumeric Dictionary
Simple Click dictionary is an essential tool to look up words
with mobile devices. Users can look up a word by simply
pressing the keypad corresponding to the word.
3.Cypus Simulator
Allows display from wireless environment to be seen in a
wired environment. Cypus Simulator supports all the wireless
markup languages including WML, HDML, mHTML, and
wbmp.
4.Cypus Chatting
Chatting with each other is possible with the use of mobile
and web. Cypus chatting can exchange fast information in
anywhere, anytime, everything
Major Clients
Wireless carrier & Portal site &Personal Users
KT freetel , KT m.com , Shinsegi , LG telecom, Dacom
Zi Coporaton (worldwide marketing of Cypus’products)
MSN Korea
Strategic Partners
Zi Corporation, Hyundai Corp, Compaq Korea, Dacom, I
Pacific, Gold Bank
Key Investors
Zi corporation (Zi Corporation is listed on the NASDAQ National
Market (ZICA) and Toronto Stock Exchange (ZIC))
Date
Fund Raisings
23-Oct-2000
Major Investors
Zi corporation
Round Amount
(US$ mil.)
0.050
0.427
0.058
109
DigitMate
Founding Date
19-Jun-1999
Consulting (B21)
Mobile Agency (B11)
CEO
Han, Jaemin
# Employees
22
Address
Samchang Plaza Bldg. 307, Mapo-Ku, Seoul,
121-040 Korea
Phone: 82-2-711-1024 Fax: 82-2-3274-1024
www.digitmate.com
1. Information Services
We provide stock & business related information to mobile
portals and mobile service providers through Digitmate’s web
site, www.moneytop.co.kr.
2. Mobile Business Consulting
As a consulting firm, we plan, CP-source and implement, and
maintain mobile portals, provides mobile-related consulting to
individual companies, and acts as Contents Syndicator on
commission base.
3. Mobile Agency
Utilizing our mobile solutions covering PIMS, Email, SMS, etc, we
provide system integration(SI) service to individual companies.
Major Clients
Carriers / Portals : SK Telecom, SK Sinsegi Telecom,
Intec Telecom, @Phone Telecom, Widerthan
SI Companies: SK C&C
Contents Syndication: Hyundai Corp.
Strategic Partners
SK Telecom, SK Sinsegi Telecom, Intec Telecom, @Phone
Telecom, SK C&C.
Key Investors
Han, Jaemin ( CEO of Digitmate Co., Ltd )
Kim, Jongwoo, Digitel Co.
Date
Fund Raisings
Feb-2000
Major Investors
Individuals
Round Amount
(US$ mil.)
0.67
0.75
0.43
110
eHealth
consulting
Founding Date
10-Mar-2000
Information Services(A13)
Brower(C22)
CEO
Seo, Hyuen-jeong
# Employees
9
Address
4th Floor, An-Won Bldg. 14-15,Yeouido-Dong,
Yeongdeungpo-Ku Seoul, 150-010 Korea
Phone: 82-2-780-3575 Fax: 82-2-780-3574
www.ehealth24.com
1. e *Health PRM Solutions
(= Personalized Health Information Service over Internet &
Wireless Network)
PRM(Patient Relationship Management)
Report appointments and lab results, and provide
personalized service over wireless network
EMR (Electronic Medical Record)
Healthcare Information“Push”(Reservation Notification,
Patient Reminder)
Healthcare Information:“On Demand”
Reference (Medical History)
2. e *Health Point-of-Care (POC) Solutions
(= Specialized Medical Information Solution with PDA)
Seamless Integration with HIS
Mobile Nurse / Doctor
Medical References
Patient Record Tracking
OCS connected
Basic EMR content
Patient Systems
Patient devices for disease management
Diabetes, Congestive Heart Failure, Asthma, and other
Chronic illnesses
Major Clients
Hospitals
Mobile communication Service Enterprise
Individuals
Strategic Partners
Jtel, Georgetown University Medical Center, Dr4U
Key Investors
the Management 52.6%, employees 5.7%, institutional
investors 3.5%, individual investors 38.2%
Date
Fund Raisings
9-Jun-2000
Major Investors
Next-Ventureport etc
Round Amount
(US$ mil.)
0.667
0.819
0.0
111
Electric
Island
Founding Date
01-Feb-2000
Games (A14)
CEO
Cho, Kyung Min
# Employees
15
Address
3rd Floor, EyunHye Bldg. 392-1 Yangjae2-Dong,
Seocho-Gu Seoul, 137-132 Korea
Phone: 82-2-578-0337 Fax: 82-2-578-0231
www.electricisland.com
Electric Island Inc. is a leading-edge provider of the purely
JAVA-based games and multimedia solutions. We
have already developed Network Game Frameworks
(NGF) and Cyber Community Builder Package.
We have provided our clients with various types of java
games using NGF via the Web and Mobile phones.
And also we are developing online games using JAVA
Technology, NGF.
Cyber Community Builder Package is a prominent
authoring tool which enables businesses and individuals
to make their own 2D Image and graphics based web
sites. It will be upgraded for individuals to communicate
with each other via the Web and Mobile phones.
Electric Island Inc. will be a leading company as a java
mobile games provider in the mobile internet business.
Major Clients
Domestic - LG Telecom
Strategic Partners
Opentown Co., Ltd.
Asia Amuse Co., Ltd.
Innovay Inc.
JKDSoft Co., Ltd.
Key Investors
New Millennium Angel Club (Seed Money)
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.17
0.22
112
EPITAL
Holdings
Founding Date
8-Mar-2000
Consulting (B21)
CEO
Lee, Yang Dong
# Employees
10
Address
West 15th Floor, Posco Ctr. 892 Daechi-Dong KangnamKu Seoul, 135-777 Korea
Phone: 82-2-501-8621 Fax: 82-2-501-5114
www.epital.com
1. Incubation
Screen business ideas generated both internally and
externally
Further develop and enhance the business plan and
strategy
Support incorporation of the company, management
setup, accounting, PR.
2. Investment
Seed funding typically ranging $200,000 to $1,000,000
Support for the successive funding in larger scale
3. Consulting
Management counseling
Business development and strategic alliance including
M&A activities
Global opportunity development and networking
Major Clients
WebSync, MjoyNET, MobileTalk, Aheadmobile
Air-I, Point-I, ECPlaza, SinjiSoft, WebtoPhone, etc.
Strategic Partners
Key Investors
Korea Technology Investment Coporation
Zinus
Date
Fund Raisings
Major Investors
9-Apr-2000
KTIC
Round Amount
(US$ mil.)
3.75
4.17
0.133
113
FEELingk
Founding Date
06-Apr-2000
Mobile Enterprise Solution (A21)
Mobile Agency (B11)
Streaming Solution (B14)
CEO
Woo, Seung-Sul
# Employees
52
Marketing(4), R&D(43), Sales(5)
Address
5th Floor, Roy Buliding 90-6 Nonhyun-Dong,
Phone: 82-2-3443-1007 Fax: 82-2-3443-6543
www.feelingk.com
FEELingk is Korea’s leading wireless Internet solution provider.
In the midst of rapidly growing wireless Internet subscriber
population, its superior technical expertise and strong brand
name recognition in Korea should combine to fuel the rapid
sales and earning growth for the company over the years
ahead.
The company’s core products include WAP gateway, SMSC
(short messaging service center), MMSC (multimedia message
service center), PIMS (personal Information management
system), PPG (PUSH proxy gateway), UMS solutions, and many
others. The company’s most important products in terms of
sales contribution are SMSC and WAP gateway solutions,
which together constituted 80% of FY2000 sales. UMS and
MMSC solutions are the second largest contributors, making up
12.1% of the total. From this year, newly developed solutions
such as PPG, MIG, and MMSC are expected to become key
sales growth drivers along with WAP gateway and SMSC
solutions.
Major Clients
Disaggregating sales by customers, SK Telecom was by far the
largest customer of the company, contributing alone 82.7% of
total sales last fiscal year, followed by Shinsegi Telecom and
Korea Racing Association at 7.4% and 4.4%, respectively. The
sales to LG Telecom and other customers made up the
remainder. Coming into this year, however, the company has
begun to diversify its client base, winning orders from other
wireless carriers and enterprises.
Strategic Partners
HP Korea, HP e-bazaar, DAOU Technology Inc.,
Airgateway (Singapore)
Key Investors
CEO, LG Venture Investment
Date
Fund Raisings
01-Jun-2000
Major Investors
LG Venture
Round Amount
(US$ mil.)
2.8
1.6
4.2
114
Future Tech
Founding Date
17-Jan-1997
Commerce solution (B13)
Customer management(A23)
Personal Commerce(A15)
CEO
Lee, Sangwon
# Employees
40
Address
Aju Bldg. #1503, 679-5 Yoksam-Dong, Kangnam-Gu,
135-081, Seoul, Korea
Phone: 82-2-400-5901 Fax: 82-2-554-6901
www.futec.com www.atbill.net
1. Billing Solution
Fully Web-enabled Billing Solution for Digital Content
over Wired and Wireless Internet:
2. Billing ASP Service
Billing Service provided in the form of Application
Service Provider (ASP). Internet Content Providers
(Wired or Wireless) can benefit:
3. Integrated Support Center for Billing: Payment and
Money Collection over Wired and Wireless Internet
Major Clients
Billing Solution:
∙ KORNET, Skylove, KINITI (Internet Content Billing
System),
∙ LG-TELECOM (Wireless Content Billing System)
Billing ASP:
∙ JOINS.COM (Joongang Daily newspaper), iMBC ,
Hankookilbo, KBS Media
∙ Chosunilbo, Digital Chosun, Sofrano, Opentown,
Cosmo I&C, Pointline, KIBA, Businessun, Abicon
Strategic Partners
Key Investors
Fund Raisings
KDB Capital Co., Ltd.
