1. KT ProprietaryIDATE Conference 20021 Elements Contributing to Korea’s Leadership in Broadband November 21, 2002 Hansuk Kim VP/Head, Management Research Lab, KT President, Pacific Telecommunications Council The Value Networking Company

2. KT ProprietaryIDATE Conference 20022 Agenda Korean Broadband Overview Korean Broadband Overview Lessons Learned Lessons Learned Future Challenges Future Challenges

3. KT ProprietaryIDATE Conference 20023 Agenda Korean Broadband Overview Korean Broadband Overview Lessons Learned Lessons Learned Future Challenges Future Challenges

4. KT ProprietaryIDATE Conference 20024 Korean Broadband Subscribers Million 10 8 6 4 Dec. ‘98 KT Hanaro Thrunet Others Dec. ‘99 Dec. ‘00 Dec. ‘01 Sep. ‘02 2 Market share (Sept. 2002 ) KT: 45.3% Hanaro: 28.7% Thrunet: 13.0% Others: 13.0%

5. KT ProprietaryIDATE Conference 20025 Driving KT’s Revenue Growth Subscriber & EBITDA Margin -13 % 1.7M 5M 52 % 3.8M 39 % 200020012002 E Number of Subscribers Broadband Revenue Growth ( Non-consolidated, KRW trillion ) 0.25 0.5 1.6 2002E 20001H 2001 2001 1.1 CAGR 111%

6. KT ProprietaryIDATE Conference 20026 KT Revenues 12.9% 64.7% 84.3% High-speed internet service rising rapidly Dramatic decrease in POTS

7. KT ProprietaryIDATE Conference 20027 Technology Employed June 2001 September 2002 DSLCable LANBWLL/Satellite53.8% 34.5% 11.6% 0.1% First service by cable modem First service by cable modem DSL dominant now DSL dominant now June 2000 60.2% 39.3% DSL Cable

8. KT ProprietaryIDATE Conference 20028 DSL Network Coverage (KT) Direct installation without qualityDirect installation without quality degradation degradation Direct installation with some qualityDirect installation with some quality degradation degradation 78% Quality guarantee through optical fiber 3Km 4Km 2Km Network Coverage 2Mbpsguarantee 93%86%78%39% 5%(100%) 17%(95%) 36%(78%)42%

9. KT ProprietaryIDATE Conference 20029 Home Internet Access Dramatic increase in the Internet connectivity and usage Dramatic increase in the Internet connectivity and usage PC Ownership 46.0% 15.2% 0.0% 48.9% 0% 25% 50% 75% 100% ’99.6’99.12’00.6’00.12’01.6’01.12 Internet Usage High-speed Internet Source: KT Panel Survey, Management Research Lab, 2002 65.9% 53.1%

10. KT ProprietaryIDATE Conference 200210 Internet Usage On-line stock trading 54% KSE 79% KOSDAQ Internet broadcasting 74% of Korean Internet population access audio/video content On-line games 54% penetration of Korean Internet users Source: Nielsen NetRatings, as of 2002 16.3 10.8 10.0 9.8 8.3 7.9 05101520 Korea Canada US Hong Kong Germany Japan Hours per week

11. KT ProprietaryIDATE Conference 200211 Internet affecting TV watching behavior Internet affecting TV watching behavior Most visible for younger generations Most visible for younger generations Implications for e-biz solutions Implications for e-biz solutions Source: KT Management Research Lab, 2002 First Half, 2000Second Half, 2001 13~18 13~18 19~24 19~24 25~35 25~35 36~49 36~49 50+ 50+ 80% 40% 0% 80% 40% 0% 80% 40% 0% 80% 40% 0% 80% 40% 0% TV Watching Internet Use TV vs. Internet

12. KT ProprietaryIDATE Conference 200212 Agenda Korean Broadband Overview Korean Broadband Overview Lessons Learned Lessons Learned Future Challenges Future Challenges

13. KT ProprietaryIDATE Conference 200213 Key Success Factors All relevant factors needed All relevant factors needed Dynamic interaction of KSFs needed Dynamic interaction of KSFs needed Policy & Regulation Supply Cultural Acceptance Demand

14. KT ProprietaryIDATE Conference 200214 KSF: Cultural Acceptance “Digital or die” “Digital or die” Historical lessons driving national consensus for digitalization Historical lessons driving national consensus for digitalization Socially competitive Socially competitive Peer pressure Peer pressure “Hurry” psychology “Hurry” psychology Cultural Acceptance

