KT CORP - Annual Report 2019 | FinancialReports.eu

6-K 1 d738389d6k.htm FORM 6-K Form 6-K

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of April 2019

Commission File Number 1-14926

KT Corporation

(Translation of registrants name into English)

90, Buljeong-ro,

Bundang-gu, Seongnam-si,

Gyeonggi-do,

Korea

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐ No ☒

If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: April 25, 2019
KT Corporation
By:	/s/ Seunghoon Chi
Name:	Seunghoon Chi
Title:	Vice President
By:	/s/ Youngkyoon Yun
Name:	Youngkyoon Yun
Title:	Director

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ANNUAL FINANCIAL REPORT

KT CORPORATION

(From January 1, 2018 to December 31, 2018)

(Translation of the Annual Report filed in Korean with the Financial Supervisory Service of Korea)

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Table of Contents

I. Corporate General
1. Corporate Purpose of KT Corporation	2
2. History	3
3. Total Number of Shares and Related Matters	4
4. Voting Rights	5
5. Dividends and Related Matters	5
II. Business Details
1. Overview	6
2. Main Products and Services	21
3. Matters Related to Revenue	27
4. Research and Development Activities	33
5. Other Matters Necessary for Making Investment Decisions	34
III. Financial Information
1. Summary of Financial Statements (Consolidated)	35
2. Summary of Financial Statements (Separate)	36
IV. Auditors Opinion
1. Auditors Opinion on the Consolidated Financial
Statements	37
2. Auditors Opinion on the Separate Financial Statements	37
3. Compensation to External Auditors for the Last Three Fiscal
Years	37
V. Management and Affiliated Companies
1. Overview of the Board of Directors and Committees	38
2. Audit Committee	45
3. Matters on Shareholders exercise of Voting Rights	50
4. Equity Investments	51
VI. Directors, Senior Management and Employees
1. Directors	52
2. Senior Management	52
3. Current Status of Employees	54
4. Remunerations of Executive Officers	55

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I. Corporate Generals

1. Corporate Purpose of KT Corporation

Business Objectives

Information and communications business;
New media business and internet multimedia broadcasting business
Development and sale of software and contents;
Sale and distribution of information communication equipment;
Testing and inspection of information communication equipment, device or facilities;
Advertisement business;
Retail business via telephone, mail order or online;
IT facility construction business, electrical construction business and fire protection facility business
Real estate and housing business

9(1). Business facilities management and business support service industry

Electronic banking and finance business;
Education and learning service business;
Security service business (Machinery system surveillance service, Facilities security service, etc);
Research and technical development, education, training and promotion, overseas businesses, and export and import, manufacture and distribution related to activities mentioned in Subparagraphs 1 through 12
Frequency-based telecommunications services and other telecommunications services
Value-added telecommunications business
Manufacture, provision (screening) and distribution of contents such as musical records, music videos, movies, videos and games
Issuance and management of pre-paid electronic payment instruments, and businesses related to electronic finance such as payment gateway services
Sales and leasing of equipment and facilities related to the activities mentioned in Subparagraphs 14 through 17
Any overseas business or export and import business related to activities mentioned in Subparagraphs 14 through 18
Tourism
(Deleted)
New and renewable energy, energy generation business, electrical system design business and electrical safety management agent business
Health Informatics business
Manufacture of communication equipment, device or facilities for military purpose
Energy diagnostics business, professional business relating to energy conservation, and any and all other business in the field of energy use rationalization
Information securities, any and all other business in the field of identification service
Activities of management consultancy
Warehousing and storage
Total construction business
Specialized design services
Any and all other activities or businesses incidental to or necessary for attainment of the foregoing

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2. History

A. Changes since Incorporation

(1) Date of Incorporation: December 10, 1981

(2) Location of Headquarters:

90 Bulljeong-ro

Bundang-gu, Seongnam-city

Gyeonggi-do 13606

Korea

(3) Major Changes in KT Corporation

On March 27, 2009, KT Corporation (KT) signed a merger agreement with its mobile subsidiary KTF, in which KT held a 54.25% interest, and on June 1, 2009, the merger was completed.

At the annual general shareholders meeting held on March 11, 2011, KTs shareholders approved the addition of the health bioinformatics business to KTs business objectives, which is a new emerging industry that integrates IT with genetic data information sequencing, computation, accumulation, and application. The shareholders also approved the addition of military communication equipment, devices and facility manufacturing to its business objectives.

Mr. Suk Chae Lee was reelected as the Chief Executive Officer (CEO) and President of KT at the annual general shareholders meeting held on March 16, 2012.

At the annual general shareholders meeting held on March 15, 2013, KTs shareholders approved the addition of energy inspection, energy conservation, and the energy use rationalization business to KTs business objectives.

Mr. Chang-Gyu Hwang was elected as the CEO and President of KT at the extraordinary general shareholders meeting held on January 27, 2014.

At the annual general shareholders meeting held on March 25, 2016, KTs shareholders approved the addition of Information securities, any and all other business in the field of identification service.

Mr. Chang-Gyu Hwang was re-elected as the CEO and President of KT at the annual general shareholders meeting held on March 24, 2017. KTs shareholders approved the addition of fire protection facility business, electrical system design business, activities of management consultancy, and warehousing & storage

At the annual general shareholders meeting held on March 23, 2018, KTs shareholders approved the addition of electrical safety management agent business. They also approved the Total construction business for Clarification of Business Purpose and Specialized design services for Business Area Expansion.

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3. Total Number of Shares and Related Matters

A. Total Number of Shares

(As of December 31, 2018)
	Type of Shares
Category	Shares	Total
I. Total Number of Authorized Shares		1,000,000,000	1,000,000,000
II. Total Number of Issued Shares		312,899,767	312,899,767
III. Total Number of Reduced Shares		51,787,959	51,787,959
Details of Reduced Shares	1. Reduction of Capital
	2. Share Retirement	51,787,959	51,787,959
	3. Redemption of Redeemable Shares
	4. Other
IV. Current Number of Issued Shares (II III)		261,111,808	261,111,808
V. Number of Treasury Shares		15,967,040	15,967,040
VI. Current Number of Issued and Outstanding Shares		245,144,768	245,144,768

B. Status of Capital Increase/Decrease

(As of December 31, 2018) — Date of Shares Issued (Retired)	Type of Shares Issued (Retired)	Details of Issued (Retired) Shares		(Unit: Won, Shares)
		Type	Number of Issued (Retired) Shares	Par Value per Share	Par Value of Issued per Share	Note
December 31, 2017

C. Acquisition and Disposal of Treasury Shares

(As of December 31, 2017) — Method of Acquisition	Beginning of Term	Acquisition (+)	Disposition (-)	Retirement (-)
Direct Acquisition	Over-the-Counter	16,014,753	847,620	895,333	15,967,040
	Exchange-Traded
Subtotal		16,014,753	847,620	895,333	15,967,040
Indirect Acquisition (e.g. Trust Contract)
Total		16,014,753	847,620	895,333	15,967,040

The above Beginning of Term means as of January 1, 2018 and End of Term means as of December 31, 2018, which is the most recent date of shareholder registry.

Details of acquisition of treasury shares from January 1, 2018 to December 31, 2018 are as follows.

Acquisition of Treasury Shares

From August 8, 2018 to September 6, 2018, KT acquired 847,620 shares of treasury shares for stock grant to employees as a part of remuneration for FY2017

Disposition of Treasury Shares

On May 14, 2018, KT disposed 3,192 shares of treasury shares for stock grant to Outside directors as a part of remuneration for FY2017

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For stock grant to executives and employees as a part of remuneration for FY2017, KT disposed 44,512 of treasury shares on August 31, 2018, and 847,620 shares of treasury shares on September 20, 2018.

4. Voting Rights

(As of December 31, 2018) — Category	Number of Shares	Note
Total Issued Shares (A)	Common Shares	261,111,808
	Preferred Shares
Shares without Voting Rights (B)	Common Shares	15,967,040	Treasury Shares
	Preferred Shares
Shares with Restricted Voting Rights under the Stock Exchange Act and Other Laws (C)
Shares with Reestablished Voting Rights (D)
Shares with Exercisable Voting Rights (E = A B C + D)	Common Shares	245,144,768
	Preferred Shares

5. Dividends and Related Matters

A. Dividends

KT determines its shareholder return policy by considering business performance and cash flow after completing its investment for long-term growth opportunities and retaining internal cash requirements. KTs shareholder return policy is subject to change depending on its operating status and business environment.

B. Dividends Paid during the Past Three Fiscal Years

Category — Par Value per Share (Won)		5,000	5,000	5,000
Net Profit of the Current Term (in Millions of Won)		762,305	561,526	834,572
Net Profit per Share (Won)		2,809	1,946	3,054
Year-end Cash Dividend (in Millions of
Won)		269,659	245,097	195,977
Year-end Share Dividend (in Millions of
Won)
Cash Dividend Pay Out (%)		39.2	51.4	26.2
Cash Dividend Yield (%)	Common Shares	3.6	3.2	2.6
	Preferred Shares
Cash Dividend per Share (Won)	Common Shares	1,100	1,000	800
	Preferred Shares

Net Profit, Net profit per share, Cash dividend propensity are based on consolidated result.

Cash dividend Pay Out (%) is calculated on a basis of Net Profit contribution to KT.

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II. Business Details

1. Overview

Customer & Marketing - KT

(1) Characteristics of the Industry

The telecommunication business involves a wide range of businesses such as mobile communications, broadband, IPTV, fixed-line telephony, line lease and enterprise solutions. On dramatic change of technology and customers needs, the traditional telecommunication business (fixed-line telephony, broadband, mobile communications) is increasingly evolving into convergence territory including wireless/wireline and telecommunications/broadcasting. The value chain is expanding to adjacent sectors including finance, security, energy and etc. from previous contents, platform, network and terminal.

(2) Growth of the Industry

The status of subscribers

Category — Broadband internet Subscribers (000)	21,286	20,989	20,349
Local Telephone Subscribers (000)	14,334	15,039	15,746
Mobile Phone Subscribers (000)	66,356	63,659	61,296
IPTV Subscribers (000)	16,599	15,389	14,071

Source: Broadband internet / Local Telephone / mobile Phone the Ministry of Science and ICT ( www.msit.go.kr ) end-2018 disclosure

IPTV Company IR data

(3) Characteristics of Economic Cycle and Seasonality

The demand for communications services does not fluctuate widely with economic conditions due to the fact that such services are regarded as a necessity in modern life. However, if the Korean economy slows and per capita income decline, it could have an adverse impact on KTs business activities.

(4) Market Conditions

4-1. Market Stability

Most business area for telecommunication service are limited to a domestic market. It is divided into B2C business for individual customers and B2B business for enterprise customers.

B2C business targets the whole nation regardless of gender, age, income and residential districts.

However, The Korean telecommunication market is competitive to grow. First, most of business (mobile, broadband internet, local telephone) are in the mature markets. Second, severe competition exists for subscriber acquisition among the telecom companies. The number of local telephone has declined consistently because it has been substituted for mobile phone service. Also, the grow rate of subscribers of broadband internet, IPTV, mobile phone has declined. Despite of that, the number of premium service subscribers increases by advanced technology, new devices and increased mobile data consumption.

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4-2. Competition

Competing Companies

Local calls: SK Broadband, LG U+, etc.

Long distance, International calls: SK Broadband, SK Telink, LG U+, Onse Telecom, etc.

Internet telephones (VoIP): SK Broadband, SK Telink, LG U+, etc.

Broadband internet: SK Broadband, LG U+, Service Operators (cable TV & relay wired broadcasting operators)

Mobile telecommunications: SK Telecom, LG U+, etc.

IPTV: SK Broadband, LG U+

Market Entry Requirements

Communication service providers: business operations must be approved by the Korea Communications Commission.

Specific telecommunications service providers: registration is required.

Value-added telecommunications service providers: reporting is required.

4-3. Market Share

(Number of Subscribers basis)	Operator — 2018	2017	2016
Local Telephone	KT	80.6	80.5	80.6
	SK Broadband	15.7	16.1	16.2
	LG U+	3.7	3.4	3.2
Mobile Telephone	KT	31.6	31.2	30.6
	SK Telecom	47.2	48.2	49.1
	LG U+	21.2	20.6	20.3
Broadband internet	KT	41.0	41.7	41.9
	SK Broadband	25.4	24.9	24.6
	LG U+	18.9	18.2	17.7
	Service Operators	14.7	15.2	15.8
IPTV	KT	47.3	48.6	50.0
	others	28.5	28.4	28.2
	total	24.2	23.0	21.8

Source: Broadband internet / Local Telephone / mobile Phone the Ministry of Science and ICT (www.msit.go.kr) end-2018 disclosure

IPTV Company IR data

Mobile Telephone market share excludes other connections for managing telecommunication facilities
Broadband internet market share of SK Broadband includes SK Telecoms resale subscribers.
Revisions of broadband internet market share in 2016, 2017 were caused by SKTs re-release in December 2018

4-4. Competitiveness

KT provides the best services such as the worlds first inter-networking (TDD-FDD) LTE roaming and VoLTE call in 2013, development/demonstration of 5G Network CA technology in 2014, VoLTE network interworking with SK Telecom and LGU+ in 2015 and so on.

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In particular, KT contributed to the national competitiveness of technology by providing a differentiated network competitiveness with the evolution to the 4CA, GiGA WiFi building, commercialization of GiGA LTE with the combination of WiFi and LTE network and export of technology. GiGA LTEs speed is 15 times faster (Max 1.167Gbps) than that of LTE.

KT has adopted C-DRX (Connected mode Discontinuous Reception) in nationwide LTE network and every LTE handsets in April 2017. Through this efforts, KT customers saved battery usage time by maximum of 45%(Galaxy S8, Youtube continuous play base). From October 2017, KT applied C-DRX technology for VoLTE service with LTE network. KT successfully hosted the Pyeong-Chang Olympics to be the first worldwide 5G Olympics by using LTE network innovation know-how built up over years. KT has built up the trial network and 5G standards with global equipment and telecom players and is preparing 5G era with various service trials and development first of all.

KT leads the data-centric mobile market by differentiated plans and benefits. KT launched LTE Data Choice plan for the first time, which helped people choose by the amount of data and offered unlimited voice call, text message service in May 2015. In addition, KT has expanded its influences to the youth market by rolling out Y24 plan which was the first plan for under the age of 24 in Korea.

KT launched Data ON which not only added more data benefits, but also offered unlimited data in May 2018. Also, KT has strengthened competitiveness in the data-centric market by launching LTE Basic plan which was 33,000 won per month. Since 2016, KT has strengthened its presence its youth market by rolling out exclusive youth plan, Y24 ON again in September 2018.

In terms of contents, KT tries to enable increased utilization of smartphone by providing services such as Genie Music which is a music service application, olleh TV mobile which is a video and TV service application and so on. In order to meet customers needs, KT also has launched Media Pack which combined all of contents service applications (Video/Music, etc).

KT launched iPhone for the first time in Korea in 2009 and brought in a smartphone era. In addition, KT expanded the tablet market base by introducing iPad for the first time. KT continues to introduce emerging devices such as smart phone, pad and kids phone actively. By using this, KT strengthens market competitiveness and builds customers perception of KT as a market leader.

In the PSTN business, KT owns 80.6% of market share as of the end of 2018 with its high brand value and loyalty from customers. However, as mobile business began introducing unlimited voice call, and voice call was further substituted for SNS and Messenger, PSTN revenue and customers have been declining steadily. Nevertheless, KT has been trying to mitigate the decline in revenue through various pricing plans (ex. flat rate plans).

In the broadband internet arena, KT introduced GiGA internet service which performed 1Gbps speed for the first time in Korea. Through this GiGA internet, KT maintains the market leadership with strong competitiveness despite competitive market environment. KT provides GiGA infrastructure nationwide and leads a premium market by launching 10GiGA internet in October 2018.

