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South Korea - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. South Korea's telecommunications market continues to be dominated by the former state-controlled incumbent operator, KT Corporation, and its affiliates such as wireless operator KTF, although it is coming under increasing pressure from rivals such as LG Dacom, ONSE, Hanaro, and others. However, the alternative operators are really only gaining market share through consolidation, strategic alliances, and complicated cross-ownership arrangements allowing them to sell each others' services via their separate networks. It may yet be some time before a sufficently large enough carrier emerges to challenge KT in the fixed-line and broadband markets. KT claimed to have accounted for 92.2% of South Korea's local telephone subscribers at the end of 2006; approximately 21 million customers in all. In terms of revenues, the company had an estimated 85.6% of all long-distance telecommunications services revenue in 2006, and a little over 40% of international long-distance revenues. Its main rival in the fixed-line sector is LG-owned LG Dacom, with a market share of little more than 5% at the end of 2006, although as LG also owns a stake in alternative operator Powercomm, combined market share would have been marginally higher. LG also controls a minority stake in another fixed-line player, Hanaro Telecom. "Independent" operator ONSE has a growing share in the market for international long-distance calls, but is now being eclipsed by new entrant SK Telink, while KT and LG Dacom are also witnessing a dilution of their market shares. There had been 38.341 million mobile telephone subscribers in South Korea at the end of 2005, a 4.8% increase year-on-year. The following year saw an approximate 5.0% increase in the number of subscribers, to 40.261 million. Over this period, market leader SK Telecom had seen its share of the subscriber base fall from 50.9% to 50.3%, while KTF remained static at 32.1%. Thus, it was LG TeleCom that grew at SK Telecom's expense in 2006, taking its market share to 17.6% from 17.0%. In July 2006, the Ministry of Information and Communication decided to cancel LG TeleCom's 3G IMT-2000 cellular licence as the company had failed to launch operations by the previously mandated start date of June 30. LG TeleCom expressed regret over the decision, saying it had been unable to launch its 3G operations as the alternative technology (W-CDMA) had already been widely adopted in many countries. In September 2006, LG Telecom said that it would pursue next-generation services by using existing 1.8GHz spectrum to launch EV-DO Rev A by December 2006, which will be more economical than using the 2.1GHz bandwidth and save the company approximately W3.35 trillion. In the broadband sector, KT has maintained a market share of 50-51% since 2003, but with rival Hanaro having acquired first broadband ISP Thrunet in 2005 and then the broadband Internet business of ONSE in late-2006, increasingly intense competition is expected from that quarter.
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