6-K 1 d133763d6k.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 April 2021

Commission File Number 1-14926

 

 

KT Corporation

(Translation of registrant’s name into English)

 

 

90, Buljeong-ro,

Bundang-gu, Seongnam-si,

Gyeonggi-do,

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               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  ☒

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: April 23, 2021

KT Corporation

By:  

/s/ Seunghoon Chi

Name:

  Seunghoon Chi

Title:

  Vice President
By:  

/s/ Ginah Yun

Name:  

Ginah Yun

Title:  

Director


ANNUAL FINANCIAL REPORT

OF

KT CORPORATION

(From January 1, 2020 to December 31, 2020)

(Translation of the Annual Report filed in Korean with the Financial Supervisory Service of Korea)


Table of Contents

 

I. Corporate General

  

1.

  Corporate Purpose of KT Corporation      2  

2.

  History      3  

3.

  Total Number of Shares and Related Matters      4  

4.

  Voting Rights      5  

5.

  Dividends and Related Matters      5  

II. Business Details

  

1.

  Overview      6  

2.

  Main Products and Services      18  

3.

  Matters Related to Revenue      25  

4.

  Research and Development Activities      32  

5.

  Other Matters Necessary for Making Investment Decisions      33  

III. Financial Information

  

1.

  Summary of Financial Statements (Consolidated)      34  

2.

  Summary of Financial Statements (Separate)      35  

IV. Auditors’ Opinion

  

1.

  Auditor’s Opinion on the Consolidated Financial Statements      37  

2.

  Audit services contract      37  

3.

  Non-Audit services contract      38  

4.

  The results of the Internal Audit Organization’s discussion with the auditor      39  

V. Management and Affiliated Companies

  

1.

  Overview of the Board of Directors and Committees      39  

2.

  Audit Committee      52  

3.

  Matters on Shareholder’s exercise of Voting Rights      57  

4.

  Equity Investments      58  

VI. Directors, Senior Management and Employees

  

1.

  Directors      61  

2.

  Senior Management      62  

3.

  Current Status of Employees      64  

4.

  Remunerations of Executive Officers      64  

 

1


I. Corporate Generals

 

1.

Corporate Purpose of KT Corporation

Business Objectives

 

  1.

Information and communications business;

 

  2.

New media business and internet multimedia broadcasting business

 

  3.

Development and sale of software and contents;

 

  4.

Sale and distribution of information communication equipment;

 

  5.

Testing and inspection of information communication equipment, device or facilities;

 

  6.

Advertisement business;

 

  7.

Retail business via telephone, mail order or online;

 

  8.

IT facility construction business, electrical construction business and fire protection facility business

 

  9.

Real estate and housing business

 

  9(1).

Business facilities management and business support service industry

 

  10.

Electronic banking and finance business;

 

  11.

Education and learning service business;

 

  12.

Security service business (Machinery system surveillance service, Facilities security service, etc);

 

  13.

Research and technical development, education, training and promotion, overseas businesses, and export and import, manufacture and distribution related to activities mentioned in Subparagraphs 1 through 12

 

  14.

Frequency-based telecommunications services and other telecommunications services

 

  15.

Value-added telecommunications business

 

  16.

Manufacture, provision (screening) and distribution of contents such as musical records, music videos, movies, videos and games

 

  17.

Issuance and management of pre-paid electronic payment instruments, and businesses related to electronic finance such as payment gateway services

 

  18.

Sales and leasing of equipment and facilities related to the activities mentioned in Subparagraphs 14 through 17

 

  19.

Any overseas business or export and import business related to activities mentioned in Subparagraphs 14 through 18

 

  20.

Tourism

 

  21.

(Deleted)

 

  22.

New and renewable energy, energy generation business, electrical system design business and electrical safety management agent business

 

  23.

Health Informatics business

 

  24.

Manufacture of communication equipment, device or facilities for military purpose

 

  25.

Energy diagnostics business, professional business relating to energy conservation, and any and all other business in the field of energy use rationalization

 

  26.

Information securities, any and all other business in the field of identification service

 

  27.

Activities of management consultancy

 

  28.

Warehousing and storage

 

  29.

Total construction business

 

  30.

Specialized design services

 

  31.

Freight Transportation Business, Cargo Transportation Intermediation Business

 

  32.

Manufacturing and sales of medical device

 

  33.

Any and all other activities or businesses incidental to or necessary for attainment of the foregoing

 

2


2.

History

 

A.

Changes since Incorporation

 

(1)

Date of Incorporation: December 10, 1981

 

(2)

Location of Headquarters:

90 Bulljeong-ro

Bundang-gu, Seongnam-city

Gyeonggi-do 13606

Korea

 

(3)

Major Changes in KT Corporation

 

   

On March 27, 2009, KT Corporation (“KT”) signed a merger agreement with its mobile subsidiary KTF, in which KT held a 54.25% interest, and on June 1, 2009, the merger was completed.

 

   

At the annual general shareholders’ meeting held on March 11, 2011, KT’s shareholders approved the addition of the health bioinformatics business to KT’s business objectives, which is a new emerging industry that integrates IT with genetic data information sequencing, computation, accumulation, and application. The shareholders also approved the addition of military communication equipment, devices and facility manufacturing to its business objectives.

 

   

Mr. Suk Chae Lee was reelected as the Chief Executive Officer (“CEO”) and President of KT at the annual general shareholders’ meeting held on March 16, 2012.

 

   

At the annual general shareholders’ meeting held on March 15, 2013, KT’s shareholders approved the addition of energy inspection, energy conservation, and the energy use rationalization business to KT’s business objectives.

 

   

Mr. Chang-Gyu Hwang was elected as the CEO and President of KT at the extraordinary general shareholders’ meeting held on January 27, 2014.

 

   

At the annual general shareholders’ meeting held on March 25, 2016, KT’s shareholders approved the addition of Information securities, any and all other business in the field of identification service.

 

   

Mr. Chang-Gyu Hwang was re-elected as the CEO and President of KT at the annual general shareholders’ meeting held on March 24, 2017. KT’s shareholders approved the addition of fire protection facility business, electrical system design business, activities of management consultancy, and warehousing & storage

 

   

At the annual general shareholders’ meeting held on March 23, 2018, KT’s shareholders approved the addition of electrical safety management agent business. They also approved the Total construction business for Clarification of Business Purpose and Specialized design services for Business Area Expansion.

 

   

Mr. Hyeon-Mo Ku was elected as the Representative Director of KT at the annual general shareholders’ meeting held on March 30, 2020.

 

3


3.

Total Number of Shares and Related Matters

 

A.

Status of Capital Increase/Decrease (As of December 31, 2020) (Unit: Won, Shares)

 

Date of Shares Issued
(Retired)

  

Type of

Shares

Issued

(Retired)

  

Details of Issued (Retired) Shares

  

Type

  

Number of Issued
(Retired) Shares

  

Par Value

per Share

  

Par Value of
Issued per Share

  

Note

                 

 

B.

Total Number of Shares (As of December 31, 2020) (Unit: Shares)

 

Category

        Type of Shares      Total  
     Common shares      Preferred
shares
 

I. Total Number of Authorized Shares

     1,000,000,000        —          1,000,000,000  

II. Total Number of Issued Shares

     312,899,767        —          312,899,767  

III. Total Number of Reduced Shares

     51,787,959        —          51,787,959  

Details of

Reduced

Shares

   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)

     261,111,808        —          261,111,808  

V. Number of Treasury Shares

     19,269,678        —          19,269,678  

VI. Current Number of Issued and Outstanding Shares

     241,842,130        —          241,842,130  

C. Acquisition and Disposal of Treasury Shares (As of December 31, 2020) (Unit: Shares)

 

Method of Acquisition

     Type of
Shares
   Beginning of
Term
     Acquisition
(+)
     Disposition
(-)
     Retirement
(-)
     End of Term  

Direct Acquisition

    

Over-the-

Counter

 

 

   Common
shares
     15,870,258        —          1,150,580        —          14,719,678  
      Preferred
shares
     —          —          —          —          —    
    
Exchange-
Traded

 
   Common
shares
     —          —          —          —          —    
      Preferred
shares
     —          —          —          —          —    

Indirect Acquisition

(e.g. Trust Contract)

      Common
shares
     —          4,550,000        —          —          4,550,000  
   Preferred
shares
     —          —          —          —          —    

Total

      Common
shares
     15,870,258        4,550,000        1,150,580        —          19,269,678  
   Preferred
shares
     —          —          —          —          —    

 

   

The above “Beginning of Term” means as of January 1, 2020 and “End of Term” means as of December 31, 2020, which is the most recent date of shareholder registry.

 

   

Details of Disposition of treasury shares from January 1, 2020 to December 31, 2020 are as follows.

- On May 29, 2020, KT disposed 3,776 shares of treasury shares for stock grant to Outside directors as a part of remuneration for FY2019.

- On July 15, 2020, KT disposed 126,699 shares of treasury shares for stock grant to executives and employees as a part of remuneration for FY2019.

- On December 23, 2020, KT disposed 1,020,105 shares of treasury shares for stock grant to employees as a part of remuneration for FY2019.

 

4


- On November 5, 2020, KT decided to enter into a trust agreement for acquisition 300 billion of treasury shares to enhance the shareholders’ value.

 

4.

Voting Rights (As of December 31, 2020) (Unit: Shares)

 

Category

     Number of
Shares
     Note  

Total Issued Shares (A)

    
Common
Shares
 
 
     261,111,808        —    
    
Preferred
Shares
 
 
     —    

Shares without Voting Rights (B)

    
Common
Shares
 
 
     19,269,678       
Treasury
Shares
 
 
    
Preferred
Shares
 
 
     —    

Shares with Restricted Voting Rights under the Articles of incorporation, Stock Exchange Act and Other Laws (C)

    
Common
Shares
 
 
     —          —    
    
Preferred
Shares
 
 
     —    

Shares with Reestablished Voting Rights (D)

    
Common
Shares
 
 
     —          —    
    
Preferred
Shares
 
 
     —    

Shares with Exercisable Voting Rights

    
Common
Shares
 
 
     241,842,130     

(E = A – B – C + D)

    
Preferred
Shares
 
 
     —          —    

 

5.

Dividends and Related Matters

Dividend Policy from FY2020 to FY2022

 

   

Return 50% of normalized separate net income

 

   

Maintain equal to or greater than the dividends for FY2019(KRW 1,100 per share)

 

Category

   FY2020      FY2019      FY2018  

Par Value per Share (Won)

     5,000        5,000        5,000  

Net Profit of the Current Term (in Millions of Won)

     703,392        665,942        762,305  

Net Profit per Share (Won)

     2,684        2,512        2,809  

Year-end Cash Dividend (in Millions of Won)

     326,487        269,766        269,659  

Year-end Share Dividend (in Millions of Won)

     —          —          —    

Cash Dividend Pay Out (%)

     49.6        43.8        39.2  

Cash Dividend Yield (%)

   Common Shares      5.3        4.0        3.6  
   Preferred Shares      —          —          —    

Cash Dividend per Share (Won)

   Common Shares      1,350        1,100        1,100  
   Preferred Shares      —          —          —    

 

   

Net Profit, Net profit per share, Cash dividend Pay Out are based on consolidated result.

 

   

Cash dividend Pay Out(%) is calculated on a basis of Net Profit contribution to KT.

 

   

Cash dividend yield(%) is the percentage of dividends per share against the arithmetic average price of the final price formed in the exchange market for the past week from the date of the two trading days before the closing date of the shareholders ‘list to convene the general shareholders’ meeting.

 

5


II. Business Details

 

1.

Overview

 

   

ICT - KT

 

(1)

Characteristics of the Industry

The telecommunications industry covers ICT (Information and Communication Technologies) and a wide range of services such as mobile communications, broadband, IPTV, fixed-line telephony, leased line, and enterprise solutions. Due to rapid development of technology and customers’ needs, the business area of traditional telecommunications business (fixed-line telephony, broadband, mobile communications) expands into convergence area that includes integration of wireless—fixed line, and telecommunications—broadcasting.

 

(2)

Growth of the Industry

 

   

The status of subscribers

 

Category

   2020      2019      2018  

Broadband Internet Subscribers (‘000)

     22,330        21,762        21,155  

Local Telephone Subscribers (‘000)

     12,859        13,600        14,334  

Mobile Phone Subscribers (‘000)

     69,542        67,937        65,360  

IPTV Subscribers (‘000)

     19,365        18,021        16,599  

 

*

Source: Broadband internet / Local Telephone / Mobile Phone – the Ministry of Science and ICT (www.msit.go.kr) year-end 20 disclosure

IPTV – Company IR data

 

(3)

Characteristics of Economic Cycle and Seasonality

The demand for telecommunications services does not fluctuate widely with economic conditions due to the fact that such services are regarded as a necessity in modern life. However, if the Korean economy slows down and per capita income declines, demand for ICT could be negatively impacted which in turn could have an adverse impact.

 

(4)

Market Conditions

1) Market Stability

Usually telecommunications service area is limited to the domestic market. It is divided into B2C business for individuals and B2B business for enterprise customers. B2C business targets all types of households regardless of gender, age, income and residential districts. Mobile business, broadband internet business, and local telephone business are at the maturity stage and face severe competition in acquiring additional subscribers. IPTV market is at the growth stage, replacing cable TV market. The number of subscribers for premium services has been increasing with advanced technology, new devices, and higher mobile data consumption.

 

2)

Competition

 

   

Competing Companies

 

   

Local calls: SK Broadband, LG U+, etc.

 

   

Long distance, International calls: SK Broadband, SK Telink, LG U+, Onse Telecom, etc.

 

   

Internet telephones (VoIP): SK Broadband, SK Telink, LG U+, etc.

 

   

Broadband internet and IPTV: SK Broadband, LG U+, Service Operators, etc.

 

   

Mobile telecommunications: SK Telecom, LG U+, etc.

 

   

Market Entry Requirements

 

   

Communications service providers: approval of KCC (Korea Communications Commission) required

 

   

Specific telecommunications service providers: registration required

 

6


   

Value-added telecommunications service providers: reporting required

 

3)

Market Share

 

(Subscribers basis)

  

Operator

   Market Share (%)  
   2020      2019      2018  

Local Telephone

   KT      80.8        80.8        80.6  
   SK Broadband      15.4        15.6        15.7  
   LG U+      3.8        3.6        3.7  

Mobile Telephone

   KT      31.4        31.6        31.6  
   SK Telecom      45.1        46.4        47.2  
   LG U+      23.5        22.0        21.2  

Broadband internet

   KT      41.1        40.9        41.0  
   SK Broadband      29.0        25.6        25.4  
   LG U+      20.3        19.6        18.9  
   Service Operators      9.6        13.9        14.7  

IPTV

   KT      45.3        46.3        47.3  
   SK Broadband      29.2        28.8        28.5  
   LG U+      25.5        24.8        24.2  

 

*

Source: Broadband internet / Local Telephone / mobile Phone –the Ministry of Science and ICT (www.msit.go.kr) year-end 20 disclosure

IPTV – Company IR data

 

*

Mobile Telephone market share excludes other connections for managing telecommunications facilities

 

*

Broadband internet market share of SK Broadband includes SK Telecom’s resale subscribers.

 

(5)

Competitiveness

KT provides mobile services through constant evolution of LTE network and technology innovations. Some good examples are, world’s first inter-networking (TDD-FDD) LTE roaming and VoLTE call in 2013, development of 5G Network CA (Carrier Aggregation) technology in 2014, VoLTE network interworking with SK Telecom and LGU+ in 2015 and the world’s first commercialization of 5G in 2019.

In April 2017, KT adopted nationwide C-DRX (Connected mode Discontinuous Reception) technology in LTE network and every LTE handsets. Through this efforts, KT customers could save up to almost 45% of battery usage time. In October 2017, KT applied C-DRX technology to VoLTE service.

In Pyeong-Chang Olympics, KT presented the first 5G service to the world, using experience compiled through innovative LTE network. KT built a trial network and 5G standards by cooperating with global equipment manufacturers and telecommunications companies to prepare for the 5G era in advance. On April 3, 2019, KT successfully commercialized 5G network and continues its efforts to provide premium 5G service through a wide 5G frequency spectrum and eight edge centers deployed nationwide.

