5G lifts telecom providers above Q1 forecasts

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5G lifts telecom providers above Q1 forecasts

Telecommunication service providers managed to post better-than-expected profits in the first quarter, buoyed by a jump in the number of subscribers for 5G wireless connectivity and internet protocol television (IPTV) business.  

KT announced on Wednesday that it registered 226.6 billion won ($185 million) in net profit between January and March, down 12.8 percent compared to the same period last year, but slightly higher than the market estimate of 222.6 billion won compiled by FnGuide.  

Revenue remained flat at 5.8 trillion won, while operating profit sank 4.7 percent to 383.1 billion won, beating the market forecast of 357.4 billion won.  

KT attributed the upbeat earnings to the rising number of 5G subscribers that drove sales of its wireless business. Those customers provide a wider profit margin than 4G LTE users, according to the company.  

Sales from the mobile telecom sector increased 1.9 percent to 1.7 trillion won. 5G subscribers at KT totaled 1.7 million at the end of March.

The company’s IPTV business generated 417.7 billion won in sales, up 11.9 percent from a year ago. The number of people subscribing to the service amounted to 8.4 million as of the end of March, gaining 5.7 percent compared to the same period last year.  

Sales in the company’s landline business shrank 7 percent to 372.5 billion won. 
LG U+ also beat the market estimate during the first three months of 2020, aided by growing IPTV customers and reduced marketing costs.  

Its net profit jumped 12.2 percent to 148.8 billion won in the first quarter, exceeding the market consensus of 134.4 billion won.  

The company did not announce its first-quarter revenue but said sales advanced 11.9 percent to 3.28 trillion won. Its operating profit jumped 11.5 percent to 219.8 billion won, edging out the average market forecast of 201.2 billion won.  

The carrier pointed to declining costs compared with the previous year, when it invested heavily into promoting 5G-based subscription plans for smartphone users ahead of the service’s launch.

Three carriers rolled out their 5G plans last April.  
At the same time, LG U+ saw an increasing number of people enrolled with the IPTV service as the figure increased 10.8 percent to 4.59 million subscribers.  

SK Telecom, Korea’s top mobile carrier, however, released a modest earnings result.  

It said last week that its net income dropped 17.9 percent on year to 306.8 billion won, due to reduced equity gains and increased spending for its 5G users. The carrier’s operating profit also dropped 6.4 percent on year to 302 billion won.  

Its revenue increased 2.66 percent to 4.45 trillion won on year.

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