The Magician’s Memorial - Chapter 462



Only Krnovel

462. Equity Participation (2)

Taewoo Telecom CEO Lee Ju-young visited the chairman’s office.

He had been suffering from internet usage fees for a long time, and his hair was turning white.

“Other telecommunications companies and the Korea Communications Commission are continuing to apply pressure. They have even threatened to no longer cooperate with Taewoo Telecom.”

“What did we do wrong? Price competition happens in every industry, doesn’t it?”

“They claim that this is an act that destroys the ecosystem of the Korean telecommunications industry. They also reported it to the Korea Communications Commission due to the issue of fairness between Korean and foreign companies, and they say they will proceed with a lawsuit.”

Even though President Choi Jae-seok has taken power.

The telecommunications cartel was still there, and had become even more entrenched, making it difficult to break it.

“Other telecommunications companies will try to exclude collaboration with Taewoo Telecom.”

“It’s already happening. A warning letter has been sent stating that Taewoo Telecom will not use the network, and it also includes measures to prevent Taewoo Telecom from using other telecom companies’ networks.”

“I guess we need to renegotiate.”

“Negotiations are not easy. Although Taewoo Telecom has the largest market share, it is difficult for it to take the lead because the telecommunications companies are of equal rank.”

The three telecommunications companies that dominate the Korean telecommunications industry.

Although Taewoo Telecom has a market share of over 40%, other telecommunication companies have 60%.

It was a structure that would have been difficult for Taewoo Communications to survive on its own.

That is why a renegotiation process was necessary to resolve this issue.

However, CEO Lee Ju-young thought that negotiations with other telecommunications companies were difficult.

“If we were on equal footing, negotiation would be difficult. But if we were on a higher level, wouldn’t it be easier to negotiate?”

“If you say higher… do you mean market share? The longer this situation continues, the higher the market share may be, but 50% is the limit. And if other telecommunications companies exclude Taewoo Telecom, the market share may actually decrease.”

It was President Lee Ju-young who misunderstood the meaning of the phrase “equal standing.”

I was talking about fundamental differences, not rankings based on market share differences.

“In the global telecommunications industry, South Korean telecommunications companies are second-tier. But what would happen if Taewoo Telecom were to be promoted to a global first-tier telecommunications company? Of course, since the levels are different, wouldn’t they have to renegotiate with other telecommunications companies?”

“That’s true, but it’s not easy to become a Tier 1 operator. It requires a lot of elements, from cache servers to multiple submarine cables and servers.”

“Taewoo Group has servers that are comparable to those of any other telecommunications company in the world. And we have also acquired a portion of the submarine cable shares from Shopbank.”

Tier 1 carrier or Tier 1 network.

Tier 1 telecommunications companies could use the global network only through non-settled peering or non-settled interconnection.

However, no specific organization designated the tiers.

It could be seen that this was done through contracts between tier 1 telecommunications companies.

As long as the infrastructure, such as submarine cables, was in place, the contract would be no problem.

“Wouldn’t it be difficult to be promoted to a Tier 1 telecommunications company right now? Other global telecommunications companies would not be willing to sign an equivalent contract with Taewoo Telecom.”

“So you’re saying that it’s difficult to sign a contract because we currently lack the infrastructure?”

“Just owning a portion of a submarine cable does not qualify you for first-tier telecommunications treatment.”

“You can’t do that with just a portion of the stake. But what if you had stakes in three submarine cables instead of just one? And then you could build three more submarine cables on your own, wouldn’t that be possible?”

Shopbank’s submarine cables weren’t all there was.

We have also signed contracts with companies larger than Shop Bank.

To be precise, I could use the submarine cable by my own will alone, without having to sign a contract.

Because the American IT companies I am a major shareholder of owned submarine cables.

“… I’m sorry, but I don’t quite understand. Could you explain in more detail what you’re saying?”

“It means that Taewoo Telecom will be able to acquire some of the shares in the submarine cables owned by Google, Facebook, and Amazon.”

“Really? If so, then there is a slight possibility.”

It was President Lee Ju-young whose complexion brightened slightly.

To brighten his complexion a little, he poured out more hopeful words.

“And in the future, Taewoo Telecom will start three submarine cable projects.”

“Are you doing it in three places at the same time?”

“Korea and North America, Korea and Asia, and Korea and Europe. The business scale is 1.5 billion dollars, and it will be carried out through collaboration with global IT companies. All preparations are complete, and all that remains is the announcement.”

At 1.5 billion dollars, it was a huge sum of money, equivalent to 2 trillion won.

But it was well worth the investment, and it was something that had to be made.

“It’s reassuring to know that we’re working with a global company, but the scale of the investment seems excessive.”

“It’s absolutely not excessive. How much was Taewoo Telecom’s operating profit last year?”

“We recorded 1.5 trillion won. Operating profit continues to increase.”

“What is too much for a company that earns 1.5 trillion won a year to invest 2 trillion won? Moreover, if you collaborate with multiple companies, you will only be investing less than 1 trillion won. That is less than the annual operating profit.”

President Lee Ju-young was trembling even at 1 trillion won.

Compared to other affiliates in the automobile, semiconductor, and financial sectors that are making investments worth tens of trillions of won, Taewoo Telecom was being too cautious.

