Good morning, and good evening. Thank you all for joining this conference call, and now we will begin the conference of the fiscal year 2023 second quarter earnings results by LG Uplus. This conference will start with a presentation followed by a divisional Q&A session. Our call is being webcasted on our homepage so that you can follow the conference simultaneously. Today's conference call will be presented for one hour, and due to schedule, we would appreciate if questions are limited to two to person. Now we will begin the conference of the fiscal year 2023 second quarter earnings results by LG Uplus.
Good morning, I am Song Hyun -mo, Team Leader of IR at LG Uplus. We would like to now begin the second quarter 2023 earnings presentation by LG Uplus. For the benefit of the investors, please refer to the second quarter, document that we have pre-circulated. For the benefit of the investors, the breakdown revenue as well as operating expense details are based on excluding, LG HelloVision numbers. Regarding the forecast that the company is making, it is subject to change depending on macro and market environment changes. Also for the benefit of our foreign investors, we will be providing consecutive interpretation. We will begin with the second quarter earnings results, which will be followed by a Q&A session.
I would like to first invite our CFO, Yeo Myung-Hee, who will walk through the Q2 2023 financial as well as business results.
Good morning, I am Yeo Myung-Hee, the CFO. I extend my gratitude to analysts and investors for joining LG Uplus' second quarter 2023 earnings presentation call. Thanks to sustained revenue growth from mobile, home, B2B, and new businesses and cost efficiency gains, in the second quarter, LG Uplus achieved steady level of operating profit. Through customer experience, innovation, mobile business, saw expansion in subscribers and 5G penetration, while through collaborations with new service providers from various different domains, we were able to bolster benefits customers could enjoy through our tariff plans. By introducing mid-segment 5G rate plan to Uplus MVNO providers through a wholesale arrangement, we expanded on customers' choice.
Smart home business saw its uptrend continue on rise in Giga internet subscribers and IPTV ARPU, on steep growth from IDC and robust growth from enterprise line business, B2B infrastructure reported a steady performance. In June, we executed a joint venture agreement with Kakao Mobility to secure competitiveness in EV charging business. The new entity to be formed will bring together LG Uplus' telecom infrastructure and operational know-how, based on which Kakao Mobility's platform capabilities will be leveraged to provide scaled-up EV charging services. Starting this year also, we expanded alliance with Hyundai Motor Company, supplying wireless communication circuits across all of Hyundai and Kia models, including Genesis, which drove sizable growth in number of IoT subscribers in Q2. If this trend was to continue, we anticipate it will bring big impact on market share of wireless subscribers of three mobile operators in the future.
Last April, we adopted online dividend inquiry services, enhancing shareholder convenience, as well as reduced paper usage, contributing to environmental protection and further fortifying ESG management. Moving on to second quarter financial performance. Consolidated second quarter service revenue was up 1.6% year-on-year, reporting KRW 2,897.1 billion, while separate basis service revenue was KRW 2,675.3 billion, up 2% year-over-year. Consolidated Q2 operating expense was up 0.2% year-on-year and down 4.3% Q1Q, recording KRW 3,141.3 billion. Marketing spend was down 1.9% year-over-year, and up 1% Q1Q to KRW 539.7 billion, continuing on with efficient spending stance. Consolidated Q2 operating profit was up 16% year-on-year to KRW 288 billion.
On separate basis, OP reported KRW 287.3 billion, up 17.5%. Consolidated Q2 EBITDA was up 6.9% year-over-year to KRW 916.8 billion, showing a sustained trend of operational cash flow enhancement. Net profit on a consolidated basis increased 31.7% year-over-year, and 37.5% on quarter, reaching KRW 213.3 billion won. CapEx reported KRW 661.3 billion, up 8.2% year-over-year. Looking at consolidated financial position as of end of the second quarter, total asset recorded KRW 20,419.3 billion, liability total was KRW 11,777.6 billion, and shareholder equity was KRW 8,641.7 billion won.
Debt to equity ratio increased 2.3 percentage points year-to-date, while net debt ratio fell 1.3 percentage points. This ends the briefing on financial and business performance. We will now move on to each business unit for a breakdown of results and outlook.
First is mobile business, and I am Lee Jaewon, Head of MX Innovation.
Q2 mobile service revenue was up 2.5% year-over-year to KRW 1,494.3 billion, and such continuing growth was attributable to growth from MVNO subscribers and recovery of roaming revenue on the back of rebound in travelers.
On mobile, 4.3% year-over-year to KRW 2.167 billion.
