South Korean mobile carriers bet on 5G for business growth

South Korean mobile carriers — SK Telecom, KT and LG Uplus — are expected to report improved earnings for the final quarter of 2020 on the back of steady growth in 5G users, Yonhap news agency reported.
Apple iphone 12 5G smartphone in Singapore
The combined operating profits of the country’s three major telecom operators are estimated at 670.9 billion won (US$620.3 million) in the Oct.-Dec. period last year, compared with 497.9 billion won the previous year, according to a poll by Yonhap Infomax, the financial arm of Yonhap News Agency.

The upbeat forecast comes as user migration to costlier 5G plans picked up amid launches of new phones, such as Apple iPhone 12 series, propelling carriers’ bottom lines.

As of end-November, the country had nearly 11 million 5G subscriptions, compared to around 9 million in September, according to government data.

SK Telecom, the country’s largest carrier, is expected to report the sharpest rise in operating profit among the three carriers in the final quarter of last year at 261.2 billion won, up 60.7 percent from the previous year.

Net growth in 5G users reached 1 million from the previous quarter, leading to an estimated 5.2 percent on-year rise in mobile-related sales, while marketing costs likely declined 6.8 percent from the previous year, Eugene Investment & Securities analyst Park Jung-won said.

KT’s operating profit during the October-December period is estimated at 206 billion won, up 39 percent from the previous year, while LG Uplus is estimated to report 203.7 billion won in operating profit, up 9 percent over the same period, according to the poll.

Analysts expect the three mobile carriers to report robust earnings this year on growing 5G users as well as new services targeting businesses.

5G subscribers will likely account for 40 percent of all mobile phones, leading to increased average revenue per user, Daishin Securities analyst Kim Hoi-jae said.

The carriers have expressed renewed focus on non-mobile services this year, with KT CEO Ku Hyeon-mo vowing to boost efforts in new technologies, such as artificial intelligence, big data and cloud services, in a New Year’s message.

Incoming LG Uplus CEO Hwang Hyeon-sik said in a New Year’s message that the company will secure new growth drivers based on upcoming technology, such as self-driving cars and smart factories.

Mobile carriers are launching cheap payment plans to woo more 5G subscribers amid accelerating user migration to their high-speed 5G networks.

LG Uplus said it will release a new monthly data plan, offering 6 gigabytes of data at 5G speeds for 47,000 won (US$43).

KT launched late last year a monthly 5G plan at 45,000 won for 5 gigabytes of data.

The new data plans are relatively more affordable than most existing 5G data plans that cost over 50,000 won a month.

SK Telecom had the most 5G subscriptions in November at 5.1 million, followed by KT at 3.3 million and LG Uplus at 2.5 million.

The country has almost 11 million 5G subscribers as of end-November, accounting for around 15.5 percent of the total 70 million mobile subscriptions.

The country’s 4G users, in comparison, stood at 53 million in November, accounting for 76 percent of total mobile subscriptions.

Fast-enough 4G network speeds and limited coverage on the nascent network have stalled migration, with over half a million 5G users even switching to 4G LTE through August last year, according to ruling party lawmaker Rep. Hong Jung-min.