After last year's hacking incidents, which battered the telecom industry, the sector is showing signs of normalization in the second quarter. SK Telecom's operating profit rose more than 60%, helped by a base effect from one-off expenses incurred while responding to last year's hacking incident and a recovery in the profitability of its core telecom business, while LG Uplus posted its biggest-ever quarterly operating profit on the back of growth in its wireless business and expense efficiencies. By contrast, KT's operating profit fell more than 30% due to a base effect from the reflection of large-scale real estate pre-sale gains tied to the Gangbuk site development last year.
According to the telecom industry on the 12th, the combined second-quarter revenue of SK Telecom, KT, and LG Uplus came to 14.7339 trillion won, with operating profit at 1.5588 trillion won. Compared with a year earlier, those figures were down about 5.6% and 6%, respectively. Still, considering that KT's results last year included one-off real estate pre-sale gains worth hundreds of billions of won, some say the industry's underlying profitability has entered a recovery phase.
◇ SKT operating profit up 67% on-year… LGU+ also sets a record
SK Telecom posted consolidated revenue of 4.3591 trillion won and operating profit of 566 billion won in the second quarter. Revenue rose 0.5% on-year, and operating profit jumped 67.3%. A base effect from response expenses deployed to restore customer trust after last year's SIM information leak and improved profitability in the telecom business lifted results. Compared with the previous quarter, operating profit also increased 5.3%. With the mobile market stabilizing, mobile subscribers continued to log net additions.
Growth in the artificial intelligence (AI) data center (DC) business also stood out. SK Telecom's second-quarter AI DC revenue was 136.2 billion won, up 92.5% on-year. In July, SK Telecom established "SK Hyper," dedicated to developing the AI DC business, and is accelerating the expansion of its data center operations.
LG Uplus posted consolidated revenue of 3.6949 trillion won and operating profit of 344.5 billion won in the second quarter. While revenue fell 3.9% on-year, operating profit rose 13.1% to an all-time quarterly high. It is analyzed that profitability improved as the company expanded its wireless business base with subscribers acquired after competitors' hacking incidents and as B2B (business-to-business) businesses, such as AI data centers and corporate infrastructure, grew.
Cost savings on fixed costs such as labor expenses from restructuring pursued since last year also helped boost operating profit. LG Uplus implemented a voluntary retirement program for about 600 employees, or 6% of its workforce, in the third quarter last year, reflecting one-off expenses of about 150 billion won. At the time, LG Uplus expected labor cost savings from the voluntary retirement to materialize in earnest starting this year. In fact, second-quarter labor costs fell 2.5% on-year, and marketing expenses were down 6.9% from the previous quarter.
◇ At KT, operating profit plunges on base effect from last year's real estate pre-sale gains
KT, on the other hand, could not avoid a base effect stemming from strong results last year. KT posted consolidated revenue of 6.6799 trillion won and operating profit of 648.3 billion won in the second quarter. Revenue fell 10.1% on-year and operating profit declined 36.1%. In the second quarter last year, a one-off real estate pre-sale gain from the Gangbuk site development was reflected, sending operating profit surging to 1.0148 trillion won. Excluding that, last year's second-quarter operating profit was about 634.8 billion won, meaning that after removing the one-off factor, this year's operating profit actually rose slightly.
In the core telecom business, a customer reward program launched after last year's hacking incident acted as a drag. Starting in February for six months, KT is spending about 450 billion won to provide wireless customers with 100GB of data per month and benefits such as additional roaming data, OTT passes, and protection insurance. Due to these customer compensation measures, second-quarter wireless service revenue fell 1.8% on-year.
By contrast, new businesses continued to grow. Revenue from KT's AX (AI transformation) business rose 22.3% on-year as demand for AI adoption increased, particularly in finance, and KT Cloud recorded double-digit growth. The company is expanding AX orders mainly in finance, public, and manufacturing, winning 22 AX projects in finance alone in the first half. KT Cloud also logged double-digit growth, helped by the operation of the Gasan data center and the expansion of DBO (design-build-operate) businesses.
◇ From first-quarter 'hacking' fallout to second-quarter 'AI and B2B'… performance drivers are shifting
The variables determining the results of the three telecom companies are changing. Through the first quarter, the key factors were last year's hacking incidents and the resulting subscriber churn, customer compensation, penalty waivers, and marketing expenses. While SK Telecom and KT poured expenses into defending subscribers and restoring customer trust, LG Uplus benefited relatively.
In the second quarter, as related expense burdens gradually normalized, the profitability of the core telecom business also stabilized. SK Telecom increased operating profit from the previous quarter, and KT also showed clear quarter-on-quarter improvement when excluding the base effect from last year's one-off gains. LG Uplus likewise posted a record quarterly operating profit, supported by expense efficiencies.
Accordingly, from the second half, rather than the lingering impact of hacking incidents, how much new B2B businesses such as AI data centers, cloud, and AX translate into actual profit is expected to determine the performance gap among the three telecom companies. SK Telecom is positioning AI data centers as a key growth pillar of its AI business and is ramping up investment. KT has set a goal of more than doubling AX revenue by 2028 compared with 2025 and plans to secure an additional 1 gigawatt (GW) of AIDC capacity by 2031. LG Uplus is also increasing the profit contribution of its non-telecom businesses, focusing on AI data centers and corporate infrastructure.
A telecom industry official said, "The expense burden from hacking incidents and subscriber churn that continued since last year has likely peaked and is moving toward normalization," adding, "In the second half, the key variable determining each company's results will be how quickly new businesses such as AI data centers, cloud, and AX generate revenue, backed by the stable cash generation of the core telecom business."