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May 7, 2007 11:06 am

Korean mobile carrier positive on 3G

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KTF, South Korea’s second-largest mobile carrier, expects 3G technology to drive the company’s long-term growth, although heavy marketing costs to promote the new services ate into its quarterly earnings.

The company said Monday it has attracted about 425,000 subscribers to 3G services in less than two months since launching next-generation services in March. These enable mobile phone users to enjoy high-speed internet access and multimedia content services as well as video calls.

The company aims to attract 2.7m 3G subscribers by the end of this year. “So far, the reception by the market has been very good. We now think even more that our target can be achieved,” Cho Young-chu, the company’s chief executive, said.

He expects demand for 3G services to grow rapidly in South Korea, citing the new service’s compatibility with mobile phone systems globally. Korea has been considered a “telecom island” because Koreans cannot use their mobile phones while travelling abroad due to network incompatibility. South Korea uses CDMA technology while most other countries use the GSM rival technology.

Mr Cho said he hoped all KTF subscribers would migrate to 3G services by 2010, helping the company to better compete with larger rival SK Telecom. KTF has a 32 per cent market share with 13m subscribers. SKT controls more than half of the Korean market.

Heavy spending on marketing and the huge investment to build 3G networks have sparked concerns about KTF’s profitability. KTF reported a 39 per cent drop in first-quarter profit, hit by surging marketing costs for 3G services. The company has told investors the company’s net profit this year will be lower than last year, but that profitability will improve in the long term.

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