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KT Freetel profit dips again

23 Jan 2008

KT Freetel (KTF), South Korea’s second-largest cellco by subscribers, has reported an eighth straight decline in quarterly profit, after boosting spending on subsidies to win customers away from rivals SK Telecom and LG. 4Q07 net income fell 51% to KRW53.1 billion (USD56 million), from KRW107.7 billion a year earlier. Sales rose 18% to KRW1.94 trillion. KTF increased spending on promotions to attract users to its 3G network, which it launched in March 2007. ‘Profitability is not going to improve right away,’ Chief Financial Officer Cho Wha Joon said in a conference call with investors. ‘We will try to reduce the spending,’ he added. Marketing costs, which includes handset sudsidies, increased 41% to KRW430.3 billion.

KTF confirmed plans to buy 33% of Malaysia’s newest wireless licensee U Mobile, in partnership with its Japanese shareholder NTT DoCoMo (which has a 10% stake in KTF). In December the pair said they will each pay USD200 million for a 16.5% stake in U Mobile. The two carriers will provide technical and management support to U Mobile, and promote roaming services to customers using the Malaysian operator’s network. U Mobile is scheduled to launch its 3G network later this year.

South Korea, U Mobile (Malaysia)

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