Pantech Co., South Korea's smallest smartphone manufacturer, on Friday raised concerns over a mobile carrier's decision to cut the factory price of its smartphone, saying the two did not have an agreement on the matter.
LG Uplus said it will slash the price of Vega Secret Up smartphones by 37 percent to 599,500 won ($577.92) from the previous 954,800 won, claiming the move is meant to help Pantech expand its sales amid stagnant market conditions.
"The matter (pricing) needs to be discussed among all three telecom firms, and we are puzzled as (LG Uplus) neglected prior consultations," an official from Pantech said. South Korea has two more mobile carriers, SK Telecom Co. and KT Corp.
"While cutting the price may help the sales, Pantech opposed the move as the massive compensation needed to be provided to carriers for existing inventories became a burden," a Pantech official said.
By customary practice, smartphone manufacturers are required to pay compensation to carriers for unsold inventory in case of a price reduction.
LG Uplus said the price cut, conducted exclusively, aims to revitalize sales for Pantech. The handset maker was put under a debt workout program in early March after struggling with poor cash flows from slumping sales.
The decision followed the release of Samsung Electronics Co.'s Galaxy S5, whose factory price was set at 860,000 won, emerging as one of the biggest challenges to the Vega Secret Up, which lacks brand awareness compared to its rivals. (Yonhap)