What make it possible to have such large number of subscribers in BB in such few time? What has the role of government there?

Transcription

1 November, 2010

2 Key Questions Private vs Public Investment on BB What make it possible to have such large number of subscribers in BB in such few time? What has the role of government there? How KT changed from state owned to private? What is currently the role of the state?

3 KT Overview Korea Broadband Introduction KT Business Status & Strategies KT s Approach

4 , Global ICT Convergence Leader DEC 1981 Establishment of KT Corporation AUG 2002 Privatization from Gov. Owned Company APR 2006 Commercial Launch of World s first Mobile WiMAX - WIBRO MAR 2007 Nationwide launch of WCDMA JUN 2009 Merged with KTF # of Employees Revenue (2009) Telephone Subscribers Broadband Subscribers Mobile Subscribers As of JAN 2010

5 KT Privatization History Government Owned Company ( 82 ~ 97) Korea Telecom Act Budgeting guideline from Government Payroll guideline Adopt Management Evaluation President selected by Gov t 2 BOD directors from Gov t Inspection by State Administration & Board of Audit Obligation to purchase SME Products SME : Small & Medium Sized Enterprise Focus on both Profitability & Public Obligation Government Invested Company ( 97 ~ 02) Special Privatization Law Independent budgeting Adopt Management Contract Follow Government s streamlining guideline Independent President selection Independent BOD directors Inspection by State Administration & Board of Audit Obligation to purchase SME Products Focus on both Profitability & Public Obligation Fully Privatized Company ( 02 ~ ) Commercial Law, Securities & Exchange Act Independent budgeting Independent managing on Human resource & Payroll Adopt Performance based Evaluation Managing by Expert Manager Focus on Profitability

6 Standpoints of Interested Parties on the Privatization Government - Promote competition in Telecommunication - Increase financial income. Due to the increased concern on loss of national wealth - The ownership of national key industry should not be dedicated to a few designated persons KT - Early privatization to respond to the competition in market - Minimize the government s intervention in management - Optimal ownership and corporate governance after privatization Employees and Labor Union - Increased demand on security of employment - Increased concern on labor intensity

7 Shareholder Information

8 KT Organization CEO/Chairman HQ Corporate Center Legal & Ethics Office Group /BU Mobile Business Group (Mobile) Mobile Business Strategy BU Home Business Group Home Customer Strategy BU Enterprise Business Group Enterprise Customer Strategy Corporate Technology Group Technology Strategy Office Network Group Network BU Global BU WIBRO BU Media BU Mobile Customer BU Mobile Marketing Center(6) Home IMC BU Home Channel BU Public Customer BU Enterprise Customer BU Technology Development Office Central R&D Laboratory Network Q&M BU Satellite BU Global Planning Department Global Service Department Global IT Business Department Special Channel Marketing Center Mobile Data BU Marketing Center(18) SMB BU IMO BU Network R&D Laboratory Network Q&M Center(6) Global Investment Department International Telecommunication Office Mobile Network BU Enterprise Product Fast Incubation BU Engineering Center Mobile Network O&M Center(6) Corporate Business Center(18) Mobile R&D Laboratory Back Office IT Planning Office Value Management Office Corporate Relations Support Office Human Resource Office Economics & Management Research Laboratory HQ Management Support Group Smart Green Development Center CR office CR Support office Public Relations Office HR Development Center General Affairs Office Real Assets Management Office Purchasing Strategy Office KT Sports Team

9 Market Share Telephone Wireless Cellular SK Broadband (8.6%) LG Dacom (1.7%) Broadband Internet LGT (18.0%) KT (89.7%) LG Powercom (15.3%) Etc (18.8%) SKT (50.7%) KT (31.3%) KT (42.5%) SK Broadband (23.4%) Subscribers: 48.9 millions Population: 48.7 millions Penetration rate: 100.4% (As of March 2010) As of JAN 2010

10 Global Presence KT Moscow Office KT UK Ltd. KT Alger Office East Telecom & Super-iMax Mongolia Telecom KT China Co. KT Dhaka Office SEOUL KT HK Office New Telecom Company KT Japan, Co. Ltd. KT America Inc. KT Hanoi Office KT Singapore Ltd. KT Bogota Office KT Kigali Office KT Jakarta Office KT Subsidiaries KT Overseas office

