5G Mid-Tier Plan 'Giu'... No Abnormality in 3rd Quarter ARPU

Q3 Telecom Business Revenue Shows Stable Growth of 0.6~2%
"Senior and Youth-Specialized 5G Plans Also Expected to Have No Negative Impact"

[Asia Economy Reporter Oh Su-yeon] Concerns that the introduction of 5G mid-tier plans would negatively impact the average revenue per user (ARPU) of the three major telecom companies have proven to be unfounded.

According to industry sources on the 11th, although the three telecom companies introduced 5G mid-tier plans offering 24?31GB of data last August, ARPU actually increased. While the numbers show a decline, when excluding Internet of Things (IoT) lines, ARPU is analyzed to have risen. SK Telecom's Q3 ARPU was 30,644 KRW, a 0.1% decrease from 30,669 KRW in the same period last year. LG Uplus recorded 29,165 KRW, down 5.7% from 30,912 KRW in the previous year.

In the securities sector, even LG Uplus, which experienced the largest ARPU decline, is believed to have seen an increase compared to the previous year when excluding IoT lines. Kim Hoe-jae, a researcher at Daishin Securities, stated, "LG Uplus's wireless ARPU showed an expanded decline. However, the ARPU based on mobile phones excluding IoT is estimated to be in the mid-30,000 KRW range, showing about a 1% increase compared to the same period last year." KT's Q3 wireless ARPU, calculated excluding IoT and M2M subscribers, was 32,917 KRW, a 3.5% increase year-over-year.

The telecommunications business revenue of the three companies also showed stable growth in Q3. SKT's mobile communication revenue was 2.625 trillion KRW, up 2% from the previous year. KT Telco B2C (consumer telecommunications) revenue was 2.3567 trillion KRW, a 0.6% increase over the same period. LG Uplus's consumer mobile revenue was 1.5458 trillion KRW, up 1.7% year-over-year.

ARPU represents the average value of the plans subscribed to by users and is considered a key indicator of profitability in the wireless business. The more customers use expensive plans like unlimited 5G plans rather than cheaper 3G or LTE plans, the higher the ARPU.

In June, the government pushed for the introduction of 5G mid-tier plans to reduce household communication expenses, and the three telecom companies launched mid-tier plans in August offering 24?31GB data for 50,000?60,000 KRW per month. Before the introduction of the 5G mid-tier plans, there were concerns that if a large number of subscribers of plans with over 110GB moved down to these mid-tier plans, ARPU would inevitably decline, negatively affecting profits. As of the end of September, the average 5G traffic per subscriber was about 27.31GB.

The number of 5G mid-tier plan subscribers is unknown. Although the Ministry of Science and ICT and the National Assembly requested related statistics, the three telecom companies reportedly did not disclose them citing trade secrets. Some speculate that subscriber response has not been strong. The government plans to launch specialized 5G plans for seniors and youth by the end of the year. However, the ARPU contraction due to these plans is also expected to be minimal.

Kim Aram, a researcher at Shinhan Investment Corp., said, "In fact, the 5G mid-tier plans are understood to have had fewer subscribers than expected, and the youth-tailored 5G plans expected to be implemented from the end of the year are new plans, so they are not expected to have a negative impact large enough to cause fluctuations in overall ARPU."

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