2024 Q2 Earnings Announcement
Driving Sales in Enterprise Infrastructure Sector
Focusing on AI Transition... Innovating Service Competitiveness
LG Uplus recorded an operating profit of 254 billion KRW in the second quarter of this year, down 11.8% compared to the previous year. While mobile revenue increased by only 1%, the Internet Data Center (IDC) business grew by 15%, driving the corporate infrastructure segment's sales performance.
LG Uplus announced on the 7th that its consolidated sales for the second quarter of 2024 reached 3.4937 trillion KRW, up 1.9% year-on-year. Service revenue, excluding device sales from total revenue, recorded 2.9439 trillion KRW, a 1.6% increase compared to the same period last year.
Operating profit stood at 254 billion KRW, down 11.8% year-on-year. LG Uplus explained that intangible asset amortization costs related to the construction of a new integrated IT system were reflected. The intangible asset amortization cost was 109.4 billion KRW, a 27.8% increase from the second quarter of last year.
Looking specifically at operating expenses, marketing costs were 521.7 billion KRW, down 3.3% from 539.7 billion KRW in the second quarter of last year. Advertising expenses also decreased by 7.8% year-on-year to 44 billion KRW during the same period. CAPEX (capital expenditure) was 557.1 billion KRW, down 15.8% year-on-year, as the construction of base stations following the allocation of an additional 20 MHz frequency was completed. However, labor costs increased by 12% to 493.9 billion KRW.
In the second quarter, mobile business revenue recorded 1.5926 trillion KRW, up 1.0% year-on-year. MNO handset subscribers numbered 10.94 million, down 1.2% compared to the same period last year. However, the number of MVNO (Mobile Virtual Network Operator) subscribers, who have a lower ARPU (Average Revenue Per User), and IoT (Internet of Things) subscribers increased by 51.5% and 69.7%, respectively, contributing to the growth in subscription lines.
Sales in the corporate infrastructure segment, which includes IDC (Internet Data Center), solutions, and corporate lines targeting businesses, increased by 5.4% year-on-year to 431.5 billion KRW.
Last month, LG Uplus unveiled a B2B mid-to-long-term growth strategy to accelerate revenue growth centered on AI transformation by advancing 'AI application services' through technological innovation in three major areas: infrastructure, platform (generative AI), and data.
IDC business revenue in the second quarter grew 15.0% year-on-year to 91.7 billion KRW, showing the highest growth among corporate infrastructure businesses. Amid rising global demand for AI servers, the IDC business has recorded double-digit revenue growth for six consecutive quarters since 2023, based on energy efficiency and stability management capabilities.
The solutions business, which includes new B2B businesses such as AICC and smart mobility, posted sales of 130.8 billion KRW in the second quarter of this year, a 2.7% increase year-on-year.
The smart home segment, composed of high-speed internet and IPTV businesses, recorded sales of 618.2 billion KRW, up 2.5% compared to the second quarter of last year.
Yeom Young-hee, Chief Financial Officer (Executive Vice President) of LG Uplus, said, "We will continue to focus on AI transformation across all business areas in the second half of this year to innovate service competitiveness. We will do our best to flexibly respond to market conditions to achieve meaningful results and enhance shareholder value."
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