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IPTV business is growing with real time broadcasting business and various VOD contents in the portion of total pay TV market. Especially, KT introduced AI based IPTV set top box GiGA Genie on January 2017 and achieved 500 thousand customer level in a year. The number of GiGA Genie reached 1.3 million at the end of 2018. It will growing continuously with qualitative customer growth and the platform revenue increase, such as VOD, advertisement, home shopping channel commission fee, etc. and AI platform with English, education contents development, enhancement of voice recognition and Home IoT connection, etc.

(5) Status and Forecast of New Businesses

In order to secure continuous growth potential, KT has been actively expanding its business into new businesses with growth prospects. KT aims to offer ubiquitous services for subscribers while offering telecommunication based business solutions to corporate clients.

KT is enhancing future growth business by focusing on making synergies among 5 areas: smart energy, integrated safety, next generation media, healthcare, intelligent networked transportation, and other businesses. Especially, KT is driving new growth engine based on IoT, Big Data and Convergence, and preparing to develop next generation services of autonomous machines, such as self-driving cars based on 5G network and VR.

Financing Business BC Card

(1) Characteristics of the Industry

Credit card business involves issuing credit card, paying for transaction with a credit card and managing credit card member stores. Credit card business generates revenues through transaction fee, annual fees and so on. If a company desires to enter credit card business, government permission is required. Also, government regulation is strong, so this industry has a very high entrance level.

(2) Growth of the Industry

Until 2010, the credit card business grew exponentially with the supportive policy of the Korean government. However, as overall levels of credit card users began to saturate and the decline of average credit card payments have escalated, the card business market is facing difficulties in securing a sustainable growth.

(3) Characteristics of Economic Cycle and Seasonality

The credit card industry is a typical domestic business which is highly affected by the private consumption trend and overall economic conditions.

(4) Market Conditions

4-1. Competition

Competing Companies

Samsung Card, Hyundai Card, Lotte Card, Shinhan Card, Kookmin Card, Woori Card, KB Card and Hana Card.

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Factors of Competition

The number of member card issuers, the number of card transactions, member stores, and the number of issued cards.

4-2. Market Share

Category — Card transaction M/S	24.1 %	24.9 %	26.1 %

Source: BC Cards internal data

(5) Competitiveness

BC Cards main business is in the acquisition of credit card issuers and in issuing credit cards on behalf of client credit card issuers. In addition, BC Card provides money transfers, insurance, telecommunication sales and travel services to its cardholders.

(6) Status and Forecast of New Businesses

BC Card is expanding its business to standardize and commercialize the next-generation of mobile cards and payment processing in traditional markets. In addition, it expects to increase profits by innovating the transaction process.

Satellite Broadcasting Business KT Skylife

(1) Characteristics of the Industry

The broadcasting market is broadly classified into the pay-TV market, the broadcasting channel trading market, the broadcasting program trading market, and the broadcasting advertising market.

In the pay-TV market, pay-TV broadcasting platforms (general cable broadcasting companies, satellite broadcasting companies, and IPTV providers) provide multi-channel broadcasting services and secure subscribers. In the analog broadcasting market cable broadcasting companies provide service and in the digital broadcasting market, cable broadcasting operators, satellite broadcasting operators, and IPTV providers are competing.

In the broadcast channel trading market, pay-TV platform operators configure a channel package on channels provided by terrestrial broadcast and program providers and its own channels. It receives license fee in return for transmitting the contents and in exchange pay channel fee (license fee) to terrestrial broadcasters and broadcasting service providers.

In the broadcasting program trading market, terrestrial broadcasters and broadcasting channel operators create its own programs or receive programs from subcontracted program producers, etc., and earn profits by audience rating-based-advertisement and paid broadcasting license fees.

In the broadcasting ad market, terrestrial broadcasters and broadcasting service providers earn profits by providing advertisements on their respective channels. pay-TV platform operators also earn profits via utilizing allocated advertisement time by its own channels or broadcasting service providers.

In addition to the above markets, there is a home shopping channel transmission market which is concluded between home shopping operators and paid broadcasting platforms (general cable broadcasting operators, satellite broadcasting operators, and IPTV providers). Home shopping transmission fee is contracted every year in exchange for home shopping operators paying the platform separately depending on the contribution of sales to the platform.

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(2) Growth of the Industry

Broadcast services are evolving into multiple media services such as mobile and OTT as well as broadcast and communication convergence services based on wired networks. In particular, personalized services that actively provide the optimal service for personal situation information and preference are growing through knowledge accumulated in the network. Ultra-high definition UHD (Ultra HD) which is 4 ~ 16 times clearer than full HD broadcasting, Next-generation broadcasting services such as multi-channel services are growing. The broadcasting service market is characterized by an intrinsic nature. The total market size based on the number of subscribers is steadily increasing, and it increased by 1.9% as of 2Q 2018 compared to last year.

(3) Characteristics of Economic Cycle and Seasonality

The paid-TV market is perceived to be a necessity. Unless there is a severe economic downturn, the customer churn rate will be relatively stable. Moreover, the revenue from paid-TV services is based on monthly subscription fees, which are not impacted by seasonality.

(4) Market Conditions

4-1. Competition

The terrestrial broadcasting service includes radio, television and terrestrial DMB. The paid-TV market is segmented by operators such as cable operators, satellite broadcasters and IPTV providers. Cable operators are again divided into cable TV operators and relay wired broadcasting operators. The number of relay wired broadcasting operators is decreasing due to M&A or liquidation of business.

KT Skylife is the sole provider of satellite broadcasting service in Korea and launched its service in March 2002. TU Media launched its service in May 2005, merged with SK Telink in November 2010 and terminated its service on August 31, 2012.

The IPTV service was first commercialized in January 2009 after receiving a license in September 2008. Currently, there are three IPTV service providers KT (olleh TV), SK Broadband (B TV) and LGU+ (LG U+ TV) and recently OTT service emerged as the new competitor. As consumers consume contents via mobile more often OTT market is expected to grow further.

4-2. Market Share

Paid-TV market share as of 2Q 2018

Companies — Subscriber	M/S
SO Total	13,940,289	43.3 %
Satellite broadcasting	3,260,271	10.1 %
IPTV Total	15,015,907	46.6 %
Total	32,216,466	100.0 %

Sources: the Mistry of Science and ICT ( www.msit.go.kr ) 1H 2018 disclosure

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(5) Competitiveness

KT Skylife has been leading the paid TV market with its competitive edge in HD channels and providing hybrid services through IPTV. Competition over subscriber acquisition is expected to be intensified as more players in the paid TV market are providing bundling products with mobile, internet, IPTV, and satellite broadcasting services.

In addition, recently UHD (4x definition of HD) market is growing, because of increasing proportion of UHD TV sales since the price of UHD TV is continuously decreasing as the competition among manufacturers becomes severe. Also, UHD contents production is expected to be vigorous. Since 3 UHD terrestrial channels commercialized real time services in June 2015, KT Skylife expanded its UHD channels of 5 which is the largest in Korea in the end of 2016, has 1 million UHD customers as of end of 2Q 2018 and is leading the UHD broadcasting market.

(6) Status and Forecast of New Businesses

In order to have a competitive edge in screen resolution quality one of the most important differentiating factors in real-time broadcasting service - KT Skylife is preparing for the UHD service, also known as the 4K and 8K. With its satellite network, KT Skylife plans to continue its leadership in the UHD market. KT Skylife has launched SLT (Skylife LTE TV) service on July 2017, which is next generation hybrid media service. SLT is the service, which is provided high quality image not related to the driving condition by combining KTs LTE technology and satellite broadcasting service. And KT Skylife has launched TELEBEE, which is the online multimedia service without certain contract on September 2017. KT Skylife will provide the new media experience with TELEBEE to the customers in the quickly evolving OTT market trend.

Others - KT Telecop

(1) Characteristics of the Industry

Security services are provided for individual clients as well as corporate and governmental organizations for the security of personnel, equipment or other assets. Services offered could be divided into four broader categories: Dispatch, Non-dispatch, Comprehensive Security, etc. Dispatch services involves installation of sensors and surveillance cameras at households and stores in order to promptly dispatch a field security agent in case of emergent situation by Control Center. For non-dispatch services, customers could check security conditions through installed surveillance cameras at households and stores. If needed, a dispatch services is also provided. Comprehensive services entails a field security agent to present on-site to patrol and control entrance/exit.

(2) Growth of the Industry

With the increase of disposable income, single (two) person households, and heinous crimes security industry is continuously growing. Also with its high entry barriers and inelastic characteristic to economy its stability is high as well. Security industry is to expand to convergence business and bio-verification areas from simple dispatch and guard service. For fiscal year 2017, market size of bio-security services was approximately KRW 2.6 trillion with YoY 4%. For fiscal year 20185, the market grew approximately 4%. Despite low global growth and economic crisis, the industry is to grow steadily as demand for safety increases.

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(3) Characteristics of Economic Cycle and Seasonality

The security business is less sensitive to economic fluctuations due to the conservative nature of the security business. However, domestic economic slowdowns and price competition may adversely affect the growth outlook. As the importance of CCTV service has been realized recently, and the high-definition CCTV has become popular, the sustained growth is expected.

(4) Market Conditions

Competition within a security industry has been intensified due to new market participants. Currently, security industry is expanding with sales of IOT based products for households and small businesses. Market conditions is expected to intensify over time as an industry will experience developments of convergence security technologies that encompass cloud based video surveillance, AI security solutions, physical/data security.

(5) Competitiveness

Security companies have focused on price competition as an attempt to increase its market share, but are now extending the range of competition to the convergence security with combining physical and information security according to the IT technology development.

KT Telecop is extending business spectrum by expanding its video security, total solution security and mobile information security businesses based on the personnel guard service in nationwide coverage.

(6) Status and Forecast of New Businesses

KT Telecop launched first the platform based All-IoT security service in the world. With the introduction of All-IoT, KT Telecop will leading the systematic security paradigm and business model innovation. With this model, KT Telecop will be able to converge with various IoT sensors, including GiGAeyes to continuously maximize customer satisfaction.

Others - Genie Music

(1) Characteristics of the Industry

The music industry refers to all industrial areas that produce added value and generate economic value through music in various fields such as composition, performance, publishing, copyright, management, music, broadcasting, advertising, and movie music. The music industry can be divided into two main categories. One is the traditional offline music industry, such as planning and production of music, and distribution. The second is online media convergence, which produces and distributes digital music through online and mobile media.

Since 2000, the size of the offline music industry has been steadily declining. However, since the digital music industry surpassed the scale of offline music industry in 2004, it continues to grow and has become a bridgehead for growth of the domestic music industry. Since the end of 2009, as the spread of smartphones has expanded, the use of music content via wireless internet such as 3G, LTE and WiFi is continuously increasing.

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(2) Growth of the Industry

According to the 2016 Music Report published by the Korea Creative Content Agency, online music retailer sales grew 12.6% YoY in 2015 and 12.0% average in 2013 ~ 2015. The spread of Smart Devices since the end of 2009 has laid the foundation for the growth of business to customer wired and wireless services. As the concept of non-allegations is applied (July 23, 2009), the possibility of distribution of illegal music is diminishing. The digital music industry is expected to grow gradually based on this strong copyright law.

(3) Characteristics of Economic Cycle and Seasonality

The music business is less sensitive to economic fluctuations as a means to fulfill basic cultural spending industry. Recent trends show that line-up of music contents affect sales revenue more than seasonality factor.

(4-1) Market Conditions

Although market entry barrier is fairly low, it is difficult for new market participant to secure competitiveness due to less differentiation among services and prices offered by market players.

(4-2) Market Shares

It is difficult to estimate the market share because of the characteristics of the business area.

(5) Competitiveness

Loen(service name melon), which is the first player, held the practical majority MS in the digital music service business and the other players are positioning 2 nd ~4 th place. Genie music (service name Genie) has grown 2 nd player position in 3 years based on the B2B2C strategy targeting KT wireless customers. Also, Genie music launched value added music service, which is targeting LG Uplus wireless customers in April 12, 2017 and is taking competitiveness as a B2B2C player.

(6) Status and Forecast of New Businesses

KT M mobile hasnt executed newly and there isnt new important business by board decision in the disclosure period.

Others - KT Estate

(1) Characteristics of the Industry

The real estate development business is a project that covers a series of processes from the preparation of the development business such as real estate acquisition, business fund procurement, project planning and promotion, construction management to stabilization after development. The real estate development business is heavily influenced by changes in the financial environment, such as interest rates and capital availability, as well as real estate conditions, due to the large capital input and long-term development planning. Real estate development projects have a higher return than subcontracting projects when they succeed, but it is a high-risk business that requires efficient risk management.

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The real estate leasing / management business includes (1) real estate property management business (PM) that covers the operation, maintenance, lease management and financial management, (2) real estate facility management (FM) that covers operation, maintenance and renovation of various facilities to create pleasant and convenient real estate use, and (3) asset management (AM) that provides a professional services in acquisition and disposal processes of real estate assets.

(2) Growth of the Industry

Real estate business is continuously changing and evolving on social/economic changes. Previously industry was driven by construction companies supplying apartments and small scale businessmen providing leasing and management service. However, the industry is to confront gradual transition as low growth and matured market is expected with the decline of birth rate and marriage rate, and an aging population. Accordingly the demand for comprehensive real estate leasing / management services centered on small residential facilities such as urban living houses is expected to increase gradually.

(3) Characteristics of Economic Cycle and Seasonality

The real estate market is heavily dependent upon cyclical movements of the economy.

(4-1) Market Conditions

Real estate development and the rental and management business are sensitive to each real estates conditions, including purpose of building, style of architecture, locations of sites, etc.

(4-2) Market Shares

It is difficult to estimate the market share because of the characteristics of the business area.

(5) Competitiveness

KT Estate has expanded its business portfolio into real estate development and rental and real estate management after receiving investment in kind of 95 major real estate assets from KT on December 1, 2012. KT Estate expanded their business portfolio to consulting, lease, development business, facility management and Securitization areas in the whole value chain.

In 2018, real estate development and investment unit started a construction of the Song-pa development project for hotel and Officetel properties in January. As part of Eul-ji development project, the Novotel Dongdaemun and Residences completed in June and opened for business in July. Furthermore, KT Estate has begun a developmental project of KT Northern Seoul Headquarter to transform the site into next-generation smart multi-purpose complex to become a new landmark.

Meanwhile, Asset business has contributed a value-added services and additional profits through offering leasing of officetels and management of properties under custody.

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(6) Status and Forecast of New Businesses

From 2012, KT Estate received approximately KRW two trillion worth of real estate from KT through payment-in-kind transactions. The phenomenon has allowed KT Estate to conduct its own real estate developments, leasing, management operations in addition to existing real estate developments and consulting businesses to KT. Establishment of joint venture with the Japanese company Daiwa Living that specializes in leasing of small-sized housings, KT Estate has obtained an expertise in operations of small-sized housing. KT Estate plans to offer total real estate asset management including planning, investment, and management of clients real estate.

Others - KT Hitel

(1) Characteristics of the Industry

Contents: Our content business sources digital distribution rights for video content, supplies it to distribution platforms, and distributes profits. Content business with its characteristic of One Source Multi Use (OSMU) can create various economic added value emerging as one of the growth engines of Korea. With OSMUs characteristics, increased content consumption platforms, introduction of prosumers that simultaneously produce and consume content, and the popularization of mobile devices are creating a favorable environment for industrial expansion. We expect to benefit from industry growth as a business operator.

T-commerce: T-Commerce industry is commerce for digital pay-TV subscribers providing two-way services. It has the characteristic of both TV home shopping and Internet shopping. T-Commerce is emerging as new retail channels because while product information can be delivered though TV that customers are familiar with, customers can search for products of interest unlike one-way service that TV home shopping provides.

