SK Telecom’s 50% share may shrink

SK Telecom, the nation’s No. 1 mobile carrier, is on the brink of losing its 50 percent market share in the mobile communications market due to the impact of the government-enforced business suspension on the three mobile carriers.

Competitors KT and LG U+ each stole bigger slices of the pie with aggressive marketing promotions during the periods when they had the business of signing up new customers all to themselves, and SK and the other competitors were suspended from attracting new accounts.

Industry analysts say that when all three mobile carriers resume normal business operations on May 19, they will engage in a fierce battle to maintain or, in SK’s case, recover the market share.

SK’s market share could temporarily drop below 50 percent on May 19 or 20 mainly due to the rapid growth of No. 2 operator KT, which finished its 45-day business suspension on April 27 and has the business of signing up new customers all to itself. SK ends its suspension on Tuesday and LG U+ on Monday.

All three companies were suspended for offering excessive subsidies to new customers but on a staggered schedule.

SK had the monopoly of signing up new customers from March 13 to April 4. LG U+ had it from April 5 to 26. KT has had it from April 27.

KT has attracted 193,000 subscribers, far more than expected, through May 13, gaining the highest number of mobile number portability (MNP) subscribers among the three wireless companies. MNP are customers changing providers but keeping the same phone number.

Analysts expect KT’s market share to rise to 30.2 percent through May 18. KT saw its market share decline to 29.86 percent at the end of March, but it recovered to exceed 30 percent recently.

“Although it is difficult to forecast just with the number of MNP subscribers, it is true that we are gaining growth momentum, accepting an average of 11,000 MNP subscribers per day,” said a spokesman for KT.

LG U+ projected that its share of the market will reach 19.8 percent on May 19. As of the end of March, LG U+ had a 19.72 percent market share. In April, when KT and SKT were suspended, its share reached as high as 19.96 percent.

If KT does expand its market share to 30.2 percent or higher, and LG U+ posts 19.8 percent, it means that SK Telecom’s market share will automatically fall below 50 percent.

SKT hasn’t had less than a 50 percent share since 2001.

“Having more than 50 percent of the market share is SK Telecom’s core asset,” said Hwang Soo-chul, chief financial officer of SKT. “We will be able to maintain more than 50 percent market share with efforts to strengthen our fundamental competitiveness and the impact of external regulations that will minimize the competition over subsidies.”

It remains to be seen whether SKT will be able to recover the lost market share, said one industry source.

“It will be inevitable for all of the three mobile carriers to pour in money in marketing promotions in order to raise their market shares,” said an industry observer.

“As the government keeps an eye on illegal subsidies, it should also maintain a proper balance between market competition and regulation.”

Fierce competition is expected in the four months until October when the Mobile Device Distribution Act takes effect. The act boosts transparency of subsidies and strengthens punishments.

SKT is considering measures to expand customer benefits such as lowering smartphone prices and offering special discounts to new subscribers.

SKT’s marketing costs will inevitably increase in the second and the third quarter.

BY KIM JUNG-YOON [kjy@joongang.co.kr]