20-F

As filed with the Securities and Exchange Commission on June 29, 2010

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

        For the fiscal year ended December 31, 2009

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

        Date of event requiring this shell company report                                         

        For the transition period from                      to                     

Commission file number 1-14926

KT Corporation

(Exact name of Registrant as specified in its charter)

KT Corporation	The Republic of Korea
(Translation of Registrant’s name into English)	(Jurisdiction of incorporation or organization)

206 Jungja-dong

Bundang-ku, Sungnam, Gyunggi-do

463-711 Korea

(Address of principal executive offices)

Thomas Bum Joon Kim

206 Jungja-dong

Bundang-ku, Sungnam, Gyunggi-do

463-711 Korea

Telephone: +82-31-727-0150; E-mail: thomaskim@kt.com

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Name of each exchange on which registered
American Depositary Shares, each representing	New York Stock Exchange, Inc.
one-half of one share of common stock
Common Stock, par value (Won)5,000 per share*	New York Stock Exchange, Inc.*

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

As of December 31, 2009, there were 243,196,468 shares of common stock, par value (Won) 5,000 per share, outstanding

(not including 17,915,340 shares of common stock held by the company as treasury shares)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No   ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No   x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  x    Accelerated filer  ¨    Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.

U.S. GAAP  ¨    IFRS   ¨    Other   x

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ¨     Item 18  x

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   x

* Not for trading, but only in connection with the registration of the American Depositary Shares.

TABLE OF CONTENTS

			Page
PART I			1
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGERS AND ADVISERS		1
	Item 1.A.	Directors and Senior Management	1
	Item 1.B.	Advisers	1
	Item 1.C.	Auditors	1
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE		1
	Item 2.A.	Offer Statistics	1
	Item 2.B.	Method and Expected Timetable	1
ITEM 3.	KEY INFORMATION		2
	Item 3.A.	Selected Financial Data	2
	Item 3.B.	Capitalization and Indebtedness	5
	Item 3.C.	Reasons for the Offer and Use of Proceeds	5
	Item 3.D.	Risk Factors	5
ITEM 4.	INFORMATION ON THE COMPANY		15
	Item 4.A.	History and Development of the Company	15
	Item 4.B.	Business Overview	15
	Item 4.C.	Organizational Structure	40
	Item 4.D.	Property, Plants and Equipment	40
ITEM 4A.	UNRESOLVED STAFF COMMENTS		43
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS		43
	Item 5.A.	Operating Results	43
	Item 5.B.	Liquidity and Capital Resources	60
	Item 5.C.	Research and Development, Patents and Licenses, Etc.	67
	Item 5.D.	Trend Information	67
	Item 5.E.	Off-balance Sheet Arrangements	67
	Item 5.F.	Tabular Disclosure of Contractual Obligations	68
	Item 5.G.	Safe Harbor	68
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		68
	Item 6.A.	Directors and Senior Management	68
	Item 6.B.	Compensation	74
	Item 6.C.	Board Practices	75
	Item 6.D.	Employees	76
	Item 6.E.	Share Ownership	78

i

TABLE OF CONTENTS

(continued)

			Page
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		78
	Item 7.A.	Major Shareholders	78
	Item 7.B.	Related Party Transactions	78
	Item 7.C.	Interests of Experts and Counsel	78
ITEM 8.	FINANCIAL INFORMATION		79
	Item 8.A.	Consolidated Statements and Other Financial Information	79
	Item 8.B.	Significant Changes	80
ITEM 9.	THE OFFER AND LISTING		80
	Item 9.A.	Offer and Listing Details	80
	Item 9.B.	Plan of Distribution	81
	Item 9.C.	Markets	81
	Item 9.D.	Selling Shareholders	85
	Item 9.E.	Dilution	85
	Item 9.F.	Expenses of the Issuer	86
ITEM 10.	ADDITIONAL INFORMATION		86
	Item 10.A.	Share Capital	86
	Item 10.B.	Memorandum and Articles of Association	86
	Item 10.C.	Material Contracts	92
	Item 10.D.	Exchange Controls	93
	Item 10.E.	Taxation	97
	Item 10.F.	Dividends and Paying Agents	102
	Item 10.G.	Statements by Experts	102
	Item 10.H.	Documents on Display	102
	Item 10.I.	Subsidiary Information	102
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		102
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES		103
	Item 12.A.	Debt Securities	103
	Item 12.B.	Warrants and Rights	104
	Item 12.C.	Other Securities	104
	Item 12.D.	American Depositary Shares	104
PART II			105
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES		105

ii

TABLE OF CONTENTS

(continued)

		Page
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	105
ITEM 15.	CONTROLS AND PROCEDURES	105
ITEM 16.	[Reserved]	107
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	107
ITEM 16B.	CODE OF ETHICS	107
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	107
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	107
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	108
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	108
ITEM 16G.	CORPORATE GOVERNANCE	109
PART III		111
ITEM 17.	FINANCIAL STATEMENTS	111
ITEM 18.	FINANCIAL STATEMENTS	111
ITEM 19.	EXHIBITS	111

iii

PRESENTATION

All references to “Korea” or the “Republic” contained in this annual report mean the Republic of Korea. All references to the “Government” are to the government of the Republic of Korea. All references to “we,” “us” or the “Company” are to KT Corporation and, as the context may require, its subsidiaries.

All references to “Won” or “(Won)” in this annual report are to the currency of the Republic and all references to “Dollars,” “$,” “US$” or “U.S. dollars” are to the currency of the United States of America. Our monetary assets and liabilities denominated in foreign currency are translated into Won at the market average exchange rate announced by Seoul Money Brokerage Services, Ltd. on the balance sheet dates, which were, for U.S. dollars, (Won)938.2 to US$1.00, (Won)1,257.5 to US$1.00 and (Won)1,167.6 to US$1.00 at December 31, 2007, 2008 and 2009, respectively. Our consolidated financial statements are expressed in Won and, solely for the convenience of the reader, the consolidated financial statements as of and for the year ended December 31, 2009 have been translated into United States dollars at the rate of (Won)1,163.7 to US$1.00, the noon buying rate in the City of New York for cable transfers in Won as certified for customs purposes by the Federal Reserve Bank of New York at December 31, 2009.

Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding.

All market share data contained in this annual report, unless otherwise specified, are based on the number of subscribers announced by the Korea Communications Commission or the Korea Telecommunications Operators Association.

PART I

Item 1.   Identity of Directors, Senior Managers and Advisers

Item 1.A.  Directors and Senior Management

Not applicable.

Item 1.B.  Advisers

Not applicable.

Item 1.C.  Auditors

Not applicable.

Item 2.  Offer Statistics and Expected Timetable

Item 2.A.  Offer Statistics

Not applicable.

Item 2.B.  Method and Expected Timetable

Not applicable.

1

Item 3.  Key Information

Item 3.A.  Selected Financial Data

You should read the selected consolidated financial data below in conjunction with the Consolidated Financial Statements as of December 31, 2008 and 2009 and for each of the years in the three-year period ended December 31, 2009, and the reports of the independent registered public accounting firms on these statements included herein. The selected consolidated financial data for the five years ended December 31, 2009 are derived from our audited consolidated financial statements.

Our Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in Korea (“Korean GAAP”), which differ in certain significant respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). See Note 40 to the Consolidated Financial Statements for a description of the nature and the effect of such differences.

Income Statement Data

	Year Ended December 31,
	2005			2006		2007		2008			2009			2009
	(In billions of Won and millions of Dollars, except per share data)
Korean GAAP (1):
Operating revenues	(Won)	17,192		(Won)	17,825	(Won)	18,614	(Won)	19,593		(Won)	19,649		US$	16,886
Operating expenses		14,781			15,442		16,859		18,153			18,683			16,055
Operating income		2,411			2,383		1,755		1,440			966			831
Non-operating revenues		490			565		486		1,052			808			694
Non-operating expenses		1,137			962		783		1,785			1,059			910
Income tax expense on continuing operations (2)		399			476		357		168			108			93
Income from continuing operations		1,365			1,510		1,106		539			607			522
Income (loss) from discontinuing operations		(5	)		—		65		(26	)		3			2
Net Income		1,360			1,510		1,171		513			610			524
Attributable to equity holders of the parent		1,085			1,292		1,056		450			495			425
Attributable to noncontrolling interests		275			218		115		63			115			99
Basic income per share from continuing operations		5,154			6,153		4,783		2,312			2,216			1.90
Basic net income per share (3)		5,131			6,155		5,112		2,217			2,254			1.94
Diluted income per share from continuing operations		5,148			6,146		4,783		2,312			2,190			1.88
Diluted net income per share (4)		5,124			6,148		5,112		2,217			2,227			1.91
Dividends per share (5)		3,000			2,000		2,000		1,120			2,000			1.72
U.S. GAAP (6):
Operating revenues	(Won)	12,328		(Won)	14,088	(Won)	17,953	(Won)	18,599		(Won)	18,891		US$	16,235
Operating income		1,539			1,868		1,499		1,197			992			853
Income taxes		356			357		270		178			118			101
Income from continuing operations		1,160			1,423		1,087		577			841			723
Income (loss) from discontinuing operations		(5	)		—		73		(4	)		(1	)		(1	)
Net Income (7)		1,155			1,423		1,160		573			840			722
Attributable to stockholders		1,149			1,329		1,069		518			742			638
Attributable to noncontrolling interests		6			94		91		55			98			84
Basic income per share from continuing operations		5,452			6,331		4,821		2,571			3,382			2.91
Basic income per share (3)		5,428			6,333		5,172		2,554			3,380			2.90
Diluted income per share from continuing operations		5,447			6,325		4,821		2,571			3,332			2.86
Diluted income per share (4)		5,423			6,327		5,172		2,554			3,330			2.86

2

Balance Sheet Data

	Year Ended December 31,
	2005		2006		2007		2008		2009		2009
	(In billions of Won and millions of Dollars)
Korean GAAP (1):
Working capital (8)	(Won)	1,309	(Won)	558	(Won)	564	(Won)	1,833	(Won)	1,031	US$	886
Net property and equipment		15,087		15,167		15,288		15,189		14,775		12,697
Total assets		24,678		24,243		24,127		26,139		26,620		22,877
Long term debt, excluding current portion		7,360		6,097		5,973		7,947		7,536		6,476
Refundable deposits for telephone installation		958		907		841		782		696		598
Total equity		10,390		10,697		11,138		11,088		10,667		9,167
U.S. GAAP (6):
Working capital (8)	(Won)	334	(Won)	333	(Won)	332	(Won)	1,640	(Won)	845	US$	726
Net property and equipment		10,677		14,729		14,671		14,460		14,041		12,066
Total assets		18,383		24,098		24,023		25,974		26,526		22,796
Total equity		7,436		10,221		10,589		10,609		10,456		8,986
Stockholders’ equity		7,345		8,038		8,438		8,490		10,287		8,841
Noncontrolling interests		91		2,183		2,151		2,119		169		145

Other Financial Data

	Year Ended December 31,
	2005			2006			2007			2008			2009			2009
	(In billions of Won and millions of Dollars)
Korean GAAP:
Net cash provided by operating activities	(Won)	5,865		(Won)	5,714		(Won)	4,265		(Won)	2,919		(Won)	3,398		US$	2,920
Net cash used in investing activities		(2,526	)		(3,061	)		(3,449	)		(3,531	)		(2,870	)		(2,467	)
Net cash provided by (used in) financing activities		(3,601	)		(2,367	)		(1,368	)		1,051			(930	)		(800	)
U.S. GAAP (6):
Net cash provided by operating activities	(Won)	3,588		(Won)	4,667		(Won)	4,260		(Won)	2,889		(Won)	3,338		US$	2,869
Net cash used in investing activities		(735	)		(2,432	)		(3,410	)		(3,502	)		(2,818	)		(2,422	)
Net cash provided by (used in) financing activities		(3,362	)		(1,671	)		(1,271	)		1,147			(901	)		(774	)

Operating Data

	As of December 31,
	2005	2006	2007	2008	2009
	(Unaudited)
Lines installed (thousands) (9)	26,190	26,838	26,671	26,008	25,907
Lines in service (thousands) (9)	20,837	20,331	19,980	18,883	17,069
Lines in service per 100 inhabitants (9)	43.1	42.0	41.2	38.8	35.0
Mobile subscribers (thousands)	12,302	12,914	13,721	14,365	15,016
Broadband Internet subscribers (thousands)	6,242	6,353	6,516	6,712	6,953

(1) Through December 31, 2008, the Korea Accounting Standards Board has issued Statements of Korea Accounting Standards (“SKAS”) No. 1 through No. 25. Among these statements, SKAS No. 1 through No. 10 and SKAS No. 12 through No. 20 are required to be applied in the prior periods. Although SKAS No. 11 and SKAS No. 21 through No. 25 are required to be applied starting in 2007, the balances of 2005 and 2006 have been reclassified in accordance with Statements of Korea Accounting Standards No. 16 and No. 21 for comparison purposes.

(2) With the early adoption in 2006 of the Application of Korea Accounting Standard 06-2 “Deferred Tax Accounting for Investments in Subsidiaries, Affiliated Companies Accounted for Using the Equity Method, and Interest in Joint Ventures,” the amounts for 2005 were restated in 2006 as required by this standard.

(3) Basic earnings per share under Korean GAAP and U.S. GAAP is calculated by dividing net earnings by the weighted average number of shares outstanding during the period. The weighted average number of shares of common stock outstanding during the period was 211,565 thousand for 2005, 209,895 thousand for 2006, 206,599 thousand for 2007, 202,891 thousand for 2008 and 219,513 thousand for 2009.

3

(4) Diluted earnings per share are calculated based on the effect of dilutive securities that were outstanding during the period. The denominator of the diluted earnings per share computation is adjusted to include the number of additional common shares that would have been outstanding if the dilutive securities had been converted into common stock. In addition, the numerator is adjusted to include the after-tax amount of interest recognized associated with convertible notes. The weighted average number of common and common equivalent shares outstanding was 211,822 thousand for 2005, 210,150 thousand for 2006, 206,599 thousand for 2007, 202,891 thousand for 2008 and 224,168 thousand for 2009.

(5) The calculation of dividends per share represents the weighted average dividends paid per share.

(6) See Note 40 to the Consolidated Financial Statements for reconciliation to U.S. GAAP.

(7) In December 2007, the Financial Accounting Standard Board issued and amended an accounting standard that requires that a noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity in consolidated financial statements. With the adoption of the amended standard, net income attributable to noncontrolling interests is included in net income. We retrospectively adopted the presentation and disclosure requirements of the standard for all of the financial statements and information included herein on January 1, 2009.

(8) “Working capital” means current assets minus current liabilities.

(9) Including public telephones.

Exchange Rate Information

The following table sets out information concerning the market average exchange rate for the periods and dates indicated.

Period	At End of Period	Average Rate (1)	High	Low
	(Won per US$1.00)
2005	1,013.0	1,024.2	1,060.3	998.2
2006	929.6	956.1	1,013.0	918.0
2007	938.2	929.2	950.0	902.2
2008	1,257.5	1,102.6	1,509.0	934.5
2009	1,167.6	1,276.4	1,573.6	1,152.8
December	1,167.6	1,166.5	1,183.6	1,152.9
2010 (through June 28)	1,204.7	1,154.5	1,261.5	1,104.0
January	1,156.5	1,138.8	1,167.6	1,119.8
February	1,158.4	1,157.1	1,172.6	1,142.7
March	1,130.8	1,137.6	1,160.2	1,129.5
April	1,115.5	1,117.1	1,132.5	1,104.0
May	1,200.2	1,163.1	1,255.1	1,108.5
June (through June 28)	1,204.7	1,213.1	1,261.5	1,176.7

Source: Seoul Money Brokerage Services, Ltd.

(1) The average rate for each full year is calculated as the average of the market average exchange rates on the last business day of each month during the relevant year. The average rate for a full month is calculated as the average of the market average exchange rates on each business day during the relevant month (or portion thereof).

Our monetary assets and liabilities denominated in foreign currency are translated into Won at the market average exchange rate announced by Seoul Money Brokerage Services, Ltd. on the balance sheet dates, which were, for U.S. dollars, (Won)938.2 to US$1.00, (Won)1,257.5 to US$1.00 and (Won)1,167.6 to US$1.00 at December 31, 2007, 2008 and 2009, respectively.

Our consolidated financial statements are expressed in Won and, solely for the convenience of the reader, the consolidated financial statements as of and for the year ended December 31, 2009 have been translated into United States dollars at the rate of (Won)1,163.7 to US$1.00, the noon buying rate in the City of New York for cable transfers in Won as certified for customs purposes by the Federal Reserve Bank of New York at December 31, 2009.

We make no representation that the Won or Dollar amounts contained in this annual report could have been or could be converted into Dollar or Won, as the case may be, at any particular rate or at all.

4

Item 3.B.  Capitalization and Indebtedness

Not applicable

Item 3.C.  Reasons for the Offer and Use of Proceeds

Not applicable.

Item 3.D.  Risk Factors

You should carefully consider the following factors.

Risks Relating to Our Business

Competition in the Korean telecommunications industry is intense.

Competition in the telecommunications sector in Korea is intense. In recent years, business combinations in the telecommunications industry have significantly changed the competitive landscape of the Korean telecommunications industry. In particular, SK Telecom Co., Ltd. (or SK Telecom) acquired a controlling stake in Hanarotelecom Incorporated in 2008, which was renamed SK Broadband Co., Ltd. (or SK Broadband). The acquisition enables SK Telecom to provide fixed-line telecommunications, broadband Internet access and Internet television (or IP-TV) services together with its mobile telecommunications services. On January 1, 2010, LG Dacom Corporation (or LG Dacom) and LG Powercom Co., Ltd. (or LG Powercom) merged into LG Telecom Co., Ltd. (or LG Telecom). The merger enables LG Telecom to provide a similar range of services as SK Telecom and us. Our inability to adapt to such changes in the competitive landscape could have a material adverse effect on our business, financial condition and results of operations.

Mobile Service. We provide mobile services based on Code Division Multiple Access (or CDMA) technology and Wideband Code Division Multiple Access (or W-CDMA) technology. Competitors in the mobile telecommunications service industry are SK Telecom and LG Telecom. We had a market share of 31.3% as of December 31, 2009, making us the second largest mobile telecommunications service provider. SK Telecom had a market share of 50.6% as of December 31, 2009.

Mobile subscribers are allowed to switch their service provider while retaining the same mobile phone number. Mobile service providers also grant subsidies to subscribers who purchase new handsets and agree to a minimum subscription period. Mobile number portability and handset subsidies have intensified competition among the mobile service providers and increased their marketing expenses. If the mobile service providers adopt a strategy of expanding market share through price competition, it could lead to a decrease in our net profit margins.

In recent years, SK Telecom and we also launched third-generation mobile telecommunications services, which we believe have further intensified competition between the two companies and resulted in an increase in marketing expenses. We expanded our coverage area of High Speed Downlink Packet Access (or HSDPA)-based IMT-2000 services nationwide in March 2007. IMT-2000 is a third-generation, high-capacity wireless communications technology, which allows operators to provide to their customers significantly more bandwidth capacity. Although we expect that SK Telecom will face similar challenges to those that we expect to face in implementing this third-generation technology, we cannot assure you that we will continue to be able to successfully compete in third-generation mobile telecommunications services.

5

Fixed-line Telephone Services. Before December 1991, we were the sole provider of local, domestic long-distance and international long-distance telephone services in Korea. Since then, various competitors have entered the local, domestic long-distance and international long-distance telephone service markets in Korea, which have eroded our market shares. LG Telecom and SK Broadband currently provide local, domestic long-distance and international long-distance telephone services. In addition, Onse Telecom Corporation and SK Telink, Inc. currently provide domestic long-distance and international long-distance telephone services. Starting in 1998, specific service providers, such as Internet phone service providers, voice resellers and call-back service providers, also began offering international long-distance service in Korea. While we offer our own Internet phone service, the entry of these and other potential competitors into the local, domestic long-distance and international long-distance telephone service markets has had and may continue to have a material adverse effect on our revenues and profitability from these businesses. As of December 31, 2009, we had a market share in local telephone service of 89.9% and a market share in domestic long-distance service of 86.3%. Further increase in competition may decrease our market shares in such businesses.

Internet Services. The Korean broadband Internet access service market has experienced significant growth in the past decade. SK Broadband (formerly Hanarotelecom) entered the broadband market in 1999 offering both Hybrid Fiber Coaxial (or HFC) and Asymmetric Digital Subscriber Line (or ADSL) services. We also began offering broadband Internet access service in 1999, followed by Dreamline, Onse and LG Telecom. In recent years, numerous cable television operators have also begun to offer HFC-based services at rates lower than ours. We had a market share of 42.5% as of December 31, 2009. As a result of having to compete with a number of competitors and the maturing of the Internet access service market, we currently encounter, and we expect to encounter, pressure to increase marketing expenses in the future.

The market for other Internet-related services in Korea, including IP-TV and Internet phone services, is also very competitive. We anticipate that competition will continue to intensify as the usage and popularity of the Internet grows and as new domestic and international competitors enter the Internet industry in Korea. The substantial growth of the Internet industry in Korea has attracted many competitors and as a result may lead to increasing price competition to provide Internet-related services. Increased competition in the Internet industry could have a material adverse effect on the number of subscribers of our Internet-related service and on our results of operations.

We may fail to realize the anticipated benefits of the merger of KTF into KT Corporation.

On June 1, 2009, KTF merged into KT Corporation, with KT Corporation surviving the merger. The success of the merger of KTF with KT Corporation will depend, in part, on our ability to realize the anticipated synergies, growth opportunities and, to a lesser extent, cost savings from combining these two companies. The realization of these anticipated benefits may be impeded, delayed or reduced as a result of numerous factors, some of which are outside our control. These factors include:

• difficulties in integrating the operations of KTF with those of KT Corporation, including information systems, personnel, policies and procedures, and in reorganizing or reducing overlapping personnel, operations, marketing networks and administrative functions;

• unforeseen contingent risks or latent liabilities relating to the merger that may become apparent in the future;

• difficulties in managing a larger business; and

• loss of key management personnel or customers.

6

Accordingly, we cannot assure you that we will realize the anticipated benefits of the merger or that the merger will not adversely affect our combined business, financial condition and results of operations.

The integration of the operations of KTF into KT Corporation may require significant amounts of time, financial resources and management attention. KT Corporation’s management intends to implement a business plan to effectively combine the operations of KTF with the operations of KT Corporation. If this business plan is not effective in integrating these operations, however, we may not realize the anticipated benefits of the merger. The integration process could also result in the disruption of our ongoing business and information technology systems, or inconsistencies in standards, controls, procedures and policies and a reduction in employee morale, each of which may adversely affect our ability to maintain relationships with customers and to retain key personnel.

In addition, as conditions to the approval of the merger of KTF into KT Corporation, the Korea Communications Commission is requiring us to (i) allow competing service providers to have greater access to our cable tunnels and telephone poles, (ii) improve Public Switched Telephone Network (or PSTN) number portability and voice over Internet protocol (or VoIP) number portability, and (iii) allow competing service providers to access our wireless Internet network. Such conditions may intensify competition in the telecommunications industry, which could have a material adverse effect on the number of our subscribers and results of operations.

Our WiBro service poses challenges and risks to us.

In March 2005, we acquired a license to provide wireless broadband Internet access service for (Won)126 billion. The license is valid for seven years from the grant date and the license amount is amortized over the remaining contractual life commencing from June 2006. Wireless broadband Internet access (or WiBro) service enables two-way wireless broadband Internet access to portable computers, mobile phones and other portable devices at a speed averaging 1 Mbps per user. A subscriber is able to access the WiBro service network during transit at speeds of up to 120 kilometers per hour. We positioned WiBro service to provide Internet Protocol (IP)-based triple-play services, which are voice, data and video, to our subscribers who have mobile phone as well as WiBro-enabled laptop computers. We commercially launched our service in June 2006, and we had approximately 287 thousand subscribers as of December 31, 2009. We believe that substantial additional amounts of capital expenditures and research and development will be required to complete the buildout of our WiBro service network, and we plan to spend approximately (Won)265 billion in capital expenditures in 2010 to expand our WiBro service network, which we may adjust subject to market demand. No assurance can be given that the network will gain broad market acceptance such that we will be able to derive revenues from WiBro service to justify the license fee, capital expenditures and other investments required to provide such service.

Disputes with our labor union may disrupt our business operations.

In the past, we have experienced opposition from our labor union for our strategy of restructuring to improve our efficiency and profitability by disposing of non-core businesses and reducing our employee base. Although we have not experienced any significant labor disputes or unrests in recent years, there can be no assurance that we will not experience labor disputes or unrests in the future, including expanded protests and strikes, which could disrupt our business operations and have an adverse effect on our financial condition and results of operation.

We also negotiate collective bargaining agreements every two years with our labor union and annually negotiate a wage agreement. Our current collective bargaining agreement expires on May 25, 2011. Although we have been able to reach collective bargaining agreements and wage agreements with our labor union in recent years, there can be no assurance that we will not experience labor disputes and unrests resulting from disagreements with the labor union in the future.

7

The Korean telecommunications and Internet protocol broadcasting industries are subject to extensive Government regulations, and changes in Government policy relating to these industries could have a material adverse effect on our operations and financial condition.

The Government, primarily through the Korea Communications Commission, has authority to regulate the telecommunications industry. The Korea Communications Commission’s policy is to promote competition in the Korean telecommunications markets through measures designed to prevent the dominant service provider in any such market from exercising its market power in such a way as to prevent the emergence and development of viable competitors.

Under current Government regulations, if a network service provider has the largest market share for a specified type of service and its revenue from that service for the previous year exceeds a specific revenue amount set by the Korea Communications Commission, it must obtain prior approval from the Korea Communications Commission for the rates and the general terms for that service. Each year the Korea Communications Commission designates service providers the rates and the general terms of which must be approved by the Korea Communications Commission. In recent years, the Korea Communications Commission has so designated us for local telephone service and SK Telecom for mobile service, and the Korea Communications Commission, in consultation with the Ministry of Strategy and Finance, currently approves rates charged by us and SK Telecom for such services. The Korea Communications Commission currently does not regulate our domestic long-distance, international long-distance, broadband internet access and mobile service rates, but the inability to freely set our local telephone service rates may hurt profits from such business and impede our ability to compete effectively against our competitors. See “Item 4. Information on the Company—Item 4.B. Business Overview—Regulation—Rates.” The form of our standard agreement for providing local network service and each agreement for interconnection with other service providers are also subject to approval by the Korea Communications Commission.

The Government also sets the policies regarding the use of radio frequencies and allocates the spectrum of radio frequencies used for wireless telecommunications. On April 29, 2010, the Korea Communications Commission announced its decision to allocate 20 MHz of spectrum in the 900 MHz band to us, 20 MHz of spectrum in the 800 MHz band to LG Telecom and 40 MHz of spectrum in the 2.1GHz band to SK Telecom. Such new allocations of spectrum will become effective on July 1, 2011. The new allocation of spectrum could increase competition among wireless service providers, which may have an adverse effect on our business.

We also plan to put more focus on the Internet protocol (or IP) media market, and we began offering IP-TV service on November 17, 2008. IP-TV is a service which combines video-on-demand services with real-time high definition broadcasting via broadband networks. The Korea Communications Commission has the authority to regulate the IP media market, including IP-TV services. Under the Internet Multimedia Broadcasting Business Act, anyone intending to engage in the IP media broadcasting business must obtain a license from the Korea Communications Commission, and anyone intending to engage in the broadcasting of certain contents must obtain additional approval of the Korea Communications Commission. Although we currently believe that we may freely compete in this market, there can be no assurance that Government regulations and policies will permit us to continue to do so.

Government policies and regulations relating to the above as well as other regulations involving the Korean telecommunications and IP broadcasting industries (including as a result of the implementation of free trade agreements between Korea and other countries, including the United States and the European Union) may change, which could have a material adverse effect on our operations and financial condition. See “Item 4. Information on the Company—Item 4.B. Business Overview—Regulation.”

8

We are subject to various regulations under the Monopoly Regulation and Fair Trade Act.

The Monopoly Regulation and Fair Trade Act provides for various regulations and restrictions on large business groups enforced by the Korea Fair Trade Commission. The Korea Fair Trade Commission initially designated us as a large business group under the Monopoly Regulation and Fair Trade Act on April 1, 2002. Our business relationships and transactions with our subsidiaries, affiliates and other companies within the KT Group are subject to ongoing scrutiny by the Fair Trade Commission as to, among other things, whether such relationships and transactions constitute undue financial support among companies of the same business group. We are also subject to the fair trade regulations limiting cross-guarantee of debt and cross-shareholdings among member companies of the same group. Any future determination by the Korea Fair Trade Commission that we have engaged in transactions that violate the fair trade laws and regulations may result in fines or other punitive measures and may have a material adverse effect on our reputation and our business.

Concerns that radio frequency emissions may be linked to various health concerns could adversely affect our business and we could be subject to litigation relating to these health concerns.

In the past, allegations that serious health risks may result from the use of wireless telecommunications devices or other transmission equipment have adversely affected share prices of some wireless telecommunications companies in the United States. We cannot assure you that these health concerns will not adversely affect our business. Several class action and personal injury lawsuits have been filed in the United States against several wireless phone manufacturers and carriers, asserting product liability, breach of warranty and other claims relating to radio transmissions to and from wireless phones. Certain of these lawsuits have been dismissed. We could be subject to liability or incur significant costs defending lawsuits brought by our subscribers or other parties who claim to have been harmed by or as a result of our services. In addition, the actual or perceived risk of wireless telecommunications devices could have an adverse effect on us by reducing our number of subscribers or our usage per subscriber.

Disruptions in global credit and financial markets and the resulting governmental actions around the world could have a material adverse impact on our business and the ability to meet our funding needs, and could cause the market value of our securities to decline.

In recent years, disruptions and volatility in the global financial markets have resulted in increases in credit spreads and limitations on the availability of credit. Starting in mid-2007, credit markets in the United States began experiencing difficult conditions and increased volatility, which in turn adversely affected worldwide financial markets. Adverse conditions in the global credit and financial markets were further exacerbated in 2008 by the bankruptcy or acquisition of, and government assistance to, several major U.S. and European financial institutions. These developments resulted in reduced liquidity, greater volatility, widening of credit spreads and a reduction in price transparency in the U.S. and global financial markets.

In response to such developments, legislators and financial regulators in the United States and other jurisdictions, including Korea, implemented a number of policy measures designed to add stability to the financial markets and stimulate the economy, including the provision of direct and indirect assistance to distressed financial institutions. However, while the rate of deterioration of the global economy slowed in the second half of 2009 and into 2010, with some signs of stabilization and improvement, the overall prospects for the Korean and global economy in 2010 and beyond remain uncertain. For example, in November 2009, the Dubai government announced a moratorium on the outstanding debt of Dubai World, a government-affiliated investment company. In addition, many governments worldwide, in particular in Greece and other countries in southern Europe, are showing increasing signs of fiscal stress and may experience difficulties in meeting their debt service

9

requirements. Any of these or other developments could potentially trigger another financial and economic crisis. In addition, while many governments worldwide are considering or are in the process of implementing “exit strategies,” in the form of reduced government spending, higher interest rates or otherwise, with respect to the economic stimulus measures adopted in response to the global financial crisis, such strategies may, for reasons related to timing, magnitude or other factors, have the unintended consequence of prolonging or worsening global economic and financial difficulties. Adverse conditions and uncertainty surrounding the Korean and global economies and financial markets may have a material adverse effect on our business and the ability to meet our funding needs, as well as negatively affect the market prices of the ADSs.

Depreciation of the value of the Won against the Dollar and other major foreign currencies may have a material adverse effect on the results of our operations and on the prices of our securities.

Substantially all of our revenues are denominated in Won. Depreciation of the Won may materially affect the results of our operations because, among other things, it causes an increase in the amount of Won required by us to make interest and principal payments on our foreign-currency-denominated debt, the costs of telecommunications equipment that we purchase from overseas sources, net settlement payments to foreign carriers and administrations and certain payments related to our derivative instruments entered into for foreign exchange risk hedging purposes. Of the (Won)7,536 billion total long-term debt (excluding current portion) outstanding as of December 31, 2009, (Won)2,788 billion was denominated in foreign currencies with interest rates ranging from 1.06% to 6.50%. See “Item 3. Key Information—Item 3.A. Select Financial Data—Exchange Rate Information” and “Item 5. Operating and Financial Review and Prospects—Item 5.B. Liquidity and Capital Resources.”

Fluctuations in the exchange rate between the Won and the Dollar will also affect the Dollar equivalent of the Won price of the shares of our common stock on the KRX KOSPI Market and, as a result, will likely affect the market price of the ADSs. These fluctuations will also affect the Dollar conversion by the depositary for the ADRs of cash dividends, if any, paid in Won on shares of common stock represented by the ADSs.

Risks Relating to Korea

Korea is our most important market, and our current business and future growth could be materially and adversely affected if economic conditions in Korea deteriorate.

We are incorporated in Korea and a significant portion of our operations occurs in Korea. As a result, we are subject to political, economic, legal and regulatory risks specific to Korea. Economic indicators in Korea in recent years have shown mixed signs, and future growth of the Korean economy is subject to many factors beyond our control.

Recent difficulties affecting the U.S. and global financial sectors, adverse conditions and volatility in the worldwide credit and financial markets, fluctuations in oil and commodity prices and the general weakness of the U.S. and global economy have increased the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the Korean economy. Due to recent liquidity and credit concerns and volatility in the global financial markets, the value of the Won relative to the Dollar has also fluctuated significantly in recent years. Furthermore, as a result of adverse global and Korean economic conditions, there has been continuing volatility in the stock prices of Korean companies. The Korea Composite Stock Price Index declined from 1,674.92 on June 30, 2008 to 938.75 on October 24, 2008. On June 28, 2010, the Korea Composite Stock Price Index recovered to 1,732.03. Future declines in the Korea Composite Stock Price Index and large amounts of sales of Korean securities by foreign investors and subsequent repatriation of the proceeds

10

of such sales may adversely affect the value of the Won, the foreign currency reserves held by financial institutions in Korea, and the ability of Korean companies to raise capital. Any future deterioration of the Korean or global economy could adversely affect our business, financial condition and results of operations.

Developments that could have an adverse impact on Korea’s economy in the future include:

• continuing difficulties in the housing and financial sectors in the United States and elsewhere and increased sovereign default risks in select countries and the resulting adverse effects on the global financial markets;

• declines in consumer confidence and a slowdown in consumer spending;

• adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the Dollar or Japanese Yen exchange rates or revaluation of the Chinese renminbi), interest rates and stock markets;

• continuing adverse conditions in the economies of countries that are important export markets for Korea, such as the United States, Japan and China, or in emerging market economies in Asia or elsewhere;

• increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers;

• the continued emergence of the Chinese economy, to the extent its benefits (such as increased exports to China) are outweighed by its costs (such as competition in export markets or for foreign investment and the relocation of the manufacturing base from Korea to China);

• the economic impact of any pending or future free trade agreements;

• social and labor unrest;

• substantial decreases in the market prices of Korean real estate;

• a decrease in tax revenues and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs that, together, would lead to an increased Government budget deficit;

• financial problems or lack of progress in the restructuring of Korean conglomerates, other large troubled companies, their suppliers or the financial sector;

• loss of investor confidence arising from corporate accounting irregularities and corporate governance issues at certain Korean conglomerates;

• geo-political uncertainty and risk of further attacks by terrorist groups around the world;

• the occurrence of severe health epidemics in Korea and other parts of the world;

• deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from trade disputes or disagreements in foreign policy;

11

• political uncertainty or increasing strife among or within political parties in Korea;

• hostilities involving oil producing countries in the Middle East and any material disruption in the supply of oil or increase in the price of oil; and

• an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States.

Escalations in tensions with North Korea could have an adverse effect on us.

Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between the two Koreas has fluctuated and may increase abruptly as a result of current and future events. In recent years, there have been heightened security concerns stemming from North Korea’s nuclear weapons and long-range missile programs and increased uncertainty regarding North Korea’s actions and possible responses from the international community.

In addition to conducting test flights of long-range missiles, North Korea announced in October 2006 that it had successfully conducted a nuclear test, which increased tensions in the region and elicited strong objections worldwide. In response, the United Nations Security Council passed a resolution that prohibits any United Nations member state from conducting transactions with North Korea in connection with any large-scale arms and material or technology related to missile development or weapons of mass destruction and from providing luxury goods to North Korea, imposes an asset freeze and travel ban on persons associated with North Korea’s weapons program, and calls upon all United Nations member states to take cooperative action, including through inspection of cargo to or from North Korea. In response, North Korea agreed in February 2007 at the six-party multi-lateral talks with Korea, the United States, China, Japan and Russia to shut down and seal the Yongbyon nuclear facility, including the reprocessing facility, and readmit international inspectors to conduct all necessary monitoring and verifications.

In April 2009, North Korea launched a long-range rocket over the Pacific Ocean. Korea, Japan and the United States responded that the launch poses a threat to neighboring nations and that it was in violation of the United Nations Security Council resolution adopted in 2006 against nuclear tests by North Korea, and the United Nations Security Council unanimously passed a resolution that condemned North Korea for the launch and decided to tighten sanctions against North Korea. Subsequently, North Korea announced that it would permanently pull out of the six party talks and restart its nuclear program, and the International Atomic Energy Agency reported that its inspectors had been ordered to remove surveillance devices and other equipment at the Yongbyon nuclear power plant and to leave North Korea. On May 25, 2009, North Korea announced that it had successfully conducted a second nuclear test and test-fired three short-range surface-to-air missiles. In response, the United Nations Security Council unanimously passed a resolution that condemned North Korea for the nuclear test and decided to expand and tighten sanctions against North Korea. In March 2010, a Korean warship was destroyed by an underwater explosion, killing many of the crewmen on board. In May 2010, the Government formally accused North Korea of causing the sinking and is seeking United Nations Security Council sanctions for the act. North Korea has threatened retaliation for any attempt to punish it for the act.

In addition, there recently has been increased uncertainty with respect to the future of North Korea’s political leadership and concern regarding its implications for economic and political stability in the region. In June 2009, U.S. and Korean officials announced that Kim Jong-il, the North Korean ruler who reportedly suffered a stroke in August 2008, designated his third son, who is reportedly in his twenties, to become his successor. The succession plan, however, remains uncertain. In addition, North Korea’s economy faces severe challenges. For example, in November 2009, the North Korean

12

government redenominated its currency at a ratio of 100 to 1 as part of a currency reform undertaken in an attempt to control inflation and reduce income gaps. In tandem with the currency redenomination, the North Korean government banned the use or possession of foreign currency by its residents and closed down privately run markets, which led to severe inflation and food shortages. Such developments may further aggravate social and political tensions within North Korea.

There can be no assurance that the level of tension on the Korean peninsula will not escalate in the future. Any further increase in tension, which may occur, for example, if North Korea experiences a leadership or economic crisis, high-level contacts break down, or military hostilities occur, could have a material adverse effect on our operations and the market value of the ADSs.

Risks Relating to the Securities

If an investor surrenders his ADSs to withdraw the underlying shares, he may not be allowed to deposit the shares again to obtain ADSs.

Korean law currently limits foreign ownership of the ADSs and our shares. In addition, under our deposit agreement, the depositary bank cannot accept deposits of shares and deliver ADSs representing those shares unless (1) we have consented to such deposit or (2) Korean counsel has advised the depositary bank that the consent required under (1) is no longer required under Korean laws and regulations. Under current Korean laws and regulations, the depositary bank is required to obtain our prior consent for the number of shares to be deposited in any given proposed deposit which exceeds the difference between (1) the aggregate number of shares deposited by us or with our consent for the issuance of ADSs (including deposits in connection with the initial and all subsequent offerings of ADSs and stock dividends or other distributions related to these ADSs) and (2) the number of shares on deposit with the depositary bank at the time of such proposed deposit. The depositary bank has informed us that, at a time it considers to be appropriate, the depositary bank plans to start accepting deposits of shares without our consent and to deliver ADSs representing those shares up to the amount allowed under current Korean laws and regulations. Until such time, however, the depositary bank will continue to obtain our consent for such deposits of shares and delivery of ADSs, which we may not provide. Consequently, if an investor surrenders his ADSs to withdraw the underlying shares, he may not be allowed to deposit the shares again to obtain ADSs. See “Item 10. Additional Information—Item 10.D. Exchange Controls.”

A foreign investor may not be able to exercise voting rights with respect to common shares exceeding the number of common shares held by our largest domestic shareholder.

Under the Telecommunications Business Act, a foreign shareholder who holds 5.0% or more of our total shares is prohibited from becoming our largest shareholder. However, any foreign shareholder who held 5.0% or more of our total shares and was our largest shareholder on or prior to May 9, 2004 is exempt from the regulations, provided that such foreign shareholder may not acquire any more of our shares. Under the Telecommunications Business Act, the Korea Communications Commission may, if it deems it necessary to preserve substantial public interests, prohibit a foreign shareholder from being our largest shareholder. In addition, the Foreign Investment Promotion Act prohibits any foreign shareholder from being our largest shareholder if such shareholder owns 5.0% or more of our shares with voting rights. In the event that any foreigner or foreign government acquires our shares in violation of the above provisions, such foreign shareholder may not be able to exercise voting rights with respect to common shares exceeding such threshold. The Korea Communications Commission may also order us or the foreign shareholder to take corrective measures in respect of the excess shares within a specified period of six months or less.

13

Holders of ADSs will not be able to exercise dissenter’s rights unless they have withdrawn the underlying common stock and become our direct shareholders.

In some limited circumstances, including the transfer of the whole or any significant part of our business and our merger or consolidation with another company, dissenting shareholders have the right to require us to purchase their shares under Korean law. A holder of ADSs will not be able to exercise dissenter’s rights unless he has withdrawn the underlying common stock and become our direct shareholder. See “Item 10. Additional Information—Item 10.B. Memorandum and Articles of Association.”

An investor may not be able to exercise preemptive rights for additional shares and may suffer dilution of his equity interest in us.

The Commercial Code of Korea and our articles of incorporation require us, with some exceptions, to offer shareholders the right to subscribe for new shares in proportion to their existing ownership percentage whenever new shares are issued. If we offer any rights to subscribe for additional shares of our common stock or any rights of any other nature, the depositary bank, after consultation with us, may make the rights available to an ADS holder or use reasonable efforts to dispose of the rights on behalf of the ADS holder and make the net proceeds available to the ADS holder. The depositary bank, however, is not required to make available to an ADS holder any rights to purchase any additional shares unless it deems that doing so is lawful and feasible and:

• a registration statement filed by us under the Securities Act of 1933, as amended, is in effect with respect to those shares; or

• the offering and sale of those shares is exempt from or is not subject to the registration requirements of the Securities Act.

We are under no obligation to file any registration statement. If a registration statement is required for an ADS holder to exercise preemptive rights but is not filed by us, the ADS holder will not be able to exercise his preemptive rights for additional shares. As a result, the ADS holder may suffer dilution of his equity interest in us.

Forward-looking statements may prove to be inaccurate.

This annual report contains “forward-looking statements” that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “should,” and similar expressions. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be incorrect. The uncertainties in this regard include, but are not limited to, those identified in the risk factors discussed above. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances.

14

Item 4.  Information on the Company

Item 4.A.  History and Development of the Company

In 1981, the Government established us under the Korea Telecom Act to operate the telecommunications services business that it previously directly operated. Under the Korea Telecom Act and the Government-Invested Enterprises Management Basic Act, the Government exercised substantial control over our business and affairs. Effective October 1, 1997, the Korea Telecom Act was repealed and the Government-Invested Enterprises Management Basic Act became inapplicable to us. As a result, we became a corporation under the Commercial Code, and our corporate organization and shareholders’ rights were governed by the Privatization Law and the Commercial Code. Among other things, we began to exercise greater autonomy in setting our annual budget and making investments in the telecommunications industry, and our shareholders began electing our directors, who used to be appointed by the Government under the Korea Telecom Act.

Prior to 1993, the Government owned all of the issued shares of our common stock. From 1993 through May 2002, the Government disposed of all of its equity interest in us, and the Privatization Law ceased to apply to us in August 2002. We amended our legal name from Korea Telecom Corp. to KT Corporation in March 2002.

Before December 1991, we were the sole provider of local, domestic long-distance and international long-distance telephone services in Korea. The Government began to introduce competition in the telecommunications services market in the early 1990’s. As a result, including ourselves, there are currently three local telephone service providers, five domestic long-distance carriers and numerous international long-distance carriers (including voice resellers) in Korea. In addition, the Government awarded licenses to several service providers to promote competition in other telecommunications business areas such as mobile telephone services and data network services. On June 1, 2009, KTF merged into KT Corporation, with KT Corporation surviving the merger, with the objective of maximizing management efficiencies of our fixed-line and mobile telecommunications operations as well as more effectively responding to the convergence trends in the telecommunications industry. See “Item 4.B. Business Overview—Competition.”

Our legal and commercial name is KT Corporation. Our principal executive offices are located at 206 Jungja-dong, Bundang-ku, Sungnam, Gyunggi-do, Korea, and our telephone number is (8231) 727-0114.

Item 4.B.  Business Overview

We are the leading telecommunications service provider in Korea and one of the largest and most advanced in Asia. As an integrated telecommunications service provider, our principal services include:

• Personal Communications Service (or PCS) mobile telecommunications service and third-generation HSDPA-based IMT-2000 wireless Internet and video multimedia communications services;

• telephone services, including local, domestic long-distance and international long-distance fixed-line telephone services and interconnection services to other telecommunications companies;

• broadband Internet access service and other Internet-related services, including IP-TV services; and

15

• various other services, including leased line service and other data communication service, satellite service and information technology and network services.

Leveraging on our dominant position in the fixed-line telephone services market and our established customer base in Korea, we have successfully pursued new growth opportunities during the past decade and obtained strong market positions in each of our principal lines of business. In particular:

• in the mobile services market in Korea, we achieved a market share of 31.3% with approximately 15.0 million subscribers as of December 31, 2009;

• in the fixed-line telephone services market in Korea, we continue to be the dominant provider with approximately 25.9 million installed lines, of which 17.0 million lines were in service as of December 31, 2009. As of such date, our market share of the local market was 89.9% and our market share of the domestic long-distance market was 86.3%;

• we are Korea’s largest broadband Internet access provider with 7.0 million subscribers as of December 31, 2009, representing a market share of 42.5%; and

• we are also the leading provider of data communication services in Korea.

For the year ended December 31, 2009, under Korean GAAP, our operating revenues were (Won) 19,649 billion, our net income was (Won)610 billion and our basic net income per share was (Won)2,254. As of December 31, 2009, our total equity was (Won)10,667 billion.

Business Strategy

We believe the telecommunications market in Korea will continue to expand due to Korea’s growing economy, consumers’ willingness to adopt new technologies, relatively high income and a relatively large middle class. In order to enhance the management efficiencies of our mobile and fixed-line telecommunications operations as well as more effectively respond to the convergence trends in the telecommunications industry, KTF merged into KT Corporation on June 1, 2009, with KT Corporation surviving the merger. We also restructured our organization into three sub-groups, the Home Customer Group, the Personal Customer Group and the Enterprise Customer Group, so that we may more effectively address differing needs of our customer segments. Consistent with our strategic objectives, we aim to pursue growth through the following four core areas:

• Home Customer Group. We aim to offer a one-stop-shop that satisfies various information technology and telecommunications needs of a household. In March 2009, we launched a new brand “QOOK” to promote our bundled products, which include broadband Internet access service, IP-TV service, Internet phone service and fixed-line telephone service. We aim to differentiate ourselves from our competitors by providing broadband Internet access service using high-speed fiber-to-the-home (or FTTH) connection and offering Internet phone service with value-added features such as video communication, short message service and phone banking. We also began offering real-time broadcasting service on our IP-TV service starting in November 2008.

• Personal Customer Group. Our Personal Customer Group focuses on expanding our wireless data communication business to meet the rising demand for broadband Internet access using advanced wireless data communications devices such as smart phones. We are working closely with handset manufacturers to expand our offerings of smart phones and handsets designed to promote convergence of fixed-line and mobile

16

telecommunications services, as well as promote development of various applications for such devices. In line with this strategy, we began offering Apple’s iPhone on November 28, 2009 and have sold more than 700 thousand units within six months of its launch. We believe that our WiBro network, which enables two-way wireless broadband Internet access to portable computers, mobile phones and other portable devices, as well as our extensive wireless LAN networks installed nationwide, enable our subscribers to maximize effective usage of their smart phones. We plan to take advantage of our industry-leading network infrastructure to attract more customers as this market further develops. In addition, we aim to further enhance our position in the mobile telecommunications market by leveraging on our strong brand, nationwide marketing network and ability to bundle various mobile and fixed-line services.

• Enterprise Customer Group. We aim to provide our corporate customers, small- and medium-sized enterprises and government agencies with one-stop solution services including designing data communications and information technology infrastructure to overseeing their day-to-day operations with the objective of achieving operational efficiencies and cost savings. We provide solutions specifically tailored for individual clients, as well as Internet-based computing services, whereby shared resources, software and information are delivered from our data centers and servers. For example, we designed an urban transit infrastructure maintenance system for the Seoul Metropolitan Rapid Transit Corporation, in which workers are able to utilize their smart phones to report back their maintenance results to the headquarters remotely from the maintenance site. Leveraging our extensive customer base, we plan to further expand the range of innovative solutions for our enterprise customers.

• Convergence. We believe that convergence of fixed-line and mobile communications technologies provides a competitive advantage to us because we have the technological know-how and experience to design and construct a unified delivery platform for a new generation of value-added services. We plan to make such platform more readily available to others so that they may create additional contents and convenience solutions such as electronic commerce and digital transaction applications that can be utilized anywhere using various media and communications devices.

The Telecommunications Industry in Korea

The Korean telecommunications industry is one of the most developed in Asia. According to the Korea Communications Commission, the number of mobile subscribers in Korea was 47.9 million and the number of broadband Internet access subscribers in Korea was 16.3 million as of December 31, 2009. As of December 31, 2009, the mobile penetration rate, which is calculated by dividing the number of mobile subscribers (including multiple counting of those who subscribe to more than one mobile service) by the population of Korea, was 98.4%, and the broadband Internet penetration rate, which is calculated by dividing the number of broadband Internet access service subscribers (including multiple counting of those who subscribe to more than one broadband Internet access service) by the number of households in Korea, was 96.6%.

Mobile Telecommunications Service Market

The Korean cellular market was formally established in 1984 when SK Telecom, formerly Korea Mobile Telecom, became the first mobile telephone operator in Korea. SK Telecom remained the only cellular operator in Korea until Shinsegi Telecom began service in 1994. In order to encourage further market growth and competition, the Ministry of Information and Communication awarded three PCS licenses in June 1996. KTF was awarded a license alongside LG Telecom and Hansol M.com, and commercial PCS service was launched in October 1997.

17

Since the introduction of three new operators in 1997, the Korean mobile market has undergone consolidation and significant growth. Following SK Telecom’s purchase of a controlling stake in Shinsegi, we acquired a 47.9% interest in Hansol M.com in 2000 and renamed the company KT M.com. KT M.com merged into KTF in May 2001 and Shinsegi merged into SK Telecom in January 2002. On June 1, 2009, KTF merged into KT Corporation, with KT Corporation surviving the merger. KT Corporation, SK Telecom and LG Telecom have invested in networks compatible with Evolution-Data Optimized (or EV-DO) handsets that allow subscribers to enjoy 2.5 generation high speed wireless data services. KT Corporation and SK Telecom also offer third-generation, high-capacity HSDPA-based IMT-2000 wireless Internet and video multimedia communications services that use significantly greater bandwidth capacity.

The table below gives the subscription and penetration information of the mobile telecommunications industry for the periods indicated:

	As of December 31,
	2005		2006		2007		2008		2009
Total Korean Population (1)	48,294		48,378		48,457		48,607		48,747
Mobile Subscribers (2)	38,342		40,197		43,498		45,607		47,944
Mobile Subscriber Growth Rate	4.8	%	4.8	%	8.2	%	4.9	%	5.1	%
Mobile Penetration (3)	79.4	%	83.1	%	89.8	%	93.8	%	98.4	%

(1) In thousands, based on population trend estimates by the National Statistical Office of Korea.

(2) In thousands, based on information announced by the Korea Communications Commission.

(3) Penetration is determined by dividing mobile subscribers by total Korean population.

Broadband Internet Access Market

With the advancement of broadband technology, the Korean broadband Internet access market has experienced significant growth. The principal technologies used in providing high speed Internet access services are xDSL, HFC and fiber optic LAN. xDSL refers to various types of digital subscriber lines, including ADSL and VDSL. xDSL offers an access solution over existing telephone lines using a specialized modem while HFC service involves the use of two-way cable networks. Fiber optic LAN is a technology that combines fiber optic cables and Unshielded Twisted Pair (or UTP) cables. Fiber optic cables are connected to residential and commercial buildings with UTP cable-based LAN capabilities. While xDSL and HFC are more widely used technologies because of their relative reliability, ease of provisioning and cost effectiveness, fiber optic LAN usage in Korea has been steadily increasing in recent years.

Since the subscribers of two-way cable networks share a limited bandwidth, the downstream speed tends to slow down as the number of subscribers increases, thereby decreasing the quality of HFC-based service. While xDSL technology was commercially introduced after HFC technology, it has surpassed HFC to become the prevalent broadband access platform in Korea. VDSL, ADSL-based technology with enhanced downstream speed, became commercialized in 2002. Some of the service providers have upgraded their broadband network to provide fiber optic LAN-based service to their subscribers, which further enhances data transmission speed up to 100 Mbps as well as improves connection quality, and enables such service providers to offer video-on-demand services with real-time high definition broadcasting.

In recent years, broadband Internet access service providers and mobile telecommunications service providers have focused their attention to provide wireless Internet connection capabilities. They have introduced wireless LAN service with speeds of up to 155 Mbps, which is designed to integrate fixed-line and wireless services by offering high speed wireless Internet access to laptops, PDAs and

18

smart phones in hot-spot zones and at home. Some service providers have also developed wireless Internet networks to provide WiBro service, which enables two-way wireless broadband Internet access to portable computers, mobile phones and other portable devices at a speed averaging 1 Mbps.

Our Services

Mobile Service

We provide mobile services based on CDMA technology and W-CDMA technology. Prior to the merger of KTF into KT Corporation, we provided such services through KTF, which was formerly a consolidated subsidiary. On June 1, 2009, KTF merged into KT Corporation, with KT Corporation surviving the merger, with the objective of maximizing management efficiencies of our fixed-line and mobile telecommunications operations as well as more effectively responding to the convergence trends in the telecommunications industry. KTF obtained one of the three licenses to provide nationwide PCS service in June 1996 and began offering PCS service in October 1997. PCS service is a digital wireless telephone and data transmission system that uses portable handsets with long battery life to communicate via low-power antennae. Our PCS service is based on CDMA technology and utilizes 40 MHz of bandwidth in the 1800 MHz frequency. KTF also began offering HSDPA-based IMT-2000 services, which is a third-generation, high-capacity wireless Internet and video multimedia communications technology that allows an operator to provide to its subscribers significantly more bandwidth capacity. We currently offer such services under the brand name “SHOW.”

Revenues related to mobile service accounted for 33.8% of our operating revenues in 2009. In addition, our goods sold, which are primarily from mobile handset sales, accounted for 17.3% of our operating revenues in 2009. The following table shows selected information concerning the usage of our network during the periods indicated and the number of our subscribers as of the end of such periods:

	As of or for the Year Ended December 31,
	2007		2008		2009
Outgoing Minutes (in thousands) (1)		27,002,928		28,959,840		30,714,420
Average Monthly Outgoing Minutes per Subscriber (1) (2)		164		168		173
Average Monthly Revenue per Subscriber (1) (3)	(Won)	38,627	(Won)	39,487	(Won)	36,241
Number of Subscribers (in thousands)		13,721		14,365		15,016

(1) Prior to the merger of KTF into KT Corporation on June 1, 2009, we maintained an air-time reselling arrangement with KTF where we billed directly to our resale subscribers for their usage of KTF’s mobile networks and collected all fees and charges relating to such usage. Such amounts related to resale subscribers are not included in our calculation of outgoing minutes and average monthly outgoing minutes and revenue per subscriber in 2007 and 2008. In 2009, we have included such amounts related to resale subscribers.

(2) The average monthly outgoing minutes per subscriber is computed by dividing the total minutes of usage for the period by the weighted average number of subscribers for the period and dividing the quotient by the number of months in the period. The weighted average number of subscribers is the sum of the total number of subscribers at the end of each month divided by the number of months in the period.

(3) The average monthly revenue per subscriber is computed by dividing total monthly fees, usage charges, interconnection fees and value-added service fees for the period by the weighted average number of subscribers and dividing the quotient by the number of months in the period.

We compete with SK Telecom, a mobile service provider that has a longer operating history than us, and LG Telecom that began its service at around the same time as KTF. As of December 31, 2009, we had approximately 15.0 million subscribers, which was second largest among the three mobile service providers. As of December 31, 2009, we had a market share of 31.3% of the mobile service market.

19

We market our mobile services primarily through independent exclusive dealers located throughout Korea. As of December 31, 2009, there were approximately 2,200 shops managed by our independent exclusive dealers. In addition to assisting new subscribers to activate mobile service and purchase handsets, authorized dealers are connected to our database and are able to assist customers with account information. Although most of these dealers sell exclusively our 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. The handsets sold by us to the dealers cannot be returned to us unless they are defective. If a handset is defective, it may be exchanged for a new one within 14 days from the date of purchase.

In response to the diversification of our customers’ demands and their increasing sophistication, we have also selectively engaged in opportunities to expand our internal sales channels in recent years. In 2007, we established a wholly-owned subsidiary, KT M&S Co., Ltd., that operates approximately 140 customer plazas 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 we offer. We also operate a website to promote and advertise our products and services to the general public and in particular to younger customers who are more familiar with the Internet.

We conduct 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.

Telephone Services

Fixed-line Telephone Services. We utilize our extensive nationwide telephone network to provide fixed-line telephone services, which consist of local, domestic long-distance and international long-distance services. These fixed-line telephone services accounted for 18.0% of our operating revenues in 2009. Our telephone network includes exchanges, long-distance transmission equipment and fiber optic and copper cables. The following table gives some basic measures of the development of our telephone system:

	As of or for the Year Ended December 31,
	2005	2006	2007	2008	2009
Total Korean population (thousands) (1)	48,294	48,378	48,457	48,607	48,747
Lines installed (thousands) (2)	26,190	26,838	26,671	26,008	25,907
Lines in service (thousands) (2)	20,837	20,331	19,980	18,883	17,069
Lines in service per 100 inhabitants (3)	43.1	42.0	41.2	38.8	35.0
Fiber optic cable (kilometers)	167,857	212,715	267,421	312,232	405,528
Number of public telephones installed (thousands)	267	218	185	161	144
Domestic long-distance call minutes (millions) (4) (5)	13,417	14,769	13,375	11,591	9,526
Local call pulses (millions) (4)	18,566	16,182	14,676	12,449	8,406

(1) Based on population trend estimates by the National Statistical Office of Korea.

(2) Including lines used for public telephones but excluding lines dedicated to centralized extension system services for corporate subscribers.

(3) Determined based on lines in service and total Korean population.

(4) Excluding calls placed from public telephones.

(5) Estimated by KT Corporation.

20

Our 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. In recent years, we have also increased the proportion of our lines that 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. We completed connection of all installed lines to digital exchanges in June 2003.

The following table shows the number of minutes of international long-distance calls recorded by us and specific service providers utilizing our international long-distance network in each specified category for each year in the five-year period ended December 31, 2009:

	Year Ended December 31,
	2005	2006	2007	2008	2009
	(In millions of billed minutes)
Incoming international long-distance calls	558.9	519.4	627.4	603.7	442.2
Outgoing international long-distance calls	467.8	400.9	431.4	398.1	325.9
Total	1,026.7	920.3	1,058.8	1,001.8	768.1

United States (20.9%), Japan (15.4%) and China (18.7%) accounted for the greatest percentage of our international long-distance call traffic measured in minutes in 2009. In recent years, the volume of our incoming calls exceeded the volume of our outgoing calls. The agreed settlement rate is applied to the call minutes to determine the applicable net settlement payment.

Interconnection. Under the Telecommunications Business Act, we are required to permit other service providers to interconnect to our fixed-line network. Currently, the principal users of this interconnection capacity include SK Broadband and LG Telecom (offering local, domestic long-distance and international long-distance services), Onse and SK Telink (offering international and domestic long-distance services), and SK Telecom and LG Telecom (transmitting calls to and from their mobile networks). We expect that interconnection revenues and payments will remain important for our results of operations. In recent years, revenues from a landline user for a call initiated by a landline user to a mobile service subscriber (land-to-mobile interconnection) have become a significant portion of our results of operations, accounting for 5.8% of our operating revenues in 2009. We recognize 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.

Internet phone services. The volume of calls made through Internet phone services has significantly increased since Internet phone service was first introduced in Korea in 1998. We provide Internet phone services that enable VoIP phone devices with broadband connection to make domestic and international calls. In order to differentiate our Internet phone services from our competitors’ services, we provide value-added services such as video communication, short message service, phone banking and a variety of traffic and local news information. In March 2009, we changed our brand name to “QOOK Internet Phone.” As of December 31, 2009, we had approximately 1.7 million subscribers.

Internet Services

Broadband Internet Access Service. Leveraging on our nationwide network of 405,528 kilometers of fiber optic cable network, we have achieved a leading market position in the broadband Internet access market in Korea. We believe we have a competitive advantage over other broadband

21

Internet access service providers because, unlike our competitors, we can utilize our existing networks nationwide to provide broadband Internet access service. Our broadband Internet access service accounted for 9.8% of our operating revenues in 2009. Our principal Internet access services include:

• ADSL, VDSL, Ethernet and FTTH services under the “QOOK Internet” brand name;

• wireless LAN service under the “Nespot” brand name, which is designed to integrate fixed-line and wireless services by offering high speed wireless Internet access to laptops, PDAs and smart phones in hot-spot zones and QOOK Internet service in fixed-line environments. Nespot enables subscribers to access the Internet at up to 155 Mbps. We sponsored approximately 13,000 hot-spot zones nationwide for wireless connection as of December 31, 2009; and

• WiBro Internet access service, which enables two-way wireless broadband Internet access to portable computers, mobile phones and other portable devices at a speed averaging 1 Mbps per user.

We had 7.0 million fixed-line QOOK Internet subscribers and approximately 296 thousand Nespot service subscribers as of December 31, 2009. We commercially launched our WiBro service in June 2006, and we had approximately 287 thousand subscribers as of December 31, 2009. We also bundle our WiBro service with QOOK Internet and Nespot services at a discount in order to attract additional subscribers.

Our QOOK Internet service utilizes 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. While ADSL technology was commercially introduced after HFC-based technology, it has surpassed HFC to become the prevalent access platform in Korea. VDSL, ADSL-based technology with enhanced downstream speed, became commercialized in July 2002. We are currently upgrading our broadband network to enable FTTH connection, which further enhances downstream speed up to 100 Mbps 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 us to deliver enhanced products and services that require high bandwidth, such as IP-TV service and delivery of other digital media content.

The high-speed downstream rates can reach up to 8 Mbps for ADSL and 100 Mbps for VDSL and FTTH. Downstream rates depend on a number of factors. For a constant wire gauge, the data rate decreases as the length of the copper wire increases. Generally, if the separation between the telephone office and the subscriber is greater than four kilometers, line attenuation is so severe that broadband speeds can no longer be achieved. Approximately 95% of the households subscribing to our basic local telephone service are located within a four kilometer radius of our telephone offices, making our QOOK Internet service available to most of the Korean population. Fiber-optic cable used by FTTH, on the other hand, uses laser light to carry signals that travel long distances inside fiber optic cable without degradation.

Other Internet-related Services. Our other Internet-related services focus primarily on providing infrastructure and solutions for business enterprises, as well as IP-TV and network portal services. Our other Internet-related services accounted for 2.6% of our operating revenues in 2009.

22

We operate seven Internet data centers located throughout Korea and provide a wide range of computing services to companies which need servers, storages and leased lines. Internet data centers are facilities used to house, protect and maintain network server computers that store and deliver Internet and other network content, such as web pages, applications and data. Our Internet data centers are designed to meet international standards, and are equipped with temperature control systems, regulated and reliable power supplies, fire detection and suppression equipment, security monitoring and wide-bandwidth connections to the Internet. Internet data centers allow corporations or Internet service providers to outsource their application and server hardware management.

Our Internet data centers offer network outsourcing services, server operation services and system support services. Our network outsourcing services include co-location, which is the installation of our customers’ network equipment at our Internet data centers. Co-location is designed to increase customers’ Internet connection speed and reduce connection time and costs by directly connecting the customers’ server to the Internet backbone switch at our Internet data centers. Our server operation services include optimal server management service and technical support service we provide with respect to the leased servers that are linked directly to our Internet backbone switch. We also lease servers and network equipment for a fixed monthly fee. Our system support services include providing system resources for a wide range of Internet computing services, such as application transfer, network storage, video streaming and application download, as well as sending short text messages and messages containing multimedia objects, such as images, audio and video.

We also offer a service called Bizmeka to develop and commercialize business-to-business solutions targeting small- and medium-sized business enterprises in Korea. Bizmeka is an applied application service provider which provides industry-specific business solutions, including customer database management and electronic data interchange.

We also offer high definition video-on-demand and real-time broadcasting IP-TV services under the brand name “QOOK TV.” Our IP-TV service offers access to an array of digital media contents, including movies, sports, news, educational programs and TV replay, for a fixed monthly fee. Through a digital set-top box that we rent to our customers, our 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. We expanded our IP-TV service to include real-time broadcasting on November 17, 2008. We had 1.2 million QOOK TV subscribers as of December 31, 2009.

Data Communication Service

Our data communication service involves 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, 2007, 2008 and 2009, we leased 391,383 lines, 386,917 lines and 327,778 lines to domestic and international businesses. The data communication service accounted for 6.7% of our operating revenues in 2009.

We provide dedicated and secure broadband Internet connection service to institutional customers under the “Kornet” brand name. We provide high-speed connection up to 4.2 Tbps, as well as rent to our customers and install necessary routers to ensure reliable Internet connection and enhanced security. We provide discount rates to qualified customers, including small- and medium-sized enterprises, businesses engaging in Internet access services and government agencies.

We currently have two satellites in operation, Koreasat 3 and Koreasat 5. We launched Koreasat 3 in September 1999. Koreasat 3 carries transponders that are used for direct-to-home satellite broadcasting, telecommunications, video distribution and high-speed data communications services. Most of the direct-to-home satellite broadcasting transponders are utilized by Korea Digital Satellite Broadcasting Inc.

23

We launched Koreasat 5 in August 2006, which replaced Koreasat 2. Koreasat 5, a combined civil and military communications satellite, is the first Korean satellite to provide commercial satellite services to neighboring countries, and the service zone of the twelve beam repeaters include Japan, China, Taiwan, the Philippines, the eastern part of China and the southern part of Russia. The design life of Koreasat 5 is fifteen years. The design life of Koreasat 3 is twelve years, and we plan to launch Koreasat 6 in November 2010 to replace Koreasat 3. We also lease satellite capacity to offer commercial satellite services to both domestic and international customers.

Miscellaneous Services

We also engage in various business activities that extend beyond telephone services and data communications services, including information technology and network services, real estate development and car rental business. Our miscellaneous services accounted for 5.8% of our operating revenues for 2009.

We offer a broad array of integrated information technology and network services to our business customers. Our range of services include consulting, designing, building and maintaining systems and communication networks that satisfy the individual needs of our customers in the public and private sectors.

We own land and real estate in various locations nationwide. Technological developments have enhanced the coverage area of individual telecommunications facilities, which enable us to better utilize our existing land and other real estate holdings. In recent years, we have engaged in the planning and development of commercial and office buildings and condominiums on our unused sites, as well as in the leasing of buildings we own.

We also operate KT Rental, a subsidiary that provides rental cars and equipment. On March 31, 2010, MBK Partners, a private equity firm, and we jointly acquired Kumho Rent-A-Car Co., Ltd. from Korea Express Inc. for (Won)289 billion, with each taking a 50% stake. Kumho Rent-A-Car was subsequently merged with the car rental business unit of KT Rental on June 1, 2010. As a result of the merger, Kumho Rent-A-Car owns approximately 55,000 cars and has a market share of 24% of the domestic car rental market.

24

Revenues and Rates

The table below shows the percentage of our revenues derived from each category of services for each of the years from 2007 through 2009:

	Year Ended December 31,
	2007		2008		2009
Mobile service	32.1	%	32.8	%	33.8	%
Fixed-line telephone services:
Local service	15.4		14.0		13.6
Non-refundable service initiation fees	0.2		0.1		0.1
Domestic long-distance service	3.6		3.0		2.4
International long-distance service	2.3		2.3		2.0
Land-to-mobile interconnection	8.5		7.1		5.8
Sub-total	30.0		26.5		23.9
Internet services:
Broadband Internet access service	11.1		10.4		9.9
Other Internet-related services (1)	1.7		2.3		2.5
Sub-total	12.8		12.7		12.4
Goods sold (2)	13.2		15.6		17.3
Data communications service (3)	6.8		6.8		6.7
Miscellaneous services (4)	5.1		5.6		5.9
Operating revenues	100.0	%	100.0	%	100.0	%

(1) Includes revenues from services provided by our Internet data centers, Bizmeka and QOOK TV.

(2) Includes mobile handset sales.

(3) Includes revenues from Kornet Internet connection service and satellite services.

(4) Includes revenues from information technology and network services, real estate development and car rental business.

Mobile Services

We derive revenues from mobile services principally from:

• initial subscription fees;

• monthly fees;

• usage charges for outgoing calls;

• usage charges for wireless data transmission;

• contents download fees; and

• value-added monthly service fees.

25

We offer various rate plans, including those that offer a specified number of free airtime minutes per month in return for a higher monthly fee and those that are geared toward business customers. In September 2009, we reduced our initial subscription fee for new subscribers by 20% from (Won)30,000 to (Won)24,000. For our HSDPA-based SHOW service, we also charge monthly fees, voice calling usage charges and video calling usage charges. Under our standard rate plan for HSDPA-based SHOW service, we charge a monthly fee of (Won)12,000, voice calling usage charges of (Won)18 per ten seconds and video calling usage charges of (Won)30 per ten seconds. The following table summarizes charges for our representative HSDPA-based SHOW service plans:

	Free Voice Call Airtime Minutes	Free Video Call Airtime Minutes	Monthly Fee
SHOW KING Sponsor Standard	0	0	(Won)	12,000
SHOW KING Sponsor Gold—Free 150 (1)	150	15		28,500
SHOW KING Sponsor Gold—Free 250 (1)	250	0		35,000
SHOW KING Sponsor Gold—Free 350 (1)	350	0		45,000
SHOW KING Sponsor Gold—Free 450 (1)	450	0		55,000
SHOW KING Sponsor Gold—Free 650 (1)	650	0		67,000
SHOW KING Sponsor Gold—Free 850 (1)	850	0		75,000
SHOW KING Sponsor Gold—Free 2000 (1)	2,000	0		97,000

(1) Requires mandatory subscription period of 24 months.

A subscriber may also subscribe to an individually designed calling rate plan by mixing free voice calling airtime minutes and free text messages at a set monthly fee.

For our PCS service, we charge monthly fees and usage charges. Under our standard rate plan for PCS service, we charge a monthly fee of (Won)12,500 and usage charges of (Won)18 per ten seconds, and the subscriber is provided with five free minutes. The following table summarizes charges for our representative PCS service plans:

	Free Airtime Minutes	Free Text Messages	Monthly Fee
Standard	5	0	(Won)	12,500
New Double Designated Numbers (1)	0	50		15,500
Roll Over (Free 200 Minutes) (2)	200	0		31,500
Roll Over (Free 550 Minutes) (2)	550	0		61,000
Roll Over (Free 800 Minutes) (2)	800	0		71,000

(1) Discounts of 40% when a subscriber makes calls to up to six pre-designated numbers.

(2) Unused free airtime may be transferred to the following month.

We also provide plans specially designed for elderly and pre-teen subscribers as well as special discounts to our subscribers with physical disabilities.

26

In September 2009, we also introduced new rate plans specifically for smart phone users. The following table summarizes charges for our representative smart phone service plans:

	Free Airtime Minutes	Free Data Transmission (1)	Monthly Fee
SHOW Smart Sponsor Free 150 (2)	150	0 megabytes	(Won)	28,500
SHOW Smart Sponsor Free 250 (2)	250	0		35,000
SHOW Smart Sponsor Free 350 (2)	350	0		45,000
SHOW Smart Sponsor Free 450 (2)	450	0		55,000
SHOW Smart Sponsor Free 650 (2)	650	0		67,000
SHOW Smart Sponsor Free 850 (2)	850	0		75,000
SHOW KING Sponsor i—Slim (3)	150	100		35,000
SHOW KING Sponsor i—Lite (3)	200	500		45,000
SHOW KING Sponsor i—Talk (3)	250	100		45,000
SHOW KING Sponsor i—Medium (3)	400	1,000		65,000
SHOW KING Sponsor i—Special (3)	600	1,500		79,000
SHOW KING Sponsor i—Premium (3)	800	3,000		95,000

(1) We do not charge for any data transmission in wireless LAN zones. We charge (Won)0.025 per 0.5 kilobyte for any additional data transmission exceeding the free monthly quota.

(2) Available only to smart phone users who do not use Apple iPhones. We provide discounts of up to 36.7% for mandatory subscription periods ranging from one to three years.

(3) We provide discounts of up to 38.2% for mandatory subscription periods ranging from one to three years.

We have entered into arrangements with various partners including a leading discount store, a leading online shopping mall, a cosmetics company, oil refinery companies, an operator of cinema complexes, a leading motor company and Korea Railroad Corporation, and the subscribers of our mobile service may elect to receive monthly discount coupons, membership points or movie tickets in lieu of our monthly rate discounts.

In September 2009, we also launched QOOK&SHOW, a bundled package for individuals with specially designed mobile phones that can be used as an Internet phone and a wireless broadband Internet access device at home and at any wireless LAN zone and as a mobile phone and a wireless broadband Internet access device outside of such locations. Subscribers pay a monthly fee according to the package selected and pay a discounted rate of (Won)13 per 10 seconds instead of the standard W-CDMA rate of (Won)18 per 10 seconds to call a mobile phone and (Won)39 per 3 minutes instead of (Won)18 per 10 seconds to call another landline phone when they are at home or at any wireless LAN zone. In addition, the basic monthly fee of (Won)2,000 for the Internet phone service is waived. QOOK&SHOW subscribers may use wireless broadband Internet access service without any usage charges at home or at any wireless LAN zone. In order to promote our QOOK&SHOW package, we are offering additional incentives to all new subscribers of the package who sign up prior to July 15, 2010. We provide to such subscribers an additional monthly discount of (Won)2,500 as well as provide them with unlimited free calls to our Internet phone subscribers. Such additional discounts and benefits apply during the mandatory subscription period.

Fixed-line Telephone Services

Local Telephone Service. Our revenues from local telephone service consist primarily of:

• Service initiation fees for new lines;

• Monthly basic charges; and

• Monthly usage charges based on the number of call pulses.

27

All calls are currently measured by call pulses. Each pulse is determined by the duration of the call and the time of the day at which the call is made. For instance, during regular service hours, a call pulse is triggered at the beginning of each local telephone call and every three minutes thereafter.

The rates we charge for local calls are currently subject to approval by the Korea Communications Commission after consultation with the Ministry of Strategy and Finance. The rates are identical for residential and commercial customers. The following table summarizes our local usage rates as of each date on which rates were revised:

	Dec 1, 1996		Sept 1, 1997		April 15, 2001		May 1, 2002
Local Usage Charges (per pulse) (1)
Regular service	(Won)	41.6	(Won)	45	(Won)	39	(Won)	39
Public telephone		40		50		50		70

(1) Since January 1, 1990, usage charges for local service in those metropolitan areas subject to measured service have been based on the number of pulses, which are a function of the duration and number of calls, and per pulse rates. Before January 1, 1993, in areas not subject to measured service, a pulse was triggered once for each local telephone call, regardless of the length of the call. Commencing January 1, 1993, measured service applies to all lines in service. A pulse is triggered at the beginning of each local call and every three minutes thereafter from 8:00 a.m. to 9:00 p.m. on weekdays and every 258 seconds thereafter on holidays and from 9:00 p.m. to 8:00 a.m. on weekdays.

We also charge a monthly basic charge ranging from (Won)3,000 to (Won)5,200, depending on location, and a non-refundable service initiation fee of (Won)60,000 to new subscribers. The non-refundable service initiation fee is waived for the new subscribers who subscribe to our local service through our online application process. Until April 2001, we charged refundable service initiation deposits, which were refunded upon termination of service. As of December 31, 2009, we had (Won)697 billion of refundable service initiation deposits outstanding and 3,087 thousand subscribers who are enrolled under the mandatory deposit plan and are eligible to switch to the no deposit plan and receive their service initiation deposit back (less the non-refundable service initial fees).

Domestic Long-distance Telephone Service. Our revenues from domestic long-distance service consist of charges for calls placed, charged for the duration, time of day and day of the week a call is placed, and the distance covered by the call. We are able to set our own rates for domestic long-distance service without approval from the Korea Communications Commission.

The following table summarizes our domestic long-distance rates as of each date on which rates were revised. These charges do not reflect discounts applicable to calls made during off-peak hours or holidays.

	Date of Rate Change (1)
	Dec. 1, 1996		Sept. 1, 1997		Dec. 1, 2000		April 15, 2001		Nov. 1, 2001
Domestic Long-Distance Charges (per three minutes) (1) (2)
Up to 30 km	(Won)	41.6	(Won)	45	(Won)	45	(Won)	39	(Won)	39
Up to 100 km		182		172		192		192		261
100 km or longer		277		245		252		252		261

(1) Domestic long-distance calls of up to 30 kilometers are billed on the same basis as local calls. Before April 15, 2001, for domestic long-distance calls in excess of 30 kilometers, a pulse was triggered at the beginning of each call and every 47 seconds for calls up to 100 kilometers or every 33 seconds for calls in excess of 100 kilometers. Commencing April 15, 2001, a pulse was triggered at the beginning of each call and every 30 seconds thereafter. Commencing November 1, 2001, a pulse is triggered at the beginning of each call and every 10 seconds thereafter.

(2) Rates for domestic long-distance calls in excess of 30 kilometers are currently discounted (by an adjustment in the period between pulses) by 10% on holidays and from 6:00 a.m. to 8:00 a.m. on weekdays, and by 30% from midnight to 6:00 a.m. every day.

28

In recent years, we have begun to offer optional flat rate plans, discount plans and bundled product plans in order to mitigate the impact from lower usage of local and domestic long-distance calls and stabilize our revenues from fixed-line telephone services. For a discussion of our bundled products, see “—Bundled Products.” Some of our new flat rate and discount plans introduced in recent years include the following:

• starting in November 2007, a subscriber who elects to pay an additional monthly flat rate of (Won)3,000 is able to make local and domestic long-distance calls at a flat rate of (Won) 39 per call without regard to length of the call;

• starting in November 2007, a subscriber who elects to pay an additional monthly flat rate of (Won)2,000 is able to make domestic long-distance calls at a rate of (Won)39 per three minutes;

• starting in June 2008, a subscriber who elects to pay a monthly flat rate of (Won)12,500 is able to make free local and domestic long-distance calls after 9 p.m. on weekdays or at any time on weekends. Each month, the subscriber also receives a free movie ticket and free 60 minutes of land-to-mobile calls. The subscriber is also eligible to receive a discount of up to 20%, subject to the length of the mandatory subscription period;

• starting in October 2009, a subscriber who elects to subscribe to our fixed-line phone service for a three year mandatory subscription period is able to make local and domestic long-distance calls at a flat rate of (Won)39 per three minutes; and

• starting in October 2009, a subscriber who elects to subscribe to our broadband Internet access service or SHOW mobile service for a three year mandatory subscription period is able to make local, domestic long-distance and land-to-mobile calls of up to (Won)150,000 with a flat rate payment of (Won)50,000 or such calls up to (Won)50,000 with a flat rate payment of (Won)10,000. Standard rates apply to calls that exceed the capped amounts.

International Long-distance Service. Our revenues from international long-distance service consist of:

• amounts we bill to customers for outgoing calls made to foreign countries (including customers who make calls to Korea from foreign countries under our home country direct-dial service);

• amounts we bill to foreign telecommunications carriers and administrations for connection to the Korean telephone network in respect of incoming calls (including calls placed in Korea by customers of the foreign carriers for home country direct-dial service); and

• other revenues, including revenues from international calls placed from public telephones.

We bill outgoing calls made by customers in Korea (and calls made to Korea from foreign countries under our home country direct-dial service) in accordance with our international long-distance rate schedule for the country called. These rates vary depending on the time of day at which a call is placed. We bill outgoing international calls on the basis of one-second increments. We are able to set our own rates for international long-distance service without approval from the Korea Communications Commission.

For incoming calls (including calls placed in Korea by customers of the foreign carriers for home country direct-dial service), we receive settlement payments from the relevant foreign carrier or administration at the applicable settlement rate specified under the agreement with the foreign entity. We have entered into numerous bilateral agreements with foreign carriers and administrations. We

29

negotiate the settlement rates under these agreements with each foreign carrier, subject to Korea Communications Commission approval. It is the practice among international carriers for the carrier in the country in which the call is billed to collect payments due in respect of the use of overseas networks. Although we record the gross amounts due to and from us in our financial statements, we make settlements with most carriers quarterly on a net basis.

Interconnection. We provide other telecommunications service providers, including mobile operators and other fixed-line operators, interconnection to our fixed-line network.

Land-to-mobile Interconnection. For a call initiated by a landline user to a mobile service subscriber, we collect from the landline user the land-to-mobile usage charge and remit to the mobile service provider a land-to-mobile interconnection charge. The Korea Communications Commission periodically issues orders setting the interconnection charge calculation method applicable to interconnections with mobile service providers. The Korea Communications Commission 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.

The following table shows the interconnection charges we paid per minute (exclusive of value-added taxes) to mobile operators for landline to mobile calls.

	Effective Starting
	January 1, 2007		January 1, 2008		January 1, 2009
SK Telecom	(Won)	32.8	(Won)	33.4	(Won)	32.9
KTF		39.6		38.7		38.0
LG Telecom		45.1		39.1		38.5

The following table shows the usage charge per minute collected from a landline user for a call initiated by a landline user to a mobile service subscriber.

	Effective Starting September 1, 2004
Weekday	(Won)	87.0
Weekend		82.0
Evening (1)		77.2

(1) Evening rates are applicable from 12:00 a.m. to 6:00 a.m. everyday.

We recognize 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.

Land-to-land and Mobile-to-land Interconnection. For a call initiated by a landline subscriber of our competitor to our fixed-line user, the landline service provider collects from its subscriber its normal rate and remits to us a land-to-land interconnection charge. In addition, for a call initiated by a mobile service subscriber to our landline user, the mobile service provider collects from its subscriber its normal rate and remits to us a mobile-to-land interconnection charge.

30

The following table shows such interconnection charge per minute collected for a call depending on the type of call, as determined by the Korea Communications Commission.

	Effective Starting
	January 1, 2007		January 1, 2008		January 1, 2009
Local access (1)	(Won)	17.3	(Won)	18.3	(Won)	18.1
Single toll access (2)		19.0		19.5		19.3
Double toll access (3)		20.7		20.6		20.4

Source: The Korea Communications Commission.

(1) Interconnection between local switching center and local access line.

(2) Interconnection involving access to single long-distance switching center.

(3) Interconnection involving access to two long-distance switching centers.

Internet Services

Broadband Internet Access Service. We offer broadband Internet access service that primarily uses existing telephone lines to provide both voice and data transmission. We charge monthly fixed fees to customers of broadband Internet service. In addition, we charge customers a one time installation fee per site of (Won)30,000 and modem rental fee ranging from (Won)3,000 to (Won)8,000 on a monthly basis. The rates we charge for broadband Internet access service are subject to approval by the Korea Communications Commission.

The following table summarizes our charges for our representative broadband Internet service plans:

	Maximum Speed	Monthly Fee
QOOK Internet Special (1)	100 Mbps	(Won)	28,800
QOOK Internet Lite (1)	50		25,500
WiBro 1G (2) (6)	3		10,000
WiBro 5G (3) (6)	3		20,000
WiBro 10G (4) (6)	3		30,000
WiBro 30G (5) (6)	3		40,000

(1) We waive the installation fee of (Won)30,000 for mandatory subscription periods of three to four years.

(2) We charge a monthly fee of (Won)10,000 for up to 1,000 megabytes of data transmission and (Won)50 per megabyte for any additional data transmission in excess of 1,000 megabytes per month.

(3) We charge a monthly fee of (Won)20,000 for up to 5,000 megabytes of data transmission and (Won)25 per megabyte for any additional data transmission in excess of 5,000 megabytes per month.

(4) We charge a monthly fee of (Won)30,000 for up to 10,000 megabytes of data transmission and (Won)10 per megabyte for any additional data transmission in excess of 10,000 megabytes per month.

(5) We charge a monthly fee of (Won)40,000 for up to 30,000 megabytes of data transmission and (Won)7 per megabyte for any additional data transmission in excess of 30,000 megabytes per month.

(6) In order to promote our WiBro service, we are currently offering promotional rates to all new customers subscribing before June 30, 2011. New subscribers may elect either flat rate plans in which the subscriber pays either a monthly fee of (Won)19,800 for up to 30,000 megabytes of data transmission or a monthly fee of (Won)27,000 for up to 50,000 megabytes of data transmission, or a discount plan in which the subscriber pays a monthly fee of (Won)10,000 for up to 1,000 megabytes of monthly data transmission and (Won)25 per megabyte for data transmission in excess of such amount, with the maximum monthly fee capped at (Won)150,000. Both promotional plans are subject to mandatory subscription periods.

QOOK TV Services. We charge our subscribers an installation fee per site of (Won) 24,000, a set-top box rental fee ranging from (Won)2,000 to (Won)7,000 on a monthly basis and a monthly subscription fee. The rates we charge for QOOK TV services are subject to approval by the Korea Communications Commission.

31

The following table summarizes charges for our representative QOOK TV service plans:

	Real-time Broadcasting Channels	Monthly Fee  (1)
QOOK TV Video-on-Demand	0	(Won)	10,000
QOOK TV Choice (2)	25		12,000
QOOK TV Education (3)	35		12,000
QOOK TV Thrift (4)	56		12,000
QOOK TV Standard (4)	78		16,000
QOOK TV Deluxe (4)	87		23,000
QOOK TV Skylife Economy (5)	92		20,000
QOOK TV Skylife Standard (5)	117		25,000
QOOK TV Skylife Premium (5)	151		30,000

(1) We provide discounts of 5% to 20% for mandatory subscription periods ranging from one to three years. For QOOK TV Skylife subscribers, we provide discounts of 20% for mandatory subscription period of three years.

(2) Assuming selection of one package. Subscribers must choose at least one channel package, each of which charges a monthly fee of (Won)2,000. The packages include entertainment, media, leisure, education and multi-room.

(3) Assuming selection of one package. Subscribers must choose at least one channel package, each of which charges a monthly fee of (Won)2,000. The packages include elementary school, middle/high school and English education.

(4) We charge additional monthly fees for value-added services such as short messaging service and high-definition channels from Skylife, our subsidiary satellite broadcasting operator.

(5) For subscription to QOOK TV Skylife service, subscribers are charged an additional (Won)11,000 installation fee.

Data Communication Service

We charge customers of domestic leased-lines on a monthly fixed-cost basis based on the distance of the leased line, the capacity of the line measured in bits per second (“bps”), the type of line provided and whether the service site is local or long-distance. In addition, we charge customers a one-time installation fee per line ranging from (Won)56,000 to (Won)1,940,000 depending on the capacity of the line.

Bundled Products

We utilize our extensive customer relationships and market knowledge to expand our revenue base by cross-selling our telecommunications products and services. We launched a new brand “QOOK” in March 2009 to promote our bundled products, and we plan to gradually unify brand names for our various service offerings as QOOK and SHOW. In order to attract additional subscribers to our new services, we bundle our services, such as our broadband Internet access service with WiBro, IP-TV, Internet phone, fixed-line telephone service and mobile services, at a discount.

The following table summarizes our various bundled packages that we currently offer. The packages require subscribers to agree to a subscription period of three years.

	Monthly Rates			Mobile usage Charge Discounts
	Flat Rate (1)		Mobile Monthly Fee	Between Family Members (2)	Calls to Designated Numbers (3)
Internet / Internet Phone / Mobile	(Won)	24,000	Discounts of between 10% to 50%, subject to the number of subscribers who participate (up to 5 mobile numbers)	50%	20%
Internet / Fixed-Line Phone / Mobile		27,000		50%	20%
Internet / IP-TV / Mobile (4)		31,000		50%	20%
Internet / Internet Phone / IP-TV / Mobile (4)		32,000		50%	50%
Internet / Fixed-Line Phone / IP-TV / Mobile (4)		34,000		50%	50%
Internet / Fixed-Line or Internet Phone / IP-TV (5)		40,000	Not applicable	Not applicable	Not applicable

(1) Assuming selection of QOOK Internet Lite service. If QOOK Internet Special is selected, additional monthly charge of (Won)3,000.

32

(2) Applies to both voice call and video call airtime minutes.

(3) Applies to voice call airtime minutes only. Limited to one designated mobile number and one designated fixed-line number.

(4) Assuming selection of QOOK TV Thrift Plan. If QOOK TV Video-on-Demand is selected, deduction of (Won)2,000 from the monthly flat rate. If QOOK TV Standard Plan is selected, additional monthly charge of (Won)3,000.

(5) Assuming selection of QOOK TV Video-on-Demand, QOOK TV Choice or QOOK TV Education for IP-TV service and QOOK Internet Special for broadband Internet access service. Additional monthly charges of (Won)2,000 to (Won)10,000 apply if other IP-TV packages are selected. We provide to such subscribers of bundled packages unlimited free voice calling from their fixed-line or Internet phones to other subscribers of our fixed-line, Internet phone or mobile services. In addition, we provide up to 100 free voice call airtime minutes for calls made to subscribers of our competing mobile service providers.

In order to promote our bundled packages, we are offering additional incentives to all subscribers who sign up prior to October 15, 2010 to packages that include mobile service with fixed-line phone or Internet phone service. We provide to such subscribers unlimited free voice calling to their immediate family members. Such additional discounts apply during the mandatory subscription period.

We have also entered into partnerships with a leading online shopping mall, an operator of cinema complexes, a satellite broadcasting service operator, a life insurance company and a manufacturer of health drinks, and our subscribers may elect to receive monthly gift certificates, music downloads, online game money or movie tickets with value of up to (Won)50,000 per month in lieu of monthly rate discounts.

We believe that subscribers who sign up for bundled products are less likely to cancel our services than subscribers who subscribe to individual services. Subscription fees paid for our bundled products are allocated to each service in proportion to their fair value and the allocated amount is recognized as revenue according to the revenue recognition policy for each service.

Competition

Competition in the telecommunications sector in Korea is intense. In recent years, business combinations in the telecommunications industry have significantly changed the competitive landscape of the Korean telecommunications industry. In particular, SK Telecom acquired a controlling stake in Hanarotelecom Incorporated in 2008, which was renamed SK Broadband. The acquisition enables SK Telecom to provide fixed-line telecommunications, broadband Internet access and IP-TV services together with its mobile telecommunications services. On January 1, 2010, LG Dacom and LG Powercom merged into LG Telecom Co., Ltd. The merger enables LG Telecom to provide a similar range of services as SK Telecom and us.

Under the Telecommunications Basic Law and the Telecommunications Business Law, telecommunications service providers in Korea are currently classified into network service providers, value-added service providers and specific service providers. See “—Regulation.”

Network Service Providers

All network service providers in Korea are permitted to set the rates for international or domestic long-distance services on their own without Korea Communications Commission approval. Many of our competitors have set their rates lower than ours. Currently, we can compete freely with other providers on the basis of rates in all services except for rates we charge for local calls and broadband Internet access service, which require advance approval from the Korea Communications Commission. In all service areas, we compete by endeavoring to provide superior customer service and superior technical quality, taking advantage of our broad customer base and our ability to provide various telecommunication services.

33

We and SK Telecom have been designated as market-dominating business entities in the respective markets under the Telecommunications Business Act. Under this Act, a market-dominating business entity may not engage in any act of abuse, such as unreasonably interfering with business activities of other business entities, hindering unfairly the entry of newcomers or substantially restricting competition to the detriment of the interests of consumers. The Korea Communications Commission has also issued guidelines on fair competition of the telecommunications companies. If any telecommunications service provider breaches the guidelines, the Korea Communications Commission may take necessary corrective measures against it after a hearing at which the service provider may defend its action.

Mobile Service. Competition in the mobile telecommunications industry in Korea is intense among SK Telecom, LG Telecom and us. Such competition has intensified in recent years due to the implementation of mobile number portability, which enabled mobile subscribers to switch their service provider while retaining the same mobile phone number, as well as payments of handset subsidies to purchasers of new handsets who agree to minimum subscription periods.

The following table shows the market share in the mobile telecommunications market as of the dates indicated:

	Market Share (%)
	KT Corporation	SK Telecom	LG Telecom
December 31, 2007	31.5	50.5	18.0
December 31, 2008	31.5	50.5	18.0
December 31, 2009	31.3	50.6	18.1

Source: Korea Communications Commission.

We offer various rate plans, including those that offer a specified number of free airtime minutes per month in return for a higher monthly fee and those that are geared toward business customers. Our competitors also offer similar plans at competitive rates.

Local Telephone Service. We compete with SK Broadband and LG Telecom in the local telephone service business. SK Broadband began providing local telephone service in 1999, followed by LG Telecom in 2004. In addition, the services provided by mobile service providers have had a material adverse effect on KT Corporation in terms of our revenues from fixed-line telephone services. We expect this trend to continue.

The following table shows the market share in the local telephone service market as of the dates indicated:

	Market Share (%)
	KT Corporation	SK Broadband	LG Telecom
December 31, 2007	90.4	8.8	0.8
December 31, 2008	89.8	8.7	1.5
December 31, 2009	89.9	8.4	1.7

Source: Korea Communications Commission.

Although the local usage charge of our competitors and us is the same at (Won)39 per pulse (generally three minutes), our competitors’ non-refundable telephone service initiation charge and basic monthly charge are lower than ours. Our customers pay a non-refundable telephone service initiation charge of (Won)60,000 and a basic monthly charge of up to (Won)5,200 depending on location. On the other hand, customers of our competitors pay a non-refundable telephone service initiation charge of (Won)30,000 and a basic monthly charge of up to (Won)5,200 depending on location.

34

Domestic Long-distance Telephone Service. We compete with SK Broadband, LG Telecom, Onse and SK Telink in the domestic long-distance market. LG Telecom began offering domestic long-distance service in 1996, followed by Onse in 1999 and SK Broadband and SK Telink in 2004. The following table shows the market shares in the domestic long-distance market as of the dates indicated:

	Market Share (%)
	KT Corporation	LG Telecom	SK Broadband	Onse	SK Telink
December 31, 2007	85.4	7.4	3.9	1.8	1.5
December 31, 2008	85.2	7.8	3.7	1.7	1.6
December 31, 2009	86.3	3.4	6.8	1.6	1.9

Source: Korea Telecommunications Operators Association.

Our competitors and we charge (Won)39 per three minutes for domestic long-distance calls up to 30 kilometers. For domestic long-distance calls greater than 30 kilometers, our competitors typically charge between 3% to 5% less than us. The following table is a comparison of our standard long-distance usage charges per 10 seconds with the standard rates of our competitors as of December 31, 2009:

	KT Corporation		SK Broadband		LG Telecom		Onse		SK Telink
30 kilometers or longer	(Won)	14.5	(Won)	13.9	(Won)	14.1	(Won)	13.8	(Won)	13.8

Source: Korea Communications Commission.

International Long-Distance Telephone Service. Four companies, SK Broadband, LG Telecom, Onse and SK Telink, directly compete with us in the international long-distance market. LG Telecom began offering international long-distance service in 1991, followed by Onse in 1997 and SK Broadband in 2004. SK Telink, which only provides Internet phone service, entered the international long-distance market in 2003 and offers its services at rates lower than those of network-based international long-distance telephone services. The entry of Internet phone service providers and other telecommunications service providers, such as voice resellers, that can offer telecommunications services at rates lower than ours has increased competition in the international long-distance market and adversely affected our revenues and profitability from international long-distance services. See “—Specific Service Providers.”

