Korean telecom firms are expected to see decreases in their operating profits in the first quarter this year, according to a market report on Tuesday.

The report by FnGuide said that the operating profits of the three major telecom companies are likely to decline due to the sluggish economy amid the COVID-19 outbreak, though they avoided major damage from it. Their sales, however, are expected to increase, backed by a sales increase in media units, as well as revenues from 5G network subscribers.

SK Telecom’s operating profit is expected to reach 294 billion won ($240 million), down by 8.8 percent on-year. That of KT is expected to decline by 11.8 percent to 354 billion won. LG Uplus is likely to see a 3.9 percent drop to 186 billion won, according to the report.

The telecom companies’ roaming services had negative impacts on their profits. The revenues from their roaming services started to decrease in February due to the novel coronavirus. Their earnings from the services in March were close to nil due to a series of travel restrictions, the report added.

The companies have also seen a significant decrease in revenues from their security-related services amid the coronavirus outbreak, as small businesses began unsubscribing to save expenses.

The telecom firms’ investment in 5G infrastructure continued to weigh on their operating profits, the report said.

The total capital expenditures that the three major telecom firms would spend in the first half reached 4 trillion won.

The overall sales of the three major firms in the first quarter, however, are expected to increase.

According to the same report, the sales of SK Telecom and KT will reach 4.5 trillion won and 5.9 trillion won, up by 3.7 percent and 2.6 percent on-year, respectively. LG Uplus is expected to mark the largest sales on-year growth of 9 percent at 3.2 trillion won during the same period.

The jump in the average revenue from individual users helped the companies secure their sales growth, the report said. As of February, there were 5.6 million 5G users, and 90 percent of those users are using data plans priced at 80,000 won or more.

The increasing sales from their media services during the viral outbreak supported the upward trend in the first quarter.

LG Uplus, for instance, saw partner company Netflix marking a tenfold increase in the number of subscribers. As of March, Netflix had 2.7 million subscribers, compared to some 260,000 a year earlier.

By Shim Woo-hyun (ws@heraldcorp.com)