KT Faces 'Management Vacuum', Q1 Operating Profit Plummets 22% to 486.1 Billion KRW (Comprehensive)

KT, currently experiencing a management vacuum, posted disappointing results for the first quarter of this year.

On the 11th, KT announced that its consolidated sales for the first quarter of this year reached 6.4437 trillion KRW, with an operating profit of 486.1 billion KRW. Sales increased by 2.6% compared to the same period last year, while operating profit decreased by 22.4%. On a separate basis, sales rose 0.2% to 4.619 trillion KRW, and operating profit fell 9.7% to 388.1 billion KRW.

KT explained the sharp decline in operating profit as due to a base effect from one-time real estate gains, including the 74.6 billion KRW gain from the sale of the Mapo Solution Center last year, and increased cost burdens from inflation.

Despite the adverse factor of a management vacuum, growth was notable in digital transformation (DX) and real estate-related businesses. The AI Contact Center (AICC) business secured the integrated AI call center construction project for Shinhan Financial Group in the first quarter of this year. The real estate business showed a clear recovery in the hotel sector, including the Le Meridien & Moxy in Myeongdong, which opened in November last year.

The Telco B2B business targeting B2B customers saw sales grow 4.1% year-on-year. The corporate internet business recorded a 3.4% sales increase compared to the same period last year, driven by increased data demand from large CPs (content providers) and growing demand for dedicated lines from public institutions. The corporate voice business grew sales by 5.4% year-on-year by strengthening cooperation with MVNO operators and quickly responding to MVNO market trends by expanding customer benefits and convenience.

In the B2C platform business (DIGICO B2C), IPTV sales increased by 2.8% year-on-year. This was likely due to active partnerships with domestic and international OTT platforms and customer-centric service improvements.

The Telco B2C business, covering wired and wireless services, maintained growth centered on premium subscribers with 8.94 million 5G subscribers, accounting for 65% of total handset subscribers. The roaming business continued its sales recovery trend from the previous quarter due to an increase in overseas travelers. Ultra-high-speed internet sales rose 2.8% year-on-year as the share of giga internet sales increased amid sustained demand for high-quality internet services.

KT Cloud, which celebrated its first anniversary, recorded sales of 148.7 billion KRW in the first quarter. The IDC business achieved double-digit sales growth due to increased demand for data centers and upselling strategies.

In the financial business, BC Card's sales increased by 5.6% year-on-year due to growth in credit card purchase amounts, new business areas such as self-issued cards, and loan businesses. K-Bank has maintained operating profits for eight consecutive quarters since the second quarter of 2021, and in the first quarter of this year, all business indicators, including customer numbers, deposits, and loans, continued to grow. As of the end of the first quarter of 2023, K-Bank's deposit balance was 16.6 trillion KRW, and loan balance was 11.9 trillion KRW, up 44.2% and 52.9% respectively compared to the same period last year.

Kim Young-jin, KT Chief Financial Officer (CFO), said, "Despite inflation and increased investment costs for growth, we led sales growth in the first quarter of this year based on a solid business structure," adding, "We will continue efforts to enhance corporate value by establishing an advanced governance system that surpasses global standards in the area of governance."

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