Mobile carriers raise investment 20% in 2011

South Korean mobile carriers’ investment rose 20 percent in 2011 from a year earlier mainly on increased spending to build high-speed long-term evolution networks, the telecommunications watchdog said Thursday.

The three mobile carriers including top player SK Telecom Co. spent 7.67 trillion won ($6.86 billion) on investment in 2011, compared with 6.4 trillion won a year earlier, according to the Korea Communications Commission.

The watchdog said that local mobile carriers spent more money last year to cope with growing demand for wireless services and brace for the impact from newly launched LTE services.

SK Telecom and LG Uplus Corp., the country’s smallest mobile carrier, launched their LTE services last July to meet subscribers’ increasing demand for accessing data at a faster pace.

KT Corp., the No. 2 mobile carrier and the country’s top fixed-line operator, belatedly launched its LTE service in January as its move to shut down its 2G service, the bandwidth which the company needed for its LTE service, hit a snag due to a court injunction.

The KCC also said that the carriers’ spending on marketing fell 8.1 percent last year on-year to 6.92 trillion won.

The watchdog said that the mobile carriers funneled more money into investment by cutting costs for marketing. High marketing costs to lure more subscribers have been blamed as the main culprit for squeezing earnings of local mobile operators.

But it added that the ratio of marketing costs against revenues was still above an advisory level of 20 percent last year due to high competition to attract smartphone users.

Four out of 10 South Koreans use smartphones and the number of smartphone users exceeded the 20 million mark in October last year, indicating that about 80 percent of the country’s 25 million economically active people are using smartphones. 

(Yonhap News)