6-K 1 d6k.htm FORM 6-K

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of, August 2006

Commission File Number 1-14926

KT Corporation

(Translation of registrant’s name into English)

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 if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):             

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):             

Indicate by check mark whether by furnishing the information contained in this Form, the registrant 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    

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                     

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.

August 3rd, 2006

2nd 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 June 30, 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 June 30, 2006 will be filed with the Financial Supervisory Service(FSS) and th Korea Exchange(KRX) in August 14, 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 2Q			2006 1Q			2006 2Q / 2006 1Q					2005 2Q			2006 2Q / 2005 2Q					2006 2nd Half
								amount		D%						amount		D%
Operating revenue		2,955.7			2,897.6			58.0		2.0	%		2,990.7			-35.1		-1.2	%		5,853.3
Ÿ Internet access		617.3			611.8			5.5		0.9	%		650.9			-33.6		-5.2	%		1,229.1
Ÿ Internet application		65.4			54.0			11.4		21.1	%		66.5			-1.1		-1.6	%		119.3
Ÿ Data		307.8			308.9			-1.1		-0.4	%		339.0			-31.2		-9.2	%		616.6
Ÿ Telephone		1,075.0			1,061.5			13.6		1.3	%		1,123.3			-48.3		-4.3	%		2,136.5
Ÿ LM		438.0			438.4			-0.3		-0.1	%		450.1			-12.1		-2.7	%		876.4
Ÿ Wireless		331.9			323.3			8.7		2.7	%		278.3			53.6		19.3	%		655.2
Ÿ Satellite		28.0			27.4			0.7		2.5	%		28.9			-0.8		-2.9	%		55.4
Ÿ Real estate		32.7			26.0			6.7		25.8	%		23.0			9.7		42.3	%		58.8
Ÿ Others		59.5			46.5			12.9		27.8	%		30.8			28.7		93.3	%		106.0
Ÿ SI		47.2			32.5			14.7		45.4	%		31.3			15.9		50.7	%		79.6
Operating expenses		2,385.4			2,232.9			152.5		6.8	%		2,651.6			-266.1		-10.0	%		4,618.4
Ÿ Labor		607.7			586.8			20.9		3.6	%		670.4			-62.8		-9.4	%		1,194.5
Ÿ Commissions		157.4			151.3			6.1		4.0	%		153.7			3.7		2.4	%		308.7
Ÿ Sales commission		102.3			107.2			-4.9		-4.5	%		90.7			11.6		12.8	%		209.5
Ÿ Sales promotion		77.8			20.4			57.4		281.6	%		137.3			-59.4		-43.3	%		98.2
Ÿ Advertising		27.4			11.5			16.0		139.5	%		32.4			-5.0		-15.3	%		38.9
Ÿ Provision for doubtful accounts		7.9			18.4			-10.5		-56.8	%		21.8			-13.8		-63.5	%		26.4
Ÿ Depreciation		473.2			487.8			-14.6		-3.0	%		485.3			-12.1		-2.5	%		961.0
Ÿ Repairs & maintenance		80.6			78.4			2.1		2.7	%		110.5			-29.9		-27.1	%		159.0
Ÿ Cost of goods sold		154.6			127.0			27.7		21.8	%		137.3			17.3		12.6	%		281.6
Ÿ Cost of service provided		439.5			429.0			10.5		2.4	%		443.1			-3.6		-0.8	%		868.4
Ÿ R&D		50.8			42.6			8.2		19.4	%		55.3			-4.5		-8.1	%		93.4
Ÿ Others		206.2			172.7			33.5		19.4	%		313.9			-107.7		-34.3	%		378.9
Operating income		570.2			664.7			-94.5		-14.2	%		339.1			231.1		68.1	%		1,234.9
Operating margin		19.3	%		22.9	%		-3.6% P					11.3	%		8.0% P					21.1	%
EBITDA(1)		1,043.4			1,152.5			-109.1		-9.5	%		824.4			219.0		26.6	%		2,195.9
EBITDA margin		35.3	%		39.8	%		-4.5% P					27.6	%		7.7% P					37.5	%
Non-operating income		96.1			168.0			-71.9		-42.8	%		208.2			-112.1		-53.8	%		264.1
Non-operating expenses		207.2			262.6			-55.4		-21.1	%		209.9			-2.7		-1.3	%		469.8
Ordinary income		459.1			570.1			-111.0		-19.5	%		337.4			121.7		36.1	%		1,029.2
Income tax expenses		116.5			160.8			-44.3		-27.5	%		113.4			3.1		2.8	%		277.4
Effective tax rate		25.4	%		28.2	%		-2.8% P					33.6	%		-8.2% P					26.9	%
Net income		342.6			409.2			-66.7		-16.3	%		224.1			118.5		52.9	%		751.8
EPS (won)		1,608			1,921			-313		-16.3	%		1,063			545		51.3	%