KT leads mobile market with its differentiated rate plans and benefits. In May 2015, KT was the first in Korea to launch ‘LTE Data Choice’ rate plan that charges subscribers by the amount of data used, and offers unlimited voice call, text message services. In March 2016, KT expanded its influences to the youth market by rolling out ‘Y24’ rate plan which targets ages under 24. In May 2018, KT launched ‘DataON’ rate plan which not only provides more data benefits, but also offers unlimited data. KT strengthened competitiveness in the data-centric market by launching ‘LTE Basic’ rate plan which was priced 33,000 won per month. In September 2018, KT strengthened in the youth market by rolling out an exclusive youth rate plan, ‘Y24 ON’. Upon launching 5G service in April 2019, KT introduced unlimited 5G data rate plan called ‘Super Plan.’ In addition to unlimited 5G data offering, this innovative rate plan features data roaming services in 185 countries. In September 2020, KT launched ‘Super Plan Choice’ rate plans to provide mobile subscribers with the choice of selecting from OTT service ‘Seezn’, music streaming service ‘Genie’, VR service, web novel/web toon service “Blice Story”, and a cloud game service. In October 2020, KT added Netflix service to expand choice range of its ‘Super Plan Choice’ rate plan subscribers

 

7


KT owns 80.8% of market share in PSTN business, as of the end of the year 2020. However, as mobile service tends to substitute PSTN service, PSTN revenue and customers have been declining steadily. Nevertheless, KT is trying to mitigate the decline in revenue through price competitiveness achieved through various bundled and flat pricing plans.

In the broadband internet market, KT introduced GiGA internet service with the performance of 1Gbps speed for the first time in Korea. Through this GiGA internet service, KT maintains the position as the market leader in the challenging market environment. KT provides GiGA infrastructure nationwide and leads the premium market by launching 10GiGA internet in October 2018.

In IPTV business, KT is leading the market not only through quality of service being offered but also differentiating customers’ experience. Vast array of contents and the AI set top box ‘GiGA Genie’ contributed to the first acquisition of 8 million IPTV subscribers in Korea. Constant increase in platform revenue (VOD, advertisement, home shopping channel commission fee, etc.) will be the growth momentum in IPTV business, and KT plans to invest continuously into contents to further enhance competitiveness.

(6) Status and Forecast of New Businesses

In April 2019. KT launched the world’s first nationwide commercial 5G network, after successfully showcasing the world’s first trial 5G service at the PyeongChang Winter Olympic Games in February 2018. To align with the higher data consumption expected for 5G services, KT was the first to reveal unlimited data rate plan ‘Super Plan.’ The 5G coverage map is publicly available to represent KT’s network leadership in 5G deployment. KT has been pioneering 5G B2B use cases (smart city, smart factory, connected car, etc.) that are enabled by the 5G network. KT deployed 5G network in the Seoul metropolitan area, six additional metropolitan cities, high-traffic commercial areas, and university campuses as well as major transportation infrastructure, including highways, airports, and train stations. KT plans to gradually expand the coverage of 5G services to bring premium services to its customers.

KT has been actively seeking new business models with high growth prospects. KT plans to transform into an AI Company by applying AI technology into every products and services. KT’s primary AI service GiGA Genie will further establish its market leadership position through expansion of device line-ups and diversification of business areas. To lead the market dominance in IPTV, relevant products and STB offerings will continue its development with customers’ value in mind. Collaboration with other partnering companies will bring additional contents. AI technology, such as GiGA Genie, will be embedded into IPTV to improve competitiveness as an intelligent media platform. KT will create synergy with superior fixed-line, wireless network infrastructures and ICT convergence experience in AI, Big Data, Cloud, IoT, etc.

 

 

Financing Business – BC Card

(1) Characteristics of the Industry

Credit card business involves issuing and managing credit cards, settling card balances derived from the usage of the card holders, and managing credit card member stores. Credit card business generates revenues through transaction fee, annual fees, financial loans, and others. If a company desires to enter into the credit card business, government licensing is required. Also, government regulations are strict, so this industry has an extremely high barriers to entry.

(2) Growth of the Industry

In early 2000, the credit card business grew exponentially with the supportive policies of the Korean government. However, since 2010, the industry is entering into the maturity stage. The growth in number of member stores is slowing down and the average payment amount is decreasing.

(3) Characteristics of Economic Cycle and Seasonality

The credit card industry is a typical domestic business which is highly affected by the private consumption trend and overall economic conditions.

(4) Market Conditions

1) Market Stability

 

  I.

Number of Credit Card and Member Store

 

8


Category

   Population
(in 10K)
     Population
Available for
Economic
Activity*1 (in
10K)
     Credit
Card
(in 10K)
     Number of
Credit
Card
Per
Capital
     Number of
Member
Stores*2
(in 10K)
 

2015

     5,101        2,715        9,314        3.4        242  

2016

     5,125        2,742        9,564        3.5        250  

2017

     5,145        2,775        9,946        3.6        257  

2018

     5,164        2,758        10,506        3.8        269  

2019

     5,171        2,819        11,098        3.9        281  

 

*1 

Age 15 or order and must be eligible for employment activity

*2 

At least one sales transaction incurred annually from a member store

 

  II.

Credit Card Usage Status in Korea (Unit : KRW billion)

 

Category

   Credit Card Usage      Credit Card
Usage over
Private
Consumption
Expenditure*
 
   Total      Lump-Sum
Payment
     Installment
Payment
     Card Loan
(Short-
term)
 

2015

     594,434.5        435,612.7        99,318.8        59,503.0        60.9

2016

     655,361.0        489,442.9        106,589.2        59,328.9        66.3

2017

     686,608.0        512,081.2        115,260.6        59,266.2        67.0

2018

     724,781.5        539,284.6        124,728.6        60,768.3        68.4

2019

     760,075.9        572,183.9        128,768.1        59,123.9        71.7

 

*

Capital spending incurred from private sector, statistic published by the Bank of Korea

*

Credit card usage amount excludes cards dedicated for corporate purchases

 

  2)

Competition

 

   

Competing Companies

 

   

Samsung Card, Hyundai Card, Lotte Card, Shinhan Card, Kookmin Card, Woori Card, KB Card and Hana Card etc.

 

   

Factors of Competition

 

   

The number of member card issuers, card transactions, member stores, and issued cards.

 

3)

Market Share

 

Category

   2020     2019     2018  

Card transaction M/S

     23.5     24.1     24.1

 

*

Source: BC Card’s internal data

 

(5)

Competitiveness

Credit card issuers and membership stores acquisition and risk management skills are critical aspects in the credit card business. With the technological advancement, boundary of financial services has become more abstract, and digital payment market has grown bigger in which competition among financial service providers are increasing. BC Card focuses on credit card processing business, and most receivables are due from banks and financial institutions with well-respected credit levels. Additionally, BC Card plans to continue its efforts to expand its business to meet market demand. For instance, BC card is offering convenient and secure payment experience to customers through its various service offerings, including ISP, NFC, QR code payment, as well as E-wallet.

 

 

Satellite Broadcasting Business – KT Skylife

(1) Characteristics of the Industry

The broadcasting market is broadly classified into the pay-TV market, the broadcasting channel trading market, the broadcasting program trading market, and the broadcasting advertising market.

 

9


In the pay-TV market, pay-TV broadcasting platforms (generally cable broadcasting companies, satellite broadcasting companies, and IPTV providers) provide multi-channel broadcasting services and secure subscribers. In the analog broadcasting market, cable broadcasting companies provide service. In the digital broadcasting market, cable broadcasting operators, satellite broadcasting operators, and IPTV providers are competing. In the broadcast channel trading market, pay-TV platform operators configure the channel package out of channels provided by terrestrial broadcast, program providers, and their own channels. It receives license fee in return for transmitting the contents and in exchange pay channel fee (license fee) to terrestrial broadcasters and broadcasting service providers.

In the broadcasting program trading market, terrestrial broadcasters and broadcasting channel operators create its own programs or receive programs from subcontracted program producers, etc., and create revenue by audience rating-based-advertisement and pay-TV broadcasting license fees. In the broadcasting ad market, terrestrial broadcasters and broadcasting service providers earn profits by providing advertisements on their respective channels. The pay-TV platform operators also earn profits by utilizing allocated advertisement time by its own channels or broadcasting service providers. In addition to the above markets, there is the home shopping channel transmission market which is conducted between home shopping operators and broadcasting platforms (generally cable broadcasting operators, satellite broadcasting operators, and IPTV providers). Home shopping operators pay home shopping contents transmission fee to the broadcasting platforms based on the contribution of sales, and the contract is renewed every year.

(2) Growth of the Industry

Broadcasting services are evolving into multiple smart media services through mobile and OTT as well as convergence services of broadcasting and communications based on wired networks. In particular, personalized services that offers customized, situational information are growing through information accumulated from the network. Ultra-high definition UHD (Ultra HD which is 4 ~ 16 times clearer than full HD) broadcasting, and next-generation broadcasting services such as multi-channel services are growing. The broadcasting service market is characterized by the intrinsic nature. The total market size based on the number of subscribers is steadily increasing, and it is increased by 1.0% as of 1Q 2020 compared to the previous year.

 

Category

   Number of Subscribers  
   2017     2018     2019     1HF 2020
YTD
 

Pay-TV Subscribers

     31,370,088       32,490,544       33,601,484       33,946,826  

Growth Rate

     5.9     3.6     3.4     1.0

 

*

Sources: the Ministry of Science and ICT (www.msit.go.kr) 1HF2020 disclosure

(3) Characteristics of Economic Cycle and Seasonality

The pay-TV market is perceived to be a necessity. Unless there is a severe economic downturn, the customer churn rate will be relatively stable. Moreover, the revenue from pay-TV services is based on monthly subscription fees, which is not impacted by seasonality.

(4) Market Conditions

 

  1)

Competition

The terrestrial broadcasting service includes radio, television, and terrestrial DMB. The pay-TV market is segmented by operators such as cable operators, satellite broadcasters, and IPTV providers. Cable operators are again divided into cable TV operators and relay wired broadcasting operators. The number of relay wired broadcasting operators is decreasing due to M&A or bankruptcy.

KT Skylife is the sole satellite broadcasting service provider in Korea and launched its service in March 2002. TU Media launched its service in May 2005, but was merged by SK Telink in November 2010 and terminated its service on August 31, 2012.

The IPTV service was first commercialized in January 2009 after receiving the license in September 2008. Currently, there are three IPTV service providers – KT (olleh TV), SK Broadband (B TV) and LGU+ (LG U+ TV) and recently OTT service emerged as the new entrant. OTT Service ‘Seezn’ is offered by KT, and SK Broadband collaborated with the terrestrial broadcasters to form an OTT service called ‘Wavve’.

 

  2)

Market Share

o Pay-TV market share and number of subscribers

 

10


Category

   As of the first half of 2020  
   Subscriber      M/S  

Satellite

     3,078,420        9.1

IPTV

     17,489,664        51.5

SO

     13,378,742        39.4

Total

     33,946,826        100.0

 

*

Sources: the Mistry of Science and ICT (www.msit.go.kr) 1HF 2020 disclosure

(5) Competitiveness

KT Skylife has been leading the pay TV market with its competitive edge in HD channels and providing hybrid services through IPTV. Competition over subscriber acquisition is expected to intensify as more players in the pay TV market are providing bundling products with mobile, internet, IPTV, and satellite broadcasting services.

Recently UHD (4x definition of HD) market is growing, because the price of UHD TV is continuously decreasing due to severe competition among manufacturers. Also, UHD contents production is expected to be vigorous. Since 3 UHD terrestrial channels commercialized real time services in June 2015, KT Skylife expanded its UHD channels to five channels which was the largest in Korea in 2016. KT Skylife has 1.42 million UHD subscribers as of year-end 2020 and is leading the UHD broadcasting market.

(6) Status and Forecast of New Businesses

KT Skylife has launched ‘SLT’ (Skylife LTE TV) service on July 2017, which is the next generation hybrid media service. SLT is the media service, which provides high quality image regardless of driving condition by combining KT’s LTE technology and satellite broadcasting service.

 

 

Others - KT SAT

(1) Characteristics of the Industry

Satellite business generates revenues from utilizing allocated orbits and spectrums from government. Therefore, operator must obtain the rights to use satellite orbits and frequency spectrum from the government. With two additional satellites launched in May 2017 and October 2017, KT SAT operates a total of four satellites.

(2) Growth of the Industry

The market size of the global satellite leasing industry is KRW 16 trillion in 2020. Companies such as Intelsat, SES and Eutelsat are the dominant incumbent players in the market and competition among these companies remains intense. The market for the global satellite leasing industry is expected to grow in South East Asia, Middle Asia, Africa, and Latin America.

(3) Characteristics of Economic Cycle and Seasonality

Transponder leasing—one of KT SAT’s major services – typically has three to five years (or longer) contract period with its clients. The main clients are the government and the broadcasting companies. As a result, KT SAT is not susceptible to seasonality and market fluctuations. However, the marine satellite communications service for shipping companies is sensitive to market conditions.

(4) Market Conditions

1) Market Stability

KT SAT was spun off from KT on December 1, 2012. Its global revenue is continuously increasing despite the stagnant domestic revenue. The satellite market in Korea is expected to expand due to increasing UHD channels and demand for repeaters. The demand for the repeaters is expected to grow because the number of DTH companies and the broadcasting channels are increasing globally. Thus KT Sat has launched two satellites in May and October 2017 to strengthen its presence in Asian and Indian markets and to enhance its marine satellite telecommunications service.

 

11


  2)

Market Competition

KT Sat is the only satellite operator in South Korea and competes with other global satellite operators in the satellite transponder leasing business. As for the domestic internet and broadcasting business, KT Sat competes with other fixed-line service providers.

 

  3)

Market Shares

Market share information is not available. However, KT SAT is the sole satellite service provider in Korea and the global market share is approximately 1%.

(5) Competitiveness

Starting from its first satellite in 1995, KT SAT has successfully launched a total of five satellites. KT SAT is expanding its presence into global market by partnership. KT SAT has launched 2 satellites in May and October 2017 to strengthen its presence in Asian and Indian markets.

 

 

Others - KT Estate

(1) Characteristics of the Industry

The real estate development business is the project that covers a series of process from the preparation of the development business such as the real estate acquisition, business fund procurement, project planning and promotion, construction management to stabilization after development. The real estate development business is heavily influenced by changes in the financial environment, such as interest rates and capital availability, as well as real estate conditions, due to the large capital input and long-term development planning. Real estate development project has a higher return than subcontracting project when it succeeds, but it is a high-risk business that requires efficient risk management.

The real estate leasing / management business includes (1) real estate property management business (PM) that covers the operation, maintenance, lease management and financial management, (2) real estate facility management (FM) that covers operation, maintenance and renovation of various facilities to create pleasant and convenient real estate environment, and (3) asset management (AM) that provides a professional service in acquisition and disposal of real estate properties.

(2) Growth of the Industry

Real estate business is continuously changing and evolving on social/economic changes. Previously industry was driven by construction companies supplying apartments and small scale businessmen providing leasing and management service. However, the industry is to confront gradual transition as low growth and matured market is expected with the decline of birth rate and marriage rate, and an aging population. Accordingly the demand for comprehensive real estate leasing and management services centered on small residential facilities is expected to increase gradually.

(3) Characteristics of Economic Cycle and Seasonality

The real estate market is heavily dependent on cyclical movements of the overall economy.

(4) Market Conditions

 

  1)

Market Stability

Real estate developments and the rental and management business are sensitive to characteristics of each real estate’s conditions, including purpose of building, style of architecture, locations of sites, etc.

 

  2)

Market Competition

 

 

Leasing: Shinsegae Central Center, Lotte Property & Development

 

 

Development: SK D&D

 

 

PM/FM: Posco O&M, Genstar, Shinyoung Asset, Serveone, etc.

 

  3)

Market Shares

It is difficult to estimate the market shares due to nature of the business.

 

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(5) Competitiveness

KT Estate has expanded its business portfolio into real estate developments and rental and real estate management after receiving investment-in-kind of 95 major real estate assets from KT on December 1.2012. KT Estate expanded their business portfolio to consulting, lease, development business, facility management and Securitization areas in the whole value chain.

Major achievements in development business include sales of (i) Busan Gaya Centreville, 20.6 billion in June 2020 and (ii) Daegu Beomeoseohan Forrest, 40.5 billion in July 2020. Despite Covid19 pandemic situation, hotel business recognized 13.2 billion revenue from Novotel Ambassador Seoul Dongdaemun Hotel and residences, and 16.4 billion from Andaz Seoul Gangnam though differentiated marketing strategy. Expected to be completed in 2021, the Songpa Branch will be developed into hotel and officetel, and the Central branch is scheduled to be developed by 2022. For a smart multi-purpose complex landmark in Seoul, KT Gangbuk(Northern Seoul) headquarters development project is also underway.

