South Korea Weighs 4th Carrier: Can it Succeed?

South Korea’s ICT ministry soon will determine whether to license the country’s fourth mobile carrier, from among three firms: Sejong Telecom Co., K Mobile and Quantum Mobile, Yonap News Agency reports.  

Should that happen, it is conceivable, and indeed likely, that the existing three market leaders will lose some amount of market share. Precisely how much is hard to say.

None of the contending service providers would seem to have the financial assets of Reliance Jio in India, for example, which is expected to rearrange Indian mobile market share in dramatic fashion.

That would not seem to be the case in South Korea, for several reasons. None of the possible South Korean firms would seem to have the financial assets to make as big a push as will Reliance Jio in India.

The other angle is the government’s interest in more affordable service. That implies that average revenue per account will be lower than today’s average mobile ARPU. That will not be too big an issue if the new entrant can operate at lower costs than the other leading carriers, spend less to get and keep accounts, and is able to survive a pricing and marketing counterattack from the market leaders.

The Ministry of Science, ICT and Future Planning, which oversees the country’s communications policy, wants to encourage more competition, especially on the budget end of the market.

Sejong Telecom Co. is currently a mobile virtual network operator.

The ministry says it is possible none of the contestants will get an operating license, if their business plans and financing are deemed inadequate.

If approved, the fourth mobile carrier could begin service in 2017.

SK Telecom currently has 50 percent market share, KT has 30 percent and LG Uplus has 20 percent.

Market structure  in Japan is roughly similar as well. While there are four leading operators, there are only three owners: NTT, KDDI and SoftBank.