Good morning and good evening. Thank you all for joining this conference call. Now we will begin the conference of the fiscal year 2022 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 per persons. Now we will begin the conference of the fiscal year 2022 second quarter earnings results by LG Uplus.
[Foreign language]
Good afternoon. I am Seong Hyun Mo, Head of IR at LG Uplus. We would like to begin second quarter 2022 earnings presentation of LG Uplus. Please refer to our second quarter earnings presentation and note that revenue breakdown of each business and details of operating expense are on the basis that excludes LG HelloVision, which we are presenting for the benefit and ease of comparison. As a disclaimer, all of the projections cited today may change, subject to overall macroeconomic and market backdrop. Please also note that we will provide consecutive interpretation for our overseas investors. We will first begin with the second quarter performance highlights, then move on to the Q&A. Without further ado, I would like to turn it over to our CFO, Lee Hyuk-ju, who will run through second quarter 2022 earnings and business results.
[Foreign language]
Good afternoon. I'm CFO Lee Hyuk-ju.
[Foreign language]
I would like to thank analysts and investors for joining 2022 second quarter earnings release call for LG Uplus.
[Foreign language]
In the second quarter, to provide differentiated customer experience, we accelerated digital innovation and transformation of LG Uplus as we provided our expertise in many different industry sites, shaping smart infrastructure, which is underpinned by Telecom Service and Digital Technologies. We also set up an emissions reduction roadmap in order to convert our electricity source to 100% renewable energy by 2050 in an effort to strengthen ESG management.
[Foreign language]
For the consumer business, placing customer value innovation as our utmost priority, we enhanced 5G quality and penetration, offering stronger benefits through the pricing scheme in partnership with new service providers from multiple verticals and leveraged data to provide personalized content to users, thereby delivering different and distinct customer experience. Thanks to all of these efforts, our consumer business reported a growth of 3.6% year-on-year, sustaining an uptrend.
[Foreign language]
For B2B infrastructure business, by expanding the order book through winning new projects and double-digit growth from new businesses, we were able to continue on with earnings growth. We also launched solutions that can be used across many industries, and we gained more references through MOUs with new partners, which drove 4.4% year-over-year growth for the B2B infrastructure business.
또한 새로운 알뜰폰 브랜드 +알파를 론칭해서 사업 경쟁력 및 고객 편의를 강화하고, 알뜰폰 사업자와의 상생 경영도 지속 강화하고 있습니다.
In order to further strengthen MVNO services, whose revenue contribution and subscriber net addition is growing on the back of MVNO market growth, we are offering MVNO customer services at Uplus stores located across the nation. We also launched an MVNO brand, which is +Alpha, and have solidified our business competitiveness and customer convenience while we continue to focus on growing and prospering together with the MVNO players.
한편 LG유플러스는 ESG 경영과 온실가스 저감 활동에 동참하기 위해서 2050년까지 전력 사용량의 100%를 재생 에너지로 전환하기 위한 온실가스 감축 로드맵을 수립하였습니다. 온실가스 감축 로드맵을 전사적으로 확산하기 위해서 연내 K-RE100에 가입해서 단계적으로 온실가스 배출을 줄여나갈 계획입니다.
We at LG Uplus have developed a roadmap for greenhouse gas reduction to convert our energy source to 100% renewable energy by 2050, in line with ESG management and emissions mitigation goals. To apply the roadmap company-wide, we plan to join Korea RE100 by the end of the year to implement our efforts towards emissions reduction in phases.
이어서 2022년 2분기 재무실적에 대해서 말씀드리겠습니다.
I will now move on to second quarter 2022 financial highlights.
LG유플러스의 연결 기준 2분기 서비스 수익은 전년 동기 대비 3% 증가, 직전 동기 대비 2.8% 증가한 2조 8,506억 원을 기록하였고, 별도 기준 서비스 수익은 2조 6,239억 원으로 전년 동기 대비 3.3% 성장했습니다.
Q2 consolidated service revenue was up 3% year-over-year and 2.8% quarter-over-quarter, reporting KRW 2,850.6 billion, while standalone service revenue came in at KRW 2,623.9 billion, increasing 3.3% YoY.
연결 기준 2분기 영업이익은 2,484억 원으로 전년 동기 대비 7.5% 감소했으나, 일회성 인건비를 제외시에는 전년 동기 대비 9.5% 증가한 수치입니다. 상반기 영업이익은 5,096억 원으로 진척률은 지난해 연간 영업이익 9,790억 원 대비해서 52% 수준입니다.
Q2 consolidated operating profit was KRW 248.4 billion, down 7.5% on year. Excluding one-off labor cost, the growth was 9.5% versus last year. First half operating profit was KRW 509.6 billion, which is around 52% of last year's full year operating profit of KRW 979 billion won.
