[Satellite News 01-31-11] South Korean operator Korea Telecom (KT) is hoping to attract more attention to the country’s market with its commercial high-definition digital imagery and 3-D programming services offering following the December launch of its Olleh-1 satellite.
    Olleh-1 will take over primary services formerly provided by KT’s 11-year-old Mugunghwa-3 satellite, which now will be used as backup.
    KT Director of Satellite Business Kwon Yeong-Mo spoke with Satellite News about what the satellite will offer and how the company hopes to build a reputation as an Asian market leader over the next 15 years.

Satellite News: What role will Olleh-1 play in your strategy for the Korean market?

Yeong-Mo: We’ve launched four broadcast and communication satellites over the past 16 years, including Olleh-1. Before the new satellite, we only had one in operation. Olleh-1 enables us to provide much higher-quality commercialized services with the ability to continuously enhance them. This is our first step in our long-term plans to be a global satellite service operator.

Satellite News: What areas are you targeting for expansion, and how do you plan on penetrating these new markets?

Yeong-Mo: We would first like to extend our presence in other Asian countries. By 2013, we hope to establish partnerships with other international satellite companies that will provide us access to the Middle East and African regions. We hope to build momentum in those markets by using some of the momentum we’ve generated in the Korean smartphone market. In Korea, we’re the exclusive supplier of Apple iPhones. We understand that we would not enjoy that status in the other international markets, but we’re hoping that we can provide an attractive offering and a variety of services. The partnerships are what we’re primarily focused on right now, and we hope to announce some new agreements within the next few months.

Satellite News: KT reported a profit in its fourth quarter after steep losses in 2009. What were some of the factors involved in the turnaround?

Yeong-Mo: Most of our difficulties came from unexpectedly high labor costs and a decline in our fixed-line services. The surge in iPhone sales certainly helped. Our handset sales increased 54 percent last year, bringing in almost $1 billion to the company. We also implemented per-second voice call billing. All of these factors helped us generate $94.3 million in profits by the end of the year after spending the last 12 months trying to cut our expenses. Unfortunately, this meant job cuts and early retirement programs, but the fact that we’re now generating a profit after almost $400 million in losses in 2009 is a huge confidence boost for us. We’re now looking to build off of that and start growing again.
 

Satellite News: Do you expect that handset sales will continue to serve as your primary growth driver?

Yeong-Mo: Definitely. It’s important to understand that we rode the wave of a Korean market boom last year with the introduction of the iPhone to South Korea. Obviously, we expect to see increased sales of the iPhone in 2011 as Korean customers continue to flock to that product. We also believe that we will meet analysts’ expectations for increased wireless data traffic. The iPhone accounts for two-thirds of our total smartphone subscriber base, and when you have a flagship product that strong, you make up for lost ground. That lost ground for us was the fact that we had one operational satellite, but even with that one satellite, we still increased our wireless data sales by 30 percent over last year. Olleh-1 will help us build on this trend as well as help us rebuild our product portfolio so that we’re not as dependent on one market.

Satellite News: What are the next steps in building on that momentum?

Yeong-Mo: By the end of 2011, we hope to launch about 25 new handset and about seven tablet devices, such as the iPad, to the market. We are hoping this will further the distance between our competitors. We’re slowly gaining a larger and larger share of the Korean data and smartphone market, and we’re seeing our competitors trying to keep up with us instead of the other way around. The most valuable aspect of the Korean market is that once you establish that momentum with consumers, you can find yourself at the front of the pack very quickly. That is why we must continue to keep up our pace and attract positive attention in our efforts to form outside partnerships.