KT Reports Strong Q2 Performance, Raising Expectations for 5G and K-Bank in H2 (Comprehensive)

Strong Performance in Telecom Core Business and Subsidiaries
Focus on 'Digico' Transformation

5G Subscriber Net Increase Expected
K-Bank Aiming for '2023 IPO'
Plans to Partner with New Products and Cryptocurrency Exchanges

[Asia Economy Reporter Cha Min-young] KT, which posted solid performance in its core telecommunications business and subsidiaries in the second quarter, will continue to focus on its transformation strategy into a 'Digico (digital platform company)' in the second half of the year. K-Bank, aiming for an initial public offering (IPO) in 2023, also raised expectations by recording its first quarterly profit four years after its launch.

Kim Young-jin, KT Chief Financial Officer (CFO) (Executive Vice President), pointed out the background of the strong quarterly performance during KT's second-quarter earnings conference call on the afternoon of the 10th, saying, "The COVID-19 pandemic has normalized non-face-to-face and online culture, increasing companies' demand for digital transformation (DX)."

Earlier that day, KT announced that its consolidated operating profit for the second quarter reached 475.8 billion KRW, up 38.5% year-on-year. Revenue for the same period grew 2.6% to 6.0276 trillion KRW. On a separate basis, revenue was 4.4788 trillion KRW and operating profit was 351.2 billion KRW, up 3.2% and 38.1% respectively compared to the same period last year.

Revenue increased across the board, from platform businesses such as artificial intelligence (AI), media, and content to 5G and ultra-high-speed internet. Content group companies' revenue rose 16.3% year-on-year, and BC Card's revenue improved by 4.6% year-on-year due to increased domestic purchase volume. Financial subsidiary K-Bank posted a net profit of 3.9 billion KRW in the second quarter, achieving a quarterly profit for the first time.

The core business was also successful. Wireless revenue recorded 1.7885 trillion KRW, up 3.8% year-on-year, as 5G subscribers increased by more than 530,000 in the first half alone. The average revenue per user (ARPU) for the second quarter rose 3.0% year-on-year to 32,342 KRW. Ultra-high-speed internet revenue increased 2.1% year-on-year, while wired telephone revenue declined 1.6%, continuing its downward trend.

"Expecting 5G Subscriber Growth... ARPU Increasing Trend"

Given the strong performance in the first half, the outlook for the second half is expected to maintain a steady trend. However, due to increased spending, expanded CAPEX (capital expenditure), and business restructuring, profits in the second half are expected to be lower than in the first half.

Supported by the net increase in 5G telecommunications service subscribers, wireless ARPU growth is expected to continue. CFO Kim Young-jin explained, "5G subscribers will increase in the second half. New Samsung foldable phones and the release of the 'iPhone 13' are anticipated. We expect the 5G subscriber ratio to reach 45%, so the ARPU growth trend will naturally be maintained." As of the end of the second quarter, the cumulative number of 5G subscribers was 5.01 million, accounting for 35% of the total.

KT was the first among the three domestic mobile carriers to launch a 5G standalone mode (SA) service, securing an aggressive image. Unlike the non-standalone mode (NSA), which operates alongside existing LTE, 5G SA processes both data and control signals entirely on the 5G network. CFO Kim emphasized, "As technologies such as augmented reality (AR), virtual reality (VR), smart factories, and autonomous vehicles accelerate development, the unique value of SA will emerge. Although demand is not yet widespread, it will be noteworthy in the future."

AI Robot New Business Also Progressing... Governance Restructuring

New businesses are also being actively pursued. The AI call center (AICC) is expanding its services beyond traditional customers in insurance and finance to public sectors, hospitals, and small business owners, with plans to launch an 'AI Voicebot' for small business owners next month. The AI robot business has completed preparations such as building a robot operation platform and sales system, and will introduce serving, care, and barista robots in the second half.

KT is also focusing on digital and bio healthcare businesses. It has already secured the basic infrastructure capable of handling large-scale bio data such as cloud, big data, and blockchain. Based on this, KT is pursuing partnerships with leading domestic and international companies to prepare specific businesses such as remote medical monitoring, digital therapeutics, and medical AI solutions.

Organizational restructuring of group subsidiaries, including media and content, is ongoing. CFO Kim stressed, "Just as we restructured the content business centered on KT Studio Genie, we will continue to proceed with group system reforms."

K-Bank Turns to Profit in First Quarter... Focus on Mobile Customers

In the second half of this year, K-Bank plans to leap forward as a differentiated financial platform business through expanding product coverage, app revamps, partnership marketing, and strengthening group synergies. K-Bank and Studio Genie were cited as representative cases of the group's IPO promotion plans.

CFO Kim Young-jin attributed K-Bank's strong performance to "leveraging the internet bank's unique low-cost, high-efficiency structure through apartment mortgage loans and partnerships with cryptocurrency exchanges," adding, "We will aim for a lock-in effect through efforts to improve app convenience, asset management, and deposit attraction." The bank is also focusing on attracting customers familiar with mobile environments.

He continued, "In credit strategies, we will diversify portfolios with safe loans and mid-interest loans, and enhance customer service to sustain credit growth through risk management. Beyond new product development, we will also advance as a financial asset management platform for customers through partnerships with cryptocurrency exchanges and asset management companies," he emphasized.

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