... 전체 handset 가입자 중 57.2%를 기록하였습니다. MVNO 가입자는 전년 동기 대비 47.2% 성장한 4,878,000 명을 기록하며 꾸준한 고성장을 이어나가고 있습니다.
Total number of mobile subscribers reached 21,677,000, up 14.3% year-over-year, of which 5G subscribers reached 6,679,000, up 24.3% year-over-year, accounting for 57.2% of total handset subscribers. MVNO subscribers were up 47.2% year-over-year, reaching 4,878,000, sustaining the elevated uptrend.
지난 사월, LG U+는 세대별 이용 행태에 따라 혜택을 늘린 생애 주기별 5G 요금제를 출시하였습니다. 청년층에는 데이터를 추가 제공하고, 장년층에는 더 저렴하게 이용할 수 있는 혜택을 제공함으로써 고객의 요금의 선택 폭을 넓혔습니다. 이뿐만 아니라, 통신 업계 최초로 U+ 알뜰폰 사업자들에게 5G 신규 요금제를 도매 제공함으로써 알뜰폰 시장의 성장과 알뜰폰 사업자들과의 상생을 위해 지속적으로 노력하고 있습니다.
In April, we launched 5G rate scheme that is well matched to the user's life cycle. To younger generation, we're giving more data, while to the older generation, we provide benefits at more reasonable price, giving more choice to our user base. For the first time in the telco industry, we offered U+ MVNO operators with new in 5G tariff scheme through a wholesale arrangement. As such, we are continuously finding ways to thrive side by side together with MVNO operators and the greater market.
LG Uplus가 2020년 통신 업계 최초로 선보인 live commerce U+ Live를 통한 모바일 개통 건수는 작년 대비 172% 증가하였습니다. 이는 고객 특성별 최적화한 방송 편성 및 맞춤형 서비스 제공을 통한 이용 경험 혁신의 결과이며, live commerce뿐만 아니라 다양한 온라인 채널을 통한 개통을 꾸준히 늘려가도록 하겠습니다.
Also, number of mobile activations achieved through U+ Live, which we introduced for the first time in the industry back in 2020, increased 172% year-over-year. This is an outcome of user experience innovation attained via personalized service offerings and by coming up with a most optimal curation that best cater to preferences of every customer. We will continue to drive activation not only through the live commerce channel, but also through various different online channels.
지난해 출시한 반려견 커뮤니티, 커뮤니티 겸 훈련 서비스, 포동은 반려견의 성향 분석, 전문가와의 상담 등 다양한 반려 가족에 대한 고객 경험 혁신 서비스를 제공하며 큰 인기를 끌었습니다. 그 결과, 가입자 200,000명을 돌파하며 꾸준히 고객들의 사랑을 받는 서비스로 거듭나고 있습니다. 또한, 종합 스포츠 플랫폼, 스포키는 출시 7개월 만에 누적 가입자 15,000,000명을 돌파하며 꾸준한 성장세를 이어가고 있습니다.
Last year, we released Podong, which is a community and a training service for pets that offer counseling services as well, and it gained big popularity thanks to innovative services offered to families of companion animals. As a result, subscribers reached above 200,000, as it became a service beloved by its customers. Also, Spoki, which is a comprehensive sports platform, broke 15 million in cumulative subscribers in just 7 months since its rollout and is continuing on with a growth trend.
LG U+는 이 분기에도 2 편의 오리지널 예능 콘텐츠, 내 편 하자, 집에 있을 걸 그랬어를 론칭하였고, 하반기 콘텐츠 제작 계획을 발표하는 등 오리지널 콘텐츠 제작도 지속적으로 확장해 나가고 있습니다. 뿐만 아니라, 미국의 인기 음악 공연의 라이센스를 확보하고, 유명 인기 IP 보유사들과의 협업을 통해 콘텐츠 경쟁력을 강화해 가고 있습니다.
During Q2, we released two original entertainment content, Be My Side and You Should Have Stayed Home, and announced our production schedule for the second half. As such, we are expanding our original content production and also through collaboration with IP holders of popular music performances in the U.S., we are bolstering LG Uplus' competitiveness in its content offerings.
이천이십삼년 남은 기간 LG U+의 모바일 사업은 고객 경험을 혁신할 수 있는 다양한 서비스와 콘텐츠를 제공함으로써, 고객들에게 많은 혜택을 제공하고, 5G로서의 전환을 가속하여 지속적인 매출 및 이익 성장을 실현할 수 있도록 최선의 노력을 다할 것입니다.
