SEOUL, July 17 (Korea Bizwire) — South Korean wireless carriers are set to report robust second quarter earnings on the back of a continued growth of 5G network users, according to analysts.
The combined operating profits of the country’s three major carriers — SK Telecom Co., KT Corp. and LG Uplus Corp. — are projected at 1.09 trillion won (US$951.4 million) for the April-June period, up 16.1 percent from a year earlier, according to estimates this month from eight local brokerage houses compiled by Yonhap Infomax, the financial arm of Yonhap News Agency.
The projection comes as user migration to costlier 5G plans continued to grow.
As of end-May, the country had 15.8 million 5G subscriptions, compared with 14.5 million at the end of March, according to ICT ministry data.
SK Telecom had the most 5G users in May at 7.4 million, followed by KT at 4.8 million and LG Uplus at 3.6 million.
KT is expected to have logged the sharpest rise in operating profit among the three carriers at 418.7 billion won, up 22.5 percent from the previous year.
“(KT’s) 5G subscribers likely increased by 608,000 on-quarter to 5.01 million (in the second quarter), while the average revenue per user is expected to have grown by 1.1 percent from the previous quarter,” Samsung Securities analyst Choi Min-ha said.
Top carrier SK Telecom’s second-quarter operating profit is estimated at 410.3 billion won, up 14.1 percent from the previous year, while smaller rival LG Uplus is forecast to report 264 billion won, up 10.1 percent, according to the estimates.
“The three companies are experiencing stable growth in their wireless top lines,” DB Financial Investment analyst Shin Eun-jung said. “Marketing costs have not increased greatly due to eased competition, leading to continued growth in profit.”
The forecast comes as carriers have pushed out cheaper 5G plans earlier this year to encourage user migration from previous generation networks amid complaints over disappointing 5G services.
Around 500 5G users have filed a collective lawsuit last month against the three companies over poor network connectivity, seeking compensation.
Carriers have increased efforts to improve services, racing to establish nationwide 5G coverage by the end of next year.
On Thursday, KT commercialized standalone 5G, which solely uses 5G network frequencies and does not switch between 4G LTE.
The telecom operator said standalone 5G is expected to reduce latency and improve phone battery life, although the carrier currently supports only a handful of devices.