For asset management business, office space rental recorded 124.4 billion. Management service for KT owned real estate maximized value of each property and secured approximately 81.3 billion in revenues. Additionally, management service extends into the properties that KT subsidiaries (KT Sports, KT SAT, and BC Card, etc.) own. Through rental housing brand Remarkville, KT Estate has provided differentiated services to the market and generated 31.3 billion revenues.

(6) Status and Forecast of New Businesses

From 2012, KT Estate received approximately KRW two trillion worth of real estate from KT through payment-in-kind transactions. This transaction allowed KT Estate to conduct its own real estate developments, leasing, management operations in addition to existing real estate developments and consulting businesses to KT. Establishment of joint venture with the Japanese company Daiwa Living that specializes in leasing of small-sized housings, KT Estate has obtained an expertise in operations of small-sized housing. KT Estate plans to offer total real estate asset management including planning, investment, and management of clients’ real estate.

 

 

Others - KT Hitel

(1) Characteristics of the Industry

Contents: The content business sources digital distribution rights for video content, supplies to distribution platforms, and distributes profits. Content business with its characteristic of One Source Multi Use (OSMU) can create various economic added value. Therefore it emerged as one of the growth engines in Korea. OSMU characteristics, increase in content consumption platforms, introduction of ‘prosumers’ that simultaneously produce and consume content, and the popularization of mobile devices are creating a favorable environment for industrial expansion.

T-commerce: T-Commerce industry is the commerce for digital pay-TV subscribers providing two-way services. It has the characteristic of both TV home shopping and Internet shopping. T-Commerce is emerging as new retail channel, because while product information can be delivered though TV that customers are familiar with, customers can still search for products of interest unlike one-way service.

(2) Growth of the Industry

Contents: Thanks to the growth of IPTV market and digital transformation of CATV, content channels are sufficiently secured, hence growth is expected. In addition, the diffusion of smart media and the spread of one-person households are expected to popularize non-real-time, mobile-centric, and personalized on-demand content consumption. With the expansion of content consumption using digital contents platforms such as OTT and MCN (Multi-Channel Network), we expect that the activation of production and consumption of online contents such as web drama and web art will stimulate the expansion of industry. As an operator with the largest IP (Intellectual Property) in movies and dramas, we expect to benefit from the growth of the industry.

T-commerce: Market is experiencing a continuous growth despite a decline in an average daily TV consumption time. Expansion of IPTV coverage, set-up box with A.I speaker, convergence between TV and mobile will enhance the shopping experience and allow continuous growth in T-commerce business.

 

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(3) Characteristics of Economic Cycle and Seasonality

Contents: Market is less sensitive to seasonal factors than other businesses. The market appears to be more affected by content line-ups rather than factors related to seasonality

T-Commerce: The T-commerce market is less sensitive to market trends and seasonality than other shopping methods due to the fact that the service is not limited to time, space, and payment methods.

(4) Market Conditions

 

  1)

Market Stability

T-Commerce business is being offered to large pool of TV subscribers regardless of IPTV, Satellite, and SO. Through differentiated level of experience and product competitiveness, the business is expected to continue its growth momentum.

 

  2)

Market Competition

Home shopping operators and other T-commerce operators who conduct shopping business on television.

3) Market Shares

Market share is unavailable due to the characteristics of the business.

(5) Competitiveness

Contents: Market is expanding to the secondary market due to the increase in contents consumption. Purchase of PPV contents is increasing and patterns of consumption are verifying. As media providers launch their own OTT services, the snack culture type of consumption is spreading around mobile media. As the movies based webtoon are showing good box office results, the value of One-Source-Multi-Use source IP is increasing.

T-Commerce: Expansion of the digital broadcasting subscribers including IPTV, and high quality set top box will make favorable environment for the multi interactive data shopping like T-commerce that enables the easy purchase using TV remote control and AI speaker.

 

 

Others - Genie Music

(1) Characteristics of the Industry

The music industry refers to all industrial areas that produce added value and generate economic value through music in various fields such as composition, performance, publishing, copyright, management, music, broadcasting, advertising, and movie music. The music industry can be divided into two main categories. The first one is traditional offline music industry, such as planning, production, and distribution. The second one is online media convergence, which produces and distributes digital music through online and mobile media.

Since 2000, the size of the offline music industry has been steadily declining. However, since the digital music industry surpassed the offline music industry in 2004, it continues to grow and has become a bridgehead for growth of the domestic music industry. Since 2009, the usage of music content via wireless internet such as 3G, LTE and WiFi is continuously increasing. The industry is expected to generate additional value-added by creating diverse business models based on new business models – Cloud, AI, VR based streaming services – derived from ultra-fast 5G network

(2) Growth of the Industry

According to the “2019 Music Report” published by the Korea Creative Content Agency, online music retailer sales grew 5.6% YoY in 2018. The spread of Smart Devices since the end of 2009 has laid the foundation for the business growth. As the concept of “non-allegations” is applied (July 23, 2009), the possibility of illegal music distribution is diminishing. The digital music industry is expected to grow gradually based on stricter copyright law.

(3) Characteristics of Economic Cycle and Seasonality

The music business is less sensitive to economic fluctuations as it is considered to be basic cultural needs.

 

14


(4) Market Conditions

 

  1)

Market Stability

As per capital increases, music culture has become more wide spread in public which in turn allowed industry’s growth. Spread of Mobile Internet environment also facilitated the digital music market to exponentially grow over the period. Recent technological advancements allowed music services to be applied into AI speaker, connected car, etc. to further support growth momentum. With stringent copyright laws, distribution of illegal music is expected to decrease and market value will be further enhanced.

 

  2)

Market Environment

Major domestic music streaming service providers are Genie, Melon, and FLO. Among three major players, Melon is an initial market pioneer that possesses the highest market shares. All three providers offer distribution services and hold promotions to acquire additional subscribers.

 

  3)

Market Shares

It is difficult to estimate the market shares information. MAU (Monthly Active User) data is used in the market; however, such figures vary by providers – App Annie, Nielson Korea, Korean Click, etc. – due to distinct computation method being applied.

(5) Competitiveness

Differentiation offered by Genie are (i) provision of high quality music streaming service and ultra-quality premium service called FLAC(Free Lossless Audio Codec) (ii) supply of CJ ENM contents, (iii) KT and LGU+ subscribers could use membership points to easily subscribe to streaming service.

 

 

Others - KT Telecop

(1) Characteristics of the Industry

Security services are provided for the individual clients as well as the corporate and the governmental organizations for the security of personnel, equipment or other assets. Services offered could be divided into four broader categories: Dispatch, Non-dispatch, Comprehensive Security, and Security SI. Dispatch services involve installation of sensors and surveillance cameras at households and stores in order to promptly dispatch a field security agent in case of emergent situation by Control Center. For non-dispatch services, customers could check security conditions through installed surveillance cameras at households and stores. If needed, the dispatch services is also provided. Comprehensive services entail the field security agent on-site, to patrol and control entrance/exit. Security SI package includes installation of CCTV, implementation of entrance/exit control system, as well as energy efficiency monitoring system for buildings.

(2) Growth of the Industry

With the increase of single (two) person households and heinous crimes, security industry is continuously growing. Also with its high entry barriers and inelastic characteristic to economy its stability is high as well. Security industry is to expand to convergence business and bio-verification areas from simple dispatch and guard service. For fiscal year 2019, market size of bio-security services was approximately KRW 2.7 trillion or 2.6% YoY. The industry is to grow steadily as demand for safety increases.

(3) Characteristics of Economic Cycle and Seasonality

The security business is less sensitive to economic fluctuations due to the conservative nature of the security business. However, domestic economic slowdowns and price competition may adversely affect the growth prospects. As the importance of CCTV service has been recognized recently, and the high-definition CCTV has become more popular, the sustainable industry growth is expected.

 

15


(4) Market Conditions

 

  1)

Market Stability

Competition within the security industry has been intensified due to new entrants. Currently, security industry is expanding with the sales of IOT based products for households and small businesses. Market competition is expected to intensify as the industry adopts new technologies such as cloud based video surveillance, AI security solutions, physical/data security.

 

  2)

Market Competition

Dispatch Security, Comprehensive Security: S1, ADT CAPS, etc.

 

  3)

Market Share

Market Share information for the industry is not available.

(5) Competitiveness

Security companies focused on price competition as an attempt to increase their market share, but are now extending competition into the convergence security area in which physical and information security are combined. KT Telecop will continue to collaborate with KT to introduce products that will meet such market demands. Through this measure, KT Telecop plans to continue its delivery of premium services.

(6) Status and Forecast of New Businesses

KT Telecop was the first to launch the platform based All-IoT security service in the world. With the introduction of All-IoT, KT Telecop is expected to lead the market by converging its services with various IoT sensors to AI Surveillance camera GiGA Eyes. KT Telecop is expected to lead the market with continuous innovations and differentiated technology.

 

 

Others - Nasmedia

(1) Characteristics of the Industry

The traditional media (TV, radio, newspaper, magazine) advertisement market is in the maturity stage, however new media (PC, mobile, IPTV) advertisement market is experiencing positive prospect as number of users increase. Online advertisement surpassed TV commercials, and advertisement through SNS created momentum for internet business to grow. Nicomedia currently sells online (PC, mobile) display advertisement channels and its business covers IPTV commercial and Digital Signage advertisement channels.

(2) Growth of the Industry

In 2020, the size of the domestic advertising market was 11.99 trillion won, a 0.8% decrease from 2019. Online advertising grew 13.0%, supported by the huge growth in mobile advertising, 17.5%. It indicates that the market is shifting from traditional media to digital media. For FY 2021, advertising market is expected to grow 12.55 trillion won size, a 4.6% increase from prior year. Online advertising will continue to be the main driver for such growth in the market. In addition, expansion of smart devices, including mobiles and tablets, are facilitating such market shift from traditional media to digital media.

 

(KRW Billion)

   2020 (F)      2019      2018  

PC Ad.

     19,410        18,548        17,708  

Mobile Ad.

     42,570        38,558        32,824  

IPTV Ad.

     1,138        1,121        1,232  

Digital Signage

     3,200        3,378        3,583  

 

*

Source: Chaeil published information—total advertising expense in Korea for year 2020

(3) Characteristics of Economic Cycle and Seasonality

The advertising market often precedes economic cycles and is highly affected by economic conditions. Revenue derived from advertising tends to show N-pattern every year. Corporates usually reduce monthly advertisements between January and February, July and August, but increase spending between April and May, and September to the year-end.

 

16


(4) Market Conditions

 

  1)

Market Stability

Internet advertisement is becoming more popular as it allows targeted advertisement campaigns at lower costs. IPTV advertisement could be more effective if bilateral communication channel could be implemented. Digital signage refers to transformation from displaying fixed images to video, hologram. Information displayed could further be customized depending on time and place. Mobile advertisement business recorded size of 3.9 trillion won in 2020 and is expected to grow to 4.3 trillion won in 2021.

 

  2)

Market Competition

Competing Competitors:

 

   

Online DA Advertisement: Mezzomedia, DMC Media, Incross, etc.

 

   

Digital Media Advertisement (IPTV): Incross, Mezzomedia, etc.

 

   

Digital Signage Advertisement: Jeonhong, Yujinmetro

Market Entry Requirement:

 

   

IPTV Advertisement Provider: approval of KCC (Korea Communications Commission) required

 

   

Digital Interior Ads: approval by the district borough office required

Factors of Competition:

Media planning capacity, negotiation skills, advertisement effect measurement and analysis systems, quality of proposals, etc.

 

  3)

Market Shares

It is difficult to estimate the market share.

(5) Competitiveness

The key contributing factors for competitiveness are technological solution, media planning capabilities, media channel network, and sales capabilities.

A. Technological Solutions

Nasmedia owns multiple solutions – Nsmart, Remix, Oasis, Wave, Nthology, IAM to analyze and advise the strategies for new media advertisements. Nasmedia is constantly making investments into developments of new technologies. Such ongoing efforts will continue enhance competitiveness of the agency in the market.

B. Media Planning Capabilities

Nasmedia has a total of 368 employees as of year-end 2020. 175 employees are considered to be media planners. 47.4% of total media planners have more than 5 years of experience and work in major business area such as online display advertisement segment.

C. Media Channel Network

Nasmedia possess wide media channel network compared to its market peers. Including major portal websites, Nasmedia possesses network with approximately 760 media channels in PC display advertisement. Furthermore, its competitiveness in media network has been further strengthened by expanding its connections in mobile, IPTV, and digital signage businesses.

D. Sales Capabilities

Since its establishment in 2005, Nasmedia secured the reputation as a No. 1 media representative agency. Such leadership strengthens stronger bonds with media channels, and advertisement agencies to facilitate synergy to expand into new business areas such as mobile and IPTV advertisements.

 

17


(6) Status and Forecast of New Businesses

To maintain its stable growth despite the decline in the online advertisement market, Nasmedia plans to develop interactive products and solutions for advertising. Nasmedia also plans to develop the integrated digital video advertising network and advertising effect measurement solution. Nasmedia seeks synergy between its sales networks, on/offline media channels of KT, and search advertisement of PlayD (Nsearch marketing). Nasmedia will be the digital media representative company to offer channel strategy for all digital media, and total marketing communication.

Furthermore, Nasmedia established the Nasmedia (Thailand) Co. Ltd. to make an expansion into global market. By using its expertise in online, offline, and mobile advertising, Nasmedia will spread its presence into southeastern Asia.

Status and Forecast of New Businesses is described under each company’s predictions (analysis, estimation, etc.) only to help them understand each company based on the current situation. Therefore, it is important to note that an investor should not make a judgment by relying only on the forecast (analysis, estimation, etc.) data of each company in its investment decisions.

2. Main Products and Services

 

  A.

Revenue breakdown of operating segments (Unit : millions of Korean won)

 

     2020      2019      2018  

ICT

     17,879,281        18,204,751        17,356,537  

Portion of total revenue (%)

     64.0        64.5        63.8  

Finance

     3,684,844        3,556,776        3,560,417  

Portion of total revenue (%)

     12.1        12.6        13.1  

Satellite TV

     698,715        694,637        690,821  

Portion of total revenue (%)

     2.5        2.5        2.5  

Others

     5,680,533        5,770,659        5,588,611  

Portion of total revenue (%)

     21.4        20.4        20.6  

Sub-sum

     27,943,373        28,226,823        27,196,386  

Elimination

     -4,026,706        -3,884,759        -3,736,243  

Consolidated amount

     23,916,667        24,342,064        23,460,143  

 

  B.

Trends in price changes for major products, etc.

 

   

ICT – KT

The price fluctuations of representative rates of mobile, IPTV, broad band, fixed-line phones, and combined products provided by KT are as follows. For more information, please refer to the product service contents on our website(https://product.kt.com). The prices below are the amounts that do not reflect the Additional discount.

 

   

Mobile

2020 (Unit : Korean won, VAT included)

 

Plan

   Monthly Rate  

5G Super Plan Choice

   Premium Choice      130,000  
   Special Choice      110,000  
   Basic Choice      90,000  

5G Simple

     69,000  

5G Save

     45,000  

 

We launched the KT 5G Super Plan Choice on September 25, 2020, and added Netflix contents on them on October 28, 2020. And we also launched the 5G Simple and the 5G Save on October 5, 2020.

 

18


2019 (Unit : Korean won, VAT included)

 

Plan

   Monthly
Rate
 

5G Super Plan

   Premium      130,000  
   Special      100,000  
   Basic      80,000  

5G Slim

     55,000  

 

We launched the KT 5G Super Plan on April 5, 2019.

2018 (Unit : Korean won, VAT included)

 

Plan

   Monthly
Rate
 

Data ON

   Premium      89,000  
   Video      69,000  
   talk      49,000  

LTE Basic

     33,000  

Y24 ON

   Premium      89,000  
   Video      69,000  
   talk      49,000  

Y Basic

     33,000  

 

We launched the Data On, LTE Basic on May 30, 2018. And we also launched the Y24 ON on September 3, 2018 and the Y Basic on September 17, 2018.

 

   

IPTV

2020 (Unit : Korean won, VAT included)

 

Plan

   Monthly Rate      Rate with 1 year
term
     Rate with 2 year
term
     Rate with 3 year
term
     Rate when IPTV and
Broadband are
combined
 

TV Basic

     18,150        17,270        16,390        14,740        12,100  

 

We launched the TV Basic in April 2020.

