About KT

KT Corporation provides integrated telecommunications and platform services in Korea and internationally. In 2020, the company announced its plans to transform itself into a digital telecommunications platform company as it strives to further expand and strengthen its digital platforms including in relation to its business-to-business (B2B), media, contents and financial services. The company’s principal services include mobile voice and data telecommunications services based on 5G, 4G LTE and 3G W-CDMA technology; fixed-line services, which include fixed-line telephone services, including local, domestic long-distance and international long-distance services, Voice over Internet Protocol (VoIP) telephone services (i.e., provision of communication services over the Internet, and not over the fixed-line PSTN) and interconnection services to other telecommunications companies; broadband Internet access services; and 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 Estate); and sale of goods, primarily sale of handsets related to its mobile services and miscellaneous telecommunications equipment, as well as sale of residential units and commercial real estate developed by KT Estate. Leveraging the company’s dominant position in the fixed-line telephone services market and its established customer base in Korea, it has successfully pursued new growth opportunities and obtained strong market positions in each of its principal lines of business. In particular in fixed-line and VoIP telephone services, the company had approximately 12.6 million subscribers, consisting of 9.4 million PSTN subscribers and 3.2 million VoIP subscribers as of December 31, 2022. The company is a Korea’s largest broadband Internet access provider with approximately 9.7 million subscribers. Services Mobile Services The company provides mobile services based on 5G, 4G LTE, and 3G W-CDMA technology. The company has 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. The company commercially launched its next generation 5G mobile services in April 2019. The faster data transmission speed and lower latency of the 5G network enables the company to offer significantly enhanced wireless data transmission with faster access to multimedia contents. The company began offering 4G LTE services in the Seoul metropolitan area in January 2012, and it completed the expansion of its coverage nationwide in October 2012. 4G LTE technology enables data to be transmitted faster than 3G W-CDMA technology. The company competes with SK Telecom. As of December 31, 2022, the company had approximately 24.1 million subscribers. The company markets its mobile services primarily through independent exclusive dealers located throughout Korea. In addition to assisting new subscribers to activate mobile service and purchase handsets, authorized dealers are connected to its database and are able to assist customers with their account. Although most of these dealers sell exclusively the company’s products and services, sub-dealers hired by exclusive dealers may sell products and services offered by other mobile telecommunications service providers. Authorized dealers are entitled to a commission for each new subscriber registered, as well as ongoing commissions for the first five years based primarily on the subscriber’s monthly fee, usage charges and length of subscription. In response to the diversification of its customers’ demands and their increasing sophistication, the company has also selectively engaged in opportunities to expand its internal sales channels. The company operates customer plazas in key areas that engage in mobile service sales activities, as well as provide a one-stop shop for a wide range of other services and products that it offers. The company also operates a website to promote and advertise its products and services to the general public and in particular to younger customers who are more familiar with the Internet. The company conducts the screening process for new subscribers with great caution. A potential subscriber must meet all minimum credit criteria before receiving mobile service. The procedure includes checking the history of non-payment and credit information from banks and credit agencies such as the National Information and Credit Evaluation Corporation. Applicants who do not meet the minimum criteria can only subscribe to the mobile service by using a pre-paid card. Fixed-line Services The company provides a variety of fixed-line services, including various telephone services, broadband Internet access and data communication services. Fixed-line and VoIP Telephone Services The company utilizes its extensive nationwide telephone network to provide fixed-line telephone services, which consist of local, domestic long-distance, international long-distance services and land-to-mobile interconnection services. The company’s fixed-line telephone network includes exchanges, long-distance transmission equipment and fiber optic and copper cables. The company also provides VoIP telephone services that enable VoIP phone devices with broadband connection to make domestic and international calls. These fixed-line and VoIP telephone services accounted for 5.3% of the company’s operating revenue in 2022. The company’s domestic long-distance cable network is entirely made up of fiber optic cable and can carry both voice and data transmissions. Compared to conventional materials, such as coaxial cable, fiber optic cable provides significantly greater transmission capacity with less signal fading, thus requiring less frequent amplification. All of the company’s lines are connected to exchanges capable of handling digital signal technology. A principal limitation of the older analog technology is that applications other