LG Uplus Q2 Operating Profit Down 7.5% Due to One-Time Labor Cost Increase

Sales reached 3.3843 trillion KRW, up 1.2%
Service revenue also increased by 3.0%, achieving 2.8506 trillion KRW

[Asia Economy Reporter Lim Hye-seon] LG Uplus announced on the 5th that its operating profit for the second quarter of this year was preliminarily estimated at 248.4 billion KRW, down 7.5% compared to the same period last year. This was due to a one-time increase in labor costs. Excluding one-time expenses, operating profit increased by 9.5% compared to the same period last year. Sales revenue rose by 1.2% to 3.3843 trillion KRW compared to the same period last year. Marketing expenses recorded 564.9 billion KRW, down 0.3% from the same period last year, and capital expenditure (CAPEX) was 611 billion KRW, invested in 5G network expansion and strengthening new businesses.

Achieved Lowest Churn Rate for Two Consecutive Quarters

Wireless business revenue recorded 1.541 trillion KRW, up 2.2% year-on-year. Qualitative growth was driven by net additions of wireless subscribers and achieving the lowest churn rate in history for two consecutive quarters. Wireless service revenue excluding access revenue (including basic fees, call charges, data, etc.) was 1.4553 trillion KRW, a 2.6% increase compared to the same period last year.

The net increase in wireless subscribers in the second quarter was 495,000, a 129.0% growth compared to the same period last year. Wireless subscribers also increased by 10.3% compared to the same period last year, bringing the total accumulated subscribers to 18.968 million. The number of 5G subscribers increased by 44.2% compared to the second quarter of last year, reaching 5.373 million. Among all handset subscribers, 5G customers accounted for 47.0%.

In particular, the mobile network operator (MNO) churn rate improved by 0.17 percentage points from the same period last year to 1.11%, achieving the lowest rate in history for two consecutive quarters following the first quarter of this year. The churn rate in the first quarter was 1.18%. Innovations in customer experience across all wireless business areas, including plans, subscription services, bundled products, and memberships, are analyzed to have driven subscriber growth and churn rate improvement.

MVNO (Mobile Virtual Network Operator) subscribers also continued their upward trend. In the second quarter, MVNO subscribers increased by 40.6% year-on-year to 3.314 million. The main reasons cited include fostering win-win cooperation with small and medium-sized operators through shared SIM cards, expanded partnerships, and benefits for long-term customers, while also enhancing MVNO subscriber satisfaction.

Smart Home Revenue Increased by 7.6%

The smart home business, including Internet TV (IPTV) and high-speed internet, as well as corporate infrastructure businesses such as smart factories and Internet Data Centers (IDC), continued to grow. The smart home segment contributed to performance growth with revenue of 579.6 billion KRW, up 7.6% compared to the second quarter of last year. IPTV revenue increased by 7.8% year-on-year to 327.6 billion KRW. Improvements in user interface (UI) and strengthening of proprietary content competitiveness such as U+ Idle Nara, U+ Home Training NOW, and U+ Golf led to a 4.3% increase in cumulative IPTV subscribers to 5.396 million compared to the same period last year. High-speed internet revenue rose by 7.3% to 252 billion KRW, with cumulative subscribers growing 4.8% to 4.862 million during the same period.

The corporate infrastructure segment, a new growth engine, also saw balanced growth across all businesses. Corporate infrastructure business revenue increased by 4.4% year-on-year to 403.2 billion KRW. Revenue from corporate internet and dedicated lines grew 6.5% year-on-year to 200.1 billion KRW, while B2B solution business revenue, including smart factories, rose 1.9% to 134 billion KRW. IDC business revenue in the second quarter increased by 3.7% year-on-year to 69.1 billion KRW, contributing to improved performance in the corporate infrastructure segment. The expansion of cloud service demand and digital transformation industry trends are interpreted as positive influences.

Expansion into Non-Telecommunication Business Areas

LG Uplus plans to accelerate qualitative growth in the telecommunications business in the second half of this year while focusing on strengthening capabilities in new non-telecommunication businesses, pushing forward its leap as a digital innovation company. In particular, it plans to continue qualitative growth based on customer experience innovation proven in the telecommunications business into new business areas.

In the B2B new business sector, as a leading company, LG Uplus plans to continuously discover solutions to secure new customers and prepare businesses with high market entry potential. In the first half of this year, LG Uplus launched a cloud-based subscription smart factory service for small and medium-sized enterprises and was the only domestic telecom operator to participate in the smart station construction project. Additionally, aiming for commercialization of Urban Air Mobility (UAM) by 2026, LG Uplus signed business agreements with companies and institutions possessing excellent related technologies, focusing on securing new growth engines.

At the same time, LG Uplus plans to visualize new businesses with high growth potential to meet market demands. The recently launched subscription platform ‘Yudok’, which has no selection restrictions, fee burdens, or cancellation inconveniences, will be opened to subscribers of other companies to expand its customer base. In the data sector, platform and data businesses have been intensified with B2B big data service ‘Data Plus’ and AI call bot service specialized for small business owners, ‘AI Store Manager’.

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