KT - Earnings call transcript Q2 2022

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Operator

Good morning, and good evening. Thank you all for joining this conference call. And now we will begin the conference of the 2022 second quarter earnings results by KT. We would like to have welcoming remarks from Mr. Seung-Hoon Chi, KT IRO; and then Mr.

will results CFO, questions. entertain Kim, Jin present and earnings your Young Instructions] to Mr. like we the [Operator would to turn Now conference over Seung-Hoon Chi, KT IRO.

Seung-Hoon Chi

am IRO. I Chi, afternoon. Good Seung-Hoon KT's

earnings Quarter Let KT's and in you slides live XXXX on release the website, call follow you Earnings on us our is Second Presentation. as begin can the webcast being This listen call.

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

As be on we to earnings. and over I accuracy QX 'XX subject completeness of aside from that, financial data, present it cannot ensure these our be and CFO, historical reminded may With hand business performances, figures Young changes. please Jin to will to that Kim,

Young Jin Kim

Kim. am I KT's Jin Young CFO, afternoon. Good

the centers is billion by Let together the of company the further core plan we the estate data digital successful drive key with second transformation, businesses top-notch for our media we for firmly In around around to portfolio XXXX. coming to the wireless transition services. of we customer our services and and of by Korea's leading KT's an AI in Korea. consolidated content adoption a with digital a quarter, since existing finance, catering third segment QX offering good service and operating growth year first achieving traditional of see as infrastructure in XXXX, transformation DX these of market, performance a we marks BXB DIGICO, example group's revenue business, businesses to digital KRWXX,XXX.X the power ramping we or where real platform businesses. growth big have technology record and our portfolio DX broadened half up and customer In the established to transformation, our to AICC business businesses. we a me By XXXX begin successfully high the highlights each and AI, capabilities playing the corporate pledge field. for of demand as fixed and are that leveraging technologies cloud biggest and DX bringing digital differentiated

therefore, conversion centers annual last year's revenue, for half has call digital in spearheading figure, First Korea. surpassed

our business is BXB half strength and also and growth XX% by sustaining basis orders of the underpinned terms sector, foundation a For year. BXC its across growth and rate values. sectors, have as services year-over-year XG long-term reached public, for pillar. as growing delivered our all solid solidifying and Internet separate the of end, defense now business and IDC as for a on established by business, customized booked, to Cloud financial quality with is volume XX% experience XX% entity, customer a IPTV cumulative in the last maintained of mid- penetration up growth up on special different BXB first par of in itself business. and for that elevating number by we customers as growth setting July

the capabilities of quarter. the market, active group's the pillar outside with quarter, demand equip by of business managed as ramp cloud with market ourselves of through businesses, for portfolio In preemptively forefront the responding growth Key the of services partnerships has alliances and build and at and and during are seen partners DIGICO We which capacity. IDC business comprise were supported up, the first growth second capacity we media enhanced proven fully to additional the we in visible results and business content and strategy. financial seen the

EBITDA is trend, and the feedback of merger seen connecting Group's business KT and from including platform. quarters, through equipping loop future different forms now financial also a of up we portfolio Also the solid markets of building nurturing KRWX,XXX.X Korea's Operating billion. business, awareness I the for channel into for platform to chain, strengthen high strategic operational on improved, ENA Seezn loans, year-over-year, was content solidifying and digital BC is billion. financial platform through diversifying deposits of run profitability growth down partnerships. our original evolving indicators business of was OTT media from seeing incumbent the positive of customers, billion, Net reporting with tap will its KRWX,XXX.X the the revenue engine results provider operating up and platform financial XXXX. Tving media KRWXXX.X while profit on CJ content. profit number channel Bank year has with growth for brand capabilities becoming and value reporting reporting a X.X% and decided the X% on its year while ENM, #X was business, on into K payment a billion, KT's we My potentials. QX back a on foundation following leading to content, of consecutive X% growth. a hit while card Data popular outside is as across alliances K up income year, all business to its KRWXXX.X For future X.X% report and down and X through with content, was

inflation, one-offs, expense. X.X% billion. up KRWX,XXX expenses changes as operating year, on backdrop expense, business expense macro labor such in including Driven was is and reporting Next up operating were by on

point XX.X%. up as June XXX.X%, Next Q-on-Q, of X.X Net ratio X.X Q-on-Q. is up was financial position. 'XX ratio percentage points the end Debt-to-equity reporting percentage of debt was