than voice communications, such as the transmission of text and computer data, require either separate networks or conversion equipment. Digital systems permit a range of voice, text and data applications to be transmitted simultaneously on the same network. Under the Telecommunications Business Act, the company is required to permit other service providers to interconnect to its fixed-line network. The principal users of this interconnection capacity include affiliates of SK Telecom and LG U+ (offering local, domestic long-distance and international long-distance services, and transmitting calls to and from their mobile networks). The company recognizes as land-to-mobile interconnection revenue the entire amount of the usage charge collected from the landline user and recognize as an expense the amount of interconnection charge paid to the mobile service provider. Broadband Internet Access Services Leveraging on the company’s nationwide network of 917,114 kilometers of fiber optic cables as of December 31, 2022, it has achieved a leading market position in the broadband Internet access market in Korea. The company’s principal Internet access services are offered under the KT Internet and KT GiGA Internet brand names. The company also offers 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. As of December 31, 2022, the company 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, the company had approximately 6.1 million KT WiFi subscribers as of such date. The company also sponsored approximately 103 thousand hot-spot zones nationwide for wireless connection as of December 31, 2022. The company’s KT Internet services primarily utilize ADSL technology, which is a technology that converts existing copper twisted-pair telephone lines into access paths for multimedia and high-speed data communications. ADSL transforms the existing public telephone network from one limited to voice, text and low-resolution graphics to a system capable of bringing multimedia to subscriber premises without new cabling. The asymmetric design optimizes the bandwidth by maximizing the downstream speed for downloading information from the Internet. The company is continually upgrading its broadband network to enable better FTTH connection, which further enhances data transmission speed and connection quality. 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. FTTH enables the company to deliver enhanced services that require high bandwidth, such as IPTV, and other digital media contents with higher stability. Data Communication Services The company’s data communication services involve offering exclusive lines that allow point-to-point connection for voice and data traffic between two or more geographically separate points. As of December 31, 2022, the company leased 306,906 lines to domestic and international businesses. The company provides dedicated and secure broadband Internet connection service to institutional customers under the Kornet brand name. The company provides high-speed connection to its Internet backbone network, as well as rent to its customers and install necessary routers to ensure reliable Internet connection and enhanced security. The company provides discount rates to qualified customers, including small- and medium-sized enterprises, businesses engaging in Internet access services and government agencies. Through its wholly owned subsidiary KT Sat Co., Ltd., the company also provides transponder leasing, broadcasting, video distribution and data communication services through satellites periodically launched by it. The company also leases satellite capacity from other satellite operators to offer satellite services to both domestic and international customers. Media and Content Services The company offers a variety of media and content services, including IPTV, satellite TV, e-commerce services, digital music services, online advertising consulting services, web comics and novels services and media content creation and distribution services. Media and content services accounted for 11.8% of the company’s operating revenue in 2022. In addition, in September 2021, KT Skylife, in which the company 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. IPTV The company offers high definition video-on-demand and real-time broadcasting and ultra-high-definition (UHD) IPTV services under the brand name Genie tv. The company’s 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. Through a digital set-top box that the company rents to its customers, its 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. As part of its IPTV services, the company also operates its OTT platform under the brand name Seezn. The company is also leveraging its big data analytics capabilities and artificial intelligence technology to further enhance its IPTV services. The company offers artificial intelligence-based GiGA genie service to its IPTV subscribers through a voice recognition speaker that also serves as the IPTV’s set-top box, which enables it to take advantage of big data analytics and enhance its product offerings, as well as operate a more effective automated customer service center. Satellite TV The company offers satellite TV services with features similar to its IPTV services through KT Skylife, in which it held a 49.99% interest as of December 31, 2022. As of December 31, 2022, the company had approximately 3.7 million subscribers for its satellite TV services, including Genie tv Skylife combination services. Digital Music Services The company operates Genie, its platform for music contents, as well as subscription-based access to digital music streaming and downloading services, through its subsidiary Genie Music Corporation, in which KT Studio Genie Co., Ltd. (KT Studio Genie) held a 36.0% interest