KT posts better-than-expected earnings in Q1

South Korean telecom giant KT Corp. beat the market’s earnings forecast with its operating profit in the first three months of this year coming to 417 billion won ($367.5 million), buoyed by brisk sales from its media and contents unit on top of cost-cutting efforts.

KT said in a regulatory filing Friday it earned 417 billion won in operating income in the January - March period of this year on a consolidated basis, up 8.3 percent from a year-ago period. The result came slightly above the market’s estimate of 405 billion won. Net profit also rose 4.3 percent on year to 224.3 billion won, while revenue gained 1.8 percent to 5.6 trillion won.

Shares of KT finished Friday at 32,200 won, up 900 won, or 2.88 percent, from the previous session.

KT’s operating profit and revenue improved in the quarter for three years and two years in a row, respectively. In particular, it was the first time the firm saw its quarterly operating profit exceed 400 billion won since 2012.

KT attributed such strong performance to its multi-year-long stringent cost-cutting efforts from restructuring to business realigning since its chief Hwang Chang-kyu took office in 2014.

By business, its media and contents business gained 16.6 percent in revenue in the first quarter from a year earlier to 519.7 billion won thanks to its new Internet protocol TV (IPTV) platform GiGA Genie that has drawn 7.1 million subscribers.

Revenue from financial businesses rose 3.0 percent on year to 847 billion won on the back of solid performance of its card unit BC Card Co. Other units including its real estate business added 6.5 percent on year to 533.7 billion won.

However, revenue from its core business wireless division slipped 3.1 percent on year to 1.79 trillion won in the quarter. Although the mobile network operator (MNO) added 342,000 new subscribers to its MNO service in the first three months of this year to total 19.23 million from the previous quarter, abolition of activation fee as well as changes reflected in accounting contributed to the drop.

The company’s landline division posted an on-year 1.9 percent drop in revenue which came to 1.25 trillion won in the first quarter as the number of telephone users dropped. Yet revenue from the Internet has continued to rise for seven straight quarters with GiGA Internet subscribers exceeding 2.8 million.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]