6-K 1 d6k.htm FORM 6-K Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO

RULE 13a-16 OR 15d-16 UNDER THE SECURITIES

EXCHANGE ACT OF 1934

For the month of May 2006

 

KT Corporation

 

206 Jungja-dong

Bundang-gu, Sungnam

Kyunggi-do

463-711

Korea

(Address of principal executive offices)

 

(indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F      X            Form 40-F              

(Indicate by check mark whether the registrant by furnishing the information contained in this form

is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes                      No      X    

 

This Current Report on Form 6-K is being filed to be incorporated by reference into Registration Statement No. 333-100251 on Form F-3, effective December 27, 2002, relating to $1,210,050,000 0.25% Convertible Notes Due 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 8, 2006

 

KT Corporation
By:  

/s/ Thomas Bum Joon Kim

Name:   Thomas Bum Joon Kim
Title:   Managing Director

May 4th, 2006

LOGO

1st Quarter 2006

Preliminary Earnings Commentary

(KRX : 030200 / NYSE : KTC)

Disclaimer

This material contains estimated information of unaudited non-consolidated preliminary financial and operating data of KT Corporation (“KT” or “the company”) as of March 31, 2006 and forward-looking statements with respect to the financial condition, results of operations and business of KT. Statements that are not historical facts, including statements about KT’s beliefs and expectations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements were based on current plan, estimates and perfections of KT and the political and economic environment in which KT will operate in the future and therefore you should not place undue reliance on them.

Therefore, KT does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the unaudited financial and operating data contained in this material and such information maybe materially different from the actual results or performance of KT. KT speaks only as of the date it is made, and KT undertakes no obligation to update publicly any of them in light of new information or future events.

The financial and operating data contained in this presentation have been rounded. Since affiliated companies have not finished accounting, estimated figures were used for the equity method gains/losses.

KT’s non-consolidated financial statements and report as of March 31, 2006 will be filed with the Financial Supervisory Service(FSS) and th Korea Exchange(KRX) in May 15, 2006.

If you have any questions in connection with the preliminary earnings, please contact Investor Relations Department of KT Corp.

Tel : 82-31-727-0931~4

Fax : 82-31-727-0949

E-mail: takim@kt.co.kr

 

1

1. Financial Highlights

A. Summary of Income Statement

 

(KRW bn)

   

2006

1Q

    

