5G network investment and marketing expenses drag down KT’s net profit in 3Q19

8 Nov 2019

Echoing its previous quarterly results, South Korea’s KT Corp has recorded a near 11% year-on-year drop in net income for the quarter ended 30 September 2019, attributing this to the increased investment in its 5G network and higher marketing costs associated with its new offerings. For the three-month period under review the telco reported a total turnover of KRW6.214 trillion (USD5.4 billion), up from KRW5.949 billion in 3Q18, though service revenue dipped marginally, from KRW5.097 trillion to KRW5.058 trillion, with merchandise revenue surging by almost 36% y-o-y to KRW1.156 trillion. Although EBITDA was up 2.1% y-o-y at KRW1.209 trillion in 3Q19, operating income totalled KRW312.5 billion, representing an annualised decline of more than 15%, with marketing expenses climbing by more than 23%, to KRW720.2 billion. Net income stood at KRW213.3 billion in 3Q19, down from KRW239.5 billion a year earlier.

In operational terms, as at end-September 2019 KT had a total of 21.771 million mobile subscribers on its books, up from 20.920 million a year earlier. Uptake for 5G has proved solid, with the cellco reporting that 1.055 million customers had taken up such a service at the end of the reporting period, up from 419,000 three months earlier, while 4G accesses numbered 17.169 million (3Q18: 16.612 million). In the fixed broadband market, SKT reported 8.904 million accesses, up from 8.698 at end-September 2018, while IPTV subscribers numbered 8.229 million at the end of the company’s most recent fiscal quarter, representing a 5.8% annual increase. Fixed voice customer numbers continued to decline, however, falling to 14.386 million in 3Q19, compared to 15.163 million in the year-ago period.

South Korea, KT Corp