The logos of three telecommunication companies are displayed at a mobile phone store in downtown Seoul.
The three mobile communication companies achieved good performance in the third quarter of this year, with a double-digit increase in combined operating profit. Management efficiency through investment in artificial intelligence (AI) and cost reduction was effective. The remaining task is AI monetization. The plan is to set specific AI new business promotion strategies and goals for each company and create a clear profit structure around communications and AI as two axes.
According to the Financial Supervisory Service’s electronic disclosure on the 10th, the combined operating profit of SK Telecom, KT, and LG U+ in the third quarter was KRW 1.2434 trillion, an increase of 15.7% compared to the same period last year. Operating profit continued to reach 1 trillion won for three consecutive quarters. Combined sales are close to 15 trillion won.
SKT’s operating profit increased 7.1% to 533.3 billion won, exceeding 500 billion won for two consecutive quarters. KT recorded an operating profit of 464.1 billion won, a 44.2% increase due to the base effect of labor costs. LG U+ alone decreased by 3.2% to KRW 246 billion due to the impact of amortization of intangible assets resulting from the construction of an integrated computer network.
All companies continued to see small growth based on line expansion in their main business, the wired and wireless business. The proportion of 5G subscribers exceeded 70% for all three companies. Profitability was also improved by reducing marketing costs and facility investment (CPAEX) and improving business stability.
The three mobile carriers have also strengthened their investment in new AI businesses and also specified a blueprint to make money through AI. We focus on building an AI profit value chain that can support the telecommunications industry in the AI business (B2B) and personal (B2C) markets.
SKT’s AI target sales are 10.5 trillion won by 2030. The plan is to fill 35% of the total target sales of 30 trillion won with AI. Among them, it seeks to monetize in three areas: AI Data Center (AIDC), AI B2B, and AI B2C. A business where short-term sales are visible is AIDC, where demand is rapidly increasing. SKT will open an NVIDIA graphics processing unit (GPU)-based AIDC within the year and launch GPUaaS, a subscription-based AI cloud service. AI agents (PAA) also continue to pursue monetization.
Kim Yang-seop, Chief Financial Officer (CFO) of SKT, said, “Over the past three years, we have focused our company-wide capabilities on becoming a global AI company, and now we want to show in detail how to make money through AI.”
KT’s telecommunications division will also continue to control costs, including restructuring and voluntary retirement, and focus on increasing AI sales. The AI/IT-related sales target is 3 trillion won by 2028. The proportion of total sales will also be increased from the current 6% to 19% within four years. We will closely cooperate with Microsoft (MS), including joint investment worth 2.4 trillion won over 5 years and establishing an AX corporation. The corporation consists of about 100 experts and plays a technical consulting role for AX, contributing to the expansion of KT’s own sales in the mid- to long-term.
LG U+ also increases sales growth in the B2B market such as AIDC and solutions and improves customer value through AX services. By 2028, a total of 3 trillion won, or 500 billion won per year, will be invested in the AI business. LG U+ CFO Yeo Myung-hee said, “We will achieve a turnaround in operating profit next year by increasing productivity and cost efficiency through AX.”
3rd quarter operating profit trend of 3 mobile communication companies (unit: KRW 100 million, data = IR for each company) – 3rd quarter operating profit trend for 3 mobile communication companies (unit: KRW 100 million, data = IR for each company)
Reporter Park Jun-ho junho@etnews.com