(2) Growth of the Industry

Contents: Thanks to the growth of the existing IPTV market and the increase in digital convergence of CATV, there is a sufficient amount of content consumption channel and stable growth is expected. In addition, the diffusion of smart media and the spread of one-person households are expected to continue to popularize non-real-time mobile-centric personalized on-demand content consumption. With the expansion of content consumption using digital contents platforms such as OTT and MCN (Multi-Channel Network), we expect that the activation of production and consumption of online contents such as web drama and web art will stimulate the expansion of industry. We expect to benefit from the growth of the industry as the largest operator in Korea with IP (Intellectual Property) and intellectual property rights (IPTV, mobile, etc.), including movies and dramas.

T-commerce: Market is experiencing a continuous growth despite a decline in an average daily TV consumption time. Expansion of IPTV coverage and set-up box with A.I speaker, and increased convergence between TV and mobile will enhance shopping experience to another level and allow continuous growth in T-commerce business.

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(3) Characteristics of Economic Cycle and Seasonality

Contents: Market is less sensitive to seasonal factors than other businesses. The market appears to be more affected by content line-ups rather than factors related to seasonality

T-Commerce: The T-commerce market is less sensitive to market trends and seasonality than other shopping methods due to the fact that the service is not limited to time, space, and payment methods.

(4-1) Market Conditions

Contents: The market is experiencing a vertical integration that distribution companies involves in creating contents. To maintain KT Hitels competitiveness of owning most IP contents, investment is executed every year to early phase of contents production to create additional profits. Furthermore, KT Hitel is actively responding to competitive environment through executing new business in related fields, such as exhibitions/concerts, webtoons, etc.

T-Commerce: There are four competing operators, excluding home shopping. Market condition is changing in fast paced, and competition is spreading into Mobile in addition to TV. KT Hitel maintains its reputation as a leading T-Commerce operator by continuously expanding size of its business and differentiated service offerings.

(4-2) Market Shares

Contents: It is difficult to estimate the market share because of the characteristics of the business area.

T-Commerce: It is difficult to estimate the market share because of the characteristics of the business area.

(5) Competitiveness

Contents: Market is expanding to the secondary market related to the growing consumption of contents. It is increasing customers purchase of PPV contents and patterns of consumption are verifying. Also their own OTT service launch of media players is increasing and snack-cultural consumption is expanding focused on the mobile media. And the value of original IP is increasing to make possible One-Source Multi-Use, such as the successful movie based on webtoon.

T-Commerce: Expanding of Digital broadcasting subscriber of IPTV and high quality set top box will make favorable environment for the multi interactive data shopping like T-commerce, which is possible to purchase goods comfortably with TV remote control and AI speaker.

(6) Status and Forecast of New Businesses

KT Hitel offers IP based edged service data broadcasting T commerce K shopping channels after it launched since July 2013. KT Hitel has total 26 patents (2018.12.31) for T-commerce and is preparing the changed competitive environment by adding new patent every year. Also KT Hitel is leading innovation of customers shopping experience with the new voice shopping function. KT Hitel will leading the T commerce market with the platform innovation and differentiated service going forward.

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Others - KT Sat

(1) Characteristics of the Industry

Satellite based services business generates revenues from utilizing allocated orbits and spectrums from government. Therefore, operator must obtain satellite orbits and spectrum allocation from government. With two additional satellites launched in May 2017 and October 2017, Kt Sat owns total of four satellites.

(2) Growth of the Industry

The market size of the global satellite leasing industry is KRW 15 trillion in 2018. Companies such as Intelsat, SES and Eutelsat are the incumbent dominant players in the market and competition among these companies remains intense. The market for the global satellite leasing industry is expected to expand into South East Asia, Middle Asia, Africa, and Latin America.

(3) Characteristics of Economic Cycle and Seasonality

Transponder leasing - one of KT Sats major services typically has a five-year (or longer) contract with its clients and its main clients are government and broadcasting companies. As a result, KT Sat is not susceptible to seasonality and market fluctuations. However, the marine service for shipping companies is sensitive to market conditions.

(4-1) Market Conditions

KT Sat is the only satellite operator in South Korea and competes with other global satellite operators for the satellite transponder leasing business. As for the domestic internet and broadcasting business, KT Sat competes with other fixed-line service providers in Korea.

(4-2) Market Shares

There is no national market share information. However KT Sat, which has satellite, is the only one player in Korea and the global market share is approximately 1%.

(5) Competitiveness

KT Sat was spun off from KT on December 1, 2012. Its global revenue is continuously increasing despite of the stagnant domestic revenue. The satellite market in Korea is expected to expand due to increasing UHD channels and demand of repeaters of UAV, and demands for the rental repeaters is expected to increase because of increasing number of DTH companies and the broadcasting channels globally. Thus KT Sat has launched 2 satellites in May and October 2017 targeting Asian and Indian market and is focusing capacity of the marine satellite telecom service.

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Others - Nasmedia

(1) Characteristics of the Industry

In the domestic advertising market, the reorganization of the market structure is becoming more and more prevalent among multinational advertising companies and domestic large-scale large advertising companies. In this environment, the advertising industry is focusing on providing comprehensive marketing communication services. In the case of small and medium-sized advertising companies, it operates as a media agency specialized in media agency and an advertising agency specialized in creative. Recently, online advertising, which is the fastest growing segment, is experiencing an increasing proportion of global players services, with service fierce competition among major portals. Major portals are constantly in the process of restructuring their advertising operations due to increased demand for advertising.

(2) Growth of the Industry

In 2017, the size of the domestic advertising market is estimated to be 12.96 trillion won, a 2.6% increase from 2016. For 2018, the market is expected to grow approximately by 9%. Particularly, mobile advertising had grown more than 13.5% and it emerged as the No.1 Media within the category. In addition, smart advertising (IPTV, mobile, internet, and digital signage) went up 6.0% signaling advertising market is transforming from traditional media to digital media. IPTV advertisement which had recorded minus growth in 2016 had turnaround in 2017 recording 4.9% growth. Meanwhile, digital signage advertisement had slightly slow-downed recording minus 1.2% growth.

(KRW Million) — Internet	2,083,570	1,915,487	1,909,192
Mobile	3,976,475	3,597,819	2,865,945
IPTV Ad.	116,020	114,656	99,307
Digital Signage	1,363,960	1,336,572	1,305,948

Source: 2018 KOBACO

(3) Characteristics of Economic Cycle and Seasonality

The advertising market is often viewed as the barometer of economic cycles and is highly affected by economic conditions. Revenue derived from advertising tends to show an N-pattern every year. Corporations usually reduce monthly advertisements from January to February and from July to August and increase spending for advertising from April to May and from September to year-end.

(4-1) Market C o nditions

Competing Competitors:

Online Advertisement: Mezzomedia, DMC Media

Digital Media Advertisement (IPTV): Incross, Dartmedia

Digital Interior Advertisement (SMRT): Jeonhong, Yujinmetro

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Market Entry Requirement:

IPTV Advertisement Provider: business operations must be approved by the Korea Communications Commission.

Digital Interior Ads: business operations must be approved by district borough office

Factors of Competition: Media planning capacity, negotiation skills, advertisement effect measurement and analysis systems, quality of proposals, and etc.

(4-2) Market Shares

It is difficult to estimate the market share because there are different competitors in each advertisement media and different types of advertisement media within each companys target sales.

(5) Competitiveness

Nasmedia, celebrating 18th anniversary this year, took the first step in 2000 starting as an internet advertisement media representative. Since 2000, nasmedia has grown as the No.1 media representative executing optimal digital advertisement based on wide networks and expert media planning services.

Nasmedia has expanded our area of expertise to mobile, digital broadcasting, digital OOH and other various ad campaigns, setting innovative trends in the fast-changing environment including digitalized media, N-Screen service.

With extensive ad campaign experiences with various media networks, along with multiple proprietary scientific and systematic solutions, nasmedia is now commonly acknowledged as the no.1 digital media planning representative agency in Korea.

(6) Status and Forecast of New Businesses

Nasmedia plans to develop interactive products and solutions for advertising to maintain its stable growth despite the decrease in the online advertisement market. Nasmedia also plans to advance the integrated digital video advertising network and will develop total advertising effect measure solution and make synergy with KT, which has on-,off-line media channels, by combining sales network of Nasmedia, online display and search advertisement with PlayD (Nsearch marketing) acquisition. Nasmedia will be digital media representative company to suggest channel strategy for all digital media and total marketing communication.

Furthermore, Nasmedia established the Nasmedia (Thailand) Co. Ltd. to make an expansion into global market. By leveraging its expertise on online, offline, and mobile advertising, Nasmedia will spread its presence into southeastern Asia.

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2. Main Products and Services

A. Revenue breakdown of operating segments(Unit : million)

Segment — Marketing/Customer	16,571,509		16,242,552		16,144,415
Portion of total revenue (%)	60.9		59.7		59.4
Finance	3,560,417		3,637,917		3,577,549
Portion of total revenue (%)	13.1		13.4		13.2
Satellite TV	690,821		685,822		665,053
Portion of total revenue (%)	2.5		2.5		2.4
Other	6,373,639		6,491,890		5,934,882
Portion of total revenue (%)	23.4		23.9		21.8
Sub-sum	27,196,386		27,058,181		26,321,899
Elimination	(3,736,243	)	(3,670,914	)	(3,578,234	)
Consolidated amount	23,460,143		23,387,267		22,743,665

B. Trends in price changes for major products, etc.

Customer & Marketing - KT

Service	2018	2017	2016
Local telephony	No Change	No Change	<2016.2> Brand Pop-up service launch (2.26) Connect calls when calling
from the smartphone An
image call connection service that displays the image / name / greetings previously registered by the customer (individual carrier) on the outgoing smartphone <2016.3> Media CID launch When a call is made from a local phone to a mobile phone, the information of the caller is
displayed in the form of multimedia
Mobile	<2018.01> LTE Selective Data Plan 87.8 launch (1.2) Offer free Media-pack
service <2018.02> LTE Selective Data Plan for
senior launch (2.1) LTE
Selective Senior 32.8/38.3/43.8 launch	<2017.01> 50% off for Smart Device (1.1) 50% off monthly price with
smart device sign up with Data together Plan <2017.02> Y Junior Plan launch
(2.6) Y Junior
19.8	<2016.3> Y24 Pricing Plan launch (3.3) Y24 299/349/399/449/499/ 599
6tyle launch Offers
Three Hours Daily Data and Half Content benefits for under-24s <2016.4> Wearable device tariff plan
launch(4.7)

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| | LTE Data Sharing Plan for the disable launch (2.1) <2018.3> LTE Data Selective (Non-contract) Plan launch (3.14) 8 types :
32.8/38.3/43.8/49.3/ 54.8/65.8/76.8/87.8/109 LTE Voice Plan launch (3.26) 2 types : 12.1/18.7 <2018.8> LTE Wearable Device Plan launch (8.31) <2018.9> Y24 On Plan launch for under 24 ages Y24 On Talk/Video/ Premium
(9.3) Y Basic Plan for
under 24 ages launch (9.17) Offer double data than LTE Basic Plan <2018.11> Unlimited data plan for
subscriber taking university entrance exam (11.1) Offer data unlimited plan to person born between 1999 to 2000 | Offer unlimited voice call for on-net 2
line <2017.04> Premium pricing plan
launch(4.3) Data Roaming
free for 24 days/60 days for LTE Data Selective plan of 87.8/109 <2017.08> Unlimited data plan for former Military Offer data unlimited plan to
subscriber discharged from army. <2017.11> Y24 Pricing plan launch Y24 76.8 (11.1) Unlimited data plan for
subscriber taking university entrance exam Offer data unlimited plan to person born between 1998 to 2000 Launch additional Data
Together Plan Launch Data Together Medium plan for wearable device | <2016.7> Actioncam tariff launch <2016.8> Yteen tariff launch Yteen 20/27/32/38 4 type launch <2016.9> Data Together Plan launch <2016.11> Y unlimited Data festival
campaign |
| --- | --- | --- | --- |
| Broadband | <2018.2.1> GiGA Plus TV Promotion Offer GiGA Internet, PPV/PPS for OTV15 new contractors Period :
18.2.1~18.7.31 <2018.4.1> Half price promotion for 1G
GiGA Internet new subscribers Period : 18.4.1~18.9.30 <2018.4.1> WiFi AP Rental fee cut and
multiple AP program launch Offer 50% discount of Wii AP rental fee for 3 year contractors <2018.6.1> Family Plan AP rental fee
discount | <2017.2.1> GiGA Internet Discount Promotion with IPTV Offer discount to subs
signing contract than 1 year with IPTV Period : 17.2.1~17.7.31 <2017.3.13> VIP Promotion Offer additional discount to
current customer using more than 7 years <2017.3.13> Launch new 200Mbps
product W 27,500 with 3 year contract <2017.4.13> Discount promotion to on-line sign-up Offer discount to new customer making contract via www.kt.com | <2016.1.1> GIGA Internet Subs 1M promotion For user, GiGA / UHD / GWH
GiGA WiFi home Rent discount Term : 16.1.1~3.31 1G Discount Promotion For Giga (1G) customers, Internet fee and GiGA WiFi home rent discount Term : 16.3.2~6.30 <2016.9.1> GIGA WiFi AP Discount GiGA WiFi AP monthly rent
discount according to the Internet products and bundle conditions used <2016.10.1> Discount promotion for on-line sign up
customers |

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| IPTV | <2018.7.2> Prepay internet plan
launch 100M/500M/1G
plan <2018.8.1> Office IP Net Renewal Offer free of installation
fee <2018.11.1> New Internet Plan launch 10GiGA Internet plan
(10G/5G/2.5G) Lift up
Data Usage limit 120GB
-> 150GB Target :
1G/500M/200M subs. Lift
up minimum guarantee internet speed (30%-> 50%) Target : 1G/500M subs. — <2018.2> GiGA Genie 2 STB launch and promotion (2.1) Plan : \4,400 for 3 yrs
contract <2018.5> OTV19 Kids launch (5.2) Offer VOD (TV15+Prome Kids
Pack) with \19,000 <2018.10> OTV Save 25 launch
(10.10) OTV Essence + 25
discount of PPV <2018.12> OTS Enter/Kids launch
(12.22) OTS Enter : OTS
Essence + TV Coupon \10,000 OTS Kids : OTS Essence + Prime Kids Pack | <2017.8> GiGA Genie Colabo Promotion Target : GiGA Genie new
customer since 17.8.1 condition : 3 year contract benefit : STB rental discount
(2k~4k W ) <2017.9> Launch OTV19 Basic price :
19,000 W /month A la carte plan with VOD | Discounted internet rate for new customers who join internet and TV products
online term :
16.10.1~17.3.31 — <2016.4> Change in formula of discount benefits to return Target : new customers
signing up from April.1. 2016 Change Item : Terminal Equipment Rental / Contract Term Discount / Re-Contract Discount Change detail : Change to a parabolic structure so that discount benefits to return are reduced
after a certain time <2016.8> Olleh TV Air launch
(8.18) Providing the
first wireless-based IPTV watching environment in Korea Price : 99,000won |
| --- | --- | --- | --- |
| VoIP | No new price plan | <2017.2> VoIP Plus plan (2.1) Standard plan : providing CID, call forwarding service Standard Video call plan:
providing 30minite call, CID | No new price plan |
| Bundle | <2018.3> Premium Family bundle discount plan launch Term : sign up at least two
mobile line starting from W 66k, and bundle with broadband benefit : 25% discount to one mobile line | <2017.9> Premium Family bundle discount promotion period :
17.9.7~18.2.28 term
: sign up at least two mobile line starting from W 66k, and bundle with broadband benefit : 25% discount to one mobile line | <2016.2> GIGA Loyal Club MediaPack discount Promotion Term : 2.1~6.30 Providing free of charge for
media pack for 24 months to customers signing up for Internet + IPTV + mobile (LTE bundle, wired / wireless combination) meeting the following conditions |

