(3rd LD) LG Telecom posts 6.75 pct drop in Q3 earnings

(ATTN: CORRECTS marketing spending in para 6)
By Lee Youkyung
SEOUL, Oct. 19 (Yonhap) -- LG Telecom Ltd., South Korea's smallest mobile
carrier, said Monday its third-quarter earnings fell less than expected from a
year earlier on decreased marketing expenses.

Net profit stood at 92.7 billion won (US$78.7 million) in the July-September
period, down 6.75 percent from 99.4 billion won a year earlier, the company said
in a regulatory filing. Its bottom line, however, rose 141.75 percent from the
second quarter.
The third-quarter bottom line was above a market consensus of 90.4 billion won,
according to Yonhap Infomax, the financial news arm of Yonhap News Agency.
Sales rose 5.64 percent on-year to 1.27 trillion won but operating profit dropped
9.61 percent to 111.1 billion won, the company said.
Shares of LG Telecom were trading at 9,030 won on the Seoul bourse as of 11:30
a.m., down 0.77 percent from Friday's close. The broader Korea Composite Stock
Price Index (KOSPI) benchmark fell 0.68 percent.
The smaller-than-expected decline in Q3 earnings was attributed to reduced
marketing costs and handset subsidies. LG Telecom said that its third-quarter
spending reached 276.6 billion won, down 14.1 percent from three months earlier.
The company added that its third-quarter market share also fell on-quarter as it
reduced marketing costs earlier than its two bigger rivals. The number of its
subscribers stood at 8.62 million as of end-September. Figures for SK Telecom Co.
and KT Corp. were not available.
The company announced last week that it will absorb its fixed-line and broadband
Internet affiliates -- LG Dacom Corp. and LG Powercom Corp. -- in January 2010.

The merger of the three firms, which belong to South Korea's third-largest
family-run conglomerate LG Group., is designed to create a fixed-line and mobile
powerhouse that can draw sales of over 8 trillion won and better compete with
bigger rivals SK Telecom Co. and KT Corp.
The company said the merged entity would focus on generating profits from a
bigger pool of corporate customers rather than the limited number of household
subscribers.
"The merger will allow LG Telecom to mobilize its strong retail networks with LG
Dacom's strength in business for corporate customers," Kim Sang-don, LG Telecom's
chief finance officer, told investors during a conference call.
LG Telecom expects the downside trend in marketing costs to continue through
year's-end, despite the introduction of Apple Inc.'s iPhone, first brought to the
local market by KT Corp.
The upcoming introduction of the iPhone will not trigger renewed competition in
marketing between the country's telecom giants, Kim said, as the local market for
smartphones remains relatively small. Smartphones are mobile handsets equipped
for use with wireless fidelity or Wi-Fi networks.
"Competition from the iPhone will be limited to the smartphone segment. We don't
think it will spill over to the entire telecommunications market," he said.
ylee@yna.co.kr
(END)