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S. Korean mobile carriers lag behind overseas rivals in profitability

Aug. 6, 2015 - 09:49 By KH디지털2
South Korean mobile carriers fell behind their overseas counterparts in profitability in the first half of 2015 as they spent big on marketing in the tightly congested domestic market and building faster mobile networks, industry data showed Thursday.

The operating margin, or the ratio of operating income to total revenue, at the country's three mobile carriers, came to 7.5 percent in the January-June period on average, according to the data.

South Korea's top mobile carrier SK Telecom Co. saw its operating margin reach 9.6 percent, trailed by No. 3 LG Uplus Corp.

and No. 2 KT Corp. with 6.7 percent and 6.3 percent, respectively.

Their performances are in stark comparison with Japanese players. NTT Docomo Inc. and KDDI enjoyed operating margins of 18.4 percent and 15.3 percent last year, respectively. SoftBank Corp. also held a comparable figure of 16.3 percent.

U.S.-based Verizon Wireless and China Mobile Communications Corp. also held comparable figures of 15.4 percent and 18.9 percent, respectively.

Currently, SK Telecom accounts for roughly half of the domestic market, followed by KT with around 30 percent.

Industry watchers said the local players' low operating margin ratios are the result of them allocating a high amount of cash to advertisement expenses.

As the South Korean firms are also battling to develop key technologies for the fifth-generation network first, they also expanded investments, which kept margins low. (Yonhap)