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KT CORP

KT CORPKT财报

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KT Corporation, formerly Korea Telecom, is a South Korean telecommunications company, mobile network operator (MNO) and mobile virtual network operator (MVNO). KT is the large wireless carrier in South Korea, with 13.5 million subscribers as of Q4 2023.

What changed in KT CORP's 20-F — 2022 vs 2023

Top changes in KT CORP's 2023 20-F

367 paragraphs added · 389 removed · 315 edited across 6 sections

Item 2. Properties

Properties — owned and leased real estate

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Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation 72 i Table of Contents Item 7. Major Shareholders and Related Party Transactions 72 Item 7.A. Major Shareholders 72 Item 7.B. Related Party Transactions 72 Item 7.C. Interests of Experts and Counsel 72 Item 8. Financial Information 73 Item 8.A. Consolidated Statements and Other Financial Information 73 Item 8.B.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation 72 i Table of Contents Item 7. Major Shareholders and Related Party Transactions 73 Item 7.A. Major Shareholders 73 Item 7.B. Related Party Transactions 73 Item 7.C. Interests of Experts and Counsel 73 Item 8. Financial Information 73 Item 8.A. Consolidated Statements and Other Financial Information 73 Item 8.B.
Significant Changes 74 Item 9. The Offer and Listing 74 Item 9.A. Offer and Listing Details 74 Item 9.B. Plan of Distribution 74 Item 9.C. Markets 74 Item 9.D. Selling Shareholders 75 Item 9.E. Dilution 75 Item 9.F. Expenses of the Issuer 75 Item 10. Additional Information 75 Item 10.A. Share Capital 75 Item 10.B.
Significant Changes 75 Item 9. The Offer and Listing 75 Item 9.A. Offer and Listing Details 75 Item 9.B. Plan of Distribution 75 Item 9.C. Markets 75 Item 9.D. Selling Shareholders 75 Item 9.E. Dilution 76 Item 9.F. Expenses of the Issuer 76 Item 10. Additional Information 76 Item 10.A. Share Capital 76 Item 10.B.
Memorandum and Articles of Association 75 Item 10.C. Material Contracts 81 Item 10.D. Exchange Controls 82 Item 10.E. Taxation 86 Item 10.F. Dividends and Paying Agents 94 Item 10.G. Statements by Experts 94 Item 10.H. Documents on Display 94 Item 10.I. Subsidiary Information 94 Item 10.J. Annual Report to Security Holders 94 Item 11.
Memorandum and Articles of Association 76 Item 10.C. Material Contracts 82 Item 10.D. Exchange Controls 82 Item 10.E. Taxation 86 Item 10.F. Dividends and Paying Agents 95 Item 10.G. Statements by Experts 95 Item 10.H. Documents on Display 95 Item 10.I. Subsidiary Information 95 Item 10.J. Annual Report to Security Holders 95 Item 11.
History and Development of the Company 20 Item 4.B. Business Overview 21 Item 4.C. Organizational Structure 43 Item 4.D. Property, Plant and Equipment 43 Item 4A. Unresolved Staff Comments 45 Item 5. Operating and Financial Review and Prospects 45 Item 5.A. Operating Results 45 Item 5.B. Liquidity and Capital Resources 58 Item 5.C.
History and Development of the Company 20 Item 4.B. Business Overview 21 Item 4.C. Organizational Structure 44 Item 4.D. Property, Plant and Equipment 44 Item 4A. Unresolved Staff Comments 46 Item 5. Operating and Financial Review and Prospects 46 Item 5.A. Operating Results 46 Item 5.B. Liquidity and Capital Resources 60 Item 5.C.
Quantitative and Qualitative Disclosures About Market Risk 94 Item 12. Description of Securities Other than Equity Securities 97 Item 12.A. Debt Securities 97 Item 12.B. Warrants and Rights 97 Item 12.C. Other Securities 97 Item 12.D. American Depositary Shares 97 Part II 99
Quantitative and Qualitative Disclosures About Market Risk 95 Item 12. Description of Securities Other than Equity Securities 98 Item 12.A. Debt Securities 98 Item 12.B. Warrants and Rights 98 Item 12.C. Other Securities 98 Item 12.D. American Depositary Shares 98 Part II 100
Research and Development, Patents and Licenses, Etc. 61 Item 5.D. Trend Information 61 Item 5.E. Critical Accounting Estimates 61 Item 6. Directors, Senior Management and Employees 61 Item 6.A. Directors and Senior Management 61 Item 6.B. Compensation 66 Item 6.C. Board Practices 66 Item 6.D. Employees 69 Item 6.E. Share Ownership 70 Item 6.F.
Research and Development, Patents and Licenses, Etc. 63 Item 5.D. Trend Information 63 Item 5.E. Critical Accounting Estimates 63 Item 6. Directors, Senior Management and Employees 63 Item 6.A. Directors and Senior Management 63 Item 6.B. Compensation 67 Item 6.C. Board Practices 68 Item 6.D. Employees 69 Item 6.E. Share Ownership 71 Item 6.F.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Over the years, the United States and the European Union have also expanded their sanctions applicable to North Korea. • In March 2010, a Korean naval vessel was destroyed by an underwater explosion, killing many of the crewmen on board. The Government formally accused North Korea of causing the sinking, while North Korea denied responsibility.
Over the years, the United States and the European Union have also expanded their sanctions applicable to North Korea. • In March 2010, a Korean naval vessel was destroyed by an underwater explosion, killing many of the crewmen on board. The Korean government formally accused North Korea of causing the sinking, while North Korea denied responsibility.
Although bilateral summit meetings were held between Korea and North Korea in April, May and September 2018 and between the United States and North Korea in June 2018, February 2019 and June 2019, there can be no assurance that the level of tensions affecting the Korean peninsula will not escalate in the future.
Although bilateral summit meetings between Korea and North Korea were held in April, May and September 2018 and between North Korea and the United States in June 2018, February 2019 and June 2019, there can be no assurance that the level of tensions affecting the Korean peninsula will not escalate in the future.
Notwithstanding the above, pursuant to an amendment to the Telecommunications Business Act that became effective on April 20, 2022, a company, so long as (i) its largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreign government or a foreigner of a country that has entered into a bilateral or multilateral free trade agreement with Korea (an “FTA Country”) that is designated by the MSIT, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the issued voting stock of such entity, may own more than 49.0% of our issued shares with voting rights but may not exercise its voting rights with respect to the shares held in excess of the 49.0% ceiling until the conclusion of the MSIT’s public interest review.
Notwithstanding the above, pursuant to an amendment to the Telecommunications Business Act that became effective in April 2022, a company, so long as (i) its largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreign government or a foreigner of a country that has entered into a bilateral or multilateral free trade agreement with Korea (an “FTA Country”) that is designated by the MSIT, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the issued voting stock of such entity, may own more than 49.0% of our issued shares with voting rights but may not exercise its voting rights with respect to the shares held in excess of the 49.0% ceiling until the conclusion of the MSIT’s public interest review.
Our business relationships and transactions with our subsidiaries, affiliates and other companies within the KT group are subject to ongoing scrutiny by the Fair Trade Commission as to, among other things, whether such relationships and transactions constitute undue financial support among companies of the same business group.
Our business relationships and transactions with our subsidiaries, affiliates and other companies within the KT group are subject to ongoing scrutiny by the Korea Fair Trade Commission as to, among other things, whether such relationships and transactions constitute undue financial support among companies of the same business group.
The Government condemned North Korea for the attack and vowed stern retaliation should there be further provocation. North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within North Korea.
The Korean government condemned North Korea for the attack and vowed stern retaliation should there be further provocation. North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within North Korea.
In particular, there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon and ballistic missile programs as well as its hostile military actions against Korea.
In particular, there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon, ballistic missile and satellite programs as well as its hostile military actions against Korea.
Operating Results—Overview—Acquisition of New Bandwidth Licenses and Usage Fees.” For more information on our bandwidth licenses, see “ Item 4. Information on the Company—Item 4.D.
Operating Results—Overview—Acquisition of New Bandwidth Licenses and Usage Fees.” For more information on our bandwidth licenses, see “Item 4. Information on the Company—Item 4.D.
In November 2021, the Seoul Central District Prosecutor’s Office also issued a summary indictment against our former representative director and chief executive officer, Hyeon-mo Ku, and nine other current and former executive officers, who permitted using their names, for violating charges that include violation of the Political Funds Act.
In November 2021, the Seoul Central District Prosecutor’s Office also issued a summary indictment against our former representative director and chief executive officer, Hyeon-mo Ku, and nine other former executive officers, who permitted using their names, for violating charges that include violation of the Political Funds Act and embezzlement.
Government regulation of the credit card industry may adversely affect the operations of BC Card in which we held a 69.5% interest as of December 31, 2022. Due to the rapid growth of the credit card market and rising consumer debt levels in Korea, the Government has heightened its regulatory oversight of the credit card industry in recent decades.
Government regulation of the credit card industry may adversely affect the operations of BC Card in which we held a 69.5% interest as of December 31, 2023. Due to the rapid growth of the credit card market and rising consumer debt levels in Korea, the Government has heightened its regulatory oversight of the credit card industry in recent decades.
Pursuant to the Settlement, which resolves these matters, and without admitting or denying any of the SEC’s findings (except for the SEC’s jurisdiction over us and the subject matter of the proceedings), we consented to the entry of an order in which the SEC made findings and ordered, pursuant to Section 21C of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that we cease and desist from committing or causing any violations and any future violations of the books and records and internal accounting control provisions of the U.S.
Pursuant to the Settlement, which resolves these matters, and without admitting or denying any of the SEC’s findings (except for the SEC’s jurisdiction over us and the subject matter of the proceedings), we consented to the entry of an order in which the SEC made findings and ordered, pursuant to Section 21C of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that we cease and desist from 7 Table of Contents committing or causing any violations and any future violations of the books and records and internal accounting control provisions of the U.S.
Depreciation of the Won may materially affect the results of our operations because, among other things, it causes an increase in the amount of Won required by us to make interest and principal payments on our foreign-currency-denominated debt, the costs of telecommunications equipment that we purchase from overseas sources, net settlement payments to foreign carriers and certain payments related to our derivative instruments entered into for foreign exchange risk hedging purposes.
Depreciation of the Won may materially affect the results of our operations because, among other things, it causes an increase in the amount of Won required by us to make interest and principal payments on our foreign-currency- 12 Table of Contents denominated debt, the costs of telecommunications equipment that we purchase from overseas sources, net settlement payments to foreign carriers and certain payments related to our derivative instruments entered into for foreign exchange risk hedging purposes.
In the past, we have experienced cyber-attacks of varying degrees from time to time, including theft of personal information of our subscribers by third parties that have led to lawsuits and administrative actions against us alleging that the leak was related to our management of subscribers’ personal information.
In the past, we have experienced cyber-attacks of varying degrees from time to time, including theft of personal information of our subscribers by third parties that have led to lawsuits and administrative actions against us alleging that the leak was related to our mismanagement of subscribers’ personal information.
There can be no assurance that such development or any further developments relating to the above-mentioned matters, including adverse publicity, will not adversely affect our business, financial results, reputation or stock price. 8 Table of Contents Cybersecurity breaches may expose us to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.
There can be no assurance that such development or any further developments relating to the above-mentioned matters, including adverse publicity, will not adversely affect our business, financial results, reputation or stock price. Cybersecurity breaches may expose us to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.
We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, hardware failures, capacity constraints due to an overwhelming number of people accessing our services simultaneously, computer viruses, power losses, fraud and security attacks.
We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors, hardware failures, capacity constraints due to an overwhelming number of people accessing our services simultaneously, 8 Table of Contents computer viruses, power losses, fraud and security attacks.
In November 2021, the Seoul Central District Prosecutor’s Office decided not to indict Chang-gyu Hwang, our previous chief executive officer, on charges that include violating the Political Funds Act, but indicted four other former executives in our Corporate Relations Division for violation of such laws as well as us for 7 Table of Contents violation of the Political Funds Act.
In November 2021, the Seoul Central District Prosecutor’s Office decided not to indict Chang-gyu Hwang, our previous chief executive officer, on charges that include violating the Political Funds Act, but indicted four other former executives in our Corporate Relations Division for violation of such laws as well as us for violation of the Political Funds Act.
To the extent a credit card company fails to maintain such ratio, Korean regulatory authorities may impose penalties on such company ranging from a warning to a suspension or revocation of its license. BC Card’s capital adequacy ratios were 35.8% as of December 31, 2021 and 27.3% as of December 31, 2022.
To the extent a credit card company fails to maintain such ratio, Korean regulatory authorities may impose penalties on such company ranging from a warning to a suspension or revocation of its license. BC Card’s capital adequacy ratios were 35.8% as of December 31, 2021, 27.3% as of December 31, 2022 and 25.4% as of December 31, 2023.
Any such additional payments may have an adverse effect on our financial condition and results of operations. Risks Relating to Korea If economic conditions in Korea deteriorate, our current business and future growth could be materially and adversely affected. We are incorporated in Korea, and we generate most of our operating revenue in Korea.
Any such additional payments may have an adverse effect on our financial condition and results of operations. 13 Table of Contents Risks Relating to Korea If economic conditions in Korea deteriorate, our current business and future growth could be materially and adversely affected. We are incorporated in Korea, and we generate most of our operating revenue in Korea.
No assurance can be given that bandwidth constraints will not adversely affect the growth of our mobile telecommunications business. Furthermore, we may be 3 Table of Contents required to make substantial payments to acquire additional bandwidth capacity in order to meet increasing bandwidth demand, which may adversely affect our business, financial condition and results of operations.
No assurance can be given that bandwidth constraints will not adversely affect the growth of our mobile telecommunications business. Furthermore, we may be required to make substantial payments to acquire additional bandwidth capacity in order to meet increasing bandwidth demand, which may adversely affect our business, financial condition and results of operations.
Moreover, in November 2010, North Korea fired more than one hundred artillery shells that hit Korea’s Yeonpyeong Island near the Northern Limit Line, which acts as the de facto maritime boundary between Korea and North Korea on the west coast of the Korean peninsula, causing casualties and significant property damage.
Moreover, in November 2010, North Korea fired more than 100 artillery shells that hit Korea’s Yeonpyeong Island near the Northern Limit Line, which acts as the de facto maritime boundary between Korea and North Korea on the west coast of the Korean peninsula, causing casualties and significant property damage.
Unauthorized parties may also attempt to circumvent our security measures to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, contractors and temporary staff.
Cybersecurity.” Unauthorized parties may also attempt to circumvent our security measures to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, contractors and temporary staff.
Any such litigation brought against us could have a material adverse effect on our business, financial condition and results of operations. 17 Table of Contents We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries.
Any such litigation brought against us could have a material adverse effect on our business, financial condition and results of operations. We are generally subject to Korean corporate governance and disclosure standards, which differ in significant respects from those in other countries.
Furthermore, pursuant to an amendment to the Telecommunications Business Act that became effective on December 11, 2022, this exemption from the restriction of foreign ownership of a network service provider beyond the 49.0% threshold applies not only to a foreign government or a foreigner from an FTA Country but also to a foreign government or a foreigner from an OECD country.
Furthermore, pursuant to an amendment to the Telecommunications Business Act that became effective in December 2022, this exemption from the restriction of foreign ownership of a network service provider beyond the 49.0% threshold applies not only to a foreign government or a foreigner from an FTA Country but also to a foreign government or a foreigner from an OECD country.
Any loss or interruption of the services of these individuals, whether from retirement, loss to competitors or other causes, or failure to attract and retain other qualified new personnel, could prevent us from effectively executing our business strategy, cause us to lose key business relationships, or otherwise materially affect our operations.
Any loss or interruption of the services of these 10 Table of Contents individuals, whether from retirement, loss to competitors or other causes, or failure to attract and retain other qualified new personnel, could prevent us from effectively executing our business strategy, cause us to lose key business relationships, or otherwise materially affect our operations.
The MSIT may also order us or the foreign shareholder to take corrective measures in respect of the excess shares within a specified period of six months or less. 18 Table of Contents In addition, the Telecommunications Business Act restricts the ownership and control of network service providers by foreign shareholders.
The MSIT may also order us or the foreign shareholder to take corrective measures in respect of the excess shares within a specified period of six months or less. In addition, the Telecommunications Business Act restricts the ownership and control of network service providers by foreign shareholders.
Quantitative and Qualitative Disclosures About Market Risk—Exchange Rate Risk.” 13 Table of Contents Fluctuations in the exchange rate between the Won and the Dollar will also affect the Dollar equivalent of the Won price of our ordinary shares on the KRX Korea Composite Stock Price Index (“KOSPI”) Market and, as a result, will likely affect the market price of the ADSs.
Quantitative and Qualitative Disclosures About Market Risk—Exchange Rate Risk.” Fluctuations in the exchange rate between the Won and the Dollar will also affect the Dollar equivalent of the Won price of our ordinary shares on the KRX Korea Composite Stock Price Index (“KOSPI”) Market and, as a result, will likely affect the market price of the ADSs.
If we offer any rights to subscribe for additional ordinary shares or any rights of any other nature, the depositary bank, after consultation with us, may make the rights available to an ADS holder or use reasonable efforts to dispose of the rights 19 Table of Contents on behalf of the ADS holder and make the net proceeds available to the ADS holder.
If we offer any rights to subscribe for additional ordinary shares or any rights of any other nature, the depositary bank, after consultation with us, may make the rights available to an ADS holder or use reasonable efforts to dispose of the rights on behalf of the ADS holder and make the net proceeds available to the ADS holder.
Under this Act, a market-dominating business entity may not engage in any act of abuse, such as unreasonably interfering with 2 Table of Contents business activities of other business entities, hindering unfairly the entry of newcomers or substantially restricting competition to the detriment of the interests of consumers.
Under this Act, a market-dominating business entity may not engage in any act of abuse, such as unreasonably interfering with business activities of other business entities, hindering unfairly the entry of newcomers or substantially restricting competition to the detriment of the interests of consumers.
The current trend of increasing data transmission use and the increasing sophistication of multimedia contents are likely to put additional strain on the bandwidth capacity of mobile service providers.
The current trend of increasing data transmission use and the increasing sophistication of multimedia contents are 3 Table of Contents likely to put additional strain on the bandwidth capacity of mobile service providers.
In particular, the FSC and the Financial Supervisory Service (“FSS”) have adopted a variety of 11 Table of Contents regulations governing the credit card industry. Among other things, these regulations impose minimum capital adequacy ratios, minimum required provisioning levels applicable to credit card receivables and stringent lending ratios.
In particular, the FSC and the Financial Supervisory Service (“FSS”) have adopted a variety of regulations governing the credit card industry. Among other things, these regulations impose minimum capital adequacy ratios, minimum required provisioning levels applicable to credit card receivables and stringent lending ratios.
We also seek to obtain patent protection for some of our technology, and we have filed various applications in Korea and elsewhere for protection of certain aspects of our intellectual property and currently hold a number of issued patents in multiple jurisdictions.
We also seek to obtain patent protection for some of our technology, and we have filed various applications in Korea and elsewhere for protection of certain aspects of our intellectual property and 9 Table of Contents currently hold a number of issued patents in multiple jurisdictions.
For purposes of the Telecommunications Business Act, the term “foreign invested company” means a company in which a foreigner or a foreign government is the largest shareholder and holds 15.0% or more of the company’s shares with voting rights, provided, however, that such company will not be counted as a foreign shareholder for the purposes of the 49.0% limit if (1) it holds less than 1.0% of our total issued and outstanding shares with voting rights or (2) if the MSIT determines that the fact that such foreign government or entity holds a 15.0% or greater shareholding in such company does not present a risk of harm to the public interest.
For purposes of the Telecommunications Business Act, the term “company deemed as a foreigner” means a company in which a foreigner or a foreign government is the largest shareholder and holds 15.0% or more of the company’s shares with voting rights, provided, however, that such company will not be counted as a foreign shareholder for the purposes of the 49.0% limit if (1) it holds less than 1.0% of our total issued and outstanding shares with voting rights or (2) if the MSIT determines that the fact that such foreign government or entity holds a 15.0% or greater shareholding in such company does not present a risk of harm to the public interest.
We purchase telecommunications network and other equipment from a 9 Table of Contents limited number of key suppliers, and any discontinuation or interruption in the availability of equipment from our key suppliers for any reason could have an adverse effect on our operations.
We purchase telecommunications network and other equipment from a limited number of key suppliers, and any discontinuation or interruption in the availability of equipment from our key suppliers for any reason could have an adverse effect on our operations.
Memorandum and Articles of Association—Limitations on Shareholding.” Holders of ADSs will not be able to exercise appraisal rights unless they have withdrawn the underlying ordinary shares and become our direct shareholders.
Memorandum and Articles of Association—Limitations on Shareholding.” 18 Table of Contents Holders of ADSs will not be able to exercise appraisal rights unless they have withdrawn the underlying ordinary shares and become our direct shareholders.
Developments that could have an adverse impact on Korea’s economy include: • declines in consumer confidence and a slowdown in consumer spending, including as a result of the global COVID-19 pandemic; • hostilities or, political or social tensions involving Russia (including the invasion of Ukraine by Russia and ensuing actions that the United States and other countries have taken and may take in the future) and any resulting adverse effects on the global supply of oil and other natural resources or the global financial markets; • adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe and Japan, or in emerging market economies in Asia or elsewhere, including as a result of the deteriorating economic and trade relations between the United States and China and increased uncertainties resulting from difficulties faced by several banks in the United States and Europe in recent months; • adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the U.S. dollar, the Euro or the Japanese Yen exchange rates or revaluation of the Chinese Renminbi), interest rates, inflation rates or stock markets; • the occurrence of severe health epidemics in Korea or other parts of the world, such as the COVID-19 pandemic; • deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy; • increased sovereign default risk in select countries and the resulting adverse effects on the global financial markets; • deterioration in the financial condition or performance of small- and medium-sized enterprises and other companies in Korea due to the Government’s policies to increase minimum wages and limit working hours of employees; • investigations of large Korean business groups and their senior management for possible misconduct; 15 Table of Contents • a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers in Korea; • the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements; • social and labor unrest; • substantial changes in the market prices of Korean real estate; • a substantial decrease in tax revenues and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs, in particular in light of the Government’s ongoing efforts to provide emergency relief payments to households and emergency loans to corporations in need of funding in light of COVID-19, which, together, would likely lead to a national budget deficit as well as an increase in the Government’s debt; • financial problems or lack of progress in the restructuring of Korean business groups, other large troubled companies, their suppliers or the financial sector; • loss of investor confidence arising from corporate accounting irregularities or corporate governance issues concerning certain Korean companies; • increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea; • geopolitical uncertainty and the risk of further attacks by terrorist groups around the world; • political uncertainty or increasing strife among or within political parties in Korea; • hostilities or political or social tensions involving oil-producing countries in the Middle East (including a potential escalation of hostilities between the United States and Iran) and Northern Africa and any material disruption in the global supply of oil or sudden increase in the price of oil; • natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; and • an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States.
Other developments that could have an adverse impact on Korea’s economy include: • declines in consumer confidence and a slowdown in consumer spending, including as a result of severe health epidemics; • hostilities or, political or social tensions involving Russia (including the invasion of Ukraine by Russia and ensuing actions that the United States and other countries have taken and may take in the future) and any resulting adverse effects on the global supply of oil and other natural resources or the global financial markets; • adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe and Japan, or in emerging market economies in Asia or elsewhere, including as a result of the deteriorating economic and trade relations between the United States and China and increased uncertainties in the global financial markets and industry; • adverse changes or volatility in foreign currency reserve levels, inflation rates, interest rates, commodity prices (including oil prices), exchange rates (including fluctuation of the U.S. dollar, the Euro or the Japanese Yen exchange rates or revaluation of the Chinese Yuan) or stock markets; • the occurrence of severe health epidemics in Korea or other parts of the world, in addition to the COVID-19 pandemic; 14 Table of Contents • deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy; • increased sovereign default risk in select countries and the resulting adverse effects on the global financial markets; • deterioration in the financial condition or performance of small- and medium-sized enterprises and other companies in Korea due to the Government’s policies to increase minimum wages and limit working hours of employees; • investigations of large Korean business groups and their senior management for possible misconduct; • continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers in Korea; • shortages of imported raw materials, natural resources, rare earth minerals or component parts due to disruptions to the global supply chain; • the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements; • social and labor unrest; • substantial changes in the market prices of Korean real estate; • a substantial decrease in tax revenues and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs, in particular in light of the Government’s ongoing efforts to provide emergency relief payments to households and emergency loans to corporations in need of funding in light of COVID-19 as well as interest rate increases, which, together, would likely lead to a national budget deficit as well as an increase in the Government’s debt; • financial problems or lack of progress in the restructuring of Korean business groups, other large, troubled companies, their suppliers or the financial sector; • loss of investor confidence arising from corporate accounting irregularities or corporate governance issues concerning certain Korean companies; • increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea; • geopolitical uncertainty and the risk of further attacks by terrorist groups around the world; • political uncertainty or increasing strife among or within political parties in Korea; • hostilities or political or social tensions involving oil-producing countries in the Middle East (including the escalation of hostilities in the Middle East following the Israel-Hamas war) and Northern Africa and any material disruption in the global supply of oil or sudden increase in the price of oil; 15 Table of Contents • natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; and • an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States.
In January 2018, the Korean police commenced an investigation in connection with the allegations that our current and former executives and employees violated the Political Funds Act of Korea, by making certain donations to various lawmakers using corporate funds.
In January 2018, the Korean police commenced an investigation in connection with the allegations that our former executives and employees violated the Political Funds Act of Korea, by 6 Table of Contents making certain donations to various lawmakers using corporate funds.
This matter is currently being investigated by the Seoul Central District Prosecutor’s Office. In February 2022, we entered into a settlement (the “Settlement”) with the SEC to resolve its investigation, which included charitable and political donations and other incidents and allegations, including matters connected to a scandal involving Ms.
This matter is currently being investigated by the Seoul Central District Prosecutor’s Office. In February 2022, we entered into a settlement (the “Settlement”) with the SEC to resolve its investigation, among others, regarding charitable and political donations and other incidents and allegations, including matters connected to a scandal involving Ms.
