6-K 1 h03406e6vk.htm KT CORPORATION

e6vk

Table of Contents

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 June 2009

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 þ          Form 40-F o

     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): o

     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): o

     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 o          No þ

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

Table of Contents

SUMMARY OF 2009 FIRST QUARTER BUSINESS REPORT

(From January 1, 2009 to March 31, 2009)

THIS IS A SUMMARY OF THE 2009 QUATERLY REPORT ORIGINALLY PREPARED IN KOREAN AND IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SUPERVISORY COMMISSION. IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED FOR THE CONVENIENCE OF READERS.
UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A NON-CONSOLIDATED BASIS IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN KOREA, OR KOREAN GAAP, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

Table of Contents

I. Corporate General			3
1. General Information			3
2. History			6
3. Total Number of Shares and Others			7
4. Voting Rights			10
5. Matters on Dividends and Others			10
II. Details of Business			11
1. Overview			11
2. Capital Expenditure			18
3. Matters Related to Revenue			19
4. Research and Development Activities			24
5. Other Matters Necessary for Making Investment Decisions			24
III. Financial Information			25
1. Summary of Financial Statements (Non-Consolidated)			25
2. Summary of Financial Statements (Consolidated)			25
IV. Auditors’ Opinion			27
1. Auditor			27
2. Audit (or Review) Opinion			27
3. Remuneration for Independent Non-Executive Auditors for the Past Three Fiscal Years			27
V. Board of Directors and Affiliated Companies			29
1. Overview of the Board of Directors and Committees under the Board			29
2. Matters on Audit Procedure			33
3. Matters on Shareholder’s Exercise of Voting Right			35
4. Affiliated companies			36
VI. Management and Employees			37
1. Remuneration to Executive Officers			37
2. Current Status of Employees			37
Exhibit 99.1

(EXHIBIT 99-1 : NON-CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 AND INDEPENDENT AUDITOR’S REPORT)

2

Table of Contents

I. Corporate General

1. General Information

A. Date of Incorporation

KT Corporation (“KT”) was incorporated on December 10, 1981 under the Korea Telecom Act with the purpose of offering telecommunication services business. On December 23, 1998 KT was listed on the Korea Stock Exchange (later, Korea Exchange).

B. Postal address of Headquarters, telephone and company website

1) Postal address :
    206 Jungja-dong,
    Bundang-gu, Sungnam City, Gyunggi-do
    463-711 Korea
2) Telephone : +82 31 727 0114
3) Company website : http://www.kt.com

C. Main Business

We are a telecommunications service provider providing fixed-line, broadband internet, mobile services. In an effort to maintain our leadership in the telecommunication market, we have launched new services such as IP-TV, VoIP and WiBRO responding to the recent industry trends of convergence between telecommunications and broadcasting and between fixed and mobile communication.

D. Affiliated Companies

(1) Name of Group : KT

(2) Affiliated Companies (as of May 15, 2009)

No.		Name		Financial year ended on		Primary business		Listed/Unlisted
1		KT		Dec. 31		Telecommunication business		Listed in KRX
2		KT Powertel Co., Ltd.		Dec. 31		Trunk radio system business		Unlisted
3		KT Networks Corporation		Dec. 31		Telecommunication, specific service provider and value-added service provider		Unlisted
4		KT Linkus Co., Ltd.		Dec. 31		Public telephone maintenance		Unlisted
5		KT Hitel Co., Ltd.		Dec. 31		Data communication		Listed in KOSDAQ
6		KT Submarine Co., LTd.		Dec. 31		Submarine cable construction and maintenance		Listed in KOSDAQ
7		KT Freetel Co., Ltd.		Dec. 31		Telecommunication business		Listed in KRX
8		KT Commerce Inc.		Dec. 31		Online commerce (B2B, B2B service)		Unlisted
9		KTF Technologies		Dec. 31		Mobile handset development		Unlisted
10		KTF M Hows Co., Ltd.		Dec. 31		Mobile marketing		Unlisted

3

Table of Contents

No.		Name		Financial year ended on		Primary business		Listed/Unlisted
11		KT Rental Co., Ltd.		Dec. 31		Rental Service		Unlisted
12		Sidus FNH Corporation		Dec. 31		Movie production		Unlisted
13		Telecop Service Co., Ltd.		Dec. 31		Security service		Unlisted
14		KT Capital Co., Ltd.		Dec. 31		Financing service		Unlisted
15		KTF M&S co., Ltd.		Dec. 31		Telecommunication devices distribution business		Unlisted
16		Olive Nine Co. Ltd.		Dec. 31		Movie, broadcasting and performance business		Listed in KOSDAQ
17		Olive Nine Creative Co. Ltd.		Dec. 31		Real estate business		Unlisted
18		The Contents Entertainment Co. Ltd.		Dec. 31		Service business		Unlisted
19		Olive Nine Entertainment Co. Ltd.		Dec. 31		Movie, broadcasting and performance business		Unlisted
20		KT FDS Co. Ltd.		Dec. 31		Data communication		Unlisted
21		Nasmedia Co. Ltd.		Dec. 31		Online advertisement business		Unlisted
22		KTF Music Co. Ltd.		Dec. 31		Entertainment business		Listed in KOSDAQ
23		Doremi Media Co., Ltd.		Dec. 31		Recording device (magneto-optical disk) and music disc manufacture		Unlisted
24		Doremi Music Publishing Co. Ltd.		Dec. 31		Publishing, printing and recording device reproducing business		Unlisted
25		Music City Media Co. Ltd.		Dec. 31		Movie, broadcasting and performance business		Unlisted
26		Parangoyangi Co. Ltd.		Dec. 31		Movie, broadcasting and performance business		Unlisted
27		D&G Star Co. Ltd.		Dec. 31		Movie, broadcasting and performance business		Unlisted
28		Softnics		Dec. 31		Software development and sales		Unlisted
29		JB Edu		Dec. 31		Online education business		Unlisted
30		KT Data System Co. Ltd.		Dec. 31		Management, supply and advisory services of information technology systems		Unlisted

[Foreign Affiliated Companies]

No.		Name		Financial year ended on		Primary business		Listed/Unlisted
1		Korea Telecom America Inc.		Dec.31		Foreign telecommunication business		Unlisted
2		Mongolian Telecommunications		Dec. 31		Foreign telecommunication business		Unlisted
3		New Telephone Company Inc.		Dec. 31		Foreign telecommunication business		Unlisted
4		KT Japan, Co. Ltd.		Dec. 31		Foreign telecommunication business		Unlisted
5		KT China.		Dec. 31		Foreign telecommunication business		Unlisted

4

Table of Contents

No.		Name		Financial year ended on		Primary business		Listed/Unlisted
6		Super iMax LLC		Dec. 31		Foreign telecommunication business		Unlisted
7		East Telecom LLC		Dec. 31		Foreign telecommunication business		Unlisted
8		KTSC Investment Management B.V.		Dec. 31		Foreign telecommunication business		Unlisted

E. Credit Rating

(1) Overseas Credit Rating

Date of		Assessed		Credit Rating of		Assessing Company		Assessment
Assessment		Securities, etc.		Assessed Securities		(Scale of Rating)		Type
Nov. 26, 2008		—		A		Fitch : U.S. (AAA, AA+, AA, AA-, A, ~ D)		Annual Assessment
July 14, 2008		—		A3		Moody’s : U.S. (Aaa, Aa1, Aa2, Aa3, A1, ~ C)		Annual Assessment
June 30, 2008		—		A-		S&P : U.S. (AAA, AA+, AA, AA-, A, ~ D)		Annual Assessment
July 2, 2007		—		A		Fitch : U.S. (AAA, AA+, AA, AA-, A, ~ D)		Annual Assessment
April 2, 2007		2007 Global Bond		A3		Moody’s : U.S. (Aaa, Aa1, Aa2, Aa3, A1, ~ C)		Special Assessment
April 2, 2007		2007 Global Bond		A-		S&P : U.S. (AAA, AA+, AA, AA-, A, ~ D)		Special Assessment
Sept. 26, 2006		—		A-		S&P : U.S. (AAA, AA+, AA, AA-, A, ~ D)		Annual Assessment
Sept. 4, 2006		—		A3		Moody’s : U.S. (Aaa, Aa1, Aa2, Aa3, A1, ~ C)		Annual Assessment
April 25, 2006		2006 Global Bond		A3		Moody’s : U.S. (Aaa, Aa1, Aa2, Aa3, A1, ~ C)		Special Assessment
April 24, 2006		2006 Global Bond		A-		S&P : U.S. (AAA, AA+, AA, AA-, A, ~ D)		Special Assessment

(2) Domestic Credit Rating

		Assessed		Credit Rating of		Assessing Company		Assessment
Date of Assessment		Securities, etc.		Assessed Securities		(Scale of Rating)		Type
Feb. 19, 2009		Corporate Bond		AAA		Korea Information Service Inc., National Information & Credit Evaluation Inc., Korea Ratings Corporation		Regular
Dec. 19, 2008		Corporate Bond		AAA		Same as above		”
July 28, 2008		Corporate Bond		AAA		Same as above		”
June 13, 2008		Commercial Paper		A1		Korea Ratings Corporation		”
June 11, 2008		Commercial Paper		A1		National Information & Credit Evaluation Inc.		”
March 20, 2008		Corporate Bond		AAA		Korea Information Service Inc., National Information & Credit Evaluation Inc., Korea Ratings Corporation		”

5

Table of Contents

		Assessed		Credit Rating of		Assessing Company		Assessment
Date of Assessment		Securities, etc.		Assessed Securities		(Scale of Rating)		Type
Feb. 18, 2008		Corporate Bond		AAA		Same as above		”
Dec. 27, 2007		Corporate Bond		AAA		Same as above		”
March 22, 2007		Corporate Bond		AAA		Same as above		”
June 27, 2007		Commercial Paper		A1		Korea Information Service Inc.		”
June 21, 2007		Commercial Paper		A1		National Information & Credit Evaluation Inc.		”
June. 29, 2006		Commercial Paper		A1		Korea Information Service Inc.		”
June 28, 2006		Commercial Paper		A1		Korea Ratings Corporation		”

- Top credit ratings (AAA, A1) were awarded to the company’s existing corporate bonds and commercial papers at its annual credit assessment.

