KT Corp (NYSE:KT) Q3 2018 Earnings Conference Call - Final Transcript

Nov 02, 2018 • 02:00 am ET

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KT Corp (NYSE:KT) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Kyung-Keun Yoon

network.

[Foreign Speech]

AI GiGA Genie is quickly evolving into an intelligent platform securing 1.2 million subscribers. We simulate convergence between services including AI platform based kids educational contents and services such as hotel and connected cars. In addition from a functional perspective, we have strengthened voice UI for voice command TV which enables customers to shop from start to final payments by just talking. Displaying the real-life innovation that customers can directly experience.

[Foreign Speech]

In the smart energy business, we continue to expand energy efficiency related services based on the GiGA Energy Manager. Going forward, we will continue to develop new business models such as KT made platform based energy control and small generation aggregators.

[Foreign Speech]

In the tangible media area following on the launch of VRIGHT, an experiential VR service in the first quarter, we launched an individual VR service that uses a head mounted display. We continue to develop a wide variety of products to foster our tangible media as a flagship 5G service for the future.

[Foreign Speech]

To prepare for 5G, which is just around the corner, KT R&D center in September opened the 5G open lab. Currently, around 100 small and medium sized enterprises are co-developing new 5G based services that use the 5G network opened by KT. This enables KT to create a 5G ecosystem early on, which can be combined with a broad scope of KT platforms to spearhead the 5G business.

[Foreign Speech]

Going forward, KT will remain committed to generating stable revenue by fixed line and wireless network innovation, in addition to continued growth through ICT convergence. With that let me delve into the third quarter 2018 performance.

[Foreign Speech]

First, I will briefly touch upon earnings based on the new standard K-IFRS 15, and then report on the previous standard for the benefit of our investors. Please note that figures under the old standards are for comparison purposes only and have not been audited or reviewed by an external auditor.

[Foreign Speech]

First, under the new accounting standard, 2018 consolidated third quarter revenue was KRW5,948.5 billion, operating profit KRW369.5 billion and net profit KRW239.5 billion.

[Foreign Speech]

From now on, for the purpose of comparison, I will present the third quarter numbers versus the second -- third quarter of last year under the previous standard.

[Foreign Speech]

Revenue was up 2.7% year-over-year, reporting KRW5,986.0 billion on high quality subscriber growth from key businesses, including wireless giga Internet and IPTV. Operating profit was down 15% Y-o-Y to KRW320.8 billion, due to an increase in operating expenses such as cost of services provided. Net profit weakened 0.8% year-on-year reporting KRW201 billion and EBITDA was down 6.5% year-on-year at KRW1,136.2 billion. Next is on operating expenses.

[Foreign Speech]

Third quarter 2018 operating expenses was KRW6,665.2 billion up 4% Y-o-Y.

[Foreign Speech]

Labor cost increased 9.6% Y-o-Y due to the base effect of wage negotiations being conducted in the fourth quarter of last year but reaching an early agreement in the