3 Years Ago with KB Kookmin Bank's 'Liiv M'
Industry Atmosphere Quite Different
Merchant CEO Lee Seung-hoon Takes the Helm
Aiming for Industry-Friendly Approach
[Asia Economy Reporter Minyoung Cha] Mobile remittance service provider Viva Republica is entering the budget phone market with 'Toss Mobile.' A new 'predator' poised to shake up the budget phone industry has appeared after a long time, but the atmosphere is completely different from when KB Kookmin Bank launched 'Liiv M' three years ago. While Liiv M disrupted existing operators with its groundbreaking pricing plans, Toss is expected to help check the financial sector and expand the market size.
According to industry sources on the 11th, fintech company Viva Republica, which operates Toss, completed the acquisition of a 100% stake in Merchant Korea, a budget phone company with 10 years of experience, on the 4th. The new brand name has been confirmed as 'Toss Mobile.' They are currently working on the website and restructuring the pricing plans simultaneously. The goal is to launch within this year.
Toss Mobile will be led by CEO Seunghoon Lee, who was the CEO of Merchant Korea. The management structure has changed from the dual CEO system of Seunghoon Lee and Gihan Yoon during Merchant Korea to a sole CEO system under Seunghoon Lee. Some executives and employees from the parent company Viva Republica will also participate in management as registered directors.
Under current domestic law, budget phones operate under a registration system rather than a licensing system, so once a transaction between companies is completed, they can enter the market without additional procedures. Currently, there are a total of 48 registered budget phone companies in Korea, and excluding 8 IoT line operators, there are 40 companies. Since this is an acquisition of an existing company rather than a new registration, the total number remains the same.
Despite the emergence of a new predator named Toss, the budget phone industry's response is neutral. This is quite different from when KB Kookmin Bank introduced the budget phone brand Liiv M in 2019 through the Innovative Financial Services (Regulatory Sandbox) system. Liiv M launched a flagship product with an 11GB data plan priced at 44,000 KRW and offered a 'half-price' promotion for new subscribers initially. The condition for the half-price discount was holding a Kookmin Bank account, reducing the price to 22,000 KRW for one year. At that time, similar plans from competing budget phone companies were priced between 35,000 and 40,000 KRW, and the major three carriers' LTE flagship plans were around 60,000 KRW. The budget phone industry strongly opposed this, claiming that a financially strong bank providing wholesale prices below cost encouraged destructive competition.
Since then, whenever the financial sector has tried to enter the budget phone market under similar conditions, existing budget phone companies have opposed it. This is due to concerns that the financial sector, which does not need to make profits from budget phones, could distort the market with aggressive bundled products. In Toss's case, the budget phone industry is rather welcoming. The business plan to focus on postpaid phones instead of destructive competition is also seen as reflecting the original purpose of introducing the budget phone market.
A Viva Republica official said, "Toss Mobile has a business plan that broadens the base of the budget phone market and aligns with the original purpose of the budget phone market to reduce household communication costs," adding, "The upcoming Toss Mobile products will also reflect demand centered on postpaid plans without destructive competition."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
