Cell subsidies drive profits down

KT Freetel Co., Korea’s second-largest mobile-phone operator, reported a fifth straight drop in quarterly profits after the company spent more on handset subsidies to win customers from rival carriers.
First-quarter net income fell 39 percent to 77.1 billion won ($83.2 million), from 125.3 billion won a year earlier, Seoul-based KT Freetel said yesterday. Sales rose 13 percent to 1.8 trillion won. The results, the first among Korea’s three mobile phone carriers, suggest competition in the industry is intensifying in a market where more than eight out of 10 people already own a cell phone.
Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 41 percent to 100.7 billion won. Marketing costs increased 36 percent to 369.1 billion won.