S Korea LG Telecom Files Court Injunction Vs SK Telecom

SEOUL -(Dow Jones)- LG Telecom Co. (032640.KQ) has filed a court injunction in the Seoul Central Court against rival SK Telecom Co. (SKM), alleging that the wireless operator is providing illegal handset subsidies to lure customers.

LG Telecom said Tuesday in a statement that since its customers were given the chance to switch to a rival operator starting January, SK Telecom has been "directly, or through its sale offices providing handset subsidies that are illegal."

"We filed the injunction Monday afternoon in order to stop SK Telecom from providing subsidies to customers," South Korea's smallest wireless operator said. "Through our research, we've found that SK Telecom has been providing rebates of up to KRW330,000 for handsets."

An SK Telecom spokesman said the firm didn't have a formal response to LG Telecom's filing, adding that it would wait to hear from the court.

In June 2000, the government banned mobile carriers from offering handset subsidies to limit the mad scramble for new subscribers that jacked up marketing costs and hurt profitability at all three carriers.

Competition in the mobile market in South Korea has intensified following the introduction of mobile number portability - which allows subscribers to switch to a rival operator without having to change phone numbers - last year.

Number portability was carried out in stages beginning with SK Telecom to give smaller carriers such as LG Telecom and KT Freetel Ltd. (032390.SE) the lead in trying to grow their subscriber base. LG Telecom subscribers began switching starting this year.

The court injunction follows LG Telecom's efforts to curb what it called illegal handset subsidies by placing full-page advertisements in local newspapers urging SK Telecom to stop providing rebates.

At 0455 GMT, shares of SK Telecom were up 0.3%, while LG Telecom, listed on the tech-laden Kosdaq market rose 1.4% to KRW4,115.

-By Yun-Hee Kim, Dow Jones Newswires; 822-732-2165; yun-hee.kim@dowjones.com

-Edited by Jessica Tan

(END) Dow Jones Newswires "

Posted to the site on 11th January 2005