“Now, Taewoo Telecom should also actively expand overseas. It will be a fertilizer that can not only increase domestic market share but also conquer overseas markets through submarine cables. If the fertilizer price is 1 trillion won, it is not an excessive amount.”

“I’m sorry. I think my brain has hardened because I’ve been in the telecommunications industry for so long. I’ve been managing Taewoo Telecom in a way that reduces investment and increases operating profit.”

I didn’t mean to blame him.

That was the reason why Taewoo Telecom was entrusted to CEO Lee Ju-young from the beginning.

Taewoo Telecom had been the cash cow of the group until now, and now it was time for the group to repay the favor.

“Now, you can manage Taewoo Telecom while making the investments you want to make.”

“We were already preparing to invest in 5G networks.”

“Other telecommunications companies are preparing, so Taewoo Telecom should also follow suit. We should also carry out submarine cable business along with 5G.”

“I will definitely succeed in both businesses!”

Commercializing 5G communications technology has been difficult.

It was a technology that had many problems even before its return, and there was even talk of giving up on 5G.

Although it was a technology that was clearly destined to fail, Taewoo Telecom could not afford to be left behind, so they did not oppose it.

***

A few days later.

There was a short news report on CNN.

The content was reproduced by Korean media outlets and spread throughout Korea.

[Taewoo Communications confirmed to be promoted to global 1st tier telecommunications company]

[Taewoo Telecom forms alliance with AT&T, Shopbank, Google, Amazon, Facebook, etc.]

[Taewoo Telecom Bet the Future on Submarine Cables. Announcement of 10 Trillion Won Submarine Cable Project]

It was literally a torrent of articles.

One vice president came to me with the newspaper with the best headline among them.

“The media is pouring a lot of oil on the fire. In particular, there are some places that have headlines like, ‘If the revenue of telecommunications companies increases, will the rates be reduced? Invest first!’”

“So far, telecommunications companies have invested less than their operating profits.”

“Even if we try to increase investment in a hurry, we won’t be able to keep up with Taewoo Telecom’s announcement of a project worth a whopping 10 trillion won.”

The actual investment amount was only 1 trillion won.

These were reporters who wrote articles that exaggerated the value of the submarine cables in which foreign companies had invested and purchased shares.

The more provocative and the bigger the amount, the more attention it will attract.

Since the report did not harm Taewoo Group, there were no plans to request fact-checking or corrections.

“I guess the other carriers have become quiet.”

“Just yesterday, the voices that were calling for Taewoo Telecom to be kicked out of the Korean telecommunications industry have completely disappeared. A second-tier telecommunications company can no longer dare to tell a first-tier telecommunications company to do whatever it wants.”

It wasn’t a relationship between A and B.

But in Korea, the power of domestic telecommunications companies remains intact.

However, Taewoo Communications was now looking down from a higher position, so they could no longer act recklessly like before.

“Now that Taewoo Communications has been promoted to Tier 1, shouldn’t we start negotiations again?”

“The contracts that were made on equal footing are now as good as void. A new contract must be made in the same way as the first-tier and second-tier carriers.”

“Domestic IT companies will also benefit greatly, as excessive network usage fees will be greatly reduced.”

Although Korea was called an advanced IT country,

In fact, that wasn’t the case at all. Rather, Korea was a place where it was difficult to conduct IT business.

Especially in the case of video platforms, it was difficult for anyone other than large corporations to enter the market due to excessive network usage fees, and portal sites were also paying network usage fees amounting to hundreds of billions of won every year.

So what about small and medium-sized IT companies?

It would be nice if the number of users increased, but the reality was that the first thing to worry about was network usage fees.

However, since Taewoo Telecom was promoted to a global tier 1 telecommunications company, its network usage fees were able to be lowered to the level of the United States or Europe.

“Network usage fees will decrease, but I don’t know if other carriers will cooperate.”

“We have no choice but to cooperate. The telecommunications industry, which was monopolized, has cracks, so we have to start struggling now to survive.”

“Now that Taewoo Telecom has been promoted to Tier 1, I expect that other telecommunications companies will also strive to be promoted to Tier 1.”

“It will be a big investment in submarine cables and servers. But it doesn’t matter. Taewoo Telecom will not raise its rates more than the inflation rate.”

All businesses want to make profits commensurate with their investments.

However, if its competitor, Taewoo Telecom, were to freeze its rates at the risk of bleeding, there was no choice but to raise the rates.

The same goes for network usage fees.

Who would want to continue accessing overseas sites at a speed that is 3 times slower?

So, in the end, the telecommunications industry had no choice but to follow Taewoo Telecom and lower its network usage fees.

“Your ears will be itchy from now on. From the perspective of the news agencies, won’t you feel like you’ve killed the goose that laid the golden eggs?”

“We can take all the swearing we want. It doesn’t matter if we swear openly. Whether they swear or not, we just need to make money.”

“I’m already working hard to earn money. The international oil price has fallen by nearly $10 in a month!”

Oil prices began to fluctuate.

However, it is unlikely to crash as dramatically as before, and it will soon recover to the $50 level again.

It was also time for oil companies to start investing again, judging that oil prices had stabilized.

We don’t know what will happen to oil prices when the Corona era comes.