On August 10, KT announced that it will purchase all assets and liabilities, worth 39.9 billion won, of the phone maker KT Tech, a subsidiary of KT. It also announced that it will acquire a hundred percent of the company’s shares by investing 10.5 billion won.
KT is currently holding 93.76 percent of the shares of KT Tech. In order to close KT Tech, it has decided to purchase all assets and liabilities of the company.
The mobile industry presumes that KT is closing KT Tech because its low-cost mobile phone products are no longer competitive in the current high-priced smartphone market.
KT Tech recorded 247.4 billion won in sales and made 0.6 billion won net profit last year, however, its financial position has been deteriorating and the company is nearly 139.8 billion in debt.
KT Tech will be completely closed in January next year after going through a liquidation process.
KT Tech was originally KTF Technologies, which separated from Freetel in 2001. When featurephones were still in the mainstream of the mobile phone market, it gained popularity with its Ever brand, promoted by such popular celebrities as Song Hye Gyo and Se7en, but it lost its popularity as smartphones came out.
KT Tech tried to target the market with its smartphone brand, Take, but it was beaten by the luxurious smartphone brands of Samsung Electronics and Apple.
As KT Tech goes into liquidation, there will be only three phone makers in Korea: Samsung Electronics, LG Electronics, and Pantech.
SK Telesys also launched a cell phone brand called W in August 2009 but went into liquidation in November last year because it couldn’t make a profit in the mobile industry.