LG Telecom has learned the hard way that you don’t get rewarded for just sitting around and doing nothing. The company has done little to develop 3G technologies in South Korea after earning a license, so the government has revoked the license from the nation’s third largest provider of mobile phones.
LG Telecom received the license in 2001 with a bid of $1.19 billion. Since then, though, the company has only spent $230 million on developing the technology. As an excuse for their inactivity, they blame the lack of business viability and little support for 3G.
Part of the problem as well is that the government is keen to focus on developing a 2-gigahertz 3G CDMA network, but LG was more interested in EV-DO because it is more economically viable. Investors in the company weren’t at all upset by the move, since the stock shot up sharply on the news. Clearly the license was a bit of an albatross for LG.