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Messaging and online content giant Kakao is to become Korea's fourth mobile operator after winning an auction for 28GHz spectrum.
A Kakao-led consortium, known as Stage X, paid 430.1 billion Korean won (US$320 million) for the spectrum, outbidding local telco Sejong Telecom, the Ministry of Science & ICT announced Wednesday.
Incredibly, Stage X paid more for the spectrum than the three incumbent operators did in 2018, when SK Telecom, KT and LG Uplus paid a little over KRW200 billion ($150 million) each for an 800MHz slice.
Stage X is a consortium comprising Kakao-owned Stage Five and other unidentified companies, according to state news agency Yonhap.
The high-band frequencies became available last year when the operators were forced to divest them after missing their rollout commitments. The three MNOs had built out national 5G networks with their mid-band spectrum – they hardly needed the 28GHz.
They now have 31.5 million 5G subs between them, representing a 5G penetration rate of 61%. In a country with a population of 52 million, there are 80 million MNO and MVNO connections in total.
So it is not clear how Kakao and its partners think they can turn a profit from 28GHz in this saturated market when the incumbents saw no use for it.
Private network services
That seems especially salient in light of the Rakuten experience in neighboring Japan. Like Kakao, Rakuten is a successful Internet company with a big customer base, but has been bleeding cash from trying to win subs away from strong incumbents in a market where everybody has a 4G or 5G service.
It seems likely Stage X will focus on private network services rather than mass market 5G – although the new licensee itself has not been very forthcoming.
"We will work to become a new brand in the communications market and facilitate fresh and innovative changes in the market by boosting the 5G network service," Yonhap quoted Stage X CEO Seo Sang-won as saying.
The company will be required to build 6,000 28GHz basestations in the first three years.
Kakao Corp is best known for its KakaoTalk messaging app, which has 53 million users, 90% of them in Korea. But it also has 21 million users on its banking app and offers a dozen other diverse services including ridesharing, blockchain, entertainment, advertising, games and commerce.
In its latest quarterly filing, it reported revenue of KRW2.16 trillion ($16.2 billion), with 53% derived from its content businesses and the rest from its platform operations. Kakao also has a small stake in SK Telecom, the result of a 2019 cross-shareholding deal between the two to settle their rivalry over ridesharing and in-car services.
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