Korean telecom giant decides to sell its stake in Russian affiliate NTC for $346m


KT Corp. said Friday that it posted 5.3 trillion won ($4.88 billion) in sales and 726.3 billion won in operating profit for this first quarter, up 6.1 percent and 61.7 percent, respectively, from a year earlier.

In its quarterly report, the country’s biggest fixed-line service operator said the solid performance was mostly due to a rise in profits in its wireless service business and surging sales of the company’s products.

The earnings of its affiliate KT Skylife also contributed to the surge in sales, operating profit and net income, said KT officials. KT acquired controlling stakes in Skylife earlier this year, making the satellite broadcast company its affiliate.

As the number of smartphone owners continued to increase, earnings in the wireless business sector reached 1.76 trillion won, up 1.5 percent from the first quarter of 2010. The number of KT’s smartphone users has now surpassed 3.83 million.

The company has featured several new models so far this year, strengthening its line-up from Samsung’s Galaxy S2, Motorola’s Atrix, LG’s Optimus Black and Google’s Nexus S, with plans to introduce more than 25 new models this year. The company has put a strong focus on Apple’s iPhone in the past, being the exclusive provider of iPhone 3 and iPhone 3GS.

The company had 16.3 million wireless subscribers as of March, taking up 31.7 percent in market share, its officials said.

KT’s business sectors in wireless, Internet, Internet-connected phones and Internet protocol television all recorded continuous growth compared to last year.

The company’s profits from its voice service decreased to 986.1 billion won in the first quarter, down 129.2 billion won from January-March last year, however earnings in the Internet phone sector rose 23.6 percent to a record 78.4 billion won.

The figure indicated that KT has become a dominant player in the Internet phone market, occupying more than 60 percent, with 2.93 million subscribers.

“With the telecommunications service being the foundation of our services, we will further expand our boundaries to include global IT, media and contents in our future businesses, growing into more than a just a telecom company,” said Kim Yeon-hak, executive vice president of finance office at KT.

KT also announced on Friday that it has sold its Russian affiliate NTC to Russian mobile carrier VimpelCom.

It said it signed an agreement with VimpelCom to sell 79.96 percent of NTC shares at $346 million. Company officials added that it decided it would be better for a telecom with a nationwide network to run NTC for it to grow further.

KT bought NTC at $22 million when it was recording losses in 1997. NTC started showing gains four years after the takeover and now has a subscriber base of 1.5 million.

By Cho Ji-hyun (sharon@heraldcorp.com)