as of December 31, 2022. Genie offers a broad selection of Korean and international music, both in streaming and download formats, as well as a variety of features designed to enhance the experience of users. In addition, the company provides a variety of original audio contents through Genie, including audio books and novels. The company offers Genie services in various formats that are specifically designed for mobile and other connected devices, PCs, TVs and automobiles. Genie Music Corporation also provides online streaming of live music performances through STAYG platform. E-commerce Services In July 2021, the company merged KTH Co., Ltd. (KTH) and KT mhows Co., Ltd. (KT mhows) to create KT alpha Co., Ltd. (KT alpha) in which it held a 70.5% interest as of December 31, 2022. Through KT alpha, the company offers TV home shopping and digital content distribution services. Furthermore, the company offers a variety of consumer products and food items on its IPTV and satellite TV platforms. The company also secures rights to digital entertainment contents such as movies, animations and TV series and distribute such contents to other media platforms. The company also offers mobile gift card services through KT alpha under the brand name giftishow and other mobile advertising solutions to corporate customers. Online Advertising Consulting Services The company provides strategic advertising consulting services for the online advertising industry through its subsidiaries Nasmedia, Co., Ltd. (Nasmedia), in which it held a 43.0% interest as of December 31, 2022, and PlayD Co., Ltd. (PlayD), in which Nasmedia and it in the aggregate held a 70.4% interest as of December 31, 2022. The company provides a variety of services for advertising agencies, online media companies and their clients, ranging from market studies to advertising campaign planning, as well as analysis of such campaign’s effectiveness. The company’s proprietary data analysis tools enable it to define specific advertising targets for the clients, as well as to evaluate the effectiveness of various marketing channels to provide an optimal advertising campaign strategy. Web Comics and Novels Services StoryWiz, which was established in 2020 and in which KT Studio Genie held a 100.0% interest as of December 31, 2022, specializes in producing and distributing web comics and web novels as well as producing original video contents using the company’s intellectual property rights. StoryWiz operates two platforms, Blice for web novels and KTOON for web comics. Through Blice, many writers distribute their web novels, and the company supports them in various ways, including holding web novel contests as well as providing funding for new and promising writers. KTOON offers a diverse selection of web comics across various genres, such as comedy, romance, action and fantasy. The company strives to further expand its intellectual property to movies, dramas and web comics. Media Content Creation and Distribution Services The company engages in media content creation and distribution services through KT Studio Genie, in which it held a 90.9% interest as of December 31, 2022. KT Studio Genie produces and sells a wide range of media contents, including multi-episode drama series, to traditional media channels and OTT services. KT Studio Genie also serves as a distribution agency of media contents produced by third-parties. Financial Services As part of its overall strategy, the company selectively pursues new business opportunities in the financial sector that complement its telecommunications business. In October 2011, the company acquired a controlling interest in BC Card, a leading credit card solutions provider in Korea in which it held a 69.5% interest as of December 31, 2022. As of such date, BC Card held a 33.7% interest in K Bank, an Internet-only bank that began its commercial operations in April 2017. BC Card Through BC Card, the company offers various credit card processing and related financial services. The company operates the largest merchant payment network in Korea as measured by transaction volume. The company also provides outsourcing services to a wide range of financial institutions for their credit card and check card business operations, including production and delivery of new credit cards, the preparation of monthly statements, management of merchants and other ancillary services. The company also offers its services in select countries in Asia, including China, Indonesia and Vietnam. A minority interest in BC Card is owned by various financial institutions in Korea, many of which are member companies that enter into co-branding agreements with the company and issue credit cards and check cards under the BC Card brand. The company’s member companies that issue co-branded credit or check cards include Woori Card, NH Card, Industrial Bank of Korea and KB Kookmin Card. The company engages in joint marketing efforts to promote cards issued pursuant to its co-branding agreements. As of December 31, 2022, the company had approximately 22 million credit cards and approximately 27 million check cards issued by its member companies under the BC Card brand. The company also provides ancillary outsourcing services to various other banks, securities companies and financial institutions that do not issue co-branded cards with it. The company charges commissions for merchant fees paid by merchants to credit card companies for processing transactions. Merchant fees vary depending on the type of merchant and the total transaction amounts generated by the merchant. In addition to merchant fees, the company receives commissions related to nominal interchange fees for international card transactions, as well as service fees from financial