• Revenue

• Revenue slightly increased compare to the previous quarter due to increase in demand for Kornet of Internet access revenue and for IDC (Internet Data Center) servers of Internet application revenue

• Operating expenses

• Operating expenses decreased compare to the previous quarter due mostly to increase in sales efforts on Megapass and Ann handset and recognition of more SI service cost as SI revenue increased

• Income tax expenses

• Income tax expenses decreased compare to the previous quarter due to decrease in ordinary income

2

B. Summary of Balance Sheet

(KRW bn)		2006 2Q			2006 1Q			2006 2Q /2006 1Q					2005 2Q			2006 2Q / 2005 2Q
								amount		D%						amount		D%
Total assets		17,492.3			17,620.5			-128.2		-0.7	%		18,194.1			-701.7		-3.9	%
Ÿ Current assets		3,154.9			3,349.2			-194.3		-5.8	%		3,957.4			-802.5		-20.3	%
Ÿ Quick assets		3,063.5			3,233.3			-169.8		-5.3	%		3,819.5			-756.0		-19.8	%
Ÿ Cash & Cash equivalents		855.6			1,096.7			-241.1		-22.0	%		1,526.3			-670.6		-43.9	%
Ÿ Inventories		91.5			116.0			-24.5		-21.1	%		137.9			-46.5		-33.7	%
Ÿ Non-current assets		14,337.4			14,271.3			66.1		0.5	%		14,236.7			100.8		0.7	%
Ÿ Investments		3,749.7			3,684.0			65.6		1.8	%		3,505.2			244.4		7.0	%
Ÿ KTF shares		2,655.6			2,552.4			103.2		4.0	%		2,425.3			230.3		9.5	%
Ÿ Long-term loans		249.1			279.6			-30.5		-10.9	%		371.6			-122.5		-33.0	%
Ÿ Others		845.0			852.0			-7.0		-0.8	%		708.4			136.6		19.3	%
Ÿ Tangible assets		10,155.6			10,166.1			-10.5		-0.1	%		10,334.3			-178.6		-1.7	%
Ÿ Intangible assets		432.1			421.2			10.9		2.6	%		397.2			35.0		8.8	%
Total liabilities		9,387.7			9,586.0			-198.3		-2.1	%		10,587.5			-1,199.8		-11.3	%
Ÿ Current liabilities		2,696.1			2,786.9			-90.9		-3.3	%		4,110.0			-1,413.9		-34.4	%
Ÿ Interest-bearing debts		332.7			634.8			-302.1		-47.6	%		1,769.6			-1,436.9		-81.2	%
Ÿ Accounts payable		630.1			607.4			22.7		3.7	%		566.4			63.7		11.2	%
Ÿ Others		1,733.3			1,544.7			188.6		12.2	%		1,774.0			-40.7		-2.3	%
Ÿ Long-term liabilities		6,691.6			6,799.1			-107.4		-1.6	%		6,477.5			214.1		3.3	%
Ÿ Interest-bearing debts		5,177.8			5,303.7			-125.9		-2.4	%		4,986.0			191.8		3.8	%
Ÿ Installation deposit		931.7			945.9			-14.2		-1.5	%		1,008.5			-76.8		-7.6	%
Ÿ Others		582.0			549.4			32.7		5.9	%		483.0			99.0		20.5	%
Total shareholders’ equity		8,104.7			8,034.6			70.1		0.9	%		7,606.6			498.1		6.5	%
Ÿ Common stock		1,561.0			1,561.0			0.0		0.0	%		1,561.0			0.0		0.0	%
Ÿ Capital surplus		1,440.3			1,440.3			0.0		0.0	%		1,440.3			0.0		0.0	%
Ÿ Retained earnings		9,052.5			8,709.9			342.6		3.9	%		8,566.5			486.0		5.7	%
Ÿ Capital adjustments		-3,949.0			-3,676.5			-272.5		N/A			-3,961.2			12.1		N/A
Ÿ Treasury stock		-4,054.1			-3,840.5			-213.7		N/A			-3,962.6			-91.6		N/A
Ÿ Gain(loss) on valuation of investment securities		34.7			39.7			-5.0		-12.6	%		-1.0			35.7		N/A
Ÿ Others		70.4			124.2			-53.8		-43.3	%		2.4			68.0		2817.7	%
Total interest-bearing debt		5,510.5			5,938.6			-428.0		-7.2	%		6,755.6			-1,245.0		-18.4	%
Net debt		4,654.9			4,841.8			-186.9		-3.9	%		5,229.3			-574.4		-11.0	%
Net debt / Total shareholders’ equity		57.4	%		60.3	%		-2.8% p					68.7	%		-11.3% 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 increased due to increase in operating expenses

