KT Achieves Highest Quarterly Revenue in 3Q... Operating Profit Down 28.9%

Due to Wage Negotiations and Content Investment

KT announced that its sales for the third quarter of 2023 under the Korean International Financial Reporting Standards (K-IFRS) reached KRW 6.6974 trillion on a consolidated basis, up 3.4% year-on-year, and KRW 4.673 trillion on a separate basis, up 1.8%. The third quarter consolidated sales marked the highest quarterly performance since the company’s listing.

Operating profit was recorded at KRW 321.9 billion on a consolidated basis and KRW 193.5 billion on a separate basis, down 28.9% and 40.2% respectively compared to the same period last year. The company explained, “The decrease compared to the same period last year was due to the early settlement of wage and collective bargaining in the third quarter and the smoothing effect of content sourcing costs.” However, considering that wage negotiations and content sourcing costs were reflected in the fourth quarter last year, both consolidated and separate operating profits maintained a stable growth trend.

Office sketch related to KT's plan to launch the super-large AI 'Mideum'. Photo by Yongjun Cho jun21@

Growth in Wireless, Wired, and Enterprise Businesses

The wireless business grew 1.6% year-on-year, surpassing 9.51 million 5G subscribers, which accounts for 70% of total handset subscribers, along with expanded roaming business revenue due to increased domestic and international travelers, and steady growth in the MVNO business.

The wired business grew 1.8% year-on-year as premium plan subscribers increased. Among these, the internet business saw a 3.2% increase in sales compared to the previous year, driven by continuous demand for high-quality services, with the share of gigabit internet subscribers expanding to 68%. The media business grew 3.9% year-on-year as premium plans combining OTT and VOD subscriptions increased. Notably, since the rebranding to ‘Genie TV,’ the usage rate of content such as VOD and OTT doubled compared to before.

The enterprise services business grew 2.7% year-on-year due to the full-scale revenue realization of previously secured enterprise DX projects and favorable real estate business performance. The enterprise internet and data business saw a slight decline in sales year-on-year due to rationalization of some low-profit businesses. However, growth in the enterprise internet product lineup continues with increased demand for dedicated lines for CCTV driven by expanding social safety infrastructure needs and growth in domestic and international CP clients. The enterprise DX business is expected to maintain annual B2B order volumes exceeding KRW 3 trillion, supported by steady domestic and international demand, including government digital transformation (DX) projects such as the Defense Broadband Integrated Network (M-BcN) and the Defense Integrated Data Center construction.

The AI and new business segment experienced a decline in sales year-on-year due to delays in some B2B project orders and efficiency improvements in some low-profit businesses. However, KT A’cen service is leading the AI contact center (AICC) market. Additionally, KT’s large AI service ‘Mideum,’ launched on the 31st of last month, plans to establish a growth foundation across five major sectors?manufacturing, finance, public sector, education, and global?centered on four lineups tailored to company size and purpose, ranging from lightweight to ultra-large models.

Strong Momentum in Finance, Real Estate, Content, and DX Group Core Businesses

KT’s core portfolio, including finance, real estate, content, and DX, continues to show strong growth. BC Card’s sales increased 1.2% year-on-year due to growth in new businesses such as self-issued cards and loan services. K-Bank has maintained operating profits for 10 consecutive quarters since the second quarter of 2021. As of the end of the third quarter of 2023, K-Bank’s deposit balance was KRW 17.2 trillion and loan balance was KRW 12.8 trillion, up 27.8% and 31.0% respectively year-on-year.

KT Estate’s sales increased 30.3% year-on-year due to increased office rental revenue and strong hotel business performance. The hotel business continued its growth through diversification strategies such as launching customized package products and attracting corporate group customers.

KT Studio Genie and skyTV produced and scheduled four original dramas and three original variety shows in the third quarter. ‘Shinbyeong 2’ ranked first among Monday-Tuesday dramas, and ‘Namnam,’ ‘I Have Waited for You for a Long Time,’ and ‘Kidnapping Day’ also showed rising viewership trends. Additionally, they are building a lineup of hit variety content such as ‘I Am Solo,’ ‘I Am Solo: Love Continues 2,’ and ‘Steel Troops 3.’ However, due to the recession in the advertising and commerce markets caused by the economic downturn, content subsidiaries’ sales decreased 3.6% year-on-year.

KT Cloud grew 34.5% year-on-year due to strong growth in private cloud orders and the internet data center (IDC) business. Leveraging top-tier domestic IDC and cloud infrastructure and partnerships with companies such as Rebellion and More, KT is securing leadership in AI cloud as a full-stack AI service provider.

Enhancing Shareholder Value... Announcement of New Medium-Term Shareholder Return Policy

KT announced a new medium-term shareholder return policy last month based on confidence in enhancing shareholder value and growth. The policy uses 50% of adjusted separate net income as a resource and guarantees a minimum dividend per share at the 2022 level for fiscal years 2023 to 2025. Even if dividend resources are insufficient, the minimum level will be guaranteed, and share buybacks and cancellations will be conducted alongside dividends within resource limits. Additionally, KT plans to introduce quarterly dividends through amendments to the articles of incorporation at next year’s regular shareholders’ meeting.

Kim Young-jin, KT’s Chief Financial Officer (CFO, Executive Vice President), said, “KT continues balanced growth in B2C and B2B businesses amid management stabilization and sustained growth in KT Group’s core business portfolio. We will strive to enhance corporate value by promoting ‘Digital Service First,’ which combines KT’s communication technology (CT) with information technology (IT) capabilities.”

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