[Summary] "Balanced Growth of Platform + Telecommunications Industry" KT Achieves Double-Digit Growth in Q1

[Asia Economy Reporter Seulgina Jo] KT, which declared its transition from a ‘Telco’ to a ‘Digico (Digital Platform Company),’ recorded double-digit operating profit growth in the first quarter. This is the result of balanced performance improvement, including the rapid growth of platform businesses such as artificial intelligence (AI), digital transformation (DX), media, and content, as well as the expansion of existing core businesses like 5G and high-speed internet.

◆Balanced Growth of Platform and Telecommunications Businesses

KT announced on the 11th that it recorded consolidated sales of KRW 6.0294 trillion and operating profit of KRW 444.2 billion in the first quarter of 2021 under Korean International Financial Reporting Standards (K-IFRS). Compared to the same period last year, sales increased by 3.4% and operating profit by 15.4%. On a separate basis, sales were KRW 4.5745 trillion and operating profit KRW 366 billion, up 3.3% and 21.4%, respectively, from a year earlier.

By segment, balanced growth between the platform business and telecommunications business stood out. The B2B market, including IDC and cloud, continues to expand due to the spread of untact services, and in the core telecommunications business, wireless ARPU turned around.

Specifically, AI and DX business sales increased by 7.5% year-on-year, leading the growth of the ‘Digico.’ The demand from major IDC clients in finance and gaming increased, and the Yongsan IDC, opened in November last year, contributed to sales expansion. Additionally, data consumption increased as the use of non-face-to-face services expanded. With orders related to the Digital New Deal, total B2B business sales, including corporate lines and corporate IT and solutions, grew by 2.3%. A KT official stated, "In the first quarter of this year, we discovered meaningful achievements such as the full-scale launch of lifestyle DX services including AICC (AI Contact Center), Call Check-in, and AI robots."

The core wireless segment also recorded sales of KRW 1.7707 trillion, up 2.0% year-on-year, due to the full-scale expansion of 5G subscribers. As of the end of the first quarter, the cumulative number of 5G subscribers reached 4.4 million, accounting for 31% of postpaid mobile subscribers.

Fixed-line telephone sales decreased by 0.3% year-on-year, but the decline significantly slowed. The proportion of business fixed-line telephone subscribers steadily increased, and sales decline stabilized due to strong sales of flat-rate products. High-speed internet recorded sales of KRW 503.2 billion, similar to the previous year.

IPTV also maintained solid growth. By continuously strengthening service competitiveness through securing premium subscribers and expanding partnerships, sales increased by 6.8% year-on-year to KRW 446.2 billion. As of the first quarter, the number of IPTV subscribers reached 8.893 million.

KT invested KRW 289.4 billion in capital expenditures (CAPEX) in the first quarter. This included KRW 149.7 billion for subscriber networks, KRW 34.2 billion for backbone networks, KRW 61.1 billion for enterprise communications, and KRW 44.4 billion for others.

◆Accelerating Portfolio Restructuring for Digico Leap

KT is accelerating portfolio restructuring to become a platform company centered on growth industries while strengthening its IT and telecommunications business capabilities this year as well. In particular, in the media sector, KT repeatedly expresses confidence as the No. 1 media platform operator in Korea with 12 million IPTV subscribers.

One of the core businesses in the KT Digico roadmap, the content sector, is becoming more concrete following the establishment of KT Studio Genie in January and the contribution of KT’s stakes in StoryWiz and skyTV to KT Studio Genie in March. In April, KT also acquired ‘Altimedia,’ a specialized technology company supplying core solutions for the media business.

Many changes and improvements are underway in the financial business as well. As of the end of April, K Bank surpassed KRW 12.1 trillion in deposits and 5.37 million customers. Additional equity investments are planned within the year. In April, KT announced a strategic equity investment in the asset management service app ‘Bank Salad,’ signaling an acceleration in my data-related businesses.

In the first quarter, KT’s content group companies’ sales grew 12.2% year-on-year. Increased sales in T-commerce and online advertising, as well as expanded music distribution volumes, contributed to the sales growth. Despite a decrease in foreign tourists due to COVID-19, BC Card’s sales improved by 5.0% year-on-year due to increased domestic purchases. On the other hand, KT Estate’s sales decreased by 41.3% year-on-year due to declines in sales from housing sales and hotels.

Kim Young-jin, KT’s Chief Financial Officer (Executive Vice President), said, “Thanks to the successful transition to ‘Digico,’ KT achieved operating profits exceeding market expectations in the first quarter of this year. Going forward, the group will maintain stable profits in both wired and wireless businesses and focus on media, finance & commerce, and B2B businesses led by the nation’s top-level ‘ABC’ platform?AI, Big Data, and Cloud?to grow as a digital platform specialist company.”

This year, KT aims for consolidated sales of KRW 25 trillion + a.

This content was produced with the assistance of AI translation services.