KT’s net profit increases 70% as sales fall 2.9%

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KT’s net profit increases 70% as sales fall 2.9%

Telecommunications company KT had mixed results for the third quarter, as the company faces modest growth in wireless cellular services and continued declines in landline services.

KT announced an operating profit of 343.3 billion won ($301.4 million), up 17.8 percent compared to 291.5 billion won in the same period of 2014.

But revenue dropped by 2.9 percent to 5.49 trillion won, in line with market estimates of 5.48 trillion won.

Entering this year, KT managed to bring in healthy profits that met the market consensus after suffering a tougher year in 2014.

Last year was particularly rough, as the carrier went into layoffs and paid employees to retire early while also spending heavily on marketing campaigns.

The company improved its profitability by reducing marketing and management costs.

The company spent 689.5 billion won on marketing from July through September, a 7 percent decrease year on year.

The cost-cutting effort contributed to a net profit of 125.9 billion won, a 70.2 percent increase compared to 73.9 billion won posted a year earlier.

Still, the efforts didn’t help boost sales. Revenue from landline services decreased by 6.4 percent to 1.3 trillion won, as home phones lost ground to cell phone plans.

KT’s wireless network service usually made up such revenue declines, but this year was different. Sales of cellular services totaled 1.8 trillion won, down 3.6 percent compared to 2014’s third quarter.

The telecom company has 12.3 million subscribers that use its LTE network, accounting for 69.3 percent of all wireless subscribers.

KT said the launch of a data-oriented billing plan attracted new LTE subscribers and increased the amount of money that each user spends.

The billing plan offers free calls and texts at several different price levels that differ in the amount of mobile data a customer signs a contract for.

Those plans have translated into a higher average revenue per user of 36,193 won, a 0.4 percent increase from the previous quarter.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]
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