KT Posts Solid Performance Despite COVID-19... Media and B2B as 'Profit Drivers' (Comprehensive)

KT's Strong Performance Despite COVID-19
B2B, 5G, Media Support Earnings
Revenue of 5.8317 Trillion KRW, Operating Profit of 383.1 Billion KRW
5G Subscriber Growth Drives Wireless Service Revenue
BC Card and Estate Weakness Offset by Genie Music and KTH

[Asia Economy Reporter Koo Chae-eun] KT announced on the 13th that it recorded consolidated sales of 5.8317 trillion KRW and operating profit of 383.1 billion KRW in the first quarter of this year. Sales remained flat with a 0.04% decrease compared to the same period last year, while operating profit decreased by 4.7%.

The impact of the novel coronavirus disease (COVID-19) led to declines in roaming and device revenue, as well as earnings from KT’s “cash cow” subsidiaries KT Estate and BC Card, which were offset by growth in IPTV and other media businesses and the B2B sector.

◆ Wireless sales up 2.2% due to increase in 5G subscribers = KT disclosed on the 13th that its separate wireless business sales rose 1.9% year-on-year to 1.7357 trillion KRW. Wireless service revenue, despite a significant drop in roaming usage due to COVID-19, grew 2.2% year-on-year to 1.6324 trillion KRW thanks to an increase in 5G subscribers. Wireless service revenue recorded its highest growth rate in two years since the third quarter of 2017, when the selective discount rate was expanded to 25%. In this quarter, MNO subscribers increased by 181,000. Among them, mobile phone subscribers increased by 66,000, marking the highest figure since the first quarter of 2017.

The cumulative number of 5G subscribers in the first quarter reached 1.78 million. KT strengthened its product competitiveness by enhancing its generation-specific rate plan lineup in the second year of 5G, launching the ‘5G Y Teen’ plan for teenagers in January and the ‘Y Super Plan’ for people in their 20s in February. KT’s separate fixed-line telephone sales amounted to 372.5 billion KRW, down 7% year-on-year. High-speed internet sales rose 0.5% year-on-year to 502.5 billion KRW, maintaining growth. The number of high-speed internet subscribers in the first quarter was 8.96 million, with gigabit internet subscribers surpassing 5.57 million, accounting for 62% of total subscribers.

◆ Media and B2B sales play a key role in performance = KT’s separate IPTV sales maintained solid growth, increasing 11.9% year-on-year to 417.7 billion KRW. The total number of IPTV subscribers in the first quarter was 8.42 million, up 5.7% year-on-year. The OTT service Seezn, launched in November last year, is cruising smoothly, surpassing 2.24 million monthly active users (MAU) just four months after its launch.

KT’s separate B2B sales rose 8.2% year-on-year to 674.8 billion KRW. B2B sales consist of corporate lines along with corporate IT/solutions, AI/DX, and other new growth businesses. In particular, driven by increased digital transformation demand from companies including those in the public and financial sectors, AI/DX sales grew 28.5% year-on-year, leading growth. The country’s number one artificial intelligence (AI) ‘Giga Genie’ surpassed 2.3 million subscribers and is leading the AI Space market in apartments, hotels, and more, delivering results.

◆ Subsidiaries BC Card and Estate sales decline... Genie Music and KTH offset = Looking at major group companies, BC Card’s sales in the first quarter fell 7.7% year-on-year due to a reduction in domestic merchant fees and consumption downturn caused by COVID-19. Content business sales grew 12% year-on-year, playing an important role in KT Group’s revenue growth, thanks to an increase in Genie Music subscribers and strong performance in KTH’s T-commerce business. Estate’s real estate sales decreased 8.4% year-on-year due to a decline in foreign tourists caused by COVID-19.

Yoon Kyung-geun, KT CFO (Head of Finance), said, “Despite increased domestic and international economic uncertainties due to the spread of the novel infectious disease, KT focused on strengthening profitability and achieved stable results in core businesses such as wireless and media, while confirming sufficient growth potential in the B2B business. Going forward, we will continue customer-centric innovation and provide the best network quality, technology, and services to proactively respond to post-COVID-19 changes and lead the market.”