Lower marketing costs boost profits of LG U+

LG U+, the third-largest mobile carrier, reported an improvement in its first quarter performance thanks to reduced marketing costs.

The company reported 154.7 billion won ($14.4 million) in operating profit, a 36.7 percent year-on-year increase.

The telecommunications provider spent a total of 503.8 billion won for marketing in the first quarter, which represents an 8.6 percent decline over a year ago.

It said in a statement that the government’s move to cap subsidies resulted in eased competition and consequently less marketing costs.

Mobile carriers used to engage in cutthroat competition to attract more subscribers by offering excessive subsidies on smartphones.

The phenomenon brought a government crackdown in the form of 45-day business suspensions last year on the three major mobile carriers, which hurt their performances.

Despite the improvement in profit for LG U+, sales declined to 2.55 trillion won, down 8.1 percent compared with the same period a year earlier.

The company cited seasonal weakness affecting its revenue.

Although overall sales decreased, its fixed-line business did better.

Sales in the fixed-line business, which includes an on-demand TV and movie service, were 799.9 billion won, increasing by 4 percent.

The company cited the release of a high-speed TV service for subscribers as a main driver of growth in the business.

As for mobile subscribers, the number of subscribers for LTE service rose by 4 percent to 8.8 million people year-on-year.

The company said that it aims to maintain growth in profit by focusing on its fixed-line content business and LTE market.

“We will increase the content available in Uflix Movie,” said Kim Young-seob, a director of the company.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]