2019 – No change

2018 (Unit : Korean won, VAT included)

 

Plan

   Monthly Rate      Rate with 1 year
term
     Rate with 2 year
term
     Rate with 3 year
term
     Rate when IPTV and
Broadband are combined
 

TV slim

     16,500        15,675        14,850        13,200        11,000  

TV light

     19,800        18,810        17,820        15,840        13,200  

TV essence

     25,300        24,035        22,770        20,240        16,500  

TV entertainment

     31,020        29,469        27,918        24,816        20,900  

TV kids

     31,020        29,469        27,918        24,816        20,900  

 

   

Broadband

The below rate is an amount that does not reflect additional expenses such as modem rental fee.

2020 (Unit : Korean won, VAT included)

 

Plan

   Monthly Rate      Rate with 1
year term
     Rate with 2
year term
     Rate with 3
year term
     Rate with 3
year term when
IPTV, mobile
and Broadband
are combined
 

GiGA Wi Max 2.5G

     78,100        69,300        60,500        45,100        39,600  

GiGA Wi Max 1G

     72,600        63,800        55,000        39,600        34,100  

GiGA Wi Max 500M

     63,800        56,100        48,400        35,200        29,700  

GiGA Wi Max 100M

     57,200        48,950        40,700        24,200        24,200  

 

The rate are the amount applied to the GiGA WiFi Buddy launch promotion.

 

19


2019 (Unit : Korean won, VAT included)

 

Plan

   Monthly Rate      Rate with 1
year term
     Rate with 2
year term
     Rate with 3
year term
     Rate with 3
year term
when IPTV,
mobile and
Broadband
are
combined
 

10 GiGA Max 10G

     110,000        99,000        93,500        88,000        77,000  

the Internet that reassures the family (10 GiGA Max 2.5G)

     63,800        57,750        51,700        45,100        39,600  

the Internet that reassures the family (GiGA Max 1G)

     58,300        52,250        46,200        39,600        34,100  

the Internet that reassures the family (GiGA Max 500M)

     49,500        44,550        39,600        34,100        28,600  

the Internet that reassures the family (Max 100M)

     42,900        37,400        31,900        23,100        23,100  

the Internet plus that reassures the family (10 GiGA Max 2.5G)

     72,600        64,900        57,200        45,100        39,600  

the Internet plus that reassures the family (GiGA Max 1G)

     67,100        59,400        51,700        39,600        34,100  

the Internet plus that reassures the family (GiGA Max 500M)

     58,300        51,700        45,100        35,200        29,700  

the Internet plus that reassures the family (Max 100M)

     51,700        44,550        37,400        24,200        24,200  

The rate with 4 year term is 77,000 won.

2018 (Unit : Korean won, VAT included)

 

Plan

   Monthly
Rate
     Rate with 1
year term
     Rate with 2
year term
     Rate with 3
year term
     Rate with 3 year term when IPTV,
mobile and Broadband are combined
 

10 GiGA Max 10G ( 1)

     110,000        99,000        93,500        88,000        82,500  

10 GiGA Max 5G ( 2)

     82,500        71,500        66,000        60,500        55,000  

10 GiGA Max 2.5G

     60,500        55,000        49,500        44,000        38,500  

GiGA Max 1G

     55,000        49,500        44,000        38,500        33,000  

GiGA Max 500M

     46,200        41,800        37,400        33,000        27,500  

Max 200M

     41,800        38,500        35,200        30,250        24,200  

Max 100M

     39,600        34,650        29,700        22,000        22,000  

10 GiGA Max 2.5G Plus

     69,300        62,150        55,000        44,000        38,500  

GiGA Max 1G Plus

     63,800        56,650        49,500        38,500        33,000  

GiGA Max 500M Plus

     55,000        48,950        42,900        34,100        28,600  

Max 100M Plus

     48,400        41,800        35,200        23,100        23,100  

 

1 : The rate with 4 year term is 77,000 won.

2 : The rate with 4 year term is 55,000 won.

 

20


   

Fixed-line Telephone Services

2018, 2019 and 2020 – No change

 

   

Bundled Rate Plans

 

2020

  

2019

  

2018

<2020.04>

● Renewal of the Internet Telephony Home bundle plan

- Change of the discount amount from 2,200 won to 1,100 won of the Internet Telephony Home bundle plan if bundled with Home Telephony with 3 year term

 

<2020.06>

● Renewal of the Home Telephony TPS bundle plan within home bundle

- Change of the discount amount from 4,620 won to 1,320 won for grade 8 or higher of the Home Telephony bundle plan if bundled with TPS with 3 year term including IPTV

 

<2020.07>

● CEO Success Pack launch

  

<2019.04>

● Change of the bundled discount rate about fixed rate discount of 5G plan

- Discount rate 10/15/20/25/30% to bundled mobile 1/2/3/4/5 line

 

<2019.08>

● 5G Premium Family bundle discount plan promotion (08.09~12.31)

- Term : sign up at least two 5G mobile line starting from W80k

- benefit : 25% discount to over 80k for 5G mobile line and 66k for LTE mobile line. (Total amount discount plan is applied to below 80k for 5G mobile line or 66k for LTE mobile line.)

  

<2018.3>

● Premium Family bundle discount plan regular launch

- Term : sign up at least two mobile line starting from W66k, and bundle with broadband

- benefit : 25% discount to mobile line (Total amount discount plan is applied to Basic line or belowW66k line)

 

<2018.11>

● Premium Single Bundle plan launch

- Term : sign up from W66k mobile plan and bundle with Internet Family

- benefit : 25% discount to mobile line

 

   

Finance—BC card (Unit : %)

 

Category

   2020      2019      2018  

Member Store fee rate

     0.8~2.3        0.8~2.3        0.8~2.5  

Installment fee rate

     11.0~18.5        11.0~18.5        11.0~18.5  

Cash service interest rate

     7.9~23.3        7.9~23.3        7.9~23.3  

 

21


   

Satellite TV – KT Skylife

 

   

TV (Unit : Korean won, VAT Included)

 

Service Type

     2020      2019      2018  

Satellite only

   Android    sky UHD Family A+      Receiving        12,100        —          —    
     Bundle        8,800        —          —    
   sky UHD Blue A+      Receiving        14,300        14,300        15,400  
     Bundle        11,000        11,000        12,100  
   sky UHD Green A+      Receiving        12,100        12,100        13,200  
     Bundle        8,800        8,800        10,450  
   UHD    sky Family+ HD + sky UHD pack      Receiving        12,100        —          —    
     Bundle        8,800        —          —    
   HD    Sky On+ HD      Receiving        8,800        8,800        8,800  
     Bundle        8,250        8,250        8,250  

OTS

   —      UHD OTS Prime Kids Land /Entertainment (19)      Receiving        20,900        20,900        —    
   UHD OTS Essence (15)      Receiving        16,500        16,500        16,500  
   UHD OTS Light (12)      Receiving        13,200        13,200        13,200  
   UHD OTS Slim (10)      Receiving        11,000        11,000        11,000  
   OTS Prime Kids Land /Entertainment (19)      Receiving        20,900        20,900        —    
   OTS Essence (15)      Receiving        16,500        16,500        16,500  
   OTS Light (12)      Receiving        13,200        13,200        13,200  
   OTS Slim (10)      Receiving        11,000        11,000        11,000  
   OTS Basic (11)      Receiving        12,100        —          —    

 

Receiving : The rate with 3 year term

Bundle : The rate if bundled between TV and Broadband

 

   

Broadband (Unit : Korean won, VAT Included)

 

Service Type

     2020      2019      2018  

Internet

   Sky 100M      Service        28,050        28,050        28,050  
     Bundle        19,800        19,800        19,800  
   Sky GiGA 200M      Service        30,250        30,250        30,250  
     Bundle        22,000        22,000        22,000  
   Sky GiGA 500M      Service        33,000        33,000        33,000  
     Bundle        27,500        27,500        27,500  
   Sky GiGA 1G      Service        38,500        38,500        38,500  
     Bundle        33,000        33,000        33,000  

 

Service : The rate with 3 year term and the rate does not reflect additional fees such as rental, installation, etc.

Bundle : The rate if bundled between TV and Broadband

The bundle rate of Sky 100M and Sky GiGA 200M are the amount applied to the AP rental discount promotion, 2,000 won.

 

22


   

Mobile (Unit : Korean won, VAT Included)

 

Service Type

     2020  

Mobile

   Slim      Service        4,400  
   Economy      Service        5,500  
   Basic      Service        9,900  
   Special      Service        21,800  
   Phone Call Enough 5GB      Service        20,900  
   Data Enough 15GB+      Service        27,300  
   All Enough 1.4GB+      Service        17,600  
   All Enough 11GB+      Service        36,000  
   All Enough 100GB+ (Seezn OTT)      Service        42,600  
   5G All Enough      Service        38,500  
   Phone Call Enough 300MB      Service        8,800  
   All Enough 0MB+      Service        11,000  
   All Enough 1GB+      Service        12,650  
   All Enough 2.5GB+      Service        15,400  

 

   

Others - Genie Music (Unit : Korean won, VAT excluded)

 

Service Type

   2020      2019      2018  

Music source service

   Unlimited Streaming    Smart Download (DRM) + Streaming      10,800        10,800        8,800  
   Online Streaming      8,400        8,400        7,800  
   Smart streaming (Mobile only)      7,400        7,400        6,800  
   MP3 Download + Unlimited Streaming    Download 30 songs + Streaming      10,800        10,800        10,800  
   Download 50 songs + Streaming      15,000        15,000        —    
   MP3 Download    Download 30 songs      8,800        8,800        8,800  
   Download 50 songs      12,500        12,500        —    

 

   

Others—KT CS (Unit : Korean won, VAT excluded)

 

Item

  

2020

  

2019

  

2018

114 directory assistance

   120 (Night/Holidays 140 won)

Priority number assistance

   30,000 / month (Dong standard)

 

“Dong” is Korea’s address classification system.

The rate of 114 directory assistance is changed to 170 won and 190 won of Day time and Night/Holidays, respectively, since February 1, 2021.

 

23


   

Others—KT IS (Unit : Korean won, VAT excluded)

 

Item

  

2020

     2019      2018  

114 directory assistance

   120 (Night/Holidays 140 won)

 

    

Monthly fixed rate

   Group 1      Group 2      Group 3      Group 4  
   “City” Unit      55,000        53,000        50,000        45,000  
   “Gu” Unit      44,000        42,000        40,000        36,000  
Priority number assistance    “Dong” Unit      33,000        31,000        30,000        27,000  

 

”Gu” and “Dong” is Korea’s address classification system.

Groups are classified by service district and the type of business.

The rate of 114 directory assistance is changed to 170 won and 190 won of Day time and Night/Holidays, respectively, since February 1, 2021.

 

   

Others—KT M mobile (Unit : Korean won, VAT included)

 

Products

  

2020

  

2019

  

2018

Mobile

(Postpaid)

  

<2020.11>

3G 30MB/180min

3G 30MB (Voice-call)

LTE Data 500M/60min

LTE Data 500M/100min

LTE Data 500M/200min

LTE Data 500M/300min

LTE Data 1G/60min

LTE Data 1G/100min

LTE Data 1G/200min

LTE Data 1G/300min

LTE Data 3G/100min

LTE Data 3G/200min

LTE Data 3G/300min

  

 

26,400

34,100

19,800

20,900

23,100

25,300

22,000

23,100

25,300

27,500

29,700

31,900

34,100

  

<2019.3>

LTE Data 0MB/30min

LTE 0MB (Voice-call)

Economy Kids basic

Economy Kids smart

Economy junior study 1.5GB

Economy junior study 3GB

Economy junior smart 6GB

Economy junior smart 10GB

 

  

 

8,800

27,500

12,100

18,700

27,500

 

29,700

 

34,100

 

38,500

  

<2018.1>

3G Young age 80min

L.Point 2GB

 

<2018.3>

LTE Practical 23

 

<2018.4>

3G 0MB/30min

LTE Practical 500M

  

 

17,600

29,799

 

23,870

 

18,700

18,700

        

<2019.4>

Sky practical 1.2GB

Sky practical 4GB

Sky practical 6GB

Sky practical 10GB+

 

<2019.8>

LTE economy 3GB

LTE economy 5GB

 

<2019.10>

LTE reassurance 1.5G

LTE reassurance 2.5G

  

24,800

36,300

39,600

60,000

 

31,900

40,700

 

26,400

31,900

  

<2018.5>

LTE Practical 250M (QoS)

LTE Practical 1GB (QoS)

 

<2018.6>

3G economical reduction

M Practical 280min

 

<2018.11>

Senior VIP Medium(3G)

Senior VIP Heavy(3G)

Senior VIP Lite(LTE)

Senior VIP Medium(LTE)

Senior VIP Heavy(LTE)

  

26,950

29,700

 

17,600

34,100

 

22,000

27,500

16,500

27,500

33,000

 

24


Products

  

2020

  

2019

  

2018

Usim only

(Postpaid)

  

<2020.4>

LTE Basic

LTE Economy 1GB

 

<2020.5>

Data free 250M+

Data free New 1GB+

Data free 10GB+

 

<2020.6>

All free 1.4GB+

Data free 6GB+/100min

All free 100GB+(Seezn)

 

<2020.7>

Data free 15GB+

Economy Voice 3GB

Economy Voice 5GB

 

<2020.9>

Voice free 6.5GB

All free 6GB+

 

<2020.10>

All 1.5GB/100min

All 2GB/200min

Data 2.4GB/100min

Data 2.4GB/200min

Data 3.5GB/100min

Data 3.5GB/200min

Data 5GB/100min

Data 5GB/200min

All reassurance+

All reassurance 1.5GB+

All reassurance 2.5GB+

All reassurance 4.5GB+

  

 

38,500

33,000

 

28,200

33,000

33,800

 

38,300

28,600

66,000

 

47,300

17,200

21,300

 

35,000

42,900

 

18,590

19,800

17,600

22,000

23,100

27,500

28,600

30,800

20,900

26,000

27,500

30,800

  

<2019.4>

Data 15GB+/100min

Economy universal rate

 

<2019.7>

Voice call free 1.5GB

Voice call free 2.5GB

Voice call free 4.5GB

 

<2019.8>

Data sharing

 

<2019.10>

Data free 100M+

Data free reassurance 1GB+/100min

Data free 3GB+

Data free ON

Voice call free 300MB

 

<2019.11>

All free 3GB+

All free 100GB+

 

<2019.12>

5G Slim M

5G Slim Special

  

 

47,300

19,900

 

35,300

43,500

47,500

 

—  

 

16,500

23,650

29,150

41,250

31,350

 

46,000

66,000

 

55,000

77,000

  

<2018,1>

L.Point 1GB(USIM)

L.Point 10GB(USIM)

 

<2018.5>

Data 6GB/100min

USIM M 1.0(QoS)

USIM M 2.0(QoS)

M Data Choice USIM 6GB

 

<2018.6>

Practical USIM E 3.5

Practical USIM E 5.0

 

<2018.8>

Data 2.4GB/50min

Data 3.5GB/50min

Data 5GB/50min

Practical USIM M 2.4

Practical USIM M 3.5

Practical USIM M 5.0

Data 2.4GB/150min

Data 3.5GB/150min

Data 5GB/150min

Practical USIM E 2.4

Data 1GB/Year

Data 9GB/Year

 

<2018.10>

Data 10GB+

Data 20GB+

The Camp 1.2GB

The Camp 3GB(QoS)

The Camp 6GB(QoS)

Data standard 700MB

Data 2GB/Year

  

 

9,900

29,700

 

25,300

19,250

21,450

39,600

 

26,400

30,800

 

15,400

20,900

27,500

17,600

22,000

28,600

19,800

24,200

29,700

22,000

22,000

33,000

 

16,300

24,000

15,400

28,600

31,900

6,600

27,500

Mobile

(Prepaid)

  

<2020>

No change in 2020

     

<2019.5>

LTE Free

PPS Data 1GB+

PPS Data 10GB

PPS Data 15GB+

 

<2019.8>

PPS Data 300MB+

  

 

—  

19,800

28,800

39,000

 

36,300

  

<2018.4>

PPS Data 6GB(QoS)

PPS Data Free(QoS)

  

 

39,270

54,780

 

Data 1,2,9GB/Year rate plans are for 12 months after one payment.