- For corporate bond, there are ten rating categories from AAA to D. For commercial paper, there are six rating categories from A1 to D.

2. History

- Major Changes in Management

		Before Change (February 29, 2008)				After Change (March 6, 2009)
		Name		Title or position				Name		Title or position
Standing Directors		Joon-Su Nam		President and CEO		Standing Directors		Suk Chae Lee		President and CEO
		Jong Lok Yoon		Director				Sang Hoon Lee		Director
		Jeong Soo Suh		Director				Hyun-Myung Pyo		Director
Outside Directors		Jeong Ro Yoon		Audit Committee Member		Outside Directors		Jeong Suk Koh		—
		Kon Sik Kim		-				Si-Chin Kang		Audit Committee Member
		Do Hwan Kim		Audit Committee Member				In-Man Song		Audit Committee Member
		Jong Kyoo Yoon		Audit Committee Member				Joon Park		Audit Committee Member
		Paul C. Yi		-				E. Han Kim		Audit Committee Member
		Jeong Suk Koh		-				Choon Ho Lee		—
		Gyu Taeg Oh		Audit Committee Member				Jeung Soo Huh		—

- At the annual general meeting of shareholder held on March 27, 2009, our shareholders resolved to amend our articles of incorporation to add KT Freetel’s business, including frequency-based telecommunication services and new and renewable energy and energy generation business to pursue new growth opportunities in the alternative energy industry to the list of KT’s business purposes.

6

Table of Contents

3. Total Number of Shares and Others

A. Total Number of Shares

(As of May 15, 2009)						(Unit: shares)
		Type of Shares
Category		Common Shares				Total
I. Total Number of Authorized Shares			1,000,000,000				1,000,000,000
II. Total Number of Issued Shares			312,199,659				312,199,659
III. Total Number of Shares Reduced			51,787,959				51,787,959
1. Reduction of Capital			—				—
2. Share Retirement			51,787,959				51,787,959
3. Redemption of Redeemable Shares			—				—
4. Other			—				—
IV. Current Number of Issued Shares (II — III)			260,411,700				260,411,700
V. Number of Treasury Shares			71,497,810				71,497,810
VI. Current Number of Issued and Outstanding Shares			188,913,890				188,913,890

* Total number of treasury shares disposed on March 3, 2009 to give long-term incentives to directors

	-		Number of shares disposed: 2,594 shares
	-		Number of shares after the disposal: 71,497,810 shares

B. Stockholders’ Equity and Par Value per Share

(As of May 15, 2009)

(Unit: in millions of Won, shares)

Stockholders’ Equity (Total Par Value)

Par Value of a Share

Total Par Value of

Total Par Value of Issued

Capital Stock in

Issued Shares

and Outstanding Shares

Capital Stock /

Financial

(Issued Shares x

(Issued and Outstanding

Capital Stock /

Total Outstanding

Category

Type

Statements

Par Value)

Shares x Par Value)

Par Value per Share

Total Issued Shares

Shares

Registered

Common Share

1,560,998

1,367,679

1,010,176

5,000

5,707

7,726

Total

1,560,998

1,367,679

1,010,176

5,000

5,707

7,726

* Unit of Par Value per Share: Won

C. Acquisition and Disposal of Treasury Shares

(1) Acquisition and Disposal of Treasury Shares

(As of May 15, 2009)																				(Unit: shares)
								Acquisition				Disposition				Retirement
Method of Acquisition		Type		Beginning of Term				(+)				(-)				(-)				End of Term
Direct Acquisition pursuant to Article 189-2 Paragraph 1 of the Securities and Exchange Act		Common Share			70,241,234				13,124,000				2,594				13,124,000				70,238,640
		Preferred Share			—				—				—				—				—

7

Table of Contents

(As of May 15, 2009)																				(Unit: shares)
								Acquisition				Disposition				Retirement
Method of Acquisition		Type		Beginning of Term				(+)				(-)				(-)				End of Term
Direct Acquisition for Reasons other than Article 189-2 Paragraph 1 of the Securities and Exchange Act		Common Share			—				—				—				—				—
		Preferred Share			—				—				—				—				—
Subtotal		Common Share			70,241,234				—				—				—				—
		Preferred Share			—				—				—				—				—
Indirect Acquisition (e.g. Trust Contract)		Common Share			1,259,170				—				—				—				1,259,170
		Preferred Share			—				—				—				—				—
Total		Common Share			71,500,404				—				—				—				71,497,810
		Preferred Share			—				—				—				—				—

*		Disposal of treasury shares since December 31, 2008: 2,594 shares were disposed of on March 3, 2009 to make performance-based payments to members of the Board of Directors.
**		13,124,000 shares were retired on April 22, 2009 to increase shareholder’s value. 260,411,700 shares remains after the retirement

(2) Share Retirement

(As of May 15, 2009)

(Unit: in millions of Won, shares)

Period of

Purpose of

Type of Shares

Acquisition for

Date of Retirement

Retirement

Retired

Number of Shares Retired

Amount Retired*

Shares Retirement

Relevant Statute

4/22/2009

To increase shareholder value

Common Share

13,124,000

508,606,626,500

March 10, 2009 to April 17, 2009

Financial Investment Services and Capital Markets Act(Act 165-3)

Total

Common Share

13,124,000

508,606,626,500

March 10, 2009 to April 17, 2009

Financial Investment Services and Capital Markets Act(Act 165-3)

* The above retired amount is presented excluding related commissions.

Share Retirement in Previous Fiscal Years:

(Unit: Won, shares)

Period of

Type of Shares

Number of Shares

Acquisition of

Date of Retirement

Retirement Purpose

Retired

Retired

Amount of Retirement

Shares Retired

Relevant Statutes

10/9/2002

To increase shareholder value

Common Share

3,122,000

167,207,040,000

September 2, 2002 to October 4, 2002

Securities and Exchange Act (Article 189)

1/6/2003

To increase shareholder value

Common Share

15,454,659

786,642,143,100

December 30, 2002

Securities and Exchange Act (Article 189)

6/20/2003

To increase shareholder value

Common Share

2,937,000

137,958,768,000

April 28, 2003 to June 13, 2003

Securities and Exchange Act (Article 189)

8

Table of Contents

(Unit: Won, shares)

Period of

Type of Shares

Number of Shares

Acquisition of

Date of Retirement

Retirement Purpose

Retired

Retired

Amount of Retirement

Shares Retired

Relevant Statutes

12/9/2003

To increase shareholder value

Common Share

5,836,600

273,545,075,500

October 21, 2003 to December 4, 2003

Securities and Exchange Act (Article 189)

7/3/2006

To increase shareholder value

Common Share

5,222,000

213,514,820,000

April 3, 2006 to June 26, 2006

Securities and Exchange Act (Article 189)

8/3/2007

To increase shareholder value

Common Share

2,058,000

91,454,033,000

May 23, 2007 to July 31, 2007

Securities and Exchange Act (Article 189)

12/20/2007

To increase shareholder value

Common Share

2,367,000

104,758,448,000

October 11, 2007 to December 17, 2007

Securities and Exchange Act (Article 189)

22/7/2008

To increase shareholder value

Common Share

1,666,700

73,755,269,396

June 26, 2008 to July 18, 2008

Securities and Exchange Act (Article 189)

Total

Common Share

1,848,835,596,996

—

—

Preferred Share

—

—

—

—

(3) Current Status of the Execution and Termination of Treasury Share Trust Agreement

																										(Unit: in millions of Won)
		Beginning of the Term								Execution (+)								Termination (-)								Term-End
						Number of								Number of								Number of								Number of
Category		Amount				Agreements				Amount				Agreements				Amount				Agreements				Amount				Agreements
Specified Money Trust			100,000				2				—				—				—				—				100,000				2
Trust Agreement with an Asset Management Company			—				—				—				—				—				—				—				—
Share Acquisition Agreement with an Investment Company			—				—				—				—				—				—				—				—
Total			100,000				2				—				—				—				—				100,000				2

* Terms of the Trust Agreements: March 9, 2007 to March 8, 2010

D. Share Ownership Status of Employee Stock Ownership Association

(1) Transactions with Employee Stock Ownership Association

     Not Applicable

(2) Guideline for Exercising the Voting Rights of Employee Stock Ownership Association

     Association Account: Employee Stock Ownership Association exercises its voting rights in the same proportion as those shares held in the association member accounts that have indicated how to vote.

