SK Telecom to keep market cap until ’07

SK Telecom Co. will extend its self-imposed cap on market share until the end of 2007, two years longer than its original plan, to avoid excessive competition, its chief executive said yesterday. At a press conference, Kim Shin-bae said Korea’s largest mobile phone operator will maintain its market share below 52.3 percent, the same level it had before the Information Ministry approved its acquisition of Shinsegi Telecom Co. in 2002. As of last month, SK Telecom had 51.1 percent of the market in terms of number of subscribers. KTF had 32.4 percent, and LG Telecom had 16.5 percent. In May 2004, Mr. Kim promised that SK Telecom would keep its market share below 52.3 percent until the end of 2005, as there were worries that SK Telecom would solidify its dominance after the introduction of the number portability system, which allows mobile phone users to change operators without changing their numbers. SK Telecom expects that four out of five Koreans will be using mobile phones at the end of this year, indicating the market is nearly saturated. “To raise the market share, companies have to spend more on marketing, but it is not worth it any more,” said Mr. Kim. He said intense competition raises marketing expenses, which ultimately eats into profits. He said the future of the telecommunications market depends on new driving forces, so SK Telecom will invest a total of 1.1 trillion won ($1 billion) in the wideband code-division multiple access network until the end of this year, and is creating measures to activate the service. by Park Sung-ha