The prepaid rate plan is based on 30 days

3. Matters Related to Revenue

 

   

ICT—KT

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

Service revenue

     15,086,246        84.4        14,937,785        82.1        14,511,585        83.6  

Merchandise sales

     2,793,035        15.6        3,266,966        18.0        2,844,952        16.4  

Total

     17,879,281        100.0        18,204,751        100.0        17,356,537        100.0  

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

25


B. Sales Organization and Channels

Sales organization

<B2C>

 

<B2B>

 

Sales Channels

<B2C>

 

26


<B2B>

 

C. Methods and Conditions of Sales

KT provides our products and services to customer through the sales organization and channel as above, basically, customers pay the service charges with cash, bank direct debit bill and credit card. In addition to monthly service fee, customers must pay the equipment rental fee and installment fee as well.

For the corporate customers, we negotiate contractual terms, such as supply conditions and services fees.

D. Sales Strategy

(a) Mobile Service

   

Device leadership : Differentiate wireless experience with pre-emptive adoption of differentiated 5G/LTE smartphones and new forms of emerging devices.

 

   

Network quality differentiation : 5G first C-DRX Application and 5G network quality based on edge communication center, tight national network LTE-A Network.

 

   

Innovative rate plans : 5G super plan to offer unlimited data and worldwide data roaming, and LTE data ON providing unlimited data across all plans

 

27


   

Segment marketing : Introducing products exclusively for young customers such as Y super pan, Y24 and providing premium single bundled rate plan optimized for single-person households

 

   

Loyalty program : A variety of mobile phone replacement programs and installment plans, including industry-leading membership benefits, long-term customer special benefits, and rental services to reduce inconvenience in device replacement.

 

   

Differentiated service : The CS system optimized for smartphones, the benefits of reducing telecommunication charge through affiliated cards, and differentiated mobile phone insurance products.

(b) Broadband Internet Service

 

   

Solidifying a No.1 market stance with active GiGA investment and wire-wireless bundling competitiveness

 

   

Market leading with 10G internet

 

   

Suggest the new internet paradigm by introducing ‘GiGA Wi internet’ which comes with new concept of WiFi service, GiGA WiFi Buddy in the era of Post-Covid19

 

   

Strengthen the B2B market with Office IP Net security packages and POSNET products that are specialized for corporate customers.

 

   

Increase sales synergies linked to GiGA infrastructure business such as 5G and IPTV

 

   

Broaden internet business coverage such as low cost market with skylife internet resale

 

   

Satisfying a diverse range of customer needs by providing differentiated value-added services such as GiGA WiFi home ax, GiGA WiFi Premium 2.4, Family Internet Security Package, etc.

 

   

Provide a variety of customer convenience by providing customized products through analysis of customer usage patterns.

(c) Telephone Service

 

   

Preemptive care activities to minimize customer churn :

 

   

Uncombined customers using the Internet and TV products : Service bundling propulsion

 

   

Customer who need home telephony service : Promoting KT telephony 3000 price plan

 

   

Customer who did re-contract VoIP service : Promoting KT VoIP 3000 price plan

 

   

SOHO, small business customer : Pushing to sign up for converged products including Telephone manager, Ringo

 

   

Preventing from decreasing revenue by restructuring price plans :

 

   

Rolling out new VoIP price plan which is charging per second

 

   

Efforts to secure new customers by providing differentiated services :

 

   

VoIP device D2 release(July, 2017) : Provide user convenience, including support for Google Address Book

(d) IPTV Service

 

   

Introducing products that reflect customer preferences

 

   

Based on AI, organizing personalized content and strengthening the recommendation

 

   

Differentiation of technologies such as subminiature and wireless set-top box(UHD4), voice-based user interface.

 

   

Finance Business (BC Card)

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

Card processing revenue

     3,076,670        87.4        3,076,670        87.0        3,100,142        87.3  

Service fee revenue

     216,397        5.9        216,397        6.1        215,054        6.1  

Additional business fee revenue

     84,217        2.3        84,217        2.4        89,932        2.5  

Member Service Fee revenue

     51,562        1.5        51,562        1.5        46,244        1.3  

Card revenue

     4,506        0.1        4,506        0.1        5,288        0.2  

Financial revenue

     22,831        0.6        22,831        0.6        22,403        0.6  

Foreign currency-related profit

     24,972        0.7        24,972        0.7        28,073        0.8  

Other operating profit

     55,428        1.6        55,428        1.6        43,607        1.2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     3,536,523        100.0        3,536,523        100.0        3,550,744        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

The above numbers are written on a consolidated basis.

2020 and 2019 was written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

28


B. Sales Organization and Channels

BC Card is engaged in the issuance and purchase of credit cards (including check cards) based on the basic contracts with card companies. In addition, we are expanding credit card business by acquiring new customers other than existing member companies.

 

   

Satellite Business (KT skylife)

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

Service revenue

     349,277        52.9        334,016        50.7        331,735        50.5  

Platform revenue

     216,968        32.9        236,353        35.9        233,366        35.5  

Others

     94,159        14.3        87,928        13.4        92,394        14.1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     660,404        100.0        658,297        100.0        657,495        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

The above numbers are written on a separate basis.

2020 and 2019 was written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

Platform revenue: Advertisement revenue + Home shopping transmission fee + T-commerce transmission fee

Service revenue: Broadcasting revenue + Internet revenue + Mobile revenue

B. Sales Organization and Channels

KT Skylife currently has various sales channels such as skylife head office, customer center, 180 sales offices which are further organized under 11 branches (three in Seoul, two in Busan and one each in Daejeon, Daegu, Gwangju and etc.) and 1 local office (in Jeju), KT.

Sales offices perform sales and services through consignment contracts with KT Skylife, and 2 customer centers(Suwon, Gwangju) perform business activities such as customer counseling, as well as defending customer churn and attracting new subscribers.

The combined products are sold through KT’s in-house/outdoor sales channels and group companies, which are nationwide, and we are continuously sold on the headquarters’ website.

In addition, we have been continuously partnering with various on and off-line companies such as companies, government offices, and online markets to secure sales channels.

As of the end of December 2020, sales by route are as follows (Accumulated from January to December 2020)

 

Category

   New Subscribers      %  

Sales office

     272,153        70.8  

KT

     37,314        9.7  

Headquarter, customer center

     74,896        19.5  
  

 

 

    

 

 

 

Total

     384,363        100.0  
  

 

 

    

 

 

 

 

   

Others Business

KT Sat

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

Gap filler rentals

     96,853        55.8        90,244        53.7        86,206        63.0  

Data transmission

     20,778        12.0        12,205        7.3        11,254        8.2  

Video transmission

     9,467        5.5        10,326        6.2        11,198        8.2  

Mobile satellite service

     20,059        11.6        16,536        9.8        16,314        11.9  

Others

     26,391        15.2        38,698        23.0        11,981        8.7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     173,548        100.0        168,009        100.0        136,953        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

29


B. Sales Organization and Channels

KT SAT’s sales organization manages and operates customers by region. Due to the nature of the service, the company has a large number of corporate customers and is attracting new customers through sales of internal sales representatives and external distribution networks (partners).

 

 

KT Estate

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

PM fee

     7,753        2.2        23,663        4.9        8,341        1.5  

Rental business

     156,784        33.4        160,283        33.4        158,143        28.0  

Real estate commission business

     134,057        39.2        188,004        39.2        157,631        27.9  

Development business

     61,360        22.5        107,923        22.5        240,091        42.6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     359,954        100.0        479,873        100.0        564,206        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

 

KT Hitel

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

T-Commerce(K Shopping)

     228,424        65.4        182,947        56.8        143,191        51.3  

Contents Distribution

     37,486        10.7        60,803        18.9        69,623        25.0  

ICT Platform

     83,404        23.9        78,571        24.4        66,074        23.7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     349,314        100.0        322,321        100.0        278,888        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

B. Sales Organization and Channels

o Contents

The content supply and demand representative make copyright agreements with the content creator or distributor. And we provide content VOD or library services to 150 platform companies such as IPTV, OTT, and Internet web hard.

o Commerce

After the MD has signed a contract with the vendor to supply the product, the product information is provided directly to the general customer through platforms such as VOD, TV, Internet, and mobile. After receiving the customer’s order through TV remote control, internet, and mobile, if payment is made, we will ship the product through the delivery company.

 

 

Genie Music

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

Music business

     236,652        95.8        222,165        96.4        155,425        90.8  

Others

     10,316        4.2        8,304        3.6        15,808        9.2  

Total

     246,968        100.0        230,469        100.0        171,233        100.0  

 

Music Business: Regular Music services and distribution of content

Others: Irregular music service development service and Artist-related MD sales

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

30


B. Sales Organization and Channels

Genie Music serves as a service provider and content distributor within the digital music industry.

o Service provider

Genie Music provides streaming and downloading services through our own misic platform Genie. B2B music service is to provide music listening services to wireless customers of KT and LGU+, shareholders. We also provide store music services(Shop & Genie) to offline stores.

o Content distributor

Genie Music supplies content distributed by us to other providers’ music platforms.

o Music Business (Music Services and Content Distributor)

Genie Music provides music services directly to the domestic customers through its own music platform Genie such as website, mobile app and etc. Also, the company is providing music services through the value-added services which telecom companies roll out.

Genie Music has signed a contract with other music services companies to distribute content which is secured by the network with record label and music companies.

o Others (IT development service, MD and etc.)

Genie Music generates IT development revenue through the contract by IT projects with private companies. Also, In terms of MD revenue, the company is selling the MD products (which are bought or imported from MD vendor) to the online and offline stores.

 

 

KT Telecop

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

Category

   2020      2019      2018  
   Amount      %      Amount      %      Amount      %  

Security service

     380,575        97.5        319,062        96.3        316,586        97.1  

Distribution

     9,098        2.3        11,482        3.5        8,945        2.7  

Others

     660        0.2        673        0.2        522        0.2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     390,333        100.0        331,217        100.0        326,053        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

B. Sales Organization and Channels

KT Telecop operates the business department, regional headquarters strategic sales team, branch offices. And we provide dispatch security service and integrated security service.

KT Telecop’s sales organization manages and operates customers by region. Due to the character of the service, the company classifies customers into SOHO and corporate customers and is attracting new customers through sales of internal sales representatives and external distribution networks (partners).

 

 

Nasmedia

A. Performance in Terms of Revenue (Unit: millions of Korean won, %)

 

     2020      2019      2018  

Category

   Amount      %      Amount      %      Amount      %  

Advertising

   Online DA (PC, Mobile)      43,892        53.5        41,470        52.9        36,396        51.1  
   Mobile platform      20,895        25.4        24,274        31.0        14,540        20.2  
   Digital broadcasting (IPTV)      7,318        8.9        1,921        2.5        3,744        5.2  
   Digital outdoor      9,895        12.1        10,669        13.6        16,833        23.4  

Commerce

     —          —          3        0.0        —          —    

Financial Lease

     58        0.1        36        0.0        65        0.1  

Total

     82,058        100.0        78,373        100.0        71,878        100.0  

The above numbers are written on a separate basis.

 

31


2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

B. Sales Organization and Channels

The online advertising industry can be divided into three areas: advertising companies, media reps, and media. Media reps generate revenue by selling media.

Nasmedia and its major subsidiaries generally deal with advertisers, advertising agencies, and media companies.

4. Research and Development Activities

 

   

R&D Costs—Consolidated Basis (Unit: millions of Korean won, %)

 

Category

   2020     2019     2018  

Raw Materials

     —         —         —    

Labor Costs

     82,225       76,433       71,544  

Depreciation

     20,732       29,586       36,404  

Commissions

     —         —         —    

Others

     120,477       147,502       164,993  

Total R&D Costs (( 1)

     230,473       253,521       272,941  

(Subsidy from Government)

     211       37       20  
Accounting   Research and Ordinary Development Costs      156,940       165,028       176,758  

Treatment     Development Costs (Intangible Assets)

     73,322       88,456       96,163  

Percentage of R&D Costs over Revenue ( 2)

     0.66     0.68     0.75

 

1:

Total costs before deducted the subsidy from government

 

2:

Rate of Total costs before deducted the subsidy from government and Total Revenue

 

   

R&D Organization Structure (KT)

 

 

Institute of Convergence Technology

 

 

 

Main Mission

 

   

Securing core technologies to strengthen future business and business competitiveness

 

   

Establishing mid- and long-term technology strategies for leading future technologies

 

   

Developing competitive technologies and supporting commercialization to strengthen business competitiveness

 

   

Developing and securing core technologies for mid- to long-term future

 

   

KT Network Technology Innovation Through R&D of Next Generation Network Technology

 

   

Developing next-generation wireless core technologies and solutions to enhance competitiveness in the wireless business

 

32


   

Development of Network Efficiency and Optimization Technology for the Competitiveness of GiGA Infra Research technology for next generation network

 

   

Development and Commercialization of Edge-Based IT Architecture + NW Infra Based on SDN

 

   

AI service and media service fast delivery and AI voice/language core engine development

 

   

Technology development for AICC, GiGA Genie and Fast Delivery of AI service

 

   

AI media service/platform technology development for IPTV and Seezn business delivery

 

   

Development of language intelligence core engine (conversation/inference/search)

 

   

Voice/complex intelligence core engine (voice recognition/synthesis/recommendation/TA) development

 

   

Innovate B2X business through customer-centered platform technology differentiation

 

   

Develop differentiated Biz solution/platform for enterprise business innovation

 

   

Developing DX solutions/platforms differentiated by industry such as factories, buildings, and logistics

 

   

Development of industry AI core technologies/services such as digital twin, vision, and sound

 

   

Establish an efficient and agile commercialization system of future technologies based on customer self-innovation

 

   

Future technology sensing/analysis and commercialization item discovery

 

   

Discover new BM/services from the perspective of customer/market value and execute pretotyping/PoC

 

   

Securing the basis for promoting the Big Thing business through cooperation/sourcing with key partners

5. Other Matters Necessary for Making Investment Decisions

A. Intellectual Property Rights (as of December 31, 2020)

 

   

ICT (KT)

KT holds 4,341 domestic patents, 1,487 overseas patents and 2,925 trademarks.

 

   

Financing Business (BC Card)

BC Card holds 122 patents and 793 trademarks.

 

   

Others

 

   

KT Hitel holds 72 patents.

 

   

Genic music holds 5 domestic patents and 69 trademarks.

 

   

KT Telecop holds 37 patents, 5 designs and 72 trademarks.

 

   

Nasmedia holds 2 patents and 3 trademarks.

 

   

PlayD holds 5 domestic patents.

 

   

KTDS holds 8 patents, 7 trademarks, 2 service marks and 12 trade/service marks

 

   

KTCS holds 1 patent.

 

   

KT M-mobile holds 3 trademarks.

 

   

KT Commerce holds 2 patents.

 

   

Initech holds 37 patents and 35 trademarks.

B. Laws that underlie company business

KT is based on the Telecommunications Framework Act, the Telecommunications Business Act, Act on Promotion of Information and Communication Network Utilization and Information Protection, and the Internet Multimedia Broadcasting Business Act, etc.

C. Matters related to the discharge of environmental substances or environmental protection

KT was designated as a company subject to the Greenhouse Gas Emissions Trading System, which has been in effect since 2015 under the ‘ Framework Act on Low Carbon Green Growth’ and ‘Act on Allocation and Transaction of Greenhouse Gas Emissions’.

In 2018, KT was allocated a greenhouse gas emission allowance from the government, and we continue to reduce Greenhouse Gas emissions.

KT’s greenhouse gas emissions are mainly due to the heating and cooling energy of office buildings nationwide and the use of electricity in telecommunication facilities, such as base stations, and repeaters. By 2030, we have set a goal of reducing greenhouse gas emissions by 35% in 2007, and are striving to achieve this.

