Chapter 759: You Didn’t Know, Did You?

Dark circles were deeply etched under Choi Woo-sik’s eyes, a stark contrast to the last time I saw him.

“Welcome, President Kim Mu-hyeok.”

He offered a handshake, a fake smile plastered on his face as he spotted me.

We shook hands and then took our seats.

Even after sitting down, we didn’t get straight to business. We exchanged pleasantries and I subtly observed Choi Woo-sik’s condition.

“How is KS Group doing these days?”

“Don’t you know very well?”

His response was quite sharp.

It seemed he was under a lot of stress because of Sovereign.

Although we’d reached an agreement thanks to my mediation, it was a fragile relationship that could break at any moment.

“Really? Do you think I’d personally handle such trivial matters every day?”

“What did you say? Trivial?”

I smiled faintly, watching Choi Woo-sik’s eyes widen.

“If you had followed my advice and attempted to convert to a holding company structure years ago, you wouldn’t be facing this issue. I’ve warned you many times, haven’t I?”

I had repeatedly advised the chairmen gathered at the Korean Economic Association to restructure their group’s ownership.

I told them to move away from the circular investment structure vulnerable to external attacks and convert to a holding company structure.

Some groups followed my advice and restructured their governance to a holding company structure, but some ignored my advice until the end.

Choi Woo-sik, one of the people who ignored my advice, glared at me.

“Converting to a holding company requires enormous capital. We were attacked while preparing. It’s not fair to simply blame us for that.”

To think that KS Group couldn’t convert to a holding company because they lacked funds, especially before the financial crisis, was absurd. He needed to talk sense.

Before the financial crisis, holding companies were illegal in Korea, so companies were forced to expand their size through a circular investment structure.

However, the financial crisis exposed the significant problems of circular investment structures.

Especially Jungwoo Group, which I acquired, had all its affiliates weakened due to the circular investment structure.

It was a prime example showing that even a robust company with trillions in revenue could be weakened overnight by the dangers of circular investment structures.

It wasn’t that Jungwoo Group’s affiliates lacked competitiveness, but that they had to bear massive debts due to the circular investment structure.

I shrugged, watching Choi Woo-sik come up with ridiculous excuses.

“I can’t believe that KS Group couldn’t convert to a holding company because they didn’t have the money. KS Group has the largest cash reserves around.”

Unlike other conglomerates, KS Group had a reliable cash cow.

They had been using their massive cash reserves to make acquisitions and mergers to grow the group.

It wouldn’t be an exaggeration to say that the group’s cash holdings were the highest in Korea.

“Well, I guess those cash reserves were completely spent on defending your management rights this time around.”

“……”

“But I didn’t come here to discuss that today. Just stick to your agreement with Sovereign, and there won’t be any issues with your management rights. It’s a matter of trust.”

When I made a gesture of stepping back, Chairman Choi Woo-sik rubbed his eyes and sighed.

“Then, what exactly did you want to meet about?”

I took out an item I had brought with me from my jacket.

“Do you know what this is?”

“Isn’t that an iPhone? Where did you get this?”

His eyes widened as he immediately recognized the object I pulled out.

“I have secured the exclusive rights to distribute the iPhone in Korea, Japan, and China.”

“I see. It’s not even surprising anymore.”

“So, I’m asking, is KS Telecom interested in exclusively distributing this?”

KS Telecom’s market share in Korea was close to 60%.

“Hmm.”

Chairman Choi Woo-sik hummed, gazing at the iPhone on the table with a complex look.

“Let’s hear about the contract terms first.”

I presented the contract terms I had agreed upon with Steve Jobs.

As Choi Woo-sik read the documents I gave him, his face became increasingly grim.

“You’re not seriously thinking we would accept these terms, are you?”

“We’ll see.”

“We will absolutely not sign a contract under these conditions. No, neither Korea Telecom nor Geumsung will accept them.”

“Don’t be so sure. I came here today to give you an opportunity.”

After a moment of hesitation, Chairman Choi Woo-sik shook his head, rejecting the offer.