연결 기준 2분기 영업비용은 일회성 인건비 및 계절성 비용 증가 등의 영향으로 전년 동기 대비 1.9% 증가, 직전 분기 대비 0.4% 감소한 3조 1,359억 원을 기록하였습니다.
Second quarter's consolidated operating expense was up 1.9% year-over-year and down 0.4% quarter-over-quarter, reporting KRW 3,135.9 billion on the back of rise in one-off labor cost and seasonality-related expenses.
연결 기준 2분기 EBITDA는 전년 동기 대비 1.5%, 직전 분기 대비 1.6% 감소한 8,576억 원을 기록하였고, 영업수익 대비 EBITDA 마진율은 전년 동기 대비 0.7%p, 직전 분기 대비 0.2%p 감소하였습니다.
Consolidated Q2 EBITDA was down 1.5% year-over-year and 1.6% quarter-over-quarter to KRW 857.6 billion. EBITDA margin against the operating revenue was down 0.7 percentage points year-over-year, and 0.2 percentage points quarter-over-quarter.
연결 기준 2분기 당기순이익은 전년 동기 대비 23.2% 감소, 직전 분기 대비 5.0% 감소한 1,620억 원을 기록했으며, 2분기 CapEx는 6,110억 원을 집행하였습니다.
Consolidated second quarter net profit was down 23.1% YoY and 5% QoQ, reporting KRW 162 billion, with Q2 CapEx at KRW 611 billion.
연결 기준 2분기 말 재무 상태는 자산 총계 ₩19조 6,643억, 자본총계 ₩8조 2,122억, 부채총계 ₩11조 4,521억을 기록하였으며, 부채 감소 및 자본 증가로 부채 비율은 전년 말 대비해서 전년 말 143.4%에서 2분기 말 139.5%로, 3.9%p 개선되었습니다.
Financial position as of end of Q2 on a consolidated basis are total assets of KRW 19.6643 t rillion, total shareholder equity of KRW 8.2122 trillion , and total liability of KRW 11.4521 trillion. Liability ratio improved 3.9 percentage points from last year's 143.4% to 139.5% as of the end of Q2 on the back of lower liabilities and increase in capital.
이상으로 경영 성과 및 재무실적에 대한 보고를 마치고 다음은 사업 부문별 실적 및 전망에 대한 발표가 있겠습니다.
To send the business and financial highlights, we will now move on to each business division and its performance and outlook.
Consumer 부문입니다. Consumer 사업그룹장 박찬승입니다.
Good afternoon. I'm Park Chan-seung, Senior VP and Head of Consumer Business Group.
이 분기 모바일 서비스 수익은 전년 동기 대비 2.6% 성장한 1조 4,553억 원을 기록했으며, 모바일 가입자는 전년 동기 대비 10.3% 성장한 1,896만 8천 명을 기록했습니다. 이 중 5G 가입자는 전년 동기 대비하여 44.2% 성장한 537만 3천 명으로 전체 핸드셋 가입자 중 47%를 기록했습니다. MVNO 가입자는 전년 동기 대비 40.6% 성장한 331만 4천 명으로 모바일 서비스 수익 기여도가 지속적으로 상승하고 있습니다.
Q2 mobile service revenue was up 2.6% year-on-year to KRW 1,455.3 billion, while mobile subscribers were up 10.3% year-on-year, recording 18,968,000 users. 5G subscribers was up 44.2% year-on-year to 5,373,000, accounting for 47% of total handset subscribers. MVNO subscribers were up 40.6% year-on-year to reach 3,314,000, growing its contribution to mobile service revenue.
마케팅 비용은 가입자 유치 비용 안정화, 언택트 채널 가입자 비중 증가 등으로 전년 동기 대비 0.3% 감소, 직전 분기 대비하여는 4% 감소한 5,649억 원을 집행하였으며, 안정적인 비용 집행으로 시장 안정화를 위해 노력하고 있습니다.
On the back of stable subscriber acquisition costs and rise in online channel mix, marketing cost was down 0.3% year-on-year and 4% quarter-on-quarter to KRW 564.9 billion, in line with our efforts to stabilize spending and market.
이 분기 Smart Home 수익은 전년 동기 대비 7.6% 성장한 5,796억 원을 기록하였습니다.
Second quarter Smart Home revenue was up 7.6% year-over-year to KRW 579.6 billion.
IPTV 수익은 연간 가입자 성장과 Disney Plus 등 고가 요금제 유치 및 홈쇼핑 수익 증가 등에 따른 수익 증가로 전년 동기 대비하여 7.8% 성장한 3,276억 원, 초고속 인터넷은 기가 인터넷 가입자의 꾸준한 증가로 전년 동기 대비하여 7.3% 성장한 2,520억 원을 기록하였습니다.
IPTV revenue was up 7.8% year-over-year to KRW 327.6 billion, driven by annual subscriber growth, higher rate plans such as Disney Plus and rising home shopping revenue. While broadband internet revenue was up 7.3% year-over-year to KRW 252 billion, on the back of sustained growth in giga internet subscribers.
