KT Corp., South Korea's second-biggest wireless services provider, said Friday its second-quarter net profit rose 8.8 percent from a year earlier due to revised accounting rules.
Net profit for the three months that ended in June moved up to 280.7 billion won (US$249 million) from 258.1 billion won a year earlier, the company said in a regulatory filing.
"A revision in the accounting standards resulted in the increased net result. But under the previous rules, the quarterly net income fell 0.4 percent to 256.7 billion won from a year ago," a company spokesman said by phone.
|KT Corp.'s corporate logo on its office building in downtown Seoul (Yonhap)|
Operating profit in the April-June period fell 11 percent to 399.1 billion won from 447.3 billion won a year ago. Sales were down 0.6 percent to 5.807 trillion won from 5.843 trillion won during the same period, the filing said.
"One-off costs ate into the second-quarter operating income. Increased labor costs worth 64 billion won and marketing expenses were reflected in the bottomline in June," the spokesman said.
In a base effect, KT's affiliate BC Card sold its stake in Master Card in the first half of last year. BC Card's one-off income worth 40.7 billion won was factored in KT's second-quarter results last year. But this year, there was no such one-off income reflected in KT's earnings, the spokesman explained.
Under the government guidelines, wireless services providers began to increase the discount rate of monthly mobile phone bills from 20 percent to 25 percent from September 2017.
"It also weighed on KT's financial results in the second quarter," he said.
KT, the country's biggest fixed-line services operator, sees its high-speed internet business growing though the overall fixed-line business shows a sluggish growth due to lower demand for traditional phones.
Sales at its wireless business fell 0.7 percent on-year to 1.7 trillion won in the second quarter. Sales at its fixed-line business declined 2.4 percent to 1.1 trillion won during the same period, KT said.
However, sales in the internet business rose 3.7 percent on-year due to more subscriptions to what it calls "giga-speed" services. The number of subscribers came to 4.5 million as of the end of July, accounting for 52 percent of the total Internet subscribers.
The media and content business, considered a new growth engine, posted sales of 604.2 billion won, jumping 7.6 percent on-year on the back of increased numbers of IPTV service users.
Sales from financial businesses contracted 5.2 percent on-year over the cited period to 866.7 billion won on the back of relatively poor performances from its credit card unit.
In a conference call held after the earnings release, KT Chief Financial Officer Yoon Kyung-keun said the company will explore new growth drivers in the innovative technology-based platform business, such as artificial intelligence and blockchain, in the upcoming 5G networks era.
KT's push for a new growth engine is aimed at offsetting declining profits in the wireless and fixed-line services divisions due to increased discount rates in phone bills and tougher competition with rivals, such as SK Telecom Co. and LG Uplus Corp., he said. (Yonhap)
Kim Sua firstname.lastname@example.org
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