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KT CORP — Regulatory Filings 2003
Aug 4, 2003
30640_ffr_2003-08-04_93f4a0f6-cc5d-400e-af34-819baed11d49.zip
Regulatory Filings
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6-K 1 d6k.htm FORM 6-K Form 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO
RULE 13a-16 OR 15d-16 UNDER THE SECURITIES
EXCHANGE ACT OF 1934
For the month of August 2003
KT Corporation
206 Jungja-dong
Bundang-gu, Sungnam
Kyunggi-do
463-711
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 X Form 40-F
(Indicate by check mark whether the registrant
by furnishing the information contained in this
form
is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.)
Yes No X
August 1, 2003
The Value Networking Company
(KSE : 30200 / NYSE : KTC)
2 nd Quarter 2003
Preliminary Earnings Commentary
2
1.
Disclaimer
This material contains estimated information of unaudited non-consolidated preliminary financial and operating data of KT Corporation (KT or the company) as of June 30, 2003 and forward-looking statements with respect to the financial condition, results of operations and business of KT management. Statements that are not historical facts, including statements about KTs beliefs and expectations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements were based on current plan, estimates and perfections of KT and the political and economic environment in which KT will operate in the future and therefore you should not place undue reliance on them.
Therefore, KT does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the unaudited financial and operating data contained in this material and such information maybe materially different from the actual results or performance of KT. KT speaks only as of the date it is made, and KT undertakes no obligation to update publicly any of them in light of new information or future events.
Please note that under the new net revenue recognition accounting rule, effective from January 1 st 2003, net revnue based financial figures of the second quarter of 2002 is provided in this material for discussion and comparative purposes.
The financial and operating data contained in this presentation have been rounded. Since affiliated companies have not finished accounting, estimated figures were used for the equity method gains/losses. KTs non-consolidated financial statements and report as of June 30, 2003 will be filed with the Korea Financial Supervisory Commission in August 14, 2003.
Final 1st quarter 2003 figures are provided in the table below, compared with the first quarter preliminary earnings.
| (KRW, billion) | 1st Quarter 2003 (Final) | 1st Quarter 2003 (Preliminary) | Change |
|---|---|---|---|
| Operating Revenues | 29,721 | 29,503 | 218 |
| Operating Expenses | 22,474 | 22,442 | 32 |
| Operating Income (OP Margin) | 7,247(24.4%) | 7,061(23.9%) | 186(0.5%P) |
| EBITDA(EBITDA Margin) | 12,699(42.7%) | 12,513(42.4%) | 186(0.3%P) |
| Net Income | 9,606 | 9,739 | 133 |
If you have any questions in connection with the preliminary earnings, please contact Investor Relations Department of KT Corp.
KT Corporation
- Investor Relations
Tel: 82-31-727-0941~6 Fax: 82-31-727-0949
E-mail: [email protected]
Financial Highlights
A. Summary of Balance She
(KRW billion)
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Assets | 20,157.6 | 22,990.8 | -2,833.2 | -12.3% | 20,433.9 | -276.3 | -1.4% |
| ¨ Current Assets | 3,734.2 | 3,120.1 | 614.1 | 19.7% | 3,873.4 | -139.2 | -3.6% |
| · Quick Assets | 3,668.9 | 3,069.5 | 599.4 | 19.5% | 3,820.1 | -151.2 | -4.0% |
| - Cash & Cash Equivalents | 1,188.0 | 947.1 | 240.9 | 25.4% | 1,226.7 | -38.7 | -3.2% |
| - Account Receivables | 1,992.1 | 1,690.5 | 301.6 | 17.8% | 2,045.5 | -53.3 | -2.6% |
| - Others | 488.7 | 431.9 | 56.8 | 13.2% | 547.9 | -59.1 | -10.8% |
| · Inventories | 65.3 | 50.6 | 14.7 | 29.0% | 53.3 | 12.0 | 22.5% |
| ¨ Fixed Assets | 16,423.5 | 19,870.7 | -3,447.2 | -17.3% | 16,560.5 | -137.1 | -0.8% |
| · Invested Assets | 4,994.9 | 7,793.3 | -2,798.4 | -35.9% | 4,923.3 | 71.6 | 1.5% |
| - KTF Shares | 2,638.8 | 2,433.1 | 205.7 | 8.5% | 2,565.6 | 73.2 | 2.9% |
| - KTICOM Shares | 0.0 | 848.5 | -848.5 | -100.0% | 0.0 | 0.0 | |
| - SKT Shares | 0.0 | 2,227.9 | -2,227.9 | -100.0% | 0.0 | 0.0 | |
| - Deferred Assets | 308.6 | 455.0 | -146.4 | -32.2% | 401.4 | -92.9 | -23.1% |
| - Long-term Assets | 900.6 | 1,033.8 | -133.2 | -12.9% | 870.1 | 30.6 | 3.5% |
| - Others | 1,146.8 | 795.0 | 351.8 | 44.3% | 1,086.2 | 60.7 | 5.6% |
| · Tangible Assets | 11,219.0 | 11,854.0 | -635.0 | -5.4% | 11,420.6 | -201.6 | -1.8% |
| · Intangible Assets | 209.6 | 223.4 | -13.8 | -6.2% | 216.6 | -7.0 | -3.2% |
| Total Liabilities | 12,734.4 | 13,693.6 | -959.2 | -7.0% | 13,236.2 | -501.8 | -3.8% |
| · Current Liabilities | 3,402.4 | 3,765.1 | -362.7 | -9.6% | 3,919.9 | -517.5 | -13.2% |
| - Interest-bearing Debts | 1,028.4 | 1,522.1 | -493.7 | -32.4% | 1,110.4 | -82.0 | -7.4% |
| - Account Payable | 705.8 | 805.3 | -99.5 | -12.4% | 738.9 | -33.1 | -4.5% |
| - Others | 1,668.2 | 1,437.7 | 230.5 | 16.0% | 2,070.6 | -402.4 | -19.4% |
| · Long-term Liabilities | 9,332.0 | 9,928.5 | -596.5 | -6.0% | 9,316.3 | 15.8 | 0.2% |
| - Interest-bearing Debts | 7,627.8 | 7,442.1 | 185.7 | 2.5% | 7,338.5 | 289.3 | 3.9% |
| - Installation Deposit | 1,331.7 | 1,771.2 | -439.5 | -24.8% | 1,442.0 | -110.3 | -7.7% |
| - Others | 372.5 | 715.2 | -342.7 | -47.9% | 535.8 | -163.2 | -30.5% |
| Total Shareholders Equity | 7,423.3 | 9,297.2 | -1,873.9 | -20.2% | 7,197.7 | 225.5 | 3.1% |
| · Capital Stock | 1,561.0 | 1,561.0 | 0.0 | 0.0% | 1,561.0 | 0.0 | 0.0% |
| · Capital Surplus | 1,440.3 | 1,440.3 | 0.0 | 0.0% | 1,440.3 | 0.0 | 0.0% |
| · Retained Earnings | 8,505.9 | 7,552.1 | 953.8 | 12.6% | 8,318.4 | 187.5 | 2.3% |
| · Capital Adjustment | -4,083.9 | -1,256.2 | -2,827.7 | 225.1% | -4,121.9 | 38.0 | 0.9% |
| - Treasury Stock | -4,056.6 | -3,326.1 | -730.5 | -22.0% | -4,056.6 | 0.1 | 0.0% |
| - Unrealized Gain on Investment | -79.2 | 2,076.5 | -2,155.7 | -103.8% | -115.6 | 36.3 | -31.5% |
| - Others | 51.9 | -6.7 | 58.6 | -874.9% | 50.3 | 1.6 | 3.2% |
| Total Intestest-bearing Debts | 8,656.2 | 8,964.3 | -308.1 | -3.4% | 8,448.9 | 207.3 | 2.5% |
| Net Debts | 7,468.1 | 8,017.2 | -549.1 | -6.8% | 7,222.2 | 246.0 | 3.4% |
| Debt/Equity Ratio | 100.6% | 86.2% | 14.4% p | 100.3% | 0.3% P |
B. Summary of Income Statement
