The combined operating profit of South Korea's three major telecom companies—SK Telecom, KT, and LG Uplus—has risen to 1.5 trillion won for the first time in a year. Although KT's real estate development profits led to a year-on-year decline, improvements in profitability at SK Telecom and LG Uplus, along with growth in new businesses such as artificial intelligence (AI) and data centers, supported the overall performance.
On August 12, the combined revenue for the three companies in the second quarter was reported at 14.7339 trillion won, a decrease of 5.6% compared to the same period last year. The combined operating profit also fell by 6% to 1.5588 trillion won.
This marks the first time since the second quarter of last year that the combined operating profit of the three companies has exceeded 1.5 trillion won. The operating profit had previously increased to 1.5116 trillion won in the first quarter of last year and 1.6576 trillion won in the second quarter. However, due to hacking incidents and one-time costs, the profit dropped to 748.3 billion won in the third quarter, 516.9 billion won in the fourth quarter, and 1.2926 trillion won in the first quarter of this year, falling below 1.5 trillion won for three consecutive quarters.
The combined operating profit for the second quarter of this year decreased by 988 billion won compared to last year, primarily due to the base effect from KT's real estate development profits. The decline in KT's operating profit outweighed the increases at SK Telecom and LG Uplus, leading to an overall decrease in operating profit year-on-year.
Specifically, SK Telecom reported second-quarter revenue of 4.3591 trillion won and an operating profit of 566 billion won, marking increases of 0.5% and 67.3%, respectively, compared to the same period last year. The improvement was influenced by a base effect from costs related to last year's SIM card hacking and a focus on profitability.
KT's revenue was 6.6799 trillion won, with an operating profit of 648.3 billion won, reflecting decreases of 10.1% and 36.1%, respectively. The decline was attributed to the base effect from last year's real estate sales and customer compensation programs related to femtocell hacking.
LG Uplus achieved revenue of 3.6949 trillion won and an operating profit of 344.5 billion won. While revenue decreased by 3.9% year-on-year, operating profit increased by 13.1%, driven by growth in service revenue from enterprise infrastructure and smart home services, along with ongoing cost efficiencies.
Looking ahead, the three telecom companies plan to strengthen investments in AI data centers (DC) and AI infrastructure. The combined revenue from DC-related sales reported by SK Telecom, KT Cloud, and LG Uplus this quarter reached 525.7 billion won, a 35.3% increase from the previous year.
In response to the growing demand for AI infrastructure, they have announced plans to expand AIDC. SK Telecom established a specialized company, SK Hyper, last month to develop large-scale data center projects, aiming to gradually expand to 5 gigawatts (GW) by 2029, with plans to reach 15 GW thereafter.
KT aims to double its AI transformation (AX) revenue by 2028, focusing on AX infrastructure and solutions as key growth drivers. The company plans to add 1 GW of AIDC capacity and 90 terabits per second (Tbps) of submarine cable capacity by 2031, targeting an Asian AX connection hub.
LG Uplus is expanding its infrastructure centered around the Paju AIDC, which will be built with a power capacity of 200 megawatts (MW). Last month, LG Uplus decided to invest an additional 1.3489 trillion won to construct two new data center buildings and enhance facilities to meet the increasing AI demand.
* This article has been translated by AI.
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