Date
Major Investors
Nov-2000
KDB Capital Co., Ltd.
Round Amount
(US$ mil.)
1.3
1.1
0.9
115
Globalweb
Founding Date
7-Jul-1999
Mobile agency (B11)
Games (A14)
CEO
Song, Hoonjae
# Employees
33
Address
2nd Floor, Woosung Bldg. 119-4, Chungpadong 3 ga
Yongsan-Ku Seoul, 140-033 Korea
Phone: 82-2-718-0663 Fax: 82-2-718-0665
www.globalweb21.com
1. Games
Developing Web based games and serving for IMT
2000, PDA, Mobile phone.
You can access at www.quizshow.co.kr
www.wartris.com www.webaduk.net
2. Entertainment Contents
On line star casting site www.imissasai.com
Internet cartoon site www.cocomics.com
Major Clients
ISP/Portal & Personal Users
SK Telecom Netsgo, Hanaro, DACOM, pkozone.com,
Hangame, Yahoo, Chollian, nownuri, thrunet
Chinanet(asiagame.com) in China
Strategic Partners
Chinanet, Dizo venture, Unitel, Hitel, Future Tech.,
Digital.com, Daeyu, Channeli, Ako Tech, Thrunet,
Key Investors
C&S Partners, Korean Technology Analysis, Daeyu
Investment MGMT, Angels
Fund Raisings
Date
Major Investors
Apr-2000
C&S Partners,
Round Amount
(US$ mil.)
0.1
Korean Tech Analysis
0.03
Daeyu Investment MGMT
0.03
Angels
0.253
0.685
1.2
116
HNT
Founding Date
27-Apr-2000
Device manufacturer (C11)
CEO
Choe, In-Gyu
# Employees
19
Address
#184-5, Jamsil-Dong, Songpa-Ku Seoul, 138-220 Korea
Phone: 82-2-2202-2147 Fax: 82-2-2202-4635
www.hntek.com
HNT is a company specializing in developing and
manufacturing the Post PCs, such as Handheld PCs and
Wireless PDAs. HNT is very proud of presenting its high
end/value-added products, called Palm PC Phones
recently developed for satisfying all various applications
on the global marketplaces.
Palm PC Phones come with extraordinary features in a
small palm size; 4”TFT Color LCD with 640x480 full VGA
resolution, built-in PCMCIA/CF slots for Wireless
connections like CDMA, GSM and GPS, SD/MMC card
slots for memory expansion, multimedia supports for
CMOS camera, MP3P, voice recording, and FM radio.
Embedded Linux is the standard Operating System and
Java/Win CE will be available soon. .
Major Clients
Strategic Partners
SK Telecom, Korea Electronic Technical Institute,
Palm Palm Technology Inc., Musetel, Aroma Soft, Point
i.com, Kredix, MIZI Research
Key Investors
iPACIFIC partners
Date
Fund Raisings
27-Apr-2000
Major Investors
Round Amount
iPACIFIC partners
0.833
(US$ mil.)
1
0
117
IMPACTRA
Founding Date
03-Jul-2000
Device Manufacturer (C11)
OS platforms (C21)
CEO
Bum, Jae Ryong
# Employees
14
Address
Junggok Bldg. 108-2 Yangjae-Dong, Seocho-Ku
Seoul 137-130 Korea
Phone: 82-2-578-7533 Fax: 82-2-578-0732
www.impactra.com
IMPACTRA develops and manufactures multimedia player and
wire and wireless contents terminal. Portable webcasting
MPEG4 player‘Motion-i’is the first multimedia player in the
world, which can store and play motion picture and other
digital sound. Contents Service Center gives multimedia
contents streaming and downloading service and into‘MotionI’and other portable device wire and wirelessly.
Portable Webcasting MPEG4 player‘Motion-I’lets user enjoy
not only digital sound but also motion picture. It is totally
different multimedia player. It supports webcasting contents,
MPEG4 format, and multi format audio files(AAC,WMA,MP3).
Clear voice recording, Simple PIMS, Games are additional
function which strengthen its usage. It also encode Video CDs
or pictures in camcorder into digital files.
Major Clients
Wire or Wireless portal provider (SK Telecom, KT Freetel)
Entertainment Contents provider (Isoft, Hangame)
Cyber Education provider (Young San Infocom)
Strategic Partners
INKAENTWORKS co., Ltd. for contents streaming service center.
CYBER BANK co., Ltd. for game-phone biz.
ISOFT co., Ltd. for wireless internet terminal of KTF(n016).
Key Investors
CEO(Mr. Bum): 24.5%
Employees : 22.6%
Relationship Companies: 22.5%
RFC in Singapore: 2%
Others: 28.4%
Fund Raisings
Round Amount
Date
Major Investors
03-Jul-2000
CEO and Employees
0.23
01-Dec-2000
Relationship companies
0.60
(US$ mil.)
0.83
0.77
118
Infoart
Founding Date
25-Aug-1999
Personal Commerce (A15)
CEO
Park, Sung Ho
# Employees
27
Address
Infoart Bldg. 732-26 Yoksam-Dong Kangnam-Ku Seoul,
135-080 Korea
Phone: 82-2-3453-3969 Fax: 82-2-3453-4344
www.infoart.com
1. Ticketing Solutions & Book/reservation business
Infoart Co. sells tickets and provide the reservation service
using ITSTM on internet and will sell on wireless internet,
ATM, etc. And Infoart are cooperating with the major site,
they can sell on their site using ITSTM.
ITSTM (Infoart Ticketing Solutions) is the solution for selling
tickets such as all kind of performances, sports, movies and
to provide reservation services such as wedding halls, travels
etc. And this system is easy to cooperate with any other
major sites and sale machines ( wireless internet, ATM etc.)
as the application service provider.
2. Contents business( culture & wedding )
Infoart produce and serve the artistic, cultural and wedding
contents to users. These make a sacrifice of
book/reservation business.
Major Clients
Contents Providers & Personal Users
∙Digital Chosun Daily Newspaper
∙Korea Broadcasting Systems
∙Seoul Broadcasting Systems
∙e-hyundai Department Store, etc..
∙SK corporation
Strategic Partners
Inicis Corp., SK Corp., e-hyundai Corp., Worldwidenet
Korea Digital chosun, Seoul Broadcasting System
Key Investors
Inicis Corp., Kolon Engineering & Construction Co., Ltd.,
Regent Merchant Bank Corp. , Hankyung.com Corp.
Fund Raisings
Round Amount
Date
Major Investors
03-Nov-1999
Inicis Corp.
0.208
22-Jan-2000
Kolon Eng. & Const. Co., ltd,
0.628
(US$ mil.)
Regent Merchant Bank
0.905
0.925
119
InfoBank
Founding Date
14-Jun-1995
Mobile Agency (B11)
Mobile Internet Enabler (C21)
CEO
Park, TaiHyung, and Jang, JunHo
# Employees
100
Address
5th Floor, Poonglim Bldg. 823,Yeoksam-Dong,
Kangnam-Ku, Seoul, 135-784 Korea
Phone: 82-2-2189-1400 Fax: 82-2-591-1432
www.infobank.net
1. M-Mail (Mobile Mail)
Service which links the wired and the wireless networks so that the
mobile phone users and contents providers can send and receive the
data easily through the wired/wireless networks regardless of
communication mode, handset types, mark-up languages/operating
systems and connected networks.
2. W-ASP (Wireless Application Service Provider)
Service which handle financial transactions (securities transaction, credit
cards settlement, searching insurance information, account transfer etc)
via mobile communications devices (PCS, cellular phones)
3. MIGS (Mobile Internet Gateway System)
InfoBank’s MIG system smoothly links the customer’s information
system based on wired network such as Internet, X.25, LAN-WAN, etc.
to the heterogeneous wireless networks. MIG system enables 5 different
mobile carriers to serve various kinds of mobile service to mobile
subscriber.
4. EMPro
Total Solution for construction and management of mobile site.
EMPro consists of 7 packages: Builder, Browser, Converter, MailGate,
RemoteDesk, Secure Tunnel, and Data Sync.
Major Clients
Samsung Corp., Hyundai Motors, Samsung Mall,
KIDC (Korea Internet Data Center) Seoul City
Major Securities: LG, Dong Won, Good Morning, Kyobo, Tong
Yang, Dongbu,
Mirae Asset, Shinyoung, Sejong, Ileun, eGIOS, eTrade
Major Banks: KorAm Bank, Shinhan Bank
Strategic Partners
Capital Communications CDP (Subsidiary of Canada Pension
Fund), National Information and Credit Evaluation Co. (NICE),
Samsung Corporation, Daum Communications, LG/Dong
Won/Tong Yang/Kyobo Securities Co.,
Mirae Asset/Hyundai/Shinyoung Venture Capital
Key Investors
Capital Communications CDP
Date
Fund Raisings
Jan-2000
Major Investors
Capital Communications CDP
Round Amount
(US$ mil.)
10.0
18.6
3.6
120
Infohand
Founding Date
1-May-2000
Entertainment (A12)
Games (A14)
CEO
Chin, Samuel
# Employees
12
Address
1808, Halla Classic, 824-11 Yeoksam-Dong,
Kangnam-Gu, Seoul, 135-080 Korea
Phone: 82-2-3452-7251 Fax: 82-2-3452-7276
www.infohand.co.kr
Mobile Solution
The Unifying wired/wireless internet Solution combining
all media in Cellular Phone(voice, text, image, etc)
Patent Applied for in Korea, USA, Japan, China and
some of Europe Countries on Mar. 1999
Content Development and Providing Business
Digital Camera
Imaging sending solution via Mobile phone
Firmware development in Image processing
Will be released on the Market at Apr 2001
Major Clients
Contents Providers & Personal Users
Celluar Phone Manufacturer
Strategic Partners
Key Investors
Fund Raisings
Date
Major Investors
31-Aug-2000
Angel
Round Amount
(US$ mil.)