(KRW billion)
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Operating Revenue | 2,946.8 | 2,863.2 | 83.6 | 2.9% | 2,972.1 | -25.3 | -0.9% |
| Operating Expense | 2,303.6 | 2,412.0 | -108.4 | -4.5% | 2,247.4 | 56.1 | 2.5% |
| · Depreciation | 571.2 | 608.5 | -37.3 | -6.1% | 545.2 | 26.0 | 4.8% |
| · Labor | 620.3 | 776.6 | -156.3 | -20.1% | 634.9 | -14.6 | -2.3% |
| · Commission | 148.1 | 140.6 | 7.5 | 5.3% | 133.3 | 14.8 | 11.1% |
| · Sales | |||||||
| Promotion | 46.3 | 36.2 | 10.1 | 27.9% | 38.6 | 7.7 | 19.9% |
| · Sales | |||||||
| Commission | 30.4 | 13.0 | 17.4 | 134.0% | 31.9 | -1.5 | -4.8% |
| · Provision for | |||||||
| doubtful accounts | 60.6 | 15.1 | 45.5 | 301.2% | 48.5 | 12.1 | 25.0% |
| · Advertising | 43.6 | 49.6 | -6.0 | -12.1% | 23.8 | 19.8 | 83.1% |
| · Repairs & | |||||||
| Maintenance | 82.4 | 104.4 | -22.0 | -21.1% | 46.2 | 36.2 | 78.2% |
| · Cost of | |||||||
| Goods | 77.6 | 65.1 | 12.5 | 19.2% | 122.9 | -45.3 | -36.8% |
| · Cost of Service | |||||||
| Provided | 457.6 | 437.6 | 20.0 | 4.6% | 455.9 | 1.7 | 0.4% |
| - Cost of Service | 131.3 | 92.7 | 38.6 | 41.7% | 88.8 | 42.6 | 48.0% |
| - LM Interconnection | 258.1 | 294.8 | -36.7 | -12.4% | 291.1 | -33.0 | -11.3% |
| - Intnl Settlement | 44.7 | 50.1 | -5.4 | -10.9% | 53.7 | -9.0 | -16.8% |
| - Cost of SI/NI Services | 23.5 | 0.0 | 23.5 | | 22.3 | 1.2 | 5.4% |
| · R&D | 57.5 | 57.4 | 0.1 | 0.2% | 51.9 | 5.6 | 10.8% |
| · Others | 107.9 | 107.9 | 0.0 | 0.0% | 114.4 | -6.4 | -5.6% |
| Operating Income | 643.2 | 451.2 | 192.0 | 42.6% | 724.7 | -81.5 | -11.2% |
| Operating Margin | 21.8% | 15.8% | 6.1% P | 24.4% | -2.6% P | ||
| EBITDA | 1,214.4 | 1,059.7 | 154.7 | 14.6% | 1,269.9 | -55.4 | -4.4% |
| EBITDA Margin | 41.2% | 37.0% | 4.2% P | 42.7% | -1.5% P | ||
| Non-operating Revenue | 90.3 | 502.1 | -411.8 | -82.0% | 933.0 | -842.8 | -90.3% |
| · Gains on Disp. | |||||||
| Of Inv. Assets | 0.0 | 278.0 | -278.0 | -100.0% | 775.2 | -775.2 | -100.0% |
| · Interest | |||||||
| Income | 19.3 | 15.3 | 4.0 | 25.9% | 26.9 | -7.7 | -28.5% |
| · FX Transaction | |||||||
| Gain | 1.7 | 7.5 | -5.8 | -77.1% | 6.0 | -4.3 | -71.5% |
| · FX Translation | |||||||
| Gain | -12.4 | 122.6 | -135.0 | -110.1% | 18.9 | -31.3 | -165.7% |
| · USO | |||||||
| Fund | 39.5 | 21.1 | 18.4 | 87.0% | 26.9 | 12.6 | 46.8% |
| · Others | 42.2 | 57.5 | -15.3 | -26.5% | 79.1 | -36.8 | -46.6% |
| Non-operating Expense | 124.1 | 292.7 | -168.6 | -57.6% | 321.0 | -196.8 | -61.3% |
| · Interest | |||||||
| Expense | 106.4 | 106.6 | -0.2 | -0.2% | 114.9 | -8.5 | -7.4% |
| · FX Transaction | |||||||
| Loss | 1.8 | 8.0 | -6.2 | -78.1% | 6.1 | -4.3 | -71.3% |
| · FX Translation | |||||||
| Loss | -65.4 | 23.7 | -89.1 | 375.7% | 66.1 | -131.5 | -198.8% |
| · Loss on Equity | |||||||
| Method | 26.8 | 29.8 | -3.0 | -10.2% | 48.8 | -22.0 | -45.2% |
| · Loss on Disp. | |||||||
| Of Fixed. Assets | 0.0 | 25.6 | -25.6 | -100.0% | 24.8 | -24.8 | -100.0% |
| · Others | 54.6 | 99.0 | -44.4 | -44.9% | 60.2 | -5.6 | -9.3% |
| Ordinary Income | 609.4 | 660.6 | -51.2 | -7.8% | 1,336.7 | -727.4 | -54.4% |
| Income Tax | 283.8 | 172.1 | 111.7 | 64.9% | 376.1 | -92.3 | -24.5% |
| Net Income | 325.5 | 488.5 | -163.0 | -33.4% | 960.6 | -635.1 | -66.1% |
Operating Resutls
A. Operating Revenue
Overview
(KRW billion)
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Operating Revenue | 2,946.8 | 2,863.2 | 83.6 | 2.9% | 2,972.1 | -25.3 | -0.9% |
| · Internet | 597.2 | 497.7 | 99.5 | 20.0% | 549.7 | 47.5 | 8.6% |
| - Broadband | 488.1 | 385.9 | 102.2 | 26.5% | 456.0 | 32.1 | 7.0% |
| · Telephone | 1,181.8 | 1,205.7 | -23.9 | -2.0% | 1,223.5 | -41.7 | -3.4% |
| · Land-to-Mobile | 562.3 | 584.5 | -22.2 | -3.8% | 548.7 | 13.6 | 2.5% |
| · Leased | |||||||
| Line | 320.6 | 364.7 | -44.1 | -12.1% | 328.4 | -7.7 | -2.4% |
| · Other | |||||||
| Data | 46.5 | 50.8 | -4.3 | -8.5% | 45.7 | 0.7 | 1.6% |
| · Wireless(PCS | |||||||
| resale etc.) | 175.5 | 162.8 | 12.7 | 7.8% | 236.4 | -60.9 | -25.8% |
| · Satellite | 31.0 | 28.4 | 2.6 | 9.2% | 30.0 | 1.1 | 3.5% |
| · Others | 57.7 | 29.7 | 28.0 | 94.3% | 59.1 | -1.4 | -2.4% |
| · Sales | |||||||
| Discount | -25.9 | -61.0 | 35.2 | -57.6% | -49.5 | 23.6 | -47.7% |
· In the second quarter of 2003, total operating revenue increased KRW 83.6 billion (2.9%) to KRW 2,946.8 billion, compared to the same period last year. Despite revenue declines in LM, telephone, leased-line and data services, broadband and wireless revenues, including PCS resale increased by KRW 99.5 billion (20.0%) and KRW 12.7 billion (7.8%), respectively, aided by a continous subscriber growth in broadband and PCS resale.
· Compared to 1Q 2003, total operating revenue decreased KRW 25.3 billion (0.9%). In spite of internet revenue increase boosted by a steady subscriber growth, and LM revenue increase supported by LM traffic growth, wireless especially PCS resale handset sales and telephone revenue decreased as a result of slow subscriber acquisition activities.
6
2. Internet Revenue
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Internet Revenue | 597.2 | 497.7 | 99.5 | 20.0 % | 549.7 | 47.5 | 8.6 % |
| · Broadband | 488.1 | 385.9 | 102.2 | 26.5 % | 456.0 | 32.1 | 7.0 % |
| - Megapass | 459.5 | 385.1 | 74.4 | 19.3 % | 438.6 | 20.9 | 4.8 % |
| - Nespot | 28.6 | 0.8 | 27.8 | 3471.0 % | 17.4 | 11.2 | 64.0 % |
| · Kornet | 66.9 | 72.1 | -5.2 | -7.2 % | 65.4 | 1.5 | 2.2 % |
| · Other | |||||||
| Internet | 42.2 | 39.7 | 2.5 | 6.4 % | 28.3 | 13.9 | 49.2 % |
| - IDC | 22.2 | 22.0 | 0.3 | 1.1 % | 21.6 | 0.6 | 2.8 % |
| - Bizmeka | 5.1 | 2.5 | 2.6 | 102.4 % | 1.7 | 3.4 | 207.0 % |
| - Others | 14.9 | 15.2 | -0.3 | -1.9 % | 5.0 | 9.9 | 196.9 % |
| Megapass Subscriber No. (000) | 5,392 | 4,333 | 1,059 | 24.4 % | 5,248 | 144 | 2.7 % |
| Nespot Subscriber No. (000) | 260 | 8 | 252 | 3150.0 % | 148 | 112 | 75.7 % |
· In the second quarter of 2003, internet revenue grew KRW 99.5 billion (20.0%) to KRW 597.2 billion, compared to the same period last year. The number of Megapass subscribers stood at 5.392 million as the end of June 2003, while the figure for the same period last year was 4.333 million. Since the launch in May 2002, the number of Nespot subscriber reached 260,000 as the end of June 2003 and contributed KRW 28.6 billion in revenue. Other internet, including Bizmeka also contributed the internet revenue to increase by KRW 2.5 billion (6.4%).
