S.Korean telcos under pressure as MVNOs ready services

Reuters | February 22, 2011 | Hyunjoo Jin and Jonathan Hopfner
* Incumbents face tariff cut pressures from new players, govt
* Seoul to decide on a new entrant this week
* SK Tel shares fall 10 pct this year; KT down 15 pct
SEOUL, Feb 23 (Reuters) – South Korean mobile virtual network operators (MVNOs) said on Wednesday they aimed to start services as early as July this year, potentially pressuring incumbents with cheaper voice and data services.
The move comes as operators already face government pressure to lower tariffs as part of a drive to contain inflation.
Telecom shares have underperformed the broader market this year, with potential tariff cuts tempering expectations of smartphone sales growth. SK Telecom (017670.KS) shares have shed 10 percent so far this year and KT (030200.KS) has lost 15 percent, underperforming the 4 percent decline in the wider market .KS11.
Six companies including Onse Telecom Corp (036630.KQ) are preparing to launch MVNO services in South Korea. MVNOs rent networks from existing operators to offer mobile services.
“We would be able to cut tariffs by 20 to 30 percent. MVNOs are the only solution to reducing household telecommunications spending and contributing to stabilising inflation,” Onse Telecom CEO Choi Ho told a news conference.
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