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29 July 2019

5G will hit the profits of South Korea’s MNOs in Q2

The early movers in 5G are not enjoying a price premium especially where several MNOs have launched at the same time. The UK, in which all four operators will offer 5G services within a few months of one another, is already engaged in a pre-emptive price war. In South Korea, where the government mandated that all three MNOs should go live on the same day (April 3 2019), the operators are set to report lower earnings because of the cost of building and marketing 5G, which is not offset by high ARPUs.

The three MNOs – KT, SK Telecom and LG Uplus – have been adding subscribers rapidly in a country with seemingly insatiable hunger for mobile data services. They crossed the one million subscriber milestone in early June, and their total is now over two million.

But analysts estimate that their second quarter revenue will be flat and combined operating profit will be down 13% year-on-year,  according to local news reports.

The earnings of the smallest operator, LG Uplus, are predicted to fall by as much as 18% because of its high phone subsidies. Market leader SK Telecom is forecast to post a 7.6% fall in profit and KT a 14.5% drop.

Lee Sun Woo, head of KT’s Infra Research Lab, told last month’s MWC Asia event that 5G data consumption per user had more than trebled compared with LTE, despite some complaints that speeds have not been as high as promised.

By the end of June, KT had installed more than 32,000 base stations in six cities and Jeju Island, covering residential areas, highways, railways, airports and shopping malls.

Latency at the edge is down by 44%, the operator says, while across its mesh network it is 63% lower. This is helping support KT’s wide new range of immersive applications for consumers and businesses.