Korean telco firms team up with local suppliers amid Huawei issue: report
[ET NEWS] South Korea’s three largest mobile carriers have increasingly opted to purchase domestic network equipment instead of Chinese products in recent years amid the escalating trade war between China and the US, according to a report issued June 10.
According to the report from lawmaker Byun Jae-il’s office, SK Telecom, KT and LG Uplus combined bought 1.37 trillion won ($1.2 billion) worth of domestic network devices in 2018, which accounted for 73 percent of their budget for new telecom network equipment. The figure increased 8.6 percentage points from 2017, when the three companies combined spent 535.7 billion won to purchase domestic devices.
In 2015 and 2016 they spent 653.5 billion won and 694.6 billion won, respectively, or 67.6 percent and 63.1 percent of their budget for network equipment, on products from Korean suppliers.
The increasing adoption of domestic equipment shows that the three telecom firms are turning their eyes toward small and medium-sized suppliers here, as well as their longtime business partner Samsung Electronics, in line with the beginning of 5G services this year, the report said.
“We had prepared for increasing demand for 5G network devices, like small cell and remote radio units,” said an official from a local telecom equipment provider. “Then the three telecom firms recently started to utilize devices made by SMEs (at the same time).”
Breaking the figures down, KT spent 555 billion won on new network devices last year, or 97 percent of its budget, while SKT bought 554.9 billion won worth of local network devices using 77 percent of its budget. LG Uplus spent the least among the three on network equipment from Korean firms: 263.6 billion won, or 44 percent of its budget. The report explained that KT and SKT had deployed Samsung’s 5G devices, while LG Uplus had chosen Huawei over Samsung for its next-generation services. The 5G network for general consumers went live in Seoul on April 3.
In the face of growing pressure from the US government, the Korean mobile carriers are expected to continue to partner up with local firms instead of Chinese companies.
From January to April, SKT, LG Uplus and KT respectively spent 323 billion won, 230 billion won and 58 billion won to purchase domestic network devices.
The lawmaker insisted that the local market needed more support from private businesses and the public sector to advance the growth of the 5G industry.
“Both the government and private companies should make efforts to improve the competitiveness of the local network equipment industry and export 5G network technologies to other nations,” Byun said.
By Kim Yong-joo and Jung Yae-lin (firstname.lastname@example.org) (email@example.com)
This story was co-produced by ET News and The Investor. For any inquiries, contact Kim Young-won (firstname.lastname@example.org).