Spending cuts lead KT's profit in Q1

By Yoon Sung-won

Hwang Chang-gyu KT Chairman

KT has posted a first-quarter operating profit of 385.1 billion won ($339.53 million), up 22.8 percent from a year ago, largely thanks to marketing spending cuts.

“We have seen both sales and the number of subscribers increase in our key businesses such as mobile, high-speed Internet and Internet protocol television (IPTV), adding to a boost in business efficiency on the back of an improvement in corporate expenditures,” KT Chief Financial Officer Shin Kwang-suk said. “This has led to a stable earnings record in the first quarter.”

The nation’s second-largest mobile carrier said in its regulatory filing Friday that its sales reached 5.51 trillion won, up 3.9 percent year-on-year. Net profit settled at 215.1 billion won, down 23.2 percent.

KT spent 655.6 billion won on marketing in the first quarter, down 7.4 percent year-on-year. Its operational expenditures reached 5.13 trillion won, up 0.9 percent in the period.

In the first quarter of last year, KT recorded 5.4 trillion won in sales and 313.6 billion won in operating profit. Its net profit was 280.6 billion won.

KT said it will continue to control spending for stable profits in the coming quarters while diversifying distribution channels and integrating mobile and fixed-line businesses.

It also pledged it will get good results in new growth businesses such as platform, energy and security, as well as on the global stage. In particular, it will push for more business in the Internet of Things, big data, online-to-offline, financial technology and content.

The mobile and fixed-line network businesses were not key factors in KT’s first-quarter performance.

In the mobile business, the company generated 1.85 trillion won in sales, up 1.6 percent year-on-year. In particular, mobile services sales rose 3 percent year-on-year, boosted by favorable responses to specialized services such as gigabit long-term evolution (LTE) and monthly plans for certain age groups.

At the end of the first quarter, KT said it had 13.21 million LTE service subscribers, 72.7 percent of its total clients. Average revenue per user ― a key indicator of a mobile carrier’s profitability ― was 36,128 won, up 1.9 percent from a year ago.

In the fixed-line sector, the company had attracted 1.33 million subscribers to its gigabit Internet service, as of March 31, adding over one million subscribers during the past year.

Despite the increase in gigabit wired Internet service subscribers, KT’s fixed-line operation sales remained at 1.28 trillion won, down 2 percent from a year ago, hit by a fall in wired telephone sales.

“We plan to attract a total of 2 million subscribers for the gigabit Internet service by expanding its network coverage to every residential area nationwide within this year,” KT said.

In the media and content business, it recorded 442.3 billion won in sales, up 15.3 percent from the previous year. Its IPTV service subscribers reached 6.68 million.

On the strong performance of its card business subsidiary BC Card, KT posted 822.6 billion won in sales of financial services, up 4 percent year-on-year.