Exchange Controls.” A foreign investor may not be able to exercise voting rights with respect to common shares exceeding certain restrictions. Under the Telecommunications Business Act, a foreign shareholder who holds 5.0% or more of our total shares is prohibited from becoming our largest shareholder.
Additional Information—Item 10.D. Exchange Controls.” A foreign investor may not be able to exercise voting rights with respect to common shares exceeding certain restrictions. Under the Telecommunications Business Act, a foreign shareholder who holds 5.0% or more of our total shares is prohibited from becoming our largest shareholder.
One key aspect of our overall business strategy calls for acquisitions of businesses and entering into joint ventures that complement or diversify our current businesses. For example, in September 2021, KT Skylife Co., Ltd. (“KT Skylife”), in which we held a 49.99% interest as of December 31, 2022, completed its acquisition of a 100.00% interest in Hyundai HCN Co., Ltd.
One key aspect of our overall business strategy calls for acquisitions of businesses and entering into joint ventures that complement or diversify our current businesses. For example, in September 2021, KT Skylife Co., Ltd. (“KT Skylife”), in which we held a 50.3% interest as of December 31, 2023, completed its acquisition of a 100.00% interest in Hyundai HCN Co., Ltd.
For all of our bandwidth licenses, we made aggregate payments of ￦ 367 billion in 2020, ￦ 603 billion in 2021 and ￦ 319 billion in 2022. For our outstanding payment obligations relating to our bandwidth licenses, see “Item 5. Operating and Financial Review and Prospects—Item 5.A.
For all of our bandwidth licenses, we made aggregate payments of ￦ 603 billion in 2021, ￦ 319 billion in 2022 and ￦ 327 billion in 2023. For our outstanding payment obligations relating to our bandwidth licenses, see “Item 5. Operating and Financial Review and Prospects—Item 5.A.
The MSIT and the KCC also have the authority to regulate the pay TV industry under the Korea Broadcasting Act and the Internet Multimedia Broadcasting Services Act, which cover our IPTV services, our satellite TV services provided through KT Skylife (in which we held a 49.99% interest as of December 31, 2022), and cable TV services that we provide through HCN, in which KT Skylife holds a 100.0% interest.
The MSIT and the KCC also have the authority to regulate the pay TV industry under the Korea Broadcasting Act and the Internet Multimedia Broadcasting Services Act, which cover our IPTV services, our satellite TV services provided through KT Skylife (in which we held a 50.3% interest as of December 31, 2023), and cable TV services that we provide through HCN, in which KT Skylife holds a 100.0% interest.
With the launch of the next generation 5G mobile services in April 2019, competition has further intensified among the three network service providers, which has resulted in an increase in marketing expenses as well as additional capital expenditures related to implementing 5G mobile services.
With the launch of 5G mobile services in April 2019, competition has further intensified among the three network service providers, which has resulted in an increase in marketing expenses as well as additional capital 2 Table of Contents expenditures related to implementing 5G mobile services.
As of December 31, 2022, 42.63% of our common shares were owned by foreign investors. In the event that any foreigner or foreign government acquires our shares in violation of the above provisions, such foreign shareholder may not be able to exercise voting rights with respect to common shares exceeding such threshold.
As of December 31, 2023, 43.2% of our common shares were owned by foreign investors. In the event that any foreigner or foreign government acquires our shares in violation of the above provisions, such foreign shareholder may not be able to exercise voting rights with respect to common shares exceeding such threshold.
Until such time, however, the depositary bank will continue to obtain our consent for such deposits of shares and delivery of ADSs, which we may not provide. Consequently, if an investor surrenders his ADSs to withdraw the underlying shares, he may not be allowed to deposit the shares again to obtain ADSs. See “Item 10. Additional Information—Item 10.D.
Until such time, however, the depositary bank will continue to obtain our consent for such deposits of shares and delivery of ADSs, 17 Table of Contents which we may not provide. Consequently, if an investor surrenders his ADSs to withdraw the underlying shares, he may not be allowed to deposit the shares again to obtain ADSs. See “Item 10.
There can be no assurance that we will not adopt additional measures that reduce rates charged to our subscribers as well as adjustments to our handset subsidies and other measures in the future to comply with regulatory requirements or the Government’s policy guidelines.
The Government may pursue additional measures to regulate the markets in which we compete. There can be no assurance that we will not adopt additional measures that reduce rates charged to our subscribers as well as adjustments to our handset subsidies and other measures in the future to comply with regulatory requirements or the Government’s policy guidelines.
Over the years, North Korea has also conducted a series of ballistic missile tests, including missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. Starting in 2022, North Korea has increased the frequency of its ballistic missile tests, including intercontinental ballistic missiles.
Over the years, North Korea has also conducted a series of ballistic missile tests, including missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland.
Other risks associated with a prolonged outbreak of COVID-19 and its variants or other types of widespread infectious diseases may potentially include: • increase in unemployment among our customers who may not be able to meet payment obligations, which in turn may decrease demand for our products and services; • service disruptions, outages and performance problems due to capacity constraints caused by an overwhelming number of people accessing our services simultaneously; • disruptions in the supply of mobile handsets or telecommunications equipment from our vendors; • depreciation of the Won against major foreign currencies, which in turn may increase the cost of imported equipment necessary for expansion and enhancement of our telecommunications infrastructure; and • impairments in the fair value of our investments in companies that may be adversely affected by the pandemic.
While we do not believe that COVID-19 had a material adverse impact on our business, risks associated with COVID-19 or other types of widespread infectious diseases may include: • increase in unemployment among our customers who may not be able to meet payment obligations, which in turn may decrease demand for our products and services; • service disruptions, outages and performance problems due to capacity constraints caused by an overwhelming number of people accessing our services simultaneously; • disruptions in the supply of mobile handsets or telecommunications equipment from our vendors; • fluctuations of the Won against major foreign currencies, which in turn may impact the cost of imported equipment necessary for expansion and enhancement of our telecommunications infrastructure; and • impairments in the fair value of our investments in companies that may be adversely affected by the pandemic.
As part of the Settlement, we paid disgorgement of approximately $2.8 million (including prejudgment interest) and a civil penalty of $3.5 million to the SEC, and agreed to periodically report to the SEC staff for a two year term the status of our remediation and implementation of compliance measures for ensuring compliance with the FCPA and other applicable anti-corruption laws, with which requirement we have been complying.
As part of the Settlement, we paid disgorgement of approximately $2.8 million (including prejudgment interest) and a civil penalty of $3.5 million to the SEC, and agreed to periodically report to the SEC staff for a two year term the status of our remediation and implementation of compliance measures for ensuring compliance with the FCPA and other applicable anti-corruption laws, which period was completed in April 2024.
Introduction of new services, such as our 5G mobile services launched in April 2019, poses challenges and risks to us. The telecommunications industry is characterized by continual advances and improvements in telecommunications technology, and we have been continually researching and implementing technology upgrades and additional telecommunications services to maintain our competitiveness.
Introduction of new services poses challenges and risks to us. The telecommunications industry is characterized by continual advances and improvements in telecommunications technology, and we have been continually researching and implementing technology upgrades and additional telecommunications services to maintain our competitiveness.
Some of the significant incidents in recent years include the following: • North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and conducted six rounds of nuclear tests since October 2006, including 16 Table of Contents claimed detonations of hydrogen bombs, which are more powerful than plutonium bombs, and warheads that can be mounted on ballistic missiles.
Some of the significant incidents in recent years include the following: • North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and has conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs, and warheads that can be mounted on ballistic missiles.
Foreigners (based on citizenship), foreign governments and “foreign invested companies” may not own more than 49.0% of the issued shares with voting rights of a network service provider, including us.
Foreigners (based on citizenship), foreign governments and “companies deemed as foreigners” may not own more than 49.0% of the issued shares with voting rights of a network service provider, including us.
While we currently are not subject to any claims of underpayment from our current or former employees, the Supreme Court decision may result in additional labor costs for us in the form of additional payments required under the expanded scope of ordinary wages, both those incurred during the past three years and those to be incurred in the future.
While we currently are not subject to any claims of underpayment from our current or former employees, the Supreme Court decision may result in additional labor costs for us in the form of additional payments required under the expanded scope of ordinary wages.
We appealed the decision of the Seoul Central District Court, which appeal was dismissed by the Seoul High Court in February 2023. In February 2023, we appealed such decision to the Supreme Court.
We appealed the decision of the Seoul Central District Court, which appeal was dismissed by the Seoul High Court in February 2023. In February 2023, we appealed such decision to the Supreme Court, which appeal was dismissed by the Supreme Court in September 2023. Accordingly, the decision of the Seoul Central District Court became final and conclusive.
We also negotiate collective bargaining agreements every two years with our labor union and annually negotiate a wage agreement. Our current collective bargaining agreement expires on September 5, 2023.
We also negotiate collective bargaining agreements every two years with our labor union and annually negotiate a wage agreement. Our current collective bargaining agreement expires on October 9, 2025.
Of the ￦ 10,006 billion total book value of borrowings outstanding as of December 31, 2022, ￦ 3,140 billion was denominated in foreign currencies. Upon identification and evaluation of our currency risk exposures, we, having considered various circumstances, enter into derivative financial instruments to try to mitigate such risks.
Of the ￦ 10,218 billion total borrowings (including short-term borrowings) outstanding as of December 31, 2023, ￦ 2,801 billion was denominated in foreign currencies. Upon identification and evaluation of our currency risk exposures, we, having considered various circumstances, enter into derivative financial instruments to try to mitigate such risks.
Any increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between Korea or the United States and North Korea break down or further military hostilities occur, could have a material adverse effect on the Korean economy and on our business, financial condition and results of operations and the market value of our ADSs.
Any further increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between Korea and North Korea or between the United States and North Korea break down or military hostilities occur, could have a material adverse effect on the Korean economy and on our business, financial condition and results of operations and the market value of our ADSs. 16 Table of Contents Korea’s legislation allowing class action suits related to securities transactions may expose us to additional litigation risk.
Even though we strive to take all steps we believe are necessary to protect personal information, hardware, software or applications we develop or procure from third parties may contain defects or other problems that could unexpectedly compromise information security.
Even though we strive to take all steps we believe are necessary to protect personal information, hardware, software or applications we develop or procure from third parties may contain defects or other problems that could unexpectedly compromise information security. For a discussion of our cybersecurity risk management and strategy, see “Item 16K.
There is no guarantee that the laws and regulations to which we are or become subject will not have a material adverse effect on our business, financial condition or results of operations. 5 Table of Contents The ongoing global pandemic of a new strain of coronavirus (“COVID-19”) and any possible recurrence of other types of widespread infectious diseases, may adversely affect our business, financial condition or results of operations.
There is no guarantee that the laws and regulations to which we are or become subject will not have a material adverse effect on our business, financial condition or results of operations. COVID-19 and any possible occurrences of other types of widespread infectious diseases could materially and adversely affect our business, financial condition or results of operations.
We are subject to various laws and regulations in Korea and other jurisdictions, including the Monopoly Regulation and Fair Trade Act of Korea. Our business operations and acts of our management, employees and other relevant parties are subject to various laws and regulations in and outside Korea.
Our business operations and acts of our management, employees and other relevant parties are subject to various laws and regulations in and outside Korea.
The Monopoly Regulation and Fair Trade Act provides for various regulations and restrictions on large business groups enforced by the Korea Fair Trade Commission to prohibit or restrict actions 12 Table of Contents that impede competition and fair trade.
The Monopoly Regulation and Fair Trade Act provides for various regulations and restrictions on large business groups enforced by the Korea Fair Trade Commission to prohibit or restrict actions that impede competition and fair trade. The Korea Fair Trade Commission designated us as a large business group under the Monopoly Regulation and Fair Trade Act on April 1, 2002.
Our principal executive offices are located at KT Gwanghwamun Building East, 33, Jong-ro 3-gil, Jongno-gu, 03155, Seoul, Korea, our telephone number is +82-2-3495-3557 and the address of our English website is https://corp.kt.com/eng/. The SEC maintains a website (http://www.sec.gov), which contains reports, information statements and other information regarding issuers that file electronically with the SEC.
Our principal executive offices are located at KT Gwanghwamun Building East, 33, Jong-ro 3-gil, Jongno-gu, 03155, Seoul, Korea, our telephone number is +82-2-3495-3557 and the address of our English website is https://corp.kt.com/eng/ .
See ““—Risks Relating to Our Business—The ongoing global pandemic of a new strain of coronavirus (“COVID-19”) and any possible recurrence of other types of widespread infectious diseases, may adversely affect our business, financial condition or results of operations.” As a result, future growth of the Korean economy is subject to many factors beyond our control, including developments in the global economy. 14 Table of Contents In recent years, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity prices, supply chain disruptions and the increasing weakness of the global economy, in particular due to the COVID-19 pandemic, and beginning in the second half of 2021, rapid increases in interest rates globally to combat inflation, have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the Korean economy.
See “— COVID-19 and any possible occurrences of other types of widespread infectious diseases could materially and adversely affect our business, financial condition or results of operations.” However, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity prices, supply chain disruptions and the increasing weakness of the global economy, in particular due to the COVID-19 pandemic, and beginning in the second half of 2021, rapid increases in interest rates globally to combat inflation, have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the Korean economy.
From 1993 through May 2002, the Government disposed of all of its equity interest in us, and the privatization laws ceased to apply to us in August 2002.
From 1993 through May 2002, the Government disposed of all of its equity interest in us, and the privatization laws ceased to apply to us in August 2002. We amended our legal name from Korea Telecom Corp. to KT Corporation in March 2002.
We amended our legal name from Korea Telecom Corp. to KT Corporation in March 2002. 20 Table of Contents Before December 1991, we were the sole provider of local, domestic long-distance and international long-distance telephone services in Korea. The Government began to introduce competition in the telecommunications services market in the early 1990’s.
Before December 1991, we were the sole provider of local, domestic long-distance and international long-distance telephone services in Korea. The Government began to introduce competition in the telecommunications services market in the early 1990’s.
Although we have been able to reach collective bargaining agreements and wage agreements with our labor union in recent years, there can be no assurance that we will not experience labor disputes and unrest resulting from disagreements with the labor union in the future.
Although we have been able to reach collective bargaining agreements and wage agreements with our labor union in recent years, there can be no assurance that we will not experience labor disputes and unrest resulting from disagreements with the labor union in the future. 11 Table of Contents We are subject to various laws and regulations in Korea and other jurisdictions, including the Monopoly Regulation and Fair Trade Act of Korea.
Significant infringements of our intellectual property rights, and limitations on our ability to assert our intellectual property rights against others, could harm our ability to compete and our business, financial condition and results of operations could be adversely affected. 10 Table of Contents We may become party to intellectual property rights claims in the future that may be expensive and time consuming to defend, and such claims, if resolved adversely, could have a significant impact on our business.
We may become party to intellectual property rights claims in the future that may be expensive and time consuming to defend, and such claims, if resolved adversely, could have a significant impact on our business.
We are currently not able to estimate the duration or full magnitude of harm from COVID-19. In the event that COVID-19 or other types of widespread infectious diseases cannot be effectively and timely contained, our business, financial condition and results of operations may be adversely affected.
In the event that a future occurrence of COVID-19 or occurrences of other types of widespread infectious diseases cannot be effectively and timely contained, our business, financial condition and results of operations may be materially and adversely affected.
Pursuing acquisitions or joint venture transactions also requires significant capital, and as we pursue further growth opportunities for the future, we may need to raise additional capital through incurring loans or through issuances of bonds or other securities in the international capital markets. 4 Table of Contents The Korean telecommunications and Internet-related industries are subject to extensive Government regulations, and changes in Government policy relating to these industries could have a material adverse effect on our operations and financial condition.
Pursuing acquisitions or joint venture transactions also requires significant capital, and as we pursue further growth opportunities for the future, we may need to raise 4 Table of Contents additional capital through incurring loans or through issuances of bonds or other securities in the international capital markets.
Internationally, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea.
In February 2016, the Korean government also closed the inter-Korea Gaeseong Industrial Complex in response to North Korea’s fourth nuclear test in January 2016. Internationally, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea.
As a result, we became a corporation under the Commercial Code, and our corporate organization and shareholders’ rights were governed by the Government’s privatization laws and the Commercial Code.
Effective October 1, 1997, the Korea Telecom Act was repealed and the Government-Invested Enterprises Management Basic Act became inapplicable to us. As a result, we became a corporation under the Commercial Code, and our corporate organization and shareholders’ rights were governed by the Government’s privatization laws and the Commercial Code.
For example, in December 2022, the MSIT cancelled our bandwidth license for the use of the 28 GHz spectrum, noting that we had failed to meet certain agreements made with the MSIT at the time of the license allocation in December 2018.
For example, in recent years, the MSIT cancelled the bandwidth licenses for the use of the 28 GHz spectrum that had been issued to us, SK Telecom and LG U+, noting the failure to meet certain agreements made with the MSIT at the time of the license allocations.
As a result, we are subject to economic, political, legal and regulatory risks specific to Korea.
As a result, we are subject to economic, political, legal and regulatory risks specific to Korea, and our performance and successful execution of our operational strategies are dependent on the overall Korean economy.
In the past, the economic indicators in Korea have shown mixed signs of growth and uncertainty, and starting in 2020, the overall Korean economy and the economies of Korea’s major trading partners have shown mixed signs of deterioration and recovery due to the debilitating effects of the COVID-19 pandemic.
Following a period of deterioration due to the debilitating effects of the COVID-19 pandemic on the Korean economy as well as on the economies of Korea’s major trading partners in 2020, the overall Korean economy showed some signs of recovery in 2021.
We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances. Item 4. Information on the Company Item 4.A. History and Development of the Company In 1981, the Government established us under the Korea Telecom Act to operate the telecommunications services business that it previously directly operated.
We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances. 19 Table of Contents Item 4. Information on the Company Item 4.A.
COVID-19, an infectious disease caused by severe acute respiratory syndrome coronavirus 2 that was first reported to have been transmitted to humans in late 2019 and has spread globally, has materially and adversely affected the global economy and financial markets in recent years. The World Health Organization declared the COVID-19 as a pandemic in March 2020.
COVID-19, an infectious disease caused by severe acute respiratory syndrome coronavirus 2, was declared a “pandemic” by the World Health Organization in March 2020. The global outbreak of COVID-19 had led to global economic and financial disruptions.
Under the Korea Telecom Act and the Government-Invested Enterprises Management Basic Act, the Government exercised substantial control over our business and affairs. Effective October 1, 1997, the Korea Telecom Act was repealed and the Government-Invested Enterprises Management Basic Act became inapplicable to us.
History and Development of the Company In 1981, the Government established us under the Korea Telecom Act to operate the telecommunications services business that it previously directly operated. Under the Korea Telecom Act and the Government-Invested Enterprises Management Basic Act, the Government exercised substantial control over our business and affairs.
In February 2022, after a summary judgment was issued, our 10 current and former executive officers filed for a formal trial. Such proceeding is pending at the Seoul Central District Court.
In February 2022, after a summary judgment was issued, our 10 former executive officers filed for a formal trial. In July 2023, with respect to alleged violation of the Political Funds Act, the Seoul Central District Court found all 10 former executives guilty and imposed monetary penalties on each person ranging from ￦ 3 million to ￦ 7 million.
The Government, primarily through the MSIT and the KCC, has the authority to regulate the telecommunications industry in Korea.
The Korean telecommunications and Internet-related industries are subject to extensive Government regulations, and changes in Government policy relating to these industries could have a material adverse effect on our operations and financial condition. The Government, primarily through the MSIT and the KCC, has the authority to regulate the telecommunications industry in Korea.
In response, the three telecommunications companies in Korea, including us, have launched additional mobile rate plans starting in August 2022. The Government may pursue additional measures to regulate the markets in which we compete.
In response, the three network service providers in Korea, including us, have launched additional lower-priced mobile rate plans.
In response, the Government has repeatedly condemned the provocations and flagrant violations of relevant United Nations Security Council resolutions. In February 2016, the Government also closed the inter-Korea Gaesong Industrial Complex in response to North Korea’s fourth nuclear test in January 2016.
North Korea has increased the frequency of such activities since the beginning of 2022, firing numerous ballistic missiles, including intercontinental ballistic missiles, and in November 2023, successfully launched its first spy satellite. In response, the Korean government has repeatedly condemned the provocations and flagrant violations of relevant United Nations Security Council resolutions.
Removed
In light of the Government’s recommendations for social distancing, we have periodically implemented remote work arrangements for a portion of our workforce, particularly for employees in areas severely impacted by the pandemic.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Data centers are facilities used to house, protect and maintain network server computers that store and deliver Internet and other network contents. kt cloud’s data centers are designed to meet international standards, and are equipped with temperature and humidity control systems, regulated and reliable power supplies, mechanical equipment, fire detection and suppression equipment, security monitoring and wide-bandwidth connections to the Internet. kt cloud’s data center businesses include (i) colocation services (provision of infrastructure services necessary for clients’ server operations), (ii) interconnection services (direct private connections of counterparties, including global cloud service providers), (iii) DBO (design, build and operation) services for clients’ data centers and (iv) managed service provider offerings (operation and maintenance of information technology equipment). kt cloud also provides a wide range of cloud services that are tailored to address specific needs of its customers in public and private sectors. kt cloud’s cloud businesses include (i) customized cloud infrastructure services for government institutions and major enterprises, (ii) CDN (content 29 Table of Contents delivery network) services offering geographically distributed and interconnected servers for enhanced data traffic and content delivery, (iii) private cloud computing services with infrastructure dedicated to a single customer and (iv) marketplace platform services that enable users to access SaaS (software as a solution) services of various partners of kt cloud.
Data centers are facilities used to house, protect and maintain network server computers that store and deliver Internet and other network contents. kt cloud’s data centers are designed to meet international standards, and are equipped with temperature and humidity control systems, regulated and reliable power supplies, mechanical equipment, fire detection and suppression equipment, security monitoring and wide-bandwidth connections to the Internet. kt cloud’s data center businesses include (i) colocation services (provision of infrastructure services necessary for clients’ server operations), (ii) interconnection services (direct private connections of counterparties, including global cloud service providers), (iii) DBO (design, build and operation) services for clients’ data centers and (iv) managed service provider offerings (operation and maintenance of information technology equipment). kt cloud also provides a wide range of cloud services that are tailored to address specific needs of its customers in public and private sectors. kt cloud’s cloud businesses include (i) customized cloud infrastructure services for government institutions and major enterprises, (ii) CDN (content delivery network) services offering geographically distributed and interconnected servers for enhanced data traffic and content delivery, (iii) private cloud computing services with infrastructure dedicated to a single customer and (iv) marketplace platform services that enable users to access SaaS (software as a solution) services of various partners of kt cloud.
Notwithstanding the above, pursuant to an amendment to the Telecommunications Business Act that became effective on April 20, 2022, a company, so long as (i) its largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreign government or a foreigner of a country that has entered into a bilateral or multilateral free trade agreement with Korea that is designated by the MSIT, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the issued voting stock of such entity, may own more than 49.0% of our issued shares with voting rights but may not exercise its voting rights with respect to the shares held in excess of the 49.0% ceiling until the conclusion of the MSIT’s public interest review.
Notwithstanding the above, pursuant to an amendment to the Telecommunications Business Act that became effective in April 2022, a company, so long as (i) its largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreign government or a foreigner of a country that has entered into a bilateral or multilateral free trade agreement with Korea that is designated by the MSIT, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the issued voting stock of such entity, may own more than 49.0% of our issued shares with voting rights but may not exercise its voting rights with respect to the shares held in excess of the 49.0% ceiling until the conclusion of the MSIT’s public interest review.
The SCFBA and the regulations thereunder require an SCFB company to satisfy a minimum paid-in capital amount of (i) ￦ 20 billion, where the SCFB company engages in no more than two kinds of core businesses and (ii) ￦ 40 billion, where the SCFB company, such as BC Card, engages in three or more kinds of core businesses.
The SCFBA and the regulations thereunder require an SCFB company to satisfy a minimum paid-in capital amount of (i) W 20 billion, where the SCFB company engages in no more than two kinds of core businesses and (ii) W 40 billion, where the SCFB company, such as BC Card, engages in three or more kinds of core businesses.
Sale of Goods We recognize revenue related to sale of goods, primarily handsets sold to subscribers of our mobile services as well as miscellaneous telecommunications equipment sold to vendors and other telecommunications companies and sale of residential units and commercial real estate developed by KT Estate. We purchase handsets primarily from Samsung Electronics, Apple and LG Electronics.
Sale of Goods We recognize revenue related to sale of goods, primarily handsets sold to subscribers of our mobile services as well as miscellaneous telecommunications equipment sold to vendors and other telecommunications companies and sale of residential units and commercial real estate developed by KT Estate. We purchase handsets primarily from Samsung Electronics and Apple.
The following table summarizes the terms of our representative 5G and LTE mobile service plans that we currently offer: Plan Monthly Rate Voice Calls Video Calls Data Transmission Additional Features 5G Super Plan Premium Choice ￦ 130,000 Unlimited 300 min.
The following table summarizes the terms of our representative 5G and LTE mobile service plans that we currently offer: Plan Monthly Rate Voice Calls Video Calls Data Transmission Additional Features 5G Premium Choice ￦ 130,000 Unlimited 300 min.
Operating Results—Overview—Acquisitions and Disposals of Interests in Subsidiaries and Joint Ventures.” IPTV We offer high definition video-on-demand and real-time broadcasting and ultra-high-definition (“UHD”) IPTV services under the brand name “Genie tv.” Our IPTV service offers access to an array of digital media contents, including broadcast channels, movies, sports, news, educational programs and TV replay, for a fixed monthly fee or on a pay-per-view basis.
Operating Results—Overview—Acquisitions and Disposals of Interests in Subsidiaries and Joint Ventures.” 25 Table of Contents IPTV We offer high definition video-on-demand and real-time broadcasting and ultra-high-definition (“UHD”) IPTV services under the brand name “Genie tv.” Our IPTV service offers access to an array of digital media contents, including broadcast channels, movies, sports, news, educational programs and TV replay, for a fixed monthly fee or on a pay-per-view basis.
