LG Telecom Says License Loss Hasn't Hurt Sign Ups, SK Gains
--From AOL.-- Cooters
Seoul, Jan. 5 (Bloomberg) -- LG Telecom Co., the smallest of Korea's five cellular phone companies, said its attempts to sign up new subscribers weren't hurt by the failure of its parent to win a license to provide new mobile phone services.
LG Telecom said it gained about 46,000 subscribers in December, down from a gain of 108,520 in November. Analysts forecast the company's current business would suffer when the government rejected LG Group's bid for one of three so-called IMT2000 licenses awarded last month. The company blamed ``seasonal factors'' instead.
``After all of the analysis we found that the failure of the IMT2000 bid had no impact on new subscriptions,'' said Lee Jung Hwan, an LG Telecom official. ``December's smaller number came from seasonal factors, such as the school holidays.''
LG will be relieved that, while its December gains were relatively lower, some of its competitors faired little better even as they were awarded licenses.
KT Freetel, which will release final numbers next week, said its customer list ``didn't increase by much'' in December. It added 204,000 in November. KT M.com Co., which will merge with Freetel this year, said its December subscriptions were only a third of November's at about 56,000.
The two affiliates of Korea's largest communications company, Korea Telecom Corp., both hold shares in KT's winning bid for the new phone license.
Handset Subsidies
So Ki Won, an official at KT Freetel's finance and accounting team, said sign-ups slowed after the two KT affiliates and LG were fined for offering what the government said was illegal support to their retail outlets.
In June the government banned service providers from subsidizing the purchase of handsets to attract new customers in a move that more than doubled the price of a new phone in Korea.
Last month the government stopped the three companies circumventing this rule by paying extra commission to retailers, about 100,000 won ($79) per phone, which allowed the outlets to sell the handsets cheaper. The companies were fined 1 billion won each.
More ominously for its competitors, SK Telecom Co., the largest cellular provider, gained subscribers for the first time since June.
SK has to reduce its market share to less than 50 percent and keep it there until June as a condition of government permission for its December 1999 purchase of rival Shinsegi Telecom Co. The two cut off non-paying subscribers and ended promotions to meet that deadline, leaving them with a combined market share of 53.7 percent at the end of November from a peak of 57 percent.
Last month SK said it added 21,452 subscribers to 10.93 million while Shinsegi's customer list fell by 16,946, its second- lowest monthly loss.
After the end of June, when the restriction are lifted, ``their market share will increase to previous levels easily,'' said Chang Sung Min, head of telecommunications research at Samsung Securities.
An SK-led group was the winner of one of two licenses awarded. The third is being offered for a second time in March.
Jan/05/2001 2:16 ET |
