KT’s OP down 8.8% in 2019 due to 5G cost increases

KT Corp. posted an 8.8 percent year-on-year decline in operating profit last year due to heavy investments into 5G network and ensuing marketing expenses.

The leading South Korean telco announced in a Thursday regulatory filing that its operating profit for full 2019 totaled 1.15 trillion won ($974.7 million) on a consolidated basis, down 8.8 percent from a year ago. Sales rose 3.8 percent to 24.34 trillion won while net income fell 12.2 percent to 669.3 billion won.

In the fourth quarter ended December 31, operating profit dropped 52.5 percent from the previous quarter but gained 54.8 percent against a year ago to $148.2 billion won. Sales fell 0.3 percent on quarter but rose 3.4 percent on year to 6.19 trillion won. But it swung to a net loss of 6.8 billion won in Q4 from a net profit of 213.3 billion won in the previous quarter.

Shares of KT finished Thursday at 25,450 won, up 2 percent from the previous session.

The decrease in operating profit was attributable to increased expenditures for 5G network and marketing activities, the company said. Its capital expenditures amounted to 3.27 trillion won last year, jumping 65 percent from the previous year. The number of its 5G base stations as of February stood at over 71,000.

The company expected its earnings would improve this and next year thanks to the growing number of 5G subscribers and robust media business.

The company’s mobile business recorded 6.97 trillion won in revenue, up 0.2 percent from a year earlier on the back of a rise in 5G service subscribers. Revenue from the wireless service business also edged up 0.7 percent to 6.57 trillion won.

Sales from media business grew 13.5 percent to 2.74 trillion won, thanks to an increase in the number of its IPTV subscribers that totaled 8.35 million. Revenue from IPTV business jumped 15.4 percent.

Revenue from the company’s financial business slipped 1 percent to 3.41 trillion won due to a fall in credit card commission fees. Other services delivered 2.43 trillion won in sales, almost unchanged from the previous year.

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