In the remainder of time, we want to be able to provide more benefits to customers by delivering diverse array of services and content that will drive customer experience, innovation, and accelerate 5G transition in order to drive sustainable revenue and profit growth.
다음은 스마트홈입니다. 홈니버스 그룹장 박찬승입니다.
Next is Smart Home Business, and I'm Park Chanseung, Head of Homenivers Business.
...Smart Home 사업의 이 분기 주요 성과를 말씀드리겠습니다. 이 분기 Smart Home 수익은 전년 동기 대비 4% 성장한 KRW 602.9 billion을 기록하였습니다. IPTV 수익은 전년 동기 대비하여 2.8% 성장한 KRW 336.9 billion, 인터넷 수익은 기가 가입자의 성장 등으로 전년 동기 대비 5.6% 성장한 KRW 266.1 billion을 기록하였습니다.
I will first start with key performance highlights of Smart Home business. Q2, Smart Home revenue was up 4% year-over-year to KRW 602.9 billion. IPTV revenue was KRW 336.9 billion, up 2.8% year-over-year, and internet revenue was up 5.6% year-on-year, reaching KRW 266.1 billion on giga subscriber growth.
IPTV 가입자는 작년 가입자에 대한 질적 개선 활동의 영향으로 전년 동기 대비하여 0.1% 감소했지만, 직전 분기 대비하여는 0.4% 증가한 5,392,000 명을 기록하였으며, 인터넷 가입자는 전년 동기 대비 4.9% 성장한 5,237,000 명을 기록하였습니다.
IPTV subscribers on the back of subscriber quality improvements that took place last year were down 0.1% year-over-year, it was up 0.4% Q-over-Q, reaching 5,392,000 subscribers. Number of internet subscribers increased 4.9% on year, reaching 5,237,000.
LG U+는 지난해 출시한 OTT TV의 업그레이드 버전인 U+ TV Next를 곧 출시할 예정입니다. U+ TV Next는 편리한 시청 경험을 제공하고, 개인별 맞춤형 콘텐츠를 추천해 주는 등 인기 OTT를 가장 쉽고 편하게 볼 수 있도록 변화하는 IPTV의 새로운 패러다임을 반영한 서비스입니다. 이를 통해 콘텐츠를 찾아다니는 불편한 시청 경험을 개선하여 보는 사람 중심의 IPTV 서비스를 만들어 가겠습니다.
LG U+ will soon launch U+ TV Next, which is an upgraded version to OTT TV, rolled out last year. U+ TV Next will offer easy viewing experience and recommend personalized content in line with the new paradigm of IPTV transformation. We will enhance viewing experience, where in the past, customers had to go after the content into a new paradigm of user centricity.
LG U+는 차세대 핵심 기술인 MSA 기술을 업계 최초로 IPTV 플랫폼에 적용하였습니다. MSA 기술은 시스템을 작은 단위로 세분화하여 운영할 수 있기 때문에 서비스를 간편하게 개선하고, 문제 발생시에도 장애 범위를 최소화할 수 있습니다. 이런 장점을 통해 미디어 플랫폼 운영 안정성을 높일 수 있고, 고객 불편 사항을 신속하게 해결할 수 있습니다. 앞으로도 LG U+는 이러한 최신 기술의 적용을 통해 고객 불편을 최소화하고, IPTV 고객 경험을 혁신하도록 하겠습니다.
We also brought next generation MSA, micro service architecture technology, to IPTV ahead of our industry peers. MSA allows systems to be segmented into smaller units, so it is easier to improve services and limit the scope of failure when problems occur. This can help media platforms' operational stability and help to quickly resolve customer complaints. LG U+ will continue to incorporate such cutting-edge technologies in order to minimize inconveniences and to innovate IPTV customer experience.
급변하는 교육 환경에서 재미와 학습을 갖춘 키즈 플랫폼, 아이들나라 는 국가 서비스 대상에서 4년 연속 키즈 콘텐츠 부문 대상을 수상하였습니다. 프리미엄 교육 콘텐츠를 제공하는 아이들나라는 U+ 3.0 핵심 플랫폼으로서 앞으로도 차별화된 브랜드 경험을 제공하고, 한 차원 높은 서비스를 제공하도록 노력하겠습니다.
Under a fast changing educational environment, Kids World, equipped with fun and learning, was awarded National Services Grand Prize in Kids Content category for four consecutive years. Kids World, as a core U+ 3.0 platform, delivers premium educational content, and we will continue to work on offering differentiated brand experience and an elevated level of services going forward.