• Shareholders’ Equity

• Treasury stock increased as KT initiated a share buyback from April 3 to June 26 and cancelled all on July 3

3

2. Operating Results

A. Internet Revenue

(KRW bn)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005		2006 2Q /2005 2Q					2006 2nd Half
						amount		D%			2Q		amount		D%
Internet access		617.3		611.8		5.5		0.9	%		650.9		-33.6		-5.2	%		1,229.1
Ÿ Broadband		548.5		551.2		-2.7		-0.5	%		572.6		-24.1		-4.2	%		1,099.7
Ÿ Megapass		527.7		532.6		-4.9		-0.9	%		539.4		-11.7		-2.2	%		1,060.3
Ÿ Nespot		20.8		18.6		2.2		11.7	%		33.2		-12.3		-37.2	%		39.5
Ÿ Kornet		72.4		64.1		8.2		12.8	%		77.7		-5.4		-6.9	%		136.5
Ÿ Others		-3.6		-3.6		0.0		N/A			0.6		-4.2		N/A			-7.2
Internet application		65.4		54.0		11.4		21.1	%		66.5		-1.1		-1.6	%		119.3
Ÿ IDC		33.3		22.9		10.4		45.4	%		25.8		7.5		28.9	%		56.2
Ÿ Bizmeka		18.6		16.6		2.1		12.4	%		23.1		-4.5		-19.3	%		35.2
Ÿ Others		13.4		14.5		-1.0		-7.2	%		17.5		-4.1		-23.4	%		27.9

• Megapass : Revenue decreased due to decrease in ARPU mainly caused by slowdown in new subscriber addition, decrease in modem rental revenue as the percentage of long-term(three years or more) contract subscribers increased and additional discount on long-term subscribers

• Nespot : Revenue increased due to increase in sales of Nespot Swing handset

• Kornet : Revenue increased due to increase in demand for Kornet, mostly PC cafe

• Internet application revenue increased due to increase in demand for IDC(Internet Data Center) servers