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Premium Single Bundle plan launch(11.1) Term : sign up from W 66k mobile plan and bundle with Internet Family benefit : 25% discount to mobile line Internet : Olleh GiGA Internet, Olleh GIGA Internet Compact IPTV : OTV 12/15//25/34, OTS 12/15 Mobile : LTE Data Selection 999, LTE Data Selection 699 <2016.8> Total amount combination launch Provide combined discounts based on total combined mobile monthly payments Establishment of Enterprise success pack business combination Provides mobile combined benefits to employees who use leased line / KORNET / VPN use as a company <2016.10> Total amount bundle mobile designated line discount (100%) Discount option that provides the total amount of mobile discounts to the total number of combined mobile calls that the customer specifies

Finance - BC card

Category	2018	2017	(Unit: %) — 2016
Member Store fee rate	0.8~2.5	0.8~2.5	0.8~2.5
Installment fee rate	11.0~18.5	11.0~18.5	11.0~18.5
Cash service interest rate	7.9~23.3	7.9~23.3	7.9~23.3
Card loan(credit loan)

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Satellite TV - KT Skylife

Service Type — Satellite only	sky UHD Blue A+	13,000	14,000	14,000
	sky UHD Green A+	11,000	12,000	12,000
	sky UHD On A+		10,000	10,000
	sky UHD Blue	13,000	14,000	14,000
	sky UHD Green	11,000	12,000	12,000
	sky Blue HD	12,000
	sky Green HD	10,000
	sky On+ HD	8,000	8,000	7,000
OTS	UHD OTS 15	15,000	15,000	15,000
	UHD OTS 12	12,000	12,000	12,000
	UHD OTS 10	10,000	10,000	10,000
	OTS 15	15,000	15,000	15,000
	OTS 12	12,000	12,000	12,000
	OTS 10	10,000	10,000	10,000
Internet	Sky Internet	25,500	25,500
	Sky GiGA 200	27,500	27,500
	Sky GiGA Compact	30,000	30,000
	Sky GiGA Internet	35,000	35,000

Other Genie Music

Category — Record	Detail — CD	9,000	9,000	8,000
Online streaming	Download 30 songs + streaming	10,800	10,800	9,000
	Download 100 songs + streaming	20,000	20,000	20,000
	Smart Download + streaming	8,800	8,800	7,000
	Download 30 songs	8,800	8,800	6,000
	Download 100 songs	18,000	18,000	18,000
	Online streaming	7,800	7,800	6,000
	Smart streaming(only for smart seduces)	6,800	6,800	5,000

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Other KT M mobile

Products	2018	2017	2016
Mobile (Postpaid)	<2018.1> M Young age Freepass L.Point 1GB(USIM) L.Point 10GB(USIM) L.Point 2GB <2018.3> LTE Practical 23 <2018.4> 3G Economy 18 LTE Practical 18 <2018.5> Practical USIM 6GB Practical USIM M 1.0 Practical USIM M 2.0 LTE Practical 250MB LTE Practical 1GB <2018.8> Practical USIM S 2.4 Practical USIM S 3.5 Practical USIM S 5.0 Practical USIM M 2.4 Practical USIM M 3.5 Practical USIM M 5.0 Practical USIM L 2.4 Practical USIM L 3.5 Practical USIM L 5.0 Practical USIM E 2.4 <2018.10> LTE Data 10GB LTE Data 20GB The Camp 1.2GB The Camp 3GB The Camp 6GB <2018.11> Senior VIP Medium(3G) Senior VIP Heavy(3G) Senior VIP Lite(LTE) Senior VIP Medium(LTE) Senior VIP Heavy(LTE)	<2017.1> Practical Discount M Practical Discount 40 minutes M Practical Discount 80
minutes <2017.2> Economy USIM 2.6 Economy USIM 1.8(in-net) Economy USIM 2.4(in-net) <2017.3> M Economy 25 250M Foreigner Economy USIM 3.9 Foreigner Economy USIM 5.7 <2017.4> Life Economy 3G Life Economy LTE M Life 275 M Life USIM 36 <2017.5> Data Standard 350M <2017.8> LTE Economy 1.2GB LTE Economy 2GB LTE Economy 6GB <2017.9> M Economy 150minutes M Economy 250minutes 3G Voice call basic 300MB Economy USIM 10GM LTE Economy 1GB	<2016.1> M JejuAirline 19/28/34 <2016.2> M unlimited Voice call USIM 448 M Teenage LTE USIM 19/24 <2016.3> M Gift 19/28/34 <2016.4> Young 30 <2016.5> M unlimited Voice call 459 Young 50 <2016.7> 3G Discounted tariff M unlimited Voice call 3G 46 <2016.8> M Adult 19/24 <2016.9> M Teen 3G 13 <2016.12> Economy USIM 0.9 Economy USIM 1.7 Economy USIM 1.9 Economy USIM 2.9
Mobile (Prepaid)	<2018.4> PPS Data 6GB PPS Data Free	<2017.3> LTE world	<2016.7> MPPS 35 <2016.8> LTE PPS 35

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Other : KT CS, KT IS

Item	2018	2017	2016
114 directory assistance	Won120 (Night/Holidays Won140)	Won120 (Night/Holidays Won140)	Won120 (Night/Holidays Won140)
Priority number assistance	Won30,000 / month (same standard)	Won30,000 / month (same standard)	Won30,000 / month (same standard)

3. Matters Related to Revenue

Customer & Marketing - KT

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
Service revenue	14,511,585	83.6	14,586,234	84.1	14,755,901	86.7
Merchandise sales	2,844,952	16.4	2,755,082	15.9	2,272,967	13.3
Total	17,356,537	100.0	17,341,316	100.0	17,028,868	100.0

B. Channels and Methods of Sales

Sales organization

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Sales Channels

C. Methods and Conditions of Sales

KT provides our products and services to customer through the sales organization and channel as above, basically, customers pay the service charges with cash, bank direct debit bill and credit card. In addition to monthly service fee, customers must pay the equipment rental fee and installment fee as well. For the corporate customers, we negotiate contractual terms, such as supply conditions and services fees.

D. Sales Strategy

(A) Mobile Service

Enhancing leadership and competitiveness in the smartphone and emerging devices market: expanding the smartphone subscriber base and pioneering tablet/wearable device market

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Strengthening competitiveness by utilizing a differentiating network: Maintaining LTE leadership with a seamless wideband LTE-A coverage and better quality

Attracting high ARPU users by offering free video streaming services to subscribers who signed for higher plans

Offering differentiated services experience after forming an optimized customer service structure to smartphone users.

Controlling marketing expenses by introducing a new sales program which provides for a special tariff discount instead of a handset subsidy.

Strengthening a customer retention policy targeting the long-term contract customers whose contract period has matured.

Providing various discount program and alliance program to the customer : credit card, CMA, check card

Constructing the CS service process to optimize the smartphone customer and providing the differentiate program.

Proving new program to the customer for more easier and innovative migration program for existing customer

Launching to Improve retention program

(b) Broadband Internet Service

Strengthening competitiveness of All-IP based products and solidifying a No.1 market stance with active GiGA investment.

Market leading with 10G internet

Expanding synergies with smart home businesses such as IPTV

Broaden internet business coverage such as low cost market with skylife internet resale

Satisfying a diverse range of customer needs by providing differentiated value-added services.

Promoting specialized high-quality and optimized products by analyzing patterns of users.

Minimizing PSTN line loss by customer segmentation.

Customer who need home telephony service : Promoting KT telephony 3000 price plan

Customer who did re-contract VoIP service : Promoting KT VoIP 3000 price plan

Expanding a new customer base.

Discovering a new business model and promoting remodeling.

Private and SOHO customer : Unlimited Price Plan

Customer retention program for various bundling service and bulk line discount program

(d) IPTV Service

Expanding the GiGA Genie products lines up

Launching the collaboration price plan for targeting on various customer needs

Enhancing the Kids contents and curating on movies.

Promoting IPTV (olleh TV) products to our existing internet subscribers.

Expanding the client base by offering free set-top box rentals (with a three-year subscription contract) and opportunities to experience KT services.

Increasing synergy with Skylife by providing a hybrid product to strengthen customer retention and to promote up-selling.

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Finance Business (BC Card)

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
Card revenue	220,342	6.2	206,105	5.7	210,879	5.9
Credit card processing	3,100,142	87.3	3,092,542	85.2	3,072,762	86.1
Additional service	89,932	2.5	101,056	2.8	88,716	2.5
Others	140,328	4.0	228,857	6.3	194,581	5.5
Total	3,550,744	100.0	3,628,560	100.0	3,566,938	100.0

Card revenue includes commissions from member companies for the proxy act of card related work.

Additional services include revenue from insurance, telecommunication, travel and etc.

figures are calculated based on K-IFRS

B. Channels and Methods of Sales

BC Card is engaged in the issuance and purchase of credit cards (including check cards) based on the basic contracts with card companies. In addition, we are expanding credit card business by acquiring new customers other than existing member companies.

Satellite Business (KT skylife)

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
Service revenue	327,785	49.9	335,057	51.8	342,187	54.7
Platform revenue	233,366	35.5	220,192	34.0	185,909	29.7
Rental revenue	4,790	0.7	30,303	4.7	43,446	6.9
Others	91,554	13.9	61,265	9.5	53,583	8.6
Total	657,495	100.0	646,816	100.0	625,126	100.0

Platform revenue: Advertisement revenue + home shopping transmission fee + T-commerce transmission fee

figures are calculated based on K-IFRS

B. Channels and Methods of Sales

KT Skylife currently has various sales channels such as skylife head office, customer center, 180 sales offices which are further organized under 11 branches (three in Seoul, two in Busan and one each in Daejeon, Daegu, Gwangju and etc) and KT. KT Skylife is offering olleh TV Skylife through KTs inbound and outbound sales channels. KT Skylife is offering expanded bundled products, which are bundled products of KTs fixed and mobile LTE services. Two customer service centers are located in Suwon and Gwangju, providing customer services and retention services like HD product promotion and new subscriber acquisition. In order to strengthen direct and indirect sales channels, KT Skylife is utilizing its homepage and partnership marketing with public offices and on-line companies.

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Others Business (KT Telecop, Genie Music, KT Estate, KT Hitel, Nasmedia, KT Sat, etc)

KT Telecop

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
Security service	316,586	97.1	308,978	98.0	307,734	98.0
Distribution	8,945	2.7	5,870	1.9	5,652	1.8
Others	522	0.2	518	0.1	542	0.2
Total	326,053	100.0	315,366	100.0	313,928	100.0

figures are calculated based on K-IFRS

B. Channels and Methods of Sales

Our sales channels which consist of internal sales staff and an outside distribution network (allied store, special partners, etc.) attract new customers.

Genie Music

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
Music business	155,425	90.8	139,670	89.7	103,001	92.6
Others	15,808	9.2	15,972	10.3	8,286	7.4
Total	171,233	100.0	155,642	100.0	111,287	100.0

Music Business: Genie, Olleh Music and other ASP sales, contents distribution and etc.

Others: Outsourcing, MD and others.

B. Channels and Methods of Sales

Through the wireline/wireless music portals, we provide audio on demand (AOD), downloading services to customers directly, and music services as ASP to KT group and our affiliates. We also conduct consulting businesses to provide adequate music services to shops and stores.

The sale of digital sound via music sites are conducted by streaming and downloads. In addition, payment is made through credit card, on-line cash transfer, and mobile handsets.

KT Estate

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
PM fee	8,341	1	6,509	1	8,183	2
Rental business	158,143	28	152,807	28	131,530	34
Real estate commission business	157,631	28	157,015	29	168,044	44
Development business	240,091	43	225,631	42	76,050	20
Total	564,206	100	541,962	100	383,807	100

figures are calculated based on K-IFRS

B. Channels and Methods of Sales

Generating revenues through development of KTs real estate, operate self-development project, consulting and real estate rental and management businesses.

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KT Hitel

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
T-Commerce (K Shopping)	143,191	51.3	107,527	47.2	73,402	36.9
Contents Distribution	69,623	25.0	57,832	25.4	56,361	28.4
ICT Platform	66,074	23.7	62,272	27.4	68,976	34.7
Total	278,888	100.0	227,631	100.0	198,739	100.0

figures are calculated based on K-IFRS

B. Channels and Methods of Sales

The majority of the sales are conducted via internet and revenue from the portal and contents are generated from end-consumers.

Nasmedia

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
Advertising	71,813	99.9	84,191	99.9	61,632	99.8
Financial Lease	65	0.1	92	0.1	118	0.2
Total	71,878	100.0	84,283	100.0	61,750	100.0

figures are calculated based on K-IFRS

B. Channels and Methods of Sales

The online advertising industry can be divided into three areas: advertising companies, media reps, and media. Media reps generate revenue by selling media.

KT Sat

A. Performance in Terms of Revenue

Category	2018	2017		2016
	Amount %	Amount	%	Amount	%
Gap filler rentals	86,206	63.0	81,642	58.3	84,903	58.8
Data transmission	11,254	8.2	11,900	8.5	13,354	9.3
Video transmission	11,198	8.2	11,659	8.3	10,843	7.5
Mobile satellite service	16,314	11.9	15,056	10.8	14,910	10.3
Others	11,981	8.7	19,839	14.2	20,428	14.1
Total	136,953	100.0	140,096	100.0	144,438	100.0

figures are calculated based on K-IFRS

B. Channels and Methods of Sales

Our sales organization is based at our headquarters and our mobile satellite business division has a sales office in Busan. For overseas repeaters sale, we operate sales offices in Jakarta and Dubai. With respect to other services, including Inmarsat, we conduct business through special distribution channels.

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4. Research and Development Activities

R&D Costs (Consolidated Basis)

Category	2018	2017	2016
Raw Materials
Labor Costs		71,544	64,753	52,483
Depreciation		36,404	39,797	45,921
Commissions
Others*		164,993	330,312	116,431
Total R&D Costs**		272,941	434,862	214,835
(Subsidy from Government)		20	36	26
Accounting Treatment	Research and Ordinary Development Costs	176,758	168,635	167,881
	Development Costs (Intangible Assets)	96,163	266,191	46,928
Percentage of R&D Costs over Revenue***		0.75 %	0.72 %	0.74 %

Data processing system development cost is included in 2017 others figure.

** Total costs before deducted the subsidy from government

*** Rate of Total costs before deducted the subsidy from government and Total Revenue

R&D Organization Structure (KT)

Institute of Convergence Technology

Main Mission

Secure core technology for developing future businesses and strengthening competitiveness of existing businesses.

Research technology for next generation network.

Research differentiated service and technology to enhance the competiveness of ICT business.

Support for business feasibility study and commercialization of ICT based convergence technology in KT Group.

Execution of convergence service and incubation of new business project.

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5. Other Matters Necessary for Making Investment Decisions

A. Intellectual Property Rights

Telecommunication (KT)

KT holds 4,892 domestic patents and 1,177 overseas patents as of December 31, 2018.

Advertising (Nasmedia)

Nasmedia holds 2 domestic patents and 3 trademarks

Software development and provider (KT DS)

KTDS holds 7 patents, 2 trademarks, 2 service marks and 12 trade/service marks

Credit Cards Business (BC Card)

BC Card holds 106 domestic patents and 725 trademarks.

Information Security Business (Initech)

Intech holds 35 domestic patents and 40 trademarks.

Online music streaming (Genie music)

Genic music holds 4 domestic patents.

E-commerce (KT Commerce)

KT Commerce holds 2 patents.

Security and Guards (KT Telecop)

KT Telecop holds total 114(37 patents, 5 designs and 72 trademarks).

Advertising (PlayD)

PlayD holds 4 domestic patents.

Online Contents Distribution (KT Hitel)

KT Hitel holds 62 patents and 3 designs.

MVNO (KT M-mobile)

KT M-mobile holds 3 intellectual property rights.

