Non-telecoms interests boost KT Corp earnings

KT Corp reported healthy gains in net income and revenues for the third quarter thanks to the strong performance of its non-telecoms interests.

The operator, which runs South Korea’s biggest fixed-line network and its second-largest mobile-phone operation, reported a 45.6% year-on-year increase in net income, to 372.3 billion won ($341 million), while revenues grew 30.6% to 6,519.4 billion won.

KT Corp reported healthy gains in net income and revenues for the third quarter thanks to the strong performance of its non-telecoms interests.

The operator, which runs South Korea’s biggest fixed-line network and its second-largest mobile-phone operation, reported a 45.6% year-on-year increase in net income, to 372.3 billion won ($341 million), while revenues grew 30.6% to 6,519.4 billion won.

The growth came entirely from the operator’s finance, rental and merchandising activities, boosted largely by last year’s takeover of BC Card, a credit-card issuer whose results have been consolidated with KT Corp’s only since the final quarter of 2011.

Sales of LTE-enabled handsets also contributed to the top-line gains, with merchandising revenues rising to 1,659.2 billion won from 942.1 billion won in the third quarter of 2011.

Those increases more than offset a rise in expenses caused by the operator’s investment in a high-speed LTE network spanning the whole of South Korea.

South Koreans have flocked to ‘4G’ in their hunger for higher-speed connections. KT Corp (Seoul, South Korea) claims to have signed up 2,488,000 LTE subscribers in the last three quarters, representing 15% of its entire mobile-phone customer base.

Despite the interest in faster mobile services, overall wireless revenues squeaked up just 0.3% to 1,442.8 billion won, with average revenue per user (ARPU) rising only 1% between the third quarter of 2011 and the last three-month period.

Those figures may trouble operators expecting the launch of LTE services to drive revenue growth.

Fixed-line revenues, meanwhile, fell 10.2% to 1,568 billion won, as customers continue to abandon traditional telephony products in favour of IP and mobile alternatives.

In addition, the operator’s strategy of bundling broadband with other services at a substantial discount led to an 11.2% decline in broadband revenues, to 432.8 billion won.

KT Corp claims to have stabilized bundling discounts in the last few months, preventing revenues from sliding further. Indeed, the figure last quarter represented a slight improvement on second-quarter sales of 431.1 billion won. Around 70% of customers are now on bundled offers.