Combined Operating Profit of the Three Major Telecom Companies Surpasses 4 Trillion Won Barrier

5G Impact in Mobile Communications Sector
Influence on New Business Growth Including B2B

[Asia Economy Reporter Lim Hye-seon] The combined operating profit of the three major mobile carriers?SK Telecom, KT, and LG Uplus?surpassed the 4 trillion won mark for the first time last year. This was thanks to the spread of 5G in their core mobile network operator (MNO) business, as well as growth in new businesses such as media and business-to-business (B2B) sectors.

Combined Operating Profit of Three Telecom Giants Hits 4 Trillion Won

On the 9th, SK Telecom announced that its operating profit last year reached 1.3872 trillion won, an 11.1% increase compared to the previous year. During the same period, operating revenue (sales) rose 4.1% from 2020 to 16.7486 trillion won. LG Uplus, which disclosed its results earlier, reported operating profit and sales of 979 billion won and 13.8511 trillion won respectively, marking increases of 10.5% and 3.2% year-on-year. KT recorded operating profits in the 1.6 trillion won range. Accordingly, the combined operating profit of the three mobile carriers in the third quarter totaled 4 trillion won, up from 3.4196 trillion won the previous year. Over recent years, the combined operating profit of the three carriers has grown from about 2.9 trillion won in 2019 to 3.4 trillion won in 2020, and 4 trillion won last year.

5G Surpasses 20 Million Subscribers

The achievement of 4 trillion won in operating profit by the three carriers is the result of balanced growth in both telecommunications and new businesses. The wireless segment, including 5G which was first commercialized in April 2019, played a key role. According to the Ministry of Science and ICT’s “Wireless Communication Service Subscription Status,” the number of 5G subscribers reached 20,915,176 by the end of last year. This is a 3.6% (725,368) increase from the end of November, when the subscriber count first surpassed 20 million (20,189,808). Thanks to the rise in subscribers opting for expensive 5G plans, the average revenue per user (ARPU) for the three carriers is expected to have reached the 30,000 won range.

Looking at the detailed results disclosed by SK Telecom on this day, the company surpassed 10 million 5G subscribers as of January. On a standalone annual basis, sales grew 3.0% year-on-year to 12.1028 trillion won, and operating profit increased 8.9% to 1.1143 trillion won. SK Broadband achieved record-high sales of 4.0492 trillion won, a 9.0% increase from the previous year. Operating profit rose 19.4% year-on-year to 275.6 billion won. SK Broadband has ranked first in net IPTV subscriber additions for three consecutive quarters since Q2 2021.

Non-Telecom Revenue Enters Growth Trajectory

Revenues from new businesses have also entered a full-fledged growth trajectory. SK Stoa maintains its position as the number one player in the T-commerce market by sales. SK Stoa recorded a total gross merchandise volume (GMV) of 1.3 trillion won in 2021, continuing a steep average annual growth rate of 48% since 2018. KT and LG Uplus are pursuing various new businesses including artificial intelligence (AI), metaverse, and smart factories. LG Uplus’s corporate infrastructure businesses such as smart factories and internet data centers (IDC) continued stable revenue growth. Revenues from corporate new businesses, including IDC and line services, grew 10.7% year-on-year to reach 1.4926 trillion won. However, challenges remain regarding ‘5G quality.’ The goal of building ‘5G 28 GHz base stations’ by the three carriers by the end of this year has effectively become unattainable.

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