Our principal services include: • mobile voice and data telecommunications services based on 5G, 4G LTE and 3G W-CDMA technology; • fixed-line services, which include: Ø (i) fixed-line telephone services, including local, domestic long-distance and international long-distance services, (ii) Voice over Internet Protocol (“VoIP”) telephone services (i.e., provision of communication services over the Internet, and not over the fixed-line PSTN) and (iii) interconnection services to other telecommunications companies; Ø broadband Internet access services; and Ø data communication services, including fixed-line and satellite leased line services and dedicated broadband Internet connection service to corporate and other institutional customers; • media and content services, including IPTV, satellite TV, digital music services, e-commerce services, online advertising consulting services and web comics and novels services; 21 Table of Contents • financial services, including credit card processing and other financial services offered primarily through BC Card; • other business activities, including information technology and network services and rental of real estate by KT Estate Inc.
Our principal services include: • mobile voice and data telecommunications services based on 5G, 4G LTE and 3G W-CDMA technology; • fixed-line services, which include: Ø (i) fixed-line telephone services, including local, domestic long-distance and international long-distance services, (ii) Voice over Internet Protocol (“VoIP”) telephone services (i.e., provision of communication services over the Internet, and not over the fixed-line PSTN) and (iii) interconnection services to other telecommunications companies; Ø broadband Internet access services; and Ø data communication services, including fixed-line and satellite leased line services and dedicated broadband Internet connection service to corporate and other institutional customers; • media and content services, including IPTV, satellite TV, digital music services, e-commerce services, online advertising consulting services and web comics and novels services; • financial services, including credit card processing and other financial services offered primarily through BC Card; • other business activities, including information technology and network services and rental of real estate by KT Estate Inc.
(“KT alpha”) in which we held a 70.5% interest on a consolidated basis as of December 31, 2022. Through such merger, we expect to achieve vertical integration and pursue additional mobile commerce opportunities by leveraging KT mhows’ large corporate customer base with the e-commerce infrastructure and know-how of KTH.
(“KT alpha”) in which we held a 70.5% interest on a consolidated basis as of December 31, 2023. Through such merger, we expect to achieve vertical integration and pursue additional mobile commerce opportunities by leveraging KT mhows’ large corporate customer base with the e-commerce infrastructure and know-how of KTH.
Slim ￦ 16,500 ￦ 13,200 219 (6) Bundled Rate Plans In order to provide our customers with additional value and further promote our marketing efforts to cross sell our various services, we provide our customers with various bundled rate plans that provide discounts for subscribing to a combination of our services, as well as family plans that provide discounts for multiple line subscriptions under one household.
Slim ￦ 16,500 ￦ 13,200 220 (6) Bundled Rate Plans In order to provide our customers with additional value and further promote our marketing efforts to cross sell our various services, we provide our customers with various bundled rate plans that provide discounts for subscribing to a combination of our services, as well as family plans that provide discounts for multiple line subscriptions under one household.
Our transmission backbone network connecting major cities in Korea utilize Packet Optical Transport Network (“POTN”), and we access such network through multi-service provisioning platform (“MSPP”) architecture. Our extensive domestic long-distance network is supplemented by our fully digital domestic microwave network, which consisted of 52 relay sites as of December 31, 2022.
Our transmission backbone network connecting major cities in Korea utilize Packet Optical Transport Network (“POTN”), and we access such network through multi-service provisioning platform (“MSPP”) architecture. Our extensive domestic long-distance network is supplemented by our fully digital domestic microwave network, which consisted of 52 relay sites as of December 31, 2023.
Ltd., a subsidiary in which we held a 57.6% interest as of December 31, 2022, acquired a 100.0% interest in Epsilon Global Communications Pte. Ltd. (“Epsilon”) for US$139 million. Epsilon is a data service provider that provides data connectivity services to corporate customers around the world.
Ltd., a subsidiary in which we held a 57.6% interest as of December 31, 2023, acquired a 100.0% interest in Epsilon Global Communications Pte. Ltd. (“Epsilon”) for US$139 million. Epsilon is a data service provider that provides data connectivity services to corporate customers around the world.
Unlimited • Unlimited data roaming at 3 Mbps • Handset insurance using reward points • No service fee for additional smart device • Free contents (subscribers can choose two services among Movie / Music / Netflix / Disney / YouTube / Tving) 5G Super Plan Special Choice ￦ 110,000 Unlimited 300 min.
Unlimited • Unlimited data roaming at 3 Mbps • Handset insurance using reward points • No service fee for additional smart device • Free contents (subscribers can choose two services among Movie / Music / Netflix / Disney / YouTube / Tving) 5G Special Choice ￦ 110,000 Unlimited 300 min.
Digital Music Services We operate Genie, our platform for music contents as well as subscription-based access to digital music streaming and downloading services, through our subsidiary Genie Music Corporation, in which KT Studio Genie Co., Ltd. (“KT Studio Genie”) held a 36.0% interest as of December 31, 2022.
Digital Music Services We operate Genie, our platform for music contents as well as subscription-based access to digital music streaming and downloading services, through our subsidiary Genie Music Corporation, in which KT Studio Genie Co., Ltd. (“KT Studio Genie”) held a 36.0% interest as of December 31, 2023.
With the launch of the next generation 5G mobile services in April 2019, competition has further intensified among the three network service providers, which has resulted in an increase in marketing expenses, as well as additional capital expenditures related to implementing 5G mobile services.
With the launch of 5G mobile services in April 2019, competition has further intensified among the three network service providers, which has resulted in an increase in marketing expenses, as well as additional capital expenditures related to implementing 5G mobile services.
In addition, if an SCFB company is registered as a foreign exchange business institution with the MOEF, such SCFB company is required to maintain (1) a foreign-currency liquidity ratio (foreign currency liquid assets due within three months divided by foreign-currency liabilities due within three months) of not less than 80%, (2) a ratio of foreign currency liquid assets due within seven days less foreign currency liabilities due within seven days, divided by total foreign-currency assets, of not less than 0%, and (3) a ratio of foreign currency liquid assets due within a month less foreign currency liabilities due within a month, divided by total foreign-currency assets, of not less than negative 10%.
In addition, if an SCFB company is registered as a foreign exchange business institution with the MOEF, such SCFB company is required to maintain (1) a foreign-currency liquidity ratio (foreign currency liquid assets due within three months divided by foreign-currency liabilities due within three months) of not less than 80%, (2) a ratio of foreign currency liquid assets due within seven days less foreign currency liabilities due within seven days, divided by total foreign-currency assets, of 42 Table of Contents not less than 0%, and (3) a ratio of foreign currency liquid assets due within a month less foreign currency liabilities due within a month, divided by total foreign-currency assets, of not less than negative 10%.
In addition, the calculation of the above-referenced 49% ceiling will apply to: (x) any foreign entities that have entered into a major management-related agreement with a network service provider or the shareholder(s) thereof; and (y) foreign entities that have entered into an agreement pertaining to the settlement of fees relating to the handling of international electronic telecommunications services.
In addition, the calculation of the above-referenced 49% ceiling applies to: (x) any foreign entities that have entered into a major management-related agreement with a network service provider or the shareholder(s) thereof; and (y) foreign entities that have entered into an agreement pertaining to the settlement of fees relating to the handling of international electronic telecommunications services.
Digital systems permit a range of voice, text and data applications to be transmitted simultaneously on the same network. 24 Table of Contents In recent years, the volume of our incoming international calls has significantly exceeded the volume of our outgoing international calls. The agreed settlement rate is applied to the call minutes to determine the applicable net settlement payment.
Digital systems permit a range of voice, text and data applications to be transmitted simultaneously on the same network. In recent years, the volume of our incoming international calls has significantly exceeded the volume of our outgoing international calls. The agreed settlement rate is applied to the call minutes to determine the applicable net settlement payment.
A majority of our patents registered in Korea and overseas relate to our wireless and fixed-line telecommunications, media services and technologies related to IoT and artificial intelligence. In addition, we operate several research and development (“R&D”) laboratories to develop latest technology and additional platforms, as described in “Item 5.C.
A majority of our patents registered in Korea and 43 Table of Contents overseas relate to our wireless and fixed-line telecommunications, media services and technologies related to IoT and artificial intelligence. In addition, we operate several research and development (“R&D”) laboratories to develop latest technology and additional platforms, as described in “Item 5.C.
FTTH is a telecommunication architecture in which a communication path is provided over optical fiber cables extending from the telecommunications operator’s switching equipment to the 25 Table of Contents boundary of home or office. FTTH uses fiber optic cable, which is able to carry a high-bandwidth signal for longer distances without degradation.
FTTH is a telecommunication architecture in which a communication path is provided over optical fiber cables extending from the telecommunications operator’s switching equipment to the boundary of home or office. FTTH uses fiber optic cable, which is able to carry a high-bandwidth signal for longer distances without degradation.
Furthermore, pursuant to an amendment to the Telecommunications Business Act that became effective on December 11, 2022, this exemption from the restriction of foreign ownership of a network service provider beyond the 49.0% threshold applies not only to a foreign government or a foreigner from an FTA Country but also to a foreign government or a foreigner from an OECD country.
Furthermore, pursuant to an amendment to the Telecommunications Business Act that became effective in December 2022, this exemption from the restriction of foreign ownership of a network service provider beyond the 49.0% threshold applies not only to a foreign government or a foreigner from an FTA Country but also to a foreign government or a foreigner from an OECD country.
We also offer a flat rate fixed-line telephone service plan with a base monthly rate of ￦ 12,100 (or ￦ 8,470 for a three year subscription commitment) that includes 50 hours of local and domestic long-distance calls and calls to VoIP phones.
We also offer a flat rate fixed-line telephone service plan with a base monthly rate of ￦ 12,100 (or ￦ 8,470 for a three year subscription commitment) that includes 50 hours of local and domestic 32 Table of Contents long-distance calls and calls to VoIP phones.
Unlimited • Unlimited data roaming at 100 kbps • Handset insurance using reward points • No service fee for additional smart device 5G Super Plan Basic Choice ￦ 90,000 Unlimited 300 min.
Unlimited • Unlimited data roaming at 100 kbps • Handset insurance using reward points • No service fee for additional smart device 5G Basic Choice ￦ 90,000 Unlimited 300 min.
We also offer a wide range of “KT DX platform” services for our corporate and other institutional customers that provide customized and integrated digital transformation services that address their technical infrastructure, platform and solution needs. In September 2021, KT ES Pte.
We also offer a wide range of “KT DX platform” services for our corporate and other institutional customers that provide customized and integrated digital transformation services that address their technical infrastructure, platform and solution needs. 28 Table of Contents In September 2021, KT ES Pte.
We provide discount rates to qualified customers, including small- and medium-sized enterprises, businesses engaging in Internet access services and government agencies. Data communication services accounted for 4.5% of our operating revenue in 2022. Through our wholly owned subsidiary KT Sat Co., Ltd., we also provide transponder leasing, broadcasting, video distribution and data communication services through satellites periodically launched by us.
We provide discount rates to qualified customers, including small- and medium-sized enterprises, businesses engaging in Internet access services and government agencies. Data communication services accounted for 4.9% of our operating revenue in 2023. Through our wholly owned subsidiary KT Sat Co., Ltd., we also provide transponder leasing, broadcasting, video distribution and data communication services through satellites periodically launched by us.
In addition to monthly rates for subscription, we charge a one-time installation fee of ￦ 27,500 per set-top box and a digital set-top box rental fee ranging from ￦ 7,700 to ￦ 9,900 per year that varies depending on the type of set-top box required for the service plan, which is also subject to discounts and waivers based on length of subscription commitment period.
In addition to monthly rates for subscription, we charge a one-time installation fee of ￦ 27,500 per set-top box and a digital set-top box rental fee ranging from ￦ 7,700 to ￦ 22,000 per year that varies depending on the type of set-top box required for the service plan, which is also subject to discounts and waivers based on length of subscription commitment period.
For households that subscribe to broadband Internet access as well as mobile services, our premium family plan provides discounts of approximately 50% for broadband Internet access subscription as well as for mobile services of each additional family member (up to four additional members). Competition We face significant competition in each of our principal business areas.
For households that subscribe to broadband Internet access as well as mobile services, our premium family plan provides discounts of approximately 50% for broadband Internet access subscription as well as for mobile services of each additional family member (up to four additional members). 35 Table of Contents Competition We face significant competition in each of our principal business areas.
Leveraging on our (i) data communications networks, (ii) infrastructure operational know-how and (iii) big data analytics capabilities, we believe that we are well-positioned to take advantage of the attractive opportunities in this era of digital transformation. In 2020, we launched our B2B brand, KT Enterprise, to better position ourselves to attract corporate customers that have digital transformation needs.
Leveraging our (i) data communications networks, (ii) infrastructure operational know-how and (iii) big data analytics capabilities, we believe that we are well-positioned to take advantage of the attractive opportunities in this era of digital transformation. In 2020, we launched a new brand, KT Enterprise, to better position ourselves to attract corporate customers that have digital transformation needs.
Competition in the credit card and check card businesses has increased substantially as existing credit card companies, consumer finance companies and other financial institutions in Korea have made significant investments and engaged in aggressive marketing campaigns and promotions for their credit and check cards, as well as investing in operational infrastructure that may reduce the need for our outsourcing services. 36 Table of Contents The following tables show the market shares in our principal markets in terms of subscribers as of the dates indicated: Mobile Services Market Share (%) (1) KT Corporation SK Telecom LG U+ December 31, 2020 31.6 44.8 23.6 December 31, 2021 31.3 44.0 24.7 December 31, 2022 31.3 42.9 25.8 Source: The MSIT.
Competition in the credit card and check card businesses has increased substantially as existing credit card companies, consumer finance companies and other financial institutions in Korea have made significant investments and engaged in aggressive marketing campaigns and promotions for their credit and check cards, as well as investing in operational infrastructure that may reduce the need for our outsourcing services. 36 Table of Contents The following tables show the market shares in our principal markets in terms of subscribers as of the dates indicated: Mobile Services Market Share (%) (1) KT Corporation SK Telecom LG U+ December 31, 2021 31.3 44.0 24.7 December 31, 2022 31.3 42.9 25.8 December 31, 2023 29.7 40.4 29.9 Source: The MSIT.
The following table shows the interconnection charges we paid per minute (exclusive of VAT) to our competitors, and the charges received per minute (exclusive of VAT) from mobile operators for mobile to mobile calls: Effective Starting January 1, 2020 January 1, 2021 January 1, 2022 KT ￦ 10.6 ￦ 10.3 ￦ 9.7 SK Telecom 10.6 10.3 9.7 LG U+ 10.6 10.3 9.7 Fixed-line Services Fixed-line Telephone Services Local and Domestic Long-distance .
The following table shows the interconnection charges we paid per minute (exclusive of VAT) to our competitors, and the charges received per minute (exclusive of VAT) from mobile operators for mobile to mobile calls: Effective Starting January 1, 2021 January 1, 2022 January 1, 2023 KT ￦ 10.3 ￦ 9.7 ￦ 9.2 SK Telecom 10.3 9.7 9.2 LG U+ 10.3 9.7 9.2 Fixed-line Services Fixed-line Telephone Services Local and Domestic Long-distance .
Our member companies that issue co-branded credit or check cards include Woori Card, NH Card, Industrial Bank of Korea and KB Kookmin Card. We engage in joint marketing efforts to promote cards issued pursuant to our co-branding agreements.
Our member companies that issue co-branded credit or check cards include Woori Card, NH Card, Industrial Bank of Korea and KB Kookmin Card. We 27 Table of Contents engage in joint marketing efforts to promote cards issued pursuant to our co-branding agreements.
We also offer bundled rate plans that provide discounts for subscribing to a combination of our services, as well as family plans that provide discounts for multiple line subscriptions under one household. For many of our services, we provide additional discounts for customers who commit to extended subscription periods.
We also offer bundled rate plans that provide discounts for subscribing to a 29 Table of Contents combination of our services, as well as family plans that provide discounts for multiple line subscriptions under one household. For many of our services, we provide additional discounts for customers who commit to extended subscription periods.
In the event that any foreigner or foreign government acquires our shares in violation of the above provisions, the Telecommunications Business Act restricts such foreign shareholder from exercising his or her voting rights with respect to common shares exceeding such threshold.
In the event that any 41 Table of Contents foreigner or foreign government acquires our shares in violation of the above provisions, the Telecommunications Business Act restricts such foreign shareholder from exercising his or her voting rights with respect to common shares exceeding such threshold.
Prior to April 2018, in accordance with the MSIT’s determination that we possessed essential infrastructure, we were required to permit other fixed-line communications service providers to co-use 39 Table of Contents our fixed-line telecommunication infrastructure, upon the request of such other fixed-line telecommunications service providers.
Prior to April 2018, in accordance with the MSIT’s determination that we possessed essential infrastructure, we were required to permit other fixed-line communications service providers to co-use our fixed-line telecommunication infrastructure, upon the request of such other fixed-line telecommunications service providers.
We also offer WiFi services under the “KT WiFi” brand name, which is designed to integrate fixed-line and wireless services by offering high speed wireless Internet access to laptops and smartphones in hot-spot zones and KT Internet service in fixed-line environments. Our broadband Internet access services accounted for 9.5% of our operating revenue in 2022.
We also offer WiFi services under the “KT WiFi” brand name, which is designed to integrate fixed-line and wireless services by offering high speed wireless Internet access to laptops and smartphones in hot-spot zones and KT Internet service in fixed-line environments. Our broadband Internet access services accounted for 9.7% of our operating revenue in 2023.
Our Services The following table sets out our operating revenue by principal product categories and the respective percentage of total operating revenue in 2020, 2021 and 2022.
Our Services The following table sets out our operating revenue by principal product categories and the respective percentage of total operating revenue in 2021, 2022 and 2023.
Our standard usage-based fixed-line telephone service plan consists of a base monthly rate of ￦ 5,720 and usage fees for local and domestic long-distance 32 Table of Contents calls, as well as calls to VoIP phones and mobile phones.
Our standard usage-based fixed-line telephone service plan consists of a base monthly rate of ￦ 5,720 and usage fees for local and domestic long-distance calls, as well as calls to VoIP phones and mobile phones.
We began offering 4G LTE services in the Seoul metropolitan area in January 2012, and we completed the expansion of our coverage nationwide in October 2012. 4G LTE technology enables data to be transmitted faster than 3G W-CDMA technology. Revenue related to mobile service accounted for 26.7% of our operating revenue in 2022.
We began offering 4G LTE services in the Seoul metropolitan area in January 2012, and we completed the expansion of our coverage nationwide in October 2012. 4G LTE technology enables data to be transmitted faster than 3G W-CDMA technology. Revenue related to mobile service accounted for 26.8% of our operating revenue in 2023.
In April 2018, to facilitate expedient establishment of 5G mobile services infrastructure, the Government announced its initiatives to amend the co-use system, as follows: (i) we should permit not only fixed-line telecommunications service providers, but also mobile service providers such as SK Telecom and LG U+ to co-use our telecommunications infrastructure necessary for provision of 5G mobile services, (ii) the Government determined that we, SK Telecom, SK Broadband and LG U+ possessed essential infrastructure with respect to the interval between the cable entry at a building and the initial occurrence of connection within the building and required that the three companies share such infrastructure throughout buildings in Korea with each other, and (iii) fixed-line telecommunications service providers and mobile service providers are required to participate in joint efforts to construct additional fixed-line and mobile network architecture.
Subsequently, to facilitate expedient establishment of 5G mobile services infrastructure, the Government amended the co-use system as follows: (i) we should permit not only fixed-line telecommunications service providers, but also mobile service providers such as SK Telecom and LG U+ to co-use our telecommunications infrastructure necessary for provision of 5G mobile services, (ii) the Government determined that we, SK Telecom, SK Broadband and LG U+ possessed essential infrastructure with respect to the interval between the cable entry at a building and the initial occurrence of connection within the building and required that the three companies share such infrastructure throughout buildings in Korea with each other, and (iii) fixed-line telecommunications service providers and mobile service providers are required to participate in joint efforts to construct additional fixed-line and mobile network architecture.
(1) Interconnection between local switching center and local access line. (2) Interconnection involving access to single long-distance switching center. (3) Interconnection involving access to two long-distance switching centers. VoIP Telephone Services Our VoIP telephone services offer rate plans that charge generally lower base monthly rates and usage-based fees compared to our fixed-line telephone services.
(1) Interconnection between local switching center and local access line. (2) Interconnection involving access to single long-distance switching center. (3) Interconnection involving access to two long-distance switching centers. 33 Table of Contents VoIP Telephone Services Our VoIP telephone services offer rate plans that charge generally lower base monthly rates and usage-based fees compared to our fixed-line telephone services.
Sale of goods accounted for 12.9% of our operating revenue in 2022. Our Rates We offer various service plans for our mobile, fixed-line and media and content services. For our individual customers, we offer rate plans targeting specific customer segments that aim to address their individual needs.
Sale of goods accounted for 12.4% of our operating revenue in 2023. Our Rates We offer various service plans for our mobile, fixed-line and media and content services. For our individual customers, we offer rate plans targeting specific customer segments that aim to address their individual needs.
Our backbone network utilizes 64 Tbp Long-haul Reconfigurable Optical Add Drop Multiplexer (“ROADM”) technology for connecting cities. ROADM technology improves bandwidth efficiency by enabling data to be transmitted from multiple signals across one fiber strand in a cable and carrying each signal on a separate wavelength.
As of December 31, 2023, our backbone network utilizes 64 Tbp Long-haul Reconfigurable Optical Add Drop Multiplexer (“ROADM”) technology for connecting cities. ROADM technology improves bandwidth efficiency by enabling data to be transmitted from multiple signals across one fiber strand in a cable and carrying each signal on a separate wavelength.
The following table shows the interconnection charges we paid per minute (exclusive of VAT) to mobile operators for landline to mobile calls: Effective Starting January 1, 2020 January 1, 2021 January 1, 2022 SK Telecom ￦ 10.6 ￦ 10.3 ￦ 9.7 LG U+ 10.6 10.3 9.7 Land-to-land and Mobile-to-land Interconnection .
The following table shows the interconnection charges we paid per minute (exclusive of VAT) to mobile operators for landline to mobile calls: Effective Starting January 1, 2021 January 1, 2022 January 1, 2023 SK Telecom ￦ 10.3 ￦ 9.7 ￦ 9.2 LG U+ 10.3 9.7 9.2 Land-to-land and Mobile-to-land Interconnection .
We also offer mobile gift card services through KT alpha under the brand name “giftishow” and other mobile advertising solutions to corporate customers. Online Advertising Consulting Services We provide strategic advertising consulting services for the online advertising industry through our subsidiaries Nasmedia, Co., Ltd.
We also offer mobile gift card services through KT alpha under the brand name “giftishow” and other mobile advertising solutions to corporate customers. 26 Table of Contents Online Advertising Consulting Services We provide strategic advertising consulting services for the online advertising industry through our subsidiaries Nasmedia, Co., Ltd.
After service is ceased, the overdue charges that are not collected by the collection agency are written off. 41 Table of Contents Credit Card Business Through BC Card in which we held a 69.5% interest as of December 31, 2022, we offer various credit card processing and related financial services.
After service is ceased, the overdue charges that are not collected by the collection agency are written off. Credit Card Business Through BC Card in which we held a 69.5% interest as of December 31, 2023, we offer various credit card processing and related financial services.
As of December 31, 2022, 42.63% of our common shares were owned by foreign investors. In the event that a network service provider violates the shareholding restrictions, its foreign shareholders cannot exercise voting rights for their shares in excess of such limitation, and the MSIT may require corrective measures be taken to comply with the ownership restrictions.
As of December 31, 2023, 43.2% of our common shares were owned by foreign investors. In the event that a network service provider violates the shareholding restrictions, its foreign shareholders cannot exercise voting rights for their shares in excess of such limitation, and the MSIT may require corrective measures be taken to comply with the ownership restrictions.
As of December 31, 2022, the net book value of our investment properties, which is accounted for separately from our property and equipment, was ￦ 1,933 billion. Other than as may be described in this annual report, no significant amount of our properties is leased. There are no material encumbrances on our properties including the fixed assets below.
As of December 31, 2023, the net book value of our investment properties, which is accounted for separately from our property and equipment, was ￦ 2,198 billion. Other than as may be described in this annual report, no significant amount of our properties is leased. There are no material encumbrances on our properties including the fixed assets below.
(1) Includes subscribers of MVNOs that lease mobile networks of the respective mobile service provider. Fixed-line Local Telephone and VoIP Services Market Share (%) KT Corporation SK Broadband LG U+ December 31, 2020 64.6 14.5 12.6 December 31, 2021 64.1 14.9 12.7 December 31, 2022 63.1 14.9 12.7 Source: Korea Telecommunications Operators Association.
(1) Includes subscribers of MVNOs that lease mobile networks of the respective mobile service provider. Fixed-line Local Telephone and VoIP Services Market Share (%) KT Corporation SK Broadband LG U+ December 31, 2021 64.1 14.9 12.7 December 31, 2022 63.1 14.9 12.7 December 31, 2023 62.3 14.9 12.7 Source: Korea Telecommunications Operators Association.
For purposes of the Telecommunications Business Act, the term “foreign invested company” means a company in which a foreigner or a foreign government is the largest shareholder and holds 15.0% or more of the company’s shares with voting rights, provided, however, that such company will not be counted as a foreign shareholder for the purposes of the 49.0% limit if (1) it holds less than 1.0% of our total issued and outstanding shares with 40 Table of Contents voting rights or (2) if the MSIT determines that the fact that such foreign government or entity holds a 15.0% or greater shareholding in such company does not present a risk of harm to the public interest.
For purposes of the Telecommunications Business Act, the term “company deemed as a foreigner” means a company in which a foreigner or a foreign government is the largest shareholder and holds 15.0% or more of the company’s shares with voting rights, provided, however, that such company will not be counted as a foreign shareholder for the purposes of the 49.0% limit if (1) it holds less than 1.0% of our total issued and outstanding shares with voting rights or (2) if the MSIT determines that the fact that such foreign government or entity holds a 15.0% or greater shareholding in such company does not present a risk of harm to the public interest.
