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South Korea Sees a Slow-Down in Mobile Number Portability
A report from Korea Investment & Securities is saying that competition in the local mobile telecom sector has cooled since August. Mobile number portability (MNP) additions, an indicator of competition intensity to attract new subscribers, reflect a clear sign of eased competition. The three mobile telcosĂ' MNP activations were high at 32,359 on daily average in 2Q08 when competition was stiffest but the numbers shrank considerably to 19,208 in 3Q08, further to 13,377 in October and to 12,132 in the first 20 days of November.
KIS had previously predicted that competition to attract new subscribers would not be fierce in 4Q08 but more intense than 3Q08 due to fixed-line/mobile bundled services. But it turned out that competition in the mobile telecom market cooled in October and November compared to 3Q08.
The launch of IPTV services by three fixed-line operators was delayed and the arrest of KTĂ's former CEO on a charge of bribery and the resulting uncertainties over the appointment of a new CEO prevented the company from focusing on the sale of bundled products in full scale. In addition, the three mobile telecos have already achieved their annual subscriber targets and are restraining themselves from competing fiercely with each other. During 3Q08, competition intensified in July but cooled in August and September.
It is hard to predict the intensity for December but KIS expects the mobile telecos to spend less on marketing in 4Q than in 3Q. Should this be the case, their profitability will likely be robust despite seasonal cost factors. The average operating margin at the three mobile telcos rose from 11.5% in 2Q08 to 15.1% in 3Q and the figure will likely go up in 4Q if cooled competition continues until the end of the year.
Posted to the site on 24th November 2008