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Record-high quarterly OP

2Q26 review: Record quarterly OP; AI data center revenue up 28.9% YoY

For 2Q26, LG Uplus reported revenue of roughly W3.7tr (-2.9% QoQ, -3.9% YoY), operating profit of W344.5bn (+26.5% QoQ, +13.1% YoY; 11% above the consensus), and an OP margin of 9.3%.

Under the firm’s ROI-focused approach, profitability improved on revenue growth in the enterprise infrastructure and smart home businesses, alongside continued improvement in cost efficiency. Results included a W24.5bn one-off gain; excluding this, we estimate operating profit grew by approximately 5% YoY.

AI data center revenue rose sharply to W124.1bn (+28.9% YoY), driven by higher colocation revenue from data centers, including the Pyeongchon and Seocho sites.

Structural cost competitiveness continues; AI strategy taking shape

For 2026, we forecast consolidated revenue at W15.7tr (+1.8% YoY) and operating profit at W1.2tr (+36.3% YoY). Key drivers of operating profit growth will likely include structural cost competitiveness and the monetization of AI-related businesses.

Starting in 3Q26, LG Uplus is expected to ramp up its ixi-O Pro service, strengthening its B2C AI capabilities. The firm is currently preparing to launch the service in Malaysia in partnership with Maxis, and is pursuing the joint development of a network-based voice AI solution with Ericsson.

The planned expansion of data center capacity also warrants attention. LG Uplus currently has 163MW of installed capacity (140MW owned), and we expect this figure to expand to 400MW (270MW owned and 130MW leased) by 2030. Four data center buildings are scheduled to come online sequentially from 2027.

Maintain TP of W19,000; focus on strong 2026F OP and shareholder returns

We maintain our Buy rating and target price of W19,000 for LG Uplus. We expect 2026 operating profit to reach W1.2tr (+36.3% YoY), driven by stronger operating leverage. We also expect the company to continue enhancing shareholder returns through flexible share buybacks and cancellations, while further expanding its high-value AI transformation (AX) services and strengthening its AI infrastructure competitiveness.