institutions that outsource their credit card business operations. K Bank K Bank is one of three Internet-only banks in Korea. Internet-only banks generally operate without branches and conduct their operations primarily through electronic means, which enable them to minimize costs and offer customers higher interest rates on deposits as well as lower lending rates. As of December 31, 2022, K Bank had approximately 849 million account holders. Other shareholders of K Bank include Woori Bank, BCC Kingpin, LLC, Khan SS L.P., JS Shinhan Partners LCC, NH Investment & Securities, Co., Ltd., GS Retail Co., Ltd. and Hanwha Life Insurance Co., Ltd. Other Businesses The company also engages in various business activities that extend beyond telecommunications and financial services, including real estate development. The company’s other businesses accounted for 14.6% of its operating revenue in 2022. Information Technology and Network Services The company offers a broad array of information technology and network services to its corporate and other institutional customers. The company’s range of systems integration services includes consulting, designing, building and maintaining systems and communication networks that satisfy the individual needs of its customers in the public and private sectors. The company also provides one-stop global ICT services specifically targeting multinational corporations and international agencies, which range from ICT infrastructure design and buildout to operational solutions that address their multinational needs. In addition, the company provides consulting services to optimize energy consumption by corporate and other institutional customers, as well as security surveillance services ranging from buildout of monitoring systems to dispatching of security personnel. The company also offers a wide range of KT DX platform services for its 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. Ltd., a subsidiary in which the company held a 57.6% interest as of December 31, 2022, acquired a 100.0% interest in Epsilon Global Communications Pte. Ltd. (Epsilon). Epsilon is a data service provider that provides data connectivity services to corporate customers around the world. Information Data Center and Cloud Services The company operates Internet data centers located throughout Korea and provide a wide range of computing services to companies that need servers, storage and leased lines. In April 2022, the company completed a vertical spin-off of its Internet data centers business and established a wholly-owned subsidiary, kt cloud Co., Ltd., (kt cloud) to more effectively promote the growth of its Internet data center and cloud operations. 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 colocation services (provision of infrastructure services necessary for clients’ server operations), interconnection services (direct private connections of counterparties, including global cloud service providers), DBO (design, build and operation) services for clients’ data centers and 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 customized cloud infrastructure services for government institutions and major enterprises, 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 marketplace platform services that enable users to access SaaS (software as a solution) services of various partners of kt cloud. Real Estate Development The company owns land and real estate in various locations throughout Korea. Technological developments have enhanced the coverage area of telecommunications facilities, which enable it to better utilize the company’s existing land and other real estate holdings. Through its wholly-owned subsidiary KT Estate, the company engages in the planning and development of residential complexes and commercial buildings on its unused sites, as well as in the leasing of buildings it owns. Under the Remark VILL brand, the company also leases units in residential complexes developed by it in urban areas, such as Seoul and Busan. Sale of Goods The company recognizes revenue related to sale of goods, primarily handsets sold to subscribers of its 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. The company purchases handsets primarily from Samsung Electronics, Apple and LG Electronics. Sale of goods accounted for 12.9% of the company’s operating revenue in 2022. Rates The company offers various service plans for its mobile, fixed-line and media and content services. For its individual customers, the company offers rate plans targeting specific customer segments that aim to address their individual needs. The company also offers bundled rate plans that provide discounts for subscribing to a combination of its services, as well as family plans that provide discounts for multiple line subscriptions under one household. For many of its services, the company provides additional discounts for customers who commit to extended subscription periods. The company provides an online tool designed to help its customers select a plan that is customized to their needs. The company’s service rates are typically charged on a monthly basis and are due at the end of the month. The company’s customers are also assessed a 10.0% VAT, which is included in the monthly subscription rates that it charges to its customers. The company’s rates for business customers are tailored to the specific needs of the business customers. Mobile Services The company offers a wide range of mobile service plans that vary depending, among others, on mobile technology (5G, LTE or W-CDMA), mobile device (mobile phone, tablet or other WiFi device) and age category, under which it offers plans based on usage volume for voice calling, data transmission and text messaging, as well as addition of value-added services. The