     Association Member Account: Employee Stock Ownership Association may exercise its voting rights only if (i) the association receives a request by an association member to exercise his voting rights within a minimum period of seven days or (ii) the association member chooses to delegate his voting rights to the association.

9

Table of Contents

(3) Shares Held by the Employee Stock Ownership Association

(As of March 31, 2009) (Unit: Shares)

Type of Account		Type of Shares		Balance at Beginning of Term		Term-End Balance
Association Account		Common Share		35,136		35,136
Association Member Account		Common Share		13,153,084		12,750,640

4. Voting Rights

(As of May 15, 2009) (Unit: Shares)

Category				Number of Shares		Note
Total Issued Shares (A)		Common Share		260,411,700		—
		Preferred Share		—
Shares without Voting Rights (B)		Common Share		71,501,064		—
		Preferred Share		—
Shares with Restricted Voting Rights under the		—		—		—
Stock Exchange Act and Other Laws (C)
Shares with Reestablished Voting Rights (D)		—		—		—
Shares with Exercisable Voting Rights		Common Share		188,910,636		—
(E = A − B − C + D)		Preferred Share		—

(1)		Shares without voting rights under the Commercial Code of Korea: 71,501,064 shares, including treasury shares, shared held through treasury stock funds and cross holding shares (3,254 shares).
(2)		Under the Financial Investment Services and Capital Markets Act, no share has its voting rights restricted. However, in appointing an audit committee member, any shareholder whose shareholding exceeds 3% of the total number of outstanding shares is limited to exercising his voting rights only up to 3% of the total number of outstanding shares with exercisable voting rights. As of December 31, 2008, out of the 16,179,637 shares that were held by the National Pension Fund, voting rights of 10,512,318 shares could not be exercised with regard to the appointment of audit committee members.

5. Matters on Dividends and Others

A. Matters on Dividends

     The shareholder return policy of the Company is to pay its shareholders at least 50% of the adjusted net profit of the current term or more through cash dividends and acquisition of treasury stock of the Company.

B. Dividends Paid during the Past Three Fiscal Years

Category				1st Quarter 2009				2008				2007
Par Value per Share (Won)					5,000				5,000				5,000
Net Profit of the Current Term (in millions of Won)					139,569				449,810				957,623
Net Profit per Share (Won)					693				2,217				4,635
Year-end Cash Dividend (in millions of Won)					—				226,280				407,374
Year-end Share Dividend (in millions of Won)					—				—				—
Cash Dividend Propensity (%)					—				50.3				42.5
Rate of Return on Cash Dividend (%)		Common Share			—				2.9				4.1
		Preferred Share			—				—				—
Rate of Return on Share Dividend (%)		Common Share			—				—				—
		Preferred Share			—				—				—
Cash Dividend per Share (Won)		Common Share			—				1,120				2,000
		Preferred Share			—				—				—
Share Dividend per Share (Share)		Common Share			—				—				—
		Preferred Share			—				—				—

* Figures for Net Profit of the Current Term, Net Profit per Share, Distributable Profit Terms Dividend Propensity for the year ended 2007 are different from the financial information in Part III because SKAS 15 and Opinion on Application of Accounting Standards 06-2 are not reflected. For the result of the adoption of the accounting standard and the opinion, please refer to the financial information in Part III

10

Table of Contents

II. Details of Business

1. Overview

A. Present Conditions of the Industry

(1) Characteristics of the Industry

     Current markets for fixed-line telephones, broadband Internet and mobile communications in Korea have reached their maturity. With technical advances and changes in customer demands, the communications industry has recently been moving toward convergence between different technologies and industries, such as convergence between fixed-lined communications and mobile communications and between the telecommunications industry and the broadcasting industry. These converged media businesses, represented by IPTV, opens up new opportunities for telecommunications carriers as they bridges telecommunications and broadcasting industries. In the mobile communications market, the transition to 3G will become a turning point in shaping a new competitive landscape, replacing the existing competition in the 2G market. In the saturated communications market, increasing customer value has become increasingly more important as fixed-line communications carriers offer integrated services such as the TPS (or Triple Play Service) or QPS (or Quadruple Play Service), and mobile communications carriers also offer additional benefits to their clients.

(2) Growth of the Industry

(Unit: 1,000 persons)

Category		December 31, 2004				December 31, 2005				December 31, 2006				December 31, 2007				December 31, 2008				February 28, 2009
Broadband Internet Subscribers			11,921				12,191				14,043				14,710				15,475				15,598
Local Telephone Subscribers			22,871				22,920				23,119				23,130				22,132				21,651
Mobile Phone Subscribers			36,586				38,342				40,197				43,498				45,607				46,235

*		From 2004 to 2007, data was provided by the Ministry of Information and Communication (www.mic.go.kr).
*		Data as of December 31, 2008 was provided by the Korea Communications Commission (www.kcc.go.kr).

(3) Characteristics of Market Fluctuations

     The demand for communications services does not fluctuate greatly as such services are regarded as a necessity in modern life. However, if the Korean economy slows and continues to do so in the future, it could have an adverse impact on KT’s business activities.

(4) Competition

(a) Competing Companies

	•		Local calls: SK Broadband, LG Dacom, etc.
	•		Long distance calls: LG Dacom, Onse Telecom, SK Broadband, SK Telink, etc.
	•		International calls: LG Dacom, Onse Telecom, SK Broadband, SK Telink, etc.
	•		Broadband Internet: SK Broadband, LG Powercom, LG Dacom, Service Operators (including cable television, relay wired broadcasting operators), etc.
	•		Mobile communications: SK Telecom, LG Telecom, etc.

11

Table of Contents

	•		Internet telephones using Internet Protocol (VoIP): SK Broadband, SK Networks, SK Telink, Samsung Networks, LG Dacom, LG Powercom, Korea Cable Telecom, etc.
	•		IPTV: SK Broadband, LG Dacom
	•		Mobile Internet (WiBro service): SK Telecom

(b) Market Entry Requirements

	•		Communication service providers: business operations must be approved by the Korea Communications Commission
	•		Specific telecommunications service providers: registration is required
	•		Value-added telecommunications service providers: reporting is required

(c) Factors of Competition : service fees, product quality, brand value and competitiveness of the distribution network.

(5) Characteristics of Resource Supplies

(a) Communications Equipment Procurement

     In accordance with the Korean government’s media industry innovation policy and to build a broadband convergence network (BcN) that can offer a range of different types of services, KT is focusing on the introduction of a fiber-optic broadband network and aims to enhance the quality of its customer’s experience by providing a variety of innovative services, including integrated voice (telephony) and data (Internet) convergent services and converging communication and broadcasting. KT’s network is also evolving from an individual service provider-oriented network to a customer-oriented service convergence network (All-IP).

     To provide such service, KT purchased the following equipment during first quarter of 2009: (i) backbone network equipment such as WDM equipment, MSPP, DCS devices and routers; (ii) equipment for broadband Internet such as FTTH equipment, switches and optical cables in order to deliver to its customers TPS and other services; (iii) equipment for newly introduced businesses such as mobile Internet equipment (such as repeaters, access terminals and devices), IPTV set-top boxes and VoIP terminals; and (iv) other handsets for end-users such as mobile handsets, PDAs, and ‘Ann’ phones.

(b) Capital Raising

     With domestic credit rating of AAA, the highest credit rating among Korean companies, KT has issued Won 40 billion of corporate bonds due 2012 and Won 360 billion of corporate bonds due 2014 in February 2009. Also KT has issued JPY 12.5 billion of corporate bonds; US$160 million of corporate bonds; and a total of Won 530 billion of corporate bonds in 2008 . In addition, at the beginning of September 2008, right before the deepening of the financial crisis in Korea, KT issued US$200 million of private corporate bonds, raising a large amount of capital at an optimal time with low interest cost.

     KT has also improved its international credit rating by receiving a credit rating level of A3 from Moody’s Investors Services (“Moody’s”) in June 2005 and KT has maintained the same level as of March 31, 2009. KT also received a credit rating level of A from Fitch Ratings in July 2007 during its periodic appraisal. In June 2008, S&P improved KT’s international credit rating level from ‘A-Stable’ to ‘A-Positive’.

     In accordance with the government policy for supporting information technology companies, KT also raised Won 10.9 billion of subsidy in May 2008 that is repayable on a three year installment basis after a two year grace period. As a result of a series of bond offerings and improved credit rating, maturity dates of outstanding borrowings have been deferred and the company has achieved increasing financial stability and effective management of debt maturity date.

12

Table of Contents

(6) Relevant Laws and Government Regulations

(a) Relevant Laws

• Telecommunications policy-related laws

- Telecommunications Basic Act, Telecommunications Business Act (total 7)

• Radio and broadcasting policy-related laws

- Radio Regulation Law

• Informatization related laws

- Promotion of Information and Communication Basic Act (total 9)

• Broadcast related laws

- Broadcasting Law, etc.