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III. Financial Information

1. Summary of Financial Statements (Consolidated)

Classification	2018	(Unit: Won, million) — 2017	2016
Current Assets	11,894,252	9,672,412	9,793,588
Cash and Cash Equivalents	2,703,422	1,928,182	2,900,311
Trade and Other Receivables	5,807,421	5,992,753	5,481,527
Inventories	683,998	457,726	377,981
Other Current Assets	2,699,411	1,293,751	1,033,769
Non-current Assets	20,294,578	20,058,498	20,944,427
Trade and Other Receivables	842,995	828,831	709,011
Property, plant and equipment	13,068,257	13,562,319	14,312,111
Investment Property	1,091,084	1,189,531	1,148,044
Intangible Assets	3,407,123	2,632,704	3,022,803
Investments in Joint Ventures and Associates	272,407	279,431	284,075
Other Non-Current Assets	1,612,712	1,565,682	1,468,383
Total Assets	32,188,830	29,730,910	30,738,015
Current Liabilities	9,387,704	9,474,162	9,482,205
Non-Current Liabilities	8,069,846	7,046,148	8,326,807
Total Liabilities	17,457,550	16,520,310	17,809,012
Capital Stock	1,564,499	1,564,499	1,564,499
Share Premium	1,440,258	1,440,258	1,440,258
Retained Earnings	11,328,859	9,988,396	9,790,768
Accumulated Other Comprehensive Expense	50,158	30,985	-1,432
Other Components of Equity	-1,181,083	-1,205,302	-1,217,934
Non-Controlling Interests	1,528,589	1,391,764	1,352,844
Total Shareholders Equity	14,731,280	13,210,600	12,929,003
		(Unit: Won million)
Classification	2018	2017	2016
Operating Revenue	23,460,143	23,387,267	22,786,989
Operating Profit	1,261,522	1,375,286	1,483,303
Profit for the Period	762,305	561,526	834,572
Number of Consolidated Companies	63	59	56

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2. Summary of Financial Statements (Separate)

Classification	2018	(Unit: Won, million) — 2017	2016
Current Assets	6,861,619	4,529,850	5,001,361
Cash and Cash Equivalents	1,779,745	1,166,402	1,602,397
Trade and Other Receivables	2,968,764	2,890,596	2,740,443
Other Financial Assets	75,401	54,774	289,613
Inventories	465,273	232,246	178,096
Other Current Assets	1,572,436	185,832	190,812
Non-Current Assets	19,149,287	18,955,355	19,849,258
Trade and Other Receivables	766,316	735,671	622,045
Other Financial Assets	130,651	75,896	198,777
Property and equipment	10,864,398	11,375,047	11,961,193
Investment Property	600,624	633,851	662,985
Intangible Assets	2,773,387	2,100,215	2,337,549
Investments in Subsidiaries, Associates and Joint Ventures	3,547,683	3,584,978	3,638,856
Other Non-Current Assets	466,228	449,697	427,853
Total Assets	26,010,906	23,485,205	24,850,619
Current Liabilities	5,908,497	5,612,725	6,043,729
Non-Current Liabilities	7,390,681	6,427,178	7,588,147
Total Liabilities	13,299,178	12,039,903	13,631,876
Capital Stock	1,564,499	1,564,499	1,564,499
Share Premium	1,440,258	1,440,258	1,440,258
Retained Earnings	10,740,042	9,478,730	9,290,428
Accumulated Other Comprehensive Income	-11,251	-1,502	-32,091
Other Components of Shareholders Equity	-1,021,820	-1,036,683	-1,044,351
Total Shareholders Equity	12,711,728	11,445,302	11,218,743
		(Unit: Won, million)
Classification	2018	2017	2016
Operating Revenue	17,356,537	17,341,316	17,072,192
Operating Profit	951,624	952,161	1,102,915
Profit for the Period	561,224	463,268	846,057

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IV. Auditors Opinion

1. Auditors opinion on the consolidated financial statements

A. Auditors opinion on the consolidated financial statements

Fiscal Year	Auditor	Audit (or review) Comments	Issues noted
2018	Samil PwC	Unqualified	Not applicable
2017	Samil PwC	Unqualified	Not applicable
2016	Samil PwC	Unqualified	Not applicable

2. Auditors opinion on the separate financial statements

A. Auditors opinion on the separate financial statements

Fiscal Year	Auditor	Audit (or review) Comments	Issues noted
2018	Samil PwC	Unqualified	Not applicable
2017	Samil PwC	Unqualified	Not applicable
2016	Samil PwC	Unqualified	Not applicable

3. Compensation to external auditors for the last three fiscal years

A. Audit services contract

Fiscal Year	Auditor	Contents	(Unit: Won million, Hours) — Compensation	Total Time
2018	Samil PwC	Review interim financial statements	2,600	36,245
		Audit of Separate financial statements
		Audit of the consolidated financial statements
		20-F Filing
2017	Samil PwC	Review interim financial statements	2,700	38,864
		Audit of Separate financial statements
		Audit of the consolidated financial statements
		20-F Filing
2016	Samil PwC	Review interim financial statements	2,700	39,835
		Audit of Separate financial statements
		Audit of the consolidated financial statements
		20-F Filing

B. Non-Audit services contract

Fiscal Year	Contract date	Contents	Service period	(Unit: Won) — Compensation
2018	2018/11	Comfort letter	2018/11	100,000,000
2017	2017/7	Comfort letter	2017/7	150,000,000
2016	2016/7	Comfort letter	2016/7	150,000,000
Total				400,000,000

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V. Management and Affiliated Companies

1. Overview of the Board of Directors and Committees

A. Matters on the Board of Directors

(1) Organization

As of March 29, 2019, the Board of Directors of KT consists of 11 Directors (3 Inside Directors and 8 Outside Directors). Under the Board of Directors, KT has eight different Committees as follows; Presidential Candidate Examination Committee, Corporate Governance Committee, Outside Director Candidate Recommendation Committee, Audit Committee, Evaluation & Compensation Committee, Executive Committee, Related-Party Transaction Committee and Corporate Sustainability Management Committee. The Board of Directors may establish additional committees if necessary. The Chairman of the Board of Directors is elected separately with CEO and the Board of Directors appoints one of the outside director as a chairman annually. Currently, The Board Chairman is Director Jong-Gu Kim who has enough leadership to coordinate members of the Board.

See VIII. Directors and Employee for R&R and job history of directors.

(2) Major Activities of the Board of Directors

Order	Date	Subject	Result of Discussion
1st	2018. 1. 12	Report on G-project final proposal	Original proposal approved
		Composition of Outside Director Candidate Recommendation Committee	Approval on Committee composition
2nd	2018. 2. 6	Approval of financial statements(separate and consolidated) of the 36th term	Original proposal approved
		Approval of Business reports of the 36th term	Original proposal approved
		Proposal on the composition change of committees of the Board of Directors	Original proposal approved
		Report on the main issues	Original proposal approved
		Proposal on donation to CSV in 2018	Original proposal approved
3rd	2018. 2. 23	Proposal on Corporate Sustainability Management Plan in 2018	Original proposal modified and approved
		Amendment of the articles of incorporation	Original proposal approved
		Recommendation of Audit committees candidate	Recommendation of Audit committees candidate
		Agreement on Recommendation of Inside Director Candidate	Recommendation of Inside Director Candidate agreed
		Limit on Remuneration of Directors in 2018	Original proposal approved
		Standards and Method of Payment on Remuneration of CEO and Inside Directors	Original proposal approved
		Limit on Remuneration, distinction and the number of administration executives	Original proposal approved
		Approval of financial statements(separate and consolidated) of the 36th term	Original proposal approved
		Approval of Business reports of the 36th term	Original proposal approved
		Notice of Annual General Meeting for the 36th term	Original proposal approved
		Report on operational condition of the internal accounting management system in 2017	Original proposal approved
		Report on inspection results of the internal accounting management system in 2017 by Audit committee	Original proposal approved

the 36 th AGM on March 23, 2018

Outside Director Suk-Gwon Chang reappointed and Outside Director Gang-Cheol Lee, Dae-You Kim newly appointed

Inside Director Hyun-Mo Ku reappointed and Inside Director Seong-Mok Oh newly appointed.

Table of Contents

Order	Date	Subject	Result of Discussion
4th	2018. 3. 23	Proposal on operational support for GCCI(Gyeonggi Center for Creative Economy and Innovation) and ICCI(Incheon Center for Creative Economy and Innovation)	Original proposal approved
		Proposal on securing strategic asset of the 2 nd Pangyo	Original proposal approved
		Proposal on revision of operating rules of the Board of Directors and the Board Committees	Original proposal approved
		Proposal on election the chairman and committee organization	Chairman of BOD and members of committees appointed
5th	2018. 4. 27	Approval of US filing consolidate financial statements of FY2017	Original proposal approved
6th	2018. 5. 3	Approval of financial statements(separate and consolidated) of the 1Q 2018	Original proposal approved
		Proposal on provision of stock incentive of 2017 and disposition of treasury shares	Original proposal approved
		Report on financial performance of corporates invested less than 15 billion won in 2017	Original proposal approved
		Proposal on revision of Corporate Governance Codes	Original proposal modified and approved
		Report on operating plan of the Board of Directors for 2018	Original proposal modified and approved
		Proposal on appointing compliance officer	Original proposal approved
		Report on inspection results of compliance management	Original proposal approved
7th	2018. 5. 31	Proposal on early termination of Wibro service	Original proposal approved
		Proposal on securing 5G spectrum	Original proposal approved
8th	2018. 8. 2	Proposal on an increase of KT Group CSR fund	Original proposal approved
		Proposal on funding universal R&D expense	Original proposal approved
		Proposal on donation to labor welfare fund in 2018	Original proposal approved
		Proposal on acquisition and disposition of treasury shares	Original proposal approved
		Report of financial statements(separate and consolidated) of the 1H 2018	Original proposal approved
		Proposal on development plan of Gangbuk branch estate	Original proposal approved
		Proposal on provision of long term incentive for 2017	Original proposal approved
		Proposal on limit of long term incentive and criteria of stock compensation for 2018	Original proposal approved
		Proposal on provision of long term incentive and disposition of treasury share	Original proposal approved
		Proposal on revision of rules of managing officers meeting	Original proposal approved
		Report on matters for resolution of executive committee for 1H 2018	Original proposal approved
9th	2018. 9. 18	Proposal on composition of Outside Director Candidate Recommendation Committee and selection criteria for Outside Director Candidate	members of committee appointed and criteria confirmed
10th	2018. 11. 3	Report of financial statements(separate and consolidated) of the 3Q 2018	Original proposal approved
		Proposal on investment-in-kind for Next Connect PFV	Original proposal approved
11th	2018. 12. 10	Proposal on an extension of Yongsan IDC	Original proposal approved
		Proposal on compensation for the small shop owners related with cable tunnel fire of Ahyun branch	Original proposal approved
		Proposal on management plan for 2019	Original proposal approved
		Report on the reorganization for 2019	Original proposal approved
		Report on the main issues of 2019	Original proposal approved

(3) The Status of Committees under the Board of Directors

(a) Organization of the Committees under the Board of Directors (as of March 29, 2019)

Title	Organization	Name	Purpose of Establishment and Authority	Note (Prior to 37 th AGM)
Presidential Candidate Examination Committee	All Outside Directors & 1 Inside Director		According to Article 32(Presidential Candidate Examination Committee), examine CEO candidates and make a short list
Corporate Governance Committee	4 Outside Directors, & 1 Inside Director	Dae-you Kim (Chairperson) Jong-Gu Kim, Suk-Gwon Chang, Gang-Cheol Lee, In-Hoe Kim	Matters related with corporate governance Article 41-2(CG Committee)	Gae-Min Lee(Chairperson) Do-Kyun Song, Jong-Gu Kim, Suk-Gwon Chang, Hyeon-Mo Ku
Outside Director Candidate Recommendation Committee	All Outside Directors & 1 Inside Director		Recommendation of Outside candidates to the general meeting See IV. 1.(4) Independence of the Board of Directors for the Outside Director Candidate
Recommendation Committee Commercial Act §542: 8(appointment of Outside Directors), Article 42(Outside Director
Candidates Recommendation Committee)	Suk-Gwon Chang (Chairperson) Jong-Gu Kim, Gae-Min Lee, Gang-Cheol Lee, Dae-You Kim, Il Im, Hyeon-Mo Ku

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| Audit Committee | 4 Outside Directors | Suk-Gwon Chang (Chairperson) Jong-Gu Kim, Dae-You Kim, Il Im | Matters related with financial and performance audit See IV. 2. Audit Committee Commercial Law §542: 11
(Audit Committee) 1st article Article 43(Audit Committee) | Suk-Gwon Chang (Chairperson) Jong-Gu Kim, Sang-Kyun Cha, Il Im |
| --- | --- | --- | --- | --- |
| Evaluation & Compensation Committee | 4 Outside Directors | Gae-Min Lee (Chairperson) Gang-Cheol Lee, Hee-Yol Yu, Tae-Yoon Sung | Management Agreement with the CEO and Assessment | Do-Kyun Song (Chairperson) Gae-Min Lee, Gang-Cheol Lee, Dae-You Kim |
| Executive Committee | 3 Inside Directors | Chang-Gyu Hwang (Chairperson), Dong-Myun Lee, In-Hoe Kim | Management matters authorized by the Board of Directors | Chang-Gyu Hwang (Chairperson), Hyeon-Mo Ku, Seong-Mok Oh |
| Related-party Transaction Committee | 4 Outside Directors | Il Im (Chairperson), Gae-Min Lee, Hee-Yol Yu, Tae-Yoon Sung | Under the Commercial Act : Matters about
approval of using business opportunities of company, Transaction between directors and company, Transactions which need to be approved by the Board of Directors among transactions with the largest shareholder and specially related persons and
Internal trading stipulated by the Monopoly Regulation and Fair Trade Act | Il Im (Chairperson), Do-Kyun Song, Gae-Min Lee, Dae-You Kim |
| Corporate Sustainability Management Committee | 4 Outside Directors, & 1 Inside Director | Gang-Cheol Lee (Chairperson), Gae-Min Lee, Hee-Yol Yu, Tae-Yoon Sung, Dong-Myun Lee | Matters about Corporate Sustainability Management | Sang-Kyun Cha(Chairperson), Gang-Cheol Lee, Suk-Gwon Chang, Il Im, Seong-Mok Oh |

Composition of the Board of Directors changed as below through the 37 th AGM on March 29, 2019

Inside Director Dong-Myun Lee and In-Hoe Kim newly appointed

Outside Director Hee-Yol Yu and Tae-Yoon Sung newly appointed

Outside Director Dae-You Kim newly appointed as a member of Audit committee

(b) Activities of the Committees under the Board of Directors

President Candidate Examination Committee : not applicable

Corporate Governance Committee

Order	Meeting Date	Agenda	Results of discussion	Outside Director				Inside Director
				Suk-Gwon Chang	Do-Kyun Song	Jong-Gu Kim	Gae-Min Lee	Hyeon-Mo Ku
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
1st	2018.1.12	Report on G-Project final proposal	Original proposal received	For	For	For	For	For
2nd	2018.2.20	Amendment of the articles of incorporation	Original proposal received	For	For	For	For	For
3rd	2018.3.23	Proposal on revision of operating rules of the Board of Directors and the Board Committees	Original proposal received	For	For	For	For	For
4th	2018.5.3	Proposal on revision of Corporate Governance Codes	Original proposal received	For	For	For	For	For

Outside Director Candidate Recommendation Committee : Refer to (4) Independence of the Board of Directors for details

Audit Committee : Refer to 2. Audit Committee (3) Major Activities of the Audit Committee for details

Evaluation & Compensation Committee

Table of Contents

Order	Meeting Date	Agenda	Results of discussion	Outside Director
				Dong-Wook Chung	Do-Kyun Song	Suk-Gwon Chang	Il Im
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
1st	2018.2.20	Proposal on remuneration standards and payment methods for CEO and Inside Directors	Original proposal received	For	For	For	For
		Result of CEO management assessment for 2017	Original proposal approved	For	For	For	For
		CEO management goal for 2018	Original proposal modified and approved	For	For	For	For

the 36 th AGM on March 23, 2018

Outside Director Gang-Cheol Lee and Dae-You Kim newly appointed

Order	Meeting Date	Agenda	Results of discussion	Outside Director
				Do-Kyun Song	Gae-Min Lee	Gang- Cheol Lee	Dae-You Kim
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
2nd	2018.7.31	Report on provision long-term incentive payment and disposition of treasury shares for 2017	Original proposal received	For	For	For	For
		Report on Limit on Remuneration of long term incentive and standard on stock compensation in 2018	Original proposal received	For	For	For	For