이처럼 LG U+의 Smart Home 사업은 계속해서 변화하는 서비스 및 콘텐츠 시장의 흐름 속에서 새로운 성장 동력을 지속적으로 발굴하여 수익성을 증가시켜 나갈 수 있도록 최선의 노력을 다하겠습니다.
Smart Home business of LG U+ will continue to endeavor to explore new engine of growth in the midst of ever-changing services and content market landscape, so as to boost profitability.
다음은 기업 인프라입니다. 기업 신사업 그룹장 임장영입니다.
Next is on B2B Infrastructure, I'm Im Jang-hyuk, Head of New Enterprise Business.
기업 인프라 사업의 이 분기 주요 성과를 말씀드리겠습니다. 이 분기 기업 인프라 사업은 IDC 사업의 지속적인 성장 등으로 전년 동기 대비 일점일퍼센트 성장한 사천구십사억원을 기록했습니다.
I will start with key results of B2B infrastructure business for the second quarter. On the back of continuing uptrend in IBC business, Q2 B2B infrastructure business was up 1.1% on year, reporting KRW 409.4 billion.
... 2분기 IDC 사업은 year-over-year 15.5% 증가한 KRW 79.8 billion을 기록하며 고성장을 이어갔고, 기업 회선 역시 KRW 20.8 billion으로 year-over-year 0.3%의 성장을 이어갔습니다.
IDC business in Q2 was up 15.5% year-over-year, reporting KRW 79.8 billion, continuing on with a high growth. While enterprise line revenue was KRW 200.8 billion, up 0.3% year-over-year.
다만 솔루션 사업의 경우, 솔루션 사업 내 포함된 중계 메시징의 트래픽 감소로 전년 동기 대비 오 점 일 퍼센트 감소한 천이백팔십팔억 원을 기록했습니다.
For the solutions business, on traffic decline from broadcast messaging, revenue fell 5.1% year-over-year, reporting KRW 128.8 billion.
LG유플러스의 기업 인프라 사업은 이십삼년 이분기에도 다양한 분야의 신사업에서 성과를 이루어냈습니다.
B2B infrastructure business during second quarter of 2023 brought tangible results from different domains of new businesses.
우선 LG유플러스의 AI 기술이 적용된 AI 음성봇을 우리카드 고객센터에 제공하여 상담 빈도가 높은 업무를 삼백육십오일 대기 없이 처리 가능하도록 하였습니다. 이 AI 음성봇의 경우, 고객의 실제 상담 내용과 AI 언어 모델의 역량을 융합해서 음성 인식률 및 응대율을 대폭 개선하였으며, 향후에도 고객 니즈를 지속적으로 반영하여 서비스 편의성을 개선함으로써 더 나은 서비스를 제공해 나갈 예정입니다.
Uri Card's customer service center uses AI voice bot, powered by LG Uplus's AI technology, and high frequency work can now be handled 24/7 without the need for a wait time. By using AI language model and actual customer service data, AI voice bot helped to significantly improve voice recognition and the response rate. We plan on further improving convenience based on customers' needs and feedback to provide better services going forward.
스마트 팩토리 사업 분야에서는 ESG, 탄소 배출량 감축 등 고객들이 당면한 환경 규제 부담 해소를 위해 관련한 솔루션 업체인 Glassstone Korea, Nubix와의 업무 협약을 체결하였으며, 통합 출입 보안 솔루션 업체인 Platform Base와도 업무 협약을 체결하였습니다. 향후 LG유플러스의 다양한 스마트 팩토리 솔루션을 확장해 팩토리 고객들의 효율적 사업 수행을 적극 지원해 나갈 예정입니다.
In Smart Factory, we executed an MOU with Glass Dome Korea and Nubix, who are companies with solutions that help relieve environmental regulatory burden of customers regarding ESG and emissions reduction. We also have business arrangements with access control and security solution company called Platform Base as well. We are planning to actively provide various smart factory solutions so that our factory customers can enjoy greater efficiency in running their businesses.
Smart Mobility 사업 분야에서는 국토교통부가 주관하는 자율주행 기술 개발 혁신사업의 주관 연구기관으로 선정되어 협약을 체결하였습니다. 해당 사업은 2027 Level 4 Plus 자율주행차 상용화 기반 완성을 목표로 하는 연구개발 사업으로, 이를 통해 원격 제어, 실시간 관제 솔루션 등의 기술을 발전시켜 자율주행 기반 기술을 한 단계 높여 나갈 예정입니다.