• Others

- Internet Multimedia Broadcasting Business Law (IP-TV related)

(b) Government Regulations

     The Korea Communications Commission is responsible for managing the convergence between broadcasting and communications, as well as assuring their independence and their role of providing public service. The commission is also responsible for issuing relevant licenses, permits, approvals, policy enactments and other matters relating to the promotion of broadcasting and communications and the enhancement of their global competitiveness.

The statements included in above section are based on KT’s forecasts and are offered for the sole purpose of providing a better understanding of the company’s current state. Consequently, investors must not rely solely on KT’s forecasts when making their investment decisions.

B. Current Status of KT

(1) Operations Outlook and Classification of Business

(a) Operations Outlook

     The Korean communications market is currently experiencing slow growth as leading services, including fixed-line telephones, broadband Internet and mobile communications, have reached maturity, caused in part by intense competition in the industry. KT is no exception to this industry trend as its local telephone, QOOK Internet broadband Internet access and mobile resale services are all facing difficult business climates due to: (i) increase in fixed-to-mobile substitution trend and the increasing popularity of VoIP market; (ii) aggressive marketing and price cutting measures from competitors of broadband Internet access service providers; and (iii) limitations of resale efforts and increasing marketing costs relating to mobile services.

     Despite the unfavorable environment, KT has made company-wide efforts to reduce costs based on quality management and treatment of customer value innovation as our top priority. KT has launched a new brand “QOOK”, for all the telecommunication services that we provide to our household customers, in order to establish an easier and efficient communication channel with our customers.

     As of the end of March 2009, KT had 6,714 thousand broadband Internet customers, 19,468 thousand local telephony customers and 2,800 thousand KT mobile resale customers.

     In the future, KT plans to promote various rate plans to address different customer calling patterns, as well as promote bundled-services (economic efficiency), reiterate value of the fix-line (well-being) and promote digital

13

Table of Contents

Ann phone (convenience) in its fixed-line telephone business and provide differentiated VoIP services to address the proliferation of internet phones.

     In the broadband Internet arena, KT will aim to improve customer value from the viewpoint of customers with continued provisions of the FTTH (Fiber-To-The-Home) services. As for KT mobile resale business, KT will focus on expanding its current marketing base in line with the future 3G-based wireless market.

     KT’s wireless broadband Internet access service business, or WiBro, plans to further expand services to the greater Seoul metropolitan area and will aim to be a leader in the Mobile 2.0 era, the next generation of two-way communication mobile environment.

     Also, KT’s IPTV business will focus on actively catering to the TV portal market through its QOOK TV service and, in the long term, by pursuing a leadership position in the broadcasting convergence market.

     We will also aim to expand our market share by enhancing our network-based care services, offering on- and off-line total solutions while expanding our bizmeka services to address individual needs, such as medical and education services.

     In particular, we will strive to combine our collective resources and diverse service offerings to periodically develop and introduce new package of services that we believe will provide KT’s new growth momentum.

(b) Operations Subject to Disclosure

     KT’s main area of business is the telecommunications sector under the Korea Standard Industry Code.

(2) Market Share

				Market Share for Each Term (%)
				1st Quarter
				of 28th								26th Fiscal				25th Fiscal
				Fiscal Year				27th Fiscal				Year				Year
Category		Operator		(2009)				Year (2008)				(2007)				(2006)
Local Telephone (On the Basis of Number of Subscribers)		KT			89.9				89.8				90.4				92.1
		SK Broadband			8.5				8.7				8.8				7.5
		LG Dacom			1.6				1.5				0.8				0.4
Long Distance Telephone (On the Basis of Number of Subscribers)		KT			85.9				85.2				85.4				85.6
		LG Dacom			3.6				3.7				3.9				4.8
		Onse Telecom			1.6				1.7				1.8				2.1
		SK Broadband			7.1				7.8				7.4				6.1
		SK Telink			1.7				1.6				1.5				1.4
Broadband Internet Subscriber (On the Basis of Number of Subscribers)		KT			42.8				43.4				44.3				45.2
		SK Broadband			23.1				22.9				24.9				25.7
		LG Powercom			14.5				14.1				11.7				8.6
		Service Operators			19.6				19.6				17.5				16.6

*		In 2006 and 2007, data was provided by the Ministry of Information and Communication (www.mic.go.kr).
*		In 2008, data was provided by the Korea Communications Commission (www.kcc.go.kr).
*		Market share for the 1st quarter of 2009 is as of the end of February 2009.

(3) Market Characteristics

     KT’s local telephone business provides universal services for homes and businesses, and despite increased marketing efforts by competitors, KT maintained approximately 89.8% of the market share as of the end of March,

14

Table of Contents

2009. Although Public Switched Telephone Network (PSTN) sales and the number of PSTN subscribers are on a gradual decline due to the increased use of mobile phones over traditional phones and the advancement of VoIP services as well as the expansion of local number portability, KT is committed to fending off a further decline in sales by (i) increasing Average Revenue per User (ARPU) through sales of additional services, (ii) increasing customer satisfaction by offering optional calling plans and (iii) retaining existing customers through customer relationship management activities.

     As for broadband Internet, KT seeks to improve its ARPU by providing competitive rates for its high-quality products, aided by reorganization of its product lineup. KT is the leader in terms of both speed and quality in a market with intense price competition, mostly through its dominance in supplying FTTH services. KT’s ultimate goal is to be a market leader in offering next generation services, such as IPTV, through achieving 100 mega-bites access for ordinary households.

     As for the KTF mobile resale services provided to KT’s individual customers, revenue from such services are increasing despite a fierce competition over new customers, partly due to mobile number portability and KT’s ability to secure new customers.

(4) Status and Forecast of New Business

     In order to overcome present market obstacles of growth limits of the voice business market and the sluggish growth of the broadband Internet access services, KT has been actively involved in developing a wide range of new businesses with growth prospects.

     KT aims to create a digital entertainment world that will enrich its customers’ lives through a ubiquitous environment which can be accessed through various terminals anytime anywhere; to offer customers convenience solutions that they may freely use without the time or location limitations, and to offer business solutions necessary to raise corporate efficiency and competitiveness. By excelling in these new business areas, KT strives to become a company that accomplishes customer value innovation while realizing its customers’ objectives.

     KT’s WiBro (Wireless Broadband) operation enables portable broadband Internet access services, allowing universal Internet access with high transmission speeds through personal handsets or laptop computers. WiBro was first commercialized in the world using Korean technology, and KT successfully provided commercial WiBro services in limited areas in 2006. Since April of 2007, KT has actively been seeking to provide WiBro services in the Seoul area, including various major buildings and university campuses in the Seoul metropolitan area. In October 2008, WiBro service in the Seoul metropolitan area was extended to 19 neighbouring cities and the service speed became twice as fast.

     Currently, anyone may utilize KT WiBro services with personal computers, WiBro compatible laptop computers, WiBro phones which combine CDMA mobile phones with WiBro service, Portable Media Players, navigation devices or Dongle, a USB device that can be connected to any laptop computer. KT will continuously try to expand its array of digital devices that are compatible with WiBro services.

     KT will promote a mobile culture for its customers through KT WiBro, which shall offer not only the basic Internet access function but also other individually tailored services, such as combined webmails, two-way visual communications, remote controlled home computers, information services linked with real-time search functions and mobile UCC to its users. Through WiBro, KT aims to lead the Mobile 2.0 generation, the next-generation mobile environment in which users may utilize information and contents they need through a two-way communication platform.

     IP-TV is a service that integrates telecommunications and broadcasting services, brought about by the acceleration in the development of broadband Internet network and multimedia contents in the era where traditional industries converge. IP-TV is a service that provides traditional Internet services, such as information searches, games, message exchanges, and shopping with VOD (Video on Demand) services, which allow users to watch a variety of contents, such as movies, dramas and educational programs, at any time.

15

Table of Contents

     From the second half of 2007 to October of 2008, only non-real time VOD services and interactive services were provided due to regulatory restrictions. However, after the passing of the Korean Internet Multimedia Broadcasting Business Law by the National Assembly in December 2007 and the granting of the IP-TV business license to KT on September 8, 2008, KT has been able to provide enhanced IP-TV service, including real-time broadcasting starting November 17, 2008 for the first time in Korea. KT is taking every step to provide new services such as providing nationwide QOOK TV services starting January 9, 2009, and expanding real-time broadcasting channels. By providing real IP-TV services, KT will promote the convergence in telecommunications and broadcasting and grow as a digital entertainment company. In particular, we plan to minimize social and cultural gaps within the society, improve the quality of life and ultimately improve national competitiveness by i) encouraging our customers to use media more actively, ii) establishing an environment that promotes telecommunications related industry including contents, set-top-box (STB) and platform equipment productions, iii) developing a business model that involves public institutions such as public schools and military and iv) developing media-poor areas.