Unlimited • Unlimited data roaming at 100 kbps • Free contents (subscribers can choose two services among Movie / Music / Netflix / Disney YouTube / Tving) 5G Super Plan Basic ￦ 80,000 Unlimited 300 min. Unlimited • Unlimited data roaming at 100 kbps 5G Simple ￦ 69,000 Unlimited 300 min.
Unlimited • Unlimited data roaming at 100 kbps • Free contents (subscribers can choose two services among Movie / Music / Netflix / Disney / YouTube / Tving) 5G Basic ￦ 80,000 Unlimited 300 min. Unlimited • Unlimited data roaming at 100 kbps 5G Simple 110 GB ￦ 69,000 Unlimited 300 min.
As of December 31, 2022, we leased 306,906 lines to domestic and international businesses. We provide dedicated and secure broadband Internet connection service to institutional customers under the “Kornet” brand name. We provide high-speed connection to our Internet backbone network, as well as rent to our customers and install necessary routers to ensure reliable Internet connection and enhanced security.
As of December 31, 2023, we leased 318,281 lines to domestic and international businesses. We provide dedicated and secure broadband Internet connection service to institutional customers under the “Kornet” brand name. We provide high-speed connection to our Internet backbone network, as well as rent to our customers and install necessary routers to ensure reliable Internet connection and enhanced security.
(“Nasmedia”), in which we held a 43.0% interest as of December 31, 2022, and PlayD Co., Ltd. (“PlayD”), in which Nasmedia and we in the aggregate held a 70.4% interest as of December 31, 2022.
(“Nasmedia”), in which we held a 43.1% interest as of December 31, 2023, and PlayD Co., Ltd. (“PlayD”), in which Nasmedia and we in the aggregate held a 70.4% interest as of December 31, 2023.
We do not carry any business interruption insurance. We provide co-location and a variety of value-added services including server-hosting services to a number of corporations whose business largely depends on critical data operated on our servers or on their servers located at our data centers.
We do not have any provisions or reserves against such loss or damage. We do not carry any business interruption insurance. We provide co-location and a variety of value-added services including server-hosting services to a number of corporations whose business largely depends on critical data operated on our servers or on their servers located at our data centers.
Broadband Internet Access Services Market Share (%) KT Corporation SK Broadband LG U+ Others December 31, 2020 41.1 29.0 20.3 9.6 December 31, 2021 41.2 28.7 20.7 9.4 December 31, 2022 41.3 28.5 21.0 9.2 Source: The MSIT.
Broadband Internet Access Services Market Share (%) KT Corporation SK Broadband LG U+ Others December 31, 2021 41.2 28.7 20.7 9.4 December 31, 2022 41.3 28.5 21.0 9.2 December 31, 2023 40.8 28.7 21.4 9.1 Source: The MSIT.
As of or for the Year Ended December 31, 2018 2019 2020 2021 2022 Total Korean population (thousands) (1) 51,826 51,850 51,829 51,639 51,439 PSTN and VoIP lines in service (thousands) 14,992 14,185 13,582 13,096 12,581 PSTN lines in service 11,637 11,052 10,449 9,905 9,376 Local lines in service 10,654 10,076 9,475 8,937 8,430 Group lines in service 983 976 973 968 946 VoIP lines in service 3,355 3,133 3,133 3,191 3,206 Fiber optic cable (kilometers) 784,088 847,497 867,051 896,076 917,114 Domestic long-distance call minutes (millions) (2) 892 744 620 500 395 Local call pulses (millions) (2) 974 804 638 554 463 (1) Based on the number of registered residents as published by the Ministry of the Interior and Safety of Korea.
As of or for the Year Ended December 31, 2019 2020 2021 2022 2023 Total Korean population (thousands) (1) 51,850 51,829 51,639 51,439 51,325 PSTN and VoIP lines in service (thousands) 14,185 13,582 13,096 12,581 12,035 PSTN lines in service 11,052 10,449 9,905 9,376 8,820 Local lines in service 10,076 9,475 8,937 8,430 7,892 Group lines in service 976 973 968 946 928 VoIP lines in service 3,133 3,133 3,191 3,206 3,215 Fiber optic cable (kilometers) 847,497 867,051 896,076 917,114 937,146 Domestic long-distance call minutes (millions) (2) 744 620 500 395 321 Local call pulses (millions) (2) 804 638 554 463 363 (1) Based on the number of registered residents as published by the Ministry of the Interior and Safety of Korea.
Approximately 88.8% of our subscribers as of December 31, 2022 pay through the direct-debit service. Accounts of subscribers who fail to pay our invoice are transferred to a collection agency, which sends out a notice of payment.
Approximately 89.2% of our subscribers as of December 31, 2023 pay through the direct-debit service. Accounts of subscribers who fail to pay our invoice are transferred to a collection agency, which sends out a notice of payment.
Unlimited, but decelerate to 1 Mbps after 3 GB • Mobile TV package offering live broadcast and VOD contents of up to 2 GB per day LTE Basic ￦ 33,000 Unlimited 50 min. 1.4 GB with an option to transfer data from and into the next month’s usage In addition to our mobile service plans, we offer value-added services for additional monthly fees that can be added to the subscription such as media packages, mobile TV packages, additional data transmission packages, caller ID, music service packages and ring tone services and usage reporting services.
Unlimited, but decelerate to 1 Mbps after 5 GB LTE Basic ￦ 33,000 Unlimited 50 min. 1.4 GB with an option to transfer data from and into the next month’s usage In addition to our mobile service plans, we offer value-added services for additional monthly fees that can be added to the subscription such as media packages, mobile TV packages, additional data transmission packages, caller ID, music service packages and ring tone services and usage reporting services.
We have made extensive efforts to continually develop advanced technologies as well as to provide a variety of new mobile services with enhanced speed, latency and connectivity. We commercially launched our next generation 5G mobile services in April 2019.
Mobile Services We provide mobile services based on 5G, 4G LTE and 3G W-CDMA technology. We have made extensive efforts to continually develop advanced technologies as well as to provide a variety of new mobile services with enhanced speed, latency and connectivity. We commercially launched our next generation 5G mobile services in April 2019.
Except for our insurance coverage of our satellites and data centers, we do not carry insurance covering losses to outside plants or to equipment because we believe the cost of such insurance is excessive and the risk of material loss or damage is insignificant. We do not have any provisions or reserves against such loss or damage.
Insurance We carry insurance against loss or damage to all significant buildings and automobiles. Except for our insurance coverage of our satellites and data centers, we do not carry insurance covering losses to outside plants or to equipment because we believe the cost of such insurance is excessive and the risk of material loss or damage is insignificant.
Media and content services accounted for 11.8% of our operating revenue in 2022. In addition, in September 2021, KT Skylife, in which we held a 49.99% interest as of December 31, 2022, acquired a 100.00% interest in HCN, which is Korea’s fifth largest cable TV operator. See “Item 5. Operating and Financial Review and Prospects—Item 5.A.
Media and content services accounted for 12.1% of our operating revenue in 2023. In addition, in September 2021, KT Skylife, in which we held a 50.3% interest as of December 31, 2023, acquired a 100.00% interest in HCN, which is Korea’s fifth largest cable TV operator. See “Item 5. Operating and Financial Review and Prospects—Item 5.A.
In addition, as of December 31, 2022, our international telecommunications networks were directly linked to 286 telecommunications service providers in various international destinations and are routed through our three international switching centers in Seoul, Daejeon and Busan.
In addition, as of December 31, 2023, our international telecommunications networks were directly linked to 263 telecommunications service 45 Table of Contents providers in various international destinations and are routed through our three international switching centers in Seoul, Daejeon and Busan.
In addition, an SCFB company is required to file a report to the FSC upon the occurrence of certain events, including (i) changes to its name; (ii) changes to the largest shareholder; or (iii) changes of 1% or more in the ownership of stocks with voting rights held by a major shareholder and such major shareholder’s specially related persons, in each case within seven days from the date of its occurrence. 42 Table of Contents Insurance We carry insurance against loss or damage to all significant buildings and automobiles.
In addition, an SCFB company is required to file a report to the FSC upon the occurrence of certain events, including (i) changes to its name; (ii) changes to the largest shareholder; or (iii) changes of 1% or more in the ownership of stocks with voting rights held by a major shareholder and such major shareholder’s specially related persons, in each case within seven days from the date of its occurrence.
Telecommunications service providers designated as “universal service providers” by the MSIT are required to provide universal telecommunications services such as local services, local public telephone services, broadband services, discount services for persons with disabilities and for certain low-income persons, telecommunications services for remote islands and wireless communication services for ships. We have been designated as a universal service provider.
Telecommunications service providers designated as “universal service providers” by the MSIT are required to provide universal telecommunications services such as local services, local public telephone services, broadband services, discount services for persons with disabilities and for certain 39 Table of Contents low-income persons, telecommunications services for remote islands and wireless communication services for ships.
In April 2022, we completed a vertical spin-off of our Internet data centers business and established a wholly-owned subsidiary, kt cloud Co., Ltd., (“kt cloud”) to more effectively promote the growth of our Internet data center and cloud operations.
In April 2022, we completed a vertical spin-off of our Internet data centers business and established a wholly-owned subsidiary, kt cloud Co., Ltd., (“kt cloud”) to more effectively promote the growth of our Internet data center and cloud operations. As of December 31, 2023, we held an 86.3% interest in kt cloud.
Through a digital set-top box that we rent to our customers, our customers are able to browse the catalogue of digital media contents and view selected media streams on their television. A set-top box provides two-way communications on an IP network and decodes video streaming data.
Through a digital set-top box that we rent to our customers, our customers are able to browse the catalogue of digital media contents and view selected media streams on their television. A set-top box provides two-way communications on an IP network and decodes video streaming data. We had approximately 9.4 million IPTV subscribers as of December 31, 2023.
Unlimited • Unlimited data roaming at 100 kbps • Handset insurance using reward points • No service fee for additional smart device • Free contents (subscribers can choose two services among Movie / Music / Netflix / Disney YouTube / Tving) 5G Super Plan Special ￦ 100,000 Unlimited 300 min.
Unlimited • Unlimited data roaming at 100 kbps • Handset insurance using reward points • No service fee for additional smart device • Free contents (subscribers can choose two services among Movie / Music / Netflix / Disney / YouTube / Tving) 30 Table of Contents Plan Monthly Rate Voice Calls Video Calls Data Transmission Additional Features 5G Special ￦ 100,000 Unlimited 300 min.
In particular: • in mobile services, we achieved a market share of 31.3% with approximately 24.1 million subscribers as of December 31, 2022; • in fixed-line and VoIP telephone services, we had approximately 12.6 million subscribers, consisting of 9.4 million PSTN subscribers and 3.2 million VoIP subscribers as of December 31, 2022.
In particular: • in mobile services, we achieved a market share of 29.7% with approximately 24.9 million subscribers as of December 31, 2023; • in fixed-line and VoIP telephone services, we had approximately 12.0 million subscribers, consisting of 8.8 million PSTN subscribers and 3.2 million VoIP subscribers as of December 31, 2023.
The following table shows the number of minutes of international long-distance calls recorded by us and network service providers utilizing our international long-distance network in each specified category for each year in the five-year period ended December 31, 2022: Year Ended December 31, 2018 2019 2020 2021 2022 (In millions of billed minutes) Incoming international long-distance calls (1) 221.1 189.6 50.8 242.4 422.2 Outgoing international long-distance calls 101.1 78.8 59.5 44.4 36.1 Total 322.2 268.4 110.3 286.8 458.3 (1) Starting in 2021, includes incoming traffic of application-to-person correspondence.
The following table shows the number of minutes of international long-distance calls recorded by us and network service providers utilizing our international long-distance network in each specified category for each year in the three-year period ended December 31, 2023: Year Ended December 31, 2021 2022 2023 (In millions of billed minutes) Incoming international long-distance calls (1) 242.4 422.2 615.8 Outgoing international long-distance calls 44.4 36.1 31.5 Total 286.8 458.3 647.3 (1) Starting in 2021, includes incoming traffic of application-to-person correspondence.
We compete with SK Telecom, a mobile service provider that has a longer operating history than us, and LG U+ which began its service at around the same time as KTF. As of December 31, 2022, we had approximately 24.1 million subscribers, or a market share of 31.3%, which was the second largest among the three mobile service providers.
We compete with SK Telecom, a mobile service provider that has a longer operating history than us, and LG U+ which began its service at around the same time as KTF. As of December 31, 2023, we had approximately 24.9 million subscribers, or a market share of 29.7%.
As of such date, our market share of the fixed-line local telephone and VoIP services was 55.0%; and • we are Korea’s largest broadband Internet access provider with approximately 9.7 million subscribers as of December 31, 2022, representing a market share of 41.3%.
As of such date, our market share of the fixed-line local telephone and VoIP services was 62.3%; and 21 Table of Contents • we are Korea’s largest broadband Internet access provider with approximately 9.8 million subscribers as of December 31, 2023, representing a market share of 40.8%.
Under the Handset Distribution Reform Act, everyone, regardless of their status, is entitled to receive either a handset subsidy related to the purchase of a recently released mobile phone, or a discount on the mobile service subscription rate.
Under the Mobile Device Distribution Improvement Act, a subscriber is entitled to receive either a designated handset subsidy related to the purchase of a recently released mobile phone, or a designated discount on the mobile service subscription rate.
As of December 31, 2022, we had approximately 9.7 million broadband Internet subscribers, including approximately 6.5 million KT GiGA Internet service subscribers with enhanced data transmission speeds. In addition, we had approximately 6.1 million KT WiFi subscribers as of such date. We also sponsored approximately 103 thousand hot-spot zones nationwide for wireless connection as of December 31, 2022.
As of December 31, 2023, we had approximately 9.8 million broadband Internet subscribers, including approximately 6.7 million KT GiGA Internet service subscribers with enhanced data transmission speeds. We also sponsored approximately 98 thousand hot-spot zones nationwide for wireless connection as of December 31, 2023.
The following table shows selected information concerning the usage of our network during the periods indicated and the number of our mobile subscribers as of the end of such periods: As of or for the Year Ended December 31, 2020 2021 2022 Average monthly revenue per subscriber (1) ￦ 31,683 ￦ 32,294 ￦ 32,803 Number of mobile subscribers (in thousands) 22,305 22,799 24,062 LTE subscribers 16,174 14,637 14,261 5G subscribers 3,619 6,378 8,483 W-CDMA subscribers 2,512 1,784 1,318 (1) The average monthly revenue per subscriber is computed by dividing total monthly fees, usage charges, interconnection fees and value-added service fees for the period by the weighted average number of subscribers (other than MVNO subscribers) and dividing the quotient by the number of months in the period.
The following table shows selected information concerning the usage of our network during the periods indicated and the number of our mobile subscribers as of the end of such periods: As of or for the Year Ended December 31, 2021 2022 2023 Average monthly revenue per subscriber (1) ￦ 31,555 ￦ 32,803 ￦ 33,965 Number of mobile subscribers (in thousands) 22,799 24,062 24,897 LTE subscribers 14,637 14,261 13,993 5G subscribers 6,378 8,483 9,918 W-CDMA subscribers 1,784 1,318 986 22 Table of Contents (1) The average monthly revenue per subscriber is computed by dividing total monthly fees, usage charges and value-added service fees for the period by the weighted average number of subscribers (other than MVNO subscribers and subscribers of miscellaneous Internet-of-things (“IoT”) services) and dividing the quotient by the number of months in the period.
As of December 31, 2022, the net book value of our 43 Table of Contents property and equipment was ￦ 14,772 billion, of which ￦ 3,827 billion is accounted for by the net book value of our land, buildings and structures.
As of December 31, 2023, the net book value of our property and equipment was ￦ 14,872 billion, of which ￦ 3,843 billion is accounted for by the net book value of our land, buildings and structures.
Broadband Internet Access Services Leveraging on our nationwide network of 917,114 kilometers of fiber optic cables as of December 31, 2022, we have achieved a leading market position in the broadband Internet access market in Korea.
Broadband Internet Access Services Leveraging our nationwide network of 937,147 kilometers of fiber optic cables as of December 31, 2023, we have achieved a leading market position in the broadband Internet access 24 Table of Contents market in Korea.
Unlimited • Handset insurance using reward points • No service fee for additional smart device • Media package offering music, video, webtoon and movie content. Data On Video ￦ 69,000 Unlimited 300 min.
Unlimited • Handset insurance using reward points • No service fee for additional smart device • Media package offering music, video, webtoon and movie content. 31 Table of Contents Plan Monthly Rate Voice Calls Video Calls Data Transmission Additional Features Data On Video ￦ 69,000 Unlimited 300 min.
In addition to offering service plans that enable TV viewing at home as well as access on mobile devices, we provide separate mobile TV plans at lower rates that are specifically designed for mobile devices. 34 Table of Contents The following table summarizes the terms of our representative IPTV and satellite TV service plans that we currently offer: Plan Monthly Rate Rate with 3 Year Term Channels (UHD) Additional Features Genie tv NETFLIX Choice UHD ￦ 39,800 ￦ 31,680 266 (6) • Genie tv Essence and NETFLIX premium service NETFLIX Choice HD ￦ 37,300 ￦ 29,680 266 (6) • Genie tv Essence and NETFLIX standard service SuperPack Choice ￦ 36,300 ￦ 29,480 266 (6) • Genie tv Essence and free movie, drama and animation contents VOD Choice ￦ 31,020 ￦ 24,816 266 (6) • Genie tv Essence and monthly coupon of ￦ 10,000 for video-on-demand Essence Plus ￦ 28,160 ￦ 22,484 266 (6) • Genie tv Essence and monthly coupon of ￦ 5,000 for video-on-demand Essence ￦ 25,300 ￦ 20,240 266 (6) Lite ￦ 19,800 ￦ 15,840 240 (3) Basic ￦ 18,150 ￦ 14,740 236 (3) Slim ￦ 16,500 ￦ 13,200 219 (3) Genie tv skylife Entertainment ￦ 31,020 ￦ 24,816 228 (6) • Monthly coupon of ￦ 10,000 for video-on-demand.
We also offer various video-on-demand contents for streaming and downloading for a fee. 34 Table of Contents The following table summarizes the terms of our representative IPTV service plans that we currently offer: Plan Monthly Rate Rate for 3 Year Term Channels (UHD) Additional Features Genie tv NETFLIX Choice UHD ￦ 42,300 ￦ 35,480 266 (6) • Genie tv Essence and NETFLIX premium service NETFLIX Choice HD ￦ 38,800 ￦ 29,680 266 (6) • Genie tv Essence and NETFLIX standard service SuperPack Choice ￦ 36,300 ￦ 29,480 266 (6) • Genie tv Essence and free movie, drama and animation contents VOD Choice ￦ 31,020 ￦ 24,816 266 (6) • Genie tv Essence and monthly coupon of ￦ 10,000 for video-on-demand Essence Plus ￦ 28,160 ￦ 22,484 266 (6) • Genie tv Essence and monthly coupon of ￦ 5,000 for video-on-demand Essence ￦ 25,300 ￦ 20,240 266 (6) Lite ￦ 19,800 ￦ 15,840 240 (3) Basic ￦ 18,150 ￦ 14,740 236 (3) Slim ￦ 16,500 ￦ 13,200 220 (3) Genie tv skylife Entertainment ￦ 31,020 ￦ 24,816 228 (6) • Monthly coupon of ￦ 10,000 for video-on-demand.
Our other businesses accounted for 14.6% of our operating revenue in 2022. Information Technology and Network Services Digital transformation has increased in recent years, and the Government announced “Digital New Deal” initiatives in July 2020 to further accelerate such trend in Korea.
Information Technology and Network Services Digital transformation has increased in recent years, and the Government announced “Digital New Deal” initiatives in July 2020 to further accelerate such trend in Korea.
As of December 31, 2022, our international Internet backbone with capacity of approximately 7,310 Gbps is connected to approximately 300 Internet service providers through our three Internet gateways in Hyehwa, Guro and Busan. In addition, we operate a broadcasting backbone with capacity of 0.96 Gbps to transmit broadcasting signals from Korea to the rest of the world.
As of December 31, 2023, our international Internet backbone with capacity of approximately 8,340 Gbps is connected to approximately 320 Internet service and content providers through our two Internet gateways in Busan. In addition, we operate a broadcasting backbone with capacity of 0.86 Gbps to transmit broadcasting signals from Korea to the rest of the world.
Pursuant to the Act on Special Cases Concerning Internet-Only Banks, starting from January 2019, a company with its ICT assets comprising more than 50% of its total assets (such as us) may obtain up to a 34.0% interest in an Internet-only bank, and is required to obtain approval from the FSC in order to become its largest shareholder. 28 Table of Contents Other Businesses We also engage in various business activities that extend beyond telecommunications and financial services, including real estate development.
Pursuant to the Act on Special Cases Concerning Internet-Only Banks, starting from January 2019, a company with its ICT assets comprising more than 50% of its total assets (such as us) may obtain up to a 34.0% interest in an Internet-only bank, and is required to obtain approval from the FSC in order to become its largest shareholder.
For the Year Ended December 31, 2020 2021 2022 Products and services Billions of Won % Billions of Won % Billions of Won % Mobile services ￦ 6,805 27.8 % ￦ 6,936 27.5 % ￦ 7,014 26.7 % Fixed-line services: Fixed-line and VoIP telephone services 1,464 6.0 1,465 5.8 1,378 5.3 Broadband Internet access services 2,256 9.2 2,344 9.3 2,505 9.5 Data communication services 1,107 4.5 1,152 4.6 1,173 4.5 Sub-total 4,827 19.7 4,960 19.7 5.057 19.3 Media and content services 2,638 10.8 2,801 11.1 3,100 11.8 Financial services 3,494 14.3 3,662 14.5 3,837 14.6 Others 3,084 12.6 3,313 13.1 3,834 14.6 Sale of goods (1) 3,593 14.7 3,533 14.0 3,394 12.9 Total operating revenue ￦ 24,441 100.0 % ￦ 25,206 100.0 % ￦ 26,234 100.0 % (1) Primarily related to sale of handsets for our mobile service and miscellaneous telecommunications equipment, as well as sale of residential units and commercial real estate developed by KT Estate. 22 Table of Contents Mobile Services We provide mobile services based on 5G, 4G LTE, and 3G W-CDMA technology.
For the Year Ended December 31, 2021 2022 2023 Products and services Billions of Won % Billions of Won % Billions of Won % Mobile services ￦ 6,936 27.5 % ￦ 7,014 26.7 % ￦ 7,140 26.8 % Fixed-line services: Fixed-line and VoIP telephone services 1,465 5.8 1,378 5.3 1,249 4.7 Broadband Internet access services 2,344 9.3 2,505 9.5 2,579 9.7 Data communication services 1,152 4.6 1,173 4.5 1,315 4.9 Subtotal 4,960 19.7 5,057 19.3 5,142 19.3 Media and content services 2,801 11.1 3,100 11.8 3,207 12.1 Financial services 3,662 14.5 3,837 14.6 3,968 14.9 Others 3,313 13.1 3,834 14.6 3,846 14.5 Sale of goods (1) 3,533 14.0 3,394 12.9 3,293 12.4 Total operating revenue ￦ 25,206 100.0 % ￦ 26,234 100.0 % ￦ 26,595 100.0 % (1) Primarily related to sale of handsets for our mobile service and miscellaneous telecommunications equipment, as well as sale of residential units and commercial real estate developed by KT Estate.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Operating Revenue and Operating Expenses Operating Revenue Our operating revenue primarily consists of: • fees related to our mobile services, including monthly fees, usage charges for outgoing calls, usage charges for wireless data transmission, contents download fees, mobile-to-mobile interconnection revenue and value-added monthly service fees; • fees from our fixed-line services, including: Ø fees from our fixed-line and VoIP telephone services, which include: Ø monthly basic charges, which are one-time or monthly fixed charges primarily consisting of (i) non-refundable activation fees; and (ii) monthly fixed charges from local telephone services (or monthly fixed charges for discount plans); Ø monthly usage charges, which are usage fees based on the amount of services used, primarily consisting of (i) monthly usage charges for local telephone and domestic long distance services; (ii) international long-distance service revenue, (primarily (a) amounts we bill to our customers for outgoing calls made to foreign countries, (b) amounts we bill to foreign telecommunications carriers for connection to the domestic telephone network in respect of incoming calls at the applicable settlement rate, and (c) other revenue, including revenue from international leased lines); (iii) land-to-mobile and land-to-land interconnection revenue; and (iv) interconnection fees we charge to fixed-line and mobile service providers and voice resellers for their use of our local, domestic long-distance and international networks in providing their services; and Ø other revenue from (i) value-added services, local telephone directory assistance, call waiting and caller identification services; and (ii) local, domestic long-distance and international calls placed from public telephones; Ø broadband Internet access service revenue, primarily consisting of installation fees and basic monthly charges; and Ø data communication services, primarily consisting of installation fees and basic monthly charges for our fixed-line and satellite leased line services and Kornet Internet connection service; 50 Table of Contents • revenue from media and content services, primarily consisting of installation fees and basic monthly charges of IPTV and satellite TV services, as well as revenue from digital music services, e-commerce services, online advertising consulting services and web comics and novels services; • financial service revenue, primarily consisting of fees from credit card services provided by BC Card, our consolidated subsidiary in which we held a 69.5% interest as of December 31, 2022; • revenue from our miscellaneous business activities categorized as “others,” including information technology and network services and rental of real estate; and • revenue from sale of goods, primarily handsets related to our mobile services and miscellaneous telecommunications equipment, as well as sale of residential units and commercial real estate developed by KT Estate.
