Disney partnership to boost LG Uplus share price

Boosting its share price has been a long-term task for LG Uplus, the third-ranking player in the local telecom services industry.

LG Uplus’ stock price had remained lackluster until recent months, with expectations of a partnership with Disney for its over-the-top (OTT) media services here among the contributing factors for its sudden rise.

LG Uplus has been in talks with Disney for months over the launch of Disney Plus here. The launch appears imminent, with the OTT service expected to be introduced here in the latter half of this year.

“A rise in subscribers and average revenue per user can be expected if content is supplemented,” Hana Financial Investment analyst Kim Hongsik stated in a report, Tuesday. “LG Uplus may be able to benefit in relation to its rivals as it has become likely to partner with Walt Disney in addition to Netflix.”

LG’s telecom services affiliate made an exclusive deal with Netflix in 2018, and saw a 20 percent surge in its IPTV subscribers in two years.

LG’s affiliate in cable TV services, LG HelloVision, has also seen its stock spike in the past weeks. LG HelloVision’s stock closed at 8,170 won, Wednesday, up from its closing price of 5,820 won two weeks earlier.

“It appears this is because of expectations that LG will be able to offer Disney content via its cable TV services if it partners with Disney,” an industry official said.

LG Uplus bought back 100 billion won of its shares earlier this month, as a means to boost its stock price.

The industry official continued, “But deals such as a partnership with a global entertainment giant would more effectively boost its stock, rather than these measures.”

Meanwhile, LG Uplus said it is still in talks with Disney. KT also said its own negotiations with Disney are ongoing.

SK Telecom (SKT), meanwhile, opted not to seek a partnership, given it has its own OTT service, Wavve. SKT partnered with local terrestrial broadcasting stations to launch Wavve, which is currently the top local OTT player.

SKT is also the only telecom firm that did not partner with Netflix. Its affiliate SK Broadband is engaged in a suit with the OTT powerhouse here, over payments concerning network usage. SK Broadband stated the spike in Netflix subscribers is making it difficult for existing networks to offer consistent quality, claiming Netflix should pay for the costs that were incurred and investments made to upgrade and expand its network for Netflix users.

The launch of Disney Plus is expected to challenge the local OTT market, currently dominated by Netflix with about a 40 percent share. Disney is set to offer an extensive array of content, with its affiliates including Pixar, National Geographic and Marvel Entertainment. Local OTT players including Wavve and Tving are stepping up investments to compete with the U.S. entertainment giant’s service.

Disney Plus has seen rapid growth globally, with the number of its subscribers surpassing 100 million in the 16 months since its launch in 2019.