LG Telecom chief insists subsidies only a part of new business plan

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LG Telecom chief insists subsidies only a part of new business plan

Consumers are likely to be big winners as the nation’s mobile service operators ― soon to be allowed to offer subsidies on new handsets to existing customers ― seek to entice new customers by offering ever cheaper phones. However, in an interview with the JoongAng Ilbo, LG Telecom’s chief executive Nam Yong said that his company ― as the smallest of Korea’s three telecom carriers in terms of the number of subscribers and amount of capital ― would not take the risk of spending too much on subsidizing new handsets. This year, LG’s marketing fee, including subsidies, would be set at around the same level as last year’s 580 billion won ($590 million), he said. But this doesn’t mean, he said, that LG Telecom would sit by as its rivals splurge on subsidies. While Mr. Nam’s company will be offering subsidies on new handsets, he said LG is helped by the fact that compared to its rivals, its customers generally have a shorter subscription period and generate less revenue per person. This means LG will have to pay subsidies to fewer subscribers than either SK Telecom Co. or KTF Co., according to Mr. Nam. The Information Ministry plans to categorize the amount of subsidies according to the subscription period and the users’ monthly charges. “When our rivals spend 1 trillion won on subsidies, we can gain the same effect with just one tenth of that amount,” he said. Mr. Nam said that at present, LG has no plans to launch new businesses, such as wireless broadband Internet, or to acquire entertainment firms. Instead, he would focus more on expanding the number of LG’s subscribers. Answering rumors that LG Telecom is considering acquiring Hanaro Telecom Inc., Korea’s second-largest Internet service provider, he said, “I am certainly interested but it is not only for me to decide.” The 58-year-old executive added that he has discussed the matter with the heads of LG Group’s two other telecommunication subsidiaries ― Dacom Corp. and Powercomm Inc. ― whenever time allowed. by Hong Joo-yun
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