11 Global IT Business Case - Rwanda and Bangladesh National backbone and Wibro network project in Rwanda National Internet and PSTN project in Bangladesh National Backbone Network project Size : 41.1 mil. USD ( 08.10~ 11.12) Build national backbone network linking 28 districts and 5 border areas of neighboring countries National Backbone Network project Size : 23 mil. USD ( 09.3~ 12.9) Build broadband Internet network in 80 districts throughout the country Used Korean government s EDCF loan WiBro project Size : 7.76 mil. USD ( 07.11~ 09.11) WiBro and optical cable network in Kigali Telecoms network modernization project Size : 27 mil. USD ( 04.9~ 08.12) Build PSTN in three districts EDCF loan

12 Korea Broadband Introduction

13 History of Internet in Korea Commercial Internet Service by KT in 1994 Commercial broadband internet service in 1998 Internet users exceed 10 million in 1999 ADSL service in 1999 ~2000 Internet users exceed 20 million in 2001 Broadband Internet subcrribers exceeds 10 million households in 2002 Start VDSL(20Mbps) service in 2003 Internet users exceed 30 million in 2004 International Standardization of WiBro in 2005 ~2005 Start FTTH service in 2006 Broadband internet subscribers exceeds 15 million in 2008 Launching of commercial IPTV service in 2008 Giga internet pilot service in 2009 IPTV subscribers exceed 1.5 million in 2009 ~2010

14 Status of Korea: Mobile Competition is beautiful: The Explosive increase in subscribers Number of Subscribers (Penetration rate) 1 out of every 4 mobile phones used in the world is made in Korea. Samsung: World's top 2 LG: World's top mil (96.4%) SK Telecom starts operation Shinsegi started services 3 PCS companies started service 1 mil (3%) 5 mil (12%) Price Index

15 Status of Korea: Broadband Fiber/LAN Broadband subscribers Download Speed (Mbps) South Korea 15.1 South Korea Japan 12.4 Latvia Sweden 6.7 Aland Islands Denmark 3.9 Japan Avg. OECD 2.1 (OECD, Jun. 2009) Romania ( May, 2010) Households with Broadband Access UN e-gov. Readiness Index Ranking South Korea Iceland Denmark Netherlands Norway (OECD Jun. 2009) Percentage of all households

16 Key Success Factors of BB in Korea Government Policy Government Policy [Competition Oriented] Asymmetric regulation for effective competition Vendors Service Provider [Creating demand] E-Government, Cyber Apartment [Vision] R&D, Venture Promotion Consumers & Market Construction of world best e- Government (2003 vision by Ministry of Government Administration and Home Affairs) 10 times faster network construction by 2012 (2010 vision by KCC)

17 E-Government Network Infrastructure by KT

18 KT Business Status &Strategies

19 Change in Competitive Landscape Paradigm of competition shifted from marketing expense to service quality Fixed Line Competition Increasing VoIP subscriber Fixed-to-mobile substitution Saturated broadband market Bundling competition Convergence Competition LG 3com merger completed Expanding FMC market Industry consolidation (Broadcasting, finance, etc.) Opportunities for B2B Wireless Competition Expanding Smartphone market Advent of mobile Internet era Marketing Expense Service Quality Utilizing KT s fixed-line networks as core assets WiFi & WiBro Major Differentiators in Mobile Broadband Market Adding solutions to FMC network Cultivating B2B Market

20 Fixed Line Telephony Home Phone Maintaining telephony(p+v) subscriber base with aggressive VoIP marketing and new competitive price Subscribers (Unit: thousand) Strategy 19,973 19,852 19,818 19,753 19, ,269 1,701 1,972 Maximize bundling Effect Bundling with mobile, broadband Launch new bundling plan, Toong Positioning VoIP as a second phone 19,468 19,057 18,550 18,052 17,614 VoIP No. 1 in net-addition in 2010 Introduce diverse new devices such as home hub phone PSTN Introduce nationwide single rate and flat rate tariff plan 1Q09 2Q09 3Q09 4Q09 1Q10

