South Korean mobile giant SK Telecom Co. is moving to expand its presence into the media business through a merger, industry watchers said Monday, with its mainstay telecom business reaching a point of saturation amid severe competition from smaller rivals.

SK Telecom, the country's No. 1 mobile carrier, said last week it will buy the country's biggest operator of cable channels and Internet TV contents in a bid to tap into the media platform business.

Under the deal, SK Telecom will purchase a 30 percent stake in CJ Hellovision from its parent firm, CJ O Shopping. SK Telecom also has an option to buy an additional 23.9 percent stake.

SK Telecom said CJ Hellovision will merge with the mobile carrier's wholly owned subsidiary SK Broadband Co., once the acquisition process is completed by April next year.

Industry watchers said with the merger, SK Telecom is aiming to bolster its presence not only in the mobile network market, but also in the broadcasting segment, which is now emerging as a new source of profit.

When the merger is completed, SK Telecom will boast 7.5 million broadcasting service subscribers.

Currently, KT Corp., its smaller local rival, is the top player in the segment by boasting 6.15 million users of Internet Protocol TV services, along with 2 million subscribers to KT Skylife Co., a satellite broadcasting provider.

LG Uplus Corp., the smallest mobile operator in the country, currently has around 2.2 million users of broadcasting services.

Industry watchers said the merger will also help SK Telecom solidify its dominance in the mobile network market.

CJ Hellovision, also the top mobile virtual network operator, currently holds around 870,000 mobile subscribers.

MVNOs refer to mobile service providers that rent networks from the country's existing carriers. As they save on network operation costs, MVNOs usually provide users with plans cheaper than those at major carriers.

SK Telecom takes up some 49 percent of the country's mobile market, but if CJ Hellovision, which currently uses KT's network, turns to using SK Telecom's mobile network, the mobile carrier is expected to regain its 50-percent-level market share.

Similar changes are in store for the high-speed Internet segment as well, industry watchers said.

The combined subscribers of Internet services held by CJ Hellovision and SK Broadband is estimated at 6 million, hovering below KT's 8.28 million, but far outpacing LG Uplus' 3.44 million.

Accordingly, existing players like KT and LG Uplus voiced concerns over SK Telecom's latest merger plan, saying that the government must thoroughly review the case in the context of fair market competition.

"SK Telecom already abuses its influence in the broadcasting and mobile market. Its acquisition of CJ Hellovision, the top cable service and MVNO player, will not be beneficial for the democracy nor the market order," local activist group People's Solidarity for Participatory Democracy also said.

South Korea's Ministry of Science, ICT, and Future Planning, meanwhile, will review SK Telecom's proposed merger. It may impose restrictions if it concludes the move may end up in a monopoly that has an adverse impact on the public's interest. (Yonhap)