Third quarter profits: what KT did next

South Korea’s incumbent telco KT Corp yesterday announced a net profit of KRW310.3 billion (USD279 million) for the three months to 30 September, compared with a net loss of KRW496.5 billion in the same period of 2003. This year’s third quarter profit is also a 45.6% increase over the second quarter. Some of the gains were a result of cost-cutting initiatives: KT’s labour costs for the period were 63% lower than the previous year following the cutting of 5,500 employees. Despite this apparent growth, the company’s core fixed line revenue, representing around 40% of sales, fell 5% from the previous quarter as more customers switched to mobile services. There are currently 22.8 million fixed line subscribers in the country, 94% of whom are served by KT. Meanwhile, its wireless arm KT Freetel controls 32.4% of South Korea’s 36 million mobile users.

At the end of September the former state-owned monopoly had six million of the country’s 11.7 million broadband internet customers, an increase of 500,000 over the last twelve months, although the actual growth rate of KT’s broadband subscribers is slowing, reflecting the intense competition in the saturated domestic broadband market.