2005

4Q

     2006 1Q / 2005 4Q    

2005

1Q

     2006 1Q / 2005 1Q  
       amount    D%       amount    D%  

Operating revenue

    2,897.6     2,970.1     -72.5    -2.4 %   2,977.7     -80.1    -2.7 %

¨ Internet access

    611.8     630.9     -19.1    -3.0 %   645.3     -33.5    -5.2 %

¨ Internet application

    54.0     58.9     -4.9    -8.4 %   60.4     -6.4    -10.7 %

¨ Data

    308.9     324.2     -15.3    -4.7 %   339.2     -30.3    -8.9 %

¨ Telephone

    1,061.5     1,084.7     -23.3    -2.1 %   1,100.8     -39.3    -3.6 %

¨ LM

    438.4     450.7     -12.3    -2.7 %   427.7     10.7    2.5 %

¨ Wireless

    323.3     262.8     60.4    23.0 %   328.6     -5.4    -1.6 %

¨ Satellite

    27.4     28.3     -1.0    -3.5 %   28.1     -0.8    -2.8 %

¨ Real estate

    26.0     29.0     -3.0    -10.4 %   19.0     7.1    37.2 %

¨ Others

    46.5     100.6     -54.1    -53.7 %   28.6     18.0    62.9 %

¡ SI

    32.5     103.4     -70.9    -68.6 %   32.3     0.2    0.5 %

Operating expenses

    2,232.9     2,710.8     -477.8    -17.6 %   2,368.3     -135.3    -5.7 %

¨ Labor

    586.8     645.8     -59.0    -9.1 %   631.2     -44.4    -7.0 %

¨ Commissions

    151.3     178.5     -27.2    -15.2 %   152.3     -1.0    -0.7 %

¨ Sales commission

    107.2     48.8     58.3    119.4 %   95.0     12.2    12.8 %

¨ Sales promotion

    20.4     86.1     -65.7    -76.3 %   68.4     -48.0    -70.2 %

¨ Advertising

    11.5     47.7     -36.3    -76.0 %   29.7     -18.2    -61.4 %

¨ Provision for doubtful accounts

    18.4     9.8     8.6    88.5 %   16.3     2.1    12.6 %

¨ Depreciation

    487.8     629.0     -141.2    -22.4 %   492.8     -5.1    -1.0 %

¨ Repairs & maintenance

    78.4     113.6     -35.2    -31.0 %   55.9     22.5    40.3 %

¨ Cost of goods sold

    127.0     102.7     24.3    23.7 %   192.8     -65.8    -34.1 %

¨ Cost of service provided

    429.0     557.2     -128.2    -23.0 %   438.6     -9.6    -2.2 %

¨ R&D

    42.6     86.3     -43.7    -50.7 %   52.8     -10.2    -19.4 %

¨ Others

    172.7     205.3     -32.6    -15.9 %   142.4     30.3    21.3 %

Operating income

    664.7     259.4     405.3    156.3 %   609.4     55.3    9.1 %

Operating margin

    22.9 %   8.7 %   14.2% P     20.5 %   2.5% P  

EBITDA(1)

    1,152.5     888.3     264.1    29.7 %   1,102.3     50.2    4.6 %

EBITDA margin

    39.8 %   29.9 %   9.9% P     37.0 %   2.8% P  

Non-operating income

    168.0     53.7     114.3    212.7 %   200.2     -32.2    -16.1 %

Non-operating expenses

    262.6     205.2     57.4    28.0 %   264.7     -2.0    -0.8 %

Ordinary income

    570.1     107.9     462.2    428.3 %   545.0     25.1    4.6 %

Income tax expenses

    160.8     3.9     156.9    3995.2 %   180.2     -19.4    -10.7 %

Effective tax rate

    28.2 %   3.6 %   24.6% P     33.1 %   -4.8% P  

Net income

    409.2     104.0     305.3    293.6 %   364.8     44.4    12.2 %

EPS (won)

    1,921     488     1,433    293.6 %   1,731     190    11.0 %

 

(1) EBITDA = Operating income + Depreciation

 

¡ Revenue

 

  - Revenue decreased compared to the previous quarter and corresponding period of 2005 due to subscriber stagnation and traffic decline

 

  - SI revenue significantly decreased compared to the previous quarter as SI business seasonal business witend to receive more project toward the second half of the year

 

¡ Operating expenses

 

  - Operating expenses decreased compared to the previous quarter and corresponding period of 2005 due to completion of one-off salary increase effect and efforts to improve profit by controlling commissions and marketing related expenses

 

¡ Income tax expenses

 

  - Income tax expenses increased compared to the previous quarter as income tax expenses significantly decrease in the 4th quarter business in general

 

  - In other words, income tax expenses decrease as operating profit decrease toward the second half of the year, and increase in temporary tax credit as CAPEX increase in the second half

 

2

B. Summary of Balance Sheet

 

(KRW bn)

   

2005

4Q

    

