19/11/2009 ( Source: www.zacks.com )

South Korea Welcomes iPhone

Apple Inc.’s (AAPL - Analyst Report) iPhone is finally reaching the hands of South Korean mobile users. The country’s telecom regulator Korea Communications Commission (“KCC”) has granted Apple the license to sell the iconic handset in the domestic cell phone market. KCC has also lifted the restrictions that prohibited location-based services on smartphone devices such as the Google Maps application on iPhone.

South Korea’s second-largest wireless carrier KT Corp. (KTC - Analyst Report) will start booking Internet order for iPhone (3G & 3GS) soon and begin selling it from Nov 28, 2009. The company targets to initially sell 150,000 units priced between KRW250,000 and KRW300,000 (US$216 and US$260). KT’s peer SK Telecom (SKM - Analyst Report), the largest mobile operator in the country, is still negotiating with Apple for securing distribution rights.

South Korean wireless market is technologically advanced and relatively mature with roughly 47 million total subscribers, representing 96% penetration of the country’s population. Currently, the country’s cellular handset market is dominated by local companies such as Samsung and LG Electronics, two of the world’s leading handset manufacturers.

With KCC’s approval, South Korea is set to become one of the last major Asian countries to get the iPhone. The device has been already launched by China Unicom (CHU - Analyst Report) in China in October 2009. Additionally, iPhone is also being sold in other major markets such as India, Japan and Australia.

KCC’s approval to allow foreign handset vendors to enter the domestic market is aimed at increasing the options for brand-conscious cell phone users rather than just limiting their choice to indigenously manufactured devices. In April 2009, the Korean government cleared the path for foreign handset vendors by abolishing a mandate requiring all mobile handsets sold locally to use a home-grown software platform.

While approval of iPhone in South Korea represents a boon for local mobile users, the presence of a leading foreign brand will intensify competition in the country’s highly penetrated mobile market. Local companies such as LG and Samsung are gearing up for the emerging competition as they are strengthening their handset range by adding more state-of-the-art devices.

Nevertheless, iPhone represents a significant opportunity for the incumbent wireless carriers in South Korea (such as KTC and SKM) to attract high-end customers, which would help them to boost wireless data ARPU (average revenue per user) and customer base.