The expected result of fierce competition? Sub brand phone could not escape loss
Jong Ye Lin | yeslin@ | 2018-04-20 10:59:11
The sub brand phone industry is forecast to record a deficit last year. It is analyzed that the deficit situation is continuing as the intense competition among business operators leads to bleeding.
According to the Ministry of Science, Technology and Communication on April 19, last year, the entire mobile phone industry recorded a deficit. The Ministry of Information and Communication said it will release the operating profit of the mobile phone industry last year. "Last year`s operating loss is similar to that of 2016," a spokesperson for the Ministry of Information and Communication said.
The deficit of the money phone industry is not today`s story yesterday. According to the Ministry of Information and Communication, the mobile phone industry posted an operating loss of KRW 90.8 billion in 2013, followed by KRW 96.5 billion in 2014 and KRW 51.1 billion in 2015. The company reported an operating loss of KRW 31.7 billion in 2016, which was announced last year. The amount of loss is decreasing, but it is still a deficit.
Especially, the operating loss of KTM Mobile and Media Log has led to a deficit in the overall mobile phone industry. In 2016, the two companies posted losses of KRW 41.5 billion and KRW 11.9 billion, respectively. If combined, it will exceed the industry-wide operating loss of KRW 53.4 billion. The situation of both companies last year has not changed much. Last year, KTM Mobile posted an operating loss of KRW 40.8 billion, while Media Log reported a loss of KRW 14.6 billion. This is the main basis for estimating that the flat phone industry did not outgrow its operating deficit last year.
The industry is pointing to excessive price competition as the cause of the operating loss of both companies. The two companies actually launched low-priced plans to increase subscribers. The media log is currently offering 10GB of data, 100 minutes of voice, 100 characters, 100GB of data, 10GB of data, 20,000 won of data, 6GB of data, 100 minutes of voice, and KRW 17,000 of data. An industry expert said, "It is a bleeding rate system that can never be released without damaging it." KTM Mobile also released a 10-gigabyte (GB) 10GB plan that offers 10GB of data, 100 minutes of voice, and 100 characters at a monthly rate of KRW 98,800.
The two companies are receiving considerable support as a subsidiary of large companies, unlike the mobile phone operators. The industry analysis shows that there is no competition for bleeding. The actual media log posted KRW45bn in August, when LGU Plus participated in the rights offering. So far, LG Uplus has been reported to have spent about 150 billion won on the media log.
It is pointed out that the government`s efforts will not be effective if the deficit in the mobile phone industry continues. The government has reduced the fee for radio telephones worth about 160 billion won over the last six years. From 2011, when the wholesale price was started to be calculated, the voice rate was reduced by 60% from 65.9 won to 26.4 won, and from data of 141.91 won to 4.51 won from last year.
In the industry, some argue that it is necessary to avoid internal bleeding to get out of the deficit. In fact, SK Telink earned 32.7 billion won last year. In the case of SK Telink, last year, it released marketing plans such as discounts on handsets, optimized data rates for video lectures, and fare products for couriers and surrogate drivers.
An industry expert said, "In order to be active in the mid- to long-term, it is the government and the network provider who negotiate the network, but there is also a portion of the mobile phone provider, and the competitor should be able to survive.”
By Jong Ye Lin yeslin@
[ copyright ⓒ The Digitaltimes ]
According to the Ministry of Science, Technology and Communication on April 19, last year, the entire mobile phone industry recorded a deficit. The Ministry of Information and Communication said it will release the operating profit of the mobile phone industry last year. "Last year`s operating loss is similar to that of 2016," a spokesperson for the Ministry of Information and Communication said.
The deficit of the money phone industry is not today`s story yesterday. According to the Ministry of Information and Communication, the mobile phone industry posted an operating loss of KRW 90.8 billion in 2013, followed by KRW 96.5 billion in 2014 and KRW 51.1 billion in 2015. The company reported an operating loss of KRW 31.7 billion in 2016, which was announced last year. The amount of loss is decreasing, but it is still a deficit.
Especially, the operating loss of KTM Mobile and Media Log has led to a deficit in the overall mobile phone industry. In 2016, the two companies posted losses of KRW 41.5 billion and KRW 11.9 billion, respectively. If combined, it will exceed the industry-wide operating loss of KRW 53.4 billion. The situation of both companies last year has not changed much. Last year, KTM Mobile posted an operating loss of KRW 40.8 billion, while Media Log reported a loss of KRW 14.6 billion. This is the main basis for estimating that the flat phone industry did not outgrow its operating deficit last year.
The industry is pointing to excessive price competition as the cause of the operating loss of both companies. The two companies actually launched low-priced plans to increase subscribers. The media log is currently offering 10GB of data, 100 minutes of voice, 100 characters, 100GB of data, 10GB of data, 20,000 won of data, 6GB of data, 100 minutes of voice, and KRW 17,000 of data. An industry expert said, "It is a bleeding rate system that can never be released without damaging it." KTM Mobile also released a 10-gigabyte (GB) 10GB plan that offers 10GB of data, 100 minutes of voice, and 100 characters at a monthly rate of KRW 98,800.
The two companies are receiving considerable support as a subsidiary of large companies, unlike the mobile phone operators. The industry analysis shows that there is no competition for bleeding. The actual media log posted KRW45bn in August, when LGU Plus participated in the rights offering. So far, LG Uplus has been reported to have spent about 150 billion won on the media log.
It is pointed out that the government`s efforts will not be effective if the deficit in the mobile phone industry continues. The government has reduced the fee for radio telephones worth about 160 billion won over the last six years. From 2011, when the wholesale price was started to be calculated, the voice rate was reduced by 60% from 65.9 won to 26.4 won, and from data of 141.91 won to 4.51 won from last year.
In the industry, some argue that it is necessary to avoid internal bleeding to get out of the deficit. In fact, SK Telink earned 32.7 billion won last year. In the case of SK Telink, last year, it released marketing plans such as discounts on handsets, optimized data rates for video lectures, and fare products for couriers and surrogate drivers.
An industry expert said, "In order to be active in the mid- to long-term, it is the government and the network provider who negotiate the network, but there is also a portion of the mobile phone provider, and the competitor should be able to survive.”
By Jong Ye Lin yeslin@