South Korea to ease telecoms foreign investment regulations

28 August 2013 | Kavit Majithia


The South Korean government has announced it will ease regulations on foreign investment in the telecoms sector, in a bid to open up the market to investors.

A revision of its regulations is mainly targeted at smaller telecoms operators, as part of the country's free-trade agreements with the US and the EU.

The new regulations are designed to allow foreign investors to own up to 100% of projects, where overseas investment in the sector was previously capped at 49%.

Despite the revision, any foreign investor must still set up a South Korean-based vehicle if it is to hold a stake in a local carrier.

The country's main domestic players – including SK Telecom, KT Corp and LG Uplus – remain subject to tight regulation, however.

Countries often cap foreign investment in their operators, as network infrastructure owned by carriers is considered strategic by the state. The South Korean government has not spelled out the reasoning behind the limits in this case.

There are often security concerns regarding network infrastructure. KT Corp – South Korea's biggest operator – was forced to suspend a bid to acquire a 20% stake in Telkom SA last year, following opposition from the South African government.

According to the Wall Street Journal, the new rule in South Korea would apply to a few small companies in the fixed-line and mobile space.

India also announced plans to allow full foreign ownership of local telecoms operators, as part of a strategy to boost fledging economies.