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(LEAD) LG Uplus Q2 net down 28 pct on 5G investment

Consumer Electronics 16:21 August 09, 2019

(ATTN: UPDATES with more details, comments from conference call in last 4 paras)

Kim Eun-jung

SEOUL, Aug. 9 (Yonhap) -- LG Uplus Corp. said Friday its net profit fell 28.1 percent in the second quarter from a year earlier due to increased spending on 5G network investment.

The nation's No. 3 mobile carrier said it posted a net profit of 98 billion won (US$81.3 million) in the April-June period, compared with a profit of 137.1 billion won a year ago.

Its sales gained 7.3 percent on-year to 3.2 trillion won, but operating profit fell 29.6 percent to 148.6 billion won over the period, the company said in a regulatory filing.

LG Uplus employees enjoy a cloud-based virtual reality game connected to the 5G network at the company's headquarters in Seoul on July 2, 2019. (Yonhap)

LG Uplus said its profits decreased, despite solid sales, due to increased marketing costs and investment for 5G networks that rolled out in early April.

The company's marketing spending rose 11.2 percent on-year to 564.8 billion won in the second quarter, as it carried out aggressive campaigns for 5G service. Its capital spending skyrocketed 181 percent to 730 billion won over the period in line with the construction of 5G base stations.

LG Uplus said revenue from the wireless division gained 2.4 percent to 1.4 trillion won, thanks to a rise in the number of new subscribers. The number of 5G mobile plan users rose to 387,000 as of June to account for 29 percent of the market.

The average revenue per user inched up from the previous quarter, marking the first growth since the second quarter of 2017, the company said.

Sales from the smart home division surged 13.7 percent to 505.7 billion in the April-June period, led by robust IPTV and high-speed internet business.

LG Uplus said it will speed up building 5G base stations across the nation to improve quality of the network and boost premium service users.

"5G subscribers have surpassed 500,000 so far. In light of the current trend, we expect 5G subscribers to account for around 10 percent of our mobile business by the end of this year," Lee Hyuk-joo, the firm's chief financial officer, said during a conference call.

The carrier's total number of mobile subscribers reached 13.7 million as of June.

"We expect the inflow of 5G customers will accelerate next year when we have national coverage and a wider range of 5G smartphones are available in the market."

Shares of LG Uplus closed unchanged at 12,450 won on the Seoul bourse on Friday, underperforming KOSPI's 0.89 percent gain. Its shares have tumbled 30.6 percent this year.


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