KT - Earnings call transcript Q4 2020

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Operator

Good morning and good evening.

First of all, thank you all for joining this conference call. And now we will begin the conference for the 2020 fourth quarter earnings results by KT. We'd like to have welcoming remarks from Mr. Seung-Hoon Chi, KT IRO. Mr. then And will questions. CFO, results then and Kyung-Keun present your entertain Yoon, earnings [Operator turn like to would Instructions] we Now to Mr. the over conference Seung-Hoon IRO. Chi, KT

Seung-Hoon Chi

release call. webcasted I'm is slides you as afternoon. Chi in KT's the This Good on listen the Seung-Hoon, can follow currently our via earnings being you website, and IRO. call

Let us XXXX QX KT's earnings presentation. now begin

have Before an under the results estimates and we begin, operating by please reviewed note standards that not and today's outside been auditor. presentation includes financial yet K-IFRS

financial of these completeness business and to accuracy ensure cannot please that we for except reminded change. performances, figures and historical As data, subject be are

Now XXXX I our earnings. Young-jin], [Kim on welcoming for his will invite presentation remarks and CFO,

Unidentified Company Representative

And by to make KT's I Good I've CFO appointed like been I afternoon. the would was just before newly correction company. the think minor a operator, [ I'm that Young-jin so mistake ], begin. I CFO. as that the Kim of

XXXX highlights. begin business with let's KT's Now key

DX as their the of a businesses launch company; and announced of profit a stand-alone of also platform have the we and -- supported KT growth wireless the media decision customers XXXX, offering portfolio. core for breaking top BXB group KRW buyback all for also January rise changes in K mhows, decided media commerce growth KRW to X.Xx rise as a businesses cash of and X.X share to X% the business trillion. Existing KRW a from to a Bank corporate platform commerce consolidated total On threshold XX.XXXX value bolstered to sustaining shareholder posted X BXB X.X million. merge upturn KRW Skylife XX.XXXX of There's business. November, earnings return. the XXX First, And of on X.X the business further made is Enterprise, decided was operating X,XXX XXXX And on of trillion decision to improvement and leading year, total of a sale deposit we on of while which surged KRW growth which KRW we company, t-commerce whole. Since our handset in basis, trillion. company's in growth and year-over-year. we've million operating KT's is On share, the June XX.X% was across rights KT trillion up for and stronger to KT's to trajectory. have year, many which of bring last line increase, normalized, process media on per in the the the with is on X.XXX on was which and KT out media, based year-over-year. is cow XXX with been trillion out of edge, all X.X% BXB there KTH, posted revenue billion our for improvements are recorded to decline highest expansion more of back AI KRW on growth XXst business, wireless the enhancement, we improved COVID-XX mobile trillion, operations growth further revenue HCN. last also Last brand in KRW years. XX to from number confidence profit pay end, a expand KT's And the acquiring BXB year, our platform, while profitability than a also, July, but On businesses pandemic, X.XXXX KRW Service service declined, revenue key profit revenue

foundation. digital that Last platform telco year, and the to a a for from transformation business we our direction digico a year telecom a will is XXXX. KT be Next declared company make with

growth contact-free we XXXX bring improvements or a a a digital world, tangible contact fundamentals and to calling is policies. companies make the in business upon become digital results digital and to the digico, plan new -- bring conversion. company. sector post-COVID-XX transformation order we Government as opportunities norm, a necessary daily our has brought KT. digico big to the speed to digital change backdrop this to public in in befitting to through XXXX consumers also into platform While culture believe We of deal adding brings In

domestic essential telecom big best elements been AI, and services; you have which KT fixed are and digital transformation. wireless and the of competitiveness in is know, As already sharpening providing its data network cloud,

starting We've model, BXB has in real zones, expanding AI big KT data contact hotel KT rooms estate climate. pride. Currently, the centers. has data video, commercial X,XXX,XXX takes biggest been and nationwide. XXX,XXX another including IPTV care services Now base Group apartments successful et subscriber on health have AI building set-top and Big to AI communications, including in AI hotel, many data a and of AI provides adopting services and X,XXX cetera; and amount that around with areas, boxes. KT been to financial, is business wireless fixed great capabilities of and

value of X With utilization. things data and opportunities Act, revision the to have comes become usage. Therefore, is the it there when now for Data more recent favorable greater data

which recently we cloud of platform services. that, cloud cloud not services launched domestic DX providing only are provider, offer hybrid #X but, Korea's on Korea's As we through a top-level top the native

for Next, year. company key let directions brief the me this on the you

combine be #X, cannot for DX specific: to messaging, new transformation AI predictions Korean data including in partner market. big of customer more we AI, KT First, further we customer to its can on we services own. and the product expand add or current plan where services. and In corporates, competitiveness, our a chatbots, gain each can Based enhance on earnest. and failure of partnerships, leased with as To financial We segmentation to do equity push industries, offerings, M&As industries alone and further provide support size convergent this investments. plan the the design growth to and To by actively capabilities investments. pursue will for and equity through market we big public, model and M&As KT BXB lack business We the communications, services but provide line can a business develop sector call, as BXB cloud will large our that such KT digital data work partners is segment, share to to

