이 기사는 2020년 04월 06일 08시00분 thebell에 표출된 기사입니다

South Korea’s Hyundai Department Store Group plans to start an auction process this month for its cable and telecom business arm, Hyundai HCN, with market watchers’ attention focused on the valuation of the company.

Hyundai HCN announced a plan late last month that it would split off its cable and telecom division into an independent legal entity which will continue to be called Hyundai HCN. The move is seen as a step toward the conglomerate’s planned sale of the business.

The separation is slated to be completed before November. Meanwhile, the conglomerate is said to have tapped potential bidders for Hyundai HCN as the attention of market observers has turned to the worth of the company.

Hyundai HCN will assume most of the parent company’s liabilities, because the cable and telecom services were the main business of the company prior to the split-off. Specifically, Hyundai HCN will carry 61 billion won in liabilities on its balance sheet, while its parent company will only have 7.7 billion won in liabilities.

A large portion of Hyundai HCN’s liabilities consists of accounts payable and unearned revenue related to the cable business, which are worth 48.2 billion won and 5.5 billion won, respectively. At the same time, Hyundai HCN will also assume a considerable portion of the parent company’s assets, including a business license obtained from the telecom regulator and business rights.

Hyundai HCN also owns a 17.75 percent stake in Home Choice Corp., which was jointly set up by domestic cable service providers including Hyundai HCN, Tbroad and D’live in 2007 to expand a video-on-demand business.

Other key factors to be considered when valuing the company include average revenue per user (ARPU), which can be used to estimate the average value per user.

According to data from the Ministry of Science and ICT, Hyundai HCN had about 1.34 million subscribers as of June 2019 with a market share of 4.07 percent. In a deal where LG Uplus acquired cable operator CJ HelloVision (now LG HelloVision) last year, the average value per user for CJ HelloVision was estimated at about 380,000 won. Hyundai HCN could have a price tag of roughly 511 billion won under the assumption that the value per user for the company will be at a similar level to its peer group.

But the value per user of Hyundai HCN could be estimated to be higher than its peers, some market observers said. Established in 1995, Hyundai HCN has obtained business licenses for eight regions. Its service areas also include regional centers like Busan and Daegu as well as some key districts in Seoul.

“The cable industry consolidation has accelerated via major acquisitions by the Big Three mobile carriers,” an industry insider said. “These big telecom companies currently dominate the cable television market, which is why few financial investors are interested in buying cable operators like Hyundai HCN. So the views of strategic investors have become more important.”

(By reporter Rho Ar-rum)