 

33


III. Financial Information

1. Summary of Financial Statements (Consolidated) (Unit : millions of Korean won)

 

     2020     2019     2018  

Current Assets

     11,154,180       11,897,229       11,894,252  

•  Cash and Cash Equivalents

     2,634,624       2,305,894       2,703,422  

•  Trade and Other Receivables

     4,902,471       5,906,445       5,807,421  

•  Inventories

     534,636       665,498       683,998  

•  Other Current Assets

     3,082,449       3,020,418       2,699,411  

Non-current Assets

     22,508,365       22,642,869       20,294,578  

•  Trade and Other Receivables

     1,250,769       1,181,797       842,995  

•  Property, plant and equipment

     14,206,119       13,785,299       13,068,257  

•  Investment Property

     1,368,453       1,387,430       1,091,084  

•  Intangible Assets

     2,161,258       2,834,037       3,407,123  

•  Investments in Joint Ventures and Associates

     557,881       267,660       272,407  

•  Other Non-Current Assets

     2,963,885       3,186,646       1,612,712  
  

 

 

   

 

 

   

 

 

 

Total Assets

     33,662,545       34,540,098       32,188,830  
  

 

 

   

 

 

   

 

 

 

Current Liabilities

     9,192,472       10,148,056       9,387,704  

Non-Current Liabilities

     8,918,640       9,208,494       8,069,846  

Total Liabilities

     18,111,112       19,356,550       17,457,550  

Capital Stock

     1,564,499       1,564,499       1,564,499  

Share Premium

     1,440,258       1,440,258       1,440,258  

Retained Earnings

     12,155,420       11,633,780       11,328,859  

Accumulated Other Comprehensive Expense

     86,051       194,934       50,158  

Other Components of Equity

     (1,234,784     (1,170,083     (1,181,083

Non-Controlling Interests

     1,539,989       1,520,160       1,528,589  
  

 

 

   

 

 

   

 

 

 

Total Equity

     15,551,433       15,183,548       14,731,280  
  

 

 

   

 

 

   

 

 

 

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

34


     2020      2019      2018  

Operating Revenue

     23,916,667        24,342,064        23,460,143  

Operating Profit

     1,184,107        1,159,566        1,261,522  

Profit for the Period

     703,392        665,942        762,305  

Owners of the Controlling Company

     658,025        615,777        688,464  

Non-controlling interest

     45,367        50,165        73,841  

Earnings per share attributable to the equity holders of the Controlling Company during the year (in Korean won):

        

Basic earnings per share

     2,684        2,512        2,809  

Diluted earnings per share

     2,683        2,510        2,809  

Number of Consolidated Companies

     64        65        63  

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

2. Summary of Financial Statements (Separate) (Unit : millions of Korean won)

 

     2020      2019      2018  

Current Assets

     7,155,734        7,235,243        6,861,619  

•  Cash and Cash Equivalents

     1,541,210        1,328,397        1,779,745  

•  Trade and Other Receivables

     3,127,040        3,231,008        2,968,764  

•  Other Financial Assets

     268,046        100,830        75,401  

•  Inventories

     353,310        477,138        465,273  

•  Other Current Assets

     1,866,128        2,097,870        1,572,436  

Non-Current Assets

     20,872,192        20,977,417        19,149,287  

•  Trade and Other Receivables

     1,080,282        1,063,440        766,316  

•  Other Financial Assets

     180,780        179,240        130,651  

•  Property and equipment

     11,999,717        11,447,952        10,864,398  

•  Right-of-use assets

     1,152,153        1,194,800        —    

•  Investment Property

     735,563        769,019        600,624  

•  Intangible Assets

     1,583,456        2,239,882        2,773,387  

•  Investments in Subsidiaries, Associates and Joint Ventures

     3,505,017        3,501,391        3,547,683  

•  Other Non-Current Assets

     635,224        581,693        466,228  

 

35


Total Assets

     28,027,926        28,212,660        26,010,906  

Current Liabilities

     6,607,967        6,801,252        5,908,497  

Non-Current Liabilities

     8,216,402        8,518,112        7,390,681  
  

 

 

    

 

 

    

 

 

 

Total Liabilities

     14,824,369        15,319,364        13,299,178  
  

 

 

    

 

 

    

 

 

 

Capital Stock

     1,564,499        1,564,499        1,564,499  

Share Premium

     1,440,258        1,440,258        1,440,258  

Retained Earnings

     11,233,714        10,866,582        10,740,042  

Accumulated Other Comprehensive Income

     42,906        23,449        (11,251

Other Components of Shareholders’ Equity

     (1,077,820      (1,001,492      (1,021,820
  

 

 

    

 

 

    

 

 

 

Total Equity

     13,203,557        12,893,296        12,711,728  
  

 

 

    

 

 

    

 

 

 

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

     2020      2019      2018  

Operating Revenue

     17,879,281        18,204,751        17,356,537  

Operating Profit

     878,239        747,722        951,624  

Profit for the Period

     665,493        428,422        561,224  

Earnings per share (in Korean won):

        

Basic earnings per share

     2,714        1,747        2,290  

Diluted earnings per share

     2,713        1,747        2,290  

 

2020 and 2019 were written in accordance with K-IFRS 1116, but 2018 was written in accordance with the previous Standard, K-IFRS 1017.

 

36


IV. Auditors’ Opinion

1. Auditors’ opinion on the consolidated/separate financial statements

 

Fiscal Year

  

Auditor

  

Audit
Comments

  

Issues noted

  

Key Audit Matters

2020    Samil PwC    Unqualified    The financial statements for the fiscal year ending on December 31, 2019 are rewritten, as the retrospectively applying the effect of the change in accounting policy due to the change in the lease term calculation method.    Cash-Generating Unit Impairment Assessment
2019    Samil PwC    Unqualified    Not applicable   

1. Impairment of investment in subsidiaries, associates and joint ventures

2. Cash-Generating Unit Impairment Assessment

2018    Samil PwC    Unqualified    Not applicable   

1. Revenue recognition in telecommunication services through the billing systems

2. Appropriateness of application of change in revenue perception according to the introduction of Corporate Accounting Standard 1115 ‘Revenue from contracts with customers’

2. Audit services contract (Unit : millions of Korean won, hours)

 

Fiscal Year

  

Auditor

  

Contents

   Contractual      Actual  
   Compensation      Total
Time
     Compensation      Total
Time
 

2020

   Samil PwC    Review interim financial statements      3,200        33,000        3,200        33,062  
   Audit of Separate financial statements
   Audit of the consolidated financial statements
   20-F Filing

2019

   Samil PwC    Review interim financial statements      3,000        39,024        3,000        35,121  
   Audit of Separate financial statements
   Audit of the consolidated financial statements
   20-F Filing

2018

   Samil PwC    Review interim financial statements      2,600        43,077        2,600        36,245  
   Audit of Separate financial statements
   Audit of the consolidated financial statements
   20-F Filing

 

Financial Statement Review and Audit Period, Internal Accounting Management System Audit (Review) Period

 

37


Category

  

2020

  

2019

  

2018

1st quarter review   

From April 1, 2020

to May 15, 2020

  

From April 13, 2019

to May 15, 2019

  

From April 13, 2018

to May 15, 2018

2nd quarter review   

From July 13, 2020

to August 14, 2020

  

From July 13, 2019

to August 14, 2019

  

From July 13, 2018

to August 14, 2018

3rd quarter review   

From October 15, 2020

to November 16, 2020

  

From October 13, 2019

to November 14, 2019

  

From October 15, 2018

to November 14, 2018

Audit of systems and automatic internal controls    -   

From May 20, 2019

to June 28, 2019,

From August 19, 2019

to September 30, 2019,

From November 18, 2019

to February 5, 2020

  

From May 23, 2018

to June 29, 2018,

From August 20,

2018

to September 21,

2018,

From November 19, 2018

to February 10, 2019

Early proof audit   

From May 11, 2020

to December 24, 2020

  

From May 6, 2019

to December 27, 2019

  

From May 7, 2018

to December 28, 2018

Internal Accounting Management System Audit (Review)   

From May 11, 2020

to March 9, 2021

  

From May 6, 2019

to March 10, 2020

  

From May 7, 2018

to March 11, 2019

Update Early Proof Audit Procedure and Financial Statement Audit   

From January 2, 2021

to March 9, 2021

  

From January 2, 2020

to March 10, 2020

  

From January 2, 2019

to March 11, 2019

3. Non-Audit services contract (Unit : millions of Korean won)

 

Fiscal Year

   Contract date    Contents    Service period    Compensation  

2020

   August 2020    Comfort letter    August 2020      100  

2019

   July 2019    Comfort letter    July 2019      100  

2018

   July 2018    Comfort letter    July 2018      100  
   November 2018    Comfort letter    November 2018      100  

 

38


4. The results of the Internal Audit Organization’s discussion with the auditor

 

Date

  

Attendee

  

Method

  

Main Discussion Content

February 4, 2020   

- KT Audit committee,

- Auditor : 2 people (Director of Business Conductor, etc.)

   A face-to-face meeting    - Key matters related to external audit
March 5, 2020   

- Audit committee, executive secretary, Compliance officer, etc.

- Auditor : 2 people (Director of Business Conductor, etc.)

   A face-to-face meeting   

- Report on the results of external auditors’ end-of-term audit of 2019

- Results of Key Audit Matters

April 16, 2020   

- Audit committee, executive secretary, Compliance officer, etc.

- Auditor : 2 people (Director of Business Conductor, etc.)

   A face-to-face meeting   

- Annual audit plan for 2020

- Scope and timing of audit, independence

April 16, 2020   

- Audit committee

- Auditor : 2 people (Director of Business Conductor, etc.)

   A face-to-face meeting    - Key matters related to external audit
May 7, 2020   

- Audit committee, executive secretary, Compliance officer, etc.

-Auditor : 2 people (Director of Business Conductor, etc.)

   A face-to-face meeting    - Results of the first quarter of 2020 review
July 14, 2020   

-Audit committee member

-Auditor : 3 people (Director of Business Conductor, etc.)

   A face-to-face meeting    - Key matters related to external audit
August 4, 2020   

- Audit committee, executive secretary, Compliance officer, etc.

- Auditor : 3 people (Director of Business Conductor, etc.)

   A face-to-face meeting   

- Results of the second quarter of 2020 review

- Group audit planning

November 3, 2020   

- Audit committee, executive secretary, Compliance officer, etc.

- Auditor : 3 people (Director of Business Conductor, etc.)

   A face-to-face meeting    - Results of the third quarter of 2020 review
December 15, 2020   

- Audit committee, executive secretary, Compliance officer, etc.

- Auditor : 3 people (Director of Business Conductor, etc.)

   A face-to-face meeting   

- Important risks identified by the auditor, selection of key audit items, and auditing by item, etc.

- Other reports related to independence

March 4, 2021   

- Audit committee, executive secretary, Compliance officer, etc.

- Auditor : 3 people (Director of Business Conductor, etc.)

   A face-to-face meeting   

- Results of the 2020 Year-end Audit

- Audit results for key audit matters and changed important accounting policies

V. Management and Affiliated Companies

1. Overview of the Board of Directors and Committees

A. Matters on the Board of Directors

(1) Organization

As of December 31, 2020, the Board of Directors of KT consists of 11 Directors (3 Inside Directors and 8 Outside Directors). Under the Board of Directors, KT has eight different Committees as follows; Representative Director Candidate Examination Committee, Corporate Governance Committee, Outside Director Candidate Recommendation Committee, Audit Committee, Evaluation & Compensation Committee, Executive Committee, Related-Party Transaction Committee and Corporate Sustainability Management Committee. The Board of Directors may establish additional committees if necessary. The Chairman of the Board of Directors is elected separately with CEO and the Board of Directors appoints one of the outside director as a chairman annually. Currently, The Board Chairman is Director Dae-You Kim who has enough leadership to coordinate members of the Board.

 

Please refer to ‘VIII. Directors, Senior Management and Employees’ to see each director’s major career.

 

39


• The Number of Outside Directors and its change

 

The Number
of Directors

  The Number of
Outside Directors
    Change of Outside Directors  
  Appointment     Dismissal     Interim resignation  
11     8       4       —         —    

 

Numbers are results of the 38th AGM 2020.

(2) Major Activities of the Board of Directors

 

Order

  

Date

  

Subject

  

Result of
Discussion

  

Outside Director

  

Inside Director

  

Jong-Gu
Kim

  

Suk-Gwon
Chang

  

Gae-Min
Lee

  

Il Im

  

Gang-
Cheol Lee

  

Dae-You
Kim

  

Hee-Yol
Yu

  

Tae-Yoon
Sung

  

Chang-Gyu
Hwang

  

Dong-
Myun Lee

  

In-Hoe
Kim

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
92.3%

  

Attendance
92.3%

  

Attendance
100%

  

Attendance
100%

  

Attendance
50%

  

Attendance
100%

  

Attendance
100%

1st    2020. 2. 6    Approval of financial statements(separate and consolidated) of the 38th term    Original proposal approved    For    For    For    For    For    For    For    For    Absence    For    For
   Approval of Business reports of the 38th term    Original proposal approved    For    For    For    For    For    For    For    For    Absence    For    For
   Proposal on adoption of electronic voting    Original proposal approved    For    For    For    For    For    For    For    For    Absence    For    For
   Report on matters for resolution of executive committee for 2H 2019    Original proposal accepted    For    For    For    For    For    For    For    For    Absence    For    For
   Report on matters for reorganization in 2020    Original proposal accepted    For    For    For    For    For    For    For    For    Absence    For    For

 

Inside director Dong-Myun Lee resigned on February 17, 2020.

 

40


Order

  

Date

  

Subject

  

Result of
Discussion

  

Outside Director

  

Inside Director

  

Jong-Gu
Kim

  

Suk-Gwon
Chang

  

Gae-Min
Lee

  

Il Im

  

Gang-
Cheol Lee

  

Dae-You
Kim

  

Hee-Yol
Yu

  

Tae-Yoon
Sung

  

Chang-Gyu
Hwang

  

In-Hoe
Kim

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
92.3%

  

Attendance
92.3%

  

Attendance
100%

  

Attendance
100%

  

Attendance
50%

  

Attendance
100%

2nd   

2020. 3.

10

   Approval of financial statements(separate and consolidated) of the 38th term    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Approval of Business reports of the 38th term    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Notice of Annual General Meeting for the 38th term    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Report on operational condition of the internal accounting management system in 2019    Original proposal accepted    For    For    For    For    For    For    For    For    For    For
   Report on inspection results of the internal accounting management system in 2019 by Audit committee    Original proposal accepted    For    For    For    For    For    For    For    For    For    For
   Proposal on Standards and Method of Payment on Remuneration of CEO and Inside Directors    Original proposal approved    For    For    For    For    For    For    For    For    (*)    (*)
   Proposal on Limit of Remuneration of Directors    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Proposal on Limit of Remuneration, distinction and the number of administration executives    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Revision of rules of payment on executives’ retirement income    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Revision of standards of compliance system    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Amendment of the articles of incorporation    Original proposal approved    For    For    For    For    For    For    For    For    For    For
   Proposal on management contract    Original proposal approved    For    For    For    For    For    For    For    For    (*)    (*)
   Recommendation of Audit committee candidate    Recommendation of Audit committee candidate    For    For    For    For    For    For    For    For    For    For
   Agreement on Recommendation of inside director candidate    Recommendation of Inside Director Candidate agreed    For    For    For    For    For    For    For    For    (*)    (*)

 

(*)

No voting right for Inside directors

 

41


the 38th AGM on March 30, 2020

 

   

Term of Inside director Chang-Gyu Hwang and In-Hoe Kim expired

 

   

Term of Outside director Jong-Gu Kim, Suk-Gwon Chang, Gae-Min Lee and Il Im expired

 

   

Inside director Hyeon-Mo Ku, Yoon-Young Park and Jong-Ook Park newly appointed

 

   

Outside director Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park and Eun-Jung Yeo newly appointed

 

Order

  

Date

  

Subject

  

Result of
Discussion

  

Outside Director

  

Inside Director

  

Dae-You
Kim

  

Gang-
Cheol

Lee

  

Hee-Yol
Yu

  

Tae-Yoon
Sung

  

Hyun-
Myung
Pyo

  

Chung-Gu
Kang

  

Chan-Hi
Park

  

Eun-Jung
Yeo

  

Hyeon-Mo
Ku

  

Yoon-
Young
Park

  

Jong-Ook
Park

  

Attendance
92.3%

  

Attendance
92.3%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
90.9%

  

Attendance
81.8%

  

