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KT profits nosedive as fines take their toll

3 Feb 2006

South Korea’s dominant fixed line operator KT Corp has posted a 20% fall in annual net profit in 2005 on the back of a string of government fines and increased labour and marketing costs. KT reported net profit of KRW997 billion (USD1.03 billion) in 2005 and an operating profit of KRW1.66 trillion on revenues of KRW11.87 trillion, up marginally on the KRW11.85 trillion reported in 2004. Results for the fourth quarter in particular made for dismal reading as net income nosedived 66%. Attempting to explain the poor results, KT said that it paid out KRW139 billion in fines over the course of the year, equal to half of its fall in net profit, the bulk of which were related to charges of price fixing of fixed line services. Looking forward, KT plans to invest KRW3 trillion in 2006, much of which will be put towards the ramping up of next-generation services including wireless broadband and IPTV.

Last week, KT’s wireless subsidiary KTF Corp (KTF) posted a disappointing set of fourth quarter financials, failing to meet expectations in the same week that rivals LG Telecom and SK Telecom boasted of better than expected growth. KTF reported a net profit of KRW109.6 billion (USD113.2 million) for the three months ended 31 December 2005, compared with KRW100.1 billion a year ago.

South Korea, KT Corp

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