Next, DIGICO CapEx on starting quarter. the our of Group's this strategy, a figure on KT communication major share To will subsidiaries clearer capital we provide expenditure.

was a IDC to of Group's and estate reported major content, of total cloud CapEx comprises first financial, while billion, billion, CapEx real KRWXXX.X which and spend KT standalone CapEx, half subsidiary First, KT business KRWX,XXX.X and with KRWX,XXX.X media billion. amount

addition reporting growth revenue Wireless and QX back were on X% as up of billion. KRWX,XXX.X wireless was trend XX,XXX,XXX billion subscribers, MNO was of broadband of X.X% was on Internet Next 'XX, year-over-year telco is net of Broadband revenue revenue on growth performance. billion X.X% subscribers billion. solid the on GiGA Driven number the subscribers. market. of subscriber revenue, up Internet. to revenue down by of growth of the Total to BXC wireless Internet KRWXXX.X sustaining business to breakdown wireless KRWX,XXX.X around year, in underpinned the XG line end year-over-year X.X% revenue subscriber by up household integrated and MVNO KRWXXX.X was management telephony Fixed decline year on total

media our on users IPTV And choice, in uptrend, platform to platform-based business. business satisfy demand order the BXC June, of was year. revamped growth billion and revenue and up subscriber we mobile On tariff KRWXXX.X year-over-year content Next more into X% business offer up is on the wide-ranging and growth in the BXC on plan sustained plan. business. to was DIGICO X.X% back DIGICO to Choice of the business from

enterprise market balanced On year-over-year. X.X% high preemptive and On the on to traffic Enterprise for expanding up rise to for and call growing from was MVNO back steep net KRWXXX.X increase, in continuing data premium X.X% Telco posting reporting Internet, enterprise enterprise data of data trend year-over-year up growth Internet continued billion. voice VoIP. responses add revenue thanks BXB growth, with the and a year-over-year, was X.X% call, voice BXB and services, demand

step from business is BXB BXB. is with in DIGICO expanding DX demand businesses. growing Next DIGICO

year-over-year the down revenue, revenue XX.X% of KRWXXX revenue Enterprise growth which if reported year-over-year there double-digit growth. DX a X.X% we our XX.X% offerings to the at market responded continuation growth was billion, to was we and differentiated While such growth service with billion, and include KRWXXX.X ktcloud's is preemptively. a as

For business. booked the on year-over-year AI business ramping the more there and new projects XX.X% AICC orders was revenue and the for growth up stream,

revenue revenue increase and rise subsidiary billion. business of year, in and On underpinned X.X% billion. KT was businesses revenues revenue to up as XX.X% content higher ad KRWXXX.X its and of on KRWXX.X e-commerce on following hotel resale volume subsidiary domestic XX.X% KRWXXX.X to assets, KRWXXX.X up year, acquiring year billion in was the KT year up SkyTV. performances. the financial Studiogenie card reporting endemic, to and Under An revenue started was up recover, recovery on from on was on by business, growth from ramping operations reporting is digital billion. XX.X% from the back Internet content MVNO Estate Next BC and Skylife up consumption

have half, schedules estate business for second Meridien Hotel the and with opening we trajectory. Le Moxy KT's upcoming expect For the on growth and to Myeong-dong, real we continue

the the successful growth transition playing we In I've businesses, through field to thanks to portfolio KT's of XXXX, record company. group which established high a DIGICO recorded XXXX second first highlights. and for quarter far, firmly half around the So revenue, earnings broadened walked a

and interest business support. new We for look concrete will BXB to by results. portfolio underpinned further group's growth generate create and from you telco businesses of value DIGICO to forward customers advance our your much. continued very to our We Thank continue

Seung-Hoon Chi

For the begin detailed refer previously. information, [Operator will we Q&A more have please now circulated the that we material Instructions] And to session.

Operator

Kim first Securities. Joonsop [Operator Instructions] by will from be KB provided The question

Joonsop Kim

like would X questions. you I to ask

with First price scheme for to the XG the And has services. business. second relates mid-priced to do BXB your the question

scheme expect to from a get And expecting to the release? scheme, plan your was scheme? question, what positive. going pricing you pricing potential has at that is look KT What quarter's if forward? assessment impact your the that introduced your forward? of or going business you landscape also how has XG quite Second business would the that competitive the are ahead everyone Regarding growth you second from to else. adopt pricing BXB competitor expect BXB mid-range you result, like it this I What assessment of develop of if

