LG Information & Communications Ltd. of South Korea is wagering its hand in the U.S. personal communications services market with plans to begin large scale PCS technology and equipment manufacturing in San Diego in the second half of this year.
The telecommunications subsidiary of Korean conglomerate LG Group (previously Lucky Goldstar Group), LGIC produces Code Division Multiple Access-based equipment. NextWave Personal Communications Inc. is its first U.S. customer.
Hong Seo Pach, LGIC’s public relations manager, said his company entered into a contract with NextWave valued at more than $250 million for switching systems and base stations. NextWave walked away from the Federal Communications Commission’s C-block auction with licenses in 56 markets. NextWave’s network construction is scheduled to begin later this year, said Pach, and PCS services are expected to start in all markets in 1997, according to NextWave.
LGIC also is negotiating with other PCS licensees for network equipment contracts, added Pach.
John Henry, who tracks Asian companies as division director in the telecom branch of the U.S. Department of Commerce, said LGIC’s plans for starting U.S. business keeps with PCS foreign investment trends. Asian companies are attracted to the PCS market as investors because they expect the industry will yield high return. In addition, sidestepping foreign investment restrictions, some international companies have structured interest in companies as loans on equipment. Henry said more than $160 million in Korean money nourished C-block bidders.
NextWave is piloted by former Qualcomm Inc. executive Allen Salmasi; LGIC’s CDMA equipment uses technology developed by Qualcomm, and Qualcomm is based in San Diego.
Love triangle or coincidence?
Pach said he was not sure what led to LGIC’s choice of location, but noted San Diego is a high-tech city.
LGIC is starting three businesses under a new holding company, LG Information Inc. LGI recently was established in San Diego and its subsidiary companies will focus in research and development, network equipment manufacturing, and PCS product maintenance and operations, said Pach. Preliminary R&D efforts already have begun, noted Pach. He said about 400 people initially will be employed between the new LGI companies.
LGI’s PCS network equipment components will be shipped from LGIC in South Korea and assembled in San Diego, Pach explained.
LGIC supplies cellular equipment to Korea Mobile Telecom, one of two companies licensed to provide CDMA in South Korea. KMT started service in January.
