[Summary] 5G and New Businesses as Dual Engines... Telecom 3 Companies Enter 1 Trillion Won Operating Profit Era

Combined Operating Profit of Three Telecom Giants Surpasses 1 Trillion Won for 3 Consecutive Quarters
LG Uplus Expected to Newly Join the '1 Trillion Club' This Year

[Asia Economy Reporter Joeslgina] The three major mobile carriers in South Korea have surpassed the combined operating profit barrier of 1 trillion KRW for three consecutive quarters this year. This is thanks to the significant impact of 5G expansion in their core mobile network operator (MNO) business, as well as the stabilization of new businesses such as media and B2B (business-to-business) into growth trajectories.

With LG Uplus newly entering the market this year, it is certain that all three companies will also be named in the annual 1 trillion KRW operating profit club.

◇ SKT also achieves double-digit growth... Combined operating profit of the three companies exceeds 1 trillion KRW

On the 10th, SK Telecom, the last of the three domestic telecom companies to announce its earnings, reported consolidated third-quarter sales of 4.9675 trillion KRW and an operating profit of 400 billion KRW. Compared to the same period last year, sales increased by 5% and operating profit by 11.7%.

Accordingly, the combined operating profit of SK Telecom, KT, and LG Uplus for the third quarter reached 1.0591 trillion KRW, marking three consecutive quarters above the 1 trillion KRW mark this year. KT and LG Uplus, which disclosed their results earlier, posted third-quarter operating profits of 382.4 billion KRW and 276.7 billion KRW respectively, up 30% and 10.2% year-on-year.

Looking into the detailed results released by SK Telecom, both its core MNO business and new ICT business showed balanced growth. Thanks to the expansion of 5G subscribers, the MNO segment’s operating profit (319.6 billion KRW) increased by 21.1% compared to the same period last year. The new ICT business also continued its growth centered on media and convergence security sectors, achieving sales of 1.6309 trillion KRW, up 6.9% year-on-year. The new ICT business accounted for 32.8% of total sales. Notably, the media business recorded its highest-ever quarterly sales of 1.0244 trillion KRW.

◇ 5G drives growth and new businesses push forward... Balanced growth across sectors

The dual growth structure of ‘telecom and new business’ is also evident in KT and LG Uplus. All three companies showed balanced growth from telecommunications to platform businesses such as media and content.

KT surpassed 1 trillion KRW in orders for its B2B business in the third quarter for the first time. The Internet Data Center (IDC) sales growth rate was an impressive 34.7%. In the telecommunications segment, the average revenue per user (ARPU) increased by 2.7% in the third quarter. Even considering that compensation for network outage damages that occurred last month will be reflected in the fourth-quarter results, KT is expected to re-enter the 1 trillion KRW club based on separate operating profit this year.

LG Uplus achieved its highest quarterly performance in 11 years. Its cumulative operating profit through the third quarter reached 820.8 billion KRW, and it is expected to surpass 1 trillion KRW in annual operating profit for the first time in history this year. LG Uplus’s total wireless subscribers (17.497 million) increased by 7.6% compared to a year ago, and sales from B2B solution businesses including corporate infrastructure and smart factories grew by 11.3% and 22.5%, respectively. The synergy from its partnership with the global online video service (OTT) Disney Plus, which will launch its Korean service on the 12th, is also expected to accelerate soon.

◇ Growth expected in Q4 as well... Challenges remain in telecom infrastructure investment

In the fourth quarter, the three telecom companies are expected to continue their performance growth driven by new businesses and the expansion of 5G subscribers. While marketing cost reduction trends continue, the number of 5G subscribers is expected to reach 20 million by the end of the year. Additionally, 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 growth trajectories.

An industry insider said, “The growth trend in new businesses is continuing,” adding, “This year, all three telecom companies, including LG Uplus, will be named in the 1 trillion KRW operating profit club.”

However, despite these results, the situation is not entirely positive. Complaints about 5G quality persist, leading to ongoing litigation, and recently, network-related issues have occurred one after another, including at KT. With the goal of building 5G 28GHz base stations by the end of this year becoming practically impossible for the three companies, related sanctions are also inevitable.

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