Operating Revenue and Operating Expenses Operating Revenue Our operating revenue primarily consists of: • fees related to our mobile services, including monthly fees, usage charges for outgoing calls, usage charges for wireless data transmission, contents download fees, mobile-to-mobile interconnection revenue and value-added monthly service fees; • fees from our fixed-line services, including: Ø fees from our fixed-line and VoIP telephone services, which include: Ø monthly basic charges, which are one-time or monthly fixed charges primarily consisting of (i) non-refundable activation fees; and (ii) monthly fixed charges from local telephone services (or monthly fixed charges for discount plans); Ø monthly usage charges, which are usage fees based on the amount of services used, primarily consisting of (i) monthly usage charges for local telephone and domestic long distance services; (ii) international long-distance service revenue, (primarily (a) amounts we bill to our customers for outgoing calls made to foreign countries, (b) amounts we bill to foreign telecommunications carriers for connection to the domestic telephone network in respect of incoming calls at the applicable settlement rate, and (c) other revenue, including revenue from international leased lines); (iii) land-to-mobile and land-to-land interconnection revenue; and (iv) interconnection fees we charge to fixed-line and mobile service providers and voice resellers for their use of our local, domestic long-distance and international networks in providing their services; and 50 Table of Contents Ø other revenue from (i) value-added services, local telephone directory assistance, call waiting and caller identification services; and (ii) local, domestic long-distance and international calls placed from public telephones; Ø broadband Internet access service revenue, primarily consisting of installation fees and basic monthly charges; and Ø data communication services, primarily consisting of installation fees and basic monthly charges for our fixed-line and satellite leased line services and Kornet Internet connection service; • revenue from media and content services, primarily consisting of installation fees and basic monthly charges of IPTV and satellite TV services, as well as revenue from digital music services, e-commerce services, online advertising consulting services and web comics and novels services; • financial service revenue, primarily consisting of fees from credit card services provided by BC Card, our consolidated subsidiary in which we held a 69.5% interest as of December 31, 2023; • revenue from our miscellaneous business activities categorized as “others,” including information technology and network services and rental of real estate; and • revenue from sale of goods, primarily handsets related to our mobile services and miscellaneous telecommunications equipment, as well as sale of residential units and commercial real estate developed by KT Estate.
See Note 16 of the notes to the Consolidated Financial Statements. However, our ability to rely on some of these alternatives could be affected by factors such as the liquidity of the Korean and the global financial markets, prevailing interest rates, our credit rating and the Government’s policies regarding Won currency and foreign currency borrowings.
See Note 15 of the notes to the Consolidated Financial Statements. However, our ability to rely on some of these alternatives could be affected by factors such as the liquidity of the Korean and the global financial markets, prevailing interest rates, our credit rating and the Government’s policies regarding Won currency and foreign currency borrowings.
Depreciation of the Won may materially affect the results of our operations because, among other things, it causes an increase in the amount of Won required by us to make interest and principal payments on our foreign currency-denominated debt, the costs of telecommunications equipment that we purchase from overseas 60 Table of Contents sources, net settlement payments to foreign carriers and certain payments related to our derivative instruments entered into for foreign exchange risk hedging purposes.
Depreciation of the Won may materially affect the results of our operations because, among other things, it causes an increase in the amount of Won required by us to make interest and principal payments on our foreign currency-denominated debt, the costs of telecommunications equipment that we purchase from overseas sources, net settlement payments to foreign carriers and certain payments related to our derivative instruments entered into for foreign exchange risk hedging purposes.
We periodically increase our short-term borrowings and adjust our long-term debt financing levels depending on changes in our capital requirements. For the maturity profile of our borrowings, their currency denomination and interest rates, see Note 16 of the notes to the Consolidated Financial Statements.
We periodically increase our short-term borrowings and adjust our long-term debt financing levels depending on changes in our capital requirements. For the maturity profile of our borrowings, their currency denomination and interest rates, see Note 15 of the notes to the Consolidated Financial Statements.
In our ordinary course of business, we routinely enter into commercial commitments for various aspects of our operations, including repair and maintenance. We have also provided guarantees to our affiliates. See Note 20 of the notes to the Consolidated Financial Statements for a disclosure of the guarantees provided.
In our ordinary course of business, we routinely enter into commercial commitments for various aspects of our operations, including repair and maintenance. We have also provided guarantees to our affiliates. See Note 19 of the notes to the Consolidated Financial Statements for a disclosure of the guarantees provided.
We currently expect our capital expenditures for the acquisition of property and equipment and investment property and acquisition of intangible assets in 2023 to decrease slightly compared to those in 2022 on a standalone basis.
We currently expect our capital expenditures for the acquisition of property and equipment and investment property and acquisition of intangible assets in 2024 to decrease slightly compared to those in 2023 on a standalone basis.
Quantitative and Qualitative Disclosures About Market Risk—Exchange Rate Risk and Interest Rate Risk.” We have not had, and do not anticipate that we will have, difficulty gaining access to short-term financing sufficient to meet our current requirements. Item 5.C. Research and Development, Patents and Licenses, Etc.
See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Exchange Rate Risk and Interest Rate Risk.” We have not had, and do not anticipate that we will have, difficulty gaining access to short-term financing sufficient to meet our current requirements. Item 5.C. Research and Development, Patents and Licenses, Etc.
Item 5.A. Operating Results The following discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB. 45 Table of Contents Overview We are an integrated provider of telecommunications services.
Item 5.A. Operating Results The following discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with IFRS as issued by the IASB. Overview We are an integrated provider of telecommunications services.
Operating Results.” Non-cash expense adjustments in our statement of cash flows from depreciation, amortization of intangible assets and depreciation of right-of-use assets amounted to ￦ 3,668 billion in 2020, ￦ 3,647 billion in 2021 and ￦ 3,711 billion in 2022, primarily reflecting our capital investment activities during the recent years, including our payments on bandwidth licenses for our operations, investments in network infrastructures and acquisition of real estate.
Operating Results.” Non-cash expense adjustments in our statement of cash flows from depreciation, amortization of intangible assets and depreciation of right-of-use assets amounted to ￦ 3,647 billion in 2021, ￦ 3,711 billion in 2022 and ￦ 3,868 billion in 2023, primarily reflecting our capital investment activities during the recent years, including our payments on bandwidth licenses for our operations, investments in network infrastructures and acquisition of real estate.
Business Overview—Our Rates.” Acquisitions and Disposals of Interests in Subsidiaries and Joint Ventures One key aspect of our overall business strategy calls for acquisitions of businesses and entering into joint ventures that complement or diversify our current business, as well as disposal or termination of such businesses from time to time.
Business Overview—Our Rates.” Acquisitions and Disposals of Interests in Subsidiaries and Joint Ventures One key aspect of our overall business strategy calls for acquisitions of businesses and entering into joint ventures that complement or diversify our current business, as well as disposal or 48 Table of Contents termination of such businesses from time to time.
In recent years, we have made extensive efforts to continue to develop mobile services with enhanced speed, latency and connectivity that enable us to offer significantly improved wireless data transmission with faster access to multimedia content. 47 Table of Contents We also make investments to continually upgrade our broadband network to enable better FTTH connection, which further enhances data transmission speed and connection quality.
In recent years, we have made extensive efforts to continue to develop mobile services with enhanced speed, latency and connectivity that enable us to offer significantly improved wireless data transmission with faster access to multimedia content. We also make investments to continually upgrade our broadband network to enable better FTTH connection, which further enhances data transmission speed and connection quality.
We also strive to prudently manage our borrowing level and mitigate our refinancing risks through various methods, including diversification of currency denominations and borrowing lines. Our debt-to-equity ratio, which is calculated by dividing total liabilities by total equity, was 116% as of December 31, 2020, 124% as of December 31, 2021 and 123% as of December 31, 2022.
We also strive to prudently manage our borrowing level and mitigate our refinancing risks through various methods, including diversification of currency denominations and borrowing lines. Our debt-to-equity ratio, which is calculated by dividing total liabilities by total equity, was 124% as of December 31, 2021, 123% as of December 31, 2022 and 131% as of December 31, 2023.
Including such contributions, total expenditures (which include capitalized expenses) on research and development were ￦ 230 billion in 2020, ￦ 214 billion in 2021 and ￦ 231 billion in 2022. Item 5.D. Trend Information These matters are discussed under Item 5.A. above where relevant. Item 5.E.
Including such contributions, total expenditures (which include capitalized expenses) on research and development were ￦ 214 billion in 2021, ￦ 231 billion in 2022 and ￦ 163 billion in 2023. Item 5.D. Trend Information These matters are discussed under Item 5.A. above where relevant. Item 5.E.
For all of our bandwidth licenses, we made aggregate payments of ￦ 367 billion in 2020, ￦ 603 billion in 2021 and ￦ 319 billion in 2022. The following table sets forth our outstanding payment obligations relating to our bandwidth licenses as of December 31, 2022.
For all of our bandwidth licenses, we made aggregate payments of ￦ 603 billion in 2021, ￦ 319 billion in 2022 and ￦ 327 billion in 2023. The following table sets forth our outstanding payment obligations relating to our bandwidth licenses as of December 31, 2023.
In our financing activities, we used cash of ￦ 1,627 billion in 2020, ￦ 1,999 billion in 2021 and ￦ 2,843 billion in 2022, for repayments of borrowings. From time to time, we may also require capital for investments involving acquisitions, including shares of our affiliates, and strategic relationships, as well as repurchases of our shares.
In our financing activities, we used cash of ￦ 1,999 billion in 2021, ￦ 2,843 billion in 2022 and ￦ 5,275 billion in 2023, for repayments of borrowings. From time to time, we may also require capital for investments involving acquisitions, including shares of our affiliates, and strategic relationships, as well as repurchases of our shares.
Our five operating segments for financial reporting purposes are organized as the following: • the ICT segment, which consists of KT Corporation on a standalone basis that is primarily engaged in providing various telecommunications and platform services to individual, household and corporate customers as well as selling handsets; • the finance segment, which engages in providing various financial services such as credit card services and value-added network and payment gateway services; • the satellite TV segment, which engages in satellite TV services; • the real estate segment, which engages in real property development and leasing services; and • the others segment, which includes (i) information technology and network services, (ii) contents and commerce services, (iii) security services, (iv) satellite service, (v) global business services that provide global network services to multinational or domestic corporate customers and telecommunications companies and (vi) miscellaneous services provided by our subsidiaries.
Our five operating segments for financial reporting purposes are organized as the following: • the ICT segment, which primarily consists of KT Corporation on a standalone basis that is primarily engaged in providing various telecommunications and platform services to individual, household and corporate customers as well as selling handsets; • the finance segment, which engages in providing various financial services such as credit card services and value-added network and payment gateway services; • the satellite TV segment, which engages in satellite TV services; • the real estate segment, which engages in real property development and leasing services; and • the others segment, which includes (i) information technology and network services, (ii) contents and commerce services, (iii) security services, (iv) satellite service, (v) global business services that provide global network services to multinational or domestic corporate customers and telecommunications companies and (vi) miscellaneous services provided by our subsidiaries. 46 Table of Contents Our future performance will depend at least in part on Korea’s general economic growth and prospects.
Including such contributions, total expenditures (which include capitalized expenses) on research and development were ￦ 230 billion in 2020, ￦ 213 billion in 2021 and ￦ 231 billion in 2022. We plan to continue to invest in researching and implementing network upgrades, which will entail additional operating expenses as well as capital expenditures.
Including such contributions, total expenditures (which include capitalized expenses) on research and development were ￦ 214 billion in 2021, ￦ 231 billion in 2022 and ￦ 225 billion in 2023. We plan to continue to invest in researching and implementing network upgrades, which will entail additional operating expenses as well as capital expenditures.
While we believe that our large subscriber base as well as the brand power of our products and services will remain key drivers of our growth, we expect to continue to invest significantly in marketing activities, particularly in connection with launching of new products and services such as the launch of our 5G mobile services in April 2019.
While we believe that our large subscriber base as well as the brand power of our products and services will remain key drivers of our growth, we expect to continue to invest significantly in marketing activities, particularly in connection with launching of new products and services.
As of December 31, 2022, on a standalone basis, we held approximately 98.7% of our cash and cash equivalents denominated in Won and the remainder denominated in foreign currencies. Other current financial assets primarily consist of financial instruments, available-for-sale financial assets and derivative assets used for hedging.
As of December 31, 2023, on a standalone basis, we held approximately 99.8% of our cash and cash equivalents denominated in Won and the remainder denominated in foreign currencies. Other current financial assets primarily consist of financial instruments, available-for-sale financial assets and derivative assets used for hedging.
The number of our KT GiGA Internet service subscribers increased from approximately 6.2 million as of December 31, 2021 to approximately 6.5 million as of December 31, 2022. Data Communication Services.
The number of our KT GiGA Internet service subscribers increased from approximately 6.5 million as of December 31, 2022 to approximately 6.7 million as of December 31, 2023. Data Communication Services.
Liquidity and Capital Resources The following table sets forth the summary of our cash flows for the years indicated: For the Years Ended December 31, 2020 2021 2022 (In billions of Won) Net cash inflow from operating activities ￦ 4,740 ￦ 5,562 ￦ 3,597 Net cash outflow from investing activities (3,761 ) (5,137 ) (4,839 ) Net cash inflow (outflow) from financing activities (648 ) (41 ) 669 Cash and cash equivalents at beginning of the year 2,306 2,635 3,020 Cash and cash equivalents at end of the year 2,635 3,020 2,449 Net increase (decrease) in cash and cash equivalents 329 384 (571 ) Capital Requirements Historically, our capital requirements consisted principally of purchases of property and equipment and other assets and repayments of borrowings.
Liquidity and Capital Resources The following table sets forth the summary of our cash flows for the years indicated: For the Years Ended December 31, 2021 2022 2023 (In billions of Won) Net cash inflow from operating activities ￦ 5,562 ￦ 3,597 ￦ 5,503 Net cash outflow from investing activities (5,137 ) (4,839 ) (4,621 ) Net cash inflow (outflow) from financing activities (41 ) 669 (453 ) Cash and cash equivalents at beginning of the year 2,635 3,020 2,449 Cash and cash equivalents at end of the year 3,020 2,449 2,880 Net increase (decrease) in cash and cash equivalents 384 (571 ) 430 Capital Requirements Historically, our capital requirements consisted principally of purchases of property and equipment and other assets and repayments of borrowings.
In our investing activities, we used cash of ￦ 3,208 billion in 2020, ￦ 3,495 billion in 2021 and ￦ 3,440 billion in 2022, for the acquisition of property and equipment and investment properties.
In our investing activities, we used cash of ￦ 3,495 billion in 2021, ￦ 3,440 billion in 2022 and ￦ 3,693 billion in 2023, for the acquisition of property and equipment and investment properties.
In addition, we used cash of ￦ 511 billion in 2020, ￦ 752 billion in 2021 and ￦ 545 billion in 2022 for the acquisition of intangible assets, which consisted primarily of acquisition of bandwidth licenses.
In addition, we used cash of ￦ 752 billion in 2021, ￦ 545 billion in 2022 and ￦ 479 billion in 2023 for the acquisition of intangible assets, which consisted primarily of acquisition of bandwidth licenses.
Liquidity We had a working capital (current assets minus current liabilities) surplus of ￦ 1,962 billion as of December 31, 2020, ￦ 1,786 billion as of December 31, 2021 and ￦ 1,991 billion as of December 31, 2022.
Liquidity We had a working capital (current assets minus current liabilities) surplus of ￦ 1,786 billion as of December 31, 2021, ￦ 1,991 billion as of December 31, 2022 and ￦ 1,347 billion as of December 31, 2023.
Our net profit margin, which is net profit for the year as a percentage of operating revenue, was 5.8% in 2021 and 5.3% in 2022.
Our net profit margin, which is net profit for the year as a percentage of operating revenue, was 5.3% in 2022 and 3.7% in 2023.
We had net proceeds from borrowings and debentures, after adjusting for repayments of borrowings and debentures, of ￦ 168 billion in 2020, ￦ 900 billion in 2021 and ￦ 1,391 billion in 2022.
We had net proceeds from borrowings and debentures, after adjusting for repayments of borrowings and debentures, of ￦ 900 billion in 2021, ￦ 1,391 billion in 2022 and ￦ 106 billion in 2023.
The following table sets forth the summary of our significant current liabilities for the years indicated: As of December 31, 2020 2021 2022 (In billions of Won) Trade and other payables ￦ 6,210 ￦ 6,641 ￦ 7,333 Borrowings 1,418 1,731 1,827 Substantially all of our revenues are denominated in Won.
The following table sets forth the summary of our significant current liabilities for the years indicated: As of December 31, 2021 2022 2023 (In billions of Won) Trade and other payables ￦ 6,641 ￦ 7,333 ￦ 8,055 Borrowings 1,731 1,827 3,059 Substantially all of our revenues are denominated in Won.
These developments include: • acquisition of new bandwidth licenses and usage fees; • researching and implementing technology upgrades and additional telecommunications services such as 5G technologies; • changes in the rate structure for our telecommunications services; 46 Table of Contents • acquisitions and disposals of interests in subsidiaries and joint ventures; and • marketing activities.
These developments include: • acquisition of new bandwidth licenses and usage fees; • researching and implementing technology upgrades and additional telecommunications services; • changes in the rate structure for our telecommunications services; • acquisitions and disposals of interests in subsidiaries and joint ventures; and • marketing activities.
For example, in September 2021, KT Skylife, in which we held a 49.99% interest as of December 31, 2022, completed its acquisition of a 100.00% interest in HCN, which is Korea’s fifth largest cable operator.
For example, in September 2021, KT Skylife, in which we held a 50.3% interest as of December 31, 2023, completed its acquisition of a 100.00% interest in HCN, which is Korea’s fifth largest cable operator.
From time to time, we also generate cash from the sale of our treasury shares. 59 Table of Contents We believe that we have sufficient working capital available to us for our current requirements and that we have a variety of alternatives available to us to satisfy our financial requirements to the extent that they are not met by funds generated by operations, including the issuance of debt securities and bank borrowings denominated in Won and various foreign currencies.
We believe that we have sufficient working capital available to us for our current requirements and that we have a variety of alternatives available to us to satisfy our financial requirements to the 61 Table of Contents extent that they are not met by funds generated by operations, including the issuance of debt securities and bank borrowings denominated in Won and various foreign currencies.
As of December 31, 2022, KT Corporation had 4,033 domestic and 1,764 international registered patents. The MSIT has the authority to recommend to network service providers that they provide funds for national research and development of telecommunications technology and related projects.
As of December 31, 2023, KT Corporation had 3,868 domestic and 1,895 international registered patents. The MSIT has the authority to recommend to network service providers that they provide funds for national research and development of telecommunications technology and related projects.
Fixed-line Services Our fixed-line services revenue increased by 1.9%, or ￦ 96 billion, from ￦ 4,960 billion in 2021 to ￦ 5,057 billion in 2022, reflecting increases in revenue from broadband Internet access services and data communication services, the impact of which was partially offset by a decrease in revenue from fixed-line and VoIP telephone services.
Fixed-line Services Our fixed-line services revenue increased by 1.7%, or ￦ 86 billion, from ￦ 5,057 billion in 2022 to ￦ 5,142 billion in 2023, reflecting increases in revenue from data communication services and broadband Internet access services, the impact of which was partially offset by a decrease in revenue from fixed-line and VoIP telephone services.
Our fixed-line and VoIP telephone services revenue decreased by 5.9%, or ￦ 87 billion, from ￦ 1,465 billion in 2021 to ￦ 1,378 billion in 2022 primarily due to a decrease in the number of PSTN and VoIP lines in service from 13.1 million as of December 31, 2021 to 12.5 million as of December 31, 2022.
Our fixed-line and VoIP telephone services revenue decreased by 9.4%, or ￦ 129 billion, from ￦ 1,378 billion in 2022 to ￦ 1,249 billion in 2023 primarily due to a decrease in the number of PSTN and VoIP lines in service from 12.5 million as of December 31, 2022 to 12.0 million as of December 31, 2023.
Our data communication services revenue increased by 1.9%, or ￦ 22 billion, from ￦ 1,152 billion in 2021 to ￦ 1,173 billion in 2022 primarily due to increases in revenue from (i) major content service providers that experienced increases in traffic volume and (ii) provision of additional backbone lines to global content service providers.
Our data communication services revenue increased by 12.0%, or ￦ 141 billion, from ￦ 1,173 billion in 2022 to ￦ 1,315 billion in 2023 primarily due to increases in revenue from (i) major content service providers that experienced increases in traffic volume and (ii) provision of additional backbone lines to global content service providers.
Operating Results—Operating Results—2020 Compared to 2021” of our Form 20-F for the fiscal year ended December 31, 2021, which we filed with the Securities and Exchange Commission on April 28, 2022. Item 5.B.
Operating Results—2021 Compared to 2022 For a discussion of our operating results of 2021 compared to 2022, please see “Item 5.A. Operating Results—Operating Results—2021 Compared to 2022” of our Form 20-F for the fiscal year ended December 31, 2022, which we filed with the Securities and Exchange Commission on April 28, 2023. Item 5.B.
The following table sets forth the summary of our significant current assets for the years indicated: As of December 31, 2020 2021 2022 (In billions of Won) Cash and cash equivalents ￦ 2,635 ￦ 3,020 ￦ 2,449 Trade and other receivables, net 4,902 5,087 6,098 Inventories, net 535 514 709 Other financial assets 1,203 1,186 1,322 Our cash and cash equivalents (substantially all of which are in Won) totaled ￦ 2,635 billion as of December 31, 2020, ￦ 3,020 billion as of December 31, 2021 and ￦ 2,449 billion as of December 31, 2022.
The following table sets forth the summary of our significant current assets for the years indicated: As of December 31, 2021 2022 2023 (In billions of Won) Cash and cash equivalents ￦ 3,020 ￦ 2,449 ￦ 2,880 Trade and other receivables, net 5,087 6,098 7,170 Inventories, net 514 718 988 Other financial assets 1,186 1,322 1,440 Our cash and cash equivalents (substantially all of which are in Won) totaled ￦ 3,020 billion as of December 31, 2021, ￦ 2,449 billion as of December 31, 2022 and ￦ 2,880 billion as of December 31, 2023.
Risk Factors—If economic conditions in Korea deteriorate, our current business and future growth could be materially and adversely affected” and “—The ongoing global pandemic of a new strain of coronavirus (“COVID-19”) and any possible recurrence of other types of widespread infectious diseases, may adversely affect our business, financial condition or results of operations.” A number of other developments have had or are expected to have a material impact on our results of operations, financial condition and capital expenditures.
Risk Factors—If economic conditions in Korea deteriorate, our current business and future growth could be materially and adversely affected” and “—COVID-19 and any possible occurrences of other types of widespread infectious diseases could materially and adversely affect our business, financial condition or results of operations.” A number of other developments have had or are expected to have a material impact on our results of operations, financial condition and capital expenditures.
Our total equity was ￦ 15,551 billion as of December 31, 2020, ￦ 16,567 billion as of December 31, 2021 and ￦ 18,413 billion as of December 31, 2022.
Our total equity was ￦ 16,567 billion as of December 31, 2021, ￦ 18,413 billion as of December 31, 2022 and ￦ 18,543 billion as of December 31, 2023.
Segment Results—Finance The operating revenue for our finance segment, prior to adjusting for inter-segment transactions, increased by 2.5%, or ￦ 89 billion, from ￦ 3,527 billion in 2021 to ￦ 3,615 billion in 2022, due to an increase in standalone revenue of BC Card’s value added network business.
The operating revenue for our finance segment, prior to adjusting for inter-segment transactions, increased by 3.0%, or ￦ 108 billion, from ￦ 3,615 billion in 2022 to ￦ 3,723 billion in 2023 primarily due to an increase in standalone revenue of BC Card’s value added network business.
Segment Results—ICT The operating revenue for our ICT segment, prior to adjusting for inter-segment transactions, decreased by 0.2%, or ￦ 37 billion, from ￦ 18,734 billion in 2021 to ￦ 18,697 billion in 2022, primarily due to decreases in revenue from our mobile services and fixed-line and VoIP telephone services, the impact of which was offset in part by increases in revenue from our broadband Internet access services and IPTV services, as described above.
The operating revenue for our ICT segment, prior to adjusting for inter-segment transactions, increased slightly by ￦ 2 billion, from ￦ 18,697 billion in 2022 to ￦ 18,699 billion in 2023, primarily due to increases in revenue from our data communication services, mobile services, broadband Internet access services and IPTV services, which impact was offset by decreases in revenue from our fixed-line and VoIP telephone services, as described above.
Long-term borrowings, excluding current installments, were ￦ 5,898 billion as of December 31, 2020, ￦ 6,706 billion in December 31, 2021 and ￦ 8,180 billion in December 31, 2022. Total short-term borrowings were ￦ 1,418 billion as of December 31, 2020, ￦ 1,731 billion as of December 31, 2021 and ￦ 1,827 billion as of December 31, 2022.
Long-term borrowings, excluding current installments, were ￦ 6,706 billion in December 31, 2021, ￦ 8,180 billion in December 31, 2022 and ￦ 7,160 billion as of December 31, 2023. Total short-term borrowings were ￦ 1,731 billion as of December 31, 2021, ￦ 1,827 billion as of December 31, 2022 and ￦ 3,059 billion as of December 31, 2023.
In terms of the market average exchange rates, the Won depreciated against the Dollar from ￦ 1,088.0 to US$1.00 as of December 31, 2020 to ￦ 1,185.5 to US$1.00 as of December 31, 2021, and further depreciated to ￦ 1,267.3 to US$1.00 as of December 31, 2022.
In terms of the Market Average Exchange Rate, the Won depreciated against the U.S. dollar from ￦ 1,185.5 to US$1.00 as of December 31, 2021 to ￦ 1,267.3 to US$1.00 as of December 31, 2022, and further depreciated to ￦ 1,289.4 to US$1.00 as of December 31, 2023.
Our effective tax rate was 26.2% in 2021 and 26.7% in 2022. See Note 30 of the notes to the Consolidated Financial Statements. Profit for the Year Due to the factors described above, our profit for the year decreased by 5.1%, or ￦ 74 billion, from ￦ 1,459 billion in 2021 to ￦ 1,386 billion in 2022.
Our effective tax rate was 26.7% in 2022 and 25.4% in 2023. See Note 29 of the notes to the Consolidated Financial Statements. Profit for the Year Due to the factors described above, our profit for the year decreased by 29.8%, or ￦ 413 billion, from ￦ 1,386 billion in 2022 to ￦ 972 billion in 2023.
Our average revenue per user increased by 1.6%, or ￦ 509, from ￦ 32,294 in 2021 to ￦ 32,803 in 2022 mainly due to an increase in our users subscribing to 5G services.
Our average revenue per user increased by 3.5%, or ￦ 1,162, from ￦ 32,803 in 2022 to ￦ 33,965 in 2023 mainly due to an increase in our users subscribing to 5G services.
