Omdia: ARPU declining or flat for South Korean 5G network operators
A new research report from Informa owned consulting firm Omdia finds that the average revenues per user (ARPU) are now falling for the three big South Korean 5G network providers. That follows two previous years of rising ARPU.
“After two years of consistent growth, mobile ARPU is back in decline for KT Corp and LG U+ while maintaining relatively flat for SK Telecom, with 5G subscription growth and revenue growth stalled,” wrote Omdia analyst Anshika Gandotra in a recent report.
“Initially, the launch of 5G stopped the declining ARPU trend. However, mobile ARPU has been declining since 1Q21. Mobile operators made diverse efforts to meet customers’ varying needs. SK Telecom started offering new 5G price plans at a 30% cut in rates for online-only mobile plans.”
“Additionally, LG U+ reduced the cost of 5G plans. South Korea has shown early signs of 5G market maturation because the top-tier customers have now upgraded to 5G services. Other customers seem more resistant to upgrading at the moment, thereby slowing down 5G growth.”
South Korea is often viewed as a bellwether for the 5G business, largely because the country was first in widescale 5G deployment and its regulator collects detailed information about the adoption of the technology. As of August 2022, there were 24.53 million 5G subscribers in South Korea, accounting for around 33% of all mobile subscriptions in South Korea. Perhaps more importantly, 5G networks are now carrying roughly 70% of all mobile data traffic in the country. That’s mainly because the average 5G user consumes around 27GB per month, or nearly 3.1x the average 4G user.
This September, Mobile World reported that ARPU at:
- SK Telecom, with the highest 5G penetration (38.7 per cent), was flat in Q2-2022.
- LG U+, with 34 per cent on 5G plans, posted a third consecutive quarterly dip in ARPU in the quarter, falling 4.1 per cent.
- KT with 32 per cent of subscribers using 5G services bucked the downward trend. ARPU rose for the fourth straight quarter, increasing 3.2 per cent.
Loud and Clear Message:
Obviously, there is no pent up demand for faster 5G services. App makers have not brought to mass market services like autonomous driving that would require more firepower. Customers can watch Netflix and surf the net well enough with existing 5G technology. Telcos have adapted by diversifying. To make the quantum leap to the highest-speed 5G will require the roll-out of essential services that need such fast connections.
“When households begin to have robots at their homes, for instance, telcos would then start ramping up infrastructure investments, so the highest-speed 5G will be partially available around 2025,” said Kim Hyun-yong, an analyst at Hyundai Motor Securities.
The lesson for other countries racing toward 5G may be: curb your enthusiasm. The new technology holds great promise, but for now there will still be as much evolution as revolution in the high-speed internet future.
References:
https://omdia.tech.informa.com/OM025134/5G-in-South-Korea–2022
https://www.lightreading.com/5g/a-concerning-arpu-trend-shows-up-in-south-koreas-5g/d/d-id/780403?
3 thoughts on “Omdia: ARPU declining or flat for South Korean 5G network operators”
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“When households begin to have robots at their homes, for instance, telcos would then start ramping up infrastructure investments, so the highest-speed 5G will be partially available around 2025,”
If one has a robot within their home, why not just use WiFi? Home robots don’t seem like a great use case for 5G. Perhaps autonomous delivery robots will be a use case for 5G, but, given the autonomous nature, 5G is more for telemetry versus control. And the telemetry can be fairly minimal bandwidth (instead of sending back video, just send status).
Given the theme of canary in the coal mine of this article, I have had one of the major carriers 5G Home service. For the most part, it works OK. But, probably 10 or 15% of the time, it has become unacceptably slow for two-way video calls. We just made the switch to cable. It will be interesting to see how sticky some of these 5G home offerings are, once people have had them for 6 months or more.
SK Telecom, South Korea’s largest wireless carrier, ranks No. 1 in terms of download speed of 5G networks, an industry report showed.
According to global mobile industry tracker Opensignal, the average download speed using SK Telecom’s 5G network was recorded at 469.6 megabits per second (Mbps), 2.55 times faster than the 184.2 Mbps average among global mobile carriers.
LG Uplus, the country’s third-largest mobile carrier, ranked second, with 429.6 Mbps, followed by Bulgaria’s Vivacom, Tele2 AB of Sweden and KT of South Korea. (Yonhap)
Source: The Korea Herald newspaper
I have not seen Omdia/Informa’s methodology on converting local currency and accounting. If you plot data on their ARPU directly from LG U+, SKT and KT quarterly reports in local currency, it shows a very different picture than “figure 4”. KT has the highest ARPU of the three operators (both with and without considering MVNOs). Since the 5G launch in April 2019, KT ARPU has been increasing, SKT was positive with and flat without MVNOs, and LG U+ has seen a significant drop in ARPU.