South Korea’s incumbent fixed-line carrier KT Corp. (KTC) has expanded its foothold in the lucrative African telecom market with the commercial launch of its wireless broadband (“WiBro”) service in Kigali, the capital of Rwanda. WiBro is the South Korean version of the WiMax mobile broadband Internet technology.
 
KT has spent roughly $7.7 million to build the communication infrastructure that will connect major government agencies in Kigali. The carrier has collaborated with South Korea’s top electronics company Samsung and seven other companies on the WiBro project.
 
KT was awarded a $40 million contract by the government of Rwanda in Oct 2008 to construct a 2,300 km long high-speed fiber-optic cable connecting 30 districts throughout the country. Under this agreement, KT has committed to install a WiBro network in Kigali with 10,000 user capacity.
 
Currently, less than 10,000 people in Rwanda (out of a population of 10 million) are connected to the Internet. With the successful installation of the fiber-optic infrastructure the Government expects to provide high-speed Internet access to 2-4 million citizens within 2-3 years. Part of this project is funded by a $24 million line of credit provided to Rwanda by the World Bank.
 
KT has also clinched a contract from the Algerian government on Dec 6, 2009 to construct Internet network for government offices in the country. Separately, the company sealed a $26 million project to deploy mobile broadband network in the Algerian city of Sidi Abdela.
 
Following its merger with wireless subsidiary KT Freetel in June 2009, KT has become a full-service provider controlling approximately 90% and 31% of the South Korean fixed-line and wireless market. However, KT continues to experience greater than expected declines in its legacy wireline business due to intense competition in the highly matured domestic fixed-line market.
 
The company is losing market share to its archrival SK Telecom (SKM), which has acquired a controlling stake in SK Broadband, Korea’s leading broadband service provider. To counter competition, KT is currently seeking new avenues of growth with WiBro and IPTV services representing the key opportunities.
 
KT is currently leading the domestic WiBro market driven by its ability to amass more subscribers than its competition. The company’s revenues and subscriber base from the WiBro service increased 88% and 48% year over year, respectively, in the last quarter.
Read the full analyst report on “KTC”
Read the full analyst report on “SKM”
Zacks Investment Research