KOREA: KT buys Uzbek telecom companies

With 86 percent of Koreans using high-speed Internet access, Korea's largest fixed-line and Internet service operator looks overseas for new markets

The Korea Herald
Wednesday, October 31, 2007

By Lee Sun-young

KT Corp., Korea's largest fixed-line and internet service operator, announced yesterday that it has bought controlling stakes in two Uzbek telecommunication firms and plans to start wireless broadband internet services in 12 major cities, including the capital Tashkent, from next year.

KT secured a 51 percent stake in Uzbek fixed-line operator East Telecom and a 60 percent stake in WiMAX provider Super-iMAX.

Utilizing the networks and facilities of the two firms, KT is looking to roll out a range of internet-based businesses in the country, including portal sites, internet protocol TV services and internet data centers.

The Central Asian acquisitions are part of KT's efforts to expand overseas as growth from its home market slows.

KT reported last week that profits declined for a third consecutive time in the third quarter. Third-quarter net income fell 2.4 percent to 310.1 billion won ($341 million) from 317.6 billion won a year earlier.

With 86 percent of Koreans already using high-speed internet services, KT has been focusing on new services such as Web-based television to spur earnings growth.

"The deals give KT an upward momentum in its foray into Central Asia -- one of its strategic markets overseas," it added.

Uzbekistan has poor telecommunication infrastructure but boasts an immense upside potential, analysts said.

Only about 60,000 of an estimated population of 28 million subscribe to internet services. Many are still using dial-up internet connections. Demand for broadband internet and landline services for corporate clients is already surging, they said.

KT has a foothold in Russia's Far East through a mobile service subsidiary called New Telecom Co. Last year, NTC registered $80 million in sales and $30 million in net profit. Its customer base reached 1 million as of July this year.

"I am confident that if KT can effectively utilize its know-how in the home market, we can have more success stories in global markets," said KT CEO Nam Joong-soo.

Date Posted: 10/31/2007