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 July 2007

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      ü            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      ü    

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

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: July 27, 2007
KT Corporation
By:		/s/ Thomas Bum Joon Kim
Name:		Thomas Bum Joon Kim
Title:		Managing Director
By:		/s/ Byung Ho Kim
Name:		Byung Ho Kim
Title:		Director

July 27, 2007

2nd Quarter 2007

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, 2007 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 plans, 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 for 1H, 2007 will be filed with the Financial Supervisory Service(FSS) and the Korea Exchange(KRX) on Aug 14, 2007.

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

Tel : 82-31-727-0950~59

Fax : 82-31-727-0949

E-mail: shinbo@kt.co.kr

1

Change in Accounting Method

1. Universal Service Obligation Fund (Applied effective 2Q 2007)

^¡ Following Korea Accounting Standards Board’s interpretation 61-71 “Non-redeemable Government Compensation”, and statement 21, USO fund has been reclassified into items for operating income

2. R&D Contribution (Applied effective 2Q 2007)

^¡ Following Korea Accounting Standard Board Statement 21, and the accounting methods of consolidated subsidiary KTF, Telecommunication and Information Improvement fund is now recognized as R&D expense

For comparison purposes, the above changes have been reflected in past financial data

2

1. Financial Highlights

A. Summary of Income Statement

(KRW bn)		2007 2Q			2007 1Q			QoQ					2006 2Q			YoY					2007 Cumm.
								Amount		D%						Amount		D%
Operating revenue		3,003.8			2,966.7			37.1		1.3	%		2,967.2			36.6		1.2	%		5,970.5
¨   Internet access		528.5			524.7			3.8		0.7	%		538.9			-10.4		-1.9	%		1,053.2
¨   Internet application		97.7			91.3			6.5		7.1	%		70.7			27.0		38.3	%		189.0
¨   Data		407.8			406.9			0.8		0.2	%		408.4			-0.7		-0.2	%		814.7
¨   Telephone		1,034.0			1,053.1			-19.1		-1.8	%		1,081.5			-47.5		-4.4	%		2,087.1
¨   LM		405.3			411.9			-6.6		-1.6	%		438.0			-32.7		-7.5	%		817.3
¨   Wireless		398.5			379.5			19.1		5.0	%		339.9			58.6		17.2	%		778.0
¨   Real estate		58.4			45.9			12.6		27.4	%		32.7			25.7		78.5	%		104.3
¨   Others		73.5			53.4			20.1		37.7	%		57.0			16.5		29.0	%		126.9
¡     SI		66.5			44.6			21.9		49.3	%		47.2			19.3		40.9	%		111.1
Operating expenses		2,626.2			2,443.2			183.0		7.5	%		2,396.0			230.2		9.6	%		5,069.5
¨   Labor		627.0			653.2			-26.1		-4.0	%		607.7			19.4		3.2	%		1,280.2
¨   Commissions		179.8			153.0			26.9		17.6	%		157.4			22.4		14.3	%		332.8
¨   Sales commission		248.8			141.0			107.8		76.5	%		102.3			146.5		143.2	%		389.8
¨   Sales promotion		47.2			50.2			-3.0		-5.9	%		77.8			-30.6		-39.3	%		97.4
¨   Advertising		35.4			20.6			14.9		72.4	%		27.4			8.0		29.1	%		56.0
¨   Provision for doubtful accounts		-0.4			20.2			-20.7		N/A			7.9			-8.4		N/A			19.8
¨   Depreciation		490.2			477.3			12.9		2.7	%		473.2			17.0		3.6	%		967.5
¨   Repairs & maintenance		51.1			25.6			25.6		100.0	%		80.6			-29.5		-36.5	%		76.7
¨   Cost of goods sold		176.2			182.3			-6.2		-3.4	%		154.6			21.6		13.9	%		358.5
¨   Cost of service provided		482.5			442.9			39.6		9.0	%		439.7			42.8		9.7	%		925.5
¨   R&D		70.9			37.6			33.3		88.6	%		50.8			20.1		39.6	%		108.5
¨   Others		217.3			239.4			-22.1		-9.2	%		216.5			0.8		0.4	%		456.8
Operating income		377.6			523.5			-145.9		-27.9	%		571.2			-193.7		-33.9	%		901.0
Operating margin		12.6	%		17.6	%		-5.1% P					19.3	%		-6.7% P					15.1	%
EBITDA(1)		867.8			1,000.8			-133.0		-13.3	%		1,044.4			-176.7		-16.9	%		1,868.5
EBITDA margin		28.9	%		33.7	%		-4.8% P					35.2	%		-6.3% P					31.3	%
Non-operating income		107.6			147.1			-39.5		-26.9	%		84.5			23.0		27.3	%		254.7
Non-operating expenses		198.5			144.2			54.3		37.6	%		196.6			1.8		0.9	%		342.7
Ordinary income		286.6			526.4			-239.7		-45.5	%		459.1			-172.5		-37.6	%		813.0
Income tax expenses		64.2			148.7			-84.5		-56.8	%		116.5			-52.3		-44.9	%		212.9
Effective tax rate		22.4	%		28.3	%		-5.9% P					25.4	%		0.1% P					26.2	%
Net income		222.4			377.6			-155.2		-41.1	%		342.6			-120.2		-35.1	%		600.1
EPS(2) (won)		1,070			1,772			-702		-39.6	%		1,624			-554		-34.1	%

