South Korea gets a new mobile operator

But it is paying a higher-than-expected price for the privilege.

Stage X was one of three groups bidding for frequencies in the 28-GHz band that were previously allocated to South Korea's mobile operators but were withdrawn by the government after the telcos failed to meet rollout requirements. It beat rivals Sejong Telecom and My Mobile Consortium, agreeing to pay 430.1 billion won (US$322 million).

That's more than twice what SK Telecom, KT Corp and LG U+ paid for the frequencies back in 2018, and almost four times what various South Korean news outlets predicted.

When we first reported on the government's decision to seize the existing telcos' 28-GHz licences in 2022 – KT Corp and LG U+ lost their licences in November of that year, while SK Telecom managed to hold on to its concession until May 2023 – we noted that it might have trouble fulfilling its wish to re-allocate the airwaves to a newcomer, which would provide additional competition in the market.

Clearly that was not the case at all. According to the Ministry of Science and ICT, Sejong Telecom dropped out of the running on the first day, but bidding continued apace between the other two, resulting in the inflated price; the ministry had set a base price of KRW74.2 billion, which seemed fairly realistic, ahead of the auction at least.

Stage X, a consortium of Stage Five, a communications affiliate of technology giant Kakao Corp, and other unidentified companies, according to the Yonhap news agency, is evidently not phased by the challenge – and the financial implications – of breaking into South Korea's well established mobile market.

As it stands, SK Telecom, KT Corp and LG U+ have carved up the market between them and, having been among the first in the world to launch 5G services almost five years ago, they have a wealth of experience there too. But Stage X is keen to take them on.

"We will work to become a new brand in the communications market and facilitate fresh and innovative changes in the market by boosting the 5G network service," Yonhap quoted Stage X CEO Seo Sang-won as saying.

The paper added that Stage X plans to distribute smartphones that support 5G at 28 GHz by linking up with local player Samsung, as well the likes of Apple and Google.

Despite its optimism, it will not be easy for Stage X to build up a decent-sized business in South Korea though.

As of the end of September, market leader SK Telecom had more than 31 million mobile customers, including 15.15 million 5G subscribers. KT and LG U+ each have around 6 million fewer and a similarly high proportion of 5G users.

It will be tough for the newcomer, but incredibly interesting for industry watchers to see how things play out.