Executive Committee

Order	Meeting Date	Agenda	Results of discussion	Inside Director
				Chang-Gyu Hwang	Hyeon-Mo Ku
				Attendance 100%	Attendance 100%
1st	2018.1.11	Plan for issuance of 190th corporate bonds	Original proposal approved	For	For
2nd	2018.1.31	KT Handset Account Receivable Selling Plan for 2018	Original proposal approved	For	For
3rd	2018.3.9	Proposal on changing names and addresses of branch offices	Original proposal approved	For	For

the 36 th AGM on March 23, 2018

Inside Director Hyeon-Mo Ku reappointed and Seong-Mok Oh newly appointed

Order	Meeting Date	Agenda	Results of discussion	Inside Director
				Chang-Gyu Hwang	Hyeon-Mo Ku	Seong-Mok Oh
				Attendance 100%	Attendance 100%	Attendance 100%
4th	2018.6.12	Plan for issuance of 2018 1st foreign currency corporate bonds	Original proposal approved	For	For	For
5th	2018.8.9	Plan for issuance of 2018 2st foreign currency corporate bonds	Original proposal approved	For	For	For
6th	2018.8.17	Plan for establishment of Mongol Internet Bank JV	Original proposal approved	For	For	For
7th	2018.10.24	Plan for capital increase to K Bank	Original proposal approved	For	For	For
8th	2018.11.1	Plan for issuance of 2018 3rd foreign currency corporate bonds	Original proposal approved	For	For	For
9th	2018.12.26	Plan for issuance of 191th corporate bonds	Original proposal approved	For	For	For

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Related-Party Transaction Committee

Order	Meeting Date	Agenda	Results of discussion	Outside Director
				Il Im	Do-Kyun Song	Gae-Min Lee	Dae-You Kim
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
1st	2018.10.30	Proposal on investment-in-kind for Next Connect PFV	Original proposal received	For	For	For	For

Corporate Sustainability Management Committee

Order	Meeting Date	Agenda	Results of discussion	Outside Director				Inside Director
				Sang-Kyun Cha	Dong-Wook Chung	Suk-Gwon Chang	Il Im	Hyeon-Mo Ku
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
1st	2018.2.23	Result of Corporate Sustainability Management assessment for 2017	Original proposal received	For	For	For	For	For
		Report on 2018 Corporate Sustainability Management plan	Original proposal received	For	For	For	For	For

the 36 th AGM on March 23, 2018

Outside Director Gang-Cheol Lee newly appointed

Order	Meeting Date	Agenda	Results of discussion	Outside Director				Inside Director
				Sang- Kyun Cha	Gang- cheol Lee	Suk-Gwon Chang	Il Im	Seong-Mok oh
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
2nd	2018.5.25	Proposal on donation to Ajou university hospital trauma centre	Review in progress	For	For	For	For	For
3rd	2018.8.2	Result of Corporate Sustainability Management assessment for 1H 2018	Original proposal received	For	For	For	For	For

(c) Evaluation on Board Activity in 2018

Evaluation Factors — Long-term strategy building	4.0
Oversight of the management	3.0
Review financial performance	4.0
Independence for the fairness to shareholders	4.2
Decision-making considering long-term interest of shareholders	3.8
CEO evaluation and compensation	3.8
CEO search, training and succession	3.6
Average	3.8

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Efficiency of BOD	The number of BOD meeting and appropriateness of agenda	4.3
	Fullness of materials and sufficient explanation	3.8
	Provision of sufficient time to review materials	3.4
	Open discussion	3.8
	Access to information necessary for decision-making	3.6
	Review of follow-up measures	3.7
	Education of new board members	3.6
	Appropriateness of BOD composition	3.9
	Average	3.8
Appropriateness of board committees activities	Expertise of BOD members	4.0
	Empowerment to committees	4.2
	Organic connection between BOD and committees	3.0
	Appropriateness of committees composition	4.1
	Proper use of expertise	4.0
	Efficient operation of committees	4.0
	Average	3.9

(4) Independence of the Board of Directors

(a) Independence of appointing BOD members

In order to secure independence and transparency, all candidates to the Board of Directors should be selected and must receive approvals from the general meeting of shareholders. Also, the outside search and advisory service may be conducted if necessary.

(b) Appointment of new Directors and recommender (As of 2018.12.31)

| Name | Tenure | Expertise | Recommendation | Committees | Inside trading, relationship
with major shareholders |
| --- | --- | --- | --- | --- | --- |
| Suk-Gwon Chang | 2 year (reappointed twice) | Finance/Accounting | Outside Director Candidate Recommendation Committee | Audit Committee(Chairperson) Corporate
Sustainability Management committee Corporate Governance Committee | Not Applicable |
| Gang-Cheol Lee | 2 year | Corporate Relation | Outside Director Candidate Recommendation Committee | Evaluation & Compensation Committee Corporate Sustainability Management committee | Not Applicable |
| Dae-You Kim | 3 year | Corporate Relation | Outside Director Candidate Recommendation Committee | Evaluation & Compensation Committee Related-party Transaction Committee | Not Applicable |

Outside Director Tae-Yoon Sung and Hee-Yol Yu newly appointed through the 37 th AGM on March 29, 2019.

| Name | Tenure | Expertise | Recommendation | Committees | Inside trading, relationship
with major shareholders |
| --- | --- | --- | --- | --- | --- |
| Hee-Yol Yu | 3 year | ICT | Outside Director Candidate Recommendation Committee | Evaluation & Compensation Committee Corporate Sustainability Management committee Related-Party
Transaction Committee | Not Applicable |
| Tae-Yoon Sung | 3 year | Global business and Economy | Outside Director Candidate Recommendation Committee | Evaluation & Compensation Committee Corporate Sustainability Management committee Related-Party
Transaction Committee | Not Applicable |

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(c) Establishing separate committee to appoint new directors : Outside Director Candidate Recommendation Committee

The 1 st Board meeting of 2018 (2018.1.12) : Chair person and members of Outside Director Candidate Recommendation Committee appointed

Name	Whether Outside Director	Note
Do-Kyun Song	O	The number of Outside Directors should be more than 50% (meet requirements stipulated in Commercial Act 542(8) 4.)
Sang Kyun Cha	O
Jong-Gu Kim	O
Gae-Min Lee(Chairperson)	O
Il Im	O
Hyeon-Mo Ku	X

Excluded Outside Director Dong-Wook Chung, Suk-Gwon Chang and Dae-Geun Park whose tenure ended by the 36 th AGM of 2018

Outside Director Candidate Recommendation Committee

Order	Meeting Date	Agenda	Results of discussion	Outside Director					Inside Director
				Gae-Min Lee	Jong-Gu Kim	Do-Kyun Song	Sang- Kyun Cha	Il Im	Hyeon-Mo Ku
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
1st	2018.1.12	Proposal on Operation plan for Outside Director Candidate Recommendation Committee	Original proposal approved	For	For	For	For	For	For
2nd	2018.2.12	Final decision on Outside Director candidates	Progress of review	For	For	For	For	For	For
3rd	2018.2.23	Final decision on Outside Director candidates	Candidates confirmed	For	For	For	For	For	For

The 9 th Board meeting of 2018 (2018.9.18) : Chair person and members of Outside Director Candidate Recommendation Committee appointed

Name	Whether Outside Director	Note
Jong-Gu Kim	O	The number of Outside Directors should be more than 50% (meet requirements stipulated in Commercial Act 542(8) 4.)
Gae-Min Lee	O
Gang-Cheol Lee	O
Dae-You Kim	O
Suk-Gwon Chang(Chairperson)	O
Il Im	O
Hyeon-Mo Ku	X

Excluded Outside Director Do-Kyun Song and Sang-Kyun Cha whose tenure ended by the 37 th AGM of 2019

Candidate Recommendation Committee

Order	Meeting Date	Agenda	Results of discussion	Outside Director — Suk-Gwon Chang	Jong-Gu Kim	Gae-Min Lee	Gang- Cheol Lee	Dae-You Kim	Il Im	Inside Director — Hyeon-Mo Ku
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%	Attendance 75%
4th	2018.11.29	Proposal on operating plan of Outside Director Candidate Recommendation Committee	Original proposal approved	For	For	For	For	For	For	Absence

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(5) Expertise of Outside Directors

KT established supportive team(corporate governance team) for outside directors to support the board meeting and committee activities. The corporate governance team provides explanatory meetings in advance, if necessary, to make agendas fully considered and information on business issues.

(a) Supportive team for Outside Directors

Department	Number of Staffs	Job Position(years served)	Activity history
Corporate Governance Team at the Management
Planning Department of Strategy planning office	5 people (Director 1 + Staffs 4)	Director 1 Vice director 2 Manager 1 Assistant manager 1 (Max. 17 years of the length of service and Max. 5 years of the length of the Board of Directors supporting service)	Provides daily news about the company and telecom policies Reports management
performance of the company monthly Provides other information needed for outside directors job and supports for their
requests.

(b) Education for outside directors

Date	Education provider	Attended outside director	Reasons for absence	Education contents
2018.3.19	KT	Director Gae-Min Lee Director Gang-Cheol Lee Director Dae-you Kim		History of KT, Management Strategy, Future convergence technology, Measures of Regulatory policies

2. Audit Committee

(1) Personal Information of Members of the Audit Committee

Name	Experience	Accounting/ Finance Expert	Note
Suk-Gwon Chang (Chair person)	Ph.D in Management Science, Korea Advanced Institute of Technology(KAIST) Chairman, Korea Association for Telecommunications Policies President, The Korean Operations Research and Management Science Society(KORMS) Professor of MIS and Telecommunications, School of Business Hanyang University (present)	applicable	Outside Director
Jong-Gu Kim	Ph.D. in Law, College of Law, Dongguk University Director of the Seoul Supreme Prosecutors Office The 46th Minister of Ministry of Justice Corporation lawyer of New Dimension Law Group (present)		Outside Director
Sang-Kyun Cha	Ph.D. in database systems, Stanford University Professor of Seoul National University (present) Chairman, Big data Research center of Seoul National University (present) Member of IEEE ICDE Executive Committee (present)		Outside Director
Il Im	MBA, Information System, University of Southern California Vice president, Korea Academic Society of Business Administration Vice president, Korean Association of Small Business Studies Associate Dean, School of Business, Yonsei University Professor of Management, School of Business, Yonsei University (present)		Outside Director

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Director Suk-Gwon Chang, who received Ph.D in Management Science and has worked over 5 years as a professor of School of Business, Hanyang University, wrote many academic papers in finance studies such as Optimization issue of finance portfolio and others and gave lectures which includes accounting and financial analysis on information and communication field and IT field. He is appointed as a finance and accounting expert because, with all of this, he is a qualified person who meets the qualifications of Article 37 (2) 2. of Enforcement decree of the commercial act A person who holds at least a masters degree in accounting or finance and who has worked for a research institute or university at least as a researcher or an assistant professor in accounting or finance for an aggregate of at least five years and determined as a finance or accounting expert who has qualifications required by Article 542 (11) 2. of Commercial Act.

Outside Director Dae-You Kim newly appointed as a member of Audit Committee through the 37 th AGM on March 29, 2019.

Name	Experience	Note
Suk-Gwon Chang	Ph.D in Management Science, Korea Advanced Institute of Technology (KAIST) Chairman, Korea Association for Telecommunications Policies President, The Korean Operations Research and Management Science Society (KORMS) Professor of MIS and Telecommunications, School of Business Hanyang University (present)	Outside Director
Jong-Gu Kim	Ph.D.in Law, College of Law, Dongguk University Director of the Seoul Supreme Prosecutors Office The 46th Minister of Ministry of Justice Corporation lawyer of New Dimension Law Group (present)	Outside Director
Il Im	MBA, Information System, University of Southern California Vice president, Korea Academic Society of Business Administration Vice president, Korean Association of Small Business Studies Associate Dean, School of Business, Yonsei University Professor of Management, School of Business, Yonsei University (present)	Outside Director
Dae-You Kim	MA, Public Policy & Administration, University of Wisconsin Economic Policy Top Secretary, Presidential Secretariat Affairs Professor, Hanyang University Vice Chairman, Wonik Investment Partners Outside Director, DB Life Insurance Co., Ltd.	Outside Director

(2) Independence of Audit Committee

The Audit Committee is established within the Board of Directors and members of the audit committee are appointed at the shareholders meeting. The Audit Committee is composed of four Outside Directors. Among the members, Suk-Gwon Jang is the financial expert.

The Audit Committee performs its duties and accounting work independently. If necessary, the Audit Committee and its members have the right to report on the companys business and investigate the companys financial status.

Outside Director	Reasons for appointment	Recommender	Roles in the Board	Transaction with Company, Relationship with the largest shareholder and major shareholders
Suk-Gwon Chang (Chair Person)	Finance/Accounting Expert	Board of Directors	Audit Committee (Chair Person), Corporate Governance Committee (Member), Corporate Sustainability Management Committee (Member)	Not applicable
Jong-Gu Kim	Legal Expert	Board of Directors	Board Chairman, Audit Committee (Member), Corporate Governance Committee (Member)	Not applicable
Sang-Kyun Cha	IT(Big data) Expert	Board of Directors	Sustainability Management Committee (Chair Person), Audit Committee (Member)	Not applicable
Il Im	Technology management/ IT Expert	Board of Directors	Related-Party Transaction Committee (Chair Person), Sustainability Management Committee (Member), Audit Committee
(Member)	Not applicable

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Outside Director Dae-You Kim newly appointed as a member of Audit Committee on through the 37 th AGM on March 29, 2019.

