Korean mobile trios earn $1bn in Q2 operating profit on growth in 5G subscribers

South Korea’s three major wireless carriers posted a combined of 1.33 trillion won ($1.01 billion) in operating profit for the second quarter on the back of growth in non-telecom business and subscriptions for fifth-generation (5G) subscriptions.

According to regulatory filings by SK telecom Co., KT Corp., and LG Uplus Corp., the combined operating profit stood at 1.33 trillion won in the April-June period, exceeding market consensus of 1.27 trillion won released at the end of July.

The combined figure was higher than the operating profit achieved in the second quarter of last year, which amounted to 1.2 trillion won and in the previous quarter, which stood at 1.24 trillion won.

The three mobile carriers posted a combined sales of 14.28 trillion won in the second quarter.

The companies exhibited stable growth in the communications sector, the key source of their earnings. The service providers achieved a steady increase in the number of 5G users, which played a pivotal role in the strong performance of wireless communications.

SK telecom has a total of 14.67 million 5G subscribers as of June, accounting for 63 percent of the company’s entire users.

KT boasts a 5G subscriber base of 9.28 million, which accounts for 68 percent of its entire subscribers. LG Uplus holds 6.68 million, constituting about 57.2 percent.

Increased sales from roaming services also drove the quarterly performance. Demand rose on increased travel.

LG Uplus saw growth in the number of Mobile Virtual Network Operator (MVNO) subscribers that stood at 4.87 million in the second quarter, up 47.2 percent from the same period a year ago.

LG Uplus has pioneered the telecommunications industry by introducing wholesale 5G intermediary plans to cater to budget phone operators. It has further extended its support by facilitating MVNO customer consultations at its stores.

Strong performance, in the meantime, was also led by increased IPTV and high-speed Internet users.

Despite the shrinking sales of video-on-demand (VOD) services due to the expansion of over-the-top (OTT) services, the wireless carriers managed to maintain a growth trend by incorporating the OTT platforms into their services.

The carriers also achieved outstanding earnings in the non-communications segments.

[Photo by Yonhap]

SK telecom’s enterprise division yielded sales of 407.1 billion won in the second quarter, marking a significant upswing of 9.2 percent compared to the corresponding period last year.

The company’s data center sector saw an exceptional growth rate by achieving a sales expansion of 30 percent in the period.

The cloud business achieved an impressive surge of over 60 percent in sales, primarily fueled by substantial orders from the gaming and financial sectors. The media business observed a moderate 1.2 percent increase in sales to 386.5 billion won.

KT successfully enhanced profitability across both the business-to-business (B2B) and business-to-consumer (B2C) sectors.

Within the B2B domain, particularly in the Digico B2B platform business, the company saw a surge of 19 percent in the value of orders compared to the second quarter of the previous year.

The increase was predominantly attributed to the expansion of sales generated from substantial-scale projects that were previously secured in addition to the recovery observed in the real estate business.

The company’s B2B telecommunications sector demonstrated robust growth of 7.6 percent in sales. The enterprise internet business exhibited an encouraging 5.2 percent uptick in sales fueled by heightened demand for dedicated lines catering to CCTV requirements.

The enterprise infrastructure sector of LG Uplus achieved sales of 404.9 billion won, up 1.1 percent in comparison to the second quarter of the previous year. It represented a surge of 11.1 percent from the previous quarter.

Industry insiders, in the meantime, projected that the mobile carriers could face limited growth in the second half of this year as the government has declared an overhaul to rectify overseas roaming service fees amid the ongoing push toward cheaper communications charges.

The government’s commitment to nurturing competitive budget phone operators could also potentially threaten the earnings prospects for the three wireless mobile carriers.