South Korea’s KT reported a 45.7 per cent fall in its Q3 profit after a rise in operating costs offset a 12 per cent increase in mobile revenue.

But the drop in net income to KRW74 billion ($70 million) is a huge improvement from a net loss of KRW757 billion in Q2.

The company’s Q3 revenue increased 3.9 per cent to KRW5.96 trillion year-on-year, but operating expenses rose 3.6 per cent to KRW5.62 trillion. The biggest contributor to the rise was selling expenses (up 25 per cent), but labour cost were down 21 per cent due to an early retirement plan. Marketing costs jumped 23 per cent year-on-year to KRW741 billion.

In addition, fixed voice revenue was down 10.6 per cent over the same period last year. And although KT added 680,000 connections, broadband revenue fell 0.6 per cent from a year ago. Overall fixed revenue declined 6.2 per cent to KRW1.37 trillion.

On the positive side, mobile revenue was up 11.6 per cent to KRW1.91 trillion from Q3 of 2013, with ARPU increasing 11.2 per cent quarter-on-quarter to KRW34,829 ($32.85). It claimed 410,000 net additions in Q3.

Its 4G customer base of 10.3 million represents almost 60 per cent of total subscribers. Churn edged up to 2.7 per cent from 2.4 per cent in Q3 2013.

Media revenue increased 12.2 per cent KWR339.7 billion as it added 270,000 IPTV subscribers and content revenue also rose 17 per cent to KWR56.3 billion during the same period.

The operator, the country’s second largest mobile player with a 31 per cent market share, allocated 32 per cent of its Q3 capex to wireless – KRW189 billion vs KRW306 billion for wire-line. For the full year, KT plans to spend KRW1 trillion of its total KRW2.7 trillion capex on wireless projects.

Despite the fall in profit, it managed a 7.2 per cent increase in its EBITDA to KRW1.28 trillion, and its EBITDA margin was up 0.7 percentage points to 21.5 per cent.