Three of the mobile carriers’ earnings announcements were finalized last year and all three companies reported a sluggish performance in their core business, mobile communications business. KT, which had a lot of investment related to 5G pilot service, received the sluggish report card while LG U + was relatively good. It is attributed to the pressure on telecom price cuts including a 25% increase in the discount on selective contracts implemented in September last year. Sales of new businesses such as the Internet and media rose, which made up for the loss of mobile communications.

KT, on February 6, announced that its consolidated sales and operating profit reached KRW 23.38 trillion and KRW 1.37 trillion, respectively. Sales grew 2.8% year-on-year but operating profit fell 4.5%. SK Telecom recorded consolidated sales of KRW 17.52 trillion and operating profit of KRW 1.33 trillion last year. Although it succeeded in rebounding sales for three years after 2014, mobile communication business, which is its main business, was not successful. In particular, sales in the fourth quarter grew 1.8 % year-on-year to KRW 3.11 trillion while operating profit fell 5.5 % to KRW 375.3 billion. LG U + recorded record-high sales and operating profit, improving margins among the three companies and LG U + showed consolidated sales of KRW 12.27 trillion and operating profit of KRW 826.4 billion last year. Sales grew 7.2% YoY and operating profit 10.7% YoY.

Especially, all three companies showed stagnation in their main business, wireless mobile communication business. SK Telecom`s average revenue per subscriber (ARPU) in the fourth quarter was KRW 35,529, down 0.4% from the same period last year and down 0.8% from the previous quarter. KT`s wireless business revenue also fell 2.9% year-on-year to KRW 7.20 trillion. ARPU for the quarter was 34,077 won, down 1.5% QoQ and 2.8% YoY. This is because 25% discount rate subscriber additions and terminal insurance service were excluded from sales due to changes in accounting standards. LG U + outperformed it’s the third quarter operating profit by 6% QoQ.

The earnings slump of the 3 major mobile carriers factories is attributed to the selective contract discount, which was raised to 25% from last year, and the government`s rate cut pressure on low-income tax rates. Poor mobile telecom earnings should continue this year. The industry is observing that the government will be willing to introduce a universal fare system, which will increase the burden on mobile carriers. SK Telecom`s CFO said, "Mobile phone sales are expected to decline year-on-year this year.

Mobile carrier is expected to focus on growth through new businesses based on 5G, including media, IoT, commerce, and artificial intelligence. SK Telecom plans to accelerate growth by expanding home service based on artificial intelligence in the media field, securing content competitiveness, and combining new business models with various businesses in the IoT area. KT plans to expand its AI ecosystem, including `Kigajini LTE` launched last year and `Kigajini 2` launched in February this year, while expanding its AI-based services to areas such as home IoT, finance and shopping. LG U + is also strengthening its competitiveness in home media business such as IPTV and home IoT using AI, along with `U + AI home`, an artificial intelligence smart home service that combines Naver clover. Set-top box AI function update and customized home service through Big Data and by providing differentiated value, it will change customer`s life more conveniently.

By Kim Ji Young kjy@


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