The Effects of an Apple iPhone Launch in Korea

The odds of KT and SK Telecom introducing Apple's iPhone in Korea continue to grow every day, according to an investment note from Korea Investments and Securities (KIS). However, the negotiations between Apple and Korea's telecom operators have hit a snag due to Apple's demanding requirements for the number of handsets, subsidy terms and iPhone-exclusive rate plans.

If the iPhone is launched in Korea, KIS expects that the profitability of wireless telcos would likely be undermined in the short term due to subsidy burden. Over the mid- to long-term, however, the iPhone will likely serve as a next growth engine to accelerate data sales.

If KT launches the iPhone ahead of rivals, it would attract early adopters and see its data sales grow. However, a simultaneous launch with SK Telecom would weaken the effect of subscriber attraction and have only neutral effects. As SK Telecom is not taking an aggressive approach to the launch due to Apple's onerous requirements, the chances of SK Telecom's preemptive launch are slim. The competition for the iPhone launch casts a dark cloud over LG Telecom, which opted out of the iPhone race. If the iPhone enjoys a surge in popularity going forward, LG Telecom would have to thwart subscriber defection and face greater marketing costs burden amid intensifying subsidy competition.

Posted to the site on 27th July 2009