SK Telecom and KT Freetel--South Korea's two biggest wireless operators--are battling for marketshare. The increased marketing costs, as a result of the fierce competition, are causing both firms' profits to suffer. SK Telecom's net profit in the fourth quarter dropped to $297 million while the company's marketing expenses increased 52 percent from a year earlier. Although the company's subscribers increased 3.8 percent to 20.3 million, its marketshare dropped to 50.43 percent from 50.94 percent.
Meanwhile, KT Freetel says its fourth-quarter net profit dropped to $114 million from $117 million a year earlier.
Analysts expect the competition to intensify in 2007 as both mobile carriers launch their nationwide HSDPA services. KT said that its capital expenditures increased 70 percent as it prepares for the HSDPA launch, which will likely occur as early as March.
For more on this:
- read this article from the Wall Street Journal (sub. req.)