IPTV와 초고속 인터넷 가입자는 전년 동기 대비하여 각각 4.3%, 4.8% 성장함으로써 누적 가입자 기준 539만 6천 명, 486만 2천 명을 각각 기록해 견조한 성장을 이어나가고 있습니다.
Subscribers for IPTV and broadband are up 4.3% and 4.8% year-on-year, respectively, bringing cumulative subscribers to 5,396,000 and 4,862,000 subscribers as solid growth continues.
LG 유플러스는 고객 가치 혁신을 위해 다양한 기업들과 협업하여 일리 커피 구독팩, 헬로렌탈 구독팩을 출시하였습니다. 또한 다양한 구독 서비스를 한 번에 가입, 해지할 수 있고, 고객이 원하는 서비스만을 골라 구독할 수 있는 플랫폼 유독을 출시하여 기존의 고객들이 구독 서비스에서 느끼는 불편을 줄이고자 노력하였습니다.
To introduce innovation in terms of customer value in collaboration with other companies, we launched subscription package for Illy and Hello Rental. We also released a platform called Udok, allowing users to subscribe and cancel multiple subscriptions all at once, or select only the services they want to subscribe to, alleviating inconveniences voiced by existing customers.
최근 코로나 엔데믹 전환으로 늘어나는 해외 출국자를 대상으로 백 원에 로밍을 이용할 수 있는 프로모션을 진행하였습니다. 내국인 고객뿐만 아니라 한국 방문 외국인 고객의 pain point 개선을 위해 외국인 전용 고객센터를 오픈하였습니다.
We also ran a promotion against outbound travelers on the back of recent transition to endemic, as more people took trips overseas, offering users roaming services at just KRW 100, and opened customer service center for foreign visitors to help out with the pain points of the inbound travelers as well.
또한 LG 유플러스는 MVNO 시장 확대에 따른 가입자 확보와 알뜰폰 사업자와의 상생 노력을 지속했습니다. 알뜰폰 CS 매장을 대폭 늘려 고객들의 오프라인 접점을 확대하였고, 알뜰폰 공동 파트너십 프로그램 +알파를 런칭하여 알뜰폰 사업자와의 상생뿐만 아니라 그 이상의 고객 가치를 지속 제공하기 위하여 노력하였습니다.
We also focused on growing together with other MVNO operators and worked to acquire more subscribers following the growth of the MVNO market. We expanded offline touchpoints by increasing CS stores for MVNO, while launching a partnership program dubbed +Alpha to grow together with MVNO operators and offer greater value to the customers.
IPTV 서비스에서도 LG 유플러스의 노력은 계속되었습니다. 직관적으로 구성한 아이 맞춤 홈 화면과 아이 전용 리모컨으로 구성된 아이들나라가 어린이 눈높이에 맞춘 디자인으로 인정받아 iF 디자인 어워드에서 본상을 수상하였고, 유아, 아동 돌봄 학습 플랫폼과 제휴하여 아이들나라의 교육 프로그램을 오프라인으로도 확대하는 등 고객 경험 혁신을 위해 지속 노력하고 있습니다.
Our efforts continued in IPTV business. Kids World won the iF Design Award for its children befitting design, having an intuitive and tailored home screen and remote control device specifically designed for kids. Also, in partnership with childcare and learning platform for toddlers and kids, we expanded the learning program of Kids World to offline, bringing innovation closer to customer experience.
최신 고객들의 시청 트렌드를 반영하여 출시한 이동형 IPTV 서비스 U+tv free의 가입자가 20만 명을 넘었고, 늘어나는 1인 가구를 위한 전용 인터넷 상품을 출시하는 등 데이터 기반으로 고객들의 새로운 니즈를 꾸준히 분석하고 반영하여 고객 경험 혁신을 사방면으로 강화하였습니다.
We recently launched portable IPTV service called U+tv free to embrace today's viewership trend, and its subscribers are now more than 200,000. We also introduced internet product for a single-member household. As such, we are using data to analyze customers' emerging needs and incorporated such insights into offering innovation to users.
22년 2분기 모바일 가입자는 MVNO 가입자의 고성장을 바탕으로 꾸준히 증가하였으며, MVNO 가입자의 모바일 서비스 수익 기여도도 증가하였습니다. 또한, 고객의 페인 포인트를 개선함으로써 해지율이 감소하여 이 분기에는 역대 최저 해지율인 1.12%를 달성하였습니다. 이처럼 누적 모바일 가입자 증가세와 줄어든 해지율은 하반기 수익 성장에 많은 기여를 할 수 있을 것으로 예상하고 있습니다.
On the back of elevated growth of MVNO subscribers, Q2 2022 mobile subscribers sustained an uptrend, growing its contribution to overall mobile service revenue. Also, as we removed pain points for users, after which the churn rate fell, reporting a record low churn of 1.11% in the second quarter. We believe growth in mobile subscribers and lower churn rates will make greater contribution to earnings growth in the second half of the year.
