KT Activates Media and Content Growth Engine to Leap Forward as a 'Digico'

[Asia Economy Reporter Park So-yeon] KT declared its transformation into a digital platform company (hereinafter Digico) last October, and in March announced the KT Group's media content business strategy as the core of the 2021 Digico roadmap.

The industry is paying attention to KT's proactive move to secure new growth engines and increase corporate value through the transition to 'Digico' while generating stable profits from its core telecommunications business.

On the 12th, KT announced that it would acquire 100% of the shares of Alticast's media division subsidiary, Altimedia. Altimedia is a specialized technology company that supplies core media business solutions (middleware, security solutions, etc.) and has grown together with KT since the early days of KT's IPTV business.

Through this acquisition of Altimedia, KT plans to accelerate growth by mobilizing the group's media business capabilities and expand KT's global media business by utilizing Altimedia's global references and bases.

KT has secured 13 million paid broadcasting subscribers through Korea's number one media platform businesses such as IPTV and satellite broadcasting (Skylife), and operates various content businesses including StoryWiz, a web novel and webtoon specialist company, SkyTV, an MPP (Multiple Program Provider) channel, the online video service Seezn, and the music streaming platform Genie Music.

To solidify its media platform dominance, Skylife is proceeding with the acquisition of Hyundai HCN, and this year plans to further grow the media commerce business by merging KTH, specializing in T-commerce and content distribution, with KT M-House, a mobile commerce specialist company, while also strengthening synergies between KTH and Nasmedia.

KT recorded consolidated sales of KRW 23.9167 trillion and operating profit of KRW 1.1841 trillion last year. The group's media sales, combining IPTV, Skylife, and content subsidiaries, entered the KRW 3 trillion range for the first time at KRW 3.1939 trillion. This is comparable to CJ ENM, a leading domestic media company engaged in various entertainment businesses such as content planning and production and commerce, which recorded sales of KRW 3.3912 trillion last year.

KT's media business continues to show stable growth. IPTV sales increased by 7.7% year-on-year in 2020, and content group sales grew by 9.6% year-on-year, with media sales expected to steadily rise this year as well. KT Group's media sales have driven KT's growth with a compound annual growth rate (CAGR) of about 15% over the past decade.

The market's response to KT's entry into the content business is positive. On the day (March 23) KT announced its media content business strategy centered on KT Studio Genie, the stocks of KTH and Genie Music, expected to play a key role within KT's media value chain, closed at their upper price limits, and the market capitalization of KT and its media subsidiaries increased by about KRW 640 billion (7.6%) over three weeks.

According to a report released by Samsung Securities (March 24), "KT is making this year the first year of transformation into a digital platform company and is accelerating the restructuring of its business portfolio focused on growth businesses," adding, "It is laying the groundwork for growth in media, content, and B2B sectors, and the wireless business will show stable profit improvement due to 5G subscriber growth and ARPU increase."

The securities industry expects that since the PER of the wireless service sector is only 10 times but the media sector's PER reaches 26 times, the transition to a comprehensive media company will act as a factor to increase KT's multiple.

To consolidate media content capabilities within the group, KT Studio Genie, established earlier this year, will serve as the control tower of the media value chain, from securing original IP to content production and distribution.

Centered on KT Studio Genie, KT aims to build a media ecosystem that coexists with domestic production companies, securing 1,000 original IPs and producing more than 100 original contents by 2023, making the media content business the growth engine of 'Digico KT.'