Outside Director	Reasons for appointment	Recommender	Roles in the Board	Transaction with Company, Relationship with the largest shareholder and major shareholders
Suk-Gwon Chang (Chair Person)	Finance/Accounting Expert (Meets requirements
stipulated by the Enforcement Decree of the Commercial Act Article 37 (2) 2.)	Board of Directors	Audit Committee (Chair Person), Corporate Governance Committee (Member)	Not applicable
Jong-Gu Kim	Legal Expert	Board of Directors	Board Chairman, Audit Committee (Member), Corporate Governance Committee (Member)	Not applicable
Il Im	Technology management/ IT Expert	Board of Directors	Related-Party Transaction Committee (Chair Person), Audit Committee (Member)	Not applicable
Dae-You Kim	Corporate Relations Expert	Board of Directors	Corporate Governance Committee (Chair Person), Audit Committee (Member)	Not applicable

(3) Major Activities of the Audit Committee

Order	Date	Agenda	Result of Discussion	Outside Director
				Jong-Gu Kim	Dong-Wook Chung	Sang- Kyun Cha	Dae-Keun Park
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
1st	2018. 2.20	Report on operational condition of the internal accounting management system for 2017	Original proposal approved	For	For	For	For
		Approval of nomination for new internal audit manager	Original proposal approved	For	For	For	For
		Audit committees report on operational condition of internal accounting management system	Review in progress	For	For	For	For
		Report on audit records for 2017 and audit plan for 2018	Original proposal approved	For	For	For	For
		Report on final audit for fiscal year 2017	Original proposal approved	For	For	For	For
		Report on the external issues	Original proposal approved	For	For	For	For
2nd	2018. 2.23	Audit committees report on operational condition of internal accounting management system	Original proposal approved	For	For	For	For
3rd	2018. 3.15	Approval of remuneration for independent auditor for the Fiscal year 2018	Original proposal approved	For	For	For	For
		Approval of audit and non-audit services for consolidated company for the Fiscal year 2018	Original proposal approved	For	For	For	For
		Research result report on agenda and documents of the annual general meeting of shareholders for the 36th term	Original proposal approved	For	For	For	For
		Audit report on the annual general meeting of shareholders for the 36th term	Original proposal approved	For	For	For	For
		Evaluation report on operational status of internal compliance device of the audit committee	Original proposal modified and approved	For	For	For	For
		Plan for internal audit on the main issues	Original proposal approved	For	For	For	For

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The 36 th General Meeting of Shareholders on March 23, 2018

Outside Director Suk-Gwon Chang and Il Im newly appointed as a member of Audit Committee

Order	Date	Agenda	Result of Discussion	Outside Director
				Suk-Gwon Chang	Jong-Gu Kim	Sang-Kyun Cha	Il Im
				Attendance 100%	Attendance 100%	Attendance 100%	Attendance 100%
4th	2018. 3.23	Appointment of the chairman of Audit committee	Chairman appointed	For	For	For	For
		Delegation of authority for prior approval of non-audit service of external auditor	Delegatee appointed	For	For	For	For
5th	2018. 4.27	Report on US filing consolidated financial statements final audit for the Fiscal year 2017	Original proposal approved	For	For	For	For
		Report on financial statements(separate and consolidated) of the 1Q 2018	Original proposal approved	For	For	For	For
6th	2018. 7.31	Report on final audit for the first half of fiscal year 2018	Original proposal approved	For	For	For	For
		Report on audit result for the first half of fiscal year 2018 and audit plan for second half of fiscal year 2018	Original proposal approved	For	For	For	For
		Report on the result of managing officer recruiting for 1H 2018	Original proposal approved	For	For	For	For
		Report on financial statements(separate and consolidated) of the 1H 2018	Original proposal approved	For	For	For	For
7th	2018. 9.18	Report on Audit Committees plan and procedure for the selection of external auditor	Original proposal approved	For	For	For	For
		Report on measures to strengthen KT compliance system	Original proposal approved	For	For	For	For
8th	2018.10.30	Report on Audit Committees evaluation criteria for external auditor	Original proposal approved	For	For	For	For
		Report on improvement plan of KT compliance	Original proposal modified and approved	For	For	For	For
		Report on financial statements(separate and consolidated) of the 3Q 2018	Original proposal approved	For	For	For	For
9th	2018.11.29	Report to the Board of Directors about audit result on the main issues	Original proposal approved	For	For	For	For
		Audit Committees selection of the external auditor	Samil Pwc was selected as preferred bidder	For	For	For	For
10th	2018.12.10	The final selection of external auditor for FY2019-FY2021	Original proposal approved	For	For	For	For

(4) Education plan

Though auditors already have sufficient experience and knowledge, KT provides auditors with reports and education programs about related issues such as industry which KT belongs to, change in management environment, legal change and etc..

Briefing on major change in management environment and compliance issue

Seminars related with the Audit Committee

Educational programs or conference

(5) Education status

Audit Committee education status

Date	Education provider	Attended audit member	Reasons for absence	Education contents
2018.10.30	Samil PwC	All members		Standard Manual and checklist for Audit Committee

(6) Supportive team for Audit Committee

Department	Number of Staffs	Job Position(years served)
Compliance Office	5 people	Director 1 (12 years served) Vice director 1
(14 years served) Manager 1 (12 years served) Lawyer 1 (2
years served) Staff 1 (1 years served)	Provides prior report on main issues Reports on the result of
compliance inspection and main issues Evaluates on inspection result and reports follow up plan Execute orders from Audit
Committee

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(7) Matters on Compliance officer

Name : Byung-Sam Park

Qualification : Passed the 35 th Korean judicial examination(1993), Lawyer

Education

Graduated School of Law, Korea University (1990)

Studied in Munich University, Germany (2007~2008)

Completed executive course in School of Law, Seoul University(2014)

Professional experience

Completed the 27 th training of the Judicial Research and Training Institute(1998)

Judge of Daegu, Incheon, Seoul Central and Seoul Southern District Court(1998~2007)

Judge of Seoul High Court(2009~2010)

Delegated to Constitutional Court(2010~2012)

Judge in charge of warrant at Seoul Central District Court(2012~2013)

Vice president, Legal Affair Department of Legal Affair Center, KT Ethics Management Office / Legal Affair 1 Department, Legal Affairs office(2013~2015)

Head of KT Legal Affair Office, Corporate Planning Group (2017.12.~2018.11.)

Head of KT Legal Affair Office (2018.11. ~ Present)

Major Activities and results

Items	Date/Period	Contents
Compliance Training	On occasion	Legal training for major positions and domestic/global business departments
about Monopoly Regulation and Fair Trade Act, Improper Solicitation and Graft Act, Act on Contracts to which the State is a party, Act on Contracts to which a Local Government is a party, Fair Transactions in Subcontracting Act and others (24
sessions) On-line
training on Improper Solicitation and Graft Act, Distribution of standard contract forms/ compliance notes for business operation	Nothing significant to report
Contract review and Legal Advise	On occasion	Legal review on job responsibilities and contracts of employee in company
rules (about 6,100 reviews in Domestic/Global)	Nothing significant to report
Compliance communication	On occasion	Support communication between compliance officer and employee and information
about compliance with legal operating system	Nothing significant to report
Strengthen compliance system	4Q 2018	Strengthen compliance system by planning reorganization plan/advanced compliance
training and defining main legal risk areas and multi-steps check procedure and etc.. Establish compliance committee( Final Decision-making Board on compliance matters), compliance
offices and etc..	Nothing significant to report

Supportive team for the compliance officer

Department	Number of Staffs	Job Position (years served)
Compliance Office	5 people	Director 1 (12 years served) Vice director 1
(14 years served) Manager 1 (12 years served) Lawyer 1 (2
years served) Staff 1 (1 years served)	Corporate compliance planning Compliance trainings for
employees Inspection and
evaluation on each compliance area Facilitating compliance to be culturally embedded Provides prior report on main
issues Supports
compliance decision making entities(Audit committee, Compliance committee and others)

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3. Matters on Shareholders Exercise of Voting Rights

(1) Adoption of Cumulative Voting System

Automatic introduction of the cumulative voting system was implemented following the completion of the privatization process in 2002.

Where a general meeting of shareholders of a company is convened to appoint two or more directors, shareholders who hold no less than three percent of the total number of issued and outstanding shares excluding nonvoting shares may request the company to appoint directors based on cumulative voting, except as otherwise provided for by the articles of incorporation.

Each shareholder shall have the same number of voting rights per share as directors to be elected, with respect to the resolutions for election of directors, and the voting rights may be exercised based on cumulative voting for one or several candidates for directors

Where directors are to be elected by a vote, the directors shall be elected in order of candidates who obtain the most votes.

For further information, refer to Commercial Act Article 382-2(Cumulative Voting) and Article 542-7(Special cases concerning Cumulative Voting)

(2) Adoption of the Written Voting System or Electronic Voting

Adoption of the written voting system in accordance with the changes in the Articles of Incorporation at the 23rd General Meeting of Shareholders (March 11, 2005). The written voting system has been introduced and exercised to protect right of the minority shareholders. To make minor shareholders can exercise voting right on each agenda with the written vote measure, KT sends voting papers with the AGM notice and shareholders can exercise voting rights by marking for/against on voting paper and mailing back to the company before the meeting.

Articles of Incorporation	Contents
Article 22-2 (Exercise of Voting Rights by Writing)	(1) The Shareholders may exercise their voting rights by writing without attending the General Meetings of Shareholders in person. (2) In case of Paragraph (1) above, KT shall send the notice of convening the
General Meeting of Shareholders, together with written documents and reference materials necessary for the Shareholders to exercise their voting rights. (3) The Shareholders desiring to exercise their voting rights by writing shall enter necessary matters in the written documents under paragraph (2) and
submit them to KT by the date immediately preceding the date set for the Meeting.

(3) Execution of the Minority Shareholders Right

| Right user | Contents of the right of the minority
shareholder | Purpose of execution of the right | Progress |
| --- | --- | --- | --- |
| Tae-Wook Cho and other 34 people | 35 people of minority shareholders requested KT to file a law suit against current and former directors | Exercising Minority Shareholders Right of Representative suits by shareholders, which is stipulated in Commercial Act Article 542-6 (6) and Article 403 | Request accepted on 26th March, 2019 |

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4. Equity Investments

[As of December 31, 2018]
Name of Company or Item	Beginning Balance			Increase (Decrease)		Ending Balance			Financial Facts (Latest fiscal year)
	Number of Shares	Equity Ratio	Book Value	Acquisition (disposal)	Valuation	Number of Shares	Equity Ratio	Book Value	Total Assets	Net Profits
				Shares	Amounts
KT Powertel Co. Ltd.	7,771,418	44.8 %	37,419				7,771,418	44.8 %	37,419	126,064	-5,545
KT Linkus co., Ltd.	3,075,232	87.3 %	6,738				3,075,232	87.3 %	6,738	54,147	1,216
KT Submarine	8,085,000	39.3 %	24,370				8,085,000	39.3 %	24,370	130,715	-4,286
KT Telecop Co. Ltd.	5,765,911	86.8 %	26,045				5,765,911	86.8 %	26,045	272,492	166
KTCS	3,177,426	7.4 %	6,427				3,177,426	7.4 %	6,427	230,707	11,174
KTIS	10,196,190	29.3 %	30,633				10,196,190	29.3 %	30,633	229,246	7,900
KT Skylife	23,908,000	50.3 %	311,696				23,908,000	50.3 %	311,696	797,807	50,961
kt service bukbu	476,094	67.3 %	7,089		2		476,094	67.3 %	7,091	30,599	-31
kt service nambu	531,127	76.4 %	10,155		5		531,127	76.4 %	10,160	37,452	160
KT New Business Investment Fund No.1	80	90.9 %	8,112	-80	-8,112-		0	0.0 %
KT Data System Co., Ltd.	2,400,000	95.3 %	19,616				2,400,000	95.3 %	19,616	144,231	8,662
KT Estate	15,848,819	100.0 %	1,084,522				15,848,819	100.0 %	1,084,522	1,691,091	58,707
KT Strategic Investment Fund No. 1	200	90.9 %	20,000			-17,979	200	90.9 %	2,021	2,260	26
SkylifeTV co., Ltd.	6,000,000	14.8 %	3,000				6,000,000	14.8 %	3,000	47,857	1,770
KT SB Data service	3,774,000	51.0 %	18,870			-14,766	3,774,000	51.0 %	4,104	8,632	-9,576
BC card	3,059,560	69.5 %	633,004				3,059,560	69.5 %	633,004	3,652,646	95,504
H&C Network	8,903	1.0 %	848				8,903	1.0 %	848	91,948	536
KT Hitel	22,750,000	63.7 %	120,078				22,750,000	63.7 %	120,078	272,708	657
KT Commerce, Inc.	266,000	19.0 %	1,782				266,000	19.0 %	1,782	137,458	519
KT mhows Co., Ltd.	760,000	76.0 %	6,794				760,000	76.0 %	6,794	60,197	3,691
KT M&S Co., Ltd.	47,400,000	100.0 %	26,764				47,400,000	100.0 %	26,764	228,073	11,208
Genie Music Co., Ltd.	20,904,514	50.0 %	37,417				20,904,514	42.5 %	37,417	221,559	6,374
Nasmedia Co., Ltd	3,742,406	42.8 %	23,051				3,742,406	42.8 %	23,051	229,197	15,458
PlayD	17,393	33.3 %	20,000				17,393	33.3 %	20,000	90,006	6,038
KT Sat	10,000,000	100.0 %	390,530				10,000,000	100.0 %	390,530	685,926	4,921
KT Strategic Investment Fund No. 2	200	90.9 %	20,000			-7,027	200	90.9 %	12,973	20,106	5,843
KT Strategic Investment Fund No. 3	130	86.7 %	13,000				130	86.7 %	13,000	12,668	-2,268
KT -Music Contents Investment fund no.1	3,150,050,000	23.3 %	3,150				3,150,050,000	23.3 %	3,150	14,092	294
KT Sprorts	1,320,000	66.0 %	6,600				1,320,000	66.0 %	6,600	9,560	-154
KT -Michigan Global Contents Fund	9,420,000,000	53.5 %	9,420				9,420,000,000	53.5 %	9,420	12,741	-670
Autopion	400,000	100.0 %	2,000				400,000	100.0 %	2,000	8,838	502
KT M mobile	40,000,000	100.0 %	200,000				40,000,000	100.0 %	200,000	146,334	-9,951
Kt investment.inc	4,000,000	100.0 %	20,000				4,000,000	100.0 %	20,000	16,693	-34
KT Strategic Investment Fund No. 4	95	95.0 %	9,500	95	9,500		190	95.0 %	19,000	18,735	-1,657
KT -Music Contents Investment fund no.2	2,000,000,000	26.7 %	2,000				2,000,000,000	26.7 %	2,000	7,629	-142
Korea Telecom America, Inc.	4,500	100.0 %	2,376				4,500	100.0 %	2,376	4,218	350
Korea Telecom Japan Co., Ltd.	1,617	100.0 %					1,617	100.0 %		1,326	-126
Korea Telecom China Co., Ltd.		100.0 %	2,160				0	100.0 %	2,160	661	10
KT Dutch B.V.	222,098	100.0 %	55,847			-23,488	222,098	100.0 %	32,359	31,693	105
PT.KT Indonesia	198,000	99.0 %	108				198,000	99.0 %	108	8
kt Belgium	81,049,999	99.9 %	86,432			-31,920	81,049,999	100.0 %	54,512	90,172	-43
KT ORS Belgium	1,829,999	99.9 %	1,961	4,400,000	4,943		6,229,999	99.9 %	6,904	6,709	-46
KBTO	237,240	92.3 %	7,757	128,000	3,983	-11,740	365,240	96.2 %		1,364	-3,771
KT MOS Bukbu		0.0 %		409,991	6,831		409,991	100.0 %	6,831	14,121	-782
KT MOS Nambu		0.0 %		248,515	5,462		248,515	98.4 %	5,462	14,313	-2,418
Next connect PFV		100.0 %		73,130,099	23,421		73,130,099	100 %	23,421	385,769	-12,449
Hong Kong Telecom	405,000	100.0 %	460				405,000	100.0 %	460	3,616	351

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VI. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

1. Directors

Name	Position	Director Since	Date of Birth	Expiration of Term of Office
Inside Directors (1)
Chang-Gyu Hwang	Chief Executive Officer	January 2014	January 23, 1953	2020 AGM
Hyeon Mo Ku	President	March 2016	January 13, 1964	2019 AGM
Seong Mok Oh	President	March 2018	August 20, 1960	2019 AGM
Outside Directors (1)
Jong-Gu Kim	Corporate lawyer, New Dimension Law Group	March 2014	July 7, 1941	2020 AGM
Do Kyun Song	Senior Advisor, Bae, Kim & Lee LLC	March 2013	September 20, 1943	2019 AGM
Sang Kyun Cha	Professor, Department of Electrical and Computer Engineering, Seoul National University	March 2012	February 19, 1958	2019 AGM
Gae-Min Lee	(Former)Editor-in-chief, The Korea Economic Daily	March 2017	November 1, 1946	2020 AGM
Il Lim	Professor, Business Administration, Yeonsei University	March 2017	March 20, 1966	2020 AGM
Suk-Gwon Chang	Dean, School of Business, Hanyang University	March 2014	February 21, 1956	2020 AGM
Gang-chul Lee	Independent Director, Ultra V Co., Ltd.	March 2018	May 6, 1947	2021 AGM
Dae-You Kim	Former Vice Chairman, Wonik Investment Partners	March 2018	July 21, 1951	2021 AGM

(1) All of our inside and outside directors beneficially own less than one percent of the issued shares of KT Corporation in the aggregate.

