5G in South Korea: 65% of mobile subscribers by 2025

South Korea is known for its cutting-edge technologies and fast-paced innovation environment. It has demonstrated its strength by becoming a leader in the 5G space too. The country had a very clear vision and a roadmap that has led South Korea to become the world’s first country to commercialise 5G in April 2019. The country’s three incumbent players have added about 16.5 million 5G subscribers in the last two and a half years – approximately 23.5% of the total mobile subscriptions and 32% of its total population, respectively.

The journey to the 5G launch is a set of various milestones, from initial public discussions to actual commercialisation. The Government of South Korea already set the stage for 5G during its meetings on the fourth industrial revolution. Under this, the ‘connected economy’ driven by 5G, AI, big data, and the Internet of Things became a part of the national strategy. In 2017, the Government came up with a ‘Hyper Intelligent Network Deployment Strategy’, comprising four major goals:

  1. Focus on becoming the first in the world to launch 5G and accomplishing nationwide coverage by 2022
  2. Increasing IoT connectivity
  3. Deploying software and AI-based network
  4. Ensuring high-speed internet connectivity across the nation

Figure 1: The journey of 5G launch in South Korea

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Journey of 5G launch in South Korea
Source: twimbit analysis

5G lessons from South Korea

  • With the help of clear vision and planning, the Government of South Korea was able to allocate the 5G spectrum in due time. Further, the Government extended its role beyond spectrum allocation and initial support by focusing on developing demand for 5G services, as well as regular intervention to ensure its availability to all.
  • Besides B2C, the Government aligned 5G with its national strategy to develop different industry specific solutions in the private sector through public-private partnerships. It laid down a separate strategy for B2B − the 5G plus strategy. Further, allowing 5G spectrum allocations to non-telco players would also boost this move.
  • In South Korea, a special committee governs the strategic deployment of 5G deployment by regularly assessing the 5G progress in the country.

Key Highlights

#1 5G Spectrum capacity in South Korea to be doubled by 2026

South Korea, the first one to launch 5G, also secured a title for the first country to award both mid and high band spectrum simultaneously.

The three operators secured spectrum in 3.5 MHz (mid-band) and 28 MHz (high-band) categories through the auction process. The Government allocated a total of 280 MHz in the 3.5 GHz spectrum band and 2,400 MHz in the 28 GHz band. Furthermore, the spectrum was divided into 28 and 24 blocks, respectively, and the regulator placed a cap of 10 blocks per spectrum band for each operator. The Government provided the operators with an equal chance to succeed because of two factors:

  1. A strict cap on both 3.5 GHz and 28 GHz at 100 MHz and 1000 MHz bandwidth, respectively.
  2. All three telcos paid almost similar prices for acquiring the spectrum.

The telcos spent a total of USD 3.3 billion on spectrum. Out of which, approximately 82 per cent went towards purchasing the mid-band. We also noted that most operators across the globe initially started building out the infrastructure using the mid-band spectrum. The mid-band is the ideal band since it combines the properties of both low and high bands while balancing their downsides. In short, mid-band offers comparatively lesser speeds; yet it can provide coverage across large distances compared to high band frequencies.

Table 1 shows the allocation of spectrum to different operators in South Korea:

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The total spectrum allocation of 2680 MHz is seven times more than the total spectrum distributed in the previous generations, including 2G, 3G and 4G. In addition, MSIT also reserved 600 MHz spectrum for Private 5G networks in the 28 GHz and 100 MHz in sub-6 (4.7 GHz)category.

In preparation for the future, MSIT decided to set aside some frequencies in the 700 MHz, 28 GHz, 2.5 GHz, and 2.3 GHz for new entrants.

Recently, in 2021, the Government announced additional spectrum allocation to be made in November 2021 not only to the incumbent players; it has also given the non-telcos an opportunity to acquire the 5G spectrum directly. This will boost 5G adoption in different enterprise verticals. The Government aims to spur investment and innovation in the private sector to align with its 5G plus strategy. One of the components of this strategy focuses on 15 5G-based industries and key services such as smart factories, autonomous vehicles, and smart cities. Initially, it will make available a total reserved spectrum of 600 megahertz in the 28 GHz band and 100 megahertz in the 4.7 GHz band.

With more demand for 5G services in the upcoming years, South Korea aims to increase its capacity by almost doubling the spectrum from the current 2680 MHz to 5320 MHz by 2026.

