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[Asia Economy Reporter Lim Hye-seon] Can David surpass Goliath? Although still modest, if the current trend continues, the growth of MVNOs (Mobile Virtual Network Operators) is expected to shake the stronghold of the three major telecom companies within two years. While the user growth of the three major telecom companies?SK Telecom, KT, and LG Uplus?has stagnated, the number of MVNO subscribers has steadily increased.

MVNOs to Catch Up with LG Uplus Within Two Years at the Latest

According to the Ministry of Science and ICT and the telecom industry on the 8th, considering the increasing trend of MVNO subscribers, MVNOs are expected to catch up with LG Uplus as early as the second half of 2023, or by 2024 at the latest. According to the wireless communication service statistics released by the Ministry of Science and ICT, the number of MVNO subscribers reached 12,462,574 in October, an increase of 1,884,636 this year. The MVNO market share, which was only 0.8% in its first year of introduction in 2011, rose to 16.2% as of last October. Especially after reaching 10 million subscribers in November last year, the growth rate has been accelerating. The number of MVNO subscribers has steadily increased by about 200,000 each month since recording 10,577,938 in January this year.

The combination of USIM plans and unlocked devices is popular among young people in their 20s and 30s who want to reduce their communication expenses. In October, the number of MVNO mobile number portability subscribers exceeded 180,000, accounting for 50% of the total number of number portability subscribers (360,000). This means that one out of every two people switched to MVNOs.

SKT and KT Subscriber Decline, LG Uplus Remains Steady

As of October, the total number of domestic mobile communication service subscribers was 76,614,456, slightly up from 76,323,271 in the previous month. SK Telecom’s subscriber share dropped by 0.9 percentage points to 40.1% this year. The industry expects that SK Telecom’s mobile communication market share will likely fall below the 40% range within the year.

This would be the first time since 1994 that SK Telecom’s market share has fallen to the 30% range. KT’s market share decreased from 24.0% at the end of last year to 22.9%. LG Uplus’s market share remains stagnant at 20.8%. The only sector showing growth is MVNOs. The MVNO market share, which was only 0.8% in its first year of introduction in 2011, surged to 16.2% as of last October. The growth trend has continued since surpassing 10% market share in 2018. Particularly after reaching 10 million subscribers in November last year, the growth rate has been accelerating.

Despite No 5G Service, MVNO Growth Continues

The growth of MVNO subscribers is expected to continue. The government supports making the current temporary provision permanent, which obligates the incumbent telecom operators to provide wholesale communication services to MVNO operators, and plans to revise the MVNO pricing method to increase discount rates. MVNO companies lease telecom networks from the three major telecom companies at wholesale prices. The industry expects that MVNO plans, which are already more than 30% cheaper than the three major telecom companies’ plans, could become even more affordable. However, profitability remains a variable. MVNO operators have recorded an operating loss of 22.8 billion KRW over five years since 2017.

In response to MVNOs, telecom companies are promoting 5th generation (5G) services. As of the end of October this year, the number of 5G subscribers reached 26,984,458, an increase of 754,893 from the previous month. The 5G subscriber market share is 47.6% for SK Telecom, 30.2% for KT, 21.7% for LG Uplus, and 0.5% for MVNOs. The number of LTE subscribers was 46,767,675, a decrease of 1.25 million this year. In October, LTE smartphone traffic per subscriber was 8.094GB, down from 8.219GB the previous month, while 5G traffic increased to 28.763GB from 27.967GB the previous month.

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