Three Telecom Firms Earn 42 Billion Won in 'Breakage Revenue' from Unused Giveaways, Belatedly Promise to "Notify Customers Before Expiration"

Average of 5.4% of gift certificates went unused over three years
Only LG Uplus gave advance notice
Plan to notify customers before expiration by year-end

South Korea's three telecom companies have earned up to 42 billion won a year from customer giveaways that went unused before their expiration dates when customers signed up for new internet service or renewed their contracts.

Logos of the three telecom companies. Yonhap News Agency

On October 18, The Chosun Daily reported that the three companies had earned “breakage revenue,” citing data provided by SK Telecom, KT, and LG Uplus, the three internet service providers (ISPs), to Kim Jang-gyeom, a People Power Party lawmaker on the National Assembly's Science, ICT, Broadcasting and Communications Committee. Breakage revenue refers to income generated when giveaways such as gift certificates that customers do not use revert to the businesses.

The average annual non-use rates for mobile gift certificates were 5.6% in 2023, 5.2% in 2024, and 5.4% in 2025. This means that an average of about 5.4% of the gift certificates issued over the past three years went unused and effectively reverted to the businesses. Based on the number of high-speed internet subscribers at the three telecom companies, typical contract cycles, and the average value of gift certificates issued, the value of unused gift certificates last year is estimated at 25 billion to 42 billion won.

The problem is that none of the companies specified in their internet service applications either the expiration dates of the giveaways or what would happen to them after they expired. LG Uplus was the only company that separately notified customers before the expiration dates. Gift certificates typically expire anywhere from 60 days to one year later, depending on the type.

After Kim raised the issue, the three telecom companies agreed to establish a system by the end of this year to clearly inform customers of expiration dates and terms of use both in service applications and when mobile gift certificates are sent, and to notify customers separately before the certificates expire. They also agreed to pursue measures to reissue expired gift certificates or extend their validity at customers' request.

Kim stressed, “Notifying customers before expiration and offering reissuance or an extension are the minimum measures that should be guaranteed. The system in which businesses benefit more when customers do not use their giveaways must be improved.”

This content was produced with the assistance of AI translation services.