LG Uplus surpasses KT in mobile subscribers for first time

[Courtesy of LG Uplus, KT]

South Korean mobile network operator (MNO) LG Uplus achieved a significant milestone by surpassing its rival, KT, in mobile subscribers for the first time. This feat is due to LG Uplus’ expansion into remote metering devices and other Internet of Things (IoT) applications as well as in-vehicle infotainment.

According to the quarterly earnings results released on Tuesday by both companies, as of the third quarter of 2023, LG Uplus had 18.29 million mobile subscribers, excluding thrifty phone (MVNO) users, while KT had 17.73 million. LG Uplus attributed this growth to a 22.3 percent increase in subscribers, primarily in the wireless communication sector, driven by IoT and connected car services.

While LG Uplus has seen a substantial growth in subscribers, KT still maintains a robust position in terms of general consumer mobile phone market share. According to statistics from the Ministry of Science and ICT, KT led in the number of mobile phone subscribers as of August 2023, with about 2.6 million more subscribers than LG Uplus.

In terms of Average Revenue Per User (ARPU), LG Uplus recorded a decline in the third quarter, marking its ninth consecutive quarter of negative growth. The company’s ARPU, which includes IoT lines, dropped by 6.4 percent compared to the previous year, reaching 27,300 won ($21), while KT’s ARPU increased by 2.8 percent on-year to 33,838 won.

Both KT and LG Uplus reported a decrease in operating profits for the July-September period compared to the previous year. KT disclosed a third-quarter revenue of 6.69 trillion won and an operating profit of 321.9 billion won. On a year-over-year basis, sales grew 3.4 percent to post the highest quarterly revenue, but operating income dropped 28.9 percent. The decline in operating profit for KT was attributed to the early resolution of wage negotiations that resulted in increased labor costs that were atypical for the third quarter.

LG Uplus reported a 2.3 percent increase in revenue on-year, totaling 3.58 trillion won, but an operating profit decline of 10.8 percent, reaching 254.3 billion won.

LG Uplus experienced a drop in operating profit due to an increase in industrial electricity rates. The cost of industrial electricity has risen in Korea, with the rate per kilowatt-hour increasing by 13.1 won in January and by 8 won in May 2023.

LG Uplus’ third-quarter miscellaneous costs increased by about 52.9 billion won compared to the previous year, a substantial portion of which is believed to be related to the impact of higher electricity rates. KT also saw an increase in business expenses as a result of a 5.7 percent rise in operating costs, potentially due to the impact of increased electricity rates.

Both companies achieved modest revenue growth in the wireless business sector, with growth rates ranging from 1 percent to 2 percent. KT recorded a wireless business revenue of 1.70 trillion won, up 1.6 percent from a year ago, while LG Uplus’ wireless business revenue reached 1.58 trillion won, up 2.7 percent.

With rising costs, and relatively stable revenue in the wireless business sector, securing non-telecommunications revenue has become more crucial. KT experienced growth in its enterprise services segment, where business-to-business (B2B) transactions are predominant, with revenues of 981.7 billion won, up 2.7 percent. KT Cloud, focusing on businesses like artificial intelligence (AI) and private cloud services, achieved a 34.5 percent growth, generating 193.8 billion won in revenue. However, the AI and new ventures sector saw a decrease in revenue of 11.9 percent, recording 106 billion won compared to a year ago.

For LG Uplus, securing revenue from new ventures has also become a priority. In the solution sector, which includes B2B new ventures such as smart factories and smart mobility, LG Uplus recorded 129.2 billion won in sales in the third quarter, up 17.5 percent. The company’s Internet Data Center (IDC) revenue was also up 18.2 percent on-year.

Meanwhile, LG Uplus set a goal to become one of the top three companies in the electric vehicle charging market within three years, reflecting its commitment to diversifying its revenue streams.