Our competitors generally charge less than us for international long-distance calls. The following table is a comparison of our standard long-distance usage charges per one minute with the standard rates of our competitors as of December 31, 2009:

	KT Corporation		SK Broadband		LG Telecom		Onse		SK Telink
United States	(Won)	282	(Won)	276	(Won)	288	(Won)	276	(Won)	156
Japan		696		672		678		672		384
China		990		984		996		984		780
Australia		1,086		1,044		1,086		1,044		528
Great Britain		1,008		966		996		966		498
Germany		948		912		942		912		402

Source: KT Corporation.

Broadband Internet Access Service. The Korean broadband Internet access market has experienced significant growth in the past decade. SK Broadband entered the broadband market in 1999 offering both HFC and ADSL services, and we entered the market with our ADSL services in

35

1999, followed by Dreamline, Onse and LG Telecom. In addition, the entry of cable television providers that offer HFC-based broadband Internet access services at rates lower than ours has increased competition in the broadband Internet access market. We expect industry consolidation among our competitors in the near future, and smaller competitors in the broadband market today may become larger competitors.

The following table shows the market share in the broadband Internet access market as of the dates indicated:

	Market Share (%)
	KT Corporation	SK Broadband	LG Powercom	Others
December 31, 2007	44.3	24.9	11.7	19.1
December 31, 2008	43.4	22.9	14.1	19.6
December 31, 2009	42.5	23.5	15.4	18.6

Source: Korea Communications Commission.

Our competitors generally charge less than us for broadband Internet access service. The following table is a comparison of fees for our QOOK Internet Lite service with three year mandatory subscription period with fees of our competitors for comparable services as of December 31, 2009:

	KT Corporation		SK Broadband		LG Telecom		Cable Providers  (1)
Monthly subscription fee	(Won)	25,500	(Won)	25,200	(Won)	25,000	(Won)	20,000
Monthly modem rental fee		3,000		3,000		None		1,000
Additional installation fee upon moving		10,000		10,000		20,000		20,000

Source: KT Corporation.

(1) These are typical fees charged by cable providers.

Data Communication Service. We had a monopoly in domestic data communication service until 1994, when LG Telecom was authorized to provide the leased-line service. The data communications service market has become more competitive with limited growth during the past decade, and we primarily compete with SK Broadband and LG Telecom.

Value-Added Service Providers

Value-added service providers may commence operations following filing of a report to the Korea Communications Commission. The scope of business of a value-added service provider includes specific value-added telecommunications activities (other than services reserved for network service providers), such as data communications utilizing telecommunications facilities leased from network service providers.

Specific Service Providers

Specific service providers, such as Internet phone service providers and voice resellers, started operations in Korea in 1998. We began providing Internet phone service for international long-distance calls in May 1998. Our Internet phone service also competes with international long-distance services provided by voice resellers who have also seen sharp increases in demand for their services.

36

Regulation

Under the Telecommunications Basic Law and the Telecommunications Business Law, telecommunications service providers are currently classified into three categories:

• network service providers, such as us, which typically provide telecommunications services with their own telecommunications networks and related facilities. Their services may include local, domestic long-distance and international long-distance telephone services, mobile communications service, paging service and trunked radio system service;

• value-added service providers, which provide telecommunications services other than those services specified for network service providers, such as data communications using telecommunications facilities leased from network service providers; and

• specific service providers, which may occupy a middle ground between network service providers and value-added service providers and are broadly defined by law as telecommunications service providers that provide network services using the telecommunications network facilities or services of network service providers.

Under the Telecommunications Basic Law and the Telecommunications Business Law, the Korea Communications Commission has comprehensive regulatory authority over the telecommunications industry and all network service providers. The Korea Communications Commission is established under the direct jurisdiction of the President and is comprised of five standing commissioners. Commissioners of the Korea Communications Commission are appointed by the President, and the appointment of the Chairperson must be approved at a confirmation hearing at the National Assembly. The Korea Communications Commission’s policy is to promote competition in the Korean telecommunications markets through measures designed to prevent the dominant service provider in any such market from exercising its market power in such a way as to prevent the emergence and development of viable competitors. A network service provider must be licensed by the Korea Communications Commission. Our license as a network service provider permits us to engage in a wide range of telecommunications services.

Under the Use and Protection of Credit Information Act, telecommunications service providers are also required to disclose personal credit information of their customers only for the purpose of validating and maintaining telecommunications service agreements. Korean telecommunications service providers may use their customers’ credit information only to the extent allowed by the Use and Protection of Credit Information Act, which has gained greater importance in recent years due to the occurrence of personal information leakage incidents.

The Korea Communications Commission also has the authority to regulate the IP media market, including IP-TV services. We began offering IP-TV services with real-time high definition broadcasting on November 17, 2008. Under the Internet Multimedia Broadcasting Business Act, anyone intending to engage in the IP media broadcasting business must obtain a license from the Korea Communications Commission. The ownership of the shares of an IP media broadcasting company by a newspaper, a news agency or a foreigner is limited, and broadcasting of certain contents must obtain additional approval of the Korea Communications Commission.

Rates

Under current regulations implementing the Telecommunications Business Act, a network service provider may set its rates at its discretion, although it must report to the Korea Communications Commission the rates and the general terms and conditions for each type of network service provided

37

by it. There is, however, one exception to this general rule: if a network service provider has the largest market share for a specified type of service and its revenue from that service for the previous year exceeds a specific revenue amount set by the Korea Communications Commission, it must obtain prior approval from the Korea Communications Commission for the rates and the general terms for that service. Each year the Korea Communications Commission designates the service providers and the types of services for which the rates and the general terms must be approved by the Korea Communications Commission. In 2009, the Korea Communications Commission designated us for local telephone service and SK Telecom for cellular service. The Korea Communications Commission, in consultation with the Ministry of Strategy and Finance, is required to approve the rates proposed by a network service provider if (1) the proposed rates are appropriate, fair and reasonable and (2) the calculation method for the rates are appropriate and transparent.

Other Activities

A network service provider, such as us, must obtain the permission of the Korea Communications Commission in order to:

• engage in certain businesses specified in the Presidential Decree under the Telecommunications Business Act, such as the telecommunications equipment manufacturing business and the telecommunications network construction business;

• change the conditions for its licenses;

• transfer, terminate, suspend or spin off all or a part of the business for which it is licensed;

• acquire all or a part of the business of another network service provider; or

• enter into a merger with another network service provider.

A telephone service provider may provide some network services using the equipment it currently has by submitting a report to the Korea Communications Commission. The Korea Communications Commission can revoke our licenses or order the suspension of any of our businesses if we do not comply with the regulations of the Korea Communications Commission under the Telecommunications Business Law.

The responsibilities of the Korea Communications Commission also include:

• formulating the basic plan for the telecommunications industry; and

• preparing periodic reports to the National Assembly of Korea regarding developments in the telecommunications industry.

In May 2010, the Korea Communications Commission issued a guideline that limits the marketing expenditure amounts of telecommunication service providers in Korea to 22% of their revenues, with the restrictions applicable to fixed-line and mobile segments to be calculated separately. However, up to (Won)100 billion of the marketing expenditures may be applied to either segment at the discretion of the service provider. The calculation of marketing expenditure amounts under the guideline excludes advertising expenses and the calculation of revenue amounts excludes revenues from handset sales. To encourage compliance with the non-binding guideline, the Korea Communications Commission plans to release the marketing expenditure amounts of each service provider on a quarterly basis. The Korea Communications Commission may periodically adjust the guideline to accommodate changes in market conditions.

The responsibilities of the Ministry of Knowledge Economy include:

• drafting and implementing plans for developing telecommunications technology;

• fostering and providing guidance to institutions and entities that conduct research relating to telecommunications; and

38

• recommending to network service providers that they invest in research and development or that they contribute to telecommunications research institutes in Korea.

In addition, since January 2000, all network service providers (other than regional paging service providers) are obligated to contribute toward the supply of “universal” telecommunications services in Korea. Telecommunications service providers designated as “universal service providers” by the Korea Communications Commission are required to provide universal telecommunications services such as local services, local public telephone services, discount services for persons with disabilities and for certain low-income persons, telecommunications services for remote islands and wireless communication services for ships. We have been designated as a universal service provider. The costs and losses recognized by universal service providers in connection with providing these universal telecommunications services will be shared on an annual basis by all network service providers (other than regional paging service providers), including us, on a pro rata basis based on their respective net annual revenue calculated pursuant to a formula set by the Korea Communications Commission.

Due to the amendment of the Telecommunications Business Law, effective April 9, 2001, a network service provider must permit other network service providers to co-use wirelines connecting the switching equipment to end-users, upon the request of such other network service providers. In addition, a network service provider may permit other network service providers to co-use its wireless communication systems upon the request of any of such other network service providers. The compensation method for the co-use must be determined by the Korea Communications Commission and be settled, by fair and proper methods.

In addition, starting April 2002, we are required to lease to other companies our fixed-lines that connect subscribers to our network. This system, which is called local loop unbundling, is intended to prevent excessive investment in local loops. This system requires us to lease the portion of our copper lines that represent our excess capacity to other companies upon their request at rates that are determined by the Korea Communications Commission based on our cost, and taking into consideration an appropriate rate of return, to enable them to provide voice and broadband services. Revenues from local loop unbundling are recognized as revenues from miscellaneous services.

Foreign Investment

The Telecommunications Business Act restricts the ownership and control of network service providers by foreign shareholders. Foreigners, foreign governments and “foreign invested companies” may not own more than 49.0% of the issued shares with voting rights of a network service provider, including us, and a foreign shareholder may not become our largest shareholder if such shareholder holds 5.0% or more of our shares. For purposes of the Telecommunications Business Act, the term “foreign invested company” means a company in which foreigners and foreign governments hold 15.0% or more shares with voting rights in the aggregate and a foreigner or a foreign government is the largest shareholder, provided, however, that such company will not be counted as a foreign shareholder for the purposes of the above-referenced 49.0% limit if it holds less than 1.0% of our total issued and outstanding shares with voting rights. As of December 31, 2009, 46.2% of our common shares were owned by foreign investors. In the event that a network service provider violates the shareholding restrictions, its foreign shareholders cannot exercise voting rights for their shares in excess of such limitation, and the Korea Communications Commission may require corrective measures be taken to comply with the ownership restrictions. There is no restriction on foreign ownership for specific service providers and value-added service providers.

Individual Shareholding Limit

Under the Telecommunications Business Act, a foreign shareholder who holds 5.0% or more of our total shares is prohibited from becoming our largest shareholder. However, any foreign shareholder who held 5.0% or more of our total shares and was our largest shareholder on or prior to

39

May 9, 2004 is exempt from the regulations, provided that such foreign shareholder may not acquire any more of our shares. In addition, under the Telecommunications Business Act, the Korea Communications Commission may, if it deems it necessary to preserve substantial public interests, prohibit a foreign shareholder from being our largest shareholder. In addition, the Foreign Investment Promotion Act prohibits any foreign shareholder from being our largest shareholder, if such shareholder owns 5.0% or more of our shares with voting rights. In the event that any foreigner or foreign government acquires our shares in violation of the above provisions, the Telecommunications Business Act restricts such foreign shareholder from exercising his or her voting rights with respect to common shares exceeding such threshold. The Korea Communications Commission may also order us or the foreign shareholder to take corrective measures in respect of the excess shares within a specified period of six months or less.

Customers and Customer Billing

We typically charge residential subscribers and business subscribers similar rates for services provided. On a case-by-case basis, we also provide discount rates for some of our high-volume business subscribers. We bill all of our customers on a monthly basis. Our customers may make payment at either payment points such as local post offices, banks or our 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. More than 70% of our subscribers as of December 31, 2009 pay through the direct-debit service. Accounts of subscribers who fail to pay our invoice are transferred to a collection agency, which sends out a notice of payment. If such charges are not paid after notice, we cease to provide outgoing service to such subscribers after a period of time determined by the type of subscribed service. If charges are still not paid two to three months after outgoing service is cut off, we cease all services to such subscribers. After service is ceased, the overdue charges that are not collected by the collection agency are written off.

Insurance

We carry insurance against loss or damage to all significant buildings and automobiles. Except for our insurance coverage of our satellites and Internet data centers, we do not carry insurance covering losses to outside plants or to equipment because we believe the cost of such insurance is excessive and the risk of material loss or damage is insignificant. We do not have any provisions or reserves against such loss or damage. We do not carry any business interruption insurance.

We provide 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 our servers or on their servers located at our data centers. Any disruptions, interruptions, physical or electronic data loss, delays or slow down in communication connections could expose us to potential liabilities for losses relating to the disrupted businesses of our customers relying on our services.

Item 4.C.  Organizational Structure

These matters are discussed under Item 4.B. where relevant.

Item 4.D.  Property, Plants and Equipment

Our principal fixed asset is our integrated telecommunications networks. In addition, we own buildings and real estate throughout Korea.

Our fixed-line equipment vendors and mobile equipment suppliers include well-known international and local suppliers such as Samsung Electronics, LG Electronics, Cisco Systems and Apple Inc.

40

Mobile Networks

Our mobile network architecture includes the following components:

• cell sites, which are physical locations equipped with base transceiver stations consisting of transmitters, receivers and other equipment used to communicate through radio channels with subscribers’ mobile telephone handsets within the range of a cell;

• base station controllers, which connect to and control, the base transceiver stations;

• mobile switching centers, which in turn control the base station controllers and the routing of telephone calls; and

• transmission lines, which connect the mobile switching centers, base station controllers, base transceiver stations and the public switched telephone network.

The following table lists selected information regarding our mobile networks as of December 31, 2009:

	CDMA	W-CDMA
Mobile switching centers	55	27
Base station controllers	274	301
Base transceiver stations	10,705	12,663
Indoor and outdoor repeaters	45,949	221,080

We have 40 MHz of bandwidth in the 1,800 MHz spectrum to provide PCS services based on CDMA wireless network standards and another 40 MHz of bandwidth in the 2,000 MHz spectrum to provide IMT-2000 services based on W-CDMA wireless network standards. We have also installed an intelligent network on our mobile network infrastructure to provide a wide range of advanced call features and value-added services.

Exchanges

Exchanges include local exchanges and “toll” exchanges that connect local exchanges to long-distance transmission facilities. We had 26.0 million lines connected to local exchanges and 1.7 million lines connected to toll exchanges as of December 31, 2009.

All of our exchanges are fully automatic. We completed replacement of all electromechanical analog exchanges with digital exchanges in June 2003 in order to provide higher speed and larger volume services. Starting in 2006, we also began conversion of our exchanges to be compatible to Internet protocol platform in preparation for building our next generation broadband convergence network by 2021. As of December 31, 2009, approximately 80% of our lines connected to toll exchanges are compatible to Internet protocol platform.

Internet Backbone

Our Internet backbone network, called KORNET, has the capacity to handle an aggregate traffic of our broadband Internet access subscribers, Internet data centers and Internet exchange system at any given moment of up to 4.2 Tbps as of December 31, 2009. We have set up contingent plans to prepare against various incidents that could affect reliable Internet access service. Starting in 2005, we have also begun deploying our Internet protocol premium network that enables us to more reliably support QOOK TV, WiBro, QOOK Internet Phone, upgraded VoIP services and other Internet protocol services. As of December 31, 2009, our Internet protocol premium network had 1,227,000 lines installed to provide voice over Internet protocol services and a total capacity to handle up to 415 Gbps of video-on-demand services. We plan to continue to expand our Kornet and Internet protocol premium network in 2010.

41

Access Lines

As of December 31, 2009, we had 12.2 million access lines installed, which allow us to reach virtually all homes and businesses in Korea. As part of our broadband deployment strategy, we have upgraded many of our access lines by equipping them with broadband capability using xDSL and FTTH technology. As of December 31, 2009, we had approximately 10.2 million broadband lines with speeds of at least 50 Mbps that enable us to deliver broadband Internet access and multimedia content to our customers.

Transmission Network

Our domestic fiber optic cable network consisted of 405,528 kilometers of fiber optic cables as of December 31, 2009 of which 86,814 kilometers of fiber optic cables are used to connect our backbone network and 318,714 kilometers are used to connect the backbone network to our subscribers. Our backbone network utilizes dense wavelength division multiplexing technology for connecting major cities as well as optical add-drop multiplexer technology for connecting neighboring cities. Dense wavelength division multiplexing technology improves bandwidth efficiency by enabling transmission of data from multiple signals across one fiber strand in a cable by carrying each signal on a separate wavelength. We enhanced our backbone network connecting six major cities in Korea by implementing an optical cross-connector (OXC) architecture in 2008 and are in the process of building our next generation broadband convergence network through installation of network equipment utilizing optical reconfigurable add-drop multiplexer technology and multi-service provisioning platform.

Our extensive domestic long-distance network is supplemented by our fully digital domestic microwave network, which consists of 55 relay sites.

International Network

Our international network infrastructure consists of both submarine cables and satellite transmission systems, including two submarine cable-landing stations in Busan and Keoje and two satellite teleports in Kumsan and Boeun. Data services such as international private lease circuits, Internet protocol and very small aperture terminals are provided through submarine cables and satellite transmission. In order to guarantee high quality services to our end customers, our submarine cables and satellite transmission systems are linked to various points-of-presence in the United States, Asia and Europe. In addition, our international telecommunications networks are directly linked to approximately 278 telecommunications service providers in various international destinations and are routed through our three international switching centers in Seoul, Daejeon and Busan.

Our international Internet backbone with capacity of 130 Gbps is connected to approximately 190 Internet service providers through our two Internet gateways in Heawha and Guro. In addition, we operate a video backbone with capacity of 665 Mbps to transmit video signals from Korea to the United States, Japan and Singapore.

Satellites

In order to provide broadcasting, video distribution and broadband data services in select areas, we operate two satellites, Koreasat 3 and 5, launched in 1999 and 2006, respectively. These two satellites are expected to reach the end of their normal operational lives in 2011 and 2021, respectively. See “Item 4.B. Business Overview—Our Services—Satellite Services.”

42

International Submarine Cable Networks

International traffic is handled by telecommunications satellites and submarine cables. Because of the high cost of laying a submarine cable, the usual practice is for multiple carriers to jointly commission a new cable and share the costs and the capacity. We own interests in several international fiber optic submarine cable networks, including:

• a 2.3% interest in the 12,083-kilometer Asia Pacific Cable Network connecting Korea, Japan and Hong Kong with six Southeast Asian countries and Australia, activated since January 1997;

• a 1.4% interest in the 29,000-kilometer FLAG Europe-Asia network connecting Korea, Southeast Asia, the Middle East and Europe, activated since April 1997;

• a 1.9% interest in the 39,000-kilometer Southeast Asia-Middle East-Western Europe 3 Cable Network linking 34 countries, activated since December 1999;

• a 6.7% interest in the 30,444-kilometer China-U.S. Cable Network linking Korea, China, Japan, Taiwan and the United States, activated since January 2000;

• a 2.5% interest in the 19,000-kilometer Asia Pacific Cable Network 2 connecting Korea, China, Japan, Taiwan, Hong Kong, Philippines, Singapore and Malaysia, activated since December 2001;

• a 20.0% interest in the 500-kilometer Korea-Japan Cable Network linking Korea and Japan, activated since March 2002.; and

• a 13.1% interest in the 16,500-kilometer Trans Pacific Express Cable Network linking Korea, China, Taiwan and the United States, activated since September 2008.

We have also invested in 15 other international fiber optic submarine cables around the world.

Item 4A.  Unresolved Staff Comments

We do not have any unresolved comments from the Securities and Exchange Commission staff regarding our periodic reports under the Exchange Act of 1934.

Item 5.  Operating and Financial Review and Prospects

Item 5.A.  Operating Results

The following discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with Korean GAAP. Korean GAAP varies in certain significant respects from accounting principles generally accepted in the United States of America. We have summarized these differences and their effect on our total equity as of December 31, 2008 and 2009 and the results of our operations for each of the years in the three-year period ended December 31, 2009, in Note 40 to the Consolidated Financial Statements.

Overview

We are an integrated provider of telecommunications services. Our principal services include mobile service, fixed-line telephone services, Internet services including broadband Internet access service and data communication service. The principal factors affecting our revenues from these

43

services have been our rates for, and the usage volume of, these services, as well as the number of subscribers. For information on rates we charge for our services, see “Item 4. Information on the Company—Item 4.B. Business Overview—Revenues and Rates.” We determined our operating segments after the merger with KTF on June 1, 2009 as (i) the Personal Customer Group, which engages in mobile and wireless data communications services, (ii) the Home Customer Group and Enterprise Customer Group, which engage in fixed-line telephone services, Internet services including broadband Internet access service and data communication service, and (iii) others, which include information technology and network services, real estate development and car rental businesses.

One of the major factors contributing to our historical performance was the growth of the Korean economy, and our future performance will depend at least in part on Korea’s general economic growth and prospects. For a description of recent developments that have had and may continue to have an adverse effect on our results of operations and financial condition, see “Item 3. Key Information—Item 3.D. Risk Factors—Korea is our most important market, and our current business and future growth could be materially and adversely affected if economic conditions in Korea deteriorate.” A number of other developments have had or are expected to have a material impact on our results of operations, financial condition and capital expenditures. These developments include:

• merger of KTF into KT Corporation on June 1, 2009;

• employee reductions and changes in severance and retirement benefits;

• IMT-2000 service license payments;

• changes in the rate structure for our services;

• developing and launching WiBro service;

• deployment of FTTH; and

• implementation of IFRS.

As a result of these factors, our financial results in the past may not be indicative of future results or trends in those results.

Merger of KTF into KT Corporation

On June 1, 2009, KTF merged into KT Corporation, with KT Corporation surviving the merger, with the objective of maximizing management efficiencies of our fixed-line and mobile telecommunications operations as well as more effectively responding to the convergence trends in the telecommunications industry. The merger was consummated pursuant to a “comprehensive stock transfer” under Article 360-15 of the Korean Commercial Code, whereby KTF common stockholders received 0.7192335 share of KT Corporation common stock for every one share of KTF common stock they owned.

The success of the merger of KTF with KT Corporation will depend, in part, on our ability to realize the anticipated synergies, growth opportunities and, to a lesser extent, cost savings from combining these two companies. The realization of these anticipated benefits may be impeded, delayed or reduced as a result of numerous factors, some of which are outside our control. Some of our challenges include difficulties in integrating the operations of KTF with those of KT Corporation, including information systems, personnel, policies and procedures, and in reorganizing or reducing overlapping personnel, operations, marketing networks and administrative functions.

44

Employee Reductions and Changes in Severance and Retirement Benefits

We sponsor a voluntary early retirement plan where we provide additional financial incentives for our employees who have been employed by us for more than 20 years to retire early, as part of our efforts to improve operational efficiencies. In 2007 and 2008, 510 employees and 1,141 employees, respectively, retired under our voluntary early retirement plan. In 2009, in addition to our usual voluntary early retirement plan, we held a special voluntary early retirement program in December 2009 where we received applications for voluntary early retirement from employees who had been employed by us for more than 15 years and provided them with additional financial incentives to retire early. The special voluntary early retirement program resulted in the early retirement of 5,992 employees out of 25,340 eligible employees. In aggregate, 6,515 employees retired in 2009 under the voluntary early retirement plan and the special voluntary early retirement program. We recorded severance indemnities relating to such voluntary early retirement plan and special voluntary early retirement program of (Won)41 billion in 2007, (Won)97 billion in 2008 and (Won)878 billion in 2009. We believe that we will be able to achieve additional operational efficiencies starting in 2010 as a result of our optimized employee headcount level.

IMT-2000 Service License Payments

We acquired the right to purchase one of three licenses to provide IMT-2000 services on December 15, 2000, as a member of a consortium of companies including KT Corporation and KTF. In March 2001, KT ICOM, a company created by the consortium, paid half of the (Won)1.3 trillion license fee payable to the Korea Communications Commission. KTF, which subsequently merged with KT ICOM, paid (Won)90 billion in 2007, (Won)110 billion in 2008 and (Won)130 billion in 2009, and we are obligated to pay the remaining (Won)320 billion as follows: (Won)150 billion in 2010 and (Won)170 billion in 2011. This payable accrues interest at the applicable three-year Government bond interest rate minus 0.75%. The accrued interest is paid on an annual basis to the Korea Communications Commission. We began offering our HSDPA-based IMT-2000 services nationwide in March 2007 under the brand name “SHOW.”

Changes in the Rate Structure for Our Services

Periodically, we change our rate structure for our services. In order to mitigate the impact from lower usage charges of local and domestic long-distance calls, we have increased our basic monthly charges and began offering optional flat rate plans for our fixed-line subscribers. Such adjustments in the rate structure have increased the portion of fixed income and stabilized our cash flow. In addition, because the growing use of mobile telecommunications services has decreased the usage of our fixed-line telephone services, we believe we are able to maximize our revenues from fixed-line telephone services by adjusting the rate structure so as to increase our basic monthly charges. We also provide bundled packages of our various services at a discount in order to attract additional subscribers to our new services. We launched a new brand “QOOK” in March 2009 to promote our bundled products, and we currently bundle our broadband Internet access service with WiBro, IP-TV, Internet phone, fixed-line telephone service and mobile services at a discount. For a discussion of adjustments in our rate structure, see “Item 4. Information on the Company—Item 4.B. Business Overview—Revenues and Rates.”

Developing and Launching WiBro Service

In March 2005, we acquired a license to provide wireless broadband Internet access service for (Won)126 billion. The license is valid for seven years from the grant date and the license amount is amortized over the remaining contractual life commencing from June 2006. We commercially launched our Wibro service in June 2006 and had approximately 287 thousand subscribers as of December 31, 2009. We believe that additional amounts of capital expenditures and research and development will

45

be required to complete the buildout of our WiBro service network. We plan to spend approximately (Won)265 billion in capital expenditures in 2010 to expand our WiBro service network, which we may adjust subject to market demand.

Upgrading of Broadband Network to FTTH

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 us to deliver enhanced products and services that require high bandwidth, such as IP-TV service and delivery of other digital media content. We are currently upgrading our broadband network to enable FTTH connection, which enhances downstream speed up to 100 Mbps and connection quality. We are planning to spend approximately (Won)301 billion in capital expenditures in 2010 to upgrade our broadband network to FTTH, which we may adjust after periodic assessments.

Transition to IFRS Starting in 2011

In March 2007, the Financial Services Commission and the Korea Accounting Institute announced a road map for the adoption of the Korean equivalent of International Financial Reporting Standards (“Korean IFRS”), pursuant to which all listed companies in Korea will be required to prepare their annual financial statements under Korean IFRS beginning in 2011. All standards and interpretations issued by the International Accounting Standards Board (“IASB”), and the International Financial Reporting Interpretations Committee have been adopted by the Korean IFRS. In preparation of such adoption, we began preparing our internal financial statements under both Korean GAAP and Korean IFRS starting in January 2010.

Critical Accounting Policies

The preparation of financial statements in conformity with Korean GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the years reported. We based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. On an on-going basis, management evaluates its estimates. Actual results may differ from those estimates under different assumptions and conditions.

The fundamental objective of financial reporting is to provide useful information that allows a reader to comprehend our business activities. To aid in that understanding, our management has identified “critical accounting estimates.” These estimates have the potential to have a more significant impact on our financial statements, either because of the significance of the financial statement item to which they relate, or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events which are continuous in nature.

These critical accounting estimates include:

• allowances for doubtful accounts;

• useful lives of property and equipment;

• impairment of long-lived assets, including goodwill assets;

• impairment of investment securities;

46

• income taxes; and

• valuation of derivatives.

Allowances for Doubtful Accounts

Allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing notes and accounts receivable. We determine the allowance for doubtful notes and accounts receivable based on an analysis of portfolio quality and historical write-off experience. Account balances are charged off against the allowance when all means of collection have been exhausted and the potential for recovery is considered remote. Our past experience shows that the possibility of collection is remote after three years of collection effort.

Changes in the allowances for doubtful accounts for each of the years in the three-year period ended December 31, 2009 are summarized as follows:

	Year Ended December 31,
	2007			2008			2009
	(In millions of Won)
Balance at beginning of year	(Won)	563,164		(Won)	487,729		(Won)	488,739
Provision		71,390			148,972			104,977
Write-offs		(146,825	)		(147,962	)		(116,592	)
Balance at end of year	(Won)	487,729		(Won)	488,739		(Won)	477,124

If economic or specific industry trends change, we would adjust our allowances for doubtful accounts by recording additional expense or benefit. Our study shows that a 5.0% decrease or increase in the historical write-off experience would increase or decrease the provision for doubtful accounts by approximately (Won)2.7 billion as of December 31, 2009.

Useful Lives of Property and Equipment

Property and equipment are depreciated based on the useful lives disclosed in Note 2(h) to the Consolidated Financial Statements. Generally, the useful lives are estimated at the time the asset is acquired and are based on historical experience with similar assets as well as taking into account anticipated technological or other changes. In certain cases and as permitted under Korean GAAP, those useful lives used for accounting purposes are different from the estimated economic lives of the related asset. In addition, the estimated lives of certain other assets, including underground access to cable tunnels, and concrete and steel telephone poles are based on rates established by a ruling by the Korean National Tax Service (which is also applicable under Korean GAAP). If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation expense in future periods. A decrease of remaining estimated useful life by one year of our property and equipment would result in an increase of depreciation expense of approximately (Won)373 billion in 2009.

Impairment of Long-lived Assets

Long-lived assets generally consist of property and equipment and intangible assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In addition, we evaluate our long-lived assets for impairment each year as part of our annual forecasting process. An impairment loss would be considered when estimated undiscounted future net cash flow expected to result from the use of the asset and its eventual disposition are less than its carrying amount. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

47

Our intangible assets include the IMT-2000 frequency usage right, which has a contractual life of 13 years and is amortized from the date commercial service is initiated through the end of its contractual life, which is November 2016. We started to amortize this frequency usage right in December 2003, and we review the IMT-2000 frequency usage right for impairment on an annual basis. In connection with our review, we utilize the estimated long-term revenue and cash flow forecasts developed as part of our planning process. The results of our review using the testing method described above did not indicate any need to impair the IMT-2000 frequency usage right in 2009. The use of different assumptions within our cash flow model could result in different amounts for the IMT-2000 frequency usage right.

Impairment of Goodwill Assets

Goodwill represents the excess of purchase price paid over the fair value assigned to the net assets of acquired businesses. The determination of the fair values of goodwill assets is based on management’s judgment on the expected cash flows of the goodwill assets, taking market demand, competition and other economic factors into consideration.

The determination of impairments of goodwill assets involves the use of estimates that include, but are not limited to, the cause, timing and amount of the impairment. Impairment is based on a large number of factors, such as changes in current competitive conditions, expectations of growth in the telecommunications industry, a decline in our expected future cash flows, changes in the future availability of financing, technological obsolescence, discontinuance of services, current replacement costs and prices paid in comparable transactions. The determination of impairment of goodwill assets requires a significant amount of management’s judgment.

We evaluate the carrying value of goodwill annually or more frequently if events or changes in circumstances indicate that the carrying amount may exceed estimated fair value. Goodwill impairment testing is a two-step process. The first step involves determining the fair value of the reporting unit and comparing that to the book value. If the fair value exceeds the book value, then no further testing is required. If the fair value is less than the book value, then a second step is performed. In the second step, the fair values of all of the assets and liabilities of the reporting unit, including those that may not be currently recorded, are determined. The difference between the sum of all of those fair values and the overall reporting unit’s fair value is a new implied goodwill amount that is compared to the recorded goodwill. If implied goodwill is less than the recorded goodwill, then impairment to the recorded goodwill is recorded.

Impairment of Investment Securities

For investments in companies, whether or not publicly held, that are not controlled, but under our significant influence, we utilize the equity method of accounting. Under the equity method of accounting, our initial investment is recorded at cost and is subsequently increased to reflect our share of the investee income and reduced to reflect our share of the investee losses or dividends received. Any excess in our acquisition cost over our share of the investee’s identifiable net assets is generally recorded as investor-level goodwill or other intangibles and amortized by the straight-line method over the estimated useful life. The amortization of investor-level goodwill or other intangibles is recorded against the equity income (losses) of affiliates.

Significant management judgment is involved in the evaluation of declines in value of individual investments. The estimates and assumptions used by management to evaluate declines in value can be impacted by many factors, such as the financial condition, earnings capacity and near-term prospects of the company in which we have invested and, for publicly-traded securities, the length of time and the extent to which fair value has been less than cost. The evaluation of these investments is also subject to the overall condition of the economy and its impact on the capital markets.

48

Income Taxes

We are required to estimate the amount of tax payable or refundable for the current year and the deferred income tax liabilities and assets for the future tax consequences of events that have been reflected in our financial statements or tax returns. This process requires management to make assessments regarding the timing and probability of the tax impact. Actual income taxes could vary from these estimates due to future changes in income tax law or unpredicted results from the final determination of each year’s liability by taxing authorities.

We believe that the accounting estimate related to establishing tax valuation allowances is a “critical accounting estimate” because: (1) it requires management to make assessments about the timing of future events, including the probability of expected future taxable income and available tax planning opportunities, and (2) the impact that changes in actual performance versus these estimates could have on the realization of tax benefits as reported in our results of operations could be material. Management’s assumptions require significant judgment because actual performance has fluctuated in the past and may continue to do so.

Valuation of Derivatives

We record rights and obligations arising from derivative instruments as assets and liabilities, which are stated at fair value. Gains and losses that result from the change in the fair value of derivative instruments are recognized in current earnings. However, for derivative instruments that qualify for cash flow hedge accounts, the effective portion of the gain or loss on the derivative instruments are recorded as gain (loss) on valuation of derivatives for cash flow hedge included in accumulated other comprehensive income (loss).

Significant management judgment is involved in determining the fair value of derivative instruments. The estimates and assumptions used by our management to determine fair value can be impacted by many factors, such as the credit quality of each derivative counterparty, interest rate, market volatility or the overall condition of the economy and its impact on the capital markets. Any changes in these assumptions could significantly affect the valuation and timing of recognition of valuation losses classified as other than temporary.

Operating Revenues and Operating Expenses

Operating Revenues

Our operating revenues primarily consist of:

• fees related to our mobile services, including initial subscription fees, monthly fees, usage charges for outgoing calls, usage charges for wireless data transmission, contents download fees and value-added monthly service fees;

• fees from our fixed-line telephone services, including:

Ø local service revenues, primarily consisting of (i) basic monthly charges and monthly usage charges (or fixed monthly charges for discount plans), (ii) revenues from value-added services, including local telephone directory assistance, call waiting and caller identification services, (iii) interconnection fees we charge to fixed-line and mobile service providers for their use of our local network in providing their services and (iv) revenues from local calls placed from public telephones;

Ø non-refundable installation fees;

49

Ø domestic long-distance service revenues, primarily consisting of (i) monthly usage charges (or fixed monthly charges for discount plans), (ii) interconnection fees we charge to fixed-line and mobile service providers and voice resellers for their use of our domestic long-distance network in providing their services and (iii) revenues from domestic long-distance calls placed from public telephones;

Ø international long-distance service revenues, primarily consisting of (i) amounts we bill to our customers for outgoing calls made to foreign countries, (ii) amounts we bill to foreign telecommunications carriers for connection to the domestic telephone network in respect of incoming calls at the applicable settlement rate, (iii) amounts we charge to fixed-line and mobile service providers and voice resellers as interconnection fees for using our international network in providing their services and (iv) other revenues, including revenues from international calls placed from public telephones and international leased lines; and

Ø land-to-mobile interconnection revenues;

• Internet service revenues which consist of:

Ø broadband Internet access service revenues, primarily consisting of installation fees and basic monthly charges; and

Ø other Internet-related service revenues related to our infrastructure and solution services for business enterprises, IP-TV and network portal services.

• revenues from goods sold that are generated primarily through sale of mobile handsets and specially designed phones for fixed-line and mobile convergence services;

• data communications service revenues, primarily consisting of installation fees and basic monthly charges for our leased line services and Kornet Internet connection service and revenues from our satellite services; and

• miscellaneous revenues that are primarily derived from information technology and network services, real estate development and car rental businesses.

Operating Expenses

Our operating expenses primarily include:

• cost of goods sold, primarily consisting of our sale of mobile handsets and specially designed phones for fixed-line mobile convergence services;

• depreciation and amortization expenses incurred primarily in connection with our telecommunications network facilities;

• salaries and related costs, including severance indemnities that are a lump-sum amount paid to employees upon departure who have been employed by us for more than one year, share-based payments and employee welfare expenses;

• sales commissions, primarily consisting of commissions to independent dealers related to procurement of mobile subscribers and mobile handset sales;

• commissions, primarily consisting of payments for third-party outsourcing services, including commissions to the call center staff;

50

• interconnection charges, which are interconnection payments to mobile service providers for calls from landline users and our mobile subscribers to our competitors’ mobile service subscribers; and

• promotion expenses that consist primarily of handset subsidies that we offer to purchasers of new handsets who agree to minimum subscription periods.

Operating Results—2008 Compared to 2009

The following table presents selected income statement data and changes therein for 2008 and 2009.

	For the Year Ended December 31,						Changes
							2008 vs. 2009
	2008			2009			Amount			%
	(In billions of Won)
Operating revenues	(Won)	19,593		(Won)	19,649		(Won)	56		0.3	%
Operating expenses		18,153			18,683			530		2.9
Operating income		1,440			966			(474	)	(32.9	)
Net non-operating income (expense)		(733	)		(251	)		482		(65.8	)
Income from continuing operations before income tax expense		707			715			8		1.1
Income tax expense on continuing operations		168			108			(60	)	(35.7	)
Net income	(Won)	513		(Won)	610		(Won)	97		18.9	%

Operating Revenues

The following table presents a breakdown of our operating revenues and changes therein for 2008 and 2009.

	For the Year Ended December 31,				Changes
					2008 vs. 2009
	2008		2009		Amount			%
	(In billions of Won)
Mobile services	(Won)	6,424	(Won)	6,646	(Won)	222		3.5	%
Fixed-line telephone services:
Local service revenues		2,752		2,674		(78	)	(2.8	)
Non-refundable service installation fee		28		17		(11	)	(39.3	)
Domestic long-distance revenues		587		475		(112	)	(19.1	)
International long-distance revenues		442		384		(58	)	(13.1	)
Land-to-mobile interconnection revenues		1,391		1,147		(244	)	(17.5	)
Sub-total		5,200		4,697		(503	)	(9.7	)
Internet services:
Broadband internet access service		2,041		1,942		(99	)	(4.9	)
Other Internet-related services		440		507		67		15.2
Sub-total		2,481		2,449		(32	)	(1.3	)
Goods sold		3,066		3,397		331		10.8
Data communication services		1,336		1,314		(22	)	(1.6	)
Other		1,086		1,146		60		5.5
Total operating revenues	(Won)	19,593	(Won)	19,649	(Won)	56		0.3	%

Total operating revenues increased by 0.3%, or (Won)56 billion, from (Won)19,593 billion in 2008 to (Won)19,649 billion in 2009 primarily due to increases in our mobile handset sales, mobile service revenues and other operating revenues, the impact of which was partially offset by decreases in our fixed-line telephone service revenues, Internet service revenues and data communication service revenues.

51

Mobile Services

Mobile service revenues increased by 3.5%, or (Won)222 billion, from (Won)6,424 billion in 2008 to (Won)6,646 billion in 2009 primarily due to a 4.5% increase in the number of subscribers to 15.0 million as of December 31, 2009 from 14.4 million as of December 31, 2008.

Fixed-line Telephone Services

Our fixed-line telephone service revenues decreased by 9.7%, or (Won)503 billion, from (Won)5,200 billion in 2008 to (Won)4,697 billion in 2009 primarily due to decreases in land-to-mobile interconnection revenues, domestic long-distance revenues and local service revenues. Specifically:

• Land-to-mobile interconnection revenues decreased by 17.5%, or (Won)244 billion, from (Won)1,391 billion in 2008 to (Won)1,147 billion in 2009 primarily due to an increase in the volume of calls between mobile subscribers, which in turn reduced the volume of calls between landline users to mobile subscribers.

• Domestic long-distance revenues decreased by 19.1%, or (Won)112 billion, from (Won)587 billion in 2008 to (Won)475 billion in 2009 primarily due to a decrease in the number of domestic long-distance call minutes in 2009 compared to 2008 primarily due to the substitution effect from increase in usage of mobile telephone services and Internet phone services. The effect of such decreases was partially offset by participation by some of our subscribers in optional flat rate plans.

• Local service revenues decreased by 2.8%, or (Won)78 billion, from (Won)2,752 billion in 2008 to (Won)2,674 billion in 2009. The number of local call pulses in 2009 compared to 2008 decreased by 32.5% primarily due to the substitution effect from increase in usage of mobile telephone services and the Internet phone services. However, the effect of such decreases was substantially offset by participation by some of our subscribers in optional flat rate plans, as well as an increase in revenues from value-added services.

Internet Services

Our Internet service revenues decreased by 1.3%, or (Won)32 billion, from (Won)2,481 billion in 2008 to (Won)2,449 billion in 2009 primarily due to a decrease in broadband Internet access service revenues, the impact of which was partially offset by an increase in other Internet-related service revenues. Specifically:

• Broadband Internet access service revenues decreased by 4.9%, or (Won)99 billion, from (Won)2,041 billion in 2008 to (Won)1,942 billion in 2009, primarily due to discounts offered to long-term subscribers and bundled products in 2009. The effect of such decreases was offset in part by an increase in the number of fixed-line QOOK Internet subscribers from 6.7 million subscribers as of December 31, 2008 to 7.0 million subscribers as of December 31, 2009.

• Other Internet-related service revenues increased by 15.2%, or (Won)67 billion, from (Won)440 billion in 2008 to (Won)507 billion in 2009 primarily due to increases in revenues from our IP-TV services.

Goods Sold

Revenues from goods sold increased by 10.8%, or (Won)331 billion, from (Won)3,066 billion in 2008 to (Won)3,397 billion in 2009 primarily due to an increase in the number of HSDPA-based IMT-2000 service compatible handsets and smart phones sold, including the Apple iPhone that we launched in November 2009.

52

Data Communications

Data communications service revenues decreased by 1.6%, or (Won)22 billion, from (Won)1,336 billion in 2008 to (Won)1,314 billion in 2009 primarily due to service fee discounts offered to government agencies and a decrease in revenues related to Kornet broadband Internet connection service to institutional customers resulting from the expiration of certain leased-line contracts.

Others

Other operating revenues increased by 5.5%, or (Won)60 billion, from (Won)1,086 billion in 2008 to (Won)1,146 billion in 2009 primarily due to an increase in revenues from real estate development activities.

Operating Expenses

The following table presents a breakdown of our operating expenses and changes therein for 2008 and 2009.

	For the Year Ended December 31,				Changes
					2008 vs. 2009
	2008		2009		Amount			%
	(In billions of Won)
Salaries and wages	(Won)	2,268	(Won)	2,192	(Won)	(76	)	(3.4	)%
Severance indemnities		361		1,128		767		212.5
Depreciation		3,214		2,874		(340	)	(10.6	)
Commissions		1,354		1,262		(92	)	(6.8	)
Interconnection charges		1,234		1,227		(7	)	(0.6	)
Cost of goods sold		2,365		3,119		754		31.9
Promotion expenses		1,080		1,122		42		3.9
Sales commissions		2,130		1,805		(325	)	(15.3	)
Others (1)		4,147		3,954		(193	)	(4.7	)
Total operating expenses	(Won)	18,153	(Won)	18,683	(Won)	530		2.9	%

(1) Including transfer to other accounts.

Total operating expenses increased by 2.9%, or (Won)530 billion, from (Won)18,153 billion in 2008 to (Won)18,683 billion in 2009 primarily due to increases in severance indemnities related to special voluntary early retirement programs and cost of goods sold, the impact of which was partially offset by decreases in depreciation, sales commissions and commissions. Specifically:

• Our severance indemnities increased significantly by 212.5%, or (Won)767 billion, from (Won)361 billion in 2008 to (Won)1,128 billion in 2009 primarily due to an increase in severance indemnities relating to a special voluntary early retirement program. In December 2009, we held a special voluntary early retirement program where we received applications for voluntary early retirement from employees who had been employed by us for more than 15 years and provided them with additional financial incentives to retire early.

• Cost of goods sold increased by 31.9%, or (Won)754 billion, from (Won)2,365 billion in 2008 to (Won)3,119 billion in 2009 primarily due to an increase in the sales of Internet phone handsets as well as an increase in the number of high-end HSDPA-compatible handsets and smart phones sold, including the Apple iPhone that we launched in November 2009.

These factors were partially offset by the following:

• Depreciation decreased by 10.6%, or (Won)340 billion, from (Won)3,214 billion in 2008 to (Won)2,874 billion in 2009 reflecting a general decrease in our capital expenditures in recent years.

53

• Sales commissions, which primarily relate to procurement of mobile subscribers and mobile handset sales by our independent dealers, decreased by 15.3%, or (Won)325 billion, from (Won)2,130 billion in 2008 to (Won)1,805 billion in 2009 primarily due to a decrease in the number of new mobile subscribers.

Operating Income

Due to the factors described above, our operating income decreased by 32.9%, or (Won)474 billion, from (Won)1,440 billion in 2008 to (Won)966 billion in 2009. Our operating margin, which is operating income as a percentage of operating revenues, decreased from 7.4% in 2008 to 4.9% in 2009.

Non-Operating Income (Expenses)

The following table presents a breakdown of our non-operating income and expenses on a net basis and changes therein for 2008 and 2009.

	For the Year Ended December 31,						Changes
							2008 vs. 2009
	2008			2009			Amount			%
	(In billions of Won)
Interest income	(Won)	151		(Won)	197		(Won)	46		30.5	%
Interest expense		(481	)		(506	)		(25	)	5.2
Net foreign currency transaction gain (loss)		3			(4	)		(7	)	N.A.
Net foreign currency translation gain (loss)		(762	)		223			985		N.A.
Net gain (loss) on disposal of equity method investment securities		(0	)		62			62		N.M.
Net loss on disposal of property and equipment		(89	)		(119	)		(30	)	33.7
Reversal of impairment loss on property and equipment		6			103			97		1,616.7
Net gain on settlement of derivatives		8			1			(7	)	(87.5	)
Net gain (loss) on valuation of derivatives		640			(174	)		(814	)	N.A.
Net other gains (losses)		(209	)		(34	)		175		(83.7	)
Net non-operating income (expenses)	(Won)	(733	)	(Won)	(251	)	(Won)	482		(65.8	)%

N.A. means not applicable.

N.M. means not meaningful.

Our net non-operating expenses decreased by 65.8%, or (Won)482 billion, from (Won)733 billion in 2008 to (Won)251 billion in 2009 primarily due to net foreign currency translation loss in 2008 compared to net foreign currency translation gain in 2009, an increase in reversal of impairment loss on property and equipment and net loss on disposal of equity method investment securities in 2008 compared to net gain on disposal of equity method investment securities in 2009, the impact of which was partially offset by net gain on valuation of derivatives in 2008 compared to net loss on valuation of derivatives in 2009. Specifically:

• We recorded net foreign currency translation loss of (Won)762 billion in 2008 compared to net foreign currency translation gain of (Won)223 billion in 2009 as the Market Average Exchange Rate of the Won against the U.S. dollar depreciated from (Won)938.2 to US$1.00 as of December 31, 2007 to (Won)1,257.5 to US$1.00 as of December 31, 2008 but appreciated to (Won)1,167.6 to US$1.00 as of December 31, 2009. The impact of such foreign currency translation gain/loss was largely offset by loss/gain from valuation of derivatives discussed below.

• Our reversal of impairment loss on property and equipment increased sixteen-fold, or (Won)97 billion, from (Won)6 billion in 2008 to (Won)103 billion in 2009 primarily due to an increase in compensation that we received from third parties for relocation of our property and equipment that resulted in impairment loss.

54

• We recorded net loss on disposal of equity method investment securities of (Won)0.1 billion in 2008 compared to net gain on disposal of equity method investment securities of (Won)62 billion in 2009. We recorded such gain in 2009 primarily due to the sale of our interest in U-Mobile. We sold all of our interest in U-Mobile with a book value of (Won)65 billion for US$100 million to a third party in September 2009.

These factors were partially offset by the following:

• We recorded net gain on valuation of derivatives of (Won)640 billion in 2008 compared to net loss on valuation of derivatives of (Won)174 billion in 2009 primarily due to gains and losses from our combined interest rate currency swap contracts as the exchange rate of the Won against the U.S. dollar fluctuated as discussed above.

Income Taxes Expense on Continuing Operations

Our income tax expense on continuing operations decreased by 35.8%, or (Won) 60 billion, from (Won)168 billion in 2008 to (Won)108 billion in 2009 primarily due to decreases from changes in deferred income tax assets unrecognized related to equity method investment securities as well as tax rate changes, the impact of which was partially offset by a decrease in tax credits. See Note 26 to the Consolidated Financial Statements. Our effective tax rate decreased from 23.7% in 2008 to 15.1% in 2009. We had net deferred income tax assets of (Won)551 billion as of December 31, 2009.

Net Income

Due to the factors described above, our net income increased by 18.9%, or (Won)97 billion, from (Won)513 billion in 2008 to (Won)610 billion in 2009. Our net income margin, which is net income as a percentage of operating revenues, increased from 2.6% in 2008 to 3.1% in 2009.

Operating Results—2007 Compared to 2008

The following table presents selected income statement data and changes therein for 2007 and 2008.

	For the Year Ended December 31,						Changes
							2007 vs. 2008
	2007			2008			Amount			%
	(In billions of Won)
Operating revenues	(Won)	18,614		(Won)	19,593		(Won)	979		5.3	%
Operating expenses		16,859			18,153			1,294		7.7
Operating income		1,755			1,440			(315	)	(17.9	)
Net non-operating income (expense)		(297	)		(733	)		(436	)	146.8
Income from continuing operations before income tax expense		1,458			707			(751	)	(51.5	)
Income tax expense on continuing operations		357			168			(189	)	(52.9	)
Net income	(Won)	1,171		(Won)	513		(Won)	(658)		(56.2	)%

55

Operating Revenues

The following table presents a breakdown of our operating revenues and changes therein for 2007 and 2008.

	For the Year Ended December 31,				Changes
					2007 vs. 2008
	2007		2008		Amount			%
	(In billions of Won)
Mobile services	(Won)	5,981	(Won)	6,424	(Won)	443		7.4	%
Fixed-line telephone services:
Local service revenues		2,856		2,752		(104	)	(3.6	)
Non-refundable service installation fee		43		28		15		(34.9	)
Domestic long-distance revenues		673		587		(86	)	(12.8	)
International long-distance revenues		432		442		10		2.3
Land-to-mobile interconnection revenues		1,588		1,391		(197	)	(12.4	)
Sub-total		5,592		5,200		(392	)	(7.0	)
Internet services:
Broadband Internet services		2,070		2,041		(29	)	(1.4	)
Other Internet-related services		302		440		138		45.7
Sub-total		2,372		2,481		109		4.6
Goods sold		2,451		3,066		615		25.1
Data communication services		1,271		1,336		65		5.1
Other		947		1,086		139		14.7
Total operating revenues	(Won)	18,614	(Won)	19,593	(Won)	979		5.3	%

Total operating revenues increased by 5.3%, or (Won)979 billion, from (Won)18,614 billion in 2007 to (Won)19,593 billion in 2008 primarily due to increases in our mobile handset sales, mobile service revenues, other operating revenues, Internet service revenues and data communication service revenues, the impact of which was partially offset by a decrease in our fixed-line telephone service revenues.

Mobile Services

Mobile service revenues increased by 7.4%, or (Won)443 billion, from (Won)5,981 billion in 2007 to (Won)6,424 billion in 2008 primarily due to a 4.7% increase in the number of subscribers from 13.7 million subscribers as of December 31, 2007 to 14.4 million subscribers as of December 31, 2008, as well as an increase in wireless data usage. The average monthly revenue per subscriber of KT increased from (Won)38,627 in 2007 to (Won)39,487 in 2008.

Fixed-line Telephone Services

Our fixed-line telephone service revenues decreased by 7.0%, or (Won)392 billion, from (Won)5,592 billion in 2007 to (Won)5,200 billion in 2008 primarily due to decreases in land-to-mobile interconnection revenues, local service revenues and domestic long-distance revenues. Specifically:

• Land-to-mobile interconnection revenues decreased by 12.4%, or (Won)197 billion, from (Won)1,588 billion in 2007 to (Won)1,391 billion in 2008 primarily due to increased volume of calls between mobile subscribers, which in turn reduced the volume of calls between landline users to mobile subscribers.

• Local service revenues decreased by 3.6%, or (Won)104 billion, from (Won)2,856 billion in 2007 to (Won)2,752 billion in 2008 primarily due to a 15.2% decrease in the number of local call pulses

56

in 2008 compared to 2007 attributable to the substitution effect from increase in usage of mobile telephone services and the Internet phone services. The effects of such decrease was partially offset by participation by some of our subscribers in optional flat rate plans, as well as an increase in revenues from value-added services.

• Domestic long-distance revenues decreased by 12.8%, or (Won)86 billion, from (Won)673 billion in 2007 to (Won)587 billion in 2008 primarily due to a decrease in the number of domestic long-distance call minutes in 2008 compared to 2007 primarily due to the substitution effect from increase in usage of mobile telephone services and Internet phone services. The effect of such decrease was partially offset by participation by some of our subscribers in optional flat rate plans.

Internet Services

Our Internet service revenues increased by 4.6%, or (Won)109 billion, from (Won)2,372 billion in 2007 to (Won)2,481 billion in 2008 primarily due to an increase in other Internet-related service revenues, the impact of which was partially offset by a decrease in broadband Internet access service revenues. Specifically:

• Other Internet-related service revenues increased by 45.7%, or (Won)138 billion, from (Won)302 billion in 2007 to (Won)440 billion in 2008 primarily due to an increase in revenues related to our Bizmeka service and Internet data centers; and

• Broadband Internet access service revenues decreased by 1.4%, or (Won)29 billion, from (Won)2,070 billion in 2007 to (Won)2,041 billion in 2008, primarily due to special discounts offered to long-term subscribers and bundled products in 2008, which was offset in part by an increase in the number of subscribers.

Goods Sold

Revenues from goods sold increased by 25.1%, or (Won)615 billion, from (Won)2,451 billion in 2007 to (Won)3,066 billion in 2008 primarily due to an increase in the number of HSDPA-based IMT-2000 service compatible handsets and specially designed phones for fixed-line services sold.

Data Communications

Data communications service revenues increased by 5.1%, or (Won)65 billion, from (Won)1,271 billion in 2007 to (Won)1,336 billion due to an increase in demand for our virtual private network service.

Others

Other operating revenues increased by 14.7%, or (Won)139 billion, from (Won)947 billion in 2007 to (Won)1,086 billion in 2008 primarily due to an increase in revenues from our real estate development activities and KT Capital.

57

Operating Expenses

The following table presents a breakdown of our operating expenses and changes therein for 2007 and 2008.

	For the Year Ended December 31,				Changes
					2007 vs. 2008
	2007		2008		Amount			%
	(In billions of Won)
Salaries and wages	(Won)	2,229	(Won)	2,268	(Won)	39		1.7	%
Severance indemnities		360		361		1		0.3
Depreciation		3,193		3,214		21		0.7
Commissions		1,049		1,354		305		29.1
Interconnection charges		1,200		1,234		34		2.8
Cost of goods sold		1,868		2,365		497		26.6
Promotion expenses		749		1,080		331		44.2
Sales commissions		1,902		2,130		228		12.0
Others (1)		4,309		4,147		(162	)	(3.8	)
Total operating expenses	(Won)	16,859	(Won)	18,153	(Won)	1,294		7.7	%

(1) Including transfer to other accounts.

Total operating expenses increased by 7.7%, or (Won)1,294 billion, from (Won)16,859 billion in 2007 to (Won)18,153 billion in 2008 primarily due to increases in cost of goods sold, promotion expenses, commissions and sales commissions. Specifically:

• Our cost of goods sold increased by 26.6%, or (Won)497 billion, from (Won)1,868 billion in 2007 to (Won)2,365 billion in 2008 primarily as a result of an increase in the sales of HSDPA-compatible handsets and specially designed phones for fixed-line services.

• Our promotion expenses, which consist primarily of handset subsidies, increased by 44.2%, or (Won)331 billion, from (Won)749 billion in 2007 to (Won)1,080 billion in 2008 primarily due to an increase in the sales volume of HSDPA-compatible handsets.

• Our commissions, which primarily relate to payments for third-party outsourcing services, including commissions to the call center staff, increased by 29.1%, or (Won)305 billion, from (Won)1,049 billion in 2007 to (Won)1,354 billion in 2008, primarily due to outsourcing of our activation and installation activities to third-parties.

• Our sales commissions, which primarily relate to procurement of mobile subscribers and mobile handset sales by independent dealers, increased by 12.0%, or (Won)228 billion, from (Won)1,902 billion in 2007 to (Won)2,130 billion in 2008, primarily due to an increase in the number of our SHOW subscribers as well as an increase in sales volume of HSDPA-compatible handsets.

Operating Income

Due to the factors described above, our operating income decreased by 17.9%, or (Won)315 billion, from (Won)1,755 billion in 2007 to (Won)1,440 billion in 2008. Our operating margin, which is operating income as a percentage of operating revenues, decreased from 9.4% in 2007 to 7.4% in 2008.

58

Non-Operating Income (Expenses)

The following table presents a breakdown of our non-operating income and expenses on a net basis and changes therein for 2007 and 2008.

	For the Year Ended December 31,						Changes
							2007 vs. 2008
	2007			2008			Amount			%
	(In billions of Won)
Interest income	(Won)	156		(Won)	151		(Won)	(5)		(3.2	)%
Interest expense		(466	)		(481	)		(15	)	3.2
Net foreign currency transaction gain (loss)		(6	)		3			9		N.A.
Net foreign currency translation loss		(7	)		(762	)		(755	)	N.M.
Gain on disposal of useless materials		25			—			(25	)	(100.0	)
Net loss on disposal of property and equipment		(65	)		(89	)		(24	)	36.9
Reversal of accrued provisions		51			4			(47	)	(92.2	)
Net gain (loss) on settlement of derivatives		(2	)		8			10		N.A.
Net gain on valuation of derivatives		25			640			615		2,460.0
Net other losses		(8	)		(207	)		(199	)	2,487.5
Net total non-operating income (expenses)	(Won)	(297)		(Won)	(733)		(Won)	(436)		146.8	%

N.A. means not applicable.

N.M. means not meaningful.

Our net non-operating expenses increased by 146.8%, or (Won)436 billion, from (Won)297 billion in 2007 to (Won)733 billion in 2008 primarily due to an increase in net foreign currency translation loss and a decrease in reversal of accrued provisions, the impact of which was partially offset by a large increase in net gain on valuation of derivatives in 2008. Specifically:

• Our net foreign currency translation loss increased significantly by (Won)755 billion, from (Won)7 billion in 2007 to (Won)762 billion in 2008, as the Market Average Exchange Rate of the Won against the U.S. dollar depreciated from (Won)929.6 to US$1.00 as of December 31, 2006 to (Won)938.2 to US$1.00 as of December 31, 2007 and depreciated further to (Won)1,257.5 to US$1.00 as of December 31, 2008. The impact of such foreign currency translation losses was largely offset by gains from valuation of derivatives discussed below.

• Our reversal of accrued provisions decreased by 92.2%, or (Won)47 billion, from (Won)51 billion in 2007 to (Won)4 billion in 2008 primarily as a result of a decrease in the amount of reversal of accrued provisions relating to points accrued under our KT membership point program.

These factors were partially offset by the following:

• Our net gain on valuation of derivatives increased twenty-five fold, or by (Won)615 billion, from (Won)25 billion in 2007 to (Won)640 billion in 2008 primarily due to gains from our combined interest rate currency swap contracts as the exchange rate of the Won against the U.S. dollar depreciated as discussed above.

Income Taxes Expense on Continuing Operations

Our income tax expense on continuing operations decreased by 53.0%, or (Won)189 billion, from (Won)357 billion in 2007 to (Won)168 billion in 2008 primarily due to an increase in tax credits, the impact of which was partially offset by an increase in changes in deferred income tax assets unrecognized related to equity method investment securities as well as an increase in tax rate changes. See Note 26 to the Consolidated Financial Statements. Our effective tax rate decreased from 24.5% in 2007 to 23.7% in 2008. We had net deferred income tax assets of (Won)485 billion as of December 31, 2008.

59

Net Income

Due to the factors described above our net income decreased by 56.2%, or (Won)658 billion, from (Won)1,171 billion in 2007 to (Won)513 billion in 2008. Our net income margin, which is net income as a percentage of operating revenues, decreased from 6.3% in 2007 to 2.6% in 2008.

Item 5.B.  Liquidity and Capital Resources

The following table sets forth the summary of our cash flows determined in accordance with Korean GAAP for the periods indicated.

	For the Years Ended December 31,
	2007			2008			2009
	(In billions of Won)
Net cash provided by operating activities	(Won)	4,265		(Won)	2,919		(Won)	3,398
Net cash used in investing activities		(3,449	)		(3,531	)		(2,870	)
Net cash provided by (used in) financing activities		(1,368	)		1,051			(930	)
Cash and cash equivalents at beginning of period		1,829			1,385			1,891
Cash and cash equivalents at end of period		1,385			1,891			1,538
Net increase (decrease) in cash and cash equivalents		(444	)		506			(353	)

Capital Requirements

Historically, our capital requirements consisted principally of purchases of property and equipment and other assets and repayments of borrowings. In our investing activities, we used cash of (Won)3,636 billion in 2007, (Won)3,362 billion in 2008 and (Won)2,774 billion in 2009 for the acquisition of property and equipment, primarily construction-in-progress. In our financing activities, we used cash of (Won)1,354 billion in 2007, (Won)2,147 billion in 2008 and (Won)1,441 billion in 2009 for repayment of current portion of bonds and long-term borrowings.

In recent years, we have also required capital for acquisitions of treasury shares for retirement and payments of retirement and severance benefits related to our early retirement programs. For the acquisition of treasury shares for retirement, we spent (Won)196 billion in 2007, (Won)74 billion in 2008 and (Won)528 billion in 2009. Subsequent to such repurchases, we retired most of the treasury shares that we repurchased. We also recorded payments of severance indemnities of (Won)104 billion in 2007, (Won)221 billion in 2008 and (Won)1,345 billion in 2009. In 2009, our payments were particularly high due to a special voluntary early retirement program held in December 2009 in which we received applications for voluntary early retirement from employees who had been employed by us for more than 15 years and provided them with additional financial incentives to retire early. The special voluntary early retirement program resulted in the early retirement of 5,992 employees out of 25,340 eligible employees.

From time to time, we may also require capital for investments involving acquisitions, including shares of our affiliates, and strategic relationships. On June 1, 2009, KTF merged into KT Corporation pursuant to a “comprehensive stock transfer” under Article 360-15 of the Korean Commercial Code, whereby KTF common stockholders received 0.7192335 share of KT Corporation common stock for every one share of KTF common stock they owned. We delivered 45,629,480 treasury shares and 700,108 shares of our newly issued common shares to KTF shareholders in connection with the merger.

Our cash dividends amounted to (Won)473 billion in 2007, (Won)409 billion in 2008 and (Won)229 billion in 2009.

60

We anticipate that capital expenditures, and, to a lesser extent, repayment of outstanding contractual obligations and commitments will represent the most significant use of funds for the next several years. We may also require capital for purchase of additional treasury shares and shares of our affiliates as well as investments involving acquisitions and strategic relationships. We compete in the telecommunications sector in Korea, which is rapidly evolving. In recent years, business combinations in the telecommunications industry have significantly changed the competitive landscape of the Korean telecommunications industry. We may need to incur additional capital expenditures to keep up with unexpected developments in rapidly evolving telecommunications technology. There can be no assurance that we will be able to secure funds on satisfactory terms from financial institutions or other sources that are sufficient for our unanticipated needs.

Payments of contractual obligations and commitments will also require considerable resources. In our ordinary course of business, we routinely enter into commercial commitments for various aspects of our operations, including repair and maintenance. We have also provided guarantees to our affiliates. See Note 33(b) to the Consolidated Financial Statements for a disclosure of the guarantees provided.

The following table sets forth selected information regarding our contractual obligations to make future payments as of December 31, 2009:

	Payments Due by Period
Contractual Obligations (1) (2)	Total		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
	(In billions of Won)
Long-term debt obligations (including current portion of long-term debt)	(Won)	9,263	(Won)	1,690	(Won)	3,684	(Won)	2,515	(Won)	1,374
Capital lease obligations		8		7		1		—		—
Operating lease obligations		9		6		3		—		—
Severance payment obligations		1,488		7		11		34		1,436
Long-term accounts payable—others		320		150		170		—		—
Total	(Won)	11,088	(Won)	1,860	(Won)	3,869	(Won)	2,549	(Won)	2,810
Estimate of interest payment based on contractual interest rates effective as of December 31, 2009	(Won)	1,617	(Won)	458	(Won)	600	(Won)	303	(Won)	256

(1) Contractual obligations represent contractual liabilities as of the consolidated balance sheet date excluding refundable deposits for telephone installation and accruals for customer call bonus points, which do not have definitive payment schedules.

(2) Excluding a put and call combination contract we entered into with Woori Investment & Securities Co., Ltd. On December 26, 2008, Woori Investment & Securities, which acquired shares of the Korea Digital Satellite Broadcasting Co., Ltd. from JP Morgan Whitefriars Inc., and we entered into a put and call combination contract. Under this contract, we may exercise a call option to acquire 9.2 million shares of the Korea Digital Satellite Broadcasting from Woori Investment & Securities during the period from December 26, 2009 to December 26, 2011, and Woori Investment & Securities has the option to exercise a put option on such shares to us on December 26, 2011. The exercise price under the contract for both parties is (Won)46 billion.

Capital Resources

We have traditionally met our working capital and other capital requirements principally from cash provided by operations, while raising the remainder of our requirements primarily through debt financing. From time to time, we have also disposed of our treasury shares to meet our capital requirements.

Our major sources of cash have been net cash provided by operating activities, including net income, expenses not involving cash payments such as depreciation and amortization, and proceeds from issuance of bonds and long-term borrowings. We expect that these sources will continue to be our principal sources of cash in the future. Net income was (Won)1,171 billion in 2007, (Won)513 billion in 2008 and (Won)610 billion in 2009 due to the reasons discussed in Item 5.A. Operating Results.

61

Depreciation and amortization was (Won)3,657 billion in 2007, (Won)3,703 billion in 2008 and (Won)3,361 billion in 2009 primarily reflecting our capital investment activities during the recent years. Aggregate cash proceeds from issuance of bonds and long-term borrowings were (Won)878 billion in 2007, (Won)3,780 billion in 2008 and (Won)1,499 billion in 2009. We also met the capital required for the June 2009 merger with KTF through delivery of 45,629,480 treasury shares and 700,108 shares of our newly issued common shares to KTF shareholders in consideration of the merger. As of December 31, 2009, we held 17,915,340 treasury shares.

We believe that we have sufficient working capital available to us for our current requirements and that we have a variety of alternatives available to us to satisfy our financial requirements to the extent that they are not met by funds generated by operations, including the issuance of debt securities and bank borrowings denominated in Won and various foreign currencies. For example, we updated our Medium Term Note program in June 2005 from US$1 billion to US$2 billion, of which US$700 million remained unused as of December 31, 2009. However, our ability to rely on some of these alternatives could be affected by factors such as the liquidity of the Korean and the global financial markets, prevailing interest rates, our credit rating and the Government’s policies regarding Won currency and foreign currency borrowings. Other factors which could materially affect our liquidity in the future include unanticipated increase in capital expenditures and decrease in cash provided by operations resulting from a significant decrease in demand for our services. We may also need to raise additional capital sooner than we expect in order to fund unanticipated investments and acquisitions.

Our total equity was (Won)11,138 billion as of December 31, 2007, (Won)11,088 billion as of December 31, 2008 and (Won)10,667 billion as of December 31, 2009.

Liquidity

We had a working capital (current assets minus current liabilities) surplus of (Won)564 billion as of December 31, 2007, (Won)1,833 billion as of December 31, 2008 and (Won)1,031 billion as of December 31, 2009. The following table sets forth the summary of our significant current assets for the periods indicated.

	As of December 31,
	2007		2008		2009
	(In billions of Won)
Cash and cash equivalents	(Won)	1,385	(Won)	1,891	(Won)	1,538
Short-term investment assets		460		417		444
Accounts receivable—trade		2,621		3,015		3,622
Inventories		299		425		699

Our cash, cash equivalents and short-term investment assets maturing within one year totaled (Won)1,845 billion as of December 31, 2007 and (Won)2,308 billion as of December 31, 2008 and (Won)1,982 billion as of December 31, 2009. Under Korean GAAP, bank deposits and all highly liquid temporary cash instruments within maturities of three months are considered as cash equivalents. Short-term investment assets primarily consist of time and trust deposits with maturities between four to twelve months and short-term loans and current portion of securities such as beneficiary certificates and available-for-sale securities.

62

The following table sets forth the summary of our significant current liabilities for the periods indicated:

	As of December 31,
	2007		2008		2009
	(In billions of Won)
Accounts payable—trade	(Won)	1,020	(Won)	834	(Won)	1,485
Short-term borrowings		226		274		368
Current portion of bonds and long-term borrowings		1,020		1,440		1,690
Accounts payable—other		1,442		1,476		2,439
Accrued expenses		484		528		483

As of December 31, 2009, we entered into various commitments with financial institutions totaling (Won)2,289 billion and US$123 million. See Note 33 to the Consolidated Financial Statements. As of December 31, 2009, (Won)298 billion and US$56 million were outstanding under these facilities. We have not had, and do not believe that we will have, difficulty gaining access to short-term financing sufficient to meet our current requirements.

Capital Expenditures

Our capital expenditures on property and equipment decreased in recent years. We used cash of (Won)3,636 billion in 2007, (Won)3,362 billion in 2008 and (Won)2,774 billion in 2009 for the acquisition of property and equipment, primarily construction-in-progress.

Our current capital expenditure plan, on a non-consolidated basis, calls for the expenditure of approximately (Won)3,200 billion in 2010. The principal components of our capital investment plans are:

• approximately (Won)953 billion in general expansion and modernization of our network infrastructure;

• approximately (Won)301 billion in upgrading our broadband network to enable FTTH connection;

• approximately (Won)741 billion in capital investments for IMT-2000 (W-CDMA) service;

• approximately (Won)265 billion in capital investments for WiBro service;

• approximately (Won)188 billion in capital investments for IP-TV service; and

• approximately (Won)183 billion in capital investments for development of services over Internet protocol.

Inflation

We do not consider that inflation in Korea has had a material impact on our results of operations in recent years. Inflation in Korea was 2.5% in 2007, 4.7% in 2008 and 2.8% in 2009. See “Item 3. Key Information—Item 3.D. Risk Factors—Korea is our most important market, and our current business and future growth could be materially and adversely affected if economic conditions in Korea deteriorate.”

Recent Accounting Pronouncements in Korean GAAP

We did not adopt any significant Korean accounting standards issued or revised in 2009.

63

U.S. GAAP Reconciliation

In 2007, we recorded net income of (Won)1,160 billion under U.S. GAAP compared to net income of (Won)1,171 billion under Korean GAAP, primarily because of difference in the treatment of depreciation and reversal of goodwill amortization. In 2008, we recorded net income of (Won)573 billion under U.S. GAAP compared to net income of (Won)513 billion under Korean GAAP, primarily because of difference in the treatment of reversal of goodwill amortization and depreciation. In 2009, we recorded net income of (Won)840 billion under U.S. GAAP compared to net income of (Won)610 billion under Korean GAAP, primarily because of difference in the treatment of service installation fees, reversal of goodwill amortization and depreciation. Total equity under U.S. GAAP is lower than under Korean GAAP by (Won)478 billion as of December 31, 2008 and (Won)211 billion as of December 31, 2009.

For further discussion of the principal differences between Korean GAAP and U.S. GAAP as they relate to us, see Note 40 to the Consolidated Financial Statements.

Recent Accounting Pronouncements in U.S. GAAP

In September 2006, the Financial Accounting Standards Board (“FASB”) issued enhanced guidance for using fair value to measure assets and liabilities by establishing a common definition of fair value, providing a framework for measuring fair value under GAAP, and expanding the disclosure requirements about fair value measurements. In February 2008, the FASB deferred the adoption of such guidance for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. We adopted the fair value guidance for nonfinancial assets and nonfinancial liabilities on January 1, 2009 with no material impact to our consolidated financial statements. In April 2009, the FASB issued additional guidance on fair value, which provided: (a) additional application guidance for estimating fair value when the volume and activity for the asset or liability have greatly decreased and (b) indicators for identifying transactions that are not considered orderly. The additional guidance was effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. We adopted the provisions in 2009 with no material impact to our consolidated financial statements.

In December 2007, the FASB issued an amended accounting guidance on business combinations. The guidance revises the method of accounting for a number of aspects of business combinations including acquisition costs, contingencies (including contingent assets, contingent liabilities and contingent purchase price) and post-acquisition exit activities of acquired businesses. We adopted the guidance in 2009 with no material impact to our consolidated financial statements.

In December 2007, the FASB issued new accounting guidance on noncontrolling interests in consolidated financial statements. The new accounting guidance requires that a noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity, provides revised guidance on the treatment of net income and losses attributable to the noncontrolling interest and changes in ownership interests in a subsidiary and requires additional disclosures that identify and distinguish between the interests of the controlling and noncontrolling owners. We retrospectively adopted the presentation and disclosure requirements of the new guidance. The adoption of the new guidance did not have a material effect on our consolidated financial statements.

In March 2008, the FASB issued enhanced guidance for disclosures about derivative instruments and hedging activities by expanding the disclosure requirements regarding: (1) how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. In addition, this guidance requires qualitative disclosures about objectives and strategies for using derivatives described in the context of an entity’s

64

risk exposures, quantitative disclosures about the location and fair value of derivative instruments and associated gains and losses, and disclosures about credit-risk-related contingent features in derivative instruments. We adopted the new guidance in 2009 with no material impact to our consolidated financial statements.

In April 2008, the FASB amended the factors that we should consider when developing renewal or extension assumptions used in the determination of useful lives of intangible assets. These assumptions should be consistent with the expected cash flow method used to measure the fair value of intangible assets. The amended guidance was applicable prospectively to intangible assets acquired after January 1, 2009 with no material impact to our consolidated financial statements.

In November 2008, the FASB ratified guidance approved by the Emerging Issues Task Force addressing how the business combination and noncontrolling interest guidance issued by the FASB might impact the accounting for equity method investments. The guidance was effective prospectively for new investments acquired in fiscal years beginning on or after December 15, 2008. We adopted the guidance in 2009 with no material impact on our consolidated financial statements.

In July 2009, the FASB issued the FASB Accounting Standard Codification (“Codification” or “ASC”), which became the single source of authoritative U.S. GAAP. Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASU”), which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification. We adopted the Codification, as required, for annual periods ending after September 15, 2009. As a result, references to accounting literature contained in our financial disclosures have been updated to reflect the new ASC structure.

In June 2009, the FASB amended the consolidation rules related to Variable Interest Entities (“VIEs”). The new rules expand the primary beneficiary analysis to incorporate a qualitative review of which entity controls and directs the activities of the VIE. The amendments also modify the rules regarding the frequency of ongoing reassessments of whether a company is the primary beneficiary. Under the revised guidance, we are required to perform ongoing reassessments as opposed to only when certain triggering events occur, as was previously required. This guidance will be effective in 2010 and is not expected to have any material effect on our consolidated financial statements.

In October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue Arrangements” (“ASU No. 2009-13”). The update addresses how revenues should be allocated among all products and services included in sales arrangements. It establishes a selling price hierarchy for determining the selling price of each product or service, with vendor-specific objective evidence at the highest level, third-party evidence of selling price at the intermediate level, and the best estimate of the selling price at the lowest level. It replaces “fair value” with “selling price” in revenue allocation guidance, eliminates the residual method as an acceptable allocation method and requires the use of the relative selling price method as the basis for allocation. It also significantly expands the disclosure requirements for such arrangements, including, potentially, certain qualitative disclosures. ASU No. 2009-13 will be effective prospectively for sales entered into or materially modified in fiscal years beginning on or after June 15, 2010. The FASB permits early adoption of ASU No. 2009-13, applied retrospectively, to the beginning of the year of adoption. We are currently evaluating the impact on our consolidated financial statements.

In October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements That Include Software Elements” (“ASU No. 2009-14”). The update clarifies the guidance for allocating and measuring revenue, including how to identify software that is out of the scope. The update also amends

65

accounting and reporting guidance for revenue arrangements involving both tangible products and software that is “more than incidental to the tangible product as a whole.” Such types of software and hardware will be outside of the scope of software revenue guidance, and the hardware components will also be outside of the scope of software revenue guidance and may result in more revenue recognized at the time of the hardware sale. Additional disclosures will discuss allocation of revenue to products and services in sales arrangements and the significant judgments applied in the revenue allocation method, including impacts on the timing and amount of revenue recognition. ASU 2009-14 will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. ASU No. 2009-14 has the same effective date, including early adoption provisions, as ASU No. 2009-13. We must adopt ASU No. 2009-14 and ASU No. 2009-13 at the same time. We are currently evaluating the impact on our consolidated financial statements.

In December 2009, the FASB issued ASU No. 2009-16, “Transfers and Servicing” (“ASU No. 2009-16”). This update removes the concept of a qualifying special-purpose entity (“QSPE”) and creates more stringent conditions for reporting a transfer of a portion of financial asset as sale. To determine if a transfer is to be accounted for as sale, the transferor must assess whether it and all of the entities included in its consolidated financial statements have surrendered control of the assets. This update is effective from January 1, 2010, with adoption applied prospectively for transfers that occur on and after the effective date. The elimination of the QSPE concept will require an entity to retrospectively assess all current off-balance sheet QSPE structures for consolidation under ASC Topic 810, “Consolidation,” and record a cumulative-effect adjustment to retained earnings for any consolidation change. Retrospective application of ASU No. 2009-16, particularly the QSPE removal, is being assessed as part of the analysis required from ASU No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.”

In December 2009, the FASB issued ASU No. 2009-17. This update addressed the primary beneficiary assessment criteria for determining whether an entity is required to consolidate a VIE. This update requires an entity to determine whether it is the primary beneficiary by performing a qualitative assessment, rather than using the quantitative-based model required under the previous accounting guidance. The qualitative assessment consists of determining whether the entity has both the power to direct the activities that most significantly impact the VIE’s economic performance and has the right to receive benefits or obligation to absorb losses that could potentially be significant to the VIE. This update is effective from January 1, 2010. We are currently evaluating the impact on our consolidated financial statements.

In January 2010, the FASB amended the disclosure guidance related to fair value measurements. The amended disclosure guidance requires new fair value measurement disclosures and clarifies existing fair value measurement disclosure requirements. The amended disclosure guidance related to disclosures about purchases, sales, issuances and settlements of Level 3 instruments will be effective for fiscal years beginning after December 15, 2010. The remaining amended disclosure guidance will be effective for annual reporting periods beginning after December 15, 2009. We are currently evaluating the impact of the amended disclosure guidance related to fair value measurements.

In January 2010, the FASB issued authoritative guidance for improving disclosures about fair value measurements, which requires new and amended disclosure requirements for classes of assets and liabilities, inputs and valuation techniques and transfers between levels of fair value measurements and accounting for distributions to shareholders with components of stock and cash, which clarifies the accounting for distributions to shareholders that offer them the ability to elect to receive their entire distribution in cash or shares of equivalent value. This guidance will be effective beginning in January 2010, and is not expected to have a material effect on our consolidated financial statements.

66

Item 5.C.  Research and Development, Patents and Licenses, Etc.

In order to maintain our leadership in the converging telecommunications business environment and develop additional platforms, services and applications, we operate:

• a central R&D laboratory;

• a network R&D laboratory;

• a mobile R&D laboratory;

• a device R&D center; and

• an economics and management research laboratory.

As of December 31, 2009, these research centers employed a total of 680 researchers and employees, of whom 118 had doctoral degrees and 399 had master’s degrees. As of December 31, 2009, KT Corporation had 5,121 registered patents domestically and 460 registered patents internationally.

Under the Information and Communications Industry Promotion Act, network service providers and specific service providers are obligated to contribute 0.75% and 0.5% of their total annual revenues, respectively, to the Institute of Information Technology Advancement, which uses the fund to promote research and development in information technology. We make contributions as a network service provider and specific service provider to the Korean government (Information and Telecommunication Improvement Fund), the Korea Electronic Telecommunication Research Institute and other research and development institutes. Including such contributions, total expenditures on research and development were (Won)291 billion in 2007, (Won)283 billion in 2008 and (Won)263 billion in 2009.

In recent years, we have focused our research and development efforts in the following areas:

• fixed mobile multimedia convergence solutions including WiBro, mobile IP-TV, mobile VoIP;

• Environmentally-friendly technologies including an intelligent electricity distribution monitoring system;

• VoIP solutions and related value-added services;

• future network structures and solutions;

• home networking solutions for multiple devices including IP-TV, Internet phones and computers;

• platform and application services for IP-TV services; and

• network technologies for backbone and access network including FTTH solutions.

Item 5.D.  Trend Information

These matters are discussed under Item 5.A. above where relevant.

Item 5.E.  Off-balance Sheet Arrangements

These matters are discussed under Item 5.B. above where relevant.

67

Item 5.F.  Tabular Disclosure of Contractual Obligations

These matters are discussed under Item 5.B. above where relevant.

Item 5.G.  Safe Harbor

See “Item 3. Key Information—Item 3.D. Risk Factors—Forward-looking statements may prove to be inaccurate.”

Item 6.  Directors, Senior Management and Employees

Item 6.A.  Directors and Senior Management

Directors

Our board of directors has the ultimate responsibility for the administration of our affairs. Our articles of incorporation provide for a board of directors consisting of:

• up to three non-independent directors, including the Chief Executive Officer; and

• up to eight outside directors.

All of our directors are elected at the general shareholders’ meeting. If the total assets of a company listed on the KRX KOSPI Market as of the end of the preceding year exceeds (Won)2,000 billion, which is the case with us, the Commercial Code of Korea requires such company to have more than three outside directors with at least half of its total directors being outside directors. The term of office for all directors is up to three years, but the term is extended to the close of the annual shareholders’ meeting convened with respect to the last fiscal year of the term. If the term of office for the director ends before the close of the annual general meeting of shareholders convened with respect to the last fiscal year within such term of office and a new director is appointed, the term of office for such new director will be the remaining term of office of his or her predecessor.

Under the Commercial Code of Korea, we must establish a committee to nominate candidates for outside directors within the board of directors, and outside directors must make up not less than half of the total members of the outside director candidate nominating committee. According to our articles of incorporation, such committee must consist of one non-independent director and all of our outside directors. Our Outside Director Candidate Nominating Committee nominates outside director candidates for appointment at the general shareholders’ meeting.

One-third of the outside directors must be up for election in any given year. Upon the request of any director, a meeting of the board of directors will be assembled. The chairman of the board of directors is elected from among the outside directors by a resolution of the board of directors. The term of office of the chairman is one year.

68

Our current directors are as follows:

Name	Position	Director Since	Date of Birth	Expiration of Term of Office
Non-Independent Directors (1)
Suk-Chae Lee	Chief Executive Officer	January 2009	September 11, 1945	2012
Sang-Hoon Lee	President	March 2009	January 24, 1955	2011
Hyun-Myung Pyo	President	March 2009	October 21, 1958	2011
Outside Directors (1)
E. Han Kim	Chairperson of the Board of Directors, Chair Professor, University of Michigan	March 2009	May 27, 1946	2012
Jeong-Suk Koh	Chief Executive Officer of Ilshin Investment Co., Ltd.	February 2008	May 22, 1957	2011
Joon Park	Professor, Seoul National University	January 2009	October 30, 1954	2011
Choon-Ho Lee	Chairperson of the Board of Directors of Korea Educational Broadcasting System	March 2009	July 22, 1945	2012
Jeung-Soo Huh	Professor, Kyungpook National University	March 2009	June 10, 1960	2012
Jong-Hwan Song	Professor, Myongji University	March 2010	September 5, 1944	2013
Hae-Bang Chung	Professor, School of Law, Konkuk University	March 2010	September 1, 1950	2013
Chan-Jin Lee	Chief Executive Officer, DreamWiz Inc.	March 2010	October 25, 1965	2013

(1) All of our standing and outside directors beneficially own less than one percent of the issued shares of KT Corporation in the aggregate.

Suk-Chae Lee is a non-independent director and has served as our chief executive officer since January 2009. Prior to joining us, he served as a senior advisor of Bae, Kim & Lee LLC, chief economic advisor to the President of Korea, Minister of Information and Telecommunications and Vice Minister of Finance and Economy. Mr. Lee holds a bachelor’s degree in economics from Seoul National University, an M.A. degree in political economy from Boston University and a Ph.D. degree in economics from Boston University.

Sang-Hoon Lee is a non-independent director and has served as the president of the Enterprise Customer Group since March 2009. He has previously served as senior executive vice president of the Business Development Group and executive vice president of the Business Marketing Unit. Mr. Lee holds a bachelor’s degree in engineering from Seoul National University and both his master’s degree and Ph.D degree in electric engineering from University of Pennsylvania.

Hyun-Myung Pyo is a non-independent director and has served as the president of the Personal Customer Group since December 2009. He has previously served as senior executive vice president of the Corporate Center and senior vice president of the Wibro Business Unit and head of the Marketing Group of KTF. Mr. Pyo holds a bachelor’s degree in electronic engineering from Korea University and both his graduate and Ph.D degrees in electronic engineering from Korea University.

E. Han Kim has served as our outside director since March 2009. He is currently a chair professor of business administration at University of Michigan and has served as outside director of POSCO and Hana Bank. Mr. Kim holds a bachelor’s degree from Rochester University, a master’s degree in business administration from Cornell University and a Ph.D. degree in finance from State University of New York-Buffalo.

69

Jeong-Suk Koh has served as our outside director since February 2008. He is currently chief executive officer of Ilshin Investment Co., Ltd. and was formerly a management consultant at McKinsey & Company. Mr. Koh holds a bachelor’s degree in business administration from Seoul National University, a master’s degree in management science from Korea Advanced Institute of Science and Technology and a doctoral degree from Massachusetts Institute of Technology.

Joon Park has served as our outside director since January 2009. He is currently a professor at the Seoul National University School of Law. Mr. Park holds a bachelor’s degree in law from Seoul National University and an LL.M. degree in law from Harvard Law School.

Choon-Ho Lee has served as our outside director since March 2009. She is currently the chairperson of the board of directors of Korea Educational Broadcasting System. Ms. Lee has served as a director of the board of Seoul Foundation for Arts and Culture. She holds a bachelor’s degree in politics and foreign affairs from Ewha Womans University and has received both her graduate and Ph.D. degrees in education from Inha University.

Jeung-Soo Huh has served as our outside director since March 2009. He is currently a professor of material science and metallurgical engineering at Kyungpook National University and was formerly a visiting professor at Manchester University. Mr. Huh holds a bachelor’s degree in physical metallurgy from Seoul National University, a graduate degree in material engineering from Seoul National University and a Ph.D. degree in material engineering from Massachusetts Institute of Technology.

Jong-Hwan Song was elected as our outside director in March 2010. He is currently a professor of North Korean studies at Myongji University. Mr. Song holds a bachelor’s degree and a graduate degree in international relations from Seoul National University and a Ph.D. degree in political science from Hanyang University.

Hae-Bang Chung was elected as our outside director in March 2010. He is currently a professor at Konkuk University School of Law. Mr. Chung holds a bachelor’s degree and a graduate degree in law from Seoul National University and a graduate degree in economics from Vanderbilt University.

Chan-Jin Lee was elected as our outside director in March 2010. He is currently the chief executive officer of DreamWiz Inc. and was formerly the chief executive officer of Hancom Inc. Mr. Lee holds a bachelor’s degree in mechanical engineering from Seoul National University.

For the purposes of the Korean Commercial Code, our Chief Executive Officer is deemed to be the “representative director” who is authorized to perform all judicial and extra-judicial acts relating to our business. Our shareholders elect the Chief Executive Officer in accordance with the provisions of the Commercial Code and our articles of incorporation. A candidate for Chief Executive Officer is nominated by a committee formed for that purpose. The Chief Executive Officer Candidate Nominating Committee consists of:

• all of our outside directors; and

• one non-independent director who is not a candidate.

Under our articles of incorporation, the Chief Executive Officer Candidate Nominating Committee must submit a draft management contract between the company and the candidate covering the management objectives of the company to the shareholders’ meeting at the time of nomination of the candidate to the meeting. When the draft management contract has been approved

70

at the shareholders’ meeting, the company enters into such management contract with the Chief Executive Officer. In such case, the chairman of the Chief Executive Officer Candidate Nominating Committee, on behalf of the company, signs the management contract.

The board of directors may conduct performance review discussions to determine if the new Chief Executive Officer performed his or her duties under the management contract, or hire a professional evaluation agency for such purpose. If the board of directors determines, based on the results of the performance review, that the new Chief Executive Officer has failed to achieve the management goals, it may propose to dismiss the Chief Executive Officer at a shareholders’ meeting.

Senior Management

Our executive officers consist of President, Senior Executive Vice President, Executive Vice Presidents and Senior Vice Presidents. The executive officers other than the non-independent directors are appointed by the Chief Executive Officer and may serve up to three years.

The current executive officers are as follows:

Name (1)	Title and Responsibilities	Current Position Held Since	Years with the Company	Date of Birth
Ho-Ick Suk	Vice Chairman, Corporate Relations Group	June 2009	1	November 27, 1952
Seong-Bok Jeong	President, Legal & Ethics Office	January 2009	1	December 7, 1954
Doo-Whan Choi	President, Service Design Group	December 2006	3	January 10, 1954
Sam-Soo Pyo	President, IT Planning Office	March 2009	1	December 12, 1953
Hyun-Myung Pyo	President, Personal Customer Group	January 2010	3	October 21, 1958
Sang-Hoon Lee	President, Enterprise Customer Group	January 2009	19	January 24, 1955
Yu-Yeol Seo	President, Home Customer Group	January 2010	32	September 9, 1956
Il-Young Kim	Senior Executive Vice President, Corporate Center	January 2010	1	September 8, 1956
Sung-Man Kim	Senior Executive Vice President, Network Group	January 2009	27	October 3, 1956
Young-Whan Kim	Senior Executive Vice President, Corporate Relations Office	January 2009	27	February 13, 1958
Han-Suk Kim	Senior Executive Vice President, Global Business Unit	January 2010	20	February 23, 1956
Gyoo-Taek Nam	Executive Vice President, Corporate Center Brand Strategy CFT	March 2009	24	February 6, 1961
Yeon-Hak Kim	Executive Vice President, Value Management Office	June 2009	23	May 17, 1962
Hyun-Mi Yang	Executive Vice President, Personal Customer Strategy Business Unit	June 2009	1	December 4, 1963
Young-Hee Song	Executive Vice President, Home Customer Strategy Business Unit	June 2009	1	March 12, 1961
Young-Hee Lee	Executive Vice President, Enterprise Customer Strategy Business Unit	January 2010	29	August 7, 1957
Deok-Rae Lim	Executive Vice President, Public Customer Business Unit	January 2010	29	March 20, 1955
Sang-Hong Lee	Executive Vice President, Technology Strategy Office	January 2010	26	April 7, 1955
Tae-Il Park	Executive Vice President, Network Quality Unit	January 2010	32	February 24, 1956
Kyung-Soo Lee	Executive Vice President, Convergence WIBRO Business Unit	January 2009	18	February 5, 1960
Jong-Ryul Seo	Executive Vice President, Media Business Unit	January 2009	1	October 31, 1959
Yong-Taek Cho	Executive Vice President, Corporate Relations Support Office	July 2009	1	September 7, 1954
Gil-Joo Lee	Executive Vice President, Public Relations Office	November 2006	34	September 20, 1955

71

Name (1)	Title and Responsibilities	Current Position Held Since	Years with the Company	Date of Birth
Tae-Yol Yoo	Executive Vice President, Economics & Management Research Laboratory	January 2009	26	April 4, 1960
Tae-Gyoo Lee	Executive Vice President, Economics & Management Research Laboratory	June 2008	2	March 22, 1964
Sang-Hyo Kim	Executive Vice President, Human Resource Office	May 2010	0	April 1, 1956
In-Sung Jeon	Executive Vice President, Group Shared Service Group	June 2009	30	October 9, 1958
Jeong-Tae Park	Executive Vice President, Purchasing Strategy Office	January 2009	26	December 10, 1959
Hyung-Joon Kim	Senior Vice President, Corporate Center Corporate Planning Department	March 2009	16	November 2, 1963
Sang-Cheon Shim	Senior Vice President, Corporate Center Financial Management Department	January 2009	24	May 19, 1960
Dong-Hyun Han	Senior Vice President, Corporate Center Strategic Investment Department	January 2009	2	June 26, 1967
Hyun-Mo Gu	Senior Vice President, Corporate Center Business Strategy Department	January 2010	23	January 13, 1964
Jung-Sik Suh	Senior Vice President, Cloud Computing Service Business Unit	April 2010	3	August 18, 1969
Tae-Hyo Ahn	Senior Vice President, Mobile R&D Laboratory	January 2010	25	January 24, 1962
Jae-Geun Choi	Senior Vice President, Business Public Relations Department	January 2010	1	November 30, 1961
Sang-Jik Lee	Senior Vice President, Legal Affairs Department	June 2009	1	September 6, 1965
Hun-Mun Lim	Senior Vice President, Home Integrative Marketing Communication Department	January 2010	23	November 15, 1960
Seok-Gyoon Na	Senior Vice President, Personal Customer Business Unit	June 2009	25	October 26, 1958
Bong-Goon Kwak	Senior Vice President, Personal Fast Incubation Center	January 2010	25	March 2, 1960
Dae-San Lee	Senior Vice President, Mobile Network Business Unit	June 2009	23	January 10, 1961
Seong-Mook Oh	Senior Vice President, Metropolitan Mobile Network O&M Center	June 2009	24	August 20, 1960
Jong-Seog Koh	Senior Vice President, R&D	January 2010	21	August 7, 1959
Kyung-Kon Koh	Senior Vice President, Corporate Center Brand Strategy CFT Online Strategy Department	January 2010	1	April 28, 1963
Yoon-Young Park	Senior Vice President, Technology Development Center	January 2010	18	April 18, 1962
Dong-Hoon Han	Senior Vice President, Southern Seoul Marketing Center	January 2010	29	September 12, 1959
Tae-Poong Kang	Senior Vice President, R&D	January 2010	30	January 27, 1955
Kyung-Choon Shin	Senior Vice President, R&D	January 2010	29	March 29, 1955
Kwan-Young Jung	Senior Vice President, Northern Seoul Marketing Center	January 2010	24	May 10, 1961
Ouk-Jung Hwang	Senior Vice President, R&D	January 2010	35	June 29, 1954
In-Kyu Park	Senior Vice President, Daegu Marketing Center	January 2009	25	July 18, 1955
Sang-Choon Kim	Senior Vice President, R&D	January 2010	34	August 9, 1956
Ouk-Young Yoo	Senior Vice President, Gyeongbuk Marketing Center	January 2009	34	June 6, 1956
Yoon-Sik Jung	Senior Vice President, Enterprise Product Strategy Department	May 2009	1	September 30, 1964
Seung-Dong Gye	Senior Vice President, Enterprise Customer Business Unit	January 2009	33	June 6, 1958
Jong-Jin Chae	Senior Vice President, Small & Medium Business Business Unit	January 2009	24	June 25, 1961

72

Name (1)	Title and Responsibilities	Current Position Held Since	Years with the Company	Date of Birth
Kyung-Seok Park	Senior Vice President, Education Dispatch at Sejong Laboratory	January 2010	24	February 10, 1958
Seok-Joon Park	Senior Vice President, R&D	January 2010	29	February 21, 1958
Kie-You Song	Senior Vice President, R&D	January 2010	20	March 16, 1960
Yoon-Hak Bang	Senior Vice President, R&D	January 2010	26	August 11, 1957
Hyung-Oak Park	Senior Vice President, Southern Seoul Corporate Business Center	January 2010	36	February 20, 1955
Pan-Sik Shin	Senior Vice President, Jeonbuk Corporate Business Center	July 2009	23	February 25, 1959
Byoung-Seon Jeon	Senior Vice President, R&D	January 2010	11	July 3, 1960
Young-Goon Yoo	Senior Vice President, R&D	January 2010	27	February 2, 1956
Kyung-Lim Yoon	Senior Vice President, R&D Reformation TFT	February 2010	4	June 14, 1963
Dong-Myun Lee	Senior Vice President, Enterprise Fast Incubation Business Unit	January 2010	19	October 15, 1962
Sun-Cheol Gweon	Senior Vice President, Corporate Center New Business Strategy Department	January 2010	19	March 1, 1962
Yung-Sig Yoon	Senior Vice President, Gangnam Network O&M Center	January 2009	26	November 20, 1956
Ju-Ouk Uhm	Senior Vice President, Northern Seoul Corporate Business Center	January 2010	25	March 17, 1960
Chan-Kyung Park	Senior Vice President, Gangbuk Network O&M Center	January 2010	4	February 8, 1959
Il-Sung Nam	Senior Vice President, R&D	January 2010	27	January 24, 1955
Ju-Kyo Shim	Senior Vice President, R&D	January 2010	29	September 3, 1959
Sung-Bum Kim	Senior Vice President, Honam Network O&M Center	August 2009	26	December 19, 1956
Young-Lyoul Lee	Senior Vice President, Corporate Center Senior Consultant	March 2010	3	September 17, 1962
Choong-Seop Lee	Senior Vice President, Policy Collaboration Department	January 2010	10	June 3, 1958
Sun-Jong Heo	Senior Vice President, Strategic Purchasing Department	January 2010	4	March 23, 1959
Won-Sik Han	Senior Vice President, Mobile Data Business Unit	January 2010	25	October 26, 1960
Bum-Joon Kim	Senior Vice President, Investor Relations Department	September 2005	5	March 25, 1965
Jung-Won Park	Senior Vice President, Gyeongnam Marketing Center	January 2010	24	July 26, 1959
Jong-Hack Kang	Senior Vice President, Busan Marketing Center	June 2009	24	April 5, 1959
Tae-Geun Kim	Senior Vice President, Network R&D Laboratory	January 2010	27	February 8, 1959
Kuk-Hyun Kang	Senior Vice President, Personal Marketing Strategy Department	January 2010	21	September 8, 1963
Sa-Il Kwon	Senior Vice President, Business Support Office	March 2010	33	January 30, 1957
Young-Mo Kwon	Senior Vice President, Satellite Business Department	January 2010	21	December 1, 1958
Tae-Ki Min	Senior Vice President, Corporate Center Brand Strategy CFT Integrated Image Department	January 2010	22	June 2, 1962
Dae-Soo Park	Senior Vice President, Daejeon Corporate Business Center	January 2010	21	October 28, 1963
Young-Sik Park	Senior Vice President, Southern Gyeonggi Corporate Business Center	January 2010	32	April 9, 1957
Yong-Hwa Park	Senior Vice President, Home Channel Business Unit	January 2010	27	June 7, 1958
Jin-Sik Park	Senior Vice President, U-City Department	January 2010	24	August 5, 1959

73

Name (1)	Title and Responsibilities	Current Position Held Since	Years with the Company	Date of Birth
Hyung-Chul Park	Senior Vice President, Jeonnam Corporate Business Center	January 2010	24	February 2, 1962
Seong-Hoon Shim	Senior Vice President, Secretarial Office	January 2010	22	January 13, 1964
Ki-Hun Yoo	Senior Vice President, Northern Gyeonggi Marketing Center	January 2010	27	January 1, 1957
Chang-Young Yoon	Senior Vice President, Southern Gyeonggi Marketing Center	January 2010	24	February 24, 1957
Gang-Geun Lee	Senior Vice President, Gangwon Corporate Business Center	January 2010	21	May 10, 1961
Sung-Jin Lee	Senior Vice President, Financial Accounting Department	January 2009	14	December 2, 1958
Jong-Ok Lee	Senior Vice President, Jungbu Network O&M Center	January 2010	27	June 3, 1960
Hong-Bum Jun	Senior Vice President, Smart Green Development Department	January 2010	19	October 3, 1962
Doo-Soo Jung	Senior Vice President, Incheon Marketing Center	January 2010	32	August 22, 1959
Jun-Soo Jung	Senior Vice President, Education Dispatch at Korea National Defense University	January 2010	18	November 2, 1962
Han-Wook Jung	Senior Vice President, Central R&D Laboratory	January 2010	24	July 17, 1960
Hwa-Joon Cho	Senior Vice President, Finance Department	January 2010	16	February 24, 1957
Sang-Wook Kim	Senior Vice President, Global Investment Department	May 2010	0	February 14, 1965
Myung-Bum Pyun	Senior Vice President, Metropolitan Mobile Marketing Center	January 2010	13	June 19, 1960

(1) All of our executive officers beneficially own less than one percent of the issued shares of KT Corporation in the aggregate.