2005

3Q

     2005 4Q / 2005 3Q    

2004

4Q

     2005 4Q / 2004 3Q  
       amount    D%       amount    D%  

Total assets

    17,620.5     17,936.5     -316.0    -1.8 %   19,007.1     -1,386.5    -7.3 %
                                        

¨ Current assets

    3,349.2     3,418.9     -69.7    -2.0 %   4,614.9     -1,265.6    -27.4 %

¡ Quick assets

    3,233.3     3,303.0     -69.7    -2.1 %   4,470.8     -1,237.5    -27.7 %

- Cash & Cash equivalents

    1,096.7     1,180.3     -83.6    -7.1 %   2,010.3     -913.5    -45.4 %

¡ Inventories

    116.0     115.9     0.1    0.1 %   144.1     -28.1    -19.5 %

¨ Non-current assets

    14,271.3     14,517.6     -246.3    -1.7 %   14,392.2     -120.9    -0.8 %

¡ Investments

    3,684.0     3,663.0     21.0    0.6 %   3,565.2     118.8    3.3 %

- KTF shares

    2,552.4     2,556.7     -4.3    -0.2 %   2,393.6     158.8    6.6 %

- Long-term loans

    279.6     311.3     -31.7    -10.2 %   406.3     -126.7    -31.2 %

- Others

    852.0     794.9     57.1    7.2 %   765.2     86.8    11.3 %

¡ Tangible assets

    10,166.1     10,411.5     -245.4    -2.4 %   10,417.9     -251.9    -2.4 %

¡ Intangible assets

    421.2     443.1     -21.9    -4.9 %   409.1     12.1    3.0 %
                                        

Total liabilities

    9,586.0     9,927.0     -341.1    -3.4 %   11,621.2     -2,035.2    -17.5 %
                                        

¨ Current liabilities

    2,786.9     3,080.0     -293.1    -9.5 %   4,916.0     -2,129.1    -43.3 %

¡ Interest-bearing debts

    634.8     800.5     -165.7    -20.7 %   2,688.4     -2,053.6    -76.4 %

¡ Accounts payable

    607.4     735.3     -127.9    -17.4 %   551.4     56.0    10.2 %

¡ Others

    1,544.7     1,544.3     0.4    0.0 %   1,676.2     -131.5    -7.8 %

¨ Long-term liabilities

    6,799.1     6,847.0     -48.0    -0.7 %   6,705.2     93.8    1.4 %

¡ Interest-bearing debts

    5,303.7     5,372.6     -68.9    -1.3 %   5,160.2     143.5    2.8 %

¡ Installation deposit

    945.9     958.9     -12.9    -1.3 %   1,051.5     -105.6    -10.0 %

¡ Others

    549.4     515.6     33.8    6.6 %   493.5     55.9    11.3 %
                                        

Total shareholders' equity

    8,034.6     8,009.5     25.1    0.3 %   7,385.9     648.7    8.8 %
                                        

¨ Common stock

    1,561.0     1,561.0     0.0    0.0 %   1,561.0     0.0    0.0 %

¨ Capital surplus

    1,440.3     1,440.3     0.0    0.0 %   1,440.3     0.0    0.0 %

¨ Retained earnings

    8,709.9     8,765.2     -55.3    -0.6 %   8,342.4     367.4    4.4 %

¨ Capital adjustments

    -3,676.5     -3,757.0     80.4    N/A     -3,957.8     281.3    N/A  

¡ Treasury stock

    -3,840.5     -3,840.5     0.0    N/A     -3,962.6     122.1    N/A  

¡ Gain (loss) on valuation of investment securities

    39.7     0.0     39.7    N/A     1.6     38.1    2403.3 %

¡ Others

    124.2     83.5     40.7    48.7 %   3.1     121.1    3847.0 %
                                        

Total interest-bearing debt

    5,938.6     6,173.1     -234.5    -3.8 %   7,848.6     -1,910.0    -24.3 %
                                        

Net debt

    4,841.8     4,992.8     -150.9    -3.0 %   5,838.3     -996.5    -17.1 %
                                        

Net debt / Total shareholders' equity

    60.3 %   62.3 %   -2.1% p     79.0 %   -18.8% P  

 

¡ Assets

 

  - Cash & cash equivalents decreased due to redemption of interest-bearing debts

 

  - Tangible assets decreased because CAPEX spending was less than depreciation expenses

 

¡ Liabilities

 

  - Interest-bearing debts decreased due to redemption of bonds and debts.

 

  - Accounts payable decreased due to decrease in operating expenses.