· Internet revenue also improved quarter-on-quarter by KRW 47.5 billion (8.6%). The main driver of the improvement was broadband revenue growth, supported by the number of Megapass and Nespot subscriber growth and other internet revenue growth.
3. Telephone Revenue
KRW billion
| 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | |||
|---|---|---|---|---|---|---|---|
| Sector | Amount | D % | Amount | D % | |||
| Total Telephone Revenue | 1,181.8 | 1,205.7 | -23.9 | -2.0% | 1,223.5 | -41.7 | -3.4% |
| Subscriber Connection | 367.0 | 422.8 | -55.8 | -13.2% | 356.6 | 10.5 | 2.9% |
| · Subscription | |||||||
| Fee | 39.0 | 93.0 | -54.0 | -58.1% | 36.5 | 2.5 | 6.7% |
| · Basic Monthly | |||||||
| Fee | 288.1 | 276.5 | 11.6 | 4.2% | 287.5 | 0.6 | 0.2% |
| · Installation | 13.1 | 14.5 | -1.4 | -9.4% | 11.4 | 1.8 | 15.6% |
| · Interconnection | 26.5 | 38.7 | -12.2 | -31.4% | 21.1 | 5.4 | 25.7% |
| · Others | 0.2 | 0.1 | 0.1 | 125.6% | 0.0 | 0.2 | 534.6% |
| Local | 322.5 | 333.2 | -10.7 | -3.2% | 330.0 | -7.5 | -2.3% |
| · Usage | 239.7 | 248.6 | -8.9 | -3.6% | 249.2 | -9.5 | -3.8% |
| · Interconnection | 36.6 | 30.4 | 6.2 | 20.5% | 38.2 | -1.6 | -4.2% |
| · Others | 46.1 | 54.2 | -8.1 | -14.9% | 42.5 | 3.6 | 8.5% |
| Domestic Long Distance | 233.1 | 252.8 | -19.7 | -7.8% | 241.7 | -8.6 | -3.6% |
| · Usage | 216.8 | 236.3 | -19.5 | -8.3% | 226.5 | -9.7 | -4.3% |
| · Interconnection | 16.1 | 16.4 | -0.3 | -1.8% | 15.1 | 1.0 | 6.9% |
| · Others | 0.2 | 0.2 | 0.0 | 11.8% | 0.2 | 0.1 | 43.4% |
| International Long Distance | 82.2 | 84.0 | -1.8 | -2.2% | 73.3 | 8.8 | 12.0% |
| · Usage | 69.2 | 83.0 | -13.8 | -16.6% | 71.7 | -2.5 | -3.5% |
| · Others | 12.9 | 1.1 | 11.8 | 1075.7% | 1.6 | 11.3 | 703.9% |
| International Settlement Revenue | 40.0 | 31.6 | 8.4 | 26.7% | 38.4 | 1.6 | 4.2% |
| VAS | 83.8 | 31.8 | 52.0 | 163.7% | 104.4 | -20.6 | -19.7% |
| 114 Phone Directory Service | 30.8 | 21.2 | 9.6 | 45.1% | 56.8 | -26.1 | -45.9% |
| Public Telephone | 21.7 | 27.4 | -5.7 | -20.8% | 22.2 | -0.5 | -2.2% |
| Miscellaneous | 0.7 | 0.8 | -0.1 | -17.4% | 0.0 | 0.7 | |
In the second quarter of 2003, telephone revenue totaled KRW 1,181.8 billion, down KRW 23.9 billion (2.0%). It is due to i) a decrease in subscription fee as growth rate of new subscriber and switching subscriber to non-refundable deposit program diminished, and ii) a decrease in usage revenues as a result of traffic decline. On the other hand, VAS (Value Added Service), international settlement, and 114 phone directory service revenues increased.
VAS (Value Added Service), international settlement, and 114 phone directory service revenues increased.
Compared to the previous quarter, telephone revenue decreased by KRW 41.7 billion1 (3.4%) because of VAS and 114 phone directory revenue decline by KRW 20.6 billion (19.7%) and KRW 26.1 billion (45.9%), respectively.
114 phone directory revenue declined significantly because one-time KRW 30.4 billion was recognized last quarter as settlement for 114 phone directory service provided to mobile was finalized. VAS revenue declined as pre- or post-paid international calling card sales decreased due to SARS outbreak.
- LM (Land to Mobile) Interconnection Revenue
KRW billion
| 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | |||
|---|---|---|---|---|---|---|---|
| Sector | Amount | D % | Amount | D % | |||
| LM Revenue | 562.3 | 584.5 | -22.2 | -3.8% | 548.7 | 13.6 | 2.5% |
| LM Interconnection cost | 258.1 | 294.8 | -36.7 | -12.4% | 291.1 | -33.0 | -11.3% |
Despite a 17.7% LM tariff cut introduced in May 1 st 2002, LM revenue totaled KRW 562.3 billion, a decrease of KRW 22.2 billion (3.8%) over 2Q 2002; however, an increase by KRW 13.6 billion (2.5%) over 1Q 2003. The increase was benefited by LM traffic increase.
Compared to the same period last year, LM interconnection cost decreased by KRW 36.7 billion (12.4%) due to a 10.3% LM interconnection rate cut, effective from January 2003. It also declined by KRW 33.0 billion (11.3%) over 1Q 2003, because of the actual settlement adjustment of LM interconnection cost among operators.
- Journalization method of LM interconnection cost: It takes about 2 months for operators to settle the volume of LM traffic; therefore, KT estimates LM interconnection cost reflecting historical traffic at the time of quarterly closing and makes adjustments next quarter.
Recently announced 5.1% LM interconnection tariff cut has been effective from July 1st and 6-minute of free call has been provided temporarily from July 1 st through December 31 st .
5. Leased Line Revenue
KRW billion
| 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | |||
|---|---|---|---|---|---|---|---|
| Sector | Amount | D % | Amount | D % | |||
| Total Leased Line Revenue | 320.6 | 364.7 | - 44.1 | - 12.1% | 328.4 | - 7.7 | - 2.4% |
| · Local | 167.8 | 180.9 | -13.1 | - 7.2% | 174.0 | -6.2 | - 3.5% |
| · Domestic Long | |||||||
| Distance | 129.4 | 140.0 | -10.6 | - 7.6% | 133.1 | -3.7 | - 2.8% |
| · Intnl | |||||||
| Long Distance | 17.3 | 21.4 | - 4.1 | -19.3% | 15.3 | 2.0 | 13.0% |
| · Broadcasting | |||||||
| & Others | 6.1 | 22.5 | -16.4 | -72.8% | 6.0 | 0.2 | 2.7% |
Leased line revenue totaled KRW 320.6 billion in the second quarter of 2003. It decreased by KRW 44.1 billion (12.1%) over 2Q 2002 and KRW 7.7 billion (2.4%) over 1Q 2003. The main drivers are lines subscribed by SKT switched to SKTs internal network, SK group switched to SK Globals and Dacom switched to Powercoms.
Compared to the second quarter of 2002 broadcasting & others revenue also decreased as special demands from World-Cup disappeared.
The main reason to the current steep decrease in the number of leased-line is service termination of low speed, which is mostly subscribed by security companies. This service is offered at a price between KRW 10,000 and 20,000 and a speed below 64 Kbps. Please, see the table below for the change in the number of lines.
| Speed | No. of lines declined | Reasons to decrease |
|---|---|---|
| DS 0 (below 64K) | -54,186 | S1* switched to wireless data |
| FE1 (1.0 ~ 2.0M) | - 3,945 | Dacom è Powercom |
| DS 1(2.0 M, 1.5M) | - 3,661 | SKT, LGT è internal network |
| Above DS 3 (above 45M) | 164 | KSCC*, Hyundai car etc. |
| Total | -61,628 |
- S1: Name of security company, KSCC(Korea Securities Computer Corp.)
