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South Korea Takes Action to Boost MVNO Uptake

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South Korea's telecoms regulator has reduced the rates paid by MVNOs to their mobile network suppliers in an attempt to improve competition in the market.

As part of the changes, the the Ministry of Science, ICT and Future Planning (MSIP) reduced the rate of wholesale prices charged by the country's three main mobile networks, and exempted MVNOs from spectrum fees for another year until September 2016.

In addition, profit sharing ratios were adjusted in favor of MVNOs, as the MSIP lifted the ratio from 55% to 60% on low-price tariffs, which account for most MVNO subscribers.

According to Korea Investment & Securities, MVNO subscribers reached 5 million, with SKT accounting for 46.3%, KT 45.4% and LGU+ 8.3%.

Based on the changes, the research house believes that network usage fees will decline 7% from their previous forecast. But with the growth in MVNO subscribers, network usage fees should still grow 1% YoY. Overall, the adjustment in network usage fees should have only a limited impact on telco earnings, especially as MVNOs help ease pricing pressure.

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Tags: mvno  Korea