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[Alpha Biz=(Chicago) Reporter Kim Jisun] LG Uplus performed poorly below market forecasts despite the explosive increase in wireless subscribers.
Profitability has decreased as the number of lines has increased mainly for the Internet of Things (IoT), which has a relatively low average sales per subscriber (ARPU).
The Internet Data Center (IDC), which is being intensively fostered, contributed greatly to sales. However, since the end of last year, operating expenses have also been high as electricity bills have been raised three times and amortization costs for additional acquisition frequencies have increased.
LG Uplus made an announcement on the 7th that its consolidated operating profit for the third quarter of this year was tentatively tallied at 254.3 billion won, down 10.8 percent from a year earlier. Sales rose 2.3 percent to 3.5811 trillion won during the same period. As a result, the operating profit ratio also fell to 8.8%.
Compared to market forecasts, operating profit fell short of this, and sales exceeded this. According to financial information provider FnGuide, LG Uplus' third-quarter operating profit average expected by local securities firms in the past three months is KRW 274.5 billion and sales are KRW 3.5759 trillion.
However, it is notable that the number of wireless subscribers (subscription lines) increased 22.3% year-on-year to 23.82 million, the highest growth ever. That's a double-digit increase for the sixth straight quarter. Net subscriber lines alone jumped 324.4% in a year to 2,143,000.
ARPU recorded 22,790 won in the third quarter, down 11.3% (2,904 won) from 25,694 won a year earlier and 5% (1,197 won) from 23,987 won in the previous quarter. Competitors SK Telecom and KT's ARPU are also on the decline, but it is unusual to lose more than 1,000 won in the first quarter.
This is due to the rapid increase in wireless lines, mainly in IoT, where ARPU is relatively low. IoT lines include remote control for low-cost water and power meter reading. These lines are low-priced at less than 1,000 won per line, making them less profitable. A case in point is the power meter reading IoT line, which LG Uplus signed a large-scale contract with KEPCO at the beginning of the year. The related fee is known to be less than 1,000 won per month.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
