(News Focus) iPhone pits S. Korean mobile giants against each other

By Kim Young-gyo
SEOUL, Aug. 13 (Yonhap) -- South Korea's top two mobile carriers are waging a war
of nerves as U.S.-based Apple Inc. is poised to launch the latest model of its
iPhone here, a move market watchers say could affect their market shares.
KT Corp., South Korea's No. 2 mobile service provider, is now in talks with Apple
to win exclusive rights to sell the iPhone on the local market. Most industry
insiders expect KT to clinch the deal and start selling the model within the
year.
Market leader SK Telecom Co., which is also in negotiations with Apple but is
less favored to win selling rights due to differences over terms, fears that KT's
exclusive sale of the iPhone, popular among younger tech-savvy customers, may
erode its market share.
Currently, SK Telecom dominates the local mobile phone market with a 50.5 percent
share, while KT is a distant No. 2 with about 31 percent. More than nine out of
10 people in South Korea, with a population of 48.6 million, own a mobile phone.
The tug of war surfaced on Tuesday when SK Telecom Co. said that the company
would start allowing customers who purchased iPhones overseas to subscribe to its
mobile phone service.
KT cried foul, saying that SK Telecom was attempting to lure potential iPhone
users before the product officially lands in the country.
While SK Telecom's announcement is not feasible under local regulations, the
tit-for-tat shows just how keenly the two rivals are gauging each other's moves,
cautiously assessing what impact iPhone will have on the South Korean telecom
industry, analysts say.
They note that there will be at least 500,000 potential buyers of the iPhone in
South Korea once it is introduced here.
"The number of iPhone buyers will hinge on the price of the handset and the rate
plan. However, securing 500,000 or even one million subscribers would not be
difficult," said Park Jong-soo, an analyst at Hanwha Securities Co.
Although it remains unclear who will obtain the contract, KT is expected to get
positive results if it can agree on terms with Apple, he said. "KT will
definitely see growth in its market share as well as in its revenue."
Park said that in the U.S. market, 40 percent of iPhone users transferred to AT&T
Inc., which exclusively launched the iPhone on its mobile service.
SK Telecom has been reluctant to adopt the iPhone as it could result in lost
revenue from add-on services. At present, SK Telecom earns a considerable portion
of its revenue from such services by acting as a mediator between mobile content
providers and customers.
SK Telecom and KT have their own portals, and subscribers have no way to download
content without accessing the members-only sites.
When iPhone launches in South Korea, they will have to allow users direct access
to the App Store or iTunes, an online market place created by Apple that permits
users to upload and download applications and content.
SK Telecom worries that under such conditions, its profits from the service and
its dominant influence against local content providers would be diminished as
they would likely move their base to the Apple's online stores.
"In light of that, the introduction of the iPhone will bring a paradigm shift in
the local telecom industry," said Choi Yong-jae, an analyst at LIG Investment and
Securities. "It can be an opportunity for the mobile carriers, too, as revenue
growth is expected in content service other than voice calls."
With the two telecom giants locking horns, many young South Korean mobile phone
users are eagerly waiting for the iconic iPhone's arrival, especially fans of
Apple's iPod portable media player that remains wildly popular here.
"Though the iPhone was released in many countries in Asia, Africa and Europe,
South Korea has yet to see its release," said Park Chang-seok, who runs a blog on
tech gadgets. "We have been looking forward to iPhone's launch, but the mobile
carriers have been simply dragging their feet."
ygkim@yna.co.kr
(END)