Item 6.B.  Compensation

Compensation of Directors and Executive Officers

In 2009, the total amount of salaries, bonuses (including long-term performance-based incentives for non-independent directors) and allowances paid and accrued to all non-independent directors and executive officers of KT Corporation for services in all capacities was approximately (Won)18.9 billion. The aggregate amount accrued by us to provide retirement benefits to such persons was (Won)1.1 billion in 2009. Starting in 2009, we no longer pay long-term performance-based incentives to our outside directors.

The chairman of the Chief Executive Officer Candidate Nominating Committee enters into an employment agreement on our behalf with our Chief Executive Officer. The employment agreement sets certain management targets to be achieved by the Chief Executive Officer, including a target for the amount of “EBITDA” to be achieved in each year. EBITDA is defined as earnings before interest, tax, depreciation and amortization. Failure to achieve certain thresholds below the targets will allow the board of directors to take actions with respect to the Chief Executive Officer’s employment, including proposing to the shareholders’ meeting an early termination of his employment. In addition, the head of each of our functional departments, the president of each of our subsidiaries and the heads of each regional head office have entered into employment agreements with the Chief Executive Officer that provide for similar management targets to be achieved by each of our departments, subsidiaries and regional head offices.

74

Item 6.C.  Board Practices

As of December 31, 2009, none of our non-independent or outside directors maintained directors’ service contracts with us or with any of our subsidiaries providing for benefits upon termination of employment.

Outside Director Candidate Nominating Committee

The Outside Director Candidate Nominating Committee consists of one non-independent director and all of our outside directors, other than for election of an outside director resulting from the expiration of the term of the office, in which case such outside director whose term is expiring may not be a member of the committee. The committee’s duties include reviewing the qualifications of potential candidates and proposing nominees to serve as outside directors on our board of directors. The committee members’ terms expire immediately after the adjournment of the shareholders’ meeting where the outside directors are elected.

Evaluation and Compensation Committee

The Evaluation and Compensation Committee is currently comprised of four outside directors, Jeung-Soo Huh, Choon-Ho Lee, Jong-Hwan Song and Chan-Jin Lee. The chairman is Jeung-Soo Huh. The committee’s duties include prior review of the Chief Executive Officer’s management goals, terms and conditions proposed for inclusion in the employment contract of the Chief Executive Officer, including, but not limited to, determining whether the Chief Executive Officer has achieved the management goals, and the determination of compensation of the Chief Executive Officer and the non-independent directors. The committee members are elected by the board after the closing of the annual meeting, and the term of the committee members is for one year.

Executive Committee

The Executive Committee is currently comprised of all of the non-independent directors. The chairman is Suk-Chae Lee. The committee’s duties include the establishment and management of branch offices, the acquisition and disposal of real estate having market value between (Won)15 billion to (Won)30 billion, making investments and providing guarantees up to (Won)30 billion, the disposal and sale of stocks of our subsidiaries, which stocks have a market value of between (Won)15 billion and (Won)30 billion, provided that no change of control with respect to such subsidiary occurs as a result of such disposal or sale, the authorization of charitable contributions between (Won)100 million to (Won)1 billion and the issuance of certain debt securities.

Related-Party Transactions Committee

The Related-Party Transactions Committee is currently comprised of four outside directors, Jeong-Suk Koh, Joon Park, Jong-Hwan Song and Hae-Bang Chung. The chairman is Jeong-Suk Koh. This committee reviews transactions between KT Corporation and its subsidiaries and ensures compliance with applicable antitrust laws. The committee members are elected by the board after the annual meeting, and the term of the committee members is for one year.

Audit Committee

Under the Commercial Code of Korea, we are required to establish an audit committee comprised of three or more outside directors comprised of at least two-thirds of the audit committee members. Audit Committee members must also meet the applicable independence criteria set forth under the rules and regulations of the Sarbanes-Oxley Act of 2002. The committee is currently

75

comprised of Joon Park, Jeong-Suk Koh, E. Han Kim and Hae-Bang Chung. The chairman is Joon Park. Members of the committee are elected by our shareholders at the shareholders’ meeting. Our internal and external auditors report directly to the committee.

• The duties of the committee include:

• appointing independent auditors;

• evaluating performance of independent auditors;

• approving services to be provided by the independent auditors;

• reviewing annual financial statements;

• reviewing audit results and reports;

• reviewing and evaluating our system of internal controls and policies; and

• examining improprieties or suspected improprieties.

In addition, in connection with the shareholders’ meeting, the committee examines the agenda for, and financial statement and other reports to be submitted by the board of directors, at each shareholders’ meeting.

Corporate Governance Committee

The Corporate Governance Committee is comprised of four outside directors and one standing director, Choon-Ho Lee, E. Han Kim, Jeung-soo Huh, Chan-Jin Lee and Hyun-Myung Pyo. The chairman is Choon-Ho Lee. The committee is responsible for the review of matters with respect to our Corporate Governance Guidelines and our performance under such guidelines to monitor effectiveness of our corporate governance.

Item 6.D.  Employees

On a non-consolidated basis, we had 30,841 employees as of December 31, 2009, compared to 35,063 employees as of December 31, 2008 and 36,913 employees as of December 31, 2007. Prior to the merger with KT Corporation, KTF had 2,560 employees as of December 31,2008, compared to 2,521 employees as of December 31, 2007.

The Voluntary Early Retirement Plans

We sponsor a voluntary early retirement plan where we provide additional financial incentives for our employees to retire early, as part of our efforts to improve operational efficiencies. In 2007 and 2008, 510 employees and 1,141 employees retired under KT Corporation’s voluntary early retirement plan, respectively.

In 2009, we had a voluntary early retirement plan where we received applications from employees who had been employed by us for more than 20 years. In addition, we held a special voluntary early retirement program in the fourth quarter of 2009 where we received applications for voluntary early retirement from employees who had been employed by us for more than 15 years and provided them with additional financial incentives to retire early. In aggregate, 6,515 employees retired in 2009 under the voluntary early retirement plan and the special voluntary early retirement program.

76

Labor Relations

We consider our current relations with our work force to be good. However, in the past, we have experienced opposition from our labor union for our strategy of restructuring to improve our efficiency and profitability by disposing of non-core businesses and reducing our employee base.

Under Korean labor law, our employees are permitted to strike. However, because the maintenance of our network is in the public interest, the Government has the authority to mediate or arbitrate any strike, as well as any disagreement involving the collective bargaining process. Criminal proceedings may be brought against any party refusing Government mediation or arbitration. The current collective bargaining agreement provides that even in the event of a strike, the minimum number of employees necessary to operate the telecommunications business must continue to work.

As of December 31, 2009, about 79.7% of all employees of KT Corporation were members of the KT Trade Union. On behalf of its members, the Union negotiates with us a collective bargaining agreement every two years, and our current collective bargaining agreement expires on May 25, 2011. The Union also negotiates with us an annual agreement on wages on behalf of its members. Under the Act of the Promotion of Worker’s Participation and Cooperation, our Employee-Employer Cooperation Committees, which are composed of representatives of management and labor for each business unit and regional office, meet quarterly to discuss employee grievances, working conditions and potential employee-initiated improvements in service or management.

Employee Stock Ownership and Benefits

We have an employee stock ownership association, which may purchase on behalf of its members up to 20.0% of any of our shares offered publicly in Korea. The employee stock ownership association owned 2.91% of our issued shares as of December 31, 2009.

We maintain a retirement and severance plan, as required by Korean labor law. Employees terminating their employment after one year or more of service are entitled to receive a lump-sum payment based upon the length of their service and their wage rates, with adjustments, at the time of termination. We make provision for our obligations under the retirement plan. In addition, we provide a wide range of fringe benefits to our employees, including physical education grants, meal allowances, housing, housing loans, medical examinations and training and resort centers. See “Item 5. Operating and Financial Review and Prospects—Item. 5.A. Operating Results—Salaries and Related Costs.”

Employee Training

The objective of our training program is to develop information and technology specialists who are able to create value for our customers. In order to develop skills of our employees, we require 100 hours of training per year from most of our employees, using individually-tailored curriculums based on individual assessments. We also operate Cyber Academy to provide online classes to our employees, as well as offer various foreign language classes to our employees. In addition, we provide tuition and living expense reimbursements to our high potential individuals who pursue graduate programs in Korea and abroad, as well as provide financial assistance to those who pursue work-related professional licenses or participate in after-work study programs.

77

Item 6.E.  Share Ownership

Common Stock

The persons who are currently our directors held, as a group, 28,073 common shares as of May 31, 2010, the most recent date for which this information is available. The table below shows the ownership of our common shares by directors

Shareholders	Number of Common Shares Owned
Suk-Chae Lee	16,244
Sang-Hoon Lee	9,316
Hyun-Myung Pyo	2,513
E. Han Kim	—
Jeong-Suk Koh	—
Joon Park	—
Choon-Ho Lee	—
Jeung-Soo Huh	—
Jong-Hwan Song	—
Hae-Bang Chung	—
Chan-Jin Lee	—

Stock Options

We have not granted any stock options to our current directors and executive officers.

Item 7.  Major Shareholders and Related Party Transactions

Item 7.A.  Major Shareholders

The following table sets forth certain information relating to the shareholders of our common stock as of December 31, 2009:

Shareholders	Number of Shares	Percent of Total Shares Issued
National Pension Corporation	22,084,320	8.46	%
NTT DOCOMO Inc.	14,257,813	5.46	%
Employee stock ownership association	7,605,163	2.91	%
Directors as a group	5,489	0.00	%
Public	199,243,683	76.31	%
KT Corporation (held in the form of treasury stock) (1)	17,915,340	6.86	%
Total issued shares	261,111,808	100	%

(1) Includes shares of treasury stock owned by our treasury stock fund.

Item 7.B.  Related Party Transactions

We have issued guarantees of (Won)113 billion and $31 million as of December 31, 2007, (Won)10 billion as of December 31, 2008 and (Won)10 billion as of December 31, 2009 in favor of our consolidated subsidiaries. We have also engaged in various transactions with our subsidiaries and affiliated companies. See Note 18 to the Consolidated Financial Statements.

Item 7.C.  Interests of Experts and Counsel

Not applicable.

78

Item 8.  Financial Information

Item 8.A.  Consolidated Statements and Other Financial Information

See “Item 18—Financial Statements” and pages F-1 through F-114.

Legal Proceedings

We are a defendant in various court proceedings involving claims for civil damages arising in the ordinary course of our business. While we are unable to predict the ultimate disposition of these claims, in the opinion of our management, the ultimate disposition of these claims will not, taken as a whole, have a material adverse effect on us.

Dividends

The table below sets out the annual dividends declared on the outstanding common stock to shareholders of record on December 31 of the years indicated and the interim dividends declared on the outstanding common stock to shareholders of record on June 30 of the years indicated.

Year	Annual Dividend per Common Stock	Interim Dividend per Common Stock	Average Total Dividend per Common Stock
	(In Won)	(In Won)	(In Won)
2005	2,000	1,000	3,000
2006	2,000	—	2,000
2007	2,000	—	2,000
2008	1,120	—	1,120
2009	2,000	—	2,000

If sufficient profits are available, the Board of Directors may propose annual dividends on the outstanding common stock, which our shareholders must approve by a resolution at the ordinary general meeting of shareholders. This meeting is generally held in March of the following year and if our shareholders at such ordinary general meeting of shareholders approve the annual dividend, we must pay such dividend within one month following the date of such resolution. Typically, we pay such dividends shortly after the meeting. The declaration of annual dividends is subject to the vote of our shareholders, and consequently, there can be no assurance as to the amount of dividends per common stock or that any such dividends will be declared. Interim dividends paid in cash can be declared by a resolution of the board of directors. See “Item 10. Additional Information—Item 10.B. Memorandum and Articles of Association—Dividends” and “Item 12. Description of Securities Other than Equity Securities—Description of American Depositary Shares—Dividends and Distributions.”

The Commercial Code provides that shares of a company of the same class must receive equal treatment. However, major shareholders may consent to receive dividend distributions at a lesser rate than minor shareholders. Previously, the Government consented to receiving a smaller dividend compared to other shareholders. The Government no longer holds any interest in us.

Any cash dividends relating to the shares held in the form of ADSs will be paid to the depositary bank in Won. The deposit agreement provides that, except in certain circumstances, cash dividends received by the depositary bank will be converted by the depositary bank into Dollars and distributed to the holders of the ADRs, less withholding tax, other governmental charges and the depositary bank’s fees and expenses. See “Item 12. Description of Securities Other than Equity Securities—Description of the American Depositary Shares—Dividends and Distributions.”

79

Item 8.B.  Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

Item 9.  The Offer and Listing

Item 9.A.  Offer and Listing Details

Market Price Information

Common Stock

Our shares were listed on the KRX KOSPI Market on December 23, 1998. The price of the shares on the KRX KOSPI Market as of the close of trading on June 28, 2010 was (Won)45,300 per share. The table below shows the high and low closing prices and the average daily volume of trading activity on the KRX KOSPI Market for the shares.

	Price		Average Daily Trading Volume
	High	Low
	(In Won)		(Number of shares)
2005	45,150	37,600	539,707
2006	49,350	37,600	539,707
2007	56,100	40,150	917,274
2008	52,200	29,500	1,019,430
First quarter	52,200	44,750	942,445
Second quarter	50,400	43,800	818,889
Third quarter	47,100	40,200	1,082,102
Fourth quarter	41,550	29,500	1,221,297
2009	42,000	33,100	1,019,430
First quarter	42,000	35,800	1,275,616
Second quarter	39,000	33,100	1,710,969
Third quarter	41,050	36,650	1,474,310
Fourth quarter	41,450	38,500	1,015,789
2010 (through June 28)	50,600	39,150	1,608,535
First quarter	50,600	39,150	1,838,430
January	50,600	39,150	2,408,449
February	49,600	43,750	1,704,364
March	48,100	43,500	1,436,015
Second quarter (through June 28)	49,350	44,650	1,374,809
April	49,050	45,300	1,466,828
May	49,350	44,650	1,278,199
June (through June 28)	49,000	45,300	1,364,872

Source: KRX KOSPI Market.

ADSs

The outstanding ADSs, each of which represents one-half of one share of our common stock, have been traded on the New York Stock Exchange and the London Stock Exchange since May 25, 1999.

80

The price of the ADSs on the New York Stock Exchange as of the close of trading on June 28, 2010 was $19.24 per ADS. The table below shows the high and low trading prices and the average daily volume of trading activity on the New York Stock Exchange for our ADSs since January 2004.

	Price		Average Daily Trading Volume
	High	Low
	(In US$)		(Number of ADSs)
2005	23.21	19.75	457,082
2006	26.66	20.11	562,859
2007	29.22	21.51	592,205
2008	27.10	10.10	819,767
First quarter	27.10	23.35	824,931
Second quarter	25.35	21.20	561,939
Third quarter	23.03	16.79	765,989
Fourth quarter	17.18	10.10	1,126,453
2009	17.64	11.42	819,767
First quarter	15.74	11.42	973,548
Second quarter	15.09	13.14	704,511
Third quarter	17.38	14.18	390,295
Fourth quarter	17.64	16.05	489,908
2010 (through June 28)	22.62	17.12	727,684
First quarter	21.43	17.12	718.461
January	21.43	17.12	856,605
February	21.25	18.81	884,126
March	20.94	19.08	467,487
Second quarter (through June 28)	22.62	18.61	736,908
April	22.60	20.11	490,214
May	22.62	18.61	962,950
June (through June 28)	20.49	18.84	769,895

Source: New York Stock Exchange.

Item 9.B.  Plan of Distribution

Not applicable.

Item 9.C.  Markets

The KRX KOSPI Market

On January 27, 2005, the Korea Exchange was established pursuant to the Korea Securities and Futures Exchange Act through the consolidation of the Korea Stock Exchange, the Korea Futures Exchange, the KOSDAQ Stock Market, Inc. (the “KOSDAQ”) and the KOSDAQ Committee within the Korea Securities Dealers Association, which was in charge of the management of the KOSDAQ. There are three different markets operated by the Korea Exchange: the KRX KOSPI Market, the KRX KOSDAQ Market and the KRX Derivatives Market. The Korea Exchange has two trading floors located in Seoul, one for the KRX KOSPI Market and one for the KRX KOSDAQ Market, and one trading floor in Busan for the KRX Derivatives Market. The Korea Exchange is a limited liability company, the shares of which are held by (i) securities companies and futures companies that were formerly members of the Korea Stock Exchange or the Korea Futures Exchange, (ii) the Small Business Corporation, (iii) the Korea Securities Finance Corporation and (iv) the Korea Securities Dealers Association. Currently, the Korea Exchange is the only stock exchange in Korea and is operated by membership, having as its members most of the Korean securities companies and some Korean branches of foreign securities companies.

81

The KRX KOSPI Market has the power in some circumstances to suspend trading in the shares of a given company or to de-list a security. The KRX KOSPI Market also restricts share price movements. All listed companies are required to file accounting reports annually and quarterly and to release immediately all information that may affect trading in a security.

The Government has in the past exerted, and continues to exert, substantial influence over many aspects of the private sector business community which can have the intention or effect of depressing or boosting the market. In the past, the Government has informally both encouraged and restricted the declaration and payment of dividends, induced mergers to reduce what it considers excess capacity in a particular industry and induced private companies to offer publicly their securities.

The KRX KOSPI Market publishes the Korea Composite Stock Price Index every two seconds, which is an index of all equity securities listed on the KRX KOSPI Market. On January 1, 1983, the method of computing the Korea Composite Stock Price Index was changed from the Dow Jones method to the aggregate value method. In the new method, the market capitalizations of all listed companies are aggregated, subject to certain adjustments, and this aggregate is expressed as a percentage of the aggregate market capitalization of all listed companies as of the base date, January 4, 1980.

Movements in Korea Composite Stock Price Index are set out in the following table together with the associated dividend yields and price earnings ratios.

					Period Average
Year	Opening	High	Low	Closing	Dividend Yield  (1) (2) (Percent)	Price Earnings Ratio  (2) (3)
1985	139.53	163.37	131.40	163.37	5.3	5.2
1986	161.40	279.67	153.85	272.61	4.3	7.6
1987	264.82	525.11	264.82	525.11	2.6	10.9
1988	532.04	922.56	527.89	907.20	2.4	11.2
1989	919.61	1,007.77	844.75	909.72	2.0	13.9
1990	908.59	928.82	566.27	696.11	2.2	12.8
1991	679.75	763.10	586.51	610.92	2.6	11.2
1992	624.23	691.48	459.07	678.44	2.2	10.9
1993	697.41	874.10	605.93	866.18	1.6	12.7
1994	879.32	1,138.75	855.37	1,027.37	1.2	16.2
1995	1,027.45	1,016.77	847.09	882.94	1.2	16.4
1996	882.29	986.84	651.22	651.22	1.3	17.8
1997	647.67	792.29	350.68	376.31	1.5	17.0
1998	374.41	579.86	280.00	562.46	1.9	10.8
1999	565.10	1,028.07	498.42	1,028.07	1.1	13.5
2000	1,028.33	1,059.04	500.60	504.62	2.1	12.9
2001	503.31	704.50	468.76	693.70	1.7	16.4
2002	698.00	937.61	584.04	627.55	1.6	15.2
2003	633.03	822.16	515.24	810.71	2.0	11.8
2004	821.26	936.06	719.59	895.92	2.0	13.8
2005	896.00	1,379.37	870.84	1,379.37	1.8	10.6
2006	1,383.32	1,464.70	1,203.86	1,434.46	1.6	11.1
2007	1,438.89	2,064.85	1,355.79	1,897.13	1.4	15.8
2008	1,891.45	1,888.88	938.75	1,124.47	2.6	8.9
2009	1,132.87	1,718.88	1,018.81	1,682.77	1.6	22.9
2010 (through June 28)	1,681.71	1,752.20	1,552.79	1,732.03	1.2	19.9

Source: The KRX KOSPI Market

(1) Dividend yields are based on daily figures. Dividend yields after January 3, 1984 include cash dividends only.

(2) Starting in April 2000, dividend yield and price earnings ratio are calculated based on KOSPI 200, an index of 200 equity securities listed on the KRX KOSPI Market. Starting in April 2000, KOSPI 200 excludes classified companies, companies which did not submit annual reports to the KRX KOSPI Market, and companies which received qualified opinion from external auditors.

(3) The price earnings ratio is based on figures for companies that record a profit in the preceding year.

82

Shares are quoted “ex-dividend” on the first trading day of the relevant company’s accounting period; since the calendar year is the accounting period for the majority of listed companies, this may account for the drop in the Korea Composite Stock Price Index between its closing level at the end of one calendar year and its opening level at the beginning of the following calendar year.

With certain exceptions, principally to take account of a share being quoted “ex-dividend” and “ex-rights,” permitted upward and downward movements in share prices of any category of shares on any day are limited under the rules of the KRX KOSPI Market to 15% of the previous day’s closing price of the shares, rounded down as set out below:

Previous Days’ Closing Price	Rounded Down To
Less than (Won)5,000	(Won)	5
(Won)5,000 to less than (Won)10,000	(Won)	10
(Won)10,000 to less than (Won)50,000	(Won)	50
(Won)50,000 to less than (Won)100,000	(Won)	100
(Won)100,000 to less than (Won)500,000	(Won)	500
(Won)500,000 or more	(Won)	1,000

As a consequence, if a particular closing price is the same as the price set by the fluctuation limit, the closing price may not reflect the price at which persons would have been prepared, or would be prepared to continue, if so permitted, to buy and sell shares. Orders are executed on an auction system with priority rules to deal with competing bids and offers.

Due to a deregulation of restrictions on brokerage commission rates, the brokerage commission rate on equity securities transactions may be determined by the parties, subject to commission schedules being filed with the KRX KOSPI Market by the securities companies. In addition, a securities transaction tax will generally be imposed on the transfer of shares or certain securities representing rights to subscribe for shares at the rate of 0.15% if such transfer is made through the KRX KOSPI Market. A special agricultural and fishery tax of 0.15% of the sales prices will also be imposed on transfer of these shares and securities on the KRX KOSPI Market. See “Item 10. Additional Information—Item 10.A. Taxation—Korean Taxation.”

The number of companies listed on the KRX KOSPI Market, the corresponding total market capitalization at the end of the periods indicated and the average daily trading volume for those periods are set forth in the following table:

	Market Capitalization on the Last Day of Each Period			Average Daily Trading Volume, Value
Year	Number of Listed Companies	(Billions of Won)	(Millions of Dollars) (1)	Thousands of Shares	(Millions of Won)	(Thousands of Dollars)  (1)
1985	342	6,570	7,381	18,925	12,315	13,834
1986	355	11,994	13,924	31,755	32,870	38,159
1987	389	26,172	33,033	20,353	70,185	88,583
1988	502	64,544	94,348	10,367	198,364	289,963
1989	626	95,477	140,490	11,757	280,967	414,430
1990	669	79,020	110,301	10,866	183,692	256,411
1991	686	73,118	96,107	14,022	214,263	281,629
1992	688	84,712	107,448	24,028	308,246	390,977
1993	693	112,665	139,420	35,130	574,048	710,367
1994	699	151,217	191,730	36,862	776,257	984,223
1995	721	141,151	182,201	26,130	487,762	629,613
1996	760	117,370	139,031	26,571	486,834	575,680
1997	776	70,989	50,162	41,525	555,759	392,707
1998	748	137,799	114,091	97,716	660,429	546,803
1999	725	349,504	305,137	278,551	3,481,620	3,039,655

83

	Market Capitalization on the Last Day of Each Period			Average Daily Trading Volume, Value
Year	Number of Listed Companies	(Billions of Won)	(Millions of Dollars) (1)	Thousands of Shares	(Millions of Won)	(Thousands of Dollars)  (1)
2000	704	188,042	149,275	306,163	2,602,211	2,065,739
2001	689	253,843	191,421	473,241	1,997,420	1,506,237
2002	683	258,681	215,496	857,245	3,041,598	2,533,815
2003	684	355,363	296,679	542,010	2,216,636	1,850,589
2004	683	412,588	395,275	372,895	2,232,109	2,138,445
2005	702	655,075	646,668	467,629	3,157,662	3,117,139
2006	731	704,588	757,948	279,096	3,435,180	3,695,332
2007	746	951,887	1,014,589	363,732	5,539,588	5,904,485
2008	765	576,888	458,757	355,205	5,189,644	4,126,953
2009	770	887,316	759,949	483,902	5,783,552	4,953,367
2010 (through June 28)	771	896,113	1,079,547	403,918	5,251,368	6,326,323

Source: The KRX KOSPI Market

(1) Converted at the Concentration Base Rate of The Bank of Korea or the Market Average Exchange Rate as announced by Seoul Money Brokerage Services Limited, as the case may be, at the end of the periods indicated.

The Korean securities markets are principally regulated by the Financial Services Commission of Korea and the Financial Investment Services and Capital Markets Act. The Securities and Exchange Act which regulated the securities markets in the past was replaced with the Financial Investment Services and Capital Markets Act on February 4, 2009. The new law, as did the Securities and Exchange Act, imposes restrictions on insider trading and price manipulation, requires specified information to be made available by listed companies to investors and establishes rules regarding margin trading, proxy solicitation, takeover bids, acquisition of treasury shares and reporting requirements for shareholders holding substantial interests.

Further Opening of the Korean Securities Market

A stock index futures market was opened on May 3, 1996 and a stock index option market was opened on July 7, 1997, in each case at the KRX KOSPI Market. Remittance and repatriation of funds in connection with investment in stock index futures and options are subject to regulations similar to those that govern remittance and repatriation in the context of foreign investment in Korean stocks.

Starting from May 1, 1996, foreign investors were permitted to invest in warrants representing the right to subscribe for shares of a company listed on the KRX KOSPI Market or registered on the KRX KOSDAQ Market, subject to certain investment limitations. A foreign investor may not acquire such warrants with respect to shares of a class of a company for which the ceiling on aggregate investment by foreigners has been reached or exceeded.

As of December 30, 1997, foreign investors were permitted to invest in all types of corporate bonds, bonds issued by national or local governments and bonds issued in accordance with certain special laws without being subject to any aggregate or individual investment ceiling. The Financial Services Commission sets forth procedural requirements for such investments. The Government announced on February 8, 1998 its plans for the liberalization of the money market with respect to investment in money market instruments by foreigners in 1998. According to the plan, foreigners have been permitted to invest in money market instruments issued by corporations, including commercial paper, starting February 16, 1998 with no restrictions as to the amount. Starting May 25, 1998, foreigners have been permitted to invest in certificates of deposit and repurchase agreements.

Currently, foreigners are permitted to invest in securities including shares of all Korean companies which are not listed on the KRX KOSPI Market nor registered on the KRX KOSDAQ Market and in bonds which are not listed.

84

Protection of Customer’s Interest in Case of Insolvency of Securities Companies

Under Korean law, the relationship between a customer and a securities company in connection with a securities sell or buy order is deemed to be consignment and the securities acquired by a consignment agent (i.e., the securities company) through such sell or buy order are regarded as belonging to the customer in so far as the customer and the consignment agent’s creditors are concerned. Therefore, in the event of a bankruptcy or reorganization procedure involving a securities company, the customer of the securities company is entitled to the proceeds of the securities sold by the securities company.

When a customer places a sell order with a securities company which is not a member of the KRX KOSPI Market and this securities company places a sell order with another securities company which is a member of the KRX KOSPI Market, the customer is still entitled to the proceeds of the securities sold received by the non-member company from the member company regardless of the bankruptcy or reorganization of the non-member company.

Under the Financial Investment Services and Capital Markets Act, the KRX KOSPI Market is obliged to indemnify any loss or damage incurred by a counterparty as a result of a breach by its members. If a securities company which is a member of the KRX KOSPI Market breaches its obligation in connection with a buy order, the KRX KOSPI Market is obliged to pay the purchase price on behalf of the breaching member. Therefore, the customer can acquire the securities that have been ordered to be purchased by the breaching member.

When a customer places a buy order with a non-member company and the non-member company places a buy order with a member company, the customer has the legal right to the securities received by the non-member company from the member company because the purchased securities are regarded as belonging to the customer in so far as the customer and the non-member company’s creditors are concerned.

As the cash deposited with a securities company is regarded as belonging to the securities company, which is liable to return the same at the request of its customer, the customer cannot take back deposited cash from the securities company if a bankruptcy or reorganization procedure is instituted against the securities company and, therefore, can suffer from loss or damage as a result. However, the Depositor Protection Act provides that Korea Deposit Insurance Corporation will, upon the request of the investors, pay investors up to (Won)50 million in case of the securities company’s bankruptcy, liquidation, cancellation of securities business license or other insolvency events. Pursuant to the Financial Investment Services and Capital Markets Act, securities companies are required to deposit the cash received from its customers to the extent the amount not covered by the insurance with the Korea Securities Finance Corporation, a special entity established pursuant to the Securities and Exchange Act

Set-off or attachment of cash deposits by securities companies is prohibited. The premiums related to this insurance are paid by securities companies.

Item 9.D.  Selling Shareholders

Not applicable.

Item 9.E.  Dilution

Not applicable.

85

Item 9.F.  Expenses of the Issuer

Not applicable.

Item 10.  Additional Information

Item 10.A.  Share Capital

Currently, our authorized share capital is 1,000,000,000 shares, which consists of shares of common stock, par value (Won)5,000 per share (“Common Shares”) and shares of non-voting preferred stock, par value (Won)5,000 per share (“Non-Voting Shares”). Common Shares and Non-Voting Shares together are referred to as “Shares.” Under our articles of incorporation, we are authorized to issue Non-Voting Shares up to one-fourth of our total issued capital stock. As of December 31, 2009, 261,111,808 Common Shares were issued, of which 17,915,340 shares were held by the treasury stock fund or us as treasury shares. We have never issued any Non-Voting Shares. All of the issued Common Shares are fully-paid and non-assessable and are in registered form. We issue share certificates in denominations of 1, 5, 10, 50, 100, 500, 1,000 and 10,000 shares.

Item 10.B.  Memorandum and Articles of Association

This section provides information relating to our capital stock, including brief summaries of material provisions of our articles of incorporation, the Financial Investment Services and Capital Markets Act, the Commercial Code and related laws of Korea, all as currently in effect. The following summaries are subject to, and are qualified in their entirety by reference to, our articles of incorporation and the applicable provisions of the Financial Investment Services and Capital Markets Act and the Commercial Code. We have filed a copy of our articles of incorporation as an exhibit to registration statements under the Securities Act or the Securities Exchange Act previously filed by us.

Dividends

We distribute dividends to our shareholders in proportion to the number of shares owned by each shareholder. No dividends are distributed with respect to shares held by us or our treasury stock fund. The Common Shares represented by the ADSs have the same dividend rights as other outstanding Common Shares.

Holders of Non-Voting Shares are entitled to receive dividends in priority to the holders of Common Shares in an amount of not less than 9% of the par value of the Non-Voting Shares as determined by the board of directors at the time of their issuance, provided that if the dividends on the Common Shares exceed those on the Non-Voting Shares, the Non-Voting Shares will also participate in the distribution of such excess dividend amount in the same proportion as the Common Shares. If the amount available for dividends is less than the aggregate amount of such minimum dividend, the holders of Non-Voting Shares will be entitled to receive such accumulated unpaid dividend in priority to the holders of Common Shares from the dividends payable in respect of the next fiscal year.

We declare dividends annually at the annual general meeting of shareholders which is held within three months after the end of the fiscal year. We pay the annual dividend shortly after the annual general meeting to the shareholders of record as of the end of the preceding fiscal year. We may distribute the annual dividend in cash or in Shares. However, a dividend of Shares must be distributed at par value. If the market price of the Shares is less than their par value, dividends in Shares may not exceed one-half of the annual dividend. We may pay interim dividends in cash once a year to shareholders or registered pledgees who are registered in the registry of shareholders as of June 30 of each fiscal year by a resolution of the board of directors. We have no obligation to pay any annual dividend unclaimed for five years from the payment date.

86

Under the Commercial Code, we may pay our dividend only out of the excess of our net assets, on a non-consolidated basis, over the sum of (1) our stated capital and (2) the total amount of our capital surplus reserve and legal reserve accumulated up to the end of the relevant dividend period. In addition, we may not pay any dividend unless we have set aside as legal reserve an amount equal to at least 10% of the cash portion of the dividend or unless we have accumulated a legal reserve of not less than one-half of our stated capital. Financial Services Commission regulations applicable to companies listed on the KRX KOSPI Market requires us to set aside specified amounts as financial structure improvement reserve until the ratio of our shareholders’ equity to the total assets reaches 30.0%. We may not use legal reserve to pay cash dividends but may transfer amounts from legal reserve to capital stock or use legal reserve to reduce an accumulated deficit.

Distribution of Free Shares

In addition to paying dividends in Shares out of our retained or current earnings, we may also distribute to our shareholders an amount transferred from our capital surplus or legal reserve to our stated capital in the form of free shares. We must distribute such free shares to all our shareholders in proportion to their existing shareholdings.

Preemptive Rights and Issuance of Additional Shares

We may issue authorized but unissued shares at times and, unless otherwise provided in the Commercial Code, on terms our board of directors may determine. Subject to the limitation described in “Limitation on Shareholdings” below, all our shareholders are generally entitled to subscribe for any newly issued Shares in proportion to their existing shareholdings. We must offer new Shares on uniform terms to all shareholders who have preemptive rights and are listed on our shareholders’ register as of the relevant record date. Under the Commercial Code, we may vary, without shareholders’ approval, the terms of these preemptive rights for different classes of shares. We must give notice to all persons who are entitled to exercise preemptive rights regarding new Shares and their transferability at least two weeks before the relevant record date. Our board of directors may determine how to distribute Shares for which preemptive rights have not been exercised or where fractions of Shares occur.

Under the Commercial Code, it is required that the new Shares, convertible bonds or bonds with warrants be issued to persons other than the existing shareholders solely for the purpose of achieving managerial objectives. Under our articles of incorporation, we may issue new Shares pursuant to a board resolution to persons other than existing shareholders, who in these circumstances will not have preemptive rights, if the new Shares are:

• publicly offered pursuant to the Financial Investment Services and Capital Markets Act;

• issued to members of our employee stock ownership association;

• represented by depositary receipts;

• issued upon exercise of stock options granted to our officers and employees;

• issued through an offering to public investors, the amount of which is no more than 10% of the issued Shares;

• issued in order to satisfy specific needs such as strategic alliance, inducement of foreign funds or new technology, improvement of financial structure or other capital raising requirement; or

• issued to domestic or foreign financial institutions when necessary for raising funds in emergency cases.

87

In addition, we may issue convertible bonds or bonds with warrants, each up to an aggregate principal amount of (Won)2,000 billion, to persons other than existing shareholders in the situations described above.

Members of our employee stock ownership association, whether or not they are our shareholders, generally have a preemptive right to subscribe for up to 20.0% of the Shares publicly offered pursuant to the Financial Investment Services and Capital Markets Act. This right is exercisable only to the extent that the total number of Shares so acquired and held by members of our employee stock ownership association does not then exceed 20.0% of the total number of Shares then issued (including in such total both: (i) all issued and outstanding Shares at the time the preemptive rights are exercised; and (ii) all Shares to be newly issued in the applicable share issuance transaction in connection with which such preemptive rights are exercised). As of December 31, 2009, 2.91% of the issued Shares were held by members of our employee stock ownership association.

Limitation on Shareholdings

The Telecommunications Business Act permits maximum aggregate foreign shareholding in us to be 49.0% of our total issued and outstanding Shares with voting rights (including equivalent securities with voting rights, e.g., depositary certificates and certain other equity interests). For the purposes of the foregoing, a shareholder is a “foreign shareholder” if such shareholder is: (1) a foreign person; (2) a foreign government; or (3) a company whose largest shareholder is a foreign person (including any “specially related persons” as determined under the Financial Investment Services and Capital Markets Act) or a foreign government, in circumstances where (i) such foreign person or foreign government holds, in aggregate, 15.0% or more of such company’s total voting shares, and (ii) such company holds at least 1.0% of our total issued and outstanding Shares with voting rights. For the avoidance of doubt, all of conditions (i) to (ii) in the foregoing item (3) must exist for such a company to be counted as a “foreign shareholder” for the purposes of calculating whether the 49.0% foreign shareholding threshold is reached under the Telecommunications Business Act. In addition, the Telecommunications Business Act prohibits a foreign shareholder from being our largest shareholder if such shareholder owns 5.0% or more of our Shares with voting rights. For the purposes of this restriction, any two or more foreign persons or foreign governments who enter into an agreement to act in concert in the exercise of their voting rights will be counted together and prohibited from becoming our largest shareholder in the event that they collectively hold 5.0% or more of our Shares. The Foreign Investment Promotion Act also prohibits any foreign shareholder from being our largest shareholder, if such shareholder owns 5.0% or more of our Shares with voting rights. For the purposes of this restriction under the Foreign Investment Promotion Act, a “foreign shareholder” is defined in the same manner as described above with respect to the foreign shareholding restriction under the Telecommunications Business Act, provided, however, that no exception is made under the Foreign Investment Promotion Act regulations for companies that own less than 1.0% of our Shares (see item (3)(ii) above in this paragraph). A foreigner who has acquired the Shares in excess of such ceiling described above may not exercise its voting rights for shares in excess of such limitation, and the Korea Communications Commission may require corrective measures to comply with the ownership restrictions.

General Meeting of Shareholders

We hold the annual general meeting of shareholders within three months after the end of each fiscal year. Subject to a board resolution or court approval, we may hold an extraordinary general meeting of shareholders:

• as necessary;

• at the request of shareholders of an aggregate of 3.0% or more of our issued Common Shares;

88

• at the request of shareholders holding an aggregate of 1.5% or more of our issued Shares for at least six months; or

• at the request of our audit committee.

Holders of Non-Voting Shares may request a general meeting of shareholders only after the Non-Voting Shares become entitled to vote or are enfranchised, as described under “—Voting Rights” below.

We must give shareholders written notice setting out the date, place and agenda of the meeting at least two weeks before the date of the general meeting of shareholders. However, for holders of less than 1.0% of the total number of issued and outstanding Common Shares, we may give notice by placing at least two public notices in at least two daily newspapers at least two weeks in advance of the meeting. Currently, we use Seoul Shinmun, Maeil Business Newspaper and The Korea Economic Daily published in Seoul for this purpose. Shareholders not on the shareholders’ register as of the record date are not entitled to receive notice of the general meeting of shareholders or attend or vote at the meeting. Holders of Non-Voting Shares, unless enfranchised, are not entitled to receive notice of general meetings of shareholders, but may attend such meetings.

Our general meetings of shareholders are held at our head office, in Sungnam, or if necessary, may be held anywhere near our head office or in Seoul.

Voting Rights

Holders of our Common Shares are entitled to one vote for each Common Share, except that voting rights of Common Shares held by us, or by a corporate shareholder that is more than 10.0% owned by us either directly or indirectly, may not be exercised. The Commercial Code permits cumulative voting, under which voting method each shareholder has multiple voting rights corresponding to the number of directors to be appointed in the voting and may exercise all voting rights cumulatively to elect one director. Our articles of incorporation permit cumulative voting at our shareholders’ meeting. Under the Commercial Code of Korea, any shareholder holding shares equivalent to not less than 1/100 of the total number of shares issued may apply to us for selecting and appointing such directors by cumulative voting.

Our shareholders may adopt resolutions at a general meeting by an affirmative majority vote of the voting shares present or represented at the meeting, where the affirmative votes also represent at least one-fourth of our total voting shares then outstanding. However, under the Commercial Code and our articles of incorporation, the following matters, among others, require approval by the holders of at least two-thirds of the voting shares present or represented at a meeting, where the affirmative votes also represent at least one-third of our total voting shares then outstanding:

• amending our articles of incorporation;

• removing a director;

• reduction of our capital stock;

• effecting any dissolution, merger or consolidation of us;

• transferring the whole or any significant part of our business;

• effecting our acquisition of all of the business of any other company or our acquisition of a part of the business of any other company which will significantly affect our business; or

• issuing any new Shares at a price lower than their par value.

89

In general, holders of Non-Voting Shares are not entitled to vote on any resolution or receive notice of any general meeting of shareholders. However, in the case of amendments to our articles of incorporation, any merger or consolidation of us, or in some other cases that affect the rights or interests of the Non-Voting Shares, approval of the holders of Non-Voting Shares is required. We may obtain such approval by a resolution of holders of at least two-thirds of the Non-Voting Shares present or represented at a class meeting of the holders of Non-Voting Shares, where the affirmative votes also represent at least one-third of our total outstanding Non-Voting Shares. In addition, if we are unable to pay dividends on Non-Voting Shares as provided in our articles of incorporation, the holders of Non-Voting Shares will become enfranchised and will be entitled to exercise voting rights until those dividends are paid. The holders of enfranchised Non-Voting Shares have the same rights as holders of Common Shares to request, receive notice of, attend and vote at a general meeting of shareholders.

Shareholders may exercise their voting rights by proxy. The proxy must present a document evidencing an appropriate power of attorney prior to the start of the general meeting of shareholders. Additionally, shareholders may exercise their voting rights in absentia by submission of signed write-in voting forms. To make it possible for our shareholders to proceed with voting on a write-in basis, we are required to attach the appropriate write-in voting form and related informational material to the notices distributed to shareholders for convening the relevant general meeting of shareholders. Any of our shareholders who desires to vote on such write-in basis must submit their completed and signed write-in voting forms to us no later than one day prior to the date that the relevant general meeting of shareholders is convened.

Holders of ADRs exercise their voting rights through the ADR depositary, an agent of which is the record holder of the underlying Common Shares. Subject to the provisions of the deposit agreement, ADR holders are entitled to instruct the ADR depositary how to vote the Common Shares underlying their ADSs. See “Item 12. Description of Securities Other than Equity Securities—Description of American Depositary Shares—Voting Rights.”

Rights of Dissenting Shareholders

In some limited circumstances, including the transfer of the whole or any significant part of our business and our merger or consolidation with another company, dissenting shareholders have the right to require us to purchase their Shares. To exercise this right, shareholders must submit to us a written notice of their intention to dissent before the general meeting of shareholders. Within 20 days after the relevant resolution is passed at a meeting, the dissenting shareholders must request us in writing to purchase their Shares. We are obligated to purchase the Shares of dissenting shareholders within one month after the expiration of the 20-day period. The purchase price for the Shares is required to be determined through negotiation between the dissenting shareholders and us. If we cannot agree on a price through negotiation, the purchase price will be the average of (1) the weighted average of the daily Share prices on the KRX KOSPI Market for the two-month period before the date of the adoption of the relevant board resolution, (2) the weighted average of the daily Share price on the KRX KOSPI Market for the one month period before the date of the adoption of the relevant board resolution and (3) the weighted average of the daily Share price on the KRX KOSPI Market for the one week period before the date of the adoption of the relevant board resolution. However, if we or any of the dissenting shareholders do not accept the purchase price calculated using the above method, the rejecting party may request the court to determine the purchase price. Holders of ADSs will not be able to exercise dissenter’s rights unless they have withdrawn the underlying common stock and become our direct shareholders.

90

Register of Shareholders and Record Dates

Our transfer agent, Kookmin Bank, maintains the register of our shareholders at its office in Seoul, Korea. It registers transfers of Shares on the register of shareholders on presentation of the Share certificates.

The record date for annual dividends is December 31. For the purpose of determining the shareholders entitled to annual dividends, the register of shareholders may be closed for the period from the day after the record date to January 31 of the following year. Further, for the purpose of determining the shareholders entitled to some other rights pertaining to the Shares, we may, on at least two weeks’ public notice, set a record date and/or close the register of shareholders for not more than three months. The trading of Shares and the delivery of share certificates may continue while the register of shareholders is closed.

Annual Reports

At least one week before the annual general meeting of shareholders, we must make our annual report and audited non-consolidated financial statements available for inspection at our principal office and at all of our branch offices. In addition, copies of annual reports, the audited non-consolidated financial statements and any resolutions adopted at the general meeting of shareholders will be available to our shareholders.

Under the Financial Investment Services and Capital Markets Act, we must file with the Financial Services Commission and the KRX KOSPI Market (1) an annual report within 90 days after the end of our fiscal year and (2) interim reports with respect to the three month period, six month period and nine month period from the beginning of each fiscal year within 45 calendar days following the end of each period. Copies of these reports are or will be available for public inspection at the Financial Services Commission and the KRX KOSPI Market.

Transfer of Shares

Under the Commercial Code, the transfer of Shares is effected by delivery of share certificates. However, to assert shareholders’ rights against us, the transferee must have his name and address registered on our register of shareholders. For this purpose, a shareholder is required to file his name, address and seal with our transfer agent. A non-Korean shareholder may file a specimen signature in place of a seal, unless he is a citizen of a country with a sealing system similar to that of Korea. In addition, a non-resident shareholder must appoint an agent authorized to receive notices on his behalf in Korea and file a mailing address in Korea. The above requirements do not apply to the holders of ADSs.

Under current Korean regulations, Korean securities companies and banks, including licensed branches of non-Korean securities companies and banks, investment management companies, futures trading companies, internationally recognized foreign custodians and the Korea Securities Depository may act as agents and provide related services for foreign shareholders. Certain foreign exchange controls and securities regulations apply to the transfer of Shares by non-residents or non-Koreans. See “Item 10. Additional Information—Item 10.D. Exchange Controls.”

Our transfer agent is Kookmin Bank, located at 24-3, Yoido-dong, Youngdungpo-ku, Seoul, Korea.

91

Acquisition of Shares by Us

We may not acquire our own Shares except in limited circumstances, such as a reduction in capital. In addition, pursuant to the Financial Investment Services and Capital Markets Act, we may acquire Shares only by (i) purchasing on the KRX KOSPI Market, (ii) a tender offer, or (iii) receiving Shares returned to us upon the cancellation or termination of a trust agreement with a trustee who acquired the Shares by either of the methods indicated above. The aggregate purchase price for the Shares may not exceed the total amount available for distribution of dividends at the end of the preceding fiscal year, subject to certain procedural requirements, provided that, in case of acquisition of our own Shares by us for the purpose of cancellation, the aggregate purchase price may not exceed the total amount available for distribution of dividends at the end of the preceding fiscal year minus certain reserves.

In general, corporate entities in which we own a 50.0% or more equity interest may not acquire our Shares.

As of December 31, 2009, there were 17,915,340 treasury shares including shares held by our treasury stock fund.

Liquidation Rights

In the event of our liquidation, after payment of all debts, liquidation expenses and taxes, our remaining assets will be distributed among shareholders in proportion to their shareholdings. Holders of Non-Voting Shares have no preference in liquidation.

Item 10.C.  Material Contracts

The Merger Agreement between KT Corporation and KTF

On January 20, 2009, KTF and KT Corporation entered into a merger agreement, pursuant to which KTF merged into KT Corporation on June 1, 2009. KTF common stockholder received 0.7192335 share of KT Corporation common stock for every one share of KTF common stock that they owned. KT Corporation waived issuance of any merger consideration in respect of all of the outstanding shares of KTF common stock held by KT Corporation immediately prior to the merger.

Pursuant to the merger agreement, all of the assets, liabilities, rights and obligations (including contractual rights and obligations) of KTF were comprehensively succeeded by KT Corporation. The employees of KTF became employees of KT Corporation as a result of the merger, and the obligations to pay severance payments to those employees were succeeded by KT Corporation.

Under Korean law, holders of shares of KT Corporation or KTF common stock who opposed the merger were entitled to exercise their appraisal rights to purchase their shares, which were set at (Won)38,535 for each share of KT Corporation common stock properly submitted to KT Corporation for appraisal and (Won)29,284 for each share of KTF common stock properly submitted to KTF for appraisal.

KT Corporation delivered 700,108 shares of its newly issued common stock (par value (Won)5,000) and 45,629,480 shares of its treasury shares (par value (Won)5,000) to KTF stockholders listed on the stockholder registry of KTF as of the date of the merger. See “Item 5. Operating and Financial Review and Prospects—Item 5.A. Operating Result—Overview—Merger of KTF into KT Corporation.”

92

Item 10.D.  Exchange Controls

General

The Foreign Exchange Transaction Act and the Presidential Decree and regulations under that Act and Decree (collectively the “Foreign Exchange Transaction Laws”) regulate investment in Korean securities by non-residents and issuance of securities outside Korea by Korean companies. Under the Foreign Exchange Transaction Laws, non-residents may invest in Korean securities only in compliance with the provisions of, and to the extent specifically allowed by, these laws or otherwise permitted by the Ministry of Strategy and Finance. The Financial Services Commission has also adopted, pursuant to its authority under the Korean Financial Investment Services and Capital Markets Act, regulations that control investment by foreigners in Korean securities and regulate the issuance of securities outside Korea by Korean companies.

Under the Foreign Exchange Transaction Laws, if the Government deems that certain emergency circumstances, including, but not limited to, the outbreak of natural calamities, wars or grave and sudden changes in domestic or foreign economies, are likely to occur, the Ministry of Strategy and Finance may temporarily suspend the transactions where Foreign Exchange Transaction Laws are applicable, or impose an obligation to deposit or sell capital to certain Korean governmental agencies or financial institutions. In addition, if the Government deems that it is confronted or is likely to be confronted with serious difficulty in movement of capital between Korea and abroad which will bring serious obstacles in carrying out its currency policies, exchange rate policies and other macroeconomic policies, the Ministry of Strategy and Finance may take measures to require any person who performs transactions to deposit such capital to certain Korean governmental agencies or financial institutions.

Government Review of Issuance of ADSs

In order for us to issue shares represented by ADSs, we are required to file a prior report of the issuance with the Ministry of Strategy and Finance if our securities and borrowings denominated in foreign currencies issued during the one-year period preceding such filing date exceed US$30 million in aggregate. No further Korean governmental approval is necessary for the initial offering and issuance of the ADSs.

Under current Korean laws and regulations, the depositary bank is required to obtain our prior consent for the number of shares to be deposited in any given proposed deposit which exceeds the difference between (1) the aggregate number of shares deposited by us or with the consent of us for the issuance of ADSs (including deposits in connection with the initial and all subsequent offerings of ADSs and stock dividends or other distributions related to these ADSs) and (2) the number of shares on deposit with the depositary bank at the time of such proposed deposit. We can give no assurance that we would grant our consent, if our consent is required. Therefore, a holder of ADRs who surrenders ADRs and withdraws shares may not be permitted subsequently to deposit those shares and obtain ADRs.

Reporting Requirements for Holders of Substantial Interests

Any person whose direct or beneficial ownership of shares, whether in the form of shares or ADSs, certificates representing the rights to subscribe for Shares and equity-related debt securities including convertible bonds and bonds with warrants (collectively, the “Equity Securities”) together with the Equity Securities beneficially owned by certain related persons or by any person acting in concert with the person accounts for 5.0% or more of the total issued Equity Securities is required to report the status of the holdings to the Financial Services Commission and the KRX KOSPI Market within five

93

business days after reaching the 5.0% ownership interest. In addition, any change in the ownership interest subsequent to the report which equals or exceeds 1.0% of the total issued Equity Securities is required to be reported to the Financial Services Commission and the KRX KOSPI Market within five business days from the date of the change. The required information to be included in the 5.0% report may be different if the acquisition of such shareholding interest is for the purpose of exercising influence over the management, as opposed to an acquisition for investment purposes. Any person reporting the holding of 5.0% or more of the total issued Equity Securities and any person reporting the change in the ownership interest which equals or exceeds 1.0% of the total issued Equity Securities pursuant to the requirements described above must also deliver a copy of such reports to us.

Violation of these reporting requirements may subject a person to criminal sanctions such as fines or imprisonment and may result in a loss of voting rights with respect to the unreported ownership of Equity Securities exceeding 5.0%. Furthermore, the Financial Services Commission may issue an order to dispose of non-reported Equity Securities.

Restrictions Applicable to ADSs

No Korean governmental approval is necessary for the sale and purchase of ADSs in the secondary market outside Korea or for the withdrawal of shares underlying ADSs and the delivery inside Korea of shares in connection with the withdrawal, provided that a foreigner who intends to acquire the shares must obtain an investment registration certificate from the Financial Supervisory Service as described below. In general, the acquisition of the shares by a foreigner must be reported by the foreigner or his standing proxy in Korea immediately to the Governor of the Financial Supervisory Service; provided, however, that in cases where a foreigner acquires shares through the exercise of rights as a holder of ADSs (or other depositary certificates), the foreigner must cause such report to the Governor of the Financial Supervisory Service to be filed by the Korea Securities Depository.

Persons who have acquired shares as a result of the withdrawal of shares underlying the ADSs may exercise their preemptive rights for new shares, participate in free distributions and receive dividends on shares without any further governmental approval.

Restrictions Applicable to Shares

As a result of amendments to the Foreign Exchange Transaction Laws and Financial Services Commission regulations adopted in connection with the stock market opening from January 1992, which we refer to collectively as the Investment Rules, foreigners may invest, with limited exceptions and subject to procedural requirements, in all shares of Korean companies, whether listed on the KRX KOSPI Market or the KRX KOSDAQ Market, unless prohibited by specific laws. Foreign investors may trade shares listed on the KRX KOSPI Market or the KRX KOSDAQ Market only through the KRX KOSPI Market or the KRX KOSDAQ Market, except in limited circumstances, including:

• odd-lot trading of shares;

• acquisition of shares (“Converted Shares”) by exercise of warrant, conversion right under convertible bonds or withdrawal right under depositary receipts issued outside of Korea by a Korean company;

• acquisition of shares as a result of inheritance, donation, bequest or exercise of shareholders’ rights, including preemptive rights or rights to participate in free distributions and receive dividends;

94

• over-the-counter transactions between foreigners of a class of shares for which the ceiling on aggregate acquisition by foreigners, as explained below, has been reached or exceeded;

• shares acquired by direct investment as defined in the Foreign Investment Promotion Law;

• disposal of shares pursuant to the exercise of appraisal rights of dissenting shareholders;

• disposal of shares in connection with a tender offer;

• acquisition of shares by a foreign depositary in connection with the issuance of depositary receipts;

• acquisition and disposal of shares through overseas stock exchange market if such shares are simultaneously listed on the KRX KOSPI Market or the KRX KOSDAQ Market and such overseas stock exchange; and

• arm’s length transactions between foreigners, if all of such foreigners belong to an investment group managed by the same person.

For over-the-counter transactions of shares between foreigners outside the KRX KOSPI Market or the KRX KOSDAQ Market for shares with respect to which the limit on aggregate foreign ownership has been reached or exceeded, an investment broker licensed in Korea must act as an intermediary. Odd-lot trading of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market must involve a licensed investment trader in Korea as the other party. Foreign investors are prohibited from engaging in margin transactions through borrowing shares from a securities company with respect to shares which are subject to a foreign ownership limit.

The Investment Rules require a foreign investor who wishes to invest in shares on the KRX KOSPI Market or the KRX KOSDAQ Market (including Converted Shares) to register its identity with the Financial Supervisory Service prior to making any such investment; however, the registration requirement does not apply to foreign investors who acquire Converted Shares with the intention of selling such Converted Shares within three months from the date of acquisition of the Converted Shares or who acquire the shares in an over-the-counter transaction or dispose of shares where such acquisition or disposal is deemed to be a foreign direct investment pursuant to the Financial Investment Services and Capital Markets Act. Upon registration, the Financial Supervisory Service will issue to the foreign investor an investment registration certificate that must be presented each time the foreign investor opens a brokerage account with a financial investment business entity. Foreigners eligible to obtain an investment registration certificate include foreign nationals who are individuals residing abroad for more than six months, foreign governments, foreign municipal authorities, foreign public institutions, corporations incorporated under foreign laws, international organizations, funds and associations as defined under the Financial Investment Services and Capital Markets Act. All Korean offices of a foreign corporation as a group are treated as a separate entity from the offices of the corporation outside Korea. However, a foreign corporation or depositary bank issuing depositary receipts may obtain one or more investment registration certificates in its name in certain circumstances as described in the relevant regulations.

Upon a foreign investor’s purchase of shares through the KRX KOSPI Market or the KRX KOSDAQ Market, no separate report by the investor is required because the investment registration certificate system is designed to control and oversee foreign investment through a computer system. However, a foreign investor’s acquisition or sale of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market (as discussed above) must be reported by the foreign investor or his standing proxy to the Governor of the Financial Supervisory Service at the time of each such acquisition or sale; provided, however, that in cases where a foreigner acquires shares through the exercise of rights as a

95

holder of ADSs (or other depositary certificates), the foreigner must cause such report to the Governor of the Financial Supervisory Service to be filed by the Korea Securities Depository; and further provided that a foreign investor must ensure that any acquisition or sale by it of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market in the case of trades in connection with a tender offer, odd-lot trading of shares or trades of a class of shares for which the aggregate foreign ownership limit has been reached or exceeded, is reported to the Governor of the Financial Supervisory Service by the investment trader, the investment broker, the Korea Securities Depository or the financial securities company engaged to facilitate such transaction. A foreign investor must appoint one or more standing proxies from among the Korea Securities Depository, foreign exchange banks, including domestic branches of foreign banks, investment traders, investment brokers, the Korea Securities Depository, financial securities companies and internationally recognized custodians that satisfies all relevant requirements under the Financial Investment Services and Capital Markets Act and will act as a standing proxy to exercise shareholders’ rights or perform any matters related to the foregoing activities if the foreign investor does not perform these activities himself. However, a foreign investor may be exempted from complying with these standing proxy rules with the approval of the Governor of the Financial Supervisory Service in cases deemed inevitable by reason of conflict between laws of Korea and the home country of the foreign investor.

Certificates evidencing shares of Korean companies must be kept in custody with an eligible custodian in Korea. Only the Korea Securities Depository, foreign exchange banks including domestic branches of foreign banks, investment traders, investment brokers, collective investment business entities and internationally recognized custodians satisfying the relevant requirements under the Financial Investment Services and Capital Markets Act are eligible to act as a custodian of shares for a non-resident or foreign investor. A foreign investor must ensure that his custodian deposits its shares with the Korea Securities Depository. However, a foreign investor may be exempted from complying with this deposit requirement with the approval of the Governor of the Financial Supervisory Service in circumstances where compliance with that requirement is made impracticable, including cases where compliance would contravene the laws of the home country of such foreign investor.

Under the Investment Rules, with certain exceptions, foreign investors may acquire shares of a Korean company without being subject to any foreign investment ceiling. As one such exception, designated public corporations are subject to a 40.0% ceiling on the acquisition of shares by foreigners in the aggregate and a ceiling on the acquisition of shares by a single foreign investor pursuant to the articles of incorporation of such corporation. Currently, Korea Electric Power Corporation is the only designated public corporation which has set such a ceiling. Furthermore, an investment by a foreign investor of not less than 10.0% of the issued shares with voting rights of a Korean company is defined as a direct foreign investment under the Foreign Investment Promotion Act, which is, in general, subject to the report to, and acceptance, by the Ministry of Knowledge Economy. The acquisition of shares of a Korean company by a foreign investor may also be subject to certain foreign shareholding restrictions in the event that the restrictions are prescribed in each specific law which regulates the business of the Korean company. A foreigner who has acquired shares of our common stock in excess of this ceiling may not exercise his voting rights with respect to the shares of our common stock exceeding the limit.

Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a foreign exchange bank at which he must open a foreign currency account and a Won account exclusively for stock investments. No approval is required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened at an investment broker or an investment trader. Funds in the foreign currency account may be remitted abroad without any governmental approval.

96

Dividends on Shares are paid in Won. No governmental approval is required for foreign investors to receive dividends on, or the Won proceeds of the sale of, any shares to be paid, received and retained in Korea. Dividends paid on, and the Won proceeds of the sale of, any shares held by a non-resident of Korea must be deposited either in a Won account with the investor’s investment broker or investment trader or his Won Account. Funds in the investor’s Won Account may be transferred to his foreign currency account or withdrawn for local living expenses up to certain limitations. Funds in the Won Account may also be used for future investment in shares or for payment of the subscription price of new shares obtained through the exercise of preemptive rights.

Investment brokers and investment traders are allowed to open foreign currency accounts with foreign exchange banks exclusively for accommodating foreign investors’ stock investments in Korea. Through these accounts, these investment brokers and investment traders may enter into foreign exchange transactions on a limited basis, such as conversion of foreign currency funds and Won funds, either as a counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.

Item 10.E.  Taxation

The following summary is based upon tax laws of the United States and the Republic of Korea as in effect on the date of this annual report on Form 20-F, and is subject to any change in United States or Korean law that may come into effect after such date. Investors in the shares of common stock or ADSs are advised to consult their own tax advisers as to the United States, Korean or other tax consequences of the purchase, ownership and disposition of such securities, including the effect of any national, state or local tax laws.

Korean Taxation

The following summary of Korean tax considerations applies to you as long as you are not:

• a resident of Korea;

• a corporation organized under Korean law; or

• engaged in a trade or business in Korea through a permanent establishment or a fixed base.

Shares or ADSs

Dividends on Shares of Common Stock or ADSs

Unless an applicable tax treaty provides otherwise, we will deduct Korean withholding tax from dividends paid to you either in cash or shares at a rate of 22.0% (including resident surtax). If you are a resident of a country that has entered into a tax treaty with Korea, you may qualify for a reduced rate of Korean withholding tax under such a treaty. For example, if you are a qualified resident of the United States for purposes of the US-Korea Tax Treaty (the “Treaty”) and you are the beneficial owner of a dividend, a reduced withholding tax rate of 16.5% generally will apply. You will not be entitled to claim treaty benefits if you are not the beneficial owner of a dividend.

In order to obtain the benefits of a reduced withholding tax rate under a tax treaty, you must submit to us, prior to the dividend payment date, such evidence of tax residence as may be required by the Korean tax authorities. In the case of ADSs, evidence of tax residence may be submitted to us through the depositary. Excess taxes withheld may be recoverable if you subsequently produce satisfactory evidence that you were entitled to have tax withheld at a lower rate.

97

If we distribute to you free shares representing a transfer of certain capital reserves or asset revaluation reserves into paid-in capital, that distribution may be a deemed dividend subject to Korean tax.

Capital Gains

Capital gain from a sale of shares of common stock will generally be exempt from Korean taxation if you have owned, together with certain related parties, less than 25.0% of our total issued shares during the year of sale and the five calendar years before the year of sale, and the sale is made through the KRX KOSPI Market, and you have no permanent establishment in Korea. Capital gain earned by a non-Korean holder from a sale of ADSs outside of Korea are exempt from Korean taxation by virtue of the Special Tax Treatment Control Law of Korea (the “STTCL”), provided that the issuance of the ADSs is deemed to be an overseas issuance under the STTCL.

If you are subject to tax on capital gain from a sale of ADSs, or shares of common stock that you acquired as a result of a withdrawal, your gain will be calculated based on your cost of acquiring the ADSs representing the shares of common stock, although there are no specific Korean tax provisions or rulings on this issue. In the absence of the application of a tax treaty that exempts tax on capital gain, the amount of Korean tax imposed on such capital gains will be the lesser of 11.0% (including resident surtax) of the gross realization proceeds or, subject to the production of satisfactory evidence of the acquisition cost and the transaction costs of the ADSs, 22.0% (including resident surtax) of the net capital gain.

If you sell your shares of common stock or ADSs, the purchaser or, in the case of a sale of shares of common stock on the KRX KOSPI Market or through a licensed securities company in Korea, the licensed securities company, is required to withhold Korean tax from the sales price in an amount equal to 11% of the gross realization proceeds and to make payment thereof to the Korean tax authorities, unless you establish your entitlement to an exemption of taxation under an applicable tax treaty or produce satisfactory evidence of your acquisition cost and the transaction costs for the shares of common stock or ADSs. In order to obtain the benefit of an exemption of tax pursuant to a tax treaty, you must submit to the purchaser or the securities company (or through the depositary), as the case may be, prior to the first payment, an exemption application, together with a certificate of your tax residence issued by a competent authority of your residence country. This requirement will not apply to exemptions under Korean tax law. Excess taxes withheld may be recoverable if you subsequently produce satisfactory evidence that you were entitled to have taxes withheld at a lower rate.

Most tax treaties that Korea has entered into provide exemptions for capital gains tax for capital gains from sale and purchase of shares of common stock. However, Korea’s tax treaties with Japan, Austria, Spain and a few other countries do not provide an exemption from such capital gains tax. For example, Article 13 of Korea’s tax treaty with Japan provides that if a taxpayer holding 25% or more (including those shares held by any related party of the taxpayer) of total issued shares of a company in a taxable year sells 5% or more (including those sold by any related party of the taxpayer) of total issued shares of the same company in the same taxable year, the country where the company is a resident may impose tax on such taxpayer.

Inheritance Tax and Gift Tax

Korean inheritance tax is imposed upon (a) all assets (wherever located) of the deceased if at the time of his death he was domiciled in Korea and (b) all property located in Korea which passes on death (irrespective of the domicile of the deceased). Gift tax is imposed in similar circumstances to the above. Taxes are currently imposed at the rate of 10% to 50% if the value of the relevant property is above a certain limit and vary according to the identity of the parties involved.

98

Under Korean Inheritance and Gift Tax Law, shares issued by a Korean corporation are deemed located in Korea irrespective of where they are physically located or by whom they are owned. It remains unclear whether, for Korean inheritance and gift tax purposes, a non-resident holder of ADSs will be treated as the owner of the shares underlying the ADSs. If such non-resident is treated as the owner of the shares, the heir or donee of such non-resident (or in certain circumstances, the non-resident as the donor) will be subject to Korean inheritance or gift tax at the same rate as described above.

Securities Transaction Tax

If you transfer shares of common stock on the KRX KOSPI Market, you will be subject to the securities transaction tax at a rate of 0.15% and an agriculture and fishery special tax at a rate of 0.15%, calculated based on the sales price of the shares. If you transfer shares of common stock and your transfer is not made on the KRX KOSPI Market you will generally be subject to the securities transaction tax at a rate of 0.5% and will generally not be subject to the agriculture and fishery special tax.

With respect to transfers of ADSs, a tax ruling recently issued in 2004 by the Korean tax authority appears to hold that depositary receipts (such as the ADSs) constitute share certificates subject to the securities transaction tax. In May 2007, the Seoul Administrative Court held that depositary receipts do not constitute share certificates subject to the securities transaction tax. In 2008, the case was upheld by the Seoul High Court and was further upheld by the Supreme Court. However, as the Supreme Court dismissed the tax authorities’ appeal without ruling on the substantive law issue, it is not clear if the Supreme Court’s decision for this case will serve as the Supreme Court’s precedent on this issue. Even if depositary receipts (such as the ADSs) constitute share certificates subject to the securities transaction tax under the Securities Transaction Tax Law, sale price of ADSs from a transfer of depositary receipts listed on the New York Stock Exchange, the Nasdaq National Market or other qualified foreign exchanges are exempt from the securities transaction tax.

United States Federal Income Taxation

This summary describes the material U.S. federal income tax consequences to you, if you are a U.S. holder (as defined below), of owning our shares of common stock or ADSs. This summary applies to you only if you hold shares of common stock or ADSs as capital assets for tax purposes. This summary does not apply to you if you are a member of a class of holders subject to special rules, such as:

• a dealer in securities or currencies;

• a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;

• a bank;

• an insurance company;

• a tax-exempt organization;

• a person that holds shares of common stock or ADSs that are a hedge or that are hedged against interest rate or currency risks;

• a person that holds shares of common stock or ADSs as part of a straddle or conversion transaction for tax purposes;

99

• a person whose functional currency for tax purposes is not the U.S. dollar; or

• a person that owns or is deemed to own 10% or more of any class of our stock.

This summary is based on laws, treaties and regulatory interpretations in effect on the date hereof, all of which are subject to change, possibly on a retroactive basis.

Please consult your own tax advisers concerning the U.S. federal, state, local and other national tax consequences of purchasing, owning and disposing of shares of common stock or ADSs in your particular circumstances.

For purposes of this summary, you are a “U.S. holder” if you are a beneficial owner of shares of common stock or ADSs and are:

• a citizen or resident of the United States;

• a U.S. domestic corporation; or

• subject to U.S. federal income tax on a net income basis with respect to income from the shares of common stock or ADSs.

Shares of Common Stock and ADSs

In general, if you hold ADSs, you will be treated as the holder of the shares of common stock represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the shares of common stock represented by that ADS.

Dividends

The gross amount of cash dividends that you receive (prior to deduction of Korean taxes) generally will be subject to U.S. federal income taxation as foreign source dividend income. Dividends paid in Won will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of your (or, in the case of ADSs, the depositary’s) receipt of the dividend, regardless of whether the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. U.S. holders should consult their own tax advisers regarding the treatment of any foreign currency gain or loss on any Won received by U.S. holders that are converted into U.S. dollars on a date subsequent to receipt.

Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an individual prior to January 1, 2011 with respect to the ADSs and common stock will be subject to taxation at a maximum rate of 15% if the dividends are “qualified dividends.” Dividends paid on the ADSs and common stock will be treated as qualified dividends if (i) we are eligible for the benefits of a comprehensive income tax treaty with the United States that the Internal Revenue Service has approved for the purposes of the qualified dividend rules and (ii) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (“PFIC”). The income tax treaty between Korea and the United States (the “Treaty”) has been approved for the purposes of the qualified dividend rules. Based

100

on our audited financial statements and relevant market and shareholder data, we do not anticipate being classified as a PFIC. You should consult your own tax advisers regarding the availability of the reduced dividend tax rate in light of your own particular circumstances.

Distributions of additional shares in respect of shares of common stock or ADSs that are made as part of a pro-rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.

Sales and Other Dispositions

For U.S. federal income tax purposes, gain or loss that you realize on the sale or other disposition of shares of common stock or ADSs will be capital gain or loss, and will be long-term capital gain or loss if the shares of common stock or ADSs were held for more than one year.

Foreign Tax Credit Considerations

You should consult your own tax advisers to determine whether you are subject to any special rules that limit your ability to make effective use of foreign tax credits, including the possible adverse impact of failing to take advantage of benefits under the income tax treaty between the United States and Korea. If no such rules apply, you generally may claim a credit, up to any applicable reduced rates provided under the Treaty, against your U.S. federal income tax liability for Korean taxes withheld from dividends on shares of common stock or ADSs, so long as you have owned the shares of common stock or ADSs (and not entered into certain kinds of hedging transactions) for at least a 16-day period that includes the ex-dividend date. Instead of claiming a credit, you may generally elect to deduct such Korean taxes in computing your taxable income provided that you do not elect to claim a foreign tax credit for any foreign income taxes paid or accrued for the relevant tax year. Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain hedged positions in securities and may not be allowed in respect of arrangements in which your expected economic profit is insubstantial. You may not be able to use the foreign tax credit associated with any Korean withholding tax imposed on a distribution of additional shares that is not subject to U.S. tax unless you can use the credit against United States tax due on other foreign-source income.

Any Korean securities transaction tax or agriculture and fishery special tax that you pay will not be creditable for foreign tax credit purposes.

The calculation of foreign tax credits and, in the case of a U.S. holder that elects to deduct foreign taxes, the availability of deductions involve the application of complex rules that depend on a U.S. holder’s particular circumstances. You should consult your own tax advisers regarding the creditability or deductibility of such taxes.

U.S. Information Reporting and Backup Withholding Rules

Payments in respect of the shares of common stock or ADSs that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless the holder (1) is a corporation or other exempt recipient or (2) provides a taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Holders that are not U.S. persons generally are not subject to information reporting or backup withholding. However, such a holder may be required to provide a certification of its non-U.S. status in connection with payments received within the United States or through a U.S.-related financial intermediary.

101

Item 10.F.  Dividends and Paying Agents

See “Item 8. Financial Information—Consolidated Statements and Other Financial Information—Dividends” for information concerning our dividend policies and our payment of dividends. See “Item 10. Additional Information—Item 10.B. Memorandum and Articles of Association—Dividends” for a discussion of the process by which dividends are paid on our common shares. See “Item 12. Description of Securities Other than Equity Securities—Description of American Depositary Shares—Dividends and Distributions” for a discussion of the process by which dividends are paid on our ADSs. The paying agent for payment of our dividends on ADSs in the United States is Citibank, N.A.

Item 10.G.  Statements by Experts

Not applicable.

Item 10.H.  Documents on Display

We are subject to the information requirements of the U.S. Securities Exchange Act of 1934, as amended, and, in accordance therewith, are required to file reports, including annual reports on Form 20-F, and other information with the U.S. Securities and Exchange Commission. These materials, including this annual report and the exhibits thereto, may be inspected and copied at the Commission’s public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms. We are required to make filings with the Commission by electronic means, which will be available to the public over the Internet at the Commission’s web site at http://www.sec.gov.

Item 10.I.  Subsidiary Information

Not applicable.

Item 11.  Quantitative and Qualitative Disclosures About Market Risk

We are exposed to foreign exchange rate and interest rate risks primarily associated with underlying liabilities, and to equity price risk as a result of our investment in equity-linked securities. Following evaluation of these positions, we selectively enter into derivative financial instruments to manage the related risk exposures. These contracts are entered into with major financial institutions, thereby minimizing the risk of credit loss. The activities of our finance division are subject to policies approved by our foreign exchange and interest rate risk management committee. These policies address the use of derivative financial instruments, including the approval of counterparties, setting of limits and investment of excess liquidity. Our general policy is to hold or issue derivative financial instruments only for hedging purposes.

For details of the assets and liabilities recorded relating to our derivative contracts outstanding as of December 31, 2008 and 2009, see Note 33 to the Consolidated Financial Statements. We recognized a valuation gain of (Won)651 billion and a valuation loss of (Won)17 billion in 2008 and a valuation gain of (Won)21 billion and a valuation loss of (Won)191 billion in 2009.

Exchange Rate Risk

Substantially all of our cash flow is denominated in Won. We are exposed to foreign exchange risk related to foreign currency denominated liabilities and anticipated foreign exchange payments. Anticipated foreign exchange payments, mostly in Dollars, relate primarily to payments of foreign currency denominated debt, net settlements paid to foreign telecommunication carriers and payments for equipment purchased from foreign suppliers.

102

In 2008 and 2009, we entered into various currency-related derivative contracts with various financial institutions, including the following:

Transaction Type	Financial Institution	Description
Interest rate contracts	Merrill Lynch and others	Exchange fixed interest rate payments for variable interest rate payments for a specified period
Currency swap contracts	Merrill Lynch and others	Exchange foreign currency cash flow for local currency cash flow for a specified period
Combined interest rate currency swap contracts	Merrill Lynch and others	Exchange foreign currency-denominated fixed or variable interest rate payments for local currency-denominated variable or fixed interest rate payments
Currency forward contracts	Kookmin Bank and others	Exchange a specified currency at an agreed exchange rate at a specified date

Interest Rate Risk

We are also subject to market risk exposure arising from changing interest rates. A reduction of interest rates increases the fair value of our debt portfolio, which is primarily of a fixed interest nature. We use, to a limited extent, interest rate swap contracts and combined interest rate and currency swap contracts to reduce interest rate volatility on some of our debt and manage our interest expense by achieving a balanced mixture of floating and fixed rate debt. We entered into several interest rate swap contracts with Merrill Lynch and others in which we exchange fixed interest rate payments with variable interest rate payments for a specified period, as well as entered into the combined interest rate and currency swap contracts described above.

The following table summarizes the carrying amounts, fair values, principal cash flows by maturity date and weighted average interest rates of our short-term and long-term liabilities as of December 31, 2009 which are sensitive to exchange rates and/or interest rates. The information is presented in Won, which is our reporting currency.

	Maturities
	2010		2011		2012		2013		2014		Thereafter		December 31, 2009
													Total		Fair Value
	(In Won millions except rates)
Local currency:
Fixed rate	1,507,346		1,567,953		1,010,767		730,767		840,767		557,063		6,214,663		6,221,613
Average weighted rate (1)	7.10	%	5.99	%	5.18	%	5.96	%	5.22	%	5.29	%	5.96	%	—
Variable rate	109,384		64,447		7,488		3,770		1,429		—		186,518		183,627
Average weighted rate (1)	5.89	%	5.67	%	4.77	%	4.77	%	4.77	%	0.00	%	5.74	%	—
Sub-total	1,616,730		1,632,400		1,018,255		734,537		842,196		557,063		6,401,181		6,405,240
Foreign currency:
Fixed rate	—		—		233,520		—		700,560		817,320		1,751,400		1,797,309
Average weighted rate (1)	0.00	%	0.00	%	5.13	%	0.00	%	5.88	%	5.39	%	5.55	%	—
Variable rate	73,610		663,171		135,909		237,256		—		—		1,109,946		1,020,888
Average weighted rate (1)	2.18	%	1.69	%	1.85	%	1.75	%	0.00	%	0.00	%	1.75	%	—
Subtotal	73,610		663,171		369,429		237,256		700,560		817,320		2,861,346		2,818,197
Total	1,690,340		2,295,571		1,387,684		971,793		1,542,756		1,374,383		9,262,527		9,223,437

(1) Weighted average rates of the portfolio at the period end.

Item 12.  Description of Securities Other than Equity Securities

Item 12.A.  Debt Securities

Not applicable.

103

Item 12.B.  Warrants and Rights

Not applicable.

Item 12.C.  Other Securities

Not applicable.

Item 12.D.  American Depositary Shares

Fees and Charges

Under the terms of the deposit agreement, holders of our ADSs are required to pay the following service fees to the depositary:

Services	Fees
Issuance of ADSs upon deposit of shares	Up to $0.05 per ADS issued
Delivery of deposited shares against surrender of ADSs	Up to $0.05 per ADS surrendered
Distribution delivery of ADSs pursuant to sale or exercise of rights	Up to $0.02 per ADS held
Distributions of dividends	Up to $0.02 per ADS held
Distribution of securities other than ADSs	Up to $0.02 per ADS held
Other corporate action involving distributions to shareholders	Up to $0.02 per ADS held

Holders of our ADSs are also responsible for paying certain fees and expenses incurred by the depositary and certain taxes and governmental charges such as:

• fees for the transfer and registration of shares charged by the registrar and transfer agent for the shares in Korea (i.e., upon deposit and withdrawal of shares);

• expenses incurred for converting foreign currency into U.S. dollars;

• expenses for cable, telex and fax transmissions and for delivery of securities;

• taxes and duties upon the transfer of securities (i.e., when shares are deposited or withdrawn from deposit); and

• fees and expenses incurred in connection with the delivery or servicing of shares on deposit.

Depositary fees payable upon the issuance and surrender of ADSs are typically paid to the depositary by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for surrender. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date.

The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividend, rights), the depositary charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of

104

ADSs held in brokerage and custodian accounts (via the Depository Trust Company, or DTC), the depositary generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary.

In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse to provide the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to such holder of ADSs.

The fees and charges that holders of our ADSs may be required to pay may vary over time and may be changed by us and by the depositary. Holders of our ADSs will receive prior notice of such changes.

Fees and Payments from the Depositary to Us

In 2009, we received the following payments from the depositary:

Reimbursement of NYSE listing fees:	$	171,531.00
Reimbursement of SEC filing fees:	$	36,139.23
Reimbursement of settlement infrastructure fees (including maintenance fees):	$	105,676.64
Reimbursement of proxy process expenses (printing, postage and distribution):	$	391,404.72
Reimbursement of legal fees:	$	568,179.65
Contributions toward our investor relations efforts (including non-deal roadshows, investor conferences and investor relations agency fees):	$	395,315.22
Administrative, compliance and other listing-related costs and expenses	$	162,110.83

PART II

Item 13.  Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14.  Material Modifications to the Rights of Security Holders and Use of Proceeds

Not applicable.

Item 15.  Controls and Procedures

Disclosure Controls and Procedures

Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2009. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act

105

is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed by, and under the supervision of, our principal executive, principal operating and principal financial officers, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management has completed an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2009 based on criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2009.

Deloitte Anjin LLC, an independent registered public accounting firm, which also audited our consolidated financial statements as of, and for the year ended December 31, 2009, as stated in their report which is included herein, has issued an attestation report on the effectiveness of our internal control over financial reporting.

Attestation Report of the Registered Public Accounting Firm

The attestation report of our independent registered public accounting firm on the effectiveness of our internal control over financial reporting is furnished in Item 18 of this Form 20-F.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the year covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

106

Item 16.  [Reserved]

Item 16A.  Audit Committee Financial Expert

At our annual shareholders’ meetings in March 2010, our shareholders elected Hae-Bang Chung as a member of the Audit Committee. Our Audit Committee is comprised of Joon Park, Jeong-Suk Koh, E. Han Kim and Hae-Bang Chung. The board of directors has determined that E. Han Kim is the audit committee financial expert.

Item 16B.  Code of Ethics

We have adopted a code of ethics, as defined in Item 16B. of Form 20-F under the Securities Exchange Act of 1934, as amended. Our code of ethics applies to our Chief Executive Officer, Chief Financial Officer and persons performing similar functions, as well as to our directors, other officers and employees. Our code of ethics is available on our web site at www.kt.com. If we amend the provisions of our code of ethics that apply to our Chief Executive Officer, Chief Financial Officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our web site.

Item 16C.  Principal Accountant Fees and Services

Audit and Non-Audit Fees

The following table sets forth the fees billed to us by our independent auditors during the fiscal year ended December 31, 2008 and 2009:

	Year Ended December 31,
	2008		2009
	(In millions)
Audit fees	(Won)	3,741	(Won)	3,830
Audit-related fees		—		107
Tax fees		25		66
Other fees		—		854
Total fees	(Won)	3,766	(Won)	4,857

Audit fees in the above table are the aggregate fees billed by our auditors in connection with the audit of our annual financial statements and the review of our interim financial statements.

Audit Committee Pre-Approval Policies and Procedures

Our audit committee has not established pre-approval policies and procedures for the engagement of our independent auditors for services. Our audit committee instead expressly approves on a case-by-case basis any engagement of our independent auditors for audit and non-audit services provided to our consolidated subsidiaries or us.

Item 16D.  Exemptions from the Listing Standards for Audit Committees

Not applicable.

107

Item 16E.  Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table sets forth the repurchases of common shares by us or any affiliated purchasers during the fiscal year ended December 31, 2009:

Period	Total Number of Shares Purchased	Average Price Paid per  Share (In Won)	Total Number of Shares Purchased as Part of Publicly Announced Plans	Maximum Number of Shares that May Yet be Purchased Under the Plans
January 1 to January 31	0	0	0	0
February 1 to February 29	0	0	0	0
March 1 to March 31	4,207,980	39,059	4,207,980	8,916,020
April 1 to April 30	8,916,020	38,610	8,916,020	0
May 1 to May 31	451,038	38,535	0	0
June 1 to June 30	0	0	0	0
July 1 to July 31	45,217	37,350	0	0
August 1 to August 31	0	0	0	0
September 1 to September 30	7	46,383	0	0
October 1 to October 31	3,970	40,737	0	0
November 1 to November 30	0	0	0	0
December 1 to December 31	0	0	0	0
Total	13,624,232	40,112	13,124,000

Neither we nor any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.

Item 16F.  Change in Registrant’s Certifying Accountant

We appointed Samil PricewaterhouseCoopers as our independent registered public accounting firm for the year ending December 31, 2010 with effect from January 1, 2010 at our audit committee meeting on February 11, 2010. The decision to change the independent registered public accounting firm from Deloitte Anjin LLC (“Deloitte”), our previous independent registered public accounting firm, to Samil PricewaterhouseCoopers was consistent with our corporate governance practice of changing audit firms every three years. The decision to appoint Samil PricewaterhouseCoopers as our new independent registered public accounting firm was approved by our audit committee and was reported to our board of directors.

The consolidated financial statements for 2007, 2008 and 2009 were audited by Deloitte. Deloitte was dismissed after the completion of the audit of our consolidated financial statements as of and for the year ended December 31, 2009. The audit report of Deloitte on our consolidated financial statements as of and for the year ended December 31, 2009 prepared in accordance with Korean GAAP did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. Furthermore, in connection with the audit of our consolidated financial statements as of and for the year ended December 31, 2009, there were no disagreements (as described in Item 16F(a)(1)(iv) of Form 20-F) with Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreement in connection with their report. In addition, we confirm that between January 1, 2008 and the date of Deloitte’s dismissal, there were no “reportable events” requiring disclosure pursuant to Item 16F(a)(1)(v) of Form 20-F.

Between January 1, 2008 and the date of appointment of Samil PricewaterhouseCoopers as our independent registered public accounting firm, neither we nor anyone on our behalf has consulted with Samil PricewaterhouseCoopers with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be

108

rendered on our consolidated financial statements, and neither a written report nor oral advice was provided to us that Samil PricewaterhouseCoopers concluded was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue or (ii) any matter that was either the subject of a disagreement, as defined in Item 16F(a)(1)(iv) of Form 20-F and the related instructions to Item 16F, or a reportable event, as defined in Item 16F(a)(1)(v) of Form 20-F.

We provided a copy of this disclosure to Deloitte and requested that Deloitte furnish us with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made above. A copy of Deloitte’s letter dated June 29, 2010 is attached as Exhibit 15.5.

Item 16G.  Corporate Governance

The following is a summary of the significant differences between the New York Stock Exchange’s corporate governance standards and those that we follow under Korean law.

NYSE Corporate Governance Standards	KT Corporation’s Corporate Governance Practice
Director Independence
Independent directors must comprise a majority of the board.	The Commercial Code of Korea requires that our board of directors must comprise no less than a majority of outside directors. Our outside directors must meet the criteria for outside directorship set forth under the Commercial Code of Korea. The majority of our board of directors is independent (as defined in accordance with the New York Stock Exchange’s standards), and 8 out of 11 directors are outside directors.
Nomination/Corporate Governance Committee
Listed companies must have a nomination/corporate governance committee composed entirely of independent directors.	We have not established a separate nomination/corporate governance committee. However, we maintain an Outside Director Candidate Nominating Committee composed of all of our outside directors and one non-independent director. We also maintain a Corporate Governance Committee comprised of four outside directors and one non-independent director. The committee is responsible for the review of matters with respect to our Corporate Governance Guidelines and our performance under such guidelines to monitor effectiveness of our corporate governance.
Compensation Committee
Listed companies must have a compensation committee composed entirely of independent directors.	We maintain an Evaluation and Compensation Committee composed of four outside directors.
Executive Session
Listed companies must hold meetings solely attended by non-management directors to more effectively check and balance management directors.	Our outside directors hold meetings solely attended by outside directors in accordance with the charter of our board of directors.
Audit Committee
Listed companies must have an audit committee that is composed of more than three directors and satisfy the requirements of Rule 10A-3 under the Exchange Act.	We maintain an Audit Committee comprised of four outside directors who meet the applicable independence criteria set forth under Rule 10A-3 under the Exchange Act.

109

NYSE Corporate Governance Standards	KT Corporation’s Corporate Governance Practice
Shareholder Approval of Equity Compensation Plan
Listed companies must allow their shareholders to exercise their voting rights with respect to any material revision to the company’s equity compensation plan.	We currently have two equity compensation plans: one providing for the grant of stock options to officers and non-independent directors; and an employee stock ownership association program. All material matters related to the granting of stock options are provided in our articles of incorporation, and any amendments to the articles of incorporation are subject to shareholders’ approval. Matters related to the employee stock ownership association program are not subject to shareholders’ approval under Korean law.
Corporate Governance Guidelines
Listed companies must adopt and disclose corporate governance guidelines.	We have adopted Corporate Governance Guidelines in March 2009 setting forth our practices with respect to corporate governance matters. Our Corporate Governance Guidelines are in compliance with Korean law but do not meet all requirements established by the New York Stock Exchange for U.S. companies listed on the exchange. A copy of our Corporate Governance Guidelines in Korean is available on our website at www.kt.com.
Code of Business Conduct and Ethics
Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for executive officers.	We have adopted a Code of Ethics for all directors, officers and employees. A copy of our Code of Ethics in Korean is available on our website at www.kt.com

110

PART III

Item 17.  Financial Statements

Not applicable.

Item 18.  Financial Statements

AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS OF KT CORPORATION

	Page
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting	F-1
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Statements of Financial Position as of December 31, 2008 and 2009	F-4
Consolidated Statements of Income for the Years Ended December 31, 2007, 2008 and 2009	F-8
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2008 and 2009	F-10
Notes to Consolidated Financial Statements	F-18

Item 19.  Exhibits

1	Articles of Incorporation of KT Corporation (English translation) Form of Common Stock Certificate of KT Corporation, par value (Won) 5,000 per share (including translation in English)
2.1*	Deposit Agreement dated as of May 25, 1999 entered into among KT Corporation, Citibank, N.A., as depositary, and all Holders and Beneficial Owners of American Depositary Shares evidenced by the American Depositary Receipts issued thereunder, including the form of American depositary receipt (incorporated herein by reference to Exhibit (a)(i) of the Registrant’s Registration Statement (Registration No. 333-13578) on Form F-6)
2.2*	Form of Amendment No. 1 Deposit Agreement dated as of May 25, 1999 entered into among KT Corporation, Citibank, N.A., as depositary, and all Holders and Beneficial Owners of American Depositary Shares evidenced by the American Depositary Receipts issued thereunder, including the form of American depositary receipt (incorporated herein by reference to Exhibit (a)(ii) of the Registrant’s Registration Statement (Registration No. 333-13578) on Form F-6)
2.3*	Letter from Citibank, N.A., as depositary, to the Registrant relating to the pre-release of the American depositary receipts (incorporated herein by reference to the Registrant’s Registration Statement (Registration No. 333-10330) on Form F-6)
2.4*	Letter from Citibank, N.A., as depositary, to the Registrant relating to the establishment of a direct registration system for ADSs and the issuance of uncertified ADSs as part of the direct registration system. (incorporated herein by reference to Exhibit 2.4 of the Registrant’s Annual Report on Form 20-F filed on June 30, 2008)
4.1*	The Merger Agreement dated January 20, 2009, entered into by and between KT Corporation and KT Freetel Co., Ltd. (incorporated herein by reference to Annex I of the Registrant’s Registration Statement (Registration No. 333-156817) on Form F-4)

111

8.1	List of subsidiaries of KT Corporation
12.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	The Telecommunications Basic Law (English translation)
15.2	Enforcement Decree of the Telecommunications Basic Law (English translation)
15.3	The Telecommunications Business Act (English translation)
15.4	Enforcement Decree of the Telecommunications Business Act (English translation)
15.5	Letter from Deloitte

* Filed previously.

112

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL

CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders of

KT Corporation

Sungnam, Korea

We have audited the internal control over financial reporting of KT Corporation and subsidiaries (the “Company”) as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting in Item 15. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on that risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

F-1

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Consolidated Statements of Financial Position and the related Consolidated Statements of Income, Cash Flows, and Changes in Equity of the Company as of and for the year ended December 31, 2009. Our report dated June 16, 2010 expressed an unqualified opinion on those financial statements and included explanatory paragraphs relating to our audit comprehending the convenience translation of Korean won amounts to U.S. dollar amounts and information relating to the nature and effect of differences between accounting principles generally accepted in the Republic of Korea and accounting principles generally accepted in the United States of America.

/s/ Deloitte Anjin LLC

Seoul, Korea

June 16, 2010

Notice to Readers

This report is effective as of June 16, 2010, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying consolidated financial statements and may result in modification to the auditors’ report.

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

KT Corporation

Sungnam, Korea

We have audited the accompanying Consolidated Statements of Financial Position of KT Corporation and subsidiaries (the “Company”) as of December 31, 2008 and 2009, and the related Consolidated Statements of Income, Cash Flows and Changes in Equity for each of the three years in the period ended December 31, 2009 (all expressed in Korean won). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of KT Corporation and subsidiaries at December 31, 2008 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the Republic of Korea.

Our audit also comprehended the translation of Korean won amounts into U.S. dollar amounts and, in our opinion, such convenience translation has been made in conformity with the basis stated in Note 2 to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers of financial statements.

Accounting principles generally accepted in the Republic of Korea vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in Note 40 to the consolidated financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 16, 2010 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ Deloitte Anjin LLC

Seoul, Korea

June 16, 2010

Notice to Readers

This report is effective as of June 16, 2010, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying consolidated financial statements and may result in modification to the auditors’ report.

