The affordable phone industry is launching ultra-low-cost plans starting from the new year to attract subscribers. It is anticipated that demand for new subscriptions will increase with the release of the Samsung Electronics 'Galaxy S25' at the end of this month.
Moreover, with the abolition of the subsidy law expected to take effect in June, the three major telecommunications companies (SK Telecom, KT, LG Uplus) will be able to dispense subsidies without restrictions, resulting in a potential loss of subscribers from affordable phones. As the launch of the Galaxy S25 could represent the last opportunity to attract affordable phone subscribers before the subsidy law is abolished, there is a competitive atmosphere among affordable phone companies.
According to the affordable phone comparison site 'Affordable Phone Hub' on the 10th, there are currently 38 types of plans available for 100 won. There are 49 low-cost plans priced under 1,000 won. In November of last year, there were 27 types of affordable phone plans priced below 1,000 won, indicating an increase of more than 20 types in just two months. The company selling the cheapest plan is 'Mobing,' which offers a monthly plan of 100 won for 7 months, providing 5GB of data, 300 minutes of currency, and 300 text messages. From the 8th month, the plan will shift to a 20,000 won price range.
The affordable phone industry is experiencing a steady decline in subscriber inflow, leading to deteriorating revenue. In December of last year, 57,710 subscribers moved from the three major telecommunications companies to affordable phones, an 8.1% decrease from the previous month (62,800 subscribers). This figure is down 28.8% from January of last year (81,048 cases). Recently, Sejong Telecom and Yeyu Mobile withdrew from the affordable phone business due to low revenue.
Affordable phone companies are hoping for a rebound with the soon-to-be-released Galaxy S25. Typically, there is a significant increase in subscribers moving numbers after the release of flagship smartphones. According to the Korea Telecommunications Operators Association (KTOA), following the launch of the iPhone 16 in October of last year, the net increase in affordable phone subscribers reached 23,923, marking a 14.3% increase compared to the previous month (20,928). The net increase for affordable phones was also 26,009 just after the release of the Galaxy Z6 series in August of last year, up 13% from the previous month.
With the subsidy law abolition bill set to be implemented in June, the number of affordable phone subscribers switching to the three major telecommunications companies is expected to rise. Due to the subsidy law concerning the distribution structure of mobile communication devices, the three major telecommunications companies were previously restricted to paying subsidies within a capped amount, but this cap will disappear following the abolition of the law. This creates a considerable incentive for subscribers to move to telecommunications plans from the three major companies that offer better conditions than affordable phone plans.
Starting in March, the 'wholesale price pre-regulation' system, which allowed the government to negotiate with the three major telecommunications companies on behalf of the weaker affordable phone companies, will also be eliminated. The consensus in the industry is that it will be difficult for affordable phone companies to negotiate price reductions without government involvement. Affordable phone companies without their infrastructure borrow the network from the three major telecommunications companies and are reported to pay 40% of LTE revenue and 50% of 5G revenue.
Han Seok-hyun, head of the Seoul YMCA Citizen Mediation Office, noted, "Affordable phone companies in difficult situations are flooding the market with low-cost plans ahead of the Galaxy S25 launch," adding that "since low-cost plans are unlikely to provide direct assistance in increasing their revenue, they are likely to serve merely as a stopgap measure."