 

¡ Shareholders’ Equity

 

  - Gain on valuation of investment is occured as KT recognized Mirae Asset Securities in fair market value for its listing

(Purchase amt. : 5 bn won, FMV : 59.8 bn won, Gain : 54.8 bn won, Effective tax : 15.1 bn won Net amt. : 39.7 bn won)

 

3

2. Operating Results

A. Internet Revenue

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  

Internet access

    611.8    630.9    -19.1    -3.0 %   645.3    -33.5    -5.2 %

¨ Broadband

    551.2    558.7    -7.4    -1.3 %   568.8    -17.6    -3.1 %

¡ Megapass

    532.6    536.3    -3.7    -0.7 %   537.3    -4.7    -0.9 %

¡ Nespot

    18.6    22.4    -3.7    -16.6 %   31.5    -12.9    -40.8 %

¨ Kornet

    64.1    71.8    -7.6    -10.6 %   75.8    -11.6    -15.3 %

¨ Others

    -3.6    0.4    -4.0    N/A     0.8    -4.4    N/A  

Internet application

    54.0    58.9    -4.9    -8.4 %   60.4    -6.4    -10.7 %

¨ IDC

    22.9    24.9    -2.0    -7.9 %   30.8    -7.9    -25.6 %

¨ Bizmeka

    16.6    15.8    0.8    5.1 %   15.3    1.3    8.2 %

¨ Others

    14.5    18.2    -3.8    -20.7 %   14.3    0.2    1.3 %

 

¡ Megapass : Revenue decreased due to decrease in modem rental revenue and additional discount for long-term contract subscribers.

 

¡ Nespot : Revenue decreased due to decrease in Nespot Swing handset sales.

 

¡ Kornet : Revenue decreased due to decrease in demand for Kornet service

 

¡ Internet application revenue decreased due to decrease in demand for IDC (Internet Data Center) servers.

B. Data Revenue

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  

Data

    308.9    324.2    -15.3    -4.7 %   339.2    -30.3    -8.9 %

¨ Leased line

    268.2    284.9    -16.7    -5.9 %   296.0    -27.8    -9.4 %

¡ Local

    110.8    123.4    -12.6    -10.2 %   126.5    -15.7    -12.4 %

¡ Domestic long distance

    85.4    86.3    -0.9    -1.0 %   89.5    -4.1    -4.5 %

¡ International long distance

    3.7    3.5    0.3    7.6 %   4.8    -1.0    -21.5 %

¡ Broadcasting & others

    68.3    71.8    -3.5    -4.9 %   75.2    -7.0    -9.3 %

¨ Other data

    40.7    39.2    1.4    3.6 %   43.2    -2.6    -5.9 %

¡ Packet data

    2.3    2.6    -0.3    -10.1 %   4.0    -1.7    -42.3 %

¡ National network ATM

    21.2    19.3    1.9    10.0 %   23.1    -1.9    -8.2 %

¡ Others

    17.2    17.4    -0.3    -1.5 %   16.1    1.0    6.2 %

 

¡ Leased line revenue decreased due to decrease in demand for local and domestic long distance leased line service.

 