2. Senior Management

Name (1)	Title and Responsibilities	Years with the Company (2)	Date of Birth
In-Hoe Kim	President, Corporate Planning Group	5	June 25, 1964
Dong-Myun Lee	President, Institute of Convergence Technology	27	October 15, 1962
Cheol-Soo Kim	Senior Executive Vice President, Customer Business Group	5	February 7, 1963
Sang-Bong Nam	Senior Executive Vice President, Ethics Office	6	October 19, 1963
Byung-Sam Park	Executive Vice President, Legal Affairs Office	6	October 13, 1966
Yoon-Young Park	Senior Executive Vice President, Enterprise Business Group	27	April 18, 1962
Jong-Ook Park	Executive Vice President, Strategy & Planning Office	28	January 24, 1962
Soo-Jung Shin	Senior Executive Vice President, IT Planning Office	4	August 10, 1965
Kyoung-Lim Yun	Senior Executive Vice President, Future Convergence Business Office	12	June 14, 1963
Jong-Jin Yoon	Senior Executive Vice President, Public Relations Office	4	February 9, 1964
Dae-San Lee	Senior Executive Vice President, Chief Operating Office, Corporate Management Group	32	January 10, 1961
Pill-Jai Lee	Senior Executive Vice President, Marketing Group	31	October 3, 1961
Hong-Beom Jeon	Executive Vice President, Infra Laboratory	27	October 3, 1962
Young-Myoung Kim	Executive Vice President, Energy Platform Business Unit	30	November 13, 1961
Young-Sik Kim	Executive Vice President, Intelligent Network Service Unit	29	March 15, 1961
Weon-Kyung Kim	Executive Vice President, GiGA Service Business Unit	28	June 15, 1963
June-Keun Kim	Executive Vice President, Safety and Security Platform Business Unit	8	November 12, 1966

Table of Contents

Name (1)	Title and Responsibilities	Years with the Company (2)	Date of Birth
Hee-Su Kim	Executive Vice President, KT Institute of Economics & Business Research	8	October 15, 1962
Kyeong-Weon Park	Executive Vice President, Daegu Sales Headquarter	30	June 25, 1963
Dae-Su Park	Executive Vice President, Business Relations Group	30	October 28, 1963
Sang-Hoon Park	Executive Vice President, Gangbuk Network O&M Headquarter	29	September 29, 1962
Chang-Seok Seo	Executive Vice President, Network Strategy Unit	25	July 5, 1967
Kyung-Min Song	Executive Vice President, CEO Office	27	November 25, 1963
Jae-Ho Song	Executive Vice President, Media Platform Business Unit	26	March 26, 1966
Hyun-Yok Sheen	Executive Vice President, Corporate Management Group	25	August 25, 1968
Sang-Keun Ahn	Executive Vice President, Southern Seoul Sales Headquarter	22	September 10, 1962
Kyung-Keun Yoon	Executive Vice President, Financial Management Office	28	January 14, 1963
Hye-Jeong Yun	Executive Vice President, Big Data Business Support Unit	28	June 12, 1966
Seung-Yong Lee	Executive Vice President, Communication Business Relations Office	26	May 18, 1964
Hyeon-Seuk Lee	Executive Vice President, Device Business Unit	22	November 12, 1966
Sang-Kwi Chang	Executive Vice President, Legal Affairs Department 1	5	July 12, 1968
Yoon-Sik Jeong	Executive Vice President, Enterprise Customer Business Unit	10	September 30, 1964
Young-min Choi	Executive Vice President, KT Group HR Development Academy	4	September 8, 1961
Myung-Beom Pyun	Executive Vice President, Sales Operating Business Unit	22	June 19, 1960
In-Sik Kang	Senior Vice President, Media Contents Department	11	March 27, 1960
Kyoung-Woo Ko	Senior Vice President, Busan Network O&M Headquarter	28	February 6, 1963
Yoon-Jeon Koh	Senior Vice President, External Training	23	July 12, 1967
Choong-Rim Ko	Senior Vice President, Strategic Channel Business Unit	24	January 11, 1967
Ki-Yeon Kwak	Senior Vice President, External Training	22	October 8, 1971
Kwang-Dong Kim	Senior Vice President, Future Convergence Policy Department	3	November 24, 1970
Ki-Taek Kim	Senior Vice President, Chungbuk Sales Headquarter	19	August 2, 1965
Man-Sik Kim	Senior Vice President, Communications Policy Department 1	14	April 9, 1967
Byung-Kyun Kim	Senior Vice President, Device Development Department	21	April 23, 1968
Bong-Gyun Kim	Senior Vice President, Biz Customer Business Unit	21	October 3, 1972
Bong-Ki Kim	Senior Vice President, Convergence Laboratory Security Design TF	24	May 7, 1968
Sung-In Kim	Senior Vice President, Global Business Unit	24	January 13, 1969
Young-Woo Kim	Senior Vice President, Global Business Development Unit	13	May 6, 1967
Young-In Kim	Senior Vice President, Network Strategy Department	22	December 1, 1968
Young-Jin Kim	Senior Vice President, CEO Office Department 1	22	December 27, 1967
Young-Ho Kim	Senior Vice President, Northern Seoul Sales Headquarter	22	September 3, 1966
Yi-Han Kim	Senior Vice President, Enterprise Business Performing Unit	23	January 29, 1966
Jae-Kyung Kim	Senior Vice President, Corporate Strategy Research Department	23	February 7, 1971
Jin-Koog Kim	Senior Vice President, Group Relations Unit	24	December 15, 1965
Jin-Han Kim	Senior Vice President, AI Tech Center	27	July 6, 1963
Chae-Hee Kim	Senior Vice President, AI Business Unit	15	February 11, 1974
Cheol-Kee Kim	Senior Vice President, Future Business Relations Office	23	January 10, 1970
Tae-Gyun Kim	Senior Vice President, Honam Network O&M Headquarter	24	May 6, 1971
Hyeon-Soo Kim	Senior Vice President, External Training	28	July 15, 1966
Hye-Joo Kim	Senior Vice President, Big Data Business Planning Department	3	May 31, 1970
Hoon-Bae Kim	Senior Vice President, New Media Business Center	22	December 13, 1963
Pyeong Ryu	Senior Vice President, Small&Medium Business Customer Department	27	October 24, 1966
Sung-Uk Moon	Senior Vice President, New Renewable Energy Business Department	6	April 9, 1972
Young-Il Moon	Senior Vice President, Data & Information Security Unit	22	December 18, 1966
Jung-Yong Moon	Senior Vice President, Platform Service Business Unit	29	August 24, 1962
Hye-Byung Min	Senior Vice President, Corporate Planning Department	22	October 24, 1969
Yong-Man Park	Senior Vice President, Jeonbuk Sales Headquarter	27	August 2, 1965
Jeong-Jun Park	Senior Vice President, Enterprise Customer Department 1	8	October 8, 1967
Jong-Ryeol Park	Senior Vice President, SCM Strategy Office	32	March 14, 1963
Joon-Hyun Park	Senior Vice President, Business Portfolio Department	22	August 1, 1971
Hyun-Jin Park	Senior Vice President, 5G Service Business Unit	19	September 10, 1968
Hyo-Il Park	Senior Vice President, CEO Office	18	January 7, 1970
Gyu-Tae Baek	Senior Vice President, Service Laboratory	23	March 3, 1959
Kyung-Cheol Seo	Senior Vice President, Chungbuk Sales Headquarter	27	November 21, 1967
Young-Soo Seo	Senior Vice President, Chungcheong Network O&M Headquarter	26	September 1, 1968
Young-Il Seo	Senior Vice President, Blockchain Biz Center	23	March 29, 1969
So-Hee Shin	Senior Vice President, Global Sales Department 1	27	May 10, 1968

Table of Contents

Name (1)	Title and Responsibilities	Years with the Company (2)	Date of Birth
Chang-Yong Ahn	Senior Vice President, Gangnam Network O&M Headquarter	26	January 27, 1966
Chi-Yong Ahn	Senior Vice President, Sales Operating Business Unit	24	October 19, 1966
Yul-Mo Yang	Senior Vice President, Media Public Relations Department 3	3	April 8, 1967
Jin-Ho Yang	Senior Vice President, Legal Affairs Department 2	1	October 9, 1973
Gi-Seob Oh	Senior Vice President, Jeonnam Sales Headquarter	33	March 29, 1962
Mi-Na Oh	Senior Vice President, International Network O&M Center	25	April 11, 1969
Byung-Ki Oh	Senior Vice President, Global Sales Department 2	22	January 31, 1964
Hun-Yong Oh	Senior Vice President, Platform IT Service Unit	27	February 25, 1966
Kyung-Hwa Ok	Senior Vice President, S/W Development unit	27	October 3, 1968
Heung-Jae Won	Senior Vice President, Customer Strategy Unit	27	October 25, 1967
Yong-Kyu Yoo	Senior Vice President, Future Business Strategy Unit	17	June 20, 1971
Chang-Kyu Yoo	Senior Vice President, Gangwon Sales Headquarter	27	October 1, 1966
Kang-Soo Lee	Senior Vice President, Infra Service Unit	22	January 10, 1967
Mi-Hyang Lee	Senior Vice President, Biz Incubation Center	29	January 26, 1965
Mi-Hee Lee	Senior Vice President, IT Service Innovation Department	26	April 7, 1970
Sun-Woo Lee	Senior Vice President, Infra Laboratory	28	January 17, 1966
Sun-Joo Lee	Senior Vice President, Sustainability Management Unit	27	July 5, 1969
Sung-Man Lee	Senior Vice President, IT Strategy & Planning Department	28	September 1, 1965
Su-Kil Lee	Senior Vice President, Network Research Technology Support Unit	19	March 19, 1968
Yong-Gyoo Lee	Senior Vice President, 5G Platform Development Unit	22	March 20, 1965
Won-Joon Lee	Senior Vice President, Human Resources Office	22	November 24, 1967
June-Sup Lee	Senior Vice President, S/W Development unit	5	March 15, 1962
Jin-Woo Lee	Senior Vice President, Enterprise Service Unit	26	January 19, 1966
Chang-Geun Lee	Senior Vice President, Public Customer Business Unit	26	December 11, 1967
Chang-Ho Yi	Senior Vice President, Transformation Unit	22	April 12, 1972
Han-Sup Lee	Senior Vice President, Global Consulting/Service Delivery Unit	19	March 6, 1966
Jong-Taek Lim	Senior Vice President, Management Support Office	24
Min Jang	Senior Vice President, CEO Office Department 2	22	February 27, 1968
Dae-Jin Jang	Senior Vice President, Group Contents Strategy Department	22	September 10, 1971
Jung-Soo Jung	Senior Vice President, Busan Sales Headquarter	25	September 1, 1966
Chang-Hwan Cho	Senior Vice President, Tax Department	14	May 10, 1962
Jung-Yong Ji	Senior Vice President, Network O&M Unit	25	May 17, 1968
Keun-Ha Chin	Senior Vice President, Ethics Department 1	26	July 7, 1968
Kang-Rim Choi	Senior Vice President, Connected Car Biz Center	6	September 30, 1974
Je-Ho Choi	Senior Vice President, Big Data Analysis P-TF	2	December 2, 1968
Chan-Ki Choi	Senior Vice President, Chungnam Sales Headquarter	19	May 11, 1966
Ho-Chang Choi	Senior Vice President, Group Communication Department	21	July 25, 1971
Sang-Hyun Han	Senior Vice President, Enterprise Business Consulting Unit	31	April 2, 1963
Ja-Kyung Han	Senior Vice President, Energy Intelligence TF	22	July 16, 1971
Yong-Sun Hae	Senior Vice President, Western Seoul Sales Headquarter	30	June 22, 1963
Suk-Zoon Huh	Senior Vice President, Marketing Strategy Department	26	August 9, 1967
Gyung-Pyo Hong	Senior Vice President, Convergence Laboratory	32	June 10, 1962

(1) All of our executive officers beneficially own less than one percent of the issued shares of KT Corporation in the aggregate.

(2) Does not include period of employment by KT Corporations affiliates.

3. Current Status of Employees

(Unit: Persons, Years, Won million)

| Type | Number of Employees | | | Average Years in
Continuous Service | Total Payroll | Average Payroll per Person |
| --- | --- | --- | --- | --- | --- | --- |
| | General | Other | Total | | | |
| Total | 23,409 | 426 | 23,835 | 20.0 | 1,820,726 | 81 |

Number of employees as of December 31, 2018.

Average years in continuous services: Calculated using aggregate years of service of employees as of December 31, 2018 divided by number of employees as of December 31, 2018.

Average payroll per person: Calculated using yearly average number of employees (23,409 employees).

Table of Contents

4. Remuneration to Executive Officers

(1) Total Remuneration paid to Directors (including Outside Directors) and Members of the Audit Committee (Auditors)

Category	Total Amount Paid	(Unit: Won million) — Amount Approved by the General Meeting of Shareholders	Average Amount Paid per Person
3 Inside Directors	3,496	6,500	1,165
8 Outside Directors	684		86

The total amount paid and the average amount paid per person include the compensation for directors who resigned in 2018.

(2) Remuneration paid to Inside Directors

Name	(Unit: Won million) — Position	Total Amount Paid
Chang-Gyu Hwang	Chief Executive Officer	1,449
Hyeon Mo Ku	President	709
Heon Moon Lim	President	680
Seong Mok Oh	President	658

Heon Moon Lim left KT on January 10, 2018.

| Type — Earned income | Salary | 573 | Note — Based on the resolution of the board of directors, the total base pay was 373 million won and the total position pay was
200 million won |
| --- | --- | --- | --- |
| | Incentives | 868 | Based on the resolution of the board of directors, the incentives has been decided by evaluating revenue and operating profits of the
previous year as the quantitative indicators and considering the business competitiveness and the status as the qualitative indicators comprehensively. The short-term incentives can be 0~250% of the base pay and the long-term incentives can be
0~340% of the base pay. We have calculated and paid 868 million won in
consideration of the earning results and the strengthened business competitiveness in AI and future businesses. |
| | Stock option | | |
| | Fringe benefits | 9 | Including medical expenses, health checkup costs |
| Retirement income | | | |
| Others | | | |

| Type — Earned income | Salary | 375 | Note — Based on the resolution of the board of directors, the total base pay was 275 million won and the total position pay was
100 million won. |
| --- | --- | --- | --- |
| | Incentives | 317 | Based on the resolution of the board of directors, the incentives has been decided by evaluating the management results comprehensively.
The short-term incentives can be 0~140% of the base pay and the long-term incentives can be 0~119% of the base pay. We have calculated and paid 317 million won in consideration of leading company strategy and cost innovation as the chief of the management group. |
| | Stock option | | |
| | Fringe benefits | 17 | Including medical expenses, health checkup costs |
| Retirement income | | | |
| Others | | | |

Table of Contents

Type — Earned income	Salary	9	Note — Based on the resolution of the board of directors, the total base pay was 283 million won and the total position pay was 100 million won.
	Incentives	312	Based on the resolution of the board of directors, the incentives
has been decided by evaluating the management results comprehensively. The short-term incentives can be 0~140% of the base pay and the long-term incentives can be 0~119% of the base pay. We have calculated and paid 312 million won in
consideration of achieving sales and profit target and qualitative subscriber growth as the chief of Marketing Office.
	Stock option
	Fringe benefits	2	Including medical expenses, health checkup costs
Retirement income		357	Paid in accordance with the regulation of executive severance pay
Others

Type — Earned income	Salary	363	Note — Based on the resolution of the board of directors, the total base pay was 266 million won and the total position pay was 100 million won.
	Incentives	286	Based on the resolution of the board of directors, the incentives
has been decided by evaluating the management results comprehensively. The short-term incentives can be 0~140% of the base pay and the long-term incentives can be 0~120% of the base pay. We have calculated and paid 598 million won in
consideration of leading 5G technology as the chief of Network Group.
	Stock option
	Fringe benefits	9	Including medical expenses, health checkup costs
Retirement income
Others

(3) Grant and Exercise of Stock Option

Not applicable as of December 31, 2018.

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