6. Other Data Revenue
KRW billion
| 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | |||
|---|---|---|---|---|---|---|---|
| Sector | Amount | D % | Amount | D % | |||
| Other Data Revenue | 46.5 | 50.8 | - 4.3 | - 8.5% | 45.7 | 0.7 | 1.6% |
| · Dial-up (014xy) | 2.2 | 6.7 | -4.5 | -66.4% | 3.4 | -1.1 | -33.0% |
| · Packet Data | 9.7 | 14.2 | -4.5 | -32.0% | 10.5 | -0.9 | -8.2% |
| · EDI | 5.3 | 5.9 | 0.6 | -9.8% | 5.1 | 0.2 | 4.8% |
| · Others (ATM etc.) | 29.2 | 23.9 | 5.3 | 22.4% | 26.8 | 2.5 | 9.2% |
Data revenue for 2Q 2003 totaled KRW 46.5 billion, a decrease of KRW 4.3 billion (8.5%) over 2Q 2002. ATM revenue increase was offset by the general trend of dial-up substitution to broadband.
7. Wireless Revenue
KRW billion
| 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | |||
|---|---|---|---|---|---|---|---|
| Sector | Amount | D % | Amount | D % | |||
| Total Wireless Revenue | 175.5 | 162.8 | 12.7 | 7.8% | 236.4 | - 60.9 | - 25.8% |
| ¨ PCS Resale | 174.0 | 162.5 | 11.5 | 7.1% | 236.5 | -62.5 | -26.4% |
| · PCS Service | 129.5 | 101.6 | 27.9 | 27.4% | 117.8 | 11.7 | 10.0% |
| · Handset Sales | 44.6 | 60.9 | -16.3 | -26.8% | 118.8 | -74.2 | -62.5% |
| ¨ Other Wireless Revenue | 1.4 | 0.3 | 1.1 | 375.7% | -0.1 | 1.6 | -1063.7% |
| PCS Resale Expense | 99.1 | 98.3 | 0.8 | 0.9% | 151.0 | - 51.9 | - 34.4% |
| · Cost of Handset | 50.6 | 54.8 | -4.2 | -7.7% | 105.5 | -54.9 | -52.1% |
| · Interconnection Fee to KTF | 48.6 | 43.5 | 5.1 | 11.6% | 45.5 | 3.0 | 6.6% |
| Resale subscribers('000) | 1,655 | 1,366 | 289 | 21.2% | 1,608 | 47.0 | 2.9% |
Wireless revenue increased KRW 12.7 billion (7.8%) to KRW 175.5 billion as accumulated subscriber growth continued to contribute the PCS service revenue to increase.
Compared to the previous quarter, it decreased by KRW 60.9 billion (25.8%) as revenue from handset sales decreased, because PCS resale promotion was softened in the second quarter.
- Satellite Revenue
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q /2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Satellite Revenue | 31.0 | 28.4 | 2.6 | 9.2% | 30.0 | 1.1 | 3.5% |
In the second quarter of 2003, satellite revenue improved by KRW 2.6 billion (9.2%) over 2Q 2002 and KRW 1.1 billion (3.5%) over 1Q 2003 and recorded KRW 31.0 billion, due to an increase in transmission satellite service.
- Other Revenue
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Other Revenue | 57.7 | 29.7 | 28.0 | 94.3% | 59.1 | -1.4 | -2.4% |
| · SI/NI | 24.7 | 0.8 | 23.9 | 2991.0% | 24.4 | 0.3 | 1.3% |
| · Real | |||||||
| Estate | 11.2 | 9.0 | 2.2 | 23.9% | 11.7 | -0.5 | -4.3% |
Compared to the same period last year, other revenues for 2Q 2003 increased KRW 19.0 billion (49.0%) to KRW 57.7 billion, benefited by revenue increase in SI/NI(System Integration and Network Integration) by KRW 23.9 billion and real estate by KRW 2.2 billion (23.9%).
B. Operating Expenses
- Overview
Operating expense for the second quarter of 2003 reflected our focus on managing costs to improve profitability corresponding to 2%~3% revenue increase. Three remarkable points were found this quarter i) labor cost reduction supported by performance-based bonus cut, introduction of volunteer five-day work-week, and volunteery retirement, ii) depreciation cost reduction trend as efficient CAPEX spending emphasized, and iii) reduction in the cost variance in quarter to lessen seasonal fluctuation, especially 113.7% of performanced-based bonus, which is one forth of the total performance-based bonus of 455% is equally distributed to each quarter, and provision for doubtful accounts recognition enhanced.
In the second quarter of 2003 total operating expense decreased KRW 108.4 billion (4.5%) to KRW 2,303.6 billion compared to the same period last year, mainly driven by cost reduction in labor cost by KRW 156.3 billion, depreciation cost by KRW 37.3 billion due to efficient CAPEX spending, repairs & maintenance cost by KRW 22.0 billion and LM interconnection cost by 36.7 billion.
Compared to the previous quarter, total expense increased by KRW 56.1 billion (2.5%), primarily due to increase in depreciation cost by KRW 26.0 billion due to CAPEX increase, repairs & maintenance cost by KRW 36.2 billion
- Labor Expense
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2003 1Q | 2003 1Q | 2003 2Q /2002 2Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Labor Expense | 620.3 | 776.6 | -156.3 | -20.1% | 634.9 | -14.6 | -2.3% |
| · Salaries & Wages | 448.6 | 597.0 | -148.4 | -24.9% | 439.3 | 9.3 | 2.1% |
| - Salaries | 274.3 | 277.6 | -3.3 | -1.2% | 275.5 | -1.3 | -0.5% |
| - Wages | 173.1 | 318.8 | -145.7 | -45.7% | 162.3 | 10.8 | 6.7% |
| * Perfromance-based Bonus | 111.6 | 238.7 | -127.1 | -53.2% | 89.0 | 22.6 | 25.4% |
| * Monthly & Annual Leave Compensation | 11.6 | 28.7 | -17.2 | -59.7% | 24.0 | -12.4 | -51.7% |
| - Miscellaneous | 1.2 | 0.6 | 0.6 | 107.5% | 1.6 | -0.3 | -19.9% |
| · Emloyee Benefits | 130.4 | 102.5 | 27.9 | 27.2% | 120.5 | 9.8 | 8.2% |
| - Bonus | 36.9 | 2.6 | 34.3 | 1320.5% | 33.8 | 3.1 | 9.2% |
| ø Retirement Allownace | 41.3 | 77.1 | -35.8 | -46.5% | 75.0 | -33.7 | -45.0% |
Beginning from this year, performance-based bonus totaling 455% of one month basic salary and employee fringe benefit totaling 200% are distributed equally throughout the year. As results, labor expense of the second quarter this year decreased KRW 156.3 billion (20.1%) to KRW 620.3 billion.
Pre-scheduled performance-based bonus(bonus) for the second quarter of 2003 was 205%, but only 113.7% of bonus was recorded. With the effort to reduce quarterly cost flucuation, the labor cost was declined by approximately KRW 83.0 billion, which equals to the remaining 91.3% of bonus. Among 91.3% (equals to KRW 83.0 billion), 63.7% (amounted to KRW 58.0 billion) was pre-recognized in the first quarter of 2003 and the remaining 27.6% (equals to KRW 25.0 billion) will be distributed to the third and forth quarter by 13.8%(amounted to KRW 12.5 billion).
- Annual Bonus Payment Schedule ( 100% equals to one months basic salary )
| Year | Types of benefit | 1Q | 2Q | 3Q | 4Q | Total |
|---|---|---|---|---|---|---|
| 2002 | Employee fringe benefit | 100 % | | 100 % | | 200 % |
| Performance-based benefit | 50 % | 250 % | 100 % | 150 % | 550 % | |
| 2003 | Employee fringe benefit | 50 % | 50 % | 50 % | 50 % | 200 % |
| Performance-based benefit | 113.7 % | 113.7 % | 113.7 % | 113.7 % | 455 % |
Despite the effort to reduce quarterly cost fluctuation, the bonus for the second quarter increased by KRW 22.6 billion (25.4%), due to recategorization of expense as a result of
organization reform. Some R&D workforce moved to business departments, for example 2.3Ghz and resulted their labor cost, which used to be recorded under R&D expense line, are now recognized under labor cost.
Compared to the previous quarter, total labor cost decreased by KRW 14.9 billion (2.3%), supported by a decrease in paid vacation by KRW 12.4 billion and retirement allowance by KRW 33.7 billion, despite an increase in performance-based bonus payment.
