[Comprehensive] "Even Alttel Phone Customers Become True Fans, Shedding the No. 3 Label"... LGU+ Unveils Win-Win Strategy

At the U+ Affordable Phone Partners 2.0 Revamp Meeting held on the 3rd at the LG Uplus headquarters, (from left) Jinwook Kang, MVNO Business Manager, Jundong Park, Head of Partnership Business Group, and Jaesul Park, Team Leader of MVNO Sales Team 1, are answering questions.

[Asia Economy Reporter Koo Eun-mo] "We confidently claim to be the most suitable operator for MVNOs."

LG Uplus has strengthened its cooperation with MVNO operators using its network, aiming to turn MVNO customers into 'true fans.' The company plans to break free from being the perennial third place in the MVNO market, which is steadily heading toward 10 million subscribers, and seize leadership. They will enhance the competitiveness of their plans by offering free data, expand LG Uplus stores accessible to MVNO customers, and reduce wholesale network fees to ease operators' cost burdens.

LG Uplus Continues Upward Trend as the 'Second Largest MVNO'

On the 3rd, LG Uplus held an online press conference to announce 'U+ MVNO Partners 2.0,' a program to strengthen mutual growth with small and medium MVNO operators using its network. This revision follows the 'U+ MVNO Partners 1.0' program launched in September 2019.

Notably, the mutual growth package unveiled this time goes beyond the 'showcase' MVNO support that was conditionally attached during the CJ Hello acquisition. The strategy is to create true LG Uplus fans among MVNO customers through co-growth. This approach is also based on the positive outcomes of past support measures emphasizing mutual growth.

The U+ MVNO Partners program, launched in 2019, saw participating companies increase from 20 to 26 within about a year, with cumulative subscribers growing by 192% and monthly new subscriptions by 200%. Thanks to this, LG Uplus recently surpassed SK Telecom to become the second largest player in the MVNO market for the first time. According to the Ministry of Science and ICT, as of the end of April, about 2.23 million MVNO subscribers use LG Uplus's network, an increase of nearly 80,000 from March, surpassing SK Telecom's 2.19 million subscribers.

LG Uplus aims for a 'win-win' by expanding its own sales through mutual growth with MVNO operators. The company also expressed its determination to shed the label of the third-largest operator in the mobile market, at least in the MVNO sector.

Park Joon-dong, Head of the Partnership Business Group (Executive Director) at LG Uplus, who attended the briefing, said, "As an MNO, we are deeply considering how to break away from being the third operator," adding, "LG Uplus will bring new vitality to the mobile market by growing together with small and medium operators and providing new value to customers."

Kang Jin-wook, in charge of MVNO business, explained, "Among the three major telecom companies, LG Uplus is driving the MVNO market the most. The MVNO business is playing a significant role in business growth." He added, "Although there is a revenue decrease as subscribers move from LG Uplus MNO to Uplus MVNO, this is offset by attracting competitors' customers." Overall, the company’s revenue is actually increasing. LG Uplus's wholesale network fee revenue is expected to grow by 70 billion KRW this year, the highest among the three major telecom companies.

LG Uplus's renewed focus on mutual growth with MVNO operators is also related to the stagnation in the mobile market. The domestic mobile market has reached saturation, leading to sluggish growth. However, the MVNO segment continues to grow steadily as more consumers prioritize cost-effectiveness. According to the Korea Telecommunications Operators Association, the number of MVNO number portings in May was 56,056, marking the 12th consecutive month of subscriber gains from the three major telecom companies.

"Enhancing MVNO Operators' Competitiveness" ? A Look at the Mutual Growth Package

The mutual growth package unveiled by LG Uplus focuses on strengthening operators' competitiveness. To this end, the wholesale network fees, the biggest concern for small and medium MVNO operators, will be lowered to the industry's lowest level. Earlier this year, LG Uplus reduced wholesale rates for some data plans by up to 8% compared to last year, and the wholesale rate for voice calls billed on a pay-per-use basis was cut by 41% year-over-year.

LG Uplus will also expand device support on behalf of MVNO operators, who lack bargaining power with device manufacturers and distributors. Beyond supporting device supply through used phone distributors, LG Uplus will supply long-term inventory devices to operators at used phone prices and sell unlocked devices at affordable prices through a dedicated U+ Partners unlocked device mall. A 'shared SIM' usable by all participating companies will be launched, and joint marketing will be promoted with small operators who lack marketing resources.

Additionally, customer service (CS) stores where customers who open MVNO lines through partners can visit LG Uplus direct and retail stores nationwide for inquiries and consultations will be expanded from about 190 to 500, with plans to consider expanding to 2,000 stores. Self-activation will also be expanded. Currently, only five MVNOs among the partners support self-activation, but this will increase to 12 by the end of the year. Increasing self-activation will improve convenience by enabling immediate activation for customers and reduce labor and logistics costs for operators.

LG Uplus is also strengthening the competitiveness of its plans to actively respond to market changes. First, to support small and medium MVNO operators in expanding postpaid subscribers, mainly among prepaid subscribers, free data will be provided. The proportion of postpaid subscribers among U+ Partners members increased from 37% at the end of 2019 to 49% in the first quarter of this year, and sales during the same period rose from 18% to 52%.

Kang explained, "Due to COVID-19, foreign arrivals decreased, making prepaid-focused sales difficult, leading to a consensus among operators that they need to shift from prepaid to postpaid. To expand postpaid sales, various plans have been structured around postpaid, and partnerships have been expanded, resulting in a higher postpaid ratio now."

LG Uplus will provide up to 150GB of data per month free of charge for 24 months to both existing and new subscribers of partner companies. There are four plans offering free data, providing 150GB, 50GB, or 10GB depending on the plan. MVNO operators can aggressively acquire subscribers by launching plans with additional data and expect to reduce churn among existing subscribers.

Regarding providing data as a promotion rather than as part of the plan, LG Uplus explained that this allows flexible responses to changes in data usage and other trends. Kang said, "Additional data can be provided depending on the situation, and the period can be adjusted, so we proceed in a promotional format to flexibly adapt to circumstances."

In partnership with KB Kookmin Card, LG Uplus will also launch a dedicated discount card for MVNOs. Customers who issue the 'KB MVNO HUB2 Card' and subscribe to unlimited data plans sold by partners can receive discounts of up to 29,900 KRW per month for 24 months. Additionally, a 'membership product' offering discounts worth about 120,000 KRW over two years will be introduced in collaboration with Naver Pay, GS25, and Olive Young.

Park emphasized, "We are not fixated on subscriber numbers but focus on the total wholesale fee as the key point. Through the mutual growth program, we will have telecom companies and MVNOs drive each other to maintain growth through the end of this year and early next year."