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[Asia Economy Reporter Koo Chae-eun] As banks are steadily entering the MVNO market, the telecom companies’ intentions have become complicated from the very beginning of the new year. For now, banks have emerged as new customers in the telecom operators’ revenue source of 'network leasing business,' but on the other hand, 5G subscribers with high Average Revenue Per User (ARPU) could be taken away by banks. The telecom industry, which fiercely competes to attract '5G customers,' now faces the double burden of having to keep banks in check.

◆ Network Leasing Market Blossoms = According to the industry on the 3rd, as banks actively enter the MVNO business, the telecom industry is busy preparing countermeasures. Previously, KB Kookmin Bank launched the MVNO brand Liiv M last month, and KEB Hana Bank and Kyobo Life Insurance also entered the MVNO business by partnering with SK Telecom’s MVNO subsidiary SK Telink. Woori Bank and Shinhan Bank are also expected to join soon. An industry insider said, "If a bank operator with a strong sales network and strong signal power enters the MVNO business, there is both expectation and tension that the 'second-tier image' of MVNOs will improve," adding, "There may be an increase in cases where telecom operators offer good conditions and ask financial companies to join their own networks."

In this regard, KT recently proposed to KB Kookmin Bank’s Liiv M, which uses LG Uplus’s network, to use KT’s network as well. This move was made with the understanding that MVNO network leasing can involve multiple contracts with two or more operators, not just one. As banks’ entry into the MVNO market becomes more active, telecom operators have an opportunity to increase their network leasing revenue.

However, the fact that banks’ entry into the MVNO market could lead to subscriber competition is a burden for telecom operators. The telecom industry is closely watching the 'disruptive power' of KB Kookmin Bank, which entered first. Unlike non-bank MVNO operators, KB offers various financial benefits, so it is difficult to easily predict its success. An industry insider said, "Although a latecomer, KB as a financial company will set an example by how many MVNO subscribers it attracts and shakes up the market."

◆ Synergy Rather Than Competition = There is also a considerable view that this will remain a 'storm in a teacup.' This is because, after applying various benefits such as the selection discount, there is little difference whether subscribing to a telecom operator’s 5G plan or an MVNO 5G plan. In fact, the cheapest 5G plans from the three major telecom operators?SK Telecom, KT, and LG Uplus?are 55,000 KRW. However, after applying a 25% selection discount, the monthly fee drops to 41,200 KRW, which is cheaper than Liiv M’s light plan (44,000 KRW per month), the cheapest 5G plan among MVNOs.

An industry insider said, "Since there is little price difference between 5G fees through MVNOs and telecom operators’ 5G fees, the price merit is not significant, so the attraction effect toward financial companies will not be large enough to offset the lock-in effect of existing subscribers." Even if financial companies launch low-priced 5G plans, more aggressive marketing could be carried out through the three telecom operators’ MVNO subsidiaries such as SK Telink, KT M Mobile, and LG Hello.

Currently, the MVNO market is not mature enough, and there are not many financial companies that have entered, so the mainstream view is that the two industries cannot be seen as 'competitors.' According to the Ministry of Science and ICT, as of November, the total number of MVNO subscribers was 7,869,230, accounting for 11.6% of the entire mobile communication market. The trend shows that subscribers have been continuously decreasing since January last year. A telecom industry official said, "It should be seen from a synergy perspective between banks investing in non-face-to-face mobile apps and telecom companies focusing on platform businesses," adding, "If telecom data and financial data are combined, the big data market that can open up is large, so collaboration between the two industries will become more active."

This content was produced with the assistance of AI translation services.