LG U+ Corp., South Korea's third-largest mobile carrier, said Oct. 31 that its net profit for the third quarter jumped 22.8 percent from a year earlier, helped by a hefty increase in mobile phone subscribers. LG U+ reported an operating profit of 211.4 billion won ($184.3 million) for the July-September period, compared with a profit of 172.1 billion won for the same quarter last year, according to the company's regulatory filing.
LG U+ attributed the result to an increase in number of subscribers for its mobile phone and wireless Internet services.
South Korean telecom firms have also benefited from a 2015 law that tones down fierce competition to woo customers with hefty subsidies. Third-quarter net profit rose 2.4 percent on-year to 133.9 billion won. Sales rose 0.7 percent to 2.7 trillion won.
The number of subscribers increased 4.8 percent on year to 12.36 million for the quarter, LG U+ said. All forecasts are subject to change due to macroeconomic and market situation, the company said.
“In the third quarter, the company focused on improving financial structure underpinned by improved performance results of the core businesses of media and IoT,” said LG U+ CFO Lee Hyuk-Ju in a conference call when announcing the Q3 2016. “As a result, driven by growth of businesses across wireless, home and data, operating revenue was up 4.5 percent year-over-year and 0.8 percent quarter-on-quarter to 2,259.1 billion won, achieving 75 percent of 8,920 billion won, which is the annual target.
“Driven by growth in operating revenue and efficient spending of operating expenses, which was down 6.4 percent quarter-on-quarter, operating profit was up 22.8 percent year-over-year and 17.3 percent quarter-on-quarter to 211.4 billion won, breaking the highest quarterly record,” he said. “Operating margin against the total revenue improved 1.5 percentage points quarter-on-quarter coming in at 7.7 percent.”
Net income was up 18 percent year-over-year and 2.4 percent quarter-on-quarter to 133.9 billion won, Q3 cumulative net income came in at 374.8 billion won, higher than the annual net income of the past 15 years, allowing for more resources to be distributed compared to last year.
In terms of the financial position, cash flow improvements led to higher retained earnings with debt to equity ratio improving 16.6 percentage points year-over-year to 150.2 percent. Net debt to equity ratio improved 13.6 percentage points year-on-year, recording 83.8 percent.
Regarding the wireless business, Park Sang-Hoon, VP of Personal Solutions Marketing, said Q3 wireless service revenue was up 3.5 percent year-on-year and 0.7 percent quarter-on-quarter to 1,259.5 billion won, thanks to continued inflow of high-value subscribers.
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