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To: carranza2 who wrote (7170)	3/2/2000 10:20:00 AM
From: slacker711	Respond to of 13582

You've got to love a price war....SK Telecom cuts prices on mobile calls by 16%. Expect the PCS companies to respond in kind.... koreaherald.co.kr Cellular service charges to be cut 16 percent due to public outcry The government and ruling party have decided to slash cellular phone service charges from next month, bowing to mounting pressure from consumers and civic groups. The authorities announced yesterday cellular charges will be cut by an average of 16 percent from April 1, bringing prices down to almost the same level as PCS (personal communications service) fees. The decision is expected to have a huge impact on the nation's mobile phone market, currently dominated by cellular service provider SK Telecom. The company's market share is expected to grow to 57 percent once it completes its planned merger with Shinsegi Telecomm. Though the rate reduction will lead to a drop in revenue, the company is likely to solidify its dominant market position by attracting PCS clients to the higher-quality cellular service, industry watchers said. Under the new fee structure, basic service charges, which are imposed irrespective of usage time, will be set at 16,000 won, an 11 percent cut from the current 18,000 won. Usage-based fees will decline 15.4 percent, from 26 won for every 10 seconds to 22 won. Rates for calls between mobile and landline phones will also be lowered. Currently, calls from fixed line to mobile phones are charged at 155 won per minute for cellular and 122 won for PCS. The fees will be cut to 117 won equally for both, equivalent to 24.6 percent and 4.7 percent cuts, respectively. The ministry will also introduce a set of measures to benefit the handicapped and low-income earners, whose monthly earning are less than 400,000 won. They will be able to save 30 percent for home-to-mobile calls. The ministry is also to abolish the controversial radio wave usage rate, which is currently charged at 3,000 won every three months. It will also diversify charging systems from which consumers choose to get discounts. The ministry expects the price cut to result in reducing tax revenue by 1.8 trillion won yearly and price levels by 0.085 percent. The decision is designed to adjust call rates to the lowered cost level for mobile network access, according to the ministry. Consumer groups have claimed cellular charges are too high compared to SK Telecom's operating costs, calling for a 40 percent cut. The company currently claims more than 10 million subscribers, and its accumulated profits are estimated at 1.18 trillion won. The carrier posted 4 trillion won in revenue and 210 billion won in net profit last year and expected this year's sales and profits to reach 4.7 trillion won and 800 billion won, respectively. As a result of the fee cut, its revenue and profits are forecast to stand at 4 trillion won and 241 billion won, respectively. With fees adjusted to the same level as PCS charges, however, the company may broaden its subscriber base sharply, offsetting the revenue decline.