KT reports Q2 net profit of 363.4 billion won, a 2 percent decline on year

KT on Wednesday reported a net profit of 363.4 billion won ($277.3 million) for the second quarter, a 2 percent decline on year. The figure fell short of the 375.3 billion won analyst forecast compiled by FnGuide.

Inflation-driven cost increases and one-off labor expenses related to employee stocks undermined the earnings. But the growth in the non-telecom business units, which the company refers to as “Digico,” boosted the bottom line, said KT.

Sales came in at 6.31 trillion won in the April-June period, up 4.7 percent on year. KT’s combined sales for the first six months reached 12.59 trillion won, a record for a first-half sales figure. Operating profit decreased 3.5 percent on year to 459.2 billion won. Both figures were below market expectations.

KT reported quarterly sales of 2.37 trillion won in the business-to-customer (B2C) telecom business, a 1.6 percent growth on year, thanks to the increase in 5G users.

KT gained 526,000 new 5G subscribers in the second quarter. The company had 7.47 million 5G users as of June, which account for 54 percent of its total handset service subscribers.

Sales from enterprise telco business climbed 6.8 percent to 529.9 billion won, thanks to rising data traffic.

The B2C Digico unit, which includes media-related businesses, saw a 2 percent increase in sales to 554.4 billion won, led by the IPTV business.

Sales from the non-telecom business for enterprise customers, which involves enterprise IT services and artificial intelligence call centers, declined 2.4 percent to 481.0 billion won, due to the KT Cloud spin-off in April.

With KT Cloud’s sales, the B2B Digico unit’s sales figure totals 578.6 billion won, up 17.4 percent on year.

KT’s media subsidiaries — KT Studio Genie, KT Alpha, and Nasmedia — reported a 34.7 percent increase in second-quarter sales to 285.3 billion won. KT Skylife, which is 49.99 percent owned by KT and operates cable channel ENA, saw a 45.2 percent jump in sales to 254.2 billion won.

The success of KT Studio Genie’s original series “Extraordinary Attorney Woo” has partially boosted the sales for KT Skylife, as ENA distributed the drama with KT’s Seezn video streaming service and Netflix.

“On the back of the popular hit from our original content, brand awareness of ENA has been improved, building a positive loop across our content channel and platform,” said KT Chief Financial Officer Kim Young-jin during an online conference call on Wednesday.

The sales increase from the legal drama is yet to be fully reflected in the earnings as the series began airing on June 29.

KT plans to merge its Seezn video streaming service with CJ ENM’s Tving. Seezn will be merged into Tving by December. The resulting company will be the second biggest video streaming service in Korea in terms of the number of users, following Netflix.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]