By Lee Min-hyung
The introduction of a fourth mobile carrier has struck problems, with possible candidates failing to find major shareholders to invest in the business.
The Ministry of Science, ICT and Future Planning previously said it would accept applications for the license until Friday.
A group of candidates ― including Korea Mobile Internet (KMI) and Quantum Mobile ― showed interest. But they are at a crossroad because they failed to find major shareholders to invest the massive capital needed for the project.
As most candidates are small- and medium-sized enterprises (SME), they are trying to build a consortium with conglomerates that can make the huge investment.
“The fourth mobile carrier business will not generate huge profits because Korea has a mobile subscription rate of more than 100 percent,” IBK Investment & Securities analyst Kim Jang-won, said Monday. “The number of mobile subscribers in Korea is around 58 million, exceeding the population of 51 million.
“In addition, the telecom market is a zero sum game that will come as a huge challenge for a possible new carrier.”
He also said the government’s subsidy cap regulation, which took effect in October last year, also discouraged companies from jumping into the business.
“The subsidy cap regulation has stabilized the telecom market, with fewer people trying to change their carriers,” he said.
The regulation helped to stop carriers from offering illegal subsidies to entice more customers from other carriers.
“All those factors considered, investors are still hesitant to invest enough in the project ― they think the project may not generate huge profits to offset their investments,” Kim said.
The government has pushed to introduce a fourth carrier since 2013 in a bid to encourage more competition in a market dominated by SK Telecom, KT and LG Uplus.
The three carriers claim the telecom market is already saturated and that there is no room for another carrier.
But the science ministry claims mobile services are not meet increasing demands from customers.