-- platform to we in growth ground group for to plan businesses. development, Second, order around around restructuring portfolio gain accelerate mainly business

KT have and for studio the financial Securing genie, with with a There growth objectives. such of competitiveness. juncture, to quite this business changes top IPs and ever Recent commerce on in mentioned, of becoming media were into the strengthen by is growth support some a the than and strong view in focus. XX more content the BXB, management launch specialized content wishes is important investments announcement make also more areas; their makeup media with As also plan selected we core for to as of content our provider, platform. content, million leveraging at original businesses line our a and subscribers to

to across CEOs all talent synergies also business. CEOs. financial by appointed group robotics plan to as have subsidiary multiple hold AI global for the we been For financial experts group. maximize Also, positions, businesses, and hired And allowing we our outside

service wireless so bolster subscribers high-quality will communications growth line Internet efficient will and by bring expand and grow for we basis, strengthen more for directions, through will revenue current business, for more commit X% of will cash And to on and we spending. profitability on we than growth. Internet trillion. consolidated our than of Lastly, cow XXXX, revenue the revenue XX profitability as Guided these to a GiGA KRW we of XG stand-alone with business, fixed top so

X.XXXX performances. was a to was handset X.X% X.X% Net to will revenue. X.XXXX as reporting XXX.X efficiency KRW XX.XXXX year on profit cost year as I decline revenue driven X.X% on increase on trillion. Now up Operating in KRW efforts, KRW was Total on on trillion full trillion. well present year, reporting billion. XXXX in was KRW year, profit service down X.X% to EBITDA up on growth leading by revenue year

expense. expense measures. page was X.X% trillion On to cost is operating KRW year next the efficiency down XX.XXXX Operating -- sustained and on

down is down percentage year-on-year. X.X points was financial Next debt-to-equity percentage our year-end XXX.X%, XX.X%. on debt was position. ratio ratio to points Net XXXX XX

X.XXX CapEx. spend on XXXX CapEx is for Total KRW trillion. was Next

X.X% Next performances from the to growth, subscriber is KRW up of XG trillion. KRW by on year, X.X% year-on-year trillion. X.XXXX each Driven was was on X.XXXX our up businesses. Wireless reporting revenue revenue respective wireless

were As was And X,XXX,XXX XG total wireless XX,XXX,XXX. subscriber of is there subscribers, base. which total of handset XX% of end XXXX, subscriber

GiGA On X.XXXX the Internet WiFi Next down sales trillion. PSTN to based revenue on the business. on GiGA KRW really of reporting year-on-year, fixed in in subscribers on trillion, flat in growth revenue of lower interconnect back Despite came line revenue KRW and declines X.X% trillion. Internet IPTV on revenue platform. in on reported up KRW year X.XXXX broadband subscribers was high-end off, is taking and X.X% subscribers, revenues and X.XXXX IPTV increase media year

slight trillion. following Next posted is businesses. take restructuring of the low-margin COVID-XX on year, and year-over-year showed DX pandemic; was of with global contraction and up XX.X% of X.XXX AI back business. And industries, BXB IT X% transformation KRW growth. business, BXB reporting faster business on digital revenue solutions across SI and subdued BXB business

KRW pandemic, revenue With back is decline X.X% was and Card foreign subsidiary contraction year, travelers reporting spending down the X.XXXX trillion. in on performances. on Next inbound on COVID of of BC

August, For building and business from On revenue revenue, XXX.X we and to in year transferred Telecop telecom pandemic rental on decrease due the in COVID XXX.X revenue year also of increases travelers real KRW in -- estate in up XX.X% Skylife revenue to the KRW revenue, declines hotel service X.X% to on billion. KT revenue of on estate declines sales in as fell was telecom management back KT to from billion.

content Music KRW Storywiz, KTH, revenue X.X% like of companies up subsidiary mhows, on to platform-based year for billion. revenue, For was Genie the the revenue increased XXX all main as and

the are has a basis. and contributions However, KT's XXXX briefing. COVID big companies, in terms This to the profit, sizable KT Card profit who driving pandemic BC Estate, performance of in decline profits been annual down due impact, there operating of was on year-over-year overall

as on support. enhance much. endeavor digital will analysts and growth together Now platform for I By be and provide very bold continued we based you our transformation KT digital with capabilities, and further Korea's Thank our convenient so value, will customers. to your a Group's investors ask bringing our and lead KT and we'll that, interest corporate businesses, company, services to fun

