If we've learned one thing from 5G's early years it is that operators need more than 5G.
Since its debut in 2019 it has been apparent that the 5G payday won't be anytime soon, if ever, and operators need to broaden their income streams. Those relying solely on 5G to bring home the bacon will be disappointed.
LG Uplus, the no.3 Korean operator, is the least diversified in that market, wholly reliant on its wireless and broadband services.
It enjoyed a return to the black in Q4 with net earnings of 101.8 billion won ($85 million) that it attributed to its media business and 5G subscriber growth.
But the reality is operating profit was down 9.8% and ARPU also declined year-on-year despite the 67% leap in 5G customer numbers.
5G accounts for 26% of its 18 million mobile customers, yet wireless service revenue rose a paltry 1.9% over the previous year.
The best contribution came from IPTV business, up 10.6% for the quarter, and broadband, up 8.1%.
The full-year numbers are better, where it recorded a 10.5% hike in operating income and net income of 724 billion won, up 52% over a poor year in 2020.
But there is only so far you can ride 5G subs growth and IPTV. The company has limited upside if it can't extend itself beyond purely telecom.
New for old
In neighboring Japan KDDI handed down a modest result for the nine months to December 31 – but without the contribution of its new growth products it would have been a bust.
Operating profit improved just 0.4% and revenue rose 2.3% for the period, the company reported.
It has 6.2 million 5G subs and says 5G users are consuming 2.5 times the data of LTE subs. But as with LG Uplus that spike in traffic isn't reflected in the financial figures. In fact non-roaming revenue across its three mobile brands – au, UQ and Povo – actually declined.
ARPU also contracted to 4,200 yen ($36.63), down from 4,270 yen the previous quarter and 4,440 yen a year ago. KDDI didn't disclose 5G ARPU.
Meanwhile Life Design Domain, the digital and retail services unit that includes subscriptions, a loyalty card and energy retail, is on track for a 36% increase in full-year sales to 250 billon yen.
KDDI's enterprise segment, which includes digital transformation, data centers and IoT, is also on a growth path far exceeding wireless, with a 17% rise in full-year revenue expected.
Besides these existing businesses, KDDI's pipeline includes a mobility JV, Mobi, that will provide short ride services, and a drone spin-off, KDDI SmartDrone.
5G could yet be a bonanza, but right now creating a path for growth beyond 5G is essential.
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- South Korea adopts 5G network sharing to boost rural 5G
- LG U+ and KDDI club together on 5G, 6G
- Cato dips toe in telco waters with KDDI collab
— Robert Clark, contributing editor, special to Light Reading