Budget Phones Reach 11.25 Million... Telecom Big 3 Also on Alert

32% Rapid Growth in One Year
Increase in Value-Conscious Consumers Amid 5G Dissatisfaction

[Asia Economy Reporter Minyoung Cha] As consumers dissatisfied with 5G mobile communication turn back to LTE services, the MVNO (Mobile Virtual Network Operator) market continues to grow. It is rapidly expanding to the extent that it threatens the market share of the three major mobile carriers that lease lines to MVNOs. The increase in cost-conscious consumers trying to save on communication expenses amid the economic downturn has also contributed to the expansion of MVNOs.

MVNO Surpasses 10 Million Subscribers with 32% Annual Growth

According to data submitted by the Ministry of Science and ICT to Rep. Youngsik Kim of the People Power Party on the 16th, as of the end of October, the total number of LTE subscribers among MVNO lines was counted at 11.25 million. This is an increase of 220,000 lines compared to the previous month and a 32% growth compared to October last year (8.52 million). The number has steadily increased since surpassing 10 million in May.

Breaking down LTE network subscribers by carrier, KT network subscribers are the highest at 5.74 million lines. LG Uplus network subscribers number 3.66 million lines, and SKT network subscribers are relatively fewer at 1.84 million lines. Subsidiaries of the three major carriers such as SK Telink (600,000 lines), KT M Mobile (1.16 million lines), and MediaLog (850,000 lines) hold top positions on their respective networks.

The main reason is the backlash against 5G services. According to the Korea Electronics and Telecommunications Research Institute (ETRI)’s report on ‘Recent Domestic Mobile Communication Service Usage Behavior Analysis,’ the attributes consumers value most when using 5G data services are price level (82%) and data transmission speed (78%). However, satisfaction with price level was only 20%, and satisfaction with data transmission speed was 30%, indicating low satisfaction.

The Three Major Carriers Growing Anxious Over Market Expansion

The three major carriers are also paying attention to changes in the MVNO market. Among them, LG Uplus is the most MVNO-friendly carrier in the market. LG Uplus is directly competing by leveraging its MVNO subsidiaries. MediaLog rebranded from ‘U+ Alttel Mobile’ to ‘U+ U Mobile’ on the 1st of last month, placing ‘U+’ at the front of the brand name to emphasize its business connection with LG Uplus. An industry insider said, "Although KT has the most lines, LG Uplus is the most aggressive in sales," adding, "When requests for technical facility improvements are made, they actively try to resolve them, making new operators prefer them."

The more the market grows, the more uneasy the traditional wireless leader SKT becomes. SKT has firmly maintained the ‘5-3-2’ market share structure among the three major carriers in the past, but as the number of subscribers using KT and LG Uplus MVNO networks increases, it now faces a ‘4-2-2’ structure. As of the end of October, among the total 76.61 million mobile subscribers, SKT’s market share was 40.1%, barely maintaining the 40% level. KT holds 22.9%, and LG Uplus 20.8%. Industry insiders interpret that SKT’s recent online plan restructuring, which allows combined discounts for wired and wireless family plans, is not unrelated to this situation.

The government is also supporting the growth of the MVNO market as part of its strategy to reduce household communication expenses, so the MVNO market is expected to continue expanding. Recently, the Korea Information Society Development Institute (KISDI), a national research institute, mentioned at a forum on the ‘Amendment Plan for the Telecommunications Business Act’ the necessity to abolish the sunset clause on the wholesale supply obligation system. They also argued for the need to revise the wholesale price calculation principles toward lowering the fees.