LG Uplus Achieves AA+ Credit Rating in 13 Years as 5G Investment Cycle Winds Down

[Korea Financial Times, Jeong Chaeyun] LG Uplus has recovered its long-term credit rating of 'AA+' for the first time in 13 years, driven by an improved financial structure as the company moves past the peak of its 5G investment cycle.

The upgrade is seen as more than a simple credit improvement — analysts view it as a signal of enhanced investment efficiency and a profitability turnaround across the broader telecommunications sector. However, an ongoing investigation related to a personal data breach that occurred last year is expected to be the biggest variable in sustaining the upgraded rating going forward.

Clearing the 5G Investment Hurdle

NICE Credit Rating upgraded LG Uplus's long-term credit rating last month from 'AA (Positive)' to 'AA+ (Stable).'
This marks the first time LG Uplus has received an AA+ rating from a domestic credit rating agency in approximately 13 years. With the upgrade, LG Uplus now stands just one notch below SK Telecom (AAA, Stable) and KT (AAA, Stable), effectively returning to the upper tier of the industry in terms of financial stability.

The rating agency cited three main factors behind the upgrade: a steady net inflow of subscribers, rising service revenues driven by increased data consumption, and improved profitability resulting from the divestment of low-margin businesses.

Also contributing positively was the fact that large-scale capital expenditure (CAPEX) for 5G network construction has effectively entered its final phase, reducing the burden of investment spending.

In addition, the company's enterprise infrastructure businesses — including B2B (business-to-business) and IDC (Internet Data Center) operations — have established themselves as new growth pillars, further enhancing the stability of future cash generation.

Park Kyung-min, a senior analyst at NICE Credit Rating, noted that "consolidated revenues have shown steady growth, rising from KRW 12.3820 trillion in 2019 to KRW 15.4517 trillion in 2025, supported by subscriber base expansion, rising data consumption, and growth in the enterprise segment." He added that the company is expected to continue gradual top-line growth "through sustained data demand and an expanding B2B business base, including IDC managed services."

Also notable is the shift in the rating outlook from 'Positive' to 'Stable.' This indicates that NICE Credit Rating has determined that LG Uplus's financial structure and business portfolio have not merely improved in the short term, but have entered a stable trajectory over the medium to long term.

Given the structural characteristics of the telecommunications industry — where substantial upfront investment is followed by a delayed onset of meaningful profitability — the upgrade is interpreted as a signal that LG Uplus has fully entered the return-on-investment phase.

Core Business Profitability Recovery and New Business Growth

The credit rating upgrade reflects the simultaneous convergence of core business profitability recovery, new business growth, and a financial turnaround. Over the past several years, the company has steadily lifted profitability in its core telecom business through subscriber expansion and tariff plan improvements.

Last year, LG Uplus recorded annual revenues of KRW 15.4517 trillion, a 5.7% increase year-on-year. Service revenues, excluding handset sales, grew 3.5% year-on-year to KRW 12.2633 trillion, while operating profit rose 3.4% to KRW 892.1 billion — both exceeding internal targets and demonstrating improved profitability.
Over the past five years, annual revenues have grown consistently: KRW 13.8511 trillion in 2021, KRW 13.9060 trillion in 2022, KRW 14.3726 trillion in 2023, KRW 14.6252 trillion in 2024, and KRW 15.4517 trillion in 2025. Notably, net subscriber inflows accelerated following a data breach incident at a competitor, and B2B and IDC enterprise infrastructure businesses have emerged as key growth engines.

Alongside the improved earnings structure, cash generation capacity and the overall financial profile have also trended positively. Last year, LG Uplus posted EBITDA (earnings before interest, taxes, depreciation, and amortization) of KRW 3.5892 trillion, up 1.8% year-on-year, while net profit surged 61.9% to KRW 509.2 billion.

This result reflects the combined effect of a favorable base from subsidiary asset impairment losses recognized in the prior year and ongoing cost efficiency efforts.

The credit rating agency assessed that the reduction in CAPEX and easing of borrowing pressure are becoming increasingly visible as the company moves past the 5G investment peak. The decline in CAPEX is expected to translate into wider free cash flow (FCF) and a reduction in net debt.

As a result, LG Uplus has secured the financial headroom to pursue both new growth investments and shareholder return initiatives going forward.

Looking ahead, B2B platforms and AI- and cloud-based IDC businesses are expected to lead growth. The company is strengthening enterprise-tailored solutions utilizing Private 5G networks and edge computing, while its media and subscription-based platform businesses are generating synergies in conjunction with data center infrastructure.

What Will It Take to Maintain 'AA+'?

Nonetheless, regulatory risks stemming from the personal data breach incident that occurred last year remain a financial and reputational variable for LG Uplus.

The controversy began in July last year when reports of a suspected hack surfaced through global cybersecurity media outlets. Subsequently, suspicions arose that the company had deleted and disposed of servers related to its Account Privilege and Password Management (APPM) system — a centralized password management platform designed to periodically and collectively change and manage system account credentials. In response, a government-led joint public-private investigation was launched.

The investigation confirmed evidence of data exfiltration from certain LG Uplus servers and revealed that the operating systems (OS) of the affected servers had been reinstalled and discarded in the process. As a result, LG Uplus became the subject of a police investigation on suspicion of obstruction of official duties.

In a securities registration statement filed on January 16 of this year, LG Uplus formally disclosed 'risks related to personal data breaches and telecommunications network stability' as a key investment risk factor. The company also officially acknowledged that a police investigation is currently underway following the joint public-private inquiry into the hacking incident that occurred last year.

Industry observers note that a short-term financial impact cannot be ruled out depending on the outcome of the investigation or any regulatory action. However, they also note that the stabilization of the 5G network and results from new businesses could provide some degree of mitigation.

A telecom industry official emphasized that "if additional security investments and system improvement costs become concentrated in the short term depending on the outcome of the investigation, the pace of financial metric improvement could slow," adding that "the key question is whether the company can elevate its security framework to a level sufficient to prevent a second or third incident."

Jeong Chaeyun (chaeyun@fntimes.com)