Korea's mobile phone replacement rate highest among major OECD countries

SEOUL, June 20 (Yonhap) -- South Korea's cell phone replacement rate is the highest among major OECD countries as local mobile carriers' fat subsidies and aggressive marketing lure customers to change their gadgets frequently, a report said Thursday.

About 15 million South Koreans, or 28 percent of mobile phone users in the country, replace their handsets every year, according to the report compiled by DigiEco, a research unit of KT Corp.

The mobile replacement rate is the highest among major OECD countries, the report said. South Korea's mobile replacement rate is higher than the 18.1 percent on average by the seven nations, including the U.S., Australia, Canada and Japan.

About 9.2 percent of Japanese cell phone users buy new phones every year.

Mobile consumers in Germany and Britain show higher rates of cell phone replacement as compared to other countries. About 27 percent of mobile users in Britain buy new phones every year with the comparable figure for Germany reaching 23.4 percent, according to the report.

The report showed that Mobile Number Portability (MNP) in South Korea also runs high compared to major OECD nations.

The country's three mobile carriers -- SK Telecom Co., KT Corp. and LG Uplus Corp. -- received a total of 12.6 million MNP applications last year, compared with 2.94 million MNP in 2004.

The portion of MNP to total mobile users reached 23 percent, much higher than the average 5 percent by the OECD countries.

The higher MNP and frequent replacement of gadgets have led to an increase in marketing costs by mobile carriers and a drop in their profitability.

The three mobile carriers spent a combined 2.8 trillion won in 2005, but the number swelled to 6.8 trillion won in 2012. Their average operating income ratio fell 29.5 percent in 2011 from 38.9 percent in 2005, the report also showed.

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