Operating margin for this segment decreased from 9.2% in 2021 to 2.8% in 2022 primarily due to an increase in expenses related to procurement of programs for our channels.
Operating expenses for this segment increased by 13.8% from 2022 to 2023 primarily due to an increase in expenses related to procurement of programs for our channels. For this segment, operating income margin was 2.8% in 2022 and operating loss margin was 9.8% in 2023.
Broadband Internet Access Services . Our broadband Internet access services revenue increased by 6.9%, or ￦ 161 billion, from ￦ 2,344 billion in 2021 to ￦ 2,505 billion in 2022, primarily as a result of an increase in the number of subscribers to our premium services.
Broadband Internet Access Services. Our broadband Internet access services revenue increased by 2.9%, or ￦ 74 billion, from ￦ 2,505 billion in 2022 to ￦ 2,579 billion in 2023 primarily due to an increase in the number of subscribers to our premium services.
Segment Results—Satellite TV The operating revenue for our satellite TV segment, prior to adjusting for inter-segment transactions, increased by 6.6%, or ￦ 44 billion, from ￦ 665 billion in 2021 to ￦ 709 billion in 2022 due to an increase in standalone operating revenue of KT Skylife.
The operating revenue for our satellite TV segment, prior to adjusting for inter-segment transactions, increased by 0.8%, or ￦ 5 billion, from ￦ 709 billion in 2022 to ￦ 715 billion in 2023 due to an increase in consolidated operating revenue of KT Skylife.
Furthermore, pursuing acquisitions, joint venture and certain investment transactions also requires significant capital, and as we pursue further growth opportunities for the future, we may need to raise additional capital by incurring loans or through the issuances of bonds or other securities in the international capital markets, which may lead to increased levels of debt and debt servicing costs in the future. 48 Table of Contents Marketing Activities We engage in marketing activities to promote our new, as well as existing, products and services and to further strengthen our marketing efforts through our network of independent exclusive dealers and other third-party dealers.
Furthermore, pursuing acquisitions, joint venture and certain investment transactions also requires significant capital, and as we pursue further growth opportunities for the future, we may need to raise additional capital by incurring loans or through the issuances of bonds or other securities in the international capital markets, which may lead to increased levels of debt and debt servicing costs in the future.
Our future performance will depend at least in part on Korea’s general economic growth and prospects. For a description of recent developments that have had and may continue to have an adverse effect on our results of operations and financial condition, see “Item 3. Key Information—Item 3.D.
For a description of recent developments that have had and may continue to have an adverse effect on our results of operations and financial condition, see “Item 3. Key Information—Item 3.D.
Segment Results—Real Estate The operating revenue for our real estate segment, prior to adjusting for inter-segment transactions, increased by 41.3%, or ￦ 139 billion, from ￦ 336 billion in 2021 to ￦ 475 billion in 2022 primarily due to increases in revenues from disposal of real estate and hotel operations.
The operating revenue for our real estate segment, prior to adjusting for inter-segment transactions, increased by 5.3%, or ￦ 25 billion, from ￦ 475 billion in 2022 to ￦ 500 billion in 2023 primarily due to increases in revenues from apartment presales and hotel operations.
For this segment, operating margin increased from 3.0% in 2021 to 3.3% in 2022. Depreciation and amortization for our finance segment, prior to adjusting for inter-segment transactions, increased by 3.1%, or ￦ 1 billion, from ￦ 46 billion in 2021 to ￦ 48 billion in 2022.
For this segment, operating margin decreased from 3.3% in 2022 to 2.5% in 2023. Depreciation and amortization for our finance segment, prior to adjusting for inter-segment transactions, decreased by 22.0%, or ￦ 10 billion, from ￦ 48 billion in 2022 to ￦ 37 billion in 2023.
Depreciation and amortization for our satellite TV segment, prior to adjusting for inter-segment transactions, decreased by 4.2%, or ￦ 3 billion, from ￦ 61 billion in 2021 to ￦ 58 billion in 2022.
Depreciation and amortization for our satellite TV segment, prior to adjusting for inter-segment transactions, decreased by 9.5%, or ￦ 6 billion, from ￦ 58 billion in 2022 to ￦ 53 billion in 2023.
In terms of the market average exchange rates announced by Seoul Money Brokerage Services, Ltd., the market average exchange rate, which was ￦ 1,088.0 to US$1.00 as of December 31, 2020, depreciated during 2021 to an average of ￦ 1,144.4 to US$1.00 in 2021 and further depreciated during 2022 to an average of ￦ 1,292.0 to US$1.00 in 2022.
The Market Average Exchange Rate, which was ￦ 1,144.4 to US$1.00 as of December 31, 2021, depreciated during 2022 to an average of ￦ 1,292.0 to US$1.00 in 2022 and further depreciated during 2023 to an average of ￦ 1,305.4 to US$1.00 in 2023.
As of December 31, 2022, we entered into various commitments with financial institutions totaling ￦ 3,278 billion, US$2,983 million, EUR 8 million and SGD 284 million, of which ￦ 516 billion, US$2,143 million, EUR 8 million and SGD 284 million were used. See Note 20 of the notes to the Consolidated Financial Statements.
As of December 31, 2023, we 62 Table of Contents entered into various commitments with financial institutions totaling ￦ 3,497 billion, US$2,047 million, EUR 8 million and SGD 400 million, of which ￦ 620 billion, US$2,047 million, EUR 8 million and SGD 400 million were used. See Note 19 of the notes to the Consolidated Financial Statements.
Operating Expenses Our operating expenses primarily include: • purchase of inventories, primarily consisting of (i) inventories purchased for our sale of mobile handsets and (ii) development costs of KT Estate for real estate units to be sold, and changes of inventories, which reflects increases or decreases of inventories of handsets, phones and for-sale real estate units during the applicable period; • salaries and wages, including post-employment benefits, termination benefits (including severance benefits for voluntary and special early retirements) and share-based payments; • card service costs, primarily consisting of costs in connection with credit and cash card services provided by BC Card, including fees paid to member credit card companies in our network for marketing expenses; • depreciation expenses incurred primarily in connection with our telecommunications network facilities; • sales commissions, primarily consisting of sales commissions to third-party dealers related to procurement of mobile subscribers and mobile handset sales; • service cost, primarily consisting of payments to IPTV and satellite TV content providers; • commissions, primarily consisting of commission-based payments for certain third-party outsourcing services, including commissions to the outsourced call center staff; • amortization expenses incurred primarily in connection with our intangible assets; and • interconnection charges, which are interconnection payments to telecommunication service providers for calls from landline users and our mobile subscribers to our competitors’ subscribers. 51 Table of Contents Operating Results—2021 Compared to 2022 The following table presents selected income statement data and changes therein for 2021 and 2022: For the Year Ended December 31, Changes 2021 vs. 2022 2021 2022 Amount % (In billions of Won) Operating revenue ￦ 25,206 ￦ 26,234 ￦ 1,029 4.1 % Operating expenses 23,506 24,266 760 3.2 Operating profit 1,699 1,968 269 15.8 Finance income 726 690 (36 ) (4.9 ) Finance costs 563 750 187 33.1 Share of net profits of associates and joint ventures 116 (17 ) (133 ) N.A.
Operating Expenses Our operating expenses primarily include: • purchase of inventories, primarily consisting of (i) inventories purchased for our sale of mobile handsets and (ii) development costs of KT Estate for real estate units to be sold, and changes of inventories, which reflects increases or decreases of inventories of handsets, phones and for-sale real estate units during the applicable period; • salaries and wages, including post-employment benefits, termination benefits (including severance benefits for voluntary and special early retirements) and share-based payments; • card service costs, primarily consisting of costs in connection with credit and cash card services provided by BC Card, including fees paid to member credit card companies in our network for marketing expenses; • depreciation expenses incurred primarily in connection with our telecommunications network facilities; • sales commissions, primarily consisting of sales commissions to third-party dealers related to procurement of mobile subscribers and mobile handset sales; • service cost, primarily consisting of payments to IPTV and satellite TV content providers; 51 Table of Contents • commissions, primarily consisting of commission-based payments for certain third-party outsourcing services, including commissions to the outsourced call center staff; • amortization expenses incurred primarily in connection with our intangible assets; and • interconnection charges, which are interconnection payments to telecommunication service providers for calls from landline users and our mobile subscribers to our competitors’ subscribers.
Capital Resources We have traditionally met our working capital and other capital requirements principally from cash provided by operations, while raising the remainder of our requirements primarily through debt financing.
Capital Resources We have traditionally met our working capital and other capital requirements principally from cash provided by operations, while raising the remainder of our requirements primarily through debt financing. Our major sources of cash have been net cash provided by operating activities, including profits for the year, and proceeds from issuance of bonds and borrowings.
In addition, our net loss on foreign currency translation decreased by 13.2%, or ￦ 24 billion, from ￦ 181 billion in 2021 to ￦ 157 billion in 2022, as the Won depreciated against the Dollar at year end in 2021 and further depreciated at year end in 2022.
Our net loss on foreign currency translation decreased by 46.6%, or ￦ 84 billion, from ￦ 157 billion in 2022 to ￦ 84 billion in 2023, as the Won depreciated against the U.S. dollar at year-end 2022 and further depreciated (to a lesser extent) at year-end 2023.
Operating margin for this segment slightly deceased from 6.0% in 2021 to 5.9% in 2022. Depreciation and amortization for this segment, prior to adjusting for inter-segment transactions, increased by 75.7%, or ￦ 248 billion, from ￦ 327 billion in 2021 to ￦ 575 billion in 2022.
Operating margin for this segment decreased from 5.9% in 2022 to 1.2% in 2023. Depreciation and amortization for this segment, prior to adjusting for inter-segment transactions, increased by 1.7%, or ￦ 10 billion, from ￦ 575 billion in 2022 to ￦ 585 billion in 2023.
The table below sets forth a reconciliation of our operating profit and net income or loss as presented in our consolidated statements of profit or loss prepared in accordance with IFRS as issued by the IASB for each of the years ended December 31, 2020, 2021 and 2022 to our operating profit and net income or loss in our consolidated statements of profit or loss prepared in accordance with K-IFRS, for each of the corresponding years, taking into account such differences: For the Year Ended December 31, 2020 2021 2022 (In billions of Won) Operating profit under IFRS as issued by the IASB ￦ 1,022 ￦ 1,699 ￦ 1,968 Effect of changes in operating profit presentation 218 (28 ) (280 ) Revenue recognition of development, sale of real estate, etc.
The table below sets forth a reconciliation of our operating profit and net income or loss as presented in our consolidated statements of profit or loss prepared in accordance with IFRS as issued 49 Table of Contents by the IASB for each of the years ended December 31, 2021, 2022 and 2023 to our operating profit and net income or loss in our consolidated statements of profit or loss prepared in accordance with K-IFRS, for each of the corresponding years, taking into account such differences: For the Year Ended December 31, 2021 2022 2023 (In billions of Won) Operating profit under IFRS as issued by the IASB ￦ 1,699 ￦ 1,968 ￦ 1,428 Differences under K-IFRS requiring other income and other expenses to be distinguished from operating revenue (28 ) (280 ) 200 Revenue recognition of development, sale of real estate, etc. — 3 22 Operating profit under K-IFRS ￦ 1,672 ￦ 1,690 ￦ 1,650 For the Year Ended December 31, 2021 2022 2023 (In billions of Won) Net income under IFRS as issued by the IASB ￦ 1,459 ￦ 1,386 ￦ 972 Revenue recognition of development, sale of real estate, etc. — 3 22 Income tax — 1 (5 ) Profit for the year under K-IFRS ￦ 1,459 ￦ 1,388 ￦ 989 Changes in Accounting Policies For a summary of new standards, amendments and interpretations issued under IFRS as issued by the IASB, see Note 2.2 of the notes to the Consolidated Financial Statements.
For this segment, operating margin, which is operating profit as a percentage of total operating revenue prior to adjusting for inter-segment transactions, increased from 6.3% in 2021 to 7.2% in 2022.
For this segment, operating margin, which is operating profit as a percentage of total operating revenue prior to adjusting for inter-segment transactions, decreased from 7.2% in 2022 to 6.4% in 2023. 57 Table of Contents Depreciation and amortization for our ICT segment, prior to adjusting for inter-segment transactions, increased by 2.5%, or ￦ 78 billion, from ￦ 3,106 billion in 2022 to ￦ 3,183 billion in 2023.
Our cash dividends paid to shareholders and non-controlling interests amounted to ￦ 311 billion in 2020, ￦ 350 billion in 2021 and ￦ 477 billion in 2022. 58 Table of Contents We anticipate that capital expenditures and repayment of outstanding contractual obligations and commitments (including for bandwidth licenses) will represent the most significant use of funds for the next several years.
We anticipate that capital expenditures and repayment of outstanding contractual obligations and commitments (including for bandwidth licenses) will represent the most significant use of funds for 60 Table of Contents the next several years.
Others Other operating revenue increased by 15.7%, or ￦ 520 billion, from ￦ 3,313 billion in 2021 to ￦ 3,834 billion in 2022, primarily due to increases in revenue from our information technology and network services, particularly from the operation of Internet data centers and systems integration services.
Financial Services Financial services revenue increased by 3.4%, or ￦ 131 billion, from ￦ 3,837 billion in 2022 to ￦ 3,968 billion in 2023 primarily due to an increase in fees from credit card services of BC Card. 53 Table of Contents Others Other operating revenue increased by 0.3%, or ￦ 12 billion, from ￦ 3,834 billion in 2022 to ￦ 3,846 billion in 2023 primarily due to increases in revenue from our information technology and network services, particularly from the operation of Internet data centers and systems integration services.
The operating profit for our real estate segment, prior to adjusting for inter-segment transactions, increased by 311.4%, or ￦ 86 billion, from ￦ 27 billion in 2021 to ￦ 113 billion in 2022, as the ￦ 139 billion increase in the segment’s operating revenue outpaced the ￦ 53 billion increase in operating expenses.
The operating income for our real estate segment, prior to adjusting for inter-segment transactions, decreased by 35.0%, or ￦ 40 billion, from ￦ 113 billion in 2022 to ￦ 73 billion in 2023, as the ￦ 65 billion increase in the segment’s operating expenses outpaced the ￦ 25 billion increase in operating revenue.
The operating profit for our others segment, prior to adjusting for inter-segment transactions, increased by 21.1%, or ￦ 82 billion, from ￦ 391 billion in 2021 to ￦ 473 billion in 2022, as the ￦ 1,485 billion increase in the segment’s operating revenue outpaced the ￦ 1,403 billion increase in the segment’s operating expenses.
The operating income for our others segment, prior to adjusting for inter-segment transactions, decreased by 79.4%, or ￦ 376 billion, from ￦ 473 billion in 2022 to ￦ 98 billion in 2023, as the ￦ 561 billion increase in the segment’s operating expenses outpaced the ￦ 185 billion increase in the segment’s operating revenue.
In order to maintain our leadership in the converging telecommunications business environment and develop additional platforms, services and applications, we engage in research and development (“R&D”) activities together with our various business units and also operate the following R&D laboratories: • the infrastructure digital transformation (“Infra DX”) R&D laboratory; • the artificial intelligence to everything (“AI2XL”) R&D laboratory; and • the convergence R&D laboratory.
In order to maintain our leadership in the converging telecommunications business environment and develop additional platforms, services and applications, we engage in research and development (“R&D”) activities together with our various business units and also operate the following R&D laboratories: • Small Language Model Development (“AI2XL”) R&D laboratory; • Multi Large Language Model Enterprise Go-to-Market Technology (“AI Tech”) R&D laboratory; • Machine Learning and Deep Learning (“AI Service”) R&D laboratory; and • New Emerging Technology (“Service Tech”) R&D laboratory.
We recorded profits for the year of ￦ 746 billion in 2020, ￦ 1,459 billion in 2021 and ￦ 1,386 billion in 2022 as discussed in “Item 5.A.
We expect that these sources will continue to be our principal sources of cash in the future. We recorded profits for the year of ￦ 1,459 billion in 2021, ￦ 1,386 billion in 2022 and ￦ 972 billion in 2023 as discussed in “Item 5.A.
Against such fluctuations, our net gain on valuation of derivatives decreased by 32.5%, or ￦ 78 billion, from ￦ 239 billion in 2021 to ￦ 161 billion in 2022, and we recognized net loss on derivative transactions of ￦ 4 billion in 2021 compared to net gain on derivative transactions of ￦ 26 billion in 2022.
Against such fluctuations, our net gain on valuation of derivatives decreased by 73.2%, or ￦ 118 billion, from ￦ 161 billion in 2022 to ￦ 43 billion in 2023, and our net gain on derivative transactions decreased by 54.9%, or ￦ 14 billion, from ￦ 26 billion in 2022 to ￦ 12 billion in 2023.
The operating profit for our finance segment, prior to adjusting for inter-segment transactions, increased by 14.6%, or ￦ 15 billion, from ￦ 105 billion in 2021 to ￦ 120 billion in 2022, as the ￦ 89 billion increase in the segment’s operating revenue outpaced the ￦ 73 billion increase in operating revenue.
The operating income for our finance segment, prior to adjusting for inter-segment transactions, decreased by 23.5%, or ￦ 28 billion, from ￦ 120 billion in 2022 to ￦ 92 billion in 2023, as the ￦ 136 billion increase in the segment’s operating expenses outpaced the ￦ 108 billion increase in operating revenue.
For example, in December 2022, the MSIT cancelled our bandwidth license for the use of the 28 GHz spectrum, noting that we had failed to meet certain agreements made with the MSIT at the time of the license allocation in December 2018.
For example, in recent years, the MSIT cancelled the bandwidth licenses for the use of the 28 GHz spectrum that had been issued to us, SK Telecom and LG U+, noting the failure to meet certain agreements made with the MSIT at the time of the license allocations.
Total operating revenue increased by 4.1%, or ￦ 1,029 billion, from ￦ 25,206 billion in 2021 to ￦ 26,234 billion in 2022, primarily due to increases in revenue from our information technology and network services categorized as “others” (particularly from the operation of Internet data centers and systems integration services), media and content services, financial services, fixed-line services and mobile services, which impact was partially offset by a decrease in revenue from sale of goods.
Total operating revenue increased by 1.4%, or ￦ 361 billion, from ￦ 26,234 billion in 2022 to ￦ 26,595 billion in 2023 primarily due to increases in revenue from data communication services, 52 Table of Contents financial services, mobile services, media and content services and broadband Internet access services, which impact was partially offset by decreases in revenue from fixed-line and VoIP telephone services and sale of goods.
Spectrum Bandwidth License Acquisition Date Total Payable Amount (in billions of Won) Total remaining amount (in billions of Won) Initial Payment Amount (in billions of Won) Initial Payment Year Annual Usage Fee (in billions of Won) Annual Usage Fee Payment Term 900 MHz 20 MHz July 1, 2021 ￦ 141 ￦ 84 ￦ 35 2021 ￦ 21 2021 to 2026 1.8 GHz 35 MHz July 1, 2021 ￦ 548 ￦ 329 ￦ 137 2021 ￦ 82 2021 to 2026 1.8 GHz 20 MHz Aug. 4, 2016 ￦ 470 ￦ 141 ￦ 118 2016 ￦ 35 2016 to 2026 2.1 GHz 40 MHz Dec. 6, 2021 ￦ 412 ￦ 247 ￦ 103 2021 ￦ 62 2021 to 2026 3.5 GHz 100 MHz Dec. 1, 2018 ￦ 968 ￦ 436 ￦ 242 2018 ￦ 73 2018 to 2028 28 GHz (1) 800 MHz Dec. 1, 2018 ￦ 208 ￦ 31 ￦ 52 2018 ￦ 31 2018 to 2023 (1) We recognized an impairment loss of ￦ 191 billion in 2020 and ￦ 3 billion in 2022 in relation to the 28 GHz spectrum 800 MHz bandwidth license, as the carrying amount of such license exceeded the recoverable amount.
Spectrum Bandwidth License Acquisition Date Total Payable Amount (in billions of Won) Total remaining amount (in billions of Won) Initial Payment Amount (in billions of Won) Initial Payment Year Annual Usage Fee (in billions of Won) Annual Usage Fee Payment Term 900 MHz 20 MHz July 1, 2021 ￦ 141 ￦ 67 ￦ 35 2021 ￦ 21 2021 to 2026 1.8 GHz 35 MHz July 1, 2021 ￦ 548 ￦ 260 ￦ 137 2021 ￦ 82 2021 to 2026 1.8 GHz 20 MHz Aug. 4, 2016 ￦ 470 ￦ 111 ￦ 118 2016 ￦ 35 2016 to 2026 2.1 GHz 40 MHz Dec. 6, 2021 ￦ 412 ￦ 195 ￦ 103 2021 ￦ 62 2021 to 2026 3.5 GHz 100 MHz Dec. 1, 2018 ￦ 968 ￦ 392 ￦ 242 2018 ￦ 73 2018 to 2028 47 Table of Contents Researching and Implementing Technology Upgrades and Additional Telecommunications Services such as 5G Technologies The telecommunications industry is characterized by continued advances and improvements in telecommunications technology, and we have been continually researching and implementing network upgrades and launching additional telecommunications services to maintain our competitiveness.
Income Tax Expense Income tax expense decreased by 2.6%, or ￦ 13 billion, from ￦ 519 billion in 2021 to ￦ 506 billion in 2022, as our profit before income tax decreased by 4.4%, or ￦ 87 billion, from ￦ 1,978 billion in 2021 to ￦ 1,891 billion in 2022.
Income Tax Expense Income tax expense decreased by 34.7%, or ￦ 175 billion, from ￦ 506 billion in 2022 to ￦ 330 billion in 2023, as our profit before income tax decreased by 31.1%, or ￦ 589 billion, from ￦ 1,891 billion in 2022 to ￦ 1,303 billion in 2023.
Mobile Services Our mobile services revenue increased by 1.1%, or ￦ 77 billion, from ￦ 6,936 billion in 2021 to ￦ 7,014 billion in 2022, primarily due to increases in the number of our mobile subscribers and our average revenue per subscriber. 52 Table of Contents We recorded a 5.5% increase in our mobile subscribers from approximately 22.8 million (including 6.4 million subscribers of 5G services) as of December 31, 2021 to approximately 24.1 million (including 8.5 million subscribers of 5G services) as of December 31, 2022.
Mobile Services Our mobile services revenue increased by 1.8%, or ￦ 126 billion, from ￦ 7,014 billion in 2022 to ￦ 7,140 billion in 2023 primarily due to increases in the number of our mobile subscribers and our average revenue per subscriber.
These factors were partially offset by the following: • We recorded changes of inventories of ￦ 20 billion in 2021 compared to changes of inventories of ￦ ( 195) billion in 2022 primarily reflecting a decrease in our sales of wired and wireless goods. • Purchase of inventories decreased by 2.6%, or ￦ 98 billion, from ￦ 3,754 billion in 2021 to ￦ 3,656 billion in 2022 primarily due to a decrease in purchase of mobile handsets used in connection with subscription of our mobile services.
These factors were partially offset by the following: • Service costs decreased by 4.2%, or ￦ 97 billion, from ￦ 2,334 billion in 2022 to ￦ 2,237 billion in 2023 primarily due to decreases in corporate messaging volume and interconnection fees. • Purchase of inventories decreased by 1.7%, or ￦ 61 billion, from ￦ 3,656 billion in 2022 to ￦ 3,595 billion in 2023 primarily due to a decrease in purchase of mobile handsets used in connection with subscription of our mobile services.
The operating profit for our satellite TV segment, prior to adjusting for inter-segment transactions, decreased by 67.8%, or ￦ 42 billion, from ￦ 61 billion in 2021 to ￦ 20 billion in 2022, as the ￦ 86 billion increase in the segment’s operating expenses outpaced the ￦ 44 billion increase in operating revenue.
The operating income for our ICT segment, prior to adjusting for inter-segment transactions, decreased by 11.4%, or ￦ 154 billion, from ￦ 1,347 billion in 2022 to ￦ 1,193 billion in 2023, as the ￦ 156 billion increase in the segment’s operating expenses outpaced the ￦ 2 billion increase in operating revenue.
Upon the identification and evaluation of our currency risk exposures, we, having considered various circumstances, enter into derivative financial instruments to manage such risks. See “Item 11.
Of the ￦ 10,218 billion total borrowings (including short-term borrowings) outstanding as of December 31, 2023, ￦ 2,801 billion was denominated in foreign currencies. See Note 15 of the notes to the Consolidated Financial Statements. Upon the identification and evaluation of our currency risk exposures, we, having considered various circumstances, enter into derivative financial instruments to manage such risks.
Operating Revenue The following table presents a breakdown of our operating revenue and changes therein for 2021 and 2022: For the Year Ended December 31, Changes 2021 vs. 2022 Products and services 2021 2022 Amount % (In billions of Won) Mobile services ￦ 6,936 ￦ 7,014 ￦ 77 1.1 % Fixed-line services: Fixed-line and VoIP telephone services 1,465 1,378 (87 ) (5.9 ) Broadband Internet access services 2,344 2,505 161 6.9 Data communication services 1,152 1,173 22 1.9 Sub-total 4,960 5,057 96 1.9 Media and content services 2,801 3,100 299 10.7 Financial services 3,662 3,837 175 4.8 Others 3,313 3,834 520 15.7 Sale of goods (1) 3,533 3,394 (139 ) (3.9 ) Total operating revenue ￦ 25,206 ￦ 26,234 ￦ 1,029 4.1 % (1) Primarily related to sale of handsets for our mobile service and miscellaneous telecommunications equipment, as well as sale of residential units and commercial real estate developed by KT Estate.
