South Korea’s telecom giant KT Corp.’s operating profit for the fourth quarter nearly halved on year due to mobile fee discounts and a rise in marketing costs for the upcoming PyeongChang Winter Olympics and fifth-generation (5G) network service.

KT said in a regulatory filing on Tuesday that it posted an operating profit of 134.2 billion won ($122.5 million) on a consolidated basis in the fourth quarter ended December, down 40.7 percent from a year ago. Sales edged up 1.4 percent to 6.1 trillion won in the same period.

Shares of KT ended Tuesday at 28,900 won, down 1.87 percent or 550 won from the previous session.

For full 2017, KT’s operating profit slid 4.5 percent to 1.38 trillion won from a year ago. Net profit also plunged 29.5 percent to 562.5 billion won over the same period, while sales reached 23.39 trillion won, up 2.8 percent on year.

KT attributed mobile fee discounts introduced by the government in a bid to lower telecommunications spending to its poor fourth-quarter performance. One-time marketing costs ahead of PyeongChang Winter Olympics where the company is due to show off the world’s first 5G network services were also blamed for the sharp fall in its profits.

But the solid growth in revenue at its media and content businesses has cushioned the further fall in its earnings for the full year period, according to the company.

Revenue from its wireless division slipped 2.9 percent on year to 7.2 trillion won last year on increased discount rates, although the telecom operator added 1.12 million new subscribers to its service over the same period. Under the government’s guideline on phone bill reduction, the country’s mobile carriers including KT started to offer a 25 percent discount rate for new subscribers on Sept. 15. They also have to exempt an 11,000 basic monthly subscription fee for the elderly and low-income household members.

Despite such challenges, the number of subscribers to its wireless service topped 20 million for the first time last year. Revenue from its high-speed Internet service increased 4.3 percent on year to 2.01 trillion won last year, thanks to a rise in the number of GiGa Internet subscribers.

KT’s key growth engines media and content businesses maintained its growth momentum last year, gaining 16.3 percent in revenue last year to 2.2 trillion won thanks to a rise in bulk subscribers to its Internet protocol TV (IPTV) service and brisk sales from its content-related units Nasmedia Corp., a digital media marketing agency, and Genie Music, the country’s leading music distributor.

KT, meanwhile, plans to unveil a trial service of world’s first 5G network at the upcoming PyeongChang Winter Olympic Games that will kick off on Friday, hoping the new technology help it stay ahead of its rivals. In a bid to foster new revenue generators, KT pledged to continue to seek new opportunities in next-generation media, connected car service, as well as smart cities and factory industries.

By Seo Dong-cheol and Lee Eun-joo

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]