Korean telecom giants introduce youth rate plans to keep budget phone customers

The signboard shows the logos of KT, SKT, and LG Uplus. [Photo by Han Joo-hyung]

The trend of switching to budget phones has slowed in South Korea as the country’s top three telecom companies introduce monthly mobile plans for young people in their 20s and 30s that offer more data.

According to industry sources on Tuesday, KT Corp. launched “Y-deom,” a plan for fifth-generation (5G) customers aged under 29, on June 2, which offers double data with an additional 10 to 110 gigabytes.

Nearly 90 percent of the 5G subscribers in their 20s are now with the plan. The per capita data usage of customers in their 20s using the non-limited data plan, which costs 69,000 won ($53.2) or less, increased by more than 10 percent compared to the previous month.

“People in their 20s are evenly signing up for youth plans,” said an official from KT. “It is analyzed that the utilization has increased by providing sufficient data even on low-cost plans to customers in their 20s who feel burdened by fees.”

SK Telecom Co., the country’s No. 1 mobile operator, is also experiencing success with its 5G plans for young people.

SK Telecom launched its “0 Youth” plan, which provides an additional 4 to 50GB of data per month depending on the plan. The carrier launched the plan at the beginning of June, making it the earliest among the three major carriers.

According to the company, 73 percent of individuals under the age of 34 chose the new plan when switching to a new device or plan.

LG Uplus Corp. introduced its 5G youth plan with 4 to 60GB of additional data on July 3, the slowest among the three carriers.

“It has only been a week since the launch, but we are observing a great deal of interest from customers in their 20s,” said an official from LG Uplus.

For a monthly plan in the upper 60,000 won range offered by the three telecom companies’ 5G plans, KT provided the highest amount of basic data at 220GB, followed by SK Telecom with 210GB, and LG Uplus with 175GB.

In the case of a monthly plan in the mid-to-upper 40,000 won range, SK Telecom offered the most basic data at 16GB, followed by LG Uplus with 14GB, and KT with 10GB.

The industry expects the number of subscribers to the three telecom companies’ 5G youth plans to exceed 2 million in the second half of this year.

According to government figures, there were 9.3 million people aged between 20 and 34 as of April. Based on this, it is expected that 20 to 30 percent of the young population will sign up for the 5G youth plans with the three telecom companies.

Amid the growing popularity of the special plans, the flow of subscriptions to budget phones has slowed.

According to data from the Korea Telecommunications Operations Association, the number of transfers from telecom carriers to smartphones was 115,395 in June, slowing down from 117,513 in May. The reason is that the telecom carriers have introduced youth plans to attract their customers and have drastically reduced sales incentives for smartphones.

The plan that promotes “zero-cost for seven months” among budget phones was possible because the three telecom companies provided subsidies of up to about 210,000 won per line to increase the subscription rate of their lines.

However, in recent years, such sales incentives have been virtually eliminated, and the “zero-cost” budget phone plan has disappeared from the market.

Many young people, nevertheless, are expected to still prefer budget phones.

“As of April, 91 percent of the 7.8 million mobile phone subscribers of the budget phone are using self-supplied devices,” said an unnamed official from the Ministry of Science and ICT. “The rational consumption trend of subscribing to the budget phone service is spreading, with the young people using self-supplied devices.”