LG Uplus: "Personal Information Leak Fines and Compensation May Negatively Impact Earnings"

Risks Disclosed in Securities Registration Statement

LG Uplus Yongsan Building Exterior View

LG Uplus announced that investigations and fines imposed by relevant authorities regarding the personal information leak, as well as compensation for affected customers and related civil and criminal liabilities, could have a negative impact on its earnings.

According to the Financial Supervisory Service's electronic disclosure system (DART) on January 21, LG Uplus submitted a securities registration statement on January 16. In the "Risks Related to Personal Information Leakage and Network Stability" section of its key investment risk notice, the company stated that last year's hacking incident and related issues could negatively affect its earnings.

LG Uplus said, "Recently, personal information leaks at our competitors SK Telecom and KT have heightened customer concerns over data breaches," adding, "On July 19 last year, the Korea Internet & Security Agency (KISA) detected signs of a data leak from our company and shared the relevant information with us."

The company continued, "Immediately after receiving this information, we conducted an internal investigation and submitted the results to the Ministry of Science and ICT. We confirmed that information stored in our server access control solution (APPM)-including server lists, account IDs, and names of employees and partner companies-had been leaked. Although we were investigated by a joint public-private task force involving the Ministry of Science and ICT, KISA, and private experts, the cause of the leak was not identified."

LG Uplus further explained that after the conclusion of the joint public-private task force, the Ministry of Science and ICT requested a police investigation to determine whether the server reinstallation and disposal actions were intentional.

Additionally, the company stated, "Issues related to strengthening the security of personal information and the stability of communication networks not only result in investigations and fines by relevant authorities, but also create civil and criminal liabilities such as compensation for affected customers, depending on court rulings." The company added, "These factors, along with negative impacts on our reputation and brand image, and increased incidental costs related to personal information protection, could ultimately have a negative effect on our earnings."

This is the first time LG Uplus has mentioned a negative scenario based on the results of a police investigation. Previously, SK TelecomSK Telecom and KT, which also experienced hacking incidents, specified such risks in their investment prospectuses in September and November last year, respectively.