Young Jin Kim

were question. expanded best range pricing Mr. a We, scheme so provide to I befit scheme more customers or more the that XG you, select choice, them. that Thank under objective also they pricing for the adopt first. your respond rate making your mid-price view first preparations under at the can will plan to the KT, to Kim, choice to

in regards will So provide future. to still the be a possible because we are you just with scheme to have -- cautious the I'm quite that specific that a With to for tariff have phase, mid-priced near upcoming -- this. we will XG this outlook it prelaunching impact you any remind

to subscribers, have be downgrade to pricing plans speed accelerate choice and more that to LTE will move said XG of the over that, terms scheme, a the having subscribers, LTE of I bit can of by this in who will the that subscribers some our scheme. to migrating believe providing also select, rate there Now of they the can pricing actually this the but we quite subscribers lower

the have will after So this be provide we picture will once a on this you outlook the scheme. clearer in again, more impact release of to able with I pricing terms

what our and second are. Moving BXB the question on are to projections the growth what drivers and for

point. me that Let elaborate on

Now as I our driver mentioned during presentation, a the business very is growth critical for BXB my opening company.

as you of at in on first increase number about we've by numbers And of end was year-over-year the orders July, booked year-over-year half a that XX%. XX%. If of growth look basis, seen the

to growth engine the So to trend. with we robust more is behind would you business, a are Then detail I provide what that. elaborate like seeing on quite some BXB on more just the

business look if So BXB to this. or are strategy, there X you KT's at pillars overall digital

The first on expanding into telco area digital new one our by of business top is capabilities. adding a

underpinning have customized Second segments. DX market, And the leverage differentiated and could with digital the the businesses customer DX we dominance our tapping a hand a providing providing strong different offering the potential that each by is companies upper we by is to the really for third the actually an of in telco where capabilities. gain model segment into of and DXI,

journey that we BXB what the the line of we wireless which the have technologies we have actually biggest a of of also visit and Big AI, and Korea's business, channels that Data edge infrastructure. products, required as also is their address And the actually services a really sense a partners each And enterprise based provide our sales we cloud. that's have fixed And that segments. terms transformation. robust including different works metropolitan is KT could facilitate to very in in supported order in and and the of and KT competitive to BXB on infrastructure, the needs towards stable. on our of customer services could important portfolio And businesses, their our customers office. nationwide sites at right we transition next such own our DX whereby our strength fixed wireless be we and that base In And that KT has have is network can have by coverage customized for boast core we of the in digital business in DX, the for

for going be projection growth the the terms revenue, that for order is BXB we growth rate rate that book of the build. In basis to

in is year the to terms in year orders book, excuse the we also that is KRWX objective, trillion Our -- than trillion this of therefore, objective XXXX KRWX revenue and orders of by year by XXXX. for win, trillion than order more terms this and the me, KRWX than of more for more have amount in our

Next question, please.

Operator

question The be Jae Daishin will following by Kim Securities. presented Hoi from

Hoi Jae Kim

is your Hoi content question from Jae first This Kim Securities. to My business. Daishin relates

content the we Attorney investment. has are a there seeing Woo on been on Extraordinary of growing With TV, interest And side. content the recent on your hit changes lot the of company's

future your also merge Second like wireless that like merge decided collaboration to understand curious SkyTV plus and business. Genie Tving Media relating you to with would your have I are look other And ENM. plans whether forward? would what to to light, with to going Seezn, in You've CJ question we as

We XG penetration high, because measures are the start trends good to there so But seeing as up may is the very concern as maybe ARPU is slow. that for well penetration ARPU.

to long-term are So your going that can a and strategies make forward? revenue to sure make you what level -- for you ARPU in that wireless place elevated from actually of perspective, sustain

Young Jin Kim

that the background Seezn, first I about what with with why respond let the Tving provide business. we plans as into ENM, ENM. you to respond Since collaboration with to Yes, our with me partnership future first we've will will the are first I entered content question CJ merged first. to

very have investments a of going key ramped business KRWXXX partnerships. into us CJ ENM, a content our that's edge been possibilities we've the quickly media to enter a And pillars up which of decided gain for DIGICO continuously is to business a role. one is for Hence, As key KT also content front these important business Genie. with decided us a all-around scale transition reviewing scheduling a executives well we've business pillar investment and entering ENM of and and and play mega competitive Studio outside alliance And to into for the into very key as CJ an to and companies content to through partnership council of the cooperation to collaboration across competitiveness. collaboration production distribution agreed had up billion in equipped of have CJ a and media as content of also as runner purchasing with into well capabilities also make X the cooperation as through board. really and the ENM very