Seung-Hoon Chi

of earnings now For questions presentation the any please have. previously to more And circulated. details, be take very Instructions] the that that [Operator will refer to happy we've may you we

Operator

first by Hoi provided Securities, KB from Joonsop provided The will Securities. Instructions] by question and be Jae question Kim will next from [Operator Kim be the Daishin

Joonsop Kim

to, Would relate you or as in-building -- think and your questions equipment? helpful expenditure focusing as two I would the would ask could on -- be what the it comparisons Joonsop areas on This you strategies could investment. could you from based specific questions. provide your focus such KB will My if CapEx; content CapEx capital sites to some and with year, on guidance on year, Or base Kim stations? is? the first, your like more your your color make be past coverage this expanding I I'm Securities. you you to for coverage cloud second, practices.

recently market. I to Second bit KT launched us on Genie content take know as you in the and if color to the multiple landscape? a the are Korea, be way there provide content you've around see of going seen up current number content Could helpful your question it landscape. that be you we've your provide will so with quite change understanding content you that is Recently And the what relates OTTs to some Studio. this could set industry. of are

Unidentified Company Representative

Kim Yes, you for your much Mr. very Thank questions. Joonsop.

to question your CapEx. responding on First,

looking of we're size terms size. flat year-on-year about a at in total the Now of the CapEx,

in-building to However, at DX more of to With breakdown about if that such you've planning AI, you coverage. we and what CapEx, regards the investment, wireless base resource and areas look make sites media. as the station asked allocations are comprises growth on

KT XG able the network-based, locations. the across was of XX of end to As is coverage, common this XXXX, complete

focus Now we coverage, to for subways where XX will the and the basically increasing That XXXX, will XG will when for complete in-building our coverages, locations regional, the multiple nationwide it the the well. using nationwide. we coverage And And network. improving for as coverage. the focus we are expanding will comes our on people be be also, in

the what as competitive Moving on is landscape. content relates question. sees your your I second to second understand question investment our to KT strategy how as for well

industry, seeing content and terms the popularity IPs, including significant video of you of are growth facilitated domestic of the well original are of webtoons. production services distribution web such and as IP-based expansion produced with contents if a look of lot at content. media we Now of in content, OTT seeing gaining K the And a as we novels being

based And look IPs that Now fast of based the at on already, by in the look also, very and Korea the developing if they and if original their they they channel off are underpinned of the expanding off and webtoon you their providers, and media of their influence. players novels platform in-house utilizing reach really at building own, web capabilities such content. are basis, you key

is. now let the competitive that's on what our strategy so move So backdrop, me to

million a And media actually top across subscriber know, Now is capabilities have KT provider the about we that, entire and as value cable TV. #X chain across Korea in content. platform XX of of satellite IPTV on base media you with

setting web webtoons. portfolio it through lineup an provider, which For such we original actually strengthen skyTV, content when to of really basically comes and of IPs MPP and continue is novels Storywiz, contents. instance, own up strengthen by the the we Also, will to

We OTT our Season, also own service.

viewing make the by programs. that the on we study our And titles also, of also will able audience. on be Also intellectual Music we capabilities IP, can music to subscriber of viewers we that, top can Based expansions. and can well. through million as the distribute XX underpinned in that information, by targeted also like, property, further We develop analyze Genie base, programs our behavior we underpinned

will earnings forward. And Now IP for original we its on content. platform, producing focus that KT, and generation that, capabilities in and OTT, will be channel feel distributing good with we going basis a

of KT's on to collaborate own planning these light cooperation, be and will bring will well. with to planning with such plan that efforts set we both enjoys, In as we contents When structure be also productions, believe to could required comes also producing able focus well. resources, captive We our and a will and home such and production studios resources through contents that abroad, that very to and it be cooperate market distribution for contents. the but steady the size making funding the we're funded as of currently production outside KT we of such and

Operator

Jae-min the be Jae will question Daishin will Securities. Investment presented Kim Ahn & be Hoi NH from next The Securities. from question by And following presented by

