SEOUL, Mar. 15 (Korea Bizwire) — South Korean mobile carriers are expected to see their sales growth slow in 2018 from last year amid a mild gain in operating profit in the wake of increased fee discounts, a market tracker said Thursday.
The consolidated sales of the three mobile carriers — SK Telecom Co., KT Corp. and LG Uplus Corp. — are predicted to inch up 0.3 percent on-year to 53.4 trillion won (US$50.2 billion) this year, according to FnGuide.
Their combined operating profit is projected to come to 3.9 trillion won in 2018, up 4.6 percent from the previous year.
Last year, the carriers’ total sales rose 3.7 percent from the preceding year, with their operating income gaining a mere 0.4 percent due to increased marketing costs.
LG Uplus, the smallest industry player, is expected to lead the market’s growth this year. The carrier’s sales are forecast to grow 0.6 percent on-year, with its operating income climbing 5.3 percent.
Market leader SK Telecom is predicted to see its sales and operating income grow 0.5 percent and 3.2 percent, respectively. KT’s sales are expected to stall, with its operating income likely to expand 5.7 percent.
In September 2017, the three telecom providers raised the discount rate of monthly mobile phone plans to 25 percent from the previous 20 percent. The discount is normally offered to subscribers on two-year contract pay plans.
According to a recent tally from the ICT ministry, 10.06 million subscribers signed up for the new discount as of Monday. Given the current pace, the number is tipped to reach as many as 2 million at the end of this year.
Meanwhile, Kyobo Securities Co. predicted the total sales of the three carriers’ wireless business to decline 1.5 percent in 2018 from the prior year.
“It will be inevitable for the three telecom operators to suffer setbacks in their wireless business in light of the increased discount rate and the government’s push to lower telecom rates,” said Kyobo Securities analyst Park Geon-young.
Amid growing concerns over their performances this year, share prices of the three companies have dropped an average of 11.1 percent this year.
Some analysts said the mobile carriers are pinning their hopes on the so-called fifth-generation (5G) wireless technology, but it remains to be seen whether it will be a new cash cow for them.