0.274
0.399
0.0
121
insideKOREA
Founding Date
20-Apr-2000
Mobile agency (B11)
Mobile Enterprise solution(A21)
Telemetry service(A32)
CEO
Lee, Chulkyu
# Employees
13
Address
4th Segi Bldg. 3-13, Nonhyun-Dong,
KangnamKu, Seoul 135-010 Korea
Phone: 82-2-516-4749 Fax: 82-2-516-4847
http://www.insidekorea.net/
1. iWAP Conversion Gateway
Converts the existing Web contents such as HTML,
ASP and JSP to fit the mobile
environments(HDML/WML/m-HTML/c-HTML etc). We
provide both enterprise and contents provider versions
at $125,000 and $42,000 respectively.
2. MISfA Solution
monitoring, controlling and managing households and
offices via an Internet access-enabled terminal and
wireless terminals.
Major Clients
iWAP Conversion Gateway
BCCard, KookminCard, LG Group, SBS, VirtualTek
MISfA Solution :
Honeywell, Samsung Heavy Industries
Strategic Partners
ADSECU(Security), Dreamline(Wireless IDC Partner)
LGTelecom(Marketing), Digital&Voice(VoiceTechnology)
Honeywell(Marketing)
Key Investors
No. 1 high technology Wireless Conversion Div. and remote /
automation supported wireless Div. in the world.
Date
Fund Raisings
Mar-2000
Major Investors
Hallim Venture Capital
Round Amount
(US$ mil.)
0.33
0.569
0.45
122
IntroMobile
Founding Date
13-Jul-2000
Commerce Solution (B13)
Value-added solution (B15)
CEO
Choi, Hangseok
# Employees
28
Address
10th FL Samyoung Bldg., 114-22, Kangnam-Ku Seoul,
140-031 Korea
Phone: 82-2-567-3434 Fax: 82-2-567-9353
www.IntroMobile.com
1. Mobile integrated solution & ASP BIZ
Mobile Advertising Solution
M-PDM
M-CRM
M-Groupware
Mobile Device Platform Technology & Solution
2. Mobile multimedia application & service.
Mobile Virtual Machine Application (K-Java, BREW)
Video/Audio solution and application independent of device
platform
Solution & Application based on the next generation mobile
OS platform
3. Mobile BIZ Consulting & Mobile Web Agency BIZ
Provides solution for optimized mobile internet business
Development of middleware such as customized mobile
groupware and M-commerce
Major Clients
Mobile integrated solution & ASP BIZ
Samsung Electronics, GoNext(Israel),
Mobile BIZ Consulting & Mobile Web Agency BIZ
SayClub (Community Chatting Site)
Strategic Partners
Samsung Electronics (Global BIZ Partner)
Mpeon (Global BIZ Partner)
Key Investors
NeoWiz Co., Ltd.
Fund Raisings
Major Investors
13-Jul-2000
Angel Fund
0.167
NeoWiz Co., Ltd.
0.583
10-Aug-2000
Round Amount
Date
0.625
(US$ mil.)
0.01(Jul 2000�Dec 2000)
0.42(Jan 2001�Feb 2001)
123
ISOFT
Founding Date
Mar-1995
Mobile agency (B11)
Mobile modem(C13)
Browser(C22)
CEO
Lee, Chul-Ho
# Employees
64
Address
5th F Seocho E-biz Tower, 23 Yanggae-Dong,
Seocho-Ku, Seoul 137-130 Korea
Phone: 82-2-508-5678 Fax: 82-2-508-5679
www.isoft.co.kr
ISOFT’s major core competencies are in mobile Internet
solutions, postPC solutions, mobile entertainment and mobile
web agency.
1. Mobile internet solutions : XML based contents reformatter
(HDML/WML to HTML, HTML to HDML/WML for all non-pc
devices). Mobile Internet community packages (PIMS,
chatting, mail, SMS, bulletin board)
2. postPC solutions : iSync(phone to web, phone to pc).
iPhone(PCS/CDMA/GSM module for PDA-visor, iPAQ)
3. Mobile internet entertainment : MPOG, VOD, AOD
ISOFT’s plans to pursue development of adaptive systems
and applications of 3G phone and PDA that enable the
convergence of internet and mobile devices.
Major Clients
KT Freetel, Samsung Electronics, KT IMT2000, IBM,
KOTRA, Appeal Telecom, Wide Telecom, Lotte,
Ko-Ex Card, etc.
Strategic Partners
Cybird(Japan),Taiwan Index(Taiwan),Microsoft, IBM,
Oracle, KT Freetel, KT IMT2000, Future System, Samsung
Electronics, Mobiminds(Brazil),
EdgeMatrix(Singapore),Appeal Telecom, Impectra, etc
Key Investors
TG Venture, Dae Han Investment, Hyundai Tech
Investment, Insight VC
Fund Raisings
Round Amount
Date
Major Investors
Jun-1997
TG Venture
0.083
Jul-1999
Hyundai Tech VC, etc
0.833
Dec-1999
Angel
1.166
(US$ mil.)
1.5
4.0
124
KISE
Founding Date
14-Jul-1999
CEO
Cheoi, Kyung Muk
# Employees
20
Address
16th Floor, Poonglim- Bldg, 823, Yuoksam1-Dong,
Kangnam-Ku, Seoul Korea
Phone: 82-2-564-6985 Fax: 82-2-564-6984
www.kise.co.kr
1. ACS(Ad Call Service
ACS(Ad Call Service) provides voice advertisement and
useful information instead of Ring Back Tone from
mobile phone. End users get minimum 25% discount
from their mobile phone billings by listening
advertisements
2. Value-added solution
ACS provides enhanced target advertisement to the
target subscribers not only based on sex, age, job,
residence and etc, but also by the current location of
the subscribers through GPS system.
Major Clients
Whole subscribers of partner mobile phone operator
Subscribers of KTF, KOLON Group, DAEWOO Group,
DAESANG Group, KEPCO Nuclear Fuel Co.,Ltd.,
Korea Electric Corporation,
Korea Plant Service & Engineering Co.,Ltd. etc.
Strategic Partners
KTF(Korea Telecom Freetel)
Diamond AD
Genetel
Key Investors
KOLON International Corp.
KOLON Data Communication Co., Ltd.
iPACIFIC partners
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
24-Sep-1999
Existing Shareholders
0.583
26-Ocb-2000
iPACIFIC partners
0.25
Mar-2001
Korea Development Bank
0.25
CEO
0.25
0.675
0.666
125
KSIGN
Founding Date
12-Nov-1999
Security Solution (B12)
CEO
Hong, Ki-Yoong
# Employees
30
Address
3F., Cheil Venture Plaza, Yeoksam-Dong, Kangnam-Ku,
Seoul, Korea, 135-080
Phone: 82-2-554-2581 Fax: 82-2-553-2589
www.ksign.com
1. Wireless PKI soluion
KSignWPKI supports E2E mobile Internet security
solution and optimized terminal crypto-module.
General wireless PKI solution to be applicable to
Mobile Explorer.
Wireless internet banking service
Safe short message service
Electronic wallet
2. VA Solution
The validation service about (Who), (With whom),
(When), and exchange of data
Major Clients
Certificate Authority
KICA, NCA, KFTC
Bank
Securities company
Strategic Partners
EVALi, KICA, PrivyLink, SealTronic, MacroTechnology, etc
Key Investors
President, Vice President, and Staff members, etc
Fund Raisings
Round Amount
Date
Major Investors
Feb-2000
Internally
0.24
Jun-2000
Internally
0.33
(US$ mil.)
0.917
1.011
126
Manastone
Founding Date
06-Apr-2000
Games (A14)
CEO
Kim, In Chul
# Employees
6
Address
Y-Gen house #501 272-10, Yangje-Dong, Secho-Gu,
Phone: 82-2-529-3189 Fax: 82-2-529-3189
www.manastone.com
HDML, mHTML, WML based Game
Mobile Java Game
Mobile Device imbedded Game
Major Clients
South Korea Wireless carriers
SK Telecom, KT Freetel, LG Telecom, Shinsegi Telecom,
Hansol M.com
Strategic Partners
SK IMT-2000 Consortium (Wireless Internet Contents
Provider)
Key Investors
None
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.267
0.05
127
M-Commerce
Founding Date
19-Feb-2000
Mobile agency (B11)
CEO
Lee, Sang-woo
# Employees
83
Address
15th Fl., 679-4, Yoksam-Dong,
Kangnam-Ku, Seoul 135-080 Korea
Phone: 82-2-6250-1500 Fax: 82-2-6250-1600
www.mcome.com
1. Vision : leading mobile world
Mobile Multimedia, Integrated Wireless Solution
Revolutionary Technology, Customized Service
2. Company Business: Mobile Agency (One-stop SVC for mobile SVC)
service & solution for mobile business
3G mobile multimedia solution
3. Company Product & services
3G Mobile Multimedia Solution , Mobile Internet SI & Mobile Office
Mobile ASP
Major Clients
1. Mobile Office
Finance: Paxnet, Dawoo Securities, Shinheung Securities,Yuhwa
Securities,Korea Exchange Bank Credit Service,
midaskhan,Dongyang Orion Investment
Trust&Securities,Industrial Bank of Korea, Korea First Bank
Insurance: Dongyang Life, Hyundai Life, Daehan Life, SsangYong
Fire&Marine Insurance
AS: Hanaro Telecom, Anam Electronics, Daewoo Electronics
Service
2. Mobile Portal Site: Hanaro Telecom (M Hananet)
3. SMS SVC for Business
* Hanaro Telecom, Interpark, Weddingwiz, Lotte Shopping
Strategic Partners
Strategic Alliance
Oracle: Mobile Internet Solution co-development & co-marketing
Sun: Mobile Internet Solution co-development & co-marketing
JTEL: Sales & Service for PDA
APAS: Global Marketing & GIS
Cooperator
Mobile Telecom Carriers: SK Telecom, Korea Telecom Freetel, KT
M.com, LG Telecom, Shinsegi Telecom
Mobile Internet Device Manufacturer: Samsung Electronics, LG
Electronics, Hyundai Electronics, JTEL
Solution: AiNet, WelcomeNet, Metamedia
Key Investors
Hanaro Telecom (51%)
Lee Sang-woo (30%)
Dong-A Daily Newspaper (11%)
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
5.833
2.627
128
Metamedia
Founding Date
09-Dec-1999
Entertainment (A12)
Games (A14)
CEO
Roh, Kwon Hyung
# Employees
11
Address
2nd Floor, Dong-young Bldg. 422-6 Dogok-Dong,
Gangnam-Gu Seoul, 135-270 Korea
Phone: 82-2-571-8195 Fax: 82-2-571-8220
www.metamedia.co.kr www.wap114.net
www.m0m.co.kr
Metamedia provides a wide range of mobile internet
services including the WAP114 search engine, various
kinds of WAP games, Virtual Machine based games,
mobile internet chatting, content hub services, and the
MobiLog mobile internet site statistics analyzing tool. As
a content hub, it houses a number of games and chat
service.
