South Korea’s second largest operator KT rebounded strongly last year from a loss in 2014, with its expanding LTE user base driving modest increases in mobile revenue and ARPU.
The operator, with a 31.5 per cent market share, reported a net profit of KRW631 billion ($512 million), after posting a loss of KRW966 billion in 2014. EBITDA soared 59 per cent to KRW4.63 trillion, while its EBITDA margin expanded 7.7 points to 20.8 per cent.
Revenue for the year was flat at KRW22.3 trillion. Service turnover increased 2.4 per cent to KRW19.5 trillion, but equipment revenue fell 15 per cent to KRW2.77 trillion due to changes in its accounting policy over subsidies.
Its results for Q4 were stronger, with overall revenue rising 8.5 per cent to KRW5.96 trillion – handset sales jumped 48 per cent to KRW881 billion — but service revenue was up just 3.7 per cent to KRW5.08 trillion. The operator generated almost a quarter of its EBITDA and a fifth of its net profit in the final quarter.
Mobile revenue last year rose 3.4 per cent to KRW6.5 trillion as its user base expanded by 738,000 customers to 18 million. LTE users increased by two million to 12.8 million and accounted for 71 per cent of its total customer base in Q4 (up from 62 per cent a year ago).
ARPU inched up 0.6 per cent to KRW36,491 ($29.60).
An 11 per cent drop in fixed voice revenue and 2 per cent decline in broadband turnover led to a 7 per cent fall in fixed-line revenue to KRW5.16 trillion.
Operating expenses for the full year fell 7.6 per cent to KRW21 trillion, with labour costs down 16 per cent. But opex was up 10.5 per cent in Q4 due to a 31 per cent increase in the cost of equipment and a 7.5 per cent rise in marketing expenses.
Capex dropped almost 5 per cent to KRW2.4 trillion in 2015, but was only 89 per cent of budget. Moody’s expects capex to rise to only KRW2.5 trillion this year.
Since its rollout of GiGA internet last year, KT has formulated plans to provide new GiGA services to boost its core fixed-line and wireless businesses, and to develop new convergence and platform businesses. Moody’s said the initiatives will help offset structural declines in its telephony market and generate growth in a largely saturated and competitive wireless market.
Moody’s expects KT to register steady revenue and adjusted EBITDA margins this year of about KRW22 trillion and 21-22 per cent respectively.