KT Corporation, South Koreas largest phone and Internet company, reported a 41 per cent decline in third- quarter profit after it offered discounts for smartphone users and a weaker won caused a foreign-exchange loss. Net income fell to 255.7 billion won ($230m) from a revised 430.9bn won a year earlier, the Seongnam, South Korea-based company said in a statement on Monday. That lagged behind the 316.1bn won average of 12 analyst estimates compiled by Bloomberg. Revenue from mobile-phone calls fell 21 per cent in the quarter on discounts offered to users of Apple Incorporateds iPhone and Samsung Electronics Incorporateds Galaxy handsets. Like its closest competitor SK Telecom Company, KT further lowered phone bills for all subscribers from last month to help the government curb inflation. "The average revenue per user will probably continue falling at least until the end of the quarter," said a Seoul-based analyst at Tong Yang Securities Incorporated, Choi Nam Kon, adding that, "Next year will be important. How many phone users are going to switch to smartphones and how that can be used to boost revenues will be key." KT fell 0.5 per cent to 36,900 won as of 10.04am in Seoul trading, while the benchmark Kospi Index declined 0.1 per cent. Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 13 per cent to 516.4bn won. Sales dropped by 6.2 per cent to 4.99tn won. The carrier said it also had a 60bn won foreign-exchange loss as a weaker South Korean currency inflated the value of overseas debt and payments. The figures released on Monday, including for the year-earlier period, were based on the International Financial Reporting Standards that the company began to use this year. Year-ago net income was revised from 350.6bn won. KT, which will start selling the iPhone 4S on November 11, had 6.3 million smartphone users at the end of the third quarter, more than tripling from 1.7 million a year earlier, the company said. The number of smartphone users in South Korea will probably reach 22 million this year, almost tripling from 7.2 million in 2010, according to Hanwha Securities Company. The surging number of smartphones led to a 47 per cent increase in wireless data sales at KT, which boosted capital expenditure 19 per cent to upgrade and expand mobile networks. SK reported an 18 per cent drop in third-quarter profit last month after cutting mobile-phone bills under an agreement with the government to help curb rising prices. KT may acquire a 20 per cent stake in Telkom South Africa Limited, Africas biggest fixed-line phone company, both companies said last month. KT will focus on emerging markets such as central America and Africa, after agreeing to sell its 80 per cent stake in Russian carrier New Telephone Company Incorporated, the company said in May.
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