South Korean multi-service operator LG Uplus saw net profit plunge in the first quarter of 2014 as the company increased marketing costs with a view to offsetting lost business during a suspension period between 13 March and 4 April. In the three months ended 31 March 2014 LG Uplus recorded a total turnover of KRW2.780 trillion (USD2.5 billion), down 2.8% against the KRW2.859 trillion generated in 1Q13. Service revenues in the first three months of 2014 totalled KRW2.016 billion, representing a 9.1% year-on-year increase, attributed to the operator’s burgeoning 4G subscriber base. However, this was more than offset by a 24.4% decline in handset revenues (KRW760.3 billion in 1Q14) and a 9.5% drop in rental revenues (KRW4.5 billion).
Operating income in the quarter stood at KRW113.2 billion, 8.1% lower than in 1Q13, with the drop attributed to increased marketing expenses, which were up by 22.6% at KRW551.1 billion in 1Q14. Earnings before interest, tax, depreciation and amortisation (EBITDA) totalled KRW465.6 billion in the first quarter of 2014, representing a 5.1% annual increase, while net income was KRW26.8 billion, a reduction of 63.9% from the KRW74.3 billion recorded in 1Q13.
In operational terms, at the end of March 2014 LG Uplus had a wireless subscriber base of 10.875 million, up 4.9% year-on-year, but down marginally from the 10.874 million recorded at end-March 2013. Of the total, 7.462 million were signed up to the cellco’s LTE-based services, up from 5.202 million a year earlier. In the fixed line arena, PSTN subscriber numbers were also up year-on-year, but down marginally against the last quarter of 2013 at 512,000. Voice-over-internet protocol (VoIP) uptake remained strong, however, with such accesses rising by 11.5% y-o-y (and 3.0% quarter-on-quarter) to reach 4.246 million at end-March 2014. Fixed broadband accesses meanwhile were up by 161,000 over the year at 2.963 million.