Ms. Song, a company employee in her 40s and an SK Telecom subscriber, applied for vacation this week to visit VIPS. SK Telecom is offering a 50% discount for subscribers using VIPS only on weekdays, up to 100,000 won, since April 1. Ms. Song said, "It is difficult to use it without taking a vacation because there are no membership discounts on weekends, and reservations are already full during weekday lunch hours." SK Telecom implemented a 50% membership discount at Starbucks, Paris Baguette, and Domino's Pizza starting in August.
After experiencing a decline in subscribers following a hacking incident, SK Telecom succeeded in turning the tide with an increase in subscribers since August. It is interpreted that the membership enhancement strategy that SK Telecom started last month has minimized the churn of existing customers.
According to the telecommunications industry and the Korea Telecommunications Operators Association (KTOA) on the 2nd, SK Telecom is the only one among the three major mobile carriers that saw a net increase in subscribers last month. In August, SK Telecom recorded an increase of 13,090 subscribers, while KT lost 7,863 and LG Uplus lost 221. MVNOs, which had seen a consistent increase in subscribers since the hacking incident in April, also lost 5,006 subscribers last month. The term net increase is used when the number of new subscribers minus the number of lost subscribers results in a gain, and net loss when it results in a loss.
Over the past three months, KT and LG Uplus, along with MVNOs, have absorbed SK Telecom subscribers and benefited as a result. Since the hacking incident in April, SK Telecom has seen a net decrease of 720,000 subscribers by July. In July, SK Telecom was the only carrier among the three to record a net loss of subscribers (a decrease of 91,267). The telecommunications industry does not view SK Telecom's net increase in subscribers as a temporary change. This is because the membership enhancement policy that SK Telecom started in August is effectively retaining existing customers. According to KTOA, 144,000 subscribers left SK Telecom in August, a 60% decrease from July's 352,000. SK Telecom is expected to maintain its half-priced membership policy until the end of the year, reinforcing this trend.
The telecommunications industry anticipated that SK Telecom would increase subsidies significantly to attract subscribers starting in August because the Mobile Device Distribution Improvement Act (subsidy law) was abolished at the end of July. However, SK Telecom decided to focus on enhancing membership discounts instead of engaging in subsidy competition. As a result, the number of number migrations among telecommunications companies sharply decreased in August. Last month, 644,600 mobile subscribers changed carriers, down 33% from July's 956,800. An industry insider noted, "If the subsidy competition is aimed at attracting number migration customers from other companies, the membership enhancement competition is a marketing strategy focused on retaining existing customers." They added, "If subsidy competition is triggered in a situation where the subsidy law has been abolished, all three telecommunications companies would face more disadvantages than advantages, so it seems that SK Telecom has chosen to focus on strengthening memberships."
Some are concerned that the weak membership benefits of MVNOs could lead to a larger decline in subscribers in the future. This prompted some MVNOs to enhance their membership benefits last month. On the 13th of last month, LG HelloVision launched a 'coupon pack rate plan' that allows the use of partnership coupons worth 5,000 won at convenience stores, markets, health and beauty stores, and delivery apps. An industry insider said, "While major corporations that own MVNO subsidiaries may have the financial resources to emulate telecom companies' membership benefits, small and medium-sized MVNOs with limited financial capacity cannot provide their own membership benefits." They added, "As of now, there are no alternatives to prevent subscriber churn."