LG Telecom profit leaps by 150%

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LG Telecom profit leaps by 150%

LG Telecom Ltd. said yesterday its net profit for the fourth quarter of 2005 soared more than 150 percent from a year ago due to increased sales from its mobile service, which was driven by aggressive marketing. In the October-to-December period, net income reached 78.7 billion won ($80.3 million), up 151.4 percent from the previous year, South Korea’s smallest mobile phone operator said in a regulatory filing. Revenue climbed 11.1 percent to 937.3 billion won, with operating profits surging 88.1 percent to 115.3 billion won. The company said it posted its largest ever net profit, 236.8 billion won, for all of 2005, up 946 percent from a year earlier. Full-year sales amounted to 3.59 trillion won. The 2005 earnings results beat the market consensus by a large margin, sending the company’s shares up 4 percent on Seoul’s secondary Kosdaq market. The main reason for the earnings growth was an increase in the number of subscribers, LG Telecom said. The mobile operator said it added about 430,000 new customers last year, bringing its subscription base to 6.5 million. The company also posted 38,694 won in average revenue per user, a key indicator of a mobile phone carrier’s operating performance, up 5.5 percent from a year earlier. The figure compares with the 44,167 won average revenue per user of market leader SK Telecom Co. released the previous day. Industry experts said the company expanded its subscription base last year partly through aggressive marketing tactics, some of which they say infringed on regulations. On Monday, the nation’s communications watchdog imposed 2.2 billion won in fines on LG Telecom for its provision of handset subsidies to lure more customers. Handset subsidies were banned in 2003 to prevent overheated and unfair market competition. The mobile operator said it spent 582.7 billion won on marketing last year, up 12.3 percent from a year earlier.
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