4

C. Telephone Revenue

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  

Telephone revenue

    1,061.5    1,084.7    -23.3    -2.1 %   1,100.8    -39.3    -3.6 %

¨ Subscriber connection

    347.0    351.8    -4.8    -1.4 %   349.3    -2.4    -0.7 %

¡ Subscription fee

    12.8    14.7    -1.9    -13.2 %   18.5    -5.8    -31.1 %

¡ Basic monthly fee

    281.4    281.4    0.0    0.0 %   281.9    -0.6    -0.2 %

¡ Installation

    9.7    10.1    -0.5    -4.6 %   9.4    0.3    2.7 %

¡ Interconnection

    43.2    45.6    -2.4    -5.2 %   39.5    3.7    9.4 %

¨ Local

    266.5    270.2    -3.8    -1.4 %   277.5    -11.0    -4.0 %

¡ Usage

    183.4    186.9    -3.5    -1.9 %   200.2    -16.8    -8.4 %

¡ Interconnection

    35.8    36.4    -0.6    -1.6 %   32.6    3.2    9.8 %

¡ Others

    47.3    46.9    0.3    0.7 %   44.7    2.6    5.8 %

¨ Domestic long distance

    180.4    186.3    -5.9    -3.1 %   196.8    -16.4    -8.3 %

¡ Usage

    173.2    177.9    -4.7    -2.6 %   189.4    -16.2    -8.6 %

¡ Interconnection

    6.9    8.1    -1.2    -14.3 %   7.0    -0.1    -1.4 %

¡ Others

    0.3    0.3    0.0    -14.1 %   0.3    -0.1    -20.7 %

¨ International long distance

    50.7    52.1    -1.4    -2.7 %   57.5    -6.8    -11.8 %

¨ International settlement

    41.3    42.9    -1.6    -3.7 %   36.8    4.5    12.2 %

¨ VoIP

    6.9    6.8    0.1    2.0 %   4.7    2.2    47.5 %

¨ VAS

    93.6    96.4    -2.8    -2.9 %   86.1    7.5    8.7 %

¨ Public telephone

    7.1    5.4    1.7    31.0 %   10.1    -3.0    -30.0 %

¨ 114 phone directory service

    36.9    31.0    5.8    18.7 %   29.8    7.0    23.5 %

¨ Others

    31.2    41.8    -10.7    -25.5 %   52.2    -21.0    -40.3 %

 

¡ Telephone revenue decreased due to overall decline in traffic volume and subscribers.

 

¡ Decrease in Ann handset sales which led to decline in other telephone revenue.

[Ann handset sales : 1Q06(6.2bn won), 4Q05(11.7bn won), 1Q05(27.9bn won)

 

5

D. LM (Land to Mobile) Interconnection Revenue

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q     2004    2005 4Q / 2004 3Q  
         amount    D%     4Q    amount    D%  

LM Revenue

    438.4    450.7    -12.3    -2.7 %   427.7    10.7    2.5 %

LM interconnection cost

    211.5    231.0    -19.5    -8.4 %   214.0    -2.6    -1.2 %

 

¡ LM revenue

 

  - LM revenue decreased compare to the previous quarter due to decline in LM traffic.

 

  - LM revenue increased compare to the corresponding period of 2005 mainly because monthly offering of 5-minute free LM calls ended as of November 30, 2005.

 

¡ It takes approximately two months for operators to verify the actual volume of LM traffic. KT estimates

LM interconnection cost reflecting historical traffic at the time of quarterly closing and makes appropriate adjustments in the following quarter. This is the reason why LM interconnection cost is not directly related to the volatility of LM traffic.

E. Wireless Revenue

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  

Wireless revenue

    323.3    262.8    60.4    23.0 %   328.6    -5.4    -1.6 %

¨ PCS resale

    307.7    240.7    67.0    27.8 %   311.4    -3.7    -1.2 %

¡ PCS service

    217.4    215.3    2.1    1.0 %   202.8    14.6    7.2 %

¡ Handset sales

    90.3    25.4    64.9    255.8 %   108.6    -18.3    -16.9 %

¨ Others

    15.6    22.1    -6.5    -29.5 %   17.2    -1.7    -9.6 %

 

¡ PCS handset sales significantly increased compare to the previous quarter as KT adopted new handset sales contract with outside sales agency in order to secure efficient distribution channel and credit control. Outside sales agency changed its sales method from simply distributing handsets to direct purchase and sale. Therefore, KT recognized handset sales revenue when KT sold handsets to outside sales agency.

