By Lee Min-hyung
The nation’s three mobile carriers ― SK Telecom, KT and LG Uplus ― have posted stronger-than-expected third-quarter earnings, beating earlier expectations that they would be hit hard in the aftermath of the global recall of Samsung’s Galaxy Note 7 smartphone.
As the popular handset hit a sales record of some 500,000 here since its launch in mid-August, critics expected the telecom operators to suffer significant losses following Samsung’s decision to give a refund on all the devices due to its manufacturing defects.
But they offset the impact by reducing marketing costs and improving performance in their wired- and wireless media businesses, according to analysts.
SK Telecom, the nation’s top telecom firm, posted 424.3 billion won ($370.89 million) in operating profit, down 13.5 percent from a year ago. But the earnings decline was largely attributable to its expanded investment in its affiliate SK Planet, an online-to-offline (O2O) commerce platform of the company.
Two other carriers ― KT and LG Uplus ― posted growth in their third-quarter earnings. KT particularly recorded 401.6 billion won in operating profit, up 17 percent from the previous year.
LG Uplus, the third-largest mobile carrier, also beat expectations by a large margin by posting 211.4 billion won in earnings, up 22.8 percent from a year ago.
“The three carriers are expected to record 6 percent growth in their combined operating profit next year, as their wireless sales will continue to grow due to increasing numbers of subscribers choosing a data-free rate system,” said Kim Hong-sik, an analyst from Hana Investment Securities. “They will also expand their dividends next year in line with their growth.”
Even if the outlook for the wireless business remains rosy for years to come, the carriers are in a cutthroat rivalry to gain the upper hand in promising next growth areas ― such as the Internet of Things (IoT) and internet protocol television (IPTV).
SK Telecom is focusing on building a long-term sales initiative for its media platform businesses ― led by its affiliates SK Planet and SK Broadband. SK Telecom said its IPTV has attracted some 390,000 new subscribers this year, with sales surging by 35 percent in the third quarter, compared to a year ago.
The IoT is also another key growth engine for which the company has recently unveiled a blueprint to launch more than 35 IoT services by the end of the year by using the energy-efficient wireless network LoRa.
KT is also seeking to boost its presence in the giga-class wired internet network system, or GiGA Internet. The company expects service subscribers to exceed more than 2 million this year.