(1) EBITDA = Operating income + depreciation

(2) EPS = Net income ÷ Weighted average of no. of shares outstanding

^¡ Revenue

- Despite fall in LM revenue from declining traffic, increase in PCS subscribers, SI projects, and real estate revenue led to QoQ increase of KRW 37.1

^¡ Operating Expense

- Increase in sales commission from heated competition, increase in KTF network usage fee from rise in subscribers, and increase in other business expenses led to a QoQ decline of KRW 145.9 bn in operating income, leading to a QoQ decline of KRW 155.2 bn in net income

3

B. Summary of Balance Sheet

(KRW bn)		2007 2Q			2007 1Q			QoQ					2006 2Q			YoY
								Amount		D%						Amount		D%
Total assets		18,254.4			17,746.1			508.3		2.9	%		17,492.3			762.1		4.4	%
¨   Current assets		3,822.7			3,311.0			511.6		15.5	%		3,154.9			667.8		21.2	%
¡     Quick assets		3,741.7			3,205.3			536.4		16.7	%		3,063.5			678.3		22.1	%
-   Cash & Cash equivalents		1,753.3			1,358.8			394.5		29.0	%		855.6			897.7		104.9	%
¡     Inventories		81.0			105.7			-24.8		-23.4	%		91.5			-10.5		-11.5	%
¨   Non-current assets		14,431.7			14,435.0			-3.3		0.0	%		14,337.4			94.3		0.7	%
¡     Investments and other non-current assets		3,767.8			3,776.5			-8.7		-0.2	%		3,749.7			18.1		0.5	%
-   KTF shares		2,687.9			2,700.0			-12.1		-0.4	%		2,655.6			32.3		1.2	%
-   Long-term loans		124.1			154.5			-30.5		-19.7	%		249.1			-125.0		-50.2	%
-   Others		955.8			922.0			33.9		3.7	%		845.0			110.9		13.1	%
¡     Tangible assets		10,229.8			10,205.8			24.0		0.2	%		10,155.6			74.2		0.7	%
¡     Intangible assets		434.1			452.8			-18.6		-4.1	%		432.1			2.0		0.5	%
Total liabilities		9,606.5			9,236.7			369.8		4.0	%		9,387.7			218.9		2.3	%
¨   Current liabilities		3,590.0			3,289.3			300.7		9.1	%		2,696.1			893.9		33.2	%
¡     Interest-bearing debts		842.4			912.2			-69.8		-7.6	%		332.7			509.7		153.2	%
¡     Accounts payable		665.6			605.1			60.5		10.0	%		630.1			35.6		5.6	%
¡     Others		2,081.9			1,772.0			309.9		17.5	%		1,733.3			348.6		20.1	%
¨   Long-term liabilities		6,016.5			5,947.4			69.1		1.2	%		6,691.6			-675.1		-10.1	%
¡     Interest-bearing debts		4,632.8			4,537.1			95.7		2.1	%		5,177.8			-545.0		-10.5	%
¡     Installation deposit		877.6			893.9			-16.3		-1.8	%		931.7			-54.2		-5.8	%
¡     Others		506.1			516.4			-10.2		-2.0	%		582.0			-75.9		-13.0	%
