Subs growth and lower costs lift South Korean operator LG Uplus net 53%, while larger rival KT saw lower revenues and a mixed bag thanks to coronavirus.

Robert Clark, Contributing Editor, Special to Light Reading

August 10, 2020

3 Min Read
LG Uplus defies gloom to hike earnings 53%

LG Uplus has defied the pandemic gloom to deliver the most upbeat result among Asian operators this earnings season.

Figure 1: Motion capture: LG U+ managed to juggle moving parts to beat the coronavirus odds. (Source: Stanislav Margolin on Unsplash) Motion capture: LG U+ managed to juggle moving parts to beat the coronavirus odds. (Source: Stanislav Margolin on Unsplash)

The smallest Korean operator hiked operating income 59% in Q2, thanks to subs and revenue growth and lower costs.

Its numbers were up across the board: service revenue gained 14%, net income 53%, EBITDA 25% and EBITDA margin 4.4 percentage points.

Cost center
Larger rival KT reported a 19% rise in operating income Friday, despite a decline in sales.

LG Uplus attributed the higher margins to its ability to contain costs, with opex up just 2.3%.

It said revenue in its core wireless service business improved 4.9% due to subscriber growth.

Like other Asian operators accustomed to a regular revenue stream from handset sales, the silver lining in the collapse in retail this year has been a big cut in handset procurement cost.

It delivered a handy 209 billion won (US$176 million) straight to LG UPlus' bottom line.

The operator added 330,000 5G subs in the quarter, to take the total to 1.79 million, around 11% of its total subscriber base.

It also recorded 10.5% growth in its smart home and broadband unit, increasing IPTV revenue by 12.5%.

Silver linings
KT, Korea's second biggest operator, said operating revenue shrank 3.6% and service revenue was flat for the quarter.

It said COVID-19 had driven down handset sales and in its credit card and real estate groups.

Total operating costs were 4.6% lower. As with LG Uplus, the plunge in the handset market had its upside in the form of a 232 billion won ($196 million) cost saving.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

KT made steady progress in 5G, adding 459,000 subs. It now has 2.24 million 5G customers, accounting for 16% of the total.

KT also enjoyed some subs growth in its fixed-line broadband unit, but broadband revenue was off 1.2% and telephony was 7% lower. The B2B group grew 2.4% to 701 billion won.

Thanks to COVID-19, capex for both operators is behind guidance.

LG Uplus capex rebounded in the quarter to 625 billion won, up 14.3% on the same period last year, but only 40% of its full-year guidance of 2.5 trillion won.

KT has tipped 967 billion into capex in the first half, less than a third of its expected 3.1 trillion for the year.

On the KRX, LG Uplus closed 0.87% higher Friday at 11,600 won. KT rose 0.21% to 23,850 won.

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— Robert Clark, contributing editor, special to Light Reading

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Asia

About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech (http://www.electricspeech.com). 

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