Despite suffering an unauthorized small-amount payment hacking incident in September, KT's number of mobile subscribers actually increased. This produced a "contradictory" indicator compared with the telecom industry's expectation that KT subscriber departures would be inevitable after the hack.
According to the Ministry of Science and ICT on the 18th, KT's number of mobile subscriber lines in September was 13,697,079, up 0.015% from August (13,694,981). In terms of lines, that is an increase of 2,098. This contrasts with SK Telecom, which lost hundreds of thousands of subscribers within a month immediately after a hacking incident at the end of April.
SK Telecom's number of mobile subscriber lines in May was 22,499,042, down 1.8% from April (22,924,260). The number of mobile lines decreased by 425,218 at the time, meaning more than 400,000 subscribers posted a net decline in just one month. A telecom industry official said, "Contrary to expectations that subscribers would leave en masse starting Sept. 8, when KT reported the hacking incident, that prediction missed the mark."
The telecom industry points to the spread of awareness that none of the three major carriers are safe from hacking as a reason KT did not see large subscriber losses. In September, after SK Telecom, KT also disclosed it had been hacked, and LG Uplus faced hacking suspicions. In August, the U.S. hacking magazine "Frack" reported that a hacker infiltrated LG Uplus's internal network using account information obtained by hacking SecureKey, a security partner of LG Uplus, amplifying anxiety. LG Uplus said that its security partner "SecureKey" reported a system hack to the Korea Internet & Security Agency (KISA) on July 31, but the company denied any hacking through last month, saying there were no traces of intrusion. LG Uplus submitted an incident report to KISA on the 23rd, two days after LG Uplus President Hong Beom-seok was called to the National Assembly audit on the 21st last month.
The lack of aggressive competition over device subsidies is also seen as helping curb KT subscriber churn. A telecom industry official noted, "Right after the SK Telecom hacking incident, the three carriers engaged in subsidy competition to attract subscribers, but they currently lack room in marketing budgets." In fact, although the Mobile Device Distribution Improvement Act was abolished in July, marketing expenses did not rise as much as expected. The combined marketing expenses of the three carriers in the third quarter were 1.974 trillion won, up 3.5% from the same period last year (1.906 trillion won). In particular, SK Telecom is providing a 1 trillion won customer compensation plan through the end of this year as hacking compensation, making it difficult to actively engage in subsidy competition.
The telecom industry expects subscriber departures at KT will not be significant until it announces a waiver of early termination fees. KT has said it will decide on a waiver after the government releases its final investigation results. The industry expects KT could announce the fee waiver as early as mid-December. A telecom company official said, "Savvy subscribers who watched the SK Telecom incident know they can get more subsidies if they switch numbers right after KT announces a fee waiver, so they are waiting." The official added, "Even if a fee waiver is announced in December, subsidy competition is expected to intensify in January next year. The burden of subsidy support related to marketing expenditure will ease only after the fiscal year turns."