By Jun Yang - Nov 7, 2011 7:35 AM GMT+0700
KT Corp. (030200), South Korea’s largest phone and Internet company, reported a 41 percent decline in third- quarter profit after offering discounts for smartphone subscribers and the local currency weakened.
Third-quarter net income fell to 255.7 billion won ($230 million), from a revised 430.9 billion won a year earlier, the Seongnam, South Korea-based company said in a statement today. That lagged behind the 316.1 billion won average of 12 analysts’ estimates compiled by Bloomberg.
Revenue from mobile-phone calls fell 21 percent after KT offered tariff discounts to lure smartphone users. The carrier also had a 60 billion won foreign-exchange loss. The company’s revenue may further decline in the fourth quarter, as it began to cut phone bills in October to help the government curb inflation, analysts said.
“The impact of the tariff cut will be fully reflected from the fourth quarter, so their average revenue per user could get worse,” Kim Hong Sik, a Seoul-based analyst at NH Investment & Securities Co., said before today’s announcement.
KT shares fell 0.5 percent to 36,900 as of 9:31 a.m. in Seoul trading, while the benchmark Kospi Index declined 0.1 percent.
Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 13 percent to 516.4 billion won. Sales dropped 6.2 percent to 4.99 trillion won.
The figures released today, including for the year-earlier period, were based on the International Financial Reporting Standards that the company began to use this year.
To contact the reporter on this story: Jun Yang in Seoul at jyang180@bloomberg.net
To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net
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