The hacking fallout that erupted last year split the fortunes of the three telecom companies. SK Telecom, which booked hacking response expenses first, saw profitability deteriorate sharply in the fourth quarter, while KT and LG Uplus, which recognized the expenses at different times, showed an improving profit trend. Still, on an annual basis, the three companies' combined operating profit topped 4 trillion won, successfully defending their topline.
◇ Despite hacking fallout, combined operating profit of the three telecom companies turned to a surplus in the fourth quarter
According to each company on the 10th, the combined revenue of the three telecom companies in the fourth quarter last year was 15,022.1 billion won, and operating profit was 516.9 billion won. Combined revenue rose 1.2% from 14,840.3 billion won a year earlier, and combined operating profit swung to a surplus from an operating loss of 258.8 billion won a year earlier.
Analysts say the base effect played a big role in this improvement. In the fourth quarter of 2024, the three telecom companies saw a sharp, one-off increase in labor costs due to restructuring and retirement programs. At the time, SK Telecom expanded severance for its retirement program "Next Career" from 50 million won to as much as 300 million won, and KT recognized about 1 trillion won in one-off labor costs tied to a workforce reduction of 4,400 people. LG Uplus also saw a temporary increase in labor costs due to a ruling expanding the scope of ordinary wages. A telecom industry official said, "Although the hacking fallout continued, the base effect from the previous year's one-off labor cost burden showed up as an improvement in last year's fourth-quarter results."
◇ SK Telecom profitability plunges, KT and LG Uplus improve profits
SK Telecom's operating profit in the fourth quarter last year was 119.1 billion won, down 53.12% from a year earlier. Revenue during the same period also fell 4.05% year over year to 4,328.7 billion won. The declines were largely due to a reduction in wireless subscribers from the hacking fallout and the booking of customer appreciation packages and security investment expenses. According to SK Telecom, excluding MVNOs, wireless subscribers decreased by a net 229,000 in the fourth quarter alone.
KT posted fourth-quarter revenue of 6,845.0 billion won last year, up 4.1% from a year earlier, and turned to a profit from a loss of 655.1 billion won in operating profit a year earlier. Excluding about 100 billion won in free USIM replacement expenses after the hacking incident in September last year, observers say the recognition of full-fledged hacking response expenses was limited. Wireless business growth was also solid. Fourth-quarter wireless revenue was 1,811.0 billion won, up 5.4% from a year earlier, and wireless lines reached 28,985,000, up 10.9%. In addition, as most of the roughly 1 trillion won in one-off labor costs recognized in 2024 were resolved, the base effect was fully reflected.
LG Uplus also showed a pronounced profit improvement trend. Fourth-quarter operating profit last year was 170.5 billion won, up 20% from a year earlier. Revenue during the period was 3,848.4 billion won, up 2.5% year over year. Mobile business revenue was 1,689.4 billion won, up 3.4% from a year earlier. During the same period, mobile lines were 30,711,000, up 7.7% from a year earlier, and total wireless lines, including MVNOs, surpassed 30 million for the first time.
◇ Combined annual revenue of telecom companies tops 60 trillion won for the first time, operating profit recovers to the 4 trillion won range
Combined annual revenue of the three telecom companies last year was 60,895.1 billion won, up 3.2% from 58,997.0 billion won a year earlier. This is the first time the three companies' combined annual revenue has exceeded 60 trillion won. Combined operating profit was 4,435.5 billion won, up 26% from 3,494.4 billion won a year earlier.
By company, SK Telecom's revenue last year was 17,199.2 billion won and operating profit was 1,074.3 billion won, both declining. They fell 4.7% and 41.1%, respectively, from a year earlier. The loss of 933,000 subscribers over the year due to the hacking fallout was a drag. In contrast, KT posted revenue of 28,244.2 billion won and operating profit of 2,469.1 billion won last year, showing strong results. Compared with a year earlier, revenue rose 6.9% and operating profit 4%, respectively. LG Uplus recorded revenue of 15,451.7 billion won last year, up 5.7% from a year earlier. This is the first time LG Uplus has surpassed 15 trillion won in annual revenue. Last year's operating profit was 892.1 billion won, up 3.4% from a year earlier.