21 Broadband Internet Expanding subscriber base by bundling and new tariff plans Subscribers and Churn Rate (Unit thousand) Broadband Bundling (Unit: thousand) 6,714 6,738 6,818 6,953 7,090 1,963 2,544 3,043 3,403 3,675 1Q09 2Q09 3Q09 4Q09 1Q10 Churn Rate 1Q09 1.7% 1.7% 2Q09 1.6% 3Q09 4Q09 1.5% 1Q10 1.4% Net Addition Market Share LGT 22.4% SKBB 14.8% KT 62.8%

22 IPTV Focus in subs expansion with broader number of channels, VOD libraries and superb picture quality of HD Subscribers (Unit: thousand) ARPU (Unit: KRW) 1,172 1,312 7,133 9,269 9,861 10,675 10,567 9,394 Total Subs ,007 1,092 4Q08 1Q09 2Q09 3Q09 4Q09 1Q Strategy Live- TV Subs Acquire platform leadership by increasing subscriber base - Targeting 2M until end-2010 Abundant contents with Open IPTV strategy Add more channels (89 channels as of 1Q) 1Q09 2Q09 3Q09 4Q09 1Q10 Strengthen competitiveness of VOD based on the 2-way platform

23 Wireless Data Data Explosion Heavier usage pattern via multi devices & exceeding 3G + LTE capacity level Trend in Heavier Data Usage Expected Traffic vs. 3G+LTE s Traffic Capacity ebook Tablet PC Mobile Connected TV (Terabytes per month) 60,000 Mobile traffics for 2014 is expected to be exceeding 4.5 times the 3G+LTE s capacity level. 50,000 40,000 30,000 Mobile IPTV 20,000 10,000 Smartphone Netbook/ Laptop Comp (E) 2010(E) 2011(E) 2012(E) 2013(E) 2014(E) Portable game devices 3G capacity LTE capacity Unsupported traffic Expected traffic demand for DE

24 Wireless Data Subscriber Target & Strategy Preparing seamless fixed and wireless total network by expanding into WiFi and WiBro to solve upcoming DE (Data Explosion) Subscriber Target for Smartphone & Tablet PC Strategy 6 million Expand WiFi zones utilizing solid foundation of fixed network 40K zones by 2010, 100K zones by million Improving accessibility of WiFi-WiBro Extensive coverage, 84 cities nationwide including major highways (by March 2011) Accessible up to 7 devices with Egg terminal 2010 Major handset/tablet PC lineup 200 K 1 million 1H 10 2H 10 Total Smartphone Feature Phone (WiFi enabled) 17(5) 8(5) 25(10) Smartphone Tablet PC Tablet PC - 3~4 3~4 *Target numbers for end of year

25 Wireless Data 3W Strategy Offer differentiated mobile data capacity through 3W (WiFi, WiMAX, WCDMA) Expecting 49 times more mobile data traffic at the end of 2012 vs. Jan Traffic allocation plan in 2012 WCDMA : WiFi : WiMAX = 20% : 60% : 20% WiMAX Utilizing as a WiFi backhaul network for mobile broadband

26 KT s Approach

27 KT Managed Service Structure KT Consulting Operator (Customer) KT GNOC Marketing Experts Marketing Strategy Planning Sales Strategy Planning Marketing Network Technical Support Team (GNOC) Network Experts Network design review Network integration test Network optimization Network organization setup Operation scenario development NOC operation process optimization Network Deployment Operation Team Core Access 1. N/W Surveillance 2. System Monitoring 3. Service Mgmt. 4. Analysis & Reporting IT infra KT Engineering Team Network acceptance test Network optimization End to End interoperability test Mobile station test Optimization NOC KT dispatched Expert Remote operation support * Remote operation support by KT GNOC for 2 years

28 Why KT? Actual experience in the advanced market Better understanding of customers, technologies through the actual operation Clear guidance for network operation and reducing trials-and-errors Develop effective market approach step by step

29 Thank you Dae Hwan, KO