LG U+ shows operating profit increase of 52%

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LG U+ shows operating profit increase of 52%

LG U+, the nation’s third-largest mobile carrier, announced its earnings for the fourth quarter of 2014 on Friday, making it the first mobile carrier to release an earnings report since the controversial Mobile Device Distribution Improvement Act took effect in October.

SK Telecom is expected to release its earnings on Jan. 29 and KT will publish its report the next day.

LG U+ reported a sharp improvement in its fourth-quarter performance, posting a whopping 5.76 trillion won ($5.3 billion), a 52.6 percent year-on-year increase in its quarterly operating profit and a 9.2 percent increase over the previous quarter.

The fourth-quarter operating profit of LG U+ surpassed the market estimate of 160 billion won.

SK Telecom’s net income also skyrocketed, jumping 77.2 percent from a year earlier to 85.2 billion won, but revenue fell 9 percent over the same period the previous year to 2.68 trillion won.

Many in the market assumed that the carrier benefited from the mobile subsidy law because it led to reduced marketing costs.

However, LG U+ denied the claim, saying that its marketing costs increased in the fourth quarter to 518.2 billion won from 477.2 billion won in the third quarter.

“After the implementation of the mobile subsidy law, we spent more in attracting subscribers, but the operating profit increased more than expected as access revenue and some of the commission fees were reflected in the fourth quarter and the profitability of wired services improved,” said a spokesman for LG U+.

Revenue from its wired business increased 3.2 percent year-on-year to reach 3.16 trillion won thanks to strong data business, as well as ultra high-speed Internet, IPTV and Internet phones.

According to the financial service FnGuide, the three mobile carriers’ average operating profit in the fourth quarter is expected to be 812.6 billion won, up 80.3 percent from the average of 450.6 billion won of the fourth quarter of 2013 due to lower marketing costs.

BY KIM JUNG-YOON [kjy@joongang.co.kr]
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