#2 Government plays a pivotal role in the success of 5G in South Korea

The Government and regulators have a crucial role to play when it comes to the 5G rollout in any country. Before launching 5G services, the Government needs to ease out certain regulations blocking 5G developments and support the operators by setting aside investments to support the industry growth.

Early spectrum auction and other strategic decisions in South Korea took place because of the formation of a committee that is solely responsible for monitoring the progress in 5G developments. Thus, the cooperation of both Government and private players, including operators, led to the successful 5G rollout. Other than the early spectrum auction, the South Korean Government took multiple initiatives to boost 5G deployments:

  1. Government as a binding force– the government integrated all the required participants such as vendors, organisations, use case developers, and other partners to build a conducive ecosystem for the 5G play.
  2. Investment into testbeds– The testbeds provided by the Government supported operators in conducting 5G network test trials.
  3. Formulated a 5G plus strategy to promote public-private partnerships- The Government announced to foster 15 5G-based strategic verticals and five key services. South Korea has an estimated USD 8.5 billion IOT market, which is primarily dominated by ‘Real Estate’ and ‘Manufacturing’ verticals.
  4. MSIT also offered tax incentives in the form of a 3 per cent tax credit for 5G investments, with an additional 3 per cent tax credit for the increase over the average of the previous three years’ investment.

Fig 2 shows the 5 key services and 10 key industries which are part of the 5G plus strategy:

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15-5G based industries covered under 5G plus strategy in South Korea
Source: MSIT

#3 Operators have ramped up 5G deployments ahead of their obligations in the 3.5 GHz band

Fig 3 shows 5G base stations in South Korea in the 3.5 GHz band:

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5G base stations in 3.5 GHz category in South Korea from 2019-2021
Source: MSIT, Y denotes April 2019, *-2021 is an estimated figure

The country aims to complete nationwide coverage by 2022. The regulator set the obligatory 5G network deployment targets for the operators at the time of spectrum allocation in 2018. According to these targets, MNOs should deploy 150,000 base stations in the 3.5 GHz category. Out of the 150,000, MNOs should deploy 15% (22.5k) in three years and 30% (45k) in five years of the 5G launch, respectively.

As per our analysis, the three operators accelerated their deployments and are ahead of this target. In 2021, we expect South Korea to deploy a total of 161,000 base stations in the 3.5 GHz band, which is approximately 20% of the existing 4G base stations.

Despite the spectrum allocation for both mid and high bands during the auction, the operators started off deployments using only the mid-band frequencies. As far as the 28 GHz band is concerned, the deployments started late in 2020, which is still in the nascent stage. There was an obligation to deploy 15000 base stations in the mm-wave category. However, operators lack the momentum− they have lately started running trials for testing this technology for various use cases. Also, the pace of mm-wave usage would widely depend on the demand coming from enterprise use cases requiring private networks.

Samsung and other non- Korean vendors, including Ericsson, Qualcomm have played an important role in ramping up the deployments by ensuring supplies of network equipment (ranging from RAN to core) to all the service providers. After launching networks using the existing LTE technology, operators need to fully start discovering SA to unlock the full potential of the 5G technology. KT, in collaboration with Samsung, claims to have launched 5G SA in July 2021.

#4 5G subscriber penetration to reach 78% by 2026

Fig 4 shows network technology-wise subscriber mix from 2019-2026:

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5G subscriber penetration  in South Korea to reach 78% by 2026
Source: twimbit analysis, operator financials

In 2021, 27% of total wireless subscribers will switch to a 5G connection.

Amidst 5G, there are talks around 6G planning in South Korea. The Government is aiming to start its 6G testing in 2026. We expect the 5G subscriber base to reach 59 million by 2026, which would account for 78% of the total subscriptions.

In Jan 2021, South Korea announced to discontinue its 2G services altogether. There is no clarity on 3G service termination. Nevertheless, 4G will co-exist with 5G. Unlike other network technologies, telecom operators can leverage 4G to build 5G networks. On the consumer side, there are issues with 5G speed. Optimal 5G speed, availability of flexible 5G pricing options, and the development of the 5G device market would largely determine the share of 5G subscribers.

