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Market surprised by popularity of LG’s first 5G smartphone

Industry watchers attribute V50 ThinQ’s soaring sales to “overheated” 5G competition among mobile carriers.

With LG Electronics’ first 5G-powered smartphone attracting more subscribers than its predecessors since its launch earlier this month, speculation is rife about the reasons behind the better-than-expected performance of the struggling smartphone manufacturer.

According to Korean mobile carriers, they have sold up to 100,000 LG V50 ThinQ handsets since it hit the market on May 10. This is estimated to be four times more than sales of its predecessor V40 ThinQ that was rolled out last year.

The figure appears to have suprised LG Electronics, which has been struggling to catch up with rival phone makers. When Samsung Electronics was attracting consumers with its first 5G smartphone Galaxy S10 5G last month, its crosstown rival decided to shut smartphone production in South Korea.

While upgrades and features of LG’s latest 5G smartphone -- such as dual screen functionality -- may have come into play, industry watchers attributed the soaring sales to “overheated competition” among mobile carriers to boost the number of 5G subscribers.

“They’re betting on the LG V50 ThinQ to win the 5G race,” said an official from a Korean mobile carrier, who requested anonymity due to sensitivity of the issue. “There is not enough room to increase 5G subscribers with Samsung’s Galaxy S10 5G.” 

Since Galaxy S10 5G enabled commercial 5G service earlier last month, the country’s three mobile carriers -- SK Telecom, KT and LG Uplus -- have sold 5G smartphones much cheaper than its original prices.

LG V50 ThinQ. LG Electronics
LG V50 ThinQ. LG Electronics

The discounted price was largely attributable to the “substantial subsidies” provided by the telecom companies. Whenever there were transitional changes for wireless network standards, mobile carriers here have often pledged to bear the cost of changing to new smartphone models.

For example, SK Telecom has offered up to 770,000 won ($644) in subsides when a consumer subscribes to its most expensive 5G data plan. Combined with additional benefits from vendors, the V50 ThinQ’s price could be lowered to 300,000 won from its original price of 1,119,000 won.

“Rather than losing subscribers to competitors, telecom companies prefer to sacrifice their short-term benefits,” said another industry watcher. “So, the competition comes down to who has more money and the largest company will win eventually.”

The race to secure more subscribers has even resulted in the venders providing 5G smartphones for free. For a few days since V50 ThinkQ rolled out, online communities were filled with stories of purchasing the smartphone for free at stores in downtown Seoul.

The government has issued warnings against “illegal subsides” by mobile carriers. The Korea Communications Commission has threatened to impose punitive fines on telecom firms who to offer more subsides than they have publicly announced.

However, industry watchers played down the prospect of the government enforcing such a restrictive measure. As long as 5G network expansion is a major policy initiative, they said, it would be hard to crack down on the efforts to increase subscribers.

“There is consensus between the government and mobile carriers on expanding the 5G market,” said another official from a local telco company. “The government will take a wait-and-watch approach for a while.”