In in terms the it was made titles produces scheduled and original an the and content platforms there through KT sourcing so the that CJ that certain Genie's that be of agreement content has of content, global ENM ENM order content. coproducing scheduling AAA TV terms of Also, including and and a platform, Studiogenie in its KT Tving. channel produce and coproduction CJ terms channel of in and will in to and titles, AAA joint engage will

everything the on sale In objective of future order the to once But to and with we date we Seezn of we target date us certain between wireless to our and smooth second integration between reviewing on you. are, on you Tving, drive your Relating for question, a MPP, as come will multiple not or move question a yet year. in will have this continuous options, that to we revenue. of today. competitiveness merger finalized SkyTV. of Genie this direction decision, the but elaborating to I integration as point, and strategy now at communicate make our is back Media and integration improve the further of to December In an terms

trending. Now is was of of penetration as continuously figure the the this up end the first reach the And XX%, and half, our is by objective XG to XX% year.

different will such wish. release Choice services, at we We bring expect not And and once value-added wish more developing tariff in provision but that point to they to and our with plan. -- and needs. we people, service we And that the through introduced provide the can them, details. value-added Last and subscribers satisfies additional is subscribe of least, you This customer are value-added preparing you revenue. rates back a where the this select we come services various we use

question, Next please.

Operator

by Park question will following Morgan The be Seyon from presented Stanley.

Seyon Park

like to questions. I submit two would

do the to has cloud spun-off with First of business, your ktcloud.

impact as connection look you we'd If on the the of this. to a what it operating was profit at second the had on impact question is some gain that in extent on understanding profit basis, operating line? with And to like separate the

on of look on And at to of with XX% If the there, adjusted be is carved course, payout separate basically, policy, out, being profit net going KT's it profit. a basis. ktcloud is you dividend impact

the you out the year, So this also as of you end actually corporate for determine end income the would paid dividend consider amount dividend, at tax distribute of you at of element the the be to when year. when well the

Young Jin Kim

question. Park, you, your question. Thank your me for Yes, first let Mr. tackle

asked question with profit ktcloud. the separate or carve basis, a on of You the impact operating spinoff out

me Let impact talk the be line spun top of expect we ktcloud there on top off, about revenue. revenue. being about KRWXXX line billion With the first to

XX.X%, included assuming X.X%. IDC so with just you under spin-off, ktcloud that's separate that cloud look on a pre KT is the at, service assumption, still the So if within growth Group basis, that of and revenues Y-o-Y

cost, growth depreciation to just we lowering impact but of also lower need expense, the the is IDC mentioned, line expenses. operating level labor with line basically, includes business, continuing. as of revenue, and terms will carve-out this in and have for the cloud the an which consider So But top trend top power of the

not size impact profit, -- the big be both of elements, operating the these think reduction line of top the less than much that revenue. there on you going we to if there's the is of in expect So an

compared typically, there the investment well initial But demand, our as been So business, the improve recently, additional margin and their typically -- which instance, profit to company-wide this headcount, expand operating believe in a past, surge in from of capacity. will higher has more other our we current preemptively hiring the But which steep rise IDC perspective, was average. investments, in and for to we as on down weighed market that cloud entailed to in also we a margin start long-term as the OPM respond margin. as a

Now moving on your second to question.

establishment income terms tax entity a going had as for that's we adjusted corporate that the and used in of adjustment of be separate With our an for profit. the to special ktcloud item paid whether as net

tax. So for spin-off non-cash an expense was regarding in actual the it yes, adjusting we business, cloud was, also when to was of out this it an that is treatment. There corporate accounting-based this comes net income and expense profit. item our items items, In P&L, the considered cash the no

So it's profit will a net adjustment yes, be distribution purposes. the the expense non-cash because it of considered for item, in

Seung-Hoon Chi

we for for joining and very and your Well, day. now like thank the with Q&A interest no further you questions, questions, much us. your Thank you session close would to the for for

despite schedules. you we for If like your you us very your the questions Call. also don't XXXX to Thank and have Thank for any us the joining more brings Quarter much your end end very questions, and of Conference you. Second busy session. This to Earnings would interest Q&A

Seung Hoon Chi	Investor Relations Officer
Young Jin Kim	Chief Financial Officer
Joonsop Kim	KB Securities
Hoi Jae Kim	Daishin Securities
Seyon Park	Morgan Stanley

KT (KT) 10 Aug 222022 Q2 Earnings call transcript