KT Reports Operating Profit of 341.8 Billion KRW in Q2 Despite COVID-19... 18.6% Increase Year-on-Year (Update)

Source: Asia Economy DB

[Asia Economy Reporter Joeslgina] KT achieved an 18% increase in operating profit compared to the previous year in the second quarter of this year despite the impact of the novel coronavirus disease (COVID-19), and laid the foundation for full-scale growth through proactive acquisitions, investments, and partnerships. However, sales decreased compared to a year ago due to a decline in device revenue and sales from some group companies such as card services.

KT announced on the 7th that it recorded consolidated sales of KRW 5.8765 trillion and operating profit of KRW 341.8 billion under the Korean International Financial Reporting Standards (K-IFRS) for the second quarter of 2020. Overall sales decreased by 3.6% year-on-year due to the impact of COVID-19, while operating profit increased by 18.6%. The B2B business showed strong performance due to growth in wireless and media businesses, maintaining service revenue at a level similar to the second quarter of last year. Additionally, efforts to strengthen profitability, such as optimizing cost expenditures, contributed to the increase in operating profit.

KT emphasized that the core new growth business, B2B performance, stood out this quarter. On a standalone basis, KT's B2B business sales increased by 2.4% year-on-year. A KT official explained, "With increased demand from companies, sales of cloud and data centers grew, and blockchain sales increased due to the rise in local currency issuance, resulting in AI/DX business sales rising 16% year-on-year, showing the highest growth rate among KT's major businesses." KT-led industry-academia-research consortium ‘AI One Team’ is actively expanding its scope with new participation from manufacturing and financial companies. Going forward, KT plans to respond swiftly to digital new deal projects, contribute to overcoming COVID-19, and grow as a B2B platform provider.

Wireless business sales increased by 0.6% year-on-year, supported by the expansion of 5G subscribers. The cumulative number of 5G subscribers in the second quarter reached 2.24 million, exceeding 16% of KT's postpaid mobile phone subscribers. The Internet of Things (IoT) business also performed well, with MNO subscribers increasing by 295,000 in the second quarter. This is the largest net increase since the first quarter of 2018.

High-speed internet and fixed-line telephone sales decreased by 1.2% and 7.0%, respectively, compared to the same period last year. High-speed internet surpassed 9 million subscribers in the second quarter, solidifying its market leadership. IPTV added 137,000 new subscribers, nearly double the first quarter, reaching a cumulative total of 8.56 million subscribers. Sales increased by 0.5% year-on-year due to subscriber and platform revenue growth.

Group company performance was mainly affected by COVID-19 issues. BC Card's sales decreased by 1.5% year-on-year due to a decline in overseas card purchases. Real estate sales also fell by 7.9% as hotel usage declined. Content business sales remained similar to the previous year despite strong performance in the T-commerce business due to a decrease in advertising revenue. Skylife's sales increased by 2% as the number of subscribers to high-priced satellite-exclusive products grew.

KT plans to focus more on strengthening growth capabilities in the future. First, K-Bank, the 'first internet-only bank in Korea,' recently completed a KRW 400 billion capital increase and will soon launch non-face-to-face apartment mortgage loans. K-Bank aims to once again establish itself as a leading internet-only bank by providing innovative financial services based on ICT.

As the number one paid broadcasting operator, KT also pursued cable TV acquisitions and partnerships with the world's leading global streaming operators to strengthen media competitiveness. Skylife was selected as the preferred bidder for the sale of Hyundai HCN and plans to pioneer a new broadcasting convergence market between satellite broadcasting and cable TV.

KT CFO Yoon Kyung-geun said, “Despite concerns about the prolonged COVID-19 pandemic, KT achieved double-digit growth in operating profit by growing in core businesses such as wireless, media, and B2B, and focusing on profitability through efficient management activities. Going forward, we will focus on building a sustainable growth structure centered on 5G and B2B, and strive to ensure that KT’s network services and digital capabilities contribute to responding to the post-COVID-19 era socially.”