F-3

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2008 AND 2009

	In millions of Korean won				In thousands of U.S. dollars (Note 2)
	2008		2009		2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Notes 2, 3, 16 and 31)	(Won)	1,890,918	(Won)	1,538,122	$	1,321,808
Short-term investment assets (Notes 3, 6 and 16)		417,138		443,934		381,501
Accounts receivable—trade, less allowance for doubtful accounts of (Won)482,242 million in 2008 and (Won)462,432 million in 2009 (Notes 2, 11, 16, 17 and 32)		3,014,687		3,621,844		3,112,485
Loans, less allowance for doubtful accounts of (Won)4,142 million in 2008 and (Won)12,017 million in 2009 (Notes 2, 5 and 16)		292,884		484,926		416,728
Current finance lease receivables, less allowance for doubtful accounts of (Won)2,355 million in 2008 and (Won)2,675 million in 2009 (Notes 2, 14 and 29)		180,954		203,406		174,800
Accounts receivable—other, less allowance for doubtful accounts of (Won)109,312 million in 2008 and (Won)140,593 million in 2009 (Notes 2, 11 and 16)		202,872		281,609		242,004
Accrued revenues		21,413		22,506		19,343
Advance payments		73,962		91,737		78,835
Prepaid expenses		99,214		119,065		102,320
Prepaid income taxes		1,518		27,037		23,234
Guarantee deposits (Note 16)		1,382		331		284
Current derivative instruments assets (Notes 2 and 33)		201,709		288		247
Current deferred income tax assets (Notes 2 and 26)		249,941		437,525		375,993
Inventories (Notes 2, 4 and 29)		424,841		699,402		601,042
Other current assets		393		117		103
Total Current Assets		7,073,826		7,971,849		6,850,727

(Continued)

F-4

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF DECEMBER 31, 2008 AND 2009

	In millions of Korean won						In thousands of U.S. dollars (Note 2)
	2008			2009			2009
ASSETS
NON-CURRENT ASSETS:
Available-for-sale securities (Notes 2 and 6)		74,744			117,290			100,795
Equity method investment securities (Notes 2 and 7)		353,347			287,989			247,488
Held-to-maturity securities (Notes 2 and 6)		8,077			65			56
Long-term loans to employees		85,969			62,758			53,932
Long-term financial instruments (Note 3)		44			3,037			2,610
Other investment assets		23,819			90,231			77,541
Property and equipment, at cost (Notes 2, 8, 9, 14 and 29)		49,393,746			49,818,718			42,812,459
Less accumulated depreciation		(33,965,691	)		(34,860,309	)		(29,957,727	)
Less accumulated impairment loss		(6,957	)		(5,616	)		(4,826	)
Less contribution for construction		(232,467	)		(178,233	)		(153,167	)
Net property and equipment		15,188,631			14,774,560			12,696,739
Intangible assets, net (Notes 2 and 10)		1,474,238			1,279,500			1,099,557
Leasehold rights and deposits (Notes 2 and 16)		352,655			353,992			304,209
Long-term accounts receivable—trade, less allowance for doubtful accounts of (Won) 13,320 million in 2008 and (Won)8,821 million in 2009 (Notes 2, 11 and 17)		282,162			402,259			345,687
Long-term loans, less allowance for doubtful accounts of (Won)7,734 million in 2008 and (Won)11,439 million in 2009 (Notes 2, 5 and 17)		253,445			414,981			356,620
Non-current finance lease receivables, less allowance for doubtful accounts of (Won) 3,642 million in 2008 and (Won)3,725 million in 2009 (Notes 2, 14 and 29)		290,799			311,795			267,945
Non-current deferred income tax assets (Notes 2 and 26)		235,514			113,266			97,337
Long-term accounts receivable—other (Notes 2 and 11)		17,260			11,596			9,965
Non-current derivative instruments assets (Notes 2 and 33)		302,689			295,058			253,562
Other non-current assets		121,385			130,091			111,797
Total Non-current Assets		19,064,778			18,648,468			16,025,840
TOTAL ASSETS	(Won)	26,138,604		(Won)	26,620,317		$	22,876,567

(Continued)

F-5

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF DECEMBER 31, 2008 AND 2009

	In millions of Korean won				In thousands of U.S. dollars (Note 2)
	2008		2009		2009
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable—trade (Notes 11, 16 and 17)	(Won)	833,818	(Won)	1,484,943	$	1,276,108
Short-term borrowings (Note 16)		274,306		367,505		315,821
Accounts payable—other (Notes 11, 14, 16 and 17)		1,475,873		2,438,674		2,095,711
Advance receipts		119,356		152,654		131,185
Withholdings (Note 16)		228,517		98,099		84,303
Accrued expenses (Notes 16 and 17)		528,004		483,366		415,388
Income taxes payable (Note 2)		151,794		12,942		11,122
Current portion of bonds and long-term borrowings (Notes 2, 11, 12 and 16)		1,439,960		1,689,546		1,451,937
Unearned revenue		9,170		9,251		7,950
Key money deposits (Notes 16 and 17)		127,689		158,799		136,466
Current derivative instruments liabilities (Notes 2 and 33)		13,619		5,124		4,403
Current accrued provisions (Notes 2 and 13)		38,815		39,841		34,238
Current deferred income tax liabilities (Notes 2 and 26)		—		1		1
Other current liabilities		107		478		411
Total Current Liabilities		5,241,028		6,941,223		5,965,044
NON-CURRENT LIABILITIES:
Bonds (Notes 2, 12 and 16)		7,662,663		7,337,399		6,305,503
Long-term borrowings in Korean won (Notes 2, 11 and 12)		146,813		143,775		123,556
Long-term borrowings in foreign currency
(Notes 2, 12 and 16)		137,249		54,498		46,833
Provisions for severance indemnities (Note 2)		507,819		337,524		290,057
Refundable deposits for telephone installation (Note 15)		781,525		696,396		598,458
Long-term accounts payable—trade (Note 11)		16,856		14,603		12,549
Long-term accounts payable—other (Notes 2, 11 and 14)		317,101		164,696		141,535
Long-term deposits received		93,800		101,924		87,590
Non-current accrued provisions (Notes 2 and 13)		85,146		103,576		89,010
Non-current deferred income tax liabilities (Notes 2 and 26)		2,734		1,065		915
Non-current derivative instruments liabilities (Notes 2 and 33)		6,777		6,155		5,289
Other non-current liabilities		51,195		50,044		43,005
Total Non-current Liabilities		9,809,678		9,011,655		7,744,300
Total Liabilities		15,050,706		15,952,878		13,709,344

(Continued)

F-6

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (CONTINUED)

AS OF DECEMBER 31, 2008 AND 2009

	In millions of Korean won						In thousands of U.S. dollars (Note 2)
	2008			2009			2009
LIABILITIES AND EQUITY
EQUITY:
Common Stock (Notes 1 and 18)		1,560,998			1,564,499			1,344,475
Capital Surplus		1,440,633			1,448,569			1,244,850
Capital Adjustments:
Treasury stock (Note 22)		(3,824,881	)		(956,159	)		(821,689	)
Loss on disposal of treasury stock		—			(890,650	)		(765,393	)
Stock options (Notes 2 and 21)		8,880			1,500			1,289
Other share–based payments (Notes 2 and 21)		1,420			2,120			1,821
Other capital adjustments		(180,155	)		(322,539	)		(277,179	)
Total Capital Adjustments		(3,994,736	)		(2,165,728	)		(1,861,151	)
Accumulated Other Comprehensive Income (Note 20) :
Gain on translation of foreign operations (Note 2)		11,083			5,571			4,787
Loss on translation of foreign operations (Note 2)		(4,887	)		(18,763	)		(16,124	)
Unrealized gain on valuation of available-for-sale securities, net (Notes 2 and 6)		468			5,227			4,493
Gain on valuation of derivatives for cash flow hedge (Notes 2 and 33)		11,136			11,468			9,855
Loss on valuation of derivatives for cash flow hedge (Notes 2 and 33)		(13,710	)		(34,747	)		(29,860	)
Increase in equity of associates (Notes 2 and 7)		10,369			438			376
Decrease in equity of associates (Notes 2 and 7)		(3,580	)		(13,736	)		(11,805	)
Total Accumulated Other Comprehensive Income		10,879			(44,542	)		(38,278	)
Retained Earnings		9,814,115			9,573,769			8,227,362
Equity Attributable to Equity Holders of the Parent		8,831,889			10,376,567			8,917,258
Noncontrolling Interest		2,256,009			290,872			249,965
Total Equity		11,087,898			10,667,439			9,167,223
TOTAL LIABILITIES AND EQUITY	(Won)	26,138,604		(Won)	26,620,317		$	22,876,567

See accompanying notes to consolidated financial statements

F-7

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009

	In millions of Korean won						In thousands of U.S. dollars (Note 2)
	2007		2008		2009		2009
OPERATING REVENUES (Notes 2, 17, 23, 24 and 35):
Service	(Won)	16,162,753	(Won)	16,527,091	(Won)	16,252,234	$	13,966,600
Goods		2,450,658		3,065,858		3,396,886		2,919,165
		18,613,411		19,592,949		19,649,120		16,885,765
OPERATING EXPENSES (Notes 2, 17, 25, 35 and 36)		16,858,848		18,152,669		18,682,661		16,055,224
OPERATING INCOME		1,754,563		1,440,280		966,459		830,541
NON-OPERATING REVENUES:
Interest income		155,579		151,335		197,404		169,642
Dividend income		583		1,060		487		418
Foreign currency transaction gain		7,486		66,510		42,129		36,204
Foreign currency translation gain (Note 2)		8,625		40,409		240,925		207,043
Equity in income of associates (Notes 2 and 7)		24,285		16,061		19,672		16,905
Gain on breach of contracts		1,821		1,555		2,731		2,347
Gain on disposal of useless materials		25,328		—		19,839		17,049
Gain on disposal of short-term investment assets		2,094		446		1,093		940
Gain on valuation of short-term investment assets		1,085		537		470		404
Gain on disposal of available-for-sale securities (Note 6)		9,605		3,996		9,496		8,161
Reversal of impairment losses of available-for-sale securities (Note 2)		76		—		—		—
Gain on disposal of equity method investment securities		935		1		62,160		53,418
Gain on disposal of property and equipment		29,447		5,391		5,531		4,753
Reversal of impairment loss on property and equipment		—		6,462		102,816		88,356
Gain on disposal of intangible assets		221		1,000		1,124		966
Reversal of accrued provisions (Note 13)		50,945		4,069		4,988		4,286
Amortization of negative goodwill (Notes 2 and 10)		518		65		—		—
Gain on settlement of derivatives (Note 2)		9,778		17,183		2,250		1,934
Gain on valuation of derivatives (Notes 2 and 33)		40,140		650,680		17,643		15,162
Other non-operating revenues		117,866		84,780		77,054		66,217
Total Non-operating Revenues		486,417		1,051,540		807,812		694,205

(Continued)

F-8

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009

	In millions of Korean won									In thousands of U.S. dollars (Note 2)
	2007			2008			2009			2009
NON-OPERATING EXPENSES:
Interest expense		(466,171	)		(480,843	)		(505,889	)		(434,743	)
Other bad debt expense (Note 2)		(4,473	)		(22,355	)		(46,872	)		(40,280	)
Foreign currency transaction loss		(13,045	)		(63,058	)		(46,183	)		(39,688	)
Foreign currency translation loss (Note 2)		(15,819	)		(802,299	)		(17,893	)		(15,377	)
Equity in loss of associates (Notes 2 and 7)		(6,652	)		(27,026	)		(33,337	)		(28,649	)
Loss on disposal of equity method investment securities		(549	)		(137	)		(84	)		(72	)
Loss on impairment of equity method investment securities
(Notes 2 and 7)		—			(2,654	)		—			—
Donations		(89,523	)		(79,544	)		(39,320	)		(33,790	)
Loss on disposal of short-term investment assets		—			(1,004	)		(15	)		(13	)
Loss on valuation of short-term investment assets		—			(1,841	)		—			—
Loss on disposal of available-for-sale securities (Note 6)		(828	)		(250	)		(8	)		(7	)
Loss on impairment of available-for-sale securities (Notes 2 and 6)		(1,809	)		(3,826	)		(10,102	)		(8,681	)
Loss on impairment of investment assets		(6,855	)		(2,677	)		(3,472	)		(2,984	)
Loss on disposal of property and equipment		(94,539	)		(94,294	)		(124,689	)		(107,154	)
Loss on impairment of property and equipment (Notes 2 and 8)		(7,990	)		(20,676	)		(1,236	)		(1,062	)
Loss on disposal of intangible assets		(535	)		(1,653	)		(4,247	)		(3,650	)
Loss on impairment of intangible assets (Notes 2 and 10)		(9,178	)		(5,865	)		(7,742	)		(6,653	)
Loss on disposal of accounts receivable—trade		(492	)		(582	)		(719	)		(618	)
Loss on settlement of derivatives (Note 2)		(11,381	)		(9,665	)		(1,031	)		(886	)
Loss on valuation of derivatives (Notes 2 and 33)		(15,542	)		(10,936	)		(191,268	)		(164,370	)
Other non-operating expense		(37,681	)		(153,439	)		(25,101	)		(21,569	)
Total Non-operating Expenses		(783,062	)		(1,784,624	)		(1,059,208	)		(910,246	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE		1,457,918			707,196			715,063			614,500
INCOME TAX EXPENSE ON CONTINUING OPERATIONS (Note 26)		356,799			167,859			107,763			92,608
NEWLY INCLUDED SUBSIDIARY’S NET LOSS BEFORE ACQUISITION		5,160			—			—			—
INCOME FROM CONTINUING OPERATIONS		1,106,279			539,337			607,300			521,892
INCOME (LOSS) FROM DISCONTINUING OPERATIONS (Note 27)		64,699			(26,047	)		2,395			2,059
NET INCOME	(Won)	1,170,978		(Won)	513,290		(Won)	609,695		$	523,951
Attributable to:
EQUITY HOLDERS OF THE PARENT	(Won)	1,056,227		(Won)	449,810		(Won)	494,846		$	425,254
NONCONTROLLING INTEREST		114,751			63,480			114,849			98,697
	(Won)	1,170,978		(Won)	513,290		(Won)	609,695		$	523,951
NET INCOME PER SHARE (Note 28) (*)
Basic income per share from continuing operations (in Korean won)	(Won)	4,783		(Won)	2,312		(Won)	2,216		$	1.904
Basic net income per share (in Korean won)	(Won)	5,112		(Won)	2,217		(Won)	2,254		$	1.937
Diluted income per share from continuing operations (in Korean won)	(Won)	4,783		(Won)	2,312		(Won)	2,190		$	1.882
Diluted net income per share (in Korean won)	(Won)	5,112		(Won)	2,217		(Won)	2,227		$	1.914

(*) Income per share attributable to the equity holders of the parent

See accompanying notes to consolidated financial statements

F-9

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009

	In millions of Korean won									In thousands of U.S. dollars (Note 2)
	2007			2008			2009			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	(Won)	1,170,978		(Won)	513,290		(Won)	609,695		$	523,951
Expenses not involving cash payments :
Share-based payment		1,239			1,922			1,049			901
Accrued severance indemnities		359,473			362,342			1,128,370			969,682
Depreciation		3,225,887			3,264,291			2,935,448			2,522,621
Amortization		430,623			438,544			426,018			366,105
Provision for doubtful accounts		69,790			150,583			104,977			90,214
Interest expense		27,942			45,581			25,994			22,338
Other bad debt expense		3,539			22,355			46,872			40,280
Foreign currency translation loss		15,810			801,357			13,111			11,267
Equity in loss of associates		6,268			28,386			33,337			28,649
Loss on disposal of equity method investment securities		549			137			84			72
Loss on impairment of equity method investment securities		—			2,654			—			—
Loss on disposal of short-term investment assets		—			1,004			15			13
Loss on valuation of short-term investment assets		—			1,841			—			—
Loss on disposal of available-for-sale securities		603			250			8			7
Loss on impairment of available-for-sale securities		1,809			3,826			10,102			8,681
Loss on impairment of investment assets		139			2,677			3,472			2,984
Loss on disposal of property and equipment		94,604			94,308			124,689			107,153
Loss on impairment of property and equipment		7,990			20,676			1,236			1,062
Loss on disposal of intangible assets		535			1,653			4,247			3,650
Loss on impairment of intangible assets		8,957			17,435			7,742			6,653
Loss on valuation of derivatives		15,542			10,936			191,268			164,369
Other non-operating expenses		15,943			16,935			682			585
Sub-total		4,287,242			5,289,693			5,058,721			4,347,286
Income not involving cash receipts:
Interest income		6,380			20,964			22,126			19,014
Foreign currency translation gain		8,279			40,490			237,215			203,854
Equity in income of associates		24,250			16,061			19,672			16,905
Gain on disposal of short-term investment assets		2,052			446			1,093			939
Gain on valuation of short-term investment assets		1,085			537			470			404
Gain on disposal of available-for-sale securities		9,479			3,996			9,496			8,161
Reversal of impairment losses of available-for-sale securities		76			—			—			—
Gain on disposal of equity method investment securities		1,832			1			62,160			53,418
Gain on disposal of property and equipment		29,382			5,391			5,531			4,753
Gain on disposal of intangible assets		221			1,000			1,124			966
Amortization of negative goodwill		518			65			—			—
Gain on valuation of derivatives		40,140			650,680			17,643			15,162
Other non-operating revenues		4,373			2,780			10,162			8,734
Sub-total		(128,067	)		(742,411	)		(386,692	)		(332,310	)

(Continued)

F-10

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009

	In millions of Korean won						In thousands of U.S. dollars (Note 2)
	2007		2008		2009		2009
Changes in assets and liabilities related to operating activities:
Accounts receivable—trade	(463,325	)	(367,263	)	(465,422	)	(399,967	)
Loans	(228,022	)	(71,188	)	(180,572	)	(155,177	)
Current finance lease receivables	75,577		78,103		5,834		5,014
Accounts receivable—other	123,167		20,460		(120,762	)	(103,779	)
Accrued revenues	(2,538	)	(7,676	)	(1,201	)	(1,032	)
Advance payments	(25,946	)	(6,919	)	(27,294	)	(23,456	)
Prepaid expenses	(12,522	)	(44,282	)	(19,928	)	(17,125	)
Prepaid income taxes	(223	)	(107	)	(25,538	)	(21,946	)
Guarantee deposits	(7,195	)	8,026		1,049		901
Derivative instruments, net	(3,381	)	166		4,585		3,940
Deferred income tax, net	(45,506	)	(126,811	)	(68,054	)	(58,483	)
Other current assets	(77	)	(173	)	275		236
Inventories	(65,106	)	(131,305	)	(274,851	)	(236,197	)
Leasehold rights and deposits	(36,349	)	(3,804	)	(2,484	)	(2,135	)
Long-term accounts receivable—trade	97,729		(253,257	)	(387,630	)	(333,116	)
Long-term loans	(7,326	)	(113,229	)	(147,602	)	(126,844	)
Non-current finance lease receivables	(109,895	)	(299,257	)	(16,555	)	(14,227	)
Long-term accounts receivable—other	(26,910	)	(8,146	)	(890	)	(765	)
Other non-current assets	(8,778	)	(19,536	)	(8,827	)	(7,586	)
Accounts payable—trade	239,238		(262,733	)	645,925		555,085
Accounts payable—other	(242,595	)	(160,717	)	869,594		747,299
Advance receipts	(30,293	)	31,905		52,277		44,925
Withholdings	25,650		26,901		(129,398	)	(111,200	)
Accrued expenses	67,302		44,402		(42,864	)	(36,836	)
Income taxes payable	(86,281	)	(152,286	)	(107,361	)	(92,262	)
Unearned revenue	2,512		1,363		81		70
Key money deposits	4,049		77,868		39,232		33,715
Accrued provisions	(29,931	)	18,500		(11,257	)	(9,674	)
Other current liabilities	(1,143	)	(6,782	)	376		323
Payment of severance indemnities	(103,955	)	(220,800	)	(1,345,331	)	(1,156,130	)
Deposits for severance indemnities	(132,471	)	(148,848	)	48,917		42,038
Contribution to National Pension Fund	(51	)	122		135		116
Refundable deposits for telephone installation	(66,145	)	(59,437	)	(85,129	)	(73,157	)
Long-term accounts payable—trade	—		30,794		17,494		15,034
Long-term accounts payable—other	—		(24,833	)	(99,864	)	(85,820	)
Other non-current liabilities	35,153		8,949		(1,151	)	(989	)
Sub-total	(1,065,587	)	(2,141,830	)	(1,884,191	)	(1,619,207	)
Net Cash Provided by Operating Activities	4,264,566		2,918,742		3,397,533		2,919,720

(Continued)

F-11

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009

	In millions of Korean won						In thousands of U.S. dollars (Note 2)
	2007		2008		2009		2009
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash inflows from investing activities:
Decrease in short-term investment assets	182,501		544,946		657,223		564,794
Disposal of available-for-sale securities	1,183,121		614,822		12,609		10,836
Decrease in equity method investment securities	10,807		1,047		1,332		1,145
Disposal of equity method investment securities	—		1,580		111,901		96,164
Collection of held-to-maturity securities	252		65		14,093		12,111
Collection of long-term loans to employees	25,736		10,001		89,603		77,002
Disposal of long-term financial instruments	—		2,819		13		11
Decrease in other investment assets	3,480		5,630		189		162
Disposal of land	15,246		9,222		15,999		13,749
Disposal of buildings	4,791		17,650		4,067		3,495
Disposal of structures	17		4,674		42		36
Disposal of machinery	68,889		4,665		8,730		7,502
Disposal of vehicles	16,536		665		188		162
Disposal of other property and equipment	13,978		19,463		40,921		35,166
Disposal of construction-in-progress	10		26		—		—
Increase of contribution for construction	76,625		74,228		16,440		14,128
Disposal of intangible assets	706		17,013		1,326		1,140
Sub-total	1,602,695		1,328,516		974,676		837,603
Cash outflows for investing activities:
Acquisition of short-term investment assets	61,397		343,115		685,809		589,360
Acquisition of available-for-sale securities	989,112		714,831		52,962		45,514
Acquisition of equity method investment securities	7,220		123,371		38,191		32,820
Acquisition of assets and liabilities of consolidated subsidiaries	124,384		55,655		—		—
Acquisition of held-to-maturity securities	5		13,988		5		4
Increase in long-term loans to employees	25,451		50,421		71,810		61,711
Increase in long-term financial instruments	18		11		3,006		2,583
Increase in other investment assets	19,826		6,245		3,782		3,250
Acquisition of land	1,424		225		48		41
Acquisition of buildings	3,398		38,787		841		723
Acquisition of structures	122		482		2		2
Acquisition of machinery	65,188		67,543		34,937		30,024
Acquisition of vehicles	990		33,161		727		625
Acquisition of other property and equipment	258,167		134,534		144,991		124,600
Acquisition of construction-in-progress	3,306,356		3,087,737		2,592,880		2,228,230
Acquisition of intangible assets	188,995		189,772		215,115		184,862
Sub-total	(5,052,053	)	(4,859,878	)	(3,845,106	)	(3,304,349	)
Net Cash Used in Investing Activities	(3,449,358	)	(3,531,362	)	(2,870,430	)	(2,466,746	)

(Continued)

F-12

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009

	In millions of Korean won									In thousands of U.S. dollars (Note 2)
	2007			2008			2009			2009
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash inflows from financing activities:
Increase in short-term borrowings		49,601			455,117			1,541,193			1,324,447
Issuance of bonds		777,981			2,405,577			1,421,091			1,221,236
Increase in long-term borrowings		100,104			1,374,480			77,539			66,634
Inflows from capital transactions of consolidated entities		2,128			7,951			4,124			3,544
Sub-total		929,814			4,243,125			3,043,947			2,615,861
Cash outflows for financing activities:
Repayment of short-term borrowings		—			412,579			1,441,798			1,239,031
Payment of accounts payable – other		118,470			29,764			48,723			41,871
Repayment of current portion of bonds and long-term borrowings		1,353,689			2,146,790			1,441,174			1,238,494
Repayment of long-term borrowings		132			697			4,683			4,024
Repayment of bonds		5,000			—			—			—
Payment of dividends		472,774			409,270			229,360			197,104
Acquisition of treasury stock		196,329			73,807			528,143			453,868
Outflows for capital transactions of consolidated entities		151,666			118,868			280,512			241,062
Sub-total		(2,298,060	)		(3,191,775	)		(3,974,393	)		(3,415,454	)
Net Cash Provided by (Used in) Financing Activities		(1,368,246	)		1,051,350			(930,446	)		(799,593	)
EFFECT OF CHANGES IN CONSOLIDATED ENTITIES		108,992			48,482			59,714			51,316
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		462			18,721			(9,167	)		(7,878	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(443,584	)		505,933			(352,796	)		(303,181	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR		1,828,569			1,384,985			1,890,918			1,624,989
CASH AND CASH EQUIVALENTS AT END OF THE YEAR	(Won)	1,384,985		(Won)	1,890,918		(Won)	1,538,122		$	1,321,808

See accompanying notes to consolidated financial statements

F-13

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2007

	Common stock		Capital surplus			Capital adjustments		Other comprehensive income (loss)			Retained earnings			Noncontrolling interest			Total
	(In millions of Korean won)
Balance as of January 1, 2007 (as reported)	(Won)	1,560,998	(Won)	1,292,475		((Won)3,817,717)			((Won)5,772)		(Won)	9,400,068		(Won)	2,267,252		(Won)	10,697,304
Cumulative effect of changes in accounting policies (Note 2)		—		148,435		(148,435	)		—			—			—			—
As restated		1,560,998		1,440,910		(3,966,152	)		(5,772	)		9,400,068			2,267,252			10,697,304
Dividends		—		—		—			—			(416,191	)		(56,583	)		(472,774	)
Retained earnings after appropriations		—		—		—			—			8,983,877			2,210,669			10,224,530
Net income for the year		—		—		—			—			1,056,227			114,751			1,170,978
Acquisition of treasury stock		—		—		(196,329	)		—			—			—			(196,329	)
Disposal of treasury stock		—		—		884			—			—			—			884
Retirement of treasury stock		—		—		196,329			—			(196,329	)		—			—
Gain (loss) on disposal of treasury stock		—		(133	)	—			—			—			—			(133	)
Acquisition of subsidiaries’ stock		—		—		(1,152	)		—			—			(365	)		(1,517	)
Increase in subsidiaries’ capital stock		—		—		212			—			—			1,916			2,128
Acquisition of subsidiaries’ treasury stock		—		—		(392	)		—			—			(620	)		(1,012	)
Appropriation of subsidiaries’ treasury stock		—		—		(14,489	)		—			—			(79,582	)		(94,071	)
Changes in consolidated entities		—		—		(3,302	)		(20,688	)		—			25,096			1,106
Stock options		—		—		25			—			—			—			25
Other share-based payment		—		—		1,022			—			—			—			1,022
Other capital adjustments		—		—		(585	)		—			—			(687	)		(1,272	)
Gain on translation of foreign operations		—		—		—			55			—			—			55
Loss on translation of foreign operations		—		—		—			19,240			—			2,896			22,136
Unrealized gain on valuation of available-for-sale securities		—		—		—			2,496			—			1,668			4,164
Gain on valuation of derivatives for cash flow hedge		—		—		—			2,024			—			—			2,024
Increase in equity of associates		—		—		—			(975	)		—			261			(714	)
Decrease in equity of associates		—		—		—			3,762			—			—			3,762
Balance as of December 31, 2007	(Won)	1,560,998	(Won)	1,440,777		((Won)3,983,929)		(Won)	142		(Won)	9,843,775		(Won)	2,276,003		(Won)	11,137,766

F-14

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2008

	Common stock		Capital surplus			Capital adjustments		Other comprehensive income (loss)			Retained earnings			Noncontrolling interest			Total
	(In millions of Korean won)
Balance as of January 1, 2008 (as reported)	(Won)	1,560,998	(Won)	1,272,634		((Won)3,815,786)		(Won)	142		(Won)	9,843,775		(Won)	2,276,003		(Won)	11,137,766
Cumulative effect of changes in accounting policies (Note 2)		—		168,143		(168,143	)		—			1,711			2,141			3,852
As restated		1,560,998		1,440,777		(3,983,929	)		142			9,845,486			2,278,144			11,141,618
Dividends		—		—		—			—			(407,374	)		(1,896	)		(409,270	)
Retained earnings after appropriations		—		—		—			—			9,438,112			2,276,248			10,732,348
Net income for the year		—		—		—			—			449,810			63,480			513,290
Acquisition of treasury stock		—		—		(73,807	)		—			—			—			(73,807	)
Disposal of treasury stock		—		—		807			—			—			—			807
Retirement of treasury stock		—		—		73,807			—			(73,807	)		—			—
Gain (loss) on disposal of treasury stock		—		(144	)	—			—			—			—			(144	)
Acquisition of subsidiaries’ stock		—		—		(944	)		—			—			(210	)		(1,154	)
Increase in subsidiaries’ capital stock		—		—		2,439			—			—			13,428			15,867
Acquisition of subsidiaries’ treasury stock		—		—		158			—			—			140			298
Appropriation of subsidiaries’ treasury stock		—		—		(14,651	)		—			—			(112,298	)		(126,949	)
Changes in consolidated entities		—		—		—			—			—			14,964			14,964
Other share-based payment		—		—		398			—			—			—			398
Other capital adjustments		—		—		986			—			—			221			1,207
Gain on translation of foreign operations		—		—		—			8,612			—			4,947			13,559
Loss on translation of foreign operations		—		—		—			8,308			—			3,471			11,779
Unrealized gain on valuation of available-for-sale securities		—		—		—			(5,831	)		—			(3,108	)		(8,939	)
Unrealized loss on valuation of available-for-sale securities		—		—		—			(4,345	)		—			(3,200	)		(7,545	)
Gain on valuation of derivatives for cash flow hedge		—		—		—			9,112			—			262			9,374
Loss on valuation of derivatives for cash flow hedge		—		—		—			(13,710	)		—			(4,660	)		(18,370	)
Increase in equity of associates		—		—		—			7,603			—			2,351			9,954
Decrease in equity of associates		—		—		—			988			—			(27	)		961
Balance as of December 31, 2008	(Won)	1,560,998	(Won)	1,440,633		((Won)3,994,736)		(Won)	10,879		(Won)	9,814,115		(Won)	2,256,009		(Won)	11,087,898

F-15

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2009

	Common stock		Capital surplus			Capital adjustments			Other comprehensive income (loss)			Retained earnings			Noncontrolling interest			Total
	(In millions of Korean won)
Balance as of January 1, 2009 (as reported)	(Won)	1,560,998	(Won)	1,440,633		(Won)	(3,994,736	)	(Won)	10,879		(Won)	9,814,115		(Won)	2,256,009		(Won)	11,087,898
Dividends		—		—			—			—			(226,280	)		(3,080	)		(229,360	)
Retained earnings after appropriations		—		—			—			—			9,587,835			2,252,929			10,858,538
Net income for the year		—		—			—			—			494,846			114,849			609,695
Issuance of common stock		3,501		—			—			—			—			—			3,501
Consideration for exchange rights		—		18,442			—			—			—			—			18,442
Exercise of exchange rights of exchangeable bond		—		(18,442	)		451,157			—			—			—			432,715
Acquisition of treasury stock		—		—			(528,143	)		—			—			—			(528,143	)
Disposal of treasury stock		—		—			2,436,797			—			—			—			2,436,797
Retirement of treasury stock		—		—			508,912			—			(508,912	)		—			—
Offset of loss on disposal of treasury stock		—		(375	)		(890,650	)		—			—			—			(891,025	)
Acquisition of subsidiaries’ stock		—		—			(24,105	)		—			—			(295,055	)		(319,160	)
Increase in subsidiaries’ capital stock		—		—			(697	)		—			—			7,199			6,502
Acquisition of subsidiaries’ treasury stock		—		—			(29,266	)		—			—			(251,048	)		(280,314	)
Changes in consolidated entities		—		—			—			—			—			26,682			26,682
Other share-based payment		—		—			700			—			—			—			700
Other capital adjustments		—		—			1,059			—			—			(811	)		248
Stock option		—		8,311			(7,381	)		—			—			—			930
Gain on translation of foreign operations		—		—			—			(4,891	)		—			(3,751	)		(8,642	)
Loss on translation of foreign operations		—		—			—			(14,497	)		—			(4,159	)		(18,656	)
Unrealized gain on valuation of available-for-sale securities		—		—			—			497			—			(610	)		(113	)
Unrealized loss on valuation of available-for-sale securities		—		—			—			4,262			—			3,425			7,687
Gain on valuation of derivatives for cash flow hedge		—		—			—			331			—			155			486
Loss on valuation of derivatives for cash flow hedge		—		—			—			(21,037	)		—			(5,186	)		(26,223	)
Increase in equity of associates		—		—			—			(9,931	)		—			(273	)		(10,204	)
Decrease in equity of associates		—		—			—			(10,155	)		—			17			(10,138	)
Change by merger		—		—			(89,375	)		—			—			(1,553,491	)		(1,642,866	)
Balance as of December 31, 2009	(Won)	1,564,499	(Won)	1,448,569		(Won)	(2,165,728	)	(Won)	(44,542	)	(Won)	9,573,769		(Won)	290,872		(Won)	10,667,439

F-16

KT CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2009

	Common stock		Capital surplus			Capital adjustments			Other comprehensive income (loss)			Retained earnings			Noncontrolling interest			Total
	(In thousands of U.S. dollars) (Note 2)
Balance as of January 1, 2009 (as reported)	$	1,341,467	$	1,238,030		$	(3,432,936	)	$	9,349		$	8,433,906		$	1,938,735		$	9,528,551
Dividends		—		—			—			—			(194,457	)		(2,647	)		(197,104	)
Retained earnings after appropriations		—		—			—			—			8,239,449			1,936,088			9,331,447
Net income for the year		—		—			—			—			425,254			98,697			523,951
Issuance of common stock		3,008		—			—			—			—			—			3,008
Consideration for exchange rights		—		15,848			—			—			—			—			15,848
Exercise of exchange rights of exchangeable bond		—		(15,848	)		387,708			—			—			—			371,860
Acquisition of treasury stock		—		—			(453,868	)		—			—			—			(453,868	)
Disposal of treasury stock		—		—			2,094,098			—			—			—			2,094,098
Retirement of treasury stock		—		—			437,341			—			(437,341	)		—			—
Offset of loss on disposal of treasury stock		—		(323	)		(765,393	)		—			—			—			(765,716	)
Acquisition of subsidiaries’ stock		—		—			(20,715	)		—			—			(253,560	)		(274,275	)
Increase in subsidiaries’ capital stock		—		—			(599	)		—			—			6,187			5,588
Acquisition of subsidiaries’ treasury stock		—		—			(25,150	)		—			—			(215,742	)		(240,892	)
Changes in consolidated entities		—		—			—			—			—			22,930			22,930
Other share-based payment		—		—			601			—			—			—			601
Other capital adjustments		—		—			910			—			—			(697	)		213
Stock option		—		7,143			(6,342	)		—			—			—			801
Gain on translation of foreign operations		—		—			—			(4,204	)		—			(3,223	)		(7,427	)
Loss on translation of foreign operations		—		—			—			(12,458	)		—			(3,575	)		(16,033	)
Unrealized gain on valuation of available-for-sale Securities		—		—			—			427			—			(524	)		(97	)
Unrealized loss on valuation of available-for-sale Securities		—		—			—			3,663			—			2,944			6,607
Gain on valuation of derivatives for cash flow hedge		—		—			—			285			—			133			418
Loss on valuation of derivatives for cash flow hedge		—		—			—			(18,079	)		—			(4,457	)		(22,536	)
Increase in equity of associates		—		—			—			(8,534	)		—			(234	)		(8,768	)
Decrease in equity of associates		—		—			—			(8,727	)		—			15			(8,712	)
Change by merger		—		—			(76,806	)		—			—			(1,335,017	)		(1,411,823	)
Balance as of December 31, 2009	$	1,344,475	$	1,244,850		$	(1,861,151	)	$	(38,278	)	$	8,227,362		$	249,965		$	9,167,223

See accompanying notes to consolidated financial statements

F-17

KT CORPORATION AND SUBSIDIAIRIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2007, 2008 AND 2009

1.    ORGANIZATION AND DESCRIPTION OF THE BUSINESS

a. Parent

KT Corporation (“KT”) commenced operations on January 1, 1982 through the segregation of specified operations from the Korean Ministry of Information and Communication (the “MIC”) for the purpose of contributing to the convenience in national life and improvement of public welfare through rational management of the public telecommunication business and improvement of telecommunication technology under the Korea Telecom Act.

Upon the announcements of the Government-Invested Enterprises Management Basic Act and the Privatization Law, as of October 1, 1997, KT became a government invested institution regulated by the Korean Commercial Code and KT’s shares were listed on the Korea Exchange (formerly, “Korea Stock Exchange”) on December 23, 1998. KT issued 24,282,195 additional shares on May 29, 1999 and issued American Depository Shares (“ADS”), representing these new shares and government-owned shares on the New York Stock Exchange and the London Exchange. On July 2, 2001, additional ADS representing 55,502,161 government-owned shares were issued.

In 2002, KT acquired its 60,294,575 government-owned shares according to the government’s privatization plan for government-owned companies and there is no government-owned share as of December 31, 2009.

KT’s shares as of December 31, 2009 are owned as follows:

	Number of shares	Ownership percentage (%)
National Pension Service	22,084,320	8.46	%
Employee Stock Ownership Association	7,605,163	2.91	%
Others	214,226,985	82.04	%
Treasury stock	17,195,340	6.59	%
Total	261,111,808	100.00	%

b. Consolidated Subsidiaries

The consolidated financial statements included the subsidiaries of which KT is the largest stockholder with more than 30% of ownership interests. The consolidated subsidiaries as of December 31, 2009 are as follows:

Subsidiary	Year of incorporation	Year of obtaining control	Primary business	Location	Financial year end
KT Powertel Co., Ltd. (“KTP”)	1985	1985	Trunk radio system business	Korea	Dec.31
KT Networks Corporation (“KTN”)	1986	1986	Group telephone management	Korea	Dec.31
KT Linkus Co., Ltd. (“KTL”)	1988	1988	Public telephone maintenance	Korea	Dec.31
KT Hitel Co., Ltd. (“KTH”)	1991	1992	Data communication	Korea	Dec.31
KT Submarine Co., Ltd. (“KTSC”)	1995	1995	Submarine cable construction and maintenance	Korea	Dec.31
KT Commerce Inc. (“KTC”)	2002	2002	B2C, B2B service	Korea	Dec.31
KT Tech, Inc. (formerly, “KTF Technologies Inc.”) (“KT Tech”)	2001	2002	PCS handset development	Korea	Dec.31

F-18

Subsidiary	Year of incorporation	Year of obtaining control	Primary business	Location	Financial year end
KT Internal Venture Fund No.2	2003	2003	Investment fund	Korea	Feb.28
KT M Hows Co., Ltd, (formerly, “KTF M Hows Co., Ltd.”) (“KT M Hows”)	2004	2004	Mobile marketing	Korea	Dec.31
KT Rental Co., Ltd. (“KTR”)	2005	2005	Rental service	Korea	Dec.31
Sidus FNH Corporation (“Sidus FNH”)	2005	2005	Movie production	Korea	Dec.31
Sidus FNH Benex Cinema Investment Fund	2006	2006	Movie investment fund	Korea	Dec.31
KT Capital Co., Ltd. (“KT Capital”)	2006	2006	Financing service	Korea	Dec.31
KT Telecop Co., Ltd. (formerly, “Telecop Service Co., Ltd.”) (“KT Telecop”)	2006	2006	Security service	Korea	Dec.31
KT M&S Co., Ltd. (formerly, “KTF M&S Co., Ltd.”) (“KT M&S”)	2007	2007	PCS distribution	Korea	Dec.31
KT Music Corporation (formerly, “KTF Music Corporation”) (“KT Music”)	1991	2007	Online music production and distribution	Korea	Dec.31
Doremi Media Co., Ltd. (“Doremi Media”)	1997	2007	Music disc manufacture	Korea	Dec.31
Nasmedia, Inc. (“Nasmedia”)	2000	2008	Online advertisement	Korea	Dec.31
Sofnics, Inc. (“Sofnics”)	2008	2008	Software development and sales	Korea	Dec.31
JungBoPremiumEdu Co., Ltd. (“JB Edu”)	2008	2008	Online education business	Korea	Dec.31
KT New Business Fund No. 1	2008	2008	Investment fund	Korea	Dec.31
KTDS (formerly, “KT DataSystems Co., Ltd.”)	2008	2008	System integration and maintenance	Korea	Dec.31
KTC Media Contents Fund 1	2008	2008	New technology investment fund	Korea	Apr.30
KTC Media Contents Fund 2	2009	2009	New technology investment fund	Korea	Dec.31
Vanguard Private Equity Fund	2009	2009	Corporate restructuring	Korea	Dec.31
Gyeonggi-KT Green Growth Fund	2009	2009	Venture investment of Green Growth Business	Korea	Dec.31
KT Innotz Inc.	2009	2009	Software development of mobile clouding computer and solution	Korea	Dec.31
Korea Telecom America, Inc. (“KTAI”)	1993	1993	Foreign telecommunication business	America	Dec.31
New Telephone Company, Inc. (“NTC”)	1993	1998	Foreign telecommunication business	Russia	Dec.31
Korea Telecom Japan Co., Ltd. (“KTJ”)	1999	1999	Foreign telecommunication business	Japan	Dec.31
Korea Telecom China Co., Ltd. (“KTCC”)	2003	2003	Foreign telecommunication business	China	Dec.31
PT. KT Indonesia (formerly, “PT. KTF Indonesia”)	2005	2005	Foreign telecommunication business	Indonesia	Dec.31
Super iMax	2007	2007	Wireless high speed internet business	Uzbekistan	Dec.31
East Telecom	2003	2007	Fixed line telecommunication business	Uzbekistan	Dec.31
KTSC Investment Management B.V.	2007	2007	Management of investment in Super iMax and East Telecom	Netherlands	Dec.31
Helios-TV	2008	2008	Cable TV business	Russia	Dec. 31

F-19

Details of investments in subsidiaries as of December 31, 2007, 2008 and 2009 are as follows:

Subsidiary	Year of Establishment	Primary Business	Ownership percentage (%)
			2007		2008		2009
KTP	1985	Trunk radio system business	44.85	%	44.90	%	44.90	%
KTN	1986	Group telephone management	100.00	%	100.00	%	100.00	%
KTL	1988	Public telephone maintenance	93.82	%	93.80	%	93.80	%
KTH	1991	Data communication	65.94	%	65.90	%	65.90	%
KTSC	1995	Submarine cable construction and maintenance	36.92	%	36.90	%	36.90	%
KTF (Note 1)	1997	PCS Business	52.99	%	54.30	%	—
KTC (Note 2)	2002	B2C, B2B service	100.00	%	100.00	%	100.00	%
KT Tech (formerly, “KTF Technologies, Inc.”)	2001	PCS handset development	78.79	%	78.80	%	78.80	%
KT Internal Venture Fund No.2	2003	Investment fund	94.34	%	94.30	%	94.30	%
KT M Hows (formerly, “KTF M Hows Co., Ltd.”)	2004	Mobile marketing	51.00	%	51.00	%	51.00	%
KTR	2005	Rental service	100.00	%	100.00	%	100.00	%
Sidus FNH	2005	Movie production	51.00	%	51.00	%	51.00	%
Sidus FNH Benex Cinema Investment Fund (Note 3)	2006	Movie investment fund	43.33	%	43.30	%	43.30	%
KT Capital (Note 4)	2006	Financing service	100.00	%	100.00	%	100.00	%
KT Telecop (formerly, “Telecop Service Co., Ltd.”)	2006	Security service	93.82	%	90.10	%	90.10	%
Olive Nine (Note 5)	1999	Broadcasting production	19.20	%	19.50	%	—
KT M&S (formerly, “KTF M&S Co., Ltd.”)	2007	PCS distribution	100.00	%	100.00	%	100.00	%
KT FDS (Note 6)	1990	Software development and system integration	100.00	%	100.00	%	—
KT Music (formerly, “KTF Music Co., Ltd.”) (Note 7)	1991	Semiconductor and telecommunication equipment manufacture	35.28	%	35.30	%	48.70	%
Doremi Media (Note 8)	1997	Recording device (magneto-optical disk) and music disc manufacture	64.24	%	64.20	%	64.20	%
Nasmedia	2008	Online advertisement	—		50.00	%	50.00	%
Sofnics	2008	Software development and sales	—		60.00	%	60.00	%
JB Edu (Note 9)	2008	Online education business	—		54.60	%	100.00	%
KT New Business Fund No. 1 (Note 10)	2008	Investment fund	—		100.00	%	100.00	%
KTDS (formerly, “KT DataSystems Co., Ltd.”) (Note 11)	2008	System integration and maintenance	—		100.00	%	95.30	%
KTC Media Contents Fund 1 (Note 12)	2008	New technology investment fund	—		—		81.80	%
KTC Media Contents Fund 2 (Note 13)	2009	New technology investment fund	—		—		93.00	%
Vanguard Private Equity Fund (Note 14)	2009	Corporate restructuring	—		—		16.10	%
Gyeonggi-KT Green Growth Fund (Note 15)	2009	Venture investment of Green Growth Business	—		—		61.10	%
KT Innotz Inc. (Note 16)	2009	Software development of mobile clouding computer and solution	—		—		60.00	%
KTAI	1993	Foreign telecommunication business	100.00	%	100.00	%	100.00	%
NTC	1993	Foreign telecommunication business	79.96	%	80.00	%	80.00	%
KTJ	1999	Foreign telecommunication business	100.00	%	100.00	%	100.00	%
KTCC	2003	Foreign telecommunication business	100.00	%	100.00	%	100.00	%
PT. KT Indonesia (formerly, “PT. KTF Indonesia”)	2005	Foreign telecommunication business	99.00	%	99.00	%	99.00	%
Super iMax (Note 17)	2007	Wireless high speed internet business	60.00	%	100.00	%	100.00	%
East Telecom (Note 17)	2003	Fixed line telecommunication business	51.00	%	85.00	%	85.00	%
KTSC Investment Management B.V.	2007	Management of investment in Super iMax and East Telecom	60.00	%	60.00	%	60.00	%
Helios-TV (Note 18)	2008	Cable TV business	—		100.00	%	100.00	%

F-20

(Note 1) On June 1, 2009, KTF was merged into the Company.

(Note 2) KTC is owned 19.0% by KT and 81.0% by KTH, respectively.

(Note 3) Sidus FNH Benex Cinema Investment Fund is owned 20.0% by KT, 3.3% by KTH and 20.0% by Sidus FNH, respectively.

(Note 4) On September 29, 2009, through a third party assignment, KTH acquired ownership interests in KT Capital for the purpose of creating synergy effects from the investment in financial business and accordingly, as of December 31, 2009, KT Capital is owned 73.7% by KT and 26.3% by KTH, respectively.

(Note 5) The Company sold all of the 9,250,000 equity shares of Olive Nine on July 1, 2009. As a result, Olive Nine is excluded from consolidation

(Note 6) The Company sold all of the 400,000 equity shares of KT FDS on August 13, 2009. As a result, KT FDS is excluded from consolidation.

(Note 7) On April 13, 2009, KT Music (formerly, “KTF Music Co., Ltd.”) issued new shares and KT’s ownership interest in KT Music has increased from 35.3% to 48.7% as of December 31, 2009.

(Note 8) Doremi Media is owned 64.2% by KT Music (formerly, “KTF Music Co., Ltd.”).

(Note 9) During the year ended December 31, 2009, KT acquired 60,000 redeemable preferred shares and 300,000 common shares of JB Edu and accordingly, KT’s ownership interest in JB Edu has increased from 54.6% to 100.0% as of December 31, 2009.

(Note 10) KT New Business Fund No. 1 is owned 90.9% by KT and 9.1% by KT Capital, respectively.

(Note 11) On July 13, 2009, KTDS (formerly, “KT DataSystems Co., Ltd.”) issued new shares and KT’s ownership interest in KTDS has decreased from 100.0% to 95.3% as of December 31, 2009.

(Note 12) KTC Media Contents Fund 1 has been excluded from the consolidation through 2008 since its total assets as of the end of prior year exceeded (Won)7 billion. In 2009, however, the Company accounts for the fund as subsidiaries and begins to consolidate. KTC Media Contents Fund 1 is owned 81.8% by KT Capital as of December 31, 2009.

(Note 13) On October 23, 2009, KT, KT Capital, Sidus FNH and Nasmedia acquired 93.0% ownership interest of KTC Media Contents Fund 2 for (Won)6,002 million. KTC Media Contents Fund 2 is owned 43.5% by KT, 28.1% by KT Capital, 14.3% by Sidus FNH and 7.1% by Nasmedia, respectively.

(Note 14) On July 24, 2009, KT Capital acquired 16.1% ownership interest of Vanguard Private Equity Fund for (Won)5,782 million. Although the Company’s ownership interest only represents 16.1%, Vanguard Private Equity Fund is included in consolidation since the Company has a substantive influence over the fund.

(Note 15) On October 7, 2009, KT and KT Capital acquired 61.1% ownership interest of Gyeonggi-KT Green Growth Fund for (Won)17,500 million. Gyeonggi-KT Green Growth Fund is owned 40.3% by KT and 20.8% by KT Capital, respectively.

(Note 16) On December 31, 2009, KT acquired 60.0% ownership interest of KT Innotz Inc. for (Won)3,000 million.

(Note 17) Super iMax and East telecom are owned 100.0% and 85.0% by KTSC Investment Management B.V., respectively.

(Note 18) Helios-TV is owned 100.0% by NTC.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Financial Statement Presentation

KT and its domestic subsidiaries maintain their official accounting records in Korean won and prepare statutory financial statements in the Korean language (Hangul) in conformity with the accounting principles generally accepted in the Republic of Korea. Certain accounting principles applied by KT and subsidiaries (the “Company”) that conform to financial accounting standards and accounting principles in the Republic of Korea may not conform to generally accepted accounting principles in other countries. Accordingly, these consolidated financial statements are intended for use by those who are informed about Korean accounting principles and practices. The accompanying consolidated financial statements have been condensed, restructured and translated into English with certain expanded descriptions from the Korean language financial statements. Certain information included in the Korean language financial statements, but not required for a fair presentation of the Company’s financial position, results of operations, changes in equity or cash flows, is not presented in the accompanying consolidated financial statements. Balance sheet presented for comparative purpose as of December 31, 2008 changed its name into statement of financial position in accordance with the Article 1-2 of the Act on External Audit of Stock Companies, as amended.

F-21

b. Adoption of Statements of Korea Accounting Standards (“SKAS”)

No significant Korea accounting standards issued or revised in 2009 was adopted by the Company.

c. Cash and Cash Equivalents

Cash and cash equivalents includes cash, substitute securities including checks issued by others, and checking accounts, ordinary deposits and financial instruments, which can be easily converted into cash and whose value changes due to changes in interest rates are not material, with maturities (or date of redemption) of three months or less upon acquisition.

d. Allowance for Doubtful Accounts

An allowance for doubtful accounts is provided to cover estimated losses on receivables (account receivable–trade, account receivable—other, loans and other), based on collection experience and analysis of the collectability of individual outstanding receivables.

Changes in the allowance for doubtful accounts for accounts receivable—trade and loans for each of the three years in the period ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007			2008			2009
Balance at the beginning of year	(Won)	563,164		(Won)	487,729		(Won)	488,739
Provision		71,390			148,972			104,977
Write-offs		(146,825	)		(147,962	)		(116,592	)
Balance at the end of year	(Won)	487,729		(Won)	488,739		(Won)	477,124

e. Inventories

Inventories, which consist mainly of supplies for telecommunication facilities and PCS handsets for sales, are stated at the acquisition cost, with cost determined using the moving average method, except for goods-in-transit and land for construction for which cost are determined using the specific identification method. During the year, perpetual inventory systems are used to value inventories, which are adjusted to physical inventory counts performed at the end of the year. When the market value of inventories (net realizable value for merchandise and current replacement cost for supplies) is less than the carrying value, carrying value is stated at the lower of cost or market. The lower of cost or market method is applied by group of inventories and loss on inventory valuation is presented as a deductive item from inventories and charged to operating expenses. However, when the circumstances that previously caused inventories to be written down below cost no longer exist and the new market value of inventories subsequently recovers, the valuation loss is reversed to the extent of the original valuation loss and the reversal is deducted from operating expenses.

f. Securities (excluding the equity method investment securities)

Debt and equity securities are initially stated at the market value of consideration given for acquisition (market value of securities acquired if market value of consideration given is not available) plus incidental costs attributable to the acquisition of the securities and are classified into trading, available-for-sale, and held-to-maturity securities depending on the purpose and nature of acquisition. Trading securities are presented as short-term investments while available-for-sale securities and held-to-maturity securities are presented as short-term investments or long-term investment securities depending on their nature in the statements of financial position. The moving average method for equity securities and the specific identification method for debt securities are used to determine the cost of securities for the calculation of gain (loss) on disposal of those securities.

F-22

• Trading securities

Securities that are bought and held principally for the purpose of selling them in the near term with active and frequent buying and selling, including securities which consist of a portfolio of securities with the clear objective of generating profits on short-term differences in price, are classified as trading securities. Trading securities are recorded at their fair value and unrealized gains or losses from trading securities are recorded as gain (loss) on valuation of trading securities included in non-operating revenues (expenses).

• Held-to-maturity securities

Debt securities that have fixed or determinable payments with a fixed maturity are classified as held-to-maturity securities only if the Company has both the positive intent and ability to hold those securities to maturity. Debt securities, whose maturity dates are due within one year from the end of reporting period, are classified as current assets.

After initial recognition, held-to-maturity securities are stated at amortized cost in the statements of financial position. When held-to-maturity securities are measured at amortized costs, the difference between their acquisition cost and face value is amortized using the effective interest rate method and the amortization is included in the cost and interest income.

When the possibility of not being able to collect the principal and interest of held-to-maturity securities according to the terms of the contracts is highly likely, the difference between the recoverable amount (the present value of expected cash flows using the effective interest rate upon acquisition of the securities) and book value are recorded as loss on impairment of held-to-maturity securities included in non-operating expenses and the held-to-maturity securities are stated at the recoverable amount after impairment loss. If the value of impaired securities subsequently recovers and the recovery can be objectively related to an event occurring after the impairment loss was recognized, the reversal of impairment loss are recorded as reversal of impairment loss on held-to-maturity securities included in non-operating revenues. However, the resulting carrying amount after the reversal of impairment loss shall not exceed the amortized cost that would have been measured, at the date of the reversal, if no impairment loss were recognized.

• Available-for-sale securities

Debt and equity securities that do not fall under the classifications of trading or held-to-maturity securities are categorized and presented as available-for-sale securities included in investment assets. However, if an available-for-sale security matures or it is certain that such security will be disposed of within one year from the end of reporting period, it is classified as a current asset.

Available-for-sale securities are recorded at fair value. Unrealized gain or loss from available-for-sale securities are presented as gain or loss on valuation of available-for-sale securities included in accumulated other comprehensive income of stockholders’ equity. In addition, accumulated gain or loss on valuation of available-for-sale securities are reflected in either gain or loss on disposal of available-for-sale securities or loss on impairment of available-for-sale securities upon disposal or recognition of impairment of the securities. However, available-for-sale equity securities that are not marketable and whose fair value cannot be reliably measured are recorded at acquisition cost.

When there is objective evidence that the available-for-sale securities are impaired and the recoverable amount is lower than the cost (amortized cost for debt securities) of the available-for-sale securities, an impairment loss is recognized as loss on impairment of available-for-sale securities of non-operating expenses and an unrealized gain or loss related to the impaired available-for-sale

F-23

securities remaining in stockholders’ equity is adjusted to the impairment loss. If the value of impaired securities subsequently recovers and the recovery can be objectively related to an event occurring after the impairment loss was recognized, the reversal of impairment loss can be recognized up to the previously recorded impairment loss as a reversal of loss on impairment of available-for-sale securities included in non-operating revenues. However, if the fair value increases after the impairment loss is recognized but does not relate to the recovery of impairment loss as described above, the increase in fair value is recorded in stockholders’ equity.

• Reclassification of securities

Trading securities should not be reclassified to other categories of securities. However, when those securities can no longer be held for sale in the near-term to generate profits from short-term price differences, the trading securities can be reclassified as available-for-sale or held-to-maturity securities. When those securities are no longer traded in an active market, such securities are reclassified as available-for-sale securities.

When trading securities are reclassified to other categories, the fair value (latest market value) as of the date of the reclassification becomes new acquisition cost of the security and the security’s unrealized holding gain or loss through the date of the reclassification should be recorded in non-operating revenues or expenses.

g. Equity Method Investment Securities

Investments in equity securities of companies, over which the Company exercises significant influence, are reported using the equity method of accounting.

• Accounting for changes in the equity of the investee

Under the equity method of accounting, the Company records changes in its proportionate equity of the net assets of the investee depending on the nature of the underlying changes in the investee as follows; (i) “equity in income (loss) of associates” in the non-operating revenues (expense) for net income (loss) of the investee; (ii) “increase (decrease) in retained earnings of associates” in the retained earnings for changes in beginning retained earnings of the investee; (iii) “increase (decrease) in equity of associates” in the accumulated other comprehensive income (loss) for other changes in stockholders’ equity of the investee.

When the equity method investee’s unappropriated retained earnings carried over from prior period changes due to significant error corrections, the Company records the changes in equity as “equity in income (loss) of associates” included in the non-operating revenues (expenses) unless the impact of the changes on the Company’s consolidated financial statements is significant. If the changes results from the changes in accounting policies of the equity method investee, they are reflected in the unappropriated retained earnings carried over from prior period in accordance with SKAS on changes in accounting policy and errors corrections. When the investee declares cash dividends, the dividends to be received are deducted directly from equity method investment securities.

• Treatment of investment difference

Difference between the acquisition cost and the Company’s proportionate equity in the fair value of net assets of the investee upon acquisition (“Investment difference”) are considered as (negative) goodwill and accounted for in accordance with accounting standards for business combination. The goodwill portion which is amortized over useful lives (4~10 years) on a straight line method and the negative goodwill portion which is amortized over the weighted average useful lives of depreciable non-monetary assets of the investee are included in “equity in income (loss) of associates”.

F-24

When the Company’s equity interest in the investee increases due to an increase (or decrease) in contributed capital with (or without) consideration, the changes in the Company’s proportionate equity in the investee is accounted for as investment difference. If the Company’s equity interest decreases, the changes are accounted for as “gain (loss) on disposal of the equity method investment securities”.

• Difference between the fair value and book value of net assets of the investee

Upon acquisition of the equity method investment securities, the Company’s proportionate shares in the differences between the fair values and book values of the identifiable assets and liabilities of the investee are amortized/reversed and included in “equity in income (loss) of associates” in accordance with the investee’s methods of accounting for the assets and liabilities.

• Elimination of unrealized gain or loss from intercompany transactions

The Company’s proportionate share in the gain (loss) arising from transactions between the Company and the investee, which remains in the book value of assets held at financial year-end is considered unrealized gain (loss) and adjusted to equity method investment securities.

• Impairment loss on equity method investment securities

When there is objective evidence that the equity method investment securities are impaired and the recoverable amount is lower than the carrying amount of the equity method investment securities, an impairment loss is recognized as “loss on impairment of equity method investment securities” included in non-operating expenses and shall first reduce the unamortized investment difference, if any. When the recoverable amount is recovered after the recognition of impairment loss, the reversal of impairment loss can be recognized as income up to the previously recorded impairment loss. The book value of the equity method investment securities after the reversal of the impairment loss cannot exceed the book value calculated as if the impairment loss had not been originally recognized. The reversal of the impairment loss recognized against the unamortized investment difference is not allowed.

• Translation of financial statements of overseas investees

For overseas investees whose financial statements are prepared in foreign currencies, the equity method of accounting is applied after assets and liabilities are translated in accordance with the accounting treatments for the translation of the financial statements of overseas’ subsidiaries for consolidated financial statements. The Company’s proportionate share of the difference between assets net of liabilities and stockholders’ equity after translation into Korean won is accounted for as “increase (decrease) in equity of associates” included in the accumulated other comprehensive income (loss).

h. Property and Equipment

Property and equipment are stated at cost (acquisition cost or manufacturing cost plus expenditures directly related to preparing the asset ready for use), except for those contributed by the government and stated at amounts revalued on January 1, 1982, and assets acquired from investment in kind, by donation or free of charge in other ways are stated at fair value as an acquisition cost. Expenditures after acquisition or completion that increase future economic benefit in excess of the most recently assessed capability level of the asset are capitalized; other expenditures are charged to expense as incurred. Borrowing costs in relation to the manufacture, purchase, construction or development of assets are charged to current operations.

F-25

Depreciation is computed by the declining-balance method (except for buildings, structures, underground access to cable tunnels, and concrete and steel telephone poles that are depreciated using the straight-line method) based on the following useful lives of the related units of property and equipment and the accumulated depreciation and impairment are directly deducted from the related assets.

	Useful lives (years)
Buildings	5-60
Structures	5-40
Machinery and equipment:
Underground access to cable tunnels, and concrete and steel telephone poles	20-40
Machinery	3-15
Other	6-15
Vehicles	3-10
Other property and equipment
Tools	3-8
Office equipment	2-20

When the expected future cash flow from use or disposal of the property and equipment is lower than the carrying amount due to obsolescence, physical damage and other, the carrying amount is adjusted to the recoverable amount (the higher of net sales price or value in use) and the difference is recognized as an impairment loss. The Company recorded loss on impairment of property and equipment totaling (Won)7,990 million, (Won)20,676 million and (Won)1,236 million for the years ended December 31, 2007, 2008 and 2009, respectively. Meanwhile, when the recoverable amount subsequently exceeds the carrying amount of the impaired asset, the excess is recorded as a reversal of impairment loss to the extent that the reversed asset does not exceed the carrying amount before previous impairment as adjusted by depreciation. There was no reversal of impairment loss for the years ended December 31, 2007, 2008 and 2009.

i. Intangible Assets

Intangible assets are initially recognized at acquisition cost (purchase cost plus expenditures directly related to preparing the asset ready for use) and subsequently presented at amortized cost using the straight-line method, with amortization beginning when the asset is available for use. Meanwhile, rights to utilize buildings and facilities and copyrights are amortized over 30 or 50 years since the Company has contractual or lawful exclusive rights to them.

Intangible assets are amortized based on the following useful lives:

	Useful lives (years)
Research and development cost	3-8
Goodwill and negative goodwill	4-10
Software	4-8
Industrial rights	5-10
Frequency usage rights	5.75 from the date of service commencement or 13
Other intangible assets	10-50

Research related costs are generally expensed as operating expenses. Development costs which meet certain requirements and from which future economic benefit is certain are capitalized as intangible assets and the amortization over the estimated useful lives is recorded as operating expenses. Development costs associated with new telecommunication businesses such as Integrated Customer Information System (“ICIS”) and Broadband Integrated Services Digital Network (“B-ISDN”) and software such as Integrated Logistics Information System, Information Superhighway and Enterprise Resource Planning (“ERP”) are accounted for as intangible assets.

F-26

The Company was elected as a WiBro business provider on January 20, 2005 and paid (Won)125,800 million to the Korea Communications Commission (the “KCC”) in exchange for the usage right to frequency range of 2331.5~2358.5 Mhz obtained on March 30, 2005. The rights have a contractual life of 7 years from the grant date and are amortized over the remaining contractual life commencing from June 30, 2006 when commercial service was initiated.

On December 15, 2000, KTF had acquired the license to provide third generation mobile services utilizing 2GHz frequency band (“IMT-2000 service”) for which a total payment of (Won)1,300 billion is to be paid to Korea Communications Commission (“KCC”) as a license fee. KTF paid (Won)650 billion out of the total license fee on March 20, 2001 and the remaining balance of (Won)650 billion is required to be paid including interest for five years from 2007 to 2011 of which (Won)110 billion and (Won)130 billion was paid in 2008 and 2009, respectively.

Future payment schedule of the license fees as of December 31, 2009 is as follows (in millions of Korean won):

Year ending December 31,
2010	(Won)	150,000
2011		170,000
Total	(Won)	320,000

The Company tests for impairment of intangible assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the recoverable amount of the assets. When the recoverable amount (the higher of net sales price or value in use) of intangible assets is significantly lower than the carrying amount due to obsolescence, and other, the difference is recognized as an impairment loss. When the recoverable amount subsequently exceeds the carrying amount of the impaired asset, the excess is recorded as a reversal of impairment loss to the extent that the reversed asset does not exceed the carrying amount before the previous impairment as adjusted for amortization. The Company recorded loss on impairment of intangible assets totaling (Won)9,178 million, (Won)5,865 million and (Won)7,742 million for the years ended December 31, 2007, 2008 and 2009, respectively. There was no reversal of impairment loss for the years ended December 31, 2007, 2008 and 2009.

Goodwill, which represents the excess of the acquisition cost over the fair value of net identifiable assets acquired related to entities that are being consolidated, is amortized on a straight-line basis over a reasonable period. However, if the recoverable amount is significantly lower than the book value, an impairment loss on goodwill is charged against current earnings. Negative goodwill, which represents the excess of the fair value of net identifiable assets acquired over the acquisition cost, is recorded as a contra account (reduction) to intangible assets. For the years ended December 31, 2007, 2008 and 2009, the amortization of goodwill of (Won)138,405 million, (Won)145,154 million and (Won)137,487 million, respectively, are included in operating expenses and the reversal of negative goodwill of (Won)518 million, (Won)65 million and nil, respectively, are included in non-operation revenues.

j. Government Subsidies and Others

Government subsidies, including contributions for construction, granted for the purpose of acquisition of certain assets are recorded as a deduction from the assets granted or other assets acquired for the temporary use of the assets granted. When the related assets are acquired, they are recorded as a deduction from the acquired assets and offset against the depreciation of the acquired assets over their useful lives. In addition, government subsidies and contributions for construction

F-27

without any repayment obligation is offset against the related expenses for which they are intended to compensate, however, if there is no matching expense, they are recorded as operating or non-operating revenue depending on whether they are directly related to the Company’s principal operating activities. Government subsidies and contributions for construction with a repayment obligation are recorded as a liability.

k. Present Value Discount for Assets and Liabilities

Receivables or payables from long-term installment transactions, long-term loans/borrowings or the other similar transactions are stated at present value which is determined by discounting total amounts receivable or payable in the future using the effective interest rate, if the nominal value is significantly different from the present value. The discount or premium resulting from the determination of present value should be reported in the statements of financial position as a direct deduction from or addition to the nominal value of the related receivables or payables and the amortization by the effective interest rate method is included in the period income (loss).

l. Translation of Assets and Liabilities Denominated in Foreign Currency

Transactions denominated in foreign currencies are recorded in Korean won translated at the exchange rate prevailing on the transaction date and the resulting gain (loss) from foreign currency transactions is included in non-operating revenues (expenses). Monetary assets and liabilities denominated in foreign currency are translated into Korean won at the Base Rates announced by Seoul Money Brokerage Services, Ltd. on the end of reporting period, which were, for U.S. dollars, (Won)938.2: USD 1, (Won)1,257.5: USD 1 and (Won)1,167.6: USD 1 at December 31, 2007, 2008 and 2009, respectively, and the resulting gain (loss) from foreign currency translation is included in non-operating revenues (expenses).

m. Convertible and Exchangeable Bonds

The proceeds from issuance of convertible bonds are allocated between the conversion right and the debt issued. When additional amount is paid upon maturity to guarantee certain yield rate, the redemption premium is recognized as an addition to the convertible bonds and the conversion right, which represents the difference between the issue price of the convertible bonds and the present value of normal bonds, is accounted for as capital surplus. The redemption premium, the conversion right and the expenses incurred for the issuance of the bonds are adjusted to the bonds and amortized to interest expense using the effective interest rate method over the redemption period of the convertible bonds.

n. Provisions for Severance Indemnities

In accordance with KT and its domestic subsidiaries’ policies, all employees with more than one year of service are entitled to receive lump-sum severance payments upon termination of their employment, based on their current rates of salary and length of service. The accrual for severance indemnities is computed as if all employees were to terminate at the end of reporting period and amounted to (Won)1,708,640 million and (Won)1,488,086 million for the years ended December 31, 2008 and 2009, respectively.

The Company has insured a portion of its obligations for severance indemnities by making deposits, that will be directly paid to employees, with Samsung Life Insurance and other and records them as deposits for severance insurance deposits which is directly deducted from the accrued severance indemnities.

F-28

o. Provisions

The Company recognizes a provision for a liability with uncertain timing or amount when (1) there is a present obligation of the Company arising from past events, (2) it is highly likely that an outflow of resources will be required to settle the obligation, and (3) the amount for the settlement of the obligation can be reliably measured.

If there is a significant difference between the nominal value and present value of such provision, the provision is stated at the present value of the expenditures expected to be required to settle the obligation.

p. Derivative Instruments

The Company records rights and obligations arising from derivative instruments in assets and liabilities, which are stated at fair value. Gains and losses that result from the changes in the fair value of derivative instruments are recognized in current earnings. However, for derivative instruments that cash flow hedge accounting applies to, the effective portion of the gain or loss on the derivatives instruments are recorded as gain (loss) on valuation of derivatives included in the accumulated other comprehensive income (loss).

q. Share-based Payment

The Company’s share-based payment transactions are accounted for in accordance with SKAS No.22 “Share-based Payment” which is effective from fiscal year beginning on or after December 31, 2007. As allowed in the transition clause of SKAS No. 22, for employee stock options granted before January 1, 2008, the Company accounts for them in accordance with Interpretation No. 39-35 “Accounting for Stock Options”.

(i) Stock Options

The Company has granted stock options to its executive officers and directors prior to January 1, 2008, and for equity-settled stock options, the Company records compensation expenses which are allocated over the period in which the options vest with the corresponding credit to the capital adjustments. When the options are exercised with the issuance of new shares, the difference between the exercise price plus the stock option cost recorded in the capital adjustments account and the par value of the new shares issued, is recorded as additional paid-in capital. In the event the Company grants stock options based on cash-settled share-based payment, the Company records compensation expenses which are allocated over the period in which the options vest with the corresponding liability recorded.

When stock options are forfeited because the specified vesting requirements are not satisfied, previously recognized compensation costs are reversed to earnings and the corresponding capital adjustments or liabilities are reversed as well. When stock options expire, previously recognized compensation costs and corresponding capital adjustments are reversed to capital surplus.

(ii) Other Share-based Payment

Other share-based payments granted on or after January 1, 2007 are measured as below:

For equity-settled share-based payment transactions, the Company measures the goods or services received, and the corresponding increase in equity (capital adjustments), directly, at the fair value of the goods or services received, unless that fair value cannot be estimated reliably. If the entity

F-29

cannot estimate reliably the fair value of the goods or services received, the Company measures the value, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted.

For cash-settled share-based payment transactions, the Company measures the goods or services acquired and the liability incurred at the fair value of the liability. Until the liability is settled, the Company re-measures the fair value of the liability at each reporting date and at the date of settlement, with any changes in value recognized in profit or loss for the period.

For share-based payment transactions in which the terms of the arrangement provide either the Company or the supplier of goods or services with a choice of whether the Company settles the transaction in cash or by issuing equity instruments, the Company is required to account for that transaction, or the components of that transaction, as a cash-settled share-based payment transaction if, and to the extent that, the Company has incurred a liability to settle in cash (or other assets), or as an equity-settled share-based payment transaction if, and to the extent that, no such liability has been incurred.

r. Accounting for Leases

A lease is classified as a finance lease or an operating lease depending on the extent of transfer to the Company of the risks and rewards incidental to ownership. If a lease meets any one of the following criteria, it is accounted for as a finance lease:

The lease transfers ownership of the asset to the lessee by the end of the lease term;

The lessee has the option to purchase the asset at a bargain price and it is certain that the option will be exercised;

The lease term is for the major part (75% or more) of the economic life of the asset even if title is not transferred;

At the date of lease commencement the present value of the minimum lease payments amounts to at least substantially all (90% or more) of the fair value of the leased asset; or

The leased assets are of such a specialized nature that only the Company can use them without major modifications.

All other leases are treated as operating leases.

(i) Lessees

For operating leases, lease payments excluding guaranteed residual value are recognized as an expense on a straight-line basis over the lease term and contingent rent is expensed as incurred. Finance leases are recognized as assets and liabilities at the lower of fair value of the leased property or the present value of the minimum lease payments discounted using the implicit interest rate of the lessor (or the Company’s incremental borrowing rate if the implicit interest rate is not practicable to determine). Any initial direct costs incurred by the Company are added to the amount recognized as an asset. The depreciation policy for depreciable leased assets is consistent with that for the similar depreciable assets that are owned by the Company. Annual minimum lease payments excluding guaranteed residual value is allocated to interest expense, which is calculated using the effective interest rate, and finance lease repayment amount. Contingent rent relating to finance are charged as expenses in the periods in which they are incurred, however, if the amount is material it is allocated to principal and interest, respectively, over the remaining lease term.

F-30

(ii) Lessors

For operating leases, lease payments on a lease contract are recognized as other revenues on a straight-line basis over the lease term. For finance leases, lessors are required to present finance lease assets as receivables in statements of financial position, at an amount equal to the fair value of the leased property at the inception of lease and required to recognize the lease payments received as repayment of the finance lease receivables and interest income.

s. Revenue Recognition

The Company’s service revenues, which include revenues derived from telephone services, internet services and data services, are recognized on a service-rendered basis. In connection with such services, KCC and other government entities have extensive authority to regulate the Company’s fees. Rates for local call, interconnection and broadband internet access services provided by the Company should be approved by KCC. As for other telecommunication services, the related rates are just required to be reported to KCC.

The Company recognizes sales on PCS handsets when these are delivered to the dealers. In addition, the Company’s construction revenue is recognized by reference to the percentage of completion of the contract which is calculated by the ratio of the actual contract costs incurred to date to the estimated total contract costs. As for subscribed construction-type contracts, the Company recognizes revenue using the percentage-of-completion method only for the subscribed portion.

Meanwhile, the Company recognizes sales revenues on a gross basis when the Company is the primary obligor in the transactions with customers and if the Company merely acts as an agent for the buyer or seller from whom it earns a commission, then the sales revenues are recognized on a net basis.

Total consideration for combined services is allocated to each service in proportion to its fair value and the allocated amount is recognized as revenue according to revenue recognition policy for the service.

t. Income Taxes

When the Company recognizes deferred income tax assets or liabilities for the temporary differences between the carrying amount of an asset and liability and tax base, a deferred income tax liability for taxable temporary difference is fully recognized except to the extent in accordance with income tax related SKAS while a deferred tax asset for deductible temporary difference is recognized to the extent that it is almost certain that taxable profit will be available against which the deductible temporary difference can be utilized. Deferred income tax asset (liability) is classified as current or non-current asset (liability) depending on the classification of related asset (liability) in the statements of financial position. Deferred income tax asset (liability) which does not relate to specific asset (liability) account in the statements of financial position such as deferred income tax asset recognized for tax loss carryforwards is classified as current or non-current asset (liability) depending on the expected reversal period. Deferred income tax assets and liabilities in the same tax jurisdiction and in the same current or non-current classification are presented on a net basis. Current and deferred income tax expense are included in income tax expense in the statement of operations and additional income taxes or tax refunds for the prior periods are included in income tax expense for the current period when recognized. However, income taxes resulting from transactions or events, which were directly recognized in stockholders’ equity in current or prior periods, or business combinations are directly adjusted to equity account or goodwill (or negative goodwill).

F-31

u. Use of Estimates

The Company’s management uses reasonable estimates and assumptions in preparing the accompanying non-consolidated financial statements in accordance with accounting principles generally accepted in the Republic of Korea. The estimates and assumptions can change according to additional experience, changes in circumstances, new information and other and may be different from actual results.

v. Elimination of Inter-Company Unrealized Gain/Loss

Unrealized gains and losses included in the inventories, property and equipment and other which were acquired by transactions amongst KT and subsidiaries are fully eliminated using the gross margin ratio of the transactions and the gains and losses on disposal.

w. Translation of Overseas Subsidiaries’ Financial Statements

For overseas subsidiaries whose financial statements are prepared in foreign currencies, assets and liabilities are translated at the exchange rate at the consolidated end of reporting period and statement of income items are translated at the average exchange rate for the respective fiscal period. Net translation adjustments are recorded as gain (loss) on translation of foreign operations included in the accumulated other comprehensive income.

x. Changes in Consolidated Entities

For the year ended December 31, 2009, KTC Media Contents Fund 1, KTC Media Contents Fund 2, Vanguard Private Equity Fund, Gyeonggi-KT Green Growth Fund and KT Innotz Inc. are newly included in the consolidation while equity interests in Olive Nine and KT FDS were sold in 2009 and those companies were excluded from the consolidation.

y. Reclassifications of Prior Year Financial Statements

Certain reclassifications have been made in prior year financial statements to conform to classifications used in the current period. Such reclassifications did not have an effect on the net assets and net income of the Company as of and for the year ended December 31, 2007 and 2008.

z. Basis of Translating Consolidated Financial Statements

The consolidated financial statements are expressed in Korean won and, solely for the convenience of the reader, the consolidated financial statements as of and for the years ended December 31, 2009, have been translated into U.S. dollars at the rate of (Won)1,163.65 to USD1 at December 31, 2009, the noon buying rate in the City of New York for cable transfers in Korean won as certified for customs purposes by the Federal Reserve Bank of New York on the last business day of the year ended December 31, 2009. The translation should not be construed as a representation that any or all of the amounts shown could be converted into U.S. dollars at this or any other rate.

F-32

3.    RESTRICTED DEPOSITS

Details of restricted deposits as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

		2008		2009		Description
Cash and cash equivalents	Restricted deposits	(Won)	5,253	(Won)	10,241	Restricted for research and development project and construction
Short-term investment assets	Time deposits		24,687		12,817	Guarantee deposits and others
Long-term financial instruments	Checking account deposits		44		3,035	Checking account deposits and others
Total		(Won)	29,984	(Won)	26,093

4.    INVENTORIES

Inventory valuations as of December 31, 2008 and 2009 are summarized as follows (in millions of Korean won):

	2008							2009
	Cost		Lower of cost or market value		Valuation allowance			Cost		Lower of cost or market value		Valuation allowance
Merchandise	(Won)	413,448	(Won)	386,595	(Won)	(26,853	)	(Won)	625,253	(Won)	580,096	(Won)	(45,157	)
Supplies		27,008		25,547		(1,461	)		43,996		39,280		(4,716	)
Goods in transit		40		40		—			69,250		69,250		—
Other		12,659		12,659		—			10,776		10,776		—
Total	(Won)	453,155	(Won)	424,841	(Won)	(28,314	)	(Won)	749,275	(Won)	699,402	(Won)	(49,873	)

5.    LOANS

Loans as of December 31, 2008 and 2009 are summarized as follows (in millions of Korean won):

a. Loans

	2008			2009
Factoring receivables	(Won)	9,074		(Won)	15,077
Allowance for doubtful accounts		(63	)		(76	)
Loans		256,010			448,398
Deferred incidental expense (revenue) of loans		(88	)		(753	)
Allowance for doubtful accounts		(2,773	)		(9,168	)
Accounts receivable-loans		994			2,154
Allowance for doubtful accounts		(12	)		(94	)
Loans for installment credit		29,891			28,412
Deferred incidental expense (revenue) of loans		(10	)		5
Allowance for doubtful accounts		(1,285	)		(2,334	)
Accounts receivable-loans for installment credit		1,155			950
Allowance for doubtful accounts		(9	)		(14	)
New technology financial investment assets		—			200
Allowance for doubtful accounts		—			(94	)
New technology financial loans		—			2,500
Allowance for doubtful accounts		—			(237	)
Total—loans	(Won)	297,026		(Won)	496,943
Total—allowance for doubtful accounts	(Won)	(4,142	)	(Won)	(12,017	)

F-33

b. Long-term loans

	2008			2009
Factoring receivables	(Won)	2,770		(Won)	2,945
Allowance for doubtful accounts		(19	)		(15	)
Loans		207,647			378,768
Deferred incidental expense (revenue) of loans		(2,876	)		(3,593	)
Allowance for doubtful accounts		(4,760	)		(7,242	)
Loans for installment credit		49,936			43,833
Deferred incidental expense (revenue) of loans		334			179
Allowance for doubtful accounts		(2,493	)		(2,994	)
New technology financial investment assets		1,000			1,356
Allowance for doubtful accounts		(400	)		(911	)
New technology financial loans		2,368			2,932
Allowance for doubtful accounts		(62	)		(277	)
Total—long-term loans	(Won)	261,179		(Won)	426,420
Total—allowance for doubtful accounts		((Won)7,734)			((Won)11,439)

6.    SECURITIES

Securities as of December 31, 2008 and 2009 are summarized as follows (in millions of Korean won):

a. Short-term investment assets

	2008		2009
Short-term financial instruments	(Won)	243,649	(Won)	387,534
Short-term loans to employee		43,456		34,402
Beneficiary certificates		39,696		15,470
Available-for-sale securities (Equity securities)		82,071		6,508
Available-for-sale securities (Debt securities)		2,171		3
Held-to-maturity securities		6,095		17
Total	(Won)	417,138	(Won)	443,934

F-34

b. Available-for-sale securities

i) Equity securities

	2008
	Percentage of ownership (%)		Acquisition cost		Fair value or net book value		Book value		Unrealized gains (losses) (Note 1)
Current assets:
Beneficiary certificates			(Won)	82,000	(Won)	82,071	(Won)	82,071	(Won)	71
Non-current assets:
Krtnet Corp.	7.4	%		1,954		1,832		1,832		(122	)
GaeaSoft Corp.	2.0	%		533		282		282		(251	)
PT.Mobile-8	2.3	%		10,069		2,322		2,322		(7,747	)
Solid Technologies, Inc.	4.7	%		590		1,602		1,602		1,012
Ongamenet Co., Ltd.	11.4	%		1,186		4,474		4,474		3,288
Bixolon Co., Ltd.	0.0	%		11		7		7		(4	)
Shinhan Venture Capital Co., Ltd. (Note 2)	0.0	%		1,800		900		900		—
Korea Information Certificate Authority, Inc. (Note 2)	9.3	%		2,000		2,242		2,000		—
Korea Software Financial Cooperative (“KSFC”) (Note 2)	0.9	%		1,000		1,229		1,000		—
Digitalinside Co., Ltd. (Note 2)	7.2	%		499		—		—		—
Vacom Wireless, Inc. (Note 2)	16.8	%		1,880		1,516		641		—
Wiz Communication Co., Ltd. (Note 2)	7.5	%		200		609		200		—
Korea Telecommunications Operators Association (“KTOA”) (Note 2)	0.0	%		689		689		689		—
Softbank Korea Co., Ltd. (Note 2)	6.7	%		1,406		959		959		—
Binext CT Financial Cooperative (Note 2)	15.0	%		1,500		1,409		1,500		—
Entaz Co., Ltd. (Note 2)	8.7	%		1,000		919		1,000		—
Luxpia Co., Ltd. (Note 2)	6.0	%		1,000		1,000		1,000		—
Neighbor Systems Co., Ltd. (Note 2)	10.4	%		525		453		525		—
Others (Note 2)				75,712		44,845		48,894		1,123
Sub total				103,554		67,289		69,917		(2,701	)
Total			(Won)	185,554	(Won)	149,360	(Won)	151,988	(Won)	(2,630	)

F-35

	2009
	Percentage of ownership (%)		Acquisition cost		Fair value or net book value		Book value		Unrealized gains (losses) (Note 1)
Current assets:
Beneficiary certificates			(Won)	6,500	(Won)	6,508	(Won)	6,508	(Won)	8
Non-current assets:
Krtnet Corp.	7.4	%		1,954		2,626		2,626		672
GaeaSoft Corp.	2.0	%		533		487		487		(46	)
PT.Mobile-8	2.3	%		10,069		2,504		2,504		8
Solid Technologies, Inc.	4.7	%		590		2,348		2,348		1,758
Ongamenet Co., Ltd.	11.4	%		1,186		5,527		5,527		3,386
Shinhan Venture Capital Co., Ltd. (Note 2)	0.0	%		1,800		900		900		—
Korea Information Certificate Authority, Inc. (Note 2)	9.3	%		2,000		2,499		2,000		—
Korea Software Financial Cooperative (“KSFC”) (Note 2)	1.1	%		1,220		1,553		1,220		—
MBC-ESS Sports Co., Ltd. (Note 2)	9.0	%		1,800		—		—		—
Digitalinside Co., Ltd. (Note 2)	7.2	%		499		—		—		—
Vacom Wireless, Inc. (Note 2)	16.8	%		1,880		657		641		—
Wiz Communication Co., Ltd. (Note 2)	18.4	%		490		2,673		1,987		1,167
Korea Telecommunications Operators Association (“KTOA”) (Note 2)	9.9	%		689		2,237		689		—
Softbank Korea Co., Ltd. (Note 2)	6.7	%		1,406		959		959		—
Binext CT Financial Cooperative (Note 2)	17.6	%		3,000		2,885		3,000		—
Entaz Co., Ltd. (Note 2)	8.7	%		1,000		1,015		1,000		—
Luxpia Co., Ltd. (Note 2)	5.5	%		1,000		1,000		1,000		—
Neighbor Systems Co., Ltd. (Note 2)	10.4	%		525		567		525		—
Others (Note 2)				104,739		78,697		84,516		427
Sub total				136,380		109,134		111,929		7,372
Total			(Won)	142,880	(Won)	115,642	(Won)	118,437	(Won)	7,380

(Note 1) The amounts are not adjusted for the tax effects and noncontrolling interests in consolidated subsidiaries.

(Note 2) Investments in equity securities above, which are recorded at book value of (Won)43,007 million and (Won)96,739 million for the years ended December 31, 2008 and 2009, respectively, do not have readily determinable fair values and therefore are stated at cost. In addition, if the estimated recoverable amount of the securities below their acquisition cost and such difference is not deemed recoverable, write-downs of the individual securities are recorded to reduce the carrying value.

For the year ended December 31, 2009, the Company disposed of its interests in certain investees including Bixolon Co., Ltd. and beneficiary certificates, and recognized gross gains and losses on disposal of available-for-sale securities amounting to (Won)9,496 million and (Won)8 million, respectively. As the estimated recoverable amount of the investments in PT.Mobile-8, MBC-ESS Sports Co., Ltd. and other fell below the acquisition cost and such difference is not deemed recoverable, the Company recognized an impairment loss amounting to (Won)10,102 million for the year ended December 31, 2009.

In accordance with SKAS No. 24 “Preparation and Presentation of Financial Statement II (Financial Industry)”, the gain and loss on disposal of available-for –sale securities amounting to (Won)3,012 million and (Won)2,412 million, recognized by KT Capital are classified as operating revenue and expense, respectively.

F-36

ii) Debt securities

		2008
		Maturity	Amortized cost		Fair value		Unrealized gains (losses) (Note)
Current assets:
Government and public bonds	National and local governments	2009	(Won)	121	(Won)	121	(Won)	—
Financial bonds of small and medium enterprise	Industrial Bank of Korea	2009		1,000		1,000		—
Convertible bonds	Neurons, lnc.	2009		650		650		—
	ImageClick Corporation.	2009		400		400		—
Sub total				2,171		2,171		—
Non-current assets:
Government and public bonds	National and local governments	2010~2019		115		115		—
	Lifecord international Co., Ltd.	2011		2,800		2,800		—
Convertible bonds	Foosung Co., Ltd.	2011		2,000		1,820		(180	)
Bonds with warrant	Samyoung connect Co., Ltd.	2010		92		92		—
Sub total				5,007		4,827		(180	)
Total			(Won)	7,178	(Won)	6,998	(Won)	(180	)

		2009
		Maturity	Amortized cost		Fair value		Unrealized gains (losses) (Note)
Current assets:
Government and public bonds	National and local governments	2010	(Won)	3	(Won)	3	(Won)	—
Sub total			(Won)	3	(Won)	3	(Won)	—
Non-current assets:
Government and public bonds	National and local governments	2011~2014		64		64		—
Convertible bonds	Tongyang Value Ocean Special Purpose Acquisition Company	2013		200		200		—
	Foosung Co., Ltd.	2011		2,000		2,420		420
	Probe corp.	2012		1,000		1,000		—
Bonds with warrant	KB2B.	2014		1,677		1,677		—
Sub total				4,941		5,361		420
Total			(Won)	4,944	(Won)	5,364	(Won)	420

(Note) The amounts are not adjusted for the tax effects and noncontrolling interests in consolidated subsidiaries.

iii) Changes in unrealized gains (losses)

	2008						2009
	Equity securities			Debt securities			Equity securities			Debt securities
Balance at beginning of period	(Won)	18,322		(Won)	—		(Won)	(2,630	)	(Won)	(180	)
Realized gains on disposal of securities, net		(5,587	)		—			5,595			—
Changes in unrealized gains (losses), net		(15,365	)		(180	)		4,415			600
Balance at end of period	(Won)	(2,630)		(Won)	(180	)	(Won)	7,380		(Won)	420

The amounts are not adjusted for the tax effects and noncontrolling interests in consolidated subsidiaries.

F-37

d. Held-to-maturity Securities

		2008
		Maturity	Amortized cost		Book value
Current assets:
Government and public bonds	National and local governments	2009	(Won)	9	(Won)	9
Commercial paper	IBK Capital Corporation	2009		1,030		1,030
	Lotte Engineering & Construction Co., Ltd.	2009		4,956		4,956
Subordinated bonds	Shinhan Bank	2009		100		100
Sub total				6,095		6,095
Non-current assets:
Government and public bonds	National and local governments	2011		77		77
Asset backed securities	New Generation Securitization Specialty Co., Ltd.	2010~2014		8,000		8,000
Sub total				8,077		8,077
Total			(Won)	14,172	(Won)	14,172
		2009
		Maturity	Amortized cost		Book value
Current assets:
Government and public bonds	National and local governments	2010	(Won)	17	(Won)	17
Sub total				17		17
Non-current assets:
Government and public bonds	National and local governments	2011~2014		7		7
		2011		58		58
Sub total				65		65
Total			(Won)	82	(Won)	82

7.    EQUITY METHOD INVESTMENT SECURITIES

Investments in securities accounted for using the equity method as of December 31, 2008 and 2009 are summarized as follows (in millions of Korean won):

a. Details of Equity Method Investment Securities

	2008
	Number of shares	Percentage of ownership (%)		Acquisition cost		Equity in net asset value		Book value		Market value
Company K Movie Asset Fund No. 1 (Note 1)	90	60.0	%	(Won)	9,000	(Won)	8,803	(Won)	8,803	(Won)	—
KT-Global New Media Fund	600	50.0	%		6,000		5,817		5,817		—
Korea Telephone Directory Co., Ltd. (“KTD”)	1,360,000	34.0	%		6,800		8,358		8,358		—
Metropol Property LLC	—	34.0	%		1,739		434		1,776		—
Korea Information Technology Fund	100	33.3	%		100,000		110,909		110,909		—
KBSi Co., Ltd.	952,000	32.4	%		4,760		4,679		4,679		—
eNtoB Corp.	970,000	30.3	%		6,050		8,187		8,740		—
Korea Digital Satellite Broadcasting Co., Ltd. (“KDB”)	22,706,000	23.3	%		195,976		22,000		32,928		—
Sky Life Contents Fund	45	22.5	%		4,500		3,737		3,737		—
Everyshow	300,000	21.3	%		1,500		1,226		1,226		—
Kiwoom Investment Co., Ltd.	1,800,000	20.2	%		9,000		6,953		6,953		—
Goodmorning F Co., Ltd. (Note 3)	114,000	19.0	%		254		1,460		1,460		—

F-38

	2008
	Number of shares	Percentage of ownership (%)		Acquisition cost		Equity in net asset value			Book value		Market value
CU Industrial Development Co., Ltd. (formerly, “CURD”) (Note 3)	266,000	19.0	%		506		8,369			8,369		—
KTCS Corporation (formerly, “Korea Information Data Corp.”) (Note 3)	760,000	19.0	%		3,800		13,666			13,666		—
KTIS Corporation (formerly, “Korea Information Service Corp.”) (Note 3)	570,000	19.0	%		2,850		12,812			12,812		—
Korea Seoul Contact all Co., Ltd. (Note 3)	45,600	19.0	%		228		327			327		—
Korea Service and Communication Co., Ltd. (Note 3)	45,600	19.0	%		228		341			341		—
Korea Call Center Co., Ltd. (Note 3)	45,600	19.0	%		228		332			332		—
TMWorld Co., Ltd. (Note 3)	45,600	19.0	%		228		320			320		—
Ubiquitous Marketing Service and Communication Co., Ltd. (“UMS&C”) (Note 3)	45,600	19.0	%		228		293			293		—
Exdell Corporation (Note 3)	38,000	19.0	%		190		218			218		—
Information Technology Service Bukbu Corporation (Note 3)	38,000	19.0	%		190		225			225		—
Information Technology Solution Nambu Corporation (Note 3)	38,000	19.0	%		190		221			221		—
Information Technology Solution Seobu Corporation (Note 3)	38,000	19.0	%		190		222			222		—
Information Technology Solution Busan Corporation (Note 3)	38,000	19.0	%		190		246			246		—
Information Technology Solution Jungbu Corporation (Note 3)	38,000	19.0	%		190		295			295		—
Information Technology Solution Honam Corporation (Note 3)	38,000	19.0	%		190		248			248		—
Information Technology Solution Daegu Corporation (Note 3)	38,000	19.0	%		190		218			218		—
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) (Note 3)	200,000	17.9	%		5,000		41			41		—
Wooridul Entertainment Investment Fund-1	1,600	20.0	%		1,600		1,529			1,529		—
Mongolian Telecommunications (“MTC”)	10,348,111	40.0	%		3,450		13,289			13,289		12,806
KTC Media Contents Investment Fund No.1 (Note 4)	45	81.8	%		4,500		4,510			4,510		—
KTF-CJ Music Contents Investment Fund (Centurion Music 1) (Note 1)	50	50.0	%		5,000		5,038			5,038		—
KT-DoCoMo Mobile Investment Fund (formerly, “KTF-DoCoMo Mobile Investment Fund”)	4,500,000,000	45.0	%		4,500		4,439			4,439		—
Boston Film Fund (Note 1)	800	39.0	%		8,000		4,281			4,281		—
Harex InfoTech Inc.	225,000	21.2	%		3,375		248			631		—
U-Mobile (Note 3)	62,601,493	16.5	%		96,700		33,102			82,663		—
Shinhan-KT Mobilecard Co., Ltd. (formerly, “Shinhan-KTF Mobilecard Co., Ltd.”)	199,999	50.0	%		1,000		708			708		—
Olive Nine Entertainment Co., Ltd. (Note 4)	140,000	67.7	%		4,200		(1,074	)		—		—
The Contents Entertainment (Note 4)	30,500	50.8	%		1,754		3			950		—
Olive Nine Creative Co., Ltd.	40,000	42.9	%		200		150			150		—
Music City China Co., Ltd. (Note 4)	—	100.0	%		144		—			—		—
Doremi Music Publishing Co., Ltd. (Note 4)	10,000	100.0	%		200		(7	)		—		—
PARANGOYANGI (Note 4)	4,000,000	100.0	%		2,900		(303	)		—		—
Music City Media Co., Ltd. (Note 4)	208,000	94.6	%		1,040		(688	)		—		—
Dooristar Co., Ltd.	980,000	49.0	%		1,500		(398	)		—		—
Oscar ent. Co., Ltd.	7,865	49.0	%		650		384			384		—
D&G Star Co., Ltd. (Note 4)	52,000	70.3	%		260		190			190		—
Paramount Music Co., Ltd.	7,848	48.9	%		1,000		313			313		—
Onestone Communication Co., Ltd. (Note 4)	100,000	100.0	%		1,159		263			206		—
Netcom	156	26.5	%		90		80			80		—
TPS (Note 4)	—	100.0	%		164		205			205		—
ETN (Note 4)	—	100.0	%		1		1			1		—
Total				(Won)	503,782	(Won)	287,220		(Won)	353,347	(Won)	12,806

F-39

	2009
	Number of shares	Percentage of ownership (%)		Acquisition cost		Equity in net asset value		Book value		Market value
Company K Movie Asset Fund No. 1 (Note 1)	90	60.0	%	(Won)	9,000	(Won)	8,806	(Won)	8,806	(Won)	—
KT-Global New Media Fund (Note 2)	1,400	50.0	%		14,000		12,932		12,932		—
KTF-CJ Music Contents Investment Fund (Centurion Music 1) (Note 1)	50	50.0	%		5,000		4,955		4,955		—
Shinhan-KT Mobilecard Co., Ltd. (formerly, “Shinhan-KTF Mobilecard Co., Ltd.”)	199,999	50.0	%		1,000		248		248		—
KT-DoCoMo Mobile Investment Fund (formerly, “KTF-DoCoMo Mobile Investment Fund”)	4,500,000,000	45.0	%		4,500		4,473		4,473		—
Boston Film Fund (Note 1)	800	39.0	%		8,000		4,249		4,249		—
Korea Information Technology Fund	100	33.3	%		100,000		115,636		115,636		—
KBSi Co., Ltd.	952,000	32.4	%		4,760		5,259		5,259		—
Boston Global Film & Contents Fund Limited Partnership (Note 2)	10,000	31.8	%		10,000		10,085		10,085		—
eNtoB Corp.	970,000	30.3	%		6,050		8,314		8,730		—
Korea Digital Satellite Broadcasting Co., Ltd. (“KDB”)	9,082,000	23.0	%		195,976		12,945		12,945		—
Sky Life Contents Fund	45	22.5	%		4,500		3,751		3,751		—
Everyshow	300,000	21.3	%		1,500		1,045		1,045		—
Harex InfoTech Inc.	225,000	21.2	%		3,375		62		62		—
KTIS Corporation (formerly, “Korea Information Service Corp.”) (Note 5)	619,619	20.3	%		2,850		16,413		16,413		—
Kiwoom Investment Co., Ltd.	1,800,000	20.2	%		9,000		7,175		7,175		—
KTCS Corporation (formerly, “Korea Information Data Corp.”) (Note 5)	813,213	20.1	%		3,800		16,449		16,449		—
OIC Language Visual Limited (Note 2)	400,000	20.0	%		200		183		183		—
Wooridul Entertainment Investment Fund-1	1,600	20.0	%		1,600		1,478		1,478		—
Touchtel Co., Ltd. (Note 3)	19,900	19.9	%		100		180		180		—
Excelnet Co., Ltd. (Note 3)	19,900	19.9	%		100		120		120		—
MTT Co., Ltd. (formerly, “KTT Co., Ltd.”) (Note 3)	19,900	19.9	%		100		206		206		—
KMTEC Co., Ltd. (formerly, “KTTEC Co., Ltd.”) (Note 3)	19,900	19.9	%		100		183		183		—
GOODTECH Co., Ltd. (Note 3)	15,900	19.9	%		80		153		153		—
KDNET Co., Ltd. (formerly, KTNET Co., Ltd.”) (Note 3)	15,900	19.9	%		80		147		147		—
WMC Co., Ltd. (Note 3)	15,900	19.9	%		80		98		98		—
MetroM Co., Ltd. (Note 3)	15,900	19.9	%		80		147		147		—
Goodmorning F Co., Ltd. (Note 3)	114,000	19.0	%		254		1,696		1,696		—
CU Industrial Development Co., Ltd. (formerly, “CURD”) (Note 3)	266,000	19.0	%		506		12,769		12,769		—
Exdell Corporation (Note 3)	38,000	19.0	%		190		239		239		—
Information Technology Service Bukbu Corporation (Note 3)	36,000	18.0	%		180		376		376		—
Information Technology Solution Nambu Corporation (Note 3)	36,000	18.0	%		180		381		381		—
Information Technology Solution Seobu Corporation (Note 3)	36,000	18.0	%		180		451		451		—
Information Technology Solution Busan Corporation (Note 3)	36,000	18.0	%		180		339		339		—
Information Technology Solution Jungbu Corporation (Note 3)	36,000	18.0	%		180		458		458		—
Information Technology Solution Honam Corporation (Note 3)	36,000	18.0	%		180		414		414		—
Information Technology Solution Daegu Corporation (Note 3)	36,000	18.0	%		180		269		269		—

F-40

	2009
	Number of shares	Percentage of ownership (%)		Acquisition cost		Equity in net asset value			Book value		Market value
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) (Note 3)	200,000	16.7	%		5,000		114			114		—
Mongolian Telecommunications (“MTC”)	10,348,111	40.0	%		3,450		11,135			11,135		19,432
Metropol Property LLC	—	34.0	%		1,739		640			1,684		—
BKLCD Co., Ltd. (Note 2)	4,444,444	29.1	%		20,000		19,542			19,542		—
PARANGOYANGI (Note 4)	4,000,000	100.0	%		2,900		(542	)		—		—
Music City Media Co., Ltd. (Note 4)	208,000	94.5	%		1,040		(688	)		—		—
D&G Star Co., Ltd. (Note 4)	52,000	70.1	%		260		27			27		—
Oscar ent. Co., Ltd.	7,865	49.0	%		650		398			398		—
Paramount Music Co., Ltd.	7,848	48.9	%		1,000		305			305		—
Netcom	156	26.5	%		90		—			—		—
TPS (Note 4)	—	100.0	%		164		1,283			1,283		—
ETN (Note 4)	—	100.0	%		1		1			1		—
Total				(Won)	431,135	(Won)	283,016		(Won)	287,989	(Won)	19,432

(Note 1) The Company is the largest stockholder of these companies with more than 30% ownership interest. However, since the Company has no control over these companies, these investments are accounted for using the equity method.