Total shareholders’ equity		8,647.9			8,509.4			138.5		1.6	%		8,104.7			543.2		6.7	%
¨   Common stock		1,561.0			1,561.0			0.0		0.0	%		1,561.0			0.0		0.0	%
¨   Capital surplus		1,440.8			1,440.9			-0.1		0.0	%		1,440.3			0.5		0.0	%
¨   Retained earnings		9,537.8			9,315.4			222.4		2.4	%		9,052.5			485.3		5.4	%
¨   Capital adjustments		-3,901.2			-3,816.7			-84.5		N/A			-4,045.4			144.2		N/A
¡     Treasury stock		-3,910.6			-3,825.7			-84.9		N/A			-4,054.1			143.6		N/A
¡     Gain(loss) on valuation of investment securities		12.8			15.6			-2.8		-18.2	%		43.4			-30.7		-70.6	%
¡     Others		-3.4			-6.6			3.2		N/A			-34.7			31.3		N/A
¨   Others		9.5			8.8			0.7		8.1	%		96.4			-86.9		-90.1	%
Total interest-bearing debt		5,475.2			5,449.3			25.9		0.5	%		5,510.5			-35.3		-0.6	%
Net debt		3,721.9			4,090.5			-368.6		-9.0	%		4,654.9			-933.0		-20.0	%
Net debt / Total shareholders’ equity		43.0	%		48.1	%		-5.0% P					57.4	%		-14.4% P

^¡ Assets

- Corporate income tax which was scheduled to be paid by March 31, 2007 has been deferred, which led to a QoQ increase in cash and cash equivalents

^¡ Liabilities

- Rise in amounts payable related to both tangible and intangible assets led to a QoQ increase in other current liabilities

^¡ Shareholders’ Equity

- Rise in retained earnings from quarterly net income of KRW 222.4bn led to a QoQ increase in shareholders’ equity

4

2. Operating Results

A. Internet Revenue

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
Internet access		528.5		524.7		3.8		0.7	%		538.9		-10.4		-1.9	%		1,053.2
¨   Broadband		529.6		525.8		3.8		0.7	%		542.6		-13.0		-2.4	%		1,055.4
¡     Megapass		510.1		513.6		-3.5		-0.7	%		527.7		-17.6		-3.3	%		1,023.7
¡     Nespot		13.2		11.7		1.5		12.9	%		14.9		-1.7		-11.1	%		24.9
¡     WiBro		6.3		0.5		5.8		1122.5	%		0.0		6.3		N/A			6.8
¨   Others		-1.1		-1.1		0.0		N/A			-3.6		2.5		N/A			-2.2
Internet application		97.7		91.3		6.5		7.1	%		70.7		27.0		38.3	%		189.0
¨   IDC		43.1		38.2		4.9		12.9	%		33.3		9.8		29.5	%		81.3
¨   Bizmeka		30.4		26.4		4.0		15.0	%		18.6		11.7		63.0	%		56.8
¨   Others		24.2		26.6		-2.4		-9.1	%		18.7		5.5		29.3	%		50.9

^¡ Megapass: QoQ and YoY decrease in revenue from modem rental fee expiration for customers exceeding 3 years subscription and long-term customer discounts

^¡ Nespot: QoQ increase in revenue from one-time increase in PSP handset sales, but YoY decline due to decrease in number of subscribers

