South Korean telcos reduce investment target for 2020
It is unlikely that SK Telecom, KT and LG Uplus will meet their initial goal of 4 trillion won.
South Korean telcos are expected to invest less in network infrastructure in 2020 compared to a year prior, likely failing to meet their initial target announced together with the country's tech ministry.
KT and LG Uplus this year will invest 3.1 trillion won and 2.5 trillion won, respectively, in network infrastructure, the companies said during their first quarter conference calls.
It is a reduction of 4.8% for KT, which invested 3.2568 trillion won last year. LG Uplus spent 2.6085 trillion won last year and the new target is a drop of 4.2%.
SK Telecom CFO Yoon Poong Young told analysts at its first quarter conference call the company didn’t expect CAPEX to increase this year compared to last year.
SK Telecom didn’t announce specific figures but is also expected to reduce its total investment volume from a year ago level with that of other carriers, people familiar with the matter said.
For the first quarter, LG Uplus, the smallest of the telcos, invested 374.6 billion won in networks, a rise of 35% from a year prior. It is the only telco to have invested more year-on-year for the quarter.
KT invested 406.9 billion won and SK Telecom spent 306.6 billion won in the same period, a drop of 26% and 7%, respectively.
Despite the reduction, South Korea’s investment into 5G networks is still considerably faster than other countries.
The three telcos invested 1.08 trillion won in total in the first quarter on networks.
In 2019, they have said they expected to invest 2.7 trillion won in the first half of the year while earlier this year they have said they will invest 4 trillion won, in a joint announcement with the Ministry of Science and ICT.
At their current rate of investment, they are strongly likely to fail to meet this target, people familiar with the matter said.
Japan’s Rakuten, which recently entered the carrier business, initially planned to rollout 5G networks in June but have announced it is delaying that by three months.
China and South Korea’s investment into 5G was faster than expected, market research firm Dell’Oro said. RAN (Radio Access Network) market in both countries grew by single digit in the first quarter of this year compared to a year prior and 5G equipment accounted between 20% to 40% of that, the firm said.