(2nd LD) LG Telecom Q2 net falls 43.3 pct on higher costs

(ATTN: UPDATES stock price; ADDS more info from 6-12 paras)
SEOUL, July 31 (Yonhap) -- LG Telecom Ltd., South Korea's smallest mobile
carrier, said Friday its second-quarter earnings fell 43.3 percent from a year
earlier largely due to higher marketing costs.

Net income stood at 38.3 billion won (US$31.1 million) in the April-June period,
compared with 67.6 billion won a year earlier, LG Telecom said in a regulatory
filing. The bottom line also plunged 66.9 percent from the first quarter.
Sales, however, rose 5.69 percent on-year to 1.33 trillion won, while operating
profit fell 38.8 percent to 58.1 billion won, it said.
Shares of LG Telecom stood at 8,610 won as of 11:55 a.m., up 0.82 percent from
the previous session.
The company said fierce competition among mobile carriers led to higher marketing
costs and capital expenditures in the second quarter, and criticized other mobile
carriers for providing excessive subsidies to customers on handset purchases.
"As a latecomer, LG has no choice but to follow initial movers," Kim Sang-don,
chief financial officer of LG Telecom, said during a conference call.
"Such competition strategies, largely based on excessive subsidies rather than
service quality, must come to an end once and for all."
In June, the number of mobile phone users who switched service providers while
keeping their existing phone numbers hit 1.25 million, the largest monthly figure
since January 2004 when mobile number portability was introduced in South Korea.
South Korea's telecom regulator earlier said the result was largely due to
overheated marketing activities among mobile carriers and urged them to cool
down.
LG Telecom expressed reservations about future market stability.
"Market conditions will continue to be challenging (due to competition), although
we will do our best to stay away from subsidy competition," Kim said.
LG Telecom added it will continue to invest in developing its fourth-generation
mobile service, which it aggressively increased starting in the second quarter.
LG Telecom, the mobile unit of South Korea's third-largest conglomerate LG Group,
has a market share of 18 percent.
ygkim@yna.co.kr
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