“……No matter how I think about it, these are unacceptable conditions. We’ll pass.”

“I understand.”

I gathered the documents I had handed to Chairman Choi Woo-sik.

I also put the iPhone I had placed on the table back in my jacket.

Choi Woo-sik was more surprised by my decisive actions.

“You’re giving up that easily?”

“There’s no reason to try to convince someone who doesn’t want to do it. You’ll probably regret today’s choice.”

“I’ve received reports about the iPhone, and I’m well aware of it. But most believe it’s just a storm in a teacup. To sell it in Korea, it’s best to partner with us.”

I could guess why Choi Woo-sik was putting up such a front.

In Korea, mobile carriers were the absolute power.

“A storm in a teacup, huh? Most of the Korean public opinion seems to be pushing that narrative.”

“Korean mobile phones are continuously evolving. No matter how good the iPhone is, it’s not a market that can bring about a dynamic change.”

“Maybe. But I’m confident in my success.”

“What makes you so confident?”

Choi Woo-sik’s question was understandable. The domestic Korean market was like a graveyard for foreign phones.

But the iPhone was different.

“You’ll understand once you experience it. A storm in a teacup? Hardly. This is a device that will change the world. Within a few years, regular mobile phones will lose their competitiveness.”

“……That’s an excessive prediction.”

“Well, if that’s how you see it, then there’s nothing I can do. Let’s stop talking about this. I’ll go meet with other carriers.”

As I stated firmly, Choi Woo-sik bit his lip.

After thinking for a while, he opened his mouth.

“……No mobile carrier will accept it.”

“Why? Because you can’t sell data due to Wi-Fi?”

“……”

Chairman Choi Woo-sik closed his mouth at my blunt question.

“I understand why the mobile phone manufacturers are against it, since it’s their livelihood at stake. I’ve also received a report that Ilseong Electronics is against it. But I can’t understand why the mobile carriers are against it. This device has to use more data than current devices. Without data, it’s completely useless.”

This wasn’t just about the iPhone.

Not only the iPhone, but also the smartphones that would be released later, would all depend on data usage rather than phone call functions.

“Don’t just look at the trees; look at the forest. You’ll become obsolete that way. And there aren’t that many areas with Wi-Fi in our country.”

“Still……”

“That’s enough. I have no intention of persuading you, so let’s stop this conversation.”

Chairman Choi Woo-sik, despite having rejected it first, kept clinging to me, as if he still had some lingering attachment.

I drew a firm line once again.

“I clearly gave you the opportunity, and it was you who rejected it. Let’s talk about something else.”

I had already anticipated that Chairman Choi Woo-sik wouldn’t agree to distribute the iPhone.

There was no reason for KS Telecom, which had the dominant market share in Korea, to accept Apple’s demands.

I finally brought up the real reason for this meeting.

“Apple wants to acquire KS Teletech.”

“KS Teletech? What are you talking about all of a sudden?”

“Specifically, they want to acquire the production factory that KS Teletech has. To manufacture iPhones in Korea.”

Currently, KS Teletech’s technology was meaningless for the iPhone.

What I wanted was only KS Teletech’s Cheonan factory and the factory they were currently building in China.

“Don’t say ridiculous things. KS Teletech is not for sale. It’s a company I’m actively nurturing.”

He was lying through his teeth. I smirked at Choi Woo-sik.

“Really? I’ve heard you’re already in preliminary discussions to sell it to Pantech.”

“Wh, what are you talking about…”

I stared straight into his eyes as he stammered in confusion.

“Don’t lie to me. This is a warning.”

“……”

“I’ve heard that the discussion with Pantech is quite advanced. But Pantech needs the patent rights and the developers, not the production plant, right?”

“How much do you know?”

“As much as you do.”

Choi Woo-sik sighed softly.

When KS Telecom merged with Korea Telecom, they limited KS Teletech’s terminal production to 1.2 million units per year.

The merger of the two companies was approved under the condition that if they violated this, they would be fined 1.1 billion won per day.

The regulation was temporary until 2005, but it was already clear that it would be extended. In fact, they seemed to be planning to strengthen the regulations further.

