South Korea’s wireless carrier KT Corp. reported a 6.1 percent on-year fall in operating profit for the third quarter due to increased marketing expenses ahead of the launch of new premium phones and a fall in revenue from wireless and landline businesses.

KT announced in a regulatory filing on Wednesday that its operating profit on a consolidated basis fell 6.1 percent on year to 377.3 billion won ($337.6 million) in the third quarter ended September. Its revenue grew 5.4 percent to 826.6 billion won from a year earlier, but net profit declined 13.6 percent to 202.6 billion won.

Shares of KT closed Wednesday at 29,350 won, unchanged from the previous session.

Its weak performance was largely due to high marketing expenses that added 2.0 percent to 677.7 billion won in the quarter from a year ago. The company upped marketing spending to reduce old phone inventory ahead of global smartphone makers’ new premium phone releases and a 25-percent phone bill discount program launched in September under the government’s direction to lower consumers’ mobile expenses. A rise in broadcasting development fund payment or obligation in lieu of radio frequency uses also weighed on its operating profit in the third quarter, the company said.

By business, its mainstay wireless and landline services slowed down. Revenue from wireless service in the third quarter decreased 3.6 percent on year to 1.8 trillion won after it excluded income from mobile phone insurance service sales to meet changes in accounting rules, said the company.

Landline revenue also slipped 2.9 percent on year to 1.2 trillion won as the number of landline telephone users continued to slide. Revenue from fixed-line telephone services plunged 10.5 percent on year, while high-speed internet revenue grew 3.9 percent thanks to the steady rise in ultra-fast gigabit internet subscribers.

In the cited period, its media and contents business gained 15.8 percent on year to 572.6 billion won after its new internet protocol TV (IPTV) platform continued to attract new users.

From the non-telecommunication area, revenue from financial businesses inched up 0.9 percent on year to 873.9 billion won on the back of solid performance of its card unit BC Card Co. and recovery in card transaction by Chinese tourists.

The company’s revenue forecast is not bright due to the government’s push to cut consumers’ mobile expenses, said Shin Kwang-seok, chief financial officer of KT. But it will combat the challenges by fostering new revenue generators with advanced technologies focusing on artificial intelligence based TV, he added.

The new Korean administration in August issued a guideline on phone bill reduction, ordering the country’s mobile carriers to widen the 20 percent discount rate to 25 percent for new subscribers starting Sept. 15. The country’s major mobile carriers including KT initially opposed the order but finally agreed to offer a 25 discount rate. The companies also exempted an 11,000 won basic monthly subscription fee for the elderly and low-income household members.

By Kim Gyu-sik and Cho Jeehyun

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