آیا پنج خیلی زیاد است؟ تجزیه و تحلیل شبیه سازی سود و ساختار هزینه در صنعت تلفن همراه کره ای

Four new nationwide entrants were introduced into the Korean mobile telephone industry provoking intense competition among the five carriers by late 1997. Some assert that there is excessive competition and industry restructuring is needed. In this paper, we analyze the profitability of mobile telephone carriers and the degree to which cost is reduced through M&A, thereby obtaining principal information on the economic incentives for industry restructuring.

During the last decade, the telecommunications industry has been in transition worldwide from a government-initiated paradigm based on the concept of natural monopoly, to a private-initiated paradigm based on market principle. Market principle implies that economic incentives of individual market entities, as the foundation in the operation of the economy, are enhanced. This trend is created on the one hand by the pressure of international free trade and on the other hand by increasing complexity of the economy with the rapid development of technologies. With these factors, individual entities of the economy recognize the limitation of the governmental role. The private-initiated paradigm in Korea induced the introduction of competition in many telecommunication services,1 particularly in the case of the mobile telephone industry, where four new nationwide entrants were introduced provoking intense competition amongst the five carriers. All of them use CDMA technology. The carriers in the 800 MHz band are called cellular carriers and the carriers in 1.8 GHz band PCS carriers. Table 1 outlines each carrier's participation in mobile telephone service. Hansol PCS and KTF have formed a roaming partnership for specific areas. Other carriers are operating nationwide networks independently.2 This situation is thought to be highly competitive, even when compared with other developed countries. Although this paradigm shift seems to be widely accepted, enormous initial investment and aggravation of short-run profitability has led some experts to stress the need for M&A among mobile telephone carriers, even through government intervention.3 Korea was under IMF administration, following the foreign exchange crisis in late 1997, and this argument became stronger in the atmosphere of government-driven industry restructuring of principal industries, which Koreans called the ‘big deal’.4 This argument is fundamentally against the market principle which respects the decisions of individual market entities. But there is resistance from conglomerates to restructuring and the widely accepted opinion is that because there have been few examples of voluntary M&A in Korean economic history, it will not be easy to restructure the market. This type of government intervention is not desirable in principle and there is the need for close examination of economic incentives of the individual entities. From this standpoint, we analyze the profitability of mobile telephone carriers and the degree to which cost is reduced through M&A, thereby obtaining principal information on the economic incentives for industry restructuring. The analysis focuses on the expectation of economic value added (EVA) from 1999 to 2003 and thus we can obtain the cost structure which can be used to estimate the effects of M&A. The remaining part of the paper is organized as follows: After presenting the algorithm for the analysis in Section 2, we will present the output of the analysis in Section 3. Then, in Section 4, policy implications will be discussed using the results of the analysis. Section 5 provides concluding remarks. Input data for the analysis are presented in the appendix.

Restructuring of the mobile telephone industry must follow the economic incentives for each participant. This analysis has evaluated these economic incentives, including profitability and the expected effects of M&A. In the process, we draw some policy and strategic implications. These are also applicable to the emerging economies in which the introduction of competition in mobile telephone industry is considered or under way. The analysis shows that each company has positive profitability. Cost reduction through M&A is not high and the problem of duplicate investment will not be important in the future. Discussion about excessive competition generally indicates a large handset subsidy. But handset subsidy cannot be evaluated as high, relative to revenue per subscriber. The average revenue except the activation fee per subscriber of Carriers A and B is $342.4 on average and handset subsidy after the activation fee per subscriber was $208.3 on average in 1998 when the mobile telephone market was in the early stage of competition and handset subsidy was very high. Subscribers are really the source of profit. Hence, the large handset subsidy is just a rational decision for profit maximization and cannot be seen as a result of excessive competition. Therefore, the argument for government-forced restructuring seems to be inappropriate and with a weak basis. Restructuring which aims to reduce the number of players can result in decrease in social welfare by reducing competition. As in the case of the joint use of infrastructure in non-capacity-constrained areas, there can be many opportunities for alliance which can decrease cost without loss of competitive efficiency. From the perspective of firms, competition is basically the way to achieve their objectives, and alliance or cooperation for common objectives can be seen as another type of competition in the new era of the telecommunication industry.