Operating Profit Exceeded 1 Trillion Won Last Year Excluding One-Time Costs
Wireless Subscribers Up 8%, 5G Customers Account for 40.5% of Handset Subscribers
[Asia Economy Reporter Lim Hye-seon] LG Uplus has achieved its highest annual performance since its establishment.
LG Uplus announced on the 28th that its operating profit last year increased by 10.5% compared to the previous year, reaching 979 billion KRW. Excluding one-time expenses, operating profit was recorded at over 1 trillion KRW. Operating revenue (sales) rose by 3.2% year-on-year to 13.8511 trillion KRW. Service revenue, excluding device revenue from operating revenue, also increased by 4.5% compared to 2020, reaching 11.0678 trillion KRW.
The background of this growth is analyzed to be due to the visible qualitative growth of wired and wireless businesses driving performance increases, while corporate infrastructure businesses including new ventures continued stable growth.
As of the fourth quarter last year, operating revenue was 3.6114 trillion KRW and service revenue was 2.8261 trillion KRW, up 2.7% and 2.8% respectively compared to the previous year. However, operating profit decreased by about 9.8% year-on-year to 158.2 billion KRW due to the reflection of one-time expenses.
The mobile network operator (MNO) churn rate in the fourth quarter last year also decreased by 0.05 percentage points compared to the same period the previous year, demonstrating qualitative growth. Customer segmentation and analysis-based exclusive services such as the acquaintance bundle product ‘U+ Together Bundle’ and subscription membership ‘Subscription Kok’, along with proactive responses to customer pain points, led to the improvement in churn rate.
5G and MVNO Subscribers Drive Performance
On an annual basis, wireless revenue increased by 4% year-on-year to 6.0547 trillion KRW. The increase in 5G and MVNO (Mobile Virtual Network Operator) subscribers is interpreted as driving overall performance.
Wireless subscribers also grew by 8% compared to the previous year. The total number of wireless subscribers, combining MNO and MVNO, was recorded at 17.987 million. In particular, 5G subscribers increased by about 67.9% compared to 2020, reaching 4.626 million. Among all subscribers based on handsets, 5G customers accounted for 40.5%, proving the qualitative growth of the mobile business.
MVNO subscribers continued to increase, rising by 49.1% year-on-year to 2.833 million. Under the motto ‘MVNO customers are also LG Uplus customers,’ proactive initiatives to revitalize the industry, such as the ‘U+ Partners’ program supporting the growth of small and medium MVNO operators, specialized plans, USIM delivery services, and AI chatbots, drove subscriber growth.
LG Uplus’s annual marketing expenses were efficiently managed, decreasing by 1.9% year-on-year to 2.2857 trillion KRW. Capital expenditures (CAPEX) amounted to 2.3455 trillion KRW, mainly for base station construction to expand 5G coverage.
Stable Growth in Smart Home and Corporate Infrastructure Businesses
The smart home business, including Internet TV (IPTV) and high-speed internet, as well as corporate infrastructure businesses such as smart factories and internet data centers (IDC), continued stable revenue growth, leading to improved performance.
The smart home sector achieved revenue of 2.2037 trillion KRW, up 9.5% year-on-year, driven by balanced growth in IPTV and high-speed internet. IPTV revenue grew by 9.6% year-on-year to 1.2556 trillion KRW due to steady subscriber growth. The company explained that providing differentiated viewing environments through core content such as ‘Disney Plus’ and ‘U+ Idle Nara,’ along with sound-enhanced set-top boxes like ‘U+tv Soundbar Black,’ significantly increased customer satisfaction. IPTV subscribers last year increased by 8.2% compared to the previous year, reaching 5.348 million.
High-speed internet contributed to the smart home performance increase with sales of 948.1 billion KRW, up 9.2% year-on-year, driven by growth in giga subscribers. High-speed internet subscribers reached 4.758 million, a 5.1% increase compared to the previous year.
Corporate infrastructure business revenue, including new business for enterprises, IDC, and leased line services, achieved 1.4926 trillion KRW, up 10.7% year-on-year, solidifying its position as a new growth engine for enterprises. The expansion of new business revenue and stable growth of foundational businesses such as IDC and dedicated lines are cited as the reasons.
Annual solution revenue contributed to corporate infrastructure business growth, increasing by 21.8% year-on-year to 488.6 billion KRW due to high growth in B2B new businesses. IDC business and corporate leased line business revenues were 258.4 billion KRW and 745.6 billion KRW respectively, up 13.4% and 3.7% year-on-year, maintaining a stable growth trend.
Securing Future Growth Engines by Strengthening Core Competencies in New Businesses This Year
LG Uplus is focusing on ‘differentiated customer experience’ beyond ‘qualitative growth’ through enhancing customer value. The strategy is to accelerate customer acquisition by providing innovative service experiences through bundled products, membership benefits, and partnerships with leading operators.
Previously, LG Uplus focused on providing innovative user experiences to subscribers with practical membership ‘Subscription Kok’ tailored to customer needs by age, preference, and household, and the first acquaintance bundle service in the telecom industry, ‘U+ Together.’ It also strengthened media content competitiveness through partnerships with global OTT operator ‘Disney Plus.’
LG Uplus plans to become the telecom operator with the lowest customer churn rate by continuously investing in core telecom competitiveness such as data quality, while advancing membership, bundled products, and content.
In new business areas, LG Uplus will accelerate new business orders by enhancing core competencies in smart factories, smart mobility, and AI call centers. In fact, LG Uplus successfully established ‘Autonomous Driving Big Data Control Center’ and ‘5G Smart Port’ last year, expanding B2B new business references.
Activities to strengthen ESG management, which evaluates non-financial factors, will continue. Additionally, to enhance shareholder value, LG Uplus acquired 100 billion KRW worth of treasury shares and introduced an interim dividend system last year. Starting this year, the dividend payout ratio will be raised from ‘30% or more’ of separate net income to ‘40% or more,’ continuously reinforcing shareholder return policies.
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