A Conditional Approval

The author is an analyst of KB Securities. He can be reached at joonsop.analyst@kbfg.com. -- Ed.

 

On June 12, the Ministry of Science and ICT cleared SKT to phase out its 2G services, provided that 2G service users are catered to in the process. According to the Korea JoongAng Daily, the following factors were cited as grounds for the approval: (1) Outdated 2G networks in operation since 1996 have caused a surge in malfunctions; in the past three years, the no. of malfunctions grew by 132% for exchangers and 139% for base stations/repeaters; (2) There have been supply shortages in network parts, creating difficulties for repairing networks and providing quality service. According to the Korea Economic Daily, 2G service users will be given the following compensation for migration to smartphone networks 3G and higher: (1) A choice between a free-of-charge mobile phone (10 models available) or a subsidy of KRW300,000 for the purchase of a new mobile phone; (2) A choice between a monthly discount of KRW10,000 for two years or a 70% discount on mobile phone tariffs for two years.

SKT 2G service to be phased out from July 6

SKT will be allowed to phase out its 2G services from July 6 (20 days after government approval). To limit service disruptions, it will start with non-metropolitan areas with outdated networks and then to Seoul and other metropolitan areas. The no. of SKT 2G subscribers stood at 393,000 at end-April, 2020. Until June 2021, their phone numbers—which start with telephone prefixes 011 and 107—will remain usable, thereafter changing to 010. Given their loyalty to mobile phone numbers, 2G service users are expected to change their tariff schemes to 3G or 4G LTE close to the deadline.

LG Uplus expected to follow suit

LG Uplus has yet to apply for approval to end its 2G services but is expected to follow suit. The no. of LGU 2G subscribers stood at 476,000 at end-April 2020.

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