[Summary] The Big Three Telecoms Break the '1 Trillion Operating Profit' Barrier Again... SKT Also Achieves Double-Digit Growth

[Asia Economy Reporter Joselgina] The three mobile carriers continued double-digit growth in the second quarter, once again surpassing the combined operating profit barrier of 1 trillion won. This is thanks to new businesses such as media, commerce, and B2B (business-to-business) that have settled on a growth trajectory despite the impact of COVID-19. The core mobile network operator (MNO) segment also benefited significantly from the expansion of 5G subscribers.

◆Non-telecom drives and 5G pushes... Combined operating profit of the three companies exceeds 1 trillion won

On the 11th, SK Telecom, the last of the three domestic telecom companies to announce its earnings, reported consolidated sales of 4.8183 trillion won and an operating profit of 396.6 billion won for the second quarter. Compared to the same period last year, sales increased by 4.7% and operating profit by 10.8%.

Accordingly, the combined operating profit of SK Telecom, KT, and LG Uplus for the second quarter totaled 1.1408 trillion won, marking the second consecutive quarter above 1 trillion won. This is an increase from the 1.1086 trillion won recorded in the first quarter, when the three companies surpassed the combined operating profit of 1 trillion won for the first time in 14 quarters. KT and LG Uplus, which disclosed their results earlier, posted second-quarter operating profits of 475.8 billion won and 268.4 billion won, up 38.5% and 12.0% year-on-year, respectively.

Examining the detailed results disclosed by SK Telecom on the day, the growth effect of new businesses is clearly visible. New ICT businesses such as media, commerce, and security continued their positive streak for five consecutive quarters. New ICT sales in the second quarter reached 1.5779 trillion won, a 10.1% increase compared to the same period last year. The New ICT segment is approaching one-third of total sales.

The core mobile telecommunications segment also showed sales of 3.0216 trillion won, up 2.7% year-on-year, as the proportion of 5G subscribers steadily increased. This was attributed to the simultaneous rise in average revenue per user (ARPU) and wireless service sales.

This structure of "new non-telecom businesses leading and 5G pushing" is similarly confirmed in KT and LG Uplus. KT showed balanced growth across platform businesses, from artificial intelligence (AI) and digital transformation (DX) to media and content. Its financial subsidiary K-Bank turned a profit for the first time in a quarter. LG Uplus also recorded double-digit growth in corporate infrastructure businesses, including new business for enterprises and line services, with a 12% increase.

Growth in the mobile telecommunications segment due to the increase in 5G subscribers is also evident. The wireless ARPU of the two companies rose 3.0% and 1.1% compared to a year ago. As of the end of June, the total number of 5G subscribers among the three telecom companies in Korea surpassed 16 million. The proportion of 5G subscribers among all mobile subscribers also expanded to 23%. The number of 5G subscribers by company is SK Telecom with 7,695,679, KT with 5,011,558, and LG Uplus with 3,722,028.

◆Growth expectations continue in the second half... but investment pressure remains

The three telecom companies are expected to continue their performance growth in the second half, supported by new businesses and the expansion of 5G subscribers. In particular, a large influx of 5G subscribers is anticipated with the launch of new 5G devices such as Samsung Electronics' new foldable smartphone and Apple’s iPhone 13 (tentative name). B2B businesses such as smart factories and digital transformation (DX), as well as media and content businesses utilizing existing wired and wireless infrastructure, are also considered to have entered their main tracks.

However, despite these results, they cannot simply smile. Complaints about 5G quality have continued, leading to the start of lawsuits, and issues such as delays in building 28 GHz base stations, known as "real 5G," remain problems that the three telecom companies must solve. It has been confirmed that the capital expenditure (CAPEX) of the three telecom companies in the first half of this year decreased by double digits.

In particular, the nationwide construction of the 5G 28 GHz network is also a key issue in this year's national audit. Previously, the three telecom companies were allocated the 5G 28 GHz frequency band in 2018 and promised to build and open about 15,000 base stations each, totaling 45,125 base stations by this year. However, as of the end of June, only 125 base stations have been constructed.

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