Up to second quarter this year, 234 employees retired volunteerly (1Q: 167, 2Q: 67) and 171 employees are standing in the third quarter.
3. Depreciation Cost
Depreciation cost for 2Q 2003 increased KRW 26.0 billion (4.8%) to KRW 571.2 billion, due to the general CAPEX trend that spending increases toward end of year.
4. Commissions
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Total Commission | 148.1 | 140.6 | 7.5 | 5.3% | 133.3 | 14.8 | 11.1% |
| · Commissions to | |||||||
| KT Linkus | 30.1 | 35.2 | -5.1 | -14.4% | 30.2 | -0.1 | -0.30% |
| · Commissions to | |||||||
| 114 Phone Directory | 31.0 | 31.6 | -0.6 | -2% | 31.1 | 0.0 | -0.1% |
| · Commissions to | |||||||
| Call Center | 32.9 | 17.6 | 15.3 | 86.8% | 23.6 | 9.2 | 39.0% |
| · Others | 54.1 | 56.1 | -2.0 | -3.6% | 48.3 | 5.8 | 11.9% |
In the second quarter of 2003, commssion expense recorded KRW 148.1 billion. Compared to the same period last year, it increased by KRW 7.5 billion (5.3%), due to a rise in outsourcing to improve operational efficiency and customer satisfaction.
5. Sales Promotion
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| · Sales | |||||||
| Promotion | 46.3 | 36.2 | 10.1 | 27.9% | 38.6 | 7.7 | 19.9% |
| · Sales | |||||||
| Commission | 30.4 | 13.0 | 17.4 | 134.0% | 31.9 | -1.5 | -4.8% |
| · Provision for | |||||||
| doubtful accounts | 60.6 | 15.1 | 45.5 | 301.2% | 48.5 | 12.1 | 25.0% |
| · Advertising | 43.6 | 49.6 | -6.0 | -12.1% | 23.8 | 19.8 | 83.1% |
Sales promotion and sales commission increased to enhance broadband and promote new service rolling out, such as wireless LAN.
In the second quarter of 2003 provision for doubtful accounts increased KRW 45.5 billion (301.2%) to KRW 60.6 billion compared to a year ago, mainly due to increased accounts receivable overdue as economy weakened and rate increase in provision for doubtful accounts from 11.1% to 15.6%.
6. Repairs & Maintenance
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| · Repair & | |||||||
| Maintenance | 82.4 | 104.4 | -22.0 | -21.1% | 46.2 | 36.2 | 78.2% |
Among CAPEX declining trend, repairs and maintenance cost, which is used to improve quality of service, decreased KRW 22.0 billion (21.1%) to KRW 82.4billion.
Compared to 1Q 2003, it rose KRW 36.2 billion (78.2%), due to a rising CAPEX spending.
7. Cost of Goods Sold
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Cost of Goods Sold | 77.6 | 65.1 | 12.5 | 19.2% | 122.9 | -45.3 | -37% |
| · PCS Handset | |||||||
| Cost | 50.6 | 54.8 | -4.2 | -7.7% | 105.5 | -54.9 | -52.1% |
| · Notebook | 13.7 | 0.0 | 13.7 | | 10.8 | 2.9 | 26.7% |
| · PDA | 10.5 | 0.0 | 10.5 | | 2.6 | 7.9 | 308.6% |
| · Wireless LAN | |||||||
| Card | 2.5 | 0.0 | 1.6 | | 1.7 | 0.8 | 45.6% |
| · Others | 24.5 | 10.3 | 14.23 | 138.5% | 2.3 | 22.2 | 982% |
Cost of goods sold for this quarter amounted to KRW 77.6 billion, an increase of KRW 12.5 billion (19.2%) over 2Q 2002, driven by an increase of notebook, PDA and wireless LAN card purchase as wireless LAN, Nespot, subscriber increased.
Compared to the previous quarter, it decreased by KRW 45.3 billion (36.8%), due to a decline in PCS handset purchase in a reflection to slow PCS resale subscriber growth.
8. Cost of Service
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q / 2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Cost of Service Provided | 457.6 | 437.6 | 20.0 | 4.6% | 455.9 | 1.7 | 0.4% |
| · Cost of | |||||||
| Service | 131.3 | 92.7 | 38.6 | 41.7% | 88.8 | 42.6 | 48.0% |
| - PCS Resale Network Cost to KTF | 48.6 | 43.5 | 5.1 | 11.6% | 45.5 | 3.0 | 6.6% |
| - B&A Service Cost | 35.2 | 18.8 | 16.4 | 87.5% | 12.6 | 22.6 | 178.7% |
| - Others | 47.5 | 30.4 | 17.1 | 56.3% | 30.6 | 17.0 | 55.5% |
| · SI/NI Service | |||||||
| Cost | 23.5 | 0.0 | 23.5 | | 22.3 | 1.2 | 5.4% |
| · International | |||||||
| Settlement Cost | 44.7 | 50.1 | -5.4 | -10.9% | 53.7 | -9.0 | -16.8% |
| · LM | |||||||
| Interconnection Cost | 258.1 | 294.8 | -36.7 | -12.4% | 291.1 | -33.0 | -11.3% |
In the second quarter of 2003 cost of service increased KRW 20.0 billion (4.6%) over 2Q 2002 and KRW 1.7 billion (0.4%) over 1Q 2003 to KRW 457.6 billion. Because cost of
services, including B&A and other items, and SI/NI service cost offset the reductions in LM interconnection cost, benefited by 10.3% LM interconnection rate cut and international settlement cost.
C. Non-Operating Revenue
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Non-operating Revenue | 90.3 | 502.1 | -411.8 | -82.0 % | 933.0 | -842.8 | -90.3 % |
| · Gains on Disp. | |||||||
| Of Inv. Assets | 0.0 | 278.0 | -278.0 | -100.0 % | 775.2 | -775.2 | -100.0 % |
| · Interest | |||||||
| Income | 19.3 | 15.3 | 4.0 | 25.9 % | 26.9 | -7.7 | -28.5 % |
| · FX Transaction | |||||||
| Gain | 1.7 | 7.5 | -5.8 | -77.1 % | 6.0 | -4.3 | -71.5 % |
| · FX Translation | |||||||
| Gain | -12.4 | 122.6 | -135.0 | -110.1 % | 18.9 | -31.3 | -165.7 % |
| · USO | |||||||
| Fund | 39.5 | 21.1 | 18.4 | 87.0 % | 26.9 | 12.6 | 46.8 % |
| · Others | 42.2 | 57.5 | -15.3 | -26.5 % | 79.1 | -36.8 | -46.6 % |
· Non-operating revenue for 2Q 2003 recorded KRW 90.3 billion, down KRW 411.8 billion (82.0%) over 2Q 2002 and KRW 842.8 billion (90.3%) over 1Q 2003, primarily due to an elimination of gain on SKT share disposal.
- Gain on disposal of SKT shares
| No. of shares | 1Q 2003 — 3,809,288 | 4Q 2002 — 4,457,635 | 2Q 2002 — 1,000,000 |
|---|---|---|---|
| Book value per share (KRW) | 18,868 | 18,868 | 18,868 |
| Amount of sales (KRW, bn) | 838.0 | 1,020.8 | 265.7 |
| Gain on sales(KRW, bn) | 775.2 | 908.3 | 246.1 |
| Implied tax(KRW, bn) | 218.1 | 208.8 | 40.5 |
| Impact on net income (KRW, bn) | 557.1 | 699.5 | 205.6 |
20
D. Non-Operating Expenses
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Non-operating Expense | 124.1 | 292.7 | -168.6 | -57.6 % | 321.0 | -196.8 | -61.3 % |
| · Interest | |||||||
| Expense | 106.4 | 106.6 | -0.2 | -0.2 % | 114.9 | -8.5 | -7.4 % |
| · FX Transaction | |||||||
| Loss | 1.8 | 8.0 | -6.2 | -78.1 % | 6.1 | -4.3 | -71.3 % |
| · FX Translation | |||||||
| Loss | -65.4 | 23.7 | -89.1 | 375.7 % | 66.1 | -131.5 | -198.8 % |
| · Loss on Equity | |||||||
| Method | 26.8 | 29.8 | -3.0 | -10.2 % | 48.8 | -22.0 | -45.2 % |
| · Loss on Disp. Of Fixed. | |||||||
| Assets | 0.0 | 25.6 | -25.6 | -100.0 % | 24.8 | -24.8 | -100.0 % |
| · Others | 54.6 | 99.0 | -44.4 | -44.9 % | 60.2 | -5.6 | -9.3 % |
· Non-operating expense for this quarter decreased KRW 168.6 billion (57.6%) over 2Q 2002 and KRW 196.8 billion (61.3%) over 1Q 2003 to KRW 124.1 billion. The main reasons of the decrease were i) improvement on the loss on equity method investments as subsidiaries earnings improved ii) government contribution rate reduction from 1% to 0.75% iii) decline in the size of the loss on disposition of tangible assets as switches and obsolete cables being disposed.
