LG Uplus Reports Q3 Operating Profit of 276.7 Billion KRW... Highest Since 2010

[Asia Economy Reporter Seulgina Jo] LG Uplus achieved the highest quarterly operating profit since 2010 in the third quarter of this year, driven by balanced growth in both wired and wireless businesses as well as new businesses.

LG Uplus announced on the 5th that its consolidated operating profit for the third quarter of 2021 recorded 276.7 billion KRW, an increase of 10.2% compared to the same period last year. This is the highest quarterly operating profit since 2010.

Operating revenue (sales) and service revenue also increased. In the third quarter of this year, operating revenue was 3.4774 trillion KRW, and service revenue was 2.7831 trillion KRW, up 4.1% and 5% respectively compared to the same period last year. With double-digit operating profit growth continuing in the third quarter, the cumulative operating profit for this year reached 820.8 billion KRW.

◆ Performance Improvement Driven by 5G and MVNO Subscriber Growth

The wireless business revenue continued a solid upward trend, supported by increases in 5G and MVNO subscribers.

Wireless business revenue in the third quarter recorded 1.5233 trillion KRW, up 4.2% compared to the same period last year. Wireless service revenue excluding access revenue was 1.4343 trillion KRW, an increase of 3.6% year-on-year.

The total wireless subscribers, combining MNO and MVNO, reached 17.497 million, a 7.6% increase compared to the same period last year. 5G subscribers recorded 4.108 million, an 89.1% increase year-on-year, influenced by the launch of flagship devices such as Galaxy Z Fold3 and Galaxy Z Flip3.

MVNO subscribers reached 2.547 million, a 73.4% increase compared to the same period last year. The continuous activation policies for MVNO, including the launch of specialized MVNO plans and promotional support, are analyzed to have driven subscriber growth.

The MNO churn rate in the third quarter was 1.39%, down 0.07 percentage points compared to the same period last year. Positive reviews of the friend-based bundled product ‘U+ Together Bundle’ and membership benefits such as ‘Subscription Kok’ are evaluated to have contributed to the churn rate improvement.

Marketing expenses in the third quarter were 564.7 billion KRW, a 2.8% decrease compared to the same period last year. During the same period, capital expenditure (CAPEX) was executed at 600.5 billion KRW, a 24.2% increase compared to the previous quarter.

◆ IPTV and High-Speed Internet Smart Home Revenue Increased by 10.5%

The smart home business, including IPTV and high-speed internet, as well as corporate infrastructure businesses such as smart factories and IDC, continued double-digit growth, leading overall performance improvement.

Smart home segment revenue in the third quarter recorded 568.5 billion KRW, a 10.5% increase compared to the same period last year. IPTV business revenue achieved 329 billion KRW, up 12.4% year-on-year. Influenced by the exclusive service for infants ‘U+ Idle Nara’, speaker-type set-top box ‘Soundbar Black’, and expectations from partnerships with global OTT services such as Disney Plus, IPTV cumulative subscribers increased by 8.8% year-on-year to 5.265 million.

High-speed internet revenue was 239.5 billion KRW, an 8.1% increase compared to the same period last year. The proportion of Giga internet subscribers was 69.4%, up 6.9 percentage points compared to the same period last year. Cumulative high-speed internet subscribers also increased by 4.9% to 4.693 million.

The corporate infrastructure business, a new growth engine, also maintained its growth trend. Corporate infrastructure business revenue, including new business for enterprises and line business, increased by 11.3% year-on-year to 369.1 billion KRW.

The IDC business continued its growth, contributing to the improvement of corporate infrastructure business revenue. Due to increased cloud demand following the transition to a contactless society, IDC business revenue in the third quarter was 68.1 billion KRW, a 19.6% increase compared to the same period last year.

B2B solution business revenue, including smart factories, achieved 115.5 billion KRW, a 22.5% increase compared to the same period last year, and corporate line business revenue, including corporate internet and dedicated lines, recorded 185.6 billion KRW, a 2.8% increase year-on-year.

◆ Strengthening Synergies through Partnerships such as Disney Plus

In particular, in the fourth quarter, the exclusive IPTV partnership with the global online video service (OTT) Disney Plus and mobile partnership synergies are expected to be fully realized. Disney Plus is scheduled to launch its service in Korea starting from the 12th. LG Uplus, which enjoyed significant subscriber growth effects by partnering with Netflix for the first time in Korea in 2018, is also expecting positive effects from this partnership.

LG Uplus emphasized, "Our strategy is to provide differentiated customer experiences through collaboration with global number one operators in each field and to enhance the core competitiveness of wired and wireless communication services." Previously, LG Uplus secured network competitiveness by signing an agreement with Japan’s KDDI for 5G new business and 6G technology preemption, and also provided tariff-linked services through an exclusive partnership with the world’s largest music platform, Spotify.

Efforts to increase non-telecommunication revenue will also continue. Earlier, LG Uplus unveiled the ‘U+ Smart Factory Solution’ and set a goal to grow related sales sevenfold over the next five years. To achieve this, it plans to expand installations nationwide in workplaces such as power plants and heavy industries, leveraging 12 solutions including motor diagnosis, distribution board diagnosis, and intelligent video security. The IDC business, which continues to grow, plans to meet market demands through the construction of the Pyeongchon IDC2 center.

Additionally, LG Uplus will continue activities to strengthen ESG management, which evaluates non-financial factors.

Lee Hyuk-joo, LG Uplus Chief Financial Officer (CFO, Vice President), said, “We are achieving stable growth in financial indicators through thorough responses to changes in the business environment caused by COVID-19,” and added, “We will do our best to achieve the targeted performance in the fourth quarter and enhance shareholder value through dividends and other means.”

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