LG Uplus is rapidly expanding its postpaid budget mobile network lines, engaging in a tight competition with the leading operator KT. Currently, as the increase in mobile communication revenue is gradually slowing down, it appears that LG Uplus is focusing on expanding its influence in the budget mobile market to boost telecommunications-related revenue. It is analyzed that KT focused on securing Internet of Things (IoT) lines from Korea Electric Power Corporation and Hyundai Motor last year.
The budget mobile network refers to the networks that the three telecom companies (SK Telecom, KT, LG Uplus) rent to budget mobile operators, divided into prepaid and postpaid plans. From the perspective of telecommunication companies, the postpaid plan is what generates actual revenue. Users pay for what they use, which the majority of domestic users utilize. The prepaid plan is primarily used by foreigners temporarily visiting Korea, resulting in lower profitability compared to the postpaid plan. As of December last year, LG Uplus maintained the lead in prepaid plan lines with 813,884 lines.
According to the current status of wireless communication service subscriptions released by the Ministry of Science and ICT on the 18th, the number of postpaid budget mobile lines using the LG Uplus network was 3,145,958 as of December last year. In the same period, the number of postpaid budget mobile lines using the KT network was tallied at 3,146,852. While KT is still maintaining the lead, the gap in the number of postpaid budget mobile lines between the two corporations is only 894.
As of January last year, LG Uplus had 2,813,580 postpaid budget mobile lines, while KT had 2,950,017. At that time, the number of lines between the two corporations differed by over 100,000, but by December last year, the gap had narrowed to nearly the same level. Although the Ministry of Science and ICT's tally results have not yet been released, it is projected that LG Uplus will gain an advantage in the number of postpaid budget mobile lines starting this year.
Currently, the three telecom companies receive a wholesale price amounting to 50% to 60% of the monthly fees paid by subscribers to budget mobile operators. The wholesale price refers to the revenue received in exchange for lending network resources to budget mobile operators. As the number of budget mobile lines increases, the revenue attained by telecom companies also rises. Industry analysis suggests that LG Uplus has actively increased its line count by offering a lower wholesale price (network rental fee) to budget mobile operators.
As the growth rate of mobile communication revenue has slowed, LG Uplus is analyzed to be aiming for improvements through the increase of budget mobile lines. Last year, the year-on-year mobile communication revenue growth rates for the three telecom companies (SK Telecom, KT, LG Uplus) remained at 1% to 2%.
Last year, KT focused on increasing its IoT lines compared to LG Uplus. In May last year, KT was selected as the final contractor for the 'Korea Electric Power Corporation low-voltage (residential) AMI (remote meter reading infrastructure) phase 6 project', securing 1.1 million IoT lines. In September last year, it was reported that KT could increase over 2 million lines by winning the contract for IoT line supply that LG Uplus had previously handled for Hyundai Motor. Since LG Uplus had an advantage in the number of IoT lines, KT appeared to have engaged in this project to avoid a widening gap.
An industry insider noted, 'Generally, when budget mobile companies use a specific telecom company's network, they enter into long-term contracts, so it is highly likely that LG Uplus will maintain its advantage in the budget mobile market for the time being.'