South Korean cellcos won’t sue over subsidy hike

South Korea’s mobile operators have reportedly decided against taking legal action over the mandated subsidy hike for regular telecoms subscriptions.

The ICT ministry this month instructed operators to implement a 25% discount rate for regular new subscribers, up from the current discount rate of 20%. In response, SK Telecom, KT and LG Uplus were said to be considering taking the government to court to request having the order rescinded.

But the operators have now written to the ministry indicating that they will accept the discount hike.

The discount is typically offered to customers on a two-year contract plan choosing not to take advantage of a handset subsidy.

The ministry has estimated that the discount increase will allow a combined 19 million subscribers to achieve a combined 1 trillion won ($888.6 million) in savings per year. The current government has made reducing telecoms expenses for households a priority.

But the operators have opposed the move on the grounds that it could dramatically impact their profitability, and that the decision was made without sufficient consultation with the industry. The operators have also expressed concern that the discount rate could be raised further in the future, compounding the impact on their finances.