^¡ Internet application: QoQ and YoY rise in revenue from increased demand for IDC and bizmeka

B. Data Revenue

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
Data		407.8		406.9		0.8		0.2	%		408.4		-0.7		-0.2	%		814.7
¨   Leased line		277.2		275.8		1.4		0.5	%		269.4		7.8		2.9	%		553.1
¡     Local		118.1		118.0		0.1		0.1	%		114.4		3.7		3.2	%		236.1
¡     Domestic long distance		84.2		84.0		0.2		0.2	%		84.2		0.0		0.0	%		168.2
¡     International long distance		4.6		4.2		0.3		8.1	%		4.4		0.2		4.0	%		8.8
¡     Broadcasting & others		70.3		69.6		0.7		1.0	%		66.3		4.0		6.1	%		139.9
¨   Data leased line		33.6		32.5		1.1		3.2	%		31.6		2.0		6.2	%		66.1
¡     Packet data		2.1		2.1		-0.1		-3.2	%		2.3		-0.2		-8.9	%		4.2
¡     National network ATM		18.5		17.8		0.7		4.0	%		18.3		0.2		1.2	%		36.3
¡     VPN		13.0		12.6		0.4		3.2	%		11.0		2.0		17.7	%		25.6
¨   Kornet		65.0		65.6		-0.6		-0.9	%		72.4		-7.4		-10.2	%		130.6
¨   Satellite		25.4		27.2		-1.8		-6.7	%		28.3		-2.9		-10.2	%		52.7
¨   Others		6.6		5.8		0.8		13.9	%		6.8		-0.2		-3.0	%		12.3

5

C. Telephone Revenue

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
Telephone revenue		1,034.0		1,053.1		-19.1		-1.8	%		1,081.5		-47.5		-4.4	%		2,087.1
¨   Subscriber connection		347.5		349.4		-1.9		-0.5	%		347.9		-0.4		-0.1	%		696.9
¡     Subscription fee		11.7		11.1		0.5		4.9	%		12.2		-0.5		-4.5	%		22.8
¡     Basic monthly fee		275.4		276.6		-1.3		-0.5	%		281.6		-6.2		-2.2	%		552.0
¡     Installation		9.1		8.9		0.2		2.1	%		10.7		-1.6		-14.7	%		18.0
¡     Interconnection		51.4		52.7		-1.4		-2.6	%		43.4		8.0		18.3	%		104.1
¨   Local		233.7		243.2		-9.5		-3.9	%		260.9		-27.2		-10.4	%		476.8
¡     Usage		158.3		164.6		-6.3		-3.8	%		177.3		-19.0		-10.7	%		322.9
¡     Interconnection		23.3		26.8		-3.5		-13.0	%		34.6		-11.3		-32.8	%		50.1
¡     Others		52.1		51.8		0.3		0.5	%		49.0		3.1		6.3	%		103.9
¨   Domestic long distance		161.8		166.4		-4.6		-2.8	%		171.6		-9.8		-5.7	%		328.3
¡     Usage		153.3		159.9		-6.6		-4.1	%		164.5		-11.2		-6.8	%		313.2
¡     Interconnection		8.3		6.3		2.0		31.1	%		6.9		1.4		19.7	%		14.6
¡     Others		0.3		0.2		0.0		9.4	%		0.3		0.0		-5.8	%		0.5
¨   International long distance		50.1		51.8		-1.6		-3.2	%		50.0		0.1		0.2	%		101.9
¨   International settlement		42.4		42.9		-0.5		-1.1	%		44.9		-2.4		-5.4	%		85.3
¨   VoIP		8.0		7.6		0.3		4.1	%		7.5		0.4		5.4	%		15.6
¨   VAS		92.2		94.4		-2.2		-2.3	%		90.6		1.6		1.8	%		186.5
¨   Public telephone		14.9		14.8		0.1		0.7	%		15.1		-0.3		-1.7	%		29.7
¨   114 phone directory service		29.6		31.1		-1.4		-4.5	%		54.3		-24.7		-45.4	%		60.7
¨   Others		53.8		51.6		2.2		4.3	%		38.6		15.2		39.4	%		105.3

