The Korea Federation of Small and Medium Business is looking to set up a fourth mobile telecom services provider, but the market divided among three long-established giants is likely to hinder the would-be telecom operator.
At present SK Group’s SK Telecom is the market leader with over 50 percent market share, followed by KT Corp., which accounts for about 35 percent of the market.
LG Uplus, which has lagged far behind its two larger rivals, has been making some headway with smartphones.
On Monday the Korea Federation of Small and Medium Business announced that its board of directors had approved plans to collaborate with SMEs in setting up a mobile carrier.
The organization said that it would contribute less than 100 billion won ($94.3 million) to setting up the firm, and that it has reached an agreement with other related organizations including the Korea Venture Business Association and the Korean Women Entrepreneurs Association to collaborate on the project.
If the plans are given the go ahead by the Korea Communications Commission, the Korea Federation of Small and Medium Business-led consortium will provide services using the WiBro mobile internet technology.
In addition to SMEs, Samsung Electronics is said to be willing to take part in the project.
While other consortiums have failed in the past to receive KCC approval based on shaky fund-raising capabilities, those in the industry say that the outlook for Korea Federation of Small and Medium Business’s project may be more positive.
KCC Chairman Choi See-joong has repeatedly made comments about a new service provider joining the market.
Most recently, while reporting to the National Assembly last month, Choi said that a number of companies were preparing a related project and that the launch of a fourth carrier could be possible before the end of the year.
However, KCC approval is only the first hurdle for the Korea Federation of Small and Medium Business and its collaborators.
While a new mobile carrier is estimated to require about 1 trillion won in initial funds, 10 times more than Korea Federation of Small and Medium Business’s 100 billion won, companies reported to be considering taking part in the project have yet to confirm the scale of their participation.
In addition, with the market firmly dominated by conglomerate-backed carriers and the formerly state-run KT that maintains solid lead in fixed-line telecom services, a newcomer will face stiff competition making market watchers doubtful about the impact an additional mobile carrier will have on the market.
“A fourth service provider is unlikely to have a big impact on the market. The market structure with SK Telecom and KT having dominance is unlikely to be affected,” a Korea Investment and Securities Co. analyst said.
Established mobile carriers also do not appear to be overly concerned about the potential new competition, with officials at both SK Telecom and KT saying that the companies had no official position on the matter.
By Choi He-suk (
cheesuk@heraldcorp.com)
