KT makes gains despite 29% fall in net income

KT Corp has reported a 29% drop in full-year income as a result of goodwill losses, while also hinting at plans to rationalize "low-profit businesses."

South Korea's biggest telco made a series of modest gains across the company, offset by higher operating costs and in the face of a slowing mobile market.

In an earnings filing, it said full-year net income had declined to 988.7 billion Korean won (US$740 million) because of impairment losses on goodwill of subsidiaries, including KT Epsilon.

Full-year operating income fell 2.4% with opex up 3.0%, slightly above the 2.9% rise in revenue.

It posted a KRW42 billion ($31.6 million) loss for Q4, down from a profit of KRW243 billion ($182.6 million) a year ago, thanks to a one-off real estate gain in 2022.

The mobile business added 320,000 5G subs in Q4, growing 3.4% to take its total to 9.83 million.

Mobile service revenue grew 2.4% for the quarter and 3.0% for the year, with ARPU of KRW34,302 ($25.78), 2.3% higher year-on-year.

KT also recorded revenue gains in the broadband and media businesses, up 2.8% and 2.3% respectively, while enterprise division sales rose 2% to 3.46 trillion won. Revenue at subsidiary KT Cloud revenue spiked 57% to KRW678 billion ($510 million).

No-contract plans

CFO Jang Min told an earnings call the company had "concerns on softening growth" in the consumer telco market and planned to innovate on pricing and distribution. He said KT had launched its first no-contract online plans last month and was looking to offer more of these and other mid to low-end bundles.

"In distribution we will be working to expand the contact mass distribution channel, and in products we will carry out more precise customer segmentation to ensure that we can offer customized products," he said.

He said the company planned to rationalize its low-profit businesses, but would not be drawn on what these might be.

KT is also pushing into AI, joining other investors in a $124 million funding round for AI chip firm Rebellions last month and unveiling its Mi:dm large language model for corporate clients in October.

Jang said the telco was laying the groundwork for its AI-driven digital transformation businesss and hoped to partner with other global operators.

KT's stock fell 1.31% on the Seoul exchange Thursday.

On Wednesday, smaller rival LG Uplus reported a 34% plunge in Q4 earnings to KRW105.2 billion (US$79.5 million), missing estimates. Analysts had expected net income of KRW131 billion ($98 million), financial data firm Yonhap Infomax said.

The No. 3 operator boosted revenue by 5.8% to KRW3.82 trillion ($2.9 billion), but this was outweighed by a 9.1% hike in operating costs. Service revenue rose 2.2% while handset sales spiked 22%.

Full year earnings fell 4.9% to KRW630.2 billion ($474 million) on revenue of KRW14.37 trillion ($11 billion), up 3.4%.