If KS Telecom, with a 60% market share, were to also monopolize the supply of terminals through KS Teletech, the adverse effects would be considerable.

There was no way Choi Woo-sik didn’t know that. That’s why he was in negotiations with Pantech with the condition of transferring management rights.

“Pantech has a lot of production capacity. So if you sell off the production plant separately when negotiating with Pantech, you can gain an advantage in the negotiations.”

The reason Pantech was trying to acquire KS Teletech was simple.

It was to acquire KS Teletech and become the second-largest player in the domestic market.

Pantech’s terminal production capacity was among the top 10 in the world.

For Pantech, the production plant owned by KS Teletech was a liability.

Integrating production facilities wasn’t something that could be done in a short amount of time.

“I will give you 150 billion won for the acquisition of the Cheonan factory, including the domestic production plant, and the factory currently under construction in China.”

“150 billion won?”

“Yes. I heard the group valued all of KS Teletech at 400 billion won including the production plants.”

“……”

“And I know you’re asking for 300 billion won for a 60% stake in KS Teletech. Of course, Pantech says that’s an absurd price.”

Choi Woo-sik let out a hollow laugh, as if he couldn’t believe it.

“Where did this information leak from?”

“That’s not what’s important. How about it? Isn’t this a good deal?”

“It’s not just good, it’s a very good deal. It’s so good that I’m worried there might be a trap hidden in it.”

The group’s current reserves were already depleted.

This was because they had been continuously buying back their own shares to raise the stock price due to the agreement with Sovereign.

They had spent over a trillion won on purchasing their own shares for management rights defense alone.

“A trap? Apple needs a production plant in Korea, and even if they start building now, it would take several years to start production properly. But if they have the production plant that KS Teletech owns, they can start production within one or two months. That’s why they want to acquire it.”

“Are you the one who is directly acquiring it?”

“Probably. But the articles will announce that Apple is preparing to acquire it.”

“Hmm……”

“If you sell the production plant and then renegotiate with Pantech, you’ll be able to get over 200 billion won.”

Choi Woo-sik was silent. He seemed lost in thought about what was more advantageous.

He didn’t think for long and answered immediately.

“No matter how much I think about it, I don’t think it will work.”

“I’m disappointed.”

“I will consider it if you acquire all of KS Teletech. On the condition that you acquire all of the 89.2% stake in KS Teletech held by KS Telecom.”

Look at this? Choi Woo-sik was using our urgency as a weapon to be bold.

Just to hear him out, I asked.

“What about the sale price?”

“How about 500 billion won including the management premium?”

“You’re being too greedy.”

“We’re not the ones in a hurry. And don’t even think about trying to use management rights as a weapon to pressure me. We’ve already made an agreement, and if you break it, your trustworthiness will be gone.”

“There’s no way I would do that. I won’t break our agreement. I will never take Sovereign’s side and hand over management rights to them.”

Choi Woo-sik was aware of that, which was why he was acting so boldly.

“How about it? Are you going to take KS Teletech for 500 billion won?”

The technology and terminals held by KS Teletech were meaningless.

The early appearance of the iPhone would accelerate the transition to smartphones even faster.

“I see. You just need the production plant, not KS Teletech itself… I reject your offer.”

“That’s too bad.”

Although he said that, his face did not look disappointed at all.

“I guess it can’t be helped.”

I got up from my seat without any lingering attachment.

“I should be going now.”

Choi Woo-sik also got up from his seat and then extended his hand to me.

“If you change your mind, please contact us. We’re always open.”

I didn’t like the victorious smile that appeared on Choi Woo-sik’s face.

I shook his hand with a crooked smile.

“No. I won’t be looking for you again.”

Still holding his hand, I continued speaking.

“I’ve heard your wife is secretly increasing her shares in KS Corp and its affiliates under other people’s names. Did you know about that?”

Choi Woo-sik’s face stiffened instantly.

“Ah, so you didn’t know. My mistake.”

I gripped his limp hand tightly and smiled again.

Sovereign isn’t the problem but here you are acting all bold.