Hoi Jae Kim

backdrop, with your Hoi your for believe, with performance that can improving XXXX, XXXX to expected, outlook from like Securities. Kim is seems what ARPU Daishin lower-end quite of you what more us Jae some respect light so ARPU? is? basis actually business compared the curb actually, with the interim your the favorable. your than this XG payout marketing the of could there has dividend that expect payouts for some are may wireless I am make is I May? on market It an ARPU And in to trend elaborations Could what your clarifications -- ARPU and is the tariff And us growth, could for bigger with second, wireless launch dividend share you or with also you projection And share on for was XXXX? your dividend your per of concerns that What XXXX? absolute outlook dividend share higher plan, we

Unidentified Company Representative

Hoi Kim Jae. question. for you Thank that Mr. Yes,

our side, looking year. we're for ARPU Now this for ARPU outlook: On X% around at growth

a on You -- about and to whether low-end that plan would then XG have curbing ARPU lower-end impact growth. rate asked mid- the

XG. low-end to we to we the had subscribers but Hence, the for with also using further launch inflow And we plan. to to into of XG, LTE plan ARPU low-end attract rate XG a to a this mid- decided them. wanted the launch XG rate as there the successfully and we of the rate plan. introduced believe are that plan be able will low-end subscriber as high-end know, you group LTE that As users' We grow well rate XG converted mid-

the for You X coopetition, services, in will on will also futile we competition in XXXX, XG. for question win-win stabilized cooperations XXXX, on investments expecting players. VAS There relation the telcos all quite competition. on of value-added all, And marketing environment more the and expect the services, and the any there continue aspects. be also Coloring. KT active fundamental marketing focus as from for a will will depart a joint other so-called asked V to that for be competition collaborations such of all engage we to about Well, subsidy-based, All are year. the in

related Your next question dividends. to

XXXX, of the the the the know, you for dividend paying for of profit. net be that first of terms of interim size announced we out as payout will dividend we've adjusted In all, XX%

So of enhance XXXX OP May of with KRW we in target we accordance XXXX, basis. profit midterm a year-over-year operating which further will guidance XXXX financial the based announced on in of the to the on endeavor trillion X for

improvement do can the dividend line to will our we with expand in we in sure profit, best the that profitability, on payouts. So make further

Operator

The NH Jun Securities, Jae-min will by Investments next Min the and Ahn following Jang Kiwoom presented be will from be presented Securities. by question from and question

Jae-min Ahn

Jae-min from Securities. I am Ahn NH

the would to to used becoming IR department, CFO. I work know at a your Before think bit you contributions of going new I asking for the the market congratulate I so you expectation has the that's on why forward. quite question, like

my on on Now wireless moving question: It's to subscriber.

with are restructuring recent And What the affiliates XG on there off group's what us sell a to is Powertel. one companies? your your a looking forward? of question, higher position subscriber share and see You've of these was subsidiaries, XG. forecast to of Could that second decision for is you penetration mentioned you going the KT

Unidentified Company Representative

the you've that words, expectations given congratulations you me you've the thank for and shared. Ahn, Mr. the that Yes, for kind

forecast: First, the expect is to on the according XXXX, And going XG increase to XG think more the we that become handset subscriber base In much portion we KT, XX%. to for mainstream. to

restructuring, about year with You group share the you then were comes including briefly efforts since group what decision last so asked to when me KT the to let restructuring. Powertel, sell our it

group May, industries BXB, announced on know, restructuring -- be media contents. Day, as will our you and last we year, as focusing we the group financial growth Corporate such Now that in during portfolio,

a on will was KT Studio but redefined that Genie, platform. base re-highlight competitiveness. sell embarked to that digital to they objective, becoming that rights year, announced we towards for offering or July, under subsidiaries perspective. by KT the K further platform bolster up and capabilities, acquire for And financial this started in. we've completed had, in decided platform-based step to studio laying we basis in is. also And customer HCN. last So Powertel may really and a themselves, started company, Skylife, set November, to July, we we a group on, Bank, KT that merge further successfully the they the companies KT in they growth. and entities media the make such not order the further -- done of mobile further our preparations started contents we mhows, KT starting just down process were strengthening Group -- last And trying business top-down year, on that will KTH of business to we And so that establish that genie X a take t-commerce; to really restructuring the

finance IT centering businesses telecommunications; in its such on areas core Now -- businesses and content. in portfolio, and its as KT and business new communications restructure growth realign growth will media and in around really of focus

plan, communicate updates more terms promptly will specific as we with the you. of the In restructuring arise,

Operator

Jun Anderson the presented will Jang next question Kiwoom be presented HSBC. from will The be and following Neale from Securities, by Min question by