^¡ Local, DLD: QoQ and YoY decline in revenue from fall in subscribers and traffic

^¡ Others: Increased Ann phone sales (1Q ‘07: KRW 18.1bn, 2Q ‘07: 19.6bn) led to a QoQ and YoY increase in other telephone revenue

6

D. LM(Land to Mobile) Interconnection Revenue

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
LM Revenue		405.3		411.9		-6.6		-1.6	%		438.0		-32.7		-7.5	%		817.3
LM interconnection cost		195.0		200.7		-5.7		-2.8	%		203.2		-8.2		-4.0	%		395.7

^¡ LM: Fall in QoQ and YoY revenue from decreased traffic

^¡ LM interconnection: It takes approximately two months for operators to verify the actual volume of LM traffic.

Thus figures for 2 months every quarter are based on estimation, resulting in disparity with actual traffic volume

E. Wireless Revenue

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
Wireless revenue		398.5		379.5		19.1		5.0	%		339.9		58.6		17.2	%		778.0
¨   PCS resale		393.3		363.4		29.9		8.2	%		315.8		77.5		24.5	%		756.8
¡     PCS service		253.8		229.4		24.4		10.6	%		219.4		34.4		15.7	%		483.2
¡     Handset sales		139.5		134.0		5.5		4.1	%		96.4		43.1		44.7	%		273.5
¨   Others		5.2		16.0		-10.8		-67.5	%		24.1		-18.9		-78.4	%		21.2

^¡ PCS service: QoQ and YoY increase in revenue from rise in subscribers and traffic volume led to increased service Revenue

7

F. Operating Expenses

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
Labor		627.0		653.2		-26.1		-4.0	%		607.7		19.4		3.2	%		1,280.2
¨   Salaries & wages		450.1		438.3		11.8		2.7	%		438.0		12.0		2.7	%		888.4
¨   Employee benefits		114.6		109.5		5.1		4.7	%		114.5		0.1		0.1	%		224.1
¨   Provision for retirement		62.4		105.4		-43.0		-40.8	%		55.1		7.2		13.1	%		167.7
Commissions		179.8		153.0		26.9		17.6	%		157.4		22.4		14.3	%		332.8
Marketing expenses		331.5		211.7		119.7		56.5	%		207.6		123.9		59.7	%		543.2
¨   Sales commission		248.8		141.0		107.8		76.5	%		102.3		146.5		143.2	%		389.8
¨   Sales promotion		47.2		50.2		-3.0		-5.9	%		77.8		-30.6		-39.3	%		97.4
¨   Advertising		35.4		20.6		14.9		72.4	%		27.4		8.0		29.1	%		56.0
Provision for doubtful accounts		-0.4		20.2		-20.7		N/A			7.9		-8.4		N/A			19.8
Depreciation		490.2		477.3		12.9		2.7	%		473.2		17.0		3.6	%		967.5
Repairs and Maintenance		51.1		25.6		25.6		100.0	%		80.6		-29.5		-36.5	%		76.7
Cost of goods sold		176.2		182.3		-6.2		-3.4	%		154.6		21.6		13.9	%		358.5
¨   PCS handset cost		146.2		145.2		0.9		0.7	%		97.0		49.2		50.8	%		291.4
¨   PDA, WLAN card, others		30.0		37.1		-7.1		-19.1	%		57.7		-27.6		-47.9	%		67.1
Cost of service provided		482.5		442.9		39.6		9.0	%		439.7		42.8		9.7	%		925.5
¨   Cost of service		235.6		193.2		42.4		21.9	%		186.9		48.7		26.0	%		428.8
¡     PCS resale network cost to KTF		127.6		113.1		14.5		12.8	%		112.7		14.9		13.2	%		240.7
¡     SI service cost		69.3		42.4		26.9		63.6	%		44.9		24.4		54.4	%		111.6
¡     Others		38.7		37.7		1.0		2.6	%		29.4		9.3		31.7	%		76.4
¨   International settlement cost		43.0		45.8		-2.8		-6.2	%		49.3		-6.4		-12.9	%		88.8
¨   LM interconnection cost		195.0		200.7		-5.7		-2.8	%		203.2		-8.2		-4.0	%		395.7
¨   Others		9.0		0.0		9.0		N/A			0.0		9.0		N/A			9.0
R&D		70.9		37.6		33.3		88.6	%		50.8		20.1		39.6	%		108.5
Others		217.3		239.4		-22.1		-9.2	%		216.5		0.8		0.4	%		456.8
CAPEX*		498.8		280.5		218.3		77.8	%		529.8		-31.0		-5.9	%		779.3

