South Korean telcos call truce on 5G subsidies

Operators have agreed to scale back competition after the launch of 5G services hit profitability.

Robert Clark, Contributing Editor, Special to Light Reading

February 21, 2020

2 Min Read
South Korean telcos call truce on 5G subsidies

After a brutal initial bout of 5G competition, South Korea's three carriers have called a truce on subsidies.

SK Telecom, KT and LG Uplus have jointly agreed to "halt excessive competition" in selling new 5G devices.

Between them they've reportedly spent around 2 trillion won ($1.2 billion) on 5G marketing since launching last April, subsidizing up to 90% of the price of high-end devices like the Galaxy S10 and LG V50 Thinq.

"To prevent user inconveniences and confusion, we have agreed to enhance the pre-order structure for newly-released mobiles," they said in a joint statement. They've agreed to set a one-week pre-order period and to not disclose any sales incentives or commissions during the period.

The imminent debut of the Galaxy S20 series seems to be one factor in the pause in hostilities. The other is the financial bleeding.

The cost of 5G – both marketing spend and capex – weighs heavily on the results of all three telcos released earlier this month.

For SK Telecom, revenues dipped 2.5% for the full year and even in the last quarter, just as its 5G base was starting to scale, contracted 0.2%. The 5G rollout was a prime factor in the 7.6% slide in operating income. (See KT's 5G Splurge Hits Profits in 2019.)

Rival KT reported an equally anemic 0.2% lift in Q4 wireless service revenue, despite the addition of 1.4 million 5G customers. Operating income was down 52% for the quarter and 8.8% for the full year, with capex, two-thirds of which was allocated to 5G, 65% higher.

LG Uplus reported a 7.4% fall in operating profit despite a 5.6% bump in sales. It too attributed the weaker result to its 5G spend, with capex up 87% and marketing expense 8.6% higher.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

But this is all familiar turf for South Korean telcos. For whatever reason, they are addicted to price wars. In 2013, they were all suspended for up to 90 days because of excessive subsidies – just as they were in 2002 and 2004.

In this latest instance, the regulator read the riot act to them following the launch of 5G, specifically warning them against illegal handset subsidies and rebates.

But it's no surprise to learn that some customers who bought the LG V50 received subsidies of KRW600,000 ($495), while LG Uplus and SK Telecom got into a bidding war over the Samsung S10, with SKT eventually offering up to KRW546,000 ($450) in benefits.

— Robert Clark, contributing editor, special to Light Reading

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About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech ( 

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