In Smart Mobility, we were selected as research institution for autonomous driving development and innovation projects sponsored by Molyt and entered into an MOU as well. This R&D project's objective is to complete the foundation for commercialization for Level Four Plus autonomous vehicles, and under the initiative, we will further scale up foundational technology, including remote control, real-time command and control solutions.
메타버스 사업과 관련해서는 대학 캠퍼스에 특화한 국내 유일의 대학 전용 메타버스 플랫폼인 유버스를 출시하고, 더본코리아와 협력해 유버스 내에서 다양한 이벤트를 진행하였습니다. 유버스는 숙명여대를 시작으로 최근 연세대학교와도 협업을 통해 학생들이 메타버스 내에서 강의를 수강할 수 있도록 하는 가상공간 서비스를 구축 중에 있습니다. LG유플러스는 향후 유버스를 이용하는 협업 대학들을 지속적으로 확대하고, 학생들이 유용하고 재미있게 느낄 수 있는 콘텐츠들을 지속적으로 선보일 계획입니다.
For the Metaverse business, with the rollout of Uverse, Korea's only metaverse platform specialized for university campuses, we held various events inside Uverse in collaboration with Theborn Korea. Starting with Sookmyung Women's University, we're collaborating with Yonsei University as well, building a virtual service where students can take lectures inside the metaverse. LG Uplus will expand a number of universities in the Uverse platform and continue to introduce fun and useful content to students.
이상과 같이 LG유플러스는 기존 사업 분야에서는 기업 고객들에게 더 차별화된 서비스를 제공할 수 있도록 다양하면서도 고객 친화적인 서비스 솔루션들을 개발해 나가고 있으며, 신규 사업의 성장을 위해서도 다양한 업무 협약 및 기술 개발로 시장을 선도해 나가기 위한 노력을 지속하고 있습니다.
As can be seen, LG Uplus continues to develop customer-friendly service and solutions to provide differentiated and diverse array of service offerings to its B2B customers in the current business segments. For new business growth, we will develop market-leading technologies to enter into various business arrangements. For the remaining months of 2023, we will endeavor to gain various different reference sites so as to speed up growth from current and new businesses of B2B infrastructure.
This ends business breakdown, and I will invite back our CFO to walk through second half business outlook.
During the first half, LG Uplus continued to endeavor to explore and provide services that will innovate customer experience while trying to identify new growth engine for future. In the second half, we expect 5G penetration to expand, following the launch of flagship handsets, and under this environment, we will drive customer experience, innovation and improve customer pain points to trigger higher growth and bring lower churn rates in order to attain sustainable profit growth. Based on customer experience built over the years and sophisticated customer analysis process, LG Uplus will bolster competitiveness in the digital channel and underpinned by internalized core technologies, we will generate tangible results from new areas, including platforms, SOHO and robotics. We anticipate expanded growth of IoT subscribers, including for connected car service, to become another growth engine for us.
Once the approval process by the authorities on the EV charging joint venture with Kakao Mobility is finalized, we will set up the entity and fully enter into the EV charger business. Supported by such strategies, we will continue to provide differentiated services to customers, and all of our business units will do their utmost to achieve financial performance on par with market expectations. We will drive bottom line growth from the telco business as well as new business segments in the second half to enhance shareholder return and to make bigger societal contributions through service value innovation. Thank you.
This ends the presentation. We will now take your questions.
Now Q&A session will begin. Please press star one. That is star and one if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two. That is star and two on your phone. The first question will be provided by Jisu Chung from Merit Securities. Please go ahead with your question.
Thank you. I am Chung Jisu from Merit Securities. I would like to ask you 2 question. First question relates to your annual guidance. Can you provide some color as to what your expectations are for this year? Second question is on your IoT business. What is the driver behind the subscriber growth of your IoT business, and what is your outlook?
Thank you. Yes, this is the CFO, I will respond to your question on guidance and IoT subscriber growth. We've originally guided that our annual guidance will be about 4% growth on a cumulative basis for the first half of the year. Service revenue posted a growth of 2% on a year-over-year basis. If you look at mobile service revenue growth on first half basis, basically, the growth rate was +2.8%, which was quite positive. If you look at the cumulative growth rate of the smart home and B2B infrastructure, the growth rates were respectively 3.1% and 1.4% underperforming. Hence, that was the key reason behind, the reason why we see that our service revenue had been below what we have previously guided.
