KT Corp boosts net 19%, names new CEO

KT Corp has reported a 19% spike in second-quarter earnings, apparently unhindered by a governance crisis that has left it without a CEO for most of the year.

The Korean telco reported a profit of 432.5 billion Korean won (US$331.8 million), beating analysts' consensus estimate of 399 billion won. Its numbers improved almost right across the board. Revenue increased 3.7% to 6.5 trillion won, earnings were 8.5% higher at 1.5 trillion won and the earnings margin gained 1 percentage point to 23%.

KT Corp stock rose 4.1% in Monday trading, driven not just by the second-quarter result but also by the much-awaited announcement Friday of a new CEO. The board said it would appoint Kim Young-Shub, the former head of LG's IT services subsidiary LG CNS, for the top job, which has been vacant since February. His candidacy will need to be ratified by shareholders at the end of August.

KT's biggest gains in the quarter came from its telco enterprise and non-telco businesses, in particular its credit card, real estate and TV content units.

The telco B2B business grew 7.6% on the back of demand for corporate connectivity and telephony services, the company said.

CFO Kim Young-jin told analysts on a call that the company was now seeing revenue from B2B projects won in previous quarters.

Consumer telco flat

"In the first half of the year, we also saw growth in the number of orders that we were able to book, so new order expansion also was a key driver behind our B2B business growth," he said.

The BC Card business grew 5.9% through a higher number of transactions and an expanding loan portfolio.

The core consumer telco operation remained flat, however. Revenue rose just 0.8% across the three segments of wireless, broadband and telephony.

The operator added 341,000 5G subs in the quarter to take the total to 9.3 million, accounting for 38% of all subs. Mobile ARPU gained 0.5% in the second quarter and is up 4.6% over the past year.

In the second half of the year, KT aimed to further improve top line revenue and operating profit, although it also expected further price rises, Kim said.

Announcing the appointment of the new CEO, KT chairman Yoon Jong-Soo said Kim Young-Shub had presented a clear vision for KT "to grow as a global digital platform company in a rapidly changing environment."

The new chief had already developed specific strategies to build corporate value in the mid- to long-term, he said. "We believe that he is the best candidate to lay the foundation for sustainable growth under the KT's new management vision, lead innovation among employees, and build collaborative relationships with internal and external stakeholders."

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— Robert Clark, contributing editor, special to Light Reading