Fitch lifts KT view to positive

Fitch Ratings said it revised the outlook on KT Corp. to positive from stable and affirmed KT's senior unsecured rating at A-.

"The revision in the outlook follows better-than-anticipated strengthening of its financial profile since its debt-funded privatization in 2002 - particularly in H105. This is due to management's commitment to reduce total debt and to sustain or further strengthen operating margins," said Jonathan Cornish, Fitch's regional head of TMT in Asia-Pacific.

"Moreover, the outlook reflects Fitch's expectation of further improvement in KT's financial profile over the coming 18 months on account of the group's greater focus on managing market share and boosting revenue per user while preserving margins and cash flow."

However, achieving management's objectives will not be without its challenges as the industry is characterized by its technologically advanced nature with high investment requirements and acute competition that, in part, stems from the asymmetric regulatory approach adopted by the regulators such as the Ministry of Information and Communication, the agency noted.

In this regard, KT has been disadvantaged by the ministry's intent to curb its dominance in fixed-line services, including in broadband where KT was recently designated as dominant, Fitch added.

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