B. Data Revenue

(KRW bn)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005		2006 2Q /2005 2Q					2006 2nd Half
						amount		D%			2Q		amount		D%
Data		307.8		308.9		-1.1		-0.4	%		339.0		-31.2		-9.2	%		616.6
Ÿ Leased line		269.4		268.2		1.2		0.4	%		295.3		-25.9		-8.8	%		537.6
Ÿ Local		114.4		110.8		3.7		3.3	%		124.5		-10.0		-8.0	%		225.2
Ÿ Domestic long distance		84.2		85.4		-1.2		-1.4	%		89.1		-4.8		-5.4	%		169.7
Ÿ International long distance		4.4		3.7		0.7		18.2	%		4.4		0.0		0.6	%		8.1
Ÿ Broadcasting & others		66.3		68.3		-2.0		-2.9	%		77.3		-11.0		-14.3	%		134.6
Ÿ Other data		38.4		40.7		-2.3		-5.6	%		43.7		-5.4		-12.3	%		79.0
Ÿ Packet data		2.3		2.3		0.0		-0.7	%		3.4		-1.1		-33.2	%		4.6
Ÿ National network ATM		18.3		21.2		-2.9		-13.8	%		24.9		-6.7		-26.8	%		39.5
Ÿ Others		17.8		17.2		0.7		3.8	%		15.4		2.4		15.9	%		35.0

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

4

C. Telephone Revenue

(KRW bn)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005 2Q		2006 2Q /2005 2Q					2006 2nd Half
						amount		D%					amount		D%
Telephone revenue		1,075.0		1,061.5		13.6		1.3	%		1,123.3		-48.3		-4.3	%		2,136.5
Ÿ Subscriber connection		347.9		347.0		0.9		0.3	%		357.9		-10.1		-2.8	%		694.9
Ÿ Subscription fee		12.2		12.8		-0.5		-4.2	%		20.6		-8.4		-40.7	%		25.0
Ÿ Basic monthly fee		281.6		281.4		0.2		0.1	%		282.5		-0.9		-0.3	%		562.9
Ÿ Installlation		10.7		9.7		1.0		10.4	%		11.2		-0.6		-5.1	%		20.3
Ÿ Interconnection		43.4		43.2		0.2		0.5	%		43.6		-0.2		-0.4	%		86.6
Ÿ Local		259.4		266.5		-7.0		-2.6	%		276.5		-17.1		-6.2	%		525.9
Ÿ Usage		177.3		183.4		-6.1		-3.3	%		194.2		-16.9		-8.7	%		360.7
Ÿ Interconnection		34.6		35.8		-1.2		-3.2	%		35.9		-1.2		-3.4	%		70.4
Ÿ Others		47.5		47.3		0.3		0.6	%		46.5		1.0		2.2	%		94.8
Ÿ Domestic long distance		171.6		180.4		-8.7		-4.8	%		189.5		-17.8		-9.4	%		352.0
Ÿ Usage		164.5		173.2		-8.7		-5.0	%		180.9		-16.5		-9.1	%		337.7
Ÿ Interconnection		6.9		6.9		0.0		-0.3	%		8.2		-1.3		-16.0	%		13.8
Ÿ Others		0.3		0.3		0.0		0.5	%		0.3		-0.1		-19.7	%		0.5
Ÿ International long distance		50.0		50.7		-0.7		-1.3	%		59.1		-9.0		-15.3	%		100.7
Ÿ International settlement		44.9		41.3		3.6		8.6	%		43.8		1.1		2.5	%		86.2
Ÿ VoIP		7.5		6.9		0.6		8.6	%		5.8		1.7		29.4	%		14.5
Ÿ VAS		93.7		93.6		0.1		0.1	%		88.9		4.7		5.3	%		187.3
Ÿ Public telephone		7.1		7.1		0.0		0.1	%		10.0		-3.0		-29.5	%		14.1
Ÿ 114 phone directory service		54.3		36.9		17.5		47.5	%		31.4		23.0		73.1	%		91.2
Ÿ Others		38.6		31.2		7.4		23.7	%		60.3		-21.7		-36.1	%		69.7