The reason why we've seen some slower growth from smart home is because of lower VOD revenue on the back of OTT growth, as well as slower home shopping commissions revenue. On the B2B infrastructure side, due to the lower level of messaging traffic, we've seen a decline in the broadcast messaging revenue. Those were the key reasons. Now, however, if you look at the mobile service revenue on the back of continuing growth of MVNO, as well as increase in the roaming revenue, we expect that in the 2nd half of the year, we will be able to maintain the current level of growth.
Now, for the smart home business, the VOD revenue has been quite slow recently, but with the coming of the summer holidays and the Chuseok, the Korean Thanksgiving season, where there will be a number of triple A titles that will be showcased, we are expecting for a rebound in top-line revenue. Also, with the introduction of a new monthly subscription plan, we expect that we will be able to bring about a mid-single-digit growth going forward on a per annum basis. Now, for the B2B infrastructure business, there's a seasonality factor whereby we see a revenue grow in the second half of the year. Once the new IDC center is complete, we are expecting to see improvement in the growth rate. On a per annum basis, we are expecting a mid-single-digit growth.
We will do our utmost to make sure that each of our business units actually achieve the annually planned objective, and also to drive revenue from our new business endeavors, so that we may achieve our service revenue guidance. From a bottom line perspective, we will make sure that our business operation is focusing on the profitability aspect, so that we can maximize shareholder return. Once again, we commit to you that we will do our best in the remaining months of 2023. Your second question was on the reason why or the key driver behind the continuous IoT subscriber growth. If you look at our Q2 home IoT subscriber, that included in the entire IoT subscriber base, we saw a growth of 39.2%, which was a quite steep growth. One of the key drivers behind this IoT performance was connected car.
Starting this year, we've become an exclusive supplier to Hyundai, Kia and Genesis. All of the models, to all of the models, we are the exclusive supplier of wireless telecommunication services. Thanks to that, we've seen our first half IoT subscriber number rise quite significantly. This broader base of subscribers will help us expand our interface to our customers and grow into an infotainment market by providing, in the future, the platform, the content, as well as the solution. We believe that this will be able to drive further growth in the in-vehicle data usage as well as our ARPU. Also, we are planning to provide an infotainment system to all of the Toyota models that will be released into the market this year.
All of these aspects will bring LG Uplus growth, and by 2024, we expect that we will become number 1 market share company in Korea's connected car market. Going forward, we will closely collaborate with third parties so that we can strengthen our media content capabilities and also develop specialized solutions, that is, for instance, connected with insurance products or that will support in-vehicle payment. As such, we will be able to provide, we will be providing a differentiated car life experience to our customers. On top of this, and from the new markets of EV charging and kiosk business, we are seeing that being a very strong momentum behind the IoT growth. Due to the broader base of IoT subscribers, we are expecting to see a higher mobile revenue contribution going forward.
The rise of such IoT subscribers, we expect, will also have an impact on the market shares of three companies, the three mobile operators subscribers. Going forward, our plan is to grow the sales of IoT across many different industry domains, and we will do our best to make sure that we not only grow the volume or increase the ARPU, but also bring about qualitative growth as well.
Next question, please.
The following question will be presented by Seoyoung Yoon from Hyundai Motor Securities. Please go ahead with your question.
Yeah, ..., from Hyundai Motor Securities. I have 2 questions. You've mentioned that once you receive authority's approval on setting up a joint venture with Kakao on your EV charging business, you've mentioned that you will be able to start expanding the segment. Can you provide a little more detail, for instance, number of charging infrastructures that you're planning on, on an yearly basis, or maybe any financial performance of projections that you have for this business? Second question is on your content business. Would like to understand as to what your plans are going forward. Do you believe that you will be able to set yourself up as a comprehensive content provider, not just for the entertainment programs, which you have now certain level of experience on, but even encompassing dramas and documentaries?
I would like to understand whether the company believes that you'll be able to set yourself up as a content, full-fledged content, production company. What are your plans going forward?
Yes, I will. I'm the CSO. I will first respond to your question about Kakao Mobility and our joint venture. LG Uplus, in order for us to gain competitiveness in the business of EV charging, we've entered into a joint venture arrangement with Kakao Mobility, which is a number one mobility company in Korea. LG Uplus and Kakao Mobility will each make equity investment of $25 billion. In total, the investment, capital investment will be $50 billion, based upon which this joint venture will be formed.
