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KT slips into red after job cuts

KTF has about 30 percent of South Korea's mobile market.
KTF has about 30 percent of South Korea's mobile market.

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SEOUL, South Korea (Reuters) -- KT Corp, South Korea's top fixed-line and broadband telecoms operator, has reported its first quarterly loss in seven years, mainly because of hefty severance payments after cutting 5,500 jobs.

The third-quarter loss of 496.5 billion won ($421.4 million), released Friday, included one-off severance expenses of 825 billion won.

It compared with a net profit of 305.7 billion won in the same period last year and was bigger than analysts' forecast of a 319.5 billion won shortfall.

KT, under pressure from stagnant sales and fierce rivalry, shed 12.6 percent of its workforce last month in an effort to save 330 billion won ($280 million) a year.

Analysts say the company lacks a driver for fresh earnings growth as customers migrate to mobile phones and South Korea's broadband Internet market -- per capita, the world's biggest -- becomes increasingly saturated.

The company has more than 90 percent of the fixed-line market for local calls and carries about half of international calls. It also has half of the broadband market, and 31 percent of the mobile market through KTF Corp, the country's second-largest wireless carrier.

Shares in KT, the country's fourth-biggest stock with a market value of $11.8 billion, closed 3.08 percent lower Friday at 47,250 won. The broader market lost half a percent.

The stock has fallen three percent so far this year, while the wider market has surged over 20 percent.

KT competes with Hanaro Telecom and Korea Thrunet in the broadband Internet market and with Dacom Corp for fixed-line services.

Sales fell slightly to 2.79 trillion won in the quarter ended on September 30, from a revised 2.80 trillion won a year ago. Its operating loss totalled 481.9 billion won, against a 423.8 billion won profit.

Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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