Operating Results—2022 Compared to 2023 The following table presents selected income statement data and changes therein for 2022 and 2023: For the Year Ended December 31, Changes 2022 vs. 2023 2022 2023 Amount % (In billions of Won) Operating revenue ￦ 26,234 ￦ 26,595 ￦ 361 1.4 % Operating expenses 24,266 25,167 901 3.7 Operating profit 1,968 1,428 (540 ) (27.4 ) Finance income 690 486 (204 ) (29.6 ) Finance costs 750 569 (181 ) (24.2 ) Share of net profits of associates and joint ventures (17 ) (43 ) (26 ) 151.2 Profit before income tax 1,891 1,303 (589 ) (31.1 ) Income tax expense 506 330 (175 ) (34.7 ) Profit for the year ￦ 1,386 ￦ 972 (413) (29.8 ) Operating Revenue The following table presents a breakdown of our operating revenue and changes therein for 2022 and 2023: For the Year Ended December 31, Changes 2022 vs. 2023 Products and services 2022 2023 Amount % (In billions of Won) Mobile services ￦ 7,014 ￦ 7,140 ￦ 126 1.8 % Fixed-line services: Fixed-line and VoIP telephone services 1,378 1,249 (129 ) (9.4 ) Broadband Internet access services 2,505 2,579 74 2.9 Data communication services 1,173 1,315 141 12.0 Subtotal 5,057 5,142 86 1.7 Media and content services 3,100 3,207 107 3.4 Financial services 3,837 3,968 131 3.4 Others 3,834 3,846 12 0.3 Sale of goods (1) 3,394 3,293 (101 ) (3.0 ) Total operating revenue ￦ 26,234 ￦ 26,595 361 1.4 (1) Primarily related to sale of handsets for our mobile service and miscellaneous telecommunications equipment, as well as sale of residential units and commercial real estate developed by KT Estate.
Depreciation and amortization for our real estate segment, prior to adjusting for inter-segment transactions, increased by 8.3%, or ￦ 5 billion, from ￦ 60 billion in 2021 to ￦ 65 billion in 2022. 57 Table of Contents Segment Results—Others The operating revenue for our others segment, prior to adjusting for inter-segment transactions, increased by 22.9%, or ￦ 1,485 billion, from ￦ 6,475 billion in 2021 to ￦ 7,960 billion in 2022, primarily due to an increase in revenue from our information technology and network services, particularly from the operation of Internet data centers and systems integration services.
Segment Results—Others The following table presents selected income statement data of the others segment and changes therein for 2022 and 2023: For the Year Ended December 31, Changes 2022 vs. 2023 2022 2023 Amount % (In billions of Won) Operating revenue ￦ 7,960 ￦ 8,145 ￦ 185 2.3 % Operating expenses 7,487 8,048 561 7.5 Operating income 473 98 (376 ) (79.4 ) Depreciation and amortization (1) 575 585 10 1.7 (1) Sum of the amortization of tangible assets, intangible assets, investment properties and right-of-use assets. 59 Table of Contents The operating revenue for our others segment, prior to adjusting for inter-segment transactions, increased by 2.3%, or ￦ 185 billion, from ￦ 7,960 billion in 2022 to ￦ 8,145 billion in 2023, primarily due to an increase in revenue from our information technology and network services, particularly from the operation of Internet data centers and systems integration services.
Operating margin for this segment increased from 8.2% in 2021 to 23.8% in 2022 primarily due to increases in operating profits from disposal of real estate and hotel operations.
Operating margin for this segment decreased from 23.8% in 2022 to 14.7% in 2023 primarily due to decreases in operating profits from disposal of real estate properties. Depreciation and amortization for our real estate segment, prior to adjusting for inter-segment transactions, increased by 7.9%, or ￦ 5 billion, from ￦ 65 billion in 2022 to ￦ 71 billion in 2023.
See Note 20 of the notes to the Consolidated Financial Statements.
See Note 19 of the notes to the Consolidated Financial Statements. From time to time, we also generate cash from the sale of our treasury shares.

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Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

28 edited+8 added−28 removed24 unchanged
Subsequently, the Representative Director Candidate Examination Committee examines and selects Representative Director candidates and submits an examination report of such candidates to our board of directors. A Representative Director candidate recommended by our board of directors is nominated at the shareholders’ meeting.
Subsequently, the Director Candidate Recommendation Committee examines and selects Representative Director candidates and submits an examination report of such candidates to our board of directors. A Representative Director candidate recommended by our board of directors is nominated at the shareholders’ meeting.
Our Outside Director Candidate Nominating Committee nominates outside director candidates for appointment at the general shareholders’ meeting. According to our articles of incorporation, upon the request of any director (to the extent that the board of directors does not separately authorize only a particular director to make such request), a meeting of the board of directors will be assembled.
Our Director Candidate Recommendation Committee nominates outside director candidates for appointment at the general shareholders’ meeting. According to our articles of incorporation, upon the request of any director (to the extent that the board of directors does not separately authorize only a particular director to make such request), a meeting of the board of directors will be assembled.
The duties of the committee include: • appointing an independent registered public accounting firm; • approving the appointment and recommending the dismissal of the internal auditor; • evaluating performance of the independent registered public accounting firm; • approving services to be provided by the independent registered public accounting firm; • reviewing annual financial statements; • reviewing audit results and reports; • reviewing and evaluating our system of internal controls and policies 68 Table of Contents • examining improprieties or suspected improprieties; and • on a quarterly basis, reviewing reports on internal controls for legal compliance, including with respect to cybersecurity laws.
The duties of the committee include: • appointing an independent registered public accounting firm; • approving the appointment and recommending the dismissal of the internal auditor; • evaluating performance of the independent registered public accounting firm; • approving services to be provided by the independent registered public accounting firm; • reviewing annual financial statements; • reviewing audit results and reports; • reviewing and evaluating our system of internal controls and policies • examining improprieties or suspected improprieties; and • on a quarterly basis, reviewing reports on internal controls for legal compliance, including with respect to cybersecurity laws.
In addition, the head of each of our functional departments, the president of each of our subsidiaries and the heads of each regional head office have entered into employment agreements with the Representative Director that provide for similar management targets to be achieved by each of our departments, subsidiaries and regional head offices. Item 6.C.
In addition, the head of each of our functional departments, the president of each of our 67 Table of Contents subsidiaries and the heads of each regional head office have entered into employment agreements with the Representative Director that provide for similar management targets to be achieved by each of our departments, subsidiaries and regional head offices. Item 6.C.
According to our articles of incorporation, such committee must consist of one inside director and all of our outside directors, other than for election of an outside director resulting from the expiration of the term of the office, in which case such outside director whose term is expiring may not be a member of the committee.
According to our articles of incorporation, such committee must consist of all of our outside directors, other than for election of an outside director resulting from the expiration of the term of the office, in which case such outside director whose term is expiring may not be a member of the committee.
In such case, the chairperson of the board of directors, on our behalf, signs the management contract. In March 2020, our articles of incorporation were amended to have 63 Table of Contents management goals be set based on objectives that can be accomplished during a Representative Director’s term in office.
In such case, the chairperson of the board of directors, on our behalf, signs the management contract. In March 2020, our articles of incorporation were amended to have management goals be set based on objectives that can be accomplished during a Representative Director’s term in office.
Starting in April 2011, in accordance with the Korean Employee Retirement Income Security Act, we replaced such lump-sum severance payment system with our current pension insurance system in the form of a defined benefit plan, and also introduced a defined contribution plan in December 2012, with a total combined unfunded portion of approximately ￦ 124 billion as of December 31, 2022.
Starting in April 2011, in accordance with the Korean Employee Retirement Income Security Act, we replaced such lump-sum severance payment system with our current pension insurance system in the form of a defined benefit plan, and also introduced a defined contribution plan in December 2012, with a total combined unfunded portion of approximately ￦ 149 billion as of December 31, 2023.
Our articles of incorporation provide for a board of directors consisting of: • up to three inside directors, including the Representative Director; and • up to eight outside directors. 61 Table of Contents All of our directors are elected at the general shareholders’ meeting.
Our articles of incorporation provide for a board of directors consisting of: • up to two inside directors, including the Representative Director; and • up to eight outside directors. 63 Table of Contents All of our directors are elected at the general shareholders’ meeting.
Lump-sum severance 69 Table of Contents amounts previously accrued prior to our adoption of the current pension insurance system continue to remain payable.
Lump-sum severance amounts previously accrued prior to our adoption of the current pension insurance system continue to remain payable.
The representative of the labor unions negotiates a collective bargaining agreement with us every two years, and our current collective bargaining agreement expires on September 5, 2023. The current collective bargaining agreement provides that even in the event of a strike, the minimum number of employees necessary to operate the telecommunications business must continue to work.
The representative of the labor unions negotiates a collective bargaining agreement with us every two years, and our current collective bargaining agreement expires on October 9, 2025. The current collective bargaining agreement provides that even in the event of a strike, the minimum number of employees necessary to operate the telecommunications business must continue to work.
The committee’s duties include reviews of sustainable management plans, the authorization of establishment of medium- and long-term sustainable management strategies, sustainable management results, regular reporting and risk management of sustainable management activities and charitable contributions. The committee members are elected by the board after the annual meeting, and the term of the committee members is one year.
The committee’s duties include reviews of sustainable 68 Table of Contents management plans, the authorization of establishment of medium-and long-term sustainable management strategies, sustainable management results, regular reporting and risk management of sustainable management activities and charitable contributions. The committee members are elected by the board after the annual meeting.
Employees On a standalone basis, we had 20,544 employees as of December 31, 2022, compared to 21,759 employees as of December 31, 2021 and 22,720 employees as of December 31, 2020. Labor Relations We consider our current relations with our work force to be good.
Employees On a standalone basis, we had 19,737 employees as of December 31, 2023, compared to 20,544 employees as of December 31, 2022 and 21,759 employees as of December 31, 2021. Labor Relations We consider our current relations with our work force to be good.
However, in the past, we have experienced opposition from our labor union for our strategy of restructuring to improve our efficiency and profitability by disposing of non-core businesses and reducing our employee base. As of December 31, 2022, about 78.6% of the employees of KT Corporation were members of labor unions.
However, in the past, we have experienced opposition from our labor union for our strategy of restructuring to improve our efficiency and profitability by disposing of non-core businesses and reducing our employee base. 69 Table of Contents As of December 31, 2023, approximately 78.1% of the employees of KT Corporation were members of labor unions.
In March 2018, we amended our articles of incorporation in efforts to add more rigor and transparency to the process of selecting our Representative Director. Our Corporate Governance Committee conducts investigation and composition of a pool of candidates and selects the representative director candidates whose candidacy will be further examined.
In June 2023, we amended our articles of incorporation in efforts to add more rigor and transparency to the process of selecting our Representative Director. Our Director Candidate Recommendation Committee conducts investigation and composition of a pool of candidates and selects the representative director candidates whose candidacy will be further examined.
Operating Results.” Employee Training The objective of our training program is to develop information technology specialists who are able to create value for our customers. In order to develop skills of our employees, we require 85 hours of training per year from most of our employees, using individually-tailored curriculums based on individual assessments.
Operating Results.” 70 Table of Contents Employee Training The objective of our training program is to develop professionals who are able to create value for our customers. In order to develop skills of our employees, we require approximately 69 hours of training per year from most of our employees, using individually-tailored curriculums based on individual assessments.
Compensation Compensation of Directors and Executive Officers In 2022, the aggregate compensation paid and accrued to all directors and executive officers was approximately ￦ 47.2 billion and the aggregate amount set aside or accrued by us to provide pension and retirement benefits to such persons was approximately ￦ 4.9 billion.
Compensation Compensation of Directors and Executive Officers In 2023, the aggregate compensation paid and accrued to all directors and executive officers was approximately ￦ 73.8 billion and the aggregate amount set aside or accrued by us to provide pension and retirement benefits to such persons was approximately ￦ 3.8 billion.
Share Ownership Ordinary Shares The persons who currently serve as our directors or executive officers held, as a group, 522,001 ordinary shares as of April 17, 2023.
Share Ownership Ordinary Shares The persons who currently serve as our directors or executive officers held, as a group, 293,574 common shares as of April 5, 2024.
The committee is responsible for the review of matters with respect to our Corporate Governance Guidelines and our performance under such guidelines to monitor effectiveness of our corporate governance.
The chairperson is YangHee Choi. The committee is responsible for the review of matters with respect to our Corporate Governance Guidelines and our performance under such guidelines to monitor effectiveness of our corporate governance. The committee members are elected by the board after the annual meeting.
Audit Committee members must also meet the applicable independence criteria set forth under the rules and regulations of the Sarbanes-Oxley Act of 2002. The committee is currently comprised of Eun-Jung Yeo, Chung-Gu Kang and Yong-Hun Kim. The chairperson is Eun-Jung Yeo and Eun-Jung Yeo also serves as the financial expert of the Audit Committee.
Audit Committee members must also meet the applicable independence criteria set forth under the rules and regulations of the Sarbanes-Oxley Act of 2002. The committee is comprised of Yeong Kyun Ahn, Yong-Hun Kim, Seong Hoon Lee and Seung Ah Theresa Cho. The chairperson is Yeong Kyun Ahn. Yeong Kyun Ahn serves as the financial expert of the Audit Committee.
Board Practices As of April 1, 2023, none of our inside or outside directors maintained directors’ service contracts with us or with any of our subsidiaries providing for benefits upon termination of employment.
Board Practices As of April 1, 2024, none of our inside or outside directors maintained directors’ service contracts with us or with any of our subsidiaries providing for benefits upon termination of employment. Corporate Governance Committee The Corporate Governance Committee is comprised of four outside directors (YangHee Choi, Woo-Young Kwak, Seung Hoon Lee and Seongcheol Kim).
Item 6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. Item 7. Major Shareholders and Related Party Transactions
For details of our share-based payments, see Note 24 of the notes to the Consolidated Financial Statements. Item 6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation Not applicable. 72 Table of Contents Item 7. Major Shareholders and Related Party Transactions
The chairperson of the board of directors is elected from among the outside directors by a resolution of the board of directors. The term of office of the chairperson is one year. As of December 31, 2022, our board of directors consisted of two inside directors (including our chief executive officer) and eight outside directors.
The chairperson of the board of directors is elected from among the outside directors by a resolution of the board of directors. The term of office of the chairperson is one year.
Senior Management In addition to our inside directors who are also our executive officers, we have the following executive officers as of March 31, 2023: Name Title and Responsibilities Year of Birth Kook-Hyun Kang President, Customer Business Group 1963 Jong-Ook Park President, Corporate Planning Group 1962 Byung-Sam Park Senior Executive Vice President, Ethics Office 1966 Chang-Seok Seo Senior Executive Vice President, Network Group 1967 Jae-Ho Song Senior Executive Vice President, AI/DX Convergence Business Group 1966 Soo-Jung Shin Senior Executive Vice President, Enterprise Business Group 1965 Hyun-Yok Sheen Senior Executive Vice President, Corporate Management Group 1968 Sang-Don Ahn Senior Executive Vice President, Legal Affairs Office 1962 Jeong-Min Woo Senior Executive Vice President, IT Group 1964 Bong-Gyun Kim Executive Vice President, Busan / Gyeongnam Regional Headquarter 1972 Young-Woo Kim Executive Vice President, Group Management Office 1967 Young-Jin Kim Executive Vice President, Financial Management Office 1967 Yi-Han Kim Executive Vice President, Institute of Convergence Technology 1966 Chae-Hee Kim Executive Vice President, Strategy & Planning Office 1974 Hoon-Bae Kim Executive Vice President, Media Business Unit 1963 Chang-Yong Ahn Executive Vice President, Daegu / Gyeongbuk Regional Headquarter 1966 Chi-Yong Ahn Executive Vice President, Northern Seoul / Gangwon Regional Headquarter 1966 Yul-Mo Yang Executive Vice President, Public Relations Office 1967 Kyung-Hwa Ok Executive Vice President, IT Strategy Unit 1968 Kong-Hwan Lee Executive Vice President, Policy Cooperation Office 1966 Sun-Joo Lee Executive Vice President, D-TF 1969 Chang-Ho Yi Executive Vice President, CEO Office 1972 Hyeon-Seuk Lee Executive Vice President, Chungnam / Chungbuk Regional Headquarter 1966 Jong-Taek Lim Executive Vice President, External Cooperation Office 1964 Sang-Kwi Chang Executive Vice President, Legal Affairs Department 1 1968 Jung-Soo Jung Executive Vice President, Southern Seoul/Western Seoul Regional Headquarter 1966 Hoon Cho Executive Vice President, SCM Strategy Office 1966 Jung-Yong Ji Executive Vice President, Jeonnam / Jeonbuk Regional Headquarter 1968 Chan-Ki Choi Executive Vice President, Sales Operating Business Unit 1966 Jun Koh Senior Vice President, Legal Affairs P-TF 1971 Gang-Bon Koo Senior Vice President, Customer Business Unit 1972 Jae-Hyung Koo Senior Vice President, Network Research Technology Unit 1972 O-Ryung Kwon Senior Vice President, Group Strategic Partnership Office 1969 Hye-Jin Kwon Senior Vice President, Network Strategy Unit 1971 Hee-Keun Kwon Senior Vice President, Metropolitan Wholesale Unit 1970 Kwang-Dong Kim Senior Vice President, Policy Cooperation Department 1970 Moo-Seong Kim Senior Vice President, ESG Management & Implementation office 1972 Byung-Kyun Kim Senior Vice President, Device Business Unit 1968 Bong-Ki Kim Senior Vice President, Convergence Laboratory 1968 Sang-Kyoon Kim Senior Vice President, Management Support Office 1970 Seong-Il Kim Senior Vice President, Chungnam / Chungbuk Network O&M Headquarter 1966 Young-Sool Kim Senior Vice President, External Cooperation P-TF 1967 Young-Sik Kim Senior Vice President, DX Platform Business Unit 1972 Young-In Kim Senior Vice President, Southern Seoul / Western Seoul Network O&M Headquarter 1968 64 Table of Contents Name Title and Responsibilities Year of Birth Jae-Kwon Kim Senior Vice President, Biz Customer Business Unit 1968 Jun-Ho Kim Senior Vice President, Public/Finance Customer Business Unit 1965 Jin-Chul Kim Senior Vice President, Jeonnam / Jeonbuk Customer Sales Headquarter 1967 Gil-Hyun Ryu Senior Vice President, On External Training 1968 Pyeong Ryu Senior Vice President, Jeonnam / Jeonbuk Enterprise Customer Sales Headquarter 1966 Sang-Ryong Moon Senior Vice President, IT Consulting Unit 1967 Sung-Uk Moon Senior Vice President, Global Business Office 1972 Young-Il Moon Senior Vice President, Information Security Unit 1966 Hye-Byung Min Senior Vice President, Enterprise Service DX Unit 1969 Sun-Ha Park Senior Vice President, Fieldwork Supporting Unit 1965 Yong-Man Park Senior Vice President 1965 Jeong-Jun Park Senior Vice President, Enterprise Customer Business Unit 1967 Jung-Ho Park Senior Vice President, Customer DX Business Unit 1970 Jong-Ho Park Senior Vice President, Network Control Unit 1964 Hyo-Il Park Senior Vice President, Customer Experience Innovation Unit 1970 Soon-Min Bae Senior Vice President, AI2XL Laboratory 1980 Seung-Yun Paik Senior Vice President, Strategic Investment Office 1970 Ki-Hong Seo Senior Vice President, Daegu / Gyeongbuk Enterprise Customer Sales Headquarter 1967 Young-Soo Seo Senior Vice President, Network O&M Unit 1968 Jeong-Hyun Seo Senior Vice President, Legal Affairs Department 3 1971 Won-Je Sung Senior Vice President, Southern Seoul Enterprise Customer Sales Headquarter 1972 Hoon-Joo Shin Senior Vice President, Corporate Image Strategy P-TF 1971 Jin-Ho Yang Senior Vice President, Legal Affairs Department 2 1973 Jae-Min Eom Senior Vice President, Busan / Gyeongnam Customer Sales Headquarter 1965 Tae-Sung Oh Senior Vice President, On External Training 1968 Hun-Yong Oh Senior Vice President, Enterprise Business Consulting & Implementation Unit 2 1966 Heung-Jae Won Senior Vice President, Western Seoul Customer Sales Headquarter 1967 Yong-Kyu Yoo Senior Vice President, Enterprise Business Strategy Unit 1971 Chang-Kyu Yoo Senior Vice President, Northern Seoul / Gangwon Enterprise Customer Sales Headquarter 1966 Kyeong-Mo Youn Senior Vice President, SCM Strategy Department 1969 Jin-Hyoun Youn Senior Vice President, Media R&D P-TF 1968 Mi-Hee Lee Senior Vice President, C-level Consulting Unit 1970 Sang-Il Lee Senior Vice President, Northern Seoul / Gangwon Network O&M Headquarter 1964 Sang-Ho Lee Senior Vice President, AI Robot Business Unit 1975 Seong-Hwan Yi Senior Vice President, Western Seoul Network O&M Headquarter 1968 Young-Jun Lee Senior Vice President, Chungnam / Chungbuk Enterprise Customer Sales Headquarter 1968 Young-Jin Lee Senior Vice President, Group Human Resources Office 1972 Yong-Gyoo Lee Senior Vice President, Busan / Gyeongnam Network O&M Headquarter 1965 Jong-Sik Lee Senior Vice President, Infra DX Laboratory 1972 Seung-Hyouk Yim Senior Vice President, Digital & Bio Health Business Unit 1970 Jang-Mi Lim Senior Vice President, Industry Biz 2 P-TF 1966 Dae-Jin Jang Senior Vice President, C-TF 1971 Kil-Sung Jung Senior Vice President, Corporate Strategy Department 1974 Jae-Wook Jeong Senior Vice President, CEO Office team 1 1972 Seong-Eun Cho Senior Vice President, S/W Development Unit 1971 Young-Sim Jin Senior Vice President, Group HR Development Academy 1972 Kang-Rim Choi Senior Vice President, AI Mobility Business Unit 1974 Sung-Wook Choi Senior Vice President, Daegu / Gyeongbuk Customer Sales Headquarter 1965 Si-Hwan Choi Senior Vice President, Eastern Seoul Customer Sales Headquarter 1967 Joon-Ki Choi Senior Vice President, AI / Big Data Business Unit 1974 Ja-Kyung Hahn Senior Vice President, Industry Biz 1 P-TF 1971 Suk-Zoon Huh Senior Vice President, Institute of Economic & Business Research 1967 Tae-Jun Heo Senior Vice President, Enterprise Business Consulting & Implementation Unit 1970 Sung-Pil Hong Senior Vice President, Group Real Estate Unit 1965 65 Table of Contents Item 6.B.
Innovation Group 1970 Young-Bok Lee Senior Executive Vice President, Legal Affairs Office 1961 Hyeon-Seuk Lee Senior Executive Vice President, Customer Business Group 1966 Hyun-Kyu Lim Senior Executive Vice President, Corporate Management Group 1964 Choong-Rim Ko Executive Vice President, Group Human Resources Office 1967 Kwang-Dong Kim Executive Vice President, Corporate Relations Office 1970 Bong-Gyun Kim Executive Vice President, Busan/Gyeongnam Regional Headquarter 1972 Young-In Kim Executive Vice President, Western Seoul Regional Headquarter 1968 Young-Ho Kim Executive Vice President, Southern Seoul Regional Headquarter 1966 Chae-Hee Kim Executive Vice President, On External Training 1974 Hoon-Bae Kim Executive Vice President, Media Business Unit 1963 Hye-Byung Min Executive Vice President, Enterprise Business Strategy Unit 1969 Hyo-Il Park Executive Vice President, Strategy Office 1970 Jeong-Hyun Seo Executive Vice President, Legal Consulting Department 1971 Jin-Ho Yang Executive Vice President, Litigation Management Department 1973 Kyung-Hwa Ok Executive Vice President, IT Platform Unit 1968 Chang-Ho Yi Executive Vice President, Chungnam/Chungbuk Regional Headquarter 1972 Min Jang Executive Vice President, Financial Management Office 1968 65 Table of Contents Name Title and Responsibility Year of Birth Woo-Jin Jung Executive Vice President, KT Consulting Group 1975 Hoon Cho Executive Vice President, SCM Strategy Office 1966 Jung-Yong Ji Executive Vice President, Jeonnam/Jeonbuk Regional Headquarter 1968 Si-Hwan Choi Executive Vice President, Daegu/Gyeongbuk Regional Headquarter 1967 Chan-Ki Choi Executive Vice President, Northern Seoul/Gangwon Regional Headquarter 1966 Eui-Jeung Choo Executive Vice President, Audit Office 1976 Seong-Kwon Kang Senior Vice President, Cloud/Platform Lead 1971 Lee-Hwan Kang Senior Vice President, Micro Enterprise Business Unit 1970 Gang-Bon Koo Senior Vice President, Western Seoul Customer Sales Headquarter 1972 Jae-Hyung Koo Senior Vice President, Network Technology Unit 1972 Hye-Jin Kwon Senior Vice President, Network Strategy Unit 1971 Hee-Keun Kwon Senior Vice President, Sales Operating Business Unit 1970 Mong-Ryong Kim Senior Vice President, Finance Customer Business Unit 1971 Byung-Kyun Kim Senior Vice President, Device Business Unit 1968 Young-Geol Kim Senior Vice President, Customer Business Unit 1973 Young-Min Kim Senior Vice President, Modern IT Lead 1971 Yong-Nam Kim Senior Vice President, Jeonnam/Jeonbuk Enterprise Customer Sales Headquarter 1969 Jae-Kwon Kim Senior Vice President, DX Business Unit 1968 Jun-Ho Kim Senior Vice President, Public Customer Business Unit 1965 Jee-Hyeon Kim Senior Vice President, Partnership & Investment Department 1969 Jin-Chul Kim Senior Vice President, Jeonnam/Jeonbuk Customer Sales Headquarter 1967 Hoon-Dong Kim Senior Vice President, AI/Data Lead 1976 Hyeong-Rae Roh Senior Vice President, Strategic Customer Business Unit 1970 Je-Hoon Myung Senior Vice President, Enterprise Telecommunications Business Unit 1972 Sang-Ryong Moon Senior Vice President, Information Security Unit 1967 Jung-Ho Park Senior Vice President, EduDX Business Unit 1970 Soon-Min Bae Senior Vice President, AI2X Lab 1980 Ki-Hong Seo Senior Vice President, Daegu/Gyeongbuk Enterprise Customer Sales Headquarter 1967 Won-Je Sung Senior Vice President, Southern Seoul Enterprise Customer Sales Headquarter 1972 Je-Hyun Sung Senior Vice President, Northern Seoul/Gangwon Enterprise Customer Sales Headquarter 1972 Hoon-Joo Shin Senior Vice President, On External Training 1971 Tae-Sung Oh Senior Vice President, ESG Management & Implementation Unit 1968 Taek-Gyun Oh Senior Vice President, Network O&M Unit 1968 Yong-Kyu Yoo Senior Vice President, Strategy & New Business Planning Unit 1971 Kyung-A Yoon Senior Vice President, AI Tech Lab 1973 Byoung-Hyu Yoon Senior Vice President, Chungnam/Chungbuk Customer Sales Headquarter 1972 Jin-Hyoun Youn Senior Vice President, Media R&D Department 1968 Tae-Sik Yoon Senior Vice President, Brand Communication Department 1969 Mi-Hee Lee Senior Vice President, Strategy & New Business Consulting & Implementation Unit 1970 Byeong-Moo Lee Senior Vice President, Customer Experience Innovation Unit 1971 Sang-Ki Lee Senior Vice President, Global Business Development Department 1970 Sang-Ho Lee Senior Vice President, Robot Platform Business Department 1975 Sung-Kyu Lee Senior Vice President, Northern Seoul/Gangwon Network O&M Headquarter 1969 Seong-Hwan Yi Senior Vice President, Western Seoul Enterprise Customer Sales Headquarter 1968 Se-Jung Lee Senior Vice President, AI Service Lab 1974 Young-Jun Lee Senior Vice President, Chungnam/Chungbuk Enterprise Customer Sales Headquarter 1968 Jung-Woo Lee Senior Vice President, Public Relations Office 1971 Jong-Sik Lee Senior Vice President, Network Laboratory 1972 Chan-Seung Lee Senior Vice President, Accounting Department 1968 Bo-Heon Im Senior Vice President, Busan/Gyeongnam Network O&M Headquarter 1967 Seung-Hyouk Yim Senior Vice President, Enterprise Business Consulting & Implementation Unit 1970 Du-Seong Chang Senior Vice President, Large AI Core Tech.
