Korea’s three major telcoms’ combined profit to exceed $767 million in Q2

This signboard shows the logos of SK telecom, KT, and LG Uplus [Photo by Yonhap]

The combined operating profit of the three major telecommunications companies in South Korea is expected to exceed 1 trillion won ($767 million) in the second quarter of this year for a sixth consecutive quarters.

According to Yonhap Infomax on Thursday, the consensus for the combined second-quarter operating profit of the three telecom companies is estimated at 1.28 trillion won.

By company, SK telecom Co. is expected to post an operating profit of 488.5 billion won, KT Corp. 510.3 billion won and LG Uplus Corp. 281.2 billion won. These figures represent year-on-year increases of 6.29 percent, 11.13 percent, and 13.2 percent, respectively.

Revenue is expected to total 14.45 trillion won, with SK telecom taking in 4.41 trillion won, KT 6.53 trillion won and LG Uplus 3.52 trillion won.

The positive performance of the telecom companies can be attributed to the growth in revenue from an increase in 5G subscribers, while there were no significant issues that would increase marketing costs.

According to data from the Ministry of Science and ICT, the number of 5G subscribers in South Korea stood at 32.3 million at the end of April, surpassing the 30 million mark.

The number of 5G subscribers by carrier was 14.35 million for SK telecom, 9.02 million for KT and 6.43 million for LG Uplus.

5G has a higher average revenue per user (ARPU) than LTE or 3G, so more subscribers mean more revenue.

Additionally, marketing and depreciation expenses have been stagnant, contributing to the increase in operating profit.

Moreover, the government’s decision to revise the mobile device distribution improvement act, instead of abolishing it altogether, has eased the burden of marketing expenses.

Furthermore, the carriers’ new businesses are also performing well, adding to their strong performance.

Kim Soo-jin, an analyst at Mirae Asset Securities Co., said of SK telecom that “solid wireless business revenue will continue through roaming expansion and data center growth will also continue to expand.” The analyst also unveiled positive expectations for the company’s new businesses, such as subscription services and ifland, a metaverse service.

However, the analyst cautioned that the number of users switching plans could increase amid economic slowdown and a decline in ARPU will be inevitable with the increase in low-priced Internet of Things (loT) and mobile virtual network operator (MVNO) subscribers.

Hwang Sung-jin, an analyst at Heungkuk Securities Co., said that LG Uplus “is continuing to perform well in all business segments, including mobile, smart home, and corporate infrastructure, based on the improvements in key fundamental indicators, while maintaining the stable trend in major costs.”