21
E. Net Income
KRW billion
| Sector | 2003 2Q | 2002 2Q | 2003 2Q / 2002 2Q | 2003 1Q | 2003 2Q /2003 1Q | ||
|---|---|---|---|---|---|---|---|
| Amount | D % | Amount | D % | ||||
| Income Before Tax | 609.4 | 660.6 | -51.2 | -7.8% | 1336.7 | -727.4 | -119.4% |
| · Income Tax | 283.8 | 172.1 | 111.7 | 64.9% | 376.1 | -92.3 | -24.5% |
| · Effective Tax | |||||||
| Rate | 46.6% | 26.1% | 20.5%P | 28.1% | 18.4%P | ||
| Net Income | 325.5 | 488.4 | -162.9 | -33.3% | 960.6 | -635.1 | -66.1% |
| Gain on SKT shares disposition | 0.0 | 205.6 | -205.6 | | 557.1 | -557.1 | -100.0% |
| Normalized Net Income | 325.5 | 282.8 | 42.7 | 15.1% | 403.5 | -78.0 | -19.3% |
· Net income for the second quarter this year recorded KRW 325.5 billion, a decrease by KRW 162.9 billion (33.3%) over 2Q 2002 and KRW 635.1 billion (66.1%) over 1Q 2003. It is mainly because of the gain on SKT share disposal, which was reflected KRW 205.6 billion in the second quarter 2002 and KRW 557.1 billion in the first quarter 2003.
· Normalized net income amounted to KRW 325.5 billion, an increase by KRW 42.7 billion (15.1%) over 2Q 2002 but a decrease by KRW 78.0 billion (19.3%) over 1Q 2003. It is supported by the reduction in operating expense and improvement in non-operting items.
· Income tax for the second quarter of 2003 was KRW 283.8 billion and its effective tax rate was 46.6%. The reason behind the sudden increase was feasibility of realization of some deferred tax asset(DTA) is low due to the realizability test for deferred tax asset(DTA) related to loss/gain on equity method and others.
22
F. Balance Sheet Highlights
1. Assets decreased KRW 276.3 billion (1.4%) to KRW 20,157.6 billion
· Current assets decreased KRW 139.2 billion (3.6%) to KRW 3,734.2 billion, compared to 1Q 2003. This is mainly due to a decrease in cash and cash equivalents resulting from 1% share buyback.
· Fixed assets decreased KRW 137.1 billion (0.8%) to KRW 16,423.5 billion, due to a reduction in tangible asset of KRW 201.6 billion as efficient CAPEX spending is emphasized.
I.
2. Liabilities decreased KRW 501.8 billion (3.8%) to KRW 12,734.4 billion
· Current liabilities decreased KRW 517.5 billion (13.2%) to KRW 3,402.4 billion, as dividend payable and income tax payable paid off, maturing debt redeemed and accounts payable reduced.
· Despite continued reduction in installation deposits with a rising number of switching subscribers to non-refundable deposit program, long-term liabilities increased KRW 15.8 (0.2%) billion to KRW 9,332.0 billion, because of newly issued US$ 250,000,000 bond(Maturity: 3 years, Interest rate: 6M Libor + 0.45%~0.80%)
3. Shareholders equity increased KRW 225.5 billion (3.1%) to KRW 7,423.3 billion
· Despite 1% share buyback (KRW 138.0 billion) in the second quarter this year, net income of KRW 325.5 billion contributed the total shareholders equity to increase.
23
Summary Statistics
| Dec-00 | Dec-01 | Jun-02 | Jul-02 | Aug-02 | Sep-02 | Oct-02 | Nov-02 | Dec-02 | Jan-03 | Feb-03 | Mar-03 | Apr-03 | May-03 | Jun-03 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Broadband Subs (1) | 1,729,320 | 3,858,194 | 4,333,268 | 4,388,929 | 4,465,225 | 4,558,006 | 4,673,936 | 4,796,191 | 4,922,535 | 5,052,949 | 5,129,782 | 5,248,075 | 5,297,325 | 5,348,086 | 5,392,801 |
| Net Addition | 1,719,021 | 2,128,874 | 78,417 | 55,661 | 76,296 | 92,781 | 115,930 | 122,255 | 126,344 | 130,414 | 76,833 | 118,293 | 49,250 | 50,761 | 44,715 |
| Megapass Lite | 1,266,004 | 3,128,605 | 3,505,855 | 3,549,537 | 3,611,490 | 3,686,148 | 3,782,533 | 3,883,839 | 3,988,336 | 4,148,469 | 4,219,691 | 4,326,374 | 4,371,516 | 4,417,083 | 4,470,065 |
| - VDSL portion | 278,532 | 373,977 | 478,704 | 590,757 | 684,782 | 778,057 | |||||||||
| Megapass Premium | 463,199 | 666,695 | 696,733 | 695,990 | 698,022 | 703,533 | 708,834 | 712,971 | 715,829 | 716,666 | 711,802 | 711,809 | 705,088 | 697,675 | 675,737 |
| - VDSL portion | 16,207 | 21,769 | 29,026 | 37,442 | 45,476 | 53,533 | |||||||||
| Megapass Special (2) | 218 | 388 | 426 | 453 | 482 | 569 | 712 | 863 | 969 | ||||||
| Megapass Ntopia | 117 | 62,894 | 130,680 | 143,402 | 155,713 | 168,325 | 182,351 | 198,993 | 217,944 | 187,361 | 197,807 | 209,323 | 220,009 | 232,465 | 246,030 |
| *Total VDSL applied subs (3) | 8,566 | 25,557 | 60,000 | 110,000 | 147,000 | 295,192 | 396,228 | 508,299 | 628,911 | 731,121 | 832,559 | ||||
| Broadband ARPU | 39,403 | 30,159 | 30,476 | 30,342 | 30,171 | 29,800 | 29,406 | 29,160 | 29,037 | 28,820 | 28,664 | 28,660 | 30,853 | 31,637 | |
| Dec-00 | Dec-01 | Jun-02 | Jul-02 | Aug-02 | Sep-02 | Oct-02 | Nov-02 | Dec-02 | Jan-03 | Feb-03 | Mar-03 | Apr-03 | May-03 | Jun-03 | |
| WLAN Subs | 8,124 | 9,695 | 19,689 | 55,261 | 71,829 | 91,102 | 112,530 | 113,207 | 126,198 | 148,748 | 180,667 | 200,082 | 260,805 | ||
| · Megapass | |||||||||||||||
| Nespot(Residential) | 7,607 | 6,040 | 14,093 | 25,319 | 32,409 | 39,209 | 47,768 | 58,127 | 79,626 | 105,651 | 128,326 | 143,120 | 169,871 | ||