이십이 년 남은 기간에도 컨슈머 사업은 고객 경험 혁신을 강화하기 위해 데이터 기반의 맞춤형 서비스 및 콘텐츠를 제공하고, 미래 성장 동력 확보를 위해 지속적으로 플랫폼, 디지털 트랜스포메이션, 데이터 사업 등 영역으로 확대하여 하반기에도 시장의 기대에 부응할 수 있도록 노력하겠습니다.
In the remainder of the year, consumer business will provide bespoke services and content underpinned by data to incorporate and strengthen innovation for customer experience. We will expand into platform digital transformation and data business to secure an engine for future growth in the second half as part of our efforts to meet market expectations.
다음은 기업 인프라입니다. 기업 신사업 국장 임장혁입니다.
Next is on B2B infrastructure, and I am Im Jang-hyuk, SVP of New Enterprise Business.
기업 인프라 사업의 이 분기 주요 성과를 말씀드리겠습니다. 이 분기 기업 인프라 사업은 전년 동기 대비 4.4% 성장한 4,032억 원을 기록했습니다.
I will run through the key highlights of the B2B infrastructure business for the second quarter. Q2 B2B infrastructure business recorded a growth of 4.4% year-on-year, coming in at KRW 403.2 billion.
IDC 사업은 기존 매출의 꾸준한 증가로 전년 동기 대비 3.7% 성장한 691억 원을 기록했으며, 솔루션 사업은 smart factory, smart mobility, 기업 메시징 등의 꾸준한 성장으로 전년 동기 대비 1.9% 증가한 1,340억 원을 기록했습니다. 기업 회선 또한 전년 동기 대비 6.5% 성장한 2,001억 원을 기록하였습니다.
On the back of sustained uptrend in underlying revenue, IDC business was up 3.1% year-on-year to KRW 69.1 billion. Solutions business was driven by sustained growth from smart factory, smart mobility, and enterprise messaging, with revenue up 1.9% year-on-year to KRW 134 billion. Enterprise line was also up 6.5% year-on-year, reporting KRW 200.1 billion.
이 분기에는 기존 매출의 꾸준한 성장으로 견조한 수익 안정성을 재확인했으며, smart factory 등 5G 기반 B2B 사업의 수주와 레퍼런스 확대를 위한 노력을 지속했습니다. 뿐만 아니라 코로나 엔데믹 시대에 발맞춰 SOHO 시장 활성화와 소상공인의 재도약을 지원하기 위해 SOHO 특화 상품을 출시하는 등 기존 사업에서의 성장을 위해서도 꾸준히 노력하고 있습니다.
In Q2, thanks to steady growth of underlying revenue, we once again became confident on solid earnings stability, while we work to expand reference sites and win more 5G-based B2B projects, including projects for smart factory. Also, in step with the COVID endemic and to support small vendors regain their footing as well as to help activate the SOHO market, we launched bespoke products for SOHO as part of the efforts to bring growth from our incumbent business.
초기 투자 비용에 대한 부담과 운영 및 유지 보수를 위한 노하우 부족으로 smart factory 도입을 망설이는 중소기업을 위해 클라우드 기반 구독, 구독형 서비스를 출시하였고
Deep learning 기반 AI 기술이 적용된 smart factory를 중소기업에 처음으로 수주하여 연내에 구축할 예정입니다. 또한 최근 사회적으로 관심이 많은 중대재해 예방을 위하여 한진부산컨테이너터미널과 같이 스마트 안전 관리 통합관제시스템을 구축하고 업무협약을 체결하였으며, 연내 적용할 예정입니다.
For SMEs who are hesitant to adopt smart factory due to initial investments required and lack of operations and maintenance knowhow, we launched cloud-based subscription. We also won a smart factory project for an SME for the first time that will leverage deep learning based AI technology, and plan to reach completion of the project before the end of the year. We also entered into an MOU for integrated command system for smart safety management with Hanjin Busan Container Terminal to prevent and have preparedness against serious disasters, which has become a societal issue of recent days.
LG유플러스는 세종스마트시티주식회사 법인에 민간 3대 출자자로 참여하여 지난 5월 26일 법인 설립을 완료하였으며, 이를 통해 세종 스마트시티의 유무선 통신망, 스마트 IoT, 스마트홈 분야를 비롯한 다양한 융복합 서비스를 구축 제공할 예정입니다.
We are also one of three private sector equity investors in Sejong Smart City Inc, the entity which was set up on May 26th. Through this entity, we will build and offer various convergence services, which include fixed and wireless network, smart IoT and smart home business.
