South Korea’s telecom major KT Corp. has made itself attractive in the global context through streamlining efforts by shedding unprofitable business and debt as underscored by the overwhelming response to its $400 million dollar-denominated offering last week, said the company’s financial chief.

“KT has been cutting cost not just to look good on the balance sheet, but to rationalize corporate performance,” said KT CFO Shin Kwang-seok during an exclusive interview with Maeil Business Newspaper on Monday. Through work-based cost-cutting efforts, the company was able to save 150 billion won ($131 million) last year.

The company sold non-core businesses KT Rental and KT Capital last year and used the proceeds to pay off debts.

“Our goal is to get A investment grade from global rating agencies through continuous deleveraging efforts,” he said. The company hopes to bring down the debt-to-EBITA (earnings before interest, tax, depreciation, and amortization) ratio to 1.5 times.

The company last week raised $400 million in 10-year dollar-denominated bonds with a coupon rate of 2.500 percent, the cheapest among Korean private companies on overwhelming demand of $3.5 billion. The debt was rated A- by Standard & Poor’s and Fitch, and Baa1 by Moody’s Investor Service with a positive outlook.

The company, privatized in 2002, also gained credibility from foreign investors through efforts to ensure transparency in corporate governance. The Financial Asia, a Hong Kong-based financial magazine recently recognized KT as the enterprise with the most committed corporate governance in Korea for this year.

At KT, seven out of 10 board members are outside directors. Management independence is in practice as there is no single owner family governing the company, and outside directors even possess the power to dismiss the chief executive officer, said Shin.

Among KT’s various businesses ranging from telecom service operation to real estate management, its ultra-fast GIGA Internet service is on the steepest rise. The GIGA Internet service that was launched late 2015 has over 1.7 million subscribed users as of early July this year and the number is expected to hit over 2 million subions at the end of this year.

Revenue from the high-speed internet service division grew 8 percent on year to 475.3 billion won in January-March period this year. Although the sales from the landline phone service have edged down by 10 percent every year, its high-speed internet service compensated for its core telecommunications services.

The company also makes a handsome profit from real estate assets. The company owns buildings and lands that have been used as telecom service outlets throughout the nation, and they are making money for various function. KT’s real estate properties are valued at about 5 trillion won in total.

KT has an advantage in real estate development as it does not have to purchase new lands, said Shin. The company transformed its telecom service offices to rent houses and a hotel in Seoul. Currently, the company is earning 250 billion won annually from leasing out real estates, and the rental income is expected to rise to 750 billion won by 2020, said Shin.

By Kim Je-lim

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