"Are Budget Phone Operating Profits High? Average 330 Million KRW Per Company Annually... It's Poor"

Association of Budget Telecom Operators Issues Statement
"Operating Profit Margin 3-4%... Management Conditions Dire"

There has been a rebuttal to the claim that small and medium-sized MVNO operators are generating high operating profits.

On the 20th, the Korea MVNO Association expressed concerns regarding the claim that independent MVNO operators, excluding mobile carrier subsidiaries, large corporations, and financial affiliates, have earned operating profits amounting to 100 billion KRW over the past five years. [Related article=Are Small MVNO Operators Struggling?... "MVNO Operating Profit Reaches 100 Billion KRW Over 5 Years"]

The association stated, "Even if the 100 billion KRW operating profit over five years for independent MVNO operators is accurate, considering there are about 60 independent MVNO operators, the average annual profit per operator is only around 330 million KRW. Furthermore, given that the average operating profit margin of member companies holding over 70% of independent MVNO subscribers is 3-4%, the majority of independent operators are in an extremely difficult business situation."

They continued, "It is true that a very small number of 2 to 3 MVNO operators are generating considerable operating profits, but these operators operate in specialized small-scale markets to maximize profits and are small operators with fewer than 100,000 subscribers."

They added, "Claims implying that independent MVNO operators have significantly high operating profits based on a few small operators are announcements that are quite detached from market reality and can seriously distort the situation of the majority of MVNO operators."

"The approximately 60 typical MVNO operators have been competing fiercely in all aspects such as price reductions and service improvements, and have sustained their businesses for over 10 years," they said.

They also argued, "Looking at companies affiliated with the association, there are many cases of operators who have run MVNO businesses for many years but have very low operating profits, so the idea that running an MVNO business automatically results in excessive operating profits is a very dangerous misconception."

Meanwhile, the association stated, "The wholesale supply obligation system, which expired last September, has not been reinstated even after a year," and added, "The wholesale supply obligation should be made permanent, and various wholesale price calculation systems should be introduced so that MVNO operators can invest with confidence. We request that conditions allowing for worry-free investment be established as soon as possible."

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