KT's Q4 net misses mark

South Korea's biggest telecom company KT Corp. reported Friday that its fourth-quarter revenues fell below expectations, however painted a brisk outlook as rising smartphone sales, led by Apple Inc.'s iPhone, are expected to improve its margin.

Reduced profit from the fixed-line phone business

A reduced profit from the fixed-line phone business, an increase in capital expenditure and the three-month delay in the introduction of the iPhone 4 hurt KT's bottom line in the period, according to the company's financial statement and its chief financial officer.

But the company forecast that its profit from mobile phone business and wireless data sales will pick up faster this year than last year as more high-end smartphone models are scheduled to be launched.

The end of last year

"Since the end of last year, we have sold a lot of high-end smartphones that guarantee as good profits as the iPhone 4," Kim Yeon-hak, the company's chief financial officer, told investors. "Overall, we expect to see an improvement in profitability."

The company secured 2.73 million smartphone subscribers as of 2010, including 2 million iPhone users. South Korea's smartphone users are estimated at 7 million.

KT, South Korea's dominant fixed-line phone operator, merged with its mobile phone unit KT Freetel Co. in June 2009 to better combine fixed-line phone, broadband Internet and wireless services. It introduced Apple's iPhone in the country five months afterwards the merger, sparking the smartphone boom in the saturated local wireless market, dominated by local brands just as Samsung Electronics Co. and LG Electronics Inc.

The introduction of the popular iPhone helped KT gain ground in the fiercely competitive wireless market in South Korea. KT's mobile market share inched up 0.3 percentage point from one year ago to 31.6 percent in 2010.

Smartphones, the feature-packed, advanced handsets that play music and video, download applications and surf the Web, will account for 70 percent of KT's total cell phone lineup this year. The company aims to secure 6.5 million smartphone users by the end of this year.

The saturated local wireless market

In the saturated local wireless market, where each person on average has more than one cell phone, the booming demand for smartphones has helped mobile carriers secure new revenue sources from wireless data sales and pocket fatter margins.

Wireless data sales at KT jumped 15 percent from one year ago in the fourth quarter, thanks to the increase in KT's data-gobbling smartphone users.

SK Telecom Co., the country's leading mobile operator, hopes to have 10 million smartphone subscribers by December, compared with 3.91 million smartphone users one year ago.

KT said it is aiming to post sales of 20.5 trillion won this year and 30 trillion won in 2015 by boosting its mobile phone business and new businesses, just as cloud computing.