By Kim Yoo-chul
KT decided to appeal to a court decision Thursday to prevent it from going ahead with ending one of its mobile services.
``KT respects the ruling from the Seoul Administrative Court. But, we will immediately appeal and continue on our plan to terminate our 2G service,’’ said spokeswoman Kim Yoon-jeong.
KT, the nation’s second-biggest mobile carrier, is planning to partner the nation’s top telecom regulator, the Korea Communications Commission (KCC), to effectively handle legal disputes, said high-ranking KT executives.
A KCC spokesman confirmed this.
``The court’s decision means a delay of 2G service termination. We will do as best as we can to help our 2G customers shift to value-added services such as 4G LTE (long-term evolution),’’ said Kim.
The court has stopped KT’s plan to completely shut down the service by accepting the request of some 900 2G customers who were seeking for an invalidation of the recent decision by the KCC which ruled KT could completely its 2G service from this month.
The regulator’s decision has been suspended until the court rules on the matter. The ruling said the court needs more time to thoroughly review the matter..
Separately, civil organizations are seeking a class action.
The number of KT’s 2G subscribers was 159,000 as of the end of the first week of December, according to data from the company.
The court’s decision is seemingly a big blow for KT, which has been eager to join LG Uplus and SK Telecom in the race for the rapidly-growing and highly-lucrative 4G LTE services.
KT earlier invested 950 billion won to secure the right broadband for 2G, however, 2G has been losing its grip as telecom operators have heavily been investing in 4G LTE to find new growth engines in the saturated local telecommunications market.
Just right after the ruling, KT cancelled its plan to hold a press conference to be attended by key officials including its chief executive Lee Suk-chae and his top confidant Pyo Hyun-myung to unveil detailed strategies for 4G LTE and pricing plans.
Stock market analysts say the court’s decision will have a negative impact on KT shares as investor sentiment freezes on higher concerns over the firm’s late entry into 4G LTE.
``We question whether KT can chase its rivals in the 4G LTE market. KT, which has been reeling from decreasing profits in its fixed-line business and stalled growth in mobile wireless data, will see further difficulties,’’ said Kim Mi-song, an analyst from Hyundai Securities, adding his company will lower its target on KT shares.
``The number of 4G LTE subscribers is rapidly increasing. The ongoing aggressive marketing campaigns by KT’s local rivals will further threaten its share price,’’ said Choi Yoon-mi, an analyst at Mirae Asset Securities.
KT shares dropped by 2.64 percent to end at 36,850 won on the nation’s main bourse, Thursday, according to data from the Korea Exchange (KRX), the nation’s main bourse operator.
Demand for 4G LTE is surging as heavy data traffic for digital devices such as smartphones and tablets can be more effectively handled by the service, which can transmit data five times faster than the existing 3G technology.
SK Telecom had secured 260,000 4G LTE subscribers as of November, representing a daily increase of 15,000 customers since July, while LG Uplus has over 240,000, KCC officials said.
``We’ve yet to kick off 4G LTE services while competitors are seeing big momentum. If the court battle extends to the high court, then that’s a disaster,’’ said a high-ranking KT executive asking not to be identified.