15. KT ProprietaryIDATE Conference 200215 KSF: Policy and Regulation Gov’t projects/initiatives Gov’t projects/initiatives Early adopter role Early adopter role Public promotion Public promotion Pro-competition Pro-competition Liberalization, forbearance Liberalization, forbearance Facility-based competition Facility-based competition Effective incentives Effective incentives Internet PC Internet PC Cyber Building Certificates Cyber Building Certificates Policy & Regulation

16. KT ProprietaryIDATE Conference 200216 KSF: Demand Enthusiastic adoption of new services Enthusiastic adoption of new services Affluent, savvy, young users Affluent, savvy, young users Many killer applications Many killer applications Online games, stock trading Online games, stock trading Extensive IT in education Extensive IT in education Wholesale demand Wholesale demand PC cafes as aggregators PC cafes as aggregators.Com ventures.Com ventures Demand

17. KT ProprietaryIDATE Conference 200217 KSF: Supply Need for Survival Need for Survival Facility-based competition Facility-based competition Aggressive pricing Aggressive pricing Geographical Advantages Geographical Advantages Dense population/network Dense population/network Extensive legacy network Extensive legacy network Dropping network costs Dropping network costs Quantity procurement Quantity procurement Supply

18. KT ProprietaryIDATE Conference 200218 Lessons All factors are required All factors are required Policy: Align incentives of all key players, Need to assume early adopter roles Policy: Align incentives of all key players, Need to assume early adopter roles Demand: Attractive services/apps Demand: Attractive services/apps Supply: Facility based and fair competition Supply: Facility based and fair competition Timing and coordination is crucial Timing and coordination is crucial Need to reach critical mass as fast as possible Need to reach critical mass as fast as possible Sequence less important Sequence less important

19. KT ProprietaryIDATE Conference 200219 Agenda Korean Broadband Overview Korean Broadband Overview Lessons Learned Lessons Learned Future Challenges Future Challenges

20. KT ProprietaryIDATE Conference 200220 Potential Broadband Market Residential Broadband Market (Sub. in Mn) Business Broadband Market 3.5 Mn Laptop/PDA Users 3 Mn SME/SOHO Users Wireless LAN Multi-ADSL KT subs Total subs HH Penetration

21. KT ProprietaryIDATE Conference 200221 WLAN for Broadband Rising Penetration Rate W-LAN ARPU Enhancement 0 20 40 60 80 BroadbandARPU Broadband + W-LAN ARPU Broadband Broadband + W-LAN Broadband + W-LAN 3030 13 (% per households and businesses ) (KRW Thousand) 27 % 47 % 59 % 67 % 69 % 0% 25% 50% 75% 100% 20002002E2004E2003E2001 2005E 70 %

22. KT ProprietaryIDATE Conference 200222 Broadband for SMEs Multi-ADSL Subscribers B2B Solution Subscribers l Up to 16 Computers with 1 ADSL Line l Higher ARPU: W53,000~W196,000 (W70,000 average) l For 3 million SMEs in Korea l Provide tailored solutions

23. KT ProprietaryIDATE Conference 200223 Broadbanding Challenges - xDSL (VDSL) - xDSL (VDSL) - IP - IP - Metro Ethernet - Metro Ethernet - IDC - IDC e-portal Wire & Wireless Integration “Value networking company” Total integrated Service Broadband Service - B2B solution platform - B2B solution platform - Billplaza - Billplaza - e-market portal - e-market portal - 2.5G  3G - 2.5G  3G - IP & Broadband - IP & Broadband - Home Networking (HDS) - Home Networking (HDS) - Fixed-Wireless Integration (WLAN) - Fixed-Wireless Integration (WLAN)

24. KT ProprietaryIDATE Conference 200224 Value Networking Challenges Local cyber community Local cyber community Cyber Dream Town Home Networking Mobile Networking Office Networking NESPOT Bizmeka Home gateway/STB Home gateway/STB Home Digital Service B2B solutions portal B2B solutions portal VOD, entertainment VOD, entertainment Home Media Service Hot-spot WLAN Hot-spot WLAN Xroshot service Unified Messaging Unified Messaging enTUM Hosting, IDC Hosting, IDC Metro Ethernet, IP-VPN

25. KT ProprietaryIDATE Conference 200225 Further Challenges Business issues Business issues Mature domestic market, M&A inevitable Mature domestic market, M&A inevitable Legacy network poses evolution challenges Legacy network poses evolution challenges Adding value to broader-band networks Adding value to broader-band networks Policy and regulatory issues Policy and regulatory issues Overhauling traditional regulatory framework Overhauling traditional regulatory framework Promotion of convergent services Promotion of convergent services Overcoming digital divide Overcoming digital divide

26. KT ProprietaryIDATE Conference 200226 The Value Networking Company Thank you The Value Networking Company