South Korea’s mobile operators have a lot to shout about these days, as they recorded continued growth in mobile service revenue, subscribers as well as ARPU in the latest quarter.
The three major players signed up a combined 1.08 million 5G subscribers in Q1, taking the country’s total to 5.89 million (10 per cent of overall mobile subs).
And since Q2 2019, when the operators simultaneously introduced 5G services [1], SK Telecom (SKT), KT [2] and LG Uplus [3] all booked year-on-year increases in mobile service revenue in three of the last four quarters, while also seeing ARPU rise sequentially in all but one quarter over the same period.
This is a remarkable turnaround from 2018 when all three suffered year-on-year declines in both mobile service revenue and ARPU for four straight quarters. ARPU peaked in mid-2017 at about KRW35,200, then started to fall after the government introduced regulations requiring operators to increase discounts [4] to make mobile services more affordable.
SKT’s Q1 results [5] reflected the overall improved health of the sector: mobile service revenue grew 4.4 per cent year-on-year to KRW2.48 trillion ($2 billion), ARPU edged up 1.9 per cent to KRW30,777 and mobile subscribers rose 4.4 per cent to 28.75 million.
5G boost
KT closed Q1 2020 with 1.78 million 5G subs, accounting for 12.5 per cent of its total user base, while LG Uplus ended March with 1.46 million subs and a 9.4 per cent penetration rate. SKT’s 5G user base hit 2.65 million for a penetration rate of 9.2 per cent.
The operators also recorded 2.1 million net additions from Q1 2019 – a significant gain for a mature market with 100 per cent smartphone penetration.
Nicole McCormick, senior principal analyst at Omdia, told Mobile World Live 5G service was indeed the catalyst behind the improvement in operators’ KPIs, with a range of new services helping to drive usage and upsell from 4G.
She noted the factors driving 5G uptake were extensive 5G network coverage, family plan discounts, unlimited data offers, handset subsidies and the rollout of rich platforms. New services include 3D AR shopping, cloud-gaming and many genres of VR apps.
Matthew Iji, a senior manager at GSMA Intelligence, pointed to high consumer awareness of the new technology and heavy handset subsidies as the key reasons behind the early success.
He said a 2019 consumer survey by GSMA Intelligence found 95 per cent of respondents in South Korea were familiar with 5G, with 60 per cent claiming they would upgrade.
Iji noted, however, that high subsidies once again attracted the attention of the regulator, which warned operators not to breach legal limits on handset support. He reckons with subsidy levels set to decline, “we are unlikely to see growth continue at its current rate”.
Foundation
Even with the prospect of revenue growth slowing, Korean operators have created a solid foundation for continued gains by differentiating 5G services from 4G and putting themselves in a position to charge more – something most operators failed to do with new LTE services ten years ago.
Another boost to adoption will be falling prices of 5G handsets. In China, for example, the ASP of 5G models dropped 22 per cent to $557 over the six-month period to end-March.
It’s still early days – just 14 months – but four strong quarters is a promising start. China, with more than 65 million 5G subscribers [6] six months after an end-October launch, will be interesting to watch as the government pushes for the country to be a 5G leader, with the aim of a nationwide rollout by end-2020. But all three major operators booked year-on-year declines in ARPU in Q1.
For now, eyes will be on the market with the highest 5G penetration in the world as Korean operators continue to buildout coverage (there have been some complaints about performance compared with 4G) and shift promotions to more mainstream customers, rather than the first wave of early adopters.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.
[1] https://www.mobileworldlive.com/featured-content/home-banner/korea-operators-set-consumer-5g-tariffs/
[2] https://www.mobileworldlive.com/asia/asia-news/kt-mobile-business-gains-on-5g/
[3] https://www.mobileworldlive.com/asia/asia-news/lg-uplus-financials-climb-on-5g-gains/
[4] https://www.mobileworldlive.com/asia/asia-news/korea-pushes-higher-discount-on-mobile-contracts/
[5] https://www.mobileworldlive.com/asia/asia-news/sk-telecom-mobile-growth-fuelled-by-5g/
[6] https://www.mobileworldlive.com/asia/asia-news/china-5g-subscriber-numbers-exceed-65m/
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