KT(US:KT)2020-08-08 01:29Financial Data and Key Metrics Changes - Q2 total revenue decreased by 3.6% year-on-year, amounting to KRW5,876.5 billion, primarily due to subdued financial and real estate business impacted by COVID-19 [7] - Operating profit increased by 18.6% year-on-year to KRW341.8 billion, while net profit rose by 2.2% year-on-year to KRW207.6 billion [8] - EBITDA reported at KRW1,252.6 billion, up 5.1% year-on-year [8] - Operating expenses decreased by 4.7% year-on-year to KRW5,534.7 billion due to cost control efforts [9] - Debt-to-equity ratio as of Q2 end was 121.2%, down 1.9 percentage points year-on-year [10] Business Line Data and Key Metrics Changes - Wireless revenue increased by 0.6% year-on-year to KRW1,722.5 billion, with service revenue up 0.2% year-on-year to KRW1,615.5 billion [11] - Fixed line telephony revenue decreased by 7% year-on-year to KRW372.2 billion, while broadband Internet revenue declined by 1.2% year-on-year to KRW496.7 billion [15] - IPTV revenue increased by 0.5% year-on-year to KRW407.6 billion, supported by high-quality subscriber growth [17] - B2B revenue rose by 2.4% year-on-year to KRW701.1 billion, driven by digital transformation demand [18] Market Data and Key Metrics Changes - Total wireless subscribers reached 22,120,000, with 2.24 million 5G subscribers, representing a 16% penetration rate [12] - MNO subscribers increased by 295,000, marking the highest rise since Q1 2018 [12] - The company holds over 70% market share in the public and financial cloud market [18] Company Strategy and Development Direction - The company aims to transform from a telecom service provider to a telecom-based platform provider, focusing on new growth opportunities in 5G and B2B platforms [26] - Plans to enhance media capabilities through partnerships, including a recent collaboration with Netflix to offer a wider range of content [17][31] - Continued investment in AI, cloud, and digital transformation to support B2B growth and innovation [21][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the COVID-19 pandemic but highlighted robust subscriber growth in core telecom and high revenue growth in AI and DX businesses [6] - The outlook for the second half of the year is optimistic, with expectations of increased 5G subscriber growth and improved revenue from various segments [56][58] Other Important Information - The company is actively exploring synergies among its subsidiaries, including K-Bank and BC Card, to enhance overall growth [23][63] - The impact of COVID-19 on group affiliates resulted in an 8.2% decline in profit contribution year-on-year [22] Q&A Session Summary Question: Netflix arrangement details - The partnership with Netflix aims to enhance content capabilities and create a virtual cycle to expand the subscriber base [31][32] Question: 5G infrastructure co-investment - Discussions are ongoing among operators regarding potential joint investment in 5G networks to enhance coverage and investment efficiency [35] Question: 5G B2B business direction - The company plans to expand 5G B2B use cases in various sectors and has seen interest from multiple customers [40][41] Question: Competitive landscape in the second half - The company expects increased competition with new handset launches but plans to focus on competitive tariff plans and unique services [54] Question: CapEx outlook - The company aims to maintain its KRW3.1 trillion CapEx guidance despite interruptions in 5G investment due to COVID-19 [49][50] Question: Marketing expenses in Q2 - Marketing expenses appeared elevated due to IFRS accounting standards, but actual spending declined [66] Question: Restructuring plans - The company is considering restructuring affiliates that do not contribute to growth, with potential fast implementation once decisions are made [67]