(Note 2) In 2009, the Company acquired 800 shares of KT-Global New Media Fund for (Won)8,000 million, 31.8% ownership interest of Boston Global Film & Contents Fund Limited Partnership for (Won)10,000 million, 20.0% ownership interest of OIC Language Visual Limited for (Won)200 million and 29.2% ownership interest of BKLCD Co., Ltd. for (Won)20,000 million, respectively.

(Note 3) Although the Company’s ownership in these companies is less than 20%, the Company has significant influence over these companies through the participation in these companies’ various management decisions. As a result, the Company accounts for these investments using the equity method.

(Note 4) It is excluded from the consolidation due to immaterial.

(Note 5) During the year ended December 31, 2009, as KTCS merged with Korea Call Center Co., Ltd. and TMworld Co., Ltd. and the KTIS merged with Korea Seoul Contact all Co., Ltd., Korea Service and Communication Co., Ltd. and Ubiquitous Marketing Service and Communication Co., Ltd., the Company’s shares in those merged companies were exchanged with 53,213 shares of KTCS and 49,619 shares of KITS, respectively.

b. Changes in Carrying Amount Resulting from the Equity Method

Changes in carrying amount resulting from the equity method of accounting for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	January 1, 2008		Equity in income (loss) (Note 4)			Increase (decrease) in equity of associates			Other increase (decrease)			December 31, 2008
Company K Movie Asset Fund No. 1	(Won)	—	(Won)	(197	)	(Won)	—		(Won)	9,000		(Won)	8,803
KT-Global New Media Fund (Note 1)		—		(183	)		—			6,000			5,817
KTD (Note 1)		8,085		273			—			—			8,358
Metropol Property LLC (Note 1)		—		(12	)		49			1,739			1,776
Korea Information Technology Fund		110,826		2,506			(1,696	)		(727	)		110,909
KBSi Co., Ltd.		3,408		1,271			—			—			4,679
eNtoB Corp. (Note 1)		7,039		655			(4	)		1,050			8,740
KDB (Note 1)		24,892		1,527			6,183			326			32,928
Sky Life Contents Fund		4,997		(1,260	)		—			—			3,737
Everyshow		—		(274	)		—			1,500			1,226
Kiwoom Investment Co., Ltd. (Note 1)		7,147		64			(258	)		—			6,953
Goodmorning F Co., Ltd.		1,151		314			(5	)		—			1,460
CU Industrial Development Co., Ltd. (formerly, “CURD”)		3,788		4,631			(50	)		—			8,369
KTCS Corporation (formerly, “Korea Information Data Corp.”)		13,541		353			—			(228	)		13,666

F-41

	2008
	January 1, 2008		Equity in income (loss) (Note 4)			Increase (decrease) in equity of associates		Other increase (decrease)			December 31, 2008
KTIS Corporation (formerly, “Korea Information Service Corp.”) (Note 1)		10,792		2,191			—		(171	)		12,812
Korea Seoul Contact all Co., Ltd.		271		56			—		—			327
Korea Service and Communication Co., Ltd.		274		67			—		—			341
Korea Call Center Co., Ltd.		266		66			—		—			332
TMWorld Co., Ltd.		294		26			—		—			320
UMS&C		275		18			—		—			293
Exdell Corporation (Note 1)		177		41			—		—			218
Information Technology Service Bukbu Corporation		190		35			—		—			225
Information Technology Solution Nambu Corporation		190		31			—		—			221
Information Technology Solution Seobu Corporation (Note 1)		190		32			—		—			222
Information Technology Solution Busan Corporation		190		56			—		—			246
Information Technology Solution Jungbu Corporation		190		105			—		—			295
Information Technology Solution Honam Corporation		190		58			—		—			248
Information Technology Solution Daegu Corporation		190		28			—		—			218
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) (Note 1)		3,016		(1,047	)		—		(1,928	)		41
Wooridul Entertainment Investment Fund-1 (Note 1)		—		(71	)		—		1,600			1,529
MTC (Note 1)		10,020		1,520			2,397		(648	)		13,289
KTC Media Contents Investment Fund No.1 (Note 1)		—		10			—		4,500			4,510
KTF-CJ Music Contents Investment Fund (Centurion Music 1)		5,011		27			—		—			5,038
KT-DoCoMo Mobile Investment Fund (formerly, “KTF-DoCoMo Mobile Investment Fund”)		4,491		(52	)		—		—			4,439
Boston Film Fund		7,149		(2,868	)		—		—			4,281
Harex InfoTech Inc.		1,183		(552	)		—		—			631
U-Mobile		—		(19,699	)		5,662		96,700			82,663
Shinhan-KT Mobilecard Co., Ltd. (formerly, “Shinhan-KTF Mobilecard Co., Ltd.”)		—		(292	)		—		1,000			708
Olive Nine Entertainment Co., Ltd. (Note 2)		659		(659	)		—		—			—
The Contents Entertainment		1,578		(628	)		—		—			950
Olive Nine Creative Co., Ltd.		218		(68	)		—		—			150
Tourtainment Inc.		34		(5	)		—		(29	)		—
Music City China Co., Ltd. (Notes1 and 2)		—		—			—		—			—
Doremi Music Publishing Co., Ltd. (Notes 1 and 2)		217		(217	)		—		—			—
Bluecord Corp. (Notes 1 and 2)		1,611		109			—		(1,720	)		—
PARANGOYANGI (Notes 1 and 2)		58		(58	)		—		—			—
Music City Media Co., Ltd. (Notes 1 and 2)		—		—			—		—			—
Dooristar Co., Ltd. (Notes 1 and 2)		112		(112	)		—		—			—
Oscar ent. Co., Ltd. (Note 1)		417		(33	)		—		—			384
D&G Star Co., Ltd. (Note 1)		—		(42	)		—		232			190
Paramount Music Co., Ltd.		—		—			—		313			313
Onestone Communication Co., Ltd. (Note 1)		—		(25	)		—		231			206
Netcom		90		(32	)		—		22			80
TPS		164		—			—		41			205
ETN		1		—			—		—			1
Total	(Won)	234,582	(Won)	(12,316	)	(Won)	12,278	(Won)	118,803		(Won)	353,347

F-42

	2009
	January 1, 2009		Equity in income (loss) (Note 4)			Increase (decrease) in equity of associates			Other increase (decrease)			December 31, 2009
Company K Movie Asset Fund No. 1	(Won)	8,803	(Won)	3		(Won)	—		(Won)	—		(Won)	8,806
KT-Global New Media Fund (Note 1)		5,817		(885	)		—			8,000			12,932
KTF-CJ Music Contents Investment Fund (Centurion Music 1)		5,038		(83	)		—			—			4,955
Shinhan-KT Mobilecard Co., Ltd. (formerly, “Shinhan-KTF Mobilecard Co., Ltd.”)		708		(460	)		—			—			248
KT-DoCoMo Mobile Investment Fund (formerly, “KTF-DoCoMo Mobile Investment Fund”) (Note 1)		4,439		34			—			—			4,473
Boston Film Fund (Note 1)		4,281		(32	)		—			—			4,249
KTD (Notes 1 and 2)		8,358		(8,358	)		—			—			—
Korea Information Technology Fund		110,909		3,984			743			—			115,636
KBSi Co., Ltd.		4,679		580			—			—			5,259
Boston Global Film & Contents Fund Limited Partnership (Notes 1 and 4)		—		84			—			10,001			10,085
eNtoB Corp. (Note 1)		8,740		281			(3	)		(288	)		8,730
KDB (Note 1)		32,928		(4,018	)		(15,965	)		—			12,945
Sky Life Contents Fund (Note 1)		3,737		14			—			—			3,751
Everyshow (Note 1)		1,226		(181	)		—			—			1,045
Harex InfoTech Inc.		631		(569	)		—			—			62
KTIS Corporation (formerly, “Korea Information Service Corp.”) (Note 1)		12,812		2,233			—			1,368			16,413
Kiwoom Investment Co., Ltd. (Note 1)		6,953		54			168			—			7,175
KTCS Corporation (formerly, “Korea Information Data Corp.”) (Note 1)		13,666		1,771			—			1,012			16,449
OIC Language Visual Limited (Note 1)		—		(17	)		—			200			183
Wooridul Entertainment Investment Fund-1 (Notes 1 and 4)		1,529		(51	)		—			—			1,478
Olive Nine(Note 3)		—		—			3			(3	)		—
Touchtel Co., Ltd. (Notes 1 and 5)		—		91			—			89			180
Excelnet Co., Ltd. (Note 5)		—		30			—			90			120
MTT Co., Ltd. (formerly, “KTT Co., Ltd.”) (Notes 1 and 5)		—		117			—			89			206
KMTEC Co., Ltd. (formerly, “KTTEC Co., Ltd.”) (Notes 1 and 5)		—		93			—			90			183
GOODTECH Co., Ltd. (Notes 1 and 5)		—		81			—			72			153
KDNET Co., Ltd. (formerly, KTNET Co., Ltd.”) (Notes 1 and 5)		—		75			—			72			147
WMC Co., Ltd. (Notes 1 and 5)		—		27			(1	)		72			98
MetroM Co., Ltd. (Notes 1 and 5)		—		76			—			71			147
Goodmorning F Co., Ltd. (Note 1)		1,460		235			1			—			1,696
CU Industrial Development Co., Ltd. (formerly, “CURD”)		8,369		4,350			50			—			12,769
Korea Seoul Contact all Co., Ltd. (Note 1)		327		281			(159	)		(449	)		—
Korea Service and Communication Co., Ltd. (Note 1)		341		200			—			(541	)		—
Korea Call Center Co., Ltd. (Note 1)		332		183			—			(515	)		—
TMWorld Co., Ltd. (Note 1)		320		154			—			(474	)		—
UMS&C (Note 1)		293		172			—			(465	)		—
Exdell Corporation (Note 1)		218		21			—			—			239
Information Technology Service Bukbu Corporation		225		164			—			(13	)		376
Information Technology Solution Nambu Corporation		221		173			—			(13	)		381
Information Technology Solution Seobu Corporation		222		242			—			(13	)		451

F-43

	2009
	January 1, 2009		Equity in income (loss) (Note 4)			Increase (decrease) in equity of associates			Other increase (decrease)			December 31, 2009
Information Technology Solution Busan Corporation		246		106			—			(13	)		339
Information Technology Solution Jungbu Corporation		295		178			—			(15	)		458
Information Technology Solution Honam Corporation		248		179			—			(13	)		414
Information Technology Solution Daegu Corporation		218		63			—			(12	)		269
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”) (Note 1)		41		(275	)		—			348			114
U-Mobile (Notes 1 and 6)		82,663		(17,794	)		555			(65,424	)		—
MTC (Note 1)		13,289		910			(2,258	)		(806	)		11,135
Metropol Property LLC (Note 1)		1,776		—			(92	)		—			1,684
KTC Media Contents Investment Fund No.1		4,510		—			—			(4,510	)		—
BKLCD Co., Ltd.		—		(458	)		—			20,000			19,542
The Contents Entertainment (Note 3)		950		—			—			(950	)		—
Olive Nine Creative Co., Ltd. (Note 3)		150		—			—			(150	)		—
D&G Star Co., Ltd. (Note 1)		190		(163	)		—			—			27
Oscar ent. Co., Ltd. (Note 1)		384		14			—			—			398
Paramount Music Co., Ltd. (Note 1)		313		(8	)		—			—			305
Onestone Communication Co., Ltd. (Note 7)		206		—			—			(206	)		—
Netcom		80		(1	)		—			(79	)		—
TPS		205		2,429			—			(1,351	)		1,283
ETN		1		—			—			—			1
Total	(Won)	353,347	(Won)	(13,671	)	(Won)	(16,958	)	(Won)	(34,729	)	(Won)	287,989

(Note 1) These securities were accounted for using the equity method of accounting based on unaudited financial statements as of and for the year ended December 31, 2009 as the audited financial statements on these companies could not be obtained by the Company’s year-end closing. In order to verify the reliability of such unaudited financial statements, the Company has performed the following procedures and found no significant exceptions:

i) Obtain the unaudited financial statements signed by the investee’s chief executive officer and statutory auditor.

ii) Identified whether the major transactions or accounting events, including those disclosed to public by the investee, which were acknowledged by the Company are properly reflected in the unaudited financial statements.

iii) Identify the major accounting issues under discussion between the investee and its external auditors and the investee’s plan to resolve such issues.

iv) Analyze the effect of potential difference between the unaudited and audited financial statements.

(Note 2) The Company discontinued the equity method of accounting since the book values of the equity method investments are below zero due to accumulated deficit.

(Note 3) Due to the exclusion from consolidation, Olive Nine Co., Ltd. was reclassified into equity method investment securities and accordingly, its equity investees are excluded from equity method investment securities.

(Note 4) In accordance with SKAS No. 24 “Preparation and Presentation of Financial Statements II (Financial Industry)”, equity income amounting to (Won)10 million and equity loss amounting to (Won)16 million recognized by KT Capital is classified as operating revenue and operating expense, respectively.

(Note 5) As it was determined that the changes in equity investment in Touchtel and other seven investees (total acquisition cost of (Won)716 million) became significant, such securities were transferred from available-for-sales securities to equity method investment securities for the year ended December 31, 2009.

(Note 6) The Company sold all of the 62,601,493 equity shares (book value: (Won)65,424 million) of U-Mobile for USD 100 million ((Won)120,930 million) to a third party on September 14, 2009.

(Note 7) For the year ended December 31, 2009, Onestone Communication Co., Ltd. was liquidated.

F-44

c. Changes in Investment Difference

Changes in investment differences from equity method investment securities for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008														2009
Affiliate	January 1, 2008			Amortization (Reversal)			Impairment loss			Other		December 31, 2008			January 1, 2009			Amortization			Other			December 31, 2009
eNtoB Corp.	(Won)	314		(Won)	(77	)	(Won)	—		(Won)	316	(Won)	553		(Won)	553		(Won)	(137	)	(Won)	—		(Won)	416
KDB		21,856			(10,928	)		—			—		10,928			10,928			(10,928	)		—			—
Harex InfoTech Inc.		766			(383	)		—			—		383			383			(383	)		—			—
MOS facilities (formerly, “Mostech Co., Ltd.”)		2,700			(772	)		(1,928	)		—		—			—			—			—			—
U-Mobile		—			(8,746	)		—			58,307		49,561			49,561			(5,830	)		(43,731	)		—
Metropol Property LLC		—			(149	)		—			1,491		1,342			1,342			(298	)		—			1,044
OliveNine Entertainment Co., Ltd.		1,288			(644	)		—			—		644			644			—			(644	)		—
The Contents Entertainment		1,420			(473	)		—			—		947			947			—			(947	)		—
Doremi Music Publishing Co., Ltd.		(23	)		8			—			—		(15	)		(15	)		—			15			—
D&G Star Co., Ltd.		—			—			(28	)		28		—			—			—			—			—
Paramount Music Co., Ltd.		—			—			(687	)		687		—			—			—			—			—
Total	(Won)	28,321		(Won)	(22,164	)	(Won)	(2,643	)	(Won)	60,829	(Won)	64,343		(Won)	64,343		(Won)	(17,576	)	(Won)	(45,307	)	(Won)	1,460

d. Elimination of Unrealized Gains (Losses)

Unrealized gains (losses) arising from intercompany transactions, which are eliminated, as of December 31, 2009 are nil.

e. Cumulative Changes in the Company’s Equity in Net Asset Value of The Investee’s not Recognized

Cumulative changes in the Company’s equity in net asset value of the investees not recognized due to the discontinuance of the equity method of accounting as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008			2009
KTD	(Won)	—		(Won)	(2,283	)
Doremi Music Publishing Co., Ltd.		(7	)		—
PARANGOYANGI		(303	)		(542	)
Music City Media Co., Ltd.		(688	)		(688	)
Dooristar Co., Ltd.		(398	)		—
Olive Nine Entertainment Co., Ltd.		(1,074	)		—
Total	(Won)	(2,470	)	(Won)	(3,513	)

F-45

f. Condensed Financial Information of The Investees (in millions of Korean won):

	2008
	Total assets		Total liabilities		Revenue		Net income (loss)
Company K Movie Asset Fund No. 1	(Won)	14,671	(Won)	—	(Won)	—	(Won)	(329	)
KT-Global New Media Fund		11,654		19		—		(365	)
KTD		62,779		38,198		44,325		804
Metropol Property LLC		1,310		33		847		403
Korea Information Technology Fund		332,724		—		19,742		7,518
KBSi Co., Ltd.		21,638		7,188		31,526		3,926
eNtoB Corp.		79,327		52,189		756,983		2,635
KDB		508,039		287,103		386,958		31,225
Sky Life Contents Fund		16,798		189		795		(5,602	)
Everyshow		6,301		538		1,359		(1,287	)
Kiwoom Investment Co., Ltd.		34,651		177		6,146		316
Goodmorning F Co., Ltd.		12,476		4,791		54,851		1,654
CU Industrial Development Co., Ltd. (formerly, “CURD”)		83,655		39,607		67,241		24,374
KTCS Corporation (formerly, “Korea Information Data Corp.”)		103,117		31,191		211,410		2,020
KTIS Corporation (formerly, “Korea Information Service Corp.”)		94,355		26,921		149,293		11,654
Korea Seoul Contact all Co., Ltd.		6,420		4,700		43,581		296
Korea Service and Communication Co., Ltd.		4,860		3,064		31,584		354
Korea Call Center Co., Ltd.		4,893		3,144		29,851		349
TMworld Co., Ltd.		4,487		2,803		30,386		257
UMS&C		4,737		3,196		31,121		94
Exdell Corporation		2,331		1,186		11,280		215
Information Technology Service Bukbu Corporation		4,802		3,619		11,802		183
Information Technology Solution Nambu Corporation		5,593		4,430		13,954		162
Information Technology Solution Seobu Corporation		4,782		3,612		12,430		170
Information Technology Solution Busan Corporation		5,095		3,799		11,182		296
Information Technology Solution Jungbu Corporation		5,600		4,045		12,569		555
Information Technology Solution Honam Corporation		4,872		3,567		11,907		305
Information Technology Solution Daegu Corporation		3,324		2,175		6,690		148
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”)		6,892		6,661		21,135		(1,535	)
Wooridul Entertainment Investment Fund-1		7,594		1		68		(407	)
MTC		40,992		7,769		28,167		3,799
KTC Media Contents Investment Fund No.1		5,591		79		91		12
KTF-CJ Music Contents Investment Fund (Centurion Music 1)		10,126		50		621		(10	)
KT-DoCoMo Mobile Investment Fund (formerly, “KTF-DoCoMo Mobile Investment Fund”)		10,378		515		416		(116	)
Boston Film Fund		11,482		513		345		(7,408	)
Harex InfoTech Inc.		2,252		1,082		2,798		(801	)
U-Mobile		307,425		106,809		27,314		(66,379	)
Shinhan-KT Mobilecard Co., Ltd. (formerly, “Shinhan-KTF Mobilecard Co., Ltd.”)		1,509		93		34		(584	)
Olive Nine Entertainment Co., Ltd.		251		1,837		1,384		(653	)
The Contents Entertainment		752		747		1,937		(305	)
Olive Nine Creative Co., Ltd.		548		198		53		(160	)
Doremi Music Publishing Co., Ltd.		17		24		39		26
PARANGOYANGI		408		711		572		(355	)
Music City Media Co., Ltd.		464		1,089		639		19
Dooristar Co., Ltd.		243		586		24		182
Oscar ent. Co., Ltd.		895		213		807		(82	)
D&G Star Co., Ltd.		235		815		879		(632	)
Onestone Communication Co., Ltd.		397		133		—		(38	)

F-46

	2009
	Total assets		Total liabilities		Revenue		Net income (loss)
Company K Movie Asset Fund No. 1	(Won)	14,677	(Won)	—	(Won)	1,498	(Won)	6
KT-Global New Media Fund		26,139		275		—		(1,771	)
KTF-CJ Music Contents Investment Fund (Centurion Music 1)		9,960		50		653		(84	)
Shinhan-KT Mobilecard Co., Ltd. (formerly, “Shinhan-KTF Mobilecard Co., Ltd.”)		596		100		80		(919	)
KT-DoCoMo Mobile Investment Fund (formerly, “KTF-DoCoMo Mobile Investment Fund”)		10,048		108		65		77
Boston Film Fund		11,116		227		119		(111	)
KTD		25,809		32,525		7,206		(31,297	)
Korea Information Technology Fund		346,909		—		30,391		11,956
KBSi Co., Ltd.		21,242		5,000		33,133		1,791
Boston Global Film & Contents Fund Limited Partnership		31,861		199		—		262
eNtoB Corp.		72,238		44,716		567,871		1,213
KDB		448,079		344,151		397,457		20,280
Sky Life Contents Fund		16,800		129		1,390		62
Everyshow		8,280		3,367		4,849		(851	)
Harex InfoTech Inc.		1,114		823		1,782		(868	)
KTIS Corporation (formerly, “Korea Information Service Corp.”)		129,494		48,715		119,679		13,200
Kiwoom Investment Co., Ltd.		35,672		100		4,750		263
KTCS Corporation (formerly, “Korea Information Data Corp.”)		129,011		47,029		245,156		12,196
OIC Language Visual Limited		920		6		—		(86	)
Wooridul Entertainment Investment Fund-1		7,393		—		28		(200	)
Touchtel Co., Ltd.		1,767		862		11,996		80
Excelnet Co., Ltd.		1,180		577		11,631		201
MTT Co., Ltd. (formerly, “KTT Co., Ltd.”)		1,839		805		12,300		196
KMTEC Co., Ltd. (formerly, “KTTEC Co., Ltd.”)		1,442		523		13,459		108
GOODTECH Co., Ltd.		1,753		985		11,600		214
KDNET Co., Ltd. (formerly, KTNET Co., Ltd.”)		1,460		723		11,061		129
WMC Co., Ltd.		1,181		690		10,541		227
MetroM Co., Ltd.		1,486		748		13,998		210
Goodmorning F Co., Ltd.		11,841		2,917		46,545		1,235
CU Industrial Development Co., Ltd. (formerly, “CURD”)		122,646		55,439		55,918		22,898
Exdell Corporation		2,111		851		10,781		115
Information Technology Service Bukbu Corporation		5,036		2,946		22,452		906
Information Technology Solution Nambu Corporation		4,343		2,227		25,790		954
Information Technology Solution Seobu Corporation		4,961		2,457		25,866		1,334
Information Technology Solution Busan Corporation		3,508		1,623		50,624		589
Information Technology Solution Jungbu Corporation		5,072		2,525		34,375		991
Information Technology Solution Honam Corporation		4,655		2,355		19,172		995
Information Technology Solution Daegu Corporation		2,622		1,124		15,489		350
MOS facilities Co., Ltd. (formerly, “Mostech Co., Ltd.”)		11,529		10,850		22,258		(1,547	)
MTC		33,715		5,877		24,361		2,275
Metropol Property LLC		2,422		538		1,515		877
D&G Star Co., Ltd.		507		418		488		(180	)
Oscar ent. Co., Ltd.		1,028		217		1,726		28
Paramount Music Co., Ltd.		851		228		915		(16	)
BKLCD Co., Ltd.		156,633		109,277		320,550		4,983

F-47

8.    PROPERTY AND EQUIPMENT

a. Changes in property and equipment for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	January 1, 2008		Acquisition cost (including capital expenditures)		Disposal			Depreciation			Impairment loss			Others (Note 1)			December 31, 2008
Land (Note 2)	(Won)	1,255,179	(Won)	225	(Won)	(6,175	)	(Won)	—		(Won)	—		(Won)	40,001		(Won)	1,289,230
Buildings (Note 2)		3,252,037		38,787		(26,905	)		(146,589	)		—			298,587			3,415,917
Structures		245,430		482		(8,188	)		(19,079	)		—			11,031			229,676
Machinery		9,501,609		67,543		(82,732	)		(2,778,108	)		(20,521	)		2,686,282			9,374,073
Vehicles		9,827		33,161		(670	)		(9,328	)		—			1,616			34,606
Others		614,976		134,534		(20,592	)		(311,187	)		(155	)		132,126			549,702
Construction- in-progress		408,944		3,087,737		(20	)		—			—			(3,201,234	)		295,427
Total	(Won)	15,288,002	(Won)	3,362,469	(Won)	(145,282	)	(Won)	(3,264,291	)	(Won)	(20,676	)	(Won)	(31,591	)	(Won)	15,188,631

	2009
	January 1, 2009		Acquisition cost (including capital expenditures)		Disposal			Depreciation			Impairment loss			Others (Note 1)			December 31, 2009
Land (Note 2)	(Won)	1,289,230	(Won)	48	(Won)	(12,021)		(Won)	—		(Won)	—		(Won)	189,534		(Won)	1,466,791
Buildings (Note 2)		3,415,917		841		(12,556	)		(150,103	)		—			52,159			3,306,258
Structures		229,676		2		(1,780	)		(16,512	)		—			(63,466	)		147,920
Machinery		9,374,073		34,937		(102,848	)		(2,511,196	)		(229	)		1,971,999			8,766,736
Vehicles		34,606		727		(143	)		(8,936	)		—			4,815			31,069
Others		549,702		144,991		(59,409	)		(248,701	)		(134	)		78,519			464,968
Construction- in-progress		295,427		2,592,880		(348	)		—			(873	)		(2,296,268	)		590,818
Total	(Won)	15,188,631	(Won)	2,774,426	(Won)	(189,105	)	(Won)	(2,935,448	)	(Won)	(1,236	)	(Won)	(62,708	)	(Won)	14,774,560

(Note 1) Others mainly consist of the transfers from construction-in-progress to machinery, increase in contribution for construction, increase due to changes in consolidated entities and reclassifications.

(Note 2) Certain portion of lands and buildings were pledged as collateral relating to short-term and long-term borrowings and certain lease contracts. The maximum pledged amount as of December 31, 2009 was (Won)73,392 million.

9.    CONTRIBUTION FOR CONSTRUCTION

Changes in contribution for construction primarily consists of government subsidies which was used in the acquisition of property and equipment for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	January 1, 2008		Increase		Decrease			Transfer			December 31, 2008
Buildings	(Won)	2,306	(Won)	—	(Won)	(221	)	(Won)	103		(Won)	2,188
Structures		1,517		—		(175	)		165			1,507
Machinery		111,311		—		(45,196	)		53,196			119,311
Others		1,537		—		(1,370	)		1,619			1,786
Construction-in-progress		88,530		74,228		—			(55,083	)		107,675
Total	(Won)	205,201	(Won)	74,228	(Won)	(46,962	)	(Won)	—		(Won)	232,467

F-48

	2009
	January 1, 2009		Increase		Decrease			Transfer			December 31, 2009
Buildings	(Won)	2,188	(Won)	—	(Won)	(233	)	(Won)	712		(Won)	2,667
Structures		1,507		—		(185	)		5			1,327
Machinery		119,311		—		(50,238	)		42,307			111,380
Others		1,786		—		(1,311	)		1,761			2,236
Construction-in-progress		107,675		16,440		(18,707	)		(44,785	)		60,623
Total	(Won)	232,467	(Won)	16,440	(Won)	(70,674	)	(Won)	—		(Won)	178,233

10.    INTANGIBLE ASSETS

a. Changes in intangible assets for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	January 1, 2008		Increase		Reversal (Amortization)			Impairment loss			Others			December 31, 2008
Goodwill	(Won)	371,500	(Won)	—	(Won)	(145,154	)	(Won)	(16,078	)	(Won)	18,126		(Won)	228,394
Negative goodwill		—		—		65			—			(65	)		—
Frequency usage rights		926,781		1,005		(115,649	)		—			—			812,137
Development costs		208,160		100,118		(114,345	)		—			(140	)		193,793
Industrial rights		9,356		2,324		(1,825	)		—			348			10,203
Software		104,279		37,298		(36,436	)		(322	)		1,328			106,147
Others		115,247		49,027		(25,135	)		(1,035	)		(14,540	)		123,564
Total	(Won)	1,735,323	(Won)	189,772	(Won)	(438,479	)	(Won)	(17,435	)	(Won)	5,057		(Won)	1,474,238

	2009
	January 1, 2009		Increase		Reversal (Amortization)			Impairment loss			Others			December 31, 2009
Goodwill	(Won)	228,394	(Won)	—	(Won)	(137,487	)	(Won)	(1,840	)	(Won)	(3,752	)	(Won)	85,315
Frequency usage rights		812,137		—		(115,649	)		—			—			696,488
Development costs		193,793		140,208		(102,366	)		(714	)		(3,327	)		227,594
Industrial rights		10,203		1,785		(1,865	)		—			348			10,471
Software		106,147		60,401		(45,594	)		(1,261	)		45,877			165,570
Others		123,564		12,721		(23,057	)		(3,927	)		(15,239	)		94,062
Total	(Won)	1,474,238	(Won)	215,115	(Won)	(426,018	)	(Won)	(7,742	)	(Won)	23,907		(Won)	1,279,500

The Company’s research and ordinary development expenses amounted to (Won)283,147 million and (Won)263,213 million for the years ended December 31, 2008 and 2009, respectively.

b. Details of goodwill and negative goodwill as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	January 1, 2008		Increase			Reversal (Amortization)			Impairment loss			December 31, 2008
KTF	(Won)	325,284	(Won)	—		(Won)	(130,114	)	(Won)	—		(Won)	195,170
Sidus FNH		11,623		—			(3,874	)		(5,425	)		2,324
Oilve Nine		14,204		—			(3,551	)		(10,653	)		—
KT FDS		4,906		—			(1,154	)		—			3,752
KT Music (formerly, “KTF Music”)		11,206		—			(2,241	)		—			8,965
East Telecom		4,277		1,508			(1,157	)		—			4,628
Nasmedia		—		14,436			(2,654	)		—			11,782
Sofnics		—		(65	)		65			—			—
JB Edu		—		2,182			(409	)		—			1,773
Total	(Won)	371,500	(Won)	18,061		(Won)	(145,089	)	(Won)	(16,078	)	(Won)	228,394

F-49

	2009
	January 1, 2009		Increase		Reversal (Amortization)			Impairment loss			Others (Note)			December 31, 2009
KTF	(Won)	195,170	(Won)	—	(Won)	(130,113	)	(Won)	—		(Won)	—		(Won)	65,057
Sidus FNH		2,324		—		(484	)		(1,840	)		—			—
KT FDS		3,752		—		—			—			(3,752	)		—
KT Music (formerly, “KTF Music”)		8,965		—		(2,241	)		—			—			6,724
East Telecom		4,628		—		(1,157	)		—			—			3,471
Nasmedia		11,782		—		(2,946	)		—			—			8,836
JB Edu		1,773		—		(546	)		—			—			1,227
Total	(Won)	228,394	(Won)	—	(Won)	(137,487	)	(Won)	(1,840)		(Won)	(3,752)		(Won)	85,315

(Note) Others are due to changes in consolidated entities.

11.    PRESENT VALUE OF ASSETS AND LIABILITIES

Assets and liabilities measured at present value as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
Accounts	Discount rate (%)	Collection period	Nominal value		Present value		Discount
Accounts receivable–trade	5.23~7.90	2009	(Won)	553,806	(Won)	537,973	(Won)	15,833
Accounts receivable–other	5.23~8.85	2009		32,831		31,204		1,627
Long-term accounts receivable–trade	5.23~7.90	2010~2025		335,044		287,706		47,338
Long-term accounts receivable–other	5.23~8.85	2010~2011		17,144		16,466		678
Accounts payable–trade	5.91~10.36	2009		15,178		13,417		1,761
Accounts payable–other	5.23~5.83	2009		134,200		132,757		1,443
Long-term accounts payable–trade	5.91~10.36	2010~2018		23,583		16,856		6,727
Long-term accounts payable–other	6.78~9.93	2010~2011		323,292		300,430		22,862
Long-term borrowings	5.23~8.85	2010~2015		3,564		2,693		871

	2009
Accounts	Discount rate (%)	Collection period	Nominal value		Present value		Discount
Accounts receivable–trade	5.23~8.00	2010	(Won)	827,933	(Won)	799,043	(Won)	28,890
Accounts receivable–other	4.95~8.85	2010		1,344		1,268		76
Long-term accounts receivable–trade	5.23~8.00	2011~2025		448,218		399,626		48,592
Long-term accounts receivable–other	4.95~8.85	2011		10,923		10,517		406
Accounts payable–trade	6.44~10.36	2010		20,193		18,282		1,911
Accounts payable–other	8.10~9.93	2010		152,775		152,058		717
Current portion of long-term borrowings	7.35~9.00	2011		524		506		18
Long-term accounts payable–trade	6.44~10.36	2011~2018		36,904		30,299		6,605
Long-term accounts payable–other	8.10~9.93	2011		170,237		163,001		7,236
Long-term borrowings	7.35~9.00	2011~2015		3,040		2,386		654

F-50

12.    LONG-TERM DEBT

a. Bonds

Bonds as of December 31, 2008 and 2009 are summarized as follows (in millions of Korean won and thousands of foreign currencies):

	2008
Company	Type	Issue date	Amount	Maturity	Repayment method	Interest rate per annum
KT	MTNP notes (Note 1)	6/24/2004	(Won)754,500 (USD 600,000)	6/24/2014	Payable in full at maturity	5.88	%
	MTNP notes (Note 1)	9/7/2004	(Won)125,750 (USD 100,000)	9/7/2034	Payable in full at maturity	6.50	%
	MTNP notes (Note 1)	7/15/2005	(Won)503,000 (USD 400,000)	7/15/2015	Payable in full at maturity	4.88	%
	MTNP notes (Note 1)	5/3/2006	(Won)251,500 (USD 200,000)	5/3/2016	Payable in full at maturity	5.88	%
	Euro bonds	4/11/2007	(Won)251,500 (USD 200,000)	4/11/2012	Payable in full at maturity	5.13	%
	FR notes	9/11/2008	(Won)251,500 (USD 200,000)	9/11/2013	Payable in full at maturity	4.32	%
	The 132nd public bond	2/9/2001	(Won)70,000	2/9/2011	Payable in full at maturity	7.68	%
	The 154th public bond	7/31/2002	220,000	7/31/2009	Payable in full at maturity	6.70	%
	The 156th public bond	9/30/2002	180,000	9/30/2009	Payable in full at maturity	6.35	%
	The 159th public bond	10/27/2003	300,000	10/27/2013	Payable in full at maturity	5.39	%
	The 160th public bond	11/24/2003	200,000	11/24/2010	Payable in full at maturity	5.45	%
	The 161st public bond	12/23/2003	230,000	12/23/2010	Payable in full at maturity	5.61	%
	The 162nd public bond	2/27/2004	320,000	2/27/2011	Payable in full at maturity	5.52	%
	The 163rd public bond	3/30/2004	170,000	3/30/2014	Payable in full at maturity	5.51	%
	The 164th public bond	6/21/2004	260,000	6/21/2011	Payable in full at maturity	5.22	%
	The 165-1st public bond	8/26/2004	130,000	8/26/2011	Payable in full at maturity	4.22	%
	The 165-2nd public bond	8/26/2004	140,000	8/26/2014	Payable in full at maturity	4.44	%
	The 166-1st public bond	3/21/2005	220,000	3/21/2010	Payable in full at maturity	4.37	%
	The 166-2nd public bond	3/21/2005	100,000	3/21/2012	Payable in full at maturity	4.57	%
	The 167-1st public bond	4/20/2005	100,000	4/20/2012	Payable in full at maturity	4.59	%
	The 167-2nd public bond	4/20/2005	100,000	4/20/2015	Payable in full at maturity	4.84	%
	The 168-1st public bond	6/21/2005	240,000	6/21/2012	Payable in full at maturity	4.43	%
	The 168-2nd public bond	6/21/2005	90,000	6/21/2015	Payable in full at maturity	4.66	%
	The 169th public bond	4/3/2007	140,000	4/3/2012	Payable in full at maturity	5.01	%
	The 170th public bond	1/11/2008	(Won)174,236 (JPY 12,500,000)	1/11/2011	Payable in full at maturity	1.45	%
	The 171st public bond	2/28/2008	100,000	2/28/2013	Payable in full at maturity	5.41	%
	The 172-1st public bond	3/31/2008	(Won)62,875 (USD 50,000)	3/31/2011	Payable in full at maturity	4.20	%
	The 172-2nd public bond	3/31/2008	(Won)138,325 (USD 110,000)	3/31/2012	Payable in full at maturity	4.30	%
	The 173-1st public bond	8/6/2008	(Won)100,000	8/6/2013	Payable in full at maturity	6.49	%
	The 173-2nd public bond	8/6/2008	100,000	8/6/2018	Payable in full at maturity	6.62	%
	The 174-1st public bond	12/19/2008	100,000	12/19/2010	Payable in full at maturity	5.34	%
	The 174-2nd public bond	12/19/2008	130,000	12/19/2011	Payable in full at maturity	5.56	%
KTP	The 4th private bond	5/3/2006	1,667	3/3/2009	Payable in installments	6.66	%
KTN	Public bond	4/17/2007	10,000	4/17/2010	Payable in full at maturity	5.29	%
	Public bond	7/24/2008	5,000	7/24/2011	Payable in full at maturity	6.82	%

F-51

	2008
Company	Type	Issue date	Amount		Maturity	Repayment method	Interest rate per annum
KTF	The 44th public bond	2/19/2004	360,000		2/19/2009	Payable in full at maturity	5.66%
	The 47-1st public bond	7/12/2004	230,000		7/13/2009	Payable in full at maturity	4.95%
	The 47-2nd public bond	7/12/2004	70,000		7/12/2011	Payable in full at maturity	5.32%
	The 48th public bond	2/15/2005	200,000		2/15/2010	Payable in full at maturity	5.31%
	The 49th public bond	2/25/2008	(Won)220,063 (USD 175,000	)	2/25/2011	Payable in full at maturity	3.66%
	The 50th public bond	4/28/2008	(Won)97,572 (JPY 7,000,000	)	4/28/2011	Payable in full at maturity	2.48%
	The 51-1st public bond	6/20/2008	(Won)119,463 (USD 95,000	)	6/20/2011	Payable in full at maturity	3.13%
	The 51-2nd public bond	6/20/2008	(Won)70,000		6/20/2013	Payable in full at maturity	6.41%
	The 52-1st public bond	8/4/2008	100,000		8/4/2011	Payable in full at maturity	6.20%
	The 52-2nd public bond	8/4/2008	100,000		8/4/2013	Payable in full at maturity	6.64%
	The 53-1st public bond	12/1/2008	20,000		12/1/2010	Payable in full at maturity	8.23%
	The 53-2nd public bond	12/1/2008	180,000		12/1/2011	Payable in full at maturity	8.36%
KTR	Public bond (the 19-2nd)	5/10/2005	10,000		5/10/2010	Payable in full at maturity	4.69%
	The 10th public bond	6/18/2007	40,000		6/18/2010	Payable in full at maturity	5.70%
	The 11th private bond	12/6/2007	20,000		12/6/2010	Payable in full at maturity	6.85%
	The 12th public bond	5/23/2008	20,000		5/23/2011	Payable in full at maturity	6.39%
	The 13-1st public bond	10/2/2008	20,000		10/2/2009	Payable in full at maturity	8.05%
	The 13-2nd public bond	10/2/2008	10,000		4/2/2010	Payable in full at maturity	8.30%
KT Capital	The 1st private bond	3/16/2007	30,000		3/16/2010	Payable in full at maturity	5.80%
	The 2nd private bond	4/16/2007	20,000		4/16/2010	Payable in full at maturity	5.94%
	The 4th public bond	5/30/2007	40,000		5/30/2010	Payable in full at maturity	5.70%
	The 5th private bond	6/29/2007	20,000		6/29/2010	Payable in full at maturity	5.67%
	The 6-1st public bond	8/3/2007	20,000		8/3/2009	Payable in full at maturity	5.64%
	The 6-2nd public bond	8/3/2007	30,000		8/3/2010	Payable in full at maturity	5.72%
	The 7-1st public bond	8/31/2007	30,000		8/31/2009	Payable in full at maturity	5.99%
	The 7-2nd public bond	8/31/2007	20,000		8/31/2010	Payable in full at maturity	6.05%
	The 8th private bond	9/28/2007	30,000		9/28/2010	Payable in full at maturity	6.26%
	The 9-1st public bond	10/18/2007	30,000		10/18/2009	Payable in full at maturity	6.37%
	The 9-2nd public bond	10/18/2007	20,000		10/18/2010	Payable in full at maturity	6.44%
	The 11th public bond	12/27/2007	20,000		12/27/2010	Payable in full at maturity	CD(91D)+ 1.39%
	The 12-1st public bond	1/23/2008	30,000		1/23/2009	Payable in full at maturity	7.50%
	The 12-2nd public bond	1/23/2008	30,000		7/23/2009	Payable in full at maturity	7.60%
	The 13-1st public bond	2/21/2008	30,000		2/21/2010	Payable in full at maturity	6.33%
	The 13-2nd public bond	2/21/2008	30,000		2/21/2011	Payable in full at maturity	6.48%
	The 14-1st public bond	3/28/2008	10,000		3/28/2010	Payable in full at maturity	6.37%
	The 14-2nd public bond	3/28/2008	10,000		3/28/2011	Payable in full at maturity	6.47%
	The 15th private bond	4/21/2008	20,000		4/21/2010	Payable in full at maturity	MOR(3M)+ 1.28%
	The 16-1st public bond	4/30/2008	60,000		1/30/2010	Payable in full at maturity	6.33%
	The 16-2nd public bond	4/30/2008	10,000		4/30/2011	Payable in full at maturity	6.46%
	The 17-1st public bond	5/30/2008	30,000		11/30/2009	Payable in full at maturity	6.71%
	The 17-2nd public bond	5/30/2008	20,000		11/30/2009	Payable in full at maturity	6.66%
	The 17-3rd public bond	5/30/2008	50,000		5/30/2013	Payable in full at maturity	7.14%
	The 18-1st public bond	6/23/2008	30,000		12/23/2009	Payable in full at maturity	7.00%
	The 18-2nd public bond	6/23/2008	40,000		6/23/2010	Payable in full at maturity	7.12%
	The 18-3rd public bond	6/23/2008	20,000		6/23/2011	Payable in full at maturity	7.22%
	The 18-4th public bond	6/23/2008	10,000		6/23/2013	Payable in full at maturity	7.55%
KT Capital	The 19-1st public bond	9/11/2008	40,000		9/11/2009	Payable in full at maturity	7.68%
	The 19-2nd public bond	9/11/2008	10,000		3/11/2010	Payable in full at maturity	7.80%
	The 19-3rd public bond	9/11/2008	20,000		9/11/2010	Payable in full at maturity	7.93%
	The 19-4th public bond	9/11/2008	10,000		9/11/2010	Payable in full at maturity	CD(91D)+ 2.10%
	The 20th public bond	10/27/2008	10,000		10/27/2009	Payable in full at maturity	8.98%
	The 21st public bond	11/26/2008	30,000		11/26/2009	Payable in full at maturity	9.10%
	Total		9,016,951
Less current portion			(1,311,667	)
Long-term portion			7,705,284
Discount on bonds			(42,621	)
	Net		(Won)7,662,663

F-52

	2009
Company	Type	Issue date	Amount		Maturity	Repayment method	Interest rate per annum
KT	MTNP notes (Note 1)	6/24/2004	(Won)700,560		6/24/2014	Payable in full at maturity	5.88%
			(USD 600,000	)
	MTNP notes (Note 1)	9/7/2004	(Won)116,760		9/7/2034	Payable in full at maturity	6.50%
			(USD 100,000	)
	MTNP notes (Note 1)	7/15/2005	(Won)467,040		7/15/2015	Payable in full at maturity	4.88%
			(USD 400,000	)
	MTNP notes (Note 1)	5/3/2006	(Won)233,520		5/3/2016	Payable in full at maturity	5.88%
			(USD 200,000	)
	Euro bonds	4/11/2007	(Won)233,520		4/11/2012	Payable in full at maturity	5.13%
			(USD 200,000	)
	FR notes (Note 2)	9/11/2008	(Won)233,520 (USD 200,000)		9/11/2013	Payable in full at maturity	LIBOR(3M) +1.5%
	The 132nd public bond	2/9/2001	70,000		2/9/2011	Payable in full at maturity	7.68%
	The 159th public bond	10/27/2003	300,000		10/27/2013	Payable in full at maturity	5.39%
	The 160th public bond	11/24/2003	200,000		11/24/2010	Payable in full at maturity	5.45%
	The 161st public bond	12/23/2003	230,000		12/23/2010	Payable in full at maturity	5.61%
	The 162nd public bond	2/27/2004	320,000		2/27/2011	Payable in full at maturity	5.52%
	The 163rd public bond	3/30/2004	170,000		3/30/2014	Payable in full at maturity	5.51%
	The 164th public bond	6/21/2004	260,000		6/21/2011	Payable in full at maturity	5.22%
	The 165-1st public bond	8/26/2004	130,000		8/26/2011	Payable in full at maturity	4.22%
	The 165-2nd public bond	8/26/2004	140,000		8/26/2014	Payable in full at maturity	4.44%
	The 166-1st public bond	3/21/2005	220,000		3/21/2010	Payable in full at maturity	4.37%
	The 166-2nd public bond	3/21/2005	100,000		3/21/2012	Payable in full at maturity	4.57%
	The 167-1st public bond	4/20/2005	100,000		4/20/2012	Payable in full at maturity	4.59%
	The 167-2nd public bond	4/20/2005	100,000		4/20/2015	Payable in full at maturity	4.84%
	The 168-1st public bond	6/21/2005	240,000		6/21/2012	Payable in full at maturity	4.43%
	The 168-2nd public bond	6/21/2005	90,000		6/21/2015	Payable in full at maturity	4.66%
	The 169th public bond	4/3/2007	140,000		4/3/2012	Payable in full at maturity	5.01%
	The 170th public bond (Note 2)	1/11/2008	(Won)157,853 (JPY12,500,000)		1/11/2011	Payable in full at maturity	TIBOR(3M) +0.6%
	The 171st public bond	2/28/2008	100,000		2/28/2013	Payable in full at maturity	5.41%
	The 172-1st public bond (Note 2)	3/31/2008	(Won)58,380 (USD 50,000)		3/31/2011	Payable in full at maturity	LIBOR(3M) +1.5%
	The 172-2nd public bond (Note 2)	3/31/2008	(Won)128,436 (USD 110,000)		3/31/2012	Payable in full at maturity	LIBOR(3M) +1.6%
	The 173-1st public bond	8/6/2008	(Won)100,000		8/6/2013	Payable in full at maturity	6.49%
	The 173-2nd public bond	8/6/2008	100,000		8/6/2018	Payable in full at maturity	6.62%
	The 174-1st public bond	12/19/2008	100,000		12/19/2010	Payable in full at maturity	5.34%
	The 174-2nd public bond	12/19/2008	130,000		12/19/2011	Payable in full at maturity	5.56%
	The 175-1st public bond	2/27/2009	40,000		2/27/2012	Payable in full at maturity	4.80%
	The 175-2nd public bond	2/27/2009	360,000		2/27/2014	Payable in full at maturity	5.47%
	The 176-1st public bond	5/28/2009	100,000		5/28/2012	Payable in full at maturity	4.37%
	The 176-2nd public bond	5/28/2009	170,000		5/28/2014	Payable in full at maturity	5.06%
	The 176-3rd public bond	5/28/2009	260,000		5/28/2016	Payable in full at maturity	5.24%
	The 47-2nd public bond	7/12/2004	70,000		7/12/2011	Payable in full at maturity	5.32%
	The 48th public bond	2/15/2005	200,000		2/15/2010	Payable in full at maturity	5.31%
	The 49th public bond (Note 2)	2/25/2008	(Won)204,330 (USD 175,000)		2/25/2011	Payable in full at maturity	LIBOR(3M) +1.5%
	The 50th public bond (Note 2)	4/28/2008	(Won)88,397 (JPY 7,000,000)		4/28/2011	Payable in full at maturity	TIBOR(3M) +1.6%
	The 51-1st public bond (Note 2)	6/20/2008	(Won)110,922 (USD 95,000)		6/20/2011	Payable in full at maturity	LIBOR(3M) +1.6%
	The 51-2nd public bond	6/20/2008	(Won)70,000		6/20/2013	Payable in full at maturity	6.41%
	The 52-1st public bond	8/4/2008	100,000		8/4/2011	Payable in full at maturity	6.20%
	The 52-2nd public bond	8/4/2008	100,000		8/4/2013	Payable in full at maturity	6.64%
	The 53-1st public bond	12/1/2008	20,000		12/1/2010	Payable in full at maturity	8.23%
	The 53-2nd public bond	12/1/2008	180,023		12/1/2011	Payable in full at maturity	8.36%

F-53

	2009
Company	Type	Issue date	Amount	Maturity	Repayment method	Interest rate per annum
KTN	Public bond	4/17/2007	10,000	4/17/2010	Payable in full at maturity	5.29%
	Public bond	7/24/2008	5,000	7/24/2011	Payable in full at maturity	6.82%
KTR	The 19-2nd public bond	5/10/2005	10,000	5/10/2010	Payable in full at maturity	4.69%
	The 10th public bond	6/18/2007	40,000	6/18/2010	Payable in full at maturity	5.70%
	The 11th private bond	12/6/2007	20,000	12/6/2010	Payable in full at maturity	6.85%
	The 12th private bond	5/23/2008	20,000	5/23/2011	Payable in full at maturity	6.39%
	The 13-2nd private bond	10/2/2008	10,000	4/2/2010	Payable in full at maturity	8.30%
	The 14th private bond	1/8/2008	30,000	1/8/2012	Payable in full at maturity	8.90%
	The 15th private bond	10/26/2008	30,000	10/26/2011	Payable in full at maturity	5.70%
	The 16th private bond	11/27/2009	30,000	11/27/2012	Payable in full at maturity	5.85%
KT Capital	The 1st private bond	3/16/2007	30,000	3/16/2010	Payable in full at maturity	5.42%
	The 2nd private bond	4/16/2007	20,000	4/16/2010	Payable in full at maturity	5.56%
	The 4th public bond	5/30/2007	40,000	5/30/2010	Payable in full at maturity	5.70%
	The 5th private bond	6/29/2007	20,000	6/29/2010	Payable in full at maturity	5.67%
	The 6-2nd public bond	8/3/2007	30,000	8/3/2010	Payable in full at maturity	5.72%
	The 7-2nd public bond	8/31/2007	20,000	8/31/2010	Payable in full at maturity	6.05%
	The 8th private bond	9/28/2007	30,000	9/28/2010	Payable in full at maturity	6.26%
	The 9-2nd public bond	10/18/2007	20,000	10/18/2010	Payable in full at maturity	6.44%
	The 11th public bond (Note 2)	12/27/2007	20,000	12/27/2010	Payable in full at maturity	CD(91D)+ 1.39%
	The 13-1st public bond	2/21/2008	30,000	2/21/2010	Payable in full at maturity	6.33%
	The 13-2nd public bond	2/21/2008	30,000	2/21/2011	Payable in full at maturity	6.48%
	The 14-1st public bond	3/28/2008	10,000	3/28/2010	Payable in full at maturity	6.37%
	The 14-2nd public bond	3/28/2008	10,000	3/28/2011	Payable in full at maturity	6.47%
	The 15th private bond (Note 2)	4/21/2008	20,000	4/21/2010	Payable in full at maturity	MOR(3M)+ 1.28%
	The 16-1st public bond	4/30/2008	60,000	1/30/2010	Payable in full at maturity	6.33%
	The 16-2nd public bond	4/30/2008	10,000	4/30/2011	Payable in full at maturity	6.46%
	The 17-3rd public bond	5/30/2008	50,000	5/30/2013	Payable in full at maturity	7.14%
	The 18-2nd public bond	6/23/2008	40,000	6/23/2010	Payable in full at maturity	7.12%
	The 18-3rd public bond	6/23/2008	20,000	6/23/2011	Payable in full at maturity	7.22%
	The 18-4th public bond	6/23/2008	10,000	6/23/2013	Payable in full at maturity	7.55%
	The 19-2nd public bond	9/11/2008	10,000	3/11/2010	Payable in full at maturity	7.80%
	The 19-3rd public bond	9/11/2008	20,000	9/11/2010	Payable in full at maturity	7.93%
	The 19-4th public bond (Note 2)	9/11/2008	10,000	9/11/2010	Payable in full at maturity	CD(91D)+ 2.10%
	The 22-1st public bond	1/23/2009	10,000	1/23/2010	Payable in full at maturity	8.70%
	The 22-2nd public bond	1/23/2009	35,000	1/23/2011	Payable in full at maturity	8.75%
	The 22-3rd public bond	1/23/2009	25,000	1/23/2012	Payable in full at maturity	8.95%
	The 23th public bond	5/29/2009	20,000	5/29/2011	Payable in full at maturity	5.35%
	The 24th public bond	6/29/2009	30,000	6/29/2012	Payable in full at maturity	6.28%
	The 25-1st public bond	7/30/2009	20,000	7/30/2011	Payable in full at maturity	6.20%
	The 25-2nd public bond	7/30/2009	25,000	7/30/2012	Payable in full at maturity	5.75%
	The 26th public bond	8/27/2009	50,000	8/27/2012	Payable in full at maturity	6.33%
	The 27th public bond	9/4/2009	10,000	9/4/2012	Payable in full at maturity	6.33%
	The 28-1st public bond	11/12/2009	20,000	11/12/2011	Payable in full at maturity	5.70%
	The 28-2nd public bond	11/12/2009	30,000	11/12/2012	Payable in full at maturity	6.08%
	The 29-1st public bond	11/30/2009	10,000	11/30/2011	Payable in full at maturity	5.60%
	The 29-2nd public bond	11/30/2009	40,000	11/30/2012	Payable in full at maturity	6.00%
	The 30-1st public bond	12/23/2009	10,000	6/23/2011	Payable in full at maturity	5.30%
	The 30-2nd public bond	12/23/2009	10,000	12/23/2011	Payable in full at maturity	5.60%
	The 30-3rd public bond	12/23/2009	10,000	12/23/2012	Payable in full at maturity	5.95%
	The 31st public bond	12/31/2009	10,000	12/31/2012	Payable in full at maturity	5.98%

F-54

	2009
Company	Type	Issue date	Amount			Maturity	Repayment method	Interest rate per annum
KT M&S	The 1st private bond (Note 2)	3/24/2009		40,000		3/24/2010	Payable in full at maturity	BD+3.95	%
	Total		(Won)	8,913,261
Less current portion				(1,540,000	)
Long-term portion				7,373,261
Discount on bonds				(35,862	)
	Net		(Won)	7,337,399

(Note 1) As of December 31, 2009, the Company has issued notes in the amount of USD 1,300 million with fixed interest rates under Medium Term Note Program (“MTNP”) registered in the Singapore Stock Exchange, which allows issuance of notes up to USD 2,000 million and the unused balance under the program is USD 700 million.

(Note 2) LIBOR (3M) is approximately 0.25%, CD(91D) is approximately 2.86%, MOR(3M) is approximately 4.08%, BD is approximately 3.49% and TIBOR (3M) is approximately 0.46% as of December 31, 2009.

b. Long-term Borrowings in Korean Won

Long-term borrowings in Korean won as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008					2009
	Maturity	Interest rate per annum	Amount			Maturity	Interest rate per annum	Amount
Informatization Promotion Fund (Note 1 and 2)	2009~2013	4.86~6.28%	(Won)	35,869		2010~2014	4.39~5.79%	(Won)	31,518
Inter-Korean Cooperation Fund (Note 1)	2026	2.00%		6,415		2026	2.00%		6,415
Facility and working capital loans	2009~2015	5.00~8.12%		79,611		2010~2015	4.90~7.35%		67,411
General purpose loans	2009~2011	5.74~7.01%		74,034		2010~2011	4.06~5.80%		65,815
Commercial papers	2011	6.55~6.71%		30,000		2011	6.25~6.71%		50,000
Total				225,929					221,159
Less Current portion				(78,245	)				(76,730	)
Long-term portion				147,684					144,429
Less present value discount				(871	)				(654	)
Net			(Won)	146,813				(Won)	143,775

(Note 1) Above Informatization Promotion Fund is repayable in installments for three years after two year grace period and Inter-Korean Cooperation Fund is repayable in installments for thirteen years after seven year grace period.

(Note 2) Certain portion of operating lease receivables of KT Rental (Won)(366 million) is provided as collateral for its long-term borrowings (Informatization Promotion Fund (Won)1,300 million).

F-55

c. Long-term Borrowings in Foreign Currency

Long-term borrowings in foreign currency as of December 31, 2008 and 2009 are as follows (in millions of Korean won and thousands of foreign currencies):

	2008
	Maturity	Interest rate per annum (%)	Amount
Company			Foreign currencies		Korean won equivalent
KTSC	2013	LIBOR+1.70	USD 28,800		(Won)	36,216
KTF	2010~2011	4.87~5.77	USD 100,000			125,750
KT Capital	2010	LIBOR+0.99	USD 19,000			23,893
NTC	2010	LIBOR+3.50	RUB 29,380			1,260
		14.00	RUB 2,877			123
East Telecom	2011	16.50	SUM 890,000			810
Total			USD147,800
			RUB 32,257
			SUM 890,000			188,052
Less current portion			(USD 40,400	)		(50,803	)
Net			USD 107,400
			RUB 32,257
			SUM 890,000		(Won)	137,249

	2009
	Maturity	Interest rate per annum (%)	Amount
Company			Foreign currencies		Korean won equivalent
KT	2010~2011	LIBOR(3M)+2.0	USD 70,000		(Won)	81,732
KTSC	2013	LIBOR+1.7	USD 22,400			26,154
KT Capital	2010	LIBOR(3M)+0.99	USD 15,000			17,514
NTC	2010	LIBOR+3.50	RUB 29,380			1,131
East Telecom	2011~2016	16.50	SUM 2,047,159			1,577
			USD 107,400
Total			RUB 29,380
			SUM 2,047,159			128,108
			(USD 61,400	)
Less current portion			(RUB 29,380	)
			(SUM 1,023,580	)		(73,610	)
Net			USD 46,000
			SUM 1,023,579		(Won)	54,498

d. Repayment Schedule

Repayment schedule of the Company’s long-term debt as of December 31, 2009 is as follows (in millions of Korean won):

Year ending December 31,	Bonds						Borrowings in local currency		Borrowings in foreign currency		Total
	In local currency		In foreign currency		Sub total
2010	(Won)	1,540,000	(Won)	—	(Won)	1,540,000	(Won)	76,730	(Won)	73,610	(Won)	1,690,340
2011		1,510,023		619,882		2,129,905		122,377		43,289		2,295,571
2012		1,010,000		361,956		1,371,956		8,255		7,473		1,387,684
2013		730,000		233,520		963,520		4,537		3,736		971,793
2014		840,000		700,560		1,540,560		2,196		—		1,542,756
Thereafter		550,000		817,320		1,367,320		7,064		—		1,374,384
Total	(Won)	6,180,023	(Won)	2,733,238	(Won)	8,913,261	(Won)	221,159	(Won)	128,108	(Won)	9,262,528

F-56

13.    PROVISIONS

Changes in provisions for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	January 1, 2008		Increase		Decrease				Other, net			December 31, 2008
					Reversal		Use
Current portion:
Litigation (Note 1)	(Won)	32,849	(Won)	18,748	((Won)1)		((Won)32,024)		(Won)	—		(Won)	19,572
KT members points (Note 2)		1,751		257	(1,045	)	(282	)		—			681
KT points (Note 4)		—		—	—		(5,414	)		10,188			4,774
Call bonus points (Note 5)		4,332		—	—		(4,493	)		5,665			5,504
Sales warranty (Note 3)		5,412		8,623	—		(8,736	)		—			5,299
Others		3,073		5,908	(7	)	(5,989	)		—			2,985
Sub total		47,417		33,536	(1,053	)	(56,938	)		15,853			38,815
Non-current portion:
KT points (Note 4)		20,087		—	(2,800	)	—			(10,188	)		7,099
Call bonus points (Note 5)		4,637		6,137	—		—			(5,665	)		5,109
Asset retirement obligation (Note 6)		—		20,382	—		—			51,151			71,533
Others		696		925	(216	)	—			—			1,405
Sub total		25,420		27,444	(3,016	)	—			35,298			85,146
Total	(Won)	72,837	(Won)	60,980	((Won)4,069)		((Won)56,938)		(Won)	51,151		(Won)	123,961

	2009
	January 1, 2009		Increase		Decrease						Other, net			December 31, 2009
					Reversal			Use
Current portion:
Litigation (Note 1)	(Won)	19,572	(Won)	2,204	(Won)	—		(Won)	(4,766	)	(Won)	—		(Won)	17,010
KT members points (Note 2)		681		—		(25	)		(110	)		—			546
KT points (Note 4)		4,774		—		—			(5,825	)		4,642			3,591
Let’s 010 call bonus points (Note 5)		5,504		—		—			(3,232	)		4,999			7,271
Sales warranty (Note 3)		5,299		9,285		—			(8,339	)		—			6,245
Others		2,985		5,033		(719	)		(2,745	)		624			5,178
Sub total		38,815		16,522		(744	)		(25,017	)		10,265			39,841
Non-current portion:
KT points (Note 4)		7,099		—		—			—			(4,642	)		2,457
Let’s 010 call bonus points (Note 5)		5,109		7,935		—			(1,607	)		(4,999	)		6,438
Asset retirement obligation (Note 6)		71,533		13,997		(3,935	)		(6,188	)		17,804			93,211
Others		1,405		374		(309	)		—			—			1,470
Sub total		85,146		22,306		(4,244	)		(7,795	)		8,163			103,576
Total	(Won)	123,961	(Won)	38,828	(Won)	(4,988	)	(Won)	(32,812	)	(Won)	18,428		(Won)	143,417

(Note 1) The amount recognized as the litigation provision is the estimate of payments required to settle the obligation.

(Note 2) The Company recorded provisions for the KT members’ points, for VIP customers of the fixed-line or mobile telephone users who are entitled to receive certain goods and other benefits with (Won)25,000 per person.

(Note 3) KT Tech (formerly, “KTF Technologies Inc.”), a subsidiary, recorded sales warranty provisions based on the estimated warranty cost for the products sold. Sales warranty provisions are calculated in proportion to cost of goods sold based on the historical defect experiences.

(Note 4) The amount recognized as the call bonus points represents the estimate of payments for KT points which are provided to fixed-line customers based on the usage of the services. Once certain criteria are met, customers are entitled to receive certain goods and other benefits from the Company. Such provision is reviewed at each end of reporting period and adjusted to reflect the current best estimate when new estimates are necessary as a result of changes in circumstances, which were used as the bases for such estimates, or an acquisition of new information or additional experience on the usage rate, the expiration of points and others.

F-57

(Note 5) The Company recorded provision for the Call bonus points provided to its PCS subscribers who are entitled to receive certain goods and other benefits from the Company.

(Note 6) When the Company is responsible for restoration of leased facility after termination of the lease contract, the present value of expected future expenditure for the restoration is recorded as a liability.

14.    LEASE

a. Lessees

Property and equipment acquired through lease arrangements with GE Capital and others as of December 31, 2008 and 2009 are as follows:

1) Finance Lease

Property and equipment acquired through finance lease arrangements with GE Capital as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008			2009
Acquisition cost	(Won)	67,208		(Won)	35,199
Accumulated depreciation		(53,596	)		(30,379	)
Net balance	(Won)	13,612		(Won)	4,820
Depreciation	(Won)	8,852		(Won)	4,859

Annual future lease payments of such leases as of December 31, 2009 are as follows (in millions of Korean won):

Year ending December 31,	Lease payment
2010	(Won)	6,512
2011~2014		1,347
Total		7,859
Less amounts representing interest		(306	)
Principal amount		7,553
Less current portion		(6,224	)
Net	(Won)	1,329

2) Operating Lease

Annual future lease payments of operating lease arrangements with HP Financial Co., Ltd. and others as of December 31, 2009 are as follows (in millions of Korean won):

Year ending December 31,	Lease payment
2010	(Won)	6,319
2011~2014		2,921
Total	(Won)	9,240

F-58

b. Lessors

1) Finance Lease

The present values of minimum lease payments and gross investments in the leased assets provided by the Company as of December 31, 2009 are as follows (in millions of Korean won):

Year ending December 31,	Lease payment
2010	(Won)	226,214
2011~2014		358,980
Thereafter		7,701
Total		592,895
Less amounts representing interest		(71,294	)
Principal amount		521,601
Less current portion		(206,081	)
Net	(Won)	315,520

2) Operating Lease

Annual future lease receipts from operating lease arrangements to be recognized by the Company as of December 31, 2009 are as follows (in millions of Korean won):

Year ending December 31,	Lease payment
2010	(Won)	14,036
2011~2014		11,208
Total	(Won)	25,244

15.    REFUNDABLE DEPOSITS FOR TELEPHONE INSTALLATION

Through September 15, 1998, the Company received deposits for telephone installation in accordance with the Korea Public Telecommunication Business Law. Such deposits (which are reflected as a liability) are to be refunded without interest to the telephone subscribers upon termination of service.

Beginning on September 15, 1998, the Company allowed customers to choose between alternative plans for basic telephone service. Under such plans, customers were permitted the option to either place fully refundable deposits or pay a reduced non-refundable service initiation fee. Effective April 15, 2001, all new customers are required to pay a non-refundable service initiation fee.

F-59

16.    ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

Significant assets and liabilities denominated in foreign currencies (excluding those held by overseas subsidiaries) as of December 31, 2008 and 2009 are summarized as follows (in millions of Korean won and thousands of foreign currencies):

	2008			2009
	Foreign currencies	Korean won equivalent		Foreign currencies	Korean won equivalent
Assets:
Cash and cash equivalents	USD 26,124	(Won)	32,851	USD 24,013	(Won)	28,038
	JPY 20,278		282	JPY 702		9
	—		—	EUR 65		110
	—		—	GBP 10		19
Short-term investment assets	USD 15,327		19,273	USD 15,327		17,896
Accounts receivable—trade	USD 164,536		206,905	USD 150,281		175,468
	JPY 178,880		2,493	JPY 78,500		991
	SDR 17,623		34,301	SDR 15,225		27,767
	EUR 486		864	EUR 211		353
	—		—	AUD 13		14
Loans	USD 49,000		61,618	USD 35,769		41,764
Accounts receivable—other	USD 2,975		3,741	USD 438		512
	JPY 2,139		30	—		—
Guarantee deposits	USD 557		700	USD 557		650
Deposits provided	USD 10		12	—		—
	USD 258,529			USD 226,385
	JPY 201,297			JPY 79,202
	SDR 17,623			SDR 15,225
Total assets	EUR 486			EUR 276
	—			GBP 10
	—	(Won)	363,070	AUD 13	(Won)	293,591
Liabilities:
	USD 135,049	(Won)	169,824	USD 119,636	(Won)	139,687
	JPY 134,945		1,882	JPY 9,885		125
Accounts payable—trade	SDR 12,413		24,160	SDR 8,566		16,841
	EUR 468		831	EUR 103		172
	AUD 17		15	—		—
	USD 2,227		2,800	USD 125		146
Accounts payable—other	—		—	JPY 1,653		21
	GBP 1		2	GBP 51		96
	—		—	KWD 288		483
	EUR 25		44	—		—
	CNY 6		1	—		—
	HKD 17		3	—		—
	USD 2,601		3,271	USD 7,283		8,503
Short-term borrowings	JPY 58,587		817	JPY 38,645		488
Withholdings	USD 215		271	USD 728		850
Accrued expenses	USD 1,470		1,849	USD 350		409
	EUR 15		26	EUR 15		25
Current portion of bonds and long-term borrowings	USD 6,400		8,048	USD 61,400		71,691
Key money deposits	USD 14		18	USD 14		16
Bonds and long-term borrowings	USD 2,130,000		2,678,475	USD 2,130,000		2,486,988
	JPY 19,500,000		271,808	JPY 19,500,000		246,250
	USD 141,400		177,811	USD46,000		53,710
	USD 2,419,376			USD 2,365,536
	SDR 12,413			SDR 8,566
	EUR 508			EUR 118
	AUD 17			—
Total liabilities	JPY 19,693,532			JPY 19,550,183
	GBP 1			GBP 51
	—			KWD 288
	CNY 6			—
	HKD 17	(Won)	3,341,956	—	(Won)	3,026,501

F-60

17.    TRANSACTIONS AND BALANCES WITH RELATED PARTIES

KT’s significant account balances with related parties as of December 31, 2008 and 2009 are summarized as follows (in millions of Korean won):

Related party	Account	2008		2009
Subsidiary:
KTF	Receivables	(Won)	52,750	(Won)	—
	Payables		172,700		—
	Key money deposits received		21,392		—
KTH	Receivables		1,320		1,537
	Accrued expenses		12,046		22,191
KTN	Receivables		5,413		5,868
	Payables		42,912		47,380
KTL	Receivables		99		90
	Payables		24,188		18,094
KT Tech (formerly, “KTF Technologies Inc.”)	Receivables		2,496		1,590
	Payables		11,117		73,830
KTR	Receivables		60		17
	Payables		56,128		74,405
KT Capital	Receivables		1		5
	Payables		42,074		54,777
KTDS (formerly, “KT DataSystems Co., Ltd.”)	Receivables		5		6,326
	Payables		27,864		104,665
KT M&S (formerly, “KTF M&S Co., Ltd.”)	Receivables		—		36,974
	Payables		—		7,543
Others	Receivables		6,510		10,713
	Payables		25,080		50,453
Equity method investees:	Receivables		9,031		11,140
	Payables		100,824		89,290
Total	Receivables	(Won)	77,685	(Won)	74,260
	Payables	(Won)	536,325	(Won)	542,628

F-61

Significant transactions between KT and its related parties for the years ended December 31, 2007, 2008 and 2009 are summarized as follows (in millions of Korean won):

Related party	Transactions	Account	2007		2008		2009
Subsidiary:
KTF	Leased line charges and other	Operating revenue	(Won)	451,668	(Won)	443,880	(Won)	185,302
	Purchase of PCS networks and other	Operating expense		761,299		756,002		282,319
KTH	Leased line charges and other	Operating revenue		5,071		10,935		10,885
	Commission and other	Operating expense		46,510		45,396		50,806
KTN	Leased line charges and other	Operating revenue		38,663		38,970		34,412
	Cost of system integration (“SI”), network integration business and other	Operating expense		147,994		178,408		115,445
KTL	Leased line charges and other	Operating revenue		1,710		1,311		1,123
	Commissions and other	Operating expense		86,188		79,428		73,072
KT Tech (formerly, “KTF Technologies Inc.”)	Telecommunication revenue and other	Operating revenue		3,327		2,347		1,672
	Cost of goods sold and other	Operating expense		88,443		52,847		171,650
KTR	Telecommunication revenue and other	Operating revenue		2,600		2,232		423
	Commissions and other	Operating expense		42,991		44,917		42,778
KT Capital	Telecommunication revenue and other	Operating revenue		45		87		96
	Interest expense of lease and other	Operating expense		88		2,129		4,046
KTDS (formerly, “KT DataSystems Co., Ltd.”)	Telecommunication revenue and other	Operating revenue		—		3,106		7,978
	Commissions and other	Operating expense		—		55,101		249,914
KT M&S (formerly, “KTF M&S Co., Ltd.”)	Telecommunication revenue and other	Operating revenue		—		—		301,303
	Commissions and other	Operating expense		—		—		153,287
Other	Telecommunication revenue and other	Operating revenue		24,725		25,443		50,832
	Commissions and other	Operating expense		49,019		49,635		74,034
Equity method investees:	Telecommunication revenue and other	Operating revenue		121,340		118,269		122,036
	Commissions and other	Operating expense		550,007		585,555		668,979
Total		Revenues	(Won)	649,149	(Won)	646,580	(Won)	716,062
		Expenses	(Won)	1,772,539	(Won)	1,849,418	(Won)	1,886,330

Compensation to KT’s key management personnel for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007		2008		2009		Description
Benefits	(Won)	19,397	(Won)	20,203	(Won)	17,068	Salaries, bonuses and other allowances, retirement benefits, medical benefits and other
Share-based payments		1,047		1,420		1,052	Other share-based payments and others
Total	(Won)	20,444	(Won)	21,623	(Won)	18,120

KT considers its management of vice president or higher, who have the authority and responsibility for planning, operation and control and are in charge of business or division unit, and non-permanent directors as key management personnel.

F-62

Significant account balances amongst subsidiaries as of December 31, 2008 and 2009 are as follows (in millions of Korea won):

Creditor	Debtor	Account	2008		2009
KT Capital	KT M&S (formerly, “KTF M&S Co., Ltd.)	Long-term loans	(Won)	—	(Won)	20,000
KTR	KTP	Long-term receivable-trade and others		31,303		33,662
Other				126,024		67,864
Total			(Won)	157,327	(Won)	121,526

Significant transactions amongst subsidiaries for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korea won):

Seller	Purchaser	2007		2008		2009
KT Tech (formerly, “KTF Technologies Co., Ltd.)	KTF (Note 1)	(Won)	358,150	(Won)	304,361	(Won)	119,884
KTF (Note 1)	KT M&S (formerly, “KTF M&S Co., Ltd.)		137,602		398,556		172,304
Other			163,213		412,795		107,990
Total		(Won)	658,965	(Won)	1,115,712	(Won)	400,178

(Note 1) Transactions with KTF represent those before merger on June 1, 2009.

As of December 31, 2009, the Company has provided guarantees for related parties as follows (in millions of Korean won):

Guarantor	Guarantee	Description	Amount
KTN	KTR	Guarantee for loan	(Won)	10,000

18.    COMMON STOCK AND CAPITAL SURPLUS

As of December 31, 2009, the Company’s number of shares authorized are 1,000,000,000 shares with par value of (Won)5,000 per share.

As of December 31, 2008 and 2009, the number of shares issued by the Company are 273,535,700 and 261,111,808 shares, respectively, and the common stock amounted to (Won)1,560,998 million and (Won)1,564,499 million, respectively. As allowed by the Securities Exchange Law, the Company retired 38,663,959 and 51,787,959 treasury shares by charges against retained earnings through December 31, 2008 and 2009, respectively. Therefore, the common stock amount differs from the amount resulting from multiplying the number of shares issued by (Won)5,000 par value of common stock.

19.    RETAINED EARNINGS RESTRICTED IN USE

Retained earnings appropriated to the legal reserve cannot be used as cash dividends under the applicable laws and regulations. The Korean Commercial Code requires the Company to appropriate an amount equal to at least 10% of the cash dividend amount to a legal reserve at the end of the year for each accounting period until the reserve equals 50% of stated capital. The legal reserve may be used to reduce a deficit or may be transferred to capital.

In accordance with the relevant tax laws, the Company is allowed to appropriate a reserve for technology and human resource development to recognize certain tax deductible benefits through the early recognition of future expenditures for tax purposes. This reserve used for its original purpose and the remaining balance after use are restored to retained earnings and may be used for dividends in accordance with the relevant tax laws.

F-63

20.    COMPREHENSIVE INCOME

Comprehensive income for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

Description	2007			2008			2009
Net income	(Won)	1,170,978		(Won)	513,290		(Won)	609,695
Cumulative effect of changes in accounting policies		—			3,852			—
Other comprehensive income (loss):
Gain on translation of foreign operations		55			13,559			(8,642	)
Loss on translation of foreign operations (Tax effect: (Won)5,005 million for 2007, ((Won)3,632) million for 2008 and (Won)3,945 million for 2009)		22,136			11,779			(18,656	)
Unrealized gain on available-for-sale securities (Tax effect: (Won)1,189 million for 2007, (Won)2,988 million for 2008 and ((Won)1,793) million for 2009)		4,164			(8,939	)		(113	)
Unrealized loss on available-for-sale securities (Tax effect: (Won)1,872 million for 2008 and ((Won)1,858) million for 2009		—			(7,545	)		7,687
Unrealized gain on valuation of derivatives (Tax effect: ((Won)768) million for 2007, ((Won)2,288) million for 2008 and ((Won)400) million for 2009)		2,024			9,374			486
Unrealized loss on valuation of derivatives (Tax effect: (Won)4,989 million for 2008 and ((Won)1,003) million for 2009)		—			(18,370	)		(26,223	)
Increase in equity of associates (Tax effect: ((Won)2,789) million for 2007, (Won)3,779 million for 2008 and ((Won)240) million for 2009)		(714	)		9,954			(10,204	)
Decrease in equity of associates (Tax effect: ((Won)4,942) million for 2007, ((Won)6,517) million for 2008 and (Won)215 million for 2009)		3,762			961			(10,138	)
Comprehensive income	(Won)	1,202,405		(Won)	527,915		(Won)	543,892
Attributable to: Equity holders of the parent	(Won)	1,082,829		(Won)	462,258		(Won)	439,425
Noncontrolling interest		119,576			65,657			104,467
	(Won)	1,202,405		(Won)	527,915		(Won)	543,892

F-64

21.    SHARE-BASED PAYMENT

The Company granted stock options to its executive officers and directors as of December 31, 2009 in accordance with the stock option plan approved by its board of directors of which details are as follows:

	1st grant		2nd grant		3rd grant		4th grant		5th grant		KTF-2nd(Note)		KTF-3rd(Note)		KTF-4th(Note)
Grant date		Dec. 26, 2002		Sep. 16, 2003		Dec. 12, 2003		Feb. 4, 2005		Apr. 28, 2005		Mar. 25, 2002		Sep. 8, 2003		Mar. 4, 2005
Grantee		Executives		Outside directors		Executives		Executives		Executives		Executives		CEO, Executives and Outside directors		Executives and Outside directors
Number of basic allocated shares upon grant		460,000		36,400		80,000		50,800		45,700		32,222		452,757		92,637
Number of additional shares related to business performance upon grant		220,000		—		40,000		20,000		20,000		—		—		—
Number of shares expected to be exercised upon grant		562,958		36,400		106,141		60,792		55,692		32,222		452,757		92,637
Number of settled or forfeited shares		191,326		33,400		106,141		10,800		65,700		11,652		232,848		13,437
Number of expired shares as of December 31, 2009		371,632		—		—		—		—		—		—		—
Number of allocated shares as of December 31, 2009		—		3,000		—		40,000		—		20,570		219,909		79,200
Number of additional shares related to business performance as of December 31, 2009		—		—		—		3,153		—		—		—		—
Number of shares expected to be exercised		—		3,000		—		43,153		—		20,570		219,909		79,200
Fair value (in Korean won)	(Won)	22,364	(Won)	12,443	(Won)	10,926	(Won)	12,322	(Won)	10,530	(Won)	1,146	(Won)	2,566	(Won)	4,328
Total compensation cost (in millions of Korean won)	(Won)	8,311	(Won)	38	(Won)	—	(Won)	531	(Won)	—	(Won)	24	(Won)	564	(Won)	343
Exercise price (in Korean won)	(Won)	70,000	(Won)	57,000	(Won)	65,000	(Won)	54,600	(Won)	50,400	(Won)	62,814	(Won)	41,711	(Won)	42,684
Exercise period		Dec.27, 2004 ~Dec. 26, 2009		Sep.17, 2005 ~Sep.16, 2010		Dec.13, 2005 ~Dec.12, 2010		Feb. 5, 2007 ~Feb. 4, 2012		Apr. 29, 2007 ~Apr. 28, 2012		Mar. 26, 2005 ~Mar. 25, 2010		Sep. 9, 2005 ~Sep. 8, 2010		Mar. 5, 2007 ~Mar. 4, 2012
Valuation method		Fair value method		Fair value method		Fair value method		Fair value method		Fair value method		Fair value method		Fair value method		Fair value method

(Note) The stock options granted prior to the merger to the directors, officers or employees of KTF were converted into stock options granting the rights to purchase the stock of KT based on the merger ratio on June 1, 2009.

Upon exercise, the Company can elect one of the following settlement methods; an issuance of new shares, a provision of treasury stocks or cash settlement (cash and provision of treasury stocks) subject to its circumstances.

F-65

KT adopted the fair value method to measure compensation costs based on the following valuation assumptions and methods are as follows:

	1st grant	2nd grant	3rd grant	4th grant	5th grant	KTF-2nd(Note)	KTF-3rd(Note)	KTF-4th(Note)
Risk free interest rate	5.46%	4.45%	5.09%	4.43%	4.07%	2.43%	2.43%	2.78%
Expected duration	4.5 years to 5.5 years	4.5 years	4.5 years to 5.5 years	4.5 years to 5.5 years	4.5 years to 5.5 years	0.5 years	0.6 years	1.5 years
Expected volatility	49.07% ~ 49.90%	34.49%	31.26% ~ 33.90%	33.41% ~ 42.13%	33.51% ~ 35.92%	30.63%	41.85%	35.03%
Expected dividend yield ratio	1.10%	1.57%	1.57%	5.86%	5.86%	3.54%	3.54%	3.54%

(Note) The compensation cost for the stock option which is granted to the directors, officers or employees of KTF were recalculated considering risk-free rate, expected duration and other on the date of the merger.

Of total compensation costs calculated using the fair value method, the compensation costs recognized through December 31, 2009 are as follows (in millions of Korean won):

	1st grant (Note)			2nd grant			3rd grant			4th grant			5th grant			KTF-2nd			KTF-3rd			KTF-4th			Total
Total compensation costs before adjustment	(Won)	10,602		(Won)	453		(Won)	1,160		(Won)	749		(Won)	586		(Won)	24		(Won)	564		(Won)	343		(Won)	14,481
Total compensation costs cancelled		(2,291	)		(415	)		(1,160	)		(218	)		(586	)		—			—			—			(4,670	)
Total compensation costs after adjustment		8,311			38			—			531			—			24			564			343			9,811
Compensation costs recognized in prior periods		(8,311	)		(38	)		—			(531	)		—			(24	)		(564	)		(343	)		(9,811	)
Compensation costs to be recognized		—			—			—			—			—			—			—			—			—

(Note) For the year ended December 31, 2009, the stock option with book value of (Won)8,311 million was transferred to other capital surplus as it was expired without exercise.

Details of stock grants to directors including chief executive officer are as follows:

	2nd grant	3rd grant	KTF-2nd grant (Note)
Grant date	March 27, 2008	May 7, 2009	June 20, 2007
Grantee	Registered directors	Registered directors	Registered directors
Estimated number of shares granted	13,345 shares	29,055 shares	11,790 shares
Vesting conditions	Service condition: one year Non-market performance condition: achievement of performance	Service condition: one year Non-market performance condition: achievement of performance	Service condition: six months Non-market performance condition: achievement of performance
Fair value per option (in Korean won)	(Won)48,160	(Won)36,200	(Won)36,050
Total compensation costs (in Korean won)	(Won)643 million	(Won)1,052 million	(Won)425 million
Estimated exercise date (exercise date)	During 2010	During 2010	During 2010
Valuation method	Fair value method	Fair value method	Fair value method

(Note) The stock options granted prior to the merger to the directors, officers or employees of KTF were converted into stock options grants providing the rights to receive the stock of KT based on the merger ratio on June 1, 2009.

F-66

Above compensation costs were calculated based on the fair value method and charged to current operations for the year ended December 31, 2009 as follows (in millions of Korean won):

	2nd grant			3rd grant			KTF-2nd grant
Total compensation costs	(Won)	643		(Won)	1,052		(Won)	425
Compensation costs recognized in prior periods		(643	)		—			(425	)
Compensation costs recognized in the current period		—			(1,052	)		—
Compensation costs to be recognized after the current period	(Won)	—		(Won)	—		(Won)	—

22.    TREASURY STOCK

Changes in KT’s treasury stock for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won except for share data):

	2008
	January 1, 2008			Increase			Disposal					Retirement					December 31, 2008
	Number of shares	Amount		Number of shares	Amount		Number of shares		Amount			Number of shares		Amount			Number of shares	Amount
Direct purchase by the Financial Investment Services and Capital Markets Act (formerly, “Securities and Exchange Act“)	70,256,407	(Won)	3,732,977	1,666,700	(Won)	73,807	(15,173	)	(Won)	(807	)	(1,666,700	)	(Won)	(73,807	)	70,241,234	(Won)	3,732,170
Indirect purchase through trust agreement and other	1,259,170		92,711	—		—	—			—		—			—		1,259,170		92,711
	71,515,577	(Won)	3,825,688	1,666,700	(Won)	73,807	(15,173	)	(Won)	(807	)	(1,666,700	)	(Won)	(73,807	)	71,500,404	(Won)	3,824,881

	2009
	January 1, 2009			Increase			Disposal (Note)					Retirement					December 31, 2009
	Number of shares	Amount		Number of shares	Amount		Number of shares		Amount			Number of shares		Amount			Number of shares	Amount
Direct purchase by the Financial Investment Services and Capital Markets Act (formerly, “Securities and Exchange Act“)	70,241,234	(Won)	3,732,170	13,624,232	(Won)	528,144	(54,085,296	)	(Won)	(2,887,954	)	(13,124,000	)	(Won)	(508,912	)	16,656,170	(Won)	863,448
Indirect purchase through trust agreement and other	1,259,170		92,711	—		—	—			—		—			—		1,259,170		92,711
	71,500,404	(Won)	3,824,881	13,624,232	(Won)	528,144	(54,085,296	)	(Won)	(2,887,954	)	(13,124,000	)	(Won)	(508,912	)	17,915,340	(Won)	956,159

(Note) Disposals include 45,629,480 shares reissued to KTF shareholders in consideration of the merger with KTF and 8,453,222 shares reissued to NTT DoCoMo, lnc. in exchange of the exchangeable bond for the year ended December 31, 2009.

Above treasury stocks are expected to be used for the stock compensation to the Company’s directors and employees and other purposes.

F-67

23.    OPERATING REVENUES

Operating revenues for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007		2008		2009
Internet services	(Won)	2,372,452	(Won)	2,481,171	(Won)	2,448,607
Data communication services		1,270,606		1,335,769		1,313,936
Telephone services		5,592,349		5,199,534		4,696,980
PCS services		5,980,628		6,424,414		6,646,389
Goods sold		2,450,658		3,065,858		3,396,886
Other		946,718		1,086,203		1,146,322
Total	(Won)	18,613,411	(Won)	19,592,949	(Won)	19,649,120

24.    CONSTRUCTION CONTRACTS

Details of construction contracts as of December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007
	Beginning contract balance		Increase		Recognized as revenue (Note)		Ending contract balance
Jungja Dong, Suwon	(Won)	27,158	(Won)	37	(Won)	(26,916)	(Won)	279
Sungsu Dong, Seoul		116,967		1,600		(54,731)		63,836
Bugae Dong, Incheon		184,179		6,260		(33,347)		157,092
Total	(Won)	328,304	(Won)	7,897	(Won)	(114,994)	(Won)	221,207
	2008
	Beginning contract balance		Increase		Recognized as revenue (Note)		Ending contract balance
Jungja Dong, Suwon	(Won)	279	(Won)	—	(Won)	(279)	(Won)	—
Sungsu Dong, Seoul		63,836		—		(50,308)		13,528
Bugae Dong, Incheon		157,092		—		(78,220)		78,872
Sungsu-dong, Seoul (factory building)		—		64,689		(212)		64,477
Total	(Won)	221,207	(Won)	64,689	(Won)	(129,019)	(Won)	156,877
	2009
	Beginning contract balance		Increase		Recognized as revenue (Note)		Ending contract balance
Jungja Dong, Suwon	(Won)	13,528	(Won)	—	(Won)	(13,528)	(Won)	—
Bugae Dong, Incheon		78,872		—		(74,537)		4,335
Sungsu-dong, Seoul (factory building)		64,477		—		(45,763)		18,714
Garak-dong, Seoul (office building)		—		48,873		(8,140)		40,733
Total	(Won)	156,877	(Won)	48,873	(Won)	(141,968)	(Won)	63,782

(Note) These revenues are classified as other in operating revenues.