company’s premium packages offer unlimited voice calling, data transmission and text messaging, as well as additional media content. The company also provides plans specially designed for elderly and young subscribers, as well as special discounts to subscribers with physical disabilities or on welfare programs. For mobile service plans that offer unlimited data transmission, the company typically decelerates data transmission speeds after a subscriber reaches a set data usage threshold. For usage-based data transmission plans, the company’s subscribers are typically charged additional data transmission fees if usage exceeds the applicable quota. However, for many of its plans, the company provides its subscribers the ability to carry over unused data transmission quota of the current month to the following month, or borrow quota allocated to the following month if the current monthly quota have been exhausted. The company also subsidizes the purchase of new handsets by its qualifying subscribers who agree to use its service for a predetermined service period and purchases handsets on an installment basis. 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. In addition to its mobile service plans, the company offers 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. The company also offers fixed-rate international roaming plans that provide data roaming services in various countries around the world, which may be scheduled or automatically activated upon access from an overseas location. Fixed-line Services Fixed-line Telephone Services Local and Domestic Long-Distance: The company’s standard usage-based fixed-line telephone service plan consists of a base monthly rate of won5,720 and usage fees for local and domestic long-distance calls, as well as calls to VoIP phones and mobile phones. The company charges won42.9 per three-minute increment for local calls, won15.95 per ten second increment for domestic long-distance calls, won53.9 per three-minute increment for calls to VoIP phones and won15.95 per ten second increment for calls to mobile phones. All usage-based fees are subject to discounts during certain low-usage periods of the day and on national holidays. The company also offers a flat rate fixed-line telephone service plan with a base monthly rate of won12,100 (or won8,470 for a three year subscription commitment) that includes 50 hours of local and domestic long-distance calls and calls to VoIP phones. Calls to mobile phones are not included in the free 50 hours, and it charges won14.50 per ten second increment for such calls. For a premium plan with a base monthly fee of won16,500 (or won11,550 for a three year subscription commitment), calls to KT mobile subscribers are included as part of the free 50 hours. International Long-Distance: For its international long-distance services, fees for out-going calls vary based on the destination country and whether the user has subscribed to an international long-distance services plan, which can be customized based on the type of telecommunication device (mobile or fixed-line), destination countries and other customer preferences. Usage is typically measured in one-second increments. The company pays a settlement fee to the relevant foreign carrier for such calls under a bilateral agreement with the foreign carrier. For incoming calls (including calls placed in Korea by customers of the foreign carriers for home country direct-dial services), the company receives settlement payments from the relevant foreign carrier at the applicable settlement rate specified under the relevant bilateral agreement. Land-to-Mobile Interconnection: The company provides other telecommunications service providers, including mobile operators and other fixed-line operators, interconnection to its fixed-line network. For a call initiated by a landline user to a mobile service subscriber, it collects from the landline user the land-to-mobile usage charge and remit to the mobile service provider a land-to-mobile interconnection charge. The company recognizes as land-to-mobile interconnection revenue the entire amount of the usage charge collected from the landline user and recognize as expense the amount of interconnection charge paid to the mobile service provider. The MSIT periodically issues orders setting the interconnection charge calculation method applicable to interconnections with mobile service providers. The MSIT determines the land to mobile interconnection charge by calculating the long run incremental cost of mobile service providers, taking into consideration technology development and future expected costs. VoIP Telephone Services The company’s VoIP telephone services offer rate plans that charge generally lower base monthly rates and usage-based fees compared to its fixed-line telephone services. For its subscribers who are initiating VoIP telephone services, the company charges a one-time nonrefundable activation fee of won27,500, which may be waived if the subscriber opts for self-installation. Broadband Internet Access Services The company offers various broadband Internet access service plans based on data transmission speed and data usage thresholds and offer discounts based on length of commitment that are applied for periods of up to four years. Most of its plans also include WiFi routers that enable the company’s subscribers to create a WiFi environment in their residences. The company charges its customers a one-time installation fee per site of won27,500. The company also charges a modem rental fee ranging from won4,400 to won22,000 per year that varies depending on the type of model required for the service plan, which is also subject to discounts and waivers based on length of subscription commitment period. Media and Content