Metamedia concentrates on mobile internet contents
services especially on KVM and GVM virtual machine
games and WAP enabled RPG games.
As a solution provider it provided mobile internet
homepage generation tool to LG Telecom and mobile
internet search engine to M-Commerce.
Major Clients
Service Operators
SK Telecom, LG Telecom, KT Freetel, KTM.com, Shinsegi
Telecom, AI Net, Hanaro Telecom
Strategic Partners
SK Telecom, LG Telecom, KT Freetel, KTM.com, Shinsegi
Telecom, AI Net, Hanaro Telecom, Cybird Korea, Hyundai
Corp., Mobilians, BDL Internet GmbH, KOZLine Pty Ltd.
Key Investors
Dream Discovery Ventures, AI Net
Fund Raisings
Round Amount
Date
Major Investors
12-Apr-2000
Dream Discovery Ventures
0.17
04-Oct-2000
AI Net
0.17
(US$ mil.)
0.42
0.078
129
Mistream
Founding Date
11-Mar-2000
Streaming solution (B14)
CEO
Rhee, Daniel K.
# Employees
26
Address
2F Hyungjae B/D, 414-13, Dogok2-Dong, Kangnam-Ku,
Seoul, 135-854, Korea
Phone: 82-2-575-1114 Fax: 82-2-576-4220
www.mistream.com
1. Wireless Streaming Solutions
Solution for receiving multimedia data onto mobile
devices, it supports MPEG4 CODEC to reduce data for
enjoying multimedia with PDA or Video enabled phone
with limited computing resources.
2. Personal Broad Casting Solution
A solution that let’s the average user become an Internet
broadcaster with just a PC and a webcam. You can get
download free PBS from Mistream’s homepage and join
our video internet community group for exchanging
broadcasting Information and tips at
http://www.mistream.com.
Major Clients
Carriers: SKT, LGT
Contents Providers:Wonercomm, ICO, all I, softmind
Internet service providers: KT, DreamX, Hanaro, G&G telecom
SI companies: Ssang young Data System, Dasan Data system
Strategic Partners
IBM, HNT, XCE, LG telecom, SKtelecom, Korea Telecom,
NTT DoCoMo, nslash.com, Turbo telecom, , uttend.com.
Audio Vidual Telecommunications, Ssang Young Data
system, 3G cellular.
Key Investors
iPACIFIC partners
Fund Raisings
Date
Major Investors
15-Jul-2000
iPACIFIC partners
Round Amount
(US$ mil.)
1.2
1.2
130
Mjoynet
Founding Date
9-May-2000
Games (A14)
Entertainment (A12)
CEO
Kang, Shinhyuk
# Employees
15
Address
7th Floor, Youngshin Bldg. Bangbae-Dong,
Seocho-Ku, Seoul, 137-060 Korea
Phone: 82-2-3486-3910 Fax: 82-2-3486-3917
www.mjoynet.com
1. Games
Planning, producing, distributing of mobile internet
games using WAP and virtual machine. Two games have
been served through SKTelecom’s wireless network since
18-November-2000.
2. Entertainment
Planning to do download service of cellular phone
characters and MP3 music.
Major Clients
Personal Users
Strategic Partners
Wizgate Co.,Ltd., KRGSoft Co., Ltd., Sonnori Co., Ltd.,
Epital Co., Ltd.
Key Investors
Shinhyuk Kang, Wizgate Co.,Ltd., KRGSoft Co., Ltd.,
Sonnori Co., Ltd., Epital Co., Ltd.
Major Investors
Fund Raisings
(US$ mil.)
17-Aug-2000
Epital Co., Ltd.
0.417
25-Aug-2000
KRGSoft Co., Ltd.,
Sonnori Co., Ltd.,
0.231
08-Sep-2000
Epital Co., Ltd.
0.03
Round Amount
0.769
0.017/month
(Note) US 1$ = 1,200 Korean Won
131
Mobile C&C
Founding Date
24-Mar-1995
CEO
Hwangbo, Young-Chul
# Employees
32
Address
4h Floor, First Bldg. Yuksam-Dong,
Kangnam-Ku Seoul, Korea 135-080
Phone: 82-2-563-5325 Fax: 82-2-568-9533
www.mobilecnc.co.kr
Mobile C&C, an enterprise mobile solution provider,
enables corporations to achieve their business goals via
faster customer services, improved productivity and
increased efficiency in an ever-changing business
environment. Our advanced mobile solution allows them
to access business data anytime and anywhere.
The Product: mPOP
Our solution, mPOP, provides a powerful operating
environment for both users and developers.
While users can access into business data fast and
efficiently by running client modules directly on their
own mobile devices, developers can significantly reduce
the time and cost by eliminating the need of fully
understanding hardware architecture of mobile devices
and by securing easy-to-handle connectivity to host
system.
Major Clients
7 leading securities companies in Korea, including LG,
Hyundai, Bookook, Shinyoung, and ETK
Taepyungyang, Pulmuwon, Ottuki and Poongnong for
sales force automation
Seoul City Gas for telemetering and customer
management
Strategic Partners
Technology: Ahope (ECC Security), Pine Soft (mPOP
Server Solution), Device Network (Gateway Development)
Industry: Inji (Insurance), iTree (Garment), Yuhan C&T
(Pharmaceutical), SLI (Logistics)
Key Investors
KDB Capital, Chohung Bank, Alpine Capital
Date
Fund Raisings
4-May-2000
Major Investors
Round Amount
(US$ mil.)
KDB Capital
0.417
CHB(Chohung Bank)
0.417
Alpine Capital
0.417
1.842
4.148
132
Mobilestorm
Founding Date
24-Oct-2000
Commerce solution(B13)
Customer management(A23)
CEO
Lee, Jongwon
# Employees
12
Address
901,Champs-ElyseesCenter 889-5,Daech-Dong,
Gangam-Ku Seoul, 140-031 Korea
Phone: 82-2-557-5015 Fax: 82-2-557-1810
www.mobilestorm.co.kr
1. XML Browser
XML browser application downloadable to VM(virtual machine)-enabled
handsets including BREW, KVM and XVM phones.
2. Mobile site builder(an authoring tool)
An authoring tool for building mobile web sites with support for all
major markup languages. We offer both a personal and an enterprise
version.
3. Call back url server
Wireless call back url push server that can push SMS messages containing
call back urls directly to the phone browser. It can be used by advertisers
and content providers to give subscribers direct access to the related web
page. It also offers mobile banner ads and DB marketing.
4. MMS(Mobile Multi-message Service)
Allows the sending of mobile multi-messages such as pictures,
characters, coupons, tickets, e-cards, advertisements, name cards, and
mobile urls directly to a mobile internet phone. The system consists of a
web server, push initiator and a mobile contents server.
MMS is a messaging service to satisfy various requirements of subscribers
with sending multi messages (pictures ,characters ,coupons ,tickets ,ecard, advertisements ,name-cards ,mobile-sites) in mobile internet phone.
Major Clients
Portal site : Lycos/happyall/naver/
Commerce site : yesticket
CRM : Ecminer./ Woongjin coway
Contents :enfant/
Strategic Partners
Dbtank: mobilestorm is ticket portal mobile solution provider
Happyall.com : mobile business partner(solution & marketing)
Ecminer : wired & wireless CRM solution
Key Investors
iPACIFIC partners
Fund Raisings
Round Amount
Date
Major Investors
1-Nov-2000
iPACIFIC partners
0.16
2-Mar-2001
iPACIFIC partners
0.25
(US$ mil.)
0.2173
133
MOCOCO
Founding Date
01-Jul-1995
OS Platforms (C21)
Browser (C22)
CEO
Shin, Seung Hyun
# Employees
33
Address
3th Simone Bldg. 144-1 Samsung-Dong, Kangnam-Ku,
Seoul, 135-090, Korea
Phone: 82-2-3430-3645 Fax: 82-2-3430-3636
www.mococo.com
1. OS Platforms : MCLinux
Embedded Linux platform for Internet appliances like
PDA, Smartphone, Web pad, and so on. MCLinux is
being applied to IS-95C Smartphone with a major
Korean customer electronic device maker.
2. Browser : Web browser, WAP browser
Internet browser for Internet appliances. Web browser
applied to digital set-top box and is being applied to
Smartphone. WAP Browser applied to ETRI PDA.
3. Application Sets : PIMS, Vertical Solution
Major Clients
Internet Appliance(PDA, Smart Phone, Web PAD etc.) Maker:
LG Electronics, Wide Telecom, Trigem
Telecom Operator : Korea Telecom
Strategic Partners
Korea Telecom, LG Electronics, Trigem, Wide Telecom
Key Investors
Inzen, ISU Chemical, ISU Capital
Fund Raisings
Date
Major Investors
27-Oct-2000
ISU Chemical,
ISU Capital
Round Amount
(US$ mil.)
