KT President Pyo Hyun-myung talks about how the company’s updated business strategies relate to its long-term evolution (LTE) business during a press conference in July at KT’s headquarters in downtown Seoul. As Apple latest iPhone 5 is able to use KT’s LTE network, the nation’s top-tier telecom company is aiming to make high-profile comeback in the growing market. / Courtesy of KT

KT seeks to become LTE leader with iPhone 5

By Kim Yoo-chul

KT Corporation (KT), the nation’s fixed-line operator, is seeking to gain the upper hand in the heated race for the long-term evolution (LTE) market by capitalizing on Apple’s release of the LTE-enabled iPhone 5.

The firm, led by Chairman Lee Suk-chae, was late to enter the exploding local market for the advanced telecom technology LTE.

Consequently, it briefly suffered a decline of its share in the promising market. LTE is already a ``big brand,’’ here, with the number of users expecting to reach 16 million by the end of this year, said the Korea Communications Commission.

Surely, KT has reason to declare its major comeback in the race for LTE. It has cash for an effective marketing. Also, its top American partner sided with the nation’s second-biggest mobile carrier, said KT officials.

Fund managers and stock market analysts have no questions that the situation is getting better with its top U.S. business partner Apple confirming to support KT’s 1.8-gigahertz LTE frequency currently being used in Korea.

“When the first iPhone was introduced, here, in late 2009, KT hit the jackpot. We don’t think the intensity will be same that KT experienced years ago. But the Apple decision will give it an undeniable competitive edge for corporate growth,’’ said a banker from a U.S.-based investment bank in Seoul over the phone.

In a recent event to unveil Apple’s iPhone 5, Apple Senior Vice President Philip Schiller said the Cupertino-based firm decided to support LTE compatibility for KT and its rival SK Telecom.

KT spokeswoman Kim Yoon-jeong declined to unveil the launch date of the iPhone 5 to local customers. But market analysts and industry sources say the new Apple phone will be available no later than November.

“The decision by Apple to support LTE networks in Korea is a blow for LG Uplus, however, is the best scenario for KT. KT will surely achieve its goal throughout this year,’’ said Kim Hoe-jae, a senior analyst at Daishin Securities, a leading local brokerage.

Citing its customer structure ― 500,000 for the outdated 3GS iPhone users and 2.1 million for the iPhone 4S ― Kim believes a simple replacement demand for the new iPhone will push KT to gain a stable lead over LG Uplus.

KT, the first to introduce the Apple iPhone in Korea, aims to get 4 million LTE customers by the end of this year. Some 2.6 million KT customers are using iPhones, accounting for 74 percent of the total iPhone users in Korea.

“We are fully ready to launch various promotional campaigns for existing iPhone users who want to come with us. Because KT is the first to service iPhone, we are far better in terms of after-sales (AS) policy and service management than others,’’ said the company spokeswoman.

Apple will support 850-megahertz, 1.8-gigahertz and 2.1-gigahertz radio frequency on its new iPhone. LG Uplus, the smallest local carrier, enjoyed a sudden rise in the local LTE market helped by its painful and cash-burning big promotional campaigns.

“But the momentum should be short-lived. Uplus will remain the smallest local carrier after KT starts to sell the new iPhone,’’ said Kim Il-tae, a senior fund manager from Taurus Investment, who recently bought more KT shares after the Apple decision.

Unlike KT and SK Telecom, Uplus was unable to sell the LTE-compatible Apple phone because its wireless networks are based on CDMA technology.

According to a survey conducted by Setizen, Korea’s biggest mobile portal, over 30 percent said they will buy an iPhone LTE using KT’s mobile networks, while 31 percent replied they will decide once KT and SK introduce subsidy plans and contract terms.

“I personally feel that KT looks better than SK Telecom because KT offers stable Wi-Fi coverage and supports proven 1.8-gigahertz frequency,’’ said a 27-year-old female office worker Park Yeon-ji, who plans to switch to KT from SK Telecom.

KT shares have risen on the back of a recovery of investor sentiment, said stock analysts. Major credit rating agencies including Fitch Ratings have affirmed KT’s business outlook as stable.

Park Jong-su from Hanwha Securities said; “Amid volatile stock market moves, KT will rise as the very attractive alternative from the third quarter helped by gaining LTE business momentum.’’

“KT is seeing an increase of its LTE customers, which will boost average revenue per use (ARPU). Also it has more cash than its local rivals for promotional campaigns for the remainder of this year,’’ said Park.

The country’s LTE adoption is currently driven by the popularity of LTE-based smartphones by Samsung Electronics, LG Electronics and even Pantech.