SKT could lose $5 bil. if early termination fee is waived

SK Telecom CEO Ryu Young-sang, left, speaks during a National Assembly hearing in Seoul, Thursday. Yonhap

SK Telecom CEO Ryu Young-sang said Thursday the company could face significant profit losses if it waives early termination fees for users following a recent data breach incident.

During a National Assembly hearing, the CEO said the company estimates it could lose up to 5 million users per month if it waives the early termination fees. This could result in a financial loss of up to 7 trillion won ($5 billion), including both the termination fees and three years' worth of revenue from those users.

Ryu said about 250,000 users have already switched to different carriers since the data breach, which was detected on April 18 and led to a massive leak of customers’ universal subscriber identity module (USIM) data.

“If we waive the fees, we expect the number to go over 10 times the current number to 2.5 million users who will switch off (to different carriers),” he said.

He explained that the termination fees alone would cost the company about 250 billion won, based on an average fee of 100,000 won per person.

Waiving early termination fees has been suggested as a damage control measure, offering a remedy for the ongoing concerns of its users.

Despite pressure from questions about a potential fee exemption, the CEO remained firm, saying that the company needs to review various factors before making a decision.

“The issue involves not only legal aspects but also the ecosystem of mobile telecommunications and various losses for SK Telecom, all complexly intertwined,” he said.

The company has 25 million subscribers, nearly half of Korea's population.

SK Telecom is expected to send out the first round of notifications by Friday to all of its users potentially affected by the data breach, based on its initial findings so far.

According to the Personal Information Protection Commission (PIPC), the personal data that were confirmed to have been leaked from the company includes a total of 25 types of information stored in its main subscriber database, such as phone numbers, subscriber identity numbers, USIM authentication keys and other USIM-related data.