LG Uplus Earnings: Spectrum and Wage Costs Hit Profit; Valuation Down to KRW 11,400 From KRW 11,600

The LG Uplus fourth-quarter result was slightly disappointing with services revenue growing at 2.2% and operating profit declining by 32%, year on year. Increased amortization due to spectrum charges, as well as increased wages, were the main drivers of the operating profit decline. We lowered our operating profit forecasts by 2%-5% over the next three years, and our fair value estimate for LG Uplus decreased to KRW 11,400 from KRW 11,600, leaving the stock with a 3-star rating.