LG Uplus Reports 7.7% Decrease in Operating Profit Last Year Due to Increased Network Infrastructure Costs

2023 Annual and Q4 Earnings Announcement
Service Revenue 11.6364 Trillion KRW... Up 2%
5G Customer Share Reaches 64.3%

LG Uplus recorded an operating profit of 998 billion KRW last year, a 7.7% decrease compared to the previous year. The company stated that this was due to the impact of increased electricity costs, expanded investment in cybersecurity, and expenses related to the construction of a new integrated IT network.

[Image source=Yonhap News]

On the 7th, LG Uplus announced that based on consolidated financial statements, it recorded sales of 14.3726 trillion KRW, service sales of 11.6364 trillion KRW, and an operating profit of 998 billion KRW last year. Service sales refer to the portion of total sales excluding device revenue.

Last year, sales and service sales increased by 3.4% and 2.0% respectively compared to 2022, but operating profit decreased by 7.7%.

LG Uplus stated, "The growth in the mobile business and the corporate infrastructure sector, which includes new B2B (business-to-business) ventures, were the main drivers of sales increase," but also noted, "Operating profit declined due to the impact of increased electricity costs and expanded investment in cybersecurity."

For the fourth quarter of last year, sales amounted to 3.8209 trillion KRW, a 5.8% increase year-on-year, and service sales rose 2.2% to 3.0098 trillion KRW. Operating profit was 195.5 billion KRW, down 31.8% year-on-year, due to factors including the start of cost recognition related to the construction of the new integrated IT network.

Mobile sales reached 6.3084 trillion KRW, a 2.0% increase compared to the previous year. Wireless service sales, excluding access revenue, grew 2.6% to 5.9814 trillion KRW. Wireless service sales refer to the total revenue from basic fees, call charges, data, and other sources.

The total number of wireless subscription lines, combining MNO and MVNO, showed solid growth, increasing 26.1% year-on-year to 25.097 million lines. In particular, 5G subscription lines reached 7.04 million, a 16.2% increase compared to 2022. The proportion of 5G customers among total mobile subscribers reached 64.3%.

MVNO subscription lines continued a steep growth trend, increasing 62.9% to 6.327 million lines. This was driven by the expansion of MVNO lines through the growth of the K-Infotainment business, the industry’s first launch of a 5G mid-tier plan, and the expansion of specialized stores for small and medium-sized budget phone companies.

In the fourth quarter of last year, sales in the corporate infrastructure sector, which includes solutions, IDC, and corporate lines, recorded the highest growth rate among all sectors, increasing 7.4% year-on-year to 1.7057 trillion KRW.

This year, LG Uplus plans to accelerate the expansion of its AI business by collaborating with LG AI Research Institute to develop the large language model (LLM) ixi-GEN, which can be applied across various fields such as telecommunications, platforms, finance, distribution, and manufacturing, using it as the core of its AI customer center (AICC) business.

Launched in September last year, the U+AICC Cloud is a service designed for medium and small enterprises that want to quickly apply AICC to their customer centers. Its strength lies in allowing customers to use call center infrastructure and AI solutions in a monthly subscription format without separate construction.

Yeom Myung-hee, LG Uplus Chief Financial Officer (CFO) and Chief Risk Officer (CRO), said, "In 2024, we will focus on strengthening digital transformation (DX) capabilities and expanding platform businesses to prove LG Uplus’s new growth engines in the market."

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