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For Koreans, a Subsidized Mobile Price

Posted on: Tuesday, 28 March 2006, 12:00 CST

South Korea's three largest mobile-phone operators began offering handsets at a subsidized price Monday after the government ended a three-year ban on the practice.

SK Telecom will offer mobile phones for as much as 190,000 won, or $195, less than the manufacturers' suggested retail price to eligible customers; KT Freetel, the No. 2 operator, will sell them for as much as 200,000 won less, the companies said. LG Telecom, the smallest among South Korea's three Seoul-based operators, said it would offer mobile phones at as much as 210,000 won less than suggested retail.

The three operators, which posted combined revenue of 19.7 trillion won last year, are now free to cut handset prices for new customers or subscribers who have not switched service providers for at least 18 months. About 24 million people, or three out of five mobile-phone users in South Korea, are eligible to buy phones at the lower prices, according to government estimates.

The government banned the practice of offering subscribers mobile phones at prices low enough to be considered a subsidy in 2003. The government at the time said it wanted to prevent mobile phone companies from spending too much to lure new users. It lifted the ban to make it easier for the mobile phone operators to spur sales.

Source: International Herald Tribune

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