LG Uplus sees Q3 OP fall 10.8% on year on increased costs

[Courtesy of LG Uplus]

Despite the continued strong sales, South Korean mobile carrier LG Uplus Corp. saw its third-quarter operating profit decline nearly 11 percent from a year ago due to increased spending on electricity.

LG Uplus said in a disclosure on Tuesday that its operating profit came to 254.3 billion won ($195 million) for the third quarter, down 10.8 percent from the same period a year ago.

The figure is 4 percent lower than the market consensus of 264.9 billion won projected by Yonhap Infomax.

Sales were up 2.3 percent on year to 3.58 trillion won during the July-September period. Net profit fell by 8.3 percent to 156.7 billion won.

Service sales, excluding device sales, increased by 2.3 percent to 2.95 trillion won.

Marketing expenses fell by 2 percent to 553.2 billion won, and capital expenditures (CAPEX) declined by 15.4 percent to 524.1 billion won, data showed.

Despite a continuous double-digit increase in wireless subscriptions for six consecutive quarters and stable revenue growth in corporate infrastructure and smart home sectors, the company saw its operating profit fall primarily due to the increase in spending for electricity bills, which amounted to about 44.9 billion won, the company said.

LG Uplus is focusing on developing new businesses such as internet data centers (IDC) that require a high electricity demand.

The company’s wireless business sales increased by 2.7 percent to 15.87 trillion won year-on-year, and wireless service sales, excluding connection revenue, increased by 3.1 percent to 1.57 trillion won compared to the same period last year.

The total number of wireless lines increased by 22.3 percent to 23.82 million, marking double-digit growth for six consecutive quarters since the second quarter of last year. Net-added lines increased by 2.14 million during this period, a 324.4 percent increase.

Mobile network operator (MNO) subscriptions increased by 15.3 percent to a total of about 18.29 million, compared to the same period last year.

5G subscriptions increased by 19.7 percent to about 6.82 million, with 5G customers accounting for 61.9 percent of the total subscribers. This figure is an 11.3 percentage point increase from the third quarter of last year.

The subscription termination rate decreased by 0.1 percentage point to 1.05 percent during the same period. Mobile virtual network operator (MVNO) subscriptions also increased by 53.1 percent to about 5.53 million.

The smart home division, composed of high-speed internet and internet TV businesses, recorded sales of 607.2 billion won, a 2.8 percent increase.

The corporate infrastructure division, which includes enterprise lines, solutions, and internet data center (IDC) businesses, recorded sales of 404 billion won, a 7.9 percent increase.

Internet data center business sales increased by 18.2 percent to 82.7 billion won, and solution sales increased by 17.5 percent to 129.2 billion won compared to the same period last year. Corporate internet and dedicated line business sales fell by about 1.2 percent to 192.1 billion won compared to 194.5 billion won during the same period a year before.

“We are seeking stable growth by enhancing both existing and new businesses while managing costs efficiently,” said LG Uplus’ Chief Financial Officer Yeo Myung-hee. “We will continue to do our best to achieve our annual goals in the fourth quarter.”