2025년까지 도심 항공교통 UAM의 국내 상용화를 목표로 하는 한국형 도심 항공교통 K-UAM Grand Challenge 실증 사업에 참여하기 위한 컨소시엄을 구성하였고, UAM의 조기 활성화 및 생태계 육성을 위해 부산광역시와 업무협약을 체결하였습니다.
We also formed a consortium to take part in proof of concept project for K-UAM Grand Challenge for Korea's UAM, which is an initiative seeking to commercialize urban air mobility in Korea. We also entered into an MOU with Busan Metropolitan City to nurture the ecosystem and facilitate early activation of UAM.
또한 U+는 통신사 중 유일하게 스마트 스테이션 구축 사업에 참여하고 있는 사업자로서 지하철 2호선 51개의 역사에 이어 8호선 스마트 스테이션도 구축을 완료하였습니다. 스마트 스테이션 구축을 통해 지능형 CCTV로 사각지대를 해소하고 승객의 안전사고를 탐지하는 등 이용객 편의를 확보하는 데 일조하였습니다.
As the only telco taking part in the smart station construction project, we completed the build out of smart stations for Subway Line Number 8, following 51 stations for Subway Line 2. By building smart stations, we removed blind spots via the use of intelligent closed circuit TVs to detect accidents of passengers, supporting enhancement of the overall passenger convenience.
이처럼 기존 사업 분야에서는 차별화된 서비스를 기업 고객에게 제공할 수 있도록 다양한 서비스를 개발하고 있으며, 비통신 신사업의 성장을 위해서 다양한 업무협약 및 기술개발로 시장을 선도해 나가기 위한 노력을 지속하고 있습니다.
As such, we are developing various different services for our enterprise customers, providing them with distinct and bespoke service offerings from our incumbent business. We are also engaging in partnerships in order to bring new business growth from non-telco segment, while we continue to endeavor to be at the forefront of technology development.
이십이 년 남은 기간에도 기업 인프라 사업은 기존 사업과 신사업의 성장을 가속화하기 위해 다양한 레퍼런스 확보를 위한 노력을 기울이겠습니다.
In the remainder of the year, we will continue to work to accelerate growth of both our incumbent and new business for B2B infrastructure and will gain many more reference sites in the process.
이상으로 사업별 실적 발표를 마치고 2022년 전망에 대한 CFO 말씀이 있겠습니다.
Now the outlook for financial year 2022 will be presented by our CFO.
LG유플러스는 고객 일상의 즐거운 변화를 주도하는 디지털 혁신 기업의 비전 아래서 고객 경험을 혁신할 수 있는 서비스 제공 및 발굴을 위한 노력을 지속하고 있으며, 동시에 새로운 시대의 미래 성장 동력을 찾기 위해서 노력하고 있습니다.
Under the vision of becoming a digital innovator who brings fun changes to customers' lives, we continue to explore services that can bring innovation to customer experience, while at the same time we are looking to find new growth engine for the future.
하반기에는 플래그십 단말기 출시로 5G 단말 판매량과 보급률이 높아지는 환경 속에서 고객 경험 혁신을 위한 다양한 노력과 고객 pain point 개선을 통해서 성장률을 높이고 해지율을 낮춤으로써 지속적인 수익 성장을 이루어나가겠습니다.
In the second half, against the backdrop of higher 5G penetration and handset sales, we will be releasing flagship handsets, bringing innovation and customer experience and removing user pain points to drive up growth and lower the churn ratio so that we may continue on with steady earnings growth.
당사가 강점을 가지고 있는 키즈, 패밀리, 아이돌, 스포츠 서비스의 새로운 기능과 오리지널 콘텐츠를 강화하고, 데이터와 AI 기반으로 고객이 상품과 서비스를 경험하는 모든 과정에서 편리함과 가치를 느낄 수 있는 구조를 구축해 나갈 것입니다.
We plan to add new features to kids, family, idol, sports services and solidify original content offerings and build a structure where customers can truly feel the convenience and value through experiencing AI powered products and services.
[Foreign language]
B2B business will focus on growing new businesses that have potential for growth and where we can leverage our capabilities in telecom. By collaborating with many other service providers, we will be able to gain additional references and build a business portfolio with strong fundamentals.
[Foreign language]
Based on the customer experience built over the years, we will work harder to achieve digital transformation and leverage our core technologies to bring growth from the non-telco business. In the second half, we will be able to share with you more details on the company's mid to long term growth strategies.
[Foreign language]
Based on such strategies, we will do our utmost to provide services that are original and unsurpassed, while all the business units work towards bringing financial performance on par with market expectations.
[Foreign language]
To enhance shareholder value, we decided on an interim payout of 250 KRW per share, which is 25% higher versus last year. Going forward, we will yet again endeavor to meet market expectations and enhance visibility on dividend payout.
[Foreign language]
LG Uplus will work to bring meaningful earnings growth from both the telecom business and non-telco businesses, and enhance both corporate value and shareholder return as we make greater social contributions through service innovation. Thank you.
