SK Telecom was handed down a seven-day suspension and a 23.5 billion won ($21.3 million) fine for giving out illegal subsidies to lure new subscribers, the telecom watchdog said Thursday.
According to the Korea Communications Commission (KCC), the carrier has paid an average 228,000 won in excess of legal ceiling for subsidies throughout January. In some cases, the illegal incentives reached 500,000 won for iPhone 6 subscribers, it said.
The current law sets the legal limit at 300,000 won and requires shops to display the factory price, the sales price and the amount of available subsidies. The shops are given an additional discount leeway of 15 percent.
The KCC, however, said it has not yet decided when to start the suspension because of the possible repercussions on consumers as Samsung Electronics is due to launch its new Galaxy smartphones next month.
“Considering the overall market condition, the government's exclusive investigation (on SK Telecom) is extremely regrettable,” the mobile carrier said in its release immediately after the announcement.
South Korea's telecom authorities have been making efforts to bring transparency to the market long distorted by subsidies, paid well over the limit as carriers vie for customers.
In August, SK Telecom was ordered to pay a fine of 37.1 billion won. Two smaller competitors, LG Uplus Corp. and KT, were also fined for illegal subsidies.
SK currently controls just under 50 percent of the market.
Shares of SK Telecom moved down 0.71 percent to 280,000 won Thursday, when the main bourse decreased 0.99 percent to close at 2,022.56. The penalties were announced after the market closed. (Yonhap)