LG Uplus will have 50% share, plus one share, and Kakao Mobility will have the remaining 50% equity stake, and this joint venture will be included in our consolidated statement.... Electric car charging business, major value chain in LG Uplus is CPO, that is, excluding electric vehicle charging station manufacturing, construction, operation, billing, sales, and subsequent value added services. We plan to expand our business. In the value chain of EV charging business, LG Uplus, its role is going to be as a CPO, a charging point operator, which means that we will be engaged in building, operating, billing, as well as selling these charging I guess, charging equipment and solutions, aside from manufacturing such charging equipment. Going forward, we will be expanding on additional value add services.
Our initial plan will be to set up these charging stations, the standard, for the standard chargers, mostly around the large apartment complexes, and then gradually expand to flash or high speed charging market. Our objective is to become top three player within the domestic market in three-year period. We will, with that objective in mind, actively pursue this business. We are in the midst of gaining approval from Korea Fair Trade Commissions, regarding the specific numbers that you've asked for, the guidance numbers on an annual basis and the specific business plan of the joint venture, we will come back to you and communicate with you those information once we acquire the approval. I will respond to your question on content. I am the CCO, Lee Deok -jae. Responding to your second question about our content production.
Since the establishment of Studio X Plus U back in October of 2022, we've been building out our content specialized organization. We've been hiring and engaging core talent, which was the key focus of our work in 2022. In 2023, upon the capabilities that we were able to secure and build, we've been gradually developing and producing original content. In the first half of 2023, we developed or we produced a documentary on LG Twin Twins, the baseball game team, under the name of Our Game, which really posted a good performance. We also have four mid-form contents that we produced.
One of them is Be On My Side, and I should have stayed, and the other is I Should Have Stayed Home, and it was featured across the U+ mobile TV platform, and it received number one ratings. Especially if you look at Be On My Side, it raked in 17 million views through YouTube and TikTok platform, creating a buzz, and we were able to see that it had a strong appeal against the people in their 20s and 30s. In the second half of the year, we have 4 more mid-form entertainment programs, so that is currently in the pipeline, is one is about the pets and there are 3 other entertainment programs. In Q4, we also have a drama that's in the pipeline as well.
For the music content, we have a plan to introduce a Tiny Desk Korea, which is a Korean version of the U.S. Tiny Desk.
저희와 방향성이 부합될 경우에는 외부 유통도 병행해서 콘텐츠의 화제성을 확보하는 것을 최우선 과제로 삼고 있습니다.
The contents and the programs that we produce will be featured and aired through U+ Mobile TV, as well as U+ TV Next within the IPTV, as well as through other OTTs and TV channels. From the perspective of creating a buzz from these contents, we will also consider using third party distribution platforms.
이러한 그 초기 성과를 바탕으로 해서 내년을 위한 미드폼 예능과 미드폼 드라마 부분도 차질 없이 준비하고 있습니다. 고객분들에게 새로운 콘텐츠의 가치를 드릴 수 있도록 끊임없이 연구해서 차별화된 즐거움과 경험을 선사할 수 있도록 지속적으로 노력하겠습니다. 감사합니다.
Upon these initial outcomes, as next year, we will be making and producing mid-form entertainment programs as well as dramas, so that we can offer new value, new entertainment to our customer base. We will continuously research into these different elements that could provide additional entertainment, and we'll do our utmost to provide interesting experience.
진행자님, 현재 질문 대기 중인 분이 계신가요?
현재 두 분 대기 중입니다.
시간 관계상 현재 질문 대기 중인 두 분만 질문, 두 분만의 질문을 받도록 하겠습니다.
Next question, please.
다음으로 질문해 주실 분은 미래에셋증권의 김수진 님입니다.
The following question will be presented by Sujin Kim from Mirae Asset Securities. Please go ahead with your question.
네, 안녕하세요? 질문 주실 기회 주셔서 감사합니다. 저 한 가지 질문드리고 싶은데요. B2B에서 진행 중인 신사업이랑 향후 구체적인 계획들에 대해서 질문을 드리고 싶습니다.
Yes, I just have one question. What are your new business initiatives under B2B business, and what is your plan going forward?
기업 신사업 그룹 임장혁입니다. 제가 말씀드리겠습니다. B2B 신사업은 지난해 약 KRW 60 billion 정도 규모였던 매출이 금년에 한 KRW 120 billion 정도로 한 두 배 정도 성장을 시키고 나서, 2025년까지는 약 네 배 정도 되는 KRW 240 billion 정도까지 성장시킨다는 계획을 가지고 있습니다.
Hello, I am Im Jang -hyuk. I will respond to your question on B2B business. B2B new business, the size of which was about KRW 63 billion last year, we were able to double that. This year we've reached about KRW 120 billion in size. Come year 2025, our objective is to increase that by fourfold to about KRW 240 billion.