* 1Q 07 CAPEX has been finalized at KRW 280.5bn (previously KRW 265.5bn )

^¡ Labor:

- QoQ decline in labor cost is a result of temporary increase in labor cost for 1Q ‘07 due to rise in provision for retirment, following bonus payments in ‘06

- YoY increase is from natural paygrade promotion

^¡ Commissions: Rise is cost for Megapass Zone improvements, call center and other outsourcing costs led to a QoQ and YoY increase

^¡ Marketing expenses: QoQ and YoY increase from increased sales commissions due to heated competition

^¡ Provision for doubtful accounts: Improvement in collectibles led to QoQ and YoY decline

^¡ Depreciation: Rise in depreciable assets following increased CAPEX led to QoQ and YoY increase

^¡ Repairs & Maintenance: QoQ rise from efforts to enhance quality in broadband and telephone services, as well as operational efficiency for buildings and other assets

^¡ COGS: QoQ decline from falling PDA phone revenue

^¡ Cost of service provided: Rise in KTF network usage cost from rise in PCS subscribers, rise in SI revenue and related service costs led to QoQ increase

^¡ R&D: Following reclassification of accounting items, KRW 31.3bn for Telecommunication and Information Improvement Fund has been reclassified as other R&D item, leading to QoQ and YoY increase

8

G. Non-operating Income

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
Non-operating income		107.6		147.1		-39.5		-26.9	%		84.5		23.0		27.3	%		254.7
¨   Gains on disposition of investments		0.0		0.0		0.0		N/A			0.8		-0.8		N/A			0.0
¨   Gains on disposition of tangible assets		6.4		7.0		-0.6		-8.5	%		2.4		4.0		165.4	%		13.5
¨   Interest income		31.3		20.1		11.2		55.8	%		20.5		10.9		53.0	%		51.5
¨   FX transaction gain		0.7		0.9		-0.3		-28.6	%		21.1		-20.5		-96.9	%		1.6
¨   FX translation gain		3.7		2.2		1.4		64.9	%		10.7		-7.0		-65.8	%		5.9
¨   USO fund		0.0		0.0		0.0		N/A			0.0		0.0		N/A			0.0
¨   Gain on equity method		16.1		17.3		-1.2		-7.1	%		1.9		14.2		751.2	%		33.4
¨   Others		49.4		99.5		-50.1		-50.4	%		27.1		22.2		81.9	%		148.8

^¡ Refund of Fair Trade Commission Fine

- Administrative litigation filed by KT in response to the fine imposed by the FTC in 2001 in regards to KT’s alleged assistance towards affiliated companies was ruled in favor of KT by the Supreme Court on April 26, 2007

- Refund of KRW 28.3bn was recognized as a non-operating income item, and KRW 8.1bn was recognized as interest income

^¡ FX transaction gain: Appreciation of KRW against USD led to an increase in FX transaction gains

^¡ Universal Service Obligation Fund: Effective 2Q 2007, income from USO fund has been reclassified into telecommunication services for remote islands(local telephone), local public telephone services(public telephone), and wireless services for ships (wireless)

^¡ Others: Temporary rise in other non-operating income in 1Q ‘07 from recognizing KRW 42bn for return in provision for call-bonus is the cause of the QoQ decline

