LG Uplus has recently moved to expand its data center DBO (design, build, operate) business. Rather than limiting itself to operating its own data centers, it has kicked off a full-fledged, entrusted-service model for external clients to attack the market.
According to the industry on the 19th, LG Uplus held a board meeting on the 13th and passed an agenda item to add investments and grants related to the data center DBO business to its articles of incorporation as a new business purpose. The agenda will be addressed at the shareholders meeting on the 24th of next month. LG Uplus said it added the business purpose "to push in earnest the data center design, operation, and build business."
The cited backdrop for LG Uplus moving to expand the DBO business is market growth potential. Market research firm Mordor Intelligence projected that the domestic data center market would reach $14.6 billion (about 2.11681 trillion won) in 2031, up 143% from $6 billion (872.48 billion won) in 2025. That is because corporations are accelerating digital transformation and infrastructure demand is expected to continue rising with the spread of artificial intelligence (AI). An official in the telecom industry said, "Recently, not only information and communication technology (ICT) companies but also asset management firms, construction companies, and overseas REITs are entering the data center business, increasing demand for specialized operators to take on and run these facilities," adding, "LG Uplus is understood to have chosen the DBO business as a new growth engine and to have moved to push it in earnest."
LG Uplus has already been pursuing the DBO business since the second half of last year. After forming a data center DBO task force (TF) at the time, it took on the entrusted operation of Koramco Asset Management's data center in Seoul's Gasan Digital Complex. Why is LG Uplus suddenly trying to add the DBO business to its articles of incorporation when it had started the data center DBO business without changing the articles?
In the industry, the background to LG Uplus seeking to specify DBO in its articles is interpreted less as a "monetization declaration" than as a preemptive housekeeping step to reduce transactional uncertainty ahead of winning large contracts and expanding projects. For client companies outsourcing DBO, the more clearly the business is specified as a corporate purpose in the articles, the clearer it becomes in external transactions whether it is "authorized business." In addition, by also including "investments and grants" in the articles, some analysts say the move reflects an intent to make future capital raising more flexible for large projects and to build a favorable foundation for joint ventures (JVs) or joint business initiatives.
A telecom industry official said, "The core of the DBO business is to bypass the time and capital constraints of a telecom company directly building additional in-house data centers," adding, "We cannot rule out the possibility that LG Uplus will soon seek external investment to push a large-scale data center project."
LG Uplus currently operates seven in-house internet data centers (IDCs). In the industry, it is known that building a new IDC takes at least three years, including site selection, permits, and construction, and requires more than 700 billion won in capital.
The industry expects LG Uplus to rapidly grow its data center revenue through the DBO business. With data center revenue already on the rise, a full-fledged entry into the DBO market could further accelerate growth. Some observers also say LG Uplus' AI data center revenue could surpass 1 trillion won within a few years. LG Uplus' AI data center revenue last year was 422 billion won, up 18.4% from a year earlier.
Kim Kyung-won, a distinguished professor in the business administration department at Sejong University, said, "In the late 1970s, when a construction boom was underway, there was a time when even food companies added construction to their business purposes in the articles of incorporation. Adding a growth business to the articles can have the effect of lifting a company's stock price," adding, "Telecom companies are in a situation where growth in their core telecom business has stagnated and a new breakthrough is needed, and the DBO business can be a good rationale." He added, "DBO is not a competition to build more data centers, but a model that productizes operational capabilities as a service. Telecom companies have networks, security, and control room experience, which is advantageous for expanding to external clients, and if they build references and operational quality, a large increase in revenue can also be expected."