Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LG Uplus Corp (XKRX:032640, Financial) reported a 1.6% growth in service revenue on a consolidated basis and 2.1% on a standalone basis year-over-year.
- The company launched Ixi Gen, a generative AI specialized in telecommunications, enhancing efficiency, security, and reliability.
- Mobile subscription count increased by 25.6% year-over-year, with a significant rise in 5G subscriptions.
- Smart home revenue grew by 2.5% year-over-year, driven by solid growth in giga internet services.
- Enterprise infrastructure business showed balanced growth, with a 5.4% year-over-year increase, driven by IDC and new business growth.
Negative Points
- Consolidated operating profit for Q2 was down 11.8% year-over-year.
- Net profit decreased by 22.8% year-over-year.
- Q2 IPTV revenue declined by 0.6% year-over-year.
- The company faces challenges in maintaining growth in the face of industry-wide business portfolio reevaluations.
- There is uncertainty regarding the financial impact and utilization rate of the new Paju IDC data center.
Q & A Highlights
Q: Does LG Uplus plan to phase out any current businesses, and what is the approach towards shareholder returns given the limited growth expected in 2024?
A: The CFO responded that LG Uplus conducts gatekeeping reviews for new business initiatives, focusing on digitalization and B2B growth. They aim to strengthen digital subscription channels and expand B2B services, including AI and digital transformation. Regarding shareholder returns, LG Uplus is positively reviewing participation in the government's value-up program and plans to disclose a shareholder return plan by the end of the year, balancing long-term growth and shareholder returns.
Q: What is the utilization rate of the Paju data center, and what financial impact is expected? Also, what is the progress on the AI-powered call agent?
A: An SVP of B2B business group stated that LG Uplus has purchased land for a new IDC at Paju to meet growing data center demand. The company currently owns seven data centers with a capacity of 350 megawatt hours, showing double-digit growth in utilization. The EVP of MX Digital Innovation mentioned that the AI-powered call agent is targeted for release in Q4 2024, aiming to improve convenience and security in voice calls.
Q: How is LG Uplus planning to enhance its B2B business, particularly in AI and digital transformation?
A: The CFO explained that LG Uplus plans to expand services catering to AI demand and digital transformation, focusing on AI Contact Center (AICC) and DX solutions. They aim to leverage their IDCs and selectively enter domains where they have a competitive edge, including the EV charging business, with a goal to be a top-three player in the slow charging market by 2027.
Q: What are the key differentiators of LG Uplus's AI model, and how will it impact mobile and home service users?
A: The EVP of MX Digital Innovation highlighted that LG Uplus's AI model, based on the large language model XC1, is lightweight and can be flexibly applied to various mobile communications applications. This model will provide better convenience to mobile and home service users and expand into the B2B area to improve business productivity.
Q: What is the strategic focus of LG Uplus in terms of digital transformation and cost management?
A: The CFO stated that LG Uplus will continue to manage costs rigorously and sustain profit-driven operations, focusing on digital transformation of fixed-line and mobile businesses. They plan to improve top-line growth in enterprise infrastructure business and bring success to key AI projects, aiming to enhance corporate and shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
