[Click eStock] "LG Uplus Continues Profit Improvement Trend This Year"

[Asia Economy Reporter Ji Yeon-jin] IBK Industrial Bank of Korea expects that LG Uplus's growth based on 5G and proven cost control capabilities will continue to improve profitability this year as well.

LG Uplus recorded separate sales of 3.25 trillion KRW in the fourth quarter of last year, up 2.8% year-on-year and 5.7% quarter-on-quarter. However, operating profit was 161.6 billion KRW, down 11.7% year-on-year and 31.2% quarter-on-quarter. This is analyzed to be due to seasonal factors involving high expenditure. Outsourcing service costs increased by 10.5% quarter-on-quarter and 13.2% year-on-year, and sales commissions also rose 4.6% quarter-on-quarter and 13.2% year-on-year. Commission fees increased by 3.2% quarter-on-quarter and 3.4% year-on-year. Labor costs, which increased 32.8% year-on-year, were also cited as one of the reasons for the decline in profitability compared to the previous year.

However, with the release of the new iPhone model, 5G subscribers increased by 583,000 net in the fourth quarter alone, and ARPU (average revenue per user) rose 0.7% quarter-on-quarter. Not only was there a positive effect from the increase in subscribers, but there was also a negative effect from rising costs, with marketing expenses exceeding 600 billion KRW, the highest level for the year.

Kim Jang-won, an analyst at IBK Investment & Securities, said, "Considering that the net increase in 5G subscribers in the fourth quarter of last year, when new 5G smartphone models were released, reached the highest quarterly level, more devices will be launched this year, and mid-to-low price plans are also being prepared, so 5G growth is expected to proceed smoothly." He added, "All competitors are refraining from overheated competition in marketing, so although there will be somewhat strong events at the beginning of the year, it is expected to maintain stability on an annual basis."

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