South Korea’s three mobile carriers posted moderate growth in their earnings in the first quarter of this year, but they seek steeper growth by shifting from their traditional mobile communications business to new content, software and artificial intelligence businesses.
According to earnings announcement by KT on Friday, the No. 2 telecom business recorded an 8.3 percent on-year increase in its first-quarter operating profit, reaching 417 billion won ($366.7 million). Revenue stood at 5.6 trillion won, up 1.8 percent from a year earlier.
Despite a 3.1 decrease in revenue from its wireless business and a 1.9 percent drop in landline revenues, the company gained 16.6 percent in media content sales. The sales came from an increased number of subscribers to IPTV and pay per view services, advertising and home shopping.
Along with the IPTV service, KT CEO Hwang Chang-gyu told investors and market watchers at a meeting Friday that the mobile carrier will focus on investing in media, smart energy, financial services, disaster and safety management and public value based on the fifth-generation network platform.
“KT is transforming toward a company that introduces services that didn’t exist before,” Hwang said. “The company does not raise money just from establishing networks and charging user fees.”
The KT chief, for the first time, expressed his regret about the allegations that the company was involved in the presidential scandal that led to impeachment of former President Park Geun-hye.
“It is regretful that KT mounted concerns on shareholders and the general public,” he said. “Learning from the lesson, KT will now move to build an advanced corporate governance structure through ample discussions with our shareholders, executives and all stakeholders.”
One day earlier, LG Uplus announced an 18.9 percent jump in its first-quarter operating profit of 202.8 billion won, owing to a surge of 35 percent in monthly data use by Long Term Evolution subscribers.
On Wednesday, SK Telecom, the country’s largest telecom service provider in terms of the number of subscribers, announced a 2.1 percent rise in its operating profit to 410.5 billion won for the first quarter.
Despite factors that decreased revenue, including the increased number of subscribers who choose contract-based mobile fee discounts, elimination of sign-up fees and reduction of interconnection fees, SK Telecom’s mobile network operation business sustained its steady performance backed by the growth of its LTE subscribers and mobile data usage per user, the company said.
As of the end of March 2017, SK Telecom’s LTE had 21.65 million subscribers, representing a 10.9 percent year-on-year increase and taking up 72.6 percent of the company’s total mobile subscriber base of 29.83 million, according to SKT.
SKT is also achieving meaningful results in some new business areas, the mobile carrier said.
Sales of SK Telecom’s artificial intelligence platform NUGU continued to increase in the first quarter, although the company did not reveal an exact figure.
While strengthening the technological competitiveness and value of its AI business by working closely with affiliate companies including SK C&C, SK Telecom will also focus on building a new ICT ecosystem around its AI platform through collaboration with startups and ventures based on an open application program interface approach, it said.
SKT on Friday announced the signing of a memorandum of understanding with electronic document software developer FORCS to discover new business opportunities in the growing paperless market along with the software firm. FORCS is the largest e-document solution provider with around 3,600 corporate customers.
“SKT has been trying to build paperless office infrastructure based on its cloud system,” said Choi Eun-sik, head of business marketing at SKT. “The two firms will work together to develop new e-document services and solutions by collaborating on communications and software technologies.”
By Song Su-hyun (song@heralcorp.com)