• Telephone revenue increased compared to the previous quarter due to temporary increase in settlement of 114 phone directory service

• Other telephone revenue increased compare to the previous quarter due to increase in sales of Ann handset [Ann handset sales : 2Q06(11.8bn won), 1Q06(6.2bn won), 2Q05(34.0bn won)

5

D. LM(Land to Mobile) Interconnection Revenue

(KRW bn)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005 2Q		2006 2Q /2005 2Q					2006 2nd Half
						amount		D%					amount		D%
LM Revenue		438.0		438.4		-0.3		-0.1	%		450.1		-12.1		-2.7	%		876.4
LM interconnection cost		203.2		211.5		-8.2		-3.9	%		208.3		-5.1		-2.4	%		414.7

• 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)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005 2Q		2006 2Q /2005 2Q					2006 2nd Half
						amount		D%					amount		D%
Wireless revenue		331.9		323.3		8.7		2.7	%		278.3		53.6		19.3	%		655.2
Ÿ PCS resale		315.8		307.7		8.2		2.7	%		261.9		54.0		20.6	%		623.5
Ÿ PCS service		219.4		217.4		2.0		0.9	%		213.9		5.5		2.6	%		436.8
Ÿ Handset sales		96.4		90.3		6.1		6.8	%		47.9		48.5		101.2	%		186.7
Ÿ Others		16.1		15.6		0.5		3.2	%		16.5		-0.4		-2.2	%		31.7

• Wireless revenue increased due to increase in the number of subscribers and in sales of handset

6

F. Operating Expenses

(KRW bn)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005 2Q		2006 2Q /2005 2Q					2006 2nd Half
						amount		D%					amount		D%
Labor		607.7		586.8		20.9		3.6	%		670.4		-62.8		-9.4	%		1,194.5
Ÿ Salaries & wages		438.0		436.0		2.0		0.5	%		492.2		-54.2		-11.0	%		874.1
Ÿ Employee benefits		114.5		105.7		8.8		8.3	%		163.9		-49.4		-30.2	%		220.2
Ÿ Provision for retirement		55.1		45.0		10.1		22.4	%		14.3		40.8		285.7	%		100.2
Commissions		157.4		151.3		6.1		4.0	%		153.7		3.7		2.4	%		308.7
Marketing expenses		207.6		139.0		68.5		49.3	%		260.3		-52.8		-20.3	%		346.6
Ÿ Sales commission		102.3		107.2		-4.9		-4.5	%		90.7		11.6		12.8	%		209.5
Ÿ Sales promotion		77.8		20.4		57.4		281.6	%		137.3		-59.4		-43.3	%		98.2
Ÿ Advertising		27.4		11.5		16.0		139.5	%		32.4		-5.0		-15.3	%		38.9
Provision for doubtful accounts		7.9		18.4		-10.5		-56.8	%		21.8		-13.8		-63.5	%		26.4
Depreciation		473.2		487.8		-14.6		-3.0	%		485.3		-12.1		-2.5	%		961.0
Repairs and Maintenance		80.6		78.4		2.1		2.7	%		110.5		-29.9		-27.1	%		159.0
Cost of goods sold		154.6		127.0		27.7		21.8	%		137.3		17.3		12.6	%		281.6
Ÿ PCS handset cost		97.0		96.8		0.2		0.2	%		43.7		53.3		121.9	%		193.7
Ÿ PDA, WLAN card, others		57.7		30.2		27.5		91.2	%		93.6		-36.0		-38.4	%		87.8
Cost of service provided		439.5		429.0		10.5		2.4	%		443.1		-3.6		-0.8	%		868.4
Ÿ Cost of service		186.9		171.8		15.1		8.8	%		190.9		-4.0		-2.1	%		358.7
Ÿ PCS resale network cost to KTF		112.7		108.3		4.4		4.0	%		107.5		5.1		4.8	%		220.9
Ÿ SI service cost		44.9		31.4		13.4		42.8	%		29.3		15.6		53.4	%		76.3
Ÿ Others		29.4		32.1		-2.7		-8.5	%		54.1		-24.8		-45.7	%		61.5
Ÿ International settlement cost		49.3		45.7		3.6		8.0	%		43.9		5.4		12.4	%		95.1
Ÿ LM interconnection cost		203.2		211.5		-8.2		-3.9	%		208.3		-5.1		-2.4	%		414.7
R&D		50.8		42.6		8.2		19.4	%		55.3		-4.5		-8.1	%		93.4
Others		206.2		172.7		33.5		19.4	%		313.9		-107.7		-34.3	%		378.9
* CAPEX		529.9		219.8		310.1		141.1	%		428.5		101.4		23.7	%