2.25
1.25
1.59
134
Mocons
Founding Date
10-Aug-2000
Mobile agency (B11)
OS platforms (C21)
Browser (C22)
CEO
Lee, Chong Ku
# Employees
10
Address
# 305,Young Chang B/D, 242-31, Nonhyun-Dong,
Kang-Nam Ku, Seoul, 135-010, Korea
Phone: 82-2-540-6276 Fax: 82-2-511-8971
www.mocons.com
Support server solution on wireless internet and industrial
solution to exclusive platform (industrial exclusive phone with
XML browser)
Support Bluetooth stack & application S/W
Combined solution on wireless internet & Bluetooth
1. XML Style Converting Gateway
A solution for converting XML-based document to the
terminal browser type.
Model : Mobile Home Page Wizard
2. XML Browser Phone Solution based on KVM
A solution that combines the flexibility of KVM with the
expressive contents of XML.
3. Bluetooth stack & application solution
Design profiles and applied products using Bluetooth.
Major Clients
SI company : POSDATA
Mobile device manufacture : PENTECH..
Strategic Partners
SUN Microsystems <sun application provider partner>
Motorola Korea
Bluetooth SIG (Early Adopters Group Membership)
Key Investors
CEO (56%), Employee (18%),
Supporting Stockholders (26%)
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.267
135
Moinvalley
Founding Date
19-Dec-1994
Customer Management (A23)
CEO
Yang, Hyun-Taek
# Employees
73
Address
2nd Floor, Sam-Ik Bldg.
Seocho-Ku Seoul, 137-061 Korea
Phone: 82-2-582-6114 Fax: 82-2-3472-6800
www.moinvalley.co.kr
1. Mobile System for Insurance Management
Overcome Limitation of Time & Space
Reduce Business Execution Time & Improve Productivity
Satisfy Users’ifying Customer Services
Avoid Standardization of Marketing Strategy
2. Isync
A tool for extracting information from websites &
converting PDA-use Data
A tool that supports wire & wireless access website
It has convenient user interface.
Major Clients
Steel Companies : Posco, Kia Steel, Dongkuk Steel,
Dongbu Steel
Banking Circles : Kumho Life Insurance, SK Life
Public Organizations : Ansan Cityhall, Kwangmyoung
Cityhall
Strategic Partners
Key Investors
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.858
3.25
136
Mstage
Founding Date
05-Jun-2000
Commerce solution (B13)
CEO
Chae, Woon-Dle
# Employees
18
Address
10th Floor, Korea Press Center, 25, Taepyungro-1ga,
Jung-Ku, Seoul 100-745, Korea
Phone: 82-2-6363-0900 Fax: 82-2-6363-0988
www.mstage.com
1. WIS-Billing
WIS-Billing is the total solution of wireless internet billing
package designed for contents providers as well as Mobile
internet carrier with usage calculation, invoicing, payment &
collection based on various factors.
1) Operating condition :
- Server : Oracle Database under Linux
- Client : Can be used with all platforms with
Management tools and Client circumstance provided on
the web.
2. MobiLog
Access logger and visualizer for web sites.
1) Structure :Mobilog, Mobichart
2) Operating condition
- MobiLog : IIS with Windows, APARCH with Linux
- MobiChart : platform independent (jave)
Major Clients
Mobile Communication Network Operator:China
Mobile Communication Corp.
Internet Service Provider : Haihua-Interlution
Contents Providers : Mainly targeting Chinese & Korean
Mobile Contents Providers
Strategic Partners
Wapdm.com (China), China Post Office, Interlution Co.,
Ltd. / Dreamholdings Asia & etc.
Key Investors
Interlution Co., Ltd., CEO of Mstage
Fund Raisings
Date
Major Investors
10-Jan-2001
Interlution Co., Ltd.
(Korea)
Round Amount
(US$ mil.)
0.250
0.417
3.000(expected in 2001)
137
Musetel
Founding Date
16-Dec-1999
Device Manufacture (C11)
Device Component (C12)
CEO
Yi, Dae-Hee
# Employees
18
Address
2th Floor, No Seung Bldg. ChunHo-2-Dong, KangDongKu, Seoul, 134-022 Korea
Phone: 82-2-476-6780 Fax: 82-2-476-6781
www.musetel.com
1. Bluetooth IC For Wireless Internet
2. Internet Audio Player For Mobile Phone
3. Wireless Internet Music Distribution Service
Major Clients
Mobile Phone Manufacutre: LG Electronics
Semiconductor Manufacuture :
Mteksemicon company
Strategic Partners
- TLI Co.,Ltd : Semiconductor Manufacture
- MCL Co., Ltd : Mobile Device Manufacture
Key Investors
Venture Capital Companys
Date
Fund Raisings
24-Mar-2000
Major Investors
ShinHan Venture Capital
Intec Venture Capital
Round Amount
(US$ mil.)
1.230
1.375
0.129
138
Nazca
Founding Date
26-Jun-1999
Entertainment (A12)
Games (A14)
CEO
Lee, Eun Jo
# Employees
30
Address
3rd Floor, Seoyoung Bldg. 367-9 Seogyo-Dong,
Mapo-Ku Seoul, 121-838 Korea
Phone: 82-2-3141-8302 Fax: 82-2-3141-8305
www.nazca.co.kr
NAZCA(www.nazca.co.kr) is a leading Korean game
developer and entertainment service provider that is
engaged mainly in the production, publication and
distribution of online and mobile games and wireless
entertainment services. NAZCA has provided end users
with all kinds of wireless entertainment services such as
mobile game, Bluetooth game, wireless image
transferring service and picture messaging service
through all major Korean Telcos since the first
introduction of wireless internet service in domestic area.
Currently, we join in SKT IMT2000 consortium as a
partner.
Major Clients
SKT, LGT, KTF, KTM, Picofun
Strategic Partners
SKT( A member of SKT IMT2000 Consortium)
Picofun(For publishing games in European areas)
Key Investors
KTM, YB Partners
Date
Fund Raisings
Major Investors
Jan-2000
Jun/Oct-2000
Round Amount
(US$ mil.)
KTM
USD 0.42
CKD, YB Partners
USD 0.57
1.25
0.475
139
NeoMtel
Founding Date
08-Dec-1999
Entertainment (A12)
CEO
Lee, Dong Heon
# Employees
52
Address
13 Floor, Oksan Bld. 157-33 Samsung-Dong, KangnamKu Seoul, 135-090 Korea
Phone: 82-2-528-9300 Fax: 82-2-555-1792
www.neomtel.com
SIS(Simple Image Serivice)
Image compression core technology
Graphic Animation enabler
Best suited for mobile internet environment overcoming
limitations such as speed and bandwidth of network and
memory, CPU and display of handsets
Proven marketability and technical feasibility
Various applicable areas
The Korean standard of graphic format (2000. 6)
CDMA graphic standard format of QUALCOMM (2001. 2 )
STS(Smart Telemetry Service)
STS based services including automobile diagnosis, remote
medical guardian, music file downloads will be serviced
through users own mobile phones.
Major Clients
Qualcomm, Motorola, SK Telecom, LG Telecom, KT
Freetel, KT M.com, Shinseogi Telecom, Samsung
Electronics, LG Electronics,
Strategic Partners
Qualcomm, Motorola, SK Telecom, LG Telecom, KT
Freetel, KT M.com, Shinseogi Telecom, Samsung
Electronics, LG Electronics, Sanyo ....
Key Investors
Fund Raisings
Date
Major Investors
01-Jun-2000
Zurich Scudder Investment
Round Amount
(US$ mil.)
4
5.2
1.6
140
Neosteps
Founding Date
15-Apr-2000
Mobile Modem (C13)
OS Platform (C21)
CEO
Yoon, Daekyun
# Employees
12
Address
Hyundai Office Suite #711 9-4 Sunae-Dong, Bundang-Gu
Sungnam-Si, Kyunggi-Do 463-783 Korea
Phone: 82-31-712-5080 Fax: 82-31-712-5188
www.neosteps.com
1. Mobile Modem
A wireless data/voice modem based on CDMA technology.
Support for any WinCE3.0 device with Compact Flash
Interface
Currently supports IS-95B, planning to migrate to IS-95C
Based on Neosteps’Proprietary interface protocol (currently
preparing for patent filing) which enables various types
(services) of data multiplexing between modem and WinCE
devices.
Target Price for the End User: $160
2. SyncML Based Data Synchronization Solution for
Mobile Devices
A data sync platform solution between mobile
devices/servers/desktop PCs
Based on SyncML standard ensuring compatibility with any
SyncML enabled
devices and servers. Mainly targeting mobile devices such
as cellular phones, PDAs.
Neosteps provides a) S/W Platform, b) customizing and
integration services if required.
Major Clients
Post-PC Manufactures and Carriers (including Perspective Clients)
SKT , KTFreete, Casio, Compaq, Trigem Computer
Phone Manufacturers: Samsung Electronics, Sewon Telecom
End Users
Strategic Partners
Samsung Electronics: Developing Mobile S/W Platform
SeMax (U.S.): Mobile Modem Dev. And Mkting in the U.S.
Winto Co., Ltd.: Wireless Portal Service provider
Fidelix Co., Ltd.: Modem H/W development
Key Investors
- Next Venture Investment
Date
Fund Raisings
Sep-2000
Major Investors
Next Venture
Investment
Round Amount
(US$ mil.)
