LGU+ Performs Well Amid COVID-19 Challenges... "Strengthening Synergy with HelloVision" (Comprehensive)

Photo by LG Uplus

[Asia Economy Reporter Kim Heung-soon] LG Uplus announced its ambition to create a synergistic growth effect in the future through collaboration with LG HelloVision, which it acquired last year, despite recording relatively favorable performance in the first quarter of this year amid the adverse effects of the novel coronavirus disease (COVID-19).

Lee Hyuk-joo, Chief Financial Officer (CFO) of LG Uplus, said during a conference call held after the announcement of the first quarter 2020 earnings on the 8th, "Although LG HelloVision's first-quarter operating profit is evaluated to have come out well at around 7 billion KRW, we are still hungry," adding, "Going forward, HelloVision's operating profit should be maintained at the first-quarter level while strengthening the business structure."

He added, "From a 'win-win' perspective for both LG Uplus and LG HelloVision, we need to integrate differentiated services into Internet Protocol (IP) TV and secure the fundamental competitiveness of the cable TV business that LG HelloVision currently holds," and "We are also considering issues such as product bundling using LG Uplus's network."

LG Uplus and LG HelloVision plan to concretize and implement plans to expand synergy, including ▲ virtual reality (VR) content collaboration ▲ expansion of B2B cloud business ▲ strengthening home rental bundled services.

The CFO also emphasized, "Although the market in the first quarter was challenging due to COVID-19, LG Uplus recorded balanced performance in its core business sectors," and "While maintaining a conservative outlook on profitability for the second quarter, there is no change in the goal of profit improvement through service competitiveness and profitability-centered management." He added, "We plan to monitor market changes in the post-COVID environment, consider untact (contactless) culture, innovate services, and create continuous business growth opportunities."

LG Uplus Summary Consolidated Income Statement

LG Uplus's capital expenditure (CAPEX) in the first quarter increased by 35.3% year-on-year to 374.6 billion KRW. This year, the company plans to continue investing to expand 5G coverage in densely populated areas, large buildings' in-building systems, and subways.

The target for 5G subscribers was slightly lowered. The CFO said, "By the end of this year, LG Uplus expects 5G subscribers to account for about 23-25% of total handset subscribers," adding, "This is a slight downward adjustment from the 30% share predicted last year." He also forecasted, "Although telecom companies are relatively less affected by COVID-19, it is true that there is some impact," and "People who use multiple phones may reduce the number of phones or downgrade their plans, which is unavoidable."

Regarding concerns about overheated marketing competition such as increased official subsidies for the Galaxy S20 series, the CFO said, "As COVID-19 somewhat subsides, the possibility of the market heating up is always open," and "We will closely monitor market trends to prevent overheating."

Meanwhile, LG Uplus's consolidated financial statements showed an operating profit of 219.8 billion KRW in the first quarter of 2020, an 11.5% increase compared to the same period last year. Both operating revenue (sales) and service revenue also increased. First-quarter operating revenue rose 11.9% year-on-year to 3.2866 trillion KRW, and service revenue, which is the combined revenue from mobile, smart home, and enterprise excluding device revenue, increased by 15.2% to 2.5175 trillion KRW.

LG Uplus analyzed that "the increase in mobile, IPTV (Internet Protocol Television), and high-speed internet subscribers, as well as growth in untact (contactless) business due to increased indoor activities, drove the strong performance." The increase in service revenue is mainly attributed to LG HelloVision's service revenue of 232 billion KRW being reflected in the consolidated income statement from this period.

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