The number of KT cancellation customers who switched to budget phones during the penalty waiver period plunged compared with SK Telecom's penalty waiver period in Jul. last year.
According to the telecom industry on the 13th, from the 31st of last month to the 12th of this month, 33,945 KT cancellation customers switched to budget phones. This equals 12.7% of KT's total 266,782 cancellations during the period. Compared with the share of customers who moved to budget phones during SK Telecom's penalty waiver period in Jul. last year, the figure nearly halved. At the time, 51,101, or 23.4%, of SK Telecom's 217,542 cancellation customers switched to budget phones.
Why did switching to budget phones decline? First, the surge in moves to budget phones during SK Telecom's penalty waiver period was influenced by the repeal of the Mobile Device Distribution Improvement Act. Because SK Telecom's penalty waiver was set to end a week before the repeal, many SK Telecom cancellation customers moved to budget phones in anticipation of a subsidies war after the repeal and received the penalty waiver first. Budget phones have no contract terms and thus no penalties, so once a subsidies war began, customers could switch carriers at any time while changing to the device they wanted. The fact that the Galaxy Z 7 series would launch after SK Telecom's penalty waiver ended also spurred the shift to budget phones.
KT cancellation customers who want the Galaxy S26, slated for release in Mar., may also benefit by moving to budget phones to get penalties waived. However, there was a reason this demand cooled. After the repeal of the Mobile Device Distribution Improvement Act at the end of Jul. last year, a major subsidies war did not materialize, and consumers learned from experience that the largest subsidies were offered during the penalty waiver window. Some carriers, including LG Uplus, also offered "pre-activation post-review" sales incentives for KT cancellation customers seeking the Galaxy S26, which contributed to fewer moves to budget phones.
Another reason cited is stronger carrier membership policies. Since Aug. last year, SK Telecom has bolstered membership benefits such as 50% discounts at partner brands to compensate customers after a hacking incident, which in turn pushed the three carriers to enhance their membership perks. As a result, analysts say the appeal of budget phones, which offer almost no membership discounts, has faded. The tilt of KT cancellation customers toward SK Telecom, which offers the strongest membership benefits among the three carriers, underscores this. According to the telecom industry, from the 31st of last month to the 12th of this month, 64.7% of KT cancellation customers switched to SK Telecom.
Kim Kyung-won, a distinguished professor in the business administration department at Sejong University, said, "When comparing low-priced budget phones with carrier membership benefits, younger customers with high demand for movies or coffee likely judged carriers to be more advantageous."