Rivals take aim at SKT customers during ban

With top carrier SK Telecom suffering a government-imposed seven-day business suspension, competitors KT and LG U+ are pulling out all the stops to capture as many of the penalized company’s customers as possible.

The two telecom companies are ramping up subsidies close to the maximum amount of 330,000 won ($280) on some of their latest premium models as well as older smartphones.

Likely attracted by the improved financial offers, a total of 6,066 subscribers have left SKT and switched to KT and LG U+ on the first day of suspension on Thursday.

The normal average departure rate for SKT is 5,605. Following the recent discounts on Thursday, KT gained 3,096 new members, while LG U+, the smallest carrier, picked up 2,970.

Before the Mobile Device Distribution Improvement Act was implemented last October there was a steep increase in subsidies and which prompted a huge exodus from suspended telecom companies.

The Act was designed to relieve the cutthroat competition among operators, though it was accused of passing on financial burdens to the public.

Under the regulation, both companies are keen on boosting the level of subsidies for the latest models such as the Samsung Galaxy S6 Edge.

KT, for example, offered the Edge at the maximum subsidy it can provide - 330,000 won plus an additional subsidy of 49,500 won under a two-year contract at its online mall, Olleh Shop.

Individual mobile phone retailers are allowed to separately provide subsidies of up to 49,500 won or 15 percent of the maximum subsidy. KT and LG U+ denied reports that they gave more than the allowable limit. “We [KT] never engaged with illegal subsidies,” said a public relations official.

The Korea Communications Commission announced in May that it slapped the nation’s largest mobile carrier, SK Telecom, with a 23.5 billion won fine and a seven-day suspension of operations.

The regulator said SKT offered its customers illegal rebates in mid-January for the Samsung Galaxy Note 4 and iPhone 6 models.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]