South Korea’s biggest telecom company KT Corp. reported Friday that its fourth-quarter earnings fell below expectations, but painted a brisk outlook as rising smartphone sales, led by Apple Inc.’s iPhone, are expected to improve its margin.
Net profit reached 105.1 billion won (US$94.3 million) in the October-December period, compared with a net loss of 430.5 billion won one year earlier, it said in a regulatory filing. The loss in the year-earlier period was caused by early retirement packages.
The figure was lower than expected. KT was forecast to earn 221.3 billion won, according to the median estimate of an analyst poll by Yonhap Infomax, the financial news arm of Yonhap News Agency.
Sales rose 9.3 percent to 5.2 trillion won in the fourth quarter, while operating profit reached 304.7 billion won, compared with a loss of 549.5 billion won in the year-earlier quarter, it said.
Shares of KT fell 0.24 percent from the previous session to close at 42,150 won on the Seoul bourse.
A reduced profit from the fixed-line phone business, an increase in capital expenditure and the three-month delay in the introduction of the iPhone 4 hurt KT’s bottom line in the period, according to the company’s financial statement and its chief financial officer.
But the company forecast that its profit from mobile phone business and wireless data sales will pick up faster this year than last year as more high-end smartphone models are scheduled to be launched.
“Since the end of last year, we have sold a lot of high-end smartphones that guarantee as good profits as the iPhone 4,” Kim Yeon-hak, the company’s chief financial officer, told investors. “Overall, we expect to see an improvement in profitability.”
The company secured 2.73 million smartphone subscribers as of 2010, including 2 million iPhone users. South Korea’s smartphone users are estimated at 7 million.
KT, South Korea’s dominant fixed-line phone operator, merged with its mobile phone unit KT Freetel Co. in June 2009 to better combine fixed-line phone, broadband Internet and wireless services. It introduced Apple’s iPhone in the country five months after the merger, sparking the smartphone boom in the saturated local wireless market, dominated by local brands such as Samsung Electronics Co. and LG Electronics Inc.
The introduction of the popular iPhone helped KT gain ground in the fiercely competitive wireless market in South Korea. KT’s mobile market share inched up 0.3 percentage point from one year ago to 31.6 percent in 2010.
Smartphones, the feature-packed, advanced handsets that play music and video, download applications and surf the Web, will account for 70 percent of KT’s total cell phone lineup this year. The company aims to secure 6.5 million smartphone users by the end of this year.
In the saturated local wireless market, where each person on average has more than one cell phone, the booming demand for smartphones has helped mobile carriers secure new revenue sources from wireless data sales and pocket fatter margins.
Wireless data sales at KT jumped 15 percent from one year ago in the fourth quarter, thanks to the increase in KT’s data-gobbling smartphone users.
SK Telecom Co., the country’s leading mobile operator, hopes to have 10 million smartphone subscribers by December, compared with 3.91 million smartphone users one year ago.
SK Telecom accounted for 50.6 percent of South Korea’s 51-million-unit mobile market, while LG Uplus Corp., the smallest mobile carrier, holds a 17.8 percent share.
For the full year, net income amounted to 1.2 trillion won (US$1.1 billion) in 2010, KT said. Annual sales reached 20.2 trillion won, and full-year operating profit stood at 2.1 trillion won.
The company said that it will pay a dividend of 2,410 won per common share.
KT said it is aiming to post sales of 20.5 trillion won this year and 30 trillion won in 2015 by boosting its mobile phone business and new businesses, such as cloud computing.