| · Kornet | |||||||||||||||
| Nespot(Corporates) | 517 | 558 | 458 | 1,754 | 2,085 | 2,347 | 2,591 | 2,627 | 2,344 | 2,338 | 2,434 | 2,246 | 2,450 | ||
| · Nespot ID | |||||||||||||||
| Only | 3,097 | 5,138 | 28,188 | 37,335 | 49,546 | 62,171 | 52,453 | 44,228 | 40,759 | 49,907 | 54,716 | 88,484 | |||
| Nespot ARPU(4) | 12,823 | 15,207 | 12,743 | 13,053 | 12,833 | 13,077 | |||||||||
| Dec-00 | Dec-01 | Jun-02 | Jul-02 | Aug-02 | Sep-02 | Oct-02 | Nov-02 | Dec-02 | Jan-03 | Feb-03 | Mar-03 | Apr-03 | May-03 | Jun-03 | |
| Bizmeka Subs | 2,276 | 44,000 | 41,154 | 67,101 | 63,392 | 59,951 | 54,680 | 51,675 | 48,610 | 63,500 | 79,800 | 80,600 | 69,327 | 56,797 |
| Dec-00 | Dec-01 | Jun-02 | Jul-02 | Aug-02 | Sep-02 | Oct-02 | Nov-02 | Dec-02 | Jan-03 | Feb-03 | Mar-03 | Apr-03 | May-03 | Jun-03 | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Leased Lines | 592,400 | 593,832 | 602,223 | 603,378 | 602,313 | 600,704 | 600,662 | 600,072 | 599,136 | 576,999 | 571,383 | 568,906 | 554,482 | 533,536 | 520,030 | ||
| · Local leased | |||||||||||||||||
| line | 532,264 | 538,308 | 549,688 | 551,361 | 551,113 | 549,750 | 549,569 | 549,381 | 548,509 | 529,709 | 524,658 | 521,539 | 507,895 | 488,089 | 475,040 | ||
| · DLD leased | |||||||||||||||||
| line | 59,763 | 55,160 | 52,168 | 51,652 | 50,835 | 50,587 | 50,724 | 50,320 | 50,256 | 46,917 | 46,374 | 47,013 | 46,232 | 45,101 | 44,644 | ||
| · International | |||||||||||||||||
| leased line | 275 | 265 | 268 | 264 | 263 | 264 | 265 | 266 | 264 | 265 | 245 | 247 | 248 | 239 | 239 | (E) | |
| · Broadcasting leased | |||||||||||||||||
| line | 98 | 99 | 99 | 101 | 102 | 103 | 104 | 105 | 107 | 108 | 106 | 107 | 107 | 107 | 107 | (E) | |
| Internet Leased Lines | 26,095 | 28,381 | 29,531 | 29,725 | 30,094 | 30,744 | 31,882 | 33,408 | 35,350 | 38,469 | 38,071 | 38,307 | 39,446 | 40,139 | 40,999 | ||
| Dec-00 | Dec-01 | Jun-02 | Jul-02 | Aug-02 | Sep-02 | Oct-02 | Nov-02 | Dec-02 | Jan-03 | Feb-03 | Mar-03 | Apr-03 | May-03 | Jun-03 | |||
| Fixed-line Subs (000) (5) | 21,524 | 21,897 | 22,109 | 22,114 | 22,147 | 22,201 | 22,266 | 22,313 | 22,327 | 22,273 | (7) | 22,295 | 22,317 | 22,321 | 22,342 | 22,348 | |
| Residential users (%) | 73 % | 72 % | 72 % | 72 % | 72 % | 72 % | 72 % | 72 % | 72 % | 72 | % | 72 % | 72 % | 72 % | 72 % | 72 | % |
| Non-refundable users(%) | 32 % | 48 % | 61 % | 62 % | 63 % | 64 % | 65 % | 65 % | 66 % | 66 | % | 67 % | 68 % | 69 % | 70 % | 70 | % |
| Fixed-line installed (000) | 24,383 | 24,854 | 24,969 | 25,037 | 25,025 | 24,973 | 25,082 | 25,075 | 25,062 | 25,104 | 25,080 | 25,078 | 25,066 | 25,055 | 25,065 | ||
| Digital(%) | 79.7 % | 87.5 % | 87.7 % | 88.1 % | 88.3 % | 88.9 % | 89.4 % | 89.7 % | 90.4 % | 92.3 | % | 92.9 % | 93.1 % | 94.1 % | 94.7 % | 94.8 | % |
| Caller ID Users (000) | | 848 | 1,506 | 1,609 | 1,702 | 1,740 | 1,816 | 1,883 | 1,946 | 2,098 | 2,195 | 2,314 | 2,395 | 2,501 | 2,769 | ||
| VAS users (000) | 8,548 | 8,948 | 9,007 | 9,026 | 9,042 | 9,071 | 9,098 | 9,117 | 9,113 | 9,145 | 9,161 | 9,214 | 9,187 | 9,140 | 9,137 | ||
| Dec-00 | Dec-01 | Jun-02 | Jul-02 | Aug-02 | Sep-02 | Oct-02 | Nov-02 | Dec-02 | Jan-03 | Feb-03 | Mar-03 | Apr-03 | May-03 | Jun-03 | |||
| Population (000) | 47,008 | 47,343 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | 47,640 | ||
| Number of Household | 14,608 | 14,834 | 15,063 | 15,063 | 15,063 | 15,063 | 15,063 | 15,063 | 15,063 | 15,063 | 15,297 | 15,297 | 15,297 | 15,297 | 15,297 | ||
| Broadband Market Share (6) |
| KT | 45.5% | 45.8% | 46.2% | 46.7% | 47.3% | 47.8% | 47.9% | 48.3% | 48.5% | 48.5% | 48.6% | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Hanaro | 28.5% | 28.6% | 28.4% | 28.1% | 27.6% | 27.4% | 27.4% | 27.3% | 27.2% | 26.9% | 26.7% | ||||
| Thrunet | 13.3% | 13.1% | 12.9% | 12.7% | 12.5% | 12.3% | 12.1% | 11.8% | 11.7% | 11.6% | 11.6% | ||||
| Others | 12.6% | 12.5% | 12.5% | 12.5% | 12.6% | 12.5% | 12.6% | 12.6% | 12.6% | 12.9% | 13.1% | ||||
| KT Leased Line Market Share | |||||||||||||||
| KT | 70.9% | 70.0% | 70.8% | 70.7% | 70.7% | N/A | 70.7% | 70.7% | 70.7% | 70.5% | 70.6% | 70.6% | 70.3% | 70.2% | 70.2% |
| Fixed-line Market Share | |||||||||||||||
| Local M/S (subscriber base) | 98.3% | 96.9% | 96.1% | 96.0% | 95.9% | 95.8% | 95.7% | 95.6% | 96.0% | 95.9% | 95.8% | 95.8% | 95.7% | 95.7% | |
| DLD M/S (revenue base) | 85.6% | 84.5% | 85.0% | 85.0% | 84.8% | 84.9% | 84.9% | 85.0% | 85.1% | 84.3% | 84.0% | 84.5% | 84.2%(E) | 84.2% | |
| ILD (revenue base) | 64.3% | 67.1% | 67.2% | 66.6% | 66.6% | 66.4% | 66.2% | 66.5% | 66.5% | 68.8% | 66.3% | 65.8% | 66.7%(E) | 66.9% | |
Selective income statement for year 2002 under the new net revenue recognition accounting policy
The following table is provided for comparative purpose to shows some of the items that would change under the new net revenue recognition accounting policy.
