SK Telecom, KT and LG Uplus, three mobile carriers spending KRW 2.22 trillion in subsidies for the third quarter of last the second quarter. In the first half of the year, it reached KRW 4.28 trillion. If the subsidy is paid by the consumer, it will be worth more than KRW 1.5 million per person.

According to the results of the first three quarters of the three mobile carriers on August 6, it was found that a total of KRW 3.90 trillion was spent on marketing expenses. SK Telecom spent a total of KRW 1.5 trillion in marketing expenses. KT spent KRW 1.03 trillion for the same period, while LG UPlus spent KRW 1.77 trillion for marketing expenses.

Marketing expenses consist of advertising costs and costs, which are the sum of sales commissions and other commissions as well, known as subsidies, minus the terminal revenue. Advertising cost is 15 ~ 30% of marketing cost, and sales commission accounts for 70 ~ 80% of marketing cost.

SK Telecom`s sales commissions totaled KRW 2.39 trillion in the first half of this year, KT`s KRW 1.37 trillion, and LG Uplus`s KRW 850.5 billion. In other words, the total amount of subsidies that the three companies injected into the market in the first half of this year amounts to KRW 4.28 trillion.

No matter how much the company spends on marketing costs, the cost can be adjustable. The problem is that these costs exceed revenue and close to a quarter of sales. The marketing expenses of the three mobile carriers are 23 ~ 24% of total sales. Over the same period last year, the portion of marketing expenses increased 20 ~ 23%.

While such huge marketing costs and subsidies have been put on the market, there are not many benefits to users.

There are 3.29 million 2159 number-transfer subscribers in the first half of this year. According to data collected by the Federation of Telecommunications Operators, there are 560,143 mobile phone number mobiles. Except this, the number of 3 subscribers to the communication will be 2,730,206. In general, when you look at subscriber payments to subscriber numbers, users can receive subsidies of KRW 1.56 million 748 per subscriber.

However, the size of receiving real subsidies is far less than that. According to the Act on the Improvement of Distribution Structure of Mobile Communication Terminal Device, which is also called `Telecom Law`, the handset subsidy is paid within a maximum of KRW 300,000, and the discount rate has been reduced by an average of KRW 170,000 per person for the past two years over the past two years. The amount of subsidy that should exceed KRW 1.5 million per person has decreased to one-fifth.

Experts emphasize that there is a `point` for lowering telecom costs in this area. A mobile expert who asked for anonymity said, "The mobile carriers are executing astronomical marketing expenses every quarter to compete for 1% of subscribers. The domestic mobile market is already saturated, so it is just a zero-sum game. Consumers will not be able to enjoy the benefits of the service.”


By Kang Eun Seong esther@


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