[Concall] KT "4Q Telecom Disruption Compensation Cost Reflected... Expect Dividend Increase"

"Different from Last Year... No One-Time Large-Scale Cost Factors"

[Asia Economy Reporter Cha Min-young] On the 9th, during the Q3 earnings conference call, KT stated regarding the compensation costs related to the communication outage, "It is expected to be reflected in Q4," but also clarified, "Unlike last year, there will be no large-scale one-time cost reflection."

The compensation for damages caused by the nationwide wired and wireless internet outage lasting 89 minutes on the 25th of last month is estimated to reach 35 billion to 40 billion KRW. This estimate was derived based on an average of 1,000 KRW per general customer and 7,000 to 8,000 KRW per small business owner. In the securities industry, there are observations that the payout amount is set at a scale larger than expected, similar to the 2018 Ahyeon Exchange Incident.

Nevertheless, the Q4 outlook is expected to be better compared to Q4 of last year. In the previous year, the three major telecom companies, including KT, recorded impairment losses on the 28GHz frequency usage rights, causing their net profits to plummet. KT’s net income for Q4 last year was 16.5 billion KRW on a separate basis, which was about one-tenth of the previous quarter’s 163.2 billion KRW.

There is also ongoing anticipation for dividend increases due to the annual operating profit growth. KT stated, "No significant factors causing fluctuations outside of operating income have been identified yet," and added, "We expect that the increase in operating profit will somewhat translate into dividend growth."

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