The combined operating profit of Korea's three mobile carriers fell below 1 trillion won in the third quarter for the first time in four years. With SK Telecom's large-scale hacking incident and LG Uplus's reflection of voluntary retirement expense overlapping, the yearslong "1 trillion club" streak was halted. By contrast, KT alone held up, helped by real estate pre-sale gains and growth in its cloud business.
◇ Operating profit of the three carriers falls below 1 trillion won in the third quarter for the first time in four years
According to the telecommunications industry on the 7th, the combined third-quarter operating profit of the three mobile carriers—SK Telecom, KT and LG Uplus—was about 748.3 billion won, down 39.8% from the same period a year earlier (1.2434 trillion won). After exceeding 1 trillion won in the third quarter from 2021 to 2024, the industry's operating profit fell below 1 trillion won for the first time in four years. This is because SK Telecom, which posted 533.3 billion won in operating profit in the same period last year, saw its results plunge due to the fallout from the hacking incident. SK Telecom's third-quarter operating profit on a consolidation basis was 48.4 billion won, down 90.9% from a year earlier. Revenue also fell 12.2% year over year to 3.9781 trillion won. SK Telecom said this was due to the impact of reflecting compensation marketing expenses such as a "customer appreciation package" for customers affected by the hacking. In Aug., SK Telecom cut fees by 50% for all subscribers and provided an additional 50 gigabytes (GB) of data for five months through the end of the year. It also waived penalty fees for subscribers who wanted to switch to another carrier within a certain period. A telecommunications industry official said, "The short-term loss is large, but the judgment was that restoring customer trust in the long run takes priority."
◇ KT alone held up in earnings; LG Uplus sees revenue fall due to restructuring
KT posted consolidated revenue of 7.1267 trillion won and operating profit of 538.2 billion won in the third quarter. Revenue rose 7.1% from a year earlier, and operating profit increased 16%. Following SK Telecom's hacking incident in Apr., number portability activity picked up, increasing new wireless subscribers. According to KT, wireless business revenue rose 4.7% year over year. Growth in non-telecom institutional sectors such as cloud, data centers (DC) and real estate also drove results. KT Estate, which handles the real estate business, recorded third-quarter revenue of 186.9 billion won, up 23.9% from a year earlier, while KT Cloud's revenue during the same period was 249 billion won, up 20.3% year over year.
LG Uplus also saw an increase in new wireless subscribers due to SK Telecom's hacking incident, but recorded weak results. In the third quarter, LG Uplus's operating profit on a consolidation basis was 161.7 billion won, down 34.3% from a year earlier. This was due to the impact of one-time personnel expenses of 150 billion to 160 billion won being reflected as about 600 people left the company through a voluntary retirement program in Aug. Revenue rose 5.5% from a year earlier to 4.0108 trillion won. LG Uplus said, "Telecom revenue in our core business has steadily increased, but profitability temporarily worsened due to restructuring expense."
The problem is the fourth-quarter results. Following SK Telecom, the hacking incident that erupted at KT in Sept. is expected to weigh on the combined fourth-quarter results of the three carriers. A telecommunications industry official said, "From the fourth quarter, the effects of the KT hacking will be fully reflected," adding, "This year saw big variables such as hacking and personnel costs, but next year, results are expected to recover around new businesses such as AI and cloud."