| 2002.1Q — Net | Total | Change | 2002.2Q — Net | Total | Change | 2002.3Q — Net | Total | Change | 2002.4Q — Net | Total | Change | 2002 — Net | Total | Change | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Revenues | 2,881.8 | 2,918.8 | (37.0 | ) | 2,863.2 | 2,890.2 | (27.0 | ) | 2,802.3 | 2,878.2 | (75.9 | ) | 2,830.4 | 3,021.6 | (191.2 | ) | 11,377.6 | 11,708.8 | (331.2 | ) | ||||||||||
| ¨ Internet | ||||||||||||||||||||||||||||||
| Revenue | 451.5 | 452.4 | (0.9 | ) | 497.7 | 498.4 | (0.7 | ) | 499.6 | 501.1 | (1.5 | ) | 544.0 | 548.5 | (4.5 | ) | 1,992.7 | 2,000.4 | (7.7 | ) | ||||||||||
| · Kornet | 70.5 | 71.1 | (0.7 | ) | 72.1 | 72.7 | (0.6 | ) | 67.9 | 69.4 | (1.5 | ) | 67.5 | 70.8 | (3.3 | ) | 277.9 | 284.0 | (6.1 | ) | ||||||||||
| - Kornet-World | 0.0 | 0.7 | (0.7 | ) | 0.3 | 0.9 | (0.6 | ) | 1.1 | 2.7 | (1.5 | ) | 0.0 | 3.3 | (3.3 | ) | 1.4 | 7.6 | (6.1 | ) | ||||||||||
| · Other | ||||||||||||||||||||||||||||||
| Internet | 25.6 | 25.7 | (0.1 | ) | 39.7 | 39.7 | (0.0 | ) | 29.5 | 29.5 | (0.0 | ) | 47.3 | 48.1 | (0.8 | ) | 142.0 | 143.0 | (1.0 | ) | ||||||||||
| - Others (Hanmir, VoIP etc) | 13.0 | 13.2 | (0.1 | ) | 15.2 | 15.3 | (0.0 | ) | 6.5 | 6.5 | (0.0 | ) | 10.3 | 11.1 | (0.8 | ) | 45.1 | 46.1 | (1.0 | ) | ||||||||||
| Hanmir | 0.7 | 0.8 | (0.1 | ) | 2.1 | 2.2 | (0.0 | ) | 3.9 | 3.9 | 0.0 | 3.5 | 3.9 | (0.4 | ) | 10.2 | 10.8 | (0.6 | ) | |||||||||||
| Wireless Internet | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | (0.0 | ) | 0.0 | 0.4 | (0.3 | ) | 0.0 | 0.4 | (0.4 | ) | ||||||||||||
| ¨ Telephone | ||||||||||||||||||||||||||||||
| Revenue | 1,192.3 | 1,205.0 | (12.8 | ) | 1,205.7 | 1,217.1 | (11.4 | ) | 1,213.1 | 1,225.9 | (12.8 | ) | 1,230.0 | 1,245.6 | (15.6 | ) | 4,841.0 | 4,893.7 | (52.6 | ) | ||||||||||
| · Local | 340.0 | 352.8 | (12.8 | ) | 333.2 | 344.7 | (11.4 | ) | 322.4 | 335.2 | (12.8 | ) | 352.7 | 368.3 | (15.6 | ) | 1,348.3 | 1,401.0 | (52.6 | ) | ||||||||||
| - VAS fee of Third party | 0.0 | 12.8 | (12.8 | ) | 0.0 | 11.4 | (11.4 | ) | 0.7 | 13.5 | (12.8 | ) | 0.0 | 15.6 | (15.6 | ) | 0.7 | 53.3 | (52.6 | ) | ||||||||||
| ¨ Wireless | ||||||||||||||||||||||||||||||
| Revenue | 167.9 | 167.9 | 0.0 | 162.8 | 162.8 | 0.0 | 167.7 | 167.8 | (0.0 | ) | 140.0 | 140.0 | (0.0 | ) | 638.4 | 638.5 | (0.1 | ) | ||||||||||||
| · Other | ||||||||||||||||||||||||||||||
| Wireless | 0.4 | 0.4 | 0.0 | 0.3 | 0.3 | 0.0 | 0.5 | 0.5 | (0.0 | ) | 0.7 | 0.7 | (0.0 | ) | 1.8 | 1.9 | (0.1 | ) | ||||||||||||
| - KT_TRS | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | (0.0 | ) | 0.0 | 0.0 | (0.0 | ) | 0.0 | 0.0 | (0.0 | ) | ||||||||||||
| ¨ Other | ||||||||||||||||||||||||||||||
| Revenues | 24.6 | 39.1 | (14.4 | ) | 29.7 | 44.3 | (14.6 | ) | 24.5 | 79.0 | (54.5 | ) | 20.6 | 182.4 | (161.8 | ) | 99.4 | 344.7 | (245.3 | ) | ||||||||||
| · SI/NI | 0.8 | 15.2 | (14.4 | ) | 0.8 | 15.4 | (14.6 | ) | 2.9 | 57.3 | (54.5 | ) | 8.5 | 170.3 | (161.8 | ) | 12.9 | 258.2 | (245.3 | ) | ||||||||||
| ¨ Sales | ||||||||||||||||||||||||||||||
| Discount | (38.2 | ) | (29.2 | ) | (9.0 | ) | (61.1 | ) | (60.7 | ) | (0.3 | ) | (84.5 | ) | (77.4 | ) | (7.1 | ) | (86.9 | ) | (77.2 | ) | (9.7 | ) | (270.7 | ) | (244.5 | ) | (26.1 | ) |
| · Discount on PCS | ||||||||||||||||||||||||||||||
| Resale | (9.0 | ) | (0.0 | ) | (9.0 | ) | (0.3 | ) | (0.0 | ) | (0.3 | ) | (7.1 | ) | 0.0 | (7.1 | ) | (9.7 | ) | 0.0 | (9.7 | ) | (26.1 | ) | (0.0 | ) | (26.1 | ) | ||
| Operating Expenses | 2,111.6 | 2,148.6 | (37.0 | ) | 2,412.0 | 2,439.0 | (27.0 | ) | 2,378.5 | 2,454.4 | (75.9 | ) | 2,681.5 | 2,872.7 | (191.2 | ) | 9,583.6 | 9,914.8 | (331.2 | ) | ||||||||||
| ¨ Cost of | ||||||||||||||||||||||||||||||
| Service Provided | 401.9 | 429.9 | (28.0 | ) | 437.6 | 464.3 | (26.7 | ) | 445.0 | 513.8 | (68.8 | ) | 461.3 | 642.8 | (181.5 | ) | 1,745.7 | 2,050.8 | (305.1 | ) | ||||||||||
| · Cost of | ||||||||||||||||||||||||||||||
| Service | 73.1 | 86.7 | (13.6 | ) | 92.7 | 104.8 | (12.1 | ) | 85.8 | 100.1 | (14.4 | ) | 121.4 | 141.2 | (19.7 | ) | 373.0 | 432.8 | (59.8 | ) | ||||||||||
| - Others | 20.7 | 34.3 | (13.6 | ) | 30.4 | 42.5 | (12.1 | ) | 27.7 | 42.0 | (14.4 | ) | 57.8 | 77.5 | (19.7 | ) | 136.6 | 196.4 | (59.8 | ) | ||||||||||
| Hanmir | 0.3 | 0.5 | (0.1 | ) | 0.8 | 0.8 | (0.0 | ) | 3.4 | 3.4 | 0.0 | 2.2 | 2.6 | (0.4 | ) | 6.7 | 7.3 | (0.6 | ) | |||||||||||
| Kornet-World | 0.0 | 0.7 | (0.7 | ) | 0.0 | 0.6 | (0.6 | ) | 0.0 | 1.5 | (1.5 | ) | 0.1 | 3.4 | (3.3 | ) | 0.1 | 6.2 | (6.1 | ) | ||||||||||
| VAS fee | 0.6 | 13.4 | (12.8 | ) | 0.1 | 11.5 | (11.4 | ) | 0.0 | 12.8 | (12.8 | ) | 5.7 | 21.3 | (15.6 | ) | 6.4 | 59.0 | (52.6 | ) | ||||||||||
| Wireless Internet | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 | (0.0 | ) | 4.2 | 4.5 | (0.3 | ) | 4.4 | 4.8 | (0.4 | ) | ||||||||||||
| KT_TRS | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | (0.0 | ) | 0.0 | (0.0 | ) | (0.0 | ) | 0.0 | (0.0 | ) | (0.0 | ) | 0.0 | (0.1 | ) | |||||||||
| · SI/NI | 1.1 | 15.6 | (14.4 | ) | 0.0 | 14.6 | (14.6 | ) | 1.7 | 56.1 | (54.5 | ) | 5.9 | 167.7 | (161.8 | ) | 8.7 | 254.0 | (245.3 | ) | ||||||||||
| ¨ Sales | ||||||||||||||||||||||||||||||
| Promotion | 29.2 | 38.2 | 0.0 | 36.2 | 36.5 | 0.0 | 47.9 | 55.0 | 0.0 | 84.3 | 94.0 | 0.0 | 197.7 | 223.8 | 0.0 | |||||||||||||||
| · PCS | ||||||||||||||||||||||||||||||
| Resale | 0.0 | 9.0 | (9.0 | ) | 0.0 | 0.3 | (0.3 | ) | 0.0 | 7.1 | (7.1 | ) | 0.0 | 9.7 | (9.7 | ) | 0.0 | 26.1 | (26.1 | ) | ||||||||||
| Operating Profit | 770.2 | 770.2 | 0.0 | 451.2 | 451.2 | 0.0 | 423.8 | 423.8 | (0.0 | ) | 148.9 | 148.9 | (0.0 | ) | 1,794.1 | 1,794.1 | (0.0 | ) | ||||||||||||
| Operating Margin | 26.7 | % | 26.4 | % | 15.8 | % | 15.6 | % | 15.1 | % | 14.7 | % | 5.3 | % | 4.9 | % | 15.8 | % | 15.3 | % |
Change to Value Added Service with new accounting re-categorization
According to the new accounting re-categorization, some of the revenue in local, DLD, ILD and LM moved to VAS revenue line, resulting 81.1 billion in the second quarter 2003 and 104.4 billion in the first quarter.
| (KRW, billion) | 2Q 2003 | 1Q 2003 |
|---|---|---|
| Revenue moved to VAS from local | 19.0 | 27.7 |
| Revenue moved to VAS from DLD | 12.0 | 15.6 |
| Revenue moved to VAS from ILD | 9.0 | 11.1 |
| Revenuen moved to VAS from LM | 11.0 | 11.3 |
| VAS before re-categorization | 30.1 | 38.7 |
| VAS after re-categorization | 81.1 | 104.4 |
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: August 4, 2003
| KT Corporation | |
|---|---|
| By: | /s/ W HA - J OON C HO |
| Name: Wha - Joon Cho Title: Managing Director |