3 South Korean mobile network providers are investing more than $829 million (1 trillion KRW) into establishment of base stations in 2017 and are going to carry out most of investments into new frequencies that they acquired through auction last year. Mobile network providers’ CAPEX (Capital Expenditures), which has fallen sharply to $4.14 billion (5 trillion KRW) per year, is likely to recover to about $4.97 billion (6 trillion KRW).
3 South Korean mobile network providers need to establish 30% (broadband, 2.1GHz, 2.6GHz) and 15% (narrowband, 1.8GHz, 2.6GHz) to base stations (106,000) that are needed to establish national network in 2017. This is the biggest amount of proportion out of network that they have to establish within 4 years that were given to them. They have to establish total of 87,450 base stations.
SK Telecom needs to establish the most base stations at 39,750. SK Telecom has secured both 2.6GHz broadband and 2.6GHz narrowband and has lowered its financial burden by only having to establish half of narrowband that needs to be established. It is going to invest about $497 million (600 billion KRW) into establishment of base stations.
LG Uplus needs to establish the second most base stations at 31,800. Although it was able to secure 2.1GHz with 20MHz width (narrowband), it is applied with the amount of broadband that needs to be established since it uses current 20MHz width with 20MHz width that is newly acquired for broadband.
KT, which has acquired 1.8GHz narrowband, established 15,900 base stations this year and has somewhat low financial burden. Unlike broadband, amount of proportion of narrowband that needs to be established until the fourth year is only 40% of current number of base stations.
3 south Korean mobile network providers need to establish more than 200,000 base stations until 2019 which is the fourth year.
Price of total base stations is going to be about $1.08 billion (1.31 trillion KRW) if each base station costs about $12,433 (15.0 million KRW). It is predicted that 3 mobile network providers’ CAPEX, which fell to $4.14 billion (5 trillion KRW) in 2015, will surpass $4.97 billion (6 trillion KRW) and reach $5.80 billion (7 trillion KRW). It is expected that increase in CAPEX will bring positive news and opportunities for markets for telecommunication equipment.
Mobile network providers’ facility investments have dropped continuously after recording highest peak at $6.84 billion (8.248 trillion KRW) in 2012 due to end of investments in global LTE network. After dropping to $4.72 billion (5.6893 trillion KRW) in 2015, amount of investments during first half of 2016 was only $1.19 billion (1.4367 trillion KRW). Although investment in network started during second half of 2016, it did not have too much influence in increasing overall facility investments. This is why expectations of telecommunication equipment industries are growing.
Excluding Samsung Electronics, base stations are made out of foreign equipment from Ericsson, Nokia, and Huawei. However wired equipment that is needed to establish optical repeaters, small repeaters, and wireless network is made from domestic components. It is expected that information communication contract industries that establish network will also benefit from investments made by mobile network providers.
“Some point out that South Korea’s small and medium telecommunication equipment manufacturers do not benefit from increase in investments from mobile network providers as base stations are mostly made out of foreign components.” said a representative for Ministry of Science, ICP and Future Planning on the 1st. “However more than 60% of investments that mobile network providers are using in establishment of base stations will go to South Korea’s equipment manufacturers.”
Staff Reporter An, Hocheon | hcan@etnews.com