The three common carriers will continue to invest in facilities by over KRW 2 trillion in the fourth quarter. For this, LTE and giga Internet are forecast to be the key points of competition. iPhone 6, which is wining sensational popularity, is expected to serve as a catalyst for triggering activation of the market that has frozen up as a result of the implementation of the Terminal Distribution Structure Improvement Act (Terminal Distribution Act). 

According to the three common carriers SK Telecom, KT and LGU+ on the 2nd, the estimated amount of the companies’ facility investments (CAPEX) in the fourth quarter would add up to KRW2.3863 trillion. This means that 34% of the companies’ estimated facility investment amount of KRW 7 trillion for this year is executed during the fourth quarter. 

KT, which has decided to invest a total of KRW 2.7 trillion this year, is scheduled to execute KRW 1.19 trillion in the fourth quarter alone. This amount is similar to the investment the company has made up to the third quarter (KRW 1.5048 trillion). The percentage of investment in wired facilities (KRW 515.4 billion) is slightly higher than wireless (KRW 427.4 billion). With wired profits in the third quarter decreased by as much as 6.2% from last year, KT has set out a strategy to securely dominate a superior position by strengthening investment in giga Internet in order to be a winner in the ‘war of the wired in ten years.’ KT decided to strengthen investment actively also for the wireless division, which has a 59.6% share of long-term evolution (LTE) subscribers (10.25 million), and thus is soon to exceed the 60% mark. 

SK Telecom was predicted to invest KRW 730 billion in the fourth quarter. This is to lay out groundwork for further improving its position in the wireless field. While strengthening LTE leadership, SK Telecom has established a policy to secure global competitiveness by starting overseas communications consulting business in Southeast Asia. In particular, SK Telecom decided to broaden the scope of its business to the related fields, such as Internet of things (IoT), by using the company’s competitive LTE communications network. 

For this year, LG U+ has built up a plan to invest KRW 2.2 trillion, which increased by as much as 46% from last year. Of the total amount, KRW 460 billion will be executed in the fourth quarter. This is contrasting to KT and SK Telecom displaying a decrease by around 10%. 

LG U+ is focusing on the next-generation LTE technologies. The goal is to build up a considerable portion of not only LTE-A, but also 3-band CA and uplink CA networks within the year. This is a movement to even take into consideration the launch of a next-generation LTE terminal. 

As the three common carriers’ LTE facility investment is continuing into the fourth quarter, competition over average revenue per user (ARPU), one of key growth indicators, is forecast to intensify. As for the three companies’ ARPUs as of the third quarter, SK Telecom is taking the lead with KRW 36,417 and it is closely followed by LG U+ with KRW 36,159 and KT with KRW 34,829. SK Telecom and LG U+ are fighting over the top position with a narrow gap in between them and KT is chasing after them fiercely by recording a high 11.2% growth in the third quarter from last year. 

With the three companies releasing unprecedented rate and subsidy plans, iPhone 6 and iPhone 6 Plus have rose to the surface rapidly as key variables for the companies’ performances in the fourth quarter. When receiving the subsidy, compensation for used phone and advance compensation for used phone, a customer can purchase a terminal practically for free and, in some cases, even by receiving discount benefits. Compensation for used phone is to pay money to a customer for returning his or her existing iPhone. Advance compensation for used phone is where customers receive compensation in advance under a condition to return new iPhone 6 after using it for a set period of time. 

For example, when a customer purchases a 16 giga (G) iPhone 6 at the factory price of KRW 789,800 (the same for all three companies) from LG U+, which released iPhone first, the customer can receive KRW 185,000 in subsidy (based on the highest rate plan), as much as KRW 370,000 for the compensation for used phone and as much as KRW 340,000 for the advance compensation for used phone. The total amount of subsidy and compensation (KRW 895,000) is larger than the factory price (KRW 789,800). 

However, as all three companies have released similar rate plans, subscriber shift prompted by rates is highly unlikely. However, many forecast that LG U+, which has released iPhone service first, will enjoy relatively greater benefits. 

“As LG U+ released iPhone service as the first, it is highly likely for the pent-up demand to move on to this company,” said a communications industry source. “While the market has contracted as a result of the ‘Terminal Distribution Act,’ iPhone will play an important role in increasing mobile subscribers.”