By Kim Yoo-chul
Global credit ratings agency Moody’s Investors Service said Thursday that the release of the iPhone 5 will have a positive impact on the credit ratings of KT and SK Telecom as it will help them attract more customers.
In a statement released Thursday the agency said, “The launch of the iPhone 5 in Korea, which will be available from late Dec. 6 from SK Telecom and early Dec. 7 from KT is credit positive for them because it provides the firms with an opportunity to boost their LTE subscriber base and average revenue per use (ARPU).”
LTE, which stands for Long-Term Evolution, is more advanced than the conventional third-generation (3G) mobile technology.
But the New York-headquartered credit rating agency currently rates the two carriers A3 with a negative outlook.
Moody’s said the arrival of the iPhone 5 will give both KT and SK Telecom a distinct advantage over the third major mobile operator in Korea, LG Uplus, whose LTE service has successfully lured customers from SK Telecom and KT.
The agency went on to say, ``KT has lagged behind its competitors in achieving its year-end target of 4 million LTE subscribers. We expect it to benefit most from the launch of the iPhone 5,’’ the agency said.
According to Moody’s analysis, KT has about 2.5 million iPhone users, taking up more than 70 percent of the total, while SK Telecom has about 900,000. KT was Korea’s first authorized partner with Apple to sell its i-devices from November 2009.
KT spokeswoman Kim Yoon-jeong declined to unveil the exact number of the firm’s iPhone customers, while representatives at SK Telecom also declined to comment.
In October, there were some 3.4 million iPhone owners in Korea, accounting for about 11 percent of the country’s 31.4 million smartphone users.
A large number of smartphone users have not yet switched to LTE platforms, presenting an attractive opportunity for KT and SK Telecom.
``Of KT’s 2.5 million iPhone users, we estimate that about 1 million to 1.5 million are likely to upgrade to the iPhone 5, based on the number of customers whose mandatory subscription period will have expired by the end of 2012,’’ Moody’s forecast.
However, the agency warned that the iPhone factor will disappear if the carriers continue to engage in cutthroat competition in marketing and subsidies.
``That will force the operators to continue pursuing large promotions and this will lead to a further erosion of margins, which were already declining,’’ it said.
The Korea Communications Commission (KCC), Korea’s top telecom regulator, summoned marketing executives from KT and SK Telecom, and ordered them not to attempt to lure customers away from each other by offering heavy and illegal subsidies.
The KCC plans to start a thorough investigation of the carriers regarding subsidies from today.