South Korean domestic teleom companies are suffering a huge loss due to the free SMS service, KakaoTalk.
Since 2010, SK telecom suffered a 28.3% reduction in their overall SMS service, and fears a further 32.3% decline by the end of next year if the current trend persists. Their SMS count per person dropped from 1,819 message per person in 2010 to a mere 1,268 in 2011. It is expected to continue reducing, as the count as of June 2012 was 429 messages per person.
This concern is shared by many others in this industry, such as KT, and LG U+. It goes without saying that their net profit damage has been significantly reduced. However, unlike short text messages, multimedia messages (MMS) usage has seen a recent increase.
For big telcos, innovation with collaborating with startups is needed to survive. It will be interesting to see how future events will unfold.
