LG Uplus saw third-quarter operating profit plunge by nearly 35% from a year earlier despite growth in the mobile institutional sector, due largely to payouts related to a voluntary retirement program.
LG Uplus said on the 5th that on a consolidation basis, third-quarter revenue came to 4.0108 trillion won and operating profit to 161.7 billion won. Revenue rose 5.5% from the same period last year on growth in the mobile institutional sector, but operating profit fell 34.3%. Net profit for the quarter was 49.1 billion won, down 63.6% from a year earlier.
LG Uplus' third-quarter results were better than brokerage forecasts. According to FnGuide, securities analysts expected LG Uplus' third-quarter revenue to increase 2.61% year over year to 3.9006 trillion won. Operating profit was forecast at 183.7 billion won and net profit at 117.9 billion won, down 25.33% and 12.62%, respectively, from a year earlier.
The steep drop in operating profit was largely due to 150 billion won spent on voluntary retirements. The company said, "If excluding the expense related to voluntary retirements, third-quarter operating profit would be 311.7 billion won, up 26.7% from the same period last year, showing continued improvement following the first half."
The wireless business in the third quarter rose 5.6% year over year to 1.7114 trillion won, driven by a higher share of 5G (fifth-generation mobile communication) handset subscriptions and an increase in mobile network operator (MNO) and mobile virtual network operator (MVNO) lines. In particular, total wireless subscription lines combining mobile and MVNO increased 8.6% from the third quarter last year to about 30,259,000, surpassing a total of 30 million lines for the first time. Mobile subscription lines rose about 5.4% from the same period last year to about 21.2 million, and MVNO subscription lines increased 16.8% to about 9.05 million. The share of 5G handset subscribers among all mobile handset subscribers also topped 80% for the first time, reaching 81.6%, up 11.4 percentage points (P) from a year earlier.
LG Uplus launched the integrated app "U+One," which adds an artificial intelligence (AI) search function, and rolled out the ixi-O 2.0 update with enhanced personalized features, developing a variety of AI services for mobile customers.
The smart home institutional sector, consisting of internet and IPTV businesses, achieved revenue of 673.4 billion won, up 3.5% from a year earlier, thanks to growth in giga internet subscribers. The share of giga internet subscribers rose 5 percentage points from the third quarter last year, and the cumulative share of lines subscribed to plans with speeds of 500M or higher increased 1.5 percentage points to 81.8%, driving smart home institutional sector growth. Internet revenue grew 8.4% year over year to 311.3 billion won, with subscribers also up 4.3%. The IPTV business steadily added lines, with subscribers up 3.3% from a year earlier, but total revenue edged down 0.4% to 334.2 billion won.
Revenue in the enterprise infrastructure institutional sector, which includes AI data centers, solutions, and corporate lines, rose 1.8% from the same period last year to 427.9 billion won.
AI data center revenue rose 14.5% year over year to 103.1 billion won, helped by higher utilization from new tenant move-ins at the Pyeongchon 2 Center and entry into the data center design, build, and operate (DBO) business. That was also a 7.1% increase from the previous quarter. The company said it expects AI data center revenue to continue growing as market demand for AI cloud increases.
During the same period, revenue in Solutions, a new business-to-business (B2B) area including AICC (AI contact center) and smart mobility, and in Corporate line, a dedicated internet access business for companies, declined slightly. Third-quarter revenue in the Solutions business fell 0.7% year over year due to factors such as the transfer of the electric-vehicle charging business, while Corporate line revenue decreased 2.2% over the same period.
Third-quarter marketing expense increased 5.2% year over year to 585.2 billion won on subscriber growth. Capital expenditure was 438.1 billion won in the third quarter, down 2.2% from the same period last year.
Yeo Myung-hee, chief financial officer and chief risk officer (CFO/CRO) at LG Uplus, said, "We will continue to focus on strengthening fundamental competitiveness through differentiated AI services, and pursue sustainable corporate value enhancement through improved profitability and stronger shareholder returns."