[Edaily Reporter Yun Junghoon ] Although the three major telecom companies all increased their marketing budgets in the first half of this year, they faced negative growth as the number of mobile subscribers actually declined. Critics point out that while the companies were competing to attract subscribers amid a series of hacking incidents and the repeal of the Mobile Terminal Distribution Act, only budget mobile carriers reaped the benefits. Amid this situation, as growth in the mobile communications market slows, telecom companies are expected to shift the focus of their investments toward artificial intelligence data centers (AIDCs) as a new growth engine.

According to financial disclosures released by each company on the 13th, SKTelecom(017670)’s wireless marketing expenses for the first half totaled 1.4885 trillion won, a 5.1% increase compared to the same period last year. KTCorporation(030200)’s sales promotion expenses and sales commissions rose 7.4% to 1.3762 trillion won. LG Uplus(032640)’s marketing expenses increased by 8.3% to 1.1863 trillion won, marking the highest growth rate among the three companies.

The rise in marketing expenses stems from security incidents and competition over subsidies. SKT, which experienced a SIM card information leak in April of last year, waived early termination fees in July. KTCorporation also waived early termination fees from December 31 of last year through January 13 of this year following an incident involving unauthorized micro-payments. Competition intensified further after the cap on subsidies was lifted with the repeal of the Mobile Terminal Sales Act in July of last year. During KTCorporation’s waiver period alone, approximately 313,000 subscribers left KTCorporation; of these, 64% (about 200,000) switched to SKT, and 22% (about 70,000) switched to LG Uplus.

More Money Spent, Yet… Mobile Subscribers at the Three Carriers Declined by 130,000 Over One Year

However, analysts note that the increased costs did not translate into overall subscriber growth for the market. According to statistics from the Ministry of Science and ICT, the total number of mobile lines across the three major carriers fell by 136,280 over the past year, from 47,226,506 in July of last year to 47,090,226 in July of this year. While SKT (152,000 lines, 0.7%) and LG Uplus (26,000 lines, 0.2%) saw increases, KTCorporation—which had implemented a waiver of early termination fees—saw a decrease of 314,000 lines (2.3%).

Even LG Uplus, which saw the highest growth rate in marketing expenses, experienced virtually no increase in mobile subscribers. According to figures released by LG Uplus, mobile network operator (MNO) subscriptions stood at 22,442,000 lines as of the end of June, a 7.2% increase over the past year. However, 90% of this increase came from Internet of Things (IoT) lines, such as those for KoreaElectricPower Corporation’s Advanced Metering Infrastructure (AMI) system.

MVNOs reaped the benefits. During the same period, MVNO mobile lines increased by 298,000 (2.9%), rising from approximately 10.2 million to 10.5 million. While the three major carriers were competing for customers, consumers seeking lower rates effectively shifted to MVNOs.

The accounting structure also plays a role in the persistent cost burden. Mobile phone subscriptions typically come with a two-year contract. Consequently, telecom companies do not recognize the sales commissions paid to agents as expenses all at once but spread them out over the contract period. This means that costs incurred last year to attract subscribers during the hacking incident continue to be reflected in this year’s financial results.

Prolonged Stagnation in Average Revenue Per User (ARPU)… Focus on AIDC Rather Than 6G

Average Revenue Per User (ARPU) has also declined. LG Uplus’s second-quarter wireless ARPU was 35,489 won, down 0.6% year-over-year, while KTCorporation’s was 34,412 won, down 2.3%. SKT’s ARPU was 29,098 won, showing a slight increase over the same period.

ARPU stagnation is likely to continue for the time being. This is due to the 5G and LTE bundled plans that the three major carriers have been rolling out one after another starting this year. Since these bundled plans enhance benefits for lower-priced tiers—such as applying speed limits (QoS) after data is exhausted—there is now a greater incentive for users of higher-priced plans to switch to lower-tier plans.

An official from a telecom company explained, “Since the concept of the bundled plans is to enhance the benefits of lower-priced plans, ARPU could decline across all three companies.” However, the official added, “If Galaxy and iPhone foldable phones sell well, the number of new customers signing up for high-end plans could increase in the short term.”

As it becomes increasingly difficult to find growth drivers in their core businesses, telecom companies are turning their attention to AI data centers (AIDCs). KTCorporation has unveiled a plan to expand its AIDC capacity to 1 GW (gigawatt) by 2030 and invest a cumulative 6 trillion won to grow revenue from AIDCs and submarine cables to 4.8 trillion won. SKT aims to secure a capacity of 5 GW (gigawatts) by 2030, centered around “SK Hyper,” its AIDC subsidiary. LG Uplus also plans to increase its data center capacity from the current 165 MW to 400 MW by 2030.

A telecommunications industry official stated, “While investment in future networks such as 6G is certainly important, the industry as a whole will focus significant investment on new businesses like AIDC,” adding, “AIDC, in particular, requires the construction of large-scale infrastructure, which entails high investment costs.”