After failing to meet their 28GHz rollout obligations, Korea’s incumbent operators now face competition from a new fourth player
Stage X obtains a licence to operate in the 28GHz band
On 31 January 2024, South Korea’s Ministry of Science and ICT (MSIT) announced that Stage X had secured (re-awarded) spectrum in the 28GHz band, effectively winning the race to become the country’s fourth mobile network operator. Stage X is a consortium that includes Stage Five (a communications affiliate of domestic tech giant Kakao), Shinhan Securities and Intellian Technologies. Its CEO has stated that the company will work to establish a new brand in the Korean telecoms market, launching 5G services in H1 2025. It has pledged to invest KRW612.8bn (£367m) and aims to acquire additional low-band frequencies to support its network rollout. Stage X also plans to increase the distribution of 5G-capable smartphones that are compatible with 28GHz spectrum in cooperation with vendors such as Apple, Google and Samsung.
New entrant will face base station deployment obligations
It has long been the case that three operators have dominated South Korea’s mobile landscape: KT, LG Uplus and SKT. However, in November 2022, the MSIT announced that it had cancelled the five-year spectrum licences of KT and LG Uplus after they failed to reach the minimum number of 28GHz base stations required, with both deploying less than 10% of the 15,000 target within the three-year deadline. SKT, which achieved just over 10%, had its licence period cut by six months to 31 May 2023 but ultimately suffered the same fate as its peers. While this situation likely came about in part due to an immature device ecosystem, the regulator considered it “worrisome” and reflective of a lack of investment, moving to reallocate the spectrum to a new fourth player. Stage X will be required to deploy a total of 6,000 base stations nationwide within the first three years and implement measures to address spectrum congestion and interference.
Market entry comes at a price
While these rollout conditions are less strict compared to when the 28GHz band was originally awarded in 2018, Stage X has paid more than double for the spectrum than each of the incumbents. The consortium submitted the auction’s highest bid of KRW430.1bn (£257m), beating off competition from Sejong Telecom and My Mobile Consortium. It acquired the licence to operate in the 28GHz band on the fifth day of proceedings during a second stage of sealed bids. The MSIT has stated that it will ensure frequency allocation and business registration processes are completed as soon as possible to support Stage X’s entry into the market. The emergence of a mobile operator will build on recent regulatory interventions from the MSIT, including mandating more affordable 5G tariffs and reducing early termination charges for broadband.