 

6

F. Operating Expenses

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  

Labor

    586.8    645.8    -59.0    -9.1 %   631.2    -44.4    -7.0 %

¨ Salaries & wages

    436.0    462.1    -26.1    -5.7 %   421.6    14.4    3.4 %

¨ Employee benefits

    105.7    132.3    -26.6    -20.1 %   104.2    1.6    1.5 %

¨ Provision for retirement

    45.0    51.3    -6.3    -12.3 %   105.5    -60.4    -57.3 %

Commissions

    151.3    178.5    -27.2    -15.2 %   152.3    -1.0    -0.7 %

Marketing expenses

    139.0    182.7    -43.7    -23.9 %   193.1    -54.1    -28.0 %

¨ Sales commission

    107.2    48.8    58.3    119.4 %   95.0    12.2    12.8 %

¨ Sales promotion

    20.4    86.1    -65.7    -76.3 %   68.4    -48.0    -70.2 %

¨ Advertising

    11.5    47.7    -36.3    -76.0 %   29.7    -18.2    -61.4 %

Provision for doubtful accounts

    18.4    9.8    8.6    88.5 %   16.3    2.1    12.6 %

Depreciation

    487.8    629.0    -141.2    -22.4 %   492.8    -5.1    -1.0 %

Repairs and Maintenance

    78.4    113.6    -35.2    -31.0 %   55.9    22.5    40.3 %

Cost of goods sold

    127.0    102.7    24.3    23.7 %   192.8    -65.8    -34.1 %

¨ PCS handset cost

    96.8    61.2    35.6    58.1 %   130.9    -34.1    -26.1 %

¨ PDA, WLAN card, others

    30.2    41.4    -11.3    -27.2 %   61.9    -31.7    -51.2 %

Cost of service provided

    429.0    557.2    -128.2    -23.0 %   438.6    -9.6    -2.2 %

¨ Cost of service

    171.8    272.2    -100.4    -36.9 %   184.6    -12.8    -6.9 %

¡ PCS resale network cost to KTF

    108.3    111.8    -3.5    -3.1 %   89.5    18.7    20.9 %

¡ SI service cost

    31.4    99.4    -68.0    -68.4 %   32.6    -1.2    -3.6 %

¡ Others

    32.1    60.9    -28.8    -47.3 %   62.5    -30.4    -48.6 %

¨ International settlement cost

    45.7    54.1    -8.4    -15.5 %   39.9    5.8    14.5 %

¨ LM interconnection cost

    211.5    231.0    -19.5    -8.4 %   214.0    -2.6    -1.2 %

R&D

    42.6    86.3    -43.7    -50.7 %   52.8    -10.2    -19.4 %

Others

    172.7    205.3    -32.6    -15.9 %   142.4    30.3    21.3 %

* CAPEX

    219.8    729.0    -509.2    -69.8 %   289.3    -69.5    -24.0 %

 

¡ Labor cost

 

  - Labor cost decreased compare to the previous quarter due to recognition of one-off salary increase by collective agreement made in 2005 is completed.

 

  - Labor cost decreased compare to the corresponding period of 2005 due to decrease in average salaries, especially decrease in bonuses, reducing burden on provision for retirement.

 

¡ Marketing expenses decreased as efforts to control cost efficiently.

 

  - Sales commission increased mainly due to an effort to expand outside sales channels for enhanced and diversified marketing activities

 

  - Sales promotion decreased due to replacing internal employee sales by external sales channels.

 

  - Advertising expense decreased as an effort to improve profitability

 

¡ Repairs and Maintenance increased to maintain high quality of services as telecom industry enviornment became more competitive

 

¡ Cost of goods sold increased compared to the previous quarter due to increase in handset sales by outside sales channels

 

¡ Cost of service provided

 

  - Decrease in SI service cost is caused by seasonal effect

 

  - Other cost of service provided decreased due to decrease in leased line revenue

 

