LG Uplus Targets Combined Operating Profit of 1 Trillion with 268.4 Billion KRW in Q2 Operating Profit, Including New Businesses and 5G (Comprehensive)

LG Uplus Q2 Earnings Announcement

[Asia Economy Reporter Eunmo Koo] LG Uplus posted strong second-quarter earnings as new business growth centered on business-to-business (B2B) transactions gained momentum. Existing wired and wireless businesses also contributed to improved performance with increases in both 5G and MVNO (Mobile Virtual Network Operator) subscribers. With operating profit surpassing 500 billion KRW in the first half, expectations for achieving a combined operating profit of 1 trillion KRW this year have grown significantly.

LG Uplus announced on the 6th through a public disclosure that its consolidated operating profit for the second quarter reached 268.4 billion KRW, a 12.0% increase compared to the same period last year. Revenue for the same period also rose 2.2% to 3.3455 trillion KRW, and net profit increased by 39.8% to 210.5 billion KRW.

The growth of the new business sector, which has gained full momentum, is cited as the main driver behind the improved performance. The corporate infrastructure business, including new businesses, achieved double-digit growth in the first half, leading overall performance improvement. Growth in the wireless business segment, driven by an increase in 5G subscribers, also supported the earnings improvement.

New Business and B2B Soaring... Corporate Infrastructure Revenue Up 12.7%

Revenue from the corporate infrastructure business, which includes new business and line services targeting companies, increased by 12.7% year-on-year to 388.8 billion KRW. This growth is attributed to strong demand for solutions and Internet Data Center (IDC) services driven by increased non-face-to-face demand.

The fastest-growing segment was the B2B solutions business, including smart factories. Corporate solutions business revenue in the second quarter reached 134.2 billion KRW, up 34.3% year-on-year and 35.8% quarter-on-quarter. Corporate line business revenue, which includes corporate internet and dedicated lines, also rose 3.3% year-on-year to 187.9 billion KRW. IDC business revenue increased by 5.7% to 66.7 billion KRW compared to the same period last year, influenced by accelerated online transitions and increased orders.

LG Uplus has actively pursued new businesses in the first half, including winning orders for smart port projects in Busan and Yeosu, as well as smart industrial complex construction projects in Ulsan and Yeosu petrochemical complexes. Positive reviews for B2B solution products focused on specialized markets, such as the ‘Uri Company Package’ for SMEs and the ‘Uri Store Package’ targeting small business owners in the food service industry, have also been cited as factors behind the improved performance.

Lee Hyuk-joo, LG Uplus Chief Financial Officer (CFO), said during a conference call after the second-quarter earnings announcement, “We aim to grow the non-telecom business sector based on our existing strengths. We believe there is potential for expansion based on the smart factory infrastructure needs seen in group companies and steel companies, as well as demand related to smart industrial complexes.”

5G Subscribers Double... MVNO Subscribers Also Soar

Second-quarter wireless business revenue rose 5.7% year-on-year to 1.5056 trillion KRW, supported by increases in both 5G and MVNO subscribers. Wireless service revenue, excluding connection fees, was 1.4151 trillion KRW, up 5% year-on-year.

The total wireless subscriber base, combining MNO (Mobile Network Operator) and MVNO, reached approximately 17.198 million, an 8.4% increase compared to the same period last year. While MNO subscribers slightly declined due to the phase-out of 2G, 5G subscribers surged by 108.8% year-on-year to about 3.727 million. The goal of securing 4.5 million 5G subscribers within the year is expected to be exceeded.

MVNO subscribers also maintained a steep growth trajectory. In the second quarter, MVNO subscribers increased by 79.4% year-on-year to approximately 2.357 million. The ‘Altteul Phone Partners 2.0’ program, which supports self-activation and offers up to 150GB of additional data, strengthening cooperation with small and medium MVNO operators, is believed to have positively influenced subscriber growth.

