SK cellcos slapped with new sales bans

Dylan Bushell-Embling
11 Mar 2014

South Korea's government has wasted no time in following through with threats to penalize operators for continuing to offer excessive smartphone subsidies.

SK Telecom, KT and LG U+ have each been handed a 45-day ban on signing up and selling handsets to new customers, VentureBeatreported.

The bans will take effect on a staggered basis between March 13 and May 19. SK Telecom's ban will last between April 5 and May 19, and the company will be unable to sell handsets to existing customers whose contracts are less than two years old over this period.

KT's ban will last from March 13 to April 26, while LG U+'s will run from March 13 to April 4 and then from April 27 to May 18.

The bans could hurt initial sales of Samsung's new Galaxy S5, although the vendor's home market accounts for a small portion of its overall volumes.

Yonhap News yesterday reported, citing industry sources, that regulator KCC could order its own suspensions in May. Two such suspensions in a row could significantly impair the operators' earnings for the first half of 2014.

Korea's communications ministry threatened last week to do “whatever it can” to stop the practice of operators offering subsidies above the legal limits of 270,000 won ($250) to try to poach customers from each others' networks.

Authorities have long taken the view that excessive subsidies distort healthy competition. The KCC suspended operators from signing up new customers for around 20 days last year over the practice.

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