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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.

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.


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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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