Balanced Growth in Platform and Communications... KT's Q3 Operating Profit Up 30% YoY (Update)

[Asia Economy Reporter Seulgina Jo] KT continued its double-digit growth compared to the previous year in the third quarter. This is interpreted as a result of the significant impact of 5G subscribers in its core mobile network operator (MNO) business, as well as the new businesses such as media and B2B (business-to-business) settling into a growth trajectory despite the COVID-19 aftermath.

KT announced on the 9th that it recorded consolidated sales of KRW 6.2174 trillion and operating profit of KRW 382.4 billion for the third quarter of 2021 under Korean International Financial Reporting Standards (K-IFRS). Compared to the same period last year, sales increased by KRW 216.2 billion (3.6%) and operating profit rose by KRW 88.4 billion (30.0%).

On a separate basis, sales were KRW 4.6647 trillion and operating profit was KRW 259.1 billion, growing by KRW 144.2 billion (3.2%) and KRW 50.6 billion (24.3%) respectively compared to the same period last year. KT explained, "Balanced growth in platform businesses such as artificial intelligence (AI)/digital transformation (DX), media and content, as well as existing core businesses like 5G, internet, and IPTV drove the increase in third-quarter performance."

Specifically, the B2B business exceeded KRW 1 trillion in order intake in the third quarter, marking the highest quarterly order volume ever recorded. In particular, sales growth in corporate lines and AI/DX businesses continued, with the IDC business showing remarkable sales growth. IDC sales increased by 34.7% compared to the same period last year. The company added that IDC business growth is expected to accelerate further through DBO projects with various operators in the future.

In the AICC (AI Contact Center) sector, the number of customers adopting KT’s AICC solutions in their call centers expanded, resulting in a 29.7% year-on-year increase in overall AI/DX revenue. Corporate line sales rose by 2.7% year-on-year due to increased traffic from companies expanding remote work.

To proactively respond to the explosive growth of the global data market, KT acquired global data specialist Epsilon in September. Through this, KT plans to expand its global data business sales capabilities from mainly Asia to all global regions including North America and Europe, combining Epsilon’s global data business infrastructure with KT’s ABC (AI, Big Data, Cloud) capabilities to discover differentiated DX services.

The IPTV business recorded over 100,000 net subscriber increases for three consecutive quarters through personalized media viewing patterns, expansion of home learning, and activation of kids’ content, along with expanded sales of the ‘Olleh tv Tab’ launched in the first half of the year, strengthened targeted marketing for each customer, and continuous growth of premium subscribers. As of the end of the third quarter, IPTV subscribers reached 9.12 million, and sales increased by 3.1% year-on-year to KRW 473.4 billion.

5G subscribers reached 5.61 million as of the end of the third quarter, accounting for 39% of postpaid mobile phone subscribers. Wireless service sales recorded KRW 1.6978 trillion, a 3.8% increase compared to the same period last year. The third-quarter ARPU rose 2.7% year-on-year to KRW 32,476.

High-speed internet sales were KRW 510.7 billion, up 2.4% year-on-year. During the same period, wired telephone sales decreased by 1.2%, but the decline in sales is slowing due to an increase in business wired telephone subscribers and expansion of call DX services such as Call Check-in.

Group companies also saw sales growth through strengthening core business competitiveness. Among them, group content sales increased by 24.6% year-on-year due to expansion of commerce and digital advertising businesses and group restructuring. BC Card’s sales improved by 2.9% year-on-year due to increased domestic purchase volume.

KT is accelerating the restructuring of its growth-centered business portfolio. First, the restructuring work centered on Studio Genie in the media and content business is in its final stages. After completing the acquisition of Hyundai Media, the company name was changed to ‘Media Genie,’ and the spin-off of KT Season was completed. In September, Studio Genie secured KRW 227.8 billion in capital through a paid-in capital increase, completing preparations to serve as the control tower for media and content businesses within the group. Additionally, KT is actively working to create synergy between Genie Music and Millie’s Library, planning to launch an AI audiobook pilot service within the year.

K-Bank recorded its first net profit turnaround since its launch last quarter and posted a net profit of KRW 16.8 billion in the third quarter, achieving cumulative annual profitability. As of the end of the third quarter, subscribers exceeded 6.6 million, with deposits surpassing KRW 12 trillion and loans exceeding KRW 6 trillion, laying the foundation for two consecutive quarters of profitability. The expansion of deposit and loan scale stabilized the net interest margin structure, and the addition of various loan portfolios contributed to this effect. Going forward, K-Bank plans to position itself as a differentiated financial platform business by expanding product coverage, revamping its app, promoting partnership marketing, and strengthening group synergies.

Kim Young-jin, KT’s Chief Financial Officer (Executive Vice President), said, “KT laid the foundation for medium- to long-term growth by continuing to improve performance and restructure the group’s business portfolio in the third quarter. We will continue to do our best to enhance corporate value by producing successful DIGICO results.”

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