SKT, KT, LG needs to resolve critical issues in July

11-Jul-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

SK Telecom, KT and LG Uplus are facing a hectic July schedule as several critical issues need to be resolved by the end of the month.

The government is scheduled to make revisions to the country’s law on illegal mobile phone subsidies and the changes will be announced this month, as will the results of an evaluation of the telecom companies 5G networks. The three firms are also set to participate in the bidding for Hyundai HCN before the end of July.

“We have a lot going on with the illegal subsidies fines, the 5G services quality evaluation. On top of that we need to consider the takeover of Hyundai HCN and the scheduled revision to the illegal mobile phone subsidies law,” a telecom official said.

Among these issues the most anticipated is the networks evaluation as Korea was the first to “commercialise” 5G in April 2019; but since then the companies have suffered endless criticism from customers over a lack of network connectivity.

Industry watchers believe the Ministry of Science and ICT will release the evaluation in late July with some expecting it to provide a ranking among the telecom companies for their network quality. The rankings could be a devastating blow to the carriers that place second or third as the three launched their 5G services on the same day.

“We are trying to release the 5G telecom quality results within July,” an official at the Ministry of Science and ICT said.

The government usually releases its annual telecom services evaluations in December, however, the ministry plans to conduct two separate evaluations this year. The first will focus on highly populated areas such as Seoul and six metropolitan cities around the country with the results expected to be released this month. The second evaluation will be conducted for the rest of the country, and is set to be released in December.

In the first half of the year, SKT, KT and LG Uplus agreed to increase their initial 5G infrastructure investments from 2.7 trillion won to 4 trillion won, which includes building 5G infrastructure in subway stations, department stores and universities. However, COVID-19 has delayed installations and the companies have fallen behind schedule.

All these issues come amid the three being slapped with fines by the country’s top telecom regulator for providing illegal subsidies to customers to entice them to switch to the 5G networks, totalling 51.2 billion won, Wednesday. This was the largest fine ever levied in Korea for the provision of illegal subsidies.

The Korea Communications Commission (KCC) fined SKT 22.3 trillion won, KT 15.4 billion won and LG 13.5 billion won, which must be paid within two months.

The KCC will send out the payment notice to the three this month, and after receiving the notice the companies will need to submit the payment within one month.

The hefty fine undoubtedly will have an impact on the companies both in the local and global 5G market as it will reduce capital to further enhance and invest in their technologies.

“Telecom companies will need to pay the government’s fine in full, which will become a burden in increasing their 5G investments amid the COVID-19 pandemic,” a telecom official said.

Next week, all three are scheduled to take part in the bidding for Hyundai HCN, a popular pay-per-view company.

Industry watchers believe SKT has the upper hand, but KT Skylife has been eager to acquire the company as of late and it will come down to who submits the highest offer to be selected as the preferred bidder.

The sale price for Hyundai HCN is estimated at between 450 billion won to 650 billion won.

KT’s market share in the pay TV sector accounted for 31.52 percent in June, followed by LG Uplus with 24.91 percent and SKT with 24.17 percent.

However, depending on the results of the take overs of D’Live, CMB and Hyundai HCN, which rank fourth to sixth, the dynamics of the pay-per-view sector could change as they have a market share of 5.98 percent, 4.58 percent and 3.95 percent, respectively.


Category: Korea

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