Subsidy law hits LG Uplus, net profit falls 18%

Subsidy law hits LG Uplus, net profit falls 19%

27 JAN 2015

South Korea’s LG Uplus suffered a decline in both net income and revenue last year, as a sharp drop in handset revenue weighed down its overall business.

Despite a 53 per cent increase in operating income in Q4, the operator’s net income for the full year dropped 18.5 per cent to KRW227.7 billion ($209 million).

Revenue fell 3.9 per cent to KRW10.999 trillion. While service revenue increased 7 per cent to KRW8.379 trillion, handset revenue declined 27.7 per cent to KRW2.6 trillion, clearly demonstrating the impact of a new subsidy regulation introduced on 1 October, setting the ceiling at KRW350,000 ($322).

On the positive side, its operating expenses last year fell 4.4 per cent to KRW10.423 trillion (thanks in part to a 20 per cent fall in handset costs) and its EBITDA margin was up 2.7 points to 18.9 per cent. But its marketing expenses rose 14 per cent to KRW2.096 trillion, a result of increased competition pushing up subscriber acquisition costs.

The country’s third largest mobile player with a 19 per cent market share added almost 400,000 new mobile connections in 2014, bringing its total to 11.26 million. Wireless revenue increased 9.3 per cent to KRW5.2 trillion, while ARPU was up 6.3 per cent to KRW42,583 ($39) in Q4. Its LTE penetration increased to 75 per cent – up from 65 per cent a year ago – as it signed up 1.4 million LTE customers.

Triple-play (IPTV, broadband and VoIP) customers jumped 9.2 per cent to 9.38 million, while triple-play revenue was up 10 per cent to KRW1.33 trillion.

Data revenue edged up slightly to KRW1.4 trillion. The operator also added 400,000 IPTV users for a total of 1.95 million, and broadband connections increased 3 per cent to over three million.

The company’s capex expanded 41 per cent to KRW2.211 trillion, with wireless investment accounting for 57 per cent of the total.


Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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