• Labor cost

• Labor cost decreased compare to the corresponding period of 2005 as KT completed collective bargaining of salary in 2Q05 and retrospectively recognized 1Q05 salary increase in 2Q05

• Marketing expenses

• Marketing expenses increased mainly due to intensed sales efforts on Megapass and Ann as industry enviornment became more competitive

• Depreciation

• Depreciation decreased as depreciable assets are reduced.

• Cost of goods sold increased compare to the previous quarter due to increase in sales of Ann handset and in purchase of IDC servers, and increased compare to the corresponding period of 2005 due to increase in sales of PCS handset

• Cost of service provided increased compare to the previous quarter because KT has recognized more SI service cost as SI revenue increased

• Other operating expenses sharply decreased compare to the corresponding period of 2005; KT recognized the FTC fine of 139.8bn won in 2Q05

7

G. Non-operating Income

(KRW bn)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005 2Q		2006 2Q / 2005 2Q					2006 2nd Half
						amount		D%					amount		D%
Non-operating income		96.1		168.0		-71.9		-42.8	%		208.2		-112.1		-53.8	%		264.1
Ÿ Gains on disposition of investments		0.8		0.1		0.7		907.4	%		53.6		-52.9		-98.6	%		0.8
Ÿ Gains on disposition of tangible assets		2.4		0.8		1.7		212.6	%		1.3		1.2		93.1	%		3.2
Ÿ Interest income		20.5		18.6		1.9		10.4	%		20.8		-0.3		-1.4	%		39.1
Ÿ FX transaction gain		21.1		2.2		18.9		872.8	%		3.4		17.7		513.0	%		23.3
Ÿ FX translation gain		10.7		65.3		-54.6		-83.6	%		0.6		10.1		1607.5	%		76.0
Ÿ USO fund		11.6		11.6		0.0		0.0	%		20.3		-8.8		-43.1	%		23.1
Ÿ Gain on equity method		1.9		24.4		-22.5		-92.2	%		35.0		-33.1		-94.6	%		26.2
Ÿ Others		27.1		45.2		-18.0		-39.9	%		73.1		-45.9		-62.9	%		72.3

• As of June 2006, our foreign currency net debt exposure (total borrowings in foreign currency of US$ 1,511 million - total foreign currency deposit of US$ 33 million) stood at US$ 1,478 million. The US$ depreciated by 15.6 won (975.9 won per dollar at the end of March ® 960.3 won per dollar at the end of June), resulting in FX translation gain of 6.3 billion (FX translation gain of 10.7 billion won - FX translation loss of 4.4 billion won = FX translation gain of 6.3 billion won).

