Spending cutbacks add up to earning boost at KT

KT, the second-largest mobile carrier, reported improved fourth-quarter earnings, backed by reduced spending and growth in its wireless service.

KT said on Friday that it posted 87.4 billion won ($72.5 million) in operating profit between October and December, sharply recovering from the previous fourth quarter’s 16.5 billion won. The latest profit represents a 428 percent increase from over a year ago but a 68.6 percent decrease from 2015’s third quarter.

That helped KT achieve annual profit of 1.3 trillion won for the first time in three years.

The carrier saw a revenue increase of 6.9 percent in the fourth quarter to 4.4 trillion won, while revenue for the full year reached 22.3 trillion won, up 2.4 percent from 2014.

The year 2014 was rough for the carrier due to heavy spending on compensation for early retirees. The move to encourage workers to retire early was intended to cut costs.

Entering 2015, its wireless network business led sales growth. Sales of cellular services totaled 7.4 trillion won, up 3.4 percent compared to 2014.

KT said that the launch of its new data-oriented billing plan attracted a number of new LTE subscribers.

The telecom company has 12.8 million subscribers that use its LTE network, accounting for 71 percent of all wireless subscribers.

The new 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 partly contributed to gaining higher average revenue per user of 36,491 won, a 0.8 percent increase from the previous quarter.

Still, revenue from landline services in 2015 decreased by 6.9 percent to 5.2 trillion won, as home phones lost ground to cellphone plans that also offer free voice calls.

For 2015, KT also saw rising revenue in its finance-related business, as it strengthened partnerships with financial and card companies for fintech, or finance-related technology businesses.

Sales from the sector increased by 5.9 percent year on year to 3.4 trillion won, boosted by new platforms like Clip, a mobile wallet service.

The mobile app alerts users to discounts and rewards they are entitled to with their credit and debit cards.

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