[Foreign language
We will now move on to the Q&A. 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. [Foreign language] The first question will be provided by Hong Sik Kim from Hana Securities. Please go ahead with your question.
[Foreign language]
I would like to ask you questions. I actually asked this question during the second quarter earnings call. This has to do with the revenue from your mobile services. In Q1 or in Q2 the growth seemed to have been a little better versus the first quarter, but it still underperformed expectations. I would like to understand what your take is for your outlook relating to the second half of the year.
If you look at the handsets, it's still in a net reduction position, and I see that the subscriber acquisition is taking place more for MVNO services rather than MNO subscribers, hence it seems like the quality is deteriorating. Going forward, there is also a talk of a market share MS regulation for the R2 phones upcoming in the future. So that's my first question. Second question, it's happy to hear that you have increased your dividend payout. However, the overall profit picture does not seem all that rosy for the first half of the year. It does not seem very optimistic for second half either because there may be some expense related pressures as we enter into the second half of the year. Would you be able to achieve year-on-year operating profit for FY 2022?
[Foreign langauge]
Yes, this is the CFO. I will respond to your second question first.
[Foreign language]
Beginning of the year, the guidance that I communicated was a revenue growth of around 5%. On a separate basis, as of today, that percentage is 3.3%. Yes, there definitely exists a gap compared to the 5% guidance.
[Foreign language]
Now, as we enter into the second half of the year for our B2B business, we usually have seasonality, where we see more orders and more projects come through, and we also see more revenue come through for our enterprise business. On the home side as well, we are working hard to make sure we bring about a rebound in the second half of the year.
We may be a little shy of that 5%, but we are endeavoring to make sure we bring more than 4% growth.
[Foreign language]
That was an answer relating to the overall top line revenue trend. You also mentioned that there is concern that we may be exposed to some expense or cost pressures in the second half of the year and a much smaller distributable profit. For our company, unless we see any particular one-off factors that we've seen in the second quarter, our expense structure is such that it is quite evenly spread across the year. I can tell you for certain that you need not be concerned about the cost aspect.
[Foreign language]
Based on the assumption that we bring about around 4% service revenue growth on a separate basis and in light of the trends that we are currently seeing, we believe that we can bring and we plan to bring double-digit operating profit margin. On the basis, on the premise that we will bring operating profit growth and also since we have adjusted the payout ratio from 35%, which was the beginning of the year figure, and we've changed that to 40%. In light of profit growth as well as the increasing of the payout ratio, we can be sure to see an increase in dividend payout.
또한 해지율도 역대 최저치로 1.11%를 기록하고 있으며, MVNO의 양적 성장도 지속하고 있기 때문에 내부 캐치업 계획을 통해서 지난해 수준의 성장을 반드시 회복하도록 노력하겠습니다.
I'm the Head of Consumer Business Group. I will respond to your question about the MVNO market share regulation and the service revenue. If you look at our second quarter mobile service revenue, driven by increases in handset, high value customer subscription and continuing MVNO subscriber growth, as well as rise in the roaming revenue, we were able to bring 2.6% growth year-over-year and was hence able to display improvement. However, in the first half of this year, the mobile growth speed had slowed. That is first of all, because of the high base effect, of a very high growth last year, as well as the net reduction that we've seen in the MNO handset market.
Since it's been two years since the start of the 5G services, we see that in the first half of the year, there's been some increases in the handset replacement or handset upgrade demand, and we think that that had an impact. However, out of all of the three telcos, we believe that for the handset subscribers, the net reduction extent is going to be the smallest in our company. As we move into the second half of the year, we're going to see recovery in the basic fee revenue and also increases in roaming revenue on the back of the vacation season. Also during the second quarter, we've seen a significant increase in the acquisition of high ARPU subscribers, which is driving up the overall handset ARPU.
We are also recording the record lowest churn ratio of 1.11%. As such, we are continuing on with also the volume growth of our MVNO services and through a catch up plan that we have internally, we will do our best to regain a growth rate on par with what we have reported in the past.
다음 알뜰폰 MS 규제는 아직 결정된 바가 없기 때문에, 업데이트 상황이 있으면 시장과 지속적으로 소통을 하고 저희 알뜰폰 파트너들과 상생할 수 있도록 계속 전략적으로 제휴해 나가도록 하겠습니다.
Now, regarding any possible market share regulations for MVNO handsets, we will update you if there are any additional direction and any finalization of this regulation. In the meantime, we will do our best to grow together with our MVNO partners.
다음 질문 받겠습니다.
Next question, please.
다음으로 질문해 주실 분은 메릴린치증권의 이선정 님입니다.
The following question will be presented by Lee Sun-jung from Merrill Lynch Securities. Please go ahead with your question.
