13 May KT profit slides 13% as it looks to B2B for growth | Light Reading
Even against the backdrop of the coronavirus outbreak, KT’s Q1 results are modest.
In its first quarter under new CEO Koo Hyun-mo, the South Korean telco recorded a 12.8% fall in net profit, a 4.7% decline in operating income and flat revenue.
On an analysts call Wednesday, CFO Kyung-keun Yoon attributed the weak result to the virus outbreak.
He said while the performance had not been “what we had planned at the beginning of the year, we are exerting efforts to minimize the negative impact with the growth of our core businesses and efficient cost execution.”
Like rivals SKT and LG Uplus, KT took a direct hit from the coronavirus lockdowns and the drying up of retail handset sales. It reported device revenue down 7% year-on-year and 20% sequentially.
It added another 360,000 5G subs in the quarter to take its total to 1.78 million, or 13% of total subs and 30% market share.
KT had forecast subs growth of 25-30% in 2020, but Yoon said it would most likely be at the lower end of the guidance.
The operator registered a small bump in its core wireless service revenue as a result of increased 5G takeup but at 2.2% it was only half that enjoyed by SK Telecom and a third of LG Uplus’ 6.2% spike.
Subsidiaries such as the card and satellite businesses also lost ground due to the coronavirus. The exception was its Genie Music operation, which grew 12%, racking up both subs and e-commerce sales, Yoon said.
Like many 5G operators, KT is pinning its hopes on business.
In its new corporate structure, the new B2B division and in particular the data center and cloud unit known as AI/DX would be important growth drivers, Yoon said.
AI/DX had grown 28.5% in the quarter and the company saw new opportunities from the acceleration of digital transformation driven by COVID-19.
Businesses looking ahead see a need to build a working environment that will increase productivity.
“Now is the time to prepare for the post-COVID-19 era,” Yoon said. “Along with the greater prevalence of the on-tap culture, we see demand for digital transformation.”
KT would assist the innovation of other industries through the combination of its leading edge network and AI capabilities, the CFO said.
Robert Clark, contributing editor, special to Light Reading