Saturated markets seen crimping KT growth

KT Corp. is in an uneasy position as the saturation of the fixed-line telecom market is putting a brake on the largest fixed-line service company’s growth. KT is in danger of posting declining sales this year for the first time since it was founded in 1981. Although it aims to expand overseas and announce medium- to long-term strategies this month, the company has not yet found a breakthrough. “KT lacks efforts to find a new business to spur its growth,” an industry official said. KT reported its third quarter sales were 2.8 trillion won ($2.4 billion), a drop of 5.2 percent from the previous quarter. Its quarterly sales have continued to decline since the first three months of this year. If it reports a decline for the fourth quarter its annual sales would be an estimated 2 to 3 percent lower than those of last year. KT’s negative growth is attributed to the saturation of the domestic fixed-line phone and high-speed Internet markets, while the Ministry of Information and Communication has lowered many telecom charges. The ministry recently laid out policies favoring KT’s rival companies; it allowed Hanaro Telecom Inc., the second- largest fixed-line telecom service provider in Korea, to borrow network cables, which KT owns and which are installed between KT offices and homes, at a cost of 9,000 won per line a month. KT is aggressively expanding to other parts of Asia, but its profitability in those areas is still in question. KT began broadband Internet services in Vietnam and Mongolia, but it earned only a maximum of a few tens of billion won in those businesses. Foreign investors are against KT’s plans to initiate other businesses abroad, citing slim chances for success. “When KT announced last month that it would invest as much as 1 trillion won in the Middle East, many foreign investors strongly resisted the plans,” a KT official said. by Kweon Hyuk-joo