F-68

25.    OPERATING EXPENSES

Operating expenses for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007			2008			2009
Salaries and wages	(Won)	2,229,273		(Won)	2,268,386		(Won)	2,192,072
Share-based payment		1,103			1,922			1,049
Severance indemnities		359,511			361,031			1,128,370
Employee welfare		527,129			565,797			587,033
Travel		38,125			31,150			22,571
Communications		76,916			58,945			26,174
Electric and water charges		245,226			248,778			250,664
Taxes and dues		260,506			269,196			207,268
Supplies		37,664			37,431			36,329
Publications		6,240			5,188			5,200
Rent		225,729			249,125			257,413
Depreciation		3,193,247			3,213,982			2,873,848
Amortization		404,004			410,538			402,801
Repairs		288,710			207,328			166,265
Maintenance		322,364			373,006			333,938
Automobile maintenance		30,572			20,278			31,895
Insurance		23,112			29,967			20,520
Commissions		1,049,490			1,354,151			1,262,024
Advertising		274,538			221,785			182,049
Education and training		31,179			29,398			23,575
Praise and reward		11,168			12,706			8,477
Research		238,722			235,508			239,508
Development		52,288			47,639			23,706
Interconnection charges		1,200,373			1,234,474			1,227,088
Cost of services		803,434			531,618			589,825
International settlement payment		216,962			263,464			263,749
Cost of goods sold		1,867,551			2,364,669			3,118,512
Promotion		749,029			1,080,089			1,121,880
Sales commission		1,902,106			2,129,674			1,804,583
Provision for doubtful accounts		71,390			148,972			104,977
Other		163,471			186,671			207,567
Sub-total		16,901,132			18,192,866			18,720,930
Less : transfer to other accounts		(42,284	)		(40,197	)		(38,269	)
	(Won)	16,858,848		(Won)	18,152,669		(Won)	18,682,661

F-69

26.    INCOME TAX EXPENSE

Components of income tax expense for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007			2008			2008
Current income tax expense (including additional income taxes and tax refunds)	(Won)	402,254		(Won)	294,620		(Won)	144,272
Changes in deferred income tax assets and liabilities related to temporary differences (including tax loss and credits carryforwards) (Note)		(45,506	)		(126,811	)		(68,048	)
Income tax expense directly reflected in stockholders’ equity		51			50			31,539
Income tax expense	(Won)	356,799		(Won)	167,859		(Won)	107,763

(Note) Changes in deferred income tax assets and liabilities related to temporary differences (in millions of Korean won):

	2008			2009
Ending deferred income tax assets	(Won)	482,721		(Won)	549,725
Beginning deferred income tax assets		(349,058	)		(482,721	)
Changes in deferred income tax assets (liabilities) directly added to (deducted from) stockholders’ equity		(3,000	)		1,044
Other		(3,852	)		—
Changes in deferred income tax assets	(Won)	126,811		(Won)	68,048

An explanation of the relationship between income tax expense and income from continuing operations before income tax expense for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007			2008			2009
Income from continuing operations before income tax expense	(Won)	1,457,918		(Won)	707,196		(Won)	715,063
Income tax expense at statutory income tax rate
(For 2007: Less than (Won)100 million: 14.3%
Over         (Won)100 million: 27.5%
For 2008: Less than (Won)200 million: 12.1%
Over        (Won)200 million: 27.5%
For 2009: Less than (Won)200 million: 12.1%
Over        (Won)200 million: 24.2%)		400,914			194,465			173,045
Differences (Note)		(44,115	)		(26,606	)		(65,282	)
Income tax expense on continuing operations	(Won)	356,799		(Won)	167,859		(Won)	107,763
Effective tax rates		24.47	%		23.74	%		15.07	%
(Note) Differences :
Non-temporary difference	(Won)	18,704		(Won)	25,412		(Won)	22,674
Changes in deferred income tax assets (liabilities) unrecognized related to equity method investment securities		35,196			83,892			4,507
Tax credit		(121,159	)		(203,070	)		(110,969	)
Additional income tax and tax refund for prior years		30,545			(4,377	)		(12,758	)
Tax rate changes		—			72,839			3,194
Other		(7,401	)		(1,302	)		(2,554	)
		((Won)44,115	)		((Won)26,606	)		((Won)65,282	)

F-70

c. Changes in temporary differences, including tax loss and credits carryforwards, and deferred income tax assets (liabilities) for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	January 1, 2008			Final tax return amount (Note 1)		Increase		Decrease			December 31, 2008			Deferred income tax assets (liabilities)
														Current			Non-current
(Deductible temporary differences)
Allowance for doubtful accounts	(Won)	358,078		(Won)	457,474	(Won)	253,716		(Won)(213,518	)	(Won)	497,672		(Won)	113,861		(Won)	5,994
Inventories		34,979			137,182		20,435		(137,225	)		20,392			628			3,915
Derivative instruments		164,721			38,474		11,729		(22,701	)		27,502			6,655			—
Available-for-sale securities		13,282			24,462		15,105		(230	)		39,337			—			8,840
Equity method investment securities		1,400,823			1,532,097		239,810		(7,022	)		1,764,885			—			388,275
Contribution for construction		205,608			205,610		27,496		—			233,106			—			51,283
Accrued expenses		297,921			149,058		212,483		(138,951	)		222,590			53,825			—
Provisions		83,919			88,036		139,193		(44,673	)		182,556			35,845			7,577
Provision for severance indemnities		1,008,394			1,019,900		151,580		(19,177	)		1,152,303			—			253,508
Refundable deposits for telephone installation		54,000			54,000		—		(3,068	)		50,932			—			11,205
Other		149,582			275,449		983,596		(118,633	)		1,140,412			56,751			199,485
Sub total		3,771,307		(Won)	3,981,742	(Won)	2,055,143	(Won)	(705,198	)		5,331,687			267,565			930,082
Not recognized as deferred income tax assets (Note 2)		(1,559,920	)									(1,861,675	)		(16,330	)		(395,012	)
Recognized as deferred income tax assets		2,211,387										3,470,012			251,235			535,070
Tax rate (Note 3)		27.5	%									24.2%, 22	%
Deferred income tax assets		608,130										786,305			251,235			535,070

F-71

	2008
	January 1, 2008			Final tax return amount (Note 1)			Increase			Decrease		December 31, 2008			Deferred income tax assets (liabilities)
															Current			Non-current
(Taxable temporary differences)
Accrued interest income	(Won)	(6,116	)	(Won)	(8,750	)	(Won)	(5,959	)	(Won)	3,057	(Won)	(11,652	)	(Won)	(2,674	)	(Won)	(124	)
Equity method investment securities		(122,069	)		(229,851	)		(82,002	)		2,517		(309,336	)		—			(68,055	)
Depreciation		(38,234	)		(31,906	)		—			8,311		(23,595	)		—			(5,191	)
Deposits for severance indemnities		(970,753	)		(980,981	)		(136,824	)		5,959		(1,111,846	)		—			(244,640	)
Derivative instruments		(2,792	)		(9,126	)		(497,413	)		22		(506,517	)		(40,974	)		(74,184	)
Reserve for technology and human resource development		(213,333	)		(213,333	)		—			106,666		(106,667	)		(25,813	)		—
Sub total		(1,353,297	)	(Won)	(1,473,947	)	(Won)	(722,198	)	(Won)	126,532		(2,069,613	)		(69,461	)		(392,194	)
Not recognized as deferred income tax liabilities (Note 2)		122,069											119,892			—			26,377
Recognized as deferred income tax liabilities		(1,231,228	)										(1,949,721	)		(69,461	)		(365,817	)
Tax rate (Note 3)		27.5	%										24.2%, 22	%
Deferred income tax liabilities		(338,588	)										(435,278	)		(69,461	)		(365,817	)
(Tax loss carryforwards)
Total loss carryforwards		67,377											223,560			—			49,183
Not recognized as deferred income tax assets (Note 4)		(38,428	)										(220,869	)		—			(48,591	)
Recognized as deferred income tax assets		28,949											2,691			—			592
Tax rate (Note 3)		27.5	%										24.2%, 22	%
Deferred income tax assets		7,961											592			—			592
(Tax credit carryforwards)
Total tax credit		111,456											153,193			75,116			78,077
Not recognized as deferred income tax assets		(22,991	)										(22,091	)		(6,949	)		(15,142	)
Recognized as deferred income tax assets		88,465											131,102			68,167			62,935
Deferred income tax assets		71,555											131,102			68,167			62,935
Deferred income tax assets, net	(Won)	349,058										(Won)	482,721		(Won)	249,941		(Won)	232,780

F-72

	2009
	January 1, 2009			Final tax return amount (Note 1)		Increase		Decrease		December 31, 2009			Deferred income tax assets (liabilities)
													Current			Non-current
(Deductible temporary differences)
Allowance for doubtful accounts	(Won)	497,672		(Won)	494,820	(Won)	184,549	(Won)	168,276	(Won)	511,003		(Won)	116,110		(Won)	6,763
Inventories		20,392			23,126		2,696		19,189		6,633			196			978
Derivative instruments		27,502			27,502		34,228		11,729		50,001			12,092			—
Available-for-sale securities		39,337			39,337		22,071		19,802		41,606			—			9,154
Equity method investment securities		1,764,885			1,764,024		7,519		1,289,887		481,656			12			105,954
Depreciation		—			13		101,193		—		101,206			—			22,265
Contribution for construction		233,106			233,110		—		54,486		178,624			—			39,297
Accrued expenses		222,590			166,854		131,773		158,458		140,169			33,918			—
Provisions		182,556			182,556		15,525		139,743		58,338			11,580			2,339
Provision for severance indemnities		1,152,303			1,152,617		51,326		45,965		1,157,978			—			254,760
Refundable deposits for telephone installation		50,932			50,932		—		7,255		43,677			—			9,609
Other		1,140,412			1,263,484		46,280		373,938		935,826			114,990			102,551
Sub total		5,331,687		(Won)	5,398,375	(Won)	597,070	(Won)	2,288,728		3,706,717			288,898			553,670
Not recognized as deferred income tax assets (Note 2)		(1,861,675	)								(550,345	)		(15,076	)		(107,592	)
Recognized as deferred income tax assets		3,470,012									3,156,372			273,822			446,078
Tax rate (Note 3)		24.2%, 22	%								24.2%, 22	%
Deferred income tax assets		786,305									719,899			273,822			446,078

F-73

	2009
	January 1, 2009		Final tax return amount (Note 1)		Increase		Decrease		December 31, 2009		Deferred income tax assets (liabilities)
											Current		Non-current
(Taxable temporary differences)
Accrued interest income	(Won)	(11,652)	(Won)	(11,326)	(Won)	(2,296)	(Won)	(5,965)	(Won)	(7,657)	(Won)	(1,855)	(Won)	—
Equity method investment securities		(309,336)		(309,028)		(120,807)		(6,214)		(423,621)		—		(93,193)
Depreciation		(23,595)		(17,912)		—		(17,912)		—		—		—
Deposits for severance indemnities		(1,111,846)		(1,112,156)		(30,758)		(6,770)		(1,136,144)		—		(250,007)
Derivative instruments		(506,517)		(504,591)		(207)		(322,446)		(182,352)		(3,772)		(26,279)
Reserve for technology and human resource development		(106,667)		(106,667)		—		(106,667)		—		—		—
Sub total		(2,069,613)	(Won)	(2,061,680)	(Won)	(154,068)	(Won)	(465,974)		(1,749,774)		(5,627)		(379,479)
Not recognized as deferred income tax liabilities (Note 2)		119,892								207,138		—		45,570
Recognized as deferred income tax liabilities		(1,949,721)								(1,542,636)		(5,627)		(333,909)
Tax rate (Note 3)		24.2%, 22%								24.2%, 22%
Deferred income tax liabilities		(435,278)								(339,536)		(5,627)		(333,909)
(Tax loss carryforwards)
Total loss carryforwards		223,560								281,201		207		61,675
Not recognized as deferred income tax assets (Note 4)		(220,869)								(280,194)		—		(61,642)
Recognized as deferred income tax assets		2,691								1,007		207		33
Tax rate (Note 3)		24.2%, 22%								24.2%, 22%
Deferred income tax assets		592								240		207		33
(Tax credit carryforwards)
Total tax credit		153,193								195,983		187,913		8,070
Not recognized as deferred income tax assets		(22,091)								(26,861)		(18,791)		(8,070)
Recognized as deferred income tax assets		131,102								169,122		169,122		—
Deferred income tax assets		131,102								169,122		169,122		—
Deferred income tax assets, net	(Won)	482,721							(Won)	549,725	(Won)	437,524	(Won)	112,201

(Note 1) Tax effects from true-up for prior year tax return arising from temporary difference and non-temporary differences were adjusted in deferred income tax assets and current earnings, respectively. Changes in temporary difference resulting from tax investigation in the current period were adjusted in final tax return amount.

(Note 2) The Company did not recognize deferred income tax assets of (Won)96,081 million related to the tax effects of deductible temporary differences from equity in losses since it was not almost certain that the Company would be able to realize the related tax benefits in the foreseeable future. The Company also did not recognize deferred income tax liabilities totaling (Won)45,570 million since it is almost certain that the differences will not reverse in the foreseeable future given that the Company is able to control the timing of reversal of the temporary difference and the investees have not declared dividends in the past 5 years. Meanwhile, certain subsidiaries including KT M&S did not recognize deferred income tax assets amounting to (Won)26,587 million which resulted from the tax effects of deductible temporary differences of (Won)113,613 million in excess of taxable differences and future taxable income.

F-74

(Note 3) Tax rate is the enacted marginal tax rate which is expected to apply to taxable income in the periods in which the deferred income tax liability or asset is expected to be settled or realized

(Note 4) Certain subsidiaries including TSC did not recognize deferred income tax assets amounting to (Won)61,642 million which resulted from the tax effects of tax loss carryforwards of (Won) 280,194 million in excess of taxable differences and future taxable income. Tax loss carryforwards will be expired through 2019.

d. Deferred income tax assets (liabilities) and income tax benefits (expenses) added to (deducted from) stockholders’ equity as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008						2009
	Income tax expense			Deferred income tax assets (liabilities)			Income tax expense			Deferred income tax assets (liabilities)
Gain on disposal of treasury stock (capital surplus)	(Won)	(144	)	(Won)	—		(Won)	(31,395	)	(Won)	—
Other capital adjustment		—			(4,147	)		—			(4,057	)
Loss on translation of foreign operations		—			1,373			—			5,318
Gain on valuation of available-for-sale securities		—			(230	)		—			(2,023	)
Loss on valuation of available-for-sale securities		—			1,872			—			14
Gain on valuation of derivatives for cash flow hedge		—			(3,056	)		—			(3,456	)
Loss on valuation of derivatives for cash flow hedge		—			4,989			—			3,986
Increase in equity of associates		—			(12	)		—			(252	)
Decrease in equity of associates		—			1,171			—			1,386
Total	(Won)	(144	)	(Won)	1,960		(Won)	(31,395	)	(Won)	916

27.    INCOME FROM DISCONTINUING OPERATIONS

Korea Telecom Venture Fund No.1 (the “Fund”) and KTPI were excluded from the consolidation as of December 31, 2007. Olive Nine and KT FDS are excluded from the consolidation as of December 31, 2009. Their net income (loss) for the years ended December 31, 2007, 2008 and 2009 were reclassified into income (loss) from discontinuing operations as follows (in millions of Korean won):

	2007									2008						2009
	Fund No.1	KTPI		Olive Nine		KT FDS		Total		Olive Nine		KT FDS		Total		Olive Nine		KT FDS		Total
[Book value]
Assets of discontinuing operations	—	—		41,588		11,363		52,951		43,666		9,292		52,958		—		—		—
Liabilities of discontinuing operations	—	—		(22,715	)	(8,911	)	(31,626	)	29,453		9,132		38,585		—		—		—
[Income (loss) from discontinuing operations]
Operating and non-operating income (loss)	388	(38,727	)	(1,649	)	(7,856	)	(47,844	)	(22,600	)	(3,447	)	(26,047	)	(7,432	)	(3,911	)	(11,343	)
Reversal of cumulative loss from discontinuing operation (Note 1)	—	112,543		—		—		112,543		—		—		—		—		—		—
Gain on disposal of discontinuing operations	—	—		—		—		—		—		—		—		4,035		4,246		8,281
Tax effect	—	—		—		—		—		—		—		—		4,305		1,152		5,457
Income (loss) from discontinuing operations	388	73,816		(1,649	)	(7,856	)	64,699		(22,600	)	(3,447	)	(26,047	)	908		1,487		2,395

(Note 1) Since future outflows of economic resources from the cumulative loss totaling (Won)112,543 million of KTPI are not expected, the cumulative loss was reversed as income

F-75

28.    INCOME PER SHARE

The Company’s net income per share for the years ended December 31, 2007, 2008 and 2009 are computed as follows (in millions of Korean won, except for per share data):

a. Basic Income Per Share From Continuing Operations

	2007		2008		2009
Net income from continuing operations	(Won)	988,119	(Won)	469,089	(Won)	486,466
Weighted average number of common stock outstanding		206,599,294		202,891,015		219,512,696
Basic income per share from continuing operations (in Korean won)	(Won)	4,783	(Won)	2,312	(Won)	2,216

b. Basic Income Per Share From Discontinuing Operations

	2007		2008		2009
Net income from discontinuing operations	(Won)	68,108	((Won)19,279	)	(Won)	8,380
Weighted average number of common stock outstanding		206,599,294	202,891,015			219,512,696
Basic income per share from discontinuing operations (in Korean won)	(Won)	330	((Won)95	)	(Won)	38

c. Basic Net Income Per Share

	2007		2008		2009
Net income	(Won)	1,056,227	(Won)	449,810	(Won)	494,846
Weighted average number of common stock outstanding		206,599,294		202,891,015		219,512,696
Basic net income per share (in Korean won)	(Won)	5,112	(Won)	2,217	(Won)	2,254

d. Diluted Income Per Share From Continuing Operations

	2007		2008		2009
Net income from continuing operations	(Won)	988,119	(Won)	469,089	(Won)	486,466
Interest on exchangeable bonds		—		—		4,395
Adjusted income from continuing operations		988,119		469,089		490,861
Weighted average number of common stock outstanding		206,599,294		202,891,015		219,512,696
Number of shares with dilutive effects		—		—		4,655,062
Diluted income per share from continuing operations (in Korean won)	(Won)	4,783	(Won)	2,312	(Won)	2,190

e. Diluted Income Per Share From Discontinuing Operations

	2007		2008		2009
Net income from discontinuing operations	(Won)	68,108	((Won)19,279	)	(Won)	8,380
Adjusted income from discontinuing operations		68,108	(19,279	)		8,380
Weighted average number of common stock outstanding		206,599,294	202,891,015			219,512,696
Number of shares with dilutive effects		—	—			4,655,062
Diluted income (loss) per share from discontinuing operations (in Korean won)	(Won)	330	((Won)95	)	(Won)	37

F-76

f. Diluted Net Income Per Share

	2007		2008		2009
Net income	(Won)	1,056,227	(Won)	449,810	(Won)	494,846
Interest on exchangeable bonds		—		—		4,395
Adjusted net income		1,056,227		449,810		499,241
Weighted average number of common stock outstanding		206,599,294		202,891,015		219,512,696
Number of shares with dilutive effects		—		—		4,655,062
Diluted net income per share (in Korean won)	(Won)	5,112	(Won)	2,217	(Won)	2,227

Basic net income per share is computed on the basis of the weighted-average number of common shares outstanding which is adjusted to include the number of common shares outstanding at the beginning of the years (208,095,178 shares, 203,686,823 shares and 202,035,296 shares as of January 1, 2007, 2008 and 2009, respectively) and weighted average number of treasury stock acquired for the years ended December 31, 2007, 2008 and 2009 (1,495,884 shares, 795,808 shares and (17,477,400) shares for the years ended December 31, 2007, 2008 and 2009, respectively).

For the purpose of calculating diluted net income per share, all dilutive potential common shares were added to net income attributable to common share holders and the weighted average number of shares outstanding, respectively. Diluted net income per share is calculated by dividing adjusted net income by the weighted average number of common shares and all dilutive potential common shares. Dilutive effect resulted from the exchangeable bonds which were issued and also exchanged for the year ended December 31, 2009. Stock options and other share-based payments have no dilutive effect and are excluded from the calculation of diluted net income per share.

F-77

(Note) Potential common shares as of December 31, 2007, 2008 and 2009 are as follows:

	Par value	Issue date	Maturity	Exercisable Period	Common shares to be issued
					December 31, 2007	December 31, 2008	December 31, 2009
Stock option	(Note 1)	December 26, 2002	December 26, 2009	Increase in the number of exercisable shares by 1/3 every year after two years from grant date	371,632	371,632	—
Stock option	(Note 2)	September 16, 2003	September 16, 2010	From 2 years after grant date till maturity date	3,000	3,000	3,000
Stock option	(Note 3)	February 4, 2005	February 4, 2012	Increase in the number of exercisable shares by 1/3 every year after two years from grant date	43,153	43,153	43,153
Stock option	(Note 4)	March 25, 2002	March 25, 2010	From 3 years after grant date till maturity date	—	—	20,570
Stock option	(Note 5)	September 8, 2003	September 8, 2010	From 2 years after grant date till maturity date	—	—	219,909
Stock option	(Note 6)	March 4, 2005	March 4, 2012	From 2 years after grant date till maturity date	—	—	79,200
Other share-based payment	(Note 7)	March 29, 2007	March 27, 2008	On maturity date, subject to the resolution of board of directors	23,925	—	—
Other share-based payment	(Note 7)	June 20, 2007	In 2010	On maturity date, subject to the resolution of board of directors	—	—	11,790
Other share-based payment	(Note 7)	March 27, 2008	In 2010	On maturity date, subject to the resolution of board of directors	—	29,481	13,345
Other share-based payment	(Note 7)	May 7, 2009	In 2010	On maturity date, subject to the resolution of board of directors	—	—	29,055
					441,710	447,266	420,022

(Note 1) Exercise price of (Won)70,000 per common share.

(Note 2) Exercise price of (Won)57,000 per common share.

(Note 3) Exercise price of (Won)54,600 per common share.

(Note 4) Exercise price of (Won)62,814 per common share.

(Note 5) Exercise price of (Won)41,711 per common share.

(Note 6) Exercise price of (Won)42,684 per common share.

(Note 7) Shares to be given subject to performance

F-78

29.    INSURANCE

As of December 31, 2009, certain assets are insured with Samsung Fire and Marine Insurance Co., Ltd. and other insurance companies as follows (in millions of Korean won):

	Risk covered	Coverage
Finance lease receivables	Movables package	(Won)	228,434
Inventories	Theft and fire		167,129
Buildings	Fire and other		1,347,580
Structures	Property package		17,753
Machinery	Property package and other		195,454
Vessel (vehicles)	Vessel and other		63,225
Others	Fire and other		234,952
Total		(Won)	2,254,527

30.    DIVIDENDS

Details of KT’s dividends for common stocks for the years ended December 31, 2007, 2008 and 2009 are as follows (in Korean won except for share data):

a. Dividends

	2007			2008			2009
Dividends per share (dividend ratio)	(Won)	2,000(40	)%	(Won)	1,120(22.4	)%	(Won)	2,000(40.0	)%
Number of shares outstanding (Note)		203,686,823			202,035,296			243,196,468
Dividend	(Won)	407,374,646,000		(Won)	226,279,531,520		(Won)	486,392,936,000

(Note) 71,515,577 shares, 71,500,404 shares and 17,915,340 shares of treasury stock as of December 31, 2007, 2008 and 2009, respectively, are excluded.

b. Dividend Payout Ratios

	2007			2008			2009
Dividend	(Won)	407,374,646,000		(Won)	226,279,531,520		(Won)	486,392,936,000
Net income (Attributable to equity holders of the parent)		1,056,227,165,634			449,809,735,316			494,846,258,352
Payout ratio		38.57	%		50.31	%		98.29	%

c. Dividend Yield Ratios

	2007			2008			2009
Dividends per share	(Won)	2,000		(Won)	1,120		(Won)	2,000
Stock price at the end of the year		48,900			37,500			39,100
Dividend yield ratio		4.09	%		2.99	%		5.12	%

F-79

31.    STATEMENTS OF CASH FLOWS

The statements of cash flows have been presented using the indirect method. Significant non-cash transactions for the years ended December 31, 2007, 2008 and 2009 are detailed as follows (in millions of Korean won):

	2007		2008		2009
Construction in progress transferred to property and equipment and other accounts	(Won)	3,122,246	(Won)	3,080,337	(Won)	2,246,210
Acquisition of equity method investment securities by issuance of exchangeable bond (Note)		—		—		319,160
Reissuing of treasury stock by exchange of exchangeable bond (Note)		—		—		451,157
Increase in capital by merger with KTF		—		—		1,553,491
Transferred to newly included subsidiary’s net income or loss before acquisition:
Share-based payment		12		—		—
Provision for severance indemnities		1,003		—		—
Depreciation		2,010		—		—
Amortization		431		—		—
Bad debt		1,712		—		—
Foreign currency translation gains		92		—		—
Gain on disposal of property and equipment		77		—		—
Gain on disposal of available-for-sale securities		185		—		—
Gain on disposal of trading securities		42		—		—
Equity in income of associates		35		—		—
Other bad debt		934		—		—
Loss on disposal of available-for-sale securities		225		—		—
Equity in loss of associates		2,139		—		—
Loss on disposal of property		171		—		—
Impairment loss on investment assets		6,716		—		—
Impairment loss on intangible assets		221		—		—

(Note) On May 27, 2009, the Company acquired 12,105,785 shares of KTF held by NTT DoCoMo, Inc.(“NTT”) and issued exchangeable bonds denominated in U.S. dollars to NTT amounting to USD 253,261 thousand ((Won)319,160 million) in exchange of the KTF shares. Issued exchangeable bonds can be converted into the Company’s treasury stocks. On December 14, 2009, NTT exchanged all of its bonds with the Company’s treasury stocks of 8,453,222 shares.

32.    COMMITMENTS AND CONTINGENCIES

a. Legal Matters

On May 25, 2005, the Fair Trade Commission (“FTC”) imposed a fine of (Won)116,168 million to the Company related to local telephone services and leased line services for internet cafes. On September 14, 2005, the FTC imposed an additional fine of (Won)24,258 million to the Company related to domestic and international long-distance services. The Company expensed these fines for the year ended December 31, 2005.

The Company filed for judicial review of the fine imposed by FTC relating to local telephone services amounting to (Won)113,048 million to the Supreme Court. On June 23, 2009, the Supreme court finally confirmed that the FTC’s calculation for the fine needed to be revisited and, in response to the recalculation by FTC, the Company recorded (Won)18,088 million as non-operating income, which resulted from the recalculated fine amounting to (Won)94,960 million, and also recorded its interest totaling (Won)16,552 million as interest income, respectively.

The Company is also in various litigation as a defendant in other cases of which claim amounts totaled (Won)46,993 million (105 cases) as of December 31, 2009. The Company accrued (Won)17,010 million as provisions related to the litigation as of December 31, 2009. However, the final result of this litigation cannot be presently determined.

F-80

b. Commitments with Financial Institutions

As of December 31, 2009, major commitments with local financial institutions are as follows (in millions of Korean won and thousands of foreign currencies)

Commitment	Amount	Related companies
Bank overdraft	(Won)1,047,900	KT, KTR, KT Capital and KTDS
Commercial paper issuance	260,000	KT, KT Capital and KT Telecop
Collateralized loan on accounts receivable—trade	814,900	KT, KTDS and Nasmedia
Letters of credit	USD 96,008	KT, KTR, KT Capital and KTL
	EUR 200
Collection for foreign currency denominated checks	USD 1,000	KT
Working capital loans	USD 2,000	KTSC
General loans	(Won)71,000 USD 24,000	KT Capital, Nasmedia and KT M&S
Corporate bonds	(Won)20,000	KT Telecop
Local credit agreements	10,000	KT M&S
Short-term finance	25,000	KT M&S
General loans	40,000	KT M&S
Total	(Won)2,288,800 USD 123,008 EUR 200

Guarantee	Financial institution	Limit	Used amount	Related companies
Performance guarantee for construction	Korea Software Financial Cooperative and others	(Won)230,594	(Won)230,594	KT, KTP, KTN, KTL, KTSC, KT Capital, KTT, Sofnics, JB Edu, Nasmedia and KTF M Hows
	Korea Exim Bank and others	USD 8,705	USD 8,705	KT, Nasmedia
		DZD103,452	DZD103,452	KT
		SAR 735	SAR 735	KT
General guarantee	Korea Exchange Bank and others	(Won)6,553	(Won)6,553	KT, KTN and KTSC
	Korea Exchange Bank and other	USD 12,135	USD 9,985	KT and KTSC

Loss on sale of accounts receivable from the transfer of those receivables amounted to (Won)719 million for the year ended December 31, 2009, and accounts receivable sold but not matured as of December 31, 2009 are (Won)17,851 million.

c. Put and Call Combination Contract with Woori Investment & Securities Co., Ltd.

On December 27, 2005, the Company and JPMorgan Chase Bank, N.A. entered into a “Put and Call Combination” contract based on the shares of Korea Digital Satellite Broadcasting (“KDB”), an equity method investee, and the contract expired on December 26, 2008.

On December 26, 2008, the Company and Woori Investment & Securities Co., Ltd. which acquired KDB shares from JP Morgan Whitefriars Inc. entered into a “Put and Call Combination” contract based on the shares of KDB. Under this contract, during the period from December 26, 2009 to December 26, 2011, KT has the option to acquire 9,200,000 shares of KDB that were purchased by Woori Investment & Securities Co., Ltd. on December 26, 2008, and Woori Investment & Securities Co., Ltd. has the option to exercise the put option on such KDB shares to KT on December 26, 2011. The exercise price under the contract for both KT and Woori Investment & Securities Co., Ltd. is (Won)46,000 million. The Company exercised this call option on February 26, 2010.

F-81

d. Payment of a Handset Subsidy to PCS or WiBro Users

According to the provisions of the Telecommunications Business Law (“TBL”), the Company has provided a onetime handset subsidy to eligible mobile phone users, who have subscribed to the Company’s service or any other mobile carriers for 18 consecutive months, within the next two years from March 27, 2006 to March 26, 2008.

Above handset subsidy program was terminated effective March 27, 2008, however the Company currently provides a variety of handset subsidy programs to PCS or WiBro subscribers according to its operation policy and sets forth the programs in details in the service agreement. The handset subsidy provided by the Company is expensed as incurred.

e. Loan Commitment

KT Capital entered into an agreement with construction developers to provide a loan covering up to (Won)38,000 million when the construction developers cannot redeem the project financing loan for construction at a maturity date due to the unsold apartments. Under the agreement, KT Capital has the right to get the unsold apartment as collateral.

f. Uncollected Promissory Notes

As of December 31, 2009, the Company is planning to take legal proceedings in regards to 5 missing notes along with the respective issuer bank of the notes.

Doremi media, one of subsidiaries, provided a blank note to Korea Credit Guarantee Fund as collateral for the long-term borrowings.

33.    DERIVATIVES

For the years ended December 31, 2007, 2008 and 2009, the Company entered into various derivatives contracts with financial institutions. Details of these derivative contracts are as follows:

Type of transaction	Financial institution	Description
Interest rate swap	Merrill Lynch and others	Exchange fixed interest rate for variable interest rate for a specified period
Currency swap	Merrill Lynch and others	Exchange foreign currency cash flow for local currency cash flow local currency cash flow for a specified period
Combined interest rate currency swap	Merrill Lynch and others	Exchange foreign currency fixed (variable) swaps interest rate for local currency variable (fixed) interest
Currency forward	Kookmin Bank and others	Exchange a specified currency at the agreed exchange rate at a specified date

F-82

The assets and liabilities recorded relating to the outstanding contracts as of December 31, 2008 and 2009 are as follows (in millions of Korean won and thousands of foreign currencies):

	2008
	Fair value
Type of transaction	Contract amount	Assets (Current)		Assets (Non- Current)		Liabilities (Current)		Liabilities (Non-Current)
Interest rate swap	(Won)307,240 USD 100,000	(Won)	—	(Won)	—	(Won)	13,610	(Won)	2,031
Currency swap (Note)	USD 220,000		14,793		57,334		—		—
Combined interest rate currency swap (Note)	USD 1,430,000 JPY 19,500,000		172,376		245,355		—		—
Currency forward	USD 35,201 JPY 20,000		—		—		9		4,746
Put Option	—		14,540		—		—		—
Total	(Won)307,240 USD 1,785,201 JPY 19,520,000	(Won)	201,709	(Won)	302,689	(Won)	13,619	(Won)	6,777
	2009
	Fair value
Type of transaction	Contract amount	Assets (Current)		Assets (Non- Current)		Liabilities (Current)		Liabilities (Non-Current)
Interest rate swap	(Won)256,000 USD 100,000	(Won)	—	(Won)	23	(Won)	5,118	(Won)	656
Currency swap (Note)	USD 220,000		—		47,547		—		3,782
	USD 1,410,000
Combined interest rate currency swap (Note)	JPY 19,500,000		—		247,488		—		—
Currency forward	USD 30,208		288		—		6		1,717
Total	(Won)256,000 USD 1,760,208 JPY 19,500,000	(Won)	288	(Won)	295,058	(Won)	5,124	(Won)	6,155

F-83

Details of the foreign currency swap contracts, combined interest rate currency swap contracts and interest rate swap contracts to which cash flow hedge and fair value hedge accounting are applied as of December 31, 2008 and 2009 are as follows (in millions of Korean won and thousands of foreign currencies):

Type of transaction	Contract date	Maturity date	Contract amount	Assets (Non-current)				Liabilities (Non-current)
				2008		2009		2009
Cash flow hedge
Currency swap (Note 2)	April 4, 2007 (Note 1)	April 11, 2012	USD 150,000	(Won)	57,046	(Won)	42,839	(Won)	—
	October 6, 2008 (Note 1)	April 11, 2012	USD 50,000		288		—		3,782
	June 20, 2009	September 7, 2034	USD 20,000		—		4,708		—
Combined interest rate currency swap (Note 2)	January 4, 2008	January 11, 2011	JPY12,500,000		62,636		48,908		—
	March 20, 2008	March 31, 2011	USD 50,000		11,917		7,751		—
	March 20, 2008	March 31, 2012	USD 110,000		27,043		18,233		—
	September 2, 2008	September 11, 2013	USD 200,000		22,787		5,988		—
	June 20, 2009	June 24, 2014	USD 600,000		—		66,812		—
	June 20, 2009	July 15, 2015	USD 100,000		—		20,172		—
	February 25, 2008	February 25, 2011	USD 175,000		50,500		37,236		—
	April 28, 2008	April 28, 2011	JPY 7,000,000		28,284		20,098		—
	June 20, 2008	June 20, 2011	USD 95,000		16,263		10,522		—
	March 12, 2008	December 13, 2010	USD 50,000		20,744		8,785		—
	July 2, 2008	April 4, 2011	USD 30,000		5,181		2,983		—
Sub-total				(Won)	302,689	(Won)	295,035	(Won)	3,782
Fair value hedge
Interest rate swap (Note 3)	September 1, 2009	December 1, 2011	(Won)180,000		—		23		—
Total			(Won)180,000 USD 1,630,000 JPY19,500,000	(Won)	302,689	(Won)	295,058	(Won)	3,782

(Note 1) Among financial institutions with which the Company entered into foreign currency swap contracts totaling USD 200 million in 2007, Lehman Brothers Holdings, Inc. (“Lehman”) filed for Chapter 11 bankruptcy with the United States Bankruptcy Court during the third quarter of 2008. Lehman’s bankruptcy filing caused the Company to discontinue its cash flow hedge accounting for foreign exchange swap contracts with Lehman totaling USD 50 million and accordingly the related derivative asset balance amounting to (Won)9,891 million was adjusted to the fair value and reclassified into accounts receivable—other while the difference between the carrying amount and the fair value was expensed as incurred. However, the Company concluded that the occurrence of the related forecasted transaction is still expected to be probable and (Won)1,382 million of unrealized derivative gain included in accumulated other comprehensive income as of December 31, 2008 will be reclassified into current operations in the periods in which the hedged forecasted transaction affects earnings.

(Note 2) Above foreign currency swap contracts are to hedge the risk of variability of future cash flows from foreign currency bonds and as of December 31, 2009, the gain and loss on valuation of the swap contract amounting to (Won)11,468 million and (Won)34,747 million, net of income tax effect, are included in accumulated other comprehensive income and for the year ended December 31, 2009, the loss on valuation of the swap contract totaling (Won)97,469 million is recognized in current operations as a result of foreign currency translation loss from foreign currency bonds. In applying cash flow hedge accounting, the Company hedges its exposures to cash flow fluctuation until September 11, 2013. Approximately (Won)3,488 million of net derivative gain included in accumulated other comprehensive income at December 31, 2009 is expected to be reclassified into current operations within 12 months from that date

(Note 3) Above interest rate swap contract is to hedge the risk of variability in future fair value from bond and as of December 31, 2009, the gain on valuation of the swap contract amounting to (Won)23 million for the year ended December 31, 2009.

F-84

The valuation gains and losses on the derivative contracts for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007
	Valuation gain						Valuation loss						Valuation gain (Note 2)
Type of Transaction	For trading		For hedging		Total		For trading		For hedging		Total		For hedging
Interest rate swap	(Won)	1,973	(Won)	—	(Won)	1,973	(Won)	10,823	(Won)	—	(Won)	10,823	(Won)	—
Currency swap		—		2,280		2,280		4,719		—		4,719		2,792
Combined interest rate currency swap		35,313		—		35,313		—		—		—		—
Currency forwards		98		—		98		—		—		—		—
Put Option		476		—		476		—		—		—		—
Total	(Won)	37,860	(Won)	2,280	(Won)	40,140	(Won)	15,542	(Won)	—	(Won)	15,542	(Won)	2,792

	2008
	Valuation gain						Valuation loss (Note 1)						Valuation gain (Note 2)
Type of Transaction	For trading		For hedging		Total		For trading		For hedging		Total		For hedging
Interest rate swap	(Won)	—	(Won)	—	(Won)	—	(Won)	10,798	(Won)	—	(Won)	10,798	(Won)	—
Currency swap		17,626		54,905		72,531		—		97		97		11,708
Combined interest rate currency swap		297,925		267,655		565,580		—		—		—		(22,146	)
Currency forwards		—		—		—		6,088		—		6,088		—
Put Option		12,569		—		12,569		—		—		—		—
Total	(Won)	328,120	(Won)	322,560	(Won)	650,680	(Won)	16,886	(Won)	97	(Won)	16,983	(Won)	(10,438	)

	2009
	Valuation gain (Note 1)						Valuation loss						Valuation gain (Note 2)
Type of Transaction	For trading		For hedging		Total		For trading		For hedging		Total		For hedging
Interest rate swap	(Won)	6,833	(Won)	23	(Won)	6,906	(Won)	—	(Won)	—	(Won)	—	(Won)	—
Currency swap		—		250		250		9,574		17,005		26,579		(3,809	)
Combined interest rate currency swap		6,178		4,605		10,783		75,401		89,282		164,683		(23,095	)
Currency forwards		3,317		—		3,317		6		—		6		—
Put Option		223		—		223		—		—		—		—
Total	(Won)	16,601	(Won)	4,878	(Won)	21,479	(Won)	84,981	(Won)	106,287	(Won)	191,268	(Won)	(26,904	)

(Note 1) In accordance with SKAS No. 24 “Preparation and Presentation of Financial Statements II (Financial Industry)”, the loss on valuation of currency forwards amounting to (Won)4,746 million and the gain on valuation of currency forwards amounting to (Won)3,029 million for the years ended December 31, 2008 and 2009, and the loss on valuation of interest rate swap amounting to (Won)1,301 million and the gain on valuation of interest rate swap amounting to (Won)807 million for the ended December 31, 2008 and 2009, respectively, recognized in KT Capital are classified as operating income and expense.

(Note 2) The amounts are before adjustment of deferred income tax which shall be directly reflected to equity and are included in equity.

F-85

34.    MERGER WITH KTF

On January 20, 2009, the Company entered into the merger agreement with KTF and on March 27, 2009, the merger was approved in its stockholders’ meeting. On June 1, 2009, the Company, as an existing company, merged with KTF.

The Company delivered 0.7192335 shares of KT common stock (face value (Won)5,000) for every one share of KTF. However, the Company did not deliver any new common stock to the shares of KTF common stock held by the Company (114,235,723 shares) and all the treasury shares of KTF (9,623,143 shares) as of the date of the merger.

a. Details of Combined Companies

	CEO	Business	Relationship
KT	Lee, Suk Chae	Telephone service, new media business, telecommunication products sales and other	Parent
KTF	Kwon, Haing Min	Mobile telecommunication service and other	Subsidiary

b. Accounting Treatment

As this is a merger between parent and subsidiary, the excess of merger consideration given over carrying amount of KTF net assets additionally acquired was recognized as capital adjustment after offsetting capital surplus, if any, from the same type of transaction. (in millions of Korean won)

Details	Amount
Decrease in noncontrolling interest (a)		((Won)1,553,491	)
Increase in equity holders of the parent (b)
Increase in common stock		3,501
Decrease in treasury stock		2,436,659
Decrease in gain on disposal of treasury stock		(375	)
Decrease in accumulated other comprehensive income		(6,932	)
Decrease in capital adjustments		(879,362	)
Sub-total		1,553,491
Changes in total equity (a + b)	(Won)	—

c. Goodwill

Changes in goodwill for the years ended December 31, 2009 is as follows (in millions of Korean won):

January 1, 2009	(Won)	195,170
Amortization		(130,113	)
December 31, 2009	(Won)	65,057

Goodwill is amortized on a straight-line basis over 10 years and as of December 31, 2009, the remaining amortization period of goodwill is six months.

F-86

d. Financial Statements of Combined Companies

[Statements of financial position] (in millions of Korean won) :

	KT				KTF
	As of June 1, 2009		As of December 31, 2008		As of June 1, 2009		As of December 31, 2008
Current assets	(Won)	4,926,684	(Won)	3,778,105	(Won)	2,716,833	(Won)	2,199,857
Investment assets		3,846,019		3,517,906		270,019		396,903
Property and equipment		9,932,337		10,428,674		3,919,107		4,165,339
Intangible asset		344,330		397,046		783,254		780,242
Other non-current assets		503,787		563,191		559,353		513,781
TOTAL ASSETS		19,553,157		18,684,922		8,248,566		8,056,122
Current liabilities		2,871,186		2,585,875		2,657,350		2,031,871
Non-current liabilities		8,274,862		7,267,158		1,282,719		1,658,402
TOTAL LIABILITIES		11,146,048		9,853,033		3,940,069		3,690,273
Total Equity		8,407,109		8,831,889		4,308,497		4,365,849
TOTAL LIABILITIES AND EQUITY	(Won)	19,553,157	(Won)	18,684,922	(Won)	8,248,566	(Won)	8,056,122

[Statements of income] (in millions of Korean won) :

	KT				KTF
	For the period from January 1, 2009 to the date of the merger		For the year ended December 31, 2008		For the period from January 1, 2009 to the date of the merger		For the year ended December 31, 2008
Operating Revenues	(Won)	4,662,137	(Won)	11,784,835	(Won)	3,516,358	(Won)	8,346,220
Operating Expenses		4,078,756		10,671,446		3,131,947		7,891,839
Non-operating Revenues		329,587		855,289		43,656		201,470
Non-operating Expenses		372,047		1,408,633		152,858		469,496
Income tax Expenses		105,765		110,235		45,833		21,776
NET INCOME	(Won)	435,156	(Won)	449,810	(Won)	229,376	(Won)	164,579

F-87

35.    SEGMENT INFORMATION

The Company determined its operating segments after the merger with KTF on June 1, 2009 as follows:

Details	Business service
Personal Customer Group (“Personal”)	PCS and WiBro
Home Customer Group (“Home”)	Telephone, Internet, data
Enterprise Customer Group (“Enterprise”)	and others
Others	Real estate, SI and others

a. Details of each segment for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007
	Personal		Home, Enterprise		Other		Sub-total		Elimination			Consolidated amount
Total sales	(Won)	7,293,321	(Won)	11,936,381	(Won)	1,778,977	(Won)	21,008,679	(Won)	(2,395,268	)	(Won)	18,613,411
Operating income	(Won)	440,900	(Won)	1,433,722	(Won)	83,395	(Won)	1,958,017	(Won)	(203,454	)	(Won)	1,754,563
Depreciation	(Won)	1,142,335	(Won)	2,134,638	(Won)	162,669	(Won)	3,439,642	(Won)	157,609		(Won)	3,597,251
Property and equipment and intangible assets	(Won)	5,117,816	(Won)	10,888,356	(Won)	635,113	(Won)	16,641,285	(Won)	382,039		(Won)	17,023,324

	2008
	Personal		Home, Enterprise		Other		Sub-total		Elimination			Consolidated amount
Total sales	(Won)	11,784,835	(Won)	8,346,220	(Won)	2,360,013	(Won)	22,491,068	(Won)	(2,898,119	)	(Won)	19,592,949
Operating income	(Won)	1,113,389	(Won)	454,381	(Won)	31,345	(Won)	1,599,115	(Won)	(158,835	)	(Won)	1,440,280
Depreciation	(Won)	2,205,496	(Won)	1,117,879	(Won)	163,391	(Won)	3,486,766	(Won)	(142,601	)	(Won)	3,344,165
Property and equipment and intangible assets	(Won)	10,825,720	(Won)	4,937,833	(Won)	660,152	(Won)	16,423,705	(Won)	239,164		(Won)	16,662,869

	2009
	Personal		Home, Enterprise			Other			Sub-total		Elimination			Consolidated amount
Total sales	(Won)	10,459,542	(Won)	8,962,978		(Won)	2,432,058		(Won)	21,854,578	(Won)	(2,205,458	)	(Won)	19,649,120
Operating income	(Won)	1,238,976	(Won)	(242,995	)	(Won)	(5,993	)	(Won)	989,988	(Won)	(23,529	)	(Won)	966,459
Depreciation	(Won)	1,372,157	(Won)	1,696,425		(Won)	199,878		(Won)	3,268,460	(Won)	7,374		(Won)	3,275,834
Property and equipment and intangible assets	(Won)	4,757,330	(Won)	10,653,089		(Won)	619,465		(Won)	16,029,884	(Won)	24,176		(Won)	16,054,060

F-88

b. Information by Industry

Assets and liabilities by industry as of December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008						2009
	Non-financial		Financial		Consolidated amount		Non-financial		Financial		Consolidated amount
Assets:
Current assets
Quick assets	(Won)	6,105,052	(Won)	543,933	(Won)	6,648,985	(Won)	6,587,387	(Won)	685,060	(Won)	7,272,447
Inventories		424,841		—		424,841		699,402		—		699,402
Sub-total		6,529,893		543,933		7,073,826		7,286,789		685,060		7,971,849
Non-current assets
Investments		510,807		35,193		546,000		512,953		48,417		561,370
Property and equipment		15,142,938		45,693		15,188,631		14,750,631		23,929		14,774,560
Intangible assets		1,474,099		139		1,474,238		1,279,236		264		1,279,500
Other		1,342,091		513,818		1,855,909		1,352,597		680,441		2,033,038
Sub-total		18,469,935		594,843		19,064,778		17,895,417		753,051		18,648,468
Total assets	(Won)	24,999,828	(Won)	1,138,776	(Won)	26,138,604	(Won)	25,182,206	(Won)	1,438,111	(Won)	26,620,317
Liabilities:
Current liabilities	(Won)	4,787,070	(Won)	453,958	(Won)	5,241,028	(Won)	6,145,841	(Won)	795,382	(Won)	6,941,223
Non-current liabilities		9,173,005		636,673		9,809,678		8,423,158		588,497		9,011,655
Total liabilities	(Won)	13,960,075	(Won)	1,090,631	(Won)	15,050,706	(Won)	14,568,999	(Won)	1,383,879	(Won)	15,952,878

Results of operations by industry for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008								2009
	Non-financial			Financial		Consolidated amount			Non-financial		Financial		Consolidated amount
Operating revenues	(Won)	19,484,587		(Won)	108,362	(Won)	19,592,949		(Won)	19,514,167	(Won)	134,953	(Won)	19,649,120
Operating expenses		18,047,795			104,874		18,152,669			18,564,584		118,077		18,682,661
Operating income		1,436,792			3,488		1,440,280			949,583		16,876		966,459
Non-operating revenues		1,051,518			22		1,051,540			806,842		970		807,812
Non-operating expenses		1,784,553			71		1,784,624			1,059,202		6		1,059,208
Income from continuing operations before income tax expense		703,757			3,439		707,196			697,223		17,840		715,063
Income tax expense on continuing operations		166,419			1,440		167,859			101,863		5,900		107,763
Newly included subsidiary’s net loss before acquisition		—			—		—			—		—		—
Income from continuing operations		537,338			1,999		539,337			595,360		11,940		607,300
Income from discontinuing operations		(26,047	)		—		(26,047	)		2,395		—		2,395
Net income	(Won)	511,291		(Won)	1,999	(Won)	513,290		(Won)	597,755	(Won)	11,940	(Won)	609,695

F-89

36.    VALUE ADDED INFORMATION

Value added information included in operating expenses for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007		2008		2009
Salaries and wages	(Won)	2,229,273	(Won)	2,268,386	(Won)	2,192,072
Share-based payment		1,103		1,922		1,049
Severance indemnities		359,511		362,342		1,128,370
Employee welfare		527,129		565,797		587,033
Rent		225,729		249,125		257,413
Depreciation		3,193,247		3,264,291		2,935,448
Amortization		404,004		438,544		426,018
Taxes and dues		260,506		269,196		207,268
Total	(Won)	7,200,502	(Won)	7,419,603	(Won)	7,734,671

37.    EMPLOYEE WELFARE

Employee welfare through various plans spent by the Company for the years ended December 31, 2008 and 2009 totaled (Won)565,797 million and (Won)587,033 million, respectively.

The Company donates cash to Employee Welfare Foundation each year. The related expenses recognized for the years ended December 31, 2008 and 2009 amounted to (Won)74,300 million and (Won)35,017 million, respectively.

38.    SHARE PURCHASE AGREEMENT TO ACQUIRE KEUM HO RENT A CAR CO., LTD.

On December 30, 2009, the Company and MBK Partners 2nd Private Equity Fund entered into a share purchase agreement to jointly acquire Keum Ho Rent A Car Co., Ltd. from Korea Express Inc. The acquisition will be completed during 2010 upon payment of acquisition cost in exchange of transfer of shares of Keum Ho Rent A Car Co., Ltd. from Korea Express Inc. after due diligence.

39.    PRE-DISCLOSURES OF IMPACT FROM TRANSITION TO K-IFRS

The Company plans to prepare its financial statements using K-IFRS starting from the year ending December 31, 2011. In October 2007, the Company set up the basic plan to adopt K-IFRS and as of December 31, 2009 it is analyzing the impact from the adoption of K-IFRS and is the developing necessary infrastructure to support and sustain its conversion to K-IFRS

F-90

40.    RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Korea (“Korean GAAP”), which differ in certain respects from accounting principles generally accepted in the United States of America (“U.S. GAAP”). The significant differences are described in the reconciliation tables below. Other differences do not have a significant effect on either consolidated net income or total equity.

The effects of the significant adjustments to net income for the years ended December 31, 2007, 2008 and 2009 which would be required if U.S. GAAP were to be applied instead of Korean GAAP are summarized as follows (in millions of Korean won):

	Note reference	2007			2008			2009
Net income in accordance with Korean GAAP		(Won)	1,170,978		(Won)	513,290		(Won)	609,695
Adjustments:
Goodwill impairment	40.c		—			(13,948	)		(1,132	)
Equity in income of associates:
Reversal of amortization of goodwill	40.c		180,343			166,422			140,169
Impairment loss relating to equity investee	40.c		—			(9,466	)		—
Additional acquisitions of equity investees	40.e		(15,760	)		6,351			(23,282	)
Intangible assets	40.f		(13,652	)		(14,329	)		(14,819	)
Property and equipment	40.g		(207,573	)		(114,744	)		(44,999	)
Interest capitalization (including related depreciation), net	40.h		5,310			(2,128	)		(7,238	)
Service installation fees	40.i		(9,236	)		5,865			232,505
Deferred income tax—methodology difference	40.j		(22,618	)		4,275			(6,357	)
Deferred income tax effects of U.S. GAAP adjustments	40.j		57,363			(15,228	)		(34,698	)
Capitalized foreign exchange transactions, net	40.k		3,433			880			6,473
Miscellaneous accounts	40.j		13,886			35,230			(16,707	)
Noncontrolling interest income	40.a and other		(2,420	)		10,953			1,015
			((Won)10,924	)	(Won)	60,133		(Won)	230,930
Net income as adjusted in accordance with U.S. GAAP		(Won)	1,160,054		(Won)	573,423		(Won)	840,625
Net income attributable to stockholders		(Won)	1,068,533		(Won)	518,245		(Won)	741,921
Net income attributable to noncontrolling interest		(Won)	91,521		(Won)	55,178		(Won)	98,704

F-91

The effects of the significant adjustments to total equity for the years ended December 31, 2008 and 2009 which would be required if U.S. GAAP were to be applied instead of Korean GAAP are summarized as follows (in millions of Korean won):

	Note reference	2008			2009
Total equity in accordance with Korean GAAP		(Won)	11,087,898		(Won)	10,667,439
Adjustments:
Goodwill impairment	40.c		(26,895	)		(28,027	)
Equity in earnings of equity method affiliates:
Reversal of goodwill amortization	40.c		1,012,727			1,152,896
Impairment loss relating to equity investee	40.c		(1,471,474	)		(1,471,474	)
Additional acquisitions of equity investees	40.e		787,293			764,011
Different useful life of intangibles	40.f		111,631			111,631
Intangible assets	40.f		38,681			23,862
Accumulated depreciation	40.g		(624,765	)		(669,764	)
Interest capitalization, net	40.h		65,694			58,456
Service installation fees	40.i		(475,753	)		(243,248	)
Deferred tax—methodology difference	40.j		32,864			26,507
Deferred tax effects of U.S. GAAP adjustments	40.j		209,666			179,986
Capitalized foreign exchange transactions, net	40.k		(3,016	)		3,457
Miscellaneous accounts	40.j		(9,474	)		16,105
Noncontrolling interest	40.a and other		(125,408	)		(135,393	)
			(478,229	)		(210,995	)
Total equity as adjusted in accordance with U.S. GAAP		(Won)	10,609,669		(Won)	10,456,444
Stockholders’ equity		(Won)	8,490,398		(Won)	10,287,594
Noncontrolling interest		(Won)	2,119,271		(Won)	168,850

a. Companies Included in Consolidation

Under Korean GAAP, all majority-owned subsidiaries and entities of which the Company or a controlled subsidiary owns more than 30% of total outstanding voting stock and is the largest stockholder are consolidated. However, U.S. GAAP generally requires that majority-owned subsidiaries be consolidated and that an entity which the Company has significant influence, generally including those in which it owns 20-50% of total outstanding voting stock, should not be consolidated; rather that entity should be accounted for under the equity method of accounting.

The following table shows the Company’s percentage of ownership and carrying value of each of its affiliates that are excluded from consolidation under U.S. GAAP and instead are accounted for under the equity method (in millions of Korean won):

	Percentage of ownership (%) Carrying value
Entity	2007	2008	2009	2007		2008		2009
Listed :
Olivenine	19.2	19.5	—	(Won)	21,431	(Won)	2,769	(Won)	—
KTSC	36.9	36.9	36.9	(Won)	12,338	(Won)	11,072	(Won)	14,775
KT Music (formerly, “KTF Music Corporation”)	35.3	35.3	35.3	(Won)	19,526	(Won)	18,705	(Won)	21,899
Unlisted :
KTP	44.9	44.9	44.9	(Won)	28,848	(Won)	31,633	(Won)	37,430
SFNH BF-(1)	43.3	43.3	43.3	(Won)	12,978	(Won)	10,505	(Won)	6,660
Vanguard Private Equity Fund	—	—	16.1		—		—	(Won)	5,650
Doremi Media	—	—	—		—		—		—

The quoted market values (based on closing KOSDAQ prices) of KTSC and KT Music shares held by the Company are (Won)24,578 million and (Won)52,587 million as of December 31, 2009, respectively.

F-92

Presented below is the summarized combined financial information of those entities that are consolidated under Korea GAAP but not for U.S. GAAP, prepared in accordance with Korean GAAP as of December 31, 2008 and 2009, and for each of the three years in the period ended December 31, 2009 (in millions of Korean won):

	2008		2009
Current assets	(Won)	185,447	(Won)	175,096
Non-current assets		172,011		160,738
Total assets		357,458		335,834
Current liabilities		104,128		87,964
Non-current liabilities		66,491		41,404
Total liabilities		170,619		129,368
Net assets	(Won)	186,839	(Won)	206,466

	2007			2008			2009
Operating revenues	(Won)	210,170		(Won)	272,407		(Won)	232,746
Operating income	(Won)	214,369		(Won)	268,978		(Won)	224,110
Net income	(Won)	8,294			((Won)15,551	)	(Won)	7,203
	2007			2008			2009
Net cash provided by operating activities	(Won)	4,487		(Won)	30,172		(Won)	62,018
Net cash used in investing activities		(23,322	)		(53,271	)		(31,534	)
Net cash used in financing activities		(19,992	)		(2,546	)		(21,502	)
Effect of changes in consolidated entities		16,536			—			20,580
Net increase (decrease) in cash and cash equivalents		(22,291	)		(25,645	)		29,562
Cash and cash equivalents at beginning of the year		69,425			47,185			19,046
Cash and cash equivalents at end of the year	(Won)	47,134		(Won)	21,540		(Won)	48,608

Condensed consolidated balance sheets as of December 31, 2008 and 2009, changes in consolidated total equity and condensed consolidated statements of cash flows of the Company under U.S. GAAP for each of the three years in the period ended December 31, 2009 are presented in Note 40 r.

b. Debt and Equity Securities

Under Korean GAAP, non-marketable securities classified as available-for-sale securities are carried at cost or fair value if applicable with unrealized holding gains and losses reported as a capital adjustment, net of tax. For U.S. GAAP purposes, investment in non-marketable equity securities are accounted for under the cost method or the equity method of accounting in accordance with ASC Topic 323 “Investments Equity Method and Joint Venture” and ASC Topic 325 “Investments Other.”

Under Korean GAAP, available-for-sale securities, whose likelihood of being disposed within one year from the balance sheet date is probable, are classified as current. Under U.S. GAAP, when the disposition of available-for-sale securities within one year is reasonably expected, available-for-sale securities are classified as current.

For U.S. GAAP purposes, the Company accounts for marketable equity and debt investments under the provisions of ASC Topic 320 “Debt and Equity Securities.” This guidance requires that marketable equity securities and all debt securities be classified in three categories and accounted for as follows:

• Debt securities that the enterprise has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and reported at amortized cost.

F-93

• Debt and equity securities that are bought and held principally for the purpose of selling in the short term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings.

• Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of stockholders’ equity until realized.

Information under U.S. GAAP with respect to investments under ASC Topic 320 at December 31, 2008 and 2009 are as follows (in millions of Korean won):

	2008
	Cost or amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Fair value
Equity securities (available-for-sale)	(Won)	103,388	(Won)	7,300	(Won)	(9,170	)	(Won)	101,518
Debt securities (available-for-sale)		6,117		—		(180	)		5,937
	(Won)	109,505	(Won)	7,300	(Won)	(9,350	)	(Won)	107,455
	2009
	Cost or amortized cost		Gross unrealized holding gains		Gross unrealized holding losses			Fair value
Equity securities (available-for-sale)	(Won)	18,726	(Won)	7,484	(Won)	(104	)	(Won)	26,106
Debt securities (available-for-sale)		4,877		420		—			5,297
	(Won)	23,603	(Won)	7,904	(Won)	(104	)	(Won)	31,403

The proceeds from sales of available-for-sale securities were (Won)1,181,025 million in 2007, (Won)614,405 million in 2008 and (Won)6,833 million in 2009. The realized gains on those sales were (Won)11,428 million in 2007, (Won)5,587 million in 2008 and (Won)1,716 million in 2009. The average-cost method is used to calculate gains or losses from the sale of available-for-sale securities.

Under Korean GAAP, when the subsequent recoveries of impaired available-for-sale securities and held-to-maturity securities result in an increase of their carrying amount, the recovery gains are reported in current operations up to the previously recognized impairment loss as reversal of loss on impairment of investment securities.

Under U.S. GAAP, the subsequent increase in carrying amount of the impaired and written down held-to-maturity securities is not allowed. The subsequent increase in fair value of available-for-sale securities is reported in other comprehensive income.

The subsequent recoveries of impaired available-for-sale securities amounted to (Won)76 million in 2007. However, such differences have not been reconciled for U.S. GAAP purposes, since the amounts are immaterial and nil in 2008 and 2009.

The Company has not included the disclosure requirements related to investments’ gross unrealized losses and fair value, since the amounts were immaterial.

c. Goodwill Impairment including Investor-level Goodwill

Under Korean GAAP, goodwill, which represents the excess of the acquisition cost over the fair value of net identifiable assets acquired, is amortized on a straight-line basis over its estimated

F-94

economic useful life not exceeding 20 years. When it is no longer probable that goodwill will be recovered from expected future economic benefits, it is expensed immediately. Also, for investments in affiliated companies accounted for using the equity method, the excess of acquisition cost of the affiliates over the Company’s share of their net assets at the acquisition date is amortized by the straight-line method over its estimated useful life.

Under U.S. GAAP, goodwill and indefinite-lived intangible assets are not amortized, but instead are tested for impairment at least annually. In accordance with ASC Topic 350, “Intangibles—Goodwill and Other”, goodwill is tested for impairment on an annual basis by comparing the fair value of the Company’s reporting units to their carrying amounts. The investor-level goodwill is tested for impairment in accordance with ASC Topic 323. The investor-level goodwill, which is recorded only at the investor’s financial statements, represents the excess of the acquisition cost of equity method investees over the fair value of investor’s share of net identifiable assets acquired.

The changes in the carrying amount of goodwill which is recorded in the Personal Customer Group for the years ended December 31, 2008 and 2009 are as follows (in millions of Korean won):

Balance as of January 1, 2008	(Won)	526,556
Goodwill acquired during the year		24,692
Balance as of December 31, 2008		551,248
Goodwill acquired during the year		—
Balance as of December 31, 2009	(Won)	551,248

d. Equity Method Accounting

Under Korean GAAP, a put and call combination contract should be recorded as a right and obligation of the Company to acquire shares in accordance with the terms of the contract. Accordingly, the Company recorded the right and obligation of the option contract as additional equity method investment securities and long-term accounts payable.

Under U.S. GAAP, the potential equity ownership that may become available to the Company upon exercise of the option is not recorded prior to exercise, as the Company does not have legal ownership of the underlying shares. However, based on the nature of the Company’s arrangement to potentially acquire additional shares in KDB, the Company has resumed recognition of its share, including the potential equity ownership, of investee gains and losses, and the amount recognized in earnings under U.S. GAAP is the same as that recognized under Korean GAAP, except for the effect of other differences described herein.

e. Additional Equity Investments in and Transactions of Subsidiaries

Under Korean GAAP, subsequent to acquiring a controlling financial interest in a subsidiary, additional equity investments by the Company in a subsidiaries stock and other equity transactions of subsidiaries are accounted for assuming such transactions occur as of the date of audited or reviewed financial statements of the acquired subsidiary closest to the date of acquisition. In addition, the difference between the Company’s cost of the acquired additional interest and the corresponding share of stockholders’ equity of the acquired subsidiary is presented as an adjustment to capital surplus.

Under U.S. GAAP, such equity investments in and transactions of affiliates and subsidiaries are recorded and accounted for as of the date the transaction occurs. As a result, the Company has a different basis in its equity investments in the subsidiaries under Korean GAAP as compared to U.S. GAAP. Therefore, any gains or losses recorded by the Company (which are recorded as capital transactions in stockholders’ equity) when an equity investee sells shares of its stock will be different

F-95

under U.S. GAAP as compared to Korean GAAP. In addition, under U.S. GAAP, the cost of an additional equity interest would be allocated based on the fair value of net tangible and identifiable assets acquired and liabilities assumed, with the excess allocated to goodwill.

f. Intangible Assets

Under Korean GAAP, the frequency usage right related to the second generation (“2G”) paid by the initial stockholders to obtain the operating licenses prior to the establishment of KTM.Com Co., Ltd. (“KTM”), which was merged into KTF in 2001, was not recognized as an intangible asset in applying purchase accounting of KTM by KT in 2000.

Under U.S. GAAP, the 2G frequency usage right was considered as indefinite lived intangible asset and thus in the process of purchase accounting of KTM, KT recognized the frequency usage right at fair value. However, on December 31, 2005, the Korea Communication Act (“Act”) was revised effective July 1, 2006. Under the revised Act, the frequency usage right of 2G will expire by June 2011. Thus, the Company amortizes the frequency usage right of 2G over the remaining useful life under U.S. GAAP beginning from the year ended December 31, 2006.

In addition, the frequency usage right related to the third generation (“3G”) acquired in 2000 has been accounted for in the same manner under Korean GAAP and U.S. GAAP.

Identifiable intangible assets determined in accordance with U.S. GAAP as of December 31, 2008 and 2009 are presented below.

	2008
	Gross carrying amount		Accumulated amortization		Net amount
	(In millions of Korean won)
Amortizable intangible assets:
Internal-use software	(Won)	876,471	(Won)	579,663	(Won)	296,808
Frequency usage rights		1,465,990		594,354		871,636
Buildings and facility utilization rights		127,896		79,799		48,097
Other		325,485		218,756		106,729
Total	(Won)	2,795,842	(Won)	1,472,572	(Won)	1,323,270

	2009
	Gross carrying amount		Accumulated amortization		Net amount
	(In millions of Korean won)
Amortizable intangible assets:
Internal-use software	(Won)	1,070,786	(Won)	686,739	(Won)	384,047
Frequency usage rights		1,465,990		726,088		739,902
Buildings and facility utilization rights		130,179		85,702		44,477
Other		316,586		251,834		64,752
Total	(Won)	2,983,541	(Won)	1,750,363	(Won)	1,233,178

Amortization expense:
For the year ended December 31, 2007	(Won)	284,016 million
For the year ended December 31, 2008		306,000 million
For the year ended December 31, 2009		314,102 million

F-96

Estimated amortization expense (in millions of Korean won):

Year ending December 31,
2010	(Won)	310,033
2011		246,239
2012		186,240
2013		137,251
2014		128,322
Thereafter		225,093

The weighted-average amortization period of total amortized intangible assets, internal-use software, frequency usage rights and utilization rights are 9 years, 6 years, 11 years and 20 years, respectively. The Company has no identifiable intangible assets that are not subject to amortization.

g. Depreciation

In 1995, KT adopted a method of depreciation, as allowed under Korean GAAP, whereby property and equipment placed in service at any time during the first half of the year received a full year of depreciation expense, and property and equipment placed in service at any time during the second half of the year received one-half year of depreciation. Also, as permitted under Korean GAAP, depreciation of these assets was based on lives which are shorter than their economic useful lives. In 1996, KT adopted the policy, also acceptable under Korean GAAP, whereby property and equipment is depreciated from the actual date it is placed in service, while continuing to use useful lives which are shorter than the economic useful lives of such assets. In 1998, under Korean GAAP, as required under a ruling by the National Tax Service (which is also applicable under Korean GAAP), the Company changed the estimated useful lives of certain assets, including underground access to cable tunnels and concrete and steel telephone poles acquired after 1995, from 6 years to periods ranging from 20 years to 40 years, and changed the depreciation method from the declining-balance method to the straight-line method.

In 1999, under Korean GAAP, the Company changed its depreciation method for buildings and structures acquired before December 31, 1994, from the declining-balance method to the straight-line method in order to be consistent with the method applied to buildings and structures acquired after January 1, 1995.

Under U.S. GAAP, property and equipment is generally depreciated over its estimated useful life in a systematic and rational manner. In addition, the depreciation method in the year of acquisition based on the Company’s in-service dates for its capital additions in 1995 described above, does not comply with U.S. GAAP in that significant depreciation expense is recognized prior to the actual use of the asset. The change in estimated useful lives in 1998, and the changes in 1998 and 1999 from the declining-balance method to the straight-line method would also not be appropriate under U.S. GAAP. Accordingly, adjustments have been reflected for U.S. GAAP purposes for the effect of each of these items.

Under U.S. GAAP, property and equipment is generally depreciated by using the declining-balance method except for the assets of certain subsidiaries, buildings and structures acquired in 1995 and thereafter which are depreciated using the straight-line method.

F-97

Under U.S. GAAP, the useful lives of property and equipment are summarized as follows:

	Estimated Useful Lives
Buildings and structures	5 - 60 years
Underground access to cable tunnels, and concrete and steel telephone poles	10 - 40 years
Machinery and equipment	3 - 15 years
Vehicles	3 - 10 years
Tools, furniture and fixtures:
Steel safe boxes	20 years
Tools, computer equipment, furniture and fixtures	3 - 8 years

h. Interest Capitalization

Under Korean GAAP, prior to January 1, 2003, interest was capitalized on borrowings related to the construction of all property and equipment and IMT-2000 frequency usage right, incurred prior to completing the acquisition, as part of the cost of such assets. Effective January 1, 2003, Korean GAAP was revised to allow a company to charge such interest expense to current operations. For Korean GAAP purpose, the Company adopted in 2003 the accounting policy not to capitalize such financing costs prospectively.

Under U.S. GAAP, interest costs related to certain assets that are routinely manufactured or otherwise produced in large quantities on a regular basis are not in the scope of interest capitalization. In addition, interest is capitalized in the amount that would have theoretically been avoided had expenditures not been made for assets which require a period of time to get them ready for their intended use.

Under U.S. GAAP, details of interest capitalization for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007		2008		2009
Total interest costs incurred	(Won)	458,951	(Won)	471,816	(Won)	512,309
Interest capitalized		13,372		15,376		8,330
Amounts charged to expense	(Won)	445,579	(Won)	456,440	(Won)	503,979

i. Revenue Recognition

Under Korean GAAP, non-refundable service installation fees for telephone and initial subscription fees for PCS and leased-line services are recognized as revenue when installation and initiation services are rendered.

Under U.S. GAAP, service installation fees and initial subscription fees related to activation of service are deferred and recognized as revenue over the expected terms of customer relationships. In 2009, due to a change in the market condition the Company changed the estimate of the expected terms of customer relationships of telephone, PCS, and leased-line service from 15 years to 11 years, from 4 years to 2 years and from 3 years to 6 years, respectively. The change in the estimated expected terms of customer relationships is accounted for as a change in accounting estimate on a prospective basis effective January 1, 2009 under the accounting standard related to change in accounting estimates. As a result, net income for the year ended December 31, 2009 increased by (Won)153 billion.

Under Korean GAAP, handset subsidy paid by the Company is accounted as expenses. However, under U.S. GAAP, the handset subsidy is treated as reduction of revenue in accordance with ASC Topic 605, “Revenue Recognition.”

F-98

j. Income Taxes

Under Korean GAAP, effective January 1, 2005, due to the adoption of SKAS No. 16 “Income Taxes”, deferred income taxes are recognized on the temporary difference related to unrealized gains and losses on investment securities that are reported as a separate component of stockholders’ equity. Any adjustments to income tax provision attributable to prior years are included in income tax expense (benefit). Consequently, there is no GAAP difference any longer in terms of deferred income taxes on unrealized gains and losses on investment securities.

Under U.S. GAAP, deferred income taxes are recognized on the temporary difference related to unrealized gains and losses on investment securities that are reported as other comprehensive income. Any adjustments to income tax provision attributable to prior years are included in income tax expense (benefit).

Under Korean GAAP, recognition of deferred income tax benefit from equity in losses of affiliates requires realization of the benefit within the near future, which is interpreted to mean within 5 years. The Company does not believe it is probable to realize such benefit within 5 years.

Under U.S. GAAP, deferred income tax assets are recognized for an excess of the tax basis over the amount for financial reporting of domestic and foreign investments accounted for on the equity method (except for corporate joint ventures). However, deferred income tax assets related to consolidated subsidiaries are recognized only if it is apparent that the temporary difference will reverse in the foreseeable future.

Under Korean GAAP, prior to January 1, 2005, all deferred income tax assets and liabilities were recorded as non-current. Effective January 1, 2005, per SKAS No. 16, deferred income tax assets and liabilities shall be classified as current or non-current based on the classification of the related assets or liabilities for financial reporting or the expected reversal date of the temporary difference. As a result of adoption of SKAS No. 16, there is no difference between Korean GAAP and U.S. GAAP as of December 31, 2008 and 2009, respectively.

Under Korean GAAP, in accordance with SKAS No. 16, effective from January 1, 2005, the Company did not recognize deferred income tax liabilities related to equity in gains of affiliates when it is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Under U.S. GAAP, deferred income tax liabilities are fully recognized for an excess of the amount for financial reporting over the tax basis of an investment in domestic subsidiaries and corporate joint ventures, unless the investment in the subsidiary can be recovered tax-free under local tax laws and management expects that it will ultimately use that means. However, deferred income tax liabilities are not recognized in an investment in a more than 50 percent-owned foreign subsidiary or foreign corporate joint venture that is essentially permanent in duration.

In 2006 the Company adopted KAI opinion 06-2 “Deferred Tax Accounting for Investments in Subsidiaries, Affiliated Companies Accounted for Using the Equity Method, and Interest in Joint Ventures”. This statement requires recognition of deferred income tax asset or liability based on net of all temporary differences arising from the same subsidiary or investee rather than on an individual basis. According to the transition rule of the statement, Korean GAAP prior year financial statements have been restated. However, in 2008 the KAI opinion 06-2 was slightly amended as described in Note 2 (b), in which temporary differences arising from certain transactions under SKAS No. 16, such as elimination of inter-company transactions through equity method, should be separately treated as an individual basis when they are recognized in the consolidated financial statements. Consequently,

F-99

there is no GAAP difference as of December 31, 2008 and 2009, respectively, in terms of the recognition of temporary differences arising from certain transactions mentioned above.

Under U.S. GAAP, on January 1, 2007, the Company adopted accounting guidance which clarifies the accounting guidance for uncertainties in income taxes. The guidance requires that the tax effect(s) of a position be recognized only if it is “more-likely-than-not” to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold represents a positive assertion by management that a company is entitled to the economic benefits of a tax position. If a tax position is not considered more-likely-than-not to be sustained based solely on its technical merits, no benefits of the tax position are to be recognized. The more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of a benefit. With the adoption of the accounting guidance, companies are required to adjust their financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Any necessary adjustment would be recorded directly to retained earnings and reported as a change in accounting principle.

k. Foreign Currency Transactions

Under Korean GAAP, prior to January 1, 2003, all unrealized foreign currency translation gains and losses on monetary assets and liabilities, except for amounts included in the cost of property and equipment, were included in results of operations. Effective January 1, 2003 the Company adopted SKAS No. 7, “Capitalization of Financing Costs”. As allowed by the standard, the Company elected to include all unrealized foreign currency translation gains and losses (including property and equipment) in the results of operations.

Under U.S. GAAP, all foreign exchange transaction gains and losses (referred to as translation gains and losses under Korean GAAP) are included in the results of operations for the current period and therefore, the amounts included in property and equipment and related depreciation expense under Korean GAAP are reversed.

Under Korean GAAP, the convertible notes denominated in a foreign currency are regarded as non-monetary liabilities since they have equity-like characteristics, and the Company does not recognize the associated foreign currency translation gain and loss.

Under U.S. GAAP, the convertible notes denominated in a foreign currency are translated at the rate of exchange on the balance sheet date, and the resulting foreign currency transaction gain and loss is included in the results of operations.

l. Noncontrolling interest

Under Korean GAAP, noncontrolling interest in consolidated subsidiaries is presented as a separate component of equity in the consolidated balance sheet.

Under U.S. GAAP, as described in Note 40 (p) in 2009 the Company retrospectively adopted the presentation and disclosure provisions of new accounting guidance on a noncontrolling interest in its consolidated financial statements, which required noncontrolling interest to be presented as a separate component of equity in the consolidated financial statements as well as modified the presentation of net income and other comprehensive income to be attributed to controlling and noncontrolling interest. Consequently, there is no GAAP difference any longer in terms of presentation of noncontrolling interest in the consolidated financial statements.

F-100

m. Other

Korean GAAP requires gains and losses from the sale of property and equipment and impairment write-downs to be included as part of non-operating revenues (expenses). Under U.S. GAAP, gains and losses from the sale of property and equipment and impairment write-downs are required to be recorded as a component of operating income.

Under Korean GAAP, purchase of treasury stock is regarded as temporary and does not impact the ownership percentages of stockholders unless there is an explicit purpose of retirement of the repurchased shares in accordance with resolution of board of directors or stockholders’ meeting. Under U.S. GAAP, purchase of treasury stock results in a change of an entity’s ownership structure and ownership percentages of stockholders.

n. Comprehensive Income

Prior to January 1, 2007, Korean GAAP did not require the presentation of comprehensive income, however, effective January 1, 2007, the Company adopted SKAS No. 21, “Preparation and Presentation of Financial Statements 1”, which requires separate disclosure of the details of comprehensive income. Consequently, there is no GAAP difference any longer in terms of disclosure of comprehensive income and its components.

Under U.S. GAAP, comprehensive income and its components must be presented in the financial statements. Comprehensive income includes all changes in total equity during a period except those resulting from investments by, or distributions to, owners, including certain items not included in the current results of operations.

Comprehensive income for the years ended December 31, 2007, 2008 and 2009 are summarized as follows (in millions of Korean won):

	2007		2008			2009
Attributable to stockholders :
Net income as adjusted in accordance with U.S. GAAP	(Won)	1,068,533	(Won)	518,245		(Won)	741,921
Other comprehensive income, net of tax :
Foreign currency translation adjustments		19,295		16,921			(19,389	)
Unrealized gains on investments :
Unrealized holding gains(losses), net of tax of (Won)1,023 million, ((Won)1,907) million and (Won)384 million in 2007, 2008 and 2009, respectively		2,698		(6,762	)		1,362
Reclassification adjustment for losses realized in net earning due to disposal, net of tax of (Won)1,004 million, (Won)687 million and (Won)378 million in 2007, 2008 and 2009, respectively		2,648		2,436			1,388
Gains(losses) on valuation of derivatives for cash flow hedge, net of tax of (Won)768 million, ((Won)1,297) million and ((Won)5,840) million in 2007, 2008 and 2009, respectively		2,024		(4,598	)		(20,705	)
Comprehensive income as adjusted in accordance with U.S. GAAP		1,095,198		526,242			704,577

	2007		2008			2009
Attributable to noncontrolling interest :
Net income as adjusted in accordance with U.S. GAAP		91,521		55,178			98,704
Other comprehensive income, net of tax :
Foreign currency translation adjustments		2,896		8,418			(7,910	)
Others		2,132		(8,183	)		(2,938	)
Comprehensive income as adjusted in accordance with U.S. GAAP		96,549		55,413			87,856
Total Comprehensive Income	(Won)	1,191,747	(Won)	581,655		(Won)	792,433

F-101

o. Statements of Cash Flows

Statements of cash flows under Korean GAAP include the cash flows of KTSC, KTP, SFNH BF-(1), KT Music (formerly, “KTF Music Corporation”), Vanguard Private Equity Fund and Doremi Media, which are accounted for under the equity method under U.S. GAAP

Under Korean GAAP, cash flows from contributions that are restricted for the purposes of constructing assets are included in investing activities. For U.S. GAAP purposes, those cash flows are included in financing activities. In addition, under Korean GAAP cash flows from initial consolidation or deconsolidation of a subsidiary is presented as a separate line whereas for U.S. GAAP purposes, it is categorized as investing activities net of cash paid or received.

p. Significant New Accounting Pronouncements

(i) In September 2006, the Financial Accounting Standards Board (“FASB”) issued enhanced guidance for using fair value to measure assets and liabilities by establishing a common definition of fair value, providing a framework for measuring fair value under GAAP, and expanding the disclosure requirements about fair value measurements. In February 2008, the FASB deferred the adoption of such guidance for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a non-recurring basis. The Company adopted the fair value guidance for nonfinancial assets and nonfinancial liabilities on January 1, 2009 with no material impact to the consolidated financial statements. In April 2009, the FASB issued additional guidance around fair value, which provided: (a) additional application guidance for estimating fair value when the volume and activity for the asset or liability have greatly decreased and (b) indicators for identifying transactions that are not considered orderly. The additional guidance was effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company adopted the provisions in 2009 with no material impact to the consolidated financial statements.

(ii) In December 2007, the FASB issued an amended accounting guidance on business combinations. The guidance revises the method of accounting for a number of aspects of business combinations including acquisition costs, contingencies (including contingent assets, contingent liabilities and contingent purchase price) and post-acquisition exit activities of acquired businesses. The Company adopted the new guidance in 2009 with no material impact to the consolidated financial statements.

(iii) In December 2007, the FASB also issued new accounting guidance on noncontrolling interests in consolidated financial statements. The new accounting guidance requires that a noncontrolling interest in the equity of a subsidiary be accounted for and reported as equity, provides revised guidance on the treatment of net income and losses attributable to the noncontrolling interest and changes in ownership interests in a subsidiary and requires additional disclosures that identify and distinguish between the interests of the controlling and noncontrolling owners. The Company retrospectively adopted the presentation and disclosure requirements of the new guidance. The adoption of the new guidance did not have a material effect on the consolidated financial statements.

(iv) In March 2008, the FASB issued enhanced guidance for disclosures about derivative instruments and hedging activities by expanding the disclosure requirements regarding: (1) how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. In

F-102

addition, this guidance requires qualitative disclosures about objectives and strategies for using derivatives described in the context of an entity’s risk exposures, quantitative disclosures about the location and fair value of derivative instruments and associated gains and losses, and disclosures about credit-risk-related contingent features in derivative instruments. The Company adopted the new guidance in 2009 with no material impact to the consolidated financial statements.

(v) In April 2008, the FASB amended the factors that the Company should consider when developing renewal or extension assumptions used in the determination of useful lives of intangible assets. These assumptions should be consistent with the expected cash flow method used to measure the fair value of the intangible asset. The amended guidance was applicable prospectively to intangible assets acquired after January 1, 2009 with no material impact to the consolidated financial statements.

(vi) In November 2008, the FASB ratified guidance approved by the Emerging Issues Task Force addressing how the business combination and noncontrolling interest guidance issued by the FASB might impact the accounting for equity method investments. The guidance was effective prospectively for new investments acquired in fiscal years beginning on or after December 15, 2008. The Company adopted the guidance in 2009 with no material impact on the consolidated financial statements.

(vii) In July 2009, the FASB issued the FASB Accounting Standard Codification (“Codification” or “ASC”), which became the single source of authoritative U.S. generally accepted accounting principles. Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASU”), which will serve to update the Codification, provide background information about the guidance and provide the basis for conclusions on the changes to the Codification. The Company adopted the Codification, as required, for annual periods ending after September 15, 2009. As a result, references to accounting literature contained in our financial disclosures have been updated to reflect the new ASC structure.

(viii) In June 2009, the FASB amended the consolidation rules related to Variable Interest Entities (“VIEs”). The new rules expand the primary beneficiary analysis to incorporate a qualitative review of which entity controls and directs the activities of the VIE. The amendments also modify the rules regarding the frequency of ongoing reassessments of whether a company is the primary beneficiary. Under the revised guidance, companies are required to perform ongoing reassessments as opposed to only when certain triggering events occur, as was previously required. This guidance will be effective in 2010 and is not expected to have a material effect on the consolidated financial statements.

(ix) In October 2009, the FASB issued ASU 2009-13 “Multiple-Deliverable Revenue Arrangements.” The update addresses how revenues should be allocated among all products and services included in sales arrangements. It establishes a selling price hierarchy for determining the selling price of each product or service, with vendor-specific objective evidence (“VSOE”) at the highest level, third-party evidence of selling price at the intermediate level, and a best estimate of the selling price at the lowest level. It replaces “fair value” with “selling price” in revenue allocation guidance, eliminates the residual method as an acceptable allocation method, and requires the use of the relative selling price method as the basis for allocation. It also significantly expands the disclosure requirements for such arrangements, including, potentially, certain qualitative disclosures. ASU 2009-13 will be effective prospectively for sales entered into or materially modified in fiscal years beginning on or after

F-103

June 15, 2010. The FASB permits early adoption of ASU 2009-13, applied retrospectively, to the beginning of the year of adoption. Management is currently evaluating the impact on the consolidated financial statements.

(x) In October 2009, the FASB issued ASU 2009-14 “Certain Revenue Arrangements That Include Software Elements.” The update clarifies the guidance for allocating and measuring revenue, including how to identify software that is out of the scope. The update also amends accounting and reporting guidance for revenue arrangements involving both tangible products and software that is “more than incidental to the tangible product as a whole.” That type of software and hardware will be outside of the scope of software revenue guidance, and the hardware components will also be outside of the scope of software revenue guidance and may result in more revenue recognized at the time of the hardware sale. Additional disclosures will discuss allocation of revenue to products and services in sales arrangements and the significant judgments applied in the revenue allocation method, including impacts on the timing and amount of revenue recognition. ASU 2009-14 will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. ASU 2009-14 has the same effective date, including early adoption provisions, as ASU 2009-13. Companies must adopt ASU 2009-14 and ASU 2009-13 at the same time. Management is currently evaluating the impact on the consolidated financial statements.

(xi) In December 2009, the FASB issued ASU 2009-16 “Transfers and Servicing.” This update removes the concept of a qualifying special-purpose entity (“QSPE”) and creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale. To determine if a transfer is to be accounted for as a sale, the transferor must assess whether it and all of the entities included in its consolidated financial statements have surrendered control of the assets. This standard is effective from January 1, 2010, with adoption applied prospectively for transfers that occur on and after the effective date. The elimination of the QSPE concept will require to retrospectively assess all current off-balance sheet QSPE structures for consolidation under ASC Topic 810, “Consolidation,” and record a cumulative-effect adjustment to retained earnings for any consolidation change. Retrospective application of ASU 2009-16, specially the QSPE removal, is being assessed as part of the analysis required from ASU 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.” Refer to the section below for further information related to ASU 2009-17.

(xii) In December 2009, the FASB issued ASU 2009-17, which addresses the primary beneficiary assessment criteria for determining whether an entity is required to consolidate a VIE. This update requires an entity to determine whether it is the primary beneficiary by performing a qualitative assessment; rather than using the quantitative-based model required under the previous accounting guidance. The qualitative assessment consists of determining whether the entity has both the power to direct the activities that most significantly impact the VIE’s economic performance and has the right to receive benefits or obligation to absorb losses that could potentially be significant to the VIE. This standard is effective from January 1, 2010. Management is currently evaluating the impact on the consolidated financial statements.

(xiii) In January 2010, the FASB amended the disclosure guidance related to fair value measurements. The amended disclosure guidance requires new fair value measurement disclosures and clarifies existing fair value measurement disclosure requirements. The amended disclosure guidance related to disclosures about purchases, sales, issuances and settlements of Level 3 instruments will be effective for fiscal years beginning after December 15, 2010. The remaining amended disclosure guidance will be effective for annual reporting periods beginning after December 15, 2009. Management is currently evaluating the impact of the amended disclosure guidance related to fair value measurements.

F-104

(xiv) In January 2010, the FASB issued authoritative guidance for improving disclosures about fair value measurements, which requires new and amended disclosure requirements for classes of assets and liabilities, inputs and valuation techniques and transfers between levels of fair value measurements and accounting for distributions to shareholders with components of stock and cash, which clarifies the accounting for distributions to shareholders that offer them the ability to elect to receive their entire distribution in cash or shares of equivalent value. This guidance will be effective beginning in January 2010, and is not expected to have a material effect on the consolidated financial statements.

q. Income per Share

The following table sets forth the computation of basic and diluted income per share attributable to stockholders for the years ended December 31, 2007, 2008 and 2009:

	2007				2008						2009
	Diluted		Basic		Diluted			Basic			Diluted			Basic
CONSOLIDATED (in millions of Korean won)
Net income from continuing operations	(Won)	996,048	(Won)	996,048	(Won)	521,692		(Won)	521,692		(Won)	746,849		(Won)	742,454
Net income (loss) from discontinuing operations		72,485		72,485		(3,447	)		(3,447	)		(533	)		(533	)
Net income	(Won)	1,068,533	(Won)	1,068,533	(Won)	518,245		(Won)	518,245		(Won)	746,316		(Won)	741,921
AVERAGE EQUIVALENT SHARES
Shares of common stock outstanding		206,599,294		206,599,294		202,891,015			202,891,015			219,512,696			219,512,696
Dilutive effect of exchangeable bond		—		—		—			—			4,655,062			—
Total average equivalent shares		206,599,294		206,599,294		202,891,015			202,891,015			224,167,758			219,512,696
PER SHARE AMOUNTS (in Korean won)
Net income from continuing operations	(Won)	4,821	(Won)	4,821	(Won)	2,571		(Won)	2,571		(Won)	3,332		(Won)	3,382
Net income (loss) from discontinuing operations		351		351		(17	)		(17	)		(2	)		(2	)
Net income per share	(Won)	5,172	(Won)	5,172	(Won)	2,554		(Won)	2,554		(Won)	3,330		(Won)	3,380

Basic income per share is computed on the basis of the weighted-average number of common stock outstanding. Diluted income per share is computed on the basis of the weighted-average number of common stock outstanding plus the effect of outstanding exchangeable bonds using the “if-exchanged method”. The denominator of the diluted income per share computation is adjusted to include the number of additional common stock that would have been outstanding had the dilutive potential common stock been issued at the beginning of the period. In addition, the numerator is adjusted to include the after-tax amount of interest and foreign currency translation gain (loss) recognized associated with the exchangeable bonds. Stock options were not considered when calculating diluted income per share because the exercise price of the stock options was greater than the average market price of the shares and, therefore, the effect would have been antidilutive.

F-105

r. Condensed Consolidated U.S. GAAP Financial Information

Condensed consolidated balance sheets in accordance with U.S. GAAP as of December 31, 2008 and 2009 are presented as follows (in millions of Korean won):

	2008		2009
Current assets
Accounts receivable—trade	(Won)	2,963,183	(Won)	3,596,936
Other current assets		3,946,259		4,232,602
Total current assets		6,909,442		7,829,538
Investments		496,052		463,701
Property and equipment, net		14,460,108		14,040,901
Goodwill		584,761		560,834
Other assets		3,523,729		3,630,526
Total assets	(Won)	25,974,092	(Won)	26,525,500
Current liabilities
Accounts payable—trade	(Won)	827,971	(Won)	1,478,667
Other current liabilities		4,441,864		5,505,811
Total current liabilities		5,269,835		6,984,478
Long-term debt, excluding current portion		7,910,118		7,515,257
Other long-term liabilities		2,184,470		1,569,321
Total liabilities		15,364,423		16,069,056
Stockholders’ equity		8,490,398		10,287,594
Noncontrolling interest		2,119,271		168,850
Total equity		10,609,669		10,456,444
Total liabilities and equity	(Won)	25,974,092	(Won)	26,525,500

F-106

Changes in consolidated total equity in accordance with U.S. GAAP for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007			2008			2009
Attributable to stockholders :
Beginning of the year	(Won)	8,037,993		(Won)	8,438,391		(Won)	8,490,398
Net income		1,068,533			518,245			741,921
Retirement of treasury stock		(196,329	)		(73,807	)		(508,912	)
Acquisition of subsidiaries’ stock		—			—			(24,105	)
Acquisition of subsidiaries’ treasury stock		—			—			(29,266	)
Foreign currency translation adjustments		19,295			16,921			(19,389	)
Unrealized gains on investments, net of tax		5,346			(4,326	)		2,700
Unrealized gains on valuation of derivatives, net of tax		2,024			(4,598	)		(20,705	)
Sale of treasury stock, net		884			807			1,526,541
Exercise of exchange rights of exchangeable bond		—			—			480,435
Change by merger		—			—			(131,236	)
Dividends		(416,191	)		(407,374	)		(226,280	)
Adoption of FIN 48		(58,667	)		—			—
Changes in consolidated entities		(23,990	)		—			—
Other, net of tax		(507	)		(6,139	)		5,492
End of the year	(Won)	8,438,391		(Won)	8,490,398		(Won)	10,287,594
Attributable to noncontrolling interest :
Beginning of the year	(Won)	2,182,548		(Won)	2,150,614		(Won)	2,119,271
Net income		91,521			55,178			98,704
Acquisition of subsidiaries’ stock		(365	)		—			(295,055	)
Acquisition of subsidiaries’ treasury stock		81			140			(251,048	)
Increase in subsidiaries’ capital stock		—			10,536			6,522
Appropriation of subsidiaries’ treasury stock		(79,582	)		(112,298	)		—
Change by merger		—			—			(1,511,630	)
Dividends		(56,583	)		(1,273	)		(2,457	)
Changes in consolidated entities		8,994			14,964			11,884
Changes in comprehensive income		5,028			235			(10,848	)
Other		(1,028	)		1,175			3,507
End of the year		2,150,614			2,119,271			168,850
Total equity	(Won)	10,589,005		(Won)	10,609,669		(Won)	10,456,444

F-107

Condensed consolidated statements of cash flows in accordance with U.S. GAAP for the years ended December 31, 2007, 2008 and 2009 are set out below (in millions of Korean won):

	2007			2008			2009
CASH FLOWS FROM OPERATING ACTIVITIES :
Net income	(Won)	1,160,054		(Won)	573,423		(Won)	840,625
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3,695,405			3,663,037			3,287,343
Provision for doubtful accounts		67,263			139,441			91,863
Loss on disposal of property and equipment		76,839			89,734			118,925
Equity in loss of associates		(145,861	)		(164,336	)		(81,078	)
Deferred income tax benefit		(68,417	)		(115,337	)		(20,522	)
Gain on disposition of available-for-sale securities, net		(11,428	)		(5,587	)		(1,716	)
Impairment losses of equity method affiliates		—			22,058			—
Foreign currency translation gain (loss), net		7,293			753,592			(245,748	)
Gain (loss) on settlement and valuation of derivatives, net		(22,440	)		(649,360	)		172,717
Changes in assets and liabilities related to operating activities:
Notes and accounts receivable		(416,506	)		(161,287	)		(620,909	)
Inventories		(72,708	)		(142,512	)		(287,367	)
Advance payments		(20,599	)		(2,795	)		(20,687	)
Notes and long-term accounts receivable		(9,384	)		(654,248	)		(533,925	)
Accounts payable		14,740			(423,619	)		1,612,516
Advance receipts		(30,484	)		19,783			52,707
Income taxes payable		(150,832	)		(153,173	)		(169,092	)
Prepaid expenses		(12,678	)		(44,291	)		(19,915	)
Withholdings		24,657			26,404			(129,912	)
Accrued expenses		66,584			24,904			(39,298	)
Refundable deposits for telephone installation		(66,145	)		(59,437	)		(85,129	)
Payment of severance indemnities		254,671			140,352			(214,965	)
Deposits for severance indemnities		(132,427	)		(148,822	)		49,861
Other, net		52,483			160,633			(418,286	)
Net Cash Provided by Operating Activities		4,260,080			2,888,557			3,338,008
CASH FLOWS FROM INVESTING ACTIVITIES :
Acquisition of property and equipment		(3,621,428	)		(3,322,381	)		(2,759,777	)
Disposal of property and equipment		103,471			53,606			69,777
Decrease (increase) in short-term financial instruments, net		114,459			209,474			(39,287	)
Disposal of available-for-sale securities		1,181,025			614,405			6,833
Decrease in equity method investment securities		10,807			1,047			1,322
Collection of held-to-maturity securities		252			5			14,093
Acquisition of available-for-sale securities		(981,008	)		(692,289	)		(79,847	)
Acquisition of equity method investment securities		(7,220	)		(123,171	)		(18,191	)
Acquisition of held-to-maturity securities		(5	)		(13,988	)		(5	)
Acquisition of assets and liabilities of consolidated subsidiaries		(31,928	)		(5,619	)		37,580
Other, net		(178,630	)		(223,359	)		(50,253	)
Net Cash Used in Investing Activities		(3,410,205	)		(3,502,270	)		(2,817,755	)
CASH FLOWS FROM FINANCING ACTIVITIES :
Payment of dividends		(472,774	)		(408,242	)		(228,332	)
Repayment of short-term borrowings		30,601			55,440			101,395
Repayment of long-term borrowings and current portion of long-term debt		(1,314,424	)		(2,121,831	)		(1,431,343	)
Increase in long-term borrowings		872,085			3,735,500			1,498,630
Acquisition of treasury stock		(195,217	)		(73,807	)		(528,143	)
Outflows from capital transactions of consolidated entities		(150,055	)		(110,917	)		(276,388	)
Other, net		(41,383	)		70,702			(37,542	)
Net Cash Provided by (Used in) Financing Activities		(1,271,167	)		1,146,845			(901,723	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(421,292	)		533,132			(381,470	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR		1,759,144			1,337,852			1,870,984
CASH AND CASH EQUIVALENTS AT END OF THE YEAR	(Won)	1,337,852		(Won)	1,870,984		(Won)	1,489,514
Supplemental schedule:
Cash paid for interest (net of amounts capitalized)	(Won)	433,471		(Won)	406,485		(Won)	498,299
Cash paid for income taxes	(Won)	486,448		(Won)	453,532		(Won)	274,302

F-108

41.    ADDITIONAL U.S. GAAP DISCLOSURES

a. Income Tax Expense

The components of income tax expense for the years ended December 31, 2007, 2008 and 2009 are as follows (in millions of Korean won):

	2007			2008			2009
Current income tax expense	(Won)	337,904		(Won)	293,512		(Won)	138,194
Deferred income tax benefit		(68,417	)		(115,337	)		(20,522	)
Income tax expense	(Won)	269,487		(Won)	178,175		(Won)	117,672

Substantially all income before income taxes and related income tax expense (benefit) are attributable to domestic operations. The provision for income taxes using statutory tax rates differs from the actual provision for the years ended December 31, 2007, 2008 and 2009 for the following reasons (in millions of Korean won):

	2007			2008			2009
Provision for income taxes at statutory tax rates	(Won)	373,159		(Won)	207,625		(Won)	232,025
Tax credits		(121,159	)		(197,492	)		(110,825	)
Additional income tax payment (refund) related to prior year		(23,683	)		(4,716	)		12,692
Non-temporary difference		18,217			24,863			15,985
Changes in deferred income tax unrecognized		9,584			(65	)		(35,338	)
Tax rate changes		—			142,437			3,421
Others		13,369			5,523			(288	)
Actual provision for income taxes	(Won)	269,487		(Won)	178,175		(Won)	117,672

The effective tax rates after adjustments of certain differences between amounts reported for financial accounting and income tax purpose, were approximately 19.9%, 23.6% and 12.3% for the years ended December 31, 2007, 2008 and 2009, respectively.

The tax effects of temporary differences that resulted in significant portions of the deferred income tax assets and liabilities at December 31, 2008 and 2009, computed under U.S. GAAP, and a description of financial statement items that created these differences are as follows (in millions of Korean won):

	2008			2009
Deferred income tax assets:
Allowance for doubtful accounts	(Won)	119,855		(Won)	122,873
Refundable deposits for telephone installation		11,205			9,609
Investment securities		8,840			9,154
Inventories		4,543			1,174
Property and equipment		130,443			156,079
Unearned revenue		74,560			55,121
Equity method investment securities		24,251			23,737
Tax credit carryforwards		131,102			169,122
Tax loss carryforwards		49,183			61,882
Accrued expenses		53,825			33,918
Other		240,529			266,453
Total deferred income tax assets		848,336			909,122
Valuation allowance		(78,444	)		(88,229	)
Deferred income tax assets		769,892			820,893
Deferred income tax liabilities:
Equity method investment securities		(41,678	)		(47,623	)
Accrued interest income		(2,798	)		(1,855	)
Deferred income tax liabilities		(44,476	)		(49,478	)
Net deferred income tax assets	(Won)	725,416		(Won)	771,415

F-109

In 2008 and 2009, valuation allowances were recognized by certain subsidiaries as realization of deferred income tax asset was not assessed as more likely than not mainly due to lack of expected future taxable income.

