KTF posts profit increase on larger market share

Jon · Korean Citizen Joined: Mar 19, 2004 Posts: 509

KT Freetel Co., Korea's second-largest mobile-phone operator, said its net income dropped 30.3 percent year-on-year to 284 billion won in 2004, after the company spent more on marketing activities.
Operating profit was reported at 529 billion won, down 32.3 percent from 2003, while revenue climbed 15 percent year-on-year to 5.83 trillion won, with the company increasing its market share.

For the fourth-quarter, net income jumped 28 percent year-on-year to 100 billion won, while revenue climbed 12 percent to 1.43 trillion won.

"The intensified cost competition between the mobile phone carriers had a negative impact on us financially. On the brighter side, we were able to gather 1.29 million more customers from a year earlier and our revenue on subscriber fees increased by 9.2 percent," said Kim Beom-jun from KTF's investors' relations team.

"We will focus more on profitability than increasing market share in 2005," said Kim.

KTF saw marginal growth in market share year through number portability, which allows mobile-phone users to switch carriers without changing phone-numbers. The company's 32.1 percent market share as of December 2004 is a slight increase from 31.1 percent a year earlier. For the full-year, marketing costs increased 45 percent year-on-year at 1 trillion won.

Amid heated marketing campaigns triggered by number portability, Korea's three mobile-phone carriers saw their profits tumble through greater marketing costs.

Last week, SK Telecom Co., which controls 51.3 percent of Korea's mobile market, reported a 23 percent drop in net income at 1.49 trillion won for 2004. It was the first full-year slide in profit for SK Telecom since 1997.

LG Telecom Ltd., the smallest of the carriers with 16.6 percent of the market, saw its annual net income drop 71.3 percent year-on-year to 22.6 billion won, while its operating profit dropped 37.9 percent from last year to 131.1 billion won.

The government applied number portability to market leader SK Telecom Co. in January last year and expanded the policy to encompass KT Freetel Co. in July.

LG Telecom customers were granted the option last month.

(thkim@heraldm.com)

By Kim Tong-hyung

2005.02.04