Korean Mobile Market Forecast and Carrier Strategy 2003-2008

According to ROA Group, the number of mobile subscribers in South Korea is expected to reach 38.25 million by the end of December 2005. CAGR (Compound Annual Growth Rate) after 2005 is immaterially 1.49%. Considering this trend, the number of mobile subscribers in Korea is expected to reach 39.4 million by 2008, which is 80.13% penetration rate of the total population in South Korea.

Meanwhile, the market shares of the three mobile carriers (SKT 51%, KTF 32%, LGT 17%) are not expected to change significantly from the year-end level of 2004. The number of prepaid subscribers is expected to reach 532,000 in 2005 and will decrease to 171,000 by 2008, since mobile carriers are more likely to involve in gaining higher data service ARPU than concentrating on prepaid subscribers in this saturated voice based market.

By maintaining a low CAGR of 1.7%, starting from 2005, the number of CDMA1X/EVDO and EVDV subscribers will reach 37.19 million by 2007. In the event of commercialization of WCDMA service in 2005, the forecasted subscribers will increase from 250,000 in 2005 to 3.96 million by 2008. In the long-term perspective, due to the introduction of WCDMA (or HSDPA), there is a high possibility that the current EVDO subscribers will migrate to WCDMA (or HSDPA). For the current CDMA IS95A/B subscribers, all of them will migrate to other network and the number of subscribers will hit zero.

Since MNP (Mobile Number Portability) is fully opened to the mobile carriers in 2005, the average churn rate of the three mobile carriers is expected to be 1.96%, a little bit lower than 2004, and the forecasted churn rate for 2008 will drop to 1.5%.

Based on the 2005 figures, the expected overall ARPU of Korean mobile market by 2008 is 43,882 KRW and data ARPU will take up 12,009 KRW from the overall number. For data subscribers, the market grows at CAGR of 2.39% and all mobile subscribers are expected to use data services by 2008. (In the first half of 2005, approximately 96.6% of all mobile subscribers used data services.)

The forecasted total revenue of Korean mobile market in 2005 is 20.6 trillion KRW and this market is expected to grow to 25.8 trillion KRW with CAGR of 6.67%. Meanwhile, data revenue will increase from 3.1 trillion in 2005, with CAGR of 13.70%, to 5.3 trillion KRW by 2008. In 2008 the data revenue is expected to occupy approximately 19.5% of the total revenue. Expected Capex (Capital Expenditure) of Korean mobile market is 2.8 trillion KRW in 2005 and 2.9 trillion KRW in 2008.