네, 안녕하세요. 질문 기회 주셔서 감사합니다. 메릴린치 이선정입니다. 저 두 가지 질문이 있는데요. 첫 번째는 콘텐츠 사업 관련해서 저희 전략 방향과 또 향후 계획에 대해서 좀 구체적으로 업데이트해 주시면 좋을 것 같습니다. 특히 산업 전반의 오리지널 콘텐츠에 관해서 관심이 많은데요. 이와 관련된 계획 등에 대해서 공유해 주시면 감사드리겠습니다. 그리고 두 번째는 최근에 출시하신 Udok 서비스에 관한 질문인데요. 구독 서비스 사업을 통해 저희가 어떻게 수익화를 하실 수 있을지, 좀 구체적인 비즈니스 모델에 대해서 설명해 주시면 감사할 것 같고요. 그리고 저희 다른 구독 서비스들 대비해서 가지고 있는 저희 장점이 무엇인지, 그리고 또 지금은 저희 모바일 고객 대상으로 서비스를 제공하시는 걸로 알고 있는데, 향후 오픈 플랫폼으로의 전환 계획에 관해 말씀해 주시면 감사드리겠습니다.
Thank you. I would like to ask you two questions. First, I would like to get some clarity on what your strategic direction and plan is for your content business. Recently, we're seeing a lot of interest build up around original content. Therefore, we'd like to understand what your content business strategy is. Second question, you talked about new subscription services. What are your monetization plans? What specific business model do you have in mind? And compared to other services, what are your strengths? I understand. For the time being, you're offering the service specifically for your mobile subscribers. Do you have plans to make it into an open platform in the future?
안녕하십니까? 콘텐츠 IP 사업 담당 이상진입니다. 콘텐츠 사업은 기존의 전통적인 기획, 제작, 방영, 유통의 구조에서 IP 개발, 기획, 제작, 광고 협찬, 유통, 부가사업 형태로 확대되고 있습니다. 이에 LG유플러스는 고객분들의 콘텐츠에 새로운 경험을 제공하고 이를 통한 고객 만족도를 높일 수 있는 방향으로 One-Source Multi-Use가 가능한 사업으로 확장해 나가고자 합니다.
Hello. I am Sangjin Lee, in charge of content IP. I will respond to your question on the content business. We are seeing a migration of the content business from the past model of planning, production, airing and distribution, moving to IP development, planning, production, advertisement, distribution and other value added services. In line with such trend, we wish to employ the use of OSMU, One-Source Multi-Use business approach so that we may offer new experience to the consumers who enjoy our content so that we may also further drive customer satisfaction.
사업 초기에는 아이돌, 스포츠 예능, 아이들나라의 캐릭터 등 내부 플랫폼의 방향성에 부합하는 콘텐츠 기획 제작으로 당사만의 콘텐츠 포트폴리오를 만들어 갈 예정입니다. 또한 콘텐츠의 기획, 제작, 시청 경험의 콘텐츠 서비스 전 단계에서 테크적인 요소를 접목하여 콘텐츠 제작의 효율성을 높이고 차별화를 추진하고자 합니다. 이를 위해 사업의 밸류체인 각 영역별로 우수 인력들과 역량 있는 외부 파트너사의 제휴 투자를 지속적으로 검토하고 있습니다.
In the initial phase, we will first develop our own content portfolio, that is in line with our content planning and production strategy, starting with idols and sports entertainment and Kids World plus characters. Basically, we would like to embed the technical elements across all of the content cycle from planning, production and to viewing so that we may further improve the efficiency of producing content and to bring about differentiation. To this end, at this point in time, we're in the process of hiring good talent across various aspects of the value chain of the business and are reviewing possibilities of entering into partnerships and investments with an outside partner.
세부적인 콘텐츠 투자 및 수익화의 계획은 당사의 콘텐츠 포트폴리오 구축과 함께 구체화해 가고 있습니다. 다만 수익화의 관점에서 단순히 콘텐츠를 기획, 제작하여 유통하는 것에 그치지 않고 성공적인 IP를 기반으로 다양한 사업 모델을 확장하는 것을 고려하고 있습니다.
We are also in the process of developing a concrete plan together with establishing a content portfolio with regards to the monetization plan for the content portfolio that we will be having. From a monetization perspective, we will not just stop at planning and producing and distributing the contents that we create, but based on successful IPs, we are considering ways to expand various different business models and monetization opportunities.
컨슈머 사업 그룹장입니다. Udok과 관련하여 말씀드리겠습니다. 일단 첫째, Udok의 서비스 수익 모델은 Udok 플랫폼에 상품을 제공하는 제휴사로부터의 수익, 수수료가 저희의 기본 수익으로 되어 있고요. 플랫폼이 성장하면서 그 외 다양한 수입원은 마련할 수 있을 것으로 기대하고 있습니다. 또 일단 시작은 저희 U+ 고객 중심으로 시작을 했지만, 올해 내 타사 고객까지 확대해서 전 국민이 이용할 수 있는 오픈 플랫폼으로 전환할 계획입니다. 또 이를 위해서 타사 가입자들을 위한 별도 결제 시스템도 지원하고, 2023년에는 전용 앱을 통해서 앱 기반으로 서비스를 제공할 계획입니다.
