Phone firms gear up for subsidy battle

With the government permitting subsidies on new mobile phones from Monday, Korea’s mobile service providers are racing to keep existing users and attract more. From next week, people who have used the same handset for at least 18 months will be able to buy phones subsidized by the providers. The exact amount of the subsidy, however, is a closely guarded secret, which the companies are only disclosing to the Ministry of Information and Communication today. With potentially billions of won at stake, industry sources say the three firms have been pulling out all the stops to get wind of how much their rivals plan to offer in subsidies. A race to offer the most enticing incentives is also under way. SK Telecom Co., the No. 1 service provider, said yesterday that from next week, customers who have been with the company for 18 months or more and whose annual phone charges exceed 600,000 won ($619) would be entered into a raffle for one trip to Europe and free passes to an amusement park. A spokeswoman said that as 70 percent of its customers qualify for the subsidy, it was imperative that the incentives for staying with the company were appealing. Meanwhile, KTF Co., No. 2 in the market, is to offer free gifts to all its customers who qualify for the subsidies and buy new handsets; LG Telecom Inc. has even promised gratuities to all its eligible subscribers who visit its sales outlets, whether or not they buy a new handset. A high-ranking SK Telecom worker who declined to be named said the average subsidy would be just over 100,000 won. Currently, cell phone users can switch to another operator without changing their phone numbers, leading some operators to offer illegal subsidies to new customers. All three carriers have faced heavy fines for doing this. by Hong Joo-yun, Seo Ji-eun