세부적으로 우선 스마트 모빌리티 사업은, 현대, 기아차 전 차종 통신 서비스 수주로 커넥티드카 사업에 의미 있는 실적을 도출했고, 또 강릉과 천안시에 ITS 사업을 수주하는 데 힘입어서 꾸준한 매출 성장세를 이어가고 있습니다. 그리고 또 금년에 도요타 RAV4 플러그인 하이브리드 모델을 필두로, 렉서스 등 도요타 전 차종에 날씨, 스마트홈, 뮤직, 동영상 콘텐츠를 제공하는 통합 인포테인먼트 서비스인 U+ Drive를 탑재해 차별화된 카 라이프 경험을 제공하고, 타 경쟁사 대비 우위의 사업 경쟁력을 확보해 나가고 있습니다. 그리고 하반기에는 화물 중개 플랫폼 서비스를 런칭해서 신규 시장을 더 확대해 나갈 생각입니다.
To provide a little more detail for our smart mobility business, we've seen a very meaningful result from connected car business by winning the order from Hyundai-Kia Motors across all of their vehicle models. We also won orders for the ITS business for Gangneung and Cheonan City, which is helping us to sustain our top line revenue growth. Also, for this year, we will be providing our services and solutions to Toyota's RAV4, which is a plug-in hybrid model, as well as to Lexus. We will provide weather, smart home, music, and video content to the integrated infotainment service called U+ Drive. We will be providing a very distinct car life experience to the users.
With these endeavors, we are currently gaining a competitive edge in this segment, and also in the second half of the year, we plan on further expanding our new markets with the launch of the freight platform.
다음으로는 스마트 인프라 사업입니다. 로봇 사업은 지난해 관련 시장을 파악하고 조직을 정비해서 출범을 하였고요. 금년에는 LG전자의 3rd generation CLOi, 그다음에 VD Company의 Foodbot 등 라인업을 확대하고 있습니다. 하반기에는 물류 로봇 등 타 영역으로 서비스 영역을 확대할 예정입니다. 메타버스 사업은 역시 대학 특화 메타버스 플랫폼인 Uverse를 출시하고, 도서관, 홍보관, 입학, 취업 박람회 등 대학교와 학생 입맛에 꼭 맞는 옵션을 충족시키면서 숙명여대, 청주대, 순천향대, 연세대 등으로 시장을 확장 중에 있습니다.
Next is on smart infrastructure business, regarding the robot business. Last year, we studied the market, and we set up the organization, and this year we're in the process of expanding our lineup to include LG Electronics, third generation, CLOi, and VD companies, Foodoo Bot. Also, in the second half of the year, we will be expanding such service domain to other areas, including logistics robot. In terms of Metaverse business, our Uverse was released. This is a university-specialized metaverse platform, whereby we provide different services that really best fit what the students need by providing different types of libraries or trade shows of university admissions and job fairs, we will be able to meet the requirements that the students have. We are at this point, expanding the portfolio of universities, including Sookmyung, Chungju, Soonchunhyang, and Yonsei University.
For our smart factory business, we're at this point expanding all the proven solutions that we at the LG affiliate factories have used in the past. In order to further expand our telecommunication foundation, we are at this point strengthening all the products for the private network and also exploring into a specialized network market. In order to satisfy various different needs of our customer base, we are at this point, further scaling up different solutions that's required for different factory arenas or, or domains, including integrated command and control and no power source digital lock. From a marketing perspective, we are also currently preparing to set up a pavilion, DX pavilion, in the headquarter office so that we can further expand our interface with, or our touch point with our customers.
다음 마지막 질문 대기자분 질문해 주시기 바랍니다.
We'll take the final question now.
The last question will be presented by Jun -seop Kim from KB Securities. Please go ahead with your question.
Thank you for taking my question. My question relates to your marketing expenditure. You mentioned that in the second half of the year, with the launch of the flagship handset, you will see your 5G subscriber grow. In the second half of the year, would you be able to still contain your marketing spend to 20% against the service revenues?
Thank you for taking my question. My question relates to your marketing expenditure. You mentioned that in the second half of the year, with the launch of the flagship handset, you will see your 5G subscriber grow. In the second half of the year, would you be able to still contain your marketing spend to 20% against the service revenues?
Marketing beyond.
Thank you for all your questions. This brings us to the end of the second quarter 2023 earnings presentation by LG Uplus. If you have any further questions, please do not hesitate to contact us at the IR team. Once again, thank you very much.