'A hollow tree' despite many subscribers
It was shown that the size of deficits in resale phone 144(MVNO service phone) accounted for $87.58 million(KRW 90 billion) and the accumulated deficits went around $181.75million(KRW 200 billion) last year. As resale phone plays its part in reduction of household communication expenses, the opinion that the unusual measure from the government for vitalization of resale phones should be taken is expected to be more persuasive than before.
According to Resale phone carriers association(president Lee Tong-hyung) on Feb.23, 28 resale phone carriers recorded gross sales of KRW 644.6 billion and operating loss of $87.58 million((KRW 90 billion )last year, respectively. The accumulated deficits for 3 years and 6months from July, 2011 since its official introduction to last year were incremented to KRW 260 billion.
These deficits were concentrated on large companies. Three companies-CJ Hello Vision, SK telink and KCT-occupying 43% of total subscribers recorded gross sales of $225.6million(KRW 248.1 billion) and operating loss of $50.28million(KRW 55.3 billion), in the respective. The deficit size of three companies was reduced, compared to the previous year($72.11million, KRW 79.3 billion), but it was increased in 2014($45.83, KRW 50.4 billion), on the contrary. The marketing expenses including whole sales fee and sales commission were attributable to this fluctuation.
The insider of this business predicted, "There is some aspect that large companies were leading enlargement of resale phones market and reduction of household communication expenses." "But in production cost structure of communication industry, if subscribers can`t reach the certain numbers in economy of scale, there is no choice but to record sustained deficit."
Last year, the total subscribers of resale phones accounted for 4.58 million, 8.0% shares of mobile communication market. It was the first time that the advancement into 8% was made. But while the deficits were continued, the gross sales went merely below 3.0% of mobile communication market which amounted to $20.05billion(KRW 22 trillion). Though its body is large, its internal instability can`t avoid adverse circumstances like a hollow tree.
The Resale phone industry concerns that without government`s sustainable financial assistance, the effect of reduction for household communication expenses by resale phone is hard to be lasted. In particular, it is forecast that if the radio charge which is temporarily exempted by this September will be imposed on from this October, the serious impact will be brought on growth of resale phones. If the exemption of radio charge will not be additionally suspended, the subscribers of resale phones will be decreased from 6.4 million to 5.54 million in 2016, which means decline of about 900,000 subscribers.
The insider of resale phone carrier association said, "Through government survey, it was shown that resale phones brought reduction effect in household communication expenses of KRW 1.56 trillion for 3 years and 2 months since their introduction. For this effect to be continuous, the radio charge should be additionally suspended for 3 years after this September."
Staff Reporter Kim,Yong-ju kyj@etnews.com