Lee Sang-won, Head of LG Uplus Consumer Business Innovation Group, explained, “Securing non-face-to-face partnership channels such as Coupang and eBay, increasing online sales through self-activation, and strengthening partnerships with KB and LG HelloVision through collaborative marketing strategies have been effective. LG Uplus’s MVNO business meets customers’ demand for cost-effectiveness and shares the role of a growth engine for the entire LG Uplus, as evidenced by the increasing revenue share of MVNO.”

The smart home business, including IPTV and high-speed internet, continued to grow thanks to subscriber increases. Second-quarter revenue rose 8.9% year-on-year to 538.7 billion KRW.

IPTV business revenue reached 303.9 billion KRW, up 8.4% year-on-year. Leveraging content competitiveness such as the exclusive service for infants and toddlers, ‘U+ Idle Nara,’ IPTV subscribers increased by 9.4% year-on-year to approximately 5.173 million. As of the end of June, cumulative users of U+ Idle Nara approached 46 million, establishing it as a leading kids’ service in Korea.

High-speed internet revenue was 234.8 billion KRW, a 9.6% increase year-on-year. Subscribers numbered about 4.637 million, up 5.1% year-on-year, and the share of giga internet subscribers rose by 7.5 percentage points compared to the same period last year to 68%, driving performance growth.

Marketing expenses were efficiently managed, maintaining a stabilization trend. Cumulative marketing expenses for the first half totaled 1.1148 trillion KRW, down 0.6% year-on-year. Capital expenditures in the second quarter increased 27.2% quarter-on-quarter to 483.3 billion KRW. Regarding marketing outlook for the second half, the CFO responded, “The excessive competition among the three telecom companies at the launch of 5G two years ago still affects related cost expenditures. Even if new flagship devices are released in the second half, given that the three telecom companies are currently focused on profit-centered management, excessive spending is unlikely.”

Focus on Non-Telecom Business Growth in the Second Half

LG Uplus plans to continue efforts for qualitative growth in the second half. The strategy is to reduce churn rates through enhanced membership benefits and new bundled products, increasing ‘true fans’ with differentiated services and competitiveness rather than aggressive marketing competition.

Earlier, LG Uplus launched the ‘Subscription Kok’ service in the second quarter, adding subscription services such as Naver Shopping, Millie’s Library, GS25, and Coupang Eats to membership benefits. In the first quarter, it introduced ‘U+ Together,’ the nation’s first bundled product for acquaintances. These efforts have resulted in improved churn rates. LG Uplus’s MNO churn rate in the second quarter was 1.28%, a 0.15 percentage point improvement compared to the same period last year.

LG Uplus plans to focus on growing non-telecom businesses such as media, new businesses, and IDC in the second half to achieve its goal of expanding non-telecom business revenue to 30% of total sales by 2025.

In the first half, LG Uplus made equity investments in infant and toddler content producers such as Monster Studio and Dream Factory Studio to enhance its media business competitiveness. In the second half, it plans to secure IP through partnerships and equity investments with various content producers and strengthen investments in original content.

However, LG Uplus expressed a cautious stance regarding partnership negotiations with Disney’s online video service (OTT) Disney Plus. Choi Chang-guk, Head of LG Uplus Home Media Business Group, said, “Negotiations with Disney are positive, but nothing has been finalized yet. We will do our best to achieve good results.”

To secure competitiveness in new businesses, LG Uplus plans to expand partnerships with group companies and leading industry players. Collaborating with LG Electronics, LG Chem, LG CNS, and others, it will actively target new businesses such as smart factories, smart mobility, and AI call centers, while strengthening competitiveness through partnerships with various leading industry players.

Additionally, by building the Pyeongchon IDC2 center capable of operating over 100,000 servers, LG Uplus plans to meet the growing IDC demand and accelerate non-telecom revenue growth through the launch of B2B solutions targeting various specialized markets.

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