[KT Concall] "Compete in 5G Services and Grow AI Platform" (Comprehensive)

[Asia Economy Reporter Koo Chae-eun] KT announced on the 6th that it achieved sales of KRW 24.342 trillion and an operating profit of KRW 1.151 trillion last year (consolidated basis), the inaugural year of 5G commercialization. Sales increased by 3.8% year-on-year due to growth in wired and wireless communication businesses including 5G and media business, but operating profit declined by 8.8%. This is interpreted as a result of increased costs such as 5G network investment and marketing. Last year, KT’s capital expenditure (CAPEX) for 5G network construction and other investments rose by 65% compared to the previous year, reaching KRW 3.2568 trillion. However, the decline in operating profit narrowed to single digits from double digits in 2018, when the adverse event of the Ahyeon exchange building fire occurred.

After the earnings announcement, KT stated in a conference call, "The 5G business is internally planning various possibilities, but uncertainties remain in market conditions, devices, and B2B sectors," adding, "To improve profitability, we will focus on competition centered on pricing and compete based on services." They also added, "At the group level, we will adjust the business portfolio to secure new growth momentum and strengthen competitiveness."

Regarding 5G coverage, KT said, "Coverage has expanded to the district level in 85 cities. This year, we plan to focus on improving customer-perceived quality by expanding in-building coverage mainly in public places and large buildings," and added, "The CAPEX guidance for this year is KRW 3.1 trillion. We will pursue fundamental structural improvements through rational investment and service differentiation."

KT also plans to secure profitability in the B2B business using 5G this year, including enterprise-dedicated 5G. KT stated, "We are discovering use cases together with partner companies for 5G B2B. As of the end of last year, 150 use cases have been identified," and added, "We launched enterprise-dedicated 5G services in April last year, and as of the end of last year, there are 53 corporate customers. We built a 5G shipyard with Hyundai Heavy Industries, and Samsung Electronics is also building a dedicated 5G network." They continued, "We will strive to create meaningful results in B2B as well to become a new source of revenue."

In particular, KT announced plans to strengthen its artificial intelligence (AI) capabilities. KT said, "The nation’s No.1 AI ‘Giga Genie’ surpassed 2.14 million subscribers as of the end of last year," and added, "Giga Genie, which drives IPTV growth as an AI set-top box, is also expanding in spatial services such as AI hotels and AI apartments. We will actively nurture the AI platform through fusion with existing businesses to improve overall business efficiency and various business partnerships, not only for future growth but also for existing businesses."

They further stated, "Recently, KT launched a new OTT service ‘Season’ that recommends content through AI and allows users to enjoy high-definition video and high-quality sound, achieving 100,000 subscribers within two weeks," and said, "Going forward, we will secure competitiveness across the media industry by acquiring personalized services using AI and differentiated content."