9

H. Non-operating Expenses

(KRW bn)		2007 2Q		2007 1Q		QoQ					2006 2Q		YoY					2007 Cumm.
						Amount		D%					Amount		D%
Non-operating expenses		198.5		144.2		54.3		37.6	%		196.6		1.8		0.9	%		342.7
¨   Interest expense		80.6		77.4		3.2		4.1	%		84.9		-4.3		-5.1	%		158.0
¨   FX transaction loss		1.6		0.8		0.8		94.5	%		1.5		0.1		6.2	%		2.4
¨   FX translation loss		-16.4		17.2		-33.6		N/A			4.4		-20.9		N/A			0.7
¨   Loss on equity method		17.2		8.2		9.1		111.3	%		3.8		13.5		357.1	%		25.4
¨   Loss on disposition of fixed assets		8.5		8.3		0.3		3.3	%		13.7		-5.2		-37.8	%		16.8
¨   Others		107.0		32.4		74.6		230.2	%		88.3		18.7		21.1	%		139.4

^¡ FX transaction loss: Appreciation of KRW against USD led to a decrease in FX transaction loss. (-) denoted amount is recognized as income

^¡ Loss on equity method: QoQ and YoY decrease due to decreased profit of subsidiary companies

^¡ Other non-operating expense: Additional corporate income tax of KRW 54.3bn was recognized in 2Q ‘07, leading to QoQ increase

