LG Sells More Mobile Phones But Costs Go Up

LG announced lower net profit margins because of rising marketing costs. They’ve had a ton of success adding customers to an incredibly saturated Korean telecom market, but it costs a lot of money to advertise.

The company attributed the plunge in first-quarter earnings to increased marketing spending amid intensifying competition among mobile operators to lure more customers.

During the first three months of the year, LG Telecom said it spent 230.3 billion won in marketing, up 30.9 percent from the same period of a year earlier. The spending was focused on the provision of handset subsidies and promotion of its existing services.

South Korea’s three mobile service providers — SK Telecom Co., KTF Co. and LG Telecom — are locked in a competition to lure more customers in the nearly-saturated market where more than four out of every five people carry mobile phones.

The company added over 200,000 customers in the last three months and said it has no plans to slow down it’s current strategy.

Resource: Yonhap News