Stage X to lose South Korea mobile licence

Stage X will not become South Korea's fourth mobile network operator because the government is reportedly about to pull its licence due to financial irregularities.

Mary Lennighan

June 17, 2024

3 Min Read

The firm, which won spectrum in the 28 GHz band earlier this year and was due to launch services in 2025, had not met a 205 billion won (US$149 million) paid-in capital commitment, Yonhap news agency reported late last week, citing a statement from South Korea's Ministry of Science and ICT (MSIT).

As such, the ministry will launch a procedure to revoke Stage X's licence before formally cancelling it, the news agency said.

The move comes as a blow both to Stage X, which seemed serious about its plans to launch mobile services in South Korea, and to the government, which is keen to bring more competition to the market.

Stage X beat two other bidders – Sejong Telecom and My Mobile Consortium – to secure its 28-GHz frequencies, agreeing to pay 430.1 billion won (US$322 million). Those same frequencies were previously allocated to the South Korea's big three mobile operators, but were withdrawn by the government after the telcos failed to meet their rollout requirements. SK Telecom lost its 28 GHz licence last May, while KT Corp and LG U+ had theirs cancelled in late 2022.

The sum Stage X bid for its licence was more than twice that paid by the big three for their 28 GHz licences in 2018. Further, the company made all the right noises about its service launch and rollout plans, and just last month brokered a deal with Rakuten to share knowledge and to use its Rakuten Symphony platform, which suggested a cloud-based Open RAN rollout was on the horizon. Essentially, there was no reason to think that Stage X would not become an MNO.

It's probably too soon after the Rakutan collaboration announcement to suggest that Stage X was spooked by what it learned from the Japanese company. But Rakuten's experiences certainly serve as a cautionary tale.

On Monday Rakuten Mobile revealed that it has reached the 7 million customers mark in Japan, and trumpeted its highest ever quarterly net additions, boosted by signing up half a million new users in just over two months.

But what Rakuten did not mention is the fact that its customer base is still a drop in the ocean of the overall market. According to Japan's Telecommunications Carriers Association, NTT DoCoMo, KDDI and Softbank had 212.4 million customers as of the end of March. Rakuten Mobile may well be proud of its progress, but it has a seriously long way to go.

Similarly, SK Telecom, KT Corp and LG U+ together had 69 million mobile customers, excluding MVNO users, at the end of March. Despite the government's recent efforts to boost competition – amongst other things, it has been pushing to lower prices for consumers – this was never going to be an easy market to break into; Stage X would have had its work cut out to sign up enough customers to enable it to turn a profit.

The Yonhap report is pretty light on detail, so we don't actually know when the MSIT plans to pull Stage X's licence, nor whether it will have the chance – or the desire – to appeal the decision. Equally, we don't know what the government's next move will be. But given its recent endeavours on competition, it's likely that there will be one.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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