     In order to differentiate KT’s Internet phone services from the competitors’ voice transmission services, KT Internet phone services provide video communication, SMS and a variety of daily life related services (home ATM and lifestyle, traffic and local news information) in addition to the voice transmission services. In order to prevent our PSTN subscribers from migrating to the competitors’servives, we released four voice-transmission phones terminals for our VoIP services. Since then, we added 180,000 new subscribers to our Internet phone service to reach 500,000 subscribers in total. Through our three video terminals with screens, we plans to offer additional customer value by offering various convenient services for customer’s everyday needs and video telephony, and to position itself as the leader in the transformation of fixed phone line into the future All-IP network environment. With the launch of KT’s Internet phone, KT is striving to shift paradigm from a heavily price sensitive environment that resulted in erosion of profitability to a service competition environment. Also, KT plans to maintain and expand its customer base through the creation of a new market by offering convergent terminals with value added services and integrated applications (e.g. ATM services)

     KT believes that its new businesses will not only bring about new sources of revenue for the company, but also assist KT to maintain its existing fixed-line market share as well as promote its competitiveness in the broadband Internet service market. KT, leveraging on its past success, intends to continue to develop and nurture new businesses so that it can become a pioneer in the areas of fixed line to mobile consolidation, convergence of communications, broadcasting and home appliances and cross-industry convergence.

The statements included in above section are based on KT’s forecasts and are offered for the sole purpose of providing a better understanding of the company’s current state. Consequently, investors must not rely solely on KT’s forecasts when making their investment decisions.

16

Table of Contents

(5) Organization Chart

2. Matters related to products
A. Status of main products

(Unit: in millions of Won)

Items		Product/service		Main brand		Revenue(%)
Internet Connection		Broadband internet		QOOK internet		519,488(18.7%)
Internet Application		IDC		Bizmeka		122,784(4.4%)
Data		Dedicated leased line		KT		417,312(15.1%)
Telephone		Fixed-line service		KT		959,279(34.6%)
LM		Fixed-line service		KT		305,241(11.0%)
Wireless		KTF resale		Let’s 010		335,961(12.1%)
System Integration		SI		KT		39,735(1.4%)
Real Estate		Lease, development				65,309(2.4%)
Others		Others				8,007(0.3%)
		Total				2,773,116(100.0%)

17

Table of Contents

2. Capital Expenditure

A. Capital Expenditure (First Quarter 2009)

						(Unit : hundred million Won)
										Total
						Cumulative				Investment
						Investment		Investment		(2009
Business Unit		Type of Investment		Effect of investment		(2005~2008)		(First quarter)		cumulative)
Internet business		WiBro, XDSL equipment		Address demands and enhancement of competence		27,827		308		308
Fixed-line business		Maintenance of fixed-line facilities		Address demands		5,790		139		139
Mobile business		Maintenance of mobile phone facilities		Address demands		31,879		1,396		1,396
Data business		ATM, dedicated leased line equipment and others		Address demands		13,428		497		497
Telecommunication infrastructure		Transmission, cable tunnels, power facilities and others		Address demands and infrastructure upgrade		34,240		401		401
Facilities and others		R&D, wireline, IT facilities and others		Address demands and management efficiency		12,963		183		183
Total						126,127		2,924		2,924

*		Capital expenditures of KT and KT Freetel are presented in a combined basis.
*		Details of KT Freel capital expenditure: Won 152.5 billion

	-		Mobile business: Won 139.6 billion
	-		Facilities and others: Won 12.8 billion

B. Capital Expenditure Plans

(Unit : hundred million Won)

Business Unit		Details		Type of Investment		2009
Internet business		- Expansion of internet facilities		WiBro, XDSL equipment		7,484
		- Expansion of new business
		facilities such as WiBro and IP-TV
Fixed-line business		- Expansion of fixed line facilities		Maintenance of fixed-line facilities		1,752
		- Network upgrade (PSTNàIP based)

18

Table of Contents

Business Unit		Details		Type of Investment		2009
Mobile business		- Expansion of mobile facilities		Maintenance of mobile phone facilities		7,907
		- Expansion of CDMA coverage
Data business		- Expansion of ATM, dedicated		ATM, dedicated line equipment and others		3,185
		leased line facilities
Telecommunication		- Expansion of infrastructure
infrastructure		facilities		Transmission, cable tunnels, power		9,130
		- Expansion of buildings and others		facilities and others
Facilities and others		- Facility expansion of IT service
		and U-City business
		- Expansion of management facilities		R&D, wireline, IT facilities and others		2,569
Total						32,027

The statements included in the above are based on our forecasts and are offered to provide a better understanding of the company’s current state only. Consequently, investors must not rely solely on our forecasts when making their investment decisions.

3. Matters Related to Revenue

A. Performance in Terms of Revenue

(Unit: in millions of Won)

		First Quarter of 28th
		Fiscal Year
		(For the month ended
Items		March, 2009)				27th Fiscal Year (2008)				26th Fiscal Year (2007)
Internet Connection			519,488				2,129,900				2,118,670
Internet Application			122,784				540,620				389,884
Data			417,312				1,650,127				1,627,923
Telephone			959,279				3,984,520				4,184,668
LM			305,241				1,393,605				1,597,203
Wireless			335,961				1,563,999				1,511,452
System Integration			39,735				248,425				260,555
Real Estate			65,309				245,840				218,182
Others			8,007				27,799				27,845
Total			2,773,116				11,784,835				11,936,382

19

Table of Contents

B. Routes and Methods of Sales

(1) Marketing Organizational Structure

• Internal distribution channel : Regional Business Unit (11), district/branch offices (326), customer center (1)

• External distribution channel : sales agencies (558), agency stores (370), specialty stores (69), specific service provider (17), KTF SHOW Stores (2,186), KTF M&S (140), affiliate channels (46)

20

Table of Contents

(2) Sales Path

	•		Branch offices offer sales of goods and customer services.
	•		Subscription to goods and services through sales agencies: sales agencies, agency stores, specialty stores, specific service providers, KTF SHOW stores, and affiliates.
	•		Subscription to goods and services through the Internet (www.kt.com).
	•		Attracting new subscribers and increasing cross-sales through business sales agreements.

• Utilizing distribution routes through alliance with other businesses.

(3) Methods and Conditions of Sales

(a) Sales Methods

	•		Service fees are paid in cash (wire transfer, direct bank transfer and credit cards). Fixed and wireless telephone services are operated on a unit pricing system or partial flat rate system and broadband Internet access service are operated on a flat rate system.
	•		Sale of terminals may involve installment payments.
	•		Rental of terminals is charged on a monthly basis, and a discounted rate is applied during the contract period.

• Distribution fees are charged upon installation and additional periodic maintenance fees.

(b) Conditions for Sales

• Discount of Service Fees in accordance with the Subscription Period

21

Table of Contents

Category		1 Year		2 Years		3 Years		4 Years
QOOK Internet		5%		10%		15%		20% (limited to Special)
KORNET (Express/Premium)		5%		10%		15%		—
QOOK TV (Live/VOD)		5%		10%		20%		—

- Additional discounts available for subscribers who have used the following services for at least 3 years

Category		After 3 Years		After 4 Years		After 5 Years		Other
QOOK Internet		2%		3%		5%		—
KORNET (Express/Premium)		2% (When subscribers sign up for an additional 1 year agreement)		3% (When subscribers sign up for an additional 2 year agreement)		5% (When subscribers sign up for an additional 3 year agreement)		When subscribers enter into an additional agreement

• Package Discounts

QOOK Internet plus SHOW		QOOK Internet		SHOW
		3% to 10% additional discount for service fees according to Agreement terms		10% discount for monthly service fees (5% for QOOK Internet subscriptions without long-term discount agreements)
QOOK Internet plus KT WIBRO		QOOK Internet		KT WIBRO
		3% to 10% additional discount for service fees according to Agreement terms		None (instead NESPOT family provided free of charge)
QOOK Internet plus QOOK TV		QOOK Internet		QOOK TV
		3% to 10% additional discount for service fees according to Agreement terms		3% to 10% additional discount for service fees according to Agreement terms

• Discounts for Multiple Leased-Lines Subscriptions

- Local Leased-Line

		30,001 to 40,000		40,001 to 60,000		Above 60,001
Category		lines		lines		lines		Note
Discount Rate		4%		5%		6%		Limited to Circuits below Low-Speed (300bps) Level

- Long Distance Leased-Line

Category		5~9 lines		Above 10 lines		Note
Discount Rate		5%		10%		—

* Please refer to the explanations for each service provided on their respective websites or the relevant terms and conditions for further details.

(4) Sales Strategy

(a) Broadband Internet Service

	•		Strengthen competitiveness by enhancing both quality and speed of FTTH offerings
	•		Satisfy a diverse range of customer needs and provide differentiated services through development and offering of additional QOOK Internet services
	•		Promote specialized high-quality products and increase sales through up-selling and retention of existing customers

22

Table of Contents

(b) WiBro Service

• Improve distribution networks and strengthen handset design and service offerings

• Promote interactive stores and pursue target marketing at WiBro U-Campus, laptop rental businesses and securities companies.

