UPDATE 1-KT cuts '08 profit targets on fixed-line decline

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SEOUL, July 10 (Reuters) - South Korea's KT Corp cut its 2008 earnings targets on Thursday on its shrinking fixed-line business and said it would take action to counter competition, raising concerns of a price war in a sluggish market.

KT (030200.KS), the country's biggest fixed-line and broadband operator, said in a filing to the Korea Exchange that it had lowered its operating profit target by 20 percent to 1.2 trillion won ($1.21 billion) from a previously stated goal of 1.5 trillion won.

The company also cut its earnings before interest, tax, depreciation and amortisation (EBITDA) target to 3.3 trillion won from 3.6 trillion won, and slightly lowered its 2008 revenue target to 11.9 trillion won.

"The decline in fixed-line phone calls has been faster than earlier expected," KT spokeswoman Alice Park told Reuters.

"Given the weak South Korean economy, KT has decided to step up our response to competition," Park said, without elaborating.

KT, which has about 90 percent of South Korea's fixed-line market and 44 percent of the country's broadband customers, has seen profits slide as it faces increasing competition from smaller rivals.

KT hopes to find new revenue sources in high-speed mobile Internet Wibro and Internet Protocol TV (IPTV), but the market has yet to expand substantially.

The country's top mobile operator, SK Telecom Co (017670.KS), took a controlling stake in No. 2 broadband operator Hanarotelecom Inc (033630.KQ) and is getting ready to offer competitive packaged services that combine telephone, mobile, broadband and Internet TV.

KT shares were down 0.43 percent to 46,550 won by 0048 GMT, in line with the wider market's 0.37 percent loss. ($1=994.7 Won) (Reporting by Cheon Jong-woo and Rhee So-eui; Editing by Marie-France Han and Jonathan Hopfner)