• FX transaction gain increased due to redemption of foreign debt of US$ 300 million

<Equity Method>

(KRW bn)		2006 2Q		2006 1Q		2006 2Q /2006 1Q					2005 2Q		2006 2Q /2005 2Q
						amount		D%					amount		D%
Ÿ Gain on equity method		1.9		24.4		-22.5		-92.2	%		35.0		-33.1		-94.6	%
Ÿ Loss on equity method		3.8		9.1		-5.3		-58.6	%		34.6		-30.8		-89.1	%
Gain or loss on equity method		-1.9		15.3		-17.1		N/A			0.5		-2.3		N/A
Gain or loss on equity method
Ÿ Gain or loss from KTF		38.9		57.4		-18.5		-32.2	%		62.2		-23.3		-37.5	%
Ÿ Amortization on goodwill from KTF		-45.6		-45.6		0.0		N/A			-45.6		0.0		N/A
Ÿ Other subsidiaries		4.8		3.5		1.4		39.6	%		-16.1		21.0		N/A

<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)		2006 2Q		2006 1Q		2006 2Q / 2006 1Q					2005 2Q		2006 2Q / 2005 2Q					2006 2nd Half
						amount		D%					amount		D%
Non-operating expenses		207.2		262.6		-55.4		-21.1	%		209.9		-2.7		-1.3	%		469.8
Ÿ Interest expense		84.9		86.7		-1.8		-2.1	%		107.4		-22.5		-21.0	%		171.6
Ÿ FX transaction loss		1.5		4.9		-3.4		-69.1	%		3.5		-2.0		-56.6	%		6.4
Ÿ FX translation loss		4.4		7.7		-3.3		-42.6	%		0.4		4.0		1085.8	%		12.1
Ÿ Loss on equity method		3.8		9.1		-5.3		-58.6	%		34.6		-30.8		-89.1	%		12.9
Ÿ Loss on disposition of fixed assets		13.7		10.7		3.0		28.1	%		7.7		6.0		77.9	%		24.4
Ÿ Others		98.9		143.5		-44.6		-31.1	%		56.4		42.5		75.5	%		242.5

• Compare to the corresponding period of 2005, other non-operating expenses increased because there was derivatives translation loss of KRW 52.1 billion for hedging foreign currency fluctuations