Services The company’s IPTV and satellite TV service plans vary based on the package of media channels provided, availability of UHD channels and the inclusion of other value-added services. In addition to monthly rates for subscription, the company charges a one-time installation fee of won27,500 per set-top box and a digital set-top box rental fee ranging from won7,700 to won9,900 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. The company also offers various video-on-demand contents for streaming and downloading for a fee. In addition to offering service plans that enable TV viewing at home, as well as access on mobile devices, the company provides separate mobile TV plans at lower rates that are specifically designed for mobile devices. Bundled Rate Plans In order to provide its customers with additional value and further promote its marketing efforts to cross sell its various services, the company provides its customers with various bundled rate plans that provide discounts for subscribing to a combination of its services, as well as family plans that provide discounts for multiple line subscriptions under one household. The majority of the company’s subscribers participate in its bundled rate plans. Fixed-line Packages The company offers substantial discounts to customers who subscribe to two or more of its fixed-line and TV services consisting of fixed-line telephone, VoIP telephone, broadband Internet access, IPTV and satellite TV services. Subscription payments collected pursuant to its bundled rate plans are allocated to each service. Mobile Packages For its mobile services, the company offers family plans that provide monthly discounts of up to won11,000 per mobile phone subscription. Up to five members of a household may participate in the company’s family plans. Fixed-line and Mobile Combination Packages The company also offers various bundled rate plans that combine its fixed-line and TV services with mobile services, for both households and single subscribers. For households that subscribe to broadband Internet access as well as mobile services, its 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). Customers and Customer Billing The company typically charges residential subscribers and business subscribers similar rates for services provided. On a case-by-case basis, the company also provides discount rates for some of its high-volume business subscribers. The company bill all of its customers on a monthly basis. The company’s customers may make payment at either payment points such as local post offices, banks or its service offices, through a direct-debit service that automatically deducts the monthly payment from a subscriber’s designated bank account, or through a direct-charge service that automatically charges the monthly payment to a subscriber’s designated credit card account. Approximately 88.8% of the company’s subscribers as of December 31, 2022, pay through the direct-debit service. Accounts of subscribers who fail to pay the company’s invoice are transferred to a collection agency, which sends out a notice of payment. Credit Card Business Through BC Card in which the company held a 69.5% interest as of December 31, 2022, it offers various credit card processing and related financial services. BC Card is regulated and supervised as a Specialized Credit Financial Business (SCFB), as defined under the Specialized Credit Financial Businesses Act of Korea (SCFBA). The SCFBA subjects SCFB companies to licensing (for credit card businesses) and registration (for leasing, installment finance or new technology finance businesses) requirements and provides guidance and restrictions regarding capital adequacy, liquidity ratios, loans to major shareholders, reporting and other matters relating to the supervision of SCFB companies. The SCFBA delegates regulatory authority over SCFB companies to the FSC and Financial Supervisory Service (FSS). The FSC has the authority to suspend the operations of an SCFB company for up to six months for non-compliance with certain regulations under the SCFBA and issue certain administrative orders. Insurance The company provides 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 its servers or on their servers located at its data centers. Competition The company primarily competes with SK Telecom Co., Ltd. (SK Telecom) and LG Uplus Corp. (LG U+) (including their affiliates). In the financial services market, the company’s credit and check cards issued under the BC Card brand pursuant to co-brand agreements with member companies compete principally with cards issued by other credit card companies in Korea with their own merchant payment networks, such as Shinhan Card, Hyundai Card, and Samsung Card. The company’s member companies that issue co-branded credit or check cards include Woori Card, NH Card, Industrial Bank of Korea, and KB Kookmin Card. Research and Development For the year ended December 31, 2022, the company’s total expenditures on R&D were won231 billion. Patents and Licensed Technology The company owns or has licenses to various patents and trademarks in Korea and overseas, and has applications for patents pending in Korea and other select countries such as the United States, Europe, China and Japan. A majority of the company’s patents registered in Korea and overseas relate to its wireless and fixed-line telecommunications, media services and technologies related to IoT and artificial intelligence. In addition, the company operates several research and development (R&D) laboratories to develop latest technology and additional platforms. The company licenses its intellectual property rights to third parties in return for periodic royal payments. History KT Corporation was founded in 1981 under the Korea Telecom Act.