South Korea’s three major telecom companies are expected to announce low fourth-quarter performances due to government-mandated reductions in plan rates but with less damage than initially feared, according to industry reports Thursday.
According to tracking firm FnGuide, local analysts expected fourth-quarter revenues from the three major telecom companies to total nearly 13.5 trillion won ($12.6 billion), down approximately 0.1 percent from the fourth quarter of last year.
Starting in mid-September, SK Telecom, KT Corp. and LG Uplus increased the monthly discount on telecom plans from 20 percent to 25 percent following a decision by the Ministry of Science and ICT. The discount is available to users who opt for a two-year binding contract instead of accepting a subsidy on the price of their handsets.
Despite initial fears, the change did not seem to have a large impact on revenue because a large proportion of new users were focused on high-end handsets such as the Galaxy Note S8 and the iPhone X. These users usually opt for higher rate plans.
“Although sales in December are expected to fall slightly, sales in November surged thanks to the release of new models from the Galaxy and iPhone lines. Marketing costs for the three main companies are expected to fall 7 percent relative to the third quarter,” wrote Kim Hong-sik of Hana Financial Investment.
SK Telecom is expected to reach 4.5 trillion won in revenue in the fourth quarter, with 378 billion won in operating profit. KT is forecast to reach 5.9 trillion won in revenue, with 266 billion won in operating profit. LG Uplus is set to reach about 3.1 trillion won in revenue, with 199 billion won in operating profit.
LG Uplus is the only company of the three that is expected to have a good fourth quarter, thanks to its draw of high-plan subscribers to its IPTV business. In addition, LG Uplus’ restructuring of its data plans, including a double data plan released in November, is helping to curb revenue cuts from the government’s rate plan discounts, according to analyst Jeong Ji-soo of Meritz Securities.
By Won Ho-jung (firstname.lastname@example.org