Moody's: Korean telecoms benefit from cap

Moody's Investors Service said that new marketing cap guidance from the Korean Communications Commission is unlikely to have an immediate rating impact on the Korean telecom operators.

In the wake of a substantial increase in competition stemming from the deregulation of handset subsidies, the commission recently announced that telecom operators should cap their marketing spending at 22% of annual revenue in 2010, Moody's said.

The agency said this cap will likely help large-scale operators such as SK Telecom and KT Corp. protect their superior market positions from smaller operators, LG Telecom and SK Broadband.

The commission said telecom operators will be able to save about KRW 1.9 trillion in 2010 and KRW 2.4 trillion to KRW 2.5 trillion in 2011 if they comply.

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