Along with ramping their network infrastructure efforts, operators continue to strategise the onboarding of 5G subscribers by improving speeds and serving more 5G price options for consumers. In 2019, the operators offered roughly 45% of total plans as unlimited plans ranging between USD 68 to USD 110. The operators introduced 5G unlimited plans at a premium as high as 50% over unlimited 4G plans. SK Telecom slashed its unlimited online only-plan in 1Q2021 by 35% to attract more 5G customers through online channels.

The Government has been intervening wherever there is unfair competition restricting the availability of 5G to all. The ministry set all MVNOs (Mobile Virtual Network Operators) free from relying on telecom operators for designing their 5G plans. Post this announcement, MVNOs in the country will release new data plans as low as USD 35, which is unparallel to the data plans offered by the three incumbent players. This move would challenge the top operators to cut down their prices to some extent, leading to more affordable 5G pricing options for consumers.

#5 Consumer revenues started witnessing an uptick due to 5G, equal focus on B2B through multiple partnerships

Fig 5 shows mobile services revenue trend from 2018-2025:

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Mobile service revenue for South Korea telecom industry (2018-2025)
Source: twimbit analysis, operator financials. Note: All figures exclude revenues from MVNOs

In 2020, the South Korea mobile service revenue touched USD 19.07 billion. Further, twimbit expects it to reach USD 24 billion by 2025 − growing at a CAGR of 3.87% for 2019-2025.

As per the open-signal report, there is 2.5 times increase in data consumption by 5G users compared to 4G. SK Telecom also reported that monthly data usage per 5G subscriber is twice as compared to 4G user. It is correct that more data consumption powered by lower latency and high speed would lead to an increased ARPU for operators. However, in a competitive market like South Korea, pricing differentiation and providing better network quality than 4G are not enough. Moreover, for some applications, 4G speeds are at par with 5G speeds. Here comes the role of bundling value-added services, which would differentiate the 5G monetisation capabilities of one operator from the other.

Operators focusing on iterating their data plans and introducing additional services such as AR/VR based on the customer feedback coming in would bear the fruits of 5G. In 2020, SK Telecom reported a 5G service usage pattern in comparison to LTE users. It highlighted that VR services consume seven times more data using 5G network, which is higher than other consumer services like videos and gaming. How ready is the ecosystem for these killer applications − this remains a question.

Despite the lowest market share in consumer business and spectrum availability, LG U plus is leading the 5G play

The three operators noted significant growth in their mobile service revenues in 1H2021 compared to 1H2020. Among the three operators, LG U plus noted the highest Y-O-Y growth of 5.2% and the absolute wireless service revenue addition of USD 11.9 million. LG U plus is witnessing the first-mover advantage in terms of network coverage and speed. It also has eight different plans, out of which all three premium plans offer unlimited data cheaper than what the other two rivals are offering. It’s not just the unlimited data; these high-value plans also include premium offerings like GeForce Now Pro, Genie Music, U plus kids library, and movie packs. LG U plus reported that 70 per cent of its 5G subscribers are opting for these premium plans, which start at USD 72.

Collaborations are critical for B2B success in the 5G era

The operators in South Korea understand that winning in B2B requires co-creation.

Table 2 shows various partnerships and collaborations by three operators in South Korea for developing B2B solutions:

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#6 Investments in 5G to peak in 2021, summing up to USD 26 billion between 2020-2026

Fig 6 shows 5G CAPEX as the % of industry CAPEX for the period 2018-2026:

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5G CAPEX in South Korea
Source: twimbit analysis
  • After the launch of 4G in 2011, the industry CAPEX peaked in 2019 at USD 7.63 billion. We noted that there was a 39% increase in the overall CAPEX during both the peak years compared to their respective previous years.
  • In 2020, the operators invested USD 3.96 billion for the development of 5G. In addition, the three operators also agreed to invest a sum of USD 22 billion (KRW 25.7 trillion) to accomplish nationwide coverage and facilitate the ‘Digital New Deal’. Under this plan, 5G connectivity will be available at 4000 public facilities, subways, railroad stations, and 20 expressways in around 85 smaller administrative districts across the nation.
  • Network sharing would help in minimising the CAPEX as well as meet the gap between the pace of urban and rural 5G infra deployment. The operators signed a deal to cover 131 regions which account for 15% of the total population. The three operators would offer 5G services in a multi-operator core network arrangement. The goal is to accomplish the rollout in these regions by 2024, for which the POC would start this year.

Read our research on the world’s biggest 5G market: China



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