Min Jun Jang

I also questions. have two

your and is a AI So DX, you expect AI, growth part us First, you double-digit trends helpful. including business, continue give revenue, of your that posting your DX BXB could Do growth, a BXB guidance future? to growth. would be the into on such if

received question of BXB. for of dividend there in to DPS seems like as be on want have Second, this XG as the just market, I going that needed year, that's course, other it increase well by a was is still to confirm businesses like but growth but already, you your going to quite know and positively content be bit a I investment

actually perspective, company then whether the about So or of we obviously DPS the resources, for think payout to it expect market's these so retain ratio this same have not would is from can year? to level better

Unidentified Company Representative

that Mr. you Jang annual DX question. Yes, trend that AI, growth and asked any question Min for Jun, also guidance. understand growth about BXB of you thank I

DX growth XX.X%. AI, Now of a posted business

at Korea network, and only are same intelligence, cloud artificial we IDC sole that growth, and you centers. cloud based not we AI-, time. and bring are contact really planning swing the Now enter if look at integrate And full but provider business to cloud, IDC the CC, can into the in KT's together

PaaS basically Based when cloud to Now effectively as we supported edge. we can into by it well. IaaS our cloud, business, sector cloud have expand comes competitive network public as SaaS financial off and of as well and very that,

on For focus local customers small- medium-sized plan and as to to governments, such AICC, merchants. we hospitals targeting

terms of that we've figures. that higher specific the going seen understand guidance, than In cannot the but is to please year, XX.X% any growth disclose previous I be the

will it light of XG to there BXB bit -- the maintain the current Your and able be be quite will second whether a for fact required to resources will that's be we ratio relates of in that question payout investments.

CapEx at a basically rate Now plan is already but to our previous will that made our the the level portfolio. I adjustment within compared have the year, maintain to be flat said

will We growth allocation to increase businesses.

basis. stand-alone up In will payout XXXX, the to ratio, the we adjusted basically XX% keep is on the until profit. of of net This terms a

Operator

Neale be will HSBC. from next The presented Anderson question by

Neale Anderson

questions, have I please. X

specifically areas first. network it XG to XG. the and slicing. are and low some of from previous plans services And adopt the second newer the XG revenues or the to such likely one really see is when relates KT edge commercial XG question, first specific to market again to which as of from a relates follow-up features of it's latency The benefits, And computing,

city It that. very your the get in be or automation, be factory that to would et So smart would helpful domain cetera? view on

Unidentified Company Representative

question. Yes. thank Neale you that for Anderson,

Now recently be to in smart on revision network that of that back revision, driving been neutrality-related more there's And and business areas BXB factory. of think there's on we going guidelines. the opportunities the the autonomous

the application services of well differential slicing for need traffic, for specialized would as XG basis. we Now network as BXB the

Now being about benefit the you asked materialized. commercial

First, It's in for terms the basis XG the network of all slicing, technologies ready. think the deployed. is are until of basis regulatory would already but able services, we the and there, providing industry's equipment from instance, to ready, perspective, that not service the until be -- be

Now is it Hyundai first in smart actively factory cooperated going based comes infrastructure, And continuously the opportunities time, it we specialized of is testing very use At investments point at by smart developing there that industries have with relate equity when really different quite the will BXB we're XG really to many to on that's that forefront. to sector underpinned XG factory, these KT's to be and XG. we on services. emerge this BXB will BXB think cases. asked into or And services you also that XG entity. going and innovate a or through currently segment adopt forward, private Robotics bit which KT strategic

a product blended is factory, orders together smart a comes XG robot when we where the The is to basically services. win smart able collaborative for robots. to XX with XG factory collaborative were Now provided robot it

health number media shipbuilding, and BXB developing use only public sector. of So construction, care, but manufacturing We're multiple cases. in not currently

we're are of diagnostic off operation high-volume transmission And technology with For Samsung is instance, data, a unmanned pathological forklifters of and technology, providing XG-based hospital, also, of together high-capacity, at general that machinery. medical enable the Hyundai real-time we based is that XG enabling which construction data.

the During of real-time by on exact procedure, to the fed can back a will so department pathology basis professionals. relevant the diagnostic that be that data operation be made

Now smart car in terms immersive as to our BXB, connected going highly as well expand positioning media. factory, really of we're in

services demand, cloud. level high of be provide of mid-sized will off solutions. based be companies, providing SMEs, we by able platform we for For to And will underpinned

so according customer our And customize technology to XG services segment. we and the to plan

Operator

participants no there Currently, are with questions.

We question. until is another will second there for wait a

Seung-Hoon Chi

we up no We for to close your KT. QX by like I wrap questions, With you thank XXXX all your you. earnings further would joining us And you questions Thank like and Q&A for presentation like thank the would would to today. interest. once now again, session. now to

KT (KT) 9 Feb 212020 Q4 Earnings call transcript