Today's Comment: South Korea reaches four million LTE subscribers; Nokia to manufacture in Vietnam; more uncertainty in India.
- South Korea now has over four million LTE subscriptions.
- Early competition and a focus on smartphones have put LTE penetration rates at 18.1% for LG Uplus and 7.5% for SK Telecom.
Today we focus on three developments:
- 4 Million LTE Customers in South Korea: KBS Media reports that South Korea now has some 4 million LTE subscriptions, of which SK Telecom has some 2 million, LG Uplus 1.7 million and KT Corp around 0.4 million.
- Nokia to Manufacture Devices in Vietnam: Thoi Bao Kinh Te reports that Nokia will announce details of the construction of its first mobile phone plant in Vietnam next week (23 April), to be based at Vietnam-Singapore Industrial Park (VSIP) in the northern province of Bac Ninh. Phan Cam Ly, PR director of Nokia to Indochina and the Philippines, is quoted as saying that the manufacturing facility will be commercially launched later this year. It will be capable of manufacturing 50 million devices per year (80% of its capacity), reaching 92% in 2013 and 95% in late 2014. An initial investment of EUR200 million (USD261 million) will be made, and the plant will employ some 10,000 people. The Finnish vendor has 10 other manufacturing plants, located in Brazil, China, Finland, Hungary, India, Mexico, Romania, the UK, and South Korea. Nokia recently announced both weak device sales and average selling prices: the opening of the latest facility will at least help Nokia gets its Symbian and Lumia-based products out to operator, retail and other channels more swiftly.
LTE Penetration (%)
5.47 million ( December 2011)
2.22 million (March 2012)
2 million (March 2012).
1.7 million (April 2012).
0.5 million (March 2012)
0.4 million (April 2012)
Source; IHS Global Insight
- More Regulatory Uncertainty in India: Last week's presidential reference to the Supreme Court has caused more uncertainty for operators. In the reference, the government asked the Supreme Court whether basic service licences issued in 1994 and 2003-2007 and 35 dual-technology licences granted to Reliance Communications, Tata Teleservices, Shyam Teleservices and HFCL were illegal. The government is questioning the legality of these licences, as like the 122 cancelled licences, they were granted without an auction. The review of these licences is likely to take several months, if not longer and concerns all the major operators. Given the independent-mindedness of the Supreme Court it is uncertain what stance it will take on these licences and the government should make plans to ensure the rapid re-auction of any licences that are cancelled.
LTE uptake in South Korea is benefitting from a competitive environment at an early stage. SK Telecom and LG Uplus in particular are among the global LTE leaders, both in terms of subscriber base and penetration of their total customer base.
LG Uplus is betting on LTE being transformative for its business. While it is too early to judge whether this will be a complete success, it has by far the highest LTE penetration of all the operators, and it alone has achieved ARPU growth since LTE launch last July. KT Corp has also apparently quickly reached 2.4% penetration of its mobile customer base since its recent launch. The saturation of 3G services in South Korea will make for faster migration to LTE than in markets such as the US, where 3G still has still has some room to grow, accounting for around 55% of mobile subscriptions at the end of 2011, according to IHS Screendigest data.
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