• Stimulate early market interest through promotional rate plans and package products

(c) IPTV Service

• Sell VOD-based QOOK TV products to QOOK Internet customers nationwide

• Expand client base by offering free set-top box rentals (with a 3 year subscription contract) and opportunities to experience KT services

• Increase synergy, such as cross-selling and customer retention, through promotion of bundling products with QOOK Internet

(d) Data Service

• Enhance customer value by offering high-quality exclusive networks that are stable and unique

• Offer customized services through professional consulting

(e) Telephone Service

	•		Focus on retaining local call subscriber base by preventing LNP transfers and cancellations
	•		Increase sales efficiency by target marketing based on analyses of customers’ usage patterns
	•		Promote customer loyalty with care programs designed specifically for each customer, and by developing services based on specific customer needs
	•		Retain existing customers and effectively compete with Internet telephone companies through optional calling plans and development of package products

(f) Mobile Service

	•		Attract good customers from other providers as well as new customers through the adoption of stand-out sales policies
	•		Focus on customer retention by engaging in care activities for preferred customers
	•		Develop additional services and improve the quality of terminals and customer service in collaboration with KTF

(g) Bundling Service

	•		Retain existing customers by developing and promoting new QOOK Internet-based package products and recruiting new clients for services such as KT WiBro and SHOW
	•		Promote customer retention through continued development and sale of package products of major services

23

Table of Contents

4. Research and Development Activities

A. Research and Development costs

(Units : in millions of Won)

Category						First quarter 2009				2008				2007				Notes
Raw material							—				—				—				—
Labor cost							13,325				69,256				65,478
Depreciation							11,073				51,637				49,524				—
Commissions							—				14,027				20,239				—
Others							25,939				214,263				236,605				—
Total R&D costs							50,337				349,183				371,846				—
Accounting treatment		Research and ordinary development costs					43,817				251,141				260,445
		Development cost (intangible asset)					6,520				98,042				111,401
Percentage of R&D costs over revenue							1.82	%			2.96	%			3.12	%			—

5. Other Matters Necessary for Making Investment Decisions

A. Merger appraisal rights

(1) Under the Commercial Code, holders of shares of KT Corporation who opposed the merger were entitled to exercise their appraisal rights to purchase their shares during the period of March 27, 2009 through April 16, 2009. As a result, a total of 451,038 shares were submitted for appraisal against the merger with KT Freetel, and KT spent Won 17,381 million to purchase those shares.

24

Table of Contents

III. Financial Information

1. Summary of Financial Statements (Non-Consolidated)

(in million Won)

Classification		As of Mar. 31, 2009				As of Dec. 31, 2008				As of Dec. 31, 2007				As of Dec. 31, 2006				As of Dec. 31, 2005
Current Assets			4,208,142				3,778,105				3,310,412				3,239,188				3,418,917
• Quick Assets			4,042,548				3,610,564				3,188,309				3,146,206				3,303,033
• Inventory			165,594				167,541				122,103				92,982				115,884
Fixed Assets			14,633,702				14,906,817				14,606,770				14,723,145				14,517,592
• Investments			3,542,196				3,517,906				3,458,580				3,661,067				3,453,071
• Tangible assets			10,107,353				10,428,674				10,448,618				10,398,084				10,411,523
• Intangible assets			361,937				397,046				439,738				470,782				443,098
• Other non-current assets			622,216				563,191				259,834				193,212				209,900
Total Assets			18,841,844				18,684,922				17,917,182				17,962,333				17,936,509
Current Liabilities			2,686,399				2,585,875				2,991,341				3,270,249				3,079,999
Fixed Liabilities			7,624,064				7,267,158				6,065,948				6,143,004				6,807,214
Total Liabilities			10,310,463				9,853,033				9,057,289				9,413,253				9,887,213
Capital			1,560,998				1,560,998				1,560,998				1,560,998				1,560,998
Capital Surplus			1,440,636				1,440,633				1,440,777				1,440,910				1,440,258
Capital Adjustments			(4,158,326	)			(3,994,736	)			(3,983,929	)			(3,817,717	)			(3,870,288	)
Accumulated Comprehensive Income			(39,331	)			10,879				(818	)			10,978				119,658
Retained Earnings			9,727,404				9,814,115				9,842,865				9,353,911				8,798,670
Total Capital			8,531,381				8,831,889				8,859,893				8,549,080				8,049,296

(in million Won)

		For the first
		quarter ended Mar.				For the year ended				For the year ended				For the year ended				For the year ended
Classification		31, 2009				Dec. 31, 2008				Dec. 31, 2007				Dec. 31, 2006				Dec 31, 2005
Sales			2,773,116				11,784,835				11,936,382				11,856,009				11,877,272
Operating Income			384,479				1,113,389				1,433,722				1,756,228				1,659,883
Ordinary Income			175,545				560,045				1,274,725				1,574,460				1,376,429
Net Income			139,569				449,810				981,967				1,233,449				1,031,810
- Basic earnings per share			693				2,217				4,753				5,877				4,877
- Diluted earnings per share			693				2,217				4,753				5,870				4,871

2. Summary of Financial Statements (Consolidated)

As of the end of December 31
(in million Won)

Classification		2008				2007				2006				2005				2004
Current Assets			7,073,826				5,642,799				5,981,420				6,131,744				6,808,977
• Quick Assets			6,648,985				5,343,695				5,744,225				5,771,631				6,434,658
• Inventory			424,841				299,104				237,195				360,113				374,319
Fixed Assets			19,064,778				18,484,086				18,261,914				18,556,973				19,664,255
• Investments			546,000				470,195				533,947				792,669				913,844

25

Table of Contents

Classification		2008				2007				2006				2005				2004
• Tangible assets			15,188,631				15,288,002				15,167,429				15,087,032				15,721,455
• Intangible assets			1,474,238				1,735,323				1,959,591				2,133,199				2,184,689
• Other non-current assets			1,855,909				990,566				600,947				544,073				844,267
Total Assets			26,138,604				24,126,885				24,243,334				24,688,717				26,473,232
Current Liabilities			5,241,028				5,078,621				5,423,115				4,822,341				8,334,490
Fixed Liabilities			9,809,678				7,910,498				8,122,915				9,476,442				9,112,362
Total Liabilities			15,050,706				12,989,119				13,546,030				14,298,783				17,446,852
Minority Interest			2,256,009				2,276,003				2,267,252				2,518,213				1,809,577
Capital			1,560,998				1,560,998				1,560,998				1,560,998				1,560,998
Capital Surplus			1,440,633				1,440,777				1,292,475				1,389,222				1,291,617
Capital Adjustments			(3,994,736	)			(3,983,929	)			(3,817,717	)			(3,868,078	)			(3,967,270	)
Accumulated Comprehensive Income			10,879				142				5,772				(3,166	)			(1,782	)
Retained Earnings			9,814,115				9,843,775				9,400,068				8,786,413				8,333,240
Total Capital			11,087,898				11,137,766				10,697,304				10,389,934				9,026,380

For the years ended December 31
(in million Won)

Classification		2008				2007				2006				2005				2004
Revenues			19,644,543				18,660,082				17,824,880				17,155,455				17,068,371
Operating Income			1,427,762				1,745,341				2,383,376				2,430,942				2,480,532
Income from continuing operations			513,290				1,096,774				1,509,721				1,365,010				1,431,147
Net Income			513,290				1,170,978				1,509,717				1,360,036				1,431,147
Consolidated Net Income			449,810				1,056,227				1,291,863				1,085,450				1,282,216
Number of consolidated companies			33				28				23				21				13

26

Table of Contents

IV. Auditors’ Opinion

1. Auditor

First quarter 2009		2008		2007		2006
Deloitte Anjin LLC		Deloitte Anjin LLC		Deloitte Anjin LLC		KPMG Samjong Accounting Corp.

2. Audit (or Review) Opinion

Term		Audit (or Review) Opinion		Issues noted
First quarter 2008		—		Not Applicable
First quarter 2007		—		Not Applicable
2008		Unqualified		Not Applicable
2007		Unqualified		Not Applicable

3. Remuneration for Independent Non-Executive Auditors for the Past Three Fiscal Years

A. Audit Contracts

(Unit in million won, hours)

Term		Auditor		Contents		Fee				Total Hours
First quarter of 2009		Deloitte Anjin LLC		Quarterly and semi-annual review of financial statements Semi-annual review of consolidated financial statements Non-consolidated financial statements audit Consolidated financial statements audit Kaesong Branch Office audit US GAAP financial statements semi-annual review US GAAP financial statements audit			2,795				3,369
2008		Deloitte Anjin LLC		Quarterly and semi-annual review of financial statements Semi-annual review of consolidated financial statements Non-consolidated financial statements audit Consolidated financial statements audit Kaesong Branch Office audit US GAAP financial statements semi-annual review US GAAP financial statements audit			2,319				33,858
2007		Deloitte Anjin LLC		Quarterly and semi-annual review of financial statements Semi-annual review of consolidated financial statements Non-consolidated financial statements audit Consolidated financial statements audit US GAAP financial statements audit			1,985				37,000

27

Table of Contents

B. Non-audit service contracts

Term		Date of contract		Contents		Period		Total Fee
2009		—		—		—		—
2008		April 2008		Revision of SEC filing documents		- June 2008 - January 2009			85,000,000
2007		—		—		—		—

28

Table of Contents

V. Board of Directors and Affiliated Companies

1. Overview of the Board of Directors and Committees under the Board

A. Matters on the Board of Directors

Currently our board of directors is comprised of three standing directors and seven outside directors. Also, we have established five committees within the board of directors: i) Audit Committee, ii) Outside Director Candidate Nominating Committee iii) Evaluation and Compensation Committee, iv) Executive Committee, and (v) Related-party Transaction Committee. The Board of directors can establish additional committees if deemed necessary.