9

Appendix 1: Factsheet

Broadband
		Dec-04			Mar-05			Jun-05			Sep-05			Dec-05			Jan-06			Mar-06			Apr-06			May-06			Jun-06
Broadband Subs		6,077,694			6,133,293			6,172,475			6,244,040			6,241,789			6,269,282			6,240,605			6,260,449			6,285,473			6,320,260
Net Addition		12,372			26,022			13,917			15,281			-3,506			27,493			-46,961			19,844			25,024			34,787
Ÿ Megapass Lite		4,888,980			4,862,075			4,821,986			4,837,269			4,788,942			4,787,601			4,724,684			4,728,481			4,740,265			4,772,280
Ÿ Megapass Premium		662,841			688,997			717,099			724,032			717,866			717,065			689,726			681,112			675,793			671,292
Ÿ Megapass Special (1)		2,765			4,970			5,973			7,206			8,196			8,553			8,992			9,035			9,069			9,035
Ÿ Megapass Ntopia		523,108			577,251			627,417			675,533			726,785			756,063			817,203			841,821			860,346			867,653
Broadband M/S
KT		51.0	%		50.7	%		50.3	%		51.8	%		51.2	%		51.0	%		50.0	%		49.9	%		49.6	%		49.5	%
Hanaro		23.1	%		22.7	%		22.7	%		23.0	%		22.7	%		29.2	%		28.6	%		28.5	%		28.4	%		28.2	%
Powercomm		0.0	%		0.0	%		0.0	%		0.5	%		2.1	%		2.7	%		3.8	%		4.4	%		5.0	%		5.6	%
Dacom		1.7	%		2.1	%		2.1	%		2.0	%		1.7	%		1.7	%		1.5	%		1.4	%		1.3	%		1.3	%
SO		9.0	%		9.6	%		10.3	%		11.0	%		11.6	%		11.8	%		12.6	%		12.5	%		12.5	%		12.4	%
Others		15.2	%		14.9	%		14.5	%		11.7	%		10.6	%		3.6	%		3.4	%		3.3	%		3.2	%		3.1	%
WLAN
		Dec-04			Mar-05			Jun-05			Sep-05			Dec-05			Jan-06			Mar-06			Apr-06			May-06			Jun-06
WLAN Subs		418,451			455,958			525,718			535,630			519,778			517,735			524,671			521,644			523,273			516,708
Ÿ NESPOT Family		238,526			243,902			249,454			242,976			237,259			236,532			230,597			227,582			224,050			219,650
Ÿ NESPOT Solo		29,914			32,189			35,871			37,218			38,385			39,133			40,725			41,042			41,270			41,519
Ÿ NESPOT Pop		131,882			154,364			180,778			189,955			187,157			184,327			180,959			179,750			180,611			173,070
Ÿ NESPOT Biz		18,129			25,503			32,337			43,695			45,814			46,018			60,776			61,612			64,130			64,205
Ÿ NESPOT Play		0			0			27,278			21,786			11,163			11,725			11,614			11,658			12,250			13,925
Ÿ NESPOT Home		0			0			0			0			0			0			0			0			962			4,339
Leased Lines
		Dec-04			Mar-05			Jun-05			Sep-05			Dec-05			Jan-06			Mar-06			Apr-06			May-06			Jun-06
Leased Lines		426,633			422,728			417,312			412,160			410,073			407,486			407,999			412,795			409,676			407,357
Ÿ Local leased line		390,085			387,080			382,946			378,615			376,620			375,009			376,458			380,593			377,308			375,501
Ÿ DLD leased line		36,233			35,404			34,119			33,300			33,217			32,256			31,293			31,918			32,050			31,480
Ÿ International leased line		110			105			111			90			91			90			91			92			91			95
Ÿ Broadcasting leased line		205			139			136			155			145			131			157			192			227			281
Internet Leased Lines		38,775			39,603			40,995			42,523			43,818			44,398			45,802			47,066			49,315			51,553
Fixed-line
		Dec-04			Mar-05			Jun-05			Sep-05			Dec-05			Jan-06			Mar-06			Apr-06			May-06			Jun-06
Fixed-line Subs (‘000)		21,091			21,107			21,056			21,013			20,837			20,845			20,843			20,865			20,885			20,804
Residential users (%)		72	%		72	%		72	%		72	%		72	%		72	%		72	%		72	%		72	%		72	%
Non-refundable users(%)		72	%		72	%		72	%		72	%		72	%		72	%		72	%		72	%		72	%		72	%
Caller ID Users (‘000)		4,043			4,057			4,049			4,123			4,222			4,270			4,357			4,402			4,437			4,450
VAS users (‘000)		12,803			13,062			13,255			13,209			13,138			13,135			13,130			13,130			13,149			13,174
Fixed-line M/S
Local M/S (subscriber base)		93.8	%		93.8	%		93.5	%		93.2	%		93.2	%		93.1	%		93.0	%		92.8	%		92.8	%		92.7	%
DLD (revenue base) (3)		83.7	%		83.5	%		83.5	%		85.7	%		85.6	%		85.3	%		85.6	%		85.7	%		85.7	%
Reference Data
		Dec-04			Mar-05			Jun-05			Sep-05			Dec-05			Jan-06			Mar-06			Apr-06			May-06			Jun-06
Population (‘000)		48,199			48,294			48,294			48,294			48,294			48,311			48,344			48,362			48,481			48,498
Number of Household		15,538			15,789			15,789			15,789			15,789			15,989			15,989			15,989			15,989			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) The number of VDSL technology applied subscribers among Megapass service

(3) Special telecom service providers are included in DLD M/S calculation.

(4) Special telecom service providers are included in ILD M/S calculation.

10

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: August 7, 2006

KT Corporation
By:		/s/ Thomas Bum Joon Kim
Name:		Thomas Bum Joon Kim
Title:		Managing Director