KT's Q3 operating profits lower than expected

KT reported lower-than-expected operating profits of $246 million for Q3 due to the rising costs of wages and content sourcing. Revenue still reached a record high of $5.6 billion.

KT's headquarters in Jung District, central Seoul [YONHAP]

KT, Korea’s telecommunications carrier, posted lower-than-expected operating profits of 321.9 billion won ($245.9 million) for the July-September period due to rising costs of wages and content sourcing.

Related costs were spent earlier than expected as employees' wage settlements were finalized and reflected in the third quarter. Last year, those costs were reflected in the fourth quarter, according to the company.

The figure fell 28.9 percent on year and was lower than the market consensus of 388.7 billion won compiled by market tracker FnGuide.

Revenue hit a record-high figure of 6.7 trillion won among quarterly earnings, up 3.4 percent on year and slightly higher than analysts expectations with a margin of 22.6 billion won.

Net profit fell 11.6 percent on year to 288.3 billion won, but still beat the market expectation of 283.5 billion won.

KT’s quarterly revenue for its wireless communication services in business-to-customer (B2C) sector jumped 1.6 percent to 1.71 trillion won.

Currently, KT has more than 9.51 million 5G subscribers, which takes up 70 percent of the company’s total handset service subscribers. The number of 5G subscribers surged 3.27 percent compared to the previous quarter.

Landline telephone revenue shrunk 7.6 percent to 186.3 billion won.

Sales from business-to-business (B2B) services such as data, telecom, real estate, digital and AI rose 2.7 percent to 981.7 billion won due to the rise in demand for network services among military troops and increased data traffic from global streaming services that have rolled out in Korea.

However, quarterly revenue from the non-telecom sector in AI decreased 11.9 percent to 106 billion won, which the company said is due to delays in orders and costs spent on reducing less lucrative businesses.

KT said it plans to increase revenue by fronting its large language model Mi:dm, which focuses on providing AI services to corporate clients in manufacturing, finance, public and education sectors, and also by releasing the model to the global market.

Quarterly revenue of KT's cloud subsidiary, KT Cloud, spiked 34.5 percent to 193.8 billion won thanks to consistent demand for its private cloud business and internet data centers.

“KT’s core business portfolios in B2C and B2B sectors are growing in a balanced manner as the company’s management stabilized,” KT’s Chief Financial Officer Kim Young-jin said in a statement. “We’ll strive to raise corporate value with the mindset of ‘digital service first’ based on the telecommunications and technologies that the company possesses.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]