LG Uplus narrows operating profit gap with bigger rivals in 2022

LG Uplus Corp., South Korea’s third-largest mobile carrier, reported more than 1 trillion won ($814.2 million) in operating profit in 2022 for the first time, further narrowing the gap with its bigger local rivals thanks to a rise in subscribers in both mobile phone and internet TV services, as well as the steady growth of its business-to-business (B2B) service.

LG Uplus announced in a regulatory filing on Friday that operating income for 2022 jumped 10.2% from a year ago to 1.08 trillion won on a consolidated basis. It was the first year that its operating income topped the 1 trillion won threshold. Its bigger rivals KT Corp. and SK Telecom Co. have already reported annual operating profits of more than 1 trillion won in recent years. 

Its sales inched up 0.4% on-year to 13.9 trillion won last year, while net profit declined 8.5% to 662.6 billion won due to an increase in financial costs in the face of rising interest rates, according to the company.

For the final quarter of last year ended in December, operating income surged 81.1% on year to 286.6 billion won on sales of 3.6 trillion won, unchanged from the same period a year earlier. Its bottom line jumped 56.6% to 159.4 billion won.   

SUBSCRIBER GAINS IN 5G, BUDGET MOBILE PLANS

Sales from its mobile business reached 6.2 trillion won in 2022, up 2.1% year on year.

In particular sales from its mobile phone services including basic phone and data plans rose 2.4% to 5.8 trillion won mainly thanks to gains in both mobile virtual network operator (MVNO) and mobile network operator (MNO) services, as well as the fast penetration of 5G service, according to LG Uplus. Its mobile service plan termination rate also dropped 0.37 percentage points to 1.03% last year.  

As of the fourth quarter of last year, the company’s total mobile service subscribers stood at 19.89 million, up 10.6% on-year. 5G service subscribers were 6.11 million, up 32.1% over the same period, and 5G users accounted for 53.5% of its total mobile phone service subscribers, upping its profit given the fact that the monthly average revenue per user (ARPU) for 5G service is higher than that of other network services.

Its MVNO subscribers last year jumped 36.7% to 3.87 million.

SOLID SMARTHOME, B2B SERVICES

Sales from the ‘Smarthome’ division, which manages internet protocol television (IPTV) and other internet services, added 6.4% on year to 2.3 trillion won in 2022. IPTV revenue was up 5.6% to 1.3 trillion won.

Sales growth was attributed to the company’s efforts to enhance user experience features such as the introduction of big data-based program curation service, as well as the revamped OTT TV platform that allows users to search real-time TV programs as well as video on demand (VOD) and over the top (OTT) programs on the same platform, according to LG Uplus.

Its B2B service also earned 1.6 trillion won in revenue last year, up 6.1% from a year earlier. The division offers internet data, smart factory, web-based storage, and network and internet infrastructure services to business clients.

LOW COSTS

It spent 2.3 trillion won in marketing last year, down 0.4% from the previous year, with marketing costs accounting for 21.6% of its entire service sales, 0.8 percentage points less from a year ago.  

Write to Han-Gyeol Seon at always@hankyung.com
Sookyung Seo edited this article.