South Korea's telecom watchdog is expected to slap mobile carriers with another business suspension in May, industry sources said Monday, as part of the government's drive to eradicate the custom of using subsidies to increase clients.

The Korea Communications Commission, Seoul's top telecom watchdog, is expected to announce its disciplinary measures against the mobile carriers on Thursday, the sources said. The measures are to follow last week's 45-day business suspension handed down by the Ministry of Science, ICT and Future Planning that handles the country's telecommunication policy.

South Korea has three mobile carriers, with SK Telecom Co. accounting for more than half of the market, followed by No. 2 KT Corp and LG Uplus Corp. They have been repeatedly penalized for giving out subsidies to attract customers away from their rivals.

While subsidies are the most widely used ploy to entice subscribers to change their mobile operator, they are also blamed for undermining fair competition and market transparency.

Industry watchers said the KCC is expected to impose its regulatory move after mid-May, when the ministry's business suspensions end. 

"(If the KCC imposes another business suspension), we will be closing our doors for a third of the first half," an official from a local mobile carrier said. "It is inevitable that we will suffer setbacks in earnings."

The KCC had imposed a business suspension of around 20 days on each firm last year, and industry watchers say the upcoming punishment will be stronger as the companies have made little effort to change since. (Yonhap)