'SKT-KT competition to hurt mobile industry'

Moody's Investors Service expects a more industry-wide negative impact from the fierce competition between SK Telecom and KT. 

"Competition among Korean telecom companies is not likely to abate any time soon, and this trend has obvious credit negative ramifications as the carriers speed up capex spending to meet the huge demand for high-speed data services," said Laura Acres, a Moody's vice president, in a recent report.

The senior credit officer added an ever-rising spiral of capital expenditure and marketing costs to retain customers have obvious negative implications for profitability and cash-flow.

Cindy Kang, a spokesman for SK Telecom, declined to comment about the report, Wednesday. Rhee In-won, a senior spokesman at KT, said the report was ``nothing special.’’

In detail, KT has announced that it will invest 5.1 trillion won or $4.3 billion on fixed-line and wireless networks until the end of 2014 to enjoy what the company claims is the "first-mover" advantage in the rapidly-growing local wireless sector.

SK Telecom, which lags in terms of the number of Wi-Fi zones compared to its biggest domestic rival, is also planning to step up the efforts for an early adaptation of the next-generation telecom technology called long-term evolution or LTE.

Although the telecom regulator designated a marketing cap ― no more than 22 percent of the total revenue ― to soothe fiercer competition, the top three local carriers including LG Uplus have failed to meet the guideline.