The committee’s duties include examining the Representative Director candidates selected under the examination criteria determined by our board of directors, selecting the Representative Director candidates pursuant to such criteria and reporting to the board of directors the outcome of the examination.
The committee’s duties include (i) authorizing the investigation and composition of a pool of internal and external Representative Director candidates, (ii) examining the Representative Director candidates selected under the examination criteria determined by our board of directors, selecting the Representative Director candidates pursuant to such criteria and reporting to the board of directors the outcome of the examination and (iii) reviewing the qualifications of outside director candidates and proposing nominees to our shareholders for consideration at the general shareholders’ meeting.
Related-Party Transactions Committee The Related-Party Transactions Committee is currently comprised of three outside directors, Chung-Gu Kang, Eun-Jung Yeo and Yong-Hun Kim. The chairperson is Chung-Gu Kang. This committee’s duties include reviews of transactions between KT Corporation and its subsidiaries and ensures compliance with applicable antitrust laws.
This committee’s duties include reviews of transactions between KT Corporation and its subsidiaries and ensures compliance with applicable antitrust laws. The committee members are elected by the board after the annual meeting.
The committee members are elected by the board after the annual meeting, and the term of the committee members is one year. Sustainability Management Committee The Sustainability Management Committee is currently comprised of three outside directors and one inside director, Hyun-Myung Pyo, Eun-Jung Yeo, Yong-Hun Kim and Hyun-Mo Ku. The chairperson is Hyun-Myung Pyo.
The committee members are elected by the board after the closing of the annual meeting. Related-Party Transactions Committee The Related-Party Transactions Committee is comprised of four outside directors (Woo-Young Kwak, Yong-Hun Kim, Jong Soo Yoon and Yeong Kyun Ahn). The chairperson is Woo-Young Kwak.
The compensation of our five highest compensated directors and executive officers who received total annual compensation exceeding ￦ 500 million in 2022 was as follows: Name Position Total Compensation in 2022 Composition of Total Compensation (In millions of Won) Hyeon-Mo Ku Chief Executive Officer ￦ 1,561 ￦ 556 (salary); ￦ 973 (bonus); ￦ 32 (benefits) Jong-Ook Park President ￦ 1,114 ￦ 440 (salary); ￦ 650 (bonus); ￦ 24 (benefits) Kook-Hyun Kang President ￦ 1,107 ￦ 440 (salary); ￦ 639 (bonus); ￦ 28 (benefits) Soo-Jung Shin Senior Executive Vice President ￦ 899 ￦ 411 (salary); ￦ 472 (bonus); ￦ 16 (benefits) Hyun-Yok Sheen Senior Executive Vice President ￦ 887 ￦ 398 (salary); ￦ 454 (bonus); ￦ 35 (benefits) The chairperson of our board of directors enters into an employment agreement on our behalf with our Representative Director.
The compensation of our directors and executive officers in 2023 that was disclosed on an individual basis in Korea was as follows: Name Position Total Compensation in 2023 Composition of Total Compensation (In millions of Won) Hyeon-Mo Ku Former Chief Executive Officer ￦ 3,073 ￦ 335 (salary); ￦ 778 (bonus); ￦ 25 (benefits); ￦ 1,935 (severance pay) Kook-Hyun Kang Former President ￦ 2,571 ￦ 364 (salary); ￦ 579 (bonus); ￦ 62 (benefits); ￦ 1,566 (severance pay) Jong-Ook Park Former President ￦ 2,134 ￦ 381 (salary); ￦ 578 (bonus); ￦ 61 (benefits); ￦ 1,113 (severance pay) Byung-Sam Park Former Senior Executive Vice President ￦ 1,726 ￦ 347 (salary); ￦ 471 (bonus); ￦ 59 (benefits); ￦ 849 (severance pay) Hyun-Yok Sheen Former Senior Executive Vice President ￦ 1,701 ￦ 327 (salary); ￦ 398 (bonus); ￦ 68 (benefits); ￦ 908 (severance pay) Chang-Seok Seo Inside Director ￦ 864 ￦ 342 (salary); ￦ 466 (bonus); ￦ 56 (benefits) Kyoung-Lim Yun Former Inside Director ￦ 812 ￦ 111 (salary); ￦ 511 (bonus); W12 (benefits); ￦ 178 (severance pay) The chairperson of our board of directors enters into an employment agreement on our behalf with our Representative Director.
(2) Yong-Hun Kim Partner Lawyer, DR & AJU Law Group March 2022 March 29, 1955 2025 (1) All of our inside and outside directors beneficially own less than one percent of the issued shares of KT Corporation in the aggregate.
June 2023 December 25, 1962 March 2025 Seongcheol Kim Professor, School of Media and Communication, Korea University June 2023 June 12, 1964 March 2025 Seung Ah Theresa Cho Professor, Strategic Management and International Business, Seoul National University Business School June 2023 October 22, 1967 March 2026 64 Table of Contents (1) All of our inside and outside directors beneficially own less than one percent of the issued shares of KT Corporation in the aggregate.
Removed
Subsequently, Hyeon-Mo Ku, our representative director and chief executive officer, resigned on March 28, 2023 and four of our outside directors (Dae-You Kim, Gang-Cheol Lee, Hee-Yol Yu and Benjamin Hong) resigned between January 2023 to March 2023 for personal reasons.
Added
Our current directors are as follows: Name Position Director Since Date of Birth Expiration of Term of Office Inside Directors (1) Young Shub Kim Representative Director and Chief Executive Officer August 2023 April 10, 1959 March 2026 Chang-Seok Seo Senior Executive Vice President, Network Group August 2023 July 5, 1967 March 2026 Outside Directors (1) Jong Soo Yoon Senior Advisor, Kim & Chang June 2023 August 13, 1958 March 2026 Yong-Hun Kim Partner, DR & AJU LLC March 2022 March 29, 1955 March 2025 YangHee Choi President, Hallym University June 2023 July 27, 1955 March 2026 Woo-Young Kwak Former Chairman of Steering Committee, Vehicle IT Fusion and Innovation Center, Ministry of Science and ICT June 2023 September 3, 1956 March 2025 Yeong Kyun Ahn Board member of IFAC June 2023 February 6, 1959 March 2026 Seung Hoon Lee Partner of KCGI Co., Ltd.
Removed
In addition, Kyoung-Lim Yun, who was our inside director and a candidate for the position of chief executive officer, resigned and withdrew his candidacy on March 27, 2023.
Added
Senior Management In addition to our inside directors who are also our executive officers, we have the following executive officers as of April 1, 2024: Name Title and Responsibility Year of Birth Soo-Jung Shin Senior Executive Vice President, Strategy & New Business Group 1965 Chang-Yong Ahn Senior Executive Vice President, Enterprise Business Group 1966 Seung-Phil Oh Senior Executive Vice President, Tech.
Removed
Of the four remaining outside directors, the terms of office for three outside directors (Hyun-Myung Pyo, Chung-Gu Kang and Eun-Jung Yeo) expired in March 2023, resulting in only one outside director (Yong-Hun Kim) remaining as the sole member of our board of directors. No additional directors were elected at our annual shareholders’ meeting held on March 31, 2023.
Added
Department 1969 Byung-Gwan Jang Senior Vice President, Win-Win Cooperation Department 1970 Kil-Sung Jung Senior Vice President, Corporate Strategy Department 1974 Seon-Il Jeong Senior Vice President, Southern Seoul Network O&M Headquarter 1968 Jae-Wook Jeong Senior Vice President, Busan/Gyeongnam Customer Sales Headquarter 1972 Seong-Eun Cho Senior Vice President, SW Development Unit 1971 Young-Sim Jin Senior Vice President, Human Resources Development Department 1972 66 Table of Contents Name Title and Responsibility Year of Birth Kang-Rim Choi Senior Vice President, Mobility Business Unit 1974 Woo-Hyung Choi Senior Vice President, Core Network O&M Unit 1970 Joon-Ki Choi Senior Vice President, AI Business Unit 1974 Ho-Chang Choi Senior Vice President, Group Human Resources Department 1971 Tae-Won Hur Senior Vice President, Compliance Office 1970 Tae-Jun Heo Senior Vice President, Enterprise Sales Unit 1970 Hae-Chon Hong Senior Vice President, Service Tech Lab 1972 Kyeng-Hee Hwang Senior Vice President, Daegu/Gyeongbuk Network O&M Headquarter 1970 Item 6.B.
Removed
In accordance with Articles 386 of the Commercial Code of Korea, a director whose term has expired or who has resigned may continue to have the rights and obligations of a director until a newly elected director takes office, if the number of directors remaining on the board would otherwise become fewer than three.
Added
Director Candidate Recommendation Committee The Director Candidate Recommendation Committee is comprised of all of our outside directors. The chairperson is Jong Soo Yoon.
Removed
Accordingly, the three outside directors (Hyun-Myung Pyo, Chung-Gu Kang and Eun-Jung Yeo) whose terms of office expired in March 2023 and Hyeon-Mo Ku, together with outside director Yong-Hun Kim (whose term expires in March 2025), are currently serving on our board of directors.
Added
Evaluation and Compensation Committee The Evaluation and Compensation Committee is comprised of four outside directors (Seongcheol Kim, YangHee Choi, Jong Soo Yoon and Seung Ah Theresa Cho). The chairperson is Seongcheol Kim.
Removed
In addition, starting March 31, 2023, Jong Ook Park, our head of corporate planning group, is serving as our acting chief executive officer while we search for a successor chief executive officer. On April 17, 2023, our board of directors created a task force that will review and recommend ways to enhance our corporate governance.
Added
Sustainability Management Committee The Sustainability Management Committee is comprised of four outside directors (YangHee Choi, Woo-Young Kwak, Jong Soo Yoon and Seongcheol Kim) and one inside director (Chang-Seok Seo). The chairperson is YangHee Choi.
Removed
The task force consists of (i) five independent corporate 62 Table of Contents governance experts selected by our board of directors from candidates recommended by our shareholders, (ii) our general counsel and (iii) our chief financial officer.
Added
Employee Stock Ownership and Benefits We operate an employee stock ownership plan (the “ESOP”) with the purpose of enabling our employees to build financial assets, enhancing corporate productivity, and fostering cooperative labor-management relations. Through the ESOP, our employee stock ownership association owned 3.95% of our issued shares as of December 31, 2023.
Removed
The board of directors completed a comprehensive review of candidates, taking into consideration their expertise in corporate governance, diversity of the task force membership and expertise in ESG management.
Added
The table below shows the ownership of our ordinary shares by our directors and executive officers as of April 1, 2024: Shareholders Number of Common Shares Owned Young Shub Kim 5,300 Chang-Seok Seo 15,511 Soo-Jung Shin 14,592 Chang-Yong Ahn 8,815 Hyeon-Seuk Lee 11,659 Choong-Rim Ko 2,446 Kwang-Dong Kim 866 Bong-Gyun Kim 9,196 Young-In Kim 6,798 Young-Ho Kim 8,254 Chae-Hee Kim 9,359 Hoon-Bae Kim 6,459 Hye-Byung Min 7,654 Hyo-Il Park 8,393 Jeong-Hyun Seo 1,452 Jin-Ho Yang 5,071 Kyung-Hwa Ok 9,915 Chang-Ho Yi 9,292 Min Jang 745 Hoon Cho 1,258 Jung-Yong Ji 11,724 Si-Hwan Choi 4,649 Chan-Ki Choi 11,592 Lee-Hwan Kang 36 Gang-Bon Koo 5,249 Jae-Hyung Koo 1,419 Hye-Jin Kwon 3,742 Hee-Keun Kwon 1,075 Mong-Ryong Kim 36 Byung-Kyun Kim 6,317 Young-Geol Kim 735 Yong-Nam Kim 86 Jae-Kwon Kim 7,992 Jun-Ho Kim 4,582 Jee-Hyeon Kim 586 Jin-Chul Kim 986 Hyeong-Rae Roh 262 Je-Hoon Myung 2,125 Sang-Ryong Moon 1,360 71 Table of Contents Shareholders Number of Common Shares Owned Jung-Ho Park 1,166 Soon-Min Bae 7,474 Ki-Hong Seo 1,023 Won-Je Sung 1,397 Je-Hyun Sung 647 Hoon-Joo Shin 3,211 Tae-Sung Oh 45 Yong-Kyu Yoo 8,031 Byoung-Hyu Yoon 157 Jin-Hyoun Youn 1,418 Mi-Hee Lee 6,131 Byeong-Moo Lee 169 Sang-Ho Lee 932 Seong-Hwan Yi 2,865 Sung-Kyu Lee 147 Young-Jun Lee 1,405 Jung-Woo Lee 265 Jong-Sik Lee 6,676 Bo-Heon Im 1,013 Seung-Hyouk Yim 5,642 Du-Seong Chang 831 Kil-Sung Jung 1,415 Seon-Il Jeong 307 Jae-Wook Jeong 9,632 Seong-Eun Cho 4,480 Young-Sim Jin 3,306 Kang-Rim Choi 6,825 Woo-Hyung Choi 147 Joon-Ki Choi 4,296 Ho-Chang Choi 3,128 Tae-Jun Heo 1,405 Hae-Chon Hong 147 Kyeng-Hee Hwang 253 Total 293,574 Share-based Payments We have granted share-based payments to our chief executive officer, inside directors, outside directors and executive officers.
Removed
The five independent corporate governance experts are (i) Jun-Ki Kim, professor at Seoul National University Graduate School of Public Administration and president of the Korean Society of Public Enterprises, (ii) Suk-Ho Sonu, professor emeritus at Hongik University and former chairman of the board of KB Financial Group, (iii) Myeong-Hyeon Cho, professor of business administration at Korea University and former head of the Korean Corporate Governance Service, (iv) Hyung-Hwan Joo, visiting professor at Sejong University and former minister of Trade, Industry and Energy and (v) Alicia Ogawa, assistant adjunct professor at Columbia University School of International and Public Affairs.
Removed
The task force, which we currently expect will operate until July 2023, will make recommendations regarding our corporate governance, including refinement of the selection process for our next chief executive officer and directors.
Removed
Our current directors are as follows: Name Position Director Since Date of Birth Expiration of Term of Office Inside Directors (1) Hyeon-Mo Ku Representative Director March 2020 January 13, 1964 N.A. (2) Outside Directors (1) Hyun-Myung Pyo Outside Director, Hankook Tire & Technology Co.,Ltd. March 2020 October 21, 1958 N.A.
Removed
(2) Chung-Gu Kang Professor, School of Electrical Engineering, Korea University March 2020 December 12, 1962 N.A. (2) Eun-Jung Yeo Professor, School of Business, Chung-Ang University March 2020 February 15, 1973 N.A.
Removed
(2) Term of office will continue until election of new directors at the shareholders’ meeting, following implementation of recommendations made by the task force, which was launched on April 17, 2023 by our board of directors to review and recommend ways to enhance our corporate governance.
Removed
Corporate Governance Committee The Corporate Governance Committee is comprised of four outside directors and one inside director, Hyun-Myung Pyo, Chung-Gu Kang, Eun-Jung Yeo, Yong-Hun Kim and Hyun-Mo Ku. The chairperson is Chung-Gu Kang.
Removed
The committee is also responsible for authorization of investigation and composition of a pool of internal and external Representative Director candidates and selection of the Representative Director candidates, who shall be further examined by the 66 Table of Contents Representative Director Candidate Examination Committee, pursuant to the examination criteria determined by our board of directors.
Removed
The committee members are elected by the board after the annual meeting, and the term of the committee members is one year.
Removed
Representative Director Candidate Examination Committee Operation of the Representative Director Candidate Examination Committee, which is expected to be comprised of all of our outside directors and one inside director, is temporarily suspended until the election of new directors at the shareholders’ meeting.
Removed
Such shareholders’ meeting will take place following implementation of recommendations made by the task force, which was launched on April 17, 2023 by our board of directors to review and recommend ways to enhance our corporate governance. The committee convenes when it becomes necessary to do so, and attendees are ascertained prior to such meeting.
Removed
No member of this committee shall become a candidate for the position of the Representative Director during his or her term as a member of the committee.
Removed
Outside Director Candidate Nominating Committee Operation of the Outside Director Candidate Nominating Committee is temporarily suspended until the election of new directors at the shareholders’ meeting.
Removed
The Outside Director Candidate Nominating Committee is expected to be comprised of all of our outside directors and one inside director, other than for election of an outside director resulting from the expiration of the term of the office, in which case such outside director whose term is expiring cannot be a member of the committee.
Removed
The committee convenes when it becomes necessary to do so, and attendees are ascertained prior to such meeting. The committee’s duties include reviewing the qualifications of potential candidates and proposing nominees to serve as outside directors on our board of directors to the shareholders at the general shareholders’ meeting.
Removed
The committee members’ terms expire immediately after the adjournment of the shareholders’ meeting where the outside directors are elected. Evaluation and Compensation Committee The Evaluation and Compensation Committee is currently comprised of three outside directors, Chung-Gu Kang, Hyun-Myung Pyo and Yong-Hun Kim. The chairperson is Hyun-Myung Pyo.
Removed
The committee members are elected by the board after the closing of the annual meeting, and the term of the committee members is one year. Management Committee Operation of the Management Committee, which requires two inside directors pursuant to Articles 393 of the Commercial Code of Korea, is temporarily suspended until our election of new inside directors.
Removed
Until such time, decisions of the Management Committee is made by the board of directors.
Removed
The committee’s duties include (i) the authorization of establishment and management of 67 Table of Contents branch offices, (ii) the disposal and sale of stocks of our subsidiaries, which have a market value between Won 15 billion and Won 30 billion, not including any sale for stocks with market value of Won 10 billion or more that involves a change of control, (iii) making investments between Won 50 billion to Won 100 billion in third parties, subject to certain exceptions, (iv) making investments between Won 15 billion to Won 30 billion in third parties for the acquisition of interest in excess of 30%, subject to certain exceptions, (v) the acquisition and disposal of real estate having market value between Won 15 billion to Won 30 billion, and (vi) the issuance of certain debt securities.
Removed
Employee Stock Ownership and Benefits We have an employee stock ownership association, which may purchase on behalf of its members up to 20.0% of any of our shares offered publicly in Korea. The employee stock ownership association owned 3.9% of our issued shares as of December 31, 2022.
Removed
The table below shows the ownership of our ordinary shares by our directors and executive officers as of April 17, 2023: Shareholders Number of Ordinary Shares Owned Hyeon-Mo Ku 36,571 Kyoung-Lim Yun 1,100 Gang-Cheol Lee 1,892 Dae-You Kim 1,979 Hee-Yol Yu 1,421 Hyun-Myung Pyo 11,633 Chung-Gu Kang 949 Eun-Jung Yeo 949 Kook-Hyun Kang 15,348 Jong-Ook Park 17,957 Byung-Sam Park 12,618 Chang-Seok Seo 13,914 Jae-Ho Song 11,461 Soo-Jung Shin 12,607 Hyun-Yok Sheen 13,320 Sang-Don Ahn 4,418 Bong-Gyun Kim 7,599 Young-Woo Kim 5,990 Young-Jin Kim 10,326 Yi-Han Kim 7,539 Chae-Hee Kim 7,574 Hoon-Bae Kim 5,201 Chang-Yong Ahn 6,996 Chi-Yong Ahn 11,102 Yul-Mo Yang 7,030 Kyung-Hwa Ok 7,930 Kong-Hwan Lee 1,905 Sun-Joo Lee 5,502 Chang-Ho Yi 7,307 70 Table of Contents Shareholders Number of Ordinary Shares Owned Hyeon-Seuk Lee 10,062 Jong-Taek Lim 8,677 Sang-Kwi Chang 10,381 Jung-Soo Jung 8,072 Hoon Cho 2,500 Jung-Yong Ji 10,127 Chan-Ki Choi 10,334 Jun Koh 81 Gang-Bon Koo 3,991 Jae-Hyung Koo 95 O-Ryung Kwon 36 Hye-Jin Kwon 2,145 Hee-Keun Kwon 127 Kwang-Dong Kim 875 Moo-Seong Kim 3,426 Byung-Kyun Kim 4,720 Bong-Ki Kim 6,192 Sang-Kyoon Kim 4,387 Seong-Il Kim 1,887 Young-Sool Kim 81 Young-Sik Kim 16 Young-In Kim 4,813 Jae-Kwon Kim 6,734 Jun-Ho Kim 3,594 Gil-Hyun Ryu 450 Pyeong Ryu 10,035 Sang-Ryong Moon 102 Sung-Uk Moon 4,104 Young-Il Moon 5,575 Hye-Byung Min 6,396 Sun-Ha Park 46 Yong-Man Park 6,178 Jeong-Jun Park 4,549 Jung-Ho Park 234 Jong-Ho Park 4,238 Hyo-Il Park 6,408 Soon-Min Bae 5,516 Seung-Yun Paik 2,856 Ki-Hong Seo 81 Young-Soo Seo 6,999 Jeong-Hyun Seo 194 Won-Je Sung 81 Hoon-Joo Shin 2,345 Jin-Ho Yang 3,813 Jae-Min Eom 4,003 Hun-Yong Oh 8,045 Heung-Jae Won 5,934 Yong-Kyu Yoo 6,434 Chang-Kyu Yoo 6,552 Kyeong-Mo Youn 55 Jin-Hyoun Youn 94 Mi-Hee Lee 5,265 Sang-Il Lee 6,511 Young-Jun Lee 81 Young-Jin Lee 81 Yong-Gyoo Lee 4,948 Jong-Sik Lee 4,691 Seung-Hyouk Yim 4,384 Jang-Mi Lim 1,973 Dae-Jin Jang 3,807 71 Table of Contents Shareholders Number of Ordinary Shares Owned Kil-Sung Jung 91 Jae-Wook Jeong 8,035 Seong-Eun Cho 3,614 Young-Sim Jin 2,048 Kang-Rim Choi 4,205 Sung-Wook Choi 3,403 Si-Hwan Choi 3,391 Joon-Ki Choi 3,038 Ja-Kyung Hahn 2,263 Suk-Zoon Huh 2,843 Tae-Jun Heo 81 Sung-Pil Hong 2,440 522,001 Stock Options We have not granted any stock options to our current directors and executive officers.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

2 edited+0 added−0 removed0 unchanged
Related Party Transactions We have engaged in various transactions with our subsidiaries and affiliated companies. See Note 36 of the notes to the Consolidated Financial Statements. We have not issued any guarantees in favor of our consolidated subsidiaries. Item 7.C. Interests of Experts and Counsel Not applicable. 72 Table of Contents Item 8. Financial Information
Item 7.B. Related Party Transactions We have engaged in various transactions with our subsidiaries and affiliated companies. See Note 35 of the notes to the Consolidated Financial Statements. We have not issued any guarantees in favor of our consolidated subsidiaries. Item 7.C. Interests of Experts and Counsel Not applicable. Item 8. Financial Information
Major Shareholders The following table sets forth certain information relating to the shareholders of our ordinary shares as of December 31, 2022: Shareholders Number of Shares Percent of Total Shares Issued National Pension Corporation 26,412,967 10.12 % Shinhan Financial Group Co., Ltd 14,557,393 5.58 % Silchester International Investors LLP 12,969,308 4.97 % Hyundai Motor Company 12,251,234 4.69 % Employee stock ownership association 10,088,264 3.86 % Hyundai Mobis Co., Ltd. 8,094,466 3.10 % Directors as a group 522,001 0.20 % Public 171,127,045 65.54 % KT Corporation (held in the form of treasury stock) 5,089,130 1.95 % Total issued shares 261,111,808 100.00 % Item 7.B.
Major Shareholders The following table sets forth certain information relating to the shareholders of our ordinary shares as of December 31, 2023: Shareholders Number of Shares Percent of Total Shares Issued National Pension Corporation 20,843,859 8.08 % Shinhan Financial Group Co., Ltd 14,532,028 5.64 % Silchester International Investors LLP 13,084,358 5.07 % Hyundai Motor Company 12,251,234 4.75 % Employee stock ownership association 10,184,803 3.95 % Hyundai Mobis Co., Ltd. 8,094,466 3.14 % Director as a group 15,867 0.01 % Public 167,406,807 64.92 % KT Corporation (held in the form of treasury stock) 11,447,338 4.44 % Total issued shares 257,860,760 100.00 % Major shareholders of our ordinary shares do not have voting rights that are different from those of our public shareholders.

Other KT 10-K year-over-year comparisons