The Top 3 Telecom Companies' Q3 Profit Hits 1 Trillion Won 'Smoothly'... Annual Profit May Surpass 5 Trillion Won

IT Industry: Portals Face 'Stagnation' and Game Industry Hits 'Earnings Shock', but
Telecom 3 Companies Soar with Stable Wireless Business and Rapid Growth in B2B and New Ventures

[Asia Economy Reporter Lim Hye-seon] The combined operating profit of the three major telecom companies?SK Telecom, KT, and LG Uplus?is expected to exceed 1 trillion won again in the third quarter. Having surpassed an annual operating profit of 4 trillion won for the first time last year, the three telecom companies are anticipated to set a new record for their best-ever performance this year.

Combined Operating Profit of Three Telecom Companies Exceeds 1 Trillion Won for 7 Consecutive Quarters

Among the three telecom companies, LG Uplus, which announced its third-quarter results first, recorded an operating profit of 285.1 billion won, a 3.0% increase compared to the same period last year. Operating revenue (sales) and service revenue (revenue excluding device sales from operating revenue) also increased compared to last year. In the third quarter of this year, operating revenue reached 3.5011 trillion won, and service revenue was 2.84 trillion won, up 0.7% and 2.0%, respectively, compared to the same period last year.

KT will release its third-quarter results on the 8th. KT is expected to report sales of 6.4284 trillion won and an operating profit of 441.5 billion won, representing increases of 3.4% and 15.5% year-on-year, respectively. SK Telecom, which is scheduled to announce its results on the 10th, is expected to record sales of 4.3694 trillion won and an operating profit of 453.3 billion won. While sales are expected to decrease by 12% compared to the same period last year, operating profit is projected to increase by 13%. The combined expected operating profit of the three telecom companies is 1.1799 trillion won. Since surpassing 1 trillion won in combined operating profit in the first quarter of last year, the three telecom companies have maintained operating profits above 1 trillion won each quarter.

Amid a slowdown in growth for portal companies like Naver and Kakao and an earnings shock in the gaming industry, which have led to an overall performance slump in the IT sector, the strong results of the three telecom companies stand out. It is understood that the stable growth of the wireless business and new business areas such as business-to-business (B2B) transactions have positively influenced their performance.

5G Penetration Rate Rises, Increasing Average Revenue Per User; New Businesses Also Positive

According to the Ministry of Science and ICT, as of the end of September, the number of 5G subscribers stood at 26,229,565. The industry expects the 5G penetration rate to exceed 60% next year. With the cumulative number of 5G subscribers increasing, the average revenue per user (ARPU) is also rising, suggesting that the wireless business performance will continue its upward trend.

LG Uplus's wireless business recorded a profit of 1.5458 trillion won, a 1.5% increase compared to the same period last year. The number of wireless subscribers was 19.473 million, up 11.3% from the third quarter of last year. The net increase in wireless subscribers in the third quarter of this year was 505,000, a 68.9% increase year-on-year, and the number of 5G subscribers rose 39.5% to 5.732 million. The proportion of 5G customers among total subscribers was 50.2%. Notably, the wireless subscriber churn rate improved by 0.39 percentage points compared to the same period last year, reaching a record low of 1.00%.

New business areas such as B2B, content, and subscriptions also showed positive results. For LG Uplus, the smart home business, including high-speed internet and Internet Protocol TV (IPTV), recorded a profit of 590.5 billion won, a 3.9% increase. Steady subscriber growth and an influx of high-value subscribers were cited as key factors for the improved performance. High-speed internet revenue was 256.5 billion won, up 7.1% year-on-year, with subscribers increasing 4.6% to 4.91 million. The IPTV business also posted revenue of 334 billion won, a 1.5% increase compared to the same period last year. Corporate infrastructure business revenue, including new business targeting enterprises, data centers (IDC), and line services, rose 1.5% year-on-year to 374.5 billion won.

SK Telecom's subscription service 'T Woosoo' is also growing. Launched in August last year, 'T Woosoo' reached 1.2 million subscribers within one year. Transaction volume in the first half of this year exceeded 260 billion won. KT is expected to see the effects of advertising for the drama 'Extraordinary Attorney Woo' reflected in its third-quarter results.

Marketing Costs Stable at Last Year’s Level; Combined Operating Profit Expected to Reach 5 Trillion Won This Year

The stability of marketing expenses is also credited with contributing to profits. LG Uplus's marketing expenses were recorded at 564.8 billion won, similar to the same period last year. Supported by improving performance, the three telecom companies are expected to comfortably surpass a combined operating profit of 4 trillion won this year. The combined operating profit for the first two quarters was 2.4872 trillion won. Including the third quarter, it is expected to exceed 3.6 trillion won.

An industry insider said, "The combined operating profit of the three telecom companies is expected to approach 5 trillion won this year," adding, "With the increase in 5G subscribers, wireless business profits will continue steadily, and new businesses are also yielding results, so telecom companies will maintain qualitative growth for the time being."

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