B. Major Activities of the Board of Directors

Outside Directors

Results

Paul C. Yi

Jeong Suk Koh

Si-Chin Kang

Jun Park

In-Man Song

Order

Meeting Date

Agenda

on discussion

Voting Result

1

Jan. 14

1) Appointment of Chairman of BOD and members of committees

Appointed

For

For

For

For

For

2

Jan. 20

2) Proposal for merger with KT Freetel Co.,

Original proposal approved

For

For

For

For

For

3) Proposal for of issuance of exchangeable bonds

Original proposal approved

For

For

For

For

For

4) Proposal for closing of books of records

Original proposal approved

For

For

For

For

For

5) Proposal for appointments of members of Outside Director Nominating Committee

Members appointed

For

For

For

For

For

3

Jan. 22

6) Approval of Financial Statements of the 27th Term

Original proposal approved

For

For

For

For

For

7) Business Report of the 27th Term

Original proposal approved

For

For

For

For

For

8) Plan for issuance of bonds for the first half year

Original proposal approved

For

For

For

For

For

29

Table of Contents

Outside Directors

Results

Paul C. Yi

Jeong Suk Koh

Si-Chin Kang

Jun Park

In-Man Song

Order

Meeting Date

Agenda

on discussion

Voting Result

4

Feb. 6

9) Approval on nominated candidate for standing directors

Original proposal approved

For

For

For

For

For

10) Proposal on remuneration standards and payment methods for the President and Executive Directors

Original proposal approved

For

For

For

For

For

11) Approval of the proposal for limit on remuneration of Directors for 2009

Original proposal approved

For

For

For

For

For

12) Approval of Financial Statements of the 27th Term

Original proposal approved

For

For

For

For

For

13) Business Report of the 27th Term

Original proposal approved

For

For

For

For

For

14) Report on operational condition of internal accounting management system of Fiscal Year 2008

Original proposal received

For

For

For

For

For

15) Convocation of Annual General Meeting of Shareholders of 27th Term

Original proposal approved

For

For

For

For

For

16) Report on validity of the Audit Committee

Original proposal approved

For

For

For

For

For

5

Feb. 24

17) Proposal for amendment of articles of incorporation

Original proposal approved

Absent

For

For

For

For

18) Convocation of Extraordinary General Meeting of Shareholders

Original proposal approved

Absent

For

For

For

For

19) 2009 Management plan

Original proposal approved

Absent

For

For

For

For

20) Disposal of treasury shares for payment of long-term incentives

Original proposal approved

Absent

For

For

For

For

21) Proposal to withhold payment of incentives to former CEO

Original proposal approved

Absent

For

For

For

For

22) Report on operational condition of internal accounting management system of Fiscal Year 2007 (prepared by the Audit Committee)

Original proposal received

Absent

For

For

For

For

* Choon-Ho Lee, E.Han Kim, Jeung-Soo Huh were newly elected as outside directors at the AGM held in March 6, 2009

Outside Directors

Results

Paul C. Yi

Jeong Suk Koh

Si-Chin Kang

Jun Park

In-Man Song

Choon-Ho Lee

E.Han Kim

Jeung-Soo Huh

Order

Meeting Date

Agenda

on discussion

Voting Result

6

Mar.6, 2009

23) Appointments of Chairman of BOD and members of committees

Appointed

For

For

For

For

For

For

For

For

24) Shareholder value enhancement plan

Original proposal approved

For

For

For

For

For

For

For

For

* Paul C. Yi resigned as our outside director in March 6, 2009

Outside Directors

Results

Paul C. Yi

Jeong Suk Koh

Si-Chin Kang

Jun Park

In-Man Song

Choon-Ho Lee

E.Han Kim

Jeung-Soo Huh

Order

Meeting Date

Agenda

on discussion

Voting Result

7

Mar.27, 2009

25) Proposal for equity investment to KTSC

Original proposal approved

For

Absent

For

For

For

For

For

For

26) Plan for amendments of BOD and committee regulations

Original proposal approved

For

Absent

For

For

For

For

For

For

30

Table of Contents

C. Committees within the Board of Directors

(1) Status of committees within the Board of Directors

								Note
				Name				(As of March 6,
Title		Organization		(Jan.14~Mar.6 '09)		Purpose of Establishment and Authority		2009)
Evaluation and Compensation Committee		5 Outside Directors		3 Outside Directors Jeong Suk Koh (Chairperson) Si-Chin Kang In-Man Song		Matters on management agreement with the president and assessment of president		4 Outside Directors Jeong Suk Koh (Chairperson) In-Man Song Choon Ho Lee Jeung Soo Huh
Executive Committee		3 Standing Directors		Suk-Chae Lee (Chairperson) Jeong-Soo Suh Jong-Lok Yoon*		Management and financial matters authorized by the Board of Directors		Suk-Chae Lee (Chairperson) Sang Hoon Lee Hyun-Myung Pyo
Related-party Transaction Committee		4 Outside Directors		4 Outside Directors Paul C.Yi (Chairperson) Jeong Suk Koh Joon Park In-Man Song		Internal transactions that require resolution by the Board of Directors as stipulated by the ‘Antitrust Regulation and Fair Trade Law’ and ‘Securities and Exchange Act’		Joon Park (Chairperson) Jeong Suk Koh Choon Ho Lee Jeung Soo Huh
Outside Director Candidate Recommendation Committee		See V. Management and Affiliated Companies 1. Overview of the Board of Directors and Committees under the Board D. Independence of Directors						—
Audit Committee		See V. Management and Affiliated Companies B. Audit Committee						—

*resigned as of January 22, 2009

(2) Main activities of committees

(a) Evaluation and Compensation Committee

						Independent and Non-Executive Directors
						Jong Kyoo Yoon		Jeong Ro Yoon		Stuart B. Solomon
				Results		Attendance 100%		Attendance 100%		Attendance 100%
Meeting Date		Agenda		on discussion		Voting Result
Feb.4, 2009		1) Proposal for remuneration standards and payment methods for the president and standing directors		Original proposal approved		For		For		For
		2) Proposal for limit on remuneration of directors		Original proposal approved		For		For		For
		3) Results of 2008 CEO management assessment		Request for revision		Against		Against		Against
		4) Proposal for president’s management index		Conditional approval		Conditional approval		Conditional approval		Conditional approval
Feb.6, 2009		5) Results of 2008 CEO management assessment		Original proposal approved		For		For		For

31

Table of Contents

						Independent and Non-Executive Directors
						Jong Kyoo Yoon		Jeong Ro Yoon		Stuart B. Solomon
				Results		Attendance 100%		Attendance 100%		Attendance 100%
Meeting Date		Agenda		on discussion		Voting Result
Feb. 18, 2009		6) Proposal for payment of long-term incentives		Original proposal approved		For		For		For
		7) Proposal to withhold payment of incentives to former CEO		Original proposal approved		For		For		For
Feb. 24, 2009		8) 2009 CEO management goal		Original proposal approved		For		For		For

     (b) Executive Committee

						Executive Directors
						Suk-Chae Lee		Jeong-Soo Suh		Jong-Lok Yoon
				Results		Attendance 100%		Attendance 100%		Attendance 100%
Meeting Date		Agenda		on discussion	Voting Result
Jan. 12, 2009		1) Proposal for the establishment, relocation and closing of branch offices		Original proposal approved		—		For		For
Feb. 16, 2009		2) Plan for issuance of bonds for the first half year		Original proposal approved		For		For		—
Feb. 24, 2009		3) Plan for relocation of branch offices		Original proposal approved		For		For		—

* President and CEO Suk-Chae Lee was appointment on January 12, 2009, Jong-Lok Yoon resigned on January 22, 2009

D. Independence of Directors

(1) Standards for appointment of directors

In order to ensure independency and transparency the Outside Director Nominating Committee appoints outside director candidates recommends to the elected at the general meeting of shareholders. If necessary the committee can appoint a research institution and establish a candidate nominating advisory council. Legally unqualified candidates are not nominated.

