LG U+ buys 5 percent of Obigo for 7.2 billion won

LG U+ on Monday said that it purchased 5 percent of Obigo, a Pangyo-Gyeonggi-based local in-car software company, for 7.2 billion won ($5 million).

Choi Taek-jin, left, LG U+ vice president, and Hwang Do-yeon, Obigo CEO, pose for a photo during a signing ceremony held last Thursday at LG U+'s headquarters in Yongsan District, central Seoul. [LG U+]

LG U+ on Monday said that it purchased 5 percent of Obigo, a Pangyo-Gyeonggi-based local in-car software company, for 7.2 billion won ($5 million).

The deal is part of LG U+'s effort to diversify its business portfolio outside the traditional telecom sector, where growth has been slowing.

LG U+ hopes to gain a foothold in the in-car infotainment market in terms of both wireless communication and content with Obigo. The plan is to supply content via Obigo's connected car service and expand its market share through joint promotions.

The companies aim to develop new businesses, such as a subscription-based content service, and establish business relations with other start-ups in the sector.

Founded in 2002, Kosdaq-listed Obigo supplies connected car software services to carmakers such as Hyundai Motor, Kia, and Toyota.

Amid slowing growth in telecom, LG U+ and other phone companies are shifting their focus to non-telecom businesses. LG U+ hopes to boost the non-telecom proportion of its revenues from last year’s 20 percent to 40 percent by 2027.

The signing ceremony was held last Thursday at LG U+'s headquarters in Yongsan District, central Seoul with Choi Taek-jin, LG U+ vice president, and Hwang Do-yeon, Obigo CEO, in attendance.

“Infotainment platforms are the key to the connected car business and what sets a service apart from others,” said Choi.

“We will create synergy by combining Obigo’s platform with our telecommunication capability, experience in working with contract manufacturers and content business capabilities to become the leading player in the future connected car and autonomous driving service sector.”

“This business collaboration will lead to a long-term partnership based on the two companies’ cooperation over the past three years and business capabilities,” said Hwang.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]