0.167
0.417
0.041
141
Netple
Founding Date
Sep-1996
Wireless Browser (C22)
Mobile Banking (A15)
CEO
Moon Seok Cho
# Employees
56
Address
Dae-Yoon B/D, 170-12, Samsung-Dong, Kangnam-Gu,
Tel: +82-2-2189-5683 Fax: +82-2-558-3264
www.netple.com
1. WAP Browser
FEATURES - Browsing WML Site created with WML,
WML Script for wireless device
CUSTOMERS - End users who want to use wireless data
EXAMPLE- Hand-Phone, PDA, 2-way Pager..
2. Enterprise
Business Application
Complementing technology of handset device to
implement business application with security, private
network device and GPS
Major Clients
Contents Providers & Carriers
SK Telecom, LG Glocom, Korea Telecom etc
Hand set makers
PDA, Device makers
Strategic Partners
Ericsson, K - medical, BI Consulting
Key Investors
Fund Raisings
Date
Major Investors
01-Jan-2000
Moohan
Round Amount
(US$ mil.)
1
$1.4
$1.4
142
Netz
Communications
Founding Date
Jun-1999
Streaming solution (B14)
CEO
Lee, Seung Woo
# Employees
10
Address
4F Sungmun Bldg., 20-34. Yangjae-Dong Seocho-Ku,
Phone: 82-2-572-0510 Fax: 82-2-572-1568
www.netz-soft.com
1.PINUT MULTICOM
Voice, Image, Data communication solution by applying VoIP
technology to a multi-terminal such as PDA, Smart-phone
Function: Voice, Image, Data communication
White-board function with stylus pen
Messenger function to communicate at any time
and anywhere
2. PINUT AUTO
- Solution to get real-time image traffic information as well
as text through PDA or Smart-phone
3.Webcall
Software possible to embody web collaboration
function -Voice communication, chatting, whiteboard, file
transmission etc. on the Internet by using VoIP
technology
(Possible to substitute for call-center based on established
telephone-network and easy to link tele-marketing with Ebusiness)
Major Clients
PDA producer, Communications company, PDA user,
Smart-phone producer
Strategic Partners
YESCOMM (CTI Solution Company)
Key Investors
Date
Fund Raisings
Apr-2000
Major Investors
YESCOMM
Round Amount
(US$ mil.)
0.260
0.260
0.108
143
Nslash.com
Founding Date
14-Jan-2000
Mobile Agency (B11)
CEO
Nam, Ki-Beom
# Employees
30
Address
4th floor, DaeHo Building, 226-5, SeokChon-Dong,
Songpa-Ku, Seoul, Korea
Tel:+82-2-419-8378
Fax:+82-2-419-8379
1.WAP Gateway, MAG
Servers translating html into wml/h servicing WAP
2.Pigeon Mail
Enables enterprise email to be seen on web and mobile
phone through one stop installation to the mail server
3.Portal Solution
Solutions used to develop a wireless portal
4.mobile CRM solution
Customer Relationship manager through use of
barcode transmission to the phone.
Major Clients
Daum Communication - http://www.daum.net/
Shinsegi Telecom - http://www.shinsegi.com/
Joins.com - http://www.joins.com/
LG Telecom - http://www.lgtelecom.com/
Pearlnet - http://www.pearlnet.com/
AsiaTelecom - http://www.asiatelecom.co.kr/
Adias - http://www.adias.co.kr/
Samsung Electronics - http://samsungelectronics.com/kr/
Strategic Partners
LG Telecom, Shinsegi, Baltimore, Secubay, UWAY,
nobreak, iPacificPartners, Locus, Pronix, Pearlnet, Daum,
Joins.com
Key Investors
iPACIFICpartners
Fund Raisings
Date
Major Investors
Aug-2000
iPACIFIC partners
Round Amount
(US$ mil.)
1.25 million
1.16 million
0.2 million
144
NTI Soft
Founding Date
15-Dec-1999
Mobile Internet Utilizer (A11-A15, A21, A31)
Technical Solution (B11-B15)
CEO
Cho, Byung Yong
# Employees
17
Address
#721, Chunggu Bluevill, 11-1, Sunae-Dong, BundangGu, Seongnam-Si, Kyungki-Do, 463-020 Korea
Phone: 82-31-716-1136 Fax: 82-31-716-2205
www.ntisoft.co.kr
1. Mobile Solutions Providers
SMSC, WAP Solutions : Messenger Server, Contents
Organizer, Chatting Server, SMSC/WAP Animation
Server(Provided to LG Telecom)
KVM, GVM Solutions, XML Solutions
Billing Solutions : Mobile On-line Billing Server(Provided to
LG Telecom)
Enterprise Mobile Solutions : Mobile Intranet Solutions
2. Mobile Contents Providers
Mobile Intranet, Speed chatting, Ez-buddy, Games
3. MASTER CP
ez-Junior master CP(LG Telecom)
Operation & Maintenance in LG Telecom
4. Intelligent Network Solutions and Services
Solutions : SSP, SCE, SMP, SCP
Services : Free phone, Premium Rate, Televoting, Calling
Card, Prepaid, VPN, Location based Services
Major Clients
Mobile Internet Service Providers:
LG Telecom(Major Customer), SK Telecom, KTF and etc.
Mobile Service Planning Companies:
MMACC, MBIZ networks global, Locus
MIDC, MASP Companies:
Oraks, Hanaro Telecom
PSTN/VoIP IN Solution Providers:
Compaq, HP, UNUS, Locus, Locus Thailand, KDD NS(TUKA)
Strategic Partners
Technical Partners: Joohong I&C, CLS, Vocotech, Duko
Electronics, Avada Soft
Business Partners: Mbiz networks global, CLS, Oraks
Sales/Marketing Partners:MMACC, Locus, UNUS,
Hwashin Telecom
Key Investors
Individuals
Date
Fund Raisings
Jun-2000
Major Investors
Individuals
Round Amount
(US$ mil.)
0.16
0.667
0.349
145
OPENTOWN
Founding Date
13-Feb-1998
Games (A14)
Mobile portal (A11)
CEO
Kwon, Oh Hyung
# Employees
30
Address
4th Floor, Myoungwoo Bldg. #747-3 Yeoksam-Dong
Phone: 82-2-3452-8020 Fax: 82-2-539-8350
www.opentown.com
Opentown is a contents provider currently providing a
total of 68 games to all the major mobile carriers. We
are seeking to enter the Japanese market as well as the
emerging markets in the greater China area.
Major Clients
Domestic Mobile Telecommunication Companies
Strategic Partners
Domestic Mobile Telecommunication Companies, Anybil,
Massnovelty, Horus, etc
Key Investors
Scudder Kemper Investments Inc(16.393%),
Kwon Oh Hyung(10.383%), Cho, Sang mun(8.013%)
Fund Raisings
Date
Major Investors
21-Aug-1999
Scudder Kemper
Investments Inc.
Round Amount
(US$ mil.)
1.666
2.516
4.382
146
Ovytz
Founding Date
15-Jun-1999
OS Platforms(C21)
CEO
Lee, Man-Chan
# Employees
10
Address
7th Floor, Shin-Bong Bldg.
Yeok-Sam Dong, Kang-Nam-Ku Seoul, 135-080 Korea
Phone: 82-2-567-2393 Fax: 82-2-539-0426
www.ovytz.com
1. Java Platform
We have worked with SK Telecom, on the J2ME
platform for their IS95-C service. And we are
developing a Java virtual machine suitable for internet
appliance such as PDA, Smart Phone, and even Home
appliance. We have cooperative relationship with
ETRI(Electronics and Telecommunications Research
Institute) for this project.
2. Java Service
We are developing and operating a service system for
carriers with contents providers. For example, mobile
cartoons for adults and teenagers.
Using accumulated technology from developing java
platform we concentrate on the service for Java
phones.
Major Clients
SK Telecom(platform), LG Telecom(service)
Strategic Partners
SK Telecom, Samsung electronics, Aroma soft
Key Investors
Our company have three divisions ERP, ASP, Wireless
Internet. Now ERP division doing a role of cashcow. So
we don’t have investors yet.
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.167
0.167
147
PalmPalm
Technology
Founding Date
28-Oct-2000
OS platforms (C21)
CEO
Choe, Kerny, Ph.D
# Employees
54
Address
5F. Hanyang Bldg., 14-31, Yoido-Dong, YoungdungpoKu, 150-748, Korea,
Phone: 82-2-6334-7700 Fax: 82-2-6334-7705
www.palmpalm.com
1. Total Embedded Linux Solutions (Tynux Package)
Providing packaged Total Embedded Linux Solutions to
Internet Appliance Developers, OEMs and Vendors by
integrating a variety of application software onto
Tynux, Embedded Linux software re-engineered by
PalmPalm Technology Inc.
2. Software Development Kit (Tynux Box)
Providing Embedded Linux Tool Kit for Internet
appliances
Major Clients
Internet Appliance Developers, OEMs, and Vendors :
Nokia, Motorola, Ericsson, Samsung, Siemens, Sagem,
and more
Strategic Partners
Software Developers
Processor Manufacturers
Network Service Providers
Key Investors
iPACIFIC partners
iPACIFIC Venture Investment
IMM Venture Investment
Asia Venture Capital for 1st Round of Funding
Date
May-2000
Fund Raisings
Major Investors
iPACIFIC partners
iPACIFIC Venture
Investment
IMM Venture
Investment
Asia Venture Capital
Round Amount
(US$ mil.)
5.4
5.4
1.1
148
Pointi.com
Founding Date
26-Apr-2000
Information service (A13)
Location-based service (A31)
CEO
Ahn, Brian
# Employees
20
Address
6th Floor, Chung-Ku Bldg. Yoeksam-Dong Kangnam-Ku
Phone: 82-2-512-0232 Fax: 82-2-512-0235
www.pointi.com www.pointmap.net www.2002kj.com
Now customer can address all of the wireless information needs
of busy, on-the-go wireless subscribers with the Pointi.com’s
innovative end-to-end solution. Our leading network-based
location technology works with every protocol, plus delivers
comprehensive, seamless implementation, expert development
support and a rich menu of Internet services. With the Pointi.com
GIS products & solutions customer can have the personalized
information they need wherever their travels take them.
