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LG Uplus Q1 profit plunges 90% on costs

South Korea’s smallest mobile carrier, LG Uplus Corp., said Tuesday that its first-quarter earnings tumbled 90 percent from a year ago, hit by higher costs and lower revenues from subscribers.

Net income reached 57 billion won ($54 million) in the January-March period, compared with 543 billion won a year earlier, the company said in a regulatory filing.

Sales fell 13 percent from one year ago to 2.12 trillion won in the three-month period, and operating profit dropped 85 percent to 90 billion won, it said.

LG Uplus absorbed two of its smaller fixed-line affiliates in January 2010 to better compete with its bigger rivals SK Telecom Co. and KT Corp.

The company shelled out higher marketing fees, and its average revenue per user decreased 8.6 percent from one year ago, weighing on its bottom line, it said in a statement.

LG Uplus said it plans to start a fourth-generation wireless service called long-term evolution nationwide in July 2012, after offering the service in three major cities this summer.

The company faces stiffer competition in the saturated local wireless market, where one person owns more than one mobile phone on average. Its competitors started offering the latest models of the iPhone and the iPad, leaving the third-largest carrier as the only mobile operator without the hit products from the U.S. company.

SK Telecom accounted for 50.6 percent of South Korea’s 51 million-unit mobile phone market as of the end of last year, according to government data, followed by KT with 31.6 percent and LG Uplus with a 17.8 percent share. 

(Yonhap News)