INTERNET: M&As trigger boom in fledgling Korean Internet marketplace

Korea's Internet advertising market trebled to US$27 million in 1999 compared with the year before, and this triple digit growth rate is expected to continue this year. The rosy outlook reflects the fact that large numbers of Koreans are taking up the cyberspace challenge - according to Korea's Ministry of Information and Communications, the total number of Internet users in the country has broken through the 10 million barrier. The mushrooming Internet business, however, has spawned a flurry of mergers and acquisitions activity, which will serve to fuel the Internet ad business, since even more advertising to promote new entities will be needed, industry analysts said. But unlike in other countries where M&As occur among big players, in Korea the big are eating up the small, a market analyst from Daewoo Securities told MEDIA. This, the analyst said, was underlined by the fact that the Samsung Group had recently set up a US$270 million fund to buy into ISP companies. At the same time, strategic alliances among cable and terrestrial TV channels, ISPs, newspapers and even ad agencies are not uncommon, since they are aiming to capture a large share of a fast-growing market. Thrunet is the most active in this area. The mergers and acquisitions mania sweeping Korea was triggered by the merging of online service provider Nowcom with Thrunet, which possesses the knowhow to deliver ultra, high-speed interconnectivity through cable networks. The merger gives Thrunet a major foothold in the Internet market against such competitors as Hanaro Telecom and Dreamline. Meanwhile, Dacom, Korea's second-largest telecom service provider has become a part of the LG Group, which has resulted in the merger between Dacom and LG Internet's Channel i. Dacom runs Chollian - the country's largest online service with 2.2 million subscribers - while Channel i has 3.1 million subscribers. However, despite the merger, the two brands will be kept separate in order to prevent confusion among consumers. But the M&A activities are not restricted to just media and ISP companies; banks and even advertising agencies are getting in on the act because the information business is becoming increasingly lucrative. For instance, Yahoo Korea and Lycos Korea are currently in merger talks with Citizen's National Bank and Pyongwha Bank respectively. In addition, Cheil Communications, one of Korea's largest ad agencies, has formed a pact with ISP company, Hankyong.com, an affiliate of Korea Economic Daily. Both sides will promote business-to-business links in the field of ebusiness among small enterprises and other internet-based companies under the strategic alliance agreement. They will also strengthen the alliance through joint marketing, investment and consulting.

Sign In

Trouble signing in?

Reset Password: Click here

Contact Customer Support at

Customerservice@campaignasia.com