Despite the domestic economic downturn in the fourth quarter of last year, SK Telecom and LG Uplus appear to have improved their performance. It is interpreted that they benefited from the struggles of the budget mobile operators, which serve as rivals to the three major telecommunications companies (SK Telecom, KT, LG Uplus). KT, which underwent large-scale restructuring and saw an increase in one-time expenses like personnel costs (retirement benefits), is analyzed to have posted a deficit in the fourth quarter of last year.
According to the securities industry on the 13th, SK Telecom's estimated revenue for the fourth quarter of last year was 4.5668 trillion won, an increase of 0.8% compared to the previous year, while its operating profit for the same period is expected to have risen by 16.2% to 345.3 billion won. LG Uplus's estimated revenue for the fourth quarter of last year was 3.8074 trillion won, down 0.4% from the previous year, but its operating profit during the same period is estimated to have increased by 13% compared to the previous year. In contrast, KT's estimated revenue for the fourth quarter of last year was 6.7107 trillion won, a 0.3% increase from the previous year; however, the company recorded an operating loss of 527.9 billion won during the same period, indicating a transition to a deficit.
KT established its subsidiaries 'KT Netcore' and 'KT P&M' with the goal of reducing personnel expenses, subsequently moving part of its head office workforce. This led to a total reduction of 4,500 employees, including about 2,800 who applied for special voluntary retirement. While a transition to a deficit is expected in the fourth quarter of last year due to retirement benefit impacts, a personnel expense reduction effect of around 300 billion won is anticipated starting this year.
SK Telecom and LG Uplus appear to have benefited from improved profitability due to reduced market competition as the budget mobile operator industry faces a downturn. Following the introduction of the 'transition support fund' system in March of last year, which provided compensation to subscribers who switched between the three major telecommunications companies, the net increase in subscribers for budget mobile operators has steadily decreased. As the burden of cancellation fees was lowered when switching numbers, subscribers of budget mobile services moved to the three major telecommunications providers, which offered relatively numerous benefits.
According to the Korea Telecommunications Operators Association (KTOA), the number of subscribers who switched from the three major telecommunications companies to budget mobile operators in October of last year was 23,923. Considering that 45,371 subscribers made the switch to budget mobile operators in February of last year, before the introduction of the transition support fund, this represents about half the number.
Notably, despite a decline in domestic consumption in the fourth quarter of last year, the three major telecommunications companies successfully defended against a drop in average revenue per user (ARPU). The estimated ARPU for SK Telecom in the fourth quarter of last year recorded a decrease of 0.5% to 29,257 won compared to the previous year. During the same period, KT's estimated ARPU was 34,495 won, a decrease of 0.2%, while LG Uplus's estimated ARPU was 22,665 won, down 3.7%.
According to the Bank of Korea's December 2024 consumer trend survey, the consumer sentiment index (CCSI), which reflects consumers' economic situation sentiment, recorded 88.4. This figure represents a decline of 12.3 points from the previous month and is the largest level in four years and nine months since March 2020 (-18.3 points) when the COVID-19 pandemic occurred.
An Jung-sang, a visiting professor at Chung-Ang University's Graduate School of Communication, noted, "It seems that the three major telecommunications companies have solidified their positions due to reduced competition in the telecommunications market," and added, "It is time for the government to consider new measures to activate competition."