[Click eStock] "KT Operating Profit Improvement Timing Likely Moved Up from Second Half to Q2"

[Asia Economy Reporter Oh Ju-yeon] Daishin Securities forecasted that KT's earnings will improve faster than expected, predicting that consolidated operating profit will also turn around in the 2nd quarter, earlier than the previously expected second half.

On the 2nd, Daishin Securities analyzed that KT's standalone operating profit for the 2nd quarter this year will be 260 billion KRW, a 34% increase compared to the same period last year, expanding profits after the turnaround success in the 1st quarter. They also expected consolidated operating profit to turn around in the 2nd quarter.

Revenue is expected to decrease by 2% year-on-year to 5.96 trillion KRW, while operating profit is forecasted to increase by 14% to 330 billion KRW.

Wireless service revenue is expected to grow to 1.7 trillion KRW, expanding growth after the turnaround in the 1st quarter, and the wireless Average Revenue Per User (ARPU) is analyzed to have expanded growth to 32,000 KRW following the turnaround in the 4th quarter of last year.

IPTV revenue is expected to reach 430 billion KRW, continuing growth without any decline since the service started in 2009, and internet revenue is forecasted at 510 billion KRW, the highest performance since 2008.

Researcher Kim Hoe-jae said, "The notable point in the 2nd quarter earnings is the expected turnaround in consolidated profit."

He explained, "In the early stages of LTE introduction, profit declined for about three years due to investment burdens, followed by a profit recovery period. Since 5G requires at least LTE-level investment costs, a similar profit trend was expected. However, unlike LTE, marketing expenses are being executed efficiently, and IPTV and high-speed internet profitability have greatly improved, so a faster-than-expected profit turnaround is anticipated."

He added, "It is very encouraging that KT's profits are improving despite implementing shorter amortization periods for 5G (6 years compared to 8 years) and marketing expenses (21 months compared to 24-28 months) than competitors."