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| Taxi drivers stage a massive rally against Kakao Mobility's plan to launch the ride-sharing service in front of the National Assembly in Seoul, Dec. 20. / Korea Times photo by Bae Woo-han |
By Jun Ji-hye
Kakao has been suffering a series of setbacks in expanding into new businesses, due to opposition from taxi drivers as well as other establishments and regulatory hurdles, according to industry analysts Monday.
Growing uncertainties surrounding new ventures of Korea's top mobile messenger operator have also adversely affected its shares over the past few weeks, they said.
Among others, Kakao Mobility suspended its pilot ride-sharing service on Jan. 18 due to continued protests from taxi drivers who have claimed the service will reduce the number of their passengers and kill the industry.
Kakao Mobility is a Kakao subsidiary formed in August to expand and monetize transportation services.
The firm said the decision was made to promote cooperation with the taxi industry and reach a consensus on the matter.
Earlier, the company postponed the official launch of its ride-sharing service, slated for Dec. 17, following the death of a cab driver who set himself on fire in protest.
The firm said it will engage in sincere dialogue with taxi drivers at a governing party-led dialogue table, which was launched Monday.
"There are no preconditions in dialogue," a Kakao Mobility official said. "We will be open to it. We can even consider going back to square one with our plan to launch the service."
But market observers say there seems to be little possibility for Kakao and the taxi industry to reach a consensus as there has been a definite difference of opinion between the two.
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| Kakao founder and Chairman Kim Beom-su / Courtesy of Kakao |
The court made its summary order last month, saying Kim omitted shareholding structure information of five subsidiaries in the firm's report submitted to the Fair Trade Commission in 2016 when the firm was designated as a quasi-chaebol or conglomerate.
Kim appealed the court's decision, demanding a full trial. Under the standing law, those who want to become large shareholders of financial companies should not have faced fines within the last five years.
This is raising possibility that Kakao Pay's plan to acquire Baro Investment & Securities, a mid-tier brokerage, can be delayed until the court makes its decision.
Kakao Pay, a fintech subsidiary of Kakao, announced a plan in October to take over Baro Investment & Securities, but the Financial Services Commission has yet to deliberate on Kakao Pay's eligibility to be a large shareholder. The deliberation is an essential procedure in an acquisition deal of a financial company.
"We have yet to apply for the deliberation as there is a lot to review and prepare," a Kakao Pay official said.
Meanwhile, eBEST Investment estimated that Kakao would post a 24.8 billion won operating profit for the fourth quarter, down by 19 percent from the previous quarter.
Analyst Seong Jong-hwa said, "Kakao paid lower marketing expenses in the third and fourth quarters last year, showing its willingness to control speed in pushing for new businesses."
