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

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