Hurry up, KT
Belated start in LTE competition worries communications giant
By Yoon Ja-young
KT, the country’s top communications company and the second largest mobile carrier, is losing subscribers to its competitors, due to a belated start in the fourth-generation (4G) long-term evolution (LTE) competition. Its executives have declared they will return 10 percent of their salaries if they fail to attain their management target this year.
KT losing subscribers
According to data for January by the Korea Telecommunications Operators Association, which counts mobile phone users switching carriers without changing their numbers, KT had 262,555 subscribers leave while it attracted 230,314 customers from other carriers, recording a loss of 32,241.
LG Uplus, the smallest mobile carrier, saw a net increase of 31,314 as 199,181 switched to it while 167,867 left to join other companies. SK Telecom, the biggest mobile carrier, saw little change, losing 306,700 old customers while finding 307,627 new ones.
KT has been losing in this game in the last few months, seeing a net decrease of 67,030.
Belated LTE service
“The data on users who switched carriers show KT is lagging behind in the LTE market,” said Lee Ji-yeon, an analyst at KB Investment & Securities.
The mobile market here is in transition from 3G to 4G LTE, which provides five-times faster downloads of data. While SK Telecom and LG Uplus launched services last July and invested massively to set up LTE networks, KT only joined early this year. It first had to halt its 2G service to use the bandwidth for LTE. But this took time as it had to resolve conflict with the small number of 2G users who took the issue to the court. The battle also hurt KT’s corporate image.
The belated start sees KT trailing its competition. It had 111,929 LTE subscribers in January, while SK Telecom increased its number by 368,331 to hit 1 million. LG Uplus, the all-time number three in the industry, also succeeded in attracting 292,252 LTE subscribers in January to increase the total to 849,275.
“It seems to be due to networks. KT has just completed building an LTE network in Seoul and the metropolitan area,” said Choi Nam-kon, an analyst at Tong Yang Investment & Securities.
He said that LTE customers have no reason to choose KT as its network is limited while nationwide networks are available from other carriers. Choi said it may start speeding up in the competition from April, when it is scheduled to complete an LTE network in 84 cities around the country.
He expects KT to catch up thanks to its huge subscriber base totaling 17 million. The problem, however, is that the sluggish start in LTE, which will be the core market substituting 3G, may change people’s impression on the firm to negative, according to Choi. It could be a harsh blow as the saturated telecommunications market has entered a zero-sum game.
It contrasts with a couple of years ago when KT enjoyed a boom thanks to being the first carrier in Korea to offer the iPhone. As it was the sole supplier of iPhones here until early last year, 86 percent of the 3.1 million iPhone users in the country were KT subscribers as of the second quarter last year.
KT to speed up
To quickly get back on track, KT executives announced emergency management measures Monday, including the vow to give back part of their pay if they don’t meet their goals. “It is a pledge by executives and employees for a stronger push. While KT tried new businesses in the past, including advancing into non-telecommunications business, this year will be the time for gathering fruit,” said a KT representative.
The company is promoting its LTE Warp technology, which effectively controls network traffic through cloud communications for better service quality. When the nationwide network is set up, KT is likely to drive LTE marketing. Choi expected that it is likely to boost LTE marketing in around May when new handsets come onto the market.