1. Service
PointMap ASP, Point World Cup, Point Yellow, Point
Meeting, Location application service
2. Solution
PointMapTM Engine, PointMap LETM Engine, KVM based
S/W Solutions, LBS (Location Based System) Solution & Biz.
Major Clients
Government:KOMS, MIC, ETRI
Contents Providers & Portal: FineHome, Nagayo, Daum
Communication & Hitel & NowNuri
Wireless communication carriers:KT, KT Freetel,
Shinsegi, SK Telecom, LG Telecom
Business enterprise that has branch
Strategic Partners
Infra companies: Free114.com, Mando Map & Soft, Rotis,
Websubway, Sysweb, W365.com, Lost114
Solution companies: Airi, IMTRANS
Device manufacturers: HNT, Navius, JTEL
Local information providers: Inchonnet, taejonnet, tegunet,
totalpusan, jeJunet, cheonJunet, bogobogo, okSuwon
Foreign companies: Gravitate, SigmaOne, Mapion
GIS SI companies: SDS, Ssangyoung IT, Tongyang Systems
Wireless communication carriers: KT IMT2000, LG Telecom
Key Investors
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.416
0.204
149
Prism
Information
System
Founding Date
09-Apr-1999
Mobile agency (B11)
CEO
Ra, In-suk
# Employees
23
Address
2th Floor, Taesung Bldg. 891-6 Daechi-Dong, KangnamKu Seoul, Korea
Phone: 82-2-539-4749 Fax: 82-2-539-4845
www.free-ism.com
1. Mobile Internet System Integration
As the company’s core focus area, Prism Information
System plans to target the enterprise customers that
want to transfer their Internet System to Mobile.
2. Mobile Internet Solution
Prism Information System plans to market its content
conversion solution (Prism Wap Gateway / Markup
Language Translator / Prism WAP SDK Ver 1.2) and
mobile group ware for enterprise customers.
If you need more detail information for the company,
please visit
www.free-ism.com.
Major Clients
Contents Providers & Personal Users : KT Freetel
SI companies : SK Securities, LG telecom, SK C&C
Strategic Partners
LG-EDS, LG-Telecom, Samsung Electronics
Key Investors
iPACIFICpartners
Fund Raisings
Date
Major Investors
19-May-2000
iPACIFIC Partners
Round Amount
(US$ mil.)
1.25
1.571
0.629
150
Rchantech
Founding Date
13-Mar-2000
Telemetry service (A32)
OS platforms (C21)
CEO
Jeong, Bo Young
# Employees
20
Address
4th Floor, Jung-Ang Bldg. Daechi-Dong 908-20
Phone: 82-2-565-3336 Fax: 82-2-3453-5704
www.rchantech.com
Ndriver : Tele-dianostic and Control System
Small OS � LOW Price
1. Ndriver 1.0
Tele-diagnostic system built LCD using with Cell
phone, Automatic Service System(CRM
Server)(Checking Error by analyzing ECU) DGPS,SOS by
Airbag Sensoring.
2. Ndriver 2.0
Built in wireless modem and the PDA size LCD panel:
Tele-Diagnostic and Control System(Locking, Theft
Protection, Tuning).
Major Clients
Strategic Partners
Key Investors
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
20-Aug-2000
-
1.250
05-Oct-2000
-
1.666
3.75
151
Rumex
Founding Date
21-Apr-1999
Mobile agency (B11)
CEO
Han,Sung Kyun
# Employees
11
Address
501, Buwon Bldg.107-45 Banpo4-Dong Seocho-Ku
Phone: 82-2-518-2800 Fax: 82-2-518-2943
www.rumex.com
1. wireless internet software solution
wireless internet solution for protection against disaster
(monitor disaster , environmental about circulation)
wireless internet solution for cyber apartment
government office wireless internet ASP business
the rates delinquent wireless retrieval system
2. Hard ware production
wireless internet CDMA Communication controller (Security
companies)
Undergroud GPS
wire/wireless measuring rainfall/water level system
Major Clients
wireless internet companies: Shinsegi Telecomm,
Korea Telecom Freetel
Hard ware companies :Kyonggi Province,
CAPS(a branch of TYCO group)
Strategic Partners
Shinsegi Telecomm
Korea Telecom (freetel & M.COM)
SamSung SDS
SamSung Electronics (SEC)
Key Investors
Han,Sung Kyun (president)
Kim,Kun Ho (director)
Woo, Chul Ho (director)
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
21-Aug-1999
President
10
20-Mar-2000
Angels
40
50
50
152
Spread
Telecom
Founding Date
29-Apr-2000
Mobile modem (C13)
Browser (C22)
CEO
Kim, Sun Young
# Employees
17
Address
4F Dong hyang B/D, 1355,Doonsan-Dong,
Seo-KU Taejeon, 302-122 Korea
Phone: +82-42-489-9885 Fax: +82-42-489-9830
www.spreadtel.com
2.5G Mobile
IS-2000 1x(IS-95C)Terminal
IS-2000 1x(IS-95C)wireless modem ▷PCMCIA
IMT-2000 Handset: : UMTS Handset, cdma2000 Handset
Internet Phone:
Internet Phone Adaptor, Internet phone
combined with wire/cordless.
Phone, and Wireless IP Phone
Major Clients
Korea Telecom M.com/ Korea Telecom Freetel/ SK Telecom
Samsung Electronics Co.,Ltd./ Telson I&C Co .,Ltd./ Wide
Telecom, Inc.
Operators and manufacturers of China, America and
Central and South America
Strategic Partners
2.5G/3G Mobile Phone : ZTE Futuretel, LSI Logic(under
nego), Korcom, ZTE Suntek, Cowell Sysnet, Korean
Manufacturers & Operators
Internet Adaptor : Insopack
Others : ETRI, SKT, Samsung, KTF
Key Investors
- iPACIFIC partners
Fund Raisings
Date
Major Investors
18-Jul-2000
iPACIFIC partners
Round Amount
(US$ mil.)
1.75
1.315
0.3
153
Toysoft
Founding Date
20-Dec-1999
Game (A14)
Entertainment (A12)
CEO
Jung, Seokjoo
# Employees
15
Address
5F DAERIM B/D YEOKSAM-DONG, Kangnam-Ku Seoul,
135-080 Korea
Phone: 82-2-517-5752 Fax: 82-2-539-5748
http://www.toysoft.co.kr/
Having the vision“To become a global leader in creating
new personal entertainment culture over mobile space via
excellent services and tools”, Toysoft was found in
Dec.1999 and has been a leading content/solution provider
in mobile games and character download service in Korea.
Major products include mobile Java games, WAP games,
character download service, and phone-embedded games.
We recently launched network version mobile java games
though LGT network, which is first version of commercial
network java game product all over the world. On the top
of this milestone, WAP games by Toysoft are scheduled to
market through all 5 different Korean wireless carriers from
next month.
Toysoft is now allocating best company resources on mobile
multimedia entertainment contents and solutions that
better adapt to advanced wireless network. All of these
endeavors are geared to a unified direction,“Creating real
& essential value providing contents & solutions for
customer over the mobile network space”.
Major Clients
Korean Telecommunication Freetel, Korean
Telecommunication M.COM, LG Telecom, SK Telecom,
Samsung Electronics, Hyundai Electronic, ....
Strategic Partners
Qualcomm, Infusio, Triverge, EXE Mobile, e-Ture.com,
U2U4.COM....
Key Investors
Mirae Asset, Korean Telecommunication M.COM
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
12-Jan-2000
KTM
(Korea Telecom M.com)
0.375
19-Feb-2000
Mirae Asset
0.833
0.1250000
0.203866
154
U2U4
Founding Date
Aug-1999
Mobile Portal (A11)
Mobile Agency (B11)
CEO
Yoon, Ki-Joo
# Employees
25
Address
4th F, Sam-heung Bldg. 705-9 Yeoksam-Dong,
Kangnam-Ku, Seoul 135-711 Korea
Phone: 82-2-6248-6264 Fax: 82-2-6248-6260
www.u2u4.com
1. Wireless Data Service Contents Holding Company
- Excavates and supports renowned Content Providers
such as Inixsoft, Real Ticket, Gentor.com, PS stock, Emoney, Incruit and supplys its services to the wireless
internet marketplace after remanufacturing.
2. Wired & Wireless integrated information
services/solutions
- Enables mobile value-added services for content
providers, wireless network operators and mobile
phone users.
3. U2U4 will enable a host of value-added services
including UMS/SMS ASP, CP incubating system,
Mobile ASP, Mobile SI and Infra reselling.
Major Clients
Domestic Wireless Internet user
Samsung Electronics(Mobile Terminal User)
Strategic Partners
Samsung Electronics, Compaq, Oracle, Enpia, Rotis,
KTF(PCS Player), KTM.COM(PCS Player)
Key Investors
Kookmin Venture Fund, UTC Venture,
ILSIN&DACOM Investment Partnership, Enpia(KOSDAQ Listed)
Fund Raisings
Round Amount
Date
Major Investors
Jan-2000
Kookmin Venture Fund
0.04
Mar-2000
ILSIN&DACOM
Investment
0.42
Jun-2000
UTC Venture
2.77
Jan-2001
Enpia(KOSDAQ Listed)
1.5
(US$ mil.)