Hello. I'm the Head of the Consumer Business. Responding to your question about Udok. The initial business model that we are using is we have these partners that provide the product across our platform, and we take a certain level of take rate from these providers. As our platform further grows and develops, we will be able to diversify multiple sources of revenue stream. For the time being, we're providing the service to LG Uplus subscribers. By the end of the year, we plan to further expand the user base to incorporate other company subscribers as well. Before the end of the year, we will make this platform an open platform, allowing everyone in Korea to use the services. We will therefore also support a third party payment processing system as well.
In 2023, we are planning to develop a dedicated application based on which we will offer the subscription services.
다음은 Udok 서비스만의 차별점입니다. 저희 Udok 서비스는 세 가지 차별점이 있습니다. 첫째는 다양한 구독 서비스의 가입, 해지, 결제를 쉽고 편하게 하나의 화면에서 할 수 있는 것입니다. 고객들께서 기존에 구독 서비스를 하시면 조회, 해지를 각각 다른 채널에서 해야 되는 불편이 있었지만, 저희 Udok에서는 이러한 고객의 pain 포인트를 해결하였습니다.
The Udok service has three key differentiating characteristics. The first one being there is convenience aspect. Basically, people can subscribe, terminate, and make payments in one single screen. In the past, when a user wants to take out a subscription service, they would have to actually go to a different channel to find the information and to go through the termination process, which was quite inconvenient. Udok service actually removes all of such pain points.
두 번째는 고객이 원하는 상품을 DIY로 가입할 수 있습니다. 저희 타사처럼 원치 않는 상품을 가입하고도 기본료를 지급해야 되는 방식이 아닌 필요한 상품만 가입하시면 됩니다.
Customer can pick and choose the product or the content that they wish. It's DIY, do it yourself. You basically do not need to pay the basic fees by receiving a product that you don't want. The users can pick and choose and just take out a subscription for products that they need.
세 번째는 고객의 비용 부담을 줄이고자 약정 없이 일 개월만 가입해도 모든 상품을 5% 할인을 해드리고요. 두 개 이상 가입하면 추가적으로 최대 70%까지 할인되는 방식으로 혜택을 제공하고 있습니다.
Third, in order to lessen the cost burden, people do not have to enter into a long-term terms of agreement. Basically, even by subscribing just with one service, they will be subject to 5% discount. If they take out more than two subscription products, then they can get as much as 70% additional discount.
[Foreign language]
[Foreign language]
Yes, due to the time limit, we will be taking the last and the final question.
[Foreign language]
The following question will be presented by Aram Kim from Shinhan Financial Investment. Please go ahead with your question.
[Foreign language]
Thank you. I would like to submit two question. First, you've recently been allocated that 5G spectrum. What is the expected impact from this, and what impact would this have on your P&L in terms of network investment?
Second question, can you provide some color as to your outlook for the IDC business for the second half and for next year? For next year, you will be opening your Pyeongchon number two IDC center. If you can you share with us what your revenue projection is from the IDC business?
[Foreign language]
Yes. I am Park Yong-ju, in charge of CLA policies. I will respond to your question on spectrum. We believe that by being given this 5G spectrum, we will be able to further improve our service quality and also to enhance convenience and ease of use for our customers.
[Foreign language]
Since we have been given that additional 20 MHz bandwidth, now all of the 3 telcos in Korea have the same amount of spectrum when it comes to 5G, which will benefit for the people of Korea in the sense that they will be able to enjoy same level of quality when it comes to 5G services.
[Foreign language]
In terms of the bottom line impact, as we've been selected as the company who will be receiving this additional 5G spectrum back in July, we are currently in the process of reviewing and developing our investment plan to satisfy the relevant conditions, such as setting up a joint network or core network in the rural areas and to build a wireless base station. Those investment related plans are ongoing as we speak.
[Foreign language]
Hello, I am Ku Sung-cheol, in charge of the fixed line business for B2B. Let me respond to your question about IDC. If you look at the performance of IDC business of LG Uplus for the first half, it was KRW 132 billion, growing 8.2% year-over-year. In the second half of the year, we will be able to onboard many different large-sized companies, and we think we will be able to bring about meaningful growth. From mid to long-term perspective, as we disclosed last year, we are currently constructing and building our second new IDC center at Pyeongchon, with an objective of completing that construction by Q3 of 2023. At this point, we are working to onboard large companies into the center, and things are going quite smoothly.
We expect we will be able to achieve our plan or even outperform the plan in terms of performance.
[Foreign language
This ends the second quarter 2022 earnings presentation of LG Uplus. For additional questions, please contact our IR team. Once again, thank you very much for joining us.