Attendance
100%

3rd    2020. 3. 30    Proposal on election of the BOD chairman and committee organization    Chairman of BOD and members of committees appointed    For    For    For    For    For    For    For    For    For    For    For
   Proposal on revision of operating rules of the board meeting and the board committee    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Proposal on revision of rules related to management executives’ meeting    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Proposal on management plan of newly appointed representative director for tenure    Original proposal approved    For    For    For    For    For    For    For    For    (*)    (*)    (*)
4th    2020. 4. 16    Proposal of Project Bali    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
5th    2020. 4. 28    Approval of US filing consolidate financial statements of FY2019    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Proposal on Corporate Sustainability Management Plan in 2020    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Proposal on donation of 2020 CSR fund    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
6th    2020. 5. 12    Report on financial performance of corporates invested less than 15 billion won in 2019    Original proposal accepted    For    Absence    For    For    For    For    For    For    For    For    For
   Proposal on disposition of treasury shares to provide stock incentive for 2019    Original proposal approved    For    Absence    For    For    For    For    For    For    For    For    For
   Report on financial statements(separate and consolidated) of 1Q FY2020    Original proposal accepted    For    Absence    For    For    For    For    For    For    For    For    For
   Proposal on Mid-term dividend policy    Original proposal approved    For    Absence    For    For    For    For    For    For    For    For    For
   Report on inspection results of compliance management    Original proposal accepted    For    Absence    For    For    For    For    For    For    For    For    For

 

42


7th    2020. 6. 16    Proposal on handling provided long term incentives    Original proposal approved    Absence    For    For    For    For    For    For    For    (*)    (*)    (*)
   Proposal on provision of long term incentive and disposition of treasury share for 2019    Original proposal approved    Absence    For    For    For    For    For    For    For    (*)    (*)    (*)
   Proposal on limit of long term incentive and criteria of stock compensation for 2020    Original proposal approved    Absence    For    For    For    For    For    For    For    (*)    (*)    (*)
   Proposal of Project Versorium    Original proposal approved    Absence    For    For    For    For    For    For    For    For    For    For
   Proposal on donation and operational support for Gyeonggi Innovation Center    Original proposal approved    Absence    For    For    For    For    For    For    For    For    For    For
8th    2020. 8. 6    Proposal on donation of corporate partnership investment fund for operating collaboration programs with partners    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Report of financial statements(separate and consolidated) of the 1H 2020    Original proposal accepted    For    For    For    For    For    For    For    For    For    For    For
   Report on matters for resolution of Executive Committee for 1H 2020    Original proposal accepted    For    For    For    For    For    For    For    For    For    For    For
   Facility(IT/Media) relocation plan by termination of lease contract for Mokdong tower    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
9th    2020. 8. 14    Proposal on deposition of flood recovery donation    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
10th    2020. 9. 22    Proposal on standards for short term incentive provision for former CEO’s service in 2020    Original proposal approved    For    For    For    For    For    For    For    For    Absence    For    For
   Proposal on composition of Outside Director Candidate Recommendation Committee and selection criteria for Outside Director Candidate   

Passed resolution organizing committee

and confirmed Outside director candidate selection criteria

   For    For    For    For    For    For    For    For    For    For    For
   Proposal on donation for RIGHT Fund    Pending resolution    Withhold    Withhold    Withhold    Withhold    Withhold    Withhold    Withhold    Withhold    Withhold    Withhold    Withhold
11th    2020. 11. 5    Report on financial statements(separate and consolidated) of 3Q FY2020    Original proposal accepted    For    For    For    For    For    For    For    For    For    For    For
   Proposal on a trust agreement contract for share buyback    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Proposal on disposition of treasury shares    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Proposal on donation to labor welfare fund in 2020    Original proposal approved    For    For    For    For    For    For    For    For    For    For    For
   Proposal on donation for RIGHT Fund    Original proposal approved    For    For    For    Abstention    For    For    Abstention    Abstention    For    For    For

 

43


12th    2020. 11. 24    Proposal on 2021 management plan    Original proposal approved    For    For    For    For    For    For    For    For    For    Absence    For
13th    2020. 12. 27    Proposal on land purchase for new IDC construction    Original proposal approved    For    For    For    For    For    For    For    For    For    Absence    For
   Plan for procurement of reallocating spectrums    Original proposal approved    For    For    For    For    For    For    For    For    For    Absence    For
   Report on matters for reorganization in 2021    Original proposal accepted    For    For    For    For    For    For    For    For    For    Absence    For

(*) No voting right for Inside directors

 

44


(3) The Status of Committees under the Board of Directors

(a) Organization of the Committees under the Board of Directors (as of December 31, 2020)

 

Committee

  

Composition

  

Name

  

Purpose of Establishment

and Authority

Representative Director Candidate Examination Committee    All Outside Directors & 1 Inside Director    —      According to Article 32(Representative Director Candidate Examination Committee), examine CEO candidates and make a short list
Corporate Governance Committee    4 Outside Directors, & 1 Inside Director    Gang-Cheol Lee (Chairperson), Dae-You Kim, Hee-Yol Yu, Hyun-Myung Pyo, Jong-Ook Park   

Matters related with corporate governance

  Article 41-2(CG Committee)

Outside Director Candidate Recommendation Committee    All Outside Directors (exclude directors whose term to be expired) & 1 Inside Director    Hee-Yol Yu (Chairperson), Tae-Yoon Sung, Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park, Eun-Jung Yeo, Jong-Ook Park   

Recommendation of Outside candidates to the general meeting

  See V. 1.(4) Independence of the Board of Directors for the Outside Director Candidate Recommendation Committee

  Commercial Act §542: 8(appointment of Outside Directors), Article 42(Outside Director Candidates Recommendation Committee)

Audit Committee    4 Outside Directors    Tae-Yoon Sung (Chairperson), Dae-You Kim, Chung-Gu Kang, Eun-Jung Yeo   

Matters related with financial and performance audit

  See V. 2. Audit system

  Commercial Law §542: 11 (Audit Committee) 1st article

  Article 43(Audit Committee)

Evaluation & Compensation Committee    4 Outside Directors    Hee-Yol Yu (Chairperson), Gang-Cheol Lee, Hyun-Myung Pyo, Chan-Hi Park    Management Agreement with the CEO and Assessment
Executive Committee    3 Inside Directors    Hyeon-Mo Ku(Chairperson), Yoon-Young Park, Jong-Ook Park    Management matters authorized by the Board of Directors
Related-party Transaction Committee    4 Outside Directors   

Hee-Yol Yu (Chairperson),

Chung-Gu Kang, Chan-Hi Park, Eun-Jung Yeo

   Under the Commercial Act : Matters about approval of using business opportunities of company, Transaction between directors and company, Transactions which need to be approved by the Board of Directors among transactions with the largest shareholder and specially related persons and Internal trading stipulated by the Monopoly Regulation and Fair Trade Act
Corporate Sustainability Management Committee    4 Outside Directors, & 1 Inside Director    Hyun-Myung Pyo (Chairperson), Gang-Cheol Lee, Tae-Yoon Sung, Chan-Hi Park, Yoon-Young Park    Matters about Corporate Sustainability Management

(b) Activities of the Committees under the Board of Directors

 

   

President Candidate Examination Committee : Not applicable

 

   

Corporate Governance Committee

 

Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Outside Director

  

Inside Director

  

Dae-You Kim

  

Jong-Gu Kim

  

Suk-Gwon Chang

  

Gang-Cheol
Lee

  

In-Hoe Kim

  

Attendance 100%

  

Attendance 100%

  

Attendance 100%

  

Attendance
100%

  

Attendance
50%

1st    2020.3.5    Report on amendment of the articles of incorporation    Original proposal modified and accepted    For    For    For    For    Absence
2nd    2020.3.20    Report on revision of operating rules of the board meeting and the board committee    Original proposal accepted    For    For    For    For    For

 

45


   

Outside Director Candidate Recommendation Committee : Refer to “(4) Independence of the Board of Directors” for details

 

   

Audit Committee : Refer to “2. Audit System major Activities of the Audit Committee” for details

 

   

Evaluation & Compensation Committee

 

Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Outside Director

  

Gae-Min Lee

  

Gang-Cheol Lee

  

Hee-Yol Yu

  

Tae-Yoon Sung

  

Attendance 100%

  

Attendance 66.7%

  

Attendance 100%

  

Attendance 100%

1st    2020.3.5    Report on Standards and Method of Payment on Remuneration of CEO and Inside Directors    Original proposal accepted    For    Absence    For    For
   Report on revision of rules of payment on executives’ retirement income    Original proposal accepted    For    Absence    For    For
   Evaluation result of CEO’s management goal achievement for 2019    Evaluation results confirmed    For    Absence    For    For
   Proposal on CEO’s management goal for 2020    Original proposal approved    For    Absence    For    For

 

the 38th AGM on March 30, 2020

 

   

Term of Outside director Jong-Gu Kim, Suk-Gwon Chang, Gye-Mein Lee and Il Im expired

 

   

Outside director Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park and Eun-Jung Yeo newly appointed

 

Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Outside Director

  

Hee-Yol Yu

  

Gang-Cheol Lee

  

Hyun-Myung Pyo

  

Chan-Hi Park

  

Attendance 100%

  

Attendance 66.7%

  

Attendance 100%

  

Attendance 100%

2nd    2020.6.11    Report on provision of long term incentive and disposition of treasury share for 2019    Original proposal accepted    For    For    For    For
   Report on limit of long term incentive and criteria of stock compensation for 2020    Original proposal accepted    For    For    For    For
3rd    2020.9.17    Report on standards for short term incentive provision for former CEO’s service in 2020    Original proposal accepted    For    For    For    For

 

   

Executive Committee

 

Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Inside Director

  

Chang-Gyu

Hwang

  

Dong-Myun Lee

  

In-Hoe Kim

  

Attendance
100%

  

Attendance 100%

  

Attendance 100%

1st    2020.2.10    KT Handset Account Receivable Selling Plan for 2020    Original proposal approved    For    For    For

Inside director Dong-Myun Lee resigned on February 17, 2020.

 

46


the 38th AGM on March 30, 2020

 

   

Term of Inside director Chang-Gyu Hwang and In-Hoe Kim expired

 

   

Inside director Hyeon-Mo Ku, Yoon-Young Park and Jong-Ook Park newly appointed

 

Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Inside Director

  

Hyeon-Mo Ku

  

Yoon-Young Park

  

Jong-Ook Park

  

Attendance 100%

  

Attendance 100%

  

Attendance 100%

2nd    2020.4.22    Proposal on establishment, relocation and closure of branch offices    Original proposal approved    For    For    For
3rd    2020.6. 3    Plan for issuance of 193th KT corporate bonds    Original proposal approved    For    For    For
   Plan for issuance of 2020 1st KT foreign currency corporate bonds    Original proposal approved    For    For    For
4th    2020.8.19    Plan for issuance of 2020 2st KT foreign currency corporate bonds    Original proposal approved    For    For    For
5th    2020.10.14    Proposal on KT O-Chang site disposition and BBH acquisition plan for transferring telecommunication facilities in the site    Original proposal approved    For    For    For
6th    2020.12.10    Proposal on transition of Yanolja’s RCPS into CPS    Original proposal approved    For    For    For

 

   

Related-Party Transaction Committee

 

Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Outside Director

  

Il Im

  

Gae-Min Lee

  

Hee-Yol
Yu

  

Tae-Yoon Sung

  

Attendance
100%

  

Attendance

100%

  

Attendance

100%

  

Attendance

100%

1st    2020. 1.20    Proposal on participating in paid-in capital increase for KT Engcore    Original proposal approved    For    For    For    For

the 38th AGM on March 30, 2020

 

   

Term of Outside director Jong-Gu Kim, Suk-Gwon Chang, Gye-Min Lee and Il Im expired

 

   

Outside director Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park and Eun-Jung Yeo newly appointed

 

Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Outside Director

  

Hee-Yol
Yu

  

Chung-Gu
Kang

  

Chan-Hi
Park

  

Eun-Jung
Yeo

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

2nd    2020. 4.14    Proposal on business transfer of KT web novel business and etc.    Original proposal approved    For    For    For    For

 

   

Corporate Sustainability Management Committee

 

47


Order

  

Meeting

Date

  

Agenda

  

Results

of discussion

  

Outside Director

  

Inside Director

  

Hyun-Myung
Pyo

  

Gang-Cheol
Lee

  

Chan-Hi
Park

  

Tae-Yoon
Sung

  

Yoon-Young
Park

  

Attendance
100%

  

Attendance
50%

  

Attendance
100%

  

Attendance
100%

  

Attendance
75%

1st    2020.4.16    Proposal on donation of refund of 2020 MWC Barcelona event    Original proposal approved    For    For    For    For    For
   Report on result of Corporate Sustainability Management assessment for 2019    Original proposal accepted    For    For    For    For    For
   Report on 2020 Corporate Sustainability Management plan    Original proposal accepted    For    For    For    For    For
2nd    2020. 5.28    Proposal on donation of corporate partnership investment fund for innovative partnership programs    Original proposal approved    For    For    For    For    For
3rd    2020. 8. 6    Report on result of Corporate Sustainability Management assessment for the 1H 2020    Original proposal accepted    For    For    For    For    For
4th    2020.12.17    Report on result of Corporate Sustainability Management assessment for 2020    Original proposal accepted    For    For    For    For    Absence

(4) Independence of the Board of Directors

 

(a)

Independence of appointing BOD members

In order to secure independence and transparency, outside director candidate should be recommended to the AGM by Outside director candidate committee and the outside search and advisory service may be conducted if necessary. Inside director, excluding representative director, should be recommended among executives by representative director with consent of the board of directors and selected from the AGM following the articles of incorporation.

 

48


(b)Appointment of new Directors and recommender (as of December 31, 2020)

 

Title

  

Name

  

Tenure

  Consecutive
term

(number of
term)
  

Appointment
background

  

Recommendation

  

Acting area as a

director

  

Transactions
with the
company,
relationship with

major
shareholders

Representative director    Hyeon—Mo Ku    March of 2020 ~ AGM day of 2023   —      ICT/Management expert    BOD    Executive committee    None
Inside director    Yoon-Young Park    March of 2020 ~ AGM day of 2021   —      ICT/Management expert   

Representative director

(w/ the consent of BOD)

  

Executive committee,

Corporate sustainability management committee

   None
Inside director    Jong—Ook Park    March of 2020 ~ AGM day of 2021   —      ICT/Management expert   

Representative director

(w/ the consent of BOD)

  

Executive committee,

Corporate governance committee

   None
Outside director    Dae-You Kim    March of 2018 ~ AGM day of 2021   —      Corporate relations expert    Outside director candidate recommendation committee    Chairperson of BOD, Corporate governance committee, Audit committee    None
Outside director    Gang-Cheol Lee    March of 2018 ~ AGM day of 2021   —      Corporate relations expert    Outside director candidate recommendation committee    Chairperson of Corporate governance committee, Evaluation and compensation committee, Corporate sustainability management committee    None
Outside director    Hee-Yol Yu    March of 2019 ~ AGM day of 2022   —      ICT expert    Outside director candidate recommendation committee    Chairperson of Evaluation and compensation committee, Chairperson of Related party transaction committee, Corporate governance committee    None
Outside director    Tae-Yoon Sung    March of 2019 ~ AGM day of 2022      Global affairs /Economy expert    Outside director candidate recommendation committee    Chairperson of Audit committee, Corporate sustainability management committee    None
Outside director    Hyun-Myung Pyo    March of 2020 ~ AGM day of 2023   —      ICT/Management expert    Outside director candidate recommendation committee    Chairperson of Corporate sustainability management committee, Corporate governance committee, Evaluation and compensation committee    None
Outside director    Chung-Gu Kang    March of 2020 ~ AGM day of 2023   —      Telecommunication ICT expert    Outside director candidate recommendation committee    Audit committee, Related party transaction committee    None
Outside director    Chan—Hi Park    March of 2020 ~ AGM day of 2022   —      Management expert    Outside director candidate recommendation committee    Evaluation and compensation committee, Related party transaction committee, Corporate sustainability management committee,    None
Outside director    Eun-Jung Yeo    March of 2020 ~ AGM day of 2023   —      Accounting·Finance expert    Outside director candidate recommendation committee    Audit committee, Related-party transaction committee    None

 

49


Tenure : Tenure as a director

 

(c)

Establishing separate committee to appoint new directors

The 9th Board meeting of 2019 (2019.9.27) : Chairperson and members of Outside Director Candidate Recommendation Committee appointed

 

Name

  

Whether Outside Director

  

Note

Dae-You Kim(Chairperson)    O   

The number of Outside Directors should be more than 50%

(fulfilled requirements stipulated in Commercial Act 542(8) 4.)

Gang-Cheol Lee    O
Hee-Yol Yu    O
Tae-Yoon Sung    O
In-Hoe Kim    X

 

Excluded Outside Director Jong-Gu Kim, Gae-Min Lee, Suk-Gwon Chang and Il Im whose tenure ended by the AGM of 2020

The 10th Board meeting of 2020 (2020.9.22) : Chairperson and members of Outside Director Candidate Recommendation Committee appointed

 

Name

  

Whether Outside Director

  

Note

Hee-Yol Yu(Chairperson)    O   

The number of Outside Directors should be more than 50%

(fulfilled requirements stipulated in Commercial Act 542(8) 4.)

