LG Uplus’s 2023 OP declines despite revenue growth

LG Uplus Office Building

South Korean telecom carrier LG Uplus Corp. failed to hit 1 trillion won in operating profit in 2023 due to increased costs, including investments in cybersecurity, despite a steady performance in its existing mobile division.

According to the company on Wednesday, its operating profit for 2023 decreased by 7.7 percent compared to the previous year, hitting 998 billion won ($751.8 million). It achieved an annual operating profit of 1 trillion won for the first time in 2022 but fell short of the 1 trillion won mark a year later as it increased its capital expenditure (CAPEX) by 3.9 percent compared to the previous year to 2.51 trillion won.

Revenue, however, increased by 3.4 percent compared to the previous year to hit 14.37 trillion won and service revenue, excluding handset device sales, increased by 2 percent to 11.64 trillion won. In the mobile sector, wireless subscriptions showed a growth trend in the 20 percent range, with an increase in 5G penetration and a cancellation rate in the early 1 percent range.

The total number of wireless subscriptions, or mobile network operator (MNO) and mobile virtual network operator (MVNO) subscriptions, increased by 26.1 percent to about 25.1 million compared to 2022. In particular, 5G subscriptions increased by 16.2 percent to 7.04 million, accounting for 64.3 percent of LG Uplus’ total subscribers.

In the enterprise infrastructure sector, which includes new business areas such as artificial intelligence contact centers (AICCs) and internet data centers (IDCs), revenue was 1.71 trillion won, showing the highest growth rate of 7.4 percent compared to 2022. LG Uplus secured contracts for next-generation customer service center projects in the finance and manufacturing sectors based on its AI technology, and the company plans to consolidate its AI business capabilities in 2024.

In the telecommunications sector, the company will introduce “chat agents,” an evolved form of chatbots equipped with AI trained on communication and platform data. It also aims to accelerate the expansion of AICC business into telecommunications, platforms, finance, distribution, and manufacturing in collaboration with LG AI Research.

“Although we expect various challenges throughout 2024, including a slowdown in 5G penetration, we will focus on strengthening digital transformation capabilities and expanding our platform business to demonstrate new growth drivers in the market,” Chief Financial Officer Yeo Myung-hee said.