Samsung Securities on November 5 maintained a "buy" rating for LG Uplus, citing expectations for improved profitability in its core telecommunications business and growth from its artificial intelligence (AI) data center operations.
Choi Min-ha, a researcher at Samsung Securities, noted that LG Uplus reported consolidated revenue of 3.9813 trillion won for the third quarter, a 0.7% decrease from the same period last year. However, operating profit surged to 297.6 billion won, an 84.1% increase, aligning with market expectations.
The significant rise in operating profit was attributed to a base effect from approximately 150 billion won in one-time labor costs incurred during the same period last year, as well as efficiency improvements in business operations. Continued efforts to enhance marketing efficiency resulted in an operating profit margin that improved by 3.4 percentage points year-on-year to 7.5%.
The wireless segment continued to show stable growth, supported by an expanding subscriber base. Samsung Securities also anticipates a reduction in marketing costs due to eased market competition in the fourth quarter. The impact of SpaceX's low-orbit satellite communication service, Starlink, on the domestic telecommunications market is expected to be limited.
The AI data center business is emerging as a new growth driver. LG Uplus reported third-quarter revenue from its AI data center of 131.7 billion won, a 27.7% increase compared to the same period last year. The Paju AI data center, with an IT capacity of 128 megawatts (MW), is set to begin phased operations in the second half of 2027.
Samsung Securities positively assessed the potential for increased shareholder returns due to improved performance. The firm projects LG Uplus's annual operating profit for this year to reach 1.153 trillion won, with an expected annual dividend per share (DPS) of 700 won, an increase of 40 won from last year.
Choi analyzed that as the profitability of the core telecommunications business strengthens and the corporate infrastructure business expands around AI data centers, LG Uplus is securing both performance stability and long-term growth potential. He anticipates that improved profitability will enhance the capacity for increased shareholder returns.
* This article has been translated by AI.
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