Tae-Yoon Sung    O
Hyun—Myung Pyo    O
Chung—Gu Kang    O
Chan-Hi Park    O
Eun-Jung Yeo    O
Jong-Ook Park    X

Excluded Outside Director Dae-You Kim and Gang-Cheol Lee whose tenure ended by the AGM of 2021

 

   

Outside Director Candidate Recommendation Committee

 

Order

  

Meeting

Date

  

Agenda

  

Results of

discussion

  

Outside Director

  

Inside
Director

  

Dae-Yoo
Kim

  

Gang-
Cheol Lee

  

Hee-Yol
Yu

  

Tae-Yoon
Sung

  

In-Hoe
Kim

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
0%

1st    2020.3.5    Final decision on Outside Director candidates    Candidates decided    For    For    For    For    Absence

The 10th Board meeting of 2020 (2020.9.22) : Chairperson and members of Outside Director Candidate Recommendation Committee appointed

 

Order

  

Meeting

Date

  

Agenda

  

Results of

discussion

  

Outside Director

  

Inside
Director

  

Hee-Yol
Yu

  

Tae-Yoon
Sung

  

Hyun-
Myung
Pyo

  

Chung-Gu
Kang

  

Chan—Hi
Park

  

Eun-Jung
Yeo

  

Jong-Ook
Park

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

2nd    2020.11.3    Proposal on operating plan of Outside Director Candidate Recommendation Committee    Committee operating plan approved    For    For    For    For    For    For    For

(5) Expertise of Outside Directors

KT established a dedicated team(corporate governance team) for outside directors to support the board meeting and committee activities. The corporate governance team provides explanatory meetings in advance, if necessary, to make agendas fully considered and information on business issues.

 

50


(a) Supportive team for Outside Directors

 

Department

  

Number of Staffs

  

Job Position(years served)

  

Activity history

BOD Office

of the Management Planning Department

   9   

Office Director 1 (4 years of service)

Team leader 2 (1 years of service on average)

Vice director 2 (4 years of service on average)

Manager 3 (3.7 years of service on average)

Assistant manager 1 (4 years of service)

  

- Provides daily news about the company and telecom policies and report on major issues

- Reports on preliminary check result for meeting items

- Provides other information needed for outside directors’ job

and supports for their requests.

Years served are counted up to date of disclosure

(b) Education for outside directors

 

Date

  

Education provider

  

Attended outside director

  

Reasons for

absence

  

Education contents

2020.3.26    KT    Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park, Eun-Jung Yeo    Only for newly appointed outside directors    Introduction of KT BOD, KT group affiliates and management plan, Domestic and global telecommunication and ICT industry trends and others
2020. 5.12    KT    All    –      Major regulation issues and responds in 2020
2020. 5.28    KT    Dae-You Kim, Gang-Cheol Lee, Hee-Yol Yu, Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park, Eun-Jung Yeo   

Director Tae-Yoon Sung was absent for private schedule

(Alternatively provided education materials)

   Group Media/Contents business strategy, Group Real estate business status and strategy
2020. 6.11    KT    All    –      Group Finance business status and strategy
2020. 6.23    KT    All    –      5G network/business strategy
2020. 7.23    KT    Dae-You Kim, Hee-Yol Yu, Tae-Yoon Sung, Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park, Eun-Jung Yeo   

Director Gang-Cheol Lee was absent for private schedule

(Alternatively provided education materials)

   AI R&D/business strategy
2020. 9.17    KT    Dae-You Kim, Gang-Cheol Lee, Hee-Yol Yu, Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park, Eun-Jung Yeo   

Director Tae-Yoon Sung was absent for private schedule

(Alternatively provided education materials)

  

KT strategic investment direction,

Group management direction and achievements

2020. 9.22    KT    All    —      Global business strategy
2020.10.30    KT    Dae-You Kim, Gang-Cheol Lee, Hee-Yol Yu, Tae-Yoon Sung, Hyun-Myung Pyo, Chung-Gu Kang, Eun-Jung Yeo   

Director Chan-Hi Park was absent for private schedule

(Alternatively provided education materials)

   KT corporate strategy, The changes of KT network and IT, Mobile network evolution direction after 5G
2020.11. 5    Samil Accounting Corporation    Dae-You Kim, Hee-Yol Yu, Tae-Yoon Sung, Hyun-Myung Pyo, Chung-Gu Kang, Chan-Hi Park, Eun-Jung Yeo   

Director Gang-Cheol Lee was absent for private schedule

(Alternatively provided education materials)

   Internal accounting management system

 

51


2. Audit system

(1) Personal Information of Members of the Audit Committee (As of December 31, 2020)

 

Name   

Outside

Director

   Experience    Accounting/ Finance Expert
   Expert    Expertise    Relevant career
Tae-Yoon Sung   

Yes

  

-Professor at School of Economics, Yonsei University

- Dean of Underwood International College, Yonsei University

- Director at Korea Money and Finance Association

- Editorial Member at Editorial Committee, Korea Economic Association

   —      —      —  
Dae-You Kim    Yes   

- Economic Policy Top Secretary, Presidential Secretariat (Vice Minister Level)

- Vice Chairman, Wonik Investment Partners

- Outside Director, DB Life Insurance Co., Ltd(Present)

   —      —      —  
Chung-Gu Kang    Yes   

-Professor at College of Engineering, Korea University

- Member of the National Academy of Engineering of Korea

- Honorary President at Korea Institute of Communication and Information Sciences

-Chair at Consultative Committee for Radio Policy, Ministry of Science and ICT

   —      —      —  
Eun-Jung Yeo    Yes   

-Profess at College of Business, Chung-Ang University

- Member of Asset Management Committee for Employment Insurance / Industrial Insurance Fund, Ministry of Employment and Labor

- Member of Financial subcommittee, Consumer Policy Committee, Fair Trade Commission, Prime Minister’s Office

- Vice President at Korea Money and Finance Association

   Yes    Ph.D. in Finance and accounting   

- Qualification : Ph.D. in Economics, University of Michigan

- Work Length : Profess at College of Business, Chung-Ang University (2013-Present)

(a) Finance and accounting expert

Director Tae-Yoon Sung, Chung-Gu Kang, and Eun-Jung Yeo are newly elected as member of Audit Committee at AGM on March 30th, 2020. Amongst Audit committee members, Director Eun-Jung Yeo is a finance/accounting expert. Director Eun-Jung Yeo received Ph,D in Economics and has worked from September, 2013 as a professor of School of Business, Chung-Ang University.

Director Eun-Jung Yeo is an expert in corporate finance (CSR, remuneration, governance, behavioral finance), Fintech (payment, virtual currency), financial brokerage (credit information, credit card, banking industry), financial investment business, and capital market, writing a number of papers related to Corporate Finance. She also has been in charge of evaluation and advisory services in accounting and finance related fields, such as in government agencies. Please refer to the following for specific major career and financial accounting-related activities.

 

   

Qualification and work experience

 

Begin Year

  

End Year

  

Experience

  

Note

1996    1998    Bachelor’s in Chemical Engineering, Seoul National University   
2000    2006    Ph.D. in Economics, University of Michigan    Qualified : Master’s degree or higher in finance and accounting related field
2013    Present    Profess at College of Business, Chung-Ang University    Qualified : Worked for a university at least as an assistant professor or higher in accounting or finance for an aggregated period of at least five years

 

52


   

Other major work experience

 

   

2017-present : Member of Financial Developments Council, Financial Services Commission

 

   

2015-present : Member of Evaluation Committee for Public Funds, Ministry of Strategy and Finance

 

   

2016-present : Member of Financing & Planning Council, City government of Seoul

 

   

2018-present : Vice President at Financial Information Society of Korea

 

   

2016 : Vice President, MBA, Chung-Ang University

 

   

2015-2016 : Director, Korea Money and Finance Association

 

   

2015-2016 : Coordinator, Korea Securities Association

 

   

2012-2014 : Public capital redemption fund oversight council, Financial Services Commission

 

   

2012-2014 : Editorial Board of Asian Review of Financial Research

 

   

2006-2009 : Research Fellow, Korea Institute of Finance

(2) Independence of Audit Committee

The Audit Committee is established within the Board of Directors and members of the audit committee are appointed at the shareholders’ meeting. The Audit Committee is composed of four Outside Directors. Among the members, Eun-Jung Yeo is the financial expert.

The Audit Committee performs its duties and accounting work independently. If necessary, the Audit Committee and its members have the right to report on the company’s business and investigate the company’s financial status.

 

Outside
Director

  

Tenure*

  

Consecutive term

(number of term)

  

Reasons for
appointment

  

Recommender

  

Roles in the Board

  

Transaction with
the Company,
Relationship
with the largest
shareholder  and
major
shareholders

Tae-Yoon Sung    March of 2020 ~ AGM of 2022    Not applicable   

Global affairs/

Economy Expert

   Board of Directors   

Audit Committee

(Chairperson)

Sustainability Management Committee(Member)

   None
Dae-You Kim    March of 2019 ~ AGM of 2021    Not applicable    External Cooperation Expert    Board of Directors   

Chairperson of BOD,

Corporate Governance Committee(Member),

Audit Committee(Member)

   None
Chung-Gu Kang    March of 2020 ~ AGM of 2023    Not applicable    ICT Expert    Board of Directors   

Audit Committee(Member),

Internal Transaction Committee(Member)

   None
Eun-Jung Yeo    March of 2020 ~ AGM of 2023    Not applicable   

Finance/Accounting Expert

(Article 37 (2) 2 of the Enforcement Decree of the Commercial Act)

   Board of Directors   

Audit Committee(Member),

Internal Transaction Committee(Member)

   None

 

53


(3) Major Activities of the Audit Committee

 

Order

  

Date

  

Agenda

  

Result of
Discussion

  

Outside Director

  

Suk-Gwon
Chang

  

Jong-Gu
Kim

  

Dae-You
Kim

  

Il Im

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

1st    2020. 2.4    Approval of audit and non-audit services for consolidated company for the Fiscal year 2020    Original proposal approved    For    For    For    For
2nd    2020.2.27    Report on operational condition of the internal accounting management system for 2019    Original proposal accepted    For    For    For    For
   Report on audit records for 2019 and audit plan for 2020    Original proposal accepted    For    For    For    For
   Report on final audit for fiscal year 2019    Original proposal accepted    For    For    For    For
3rd    2020. 3.5    Evaluation report on operational status of internal compliance device of the audit committee for 2019    Original proposal approved    For    For    For    For
4th    2020.3.20    Audit report of the annual general meeting of shareholders for the 38th term    Original proposal approved    For    For    For    For
   Evaluation Opinion on the Operation Status of the Audit Committee’s Internal Monitoring System    Original proposal approved    For    For    For    For
   Research result report on agenda and documents of the annual general meeting of shareholders for the 38th term    Original proposal approved    For    For    For    For
   Appointment of the Chairman of the Compliance Committee    Appointment of Chairperson    For    For    For    For

 

After the 38th General Meeting of Shareholders on March 30, 2020

 

Order

  

Date

  

Agenda

  

Result of Discussion

  

Outside Director

  

Tae-
Yoon
Sung

  

Dae-You
Kim

  

Chung-Gu
Kang

  

Eun-Jung
Yeo

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

  

Attendance
100%

5th    2020.3.30    Appointment of the chairman of Audit committee    Chairman appointed    For    For    For    For
   Delegation of authority for prior approval of non-audit service of external auditor    Delegatee appointed    For    For    For    For
6th    2020.4.16    Appointment and dismissal agreement for internal audit manager    Original proposal approved    For    For    For    For
   2020 Compliance Plan Report    Original proposal accepted    For    For    For    For
   Report on the status of audit performance by external auditors in fiscal year 2019    Original proposal accepted    For    For    For    For
   Report on US filing consolidated financial statements final audit for the Fiscal year 2019    Original proposal accepted    For    For    For    For
7th    2020.5. 7    Report on financial statements(separate and consolidated) of the 1Q 2020    Original proposal accepted    For    For    For    For
8th    2020.8.4    Report on hiring results of management executives in the first half of 2020    Original proposal accepted    For    For    For    For
   Approved for audit service of consolidated company by external auditor in fiscal year 2020    Original proposal approved    For    For    For    For
   Report on final audit for the first half of fiscal year 2020    Original proposal accepted    For    For    For    For
   Report on audit result for the first half of fiscal year 2020 and audit plan for second half of fiscal year 2020    Original proposal accepted    For    For    For    For
      Report on financial statements(separate and consolidated) of the 1H 2020    Original proposal accepted    For    For    For    For
9th    2020.11.3    Report on financial statements(separate and consolidated) of the 3Q 2020    Original proposal accepted    For    For    For    For
   Approved additional remuneration by external auditor    Original proposal approved    For    For    For    For
   Report on compliance performance in 2020    Original proposal accepted    For    For    For    For
   Report on results of 2020 compliance implementation    Evaluation grade determined    For    For    For    For
10th    2020.11.23    Approved audit service for consolidated companies(periodic designation) by external auditors in fiscal year 2021    Original proposal approved    For    For    For    For
11th    2020.12.15    Approval of remuneration for independent auditor for the Fiscal year 2021    Original proposal approved    For    For    For    For

 

54


(4) Education plan

Though auditors already have sufficient experience and knowledge, KT provides auditors with reports and education programs about related issues such as industry which KT belongs to, change in management environment, legal change and etc..

- Briefing on major change in management environment and compliance issue

 

   

Seminars related with the Audit Committee

 

   

Educational programs or conference

(5) Audit Committee Education status

 

Date

  

Education
provider

  

Attended audit member

  

Reasons for absence

  

Education contents

2020.4.16    Samil Accounting Corporation    All    —     

Role and Responsibilities of the Audit Committee

-New market environment and audit committee

-Financial reporting and external audit

-Internal control and risk management

-Internal audit

2020.4.28    KT   

Tae-Yoon Sung,

Chung-Gu Kang,

Eun-Jung Yeo

  

Director Kim Dae-You not attended due to personal schedule

(Substitute for provision of educational materials)

   Compliance training
2020.7.7    Audit Committee Forum   

Kim Dae-You,

Chung-Gu Kang,

Eun-Jung Yeo

  

Director Tae-Yoon Sung not attended due to personal schedule

(Substitute for provision of educational materials)

  

2020 1st regular forum for auditors and auditors

-Finding reasons for disagreement between auditors and solutions

-Introduction of audit committee operation guidelines

2020.7.14    Samil Accounting Corporation    All    —     

Role and Responsibilities of the Audit Committee

Changes in the financial landscape in 2020

(6) Supportive team for Audit Committee

 

Department

  

Number
of
Staffs

  

Job Position(years served)

  

Activity history

Ethics Management Office    44   

Offce Head 1 (2 years of service)

Director 2 (1.5 years of service on average)

Team leader 8 (3 years of service on average)

Team members 33 (3 years of service on average)

  

•  Group/company-wide ethical management promotion and organizational soundness and ethics diagnosis/audit

•  Company-wide risk management and compliance status diagnosis and inspection

•  Group/company-wide accounting audit and internal control diagnosis

(7) Matters on Compliance officer

 

   

Name : Byung-Sam Park

 

   

Qualification : Passed the 35th Korean judicial examination(1993), Lawyer

 

   

Education

 

   

Graduated School of Law, Korea University (1990)

 

   

Studied in Munich University, Germany (2007~2008)

 

   

Completed executive course in School of Law, Seoul University (2014)

 

55


   

Professional experience

 

   

Completed the 27th training of the Judicial Research and Training Institute (1998)

 

   

Judge of Daegu, Incheon, Seoul Central and Seoul Southern District Court (1998~2007)

 

   

Judge of Seoul High Court (2009~2010)

 

   

Delegated to Constitutional Court (2010~2012)

 

   

Judge in charge of warrant at Seoul Central District Court (2012~2013)

 

   

Vice president, Legal Affair Department of Legal Affair Center, KT Ethics Management Office / Legal Affair 1 Department, Legal Affairs office (2013~2015)

 

   

Head of KT Legal Affair Office, Corporate Planning Group (2017.12.~2018.11)

 

   

Head of KT Legal Affair Office (2018.11 ~ Present)

 

   

Major Activities and results

 

Items

  

Date/Period

  

Contents