Seoul, South Korea - LG Uplus (KRX: 032640) has announced its Q2 2023 Earnings.
Why It Matters:
LG U+ is one of the major players in the South Korean telecommunications market. This earnings call was vital because it showed the evolution of the telco market, mainly LG U+'s focus on the B2B market.
The Key Points
- Service Revenue and Operating Profit Growth: LG U+ reported a year-on-year increase of 1.6% in service revenue, reaching KRW 2.8971 trillion (US$ 2.2 billion). Operating income showed significant growth at 16.0% year-on-year, amounting to KRW 288 billion (US$ 218.5 million), partially affected by the base effect of a one-time labor cost charge in Q2 of the previous year.
- Wireless Business Flourishing: Wireless revenue increased by 2.1% to KRW 1,576.1 billion (US$ 1.2 billion), driven by both major network operators (MNOs) and mobile virtual network operators (MVNOs). Total wireless subscribers surged 14.3% year-on-year, hitting the fifth consecutive quarter of double-digit growth. Notably, 5G subscriptions increased by 24.3% YoY, accounting for 57.2% of total subscriptions.
- Smart Home Segment Showing Quality Growth: The Smart Home segment, which includes high-speed internet and IPTV, saw revenue rise by 4.0% YoY, reaching KRW 602.9 billion (US$ 457.3 million). Proactive strategies like restructuring U+tv for integrated search and collaboration with popular platforms like Netflix, Disney+, and TVing drive this growth.
- Enterprise Infrastructure Segment Expanding: This segment's revenue increased by 1.1% year-on-year and 11.1% quarter-on-quarter to KRW 409.4 billion (US$ 310.4 million). The IDC business within this segment posted the highest growth at 15.5% YoY. Solutions business revenue declined slightly but showed a promising quarterly increase, reflecting the visibility of new B2B initiatives like AI Voice Bot, Smart Factory, and Smart Mobility.
The Big Picture:
LG U+ continued to invest in its 5G fixed and mobile networks, with CAPEX rising by 8.2% YoY to KRW 613.3 billion (US$ 464.7 million).
Marketing expenses were slightly down at KRW 539.7 billion (US$ 409.1 million).
The impressive growth in wireless, particularly in MVNO subscribers, up 47.2% YoY, reflects LG U+'s commitment to enhancing the competitiveness of products and services for small and medium-sized operators.
Collaboration with high-profile OTT platforms further underscores its proactive approach to adapting to the changing content viewing environment.