SK Telecom, which suffered a hacking incident, recently permitted waiver of contract violation penalties for cancellations over the past ten days, but the actual decrease in subscribers was only about 70,000. Analysis from the telecommunications industry suggests that, despite extensive promotions from competitors, there was no major exodus of subscribers due to the penalty waiver. It is interpreted that SK Telecom's strategy to protect its existing customers has been effective, and subscribers who felt burdened by the lump-sum payments for device installments and family plan cancellations chose not to switch.
◇ Subscriber decrease of about 70,000 during penalty waiver period... “SK Telecom performs well”
According to the telecommunications industry and the Korea Telecommunications Operators Association (KTOA) on the 15th, the net loss of SK Telecom subscribers (excluding budget phones) from April 22, when the hacking incident became known, to the 14th of this month, reached 601,376. This means that an average of 7,245 subscribers were lost each day. From the 5th, when SK Telecom began waiving termination penalties, until the 14th, the net loss was 79,171, averaging 7,917 subscribers lost per day.
Contrary to initial concerns that a waiver of penalties would lead to a large-scale exodus of subscribers, reports in the telecommunications industry indicate that SK Telecom has performed well. Ryu Young-sang, the CEO of SK Telecom, had expressed concerns that waiving the penalties could result in a loss of between 2.5 million and 5 million customers. He noted that a loss of up to 5 million customers would inevitably result in a loss of 7 trillion won over three years.
◇ Burden of lump-sum payments for device installments and family plans leads to abandoning moves to other carriers
Industry insiders cite the burden of lump-sum payments for device installments as the reason why there was no major rush for number transfers by SK Telecom subscribers despite the waiver of penalties. One industry official said, “Even if the penalties are waived, subscribers must pay off the remaining balance on installment plans in one lump sum to switch to another carrier,” adding that many subscribers likely felt the burden of paying off expensive devices costing between 1 million and 2 million won.
Analysis indicates that SK Telecom’s family plan discount system also contributed to reducing migrations to other carriers. A representative from a mobile communications distribution point said, “Customers often returned because family plan discounts were tied together.” Another representative noted, “There was a time when an entire family using SK Telecom came in to switch to KT during the penalty waiver period, but the parents had to pay over 1 million won for a device purchased three months ago, creating an obligation to pay. The children also could not give up the benefits of the family plan discount, so they remained with SK Telecom.”
◇ Effects of rates and membership discounts are evident... Waiver of penalties ends before the launch of the ‘Galaxy Z 7’
SK Telecom's bold marketing strategy targeting existing subscribers also contributed to the decrease in subscribers. SK Telecom plans to offer a 50% discount on communication fees in August, an additional 50 gigabytes (GB) of data each month until December of this year, and a 50% discount on major membership brands. They also promised to provide the same services to customers who moved their numbers from KT and LG Uplus.
An industry insider commented, “By receiving free phones and exceptional discount benefits, demand for transferring to SK Telecom increased,” adding that “in the final days of the penalty waiver period, there was a significant increase in customers switching from KT and LG Uplus to SK Telecom.” According to the telecommunications industry, the number of subscribers who left SK Telecom for KT and LG Uplus during the waiver period was 166,441, but SK Telecom attracted 87,270 from KT and LG Uplus, offsetting the subscriber loss.
During the penalty waiver period, intense competition for retailer incentives led to a significant number of free phones being released, including the ‘Galaxy S25’ and ‘iPhone 16’, but the absence of the launch of the ‘Galaxy Z 7’ series resulted in no migrations from those hoping to purchase the latest smartphones, which is considered another reason for SK Telecom's strong performance. An adjunct professor at Chung-Ang University, who specializes in communications, stated, “SK Telecom's decision to end the penalty waiver period prior to the launch of the ‘Galaxy Z 7’ series contributed to reducing subscriber losses,” adding, “Had new Samsung phones been released during this time, alongside potential repeals of the device distribution law, the scale of subscriber losses would have been greater.”