2.92
1.5
155
Uniwis
Founding Date
02-Oct-2000
CEO
Park, Woo Kyung
# Employees
21
Address
5th Floor, C&S Venture Building, Nonhyun-Dong,
Kangnam-Ku Seoul, 135-829, Korea
Phone: 82-2-6001-2021~3 Fax: 82-2-6001-2040
www.uniwis.com
1. Mobile Studio
WYSIWIG Contents Editor like a Word-processor
Make only One Content, then Publish it Various Format (WML,
mHTML, HDML, cHTML, etc)
Built-in User defined Rule Based Markup Language Converter
Built-in Image Converter, Image Editor
2. Mobile Application Server
Support Various Service Environments(Lotus Notes, POP3, IMAP4,
UMS, I/F)
Receive, Reply and Send E-mail Services with E-mail Notification
Convert Attached Text Files & Images into Wireless Contents
Support Multi-MAS by Load Balancing
Powerful Operation & Maintenance Process (OMP) for System
Manager
Sales on Module base as satisfied Customer Terms
Major Clients
Wireless Portal Site, IDC, Large Companies, Collage &
Universities, Banks, Securities, Contents Providers,
Devices Manufactures, Wireless Hub sites,
Personal Computer Communications, Personal Users
Iheart, Unitel, Telson Electronics, Doorisoft,
Samsung Cards, ENGEN
Strategic Partners
Snet systems, Dizzogame etc...
Key Investors
Snet systems, TeraSource Venture Capital
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
16-Nov-2000
Snet Systems
0.67
16-Feb-2001
TeraSource
Venture Capital
0.42
1.08
0
156
Verytech
Founding Date
27-Feb-2000
Systems (C15)
CEO
Han, Mi Sook
# Employees
16
Address
#402, Jang Yong Shil Kwan, Venture Town, 1688-5
Shinil-Dong Daedeok-Ku, Taejon, 306-230 KOREA
Phone: + 82-42-934-9889 Fax: + 82-42-934-9885
www.verytech.co.kr
We are a leading network software provider in Korea covering
such areas as the Open Telecommunication Network
Management Technology and Wire/Wireless/Internet Integrated
Service, which possess the basic technology of
telecommunication systems and intelligent network services.
- INI (Integrated Network and Intelligent) SCP
INI SCP is a JAIN(Java Advanced Intelligent Network)
SCP(Service Control Point) system supporting IMT-2000
service creation, service control and service management.
- INI (Integrated Network and Intelligent) Gate
INI Gate is a gateway system supporting JAIN Parlay API,
which is international standardized specification for the open
network. The secure network provider that introduces the INI
Gate can improve network capability by offering network
resources to Internet third party who has various services
capabilities in the core network.
- INI (Integrated Network and Intelligent) Server
INI Server is an Internet service providing system, which can be
connected to the INI Gate in the secure network and run in
accordance with JAIN Parlay API, which is international
standardized specification of open network.
Major Clients
Service pr1oviders: KT, SKT, DACOM
Contents providers
Strategic Partners
- HP
- SUN
Key Investors
Mi-Sook Han, Ki-Ryung Kim, Moon-Ki Choi, Sang-Hoon Lee
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
0.417
0.287
157
WiderThan.com
Founding Date
16-Jun-2000-
Mobile Agency (B11)
Value-Added Solution (B15)
CEO
So, Jin Woo
# Employees
80
Address
10th Fl, Daebong Bldg, 720-4,
Yeoksam-Dong, Kangnam-Ku, Seoul, 135-080, Korea
Phone: 82-2-6240-5145 Fax: 82-2-6240-5151
http://www.widerthan.com/
WiderThan.com is a premium wireless service enabler providing
application and contents services to the major Korean wireless
carriers in the following areas;
1. Application based service
Multimedia service for IS 95C and IMT2000
Community solution (world first wired/ wireless synchronized
community solution)
Mobile advertisement service
Voice Portal service
Commerce application service (stock trading - applying most
advanced virtual machine platform)
2. Contents based service
Motion pictures
Animation and character
Music, Game, Voice, News and information
3. Consultancy on wireless internet service
Consulting service for WISP from service design to
implementation
* Consulted on reshaping of leading domestic wires internet
service in 2000
Major Clients
SK Telecom, Shinsegi Telecom
Strategic Partners
Unwired Korea (wireless ad-server developer)
mAdnet (mobile media rep.)
Key Investors
SK Group
Date
Fund Raisings
Major Investors
Round Amount
-
-
01-Jun-2000
(US$ mil.)
4
4
158
WINK
Founding Date
08-Mar-1999
Location-based Service (A31)
Mobile Agency (B11)
CEO
Lee, Min-Chul
# Employees
66
Address
2nd / 4th Floor Oriri B/D 236-4 Nohnhyun Dong
Kangnam Gu Seoul Korea 135-010
Phone: 82-2-518-1987 Fax: 82-2-518-1986
www.winksoft.com
Our business domain is B2B solution for service quality &
convenience in communication and development of wireless
Internet data services and solutions for government offices &
corporations. We are constructing 18 wireless Internet portal
sites such as M-Tour system, Insurance system, National Police
Information Inquiry System, Logistics System and so on. M-Tour
System is the one that we are concentrating our effort in and
we’ve already finished the development on that. It is PDA
solution to help foreign visitors by providing tour information in
several languages such as in English, Japanese, Chinese, French
and Spanish.
Major Clients
Business Relations expected :
Insurance System: Allianz First Life, Kumho, Samsung,
Kyobo, Korea Life Insurance
National Police Information Inquiry System:
National Police Agency
Logistics System:Global Trading Web Korea,
Korea Airline: Korea Integrated Freight Terminal
M-Tour System:Korea National Tourism Organization, KAL,
Inter-continental Hotel, Lotte Hotel, Chosun Hotel, Shilla Hotel
SI companies : Kumho Mitsui Chemicals, Kumho Chemical,
Kumho Industry, Asiana Airline, LG EDS, Dacom System,
Infovision, Chungang Soft, Dongbu Insurance, Unify Korea,
Hunet, Insol Information & Technology, Hanvit Bank Systems,
Sejin Telecom, LG Telecom, Petcom Korea..etc
Strategic Partners
Korea Telecom Powertel/Freetel/M.com, HP Korea, COMPAQ Korea,
LG Telecom, Sun Microsystems, SAP Korea, Samsung Electronic,
Yahoo Korea, ACER Korea, IMDB, Eocyber, Mirae Soft Forum,
Billfamily, MplusTech, Cesscom, Palm, CASIO..etc
Key Investors
KorAm Bank, Korea Technology Transfer Center
Date
Fund Raisings
Major Investors
Round Amount
(US$ mil.)
04-Nov-2000
Korea Technology
Transfer Center
0.083
28-Feb-2001
korAm Bank
1.042
0.60
1.683
159
WISEngine
Founding Date
19-Feb-2000
Mobile agency (B11)
CEO
Park, Joonseok
# Employees
37
Address
5th Floor, Yak-San Bldg. Daechi-Dong,Kangnam-Ku
Phone: 82-2-508-1919 Fax: 82-2-508-1995
www.wisengine.com
1. WISEMobileFusion
WISEMobileFusion transforms regular web sites into wireless
webs accessible from any mobile device, including cell
phones and PDAs. WISEMobileFusion does not require
development of additional web sites to accommodate each
wireless format. Instead, it translates dynamic web content in
real time into any format for wireless devices.
Customers of WISEMobileFusion enjoy significant cost
reductions in wireless web construction as well as in
recurring maintenance as there are no separate wireless web
sites to update.
*Price : 2,000 $/per month (ASP Model)
Major Clients
Portal: MSN Korea, Lycos Korea, Korea Telecom Hitel
Simmani, Intizen, Joins.com
Solution Vendor: 3Rsoft
Web Agency: Clic , InKorea, Top-ranker.com, Dws, ICO
Strategic Partners
Portal: MSN Korea, Lycos Korea, Korea Telecom Hitel
Simmani, Intizen, Joins.com
Solution Vendor: 3Rsoft
Web Agency: Clic , InKorea, Top-ranker.com, Dws, ICO
Key Investors
PSINet, IlShin Investment, iventure, joins.com
Date
Fund Raisings
15-Sep-2000
Major Investors
PSINet, ilshin
Round Amount
(US$ mil.)
1.7
2
0.008
160
XCE
Founding Date
01-May-1999
OS Platforms (C21)
Entertainment (A12)
CEO
Kim, Ju Hyeok
# Employees
15
Address
13th Floor, SK Telecom B/D 9-1 Sunae-Dong, BundangKu, Songnam City, Kyonggi-Do, 463-784 Korea
Phone: 82-31-601-5821 Fax: 82-31-601-5829
www.xce.co.kr
XCE offers a Java software platform for new wireless Internet
services. It developed its own Java platform for the wireless
Internet in Apr, 2000 and wrapped up the development of
J2ME (Java 2 Micro Edition) in October, 2000 under contract
with SK Telecom and Samsung Electronics. The Java-based
commercial service by SK Telecom and Shinsegi Telecom is to
be launched in May, 2001. This Java platform is a clean roombased J2ME runtime environment, which means XCE developed
Java platform with its own technology. Besides XCE’s Java
platform shows much better performance than that of Sun
Microsystems and Aplix.
Java platform is said to be the best alternative to the existing
WAP-based solution. XCE’s Java platform provides securityensured and device independent environment to service
providers, vendors and content providers. It also enables
dynamic multimedia contents which are not provided by the
existing text-based mobile Internet service. This multimedia
Java-based service will prevail when Samsung Electronics’color
LCD-equipped handsets are available in the market in May,
2001. Around 4 million Java-enabled handsets are expected to
come out to the market by the end of this year.
XCE is also developing Java applications for the wireless
Internet, such as character downloading and stock trading to
show its Java platform’s unsurpassed performance.
Major Clients
SK Telecom, Samsung Electronics, Shinsegi Telecom
Strategic Partners
SK Telecom, Samsung Electronics, Taijinmedia and other CPs
Key Investors
SK Telecom
Fund Raisings
Date
Major Investors
Round Amount
-
-
-
(US$ mil.)
$ 0.17 million (KRW 200 million) $ 0.268 million (KRW 321 million)
161

Mobile Internet: Korea

Transcription

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