7

G. Non-operating Income

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  

Non-operating income

    168.0    53.7    114.3    212.7 %   200.2    -32.2    -16.1 %

¨ Gains on disposition of investments

    0.1    0.0    0.1    N/A     2.6    -2.6    -97.1 %

¨ Gains on disposition of tangible assets

    0.8    8.5    -7.7    -90.8 %   0.8    0.0    -1.7 %

¨ Interest income

    18.6    20.5    -1.9    -9.2 %   21.1    -2.5    -12.0 %

¨ FX transaction gain

    2.2    5.9    -3.7    -63.1 %   9.4    -7.2    -76.8 %

¨ FX translation gain

    65.3    38.8    26.5    68.3 %   33.9    31.5    92.8 %

¨ USO fund

    11.6    -49.8    61.4    N/A     20.3    -8.8    -43.1 %

¨ Gain on equity method

    24.4    24.2    0.2    0.7 %   32.2    -7.9    -24.4 %

¨ Others

    45.2    5.8    39.4    684.2 %   79.9    -34.7    -43.4 %

 

¡ As of March 2006, our foreign currency net debt exposure (total borrowings in foreign currency of US$ 1,611 million - total foreign currency deposit of US$ 37 million) stood at US$ 1,574 million. The US$ depreciated by 37.1 won (1,013.0 won per dollar at the end of December ð 975.9 won per dollar at the end of March), resulting in FX translation gain of 57.6 billion (FX translation gain of 65.3 billion won - FX translation loss of 7.7 billion won = FX translation gain of 57.6 billion won).

 

¡ USO fund in 4Q 2005 was recognized in negative as we adjust the over-estimated USO fund which was finalized in January 2006.

<Equity Method>

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  

¨ Gain on equity method

    24.4    24.2    0.2    0.7 %   32.2    -7.9    -24.4 %

¨ Loss on equity method

    9.1    30.3    -21.2    -70.0 %   13.9    -4.8    -34.5 %

Gain or loss on equity method

    15.3    -6.1    21.4    N/A     18.4    -3.1    -16.9 %

Gain or loss on equity method

                    

¨ Gain or loss from KTF

    57.4    57.4    0.0    0.0 %   62.2    -4.8    -7.7 %

¨ Amortization on goodwill from KTF

    -45.6    -45.6    0.0    N/A     -45.6    0.0    N/A  

¨ Other subsidiaries

    3.5    -17.9    21.4    N/A     1.8    1.7    97.3 %

<Schedule for Amortization on Goodwill>

                    

(KRW bn)

    2004    2005    2006    2007     2008    2009    2010  

Total

    326.0    181.7    181.9    154.5     141.1    141.1    76.0  

 

8

H. Non-operating Expenses

 

(KRW bn)

   

2005

4Q

   

2005

3Q

    2005 4Q / 2005 3Q    

2004

4Q

    2005 4Q / 2004 3Q  
         amount    D%        amount    D%  
Non-operating expenses    262.6    205.2    57.4    28.0 %   264.7    -2.0    -0.8 %

¨ Interest expense

    86.7    96.7    -9.9    -10.3 %   113.2    -26.5    -23.4 %

¨ FX transaction loss

    4.9    1.8    3.1    176.9 %   6.0    -1.2    -19.4 %

¨ FX translation loss

    7.7    6.8    0.9    12.6 %   5.9    1.8    31.1 %

¨ Loss on equity method

    9.1    30.3    -21.2    -70.0 %   13.9    -4.8    -34.5 %

¨ Loss on disposition of fixed assets

    10.7    17.2    -6.5    -37.9 %   8.1    2.6    32.8 %

¨ Others

    143.5    52.4    91.2    174.1 %   117.6    25.9    22.0 %

 

¡ Compare to the corresponding period of 2005, other non-operating expenses increased because there was derivatives translation loss of approximately KRW 80 billion for hedging foreign currency fluctuations.

 

¡ Loss on equity method decreased compare to the previous quarter due to improved operating performance by our subsidiaries, mainly KTP and KTL.