(2) Background for candidate nomination

						Transaction with
						company/
						Relationship with
Outside Director		Reason for nomination		Acting committee		major shareholders
Jeong Suk Koh		Expertise in investment		Evaluation and compensation committee (Chairman), Related-party Transaction Committee		None
Choon-Ho Lee		Expertise in media business		Evaluation and compensation committee (Chairman), Related-party Transaction Committee		None
Jeong Soo Huh		Expertise in new and renewable energy		Evaluation and compensation committee (Chairman), Related-party Transaction Committee		None

32

Table of Contents

(3) Separate committee established for nomination of outside director candidate

• Appointment of Members and Chairman of the Outside Director Candidate Nominating Committee (January 20, 2009)

Name		Outside Director		Note
Paul C. Yi		O		At least half of the directors shall be Outside Directors (satisfied the requirement of Article 542-8 of the Commercial Code)
Jeong Suk Koh		O
Si-Chin Kang		O
In-Man Song		O
Joon Park		O
Jeong-Soo Suh		X

Independent and Non-Executive Directors

Executive Director

Paul C. Yi

Jeong Suk Koh

Si-Chin Kang

In-Man Song

Joon Park

Jeong-Soo Suh

Results

Attendance 100%

Attendance 100%

Attendance 100%

Attendance 100%

Attendance 100%

Attendance 100%

Meeting Date

Agenda

on discussion

Voting Result

Jan. 20

1) Support plan for the recommendation of Outside Director candidates

Original proposal approved

For

For

For

For

For

For

Jan.29

2) Appointment of outside director candidates

Original proposal received

For

For

For

For

For

For

Feb.4

3) Final nomination of candidates for Outside Directors - Choon-Ho Lee, Jeong-Soo Huh, E.Han Kim

Advisory council organized

For

For

For

For

For

For

2. Matters on Audit Procedure

A. Personal Information of Members of the Audit Committee (As of March 31, 2008)

Name		Experience
Si-Chin Kang		- Master in Business Administration, Korea University - Audit Committee, Standard Chartered First Bank - Auditor, Catholic Education Foundation
In-Man Song		- Ph.D in Business Administration, University of Wisconsin-Madison - IFRS Advisor, Financial Supervisory Service (present) - Professor, Graduate School of Business Sungkyunkwan University
Joon Park		- LL.M., Harvard Law School - Attorney-at-law, Kim&Chang, Seoul, Korea - Professor, College of Law, Seoul National University
E.Han Kim		- Ph.D. in finance, State University of New York at Buffalo - Independent Director and Chairman of board of directors, POSCO - Endowed Chair Professor and Director of Financial Research Center, University of Michigan

33

Table of Contents

B. Audit committee independence

We have established an audit committee within our BOD and its members are elected at the general meeting of shareholders. All four of our audit committee members are outside directors and three of them are financial experts. The audit committee functions independently to KT and is entitled to request for information on business matters and evaluate KT financial status.

						Transaction with
						company/
						Relationship with
Outside Director		Reason for nomination		Acting committee		major shareholders
E.Han Kim		An expert in finance		Chairman, audit committee		None
Si-Chin Kang		An expert in finance		Audit committee(chairman,)		None
In-Man Song		An expert in finance		Audit committee, evaluation and compensation committee		None
Joon Park		An expert in law		Audit committee, Related-party transaction committee		None

C. Audit committee main activities

Order		Date		Subject		Result of Discussion
First		Jan.14, 2009		1) Appointment of the Chairman of the Audit Committee		Chairman appointed
				2) Agreement of appointments and dismissals of internal auditors		Original proposal approved
Second		Jan.21, 2009		3) Report on approval of Financial Statements of the 27th Term		Original proposal received
				4) Report on Business Report of the 27th term		Original proposal received
				5) Report on final audit of fiscal year 2008		Original proposal received
Third		Feb. 4, 2009		6) Approval of consolidated company’s independent auditor and remuneration for fiscal year 2008		Revision requested
				7) Report on operational condition of internal accounting management system of Fiscal Year 2008		Original proposal received
				8) Report on operational condition of internal accounting management system of Fiscal Year 2007 (prepared by Audit Committee)		Original proposal received
				9) Report on validity of audit committee		Original proposal received
				10) Report on 2008 audit results and 2009 audit plans		Original proposal received
Fourth		Feb. 6, 2009		11) Report on operational condition of internal accounting management system of Fiscal Year 2008		Original proposal approved
Fifth		Feb. 18, 2009		12) Report on agenda of 27th Annual General Meeting of Shareholders and results on document examination		Original report received
				13) Audit report for 27th Annual General Meeting of Shareholders		Original report received
				14) Written Opinion on operational status of internal compliance device of the Audit Committee		Reexamination requested
Sixth		Feb. 24, 2009		15) Report on operational condition of internal accounting management system of Fiscal Year 2007 (prepared by Audit Committee)		Original report received
				16) Written Opinion on operational status of internal compliance device of the Audit Committee		Original report received
Seventh		Mar. 20, 2009		17) Approval of remuneration to independent auditor for Fiscal Year 2009		Original proposal approved
				18) Approval of consolidated company’s independent auditor and remuneration for Fiscal Year 2009		Original proposal approved
				19) Report on consolidated financial statements audit for fiscal year 2008		Original report received
				20) Report on agenda of Extraordinary General Meeting of Shareholders and results on document examination		Original report received

34

Table of Contents

3. Matters on Shareholder’s Exercise of Voting Right

A. Adoption of Cumulative Voting System

     Automatic introduction of the cumulative voting system following the completion of the privatization process in 2002.

B. Adoption of the Written Voting System or Electronic Voting

     Adoption of the written voting system in accordance with the changes in the Articles of Incorporation at the 23rd General Meeting of Shareholders (March 11, 2005)

C. Exercise of Minority Shareholders’ Rights

     The minority shareholders’ rights were exercised most recently at the 24th General Meeting of Shareholders in 2006.

24th General Meeting of Shareholders (March 10, 2006)

		Contents of the
		Minority
Shareholder		Shareholder's Right		Purpose of Exercise		Result		Note
Jai Sik Ji and others		Shareholder proposal on the subject matter of the general meeting of shareholders		Recommendation of Outside Director candidates who will also be members of the Audit Committee		Candidates recommended through shareholder proposals failed to be appointed at the General Meeting of Shareholders (cumulative voting)		Article 191-14 of the Securities and Exchange Act
Jai Sik Ji and others		Request for cumulative voting		Request for cumulative voting for appointment of Outside Director candidates who will also be members of the Audit Committee		Candidates recommended through shareholder proposals failed to be appointed at the General Meeting of Shareholders (cumulative voting)		Article 191-18 of the Securities and Exchange Act

35

Table of Contents

4. Affiliated companies

(As of May 15, 2009)

36

Table of Contents

VI. Management and Employees

1. Remuneration to Executive Officers

A. Remuneration paid to Directors (including Outside Directors) and Members of the Audit Committee (Auditors)

(Unit: in hundred million Won)

				Amount Approved by		Average
				the General Meeting		Amount Paid		Fair Value of Stock
Category		Total Amount Paid		of Shareholders		per Person		Option		Weight		Reference
3 Standing Directors		2.16		45		0.72		—		—		—
7 Outside Directors		0.98				0.14		—		—		—

*Performance-based compensation made at year end.

B. Grant and Exercise of Stock Option

As of March 31, 2008																		(Unit: Won, shares)
						Shares to be given				Changed Volume												Period for		Exercise
Holder		Position		Date of Grant		upon exercise		Type of Share		Granted				Exercised		Revoked		Unexercised				Exercise		Price
Yong Kyung Lee		Standing Director		12/26/2002		Treasury Share		Common Share			300,000			—		—			253,100			12/27/ 2004 to 12/26/ 2009			70,000
Tae-Won Chung		Standing Director		12/26/2002		Treasury Share		Common Share			100,000			—		—			45,145			Same as Above			70,000
Young- Han Song		Standing Director		12/26/2002		Treasury Share		Common Share			60,000			—		—			28,717			Same as Above			70,000
Ahn-Yong Choi		Standing Director		12/26/2002		Treasury Share		Common Share			60,000			—		—			32,170			Same as Above			70,000
Hong-Sik Chun		Standing Director		12/26/2002		Treasury Share		Common Share			100,000			—		—			12,500			Same as Above			70,000
Hyun-June Chang		Standing Director		9/16/2003		Treasury Share		Common Share			5,200			—		—			3,000			9/17/ 2005 to 9/16/ 2010			57,000
Hui-Chang Roh		Standing Director		2/4/2005		Treasury Share		Common Share			60,000			—		—			43,153			2/05/ 2007 to 2/04/ 2012			54,600
Total		—		—		—		—			685,200			—		—			417,785			—		—

The weighted-average of the non-exercise stock option: Won 68,316.

Remarks:

(1) Position is as of the date of the stock option grant.

(2) Difference between the number of shares granted and the number shares with stock option unexercised: due to adjustment of number of granted shares that are dependent on management results and duration of continuous service

2. Current Status of Employees

(As of March 31, 2009)

(Unit: persons, in millions of Won)

Number of Employees *

Total

Office

Research

Average Years in

Payroll for first

Average Payroll per

Staff

Engineers

Staff

Other

Total

Continuous Service

quarter

Person **

Note

8,429

25,543

686

310

34,968

20.1

476,510

13.52

—

* Excluding 65 Executive Directors, 24 Professional Executive Directors and 273 Assistant Vice Presidents.

37

Table of Contents

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:  June 18, 2009
	KT Corporation
	By:	/s/ Thomas Bum Joon Kim
	Name:	Thomas Bum Joon Kim
	Title:	Managing Director
	By:	/s/ Young Jin Kim
	Name:	Young Jin Kim
	Title:	Director