South Korea's major telecom companies—SK Telecom, KT, and LG Uplus—are set to report their second-quarter results next month, with expectations of mixed outcomes. While SKT and LG Uplus are anticipated to show improved performance due to the expansion of their artificial intelligence (AI) businesses and recovery in wireless services, KT is expected to face unavoidable decline due to the base effect from one-time gains recorded last year.
According to financial information provider FnGuide on July 13, the combined operating profit of the three telecom companies is projected to be 1.445 trillion won, reflecting a 12.83% decrease compared to the same period last year.
The decline in combined operating profit is primarily attributed to KT's base effect. In the second quarter of last year, KT recorded a one-time gain of approximately 386 billion won from the sale of real estate, significantly boosting its operating profit. As a result of this high base effect, KT is expected to be the only company among the three to report a decline in Q2.
Due to KT's revenue drop, the combined revenue of the three telecom companies is also expected to decrease. The projected combined revenue for Q2 is 15.186 trillion won, down 2.72% year-on-year. SKT is expected to report revenue of 4.4057 trillion won, a 1.54% increase from the previous year, while LG Uplus is projected to see a 1.6% rise to 3.9057 trillion won. In contrast, KT's revenue is anticipated to decline by 7.45% to 6.8744 trillion won.
In addition to the base effect, KT is expected to see a 1.4% decrease in wireless revenue compared to the same period last year, likely still feeling the impact of a hacking incident. Shin Eun-jung, a researcher at DB Financial Investment, noted, "While MNO subscribers have returned to net growth, the impact of providing data as part of a customer reward program has led some high-tier plan subscribers to downgrade their plans."
Kim Ah-ram, a researcher at Shinhan Investment Corp, also commented, "The implementation of a customer appreciation package offering 100GB of free data has temporarily lowered the average revenue per user (ARPU), and the sluggish performance in wireless revenue is expected to continue."
On the other hand, SKT is expected to continue its performance improvement, reflecting the base effect from last year's hacking incident. According to FnGuide, SKT's operating profit for Q2 is projected to increase by about 57% year-on-year to 530.7 billion won. Kim Hong-sik, a researcher at Hana Financial Investment, stated, "If the performance trend continues as expected, the consolidated operating profit for this year could reach around 2 trillion won."
LG Uplus is also expected to report a 0.56% increase in operating profit to 306.2 billion won. The growth in wireless services and the expansion of corporate infrastructure projects are expected to support this performance improvement. Lee Seung-woong, a researcher at Yuanta Securities, remarked, "The growth in wireless subscribers and the expansion of corporate infrastructure projects will continue, with increased revenue from AI data centers (AIDC) and data center construction and operation driving growth in the corporate sector."
* This article has been translated by AI.
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