South Korean Telecom has made every effort to invest 5g to win the title of "the world's first 5g network business country", but now they are paying a price for it.
Due to the expensive investment of 5g, the operating profit of Korean telecom companies decreased.
SK Telecom, KT and LG U + revenues totaled KRW 52.5 trillion (US $44 billion) in 2019, an increase of 4.6% over 2018. Operating profit fell 8% year on year to 2.9 trillion won.
For the three companies, the biggest driver of revenue growth is the growth of media business, such as IPTV, a monthly subscription service that provides movies and videos for cable TV and national radio and television channels.
In this segment, KT generated an annual revenue of 2.7 trillion won, an increase of 13.5% year on year. The total number of subscribers to Olleh TV, the company's IPTV service, increased to 8.35 million, which resulted in increased revenue from paid services provided by the platform.
The highest revenue was SK Telecom, whose IPTV service SK broadband increased revenue by 10.7%. Last year, 464000 new users joined the service, bringing the total number of cumulative users to 5.19 million.
LG U +'s IPTV revenue rose 16.6% year on year to 1.03 trillion won. The number of IPTV users increased by 11.4% year on year, reaching 4.47 million in 2019.
The revenue of mobile network business also contributes to the revenue. KT's revenue in this area increased by 0.2% to 7 trillion won in 2019. LGU + revenue increased 1.4% to 5.5 trillion won. For SK Telecom, the figure fell 2.5% to 11.4 trillion won.
SK Telecom expects revenue to increase from the second quarter as data traffic consumption increases and 5g network package users increase.
Last year, KT's total capital expenditure was 3 trillion and 260 billion won, which is equivalent to a 65% year-on-year increase. Marketing costs increased by 18.4% to 2.7 trillion won. LG's capital expenditure increased by 86.7% to 2.6 trillion won. It spent 8.7% on marketing costs, bringing the annual figure to 2.2 trillion won.
All three said they had an optimistic outlook for 2020, claiming explosive growth in their 5g business. Non telecom services, such as media and content, will continue to grow.
SK Telecom will work with partners at home and abroad to develop its 5g services, and use the next generation network to develop enterprise to enterprise models. It also has high hopes for the SK broadband and t-broad merger, which will be completed this year, as well as its security and e-commerce business, which will be profitable for the first time in 2019.
KT promises to enhance 5g service. By expanding the indoor coverage of the network and developing the independent networking mode, the existing 4G infrastructure cannot provide this mode. Its video content applications Seezn and Giga Genie will also be upgraded based on personal recommendations.
LG U + also plans to use an independent 5g mode to improve call quality. The company also plans to expand exclusive content on its IPTV. Last year, the company acquired LG Hellovision to create synergies with its business.
