By Kim Yoo-chul
Staff Reporter

KT Corp., the nation's biggest fixed-line operator, has suffered a decline in its quarterly operating profit due to heated competition in the broadband and Internet telephony markets.

Operating profit for the third quarter dropped 11.7 percent from a year ago to 413.1 billion won from 467.8 billion won.

On a quarterly basis, profit also declined by 14.5 percent from the previous quarter, KT said in a regulatory filing Tuesday.

During the July-September period, KT spent 810 billion won, an increase of 33.8 percent from 605 billion won in the previous quarte on marketing. The quarterly marketing costs were the highest since the first quarter of 2008.

"We've been placed under higher pressure to secure new customers for our latest converged telecom services to offset poor landline call revenue in a highly saturated domestic market," a company spokesman said.

As for a breakthrough in the local telecom market, KT has been offering new services that combine various mobile and fixed-line products, such as a mobile phone that supports Internet calls and free wireless data access on Wi-Fi networks.

South Korea's three biggest wireless players ― SK Telecom, KT and LG Telecom ― are busy securing new customers with multiyear contracts in a market where more than 90 percent of people own a handset.

KT, which bought its wireless unit KT Freetel in early June, said its quarterly net profit rose to 351.4 billion won from 195.3 billion won a year ago driven by increased wireless revenue after the acquisition, with the help of a stronger won against the greenback.

"The cost for foreign currency debt was reduced by 175 billion won in the third quarter thanks to the stronger won against the U.S. dollar," the spokesman said.

Sales were up 3.9 percent to 4.8 trillion won from 4.6 trillion won on a yearly basis. All of the figures from last year are recalculated by KT on a merged basis as its past records didn’t include the performance of the wireless unit it absorbed in June.

KT said it is feeling positive on its chances to achieve this year's annual sales target of 19 trillion won and added it will reap 1.8 trillion won in operating profit for the whole of this year, citing the impressive performance of its wireless data and converged businesses.

Sales at its wireless division increased almost seven-fold to 2.5 trillion won.

But revenue from traditional phone calls declined 6.3 percent to 1.2 trillion won after the number of fixed-line subscribers fell by 10 percent.

"KT plans to give 2,000 won per share to shareholders as dividends as the accumulated net profit during the first three quarters was 1.05 trillion won," Kim Yeon-hak, the company's chief financial officer said, adding the dividend plan is, however, subject to the currency fluctuations.

Analysts say the fourth quarter will be difficult for KT as there are some uncertainties due to tariff cuts.

yckim@koreatimes.co.kr