SEOUL (Reuters) - Samsung Electronics Co’s Galaxy S5 smartphone could get off to a slow start in South Korea as the flagship’s launch next month will coincide with a 45-day ban on local carriers selling phones, analysts said.
Samsung plans to start global sales of the S5 on April 11, with South Korea usually among the first countries to get a taste of the world’s biggest smartphone maker’s marquee products.
But the communications regulator on Friday banned SK Telecom Co Ltd, KT Corp and LG UPlus Corp from signing up customers or replacing phones for dates ranging from March 13 to May 19.
The carriers, fighting for more share of a market where 7 out of 10 people already have smartphones, had broken regulations by subsidizing more than 270,000 won ($250) the cost of handsets.
“The Korean market accounts for a relatively small portion of Samsung’s overall smartphone sales, but given that they need to maximize sales in the first three months of the launch, the operation suspension of mobile carriers could hit initial S5 sales,” said IM Investment & Securities analyst Lee Min-hee.
The ban, as well as a lack of sweeping hardware improvements, may see S5 sales in the first three months falling short of the 20 million S4s sold within three months of the predecessor’s launch, Lee said.
To bump up S5 sales, Samsung on Monday announced $600 worth of pre-paid and discounted subscriptions for services such as LinkedIn Corp’s professional social network, Dropbox sharing and PayPal payment.
The launch will be two weeks earlier than that of the S4 because sales of the predecessor have been weaker than analyst estimates. S4 sales pulled down overall earnings in October-December when the smartphone lost market share to Apple Inc’s iPhone 5S in the United States and Japan.
A spokeswoman for Samsung on Monday said the company has no comment on the impact of carriers’ sales ban as it has not decided when it will start selling the S5 in South Korea.
The country’s biggest carrier by subscribers SK Telecom has been banned from signing up and selling phones to new customers, and upgrading phones where service contracts are less than two years old, from April 5 to May 19.
Second-ranked KT has been banned from March 13 to April 26, and third-placed LG UPlus has been banned from March 13 to April 4 and from April 27 to May 18.
Reporting by Miyoung Kim; Editing by Christopher Cushing