In 2009, the Company was eligible for tax credits of (Won)276,332 million. However, due to the minimum tax provisions, the Company utilized only (Won)80,349 million. The remaining tax credit will expire in 2014. During 2009, the Company concluded that the remaining tax credit was more likely than not of realization in the future based on future taxable income estimates. As a result, the Company recorded an income tax benefit of (Won)169,122 million of the tax credit. The tax loss carryforwards of (Won)281,201 million as of December 31, 2009 will expire through 2019. During 2009, certain subsidiaries including KT Tech did not recognize deferred income tax assets amounting to (Won)61,642 million which resulted from the tax effects of tax loss carryforwards of (Won)280,194 million in excess of taxable differences and future taxable income.

In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and tax carryforwards are utilizable. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred income tax assets are deductible, management believes that it is more likely than not the Company will realize the benefits of these deductible differences and tax carryforwards.

The amount of unrecognized tax benefits that would favorably affect the effective income tax rate was (Won)784 million and ((Won)25,872) million for the years ended December 31, 2008 and 2009, respectively. The liability for uncertain tax positions is classified as a non-current liability in accordance the guidance.

A reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows (in millions of Korean won):

	2007			2008			2009
Balance at January 1,	(Won)	67,142		(Won)	6,450		(Won)	4,252
Additions to tax positions recorded during the current year		3,303			573			(5,293	)
Additions to tax positions recorded during prior years		—			268			347
Reductions to tax positions recorded during prior years		—			(226	)		(360	)
Reductions for settlement		(63,995	)		(2,813	)		(564	)
Balance at December 31,	(Won)	6,450		(Won)	4,252		(Won)	(1,618	)

The Company’s practice is to classify interest on uncertain tax positions in non-operating expense whereas penalties are classified in income tax expense. The Company recognized (Won)295 million and (Won)347 million in penalties for the years ended December 31, 2008 and 2009, respectively. As of December 31, 2008 and 2009, the Company had (Won)683 million and (Won)909 million accrued for the payment of penalties.

The Company has open tax years ranging from 2005 to 2009, by which its taxes remain subject to examination. However, the Company does not anticipate that the total amount of unrecognized tax benefits will significantly change in the next 12 months.

F-110

b. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). GAAP establishes a valuation hierarchy for prioritizing the inputs and the hierarchy places greater emphasis on the use of observable market inputs and less emphasis on unobservable inputs. When determining fair value, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of the hierarchy are as follows: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Following is a description of the valuation methodologies the Company used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

(i) Recurring Fair Value

Securities

The Company classifies its securities within Level 1 of the valuation hierarchy where quoted prices are available in an active market. The Company generally classifies its securities within Level 2 of the valuation hierarchy where quoted market prices are not available. If quoted market prices are not available, the Company determines the fair value of its securities using pricing models, quoted prices of securities with similar characteristics or discounted cash flow models.

Derivatives

The Company generally classifies derivatives within Level 2 of the valuation hierarchy. The derivative financial instruments consist of cross currency interest rate swap and put option contracts. The cross currency interest swaps are valued using internal models that use as their basis readily observable market inputs, such as time value, forward interest rates, volatility factors and current and forward market prices for foreign currency.

The Company classifies put option within Level 3 of the valuation hierarchy. The put option is valued using internal model with significant unobservable inputs as Level 3 of the valuation hierarchy. The fair value of the put option is measured using Black-Sholes option pricing model that utilizes unobservable inputs such as expectation about dividend and future volatility. In addition, considering the fair value measurement, management judgments are applied to assess the appropriate level of valuation adjustments to reflect counterparty credit quality and the Company’s own nonperformance risk, where relevant.

F-111

The following fair value hierarchy table presents information regarding the assets and liabilities measured at fair value on a recurring basis as of December 31, 2008 and 2009, respectively (in millions of Korean won):

	2008
	Level 1		Level 2		Level 3		Total
ASSETS
Securities
• Beneficiary certificates	(Won)	39,696	(Won)	—	(Won)	—	(Won)	39,696
• Available-for-sale securities :		107,455		—		—		107,455
• Held-to-maturity securities		—		14,073		—		14,073
Derivative instruments assets :
• Currency swap		—		72,127		—		72,127
• Combined interest rate currency swap		—		417,731		—		417,731
• Put option		—		—		14,540		14,540
Total	(Won)	147,151	(Won)	503,931	(Won)	14,540	(Won)	665,622
LIABILITIES
Derivative instruments liabilities :
• Interest rate swap		—		15,641		—		15,641
• Currency forwards		—		4,755		—		4,755
Total	(Won)	—	(Won)	20,396	(Won)	—	(Won)	20,396
	2009
	Level 1		Level 2		Level 3		Total
ASSETS
Securities
• Beneficiary certificates	(Won)	84,199	(Won)	—	(Won)	—	(Won)	84,199
• Trading securities		15,470		—		—		15,470
• Available-for-sale securities		31,403		—		—		31,403
• Held-to-maturity securities		—		82		—		82
Derivative instruments assets :
• Interest rate swap		—		23		—		23
• Currency swap		—		47,547		—		47,547
• Combined interest rate currency swap		—		417,731		—		417,731
• Currency forwards		—		288		—		288
Total	(Won)	131,072	(Won)	465,671	(Won)	—	(Won)	596,743
LIABILITIES
Derivative instruments liabilities :
• Interest rate swap		—		5,775		—		5,775
• Currency swap		—		3,781		—		3,781
• Currency forwards		—		1,723		—		1,723
Total	(Won)	—	(Won)	11,279	(Won)	—	(Won)	11,279

F-112

The following table provides a reconciliation of the beginning and ending balances for the years ended December 31, 2008 and 2009 of the Company’s put option, as the option is measured at fair value using significant unobservable inputs (in millions of Korean won):

Balances at January 1, 2008	(Won)	1,971
Unrealized gain included in earnings		12,569
Unrealized gain (loss) included in other comprehensive income		—
Purchases, sales, issuances and settlements, net		—
Transfer in and/or out of Level 3		—
Balances at December 31, 2008	(Won)	14,540
Balances at January 1, 2009	(Won)	14,540
Unrealized gain included in earnings		—
Unrealized gain (loss) included in other comprehensive income		—
Purchases, sales, issuances and settlements, net		(14,540	)
Transfer in and/or out of Level 3		—
Balances at December 31, 2009	(Won)	—

(ii) Non-recurring Fair Value

As discussed in Note 40,p(i), “Significant New Accounting Pronouncements,” on January 1, 2009 the Company adopted the provisions of the authoritative guidance on fair value measurements for nonfinancial assets and nonfinancial liabilities that the Company does not recognize or disclose at fair value on a recurring basis (at least annually). These include reporting units measured at fair value in a goodwill impairment test, other nonfinancial assets or liabilities measured at fair value for impairment testing, and nonfinancial assets acquired and liabilities assumed in a business combination. In connection with the adoption of this guidance the Company analyzed and evaluated them to determine whether nonfinancial assets and liabilities had any evidences of impairment. As a result of the evaluation, the Company noted that it currently does not have significant non-financial assets or non-financial liabilities that are required to be measured at fair value on a non-recurring basis.

c. Fair Value of Financial Instruments

The following method and assumptions were used to estimate the fair value of each significant class of financial instrument for which it was practicable to estimate such value:

(i) Cash and cash equivalents, short-term financial instruments, accounts receivable, accounts payable and short-term borrowings

The carrying amount approximates fair value due to the short-term maturity of these instruments.

(ii) Loans to employees

The carrying amount of short-term loans approximates fair value due to the short term maturities of these loans. The fair value of long-term loans is estimated based on discounted cash flows using current rates offered for loans of the similar remaining maturities.

(iii) Long-term debt

The fair value of the long-term debt, including current portion, is estimated based on quoted market prices for the same or similar issues or on the current rates offered for debt of the same remaining maturities.

F-113

The estimated fair values of the Company’s significant financial instruments at December 31, 2008 and 2009 are summarized as follows (in millions of Korean won):

	2008				2009
	Carrying amount		Fair value		Carrying amount		Fair value
Cash and cash equivalents	(Won)	1,871,018	(Won)	1,871,018	(Won)	1,489,674	(Won)	1,489,674
Short-term financial instruments		86,059		86,059		84,199		84,199
Notes and accounts receivable		3,805,072		3,805,072		4,082,386		4,082,386
Loans to employees		56,020		52,616		53,020		52,801
Accounts payable		1,212,756		1,212,756		1,479,812		1,479,812
Short-term borrowings		261,006		261,006		358,205		358,205
Long-term debt, including current portion		9,371,938		9,182,625		9,219,764		9,154,905

d. Accrued Severance Indemnities

The Company expects to pay the following future benefits to its employees upon their normal retirement age (in millions of Korean won):

Year ending December 31,
2010	(Won)	7,156
2011		4,714
2012		5,502
2013		8,919
2014		25,202
2015-2019		478,549

F-114

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

KT CORPORATION

(Registrant)

/s/ Suk-Chae Lee

Name: Suk-Chae Lee

Title: Chief Executive Officer

Date: June 29, 2010

EX-1

Exhibit 1

THE ARTICLES OF INCORPORATION

OF

KT Corporation

Adopted on October 1, 1997

Amended on December 8, 1997

September 18, 1998

March 19, 1999

March 24, 2000

March 21, 2001

March 22, 2002

August 20, 2002

March 14, 2003

March 12, 2004

March 11, 2005

August 19, 2005

March 10, 2006

March 16, 2007

January 14, 2009

March 27, 2009

March 12, 2010

1

CHAPTER I. GENERAL PROVISIONS

Article 1. (Name) The name of the Corporation shall be “Chusik Hoesa KT”, which shall be written in English as “KT Corporation” (hereafter “KT”).

Article 2. (Purpose) The objective of KT is to engage in the following business activities:

1. Information and communications business;

2. New media business;

3. Development and sale of software and contents;

4. Sale and distribution of information communication equipment;

5. Testing and inspection of information communication equipment, device or facilities;

6. Advertisement business;

7. Retail business via telephone, mail order or online;

8. IT facility construction business and electrical construction business;

9. Real estate and housing business;

10. Electronic banking and finance business;

11. Education and learning service business;

12. Security service business (Machinery system surveillance service, Facilities security service, etc);

13. Research and technical development, education, training and promotion, overseas businesses, and export and import, manufacture and distribution related to activities mentioned in Subparagraphs 1 through 12;

14. Frequency-based telecommunications services and other telecommunications services;

15. Value-added telecommunications business;

16. Manufacture, provision (screening) and distribution of contents such as musical records, music videos, movies, videos and games;

17. Issuance and management of pre-paid electronic payment instruments, and businesses related to electronic finance such as payment gateway services;

18. Sales and leasing of equipment and facilities related to the activities mentioned in Subparagraphs 14 through 17;

19. Any overseas business or export and import business related to activities mentioned in Subparagraphs 14 through 18;

20. Tourism;

21. Insurance agency business;

22. New and renewable energy and energy generation business; and

23. Any and all other activities or businesses incidental to or necessary for attainment of the foregoing.

2

Article 3. (Location of Offices) The head office of KT (the “head office”) shall be located in Seoul or Kyunggi Province. KT may establish requisite sub-offices at site(s) pursuant to resolution of the Board of Directors.

Article 4. (Method of Public Notice) Public notices by KT shall be given in The Seoul Shinmun circulated in Seoul, Republic of Korea. Provided, however, that if the public notices cannot be published in The Seoul Shinmun due to unavoidable circumstances, such public notices may be given in any daily newspaper published in Seoul, Republic of Korea.

CHAPTER II. SHARES OF STOCK

Article 5. (Amount of Authorized Capital) The total number of shares authorized to be issued by KT shall be one billion shares.

3

Article 6. (Par Value and Types of Shares and Share Certificates)

(1) Par value per share issued by KT shall be 5,000 Korean Won. The type of shares shall be common shares and preferred shares, both of which shall be in registered form.

(2) Share certificates shall be in eight (8) denominations of one (1), five (5), ten (10), fifty (50), one hundred (100), five hundred (500), one thousand (1000) and ten thousand (10,000) shares.

Article 7. (Shares to be Issued at the Time of Incorporation) The total number of shares to be issued by KT at the time of incorporation shall be 395,675,369 shares.

Article 8. (Number and Description of Preferred Shares)

(1) The total number of Preferred Shares to be issued by KT shall be up to one-fourth ( ¹/4) of the total number of shares issued and outstanding, which shall be without voting rights.

(2) Dividends on Preferred Shares shall be an amount not less than nine (9) percent p.a. of the par value as determined by the Board of Directors at the time of issuance.

(3) If the dividends on the Common Shares exceed those on Preferred Shares, the excess dividend amount shall also be paid to the holders of Preferred Shares commensurate to the rate applicable to Common Shares.

(4) If dividends on Preferred Shares are not paid for any fiscal year, the holders of such Preferred Shares shall be entitled to receive such accumulated unpaid dividend in priority to the holders of Common Shares from the dividends payable in the next fiscal year.

Article 9. (Preemptive Rights)

(1) When KT issues new shares, the shareholders of KT shall be entitled to subscribe for such new shares in proportion to their existing shareholdings.

(2) Notwithstanding Paragraph (1) above, new shares may be issued to persons other than the shareholders of KT, in the following cases:

1. When the new shares are issued by public offering or subscribed by underwriters pursuant to Article 4 and Article 119 of the Financial Investment Services and Capital Markets Act (“FSCMA”);

4

2. When the members of the Employee Stock Ownership Association of KT have preemptive rights to subscribe for such new shares pursuant to Article 165-7 of the FSCMA;

3. When the new shares are represented by depositary receipt pursuant to Article 165-16 of the FSCMA;

4. When the new shares are issued by the exercise of stock options set forth in Article 10 of these Articles of Incorporation;

5. When the new shares are issued in order to accomplish specific business purposes such as strategic alliance, inducement of foreign funds, other capital raising requirements, introduction of new technology, and improvement of financial structure;

6. When the new shares are issued by a resolution of the Board of Directors through a general public offering pursuant to Article 165-6 of the FSCMA. However, in such case, the total number of the shares to be issued shall not exceed ten percent (10%) of the total number of KT issued and outstanding; or

7. When there exists an immediate need for the company to raise funds, new shares can be issued to domestic and foreign financial institutions (enacted on March 21, 2001).

(3) The method of disposition of shares in respect of which preemptive rights have not been exercised or where fractions of shares occur shall be determined by a resolution of the Board of Directors.

(4) Notwithstanding Paragraph (1) above, shareholders who acquire shares in violation of any laws and regulations or these Articles of Incorporation shall not be entitled to subscribe for new shares in respect of such shares.

5

Article 10. (Stock Options)

(1) KT may grant stock options to its officers and employees who have contributed, or are capable of contributing, to the establishment, management or technical innovation of KT, except for officers or employees in any of the following cases, by a Special Resolution of the General Meeting of Shareholders pursuant to Article 340-2 and Article 542-3 of the Commercial Code of Korea, to the extent not exceeding fifteen percent (15%) of the total number of issued shares, provided that KT may grant stock options by a resolution of the Board of Directors adopted by affirmative votes of two-thirds ( ²/3) of the directors in offices, to the extent not exceeding one percent (1%) of the total number of issued shares. In such case, the provision of the latter part of the Proviso of Paragraph 1 of Article 38 shall apply mutatis mutandis:

1. The largest shareholder of KT and the Related Person thereto (refers to the Related Person as prescribed in Paragraph 2-5, Article 542-8 of the Commercial Code of Korea. The same shall apply in this Article);

2. Major Shareholders (refers to the Major Shareholders as prescribed in Paragraph (2-6) of Article 542-8 of the Commercial Code of Korea. The same shall apply hereinafter) and the Related Person thereto; or

3. Any person who shall become a Major Shareholder of KT by exercising his/her stock options.

(2) The proviso of Paragraph (1) shall not apply to the directors of KT, and the grant of stock options pursuant to the proviso of Paragraph (1) shall be approved by the General Meeting of Shareholders which is held after such grant of stock options.

(3) The shares to be issued to the officers or employees by the exercise of their stock options (in case where KT pays in cash or shares the difference between the exercise price of stock options and the market price, refers to the shares which are the basis for such calculation) shall be Common Shares in registered form.

(4) The number of officers and employees of KT who are granted with stock options shall not exceed ninety nine percent (99%) of the total number of officers and employees in office. Stock options granted to one single officer or employee shall not exceed ten percent (10%) of total number of shares issued and outstanding.

6

(5) The exercise price per share of the stock options shall not be less than the price as set forth in the Commercial Code of Korea.

(6) Unless otherwise provided for by the relevant laws, the exercise period of stock options shall be determined by separate agreements, to the extent that such exercise periods shall not exceed seven (7) years from the date two (2) years have elapsed after the date of the General Meeting of Shareholders or the Meeting of the Board of Directors at which a resolution to grant such stock option rights is adopted.

(7) KT may cancel the grant of stock options by a resolution of the Board of Directors in any of the following cases:

1. When the relevant officer or employee of KT voluntarily retires from his/her office within two (2) years after the date of the General Meeting of Shareholders or the Meeting of the Board of Directors at which a resolution to grant such stock option rights is adopted;

2. When the relevant officer or employee of KT is dismissed for substantial damages incurred to KT due to his/her willful misconduct or gross negligence; or

3. When any event for the cancellation set forth in the agreement for granting such stock options occurs.

Article 11. (Base Date Regarding Dividends of the New Shares) (1) In case KT issues new shares through right issues, bonus issues and stock dividends, with respect to the distribution of dividends on the new shares, the new shares shall be deemed to have been issued at the end of the fiscal year immediately prior to the fiscal year during which the new shares are issued.

Article 12. (Transfer Agent)

(1) KT may appoint a transfer agent to make entries in the register of shareholders.

(2) The transfer agent, and the place and scope of business of the transfer agent shall be determined by a resolution of the Board of Directors, and a public notice shall be given thereof.

7

Article 13. (Report of Names, Addresses and Seals of Shareholders)

(1) Shareholders and registered pledges shall report their names, addresses, and seals to the transfer agent referred to in Article 12. Any changes thereto shall also be reported.

(2) Shareholders and registered pledgees who reside in foreign countries shall appoint and report the place where, and an agent to whom, notices will be given in Korea. Any changes there to shall also be reported.

Article 14. (Closing of the Register of Shareholders and the Record Date)

(1) KT shall suspend the entries of any changes into the register of shareholders regarding any rights on Shares from January 1 to January 31 of each year.

(2) KT shall let the shareholders who are entered into the register of shareholders on December 31 of each year exercise their rights thereof at the Ordinary General Meeting of Shareholders.

(3) KT may, for convening an Extraordinary General Meeting of Shareholders or when necessary, by a resolution of the Board of Directors, set the record date or close the register of shareholders for a certain period not exceeding three (3) months by giving at least two (2) weeks’ prior public notice.

CHAPTER III. DEBENTURES

Article 15. (Issuance of Convertible Bonds)

(1) KT may issue convertible bonds to persons other than shareholders to the extent that the aggregate face value of the convertible bonds so issued shall not exceed 2 trillion (2,000,000,000,000) Korean Won. Provided that, the issuance of convertible bonds to persons other than shareholders may be made in cases provided for by any of the Subparagraphs of Paragraph (2) of Article 9.

8

(2) The Board of Directors may determine that the convertible bonds referred to in Paragraph (1) may be issued on the condition that conversion rights will be attached to only a portion of the convertible bonds.

(3) The type of shares to be issued upon conversion of convertible bonds shall be common shares. The conversion price, which shall be equivalent to or more than the par value of the shares, shall be determined by the Board of Directors at the time of issuance.

(4) The period during which conversion rights may be exercised shall commence on the date set forth in the FSCMA after the date of issuance of the relevant convertible bonds and end on the date immediately preceding the redemption date thereof. However, the Board of Directors may adjust the conversion period in accordance with relevant laws within the above period by its resolution.

(5) For the purposes of any distribution of dividends on the shares issued upon conversion or any payment of interest on the convertible bonds, the convertible bonds shall be deemed to have been converted into shares at the end of the fiscal year immediately preceding the fiscal year in which the relevant conversion rights are exercised.

Article 16. (Issuance of Bonds with Warrants)

(1) KT may issue bonds with warrants to persons other than shareholders to the extent that the aggregate face value of the bonds with warrants so issued shall not exceed 2 trillion (2,000,000,000,000) Korean Won. Provided that, the issuance of bonds with warrants to persons other than shareholders may be made in only in cases provided for by Subparagraphs of Paragraph (2) of Article 9.

(2) The amount of new shares which can be subscribed by the holders of the bonds with warrants shall be determined by the Board of Directors, provided that the maximum amount of such new shares shall not exceed the aggregate face value of the bonds with warrants.

9

(3) The type of shares to be issued upon exercise of warrants shall be common shares. The issue price, which shall be equivalent to or more than the par value of the shares, shall be determined by the Board of Directors at the time of issuance.

(4) The period during which warrants may be exercised shall commence on the date set forth in the FSCMA after the date of issuance of the relevant bonds with warrants and end on the date immediately preceding the redemption date thereof. Provided that, the Board of Directors may adjust the conversion period in accordance with the relevant laws within the above period by its resolution.

(5) For the purposes of any distribution of dividends on the shares issued upon exercise of warrants, shares shall be deemed to have been issued at the end of the fiscal year immediately preceding the fiscal year in which the subscription monies therefor are fully paid.

Article 17. (Applicable Provisions regarding Issuance of Bonds) The provisions of Articles 12 and 13 shall apply mutatis mutandis to the issuance of bonds.

CHAPTER IV. GENERAL MEETING OF SHAREHOLDERS

Article 18. (Convening of General Meeting)

(1) Ordinary General Meeting of Shareholders shall be convened within three (3) months after the end of each fiscal year, and Extraordinary General Meeting of Shareholders may be convened at any time, by the President (hwejang) pursuant to a resolution of the Board of Directors except as otherwise provided by the relevant laws and regulations. Provided, however, that Article (29), Paragraph (2) shall apply mutatis mutandis in the event the President (hwejang) fails to perform his duties.

10

(2) Notice of the General Meeting of Shareholders specifying the time, place and purpose thereof shall be sent to each shareholder two (2) weeks prior to the date set for the General Meeting of Shareholders. However, such notice to the shareholders who hold less than one-hundredth ( ¹/100) of the total number of shares with voting rights may be given in the form of a public notice of the meeting appearing twice or more in The Seoul Shinmun, The Maeil Business Newspaper and The Korean Economic Daily instead.

(3) General Meeting of Shareholders shall be held at the location of the head office, Seoul or its neighboring place.

Article 19. (Chairman) The President (hwejang) shall preside at the General Meeting of Shareholders; provided, however, that Paragraph (2) of Article 29 shall apply mutatis mutandis in the event that the President (hwejang) fails to perform his duties.

Article 20. (Chairman’s Right to Maintain Order)

(1) The Chairman shall suspend or cancel the proposal of any person who intentionally disrupts, by speech or behavior, the proceedings of the General Meeting of Shareholders or shall order such person to leave the General Meeting of Shareholders.

(2) If the Chairman deems it necessary for the smooth proceeding of the General Meeting of Shareholders, the Chairman may restrict the time and frequency of a shareholder’s proposal.

Article 21. (Voting by Proxy)

(1) A shareholder may exercise its voting rights by proxy.

(2) The proxy described in Paragraph (1) must file with KT a power of attorney before the opening of the General Meeting.

11

Article 22. (Method of Adoption of Resolutions) Resolutions of the General Meetings of Shareholders, except as otherwise provided by the relevant laws and regulations, shall be adopted if the approval of a majority vote of the shareholders present at such meeting is obtained and such majority also represents at least one-fourth ( ¹/4) of the total number of shares issued and outstanding.

Article 22-2 (Exercise of Voting Rights by Writing)

(1) The Shareholders may exercise their voting rights by writing without attending the General Meetings of Shareholders in person.

(2) In case of Paragraph (1) above, KT shall send the notice of convening the General Meeting of Shareholders, together with written documents and reference materials necessary for the Shareholders to exercise their voting rights.

(3) The Shareholders desiring to exercise their voting rights by writing shall enter necessary matters in the written documents under paragraph (2) and submit them to KT by the date immediately preceding the date set for the Meeting.

Article 23. (Minutes of the General Meeting) With respect to the proceedings of the General Meeting of Shareholders, the details of the proceedings and its resolutions shall be recorded in the minutes which shall bear the names and seals or signatures of the Chairman and the Directors present, and shall be preserved at the head office and branches.

CHAPTER V. DIRECTORS

Article 24. (Number of Directors) KT shall have not more than eleven (11) directors. The number of inside directors, including the hwejang as Representative Director (the “President (hwejang)”), shall not exceed three (3), and the number of outside directors shall not exceed eight (8).

12

Article 25. (Election of Representative Director and Directors)

(1) The President (hwejang) shall be elected by a resolution of the General Meeting of Shareholders among those who are recommended by the CEO Recommendation Committee pursuant to Article (32) of these Articles of Incorporation, and the inside director recommended by the President (hwejang) may be elected the Representative Director by a resolution of the Board of Directors.

(2) The dismissal of the President (hwejang) requires a resolution by the General Meeting of Shareholders adopted by the affirmative vote of two-thirds ( ²/3) of the voting rights of the shareholders in attendance at the Meeting; provided, however, that such votes shall represent at least one-third ( ¹/3) of the total number of issued shares of KT. Dismissal of the Representative Director other than the President (hwejang) shall be in accordance with the resolution under Article 38 of these Articles of Incorporation.

(3) Inside directors other than the President (hwejang) shall be elected at the General Meeting of Shareholders among the executive officers under the provision of Article 35 of these Articles of Incorporation who are recommended by the President (hwejang) with the consent of the Board of Directors. the President (hwejang) may propose to the General Meeting of Shareholders with the consent of the Board of Directors the dismissal of any inside director even during his/her term of office, when any of the following event occurs. In this case, the inside directors other than the President (hwejang) shall not participate in the resolution of the Board of Directors:

1. Inability to perform his/her duties for a period not less than one (1) year due to his/her physical and/or mental disorders; or

2. Remarkably poor results of his/her business management due to deficient management abilities.

(4) Notwithstanding Paragraph 3 above, if the CEO Recommendation Committee has recommended a candidate for the President (hwejang), the candidate for the President (hwejang) shall recommend candidates for the inside directors with the consent of the Board of Directors. Provided, however, that the candidate for the President (hwejang) is not elected as the President (hwejang) at the General Meeting of Shareholders, his recommendation of the candidacy for the inside directorship shall become null and void.

13

(5) Any person who falls under any of the following categories shall not become a director of KT, and upon any elected director of KT falling under any of the following categories, such director shall be dismissed:

1. Person who retired from his/her office within the last three (3) years due to his/her own faults or business responsibilities;

2. Person who is sentenced to imprisonment or more severe punishment, and three (3) years have not elapsed after the expiration of the execution of such imprisonment or determination not to execute such imprisonment;

3. Person who is currently under the suspension of pronouncement or who is sentenced to probation, and two (2) years have not elapsed after the expiration of the probation period;

(6) Any person who falls under any of the following disqualification criteria shall not become an outside director of KT, and any elected outside director shall be dismissed if he or she falls under any of the following disqualification criteria:

1. The same person and his or her related party as defined in the Monopoly Regulation and Fair Trade Act (“MRFTA”) who controls a company in competition with KT’s major business areas (however, with respect to the definition of competitor of KT used herein, if the company engages in the same business as KT and belongs to the same enterprise group of KT, such company is not deemed to be in competition with KT. This shall have the same meaning hereafter);

2. Any person who presently serves or has served at any time during the past two (2) years, as an officer or an employee for the company in competition with KT’s major business areas and for other companies which belong to the same enterprise group under the MRFTA of such company;

3. Any person who presently works or has worked at any time during the past two (2) years, as an officer or an employee for the largest or second largest shareholding company in competition with KT’s major business areas and for other companies which belong to the same enterprise group under the MRFTA of such company; or

4. Any person who falls under the disqualification criteria under the Commercial Code of Korea and other relevant laws and regulations

14

Article 26. (Staggered Term of Office of Outside Director) One-third of the total number of the outside directors shall be elected every year.

Article 27. (Term of Office of Directors)

(1) The term of office of directors shall be not more than three (3) years; where the term of office expires before the closing date of the Ordinary General Meeting of Shareholders in the last fiscal year of such term, the term of office shall be extended to the closing date of such General Meeting.

(2) An outside director may be re-elected only once.

Article 28. (By-election of Directors)

(1) In case of any vacancy in the office of a director, a director shall be elected to fill such vacancy at the General Meeting of Shareholders, provided that election thereof may not be made unless such vacancy results in lack of the requisite number of the directors or a difficulty in the administration of business.

(2) The term of office of an outside director elected to fill a vacancy shall be the remainder of the term of office of his/her predecessor.

Article 29. (Duties of the President (hwejang) and Directors)

(1) The Representative Directors (including the President (hwejang)) shall respectively represent KT, the President (hwejang)shall execute businesses resolved by the Board of Directors and supervise all businesses of KT. Duties of the Representative Director elected through recommendation of the President (hwejang) shall be determined by the Board of Directors.

15

(2) Inside directors shall assist the President (hwejang) and shall perform their duties. In the event the President (hwejang) fails to perform his duties, an inside director shall perform his/her duties in accordance with the order as provided in the Office Regulation. However, in the event both the President (hwejang) and inside directors fail to perform their duties, a director shall perform his/her duties in accordance with the order as provided in the Office Regulation.

(3) If a director becomes aware of any event which may cause a material damage to KT, such director should immediately report to the Auditors’ Committee thereof.

Article 30. (Duties of Directors)

(1) Directors shall perform their duties faithfully for the good of KT in accordance with the applicable laws and regulations and the provisions of these Articles of Incorporation.

(2) The directors shall not disclose any business secret of KT that they obtained in the course of performance of their duties, during and after their terms of offices.

Article 31. (Remuneration and Severance Allowance for Directors)

(1) The Remuneration for the directors shall be determined by a resolution of the General Meeting of Shareholders, and such remuneration may be paid either in cash or in combination of cash and stock.

(2) The criteria for remuneration for the President (hwejang) and the inside directors, and the method of payment thereof shall be determined by a resolution of the Board of Directors, which shall be reported to the General Meeting of Shareholders.

(3) The President (hwejang) and the inside directors shall not participate in the resolution of the Board of Directors as set forth in Paragraph (2) above.

(4) Severance allowances for directors shall be paid in accordance with KT’s regulations for payment of officers’ severance allowance adopted at the General Meeting of Shareholders.

(5) The Outside directors may be reimbursed for expenses necessary for the performance of their duties.

16

Article 32. (CEO Recommendation Committee)

(1) KT may organize a CEO Recommendation Committee in order to recommend a President (hwejang) candidate. The CEO Recommendation Committee shall consist of all of the outside directors and one (1) inside director (provided, however, that any person who is elected as a member of the CEO Recommendation Committee shall not be a candidate for the President (hwejang), and the CEO means the President (hwejang)).

(2) The CEO Recommendation Committee shall be organized by not later than two (2) months prior to the date of expiration of the term of office of the President (hwejang) (or within two (2) weeks from the date of retirement of the President (hwejang)) when such retirement is due to reasons other than the expiration of the term of office thereof), and shall be dissolved after the execution of management agreement between the President (hwejang) so elected and the chairman of the CEO Recommendation Committee.

(3) The chairman of the CEO Recommendation Committee shall be elected by the Board of Directors from among its members who hold the position of outside directors of KT. In this case, the President (hwejang) and the inside directors shall not participate in the resolution of the Board of Directors.

(4) A resolution of the CEO Recommendation Committee shall be adopted by the affirmative votes of a majority of the members in office other than the chairman thereof. In this case, the chairman shall not have any voting rights.

(5) The CEO Recommendation Committee shall examine all the President (hwejang) candidates in compliance with the criteria for the examination of a candidate for the President (hwejang) prescribed by the Board of Directors, in consideration of the following requirements:

1. Experiences and scholastic achievements under which his/her knowledge with respect to the field of business management and economics can be evaluated in objective point of view;

17

2. Past business results and the management period of being in office under which his/her business experience can be evaluated in objective point of view;

3. Any requirements to evaluate qualification and ability as a chief executive officer; and

4. Any requirements to evaluate professional knowledge and experience with respect to the telecommunications and related fields.

Article 33. (Election of President (hwejang))

(1) President (hwejang) shall be elected from among CEO-qualified candidates who have a knowledge of management and economics or who have much managerial work experience.

(2) The CEO Recommendation Committee may conduct a search for such candidates or hire a third party agency to perform searches.

(3) The CEO Recommendation Committee shall examine the candidates for the President (hwejang) who are searched pursuant to the provision of Paragraph 2 above, in accordance with the candidates evaluation criteria determined by the Board of Directors.

(4) The CEO Recommendation Committee shall, in selecting the candidates for the President (hwejang), consult with such candidates regarding the terms of employment contract including the management goal established by the Board of Directors. In such case, if deemed necessary, the CEO Recommendation Committee may change the terms of employment contract.

(5) The CEO Recommendation Committee shall recommend a candidate for the President (hwejang) to the General Shareholders’ Meeting, based on the evaluation under Paragraph 3 and the consultation under Paragraph 4 above, concurrently submitting a draft employment contract.

(6) The President (hwejang) and inside directors shall not attend the Board of Directors’ Meeting for the resolution of the agenda prescribed in Paragraphs 3 through 4.

18

Article 34. (Execution of Employment Contract with the Candidate for President (hwejang))

(1) When the draft employment contract submitted pursuant to Paragraph 5 of Article 33 above is approved at the General Shareholders’ Meeting, KT shall enter into such management contract with the candidate for President (hwejang). In such case, the Chairman of the CEO Recommendation Committee shall, in the capacity of the representative of KT, sign the management contract.

(2) The Board of Directors may conduct a performance review to determine if the new President (hwejang) has performed his/her duties under the management contract as provided in Paragraph 1 or hire a professional evaluation agency for such purpose.

(3) When the Board of Directors determines, based on the result of performance review under the provision of Paragraph 2 above, that the new President (hwejang) has failed to achieve the management goal, it may propose to dismiss the President (hwejang) at the General Shareholders’ Meeting.

(4) The management goal shall include revenue increase, profitability improvement, investment plan and other related business objectives and shall be determined, on a yearly basis, at the Board of Directors’ Meeting in order to achieve the mid to long-term plans approved by the Board of Directors. Such management goal may be established on a numerical basis, if possible.

(5) The performance review prescribed in Paragraph 2 above, shall be conducted by the Board of Directors at the closing of each fiscal year or may be delegated by the Board of Directors to a professional evaluation agency; provided, however, that if the Board of Directors deems necessary, it may conduct the performance review during any fiscal year.

(6) The Board of Directors shall report the result of the performance review prescribed in Paragraph 2 above to the General Meeting of Shareholders.

(7) The President (hwejang) and the inside directors may not attend the Board of Directors’ Meeting for the resolution of the agenda prescribed in Paragraphs 2 through 4.

19

Article 35. (Executive Officers)

(1) For the efficient operation, KT shall have executive officers including inside directors.

(2) The executive officers shall consist of positions determined by the Board of Directors.

(3) The number and remuneration of the executive officers who do not hold the position of inside directors of KT shall be determined by the Board of Directors. The severance allowance for the said executive officers shall be paid in accordance with KT’s regulations for payment of officers’ severance allowance adopted at a General Meeting of Shareholders.

(4) Executive officers who do not hold the position of inside directors of KT shall be elected by the President (hwejang) of KT, whose term of office shall not exceed three (3) years.

(5) All matters concerning the respective duties of executive officers shall be determined by the President (hwejang).

Article 36. (Advisor, etc.) The President (hwejang) may employ an Advisor or appoint an Advisory Council in order to receive advice and suggestions regarding important matters concerning the operation of KT’s businesses.

CHAPTER VI. BOARD OF DIRECTORS

Article 37. (Organization and Operation)

(1) The Board of Directors shall consist of the directors, and shall resolve important matters related to the execution of business of KT as prescribed in the laws and regulations and these Articles of Incorporation, which were submitted by a director as an agenda.

20

(2) The Board of Directors’ Meeting shall be convened by each director. However, this shall not apply in the event that a director to convene the Board of Directors’ Meeting is determined by a resolution of the Board of Directors’ Meeting.

(3) The rest of directors may request the director designated under Paragraph 2 above to convene the Board of Directors’ Meeting. However, if the designated director refuses to convene the Board of Directors’ Meeting without any justifiable reason therefor, other directors may convene the Board of Directors’ Meeting.

(4) In convening a meeting of Board of Directors, the notice thereof shall be given at least three (3) days prior to the date set for such meeting to each director; provided, however, that the above procedure may be omitted with the consent of all of the directors.

(5) Matters necessary for the operation of the Board of Directors shall be set forth in the Regulations of the Board of Directors.

(6) For the efficient management of the Board of Directors, a self evaluation regarding the activities of the Board of Directors may be conducted, and detailed matters therefor, including the evaluation method, etc. shall be determined by a resolution of the Board of Directors.

Article 38. (Resolution and Delegation)

(1) A resolution at a meeting of Board of Directors shall be adopted by the presence of a majority of all directors in offices and by the affirmative votes of a majority of the directors present. However, the resolution on the sale of equity in any subsidiary of KT accompanying transfer of management rights, which is for more than 10 billion (10,000,000,000) Korean Won of the subsidiary’s equity, shall be adopted by affirmative votes of two-thirds ( ²/3) of the directors in office, and the resolution on the dismissal of the President shall be adopted by the affirmative votes of two-thirds ( ²/3 ) of the outside directors in offices.

(2) The Board of Directors may delegate part of its authorities to the President (hwejang).

21

Article 39. (Chairman)

(1) The chairman of the Board of Directors shall be elected from among the outside directors by a resolution of the Board of Directors.

(2) The term of office of the chairman shall be one (1) year.

Article 40. (Minutes of the Board of Directors) The proceeding and the result of meeting of the Board of Directors shall be recorded in the minutes, which shall bear the names, seals or signatures of the Chairman and the directors present at the meeting, and shall be kept at the head office.

Article 41. (Committees within the Board of Directors)

(1) The Board of Directors may have expert committees under its control by its resolution, in order to deliberate or decide with respect to the specific matters submitted to the Board of Directors.

1. CEO Recommendation Committee;

2. CG (Corporate Governance) Committee (the “CG Committee”);

3. Outside Director Candidates Recommendation Committee;

4. Audit Committee; and

5. Other Committees which the Board of Directors deems necessary.

(2) Any necessary matters, including those regarding the composition, authority or operation, of a committee under the Board of Directors described in Paragraph 1 above shall be determined by a resolution of the Board of Directors.

Article 41-2. (CG Committee)

(1) The CG Committee shall be composed of four (4) outside directors and one (1) inside director.

(2) The CG Committee shall deliberate and decide overall matters relating to the corporate governance of the Company.

22

(3) Specific issues, such as the operation of the CG Committee, shall be determined by a resolution of the Board of Directors.

Article 42. (Outside Director Candidates Recommendation Committee)

(1) The Outside Director Candidates Recommendation Committee shall consist of one (1) inside director and all of the outside directors; provided that in case of election of an outside director due to the expiration of the term of office of an outside director, the relevant outside director the expiration of whose term has caused the need for such election may not be a member of the Committee.

(2) The Outside Director Candidates Recommendation Committee shall recommend outside director candidates to the General Shareholders’ Meeting.

(3) Any other detailed matters regarding organization and operation of the Outside Director Candidates Recommendation Committee shall be determined by a resolution of the Board of Directors.

Article 43. (Audit Committee)

(1) The Audit Committee shall consist of not less than three (3) outside directors.

(2) The Audit Committee shall perform an audit of KT’s accounting books and records, and of other aspects of its business operations.

(3) Any other detailed matters regarding organization and operation of the Audit Committee shall be determined by a resolution of the Board of Directors.

Article 44. (Executive Officers’ Meeting)

(1) KT may convene executive officers’ meeting in order to consider and resolve matters delegated by the Board of Directors.

(2) Matters necessary for the organization and operation of the executive officers’ meeting set forth in Paragraph 1 above shall be determined by a resolution of the Board of Directors.

23

CHAPTER VII. ACCOUNTING

Article 45. (Fiscal Year) The fiscal year of KT shall be from January 1 to December 31 of each year.

Article 46. (Preparation, Submission and Maintenance of the Financial Statements)

(1) The President (hwejang) of KT shall prepare the following documents and supplementary documents thereto and the business report for each fiscal year, and submit such documents, after approved by the Board of Directors, to the Audit Committee, six (6) weeks prior to the date of the Ordinary General Meeting of Shareholders:

1. A balance sheet;

2. A statement of profit and loss; and

3. A statement of appropriation of retained earnings or a statement of disposition of deficit.

(2) The Audit Committee shall submit an auditor’s report to the President (hwejang) at least one (1) week before the General Shareholders’ Meeting.

(3) The President (hwejang) shall keep each document listed in Paragraph (1) together with the business report and the auditor’s report at the head office for a period of five (5) years, commencing from one week prior to the date of the Ordinary General Meeting of Shareholders. Certified copies of these documents shall be kept in each respective branch office for a period of three (3) years.

(4) The President (hwejang) shall submit each document listed in Paragraph (1) to the Ordinary General Meeting of Shareholders and request approval therefor. With respect to the business report, he/she shall report the contents thereof to the Ordinary General Meeting of Shareholders.

(5) When the approval of the General Meeting of Shareholders is obtained for the documents listed in Paragraph (1), the President (hwejang) shall, without delay, give a public notice of the balance sheet and the audit opinion thereon of an independent auditor.

24

Article 47. (Disposition of Profits) The unappropriated retained earnings for each fiscal year of KT shall be disposed of as following order:

1. Legal Reserves;

2. Other statutory reserves;

3. Amortization by way of the appropriation of the retained earnings;

4. Dividends; and

5. Voluntary reserve.

Article 48 (Retirement of Shares) Pursuant to Article (165-3) of the FSCMA, KT may, by a resolution of the Board of Directors, retire the shares within the scope of profits attributable to the shareholders.

Article 49. (Payment of Dividends)

(1) Dividends may be paid either in cash or in shares.

(2) In case of stock dividends, if KT has issued several types of shares, different types of shares may be allotted by a resolution of the General Meeting of Shareholders.

(3) Pursuant to a resolution of the Board of Directors, KT may pay interim dividends in cash once during a fiscal year with June 30 as a base date (referred to as the fixed interim dividend date).

(4) The dividends referred to in Paragraphs (1) and (3) shall be paid to the shareholders or registered pledgees who are registered in the registry of shareholders as of the end of each fiscal year or as of the fixed interim dividend date.

(5) The rights to dividends shall be extinguished if it is not exercised within five (5) years from the date when the relevant dividend was declared, and such unclaimed dividends shall belong to KT.

25

CHAPTER VIII. SUPPLEMENTARY PROVISIONS

Article 50. (Guarantee of Personnel Status)

(1) Any employee of KT shall not receive a dismissal, suspension, reduction in compensation, reprimand and other disadvantageous orders, without any justifiable reasons therefor.

(2) The retirement age of the employee of KT shall be prescribed in accordance with Paragraph 2 of Article (6)of Addenda of the Laws Repealing the Korea Telecom Act.

Article 51. (Publication of Management Information) KT shall make public any and all matters deemed to be necessary for the promotion of transparency in management.

ADDENDUM

Article 1. (Enforcement Date) These Articles of Incorporation shall be effective from October 1, 1997.

Article 2. (Term of Office of the First President and Standing Directors) Notwithstanding Paragraph (1), Article (29) hereof, the term of office of the first President and the standing directors to be elected at the General Meeting of Shareholders convened after the execution of these Articles of Incorporation shall be extended until the end of the Ordinary General Meeting of Shareholders convened after the expiration of the said term of office.

26

Article 3. (Term of Office of First Non-Standing Director)

(1) Pursuant to Article (3) of the Addenda of the Special Act, candidates for non-standing directors who are recommended by the Temporary Non-standing Directors Recommendation Committee shall be classified into three groups, i.e., first, second and third groups, which shall consist of one, two and three persons, respectively.

(2) Notwithstanding Article (29), Paragraph (1) hereof, the term of office of a non-standing director in the first group shall expire at the close of the first Ordinary General Meeting of Shareholders convened after one (1) year has elapsed. The term of office of non-standing directors in the second and third group shall expire at the close of the first Ordinary General Meetings of Shareholders convened after two (2) and three (3) years have elapsed, respectively.

Article 4. (Special Provisions for Term of Office of Standing Directors succeed to the Term of Office of an Executive Officer) In the event that a former executive officer who has been elected prior to the date of enforcement of these Articles of Incorporation is elected as a first standing director of KT after the enforcement of these Articles, his/her term of office may be shortened to the remainder of the term of office of a executive officer prior to the date of enforcement of these Articles of Incorporation.

ADDENDUM (December 8, 1997)

These articles of Incorporation shall be effective from the date of resolution of the general meeting of shareholders thereon.

ADDENDUM (September 18, 1998)

Article 1. (Enforcement Date) These Articles of Incorporation shall be effective from the date of resolution thereon of the general meetings of shareholders.

27

Article 2. (Interim Measures for the Acquisition of Shares of KT by Foreigners) Those provisions of Paragraph (3), Article (10) hereof shall not be applicable where Foreigners have acquired any shares of KT prior to the date of enforcement of these Articles of Incorporation pursuant to the relevant laws and regulations. In this regard, the number of shares so acquired shall be included in the maximum aggregate shareholdings ceiling prescribed in Item 1, Paragraph (2), Article (10) above.

ADDENDUM (March 19, 1999)

Article 1. (Enforcement Date) These Articles of Incorporation shall be effective from the date of resolution thereon of the general meetings of shareholders.

Article 2. (Interim Measure) The cumulative voting system provided for in Article (382-2) of the Commercial Code shall not apply until each of the requirements set forth in Paragraph (1), Article (21) of the Special Act has been satisfied.

ADDENDUM (March 24, 2000)

These Articles of Incorporation shall be effective from the date of resolution thereon of the general meeting of shareholders.

28

ADDENDUM (March 21, 2001)

These Articles of Incorporation shall be effective from the date of resolution thereon of the general meeting of shareholders.

ADDENDUM (March 22, 2002)

These Articles of Incorporation shall be effective as of the date of resolution of the general meeting of Shareholders.

ADDENDUM (August 20, 2002)

Article 1. (Enforcement Date) These Articles of Incorporation shall become effective from the date on which a resolution on the foregoing amendments is adopted at the General Meeting of Shareholders. Provided, however, that the amended provision of Article 41-3 shall become effective from the date following the day on which the first General Meeting of Shareholders is convened after enforcement of these amended Articles of Incorporation.

Article 2. (Interim Measures regarding Auditor)

(1) The amended provisions regarding auditor of Articles 27, 28, 29, 30, 32, 33, 37 and 40 shall remain invalid, concurrently upon establishment of the Audit Committee.

(2) The term, “auditor” referred in Paragraph 3 of Article 31 and Article 44, shall be interpreted to be “Audit Committee”, respectively, concurrently upon establishment of the Audit Committee.

29

Article 3. (Interim Measures on Increase in Number of Outside Directors) Notwithstanding the amended provision of Article 26, a candidate for outside director recommended by the Shareholders’ Committee established in accordance with the previous AOI, shall be deemed to have been recommended by the Outside Director Recommendation Committee, and the term of office of such additionally appointed outside director in the above shall be until the date on which the Ordinary General Meeting of Shareholders is held in the year of 2005.

ADDENDUM (March 14, 2003)

These Articles of Incorporation shall be effective from the date of resolution thereon of the general meeting of shareholders.

ADDENDUM (March 12, 2004)

These Articles of Incorporation shall become effective as of the date of resolution of the General Meeting of Shareholders.

ADDENDUM (March 11, 2005)

These Articles of Incorporation shall become effective as of the date when the General Meeting of Shareholders resolved adoption hereof.

30

ADDENDUM (August 19, 2005)

These Articles of Incorporation shall take effect upon approval by the General Meeting of Shareholders.

ADDENDUM (March 10, 2006)

These Articles of Incorporation shall become effective as of the date of resolution of the General Meeting of Shareholders.

ADDENDUM (March 16, 2007)

These Articles of Incorporation shall become effective as of the date of resolution of the General Meeting of Shareholders.

ADDENDUM (March 27, 2009)

Article 1. (Enforcement Date) These Articles of Incorporation shall become effective upon resolution of the General Meeting of Shareholders approving the amendment hereof.

Article 2. (Interim Measure) The person who is “President (sajang)” as of the amendment date of these Articles of Incorporation will become the “President (hwejang)”, and in applying Article 32(1)-2 “ex-Presidents (sajang)” prior to the amendment date will be interpreted as “ex-Presidents (hwejang)”.

31

ADDENDUM (March 12, 2010)

These Articles of Incorporation shall become effective as of the date of resolution of the General Meeting of Shareholders.

32

EX-8.1

Exhibit 8.1

List of Subsidiaries of KT Corporation

(As of December 31, 2009)

Name	Jurisdiction of Incorporation
KT Powertel Co., Ltd.	Korea
KT Networks Corporation	Korea
KT Linkus Co., Ltd.	Korea
KT Hitel Co., Ltd.	Korea
KT Submarine Co., Ltd.	Korea
KT Commerce Inc.	Korea
KT Tech, Inc.	Korea
KT Internal Venture Fund No.2	Korea
KT M Hows Co., Ltd.	Korea
KT Rental Co., Ltd.	Korea
Sidus FNH Corporation	Korea
Sidus FNH Benex Cinema Investment Fund	Korea
KT Capital Co., Ltd.	Korea
KT Telecop Co., Ltd.	Korea
KT M&S Co., Ltd.	Korea
KT Music Corporation	Korea
Doremi Media Co., Ltd.	Korea
Nasmedia, Inc.	Korea
Sofnics, Inc.	Korea
JungBoPremiumEdu Co., Ltd.	Korea
KT New Business Fund No. 1	Korea
KTDS	Korea
KTC Media Contents Fund 1	Korea
KTC Media Contents Fund 2	Korea
Vanguard Private Equity Fund	Korea
Gyeonggi-KT Green Growth Fund	Korea
KT Innotz Inc.	Korea
Korea Telecom America, Inc.	America
New Telephone Company, Inc.	Russia
Korea Telecom Japan Co., Ltd.	Japan
Korea Telecom China Co., Ltd.	China
PT. KT Indonesia	Indonesia
Super iMax	Uzbekistan
East Telecom	Uzbekistan
KTSC Investment Management B.V.	Netherlands
Helios-TV	Russia

EX-12.1

Exhibit 12.1

CERTIFICATION

I, Suk-Chae Lee, certify that:

1. I have reviewed this annual report on Form 20-F of KT Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: June 29, 2010

/s/ SUK-CHAE LEE

Suk-Chae Lee

Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATION

I, Yeon-Hak Kim, certify that:

1. I have reviewed this annual report on Form 20-F of KT Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: June 29, 2010

/S/ YEON-HAK KIM

Yeon-Hak Kim

Executive Vice President and

Chief Financial Officer

EX-13.1

Exhibit 13.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of KT Corporation, a corporation organized under the laws of the Republic of Korea (the “Company”), does hereby certify, to such officer’s knowledge, that:

The annual report on Form 20-F for the year ended December 31, 2009 (the “Form 20-F”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operation of the Company.

/s/ SUK-CHAE LEE

Suk-Chae Lee

Chief Executive Officer

Date: June 29, 2010

/S/ YEON-HAK KIM

Yeon-Hak Kim

Executive Vice President and

Chief Financial Officer

Date: June 29, 2010

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to KT Corporation and will be retained by KT Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-15.1

Exhibit 15.1

THE TELECOMMUNICATIONS BASIC LAW

Amended by Act No. 10139 of Mar. 17, 2010, effective Mar. 17, 2010.

CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose)

The purpose of this Act is to contribute to the enhancement of the public welfare by managing telecommunications efficiently and stimulating the development of telecommunications by providing basic matters on telecommunications.

Article 2 (Definitions)

The definitions of the terms as used in this Act shall be as follows:

1. The term “telecommunications” means transmission or reception of code, words, sound or image through wired, wireless, optic, and other electro-magnetic processes;

2. The term “telecommunications facilities and equipment” means machinery, appliances, lines for telecommunications, and other facilities necessary for telecommunications;

3. The term “telecommunications line facilities and equipment” means the facilities and equipment which constitute communications channels between sending and receiving points for telecommunications among the telecommunications facilities and equipment, and the transmission and line facilities and equipment, with the exchange facilities installed as one body of the transmission and line facilities, and all facilities attached thereto;

4. The term “telecommunications business facilities and equipment” means the telecommunications facilities and equipment to be provided for telecommunications businesses;

5. The term “private telecommunications facilities and equipment” means the telecommunications facilities and equipment other than the telecommunications business facilities and equipment, installed by an individual to be used for his own telecommunications;

6. The term “telecommunications equipments” means apparatus, machinery, parts or line equipments, etc. used by the telecommunications facilities and equipment;

7. The term “telecommunications service” means services that mediate a third party’s communication through the telecommunications facilities and equipment or to provide the telecommunications facilities and equipment for the third party’s telecommunications; and

8. The term “telecommunications business” means a business that provides telecommunications services.

Article 3 (Supervision of Telecommunications)

The matters concerning telecommunications shall be governed by the Korea Communications Commission, except the ones stipulated specifically by this Act or other Acts. <Amended by Act No. 5219, Dec. 30, 1996; Amended by Act No. 8867, Feb. 29, 2008>

Article 4 (Government Policies)

The Korea Communications Commission shall devise basic and comprehensive government policies concerning telecommunications to attain the purpose of this Act. <Amended by Act No. 5219, Dec. 30, 1996; Amended by Act No. 8867, Feb. 29, 2008>

Article 5 (Establishment of Basic Telecommunications Plans)

(1) The Korea Communications Commission shall establish and publicly notify basic telecommunications plans (hereinafter referred to as the “basic plan”) for smooth development of telecommunications and the promotion of the information society. <Amended by Act No. 5219, Dec. 30, 1996; Amended by Act No. 8867, Feb. 29, 2008>

2

(2) The following matters shall be included in the basic plan of paragraph (1):

1. Matters concerning utilization efficiency of telecommunications;

2. Matters concerning maintenance of telecommunications order;

3. Matters concerning telecommunications business;

4. Matters concerning telecommunications facilities and equipment;

5. Matters concerning promotion of telecommunications technology (including technology about telecommunications construction; hereinafter the same shall apply); and

6. Other basic matters concerning telecommunications.

(3) The Korea Communications Commission shall consult in advance with the heads of administrative agencies concerned, when establishing the basic plan for the matters of paragraph (2) 4 and 5 of this Article. <Amended by Act No. 5219, Dec. 30, 1996; Amended by Act No. 8867, Feb. 29, 2008>

Article 6 Deleted. <by Act No. 9701, May 21, 2009>

Article 7 (Classification of Telecommunications Business Operator)

The telecommunications business operator shall be classified as the key communications business operator, the special communications business operator and the value-added communications business operator pursuant to the Telecommunications Business Act. <Amended by Act No. 5385, Aug. 28, 1997>

[This Article Wholly Amended by Act No. 4905, Jan. 5, 1995]

3

CHAPTER II Deleted. <by Act No. 9708, May 22, 2009>

Article 8, 9, 10, 11, 12 and 13 Deleted. <by Act No. 9708, May 22, 2009>

Articles 14 and 15 Deleted. <by Act No. 5219, Dec. 30, 1996>

Article 15-2 Deleted. <by Act No. 5733, Jan. 29, 1999>

CHAPTER III TELECOMMUNICATIONS FACILITIES AND EQUIPMENT

SECTION 1 Telecommunications Facilities and Equipment for Business

Article 16 (Maintenance and Repair of Telecommunications Facilities and Equipment)

The telecommunications business operator shall maintain and repair his telecommunications facilities and equipment so as to have them compatible with technical criteria as determined by the Enforcement Decree, for a stable supply of his telecommunications services. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 17 (Installation Report of Telecommunications Facilities and Equipment, and Approval thereon, etc.)

(1) Any key communications business operator shall, where he intends to install or alter major telecommunications facilities and equipment, file in advance a report thereon with the Korea Communications Commission under the conditions as prescribed by the Enforcement Decree: Provided, That with respect to any telecommunications facilities and equipment which are first installed under a new telecommunications technology mode, an approval shall be obtained from the Korea

4

Communications Commission under the conditions as determined by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

(2) The scope of major telecommunications facilities and equipment under paragraph (1) shall be prescribed and publicly announced by the Korea Communications Commission. <Amended by Act No. 5219, Dec. 30, 1996; Amended by Act No. 8867, Feb. 29, 2008>

Article 18 (Joint Installation of Telecommunications Facilities and Equipment)

(1) The key communications business operator may jointly construct and use the telecommunications facilities and equipment with other key communications business operators. In this case, the key communications business operator shall make in advance a consultation with another key communications business operator. <Newly Inserted by Act No. 6602, Jan. 14, 2002; Act No. 8867, Fe. 29, 2008>

(2) The Korea Communications Commission may, in case where a key communications business operator makes a consultation under paragraph (1), investigate and provide the required information, under the .Enforcement Decree <Amended by Act No. 6602, Jan. 14, 2002; Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission may, in order to effectively perform the investigation of data under paragraph (2), have a specialized institution in the field of telecommunications perform the relevant investigation under the conditions as prescribed by the Enforcement Decree. <Newly Inserted by Act No. 6602, Jan. 14, 2002>

(4) The Korea Communications Commission may, where it falls under any of the following subparagraphs, advise the key communications business operator under paragraph (1) to jointly construct the telecommunications facilities and equipment, under the conditions as prescribed by the Enforcement Decree: <Newly Inserted by Act No. 6602, Jan. 14, 2002; Amended by Act No. 8867, Feb. 29, 2008>

1. Where the consultation under paragraph (1) has not been achieved, and where there exists a request from the relevant key communications business operator; and

5

2. Where deemed necessary for promoting the public interests.

(5) Where it is necessary to use the land or structures, etc. owned by the State, local government, government-invested institution, or other key telecommunications business operator for a joint installation of telecommunications facilities and equipment, and where an agreement is not reached on it, the key communications business operator may ask the Korea Communications Commission for its cooperation in the use of the relevant land or structures, etc. <Amended by Act No. 8867, Feb. 29, 2008>

(6) The Korea Communications Commission may, upon receipt of a request for its cooperation under paragraph (5), ask the head of the State agency, local government or government-invested institution or other key communications business operator to comply with a consultation on the use of the relevant land or structures, etc. with the key communications business operator who has asked for a cooperation under paragraph (5). In this case, the State agency, local government, or the head of government -invested institution or other key communications business operator shall comply with a consultation with the key telecommunications business operator unless there exist any justifiable causes. <Amended by Act No. 6602, Jan. 14, 2002; Act No. 8867, Feb. 29, 2008>

[This Article Wholly Amended by Act No. 5219, Dec. 30, 1996]

Article 19 Deleted. <by Act No. 5219, Dec. 30, 1996>

SECTION 2 Private Telecommunications Facilities and Equipment

Article 20 (Installation of Private Telecommunications Facilities and Equipment)

(1) A person who intends to install private telecommunications facilities and equipment shall report thereon to the Korea Communications Commission under the conditions as prescribed by the Enforcement Decree. The same shall also apply in case where he intends to alter the important matters as determined by the Enforcement Decree from among the reported matters. <Amended by Act No. 4905, Jan. 5, 1995; Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

6

(2) Notwithstanding the provisions of paragraph (1), the private telecommunications facilities and equipment with wireless modes, the military telecommunications facilities and equipment, etc., which are specially stipulated by other statutes, shall be governed by such statutes.

(3) A person who has made a report or a modified report on the installation of private telecommunications facilities and equipment under paragraph (1) shall obtain, upon completion of an installation work or a modifying work, a confirmation by the Korea Communications Commission, prior to their use, under the conditions as stipulated by the Enforcement Decree. <Newly Inserted by Act No. 4905, Jan. 5, 1995; Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(4) Any private telecommunications facilities and equipment prescribed by the Enforcement Decree may, notwithstanding the provisions of paragraph (1), be installed without filing any report. <Newly Inserted by Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

Article 21 (Restriction on Use Beyond Its Purpose)

(1) Any person who has installed the private telecommunications facilities and equipment shall not mediate a third party’s communications with the facilities, nor operate the facilities against the installation purpose: Provided, That this shall not apply to cases of special provisions in other statutes or of uses falling under any of the following subparagraphs, within the limits not against the installation purposes: <Amended by Act No. 4905, Jan. 5, 1995; Act No. 5219, Dec. 30, 1996; Act No. 6602, Jan. 14, 2002; Act No. 8867, Feb. 29, 2008>

1. In case of use for maintaining public peace or providing emergency rescue mission by the person engaged in police or accident rescue works;

2. In case of use, prescribed by the Korea Communications Commission, between the person who installed private telecommunications facilities and equipment and the one specially related with him for the purpose of work; and

7

3. Deleted. <by Act No. 6602, Jan. 14, 2002>

(2) Any person who has installed his private telecommunications facilities and equipment may provide telecommunications facilities and equipment including line tracks, line equipments, etc., to the key communication business operator, pursuant to the Enforcement Decree.

(3) The provisions of Articles 33-5, 34-6 (excluding paragraph (5)), and 35 of the Telecommunications Business Act shall apply mutatis mutandis to the above paragraph (2) concerning the supply of facilities and equipment. <Amended by Act No. 4905, Jan. 5, 1995; Act No. 5219, Dec. 30, 1996>

(4) Deleted. <by Act No. 6602, Jan. 14, 2002>

Article 22 (Securing of telecommunications in Case of Emergency)

(1) The Korea Communications Commission may order the person who installed private telecommunications facilities and equipment to provide telecommunications services or other important communication services, or to interconnect the private facilities and equipment in question with other telecommunications facilities and equipment, when war, natural disaster or other national emergency situation corresponding to such happens or is likely to happen. This shall apply mutatis mutandis to the provisions concerning telecommunications services under the Telecommunications Business Act. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission may make the key telecommunications business operator deal with such services, when deemed necessary of paragraph (1). <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) The expenses necessary for performing the services or for interconnection of the facilities of paragraph (1) shall be borne by the Government: Provided, That when the private telecommunications facilities and equipment are provided for telecommunications services, then the key communications business operator provided with the facilities, shall bear such expenses.

8

Article 23 (Orders for Correction, etc. <Amended by Act No. 6231, Jan. 28, 2000>)

(1) The Korea Communications Commission may, when any person who has installed the private telecommunications facilities and equipment violates this Act or the orders under this Act, order him to make a correction thereof with fixing a specified period. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission may, when any person who has installed the private telecommunications facilities and equipment falls under any of the following subparagraphs, order him to suspend the relevant uses with fixing a period of not more than one year: <Newly Inserted by Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

1. Where he fails to execute an order under paragraph (1);

2. Where he uses the private telecommunications facilities and equipment without obtaining a confirmation in contravention of Article 20 (3); and

3. Where he intermediates other’s communications or operates the private telecommunications facilities and equipment in a manner contrary to the installation purposes, in contravention of Article 21 (1).

(3) The Korea Communications Commission may, where deemed that any private telecommunications facilities and equipment impede other’s telecommunications or likely undermine other’s telecommunications facilities and equipment, order the person who has installed the relevant facilities and equipment to suspend a use of them or to renovate or repair them, or take other measures. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 24 (Imposition of Penalty Surcharge)

(1) The Korea Communications Commission may, in issuing an order to suspend a use of any private telecommunications facilities and equipment under Article 23 (2), and where a suspension of the relevant use is likely to cause any serious inconveniences to users of telecommunications services which are rendered by using such private telecommunications facilities and equipment, or to undermine other public interests, impose a penalty surcharge of not exceeding 1 billion won in lieu of such order to suspend the relevant use. <Amended by Act No. 8867, Feb. 29, 2008>

9

(2) Classifications of the violating acts subject to the imposition of a penalty surcharge under paragraph (1), the amount of penalty surcharge as determined by the relevant levels and other necessary matters shall be prescribed by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission shall, where any person liable for the payment of a penalty surcharge under paragraph (1) fails to pay such penalty surcharge by a payment term, collect it according to the example of a disposition on the national taxes in arrears. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6231, Jan. 28, 2000]

SECTION 3 Technical Standards, etc. for Telecommunications Facilities and Equipment

Article 25 (Technical Standards, etc.)

(1) A person who installs and operates the telecommunications facilities and equipment shall keep such facilities and equipment compatible with the technical standards as prescribed by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) In case of the installation of telecommunications facilities and equipment as determined and publicly announced by the Korea Communications Commission or of the expansion of installed facilities and equipment, the key communication business operator and the special communications business operator shall test whether the relevant telecommunications facilities and equipment conform with the technical standards under paragraph (1) above, prior to commencing a provision of telecommunications services, and record and manage the results thereof. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

10

(3) The installation and conservation of telecommunications facilities and equipment shall be executed according to the design documents.

(4) Matters necessary for making the design documents under paragraph (3) shall be prescribed by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(5) In any of the following cases, the Korea Communications Commission may have public officials belonging to him investigate or test the facilities of the person who installs and operates the telecommunications facilities and equipment in order to verify whether the telecommunications facilities and equipment are installed and operated in conformity with the technical standards: <Newly Inserted by Act No. 5219, Dec. 30, 1996; Act No. 7810, Dec. 30, 2005; Act No. 8867, Feb. 29, 2008>

1. to establish policies related to telecommunications facilities;

2. to prevent national emergency;

3. to prevent natural disasters and in the event of natural disasters; and

4. in the event wide-spread telecommunications hurdles are expected due to malfunctions in the telecommunications facilities. <Newly Inserted by Act No. 5219, Dec. 30, 1996>

(6) The public official who conducts an investigation or a testing under paragraph (5) shall notify the person who has installed and operated telecommunications facilities no later than seven (7) days prior to the date of investigation or testing, informing the person of the investigation or testing plans, including the time and substance of, and the reasons for, the investigation or testing. Provided, no such notification is necessary in the event of emergency or in the event that there is risk that relevant evidence will be destroyed. <Newly Inserted by Act No. 7810, Dec. 30, 2005>

(7) A public official who conducts the investigation or testing under paragraph (5) shall carry a certificate indicating his authority, present it to the person concerned and give the documents indicating the name, time of entry and purpose of entry, etc. to the person concerned at the time of entry. <Newly Inserted by Act No. 5219, Dec. 30, 1996; Act No. 7810, Dec. 30, 2005>

11

(8) The person who installs and operates telecommunication facilities under paragraph (1) shall report to the Korea Communications Commission any mobile phone (referring to any telecommunication terminal that uses, among the key communications business under Article 4(2), those services provided via allocated wireless network frequency) that is suspected, as determined by illegal duplication detection program, to have been illegally duplicated. <Newly Inserted by Act No. 9701, May. 21, 2009>

Article 26 (Management Rules)

(1) The key communications business operator shall set forth the management rules for communications facilities and equipment and manage them, in order to provide a stable telecommunications service. <Amended by Act No. 5219, Dec. 30, 1996>

(2) Matters to be explicitly stipulated in the management rules under paragraph (1) shall be prescribed by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 27 (Correction Order for Violations of Technical Standards)

When the installed telecommunications facilities and equipment have come not to conform with the technical standards under Article 25, the Korea Communications Commission may issue an order to make a correction thereto or take other necessary measures. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 28 (Adoption of New Telecommunications Modes, etc.)

(1) The Korea Communications Commission may adopt the new telecommunications modes, etc., for a smooth development of telecommunications. <Amended by Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission shall, in case where it has adopted the new telecommunications modes, etc. under paragraph (1), make a public announcement thereof.

12

[This Article Wholly Amended by Act No. 5219, Dec. 30, 1996]

Article 29 (Promotion of Standardization)

(1) The Korea Communications Commission may promote the standardization of telecommunications, and recommend it to the telecommunications business operator or the manufacturers of telecommunications equipments, for a sound development of telecommunications and for ensuring the convenience of users: Provided, That in a case of matters for which the Korean Industrial Standards under the Industrial Standardization Act are set, such standards shall govern. <Amended by Act No. 4528, Dec. 8, 1992; Act No. 5219, Dec. 30, 1996>

(2) The Korea Communications Commission shall, in case where it has adopted the telecommunications standards, make a public announcement thereof. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) Matters necessary for the promotion of standardization of telecommunications under paragraph (1) shall be determined by Enforcement Decree. <Newly Inserted by Act No. 6602, Jan. 14, 2002; Act No. 9701, May 21, 2009>

Article 30 (Telecommunications Technology Association)

(1) The Telecommunications Technology Association (hereinafter referred to as the “Association”) may be established for efficient promotion of the business concerning telecommunications standardization. <Amended by Act No. 5219, Dec. 30, 1996>

(2) The Association shall be established in the form of a juristic person.

(3) The Government may contribute to the Association within the budget limit, when necessary for the establishment and operation of the Association.

(4) The Korea Communications Commission may order changes of articles of incorporation, project plans, or reelection of officers, when the operation of the Association is deemed in violation of the Acts and subordinate statutes or articles of incorporation. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

13

(5) Except for those stipulated under this Act, the provisions pertaining to an incorporated foundation in the Civil Act shall apply mutatis mutandis to matters on the Association.

SECTION 4 Integrated Operation of Telecommunications Facilities and Equipment, etc.

Article 30-2 (Securing Pipeline Facilities, etc.)

(1) A person who installs or builds up the facilities, etc. falling under any of the following subparagraphs (hereinafter referred to as the “facilities installer”) shall listen to the views of key communications business operators on the installation of joint-use tunnels in which the telecommunications facilities and equipment may be accommodated and the pipelines, etc. as well, and reflect its contents: Provided, That the same shall not apply to the case where the reflection of the views of key communications business operators are very difficult: <Amended by Act No. 6602, Jan. 14, 2002; Act No. 7210, Mar. 22, 2004; Act No. 7303, Dec. 31, 2004; Act No. 9780, Jun. 9, 2009>

1. Roads under Article 2 of the Road Act;

2. Railroads under subparagraph 1 of Article 2 of the Railroad Enterprise Act;

3. Urban railroads under subparagraph 1 of Article 3 of the Urban Railroad Act;

4. Industrial complex under subparagraph 5 of Article 2 of the Industrial Sites and Development Act;

5. Free trade zone under subparagraph 1 of Article 2 of the Act on Designation and Management of Free Trade Zones;

6. Airport area under subparagraph 9 of Article 2 of the Aviation Act;

14

7. Harbor area under subparagraph 4 of Article 2 of the Harbor Act; and

8. Other facilities or housing sites as prescribed by the Enforcement Decree.

(2) Any views expressed by the key communications business operators on the installation of joint-use tunnels or pipelines under paragraph (1) shall be in conformity with the standards for the installation of pipelines as prescribed by .the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The provisions of Articles 33-5, 34-6 (excluding paragraph (5) of the same Article) and 35 of the Telecommunications Business Act shall apply mutatis mutandis to the offer of joint-use tunnels or pipelines, etc., installed under paragraph (1).

(4) A facilities installer shall, where he is unable to reflect the views of key communications business operators under paragraph (1), notify the relevant key communications business operators of the relevant reasons within 30 days from the date of receiving their views.

(5) Where any facilities installer fails to reflect the views of key communications business operators under paragraph (1), the relevant telecommunications business operator may ask the Korea Communications Commission for its adjustments. <Amended by Act No. 8867, Feb. 29, 2008>

(6) The Korea Communications Commission shall, where it makes such adjustments upon receipt of a request for adjustments under paragraph (5), consult in advance with the heads of the related central administrative agencies. <Amended by Act No. 8867, Feb. 29, 2008>

(7) Matters necessary for the adjustments under paragraphs (5) and (6) shall be prescribed by the Enforcement Decree.

[This Article Wholly Amended by Act No. 6231, Jan. 28, 2000]

15

Article 30-3 (Installation of Telecommunications Facilities and Equipment for Extension)

(1) The structures under subparagraph 2 of Article 2(1) of the Building Act shall be equipped with the telecommunications line facilities, etc. for extension, and secure a specified area for a connection with the telecommunications line facilities and equipment. <Amended Mar. 21, 2008>

(2) Matters on the scope of structures, the criteria for installation of telecommunications line facilities, etc., and the securing, etc., of an area for a connection with telecommunications line facilities and equipment under paragraph (1) shall be determined by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5219, Dec. 30, 1996]

Article 30-4 Deleted. <by Act No. 6823, Dec. 26, 2002>

Article 31 (Integrated Operation of Telecommunications Facilities and Equipment, etc.)

(1) The Korea Communications Commission may, where it is necessary for an efficient management and operation of telecommunications facilities and equipment, have a key communications business operator selected according to the standards and procedures as prescribed by the Enforcement Decree (hereinafter referred to as the “communications business operator under integrated operations”) make an integrated operation of the telecommunications facilities and equipment installed under this Act or other Acts, and the land, buildings and other structures appurtenant thereto (hereinafter referred to as the “telecommunications facilities and equipment, etc.”). <Amended by Act No. 5219, Dec. 30, 1996; Act No. 5454, Dec. 13, 1997; Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission shall, where it intends to put the telecommunications facilities and equipment, etc. under an integrated operation under paragraph (1), formulate an integrated operation plan for telecommunications facilities and equipment, etc. (hereinafter referred to as the “integrated operation plan”), consult with the heads of the related administrative agencies, and obtain an approval of the President by going through a deliberation by the State Council. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

16

(3) The integrated operation plan under paragraph (2) shall contain the matters falling under one of the following subparagraphs:

1. Objects, time, methods and procedures for the integration;

2. Matters concerning an operation of telecommunications facilities and equipment, etc. after integration; and

3. Other matters as prescribed by the Enforcement Decree.

(4) The Korea Communications Commission, where it intends to formulate an integrated operation plan under paragraph (2), consult in advance with the installer of the telecommunications facilities and equipment, etc. to be integrated. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 32 (Purchase of Telecommunications Facilities and Equipment, etc.)

(1) The communications business operator under integrated operations may, when necessary for an integrated operation of the telecommunications facilities and equipment, etc. under Article 31 (1), make a request for purchase of the relevant telecommunications facilities and equipment, etc. In this case, the owner of relevant telecommunications facilities and equipment, etc. shall not refuse it without any justifiable reasons. <Amended by Act No. 6231, Jan. 28, 2000>

(2) National or public telecommunications facilities and equipment, etc. for which the communications business operator under integrated operations has made a request for their purchase under paragraph (1) may be sold to the communications business operator under integrated operations, notwithstanding the provisions of Article 27 of the State Properties Act or Article 82 of the Local Finance Act. In this case, matters necessary for the sale such as the calculation method of sale price, procedures for the sale, and payment methods of sale price, etc., shall be prescribed by the Enforcement Decree. <Amended by Act No. 6231, Jan. 28, 2000; Amended, Jan. 30, 2009>

17

(3) The provisions of Articles 67 (1), 70, 71, 74 through 77, and 78 (5) through (7) of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor shall be applied mutatis mutandis to the calculation method, criteria, etc. for purchase price of the telecommunications facilities and equipment, etc. other than the national or public ones which are purchased by the communications business operator under integrated operations under paragraph (1). <Amended by Act No. 5219, Dec. 30, 1996; Act No. 6231, Jan. 28, 2000; Act No. 6656, Feb. 4, 2002>

CHAPTER IV MANAGEMENT OF TELECOMMUNICATIONS EQUIPMENTS

Article 33 (Approval for Types)

(1) A person who intends to manufacture, sell or import the telecommunications equipments which are specified by the Korea Communications Commission after consulting with the heads of the related administrative agencies, shall obtain an approval with respect to such telecommunications equipments from the Korea Communications Commission: Provided, That this shall not apply to the cases of telecommunications equipments as prescribed by the Enforcement Decree such as the telecommunications equipments for the purpose of test, research or export. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) Objects, methods and procedures, etc. for the approval of types under paragraph (1) shall be prescribed by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission shall grant a type approval, when the telecommunications equipments conform with technical criteria for telecommunications equipments as prescribed by .the Enforcement Decree <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(4) When a person who has obtained a type approval of telecommunications equipments under paragraph (1) intends to sell or display such telecommunications equipments, the sign of type approval shall be marked pursuant to .the Enforcement Decree <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

18

(5) A person who has obtained the type approval for the telecommunications equipments under paragraph (1) shall, when he intends to modify the matters for which a type approval has been obtained, file a report thereon with the Korea Communications Commission under the conditions as determined by the Enforcement Decree. In this case, if the matters reported on modification are related to the technical criteria under paragraph (3), the said paragraph shall apply mutatis mutandis. <Newly Inserted by Act No. 6602, Jan. 14, 2002; Act No. 8867, Feb. 29, 2008>

(6) A person who intends to obtain the type approval under paragraph (1) or a person who files a report on modification under paragraph (5) shall pay the fees as prescribed by the Enforcement Decree. <Amended by Act No. 6602, Jan. 14, 2002; Act No. 8867, Feb. 29, 2008>

Article 33-2 (Designation, etc. of Performance Testing Institution)

(1) The Korea Communications Commission may, in granting the type approval under Article 33, have a testing institution designated by the said Commission (hereinafter referred to as the “designated testing institution”) conduct the performance test. <Amended by Act No. 8867, Feb. 29, 2008>

(2) A person who is eligible for a designation as a designated testing institution shall be limited to a juristic person.

(3) The Korea Communications Commission may inspect any designated testing institution under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

(4) The Korea Communications Commission may, when a designated testing institution falls under any of the following subparagraphs, cancel the relevant designation or order a suspension of the testing service, in whole or in part, for a fixed period of not more than one year: Provided, That where it falls under subparagraph 1, its designation shall be cancelled: <Amended by Act No. 8867, Feb. 29, 2008>

1. When it has obtained a designation by deceit or other illegal means;

2. When it has failed to conduct the testing service without any justifiable reasons;

19

3. When it has conducted an inaccurate testing service by deliberation or gross negligence;

4. When it has refused, obstructed or evaded the inspection under paragraph (3) without any justifiable reasons, or flunked the inspection; and

5. When it has violated the Acts and subordinate statutes relating to telecommunications.

(5) Any person who intends to be designated as a testing institution under paragraph (1) and a person who undergoes the inspection under paragraph (3) shall pay fees under the conditions as prescribed by .the Enforcement Decree. <Amended by Act No, 8867, Feb. 29, 2008>

(6) Matters necessary concerning the designation, management, testing standards, and supervision, etc. of any designated testing institution shall be determined by .the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Wholly Amended by Act No. 6231, Jan. 28, 2000]

Article 33-3 (Mutual Recognition of Type Approval between States)

(1) The Government may conclude an agreement with a foreign government on the mutual recognition of type approval of telecommunications equipment.

(2) Where the Government has concluded an agreement under paragraph (1), it may recognize the telecommunications equipment which have obtained an authentication of a foreign government same as or similar to the type approval under Article 33 as have been granted a type approval under Article 33, or make the designation of a foreign testing agency as a designated testing institution under Article 33-2 (1) the content of the relevant agreement.

(3) Where an agreement has been concluded with a foreign government on the mutual recognition of type approval of the telecommunications equipment under paragraph (1), the Korea Communications Commission shall publicly announce its contents. <Amended by Act No. 8867, Feb. 29, 2008>

20

[This Article Newly Inserted by Act No. 5219, Dec. 30, 1996]

Article 34 Deleted. <by Act No. 6231, Jan. 28, 2000>

Article 34-2 (Termination of Type Approval)

(1) When a person who has obtained the type approval of telecommunications equipment under Article 33 (1) intends to discontinue the manufacture, sale or import of the telecommunications equipment, he may make an application to the Korea Communications Commission for a termination of the relevant type approval. <Amended by Act No. 8867, Feb. 29, 2008>

(2) Matters necessary for the application for a termination of the type approval under paragraph (1) shall be determined by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>.

[This Article Newly Inserted by Act No. 5219, Dec. 30, 1996]

Article 35 (Cancellation, etc. of Type Approval)

(1) In case where a person who has obtained a type approval of the telecommunications equipments under Article 33 (1) falls under any of the following subparagraphs, the Korea Communications Commission may cancel the relevant type approval, or suspend the manufacture of relevant products or take other necessary measures: <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

1. When he has obtained a type approval by deceit and other illegal means;

2. When the telecommunications equipments have come not to conform with the technical criteria under Article 33 (3); and

3. When the sign of type approval under Article 33 (4) is not marked, or a false sign is marked.

21

(2) Where a person who has obtained a type approval under Article 33 (1) comes to fall under paragraph (1) 1 or 3 and his type approval has thus been cancelled, he shall not file an application for the type approval of telecommunications equipments within the period as fixed by the Enforcement Decree within the scope of 6 months after from the day when type approval is cancelled. <Amended by Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

Article 36 (Follow-up Management)

(1) No person shall sell, or display for the purpose of selling, the telecommunications equipments for which a type approval under Article 33 (1) has not been obtained or other telecommunications equipments which are not marked with a sign of the type approval under Article 33 (4): Provided, That the same shall not apply to the telecommunications equipments for tests or research. <Amended by Act No. 6231, Jan. 28, 2000>

(2) In any of the following cases, the Korea Communications Commission may, in case where necessary to confirm whether the matters concerning a type approval of the telecommunications equipments are implemented, have the public officials belonging to him investigate or test the telecommunications equipments in the process of production, import or circulation: < Amended by Act No. 5219, Dec. 30, 1996; Act No. 7810, Dec. 30, 2005; Act No. 8867, Feb. 29, 2008>

1. in the event any harm has been or is likely to be done to the telecommunications network; and

2. in the event the telecommunications network has been altered or reconstructed in violation of relevant laws or the production, purchase and sale of machinery that do not comport with the relevant technical standards haven taken place.

(3) The Korea Communications Commission may order a person who has manufactured, imported, sold or displayed with intention of sale the telecommunications equipments which have been sold or displayed with intention of sale in violation of paragraph (1), or the telecommunications equipments which have been found as the inferior goods upon the investigation or tests under paragraph (2), to destroy or recall the relevant telecommunications equipments, under the conditions as prescribed by the Enforcement Decree.

22

(4) The provisions of Article 25 (7) shall apply mutatis mutandis to the cases under paragraph (2).<Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(5) Matters necessary for the procedures for and methods of the investigation or tests under paragraph (2) shall be prescribed by the Enforcement Decree <Newly Inserted by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(6) In the event of investigation or testing pursuant to paragraph (2) above, the person subject to such investigation or testing shall be notified no later than seven (7) days prior to the date of investigation or test, with details of the investigation or testing plans including the investigation or testing time, content and reasons therefore. Provided, no such notification is necessary in the event of emergency or in the event that there is risk that relevant evidence will be destroyed. <Newly Inserted, Dec. 30, 2005>

CHAPTER V. Ruling of Disputes, etc. <Amended by Act No. 8867, Feb. 29, 2008>

Article 37 Deleted. <by Act No. 8867, Feb. 29, 2008>

Article 38 Deleted. <by Act No. 8867, Feb. 29, 2008>

Article 39 Deleted. <by Act No. 8867, Feb. 29, 2008>

Article 40 Deleted. <by Act No. 8867, Feb. 29, 2008>

23

Article 40-2 (Ruling by Korea Communications Commission)

(1) The telecommunications business operators or users may make an application to the Korea Communications Commission for a ruling, in case where an agreement between the parties has not been reached, or they are unable to make an agreement on the matters falling under any of the following subparagraphs: <Amended by Act No. 6602, Jan. 14, 2002; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

1. Compensation for damages under Article 33-2 of the Telecommunications Business Act;

2. The supply of telecommunications facilities and equipment under Article 33-5 (1) and (2) of the Telecommunications Business Act, the joint utilization of the radio communications facilities under Article 33-7 (1) and (2) of the same Act, the interconnection under Article 34 (1), the joint use, etc. under Article 34-3 (1), or the conclusion of an agreement on supply, etc. of information under Article 34-4 (1);

3. The supply of telecommunications facilities and equipment under Article 33-5 (1) and (2) of the Telecommunications Business Act, the joint utilization of the radio communications facilities under Article 33-7 (1) and (2) of the same Act, the interconnection under Article 34 (1), the joint use, etc. under Article 34-3 (1), or the implementation of an agreement on supply, etc. of information under Article 34-4 (1) or a compensation for damages; and

4. Other disputes related to the telecommunications business, or other matters prescribed by other Acts as the matters to be ruled by the Korea Communications Commission. <Amended by Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission shall, upon receipt of an application for ruling under paragraph (1), notify the other party of the relevant fact, and provide him with an opportunity to state an opinion with fixing a period: Provided, That this shall not apply in case where the interested parties fail to comply with it without any justifiable reasons.

(3) The Korea Communications Commission shall, in case where it makes a ruling on the application for ruling under paragraph (1), forward the document of such ruling to the parties concerned without delay. <Amended by Act No. 8867, Feb. 29, 2008>

24

(4) When the Korea Communications Commission makes a ruling, and where a lawsuit has not been initiated or it has been withdrawn concerning the content of the relevant ruling, within sixty days from the date when the authentic copy of the document of ruling is served on the parties concerned, an agreement which is identical with the content of the relevant ruling is deemed to have been reached between the parties concerned. <Amended by Act No. 8867, Feb. 29, 2008>

(5) A person who is dissatisfied with the amount which shall be paid or received by the parties concerned from among the rulings of the Korea Communications Commission, may request an increase or decrease of the relevant amount by a lawsuit, within sixty days from the date when he has been served with the written ruling. <Amended by Act No. 8867, Feb. 29, 2008>

(6) In the lawsuit under paragraph (5), the other party shall be the defendant.

[This Article Newly Inserted by Act No. 5219, Dec. 30, 1996]

Article 40-3 (Good Offices of Disputes)

The Korea Communications Commission may, in case where deemed inadequate to make a ruling or when necessary, upon receipt of an application for ruling under Article 40-2 (1), set up the subcommission by cases of dispute, and have such subcommission offer its good offices thereon. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5219, Dec. 30, 1996]

Article 41 Deleted. <by Act No. 8867, Feb. 29, 2008>

Article 42 Deleted. <by Act No. 8867, Feb. 29, 2008>

Article 43 (Investigation and Listening to Opinions, etc.)

25

The Korea Communications Commission may, in case where deemed necessary to deal with a case for ruling, carry out the acts falling under any of the following subparagraphs, upon a request from a party concerned or ex officio: <Amended by Act No. 8867, Feb. 29, 2008>

1. A request for the presence of a party concerned or a relevant witness, and listening to his opinions;

2. A request to an appraiser for an appraisal;

3. A request for the furnishing of any document or articles related to a case of dispute, and the provisional holding of furnished document or articles; and

4. An act of letting public officials belonging to the Korea Communications Commission enter the business place of the party concerned and other places related to the case of dispute to examine and peruse the documents or articles, or copy such documents.

[This Article Newly Inserted by Act No. 6231, Jan. 28, 2000]

Article 44 Deleted. <by Act No. 8867, Feb. 29, 2008>

Article 44-2 Deleted. <by Act No. 9481, Mar. 13, 2009>

CHAPTER V-2 COMMUNICATIONS DISASTER CONTROL <Newly inserted by Act No. 6823, Dec. 26, 2002>

Article 44-3 (Development of Basic Plan for Control of Communications Disaster)

(1) The Korea Communications Commission shall draw up a basic plan for the control of communications disaster (hereinafter referred to as the “basic plan”) to prevent the occurrence of any disaster provided for in the Framework Act on the Management of Disasters and Safety, any disaster provided for in the Countermeasures against Natural Disasters Act and any other physical and technical defects, etc. (hereinafter referred to as the “communications disaster”), and to swiftly control and restore the communications disaster with respect to telecommunications services rendered by the key communications business operators prescribed by the Enforcement Decree (hereinafter referred to as the “key communications business operator”). In this case, the basic plan shall be deemed a plan in the field of communications from among the safety management plans provided for in Article 22 of the Framework Act on the Management of Disasters and Safety and the execution plans for the prevention of disasters provided for in Article 16 of the Countermeasures against Natural Disasters Act. <Amended by Act No. 7188, Mar. 11, 2004; Act No. 8867, Feb. 29, 2008>

26

(2) The basic plan shall contain the matters falling under each of the following subparagraphs:

1. Matters concerning the designation and management of the telecommunications facilities and equipment that has the high risk of incurring any communications disaster or is needed to be continuously managed to prevent the occurrence of any communications disaster, and of the installation area thereof, etc.;

2. Matters concerning each of the following which is needed to prepare against any communications disaster:

(a) security of communications bypass path;

(b) formation of an information system for combined operation of the telecommunications line facilities and equipment; and

(c) security of the goods for the restoration of damages; and

3. Other matters deemed necessary for the control of any communications disaster.

(3) The Korea Communications Commission shall, when it intends to develop the basic plan referred to in paragraph (1), establish a guideline for developing such basic plan and notify key communications business operators of it. <Amended by Act No. 8867, Feb. 29, 2008>

27

(4) The key communications business operators shall each draw up a plan for the control of communications disaster in line with the guideline referred to in paragraph (3) and submit it to the Korea Communications Commission. <Amended by Act No 8867, Feb. 29, 2008>.

(5) The Korea Communications Commission shall put together the plans for the control of communications disaster submitted by the key communications business operators pursuant to paragraph (4) and develop the basic plan. <Amended by Act No. 8867, Feb. 29, 2008; Act No. 9481, Mar. 13, 2009>

(6) The Korea Communications Commission shall notify the key communications business operators of the matters that are concerned with them in the basic plan that is finally decided under paragraph (5). <Amended by Act No. 8867, Feb. 29, 2008>

(7) Detailed matters necessary for developing the basic plan shall be prescribed by the Enforcement Decree.

(8) The provisions of paragraphs (3) through (7) shall apply mutatis mutandis to any alteration of the basic plan.

[This Article Newly Inserted by Act No. 6823, Dec. 26, 2002]

Article 44-4 (Preparations against Communications Disaster)

(1) In the event that any communications disaster occurs or is obviously expected to occur, the Korea Communications Commission may have a key communications business operator operate his telecommunications facilities and equipment integrated with the telecommunications facilities and equipment owned by other key telecommunications business operators or owner of private telecommunications facilities and equipment to ensure smooth communications and emergency restoration in the relevant area. <Amended by Act No. 8867, Feb. 29, 2008>

(2) The provisions of Article 22 (3) shall apply mutatis mutandis to a case where the actual expense required for integrated operation of the telecommunications facilities and equipment under paragraph (1) is indemnified.

28

(3) Necessary matters concerning the integrated operation of the telecommunications facilities and equipment under paragraph (1) shall be prescribed by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6823, Dec. 26, 2002]

Article 44-5 Deleted. <by Act No. 9481 of Mar. 13, 2009>

Article 44-6 Deleted. <by Act No. 9481 of Mar. 13, 2009>

Article 44-7 (Report on Communications Disaster)

Any key communications business operator shall, when any communications disaster occurs with respect to the telecommunications services rendered by him, report without delay the current situation, cause of such communications disaster, details of emergency measures, countermeasures to restore damage, etc. to the Korea Communications Commission. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6823, Dec. 26, 2002]

Article 44-8 (Communications Disaster Countermeasures Headquarters)

(1) In the event that the damage caused by any communications disaster is extensive requiring a comprehensive measure at the level of the Government, the Korea Communications Commission may establish and operate the communications disaster countermeasures headquarters (hereinafter referred to as the “countermeasures headquarters”). <Amended by Act No. 8867, Feb. 29, 2008>

(2) The head of the countermeasures headquarters shall be the Chairman of the Korea Communications Commission. <Amended by Act No. 8867, Feb. 29, 2008>

(3) Necessary matters concerning the composition, operation, etc. of the countermeasures headquarters shall be prescribed by the Enforcement Decree.

29

(4) The key communications business operators shall report the current situation, etc. of the progress in the restoration of damage done by any communications disaster to the countermeasures headquarters under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6823, Dec. 26, 2002]

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 45 (Report, Inspection, etc.)

(1) The Korea Communications Commission may, when the Enforcement Decree so determines, have the installer of the telecommunications facilities and equipment report on the relevant facilities, or have the public officials belonging to him enter the relevant office, business office, factory or business place to inspect the status of facilities, account books or documents, etc. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission may, where there exists a person who has installed the telecommunications facilities and equipment in violation of this Act, order him to remove the relevant facilities and take other necessary measures. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) The provisions of Article 25 (7) shall apply mutatis mutandis to the cases under paragraph (1). <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(4) In the event of the investigation or testing pursuant to paragraph (1) above, the facilities installer shall be notified no later than seven (7) days prior to the date of investigation or testing, with details of the investigation or testing plans including the investigation or testing time, content and reasons therefore. Provided, no such notification is necessary in the event of emergency or in the event that there is risk that relevant evidence will be destroyed. <Newly Inserted, Dec. 30, 2005>

30

Article 45-2 (Hearing)

The Korea Communications Commission shall, in case where he intends to make a disposition falling under any of the following subparagraphs, hold a hearing: <Amended by Act No. 6231, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

1. Cancellation of a designation under Article 33-2 (4); and

2. Cancellation of a type approval under Article 35 (1).

[This Article Wholly Amended by Act No. 5453, Dec. 13, 1997]

Article 46 (Delegation and Entrustment of Authority)

(1) Part of the authority of the Minister of Knowledge Economy and the Korea Communications Commission under this Act may be delegated or commissioned to the head of the related agencies or of the Korea Post under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission may commission the tasks under Article 29 to the Association, under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

CHAPTER VII PENAL PROVISIONS

Article 47 (Penal Provisions)

(1) A person who has publicly made a false communication over the telecommunications facilities and equipment for the purpose of harming the public interest shall be punished by imprisonment for not more than five years or by a fine not exceeding fifty million won. <Amended by Act No. 5219, Dec. 30, 1996>

(2) A person who has publicly made a false communication over the telecommunications facilities and equipment for the purpose of benefiting himself or the third party or inflicting damages on the third party shall be punished by imprisonment for not more than three years or by a fine not exceeding thirty million won. <Amended by Act No. 5219, Dec. 30, 1996>

31

(3) In case where the false communication under paragraph (2) is of a telegraphic remittance, it shall be punished by imprisonment for not more than five years or by a fine not exceeding fifty million won. <Amended by Act No. 5219, Dec. 30, 1996>

(4) When a person engaged in the telecommunications business commits the act under paragraph (1) or (3), he shall be punished by imprisonment for not more than ten years or by a fine not exceeding 100 million won, and in case of committing the act under paragraph (2), he shall be punished by imprisonment for not more than five years or by a fine not exceeding fifty million won. <Amended by Act No. 5219, Dec. 30, 1996>

Article 48 (Penal Provisions)

A person who has produced, sold, or imported the telecommunications equipment without obtaining type approval, in violation of Article 33 (1), shall be punished by imprisonment for not more than three years or by a fine not exceeding thirty million won.

