Despite the difficult domestic and international management environments, LG Uplus achieved a growth of 2.5% in consolidated service revenue and 2.7% in standalone revenue, driven by its B2B business expansion. This surpasses the initial management goal of a 2% growth in standalone service revenue set at the beginning of the year.

On the 9th, LG Uplus announced that, according to the K-IFRS consolidated financial statements, it recorded revenues of 3.577 trillion won, service revenues of 2.8939 trillion won, and operating profits of 220.9 billion won for the first quarter of 2024. Note: Service revenue is the revenue excluding device sales from operating revenue.

Revenue increased by 1.0% compared to the same period last year, while service revenue, excluding device sales from total revenue, grew by 2.5%. The growth in revenue is attributed to the expansion of the B2B corporate infrastructure sector. The ‘solutions business’ including new ventures such as AICC (AI Contact Center) and smart mobility, along with the ‘IDC business’, achieved double-digit revenue growth, driving the overall performance.

Operating profit decreased by 15.1% year-on-year to 220.9 billion won, primarily due to cost accounting from building a new integrated computer network and increased marketing expenses associated with rising mobile phone sales. As we enter the AI era, LG Uplus developed and implemented a next-generation integrated computer system with enhanced security and easier application of AI technology.

Marketing expenses rose by 2.3% to 546.7 billion won compared to 534.3 billion won in the first quarter of last year. First quarter CAPEX (capital expenditure) was 384.9 billion won, a 25.9% decrease year-on-year, as the construction of base stations for additional 20MHz frequency allocation was completed.

█ Corporate Infrastructure Revenue Increases by 9.9%, AICC and ‘Solutions Business’ Grow by 19.8%, ‘IDC’ Grows by 11.7%

The corporate infrastructure sector, which includes solutions, IDC, and dedicated lines for companies, recorded a revenue of 405 billion won, representing a 9.9% increase compared to the same period last year.

Building on its accumulated AI capabilities, LG Uplus plans to rapidly apply AI-centric digital transformation (AX) to its B2B businesses such as AICC, SOHO, and IDC, achieving substantial results and revenue growth starting this year.

The most rapidly growing segment includes the solutions business, which encompasses areas like AICC, SOHO, and smart mobility. In the first quarter, solutions business revenue reached 122 billion won, marking a 19.8% increase year-on-year.

LG Uplus operates AICC solutions tailored to the scale of corporate clients, broadening customer choices based on advanced AI technology. In the future, LG Uplus plans to integrate its AI technology, ‘ixi’, developed for AICC, and deploy the large language model ‘ixi-GEN’, thereby enhancing its competitive edge.

The IDC business recorded double-digit revenue growth for five consecutive quarters since 2023. In the first quarter, IDC business revenue grew by 11.7% year-on-year, reaching 85.5 billion won. As the AI era progresses, customer satisfaction maximized by power-saving know-how and superior stability management capabilities has been identified as the underlying reason for revenue growth.

LG Uplus’s recently completed second hyperscale IDC, ‘Pyeongchon 2 Center’, is fully booked for its computer rooms. Notably, the Paju IDC, which was chosen as the third hyperscale data center on April 30, is strategically positioned as an ‘AI Data Center’, optimized for operating and managing generative AI-specific GPUs.

Revenue from corporate line businesses, including corporate internet and dedicated lines, also showed steady growth, increasing by 3.8% year-on-year to 197.4 billion won.

█ Wireless Subscription Lines Record Highest Growth Since 5G Launch… Achieving 20% Growth for Three Consecutive Quarters

The mobile sector saw total subscription lines reach their highest growth rate since the introduction of 5G, continuing its upward trend. Mobile business revenue rose by 1.3% year-on-year to 1.581 trillion won. Excluding access revenue, wireless service revenue grew by 1.9% to 1.507 trillion won. Note: Wireless service revenue is the total revenue from wireless service-related base charges, call charges, and data.

The combined total of wireless subscription lines for MNO and MVNO reached 26.268 million, an increase of 27.8% compared to the previous year, attaining a continuous growth rate above 20% for three consecutive quarters. (▲ 23 Q3 increased by 22.3%, ▲ ’23 Q4 increased by 26.1%) The total net increase in subscription lines was 1.171 million, a 77.7% increase compared to the first quarter of last year.

MNO subscription lines increased by 18.7% to 19.234 million compared to last year’s first quarter of 16.207 million. Despite the active number portability among telecom companies in the first quarter of this year, the MNO churn rate recorded 1.18%, while the number of 5G subscription lines increased by 13.2% year-on-year to 7.19 million. The proportion of 5G customers among all subscribers based on devices reached 65.7%, which is an increase of 8.8 percentage points compared to the previous year.

MVNO subscription lines also maintained a rapid growth trend. In the first quarter, MVNO lines saw a year-on-year increase of 61.8%, reaching 7.034 million. The efforts to support small businesses through professional online and offline stores and integrated SIM cards for budget phone companies benefiting from the connected car infotainment service contributed positively to subscriber growth.

█ Smart Home Revenue Up 2.9% Year-on-Year, Growth Driven by IPTV and High-Speed Internet Subscription Line Increases

The smart home sector, which includes IPTV and high-speed internet, continued to grow on the back of increased value-added subscription lines. In the first quarter, revenue rose by 2.9% year-on-year to 611.7 billion won.

Revenue from the high-speed internet business maintained solid growth, increasing by 6.5% year-on-year to 277.5 billion won. High-speed internet subscription lines rose by 4.4% compared to the previous year, reaching 5.218 million.

IPTV business revenue was 334.1 billion won, reflecting a 0.1% increase year-on-year. In the first quarter of this year, IPTV subscription lines increased by 2.1% year-on-year to 5.479 million while net subscription lines increased by 119.2%, totaling 34,000.

Thanks to the successful transition to IPTV MSA (Microservices Architecture), initiated by the industry, LG Uplus was able to apply updates such as tariff plans, customized content features, and UI/UX swiftly without service interruptions, significantly enhancing customer satisfaction.

LG Uplus’s Chief Financial Officer and Chief Risk Officer, Yeom Myung-hee, stated, “In light of the challenging domestic and external environment expected this year, we aim to create greater growth opportunities in all business areas, including communications and new ventures, through AI-based digital transformation (AX).” She continued, “We will do our utmost to achieve our management goals flexibly in response to market conditions, while enhancing shareholder value through innovation in customer experience and revenue growth.”

Lee Sang-jin daedusj@autodiary.kr