Reducing Costs for Mobile Carriers
Competition between Samsung Electronics and China’s Huawei is getting more and more intense in the South Korean 5G equipment market, which is estimated at up to 30 trillion won (US$27 billion).
The top three South Korean mobile carriers, including SK Telecom, KT and LG U+, are expected to be able to achieve a cost reduction of more than one trillion won (US$900 million) as a result.
KT and LG U+ are planning to choose their partners for 5G equipment supply within this month. Under the circumstances, Huawei is reportedly trying to win them over with a price equivalent to 60% of those offered by others. Samsung Electronics is cutting the price of its equipment as well.
Earlier, Huawei failed to partner with SK Telecom. The Chinese company’s market reentry may become impossible if the failure is repeated this month. This is because mobile carriers tend to continue to work with existing partners to ensure service stability and compatibility. At present, Huawei’s 5G equipment is regarded as being a quarter ahead of the devices from Samsung Electronics, Ericsson and Nokia.
“In the past, LG U+ adopted Huawei’s equipment for its 4G network in the metropolitan area, and LG U+ and Huawei are expected to work with each other again,” said an industry source, adding, “Meanwhile, KT is unlikely to partner with Huawei in that the company has worked with Samsung Electronics and Nokia for its LTE networks.”
Earlier, the three mobile carriers were predicted to bear a total cost of 24 trillion won (US$21 billion) to 30 trillion won for 5G frequency allocation and infrastructure construction. 5G services require many more base stations than 4G for propagation loss compensation and high-speed data transmission. The estimated cost was more than 10 trillion won for SK Telecom, eight trillion won for KT, and at least six trillion won for LG U+. However, the cost is likely to be reduced by at least one trillion won as a result of the fierce competition.