KT sees iPhone impact, to offer new phones

Opposition Democratic Party lawmaker Seiji Ohsaka holds two mobile phones that he uses to make Twitter posts at his office in Tokyo June 29, 2009.

SEOUL (Reuters) - South Korea's KT Corp (030200.KS), which is holding talks to sell Apple's (AAPL.O) iPhone in South Korea, plans to introduce 3G smartphones supporting WiFi and mobile WiMAX from Samsung Electronics (005930.KS) and LG Electronics (066570.KS), its chief strategy officer told Reuters.

Although the date and other details for the iPhone's South Korean debut had yet to be set, Apple's blockbuster handset would likely create its own market segment among the country's smartphone users and may help jumpstart healthy competition, Pyo Hyun-myung said in an interview on Monday.

No foreign maker had so far achieved notable success in South Korea, home turf for the world's No.2 and No.3 handset makers Samsung and LG.

"The iPhone will create its own (market) segment ... among those who want an intuitive user interface and mobile Web access," Pyo said.

"Importing foreign cars helped Hyundai improve, and the iPhone will do the same" (for Korean handset makers).

The country's technology ventures and content providers for mobile applications will also get a boost from iPhone, he said.

Smartphones are also set to change the way Korean mobile operators compete in the saturated home market, where 97 percent of the population has a mobile phone.

To boost mobile data use, KT is revamping its service offerings to enable mobile calls and data services on cheaper WiFi and WiMAX networks, which could hurt its traditional 3G revenue initially, but could eventually grow into a new revenue source.

The new phones from Samsung and LG, to be available from late November, could support those services, he said.

"Consumers are generally happy with voice services, but they have lots of complaints regarding mobile data," Pyo said. "Those new handsets will become the mainstream."

KT, South Korea's top fixed-line operator and No.2 mobile carrier, expects government-initiated mobile tariff cuts, announced on Sunday, to have a limited impact on its revenue, according to Pyo.

He said KT was taking steps to preserve its operating profit next year as dwindling fixed-line business and discounts from service bundling weighed on sales.

Before Sunday's tariff measures, analysts expected KT's 2010 operating profit and revenue to grow slightly from 2009, according to earnings tracker IBES.

KT is more aggressively marketing Internet telephony -- a departure from its previous stance of protecting the traditional landline market, where it used to have a monopoly -- and is opening up the Internet TV platform.

"Those convergence services won't be a cash cow anytime soon and we will somehow need to maintain profitability to continue to invest for the future," said Pyo.

For its overseas business, Pyo said KT continued to seek opportunities in developing markets but admitted that entering established markets as a telecom operator would be difficult.

Leading Korean mobile operator SK Telecom (017670.KS) said on Monday that it was selling back its $1.3 billion stake in China Unicom (0762.HK) as prospects darkened for its Chinese business ambition.

Pyo also said KT was willing to expand its WiMAX network, currently limited to Seoul and nearby areas, to the whole nation once the government finalized its support plan to boost mobile technology.

Pyo said KT was working to participate in the government-led "smart grid business" project, and hoped to enter global markets for the telecom-based power distribution service with partners such as Korea Electric Power Corp (015760.KS).

(Editing by Chris Lewis)