 

9

Appendix 1: Factsheet

 

Broadband             
     Dec-04     Mar-05     Jun-05     Sep-05     Dec-05     Mar-06  

Broadband Subs

    6,077,694     6,133,293     6,172,475     6,241,213     6,242,592     6,240,605  

Net Addition

    12,372     26,022     13,917     12,454     -2,703     -46,961  

¡ Megapass Lite

    4,888,980     4,862,075     4,821,986     4,834,442     4,789,363     4,724,684  

¡ Megapass Premium

    662,841     688,997     717,099     724,032     718,017     689,726  

¡ Megapass Special (1)

    2,765     4,970     5,973     7,206     8,192     8,992  

¡ Megapass Ntopia

    523,108     577,251     627,417     675,533     727,020     817,203  

Broadband M/S

             

KT

    51.0 %   50.7 %   50.3 %   51.8 %   51.2 %   50.0 %

Hanaro(2)

    33.9 %   33.3 %   33.1 %   30.7 %   29.6 %   28.6 %

Others

    15.1 %   16.0 %   16.5 %   17.5 %   19.2 %   21.4 %
WLAN             
     Dec-04     Mar-05     Jun-05     Sep-05     Dec-05     Mar-06  

WLAN Subs

    418,451     455,958     482,098     513,844     492,588     495,961  

¡ NESPOT Family

    238,526     243,902     245,719     242,976     233,481     226,914  

¡ NESPOT Solo

    29,914     32,189     34,155     37,218     36,382     38,626  

¡ NESPOT Pop

    131,882     154,364     171,113     189,955     177,396     171,190  

¡ NESPOT Biz

    18,129     25,503     31,111     43,695     45,329     59,231  
Leased Lines             
     Dec-04     Mar-05     Jun-05     Sep-05     Dec-05     Mar-06  

Leased Lines

    426,633     422,728     417,351     412,145     410,036     407,999  

¡ Local leased line

    390,085     387,080     382,946     378,615     376,620     376,458  

¡ DLD leased line

    36,233     35,404     34,119     33,300     33,217     31,293  

¡ International leased line

    110     105     111     101     86     91  

¡ Broadcasting leased line

    205     139     175     129     114     157  

Internet Leased Lines

    38,775     39,603     40,995     42,523     43,818     45,802  

Leased Line M/S

    67.6 %   67.1 %   66.5 %   66.1 %   65.8 %   65.0 %
Fixed-line             
     Dec-04     Mar-05     Jun-05     Sep-05     Dec-05     Mar-06  

Fixed-line Subs (‘000)

    21,091     21,107     21,056     21,013     20,837     20,843  

Residential users (%)

    72 %   72 %   72 %   72 %   72 %   72 %

Non-refundable users(%)

    72 %   72 %   72 %   72 %   72 %   72 %

Caller ID Users (‘000)

    4,043     4,057     4,049     4,123     4,222     4,357  

VAS users (‘000)

    12,803     13,062     13,255     13,209     13,138     13,130  
Fixed-line M/S             

Local M/S (subscriber base)

    93.8 %   93.8 %   93.5 %   93.2 %   93.2 %   93.0 %

DLD (revenue base) (3)

    83.7 %   83.5 %   83.5 %   85.7 %   85.6 %  

ILD (revenue base) (4)

    45.1 %   45.3 %   45.1 %   44.6 %   44.8 %  
Reference Data             
     Dec-04     Mar-05     Jun-05     Sep-05     Dec-05     Mar-06  

Population (‘000)

    48,199     48,294     48,294     48,294     48,294     48,497  

Number of Household

    15,538     15,789     15,789     15,789     15,789     15,989  

Company data except Braodband Market Share and Population

 

* Source of Population, No of Household: Korea National Statistical Office
* Broadband ARPU: excluding revenue from WLAN
(1) Special: Broadband service providing speed up to 20Mbps & 50Mbps.
(2) Market share of Hanaro includes that of Thrunet.
(3) Special telecom service providers are included in DLD M/S calculation.
(4) Special telecom service providers are included in ILD M/S calculation.

 

1