Mobile communications in South Korea

The Mobile Communication Industry in South Korea

As of March 2009, the number of mobile subscribers in Korea nearing 46 million total mobile subscribers and the nation’s penetration rate almost 100%. Mobile telecommunications services in South Korea are served by three operators: SKT (SKTelecom), KTF (Korea Telecom Freetel), and LGT (LG Telecom). SKT represents 50.50% of the market share, KTF 31.54% and LGT 17.95% as of December 2007. The nation first launched its mobile telecommunication services in 1960.

Changes in the number of mobile subscribers are indicated in the table below:

unit: number of subscribers

	Dec. 2001	Dec. 2002	Dec. 2003	Dec. 2004	Dec. 2005	Dec. 2006	Dec. 2007
SKT	15,179,063[1]	17,219,562	18,313,135	18,783,338	19,530,117	20,271,133	21,968,169
KTF	9,590,698	10,332,770	10,441,766	11,728,932	12,302,357	12,913,699	13,720,734
LGT	4,275,835	4,790,161	4,814,046	6,073,782	6,509,849	7,012,283	7,808,638
Total	29,045,596	32,342,493	33,568,947	36,586,052	38,342,323	40,197,115	43,497,541

In March, 1984, the Korean government permitted the Korea Telecom to establish the Korea Mobile Telecom as a subsidiary dealing with mobile services. The Korea Mobile Telecom was to provide analogue cellular service employing the method of AMPS (Advanced Mobile Phone Service) in Seoul metropolitan area including Seoul, An-Yang, Suwon, and Sung-nam. In May, 1988, the Korea Mobile Telecom launched a full swing mobile communication business, expanding its scope into areas beyond Seoul and its vicinity, and at the end of 1991, the entire nation came to enjoy mobile services.

In 1994, in an effort to restructure communications industry, the Korean government announced its selection of a second mobile service provider, Shinsegi (which was later merged into SKT in January, 2002), and privatized the Korea Mobile Communications. As a result, the era of monopoly ended in the nation’s mobile communications service, laying groundwork for duopoly.

The market became truly competitive in April, 1996, when Shinsegi started providing services using the method of CDMA. In June, 1996, the Korean government selected PCS (Personal Communication Services) providers, which would compete with the aforementioned companies, the so called “second generation mobile services companies.” The goal of the government was to secure competitive environment in the nation’s communications market. The Korea Telecom Freetel, LG Telecom, and Hansol PCS (merged into KTF in May, 2001) were the three selected PCS carriers and began their PCS business in October, 1997. With Shinsegi and Hansol PCS out of the picture, only SKT, KTF, and LGT are currently competing in Korea’s mobile communications market.

Each company's financial status as of 2006 is indicated in the table below:

unit: KRW million

	SKT	KTF	LGT
Sales	10,650,952	6,057,350	3,943,456
Operating Income	2,584,370	668,747	416,532
Ordinary Income	2,021,580	513,770	83,700
Net Income	1,446,598	411,702	237,986

The ARPU (Average Revenue Per User) of each company is as follows: SKT is 44,599 KRW (as of 2006), KTF 38,899 KRW (as of 4Q/2006) and LGT 35,700 KRW

Notes

[1] The # of subscribers of SKT in December 2001 includes those of Shinsegi, a former mobile telecommunication company, which was later acquired by SKT in January 2001.

References

1. 'The Status of Fixed and Mobile Telecommunication Service Subscribers' by the Ministry of Information and Communications

2.Song Weejeen 'Korean Mobile Communication leaps from the era of a chaser to that of a leader' ISBN 89-7633-277-6

3. Annual Report 2006 by SKT, KTF and LGT