KT’s Q2 profit drops due to phone discounts

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KT’s Q2 profit drops due to phone discounts

Korea’s No. 2 mobile carrier, KT, reported weak performance for the second quarter Friday mainly due to increased costs caused by a change to accounting standards and the application of new mobile phone discount fees.

Operating profit came to 399.1 billion won ($353.8 million) for the April-June period, down from 447.3 billion won tallied for the same quarter last year, the company said in a regulatory filing.

This represents a 10.8 percent on-year fall.

Second-quarter net profit also decreased 8.8 percent on-year to 280.7 billion won, while sales came to 5.86 trillion won, down 0.6 percent over the cited period.

The government earlier mandated that the discount rate for monthly mobile phone plans provided by telecom firms be raised from 20 percent to 25 percent in line with its efforts to reduce outlays related to telecommunication services

Total sales at its wireless business inched down 0.7 percent on-year to 1.71 trillion won in the second quarter.

The telecom company said sales at its fixed-line business were down 2.4 percent from a year earlier to 1.1 trillion won due to fewer people using traditional phones.

On the other hand, sales from its internet business advanced 3.7 percent on-year due to more subscriptions to what it calls “giga-speed” services.

The number of subscribed people came to 4.5 million as of the end of July, accounting for 52 percent of the total internet subscribers.

The company’s media and content business, considered a new growth engine, posted sales of 604.2 billion won, jumping 7.6 percent on-year on the back of increased numbers of internet protocol television service users.

Sales from its financial businesses contracted 5.2 percent on-year over the cited period to 866.7 billion won on the back of relatively poor performances from its credit card unit.

The company said its marketing costs reached 674.6 billion won during the cited period, up 1.6 percent from a year earlier.

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