(Updates with share price in fifth paragraph.)
Nov. 7 (Bloomberg) -- KT Corp., South Korea’s largest phone and Internet company, reported a 41 percent 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 ($230 million) from a revised 430.9 billion won a year earlier, the Seongnam, South Korea-based company said in a statement today. That lagged behind the 316.1 billion won average of 12 analyst estimates compiled by Bloomberg.
Revenue from mobile-phone calls fell 21 percent in the quarter on discounts offered to users of Apple Inc.’s iPhone and Samsung Electronics Inc.’s Galaxy handsets. Like its closest competitor SK Telecom Co., 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 Choi Nam Kon, a Seoul-based analyst at Tong Yang Securities Inc. “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 percent to 36,900 won as of 10:04 a.m. in Seoul trading, while the benchmark Kospi Index declined 0.1 percent.
Operating profit, or sales minus the cost of goods sold and administrative expenses, fell 13 percent to 516.4 billion won. Sales dropped 6.2 percent to 4.99 trillion won. The carrier said it also had a 60 billion won foreign-exchange loss as a weaker South Korean currency inflated the value of overseas debt and payments.
The figures released today, 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 350.6 billion won.
KT, which will start selling the iPhone 4S on Nov. 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 Co.
The surging number of smartphones led to a 47 percent increase in wireless data sales at KT, which boosted capital expenditure 19 percent to upgrade and expand mobile networks.
SK reported an 18 percent 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 percent stake in Telkom South Africa Ltd., Africa’s 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 percent stake in Russian carrier New Telephone Co. Inc., the company said in May.
--Editors: Anand Krishnamoorthy, Terje Langeland
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