10

Appendix 1: Factsheet

Broadband
		Jun-05			Sep-05			Dec-05			Mar-06			Jun-06			Sep-06			Dec-06			Jan-07			Mar-07			Apr-07			May-07			Jun-07
Broadband Subs		6,172,475			6,244,040			6,241,789			6,240,605			6,320,260			6,333,119			6,352,542			6,382,446			6,449,729			6,492,321			6,515,008			6,522,631
Net Addition		13,917			15,281			-3,506			-46,961			34,787			26,562			4,817			29,904			36,334			42,592			22,687			7,623
o  Megapass Lite		4,821,986			4,837,269			4,788,942			4,724,684			4,772,280			4,834,732			4,937,187			4,987,024			5,106,874			5,424,229			5,437,207			5,430,552
o  Megapass Premium		717,099			724,032			717,866			689,726			671,292			646,839			604,485			598,046			579,580			258,690			262,392			264,185
o  Megapass Special		5,973			7,206			8,196			8,992			9,035			8,730			8,204			8,139			7,739			32,237			35,463			36,641
o  Megapass Ntopia		627,417			675,533			726,785			817,203			867,653			842,818			802,666			789,237			755,536			777,165			779,946			791,253
Broadband M/S
KT		50.3	%		51.8	%		51.2	%		50.0	%		49.5	%		45.6	%		45.2	%		45.3	%		45.3	%		45.4	%		45.4	%		45.2	%
Hanaro		22.7	%		23.0	%		22.7	%		28.6	%		28.2	%		25.9	%		25.7	%		25.8	%		25.6	%		25.5	%		25.5	%		25.5	%
Powercomm		0.0	%		0.5	%		2.1	%		3.8	%		5.6	%		7.1	%		8.6	%		8.8	%		9.3	%		9.8	%		10.1	%		10.3	%
Dacom		2.1	%		2.0	%		1.7	%		1.5	%		1.3	%		1.0	%		0.8	%		0.8	%		0.7	%		0.7	%		0.6	%		0.6	%
SO		10.3	%		11.0	%		11.6	%		12.6	%		12.4	%		16.5	%		16.6	%		16.8	%		17.0	%		17.0	%		17.1	%		17.2	%
Others		14.5	%		11.7	%		10.6	%		3.4	%		3.1	%		3.9	%		3.0	%		2.6	%		2.1	%		1.7	%		1.3	%		1.2	%
WLAN
		Jun-05			Sep-05			Dec-05			Mar-06			Jun-06			Sep-06			Dec-06			Jan-07			Mar-07			Apr-07			May-07			Jun-07
WLAN Subs		525,718			535,630			519,778			524,671			516,708			492,557			470,855			465,262			450,147			447,858			446,719			432,068
o  NESPOT Family		249,454			242,976			237,259			230,597			219,650			200,883			185,599			181,794			172,750			168,455			164,790			161,301
o  NESPOT Solo		35,871			37,218			38,385			40,725			41,519			39,374			38,260			38,171			38,130			37,960			37,684			37,372
o  NESPOT Pop		180,778			189,955			187,157			180,959			173,070			155,002			138,436			133,910			124,092			121,157			117,223			113,037
o  NESPOT Biz		32,337			43,695			45,814			60,776			64,205			64,458			67,091			66,720			66,033			68,713			68,563			68,620
o  NESPOT Play		27,278			21,786			11,163			11,614			13,925			15,318			13,792			14,327			13,143			13,238			18,096			9,103
o  NESPOT Home		0			0			0			0			4,339			17,522			27,677			30,340			35,999			38,335			40,363			42,635
Leased Lines
		Jun-05			Sep-05			Dec-05			Mar-06			Jun-06			Sep-06			Dec-06			Jan-07			Mar-07			Apr-07			May-07			Jun-07
Leased Lines		417,312			412,160			410,073			407,999			407,357			400,656			400,196			398,737			398,461			396,959			396,692			396,227
o  Local leased line		382,946			378,615			376,620			376,458			375,501			370,349			368,693			366,685			367,169			366,925			366,663			366,334
o  DLD leased line		34,119			33,300			33,217			31,293			31,480			30,028			31,283			31,886			31,062			29,751			29,730			29,523
o  International leased line		111			90			91			91			95			94			112			118			130			130			146			145
o  Broadcasting leased line		136			155			145			157			281			185			108			48			100			153			153			225
Internet Leased Lines		40,995			42,523			43,818			45,802			51,553			54,778			56,619			56,874			58,598			57,293			60,231			61,103
Fixed-line
		Jun-05			Sep-05			Dec-05			Mar-06			Jun-06			Sep-06			Dec-06			Jan-07			Mar-07			Apr-07			May-07			Jun-07
Local (‘000)		20,729			20,687			20,522			20,527			20,488			20,392			20,331			20,316			20,281			20,266			20,259			20,219
Domestic Long Distance (‘000)		18,791			18,699			18,544			18,629			18,734			18,718			18,688			18,687			18,713			18,725			18,749
*  Ann (‘000)		782			945			1,066			1,130			1,267			1,610			1,747			1,799			1,882			1,958			2,020			2,095
*  Ringo (‘000)		3,226			3,303			3,382			3,385			3,485			3,707			3,766			3,784			3,809			3,664			3,785			3,779
*  Caller ID Users (‘000)		4,600			4,731			4,845			4,931			5,035			5,237			5,315			5,331			5,391			5,438			5,478			5,503
*  My Style(Local) (‘000)																							421			671			775			834			928
*  My Style(DLD) (‘000)																							391			614			707			757			834
Fixed-line M/S
Local M/S (subscriber base)		93.5	%		93.2	%		93.2	%		93.0	%		92.7	%		92.4	%		92.2	%		92.0	%		91.7	%		91.6	%		91.5	%		91.4	%
DLD (revenue base)		83.5	%		85.7	%		85.6	%		85.6	%		85.7	%		85.8	%		85.6	%		85.5	%		85.6	%		85.6	%		85.7	%
Reference Data
		Jun-05			Sep-05			Dec-05			Mar-06			Jun-06			Sep-06			Dec-06			Jan-07			Mar-07			Apr-07			May-07			Jun-07
Population (‘000)		48,294			48,294			48,294			48,344			48,498			48,547			48,378			48,391			48,418			48,431			48,444			48,457
Number of Household		15,789			15,789			15,789			15,989			15,989			15,989			15,989			16,194			16,194			16,194			16,194			16,194

11