Three Major Mobile Carriers Announce Q2 2020 Earnings
Breaking expectations, it rose compared to the same period last year
Turning the COVID-19 crisis into an opportunity was key.


The second-quarter 2020 earnings of the three mobile carriers have all been announced.

All three companies achieved strong results, primarily due to turning the COVID-19 crisis into an opportunity. They preserved related costs as opportunities for face-to-face marketing diminished, and boosted performance by strengthening their non-face-to-face service sectors in response to the increasing demand.

Based on K-IFRS consolidated financial statements, KT recorded revenue of 5.8765 trillion won and an operating profit of 341.8 billion won, SK Telecom recorded revenue of 4.6028 trillion won and an operating profit of 359.5 billion won, and LG Uplus recorded revenue of 3.2726 trillion won and an operating profit of 239.7 billion won.


◇ Promoting convergence with other industries to strengthen AI competitiveness

KT posted the highest revenue among the three companies in the second quarter of this year. However, revenue fell by 3.6% compared to the same period last year due to a decline in handset sales caused by COVID-19 and reduced sales from some group companies, such as credit cards and hotels. On the other hand, operating profit increased by 18.6% compared to the same period last year, driven by growth in the wireless and media businesses and strong performance in the AI/DX-based B2B business.

B2B performance stood out this quarter. KT's B2B business revenue increased by 2.4% compared to the same period last year. Driven by rising demand from companies, cloud and data center revenues grew, while blockchain revenue increased due to the rise in local currency issuance. As a result, AI/DX business revenue rose by 16% compared to the same period last year, recording the highest growth rate among KT's major businesses.

KT announced that it will pursue various collaborations with other industries to prepare for the post-COVID era, where non-face-to-face interactions will become the norm, and to enhance its AI competitiveness. Recently, manufacturing and financial companies joined the 'AI One Team,' an AI industry-academia-research collaboration led by KT. Furthermore, the company plans to continue strengthening its capabilities in intelligent service robots and smart factories, as well as integrating Skylife (satellite) with Hyundai HCN (cable).


◇ Increased sales in media, security, and commerce driven by rising demand for non-face-to-face services

SK Telecom's revenue and operating profit in the second quarter of this year increased by 3.7% and 11.4%, respectively, compared to the same period last year, driven by steady growth across all New Biz. sectors and improved performance in the wireless business. Due to increased demand for non-face-to-face services, revenues for SK Broadband (media), ADT Caps and SK Infosec (security), and 11st and SK Store (commerce) increased by 16.2%, 8.7%, and 8.5%, respectively, compared to the same period last year.

Going forward, SK Telecom plans to continue business innovation in its e-sports company 'T1', app market 'ONE Store', and OTT platform 'Wavve' to secure new growth engines in the post-COVID era. In addition, to strengthen competitiveness in its core mobile telecommunications business, it invested 1.2244 trillion won in facilities during the first half of the year alone and announced that it would officially launch 5G cloud gaming with MS in September of this year.


◇ Plan to expand large-scale orders in the second half based on 5G B2B experience in the first half

LG Uplus's revenue and operating profit in the second quarter of this year rose by 5.1% and 2.6%, respectively, compared to the same period last year. Mobile service revenue increased by 4.9% compared to the same period last year due to steady subscriber growth despite a decline in smartphone sales, while cumulative subscribers for MVNOs (low-cost mobile phones) increased by 37.1% compared to last year and 10.3% compared to the previous quarter, driven by the growth of channels such as LG HelloVision and KB LiivM.

Revenue from Smart Home (IPTV and High-Speed Internet) reached 494.6 billion won, a 10.5% increase from the previous year, driven by subscriber growth and an influx of high-value customers. Notably, net IPTV subscribers in the second quarter totaled 130,000, a 42.3% increase compared to the same period last year. Enterprise infrastructure revenue recorded 345 billion won, up 2.7% from the same period last year and 10.1% from the previous quarter, driven by the expansion of IDC and solution businesses.

LG Uplus plans to provide realistic 5G content in its B2C business. In its B2B business, it will focus on expanding large-scale orders in the second half of the year based on 5G B2B cases from the first half. The strategy is to lay the groundwork for mid-to-long-term business growth by discovering 5G network-based business models such as 5G convergence, AR/VR, big data, and education, in line with the government's Digital New Deal policy direction.


◇ Strong performance must lead to investment in 5G, where public dissatisfaction is significant.

Meanwhile, according to the Ministry of Science and ICT, the number of 5G subscribers stood at 7.37 million as of June, an increase of 7.17% compared to the previous month (6,876,914). By operator, the number of 5G subscribers was 3,347,684 for SK Telecom, 2,237,684 for KT, and 1,783,685 for LG Uplus.

With the launch of new 5G smartphones such as the iPhone 12 and Galaxy Z Fold 2 scheduled for the second half of the year, the industry expects the number of 5G subscribers to reach 10 million within this year.

Given the unexpectedly strong results achieved in the first half of the year, it is a time when further investment in 5G infrastructure is needed.