Mobile Carriers 3, 5G Subscribers Soon Reach 20 Million... Q3 Operating Profit Expected to Easily Hit 1 Trillion Won

Combined Operating Profit of Top 3 Telecoms Expected at 1.0357 Trillion KRW
Growth in New Non-Telecom Businesses and High-Margin 5G Impact Drive Expansion
Quality Controversies Persist in 3rd Year of Commercialization... Base Station Deployment Issues Remain Challenges

[Asia Economy Reporter Eunmo Koo] As the era of 20 million 5G subscribers approaches, the three major mobile carriers are expected to post strong earnings again in the third quarter of this year. Following the first and second quarters, the combined operating profit of the three companies is expected to easily surpass the 1 trillion won mark for three consecutive quarters. However, issues related to 5G quality and pricing controversies continue, leaving many challenges to be addressed.

Three Major Carriers’ Q3 Operating Profit Hits 1 Trillion Won

According to financial information firm FnGuide on the 6th, the combined operating profit of the three mobile carriers in the third quarter of this year is expected to reach 1.0357 trillion won, exceeding 1 trillion won for three consecutive quarters. Although this is less than the previous quarter (1.1408 trillion won), it is higher than the first quarter (1.0186 trillion won), when the three companies surpassed 1 trillion won in combined operating profit for the first time in 14 quarters. By company, SK Telecom is expected to record 395.7 billion won, KT 364.4 billion won, and LG Uplus 275.6 billion won. Notably, KT’s operating profit is estimated to have grown by 24.7% compared to the same period last year.

This strong performance is attributed to the clear growth of new businesses beyond telecommunications pursued by these three companies, while their core mobile network operator (MNO) business is also benefiting significantly from the expansion of 5G subscribers. According to the Ministry of Science and ICT’s ‘Wireless Communication Service Subscription Status,’ as of the end of August, the number of domestic 5G subscribers has exceeded 17.8 million. It is expected to surpass 20 million within this year.

In particular, the number of 5G subscribers has gained momentum following the recent launch of Samsung Electronics’ third-generation foldable smartphones. The monthly increase in domestic 5G subscribers, which had slowed from around 1 million to 600,000, rebounded to about 700,000 as of the end of August after the release of the ‘Galaxy Z Flip3’ and ‘Galaxy Z Fold3.’ With Apple officially launching the ‘iPhone 13’ series in Korea on the 8th, it is anticipated that the monthly increase will exceed 1 million for the remainder of the year.

The high-margin effect of 5G is expected to be fully reflected in the profit growth of the carriers. Hong-sik Kim, a researcher at Hana Financial Investment, said, "While major operating expenses are being controlled, mobile phone sales revenue based on 5G is expected to begin growing in earnest," adding, "There is a strong belief that domestic telecom companies will achieve high profit growth through 5G for the first time this year, which will be reflected in the third-quarter results."

"Expensive, Disconnected" 5G Controversies Remain Challenges

However, controversies surrounding domestic 5G persist even in its third year of commercialization. Complaints about 5G quality continue, leading to lawsuits, and the deployment of 28 GHz base stations, known as ‘real 5G,’ is delayed, presenting numerous issues that the three mobile carriers must resolve. Criticism from both ruling and opposition parties has continued during the National Assembly’s Science, Technology, Information and Communications Committee’s audit that began this month.

A representative issue is the problem of 5G quality and insufficient base station deployment. Jeon Hye-sook, a member of the National Assembly’s Science and ICT Committee from the Democratic Party, pointed out, "Public dissatisfaction with telecommunication services is increasing," and criticized, "The quality evaluations announced annually by the Ministry of Science and ICT differ from actual speeds." Citing a whistleblower, Rep. Jeon claimed, "While the Ministry’s quality evaluation showed a download speed of 209.48 Mbps at the whistleblower’s residence, actual measurements showed only 8.85 Mbps." According to the Korea Consumer Agency’s ‘5G Consumer Issue Survey’ released last year, the most common complaint among respondents was that the perceived speed of 5G was unsatisfactory.

The status of 5G base station deployment has also come under scrutiny. Although 5G subscribers account for nearly 25% of the total, the proportion of base stations barely exceeds 10%. In particular, it is practically impossible for the three carriers to meet their mandatory deployment targets for 28 GHz 5G base stations, known as ‘real 5G,’ within this year. Joo Ho-young, a member of the People Power Party, stated, "They were supposed to build 45,000 by the end of this year, but only 120 have been constructed so far."

Consumers frustrated by the high cost of 5G service and services that fall short of expectations are increasingly switching to budget carriers. According to the office of Kim Sang-hee, a Democratic Party lawmaker, the number of subscribers porting their numbers from the three major carriers to budget carriers has steadily increased over the past three years. The figures were 428,561 in 2019, 724,563 last year, and 741,937 up to August this year, representing about a 73% increase compared to 2019.

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