Final Results Satisfy LG U+ Plus
Korea’s three mobile carriers, LG U+, SK Telecom and KT enlarged their entire market shares as sales increased or maintained previous-year levels. However, profits stand at substantial differences. Wireless telecommunication heavily influenced overall performances.
LG U+ outperformed both SK and KT. LG U + has announced a three-digit operating profit growth, crowned the ultimate leader in market competition in 2013. Last year, LG U+'s operating income reached ₩542.1 billion, an increase of 327% from the prior year. Its sales hit ₩11.4 trillion, up 5%. Net income sat at ₩279.4 billion. These results occurred as the company excelled in wireless telecommunication. With a half of Koreans using the LTE service, the company expanded its LTE market share to nearly 20%. The proportion of total LTE subscribers in the country increased from 43.1% to 65.2%.
All three carriers are determined to sign up more LTE subscribers as an increase raises average annual revenue per user, or ARPU directly connected to profits.
LG U+ developed various LTE services and charging systems while putting an emphasis on its slogan, “The world’s first 100% LTE service.” Such efforts paid off in the market. Last month, SK Telecom put up a good defense, chalking up a market share of over 50.02%. SK Telecom’s operating income stood at ₩2.01 trillion, up 16.2% from a year earlier. The company posted ₩16.6 trillion in sales, an increase of 2.0% from a year before. Its net income soared 44.3%. But this figure is credited mainly to the strong performances of SK Hynix, a company in which SK Telecom invested.
KT posted ₩23.8 trillion in sales, a drop of 0.2% from a year before. Its operating income slid 27.7% year to ₩874 billion. KT claims that its poor performances were attributable to shrinking sales in the wired telecommunication sector. But shrinkage in wired telecommunications is not a short-term but an endemic problem. Industry experts claim that a bigger problem is a small improvement in its performances in the wireless telecommunication sector. Some say that a `Big Bath’ phenomenon took place at KT. In a `Big Bath’ phenomenon, hidden mismanagement is exposed at a company at a time when the company is about to change its CEO. “The competitiveness of our telecommunication business, the core of our business has significantly weakened and our non-telecommunication business failed to bring tangible results,” said Hwang Chang-kyu, new chairman of KT at a top management meeting, declaring an emergency in the company’s management. Hwang added that he would cut his salary by 30%. Executives also slashed their salaries by 10%.
2014 Marketing Plan
This year, several big changes will be made in a mobile telecommunication market already saturated with over 50 million subscribers. The changes across the nation are at broadband LTE service, the popularization of more affordable cell phones and the passage of a handset distribution structure. These will intensify competition among the carriers. With their current market share as their Maginot lines, they are planning to execute strategies to expand their market shares by introducing new services and charging systems and, therefore, stealing subscribers from their competitors.
“We will continue to take the lead in the LTE market through the expansion of our national LTE network and three-band LTE-A technology,” a LG U+ spokesperson said. “We will concentrate on our basic value to provide the most rational and innovative services. We look to achieve a 5% increase in the number of subscribers by maintaining the efficiency of marketing costs.”
SK Telecom announced its plan to enhance the competitiveness of its network. “We are planning to commercialize broadband LTE-A in the second half of this year,” an SKT public relations team member said. “We will not lose our leadership in the market by steadily releasing innovative services such as T Phone and B Box,” said an SK Telecom spokesperson in a conference call, clarifying the company’s position to maintain its 50% share in the market.
“We will overcome difficulties with a tragic but brave resolution along with our new chairman," said a KT employee. “We will turn KT into a creative, innovative and harmonious company that can create a future ICT business.Our 30% market share will be maintained to secure our minimum competiveness and growth potential,” the employee added.