[This Article Wholly Amended by Act No. 5219, Dec. 30, 1996]

Article 48-2 Deleted. <by Act No. 6360, Jan. 16, 2001>

Article 49 (Penal Provisions)

A person who falls under any of the following subparagraphs shall be punished by imprisonment for not more than one year or by a fine not exceeding ten million won:

1. A person who has installed or modified the telecommunications facilities and equipment without making a report under the text of Article 17 (1), or who has installed the telecommunications facilities and equipment without obtaining an approval under the proviso of the same Article and same paragraph;

32

2. A person who has installed the private telecommunications facilities and equipment without making a report or modified report under Article 20 (1);

3. A person who has intermediated other person’s communications by utilizing the private telecommunications facilities and equipment under Article 21 (1), or who has operated them in a manner contrary to the installation purposes;

4. A person who has violated an order to provide telecommunications services or other important communication services, or to interconnect the relevant facilities and equipment with other telecommunications facilities and equipment under Article 22 (1);

5. A person who has violated an order to suspend the use under Article 23 (2), or an order to suspend their use, to renovate, or to repair under paragraph (3) of the same Article;

6. A person who has displayed the telecommunications equipment with intention of sale without obtaining type approval under Article 33 (1);

7. A person who has violated an order to suspend production under Article 35 (1);

8. A person who has violated an order to destroy or recall under Article 36 (3); and

9. A person who has violated an order to remove telecommunications facilities under Article 45 (2).

[This Article Wholly Amended by Act No. 6602, Jan. 14, 2002]

Article 50 Deleted. <by Act No. 6231, Jan. 28, 2000>

33

Article 51 (Joint Penal Provisions)

When a representative of a juristic person or an agent, an employee or any other employed person of the juristic person or individual commits violation under Articles 48 and 49 in connection with the business of such juristic person or individual, then a fine under the related Article shall be imposed on the juristic person or individual, in addition to the punishment of the violator except in cases where such juristic person or individual has not been lax in exercising due care and supervision in regard to the relevant business to prevent such violation. <This Article Wholly Amended by Act No. 10139, Mar. 17, 2010>

Article 52 (Legal Fiction of Public Officials in Application of Penal Provisions)

A person who carries out a performance test under Article 33-2 (1), and a person who deals with the entrusted business under Articles 46 (2), shall be deemed public officials in the application of Articles 129 through 132 of the Criminal Act. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 53 (Fine for Negligence)

(1) A person falling under any of the following subparagraphs shall be punished by a fine for negligence not exceeding ten million won: <Amended by Act No. 6231, Jan. 28, 2000; Act No. 6602, Jan. 14, 2002; Act No. 6823, Dec. 26, 2002>

1. A person who has used the private telecommunications facilities and equipment without obtaining a confirmation, in contravention of Article 20 (3);

2. A person who has failed to conduct the testing under Article 25 (2) or to record and manage its results;

3. A person who has committed the act of refusing, evading or obstructing the inspection and the testing under Article 25 (5);

4. A person who has managed the telecommunications facilities and equipment without setting forth the management regulations under Article 26 (1);

5. A person who has violated the orders under Article 27;

34

6. A person who has sold the telecommunications equipment, or displayed it with intention of sale, without making any indication of type approval, in violation of Article 33 (4);

7. A person who has produced or imported the telecommunications equipment which was judged as inferior goods by the investigation or test under Article 36 (2), or who has sold or displayed it with intention of sale while being aware that it was judged as inferior goods;

8. A person who has refused, obstructed or evaded the inspection and testing under Article 36 (2);

9. A person who has failed to submit the plan for the control of communications disaster required by Article 44-3 (4);

10. A person who has failed to report the communications disaster required by Article 44-7 or made a false report;

11. A person who has failed to report the current situation of the progress in the restoration of damage, etc. required by Article 44-8 (4) or made a false report;

12. A person who has failed to file a report under Article 45 (1), or filed a false report; and

13. A person who has refused, obstructed or evaded the inspection under Article 45 (1).

(2) The fine for negligence under paragraph (1) shall be imposed and collected by the Korea Communications Commission, under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) A person who is dissatisfied with a disposition of fine for negligence under paragraph (2) may raise an objection to the Korea Communications Commission within 30 days from the date of notification of such disposition. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

35

(4) When the person notified of a disposition of fine for negligence under paragraph (2) raises an objection under paragraph (3), the Korea Communications Commission shall notify without delay the competent court thereof, and the court so notified shall make judgments of a fine for negligence based on the Non-Contentious Case Litigation Procedure Act. <Amended by Act No. 5219, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(5) In case where neither an objection to nor the payment of the fine for negligence within the period specified under paragraph (3) is made, it shall be collected pursuant to the example of the disposition on the national taxes in arrears.

Addendum <Act No.10139, Mar. 17, 2010>

This Act shall take effect on the date it is published.

36

EX-15.2

Exhibit 15.2

ENFORCEMENT DECREE OF THE TELECOMMUNICATIONS BASIC LAW

Amended by Enforcement Decree No. 21835 of Nov. 20, 2009, effective Nov. 22, 2009.

CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose)

The purpose of this Enforcement Decree is to provide matters delegated under the Telecommunications Basic Law (the “Act”) and matters necessary for its enforcement.

CHAPTER II Deleted. <by Enforcement Decree No. 21692 of Aug. 18, 2009>

Article 2, 3, 4, 5, 6, 7, 8, 9 and 10 Deleted. <by Enforcement Decree No. 21692 of Aug. 18, 2009>

CHAPTER III TELECOMMUNICATIONS FACILITIES AND EQUIPMENT

Article 11 (Report on Installation or Alternation of Telecommunications Facilities and Equipment)

Key communications business operators who wish to install or alter major telecommunications facilities and equipment under the text of Article 17(1) of the Act shall submit to the Korea Communications Commission a report on installation of, or alteration to, major telecommunications facilities and equipment (including an electronic report) with each of the following documentation (including electronic documentation) attached thereto:

1. details of installation of, or alteration to, telecommunications facilities and equipment, including a communication network diagram; and

2. security polices relating to telecommunications facilities and equipment.

1

Article 12 (Authorization to Install Telecommunications Facilities and Equipment)

(1) Key communications business operators who wish to obtain an authorization to install telecommunications facilities and equipment for the first time in accordance with new telecommunications technology under the proviso of Article 17(1) of the Act shall submit to the Korea Communications Commission an application for authorization to install telecommunications facilities and equipment (including an electronic application) with each of the following documentation (including electronic documentation) attached thereto:

1. a business proposal;

2. security polices relating to telecommunications facilities and equipment;

3. present technological trend of the subject telecommunications facilities and equipment, such as their standards in or outside Korea;

4. present status of research and development relating to the subject telecommunications facilities and equipment in or outside Korea; and

5. an accord (applicable only where installing or using telecommunications facilities and equipment jointly with other operators in or outside Korea).

(2) Upon receipt of an application under paragraph (1), the Korea Communications Commission shall examine the distinctive technical qualities of the telecommunications facilities and equipment sought to be installed and notify the relevant applicant, within 15 days of the date of receipt of the application, whether the application has been approved.

Article 13 (Selection of Specialized Agency for Data Survey)

(1) When, under Article 18(3) of the Act, the Korea Communications Commission intends to have a specialized agency in the field of telecommunications conduct data survey necessary for consultation among key communications business operators regarding joint installation of telecommunications facilities and equipment, it shall select an agency recognized as having specialty with regard to the relevant survey and being capable of ensuring impartiality and objectivity and have such agency conduct the data survey.

2

(2) Upon selecting a specialized agency to conduct data survey under paragraph (1), the Korea Communications Commission shall inform the key communications business operator concerned thereof.

Article 14 (Investigation of Information related to Joint Installation of Telecommunications Facilities and Equipment)

Under Article 18(2) of the Act, the Korea Communications Commission may investigate each of the following information necessary for consultation among key communications business operators regarding joint installation of telecommunications facilities and equipment:

1. a key communications business operator’s plans for installing telecommunications facilities and equipment concerning each of the following:

(a) types and standards of the telecommunications facilities and equipment to be installed;

(b) areas and sections for installation;

(c) time of installation; and

(d) technological conditions, etc.;

2. telecommunications facilities and equipment capable of being jointly installed, and areas and sections suitable for joint installation of telecommunications facilities and equipment;

3. plans for efficient joint installation of telecommunications facilities and equipment; and

4. economical effect of joint installation of telecommunications facilities and equipment.

Article 15 (Recommendation to Jointly Install Telecommunications Facilities and Equipment)

(1) In the event the Korea Communications Commission makes a recommendation, pursuant to Article 18(4) of the Act, for key communications business operators to jointly install telecommunications facilities and equipment, it shall specify the telecommunications facilities and equipment subject to joint installation, areas and sections for installation, time of installation, technological conditions, etc. in its recommendation.

3

(2) A key communications business operator who wishes to jointly install telecommunications facilities and equipment under Article 18(4)1 of the Act shall submit documentation containing each of the following to the Korea Communications Commission:

1. plans for jointly installing telecommunications facilities and equipment;

2. economical effect of joint installation of telecommunications facilities and equipment; and

3. reasons why consultations with the key communications business operator subject to joint installation of telecommunications facilities and equipment have not taken place, and solutions therefor.

(3) A key communications business operator who receives a recommendation to jointly install telecommunications facilities and equipment from the Korea Communications Commission shall notify the Korea Communications Commission, within 21 days from the date of receipt of such recommendation, whether it can accept such recommendation and, in the event it cannot, the reasons therefor.

Article 16 (Report on Private Telecommunications Facilities and Equipment)

(1) A person who intends to install private telecommunications facilities and equipment under Article 20 of the Act shall submit, not later than 21 days prior to the date installation work for such facilities and equipment commences, to the Korea Communications Commission a report on installation of private telecommunications facilities and equipment (including an electronic report), specifying each the following, with design drawings of the installation work for such facilities and equipment attached thereto:

1. reporter;

2. type of business;

3. purpose of business;

4

4. telecommunications method;

5. installation place of facilities and equipment;

6. outline of the facilities and equipment; and

7. (expected) operation date of the facilities and equipment.

(2) “Matters specified under the Enforcement Decree of the Act” in the latter part of Article 20(1) of the Act means matters set forth in subparagraphs 2-6 of paragraph (1).

(3) In the event a person who filed a report on installation of private telecommunications facilities and equipment intends to alter the matters prescribed under paragraph (2), the person shall file with the Korea Communications Commission, not later than 21 days prior to the commencement date of the relevant alteration (or, where intending to alter any of the information set forth in subparagraphs 4-6 of paragraph (1), the commencement date of the relevant alteration work), a report (including an electronic report) on such alteration stating the details thereof, with design drawings of the installation work for such facilities and equipment, including a comparison of before and after the alteration, attached thereto.

(4) Upon receipt of a report on installation of, or alternation to, private telecommunications facilities and equipment under paragraph (1) or (3), the Korea Communications Commission shall examine each of the following:

1. whether the installation or alteration complies with the technical standards under Article 25(1) of the Act; and

2. whether the private telecommunications facilities and equipment were installed by an individual to be used for her or his own telecommunications.

(5) Upon verifying that a report on installation of, or alternation to, private telecommunications facilities and equipment satisfies the considerations set forth in each of the subparagraphs of paragraph (4), the Korea Communications Commission shall issue to the person who filed such report a certificate thereof.

5

Article 17 (Confirmation on Construction Work, etc. for Installation)

(1) A person who files an installation or alteration report on private telecommunications facilities and equipment under Article 20(3) of the Act shall receive confirmation thereof from the Korea Communications Commission within 7 days after the construction work for the installation or alteration of such facilities and equipment is completed.

(2) A person who intends to receive confirmation from the Korea Communications Commission under paragraph (1) shall submit thereto an application for confirmation of private telecommunications facilities and equipment (including an electronic application) with each of the following documentation (including electronic documentation) attached thereto:

1. documentation demonstrating that the construction work was completed in compliance with the technical criteria under Article 25(1) of the Act;

2. documentation demonstrating that the construction work was completed in compliance with the design drawings under Article 25(3) of the Act; and

3. copies of licenses held by the operator.

(3) In the event any of the following is discovered as a result of examination of the documentation under paragraph (2), the Korea Communications Commission may request supplementation thereto within a period reasonably fixed:

1. where any of the attachments is incomplete; or

2. where the contents of the application or attachments are unclear.

Article 18 (Exemption from Report on Installation of Private Telecommunications Facilities and Equipment)

Private telecommunications facilities and equipment that may be installed without a report under Article 20(4) of the Act are as follows:

1. private telecommunications facilities and equipment for installing main and terminal equipment inside a building and on the site thereof;

6

2. private telecommunications facilities and equipment for installing main and terminal equipment inside two or more buildings, or on the sites thereof, between which the shortest distance is 100 meters or less and which are possessed by one person (excluding buildings or sites separated by a road or river); or

3. private telecommunications facilities and equipment installed for use, not exceeding 1 month, by the police in urgent situations.

Article 19 (Supply of Private Telecommunications Facilities and Equipment)

(1) A person who has installed private telecommunications facilities and equipment may supply them to a key communications business operator if there are unused telecommunications facilities and equipment in excess of the capacity necessary for the person’s use of telecommunication among the private telecommunications facilities and equipment installed, where the key communications business operator asked to install such private telecommunications facilities and equipment under Article 21(2) of the Act.

(2) The consideration for any supply of private telecommunications facilities and equipment to key communications business operators under paragraph (1) shall be determined in accordance with the criteria publicly notified by the Korea Communications Commission within the limit of the amount which adds the amount of investment and repair to the expenses required for the network and operation of the private telecommunications facilities and equipment concerned.

Article 20 (Criteria for Order to Suspend Use)

The criteria for issuing an order to suspend use under Article 23(2) of the Act are as provided in Table 2 attached hereto. <Amended by Enforcement Decree No. 21224 of Dec. 31, 2008>

Article 21 (Types of Offenses Subject to Imposition of Penalties and Amount of Penalties, etc.)

(1) The types of offenses subject to imposition of penalties under Article 24 of the Act and the amount of such penalties shall be as provided in Table 3 attached hereto. <Amended by Enforcement Decree No. 21224 of Dec. 31, 2008>

7

(2) In deciding the amount of penalties under paragraph (1), the Korea Communications Commission shall consider each of the following:

1. substance and severity of the offense;

2. period and frequency of the offense; and

3. scale of any profits acquired through the offense.

Article 22 (Imposition and Payment of Penalties)

(1) The Korea Communications Commission shall, where it intends to impose a penalty pursuant to Article 24(2) of the Act, notify, in writing, the person subject to such penalty of the type of the offense, the amount of penalty imposed, etc.

(2) A person receiving a notification under paragraph (1) shall pay the penalty imposed to a receiving agency designated by the Korea Communications Commission within 20 days from the date of receiving such notification; provided that, where the person is unable to pay the penalty imposed within such period due to a natural disaster or other unavoidable circumstances, the person shall pay the penalty imposed within 7 days from the date on which said reason ceases to exist.

(3) A receiving agency in receipt of a payment of penalty under paragraph (2) shall issue a receipt thereof to the person who paid the penalty.

(4) A receiving agency in receipt of a payment of penalty shall notify the Korea Communications Commission thereof without delay.

(5) Penalties may not be paid in installments.

Article 23 (Preparing Design Drawings)

(1) Design drawings under Article 25(3) of the Act shall be prepared by persons falling under any of the following:

1. a proprietor of engineering activities in the field of communications or information processing pursuant to the Engineering Technology Promotion Act, or a proprietor of engineering activities or professional engineer in the field of communications or information processing whose office is registered pursuant to the Professional Engineers Act; or

8

2. an information or communications technician engaged in technical activities pursuant to subparagraph 1 of Table 2 attached to the Enforcement Decree of the Information and Communication Work Business Act.

(2) The Korea Communications Commission may separately determine, and issue public notification concerning, the scope of construction work for telecommunications facilities and equipment installation that may only be designed by persons falling under subparagraph 1 of paragraph (1).

Article 24 (Certificate)

Details concerning the certificate referred to in Article 25(7) of the Act shall be prescribed under the Korea Communications Commission Rule.

Article 25 (Management Rules)

Matters to be determined under the management rules for telecommunications facilities and equipment pursuant to Article 26 of the Act are as follows:

1. composition, duties and limited liabilities of telecommunications facilities and equipment management structure;

2. installation, testing, operation, inspection, maintenance and repair of telecommunications facilities and equipment;

3. procedures and countermeasures in the event telecommunications facilities and equipment are experiencing trouble;

4. measures for protecting communication secrets of users of telecommunications facilities and equipment; and

9

5. other matters necessary for secure and reliable provision of telecommunications facilities and equipment.

Article 26 (Facilities Entitled to Securing Pipeline Ways)

The term “other facilities or housing sites as determined by the Enforcement Decree” in Article 30-2(1)8 of the Act means any of the following facilities, etc.: <Amended by Enforcement Decree No. 21835 of Nov. 20, 2009>

1. passenger transport terminals under the Passenger Transport Service Act;

2. freight terminals under the Goods Distribution Promotion Act;

3. complexes for the cooperating business of small and medium enterprises created under the Small and Medium Enterprises Promotion Act;

4. distribution complexes developed under the Promotion of Distribution Complex Development Act;

5. tourist resorts or sightseeing complexes created under the Tourism Promotion Act; and

6. sewage culverts under the Sewerage Act.

Article 27 (Conciliation on Securing Pipeline Ways)

(1) When asked for conciliation pursuant to Article 30-2(5) of the Act and preparing a draft conciliation thereafter, the Korea Communications Commission shall be advised by the head of the related administrative agency and the parties concerned.

(2) In the event the Korea Communications Commission prepares a draft conciliation under paragraph (1), it shall notify the parties concerned and may recommend acceptance thereof by specifying a period of not less than 30 days.

(3) Where the draft conciliation under paragraph (2) is accepted by the parties concerned, the Korea Communications Commission shall prepare a draft conciliation indicating each of the following and have the parties concerned sign and affix their seal to it:

1. case reference;

10

2. names and addresses of the parties concerned, appointed parties or agents;

3. purpose of the request for conciliation;

4. conciliation provisions; and

5. date of preparation.

Article 28 (Integrated Operation of Telecommunications Facilities and Equipment, etc.)

“Where it is necessary for an efficient management and operation of telecommunications facilities and equipment” in Article 31(1) of the Act shall mean where it is necessary to prevent overlapping investment of telecommunications facilities and equipment through an efficient management and operation of such telecommunications facilities and equipment.

Article 29 (Selection of Integrated Operation Communications Business Operators)

(1) In selecting, under Article 31(1) of the Act, key communications business operators who are capable of operating telecommunication facilities and equipment, etc. in an integrated manner, the Korea Communications Commission shall examine matters falling under each of the following and select such operators from among key communications business operators who render telecommunications service in areas or their adjacent areas where telecommunications facilities and equipment subject to the integrated operation are installed:

1. manpower and organizations of the key communication business operators;

2. facilities and equipment in possession of the key communication business operators;

3. technical levels of the key communication business operators; and

4. financial structure of the key communication business operators.

11

(2) The Korea Communications Commission shall, where it intends to select operators of integrated operation communications business under Article 31 (1) of the Act, go through in advance deliberation of the Information and Communications Policy Deliberation Council (the “Council”) pursuant to Article 44-2(1) of the Act.

Article 30 (Matters to be Included in Integrated Operation Plan)

“Other matters prescribed under the Enforcement Decree of the Act” in Article 31(3)3 of the Act means each of the following:

1. matters concerning charges for integrated telecommunications facilities and equipment; and

2. matters concerning workers who operate integrated telecommunications facilities and equipment.

Article 31 (Purchase of Telecommunications Facilities and Equipment, etc.)

(1) Sales price of telecommunications facilities and equipment, etc. under Article 32(2) of the Act shall be calculated based on the appraised value of certified public appraisers under the Public Notice of Values and Appraisal of Real Estate Act; provided that, if it is not easy to obtain a certified public appraiser’s appraisal, sales price may be calculated through consultation among the parties concerned.

(2) Matters concerning the sales procedure of telecommunications facilities and equipment, etc. and the payment method of the sales price under Article 32(2) of the Act shall be determined through consultation among the parties concerned.

Article 32 (Disposal and Collection of Telecommunications Machinery and Materials)

Any order by the Korea Communications Commission for the disposal or collection of telecommunications machinery and materials under Article 36(3) of the Act shall be made in writing, and the reason and period for the disposal or collection shall be specified.

12

CHAPTER IV RULING IN DISPUTES, ETC.

Article 33 (Application for Ruling)

(1) Any person who wishes to apply for a ruling pursuant to Article 40-2(1) of the Act shall submit to the Korea Communications Commission an application for ruling with each of the following documentation attached thereto; provided that, the documentation set forth in subparagraphs 3-5 shall be applicable only to applications for ruling pursuant to Article 40-2(1)3.

1. documentation relating to the summary of the application for ruling;

2. documentation relating to the results of consultation among the parties concerned;

3. copy of the Accord;

4. documentation relating to the amounts due or payable and the computation method thereof; and

5. drawings indicating provision, common use or interconnection of telecommunications facilities and equipment, or a summary of information provided.

(2) In the event any of the following is discovered as a result of examination of the documentation under paragraph (2), the Korea Communications Commission may request supplementation thereto within a period reasonably fixed:

1. where any of the attachments is incomplete; or

2. where the contents of the application or attachments are unclear.

(3) In the event an applicant fails to comply, within the time period prescribed in paragraph (2), with a supplementation request made by the Korea Communications Commission, the Korea Communications Commission shall return all the relevant application materials to such applicant, clearly indicating the reason for the return.

13

Article 34 (Period for Ruling)

(1) The Korea Communications Commission shall make a ruling within 60 days after it receives an application for a ruling under Article 40-2 of the Act.

(2) In the event the Korea Communications Commission fails to make a ruling within the fixed period under paragraph (1) due to an unavoidable circumstance, a period for the ruling may be extended, only once, for not more than 30 days by the resolution of the Korea Communications Commission.

Article 35 (Ruling)

(1) Rulings of the Korea Communications Commission shall be in writing.

(2) Rulings provided under paragraph (1) shall specify an order, the reason of order, and date of decision, and the chairman, and officials presented in the meeting shall sign or seal the ruling and send it to parties concerned.

Article 36 (Composition of Information and Communications Policy Deliberation Council, etc.)

(1) The Council prescribed under Article 44-2 of the Act shall be composed of not more than 20 members including one chairman.

(2) The chairman and members of the Council shall be appointed or commissioned by the Commissioner of the Korea Communications Commission among those falling under any of the following:

1. public officials of Grade III or higher, or equivalent to Grade III or higher of related administrative agencies( including public officials of high ranking or Grade);

2. persons in charge of lecture and research on the information and communications-related fields at universities or research institutes under the Higher Education Act;

3. representatives of information and communications-related organizations or agencies, or persons who have been or were in office as executive officers of information and communications-related enterprises for not less than 5 years;

14

4. persons with a significant amount of knowledge and experience in information and communications; or

5. persons recommended by civil organizations (referring to nonprofit non-governmental organizations under Article 2 of the Assistance for Nonprofit Non-Governmental Organizations Act).

(3) The terms of office for members shall be two years after which time they may be reappointed; provided that, the term of office for any member who is appointed or commissioned after the decision of his position shall be the period for which he holds such position.

Article 37 (Duties of Chairman)

(1) The chairman shall exercise overall control over the affairs and represent the Council.

(2) Where the chairman is unable to discharge his duties due to compelling reasons, a member appointed in advance by the chairman shall act as chairman on his behalf.

Article 38 (Meetings of the Council)

(1) The chairman shall convene a meeting of the Council and shall preside over it.

(2) Decisions of a meeting of the Council shall be taken by a majority of all the members attending and by affirmative vote of a majority of members present.

(3) Where deemed necessary, the Council may be advised by the related public officials or related experts.

Article 39 (Secretary of Information and Communications Policy Deliberation Council)

The Council shall have a secretary to handle the affairs of the Council, and the secretary shall be appointed by the Commissioner of Korea Communications Commission from among the public officials belonging to the Korea Communications Commission.

15

Article 40 (Subcommissions)

The Council may have subcommissions where the matters which the Korea Communications Commission submits for deliberation need a technical review.

Article 41 (Allowance)

The members who attend the Council or subcommissions shall be paid an allowance within the limits of the budget; provided that, such allowance shall not be applicable where the members who are public officials attend it in direct connection with their duties as public officials.

Article 42 (Detailed Operational Regulations)

Except those prescribed under this Enforcement Decree, any matter necessary for operation of the Council and composition and operation etc. of subcommissions shall be determined by the chairman through a resolution of the Council.

CHAPTER V CONTROL OF COMMUNICATIONS DISASTERS

Article 43 (Major Key Communications Business Operators)

Major key communications business operators under Article 44-3(1) of the Act (the “Major Key Communications Business Operators”) shall be (i) key communications business operators providing any of the following services and (ii) either key communications business operators deemed and publicly notified by the Korea Communications Commission to have a great impact on the public interest and national industries, or key communications business operators whose stable provision of services is deemed and publicly notified by the Korea Communications Commission to be especially necessary:

1. local telephone service;

2. long distance telephone service;

3. international telephone service;

4. high speed internet service; or

16

5. among services provided upon being assigned frequencies, a mobile telephone service or a trunked radio system service with at least 100,000 users.

Article 44 (Formulation Procedures for Basic Plan for Communications Disaster Control)

(1) Pursuant to Article 44-3(3) of the Act, the Korea Communications Commission shall prepare guidelines on formulation of basic plans for communications disaster control for the next fiscal year not later than the end of April each year and notify major key communications business operators thereof.

(2) Major key communications business operator shall formulate a plan for communications disaster control for the next fiscal year in accordance with the guidelines on formulation under paragraph (1), and submit it to the Korea Communications Commission not later than the end of May each year.

(3) Pursuant to Article 44-3(5) of the Act, the Korea Communications Commission shall fix the basic plans for communications disaster control for the next fiscal year not later than the end of July each year.

Article 45 (Integrated Management of Telecommunications Facilities and Equipment)

(1) For the purpose of integrated management of telecommunications facilities and equipment pursuant to Article 44-4(1) of the Act, the Korea Communications Commission may order key communications business operators and holders of private telecommunications facilities and equipment to exchange with each other information on the facilities and equipment they operate or own, or order a professional institution designated by the Korea Communications Commission to establish a database of such information and share the database with the Korea Communications Commission.

(2) A key communications business operator may, where integrated management of telecommunications facilities and equipment pursuant to Article 44-4(1) of the Act is needed, make a request for such integrated management to another key communications business operator or a holder of private telecommunications facilities and equipment, and the entity or person so requested shall oblige such request barring any particular circumstances.

17

(3) A key communications business operator may request conciliation by the Korea Communications Commission in the event another key communications business operator or a holder of private telecommunications facilities and equipment does not oblige its request under paragraph (2) for integrated management.

(4) The Korea Communications Commission may, either upon receiving request for conciliation or by its authority, order integrated management of telecommunications facilities and equipment against a key communications business operator or a holder of private telecommunications facilities and equipment.

Article 46 (Organization and Operation of Communications Disaster Control Committee)

(1) Vice Ministers of related central administrative agencies who are to become the members of the Communications Disaster Control Committee (hereinafter referred to as the “Committee”) under Article 44-5 (3) of the Act, shall be the Administrator of the National Emergency Management Agency, Vice Minister of National Defense, Deputy Director of the National Intelligence Service, and Vice Ministers of related administrative agencies which are deemed necessary by the Chairman.

(2) The Chairman shall convene a meeting of the Committee and preside over it.

(3) If the Chairman is unable to perform his duties due to any inevitable reasons, a member shall act on behalf of the Chairman in the order of members nominated by the Chairman.

(4) Where the Chairman intends to convene a meeting of the Committee, he shall notify each member, in writing or by an electronic document, of the date and time, venue and agenda of the meeting not later than 7 days before an opening of the meeting: Provided, That the same shall not apply to the case where it is a matter of urgency or there exist inevitable causes.

(5) The Committee shall resolve by the attendance of a majority of all incumbent members, and by the consent of a majority of those present.

(6) The Committee may hear the opinions of the related public officials or the related specialists in case where it is deemed necessary.

18

(7) The Committee shall have an executive secretary to deal with its affairs, and he shall be nominated by the Chairman from among the public officials belonging to the Korea Communications Commission.

Article 47 (Organization and Operation of Working Committees)

(1) Working committees established within the Committee under Article 44-5(4) of the Act shall consist of 15 working members or less, including one chairman of working committee.

(2) The chairman of working committee shall be the emergency strategist of the Korea Communications Commission, and the working members shall be the persons falling under each of the following:

1. each one of persons designated by the head of relevant institution, from among the public officials of Grade IV or those corresponding thereto, who belong to the central administrative agencies whereto the members under Article 46(1) hereof belong, and to the related administrative agencies deemed necessary by the chairman of working committee; and

2. person who is commissioned by the chairman of working committee among the persons falling under any of the following items:

(a) person in charge of the duties concerning communications disaster, from among the employees of a major key communications business operator and of the electric communications business operators’ organization; and

(b) person who has much knowledge of, and experiences in, communications disaster control.

(3) The chairman of working committee shall convene a meeting of the said committee, and preside over it.

(4) The working committee shall have an executive secretary to deal with its affairs, and the executive secretary shall be appointed by the Commissioner of the Korea Communications Commission among the public officials belonging to the Korea Communications Commission.

19

(5) The working committee shall examine and deliberate on the cases referred to the Committee, and on the items delegated by the Committee or directed by the Chairman of the Committee.

Article 48 (Allowances)

Allowances may be paid within the limit of budgets to the members or the working members who have attended a meeting of the Committee or the working committees; provided that, the same shall not apply to the case where the members or the working members who are the public officials attend in direct relations with their competent duties.

Article 49 (Detailed Operational Rules)

Except as prescribed under this Enforcement Decree, matters necessary for an organization and operation, etc. of the Committee shall be determined by the Chairman after going through a resolution by the Committee, and matters necessary for an organization and operation, etc. of the working committee shall be determined by the chairman of working committee after going through a resolution by the working committee, respectively.

Article 50 (Report on Communications Disasters)

Pursuant to Articles 44-7 and 44-8(4) of the Act, the Major Key Communications Business Operators shall, upon occurrence of a communications disaster and until such disaster has been fully contained, report, from time to time, on any damages incurred, present recovery status, countermeasures, etc. to the Korea Communications Commission or the communications disaster countermeasure headquarters under Article 44-8 of the Act (the “Countermeasure Headquarters”)

Article 51 (Organization and Operation of Countermeasure Headquarters)

(1) The Countermeasure Headquarters shall consist of public officials belonging to the central administrative agency and the employees belonging to the major key communications business operator, who are directly related with a restoration of communications disaster.

(2) The Korea Communications Commission shall determine in advance an organizing method of the countermeasure headquarters, so as to enable to swiftly cope with the communications disaster, and to notify it to the head of central administrative agency and the major key communications business operator whereto belong the constituent members of the countermeasure headquarters under paragraph (1).

20

(3) The head of countermeasure headquarters shall represent the said headquarters and exercise overall control of the affairs falling under any of the following:

1. direction and control of the mobilization of materials for an urgent restoration and the restoration activities by the major key communications business operator;

2. establishment of the countermeasures for efficient urgent restoration activities, such as a setting-up of the urgent restoration systems and a sharing of roles between the major key communications business operators, etc.;

3. support to the communications in the communications disaster areas; and

4. other matters deemed necessary by the head of countermeasure headquarters.

(4) The head of countermeasure headquarters may request the major key communications business operators to dispatch their employees, in order to efficiently operate the countermeasure headquarters. In this case, any major key communications business operator in receipt of a request for dispatching his employees shall comply with it unless there exist any special grounds.

(5) Except as otherwise prescribed in this Enforcement Decree, the matters necessary for organization and operation of the countermeasure headquarters shall be determined by the head of countermeasure headquarters.

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 52 (Procedures for Stating Opinions)

(1) If the Korea Communications Commission intends to give an opportunity to state opinion under Article 40-2(2) of the Act, it shall notify the person concerned or the person’s representative not later than ten days before the fixed date for stating opinion.

21

(2) The person or the person’s representative notified under paragraph (1) may present oneself on the date fixed, and state or submit in writing one’s opinion.

(3) When the person concerned or the person’s representative present oneself and state one’s opinion under paragraph (2), public officials concerned shall prepare a written abstract thereof and have the subject person confirm it and affix signature and seal thereto.

(4) Notification under paragraph (1) shall specify that the subject person will be deemed to have no opinion in the absence of an oral or a written statement of opinion without a compelling reason.

Article 53 (Report on, and Inspection of, Telecommunications Facilities and Equipment)

“As prescribed under the Enforcement Decree of the Act” in Article 45(1) of the Act means any of the following:

1. where necessary for the establishment or enforcement of policies relating to telecommunications;

2. where necessary in order to verify the propriety of installation or management of telecommunications facilities and equipment; or

3. where necessary for securing stable communication during a state emergency or disaster.

Article 54 (Delegation and Commission of Powers)

(1) Pursuant to Article 46(1) of the Act, the Korea Communications Commission shall delegate each of the following authorities to the director general of the Radio Research Laboratory:

1. form approval of telecommunications machinery and materials under Article 33(1) of the Act;

2. designation, inspection, cancellation, suspension of business and supervision of designated testing institutions under Article 33-2 of the Act;

22

3. termination of form approval under Article 34-2 of the Act;

4. revocation of form approval, suspension of product manufacturing or taking other necessary measures under Article 35(1) of the Act;

5. affairs concerning investigation and testing of telecommunications machinery and materials under Article 36(2) of the Act (applicable only to telecommunications machinery and materials for which form approval has been granted under the text of Article 33(1) of the Act);

6. order for destruction or removal of telecommunications machinery and materials under Article 36(3) of the Act (applicable only to telecommunications machinery and materials for which a sign of form approval has not been marked in contravention of the provisions of Article 33(4) of the Act, or which have been judged inferior in quality after investigation and testing under Article 36(2) of the Act);

7. hearing under Article 45-2 of the Act; and

8. imposition or collection of a fine for negligence, pursuant to Article 53(2) of the Act, on and from any person who falls under Article 53(1) 6, 7 or 8 of the Act (applicable only to any person who has rejected, hindered or dodged investigation or testing of telecommunications machinery and materials to which form approval has been granted under the text of Article 33(1) of the Act).

(2) The Korea Communications Commission shall delegate the following authorities to the Director General of the Central Radio Management Office under Article 46(1) of the Act: <Amended, Jul. 3, 2008>

1. acceptance of reports on the installation of private telecommunications facilities and equipment, and reports on any alteration to the telecommunications facilities and equipment installed, under Article 20(1) of the Act;

2. verification under Article 20(3) of the Act;

3. issuance of orders, under Article 22(1) of the Act, against persons who installed private telecommunications facilities and equipment to either engage in a telecommunications business or to connect such private telecommunications facilities and equipment with other telecommunications facilities and equipment;

23

4. issuance of correction orders, under Article 23(1) of the Act, against persons who installed private telecommunications facilities and equipment;

5. issuance of orders, under Article 23(2) and (3) of the Act, to suspend the use of private telecommunications facilities and equipment or to remodel or repair private telecommunications facilities and equipment;

6. imposition or collection of penalties under Article 24 of the Act;

7. examination or testing of telecommunications facilities and equipment, under Article 25(5) of the Act, in order to verify whether they conform to the technical standards;

8. measures necessary, under Article 27 of the Act, to correct persons who installed telecommunications facilities and equipment or for other purposes;

9. investigation of telecommunications machinery and materials under Article 36(2) of the Act (applicable only to telecommunications machinery and materials for which form approval has not been granted in contravention of the text of Article 33(1) of the Act);

10. issuance of orders to destruct or remove telecommunications machinery and materials under Article 36(3) of the Act (applicable only to telecommunications machinery and materials for which form approval has not been granted in contravention of the text of Article 33(1) of the Act);

11. acceptance and inspection of reports with respect to persons who install telecommunications facilities and equipment under Article 45(1) of the Act;

12. issuance of orders to eliminate illegal telecommunication facilities and equipment and taking other measures necessary therefor under Article 45(2) of the Act; and

13. imposition or collection of a fine for negligence, pursuant to Article 53(2) of the Act, on

24

and from any person who falls under Article 53(1)1-5, 8, 9 or 10 of the Act (applicable only to any person who has rejected, hindered or dodged investigation of telecommunications machinery and materials to which form approval has not been granted in contravention of the text of Article 33(1) of the Act).

Article 54-2 (Review of Regulations)

The Ministry of Knowledge Economy shall review the appropriateness of the standards for calculating, reducing and increasing contribution amount by December 31, 2012 to determine whether to abolish, relax or maintain them.

[This Article Newly Inserted by Act No. 21626, JUL. 7, 2009]

Article 55 (Fines for Negligence)

(1) When the Korea Communications Commission imposes a fine for negligence under Article 53(2) of the Act, it shall, upon investigation and verification of the subject offense, notify, in writing, the person subject to such fine to pay it, specifying the details of the subject offense and methods of, and period for, raising objection.

(2) When the Korea Communications Commission intends to impose a fine for negligence under paragraph (1), it shall specify a period of not less than 10 days and give the person subject to such fine an opportunity to state her or his opinion. In such case, it shall be deemed that there is no opinion in the absence of any oral or written opinion presented within the period specified.

(3) In determining the amount of a fine for negligence, the Korea Communications Commission shall take into account the motive and consequences of the subject offense.

(4) Fines for negligence shall be collected in accordance with the collection procedures for any income prescribed under the laws relating to the management of national funds, and any payment notice shall include methods of, and period for, objection.

25

ADDENDA <Enforcement Decree No. 21835, Nov. 22, 2009>

Article 1 (Enforcement Date) This Act shall take effect on November 22, 2009.

Article 2 (Amendments to Other Laws)

<1> through <44> are omitted.

<45> Enforcement Decree of the Telecommunications Basic Law shall be amended as follows:

In Article 26(3), all references to the Promotion of Small and Medium Enterprises and Encouragement of Purchase of their Products Act shall be amended to refer to the Small and Medium Enterprises Promotion Act.

<46> through <64> are omitted.

Article 3 Omitted.

26

EX-15.3

Exhibit 15.3

TELECOMMUNICATIONS BUSINESS ACT

As amended by Act No. 9919 of Jan. 1, 2010, effective Jan. 1, 2010.

CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose)

The purpose of this Act is to contribute to the promotion of public welfare by encouraging sound development of telecommunications business and ensuring convenience to the users of telecommunications service through proper management of such business.

Article 2 (Definitions)

(1) For the purpose of this Act, <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5385, Aug. 28, 1997; Act No. 5564, Sep. 17, 1998>

1. the term “telecommunications business operator” means a person who provides telecommunications service with holding a license or making a registration or report under this Act;

2. the term “user” means a person who has made a contract for the use of any telecommunications service with the telecommunications business operator in order to receive a provision of telecommunications service; and

3. the term “universal service” means the basic telecommunications service which any user may receive at reasonable fees anytime and anywhere.

(2) The terms used in this Act shall be the same as defined in the Telecommunications Basic Law, except for those defined in paragraph (1) above. <Amended by Act No. 8198, Jan. 3, 2007>

1

Article 3 (Duty of Providing Services, etc.)

(1) A telecommunications business operator shall not refuse to provide any telecommunications service, without justifiable reasons.

(2) A telecommunications business operator shall guarantee the fairness, speediness and accuracy in performing his business.

(3) A fee for telecommunications service shall be reasonably fixed so as to ensure a smooth development of telecommunications business and to provide the users with convenient and diverse telecommunications services in the fair and inexpensive manner.

Article 3-2 (Universal Service)

(1) All telecommunications business operators shall have the obligation to provide universal service or to replenish the losses incurred by such provisions. <Amended by Act No. 6346, Jan. 8, 2001>

(2) The Communications Commission may, notwithstanding the provisions of paragraph (1), exempt the telecommunications business operator determined by the Enforcement Decree as a telecommunications business operator for whom an imposition of obligation under paragraph (1) is deemed inadequate in view of the peculiarity of telecommunications service, or the telecommunications business operator whose turnover of telecommunications service is less than the amount as determined by the Enforcement Decree within the limit of 1/100 of total turnover of the telecommunications services, from the relevant obligations. <Newly Inserted by Act No. 6346, Jan. 8, 2001, Act No. 8867, Feb. 29, 2008>

(3) The details of universal service shall be determined by the Enforcement Decree in consideration of the following matters: <Amended by Act No. 8425, May 11, 2007>

1. Level of the development of information and communications technology;

2. Level of the dissemination of telecommunications service;

3. Public interest and safety;

2

4. Promotion of social welfare; and

5. Acceleration of informatization.

(4) In order to provide effective, stable universal service, the Korea Communications Commission may, in consideration of size and quality of universal service, level of price and the technical capability of a telecommunications business operator, designate a telecommunications business operator through the method and procedure prescribed by the Enforcement Decree. <Amended by Act No. 8425, May 11, 2007; No. 8867, Feb. 29, 2008>

(5) Under the method and procedure prescribed by the Enforcement Decree, the Korea Communications Commission may have a telecommunications business operator bear compensation for losses incurred in the course of providing universal service based on the total sales. <Newly Inserted by Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5564, Sep. 17, 1998]

CHAPTER II TELECOMMUNICATIONS BUSINESS

SECTION 1 General Provisions

Article 4 (Classification, etc. of Telecommunications Business)

(1) The telecommunications businesses shall be classified into a key communications business, a specific communications business and a value-added communications business. <Amended by Act No. 5385, Aug. 28, 1997>

(2) The key communications business shall be the business to install telecommunications line facilities, and thereby provide telecommunications services such as telegraph and telephone service (hereinafter referred to as the “key telecommunications services”), whose types and contents are determined by the Enforcement Decree, in consideration of impacts on the public interest and national industries and the necessity for stable provision of services. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) The specific communications business shall correspond to one of the following subparagraphs: <Newly Inserted by Act No. 5385, Aug. 28, 1997; Act No. 8867, Feb. 29, 2008>

3

1. Business which provides a key telecommunications service by making use of telecommunications line facilities, etc. of a person who has obtained a license for key communications business under Article 5 (hereinafter referred to as a “key communications business operator”); and

2. Business which installs the telecommunications facilities in the premises as determined by the Enforcement Decree, and provides a telecommunications service therein by making use of the said facilities.

(4) The value-added communications business shall be the business which leases telecommunications line facilities from a key communications business operator, and provides a telecommunications business service other than the key telecommunications services under paragraph (2) (hereinafter referred to as the “value-added communications service”). <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997>

[This Article Wholly Amended by Act No. 4903, Jan. 5, 1995]

SECTION 2 Key Communications Business

Article 5 (License etc. of Key Communications Business Operator)

(1) A person who intends to run a key communications business shall obtain a license from the Korea Communications Commission. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) Deleted. <by Act No. 9481, Mar. 13, 2009>

(3) The Korea Communications Commission shall, in granting a license under paragraph (1), comprehensively examine the matters falling under each of the following subparagraphs: <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

1. Propriety of the plans for providing the key telecommunications services;

2. Appropriateness of the size of telecommunications facilities;

4

3. Financial and technical capability;

4. Actual results of technical developments related to key telecommunications services to be provided;

5. Technical development plans related to key telecommunications services;

6. Support plans for technical developments for promoting telecommunications; and

7. Other necessary matters for the performance of business.

(4) The Communications Commission shall set forth the detailed examination criteria by examining item under paragraph (3), period for license and outline of application for license, and make a public announcement thereof. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(5) The Korea Communications Commission may, in case where it grants a license for key communications business under paragraph (1), attach the conditions necessary for the promotion of fair competition, protection of users, improvement of service quality and efficient employment of resources for information and communication. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

(6) A person subject to a license under paragraph (1) shall be limited to a juristic person.

(7) Procedures for a license under paragraph (1) and other necessary matters shall be determined by the Enforcement Decree. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

[This Article Wholly Amended by Act No. 4903, Jan. 5, 1995]

Article 5-2 (Reasons for Disqualification for License)

Persons falling under each of the following subparagraphs shall not be entitled to obtain the license for a key communications business as referred to in Article 5:

1. The State or local governments;

5

2. Foreign governments or foreign corporations; and

3. Corporations whose stocks are owned by foreign governments or foreigners in excess of the restrictions on stock possessions as referred to in Article 6 (1).

[This Article Newly Inserted by Act No. 7165, Feb. 9, 2004]

Article 6 (Restrictions on Stock Possessions of Foreign Governments or Foreigners)

(1) The stocks of a key communications business operator (limited to the voting stocks, and including the stock equivalents with voting rights, such as stock depositary receipts, etc. and investment equities; hereinafter the same shall apply) shall not be owned in excess of 49/100 of the gross number of issued stocks, when adding up all of those owned by the foreign governments or foreigners.

(2) A corporation whose largest stockholder is a foreign government or a foreigner (including, throughout this Act, a specially-related person under Article 9(1)1 of the Capital Markets and Financial Investment Business Act) and not less than 15/100 of the gross number of its issued stocks is owned by said foreign government or foreigner (hereinafter referred to as the “fictitious corporation of foreigners”) shall be regarded as a foreigner. <Amended, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

(3) A corporation that owns less than 1/100 of the gross number of stocks issued by a key communications business operator shall not be regarded as a foreigner, even if it is equipped with the requirements as referred to in paragraph (2).

[This Article Wholly Amended by Act No. 7165, Feb. 9, 2004]

Article 6-2 (Grounds for Disqualifying Officers)

(1) Any person falling under each of the following subparagraphs shall be disqualified to serve as an officer of any key communications business operator <Amended by Act No. 7445, Mar. 31, 2005; Act No. 8198, Jan. 3, 2007>:

1. A minor, an incompetent or a quasi-incompetent;

6

2. A person who has yet to be reinstated after having been declared bankrupt;

3. A person who has been sentenced to imprisonment without prison labor or a heavier punishment on charges of violating this Act, the Telecommunications Basic Law, the Radio Waves Act or the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc. and for whom three years have yet to pass from the date on which the execution of the sentence is terminated (including a case where the execution of the sentence is deemed to be terminated) or the execution of the sentence is exempted;

4. A person who is in a stay period after having been sentenced to a stay of the execution of the imprisonment without prison labor or a heavier punishment on charges of violating this Act, the Telecommunications Basic Law, the Radio Waves Act or the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc.;

5. A person who has been sentenced to a fine on charges of violating this Act, the Telecommunications Basic Law, the Radio Waves Act or the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc. and for whom three years have yet to pass from the date of such sentence; and

6. A person who has been subject to a disposition taken to revoke his permission in accordance with Article 15 (1), a disposition taken to revoke his registration in accordance with Article 28 (1) or an order given in accordance with paragraph (2) of the same Article to discontinue his business and for whom three years have yet to pass from the date of such disposition or order. In the case of a corporation, the person refers to the person who commits the act of causing the disposition to revoke permission, the disposition to revoke registration or the order to discontinue business, and its representative.

(2) In the event that any officer is found to fall under each subparagraph of paragraph (1) or is found to fall under each subparagraph of paragraph (1) at the time that he is selected and appointed as an officer, he shall rightly resign from the office.

(3) Any act in which any officer has been involved prior to his resignation under paragraph (2) shall not lose its legal efficacy.

7

[This Article Wholly Amended by Act No. 6822, Dec. 26, 2002]

Article 6-3 (Examination of Public Interest Nature of Stock Acquisition, etc. by Key Communications Business Operator)

(1) The Public Interest Nature Examination Committee (hereinafter referred to as the “Committee”) shall be established in the Korea Communications Commission in order to make an examination regarding whether or not what falls under each of the following subparagraphs impedes the public interests as prescribed by the Enforcement Decree (hereinafter referred to as the “examination of public interest nature”), such as the national safety guarantee and maintenance of public peace and order, etc.<Amended, Jan. 3, 2007; Act No.8635, Aug. 3, 2007; Act No. 8867, Feb. 29, 2008>:

1. Where the principal comes to own not less than 15/100 of the gross number of stocks issued by a key communications business operator, when adding up those owned by the specially-related person as referred to in Article 9 paragraph (1) subparagraph 1 of the Capital Market Integration Act(hereinafter referred to as the “specially-related person”);

2. Where the largest stockholder of a key communications business operator is altered;

3. Where a key communications business operator or any stockholder of a key communications business operator concludes a contract for important management matters as prescribed by the Enforcement Decree, such as the appointment and dismissal of executives and the transfer or takeover, etc. of business of the relevant key communications business operator, with a foreign government or a foreigner; and

4. Other cases as prescribed by the Enforcement Decree, where there exists a change in the stockholders who have de facto management rights of a key communications business operator.

(2) Where a key communications business operator or any stockholder of a key communications business operator comes to fall under each of subparagraphs of paragraph (1), he shall file a report thereon with the Korea Communications Commission within seven days from the time when such a fact took place. <Amended by Act No. 8867, Feb. 29, 2008>

(3) Where a key communications business operator or any stockholder of a key communications business operator is to come to fall under each of subparagraphs of paragraph (1), he may, prior to the said situation, request the Korea Communications Commission to make an examination as referred to in paragraph (1). <Amended by Act No. 8867, Feb. 29, 2008>

8

(4) Where the Korea Communications Commission has received a report as referred to in paragraph (2) or a request for examination as referred to in paragraph (3), it shall refer it to the Committee. <Amended by Act No. 8867, Feb. 29, 2008>

(5) Where the Korea Communications Commission judges that there exists a danger of impeding the public interests by the cases falling under each of subparagraphs of paragraph (1) in view of the result of examination as referred to in paragraph (1), it may order the alteration of contract detail and suspension of its implementation, the suspension of exercise of voting rights, or the sale of relevant stocks. <Amended by Act No. 8867, Feb. 29, 2008>

(6) The report as referred to in paragraph (2) or (3), or the scope of key communications business operators to be examined, the procedures for reports and examinations and other necessary matters shall be stipulated by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>.

[This Article Newly Inserted by Act No. 7165, Feb. 9, 2004]

Article 6-4 (Composition and Operation, etc. of Public Interest Nature Examination Committee)

(1) The Committee shall consist of not less than five but not more than ten members including one Chairman.

(2) The Chairman shall be the Vice Chairman of the Korea Communications Commission, and the members shall be the persons commissioned by the Chairman from among the public officials ranking Grade III or higher grade of related central administrative agencies or public officials who belong to senior executive service as prescribed by the Enforcement Decree, and those falling under each of the following subparagraphs <Amended by Act No. 7796, Dec. 29, 2005; Act No. 8198, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>:

1. Persons having profound knowledge and experiences in the information and communications;

2. Persons recommended by the Government-contributed research institutes relating to the national safety guarantee and maintenance of public peace and order;

9

3. Persons recommended by the nonprofit non-governmental organizations as referred to in Article 2 of the Assistance for Nonprofit Non-Governmental Organizations Act; and

4. Other persons deemed necessary by the Chairman.

(3) The Committee may conduct necessary investigations for the examination of public interest nature, or request the interested parties or the reference witnesses to provide the data. In such case, the relevant interested parties or the reference witnesses shall comply with it unless they have any justifiable reasons.

(4) Where the Committee deems it necessary, it may have the interested parties or the reference witnesses attend the Committee, and hear their opinions.

(5) Matters necessary for the organization or operation, etc. of the Committee shall be prescribed by the Enforcement Decree.

[This Article Newly Inserted by Act No. 7165, Feb. 9, 2004]

Article 7 (Restrictions, etc. on Stockholders of Excessive Possession)

(1) Where a foreign government or a foreigner has acquired the stocks in contravention of the provisions of Article 6 (1), no voting rights shall be exercised for the stocks under the said excessive possession.

(2) The Korea Communications Commission may order the stockholder who has acquired stocks in contravention of the provisions of Article 6 (1), a key communications business operator wherein exists the said stockholder, or the stock-holder of the fictitious corporation of foreigners, to make corrections in the relevant matters, with specifying the period within the limit of six months. <Amended by Act No. 8867, Feb. 29, 2008>

(3) Persons subjected to the order for corrections as referred to in paragraph (2) shall make corrections in the relevant matters within the specified period.

(4) With regard to the stockholder in contravention of the provisions of Article 6 (1), a key communications business operator may refuse any renewals for the excessive portion in the register of stockholders or of members.

10

[This Article Wholly Amended by Act No. 7165, Feb. 9, 2004]

Article 7-2 (Charge for Compelling Execution)

(1) Against the persons who were subjected to the orders as referred to in Articles 6-3 (5) or 7 (2) (hereinafter referred to as the “corrective orders”) and has failed to comply with them within the specified period, the Communications Commission may levy the charge for compelling the execution. In such case, the charge for compelling the execution leviable per day shall be not more than 3/1,000 of purchase prices of relevant possessed stocks, but in the case not related with the stock possession, it shall be the amount not exceeding 100 million won. <Amended by Act No. 8867, Feb. 29, 2008>

(2) The period subject to a levy of the charge for compelling the execution as referred to in paragraph (1) shall be from the day next to the date of expiration of the period set in the corrective orders to the date of implementing the corrective orders. In such case, a levy of the charge for compelling the execution shall be made within 30 days from the day next to the expiration date of the period set in the corrective orders, except for the case where there exists a special reason.

(3) Provisions of Article 37-2 (4) shall apply mutatis mutandis to the collection of the charge for compelling the execution.

(4) Matters necessary for the levy, payment, refund, etc. of the charge for compelling the execution shall be prescribed by the Enforcement Decree.

[This Article Newly Inserted by Act No. 7165, Feb. 9, 2004]

Article 8 (Issuance of Stocks)

A key communications business operator shall, in a case of an issuance of stocks, issue the registered ones. <Amended by Act No. 4903, Jan. 5, 1995>

Article 9 (Obligation of Commencing Business)

(1) A key communications business operator shall install telecommunications facilities and commence business within the period as fixed by the Korea Communications Commission. <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

11

(2) The Korea Communications Commission may, in case where the said business operator is unable to commence business within the period under paragraph (1) due to force majeure and other unavoidable reasons, extend the relevant period only once, upon an application of the key communications business operator. <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) Deleted. <by Act No. 5564, Sep. 17, 1998>

Article 10 (Addition of Service and Modification of License)

(1) A key communications business operator shall, in case where he intends to additionally provide a key communications service other than that already licensed under Article 5, obtain a modified license for such change from the Korea Communications Commission under the conditions as prescribed by the Enforcement Decree: Provided, That where a key communications business operator who provides a telephone service intends to additionally provide a key communications service prescribed by the Enforcement Decree within the limit of not hampering a key communications service which is provided by making use of existing facilities, he shall make a report thereon to the Minister of Information and Communication. <Amended by Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

(2) Where a key communications business operator intends to modify the important matters prescribed by the Enforcement Decree from among the matters licensed under Article 5, he shall obtain a modified license from the Korea Communications Commission, under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The provisions of Articles 5 (5) and Article 9 shall be applicable mutatis mutandis to a modified license for change under paragraph (1).

[This Article Wholly Amended by Act No. 5564, Sep. 17, 1998]

12

Article 11 (Concurrent Operation of Business)

(1) A key communications business operator shall, in case where he intends to run any of the businesses set forth in the following subparagraphs, obtain approval from the Korea Communications Commission: Provided that, this provision shall not apply to any key communications business operator with less than 30,000,000,000 Korean Won in turnover of services: <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 8324, Mar. 29, 2007; Act No. 8867, Feb. 29, 2008>

1. manufacturing of telecommunications [tools];

2. information and communications work pursuant to paragraph 3 of Article 2 of the Information and Communications Work Business Act (excluding renovation and consolidation work for electronic telecommunications network); and

3. services pursuant to subparagraph 6 of Article 2 of the Information and Communications Work Business Act (excluding renovation and consolidation of electronic telecommunications network).

(2) The Korea Communications Commission shall grant approval under paragraph (1), in case where deemed that a key communications business operator is not likely to cause any impediments to the operation of telecommunications service by running a business under paragraph (1), and that it is required for the development of telecommunications. <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 12 Deleted. <by Act No. 5986, May 24, 1999>

Article 13 (Takeover of Business and Merger of Juristic Persons etc.)

(1) A person who belongs to any one of the categories set forth in the following paragraphs shall obtain an authorization from the Korea Communications Commission under the conditions as prescribed by the Enforcement Decree: Provided, that in case that person sells telecommunications circuit installations except the ones prescribed by the Enforcement Decree, he shall report it to the Korea Communications Commission under the conditions as determined by the Enforcement Decree: <Amended by Act No. 8198, Jan. 3, 2007; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

13

1. a person who takes or intends to take over the whole or part of a business of a key communications business operator;

2. a person who intends to merge with a juristic person which is a key communications business operator;

3. a key communications business operator intending to sell the telecommunications circuit installations necessary for provision of key communications service; or

4. a person who, along with a certain related person intends to become the [largest shareholder of a key communications business operator or own 15% of more of the issued shares of the key communications business operator.

(2) Where a key communications business operator intends to establish a juristic person in order to provide a part of key communications services from among the plural key communications services licensed, he shall obtain approval from the Korea Communications Commission, under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission shall, in case where it intends to grant authorization or approval under paragraph (1) or (2), comprehensively examine the matters falling under each of the following subparagraphs: <Newly Inserted by Act No. 6230, Jan. 28, 2000; Act No. 8425, May 11. 2007; Act No. 8867, Feb. 29, 2008>

1. Appropriateness of financial and technical capability and business operational capability;

2. Appropriateness of management of resources for information and communications, such as frequencies and telecommunications numbers, etc.;

3. Impact on the competition of key communications business;

4. Impact on the protection of users and the public interests; and

5. Impact on public interests, such as the use of telecommunications facilities and communication networks, efficiency of research and development and international competitive power of the communications industry, etc.

14

(4) Matters necessary for the detailed examination standards by examination items and the examination procedures, etc. under paragraph (3) shall be fixed and publicly announced by the the Korea Communications Commission. <Newly Inserted by Act No. 6230, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

(5) A person who has taken over the business of a key communications business operator by obtaining an authorization under paragraph (1), or a juristic person surviving a merger or that established by a merger, or that established by obtaining an authorization under paragraph (2), shall succeed to the status which is related to a license of the relevant key communications business.

(6) The Korea Communications Commission may, in case where it grants authorization or approval under paragraph (1) or (2), attach conditions required for fair competition and protection of users, etc. <Newly Inserted by Act No. 6230, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

(7) The Korea Communications Commission shall, in case where it intends to grant an authorization under paragraph (1), go through a consultation with the Fair Trade Commission. <Amended by Act No. 6230, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008; Act No. 9481, March 13, 2009>

(8) The provisions of Article 5-2 shall apply mutatis mutandis to an authorization under paragraph (1) and approval under paragraph (2). <Amended by Act No. 7165, Feb. 9, 2004>

(9) In the event any person/entity subject to Article 1(4) fails to acquire the permit pursuant thereto, the Korea Communications Commission may order suspension of its voting right or sale of the applicable shares. <Newly Inserted, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

(10) A person who wishes to obtain authorization under paragraph (1) or approval under paragraph (2) shall not unify communications networks, appoint officers, execute other activities such as transferring, consolidating, entering into contract concerning disposing of facilities or take follow-up measures regarding establishment of a company prior to obtaining such authorization or approval. <Newly Inserted by Act No. 8425, May 11, 2007>

[This Article Wholly Amended by Act No. 5564, Sep. 17, 1998]

15

Article 14 (Suspension, Closedown of Business or Dissolution of Juristic Persons, etc.)

(1) A key communications business operator shall, in case where he intends to suspend or discontinue the whole or part of a key communications business run by him, notify the users at least 60 days prior to the date of termination and obtain approval of such suspension or discontinuation from the Korea Communications Commission. <Amended by Act No. 5220, Dec. 30, 1996; Act No.8324, Mar. 29, 2007; Act No. 8867, Feb. 29, 2008>

(2) In the event separate measures of protection is deemed to be necessary for the protection of users upon suspension or discontinuance of the relevant key communications business, the Korea Communications Commission may order such measures (including assistance for membership change, bearing expenses, termination of membership) to be taken. Amended by Act No. 8324 Mar. 29, 2007; Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission shall, in case where an application for approval or authorization under paragraph (1) is made, and where deemed that suspension, discontinuance of relevant business or a dissolution of a juristic person is likely to hamper the public interests, not grant the relevant approval or authorization. <Amended by Act No. 5220, Dec. 30, 1996. Amended by Act No. 8324, Mar. 29, 2007; Act No. 8867, Feb. 29, 2008>

[This Article Wholly Amended by Act No. 4903, Jan. 5, 1995] [Article Heading Amended by Act No.8324, Mar. 29, 2007]

Article 15 (Cancellation of License, etc.)

(1) The Korea Communications Commission may, in case where a key communications business operator falls under any one of the following subparagraphs, cancel the relevant license or give an order to suspend the whole or part of business with fixing a period of no more than one year: <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5564, Sep. 17, 1998; Act No. 5835, Feb. 8, 1999; Act No. 6230, Jan. 28, 2000; Act No. 6360, Jan. 16, 2001; Act No. 7916, March 24, 2006,; Act No. 8198, Jan. 3, 2007; Act No. 8425, May 11, 2007; Act No., 8867, Feb. 29, 2008>

1. Where he has obtained a license by deceit and other illegal means;

2. Where he has failed to implement the conditions under Articles 5 (5) and 13 (6);

3. Where he has failed to observe the orders under Article 7 (2);

16

4. Where he has failed to commence business within the period under Article 9 (1) (in case of obtaining an extension of the period under Article 9 (2), the extended period);

5. Where he has failed to comply with the standardized use contract, that is authorized or reported under Article 29 (1); and

6. Where he fails to comply with an order for correction under Article 37 (1) or Article 65 (1) without any justifiable reasons.

(2) Criteria and procedures for the dispositions under paragraph (1) and other necessary matters shall be determined by the Enforcement Decree. <Amended by Act No. 5220, Dec. 30, 1996,: Act No. 8324, Mar. 29, 2007>

Article 16 Deleted. <by Act No. 5564, Sep. 17, 1998>

SECTION 3 Deleted.

Articles 17 and 18 Deleted. <by Act No. 4903, Jan. 5, 1995>

SECTION 4 Specific Communications Business and Value-Added Communications Business

Article 19 (Registration of Specific Communications Business Operator)

(1) A person who intends to operate a specific communications service shall register the following matters with the Korea Communications Commission (including registration through information network) under the conditions as determined by the Enforcement Decree <Amended by Act No. 8198 Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>:

1. Financial and technical capability;

2. Plans for a user protection; and

3. Business plans, etc. and other matters as determined by the Enforcement Decree.

17

(2) The Korea Communications Commission may, upon receipt of the registration of a specific communications business under paragraph (1), attach the conditions necessary for the promotion of fair competition, protection of users, improvement of service quality and efficient employment of resources for information and communication. <Amended by Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

(3) A person subject to the registration of specific communications business under paragraph (1) shall be limited to a juristic person.

(4) Procedures and requirements for the registration under paragraph (1) and other necessary matters shall be determined by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5385, Aug. 28, 1997]

Article 20 Deleted. <by Act No. 5986, May 24, 1999>

Article 21 (Report, etc. of Value-Added Communications Business Operator)

A person who intends to run a value-added communications business shall report to the Korea Communications Commission (including reports via information network), according to the requirements and procedures as prescribed by the Enforcement Decree: Provided, That this shall not apply to a case where a key communications business operator intends to run a value-added communications business or where the size of the operating telecommunications facilities is a small value-added communication business matching the criteria prescribed by the Enforcement Decree. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 7445, Mar. 31, 2005; Act No. 8198, Jan. 3, 2007; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

[This Article Wholly Amended by Act No. 4903, Jan. 5, 1995]

Article 22 (Modification of Registered or Reported Matters)

A person who has registered as a specific communications business operator under Article 19 (hereinafter referred to as a “specific communications business operator”) or who has made a report of a value-added communications business operator under Article 21 (hereinafter referred to as a “value-added communications business operator”) shall, when he intends to modify the matters as determined by the Enforcement Decree from among the relevant registered or reported matters, make in advance a modified registration or modified report (including modified registration or modified report through information network) to the Korea Communications Commission under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 8198, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

18

[This Article Wholly Amended by Act No. 5385, Aug. 28, 1997]

Article 23 Deleted. <by Act No. 4903, Jan. 5, 1995>

Articles 24 and 24-2 Deleted. <by Act No. 5986, May 24, 1999>

Article 25 (Transfer or Takeover, etc. of Business)

In case where there exists a transfer or takeover of the whole or part of a specific communications business or a value-added communications business, or a merger or succession of a juristic person which is a specific communications business operator or a value-added communications business operator, a person who has taken over the relevant business, the juristic person surviving the merger, the juristic person founded by the merger, or the successor shall make the report thereon (including reports through information network) to the Korea Communications Commission, according to the requirements and procedures as prescribed by the Enforcement Decree. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 5564, Sep. 17, 1998; Act No. 8198, Jan. 3, 2007; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

Article 26 (Succession of Business)

In case where there have existed a transfer or takeover of a specific communications business or a value-added communications business, a merger of a juristic person which is a value-added communications business operator, or a succession of a value-added communications business, under Article 25, a person who has taken over the business, a juristic person surviving a merger, a juristic person founded by a merger or a successor shall succeed to the status of a former specific communications business operator or a value-added communications business operator. <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5385, Aug. 28, 1997>

19

Article 27 (Suspension or Closedown, etc. of Business)

(1) A specific communications business operator or a value-added communications business operator shall, in case where he intends to suspend or close down the whole or part of his business, notify the relevant contents to the users of relevant services, and report thereon to the Korea Communications Commission (including reports through information network) not later than thirty days prior to the slated date of the relevant suspension or closedown. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1998; Act No. 8198, Jan. 3, 2007, Act No. 8867, Feb. 29, 2008>

(2) Where a juristic person which is a specific communications business operator or a value-added communications business operator is dissolved for reasons other than a merger, a relevant liquidator (referred to a trustee in a bankruptcy, when it is dissolved by bankruptcy) shall report thereon without delay to the Korea Communications Commission. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997, Act No. 8198, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

Article 28 (Cancellation of Registration and Order for Closedown of Business)

(1) The Korea Communications Commission may, when a specific communications business operator falls under any of the following subparagraphs, cancel his registration, or suspend his business by specifying the period of not more than one year: Provided, That when he falls under the subparagraph 1, the Korea Communications Commission shall cancel his registration: <Newly Inserted by Act No. 5385, Aug. 28, 1997; Act No. 5564, Sep. 17, 1998; Act No. 5835, Feb. 8, 1999; Act No. 5986, May 24, 1999; Act No. 6230, Jan. 28, 2000; Act No. 6360, , Jan. 16, 2001, Act No. 7916, Mar. 24, 2006; Act No. 8198, Jan. 3, 2007; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

1. Where he makes a registration by deceit and other illegal means;

2. Where he fails to commence business within one year from the date on which a registration was made under Article 19 (1), or continually suspends business operation for not less than one year;

20

3. Where he fails to implement the conditions under Article 19 (2);

4. Deleted <by Act No. 5986, May 24, 1999>;

5. Where he fails to comply with an order for correction under Article 37 (1) or Article 65 (1) without any justifiable reasons;

6. Deleted <Act No. 8425, May 11, 2007>; or

7. Deleted <Act No. 8425, May 11, 2007>.

(2) The Minister of Information and Communication may, when a value added communications business operator falls under any of the following subparagraphs, issue an order to him for a closedown of business or for a suspension of business by specifying a period of not more than one year: Provided, That where he falls under any one of the following subparagraphs, the said Minister shall issue an order to him for a closedown of business: <Amended by Act No. 4903, Jan 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5564, Sep. 17, 1998; Act No. 5835, Feb. 8, 1999; Act No. 5986, May 24, 1999; Act No. 6230, Jan. 28, 2000; Act No. 6360, Jan. 16, 2001; Act No. 7916, Mar. 24, 2006; Act No. 8198, Jan. 3, 2007; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

1. Where he makes a report by deceit and other illegal means;

2. Where he fails to commence the business within one year from the reporting date under Article 21, or suspend the business operation for not less than one year;

3. Deleted <by Act No. 5986, May 24, 1999>;

4. Where he fails to comply with a correction order under Article 37 (1) or Article 65 (1) without any justifiable reasons; and

5. Deleted <May 11, 2007>.

(3) Criteria and procedures for dispositions taken under paragraph (1) or (2) and other necessary matters shall be determined by the Ordinance of the Ministry of Information and Communication. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 8324, Mar. 29, 2007>

21

CHAPTER III TELECOMMUNICATIONS SERVICE

Article 29 (Report, etc. of Standardized Use Contract)

(1) A key communications business operator shall set forth the fees and other terms for use by service with respect to the telecommunications service which he intends to provide (hereinafter referred to as the “standardized use contract”), and report thereon (including a modified report) to the Korea Communications Commission: Provided, That in a case of a key communications service whose size of business and market share correspond to the standards as determined by the Enforcement Decree, it shall obtain an authorization of the Korea Communications Commission (including a modified authorization). <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) Deleted. <by Act No. 5385, Aug. 28, 1997>

(3) The Korea Communications Commission shall authorize the standardized use contract under the proviso of paragraph (1), if it falls under the criteria of every following subparagraph: <Amended by Act No. 5220, Dec. 30, 1996, May 11, 2007, Feb. 29, 2008>

1. Fees for telecommunications service shall be reasonably calculated considering but not limited to costs of supply, profits, classification of costs/ profits by labor, cost savings achieved by methods of provision of labor, and effects on fair competitive environments;

2. Deleted; <May 11, 2007>

3. Matters concerning the responsibility of key communications business operators and relevant users, cost-sharing methods concerning the installation work of telecommunications facilities and other works shall not be unreasonably disadvantageous to users;

4. Forms of use of telecommunications line facilities by other telecommunications business operators or users shall not be unduly restricted;

5. Undue discriminatory treatments shall not be made to specific persons; and

22

6. Matters on securing the important communications under Article 55 shall take into consideration matters such as achieving efficient performance of State’s function.

(4) Deleted. <May 11, 2007>

(5) The standardized use contract under paragraph (1) shall be applicable with respect to use of telecommunications line facilities, in case where a specific communications business operator or a value-added communications business operator makes use of telecommunications line facilities of a key communications business operator. <Amended by Act No. 5385, Aug. 28, 1997>

(6) A person intending to acquire the approval (including approval for change of business) or file a report with respect to the telecommunications services shall submit the supporting data for calculation of fee (including subscription fee, basic fee, usage fee, value-added service fee, and actual expense). In case of business change, a table comparing the old (before change) and new (after change) supporting data should be submitted to the Korea Communications Commission for comparison. <Newly Inserted, Act No. 8198, Jan. 3 2007; Amended by Act No. 8867, Feb. 29, 2008>

Article 30 Deleted. <Jan. 3, 2007>

Article 31 Deleted. <by Act No. 5986, May 24, 1999>

Article 32 (Reduction or Exemption of Fees)

A key communications business operator may reduce or exempt the fees for telecommunications service under the conditions prescribed by the Enforcement Decree, such as national security guarantee, disaster relief, social welfare and public interest. <Amended by Act No. 8425, May 11, 2007>

Article 32-2 (Restriction on Use by Others)

No person shall intermediate other’s communications or provide for other’s communications by making use of telecommunications services provided by a telecommunications business operator: Provided, That the same shall not apply to the case falling under any of the following subparagraphs: <Amended by Act No. 6822, Dec. 26, 2002>

23

1. Where it is needed to ensure the prevention and rescue from disaster, traffic and communication, and the supply of electricity, and to maintain order in a national emergency situation;

2. Where telecommunications services are incidentally rendered to clients while running a business other than the telecommunications business;

3. Where it is allowed to use on a trial basis for the purpose of developing and marketing telecommunications facilities, such as terminal devices, etc. which enable to use the telecommunications services;

4. Where any user permits any third party to use to the extent that the latter does not use repeatedly; and

5. Where it is necessary for the public interests or where the business run by any telecommunications business operator is not impeded, which is prescribed by the Enforcement Decree.

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

<This Article was amended by Act No. 6822 on Dec. 26, 2002 following the decision of unconstitutionality by the Constitutional Court which had been made on May 30, 2002>

Article 32-3 Deleted. <by Act No. 6602, Jan. 14, 2002>

Article 32-4 (Use of Transmission or Line Equipment, etc.)

(1) The composite cable TV business operator, transmission network business operator, or relay cable broadcasting business operator under the Broadcasting Act may provide the transmission or line equipment or the cable broadcasting equipment possessed under the methods prescribed by the Enforcement Decree to the key communications business operators. <Amended by Act No. 6346, Jan 8, 2001, Jan. 3, 2007; Amended by Act No. 8425, May 11, 2007>

24

(2) The composite cable TV business operator, transmission network business operator, or relay cable broadcasting business operator under the Broadcasting Act shall, when he intends to provide value-added communications services by making use of the transmission or line equipments or cable broadcasting equipments, make a report thereon to the Korea Communications Commission pursuant to Article 21. <Amended, Jan. 18, 2001, Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(3) The provisions of Articles 33-5 through 37 and 38 shall be applicable mutatis mutandis to the transmission or line equipment or cable broadcasting facilities under paragraph (1). <Amended by Act No. 5564, Sep. 17, 1998; Act No. 6346, Jan. 8, 2001>

(4) The provisions of Article 25 (2) through (6) of the Telecommunications Basic Law shall be applicable mutatis mutandis to the offer of services under paragraph (2). <Amended, Jan. 3, 2007>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996] [Article Heading Amended by Act No.6346, Jan. 8, 2001]

Article 33 (Protection of Users)

(1) Deleted. <by Act No. 5986, May 24, 1999>

(2) A telecommunications business operator shall take a prompt measure on the reasonable opinions or dissatisfactions raised by the users with respect to the telecommunications service. In this case, if it is difficult to take a prompt measure, he shall notify the users of the reasons thereof and the schedule for measures.

(3) Compensations for the damages incurred by the occurrence of reasons causing the opinions or dissatisfactions under paragraph (2) and by the delay of relevant measures shall be made pursuant to Article 33-2. <Amended by Act No. 5220, Dec. 30, 1996>

Article 33-2 (Compensation for Damages)

A telecommunications business operator shall make compensations when he inflicts any damages on the users in the course of providing telecommunications services: Provided, That if such damages are the results of force majeure, or of intent or negligence of the users, the relevant liability for compensations shall be reduced or exempted.

25

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 33-3 (Procedure for Compensating Damages and Filing Application for Ruling)

(1) In compensating any damage under Article 33-2, consultations shall be made with the recipient of the compensation for such damage. <Amended by Act No. 6822, Dec. 26, 2002>

(2) If the consultations on the compensation for damages under paragraph (1) have not been made or are unable to be made, the parties concerned may file an application with the Korea Communications Commission for a ruling thereon. <Amended by Act No. 6822, Dec. 26, 2002; Amended, Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996] [Article Heading Amended by Act No.6822, Dec. 26, 2002]

CHAPTER IV PROMOTION OF COMPETITION AMONG THE TELECOMMUNICATIONS BUSINESS

Article 33-4 (Promotion of Competition)

(1) The Korea Communications Commission shall exert efforts to construct an efficient competition system and to promote fair competitive environments, in the telecommunications services. <Amended by Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission shall conduct annual evaluation of competition system with respect to key communications business in order to construct an efficient competition system and to promote fair competition in the telecommunication services industry pursuant to paragraph 1 above. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The specific evaluation standards, procedure and method for evaluating competition system under paragraph 2 above shall be prescribed by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

26

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 33-5 (Provision of Telecommunications Facilities)

(1) A key communications business operator may, upon receipt of a request for the provision of telecommunications facilities from other key communications business operator, provide the telecommunications facilities by concluding an agreement with him.

(2) A key communications business operator falling under any of the following subparagraphs shall, upon receipt of a request under paragraph (1), provide the telecommunications facilities by concluding an agreement, notwithstanding the provisions of paragraph (1): <Newly Inserted by Act No. 6346, Jan. 8, 2001; Act No. 8867, Feb. 29, 20008>

1. A key communications business operator who possesses the equipments which are indispensable for other telecommunications business operators in providing the telecommunications services; and

2. A key communications business operator whose business scale and market shares, etc. of key telecommunications services are equivalent to the criteria as determined by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The Korean Communications Commission shall set forth and publicly notify the scope of telecommunications facilities, the conditions, procedures and methods for the provision of facilities, and the standards for calculation of prices under paragraphs (1) and (2). In this case, the scope of telecommunications facilities to be provided under paragraph (2) shall be determined in view of the demand for telecommunications facilities by the key communications business operators falling under each subparagraph of the same paragraph. <Amended by Act No. 6346, Jan. 8, 2001, Amended by Act No. 8867, Feb. 29, 2008>

(4) A key communications business operator in receipt of provisions of the telecommunications facilities may install the apparatus enhancing the efficiency of the relevant facilities, within the limit necessary for the provision of the licensed telecommunications services.

(5) Deleted. <by Act No. 8867 Feb. 29, 2008>

27

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 33-6 (Joint Utilization of Subscriber’s Lines)

(1) A key communications business operator shall, in case where other telecommunications business operators as determined and publicly noticed by the Korea Communications Commission have made a request for a joint utilization with respect to the lines installed in the section from the exchange facilities directly connected with the users to the users (hereafter in this Article, referred to as the “subscriber’s lines”), allow it. <Amended By Act No. 8867, Feb 29, 2008>

(2) The Korea Communications Commission shall set forth and publicly notify the scope of joint utilization of the subscriber’s lines under paragraph (1), its conditions, procedures and methods, and the standards for calculation of prices. <Amended By Act No. 8867, Feb. 29, 2008>

(3) Deleted. <by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6346, Jan. 8, 2001]

Article 33-7 (Joint Utilization of Radio Communications Facilities)

(1) A key communications business operator may, upon receipt of a request for the joint utilization of radio communications facilities (hereinafter referred to as the “joint utilization”) from other key communications business operators, allow it by concluding an agreement. In this case, the prices for the joint utilization among the key communications business operators as set forth and publicly notified by Korea Communications Commission shall be computed and settled accounts by a fair and reasonable means. <Amended By Act No. 8867, Feb. 29, 2008>

(2) The key communications business operators as determined and publicly notified by the Korea Communications Commission shall, upon receipt of a request for the joint utilization from other key communications business operators as determined and publicly notified by the Korea Communications Commission, allow it by concluding an agreement, notwithstanding the provisions of paragraph (1), in order to enhance the efficiency of the telecommunications business and to protect the users. <Amended By Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission shall set forth and publicly notify the standard for computing the prices for joint utilization under the latter part of paragraph (1) and its procedures and payment methods, etc., and the scope of joint utilization under paragraph (2), its conditions, procedures and methods, and the computation of prices, etc. <May 11, 2007; Amended By Act No. 8867, Feb. 29, 2008>

28

(4) Deleted. <by Act No. 8425, May 11, 2007>

[This Article Newly Inserted by Act No. 6346, Jan. 8, 2001]

Article 34 (Interconnection)

(1) A telecommunications business operator may allow the interconnection by concluding an agreement, upon a request from other telecommunications business operators for an interconnection of telecommunications facilities.

(2) The Korea Communications Commission shall set forth and publicly notify the scope of interconnections of telecommunications facilities, the conditions, procedures and methods, and the standards for calculation of prices under paragraph (1). <Amended by Act No. 8867, Feb. 29, 2008>

(3) Notwithstanding the provisions of paragraphs (1) and (2), the key communication business operators falling under any of the following subparagraphs shall allow the interconnection by concluding an agreement, upon receipt of a request under paragraph (1): <Amended by Act No. 8867, Feb. 29, 2008>

1. A key communications business operator who possesses such facilities as are indispensable for a provision of telecommunications services by other telecommunications business operators; and

2. A key telecommunications business operator whose business size of key communications services and the ratio of market shares are compatible with the standards as determined by the Enforcement Decree.

(4) Deleted. <by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

29

Article 34-2 (Prices of Interconnection)

(1) Prices for using the interconnection shall be calculated by a fair and proper means and deducted from each other’s accounts. The detailed standards for such calculation, their procedures and methods shall be governed by the standards of Article 34 (2).

(2) A key communications business operator may deduct the prices for interconnection from each other’s accounts under the conditions as prescribed by the standards under Article 34 (2), if he suffers any disadvantages due to the causes of no liability on his part, in the method of interconnection, the quality of connected conversations, or the provision of information required for interconnection, etc.

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 34-3 (Joint Use, etc. of Telecommunications Facilities)

(1) A key communications business operator may allow an access to or a joint use of the telecommunications equipment or facilities by concluding an agreement, upon receipt of a request from other telecommunications business operators for an access to or a joint use of the telecommunications equipment or facilities such as pipes, cables, poles, or stations of the relevant key communications business operator, for the establishment or operation of facilities required for interconnection of telecommunications facilities.

(2) The Korean Communications Commission shall set forth, and make a public notice of, the scope, conditions, procedures and methods for an access to or a joint use of telecommunications equipment or facilities, and the standards for computation of prices under paragraph (1). <Amended by Act No. 8867, Feb. 29, 2008>

(3) Notwithstanding the provisions of paragraph (1), a key communications business operator falling under any of the following subparagraphs shall allow an access to or a joint use of the telecommunications equipment or facilities under paragraph (1) by concluding an agreement, upon a receipt of request under paragraph (1): <Amended by Act No. 8867, Feb. 29, 2008>

1. A key communications business operator who possesses such facilities as are indispensable for a provision of telecommunications services by other telecommunications business operators; and

30

2. A key telecommunications business operator whose business size of key telecommunications services and the ratio of market shares are compatible with the standards as determined by the Enforcement Decree.

(4) Deleted. <by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 34-4 (Provision of Information)

(1) A key communications business operator may provide requested information by concluding an agreement, upon a receipt of request from other telecommunications business operators for a provision of information related to technological information or the user’s personal matters which are required for a provision of telecommunications facilities, interconnection, or joint use, etc. and imposition and collection of fees and a guide to the telecommunications number. <Amended by Act No. 5385, Aug. 28, 1997>

(2) The Korean Communications Commission shall set forth, and make a public notice of, the scope, conditions, procedures and methods for a provision of information, and the standards for computation of prices under paragraph (1). <Amended by Act No. 8867, Feb. 29, 2008>

(3) Notwithstanding the provisions of paragraph (1), a key communications business operator falling under any of the following subparagraphs shall provide the requested information by concluding an agreement, upon a receipt of request under paragraph (1): <Amended by Act No. 8867, Feb. 29, 2008>

1. A key communications business operator who possesses such facilities as are indispensable for a provision of telecommunications services by other telecommunications business operators; and

2. A key communications business operator whose business size of key telecommunications services and the ratio of market shares are compatible with the standards as determined by the Enforcement Decree.

(4) A key communications business operator under paragraph (3) shall set forth the technical standards required for a use by other telecommunications business operators or users by means of a connection of a monitor and other telecommunications equipment on the relevant telecommunications facilities, the standards for use and provision, and other standards required for a creation of fair competitive environments, and make a public notice thereof by obtaining approval from the Korea Communications Commission. <Amended by Act No. 8867, Feb. 29, 2008>

31

(5) Deleted. <by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 34-5 (Prohibition of Information Diversion)

(1) A telecommunications business operator shall not divulge any information concerning an individual user which has been obtained due to a provision of his own service, a provision of telecommunications facilities, or an interconnection: Provided, That the same shall not apply, when there exists the consent of the principal or the case under a lawful procedure pursuant to the provisions of the Acts.

(2) A telecommunications business operator shall use the information obtained under Article 34-4 within the context of purposes thereof, and may not use it unjustly, or provide it to the third parties.

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 34-6 (Report, etc. of Agreement on Interconnection, etc.)

(1) A key communications business operator shall conclude an agreement under Article 33-5 (1) and (2), the former part of 33-7 (1), 34 (1), 34-3 (1) or 34-4 (1) and report it to the Korea Communications Commission within ninety days unless there exist any special reasons, upon receipt of a request from other telecommunications business operators for a provision, a joint utilization, an interconnection or a joint use, etc. of telecommunications facilities, or a provision of information. The same applies in the case of a change or abolition of the agreement. <Amended by Act No. 6346, Jan. 8, 2001; Act No. 6822, Dec. 26, 2002; Act No. 8867, Feb. 29, 2008>

(2) Notwithstanding the provision of paragraph (1), in case of an agreement in which a key communications business operator under the latter part of Article 33-7 (1), Articles 33-7 (2), 34 (3), 34-3 (3) and 34-4 (3) is a party concerned, an authorization of the Korea Communications Commission shall be obtained. <Amended by Act No. 6346, Jan. 8, 2001; Act No. 6822, Dec. 26, 2002; Act No. 8867, Feb. 29, 2008>

32

(3) The agreement under paragraphs (1) and (2) shall meet the standards which are publicly notified by the Korea Communications Commission under Articles 33-5 (3), 33-7 (3), 34 (2), 34-3 (2), or 34-4 (2). <Amended by Act No. 6346, Jan. 8, 2001; Act No. 8867, Feb. 29, 2008>

(4) The Korea Communications Commission may, if any application for authorization referred to in paragraph (2) needs supplemented, order such application for authorization supplemented for a fixed period. <Amended by Act No. 6822, Dec. 26, 2002, Amended by Act No. 8867, Feb. 29, 2008>

(5) The agreement under Articles 34-3 (1) and 34-4 (1) may be concluded by an inclusion in the agreement under Article 34 (1).

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 35 (Application for Ruling, etc.)

(1) A telecommunications business operator may make an application to the Korea Communications Commission for a ruling under Article 40-2 of the Telecommunications Basic Law, when the agreement between the telecommunications business operators on a provision and joint utilization of telecommunications facilities, an interconnection, or a joint use, etc. or a furnishing of information is not concluded within the period specified by Article 34-6 (1) or is unable to be concluded. <Amended by Act No. 6346, Jan. 8, 2001, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

(2) A telecommunications business operator may make an application to the Korea Communications Commission for a ruling with the contents of an implementation of the agreement or a compensation for damages, when the damages occur due to the non-performance of the agreement concerning a provision and joint utilization of telecommunications facilities, an interconnection, a joint use, etc. or a furnishing of information, on the part of other telecommunications business operators. <Amended by Act No. 6346, Jan. 8, 2001; Act No. 8867, Feb. 29, 2008>

(3) through (5) Deleted. <by Act No. 5564, Sep. 17, 1998>

33

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 36 (Telecommunications Number, etc.)

(1) The Korea Communications Commission shall formulate and enforce the management plan for telecommunications number, in order to make an efficient provision of telecommunications service, and the promotion of user’s convenience and of the environments of fair competition among telecommunications business operators. <Amended by Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission shall, when he has formulated the plans under paragraph (1), make a public notice thereof. This shall also apply to any alterations in the established plan. <Amended by Act No. 8867, Feb. 29, 2008>

(3) A telecommunications business operator shall observe the matters publicly noticed under paragraph (2).

(4) Deleted. <by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 36-2 (Accounting Adjustment)

(1) A key communications business operator shall adjust the accounting, prepare a business report for the preceding year by the end of within 3 months after the end of each fiscal year, and submit it to the Korea Communications Commission, under the conditions as determined by the Enforcement Decree, and keep the related books and authoritative documents. <Amended by Act No. 6822, Dec. 26, 2002, Jan. 3, 2007; No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission shall, when it intends to determine the matters of accounting adjustments under paragraph (1), go in advance through a consultation with the Minister of Strategy and Finance. <Amended by Act No. 5564, Sep. 17, 1998; Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission may verify contents of any business report submitted by any key communications business operator in accordance with paragraph (1). <Amended by Act No. 6822, Dec. 26, 2002; Act No. 8867, Feb. 29, 2008>

34

(4) The Korea Communications Commission may, if it is necessary to conduct the verification referred to in paragraph (3), order the relevant key communications business operator to submit related material or launch inspection necessary to ascertain the facts. <Amended by Act No. 6822, Dec. 26, 2002; Act No. 8867, Feb. 29, 2008>

(5) The Korea Communications Commission shall, when it intends to launch inspection in accordance with paragraph (4), notify the relevant key communications business operator of the plans of such inspection including inspection period, reasons, and contents of the inspection within seven (7) days prior to the scheduled date of inspection. <Newly Inserted by Act No. Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(6) A person verifying the contents pursuant to paragraph (4) shall present the proof of the authorization therefor and give documents indicating his name, stay period and purpose of entrance to related party at the time of his first entrance. <Newly Inserted Jan. 3, 2007>

(7) Deleted. <by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 36-3 (Prohibited Act)

(1) A telecommunications business operator shall not commit any of the following acts (hereinafter referred to as “prohibited act”) which undermines or is feared to undermine fair competition or users’ interests, or have other telecommunications business operators or the third parties commit such act: <Amended by Act No. 5986, May 24, 1999; Act No. 6346, Jan. 8, 2001; Act No. 6822, Dec. 26, 2002, Act No. 7916, March 24, 2006; Act No. 8425, May 11, 2007>

1. Act of unfair discriminations in a provision, a joint utilization, a joint using, an interconnection or a joint use, etc. of telecommunications facilities, or a provision of information, etc. or act of unfairly refusing a conclusion of agreement, or act of non-performance of the concluded agreement without any justifiable reasons;

2. Act of unfairly diverting the information of other telecommunications business operators to his own business activities, which have been known to him in the course of a provision, a joint utilization, a joint using, an interconnection or a joint use, etc. of telecommunications facilities, or a provision of information, etc.;

35

3. Act of computing the fees, etc. for a use of telecommunications services, or the prices for a provision, a joint utilization, a joint using, an interconnection or a joint use, etc. of telecommunications facilities, or a provision of information, by unfairly itemizing the expenses or revenues;

4. Act of rendering the telecommunications services in a manner different from the standardized use contract (the standardized use contract refers to only those of which was reported or approved as pursuant to the Article 29 (1)) or act of rendering the telecommunications services in a manner which significantly undermines the profits of users; and

5. Deleted. <Mar. 24, 2006>

(2) When any person acting on behalf of any telecommunications business operator under a contract therewith in executing contracts between such telecommunications business operator and its users (including making any amendment to such contracts) commits any act falling under paragraph (1)4 or any act in violation of paragraph 1 or 6 of Article 36-4 hereof, his act shall be deemed the act committed by such telecommunications business operator and only the provisions of Articles 37 and 37-2 shall apply to such act: Provided, That the same shall not apply to a case where the relevant telecommunications business operator has paid reasonable attention to the prevention of such act. <Amended by Act No. Dec. 26, 2002 and Mar. 24, 2006>

(3) Necessary matters concerning categories of and standards for the prohibited act referred to in paragraph (1) shall be prescribed by the Enforcement Decree. <Amended by Act No. 6822, Dec. 26, 2002>

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 36-4 (Prohibition on the supplemented purchase of telecommunications terminal equipment)

(1) In the event the business operator to whom radio waves are allocated under Article 11 or 12 of Radio Waves Act provides key communications services, no aid (together with selling at a price lower than the purchase price, payment of cash, supplementing membership fee or provision other financial benefits, the “Support”) shall be provided for the purchase of telecommunications terminal equipment necessary for provision of such services. Provided, exceptions apply in any of the following events:

1. providing Support to users who use the key communications services from a same telecommunications business operator for consecutive terms (each of which lasts for more than 18 months) starting from the date of the Support. Provided, the Support shall be allowed no more than once within 2 years after the date of the Support.

36

2. Support from telecommunications business operator to the user of the relevant key communications services in the event less than 6 years have passed form the commencement date of the key communications services.

(2) The telecommunications business operator who intends to provide Support for the purchase of telecommunications terminal facilities pursuant to paragraph (1) shall set forth the limits to and standards for the Support (hereinafter the “Support Standards”) and report them to the Korea Communications Commission within 30 days after the Support Standards are put into effect and specify the standards in the user’s agreement. The telecommunications terminal facilities shall not provide any support other than the Support as reported. The Support Standards shall not enter into force unless 30 days have passed form the date of reporting. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The telecommunications business operator shall put up a notice of the Supporting Standards in its place of business and its agent (who acts on its behalf in executing the contracts between the telecommunications business operator and the users)’s place of business. In the event the standards are changed to the disadvantage of the users, the users shall be notified of such change 30 days prior to the execution date of such changes. Upon a user’ request, the user shall be informed of the usage period, record, and the amount of Support it may receive under the Support Standards.

(4) The telecommunications business operator shall not, without any justifiable grounds, discriminate between newly subscribed members and existing members in providing Support.

(5) The specific telecommunications business operator, who provides key communications services by using the key communications business operator’s telecommunications line facilities, shall comply with the Support Standards. The amount of Support to the operator shall not exceed the amount allowed under the applicable Support Standards.

37

(6) The telecommunications business operator shall manage, for a certain period of time, data/documents related to users’ subscription period and the applicable Support for the purchase price of the telecommunications terminal equipment. In the event the Korea Communications Commission upon the users’ consent requests whether a person/entity is qualified to receive Support pursuant to paragraph (1) and requests confirmation thereof, the telecommunications business operator shall provide the requested information and shall not provide erroneous information or delay the provision of information without any justifiable grounds. <Amended by Act No. 8867, Feb. 29, 2008>

(7) The Korea Communications Commission shall set forth and publicly announce or display the following: the method of determining the usage period contemplated under Article 1 (1) and the Support Standards pursuant to Article 3; any disadvantageous changes made thereto; specific scope of information management with respect to Article 6; and information management period and the method of provision thereof. <Amended by Act No. 8867, Feb. 29, 2008>

<Newly Inserted, Mar. 24, 2006> <Article 36-4 in the previous version of the Act is now inserted as Article 36-5, Mar. 24, 2006>

Article 36-5 (Investigation of Fact)

(1) In the event the Korea Communications Commission believes that activities in violation of Article 36-3 and of subparagraphs 1 and 6 of Article 36-4 have been committed, it may order the relevant public official belonging to the Korea Communications Commission to conduct investigation thereof. <Amended, Dec. 26, 2002, Mar. 24, 2006; Act No. 8867, Feb. 29, 2008>.

(2) The Korea Communications Commission may order public officials belonging to the Korea Communications Commission to enter into the offices or workplaces of the telecommunications business operators or the workplaces of the persons entrusted with handling of the business of telecommunications business operators (limited, throughout this Article, to telecommunications business operators entrusted with work related to Article 36-3 or 36-4) and inspect books, documents and other data and objects. <Amended by Act No. Sep. 17, 1998; Act No. 6822, Dec. 26, 2002; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

(3) In the event any investigation is to be conducted pursuant to paragraph (1), the Korea Communications Commission shall notify the relevant telecommunications business operator at least seven (7) days prior to the expected date of investigation with information on the duration, purpose and content of the investigation. Provided, this provision may not apply in the event of emergency or if there is risk that the evidence will be destroyed. <Newly Inserted. Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>

38

(4) A person who investigates by visiting the offices or workplaces of the telecommunications business operators, or the workplaces of the persons handling, under an entrustment, the business of telecommunications business operators, under paragraph (2) shall carry a certificate indicating the authority, and present it to the persons concerned. He also should be accompanied by the person of the corresponding offices or workplaces. <Amended by Act No. 5564, Sep. 17, 1998; Act No. 8198, Jan. 3, 2007; Act No. 8425, May 11, 2007>.

(5) A public official who investigates pursuant to paragraph (2) may order telecommunications business operators or persons entrusted with handling of the business of telecommunications business operators to submit any necessary information or object. In the event there is a possibility of abandonment, concealment, or replacement of the information or object so submitted, the public official may temporarily take them into custody. <Newly Inserted by Act No. 8425, May 11, 2007>

(6) The Korea Communications Commission shall immediately return the information or object under its custody if it falls under any one of the following:

1. It is deemed, after an examination of the information or object under the custody, that it has no relevance to the current investigation; or

2. The purpose of investigation is fully accomplished so that keeping the information or object under its custody is no longer necessary.

[This Article Newly Inserted, Dec. 30, 1996] [Removed from Article 36-4, March 24, 2006]

Article 37 (Measures on Prohibited Acts)

(1) The Korea Communications Commission may order any telecommunication business operator to take the measures falling under each of the following subparagraphs when it is recognized that the act under paragraph 1 of Article 36-3 or any act in violation of paragraph 1 or 6 of Article 36-4 has been committed: <Amended by Act No. 5564, Sep. 17, 1998; Act No. 6346, Jan. 8, 2001; Act No. 6822, Dec. 26, 2002; Act No. 7445, Mar. 31, 2005, Mar. 24, 2006; Amended by Act No. 8867, Feb. 29, 2008>

39

1. Separation of the supply system of telecommunications service;

2. Change of internal accounting regulations, etc. concerning telecommunications service;

3. Disclosure of information concerning telecommunications service;

4. Conclusion, performance or change of contents of the agreement between the telecommunications business operators;

5. Change of the standardized use contract and the articles of incorporation of the telecommunications business operators;

6. Suspension of prohibited acts;

7. Public announcement of a fact of receiving a correction order due to committing the prohibited acts;

8. Measures necessary for restoring the violated matters due to the prohibited acts to their original status, such as the removal of telecommunications facilities which have caused the prohibited acts;

9. Improvement of business conduct procedures regarding telecommunications service; and

10. Such other matters prescribed by the Enforcement Decree as may be necessary for the measures referred to in subparagraphs 1 through 9.

(2) The telecommunications business operators shall execute any order issued by the Korea Communications Commission under paragraph (1) within the period specified by the Enforcement Decree: Provided, That the Korea Communications Commission may extend the relevant period only once, if it is deemed that the telecommunications business operators are unable to carry out the order within the specified period due to natural disasters and other unavoidable causes. <Amended by Act No. 6822, Dec. 26, 2002; Amended by Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission shall, before ordering the measures under paragraph (1), notify the parties concerned of the content of relevant measures, and provide them with an opportunity to make a statement within a specified period, and may hear, where deemed necessary, the opinions of the interested parties: Provided, That this shall not apply when the parties concerned fail to respond without any justifiable reasons. <Amended by Act No. 6822, Dec. 26, 2002; Amended by Act No. 8867, Feb. 29, 2008>

40

(4) In the event five (5) years have passed from the date on which the acts contemplated under paragraph 1 of Article 36-3 or any acts committed in violation of paragraph 1 or 6 of Article 36-4 have been terminated, the Korea Communications Commission shall not order any measures pursuant to paragraph 1 or impose a penalty surcharge pursuant to Article 37-2. Provided, this provision under this paragraph 4 of Article 37-1 shall not apply if any measure or imposition of penalty surcharge is cancelled by court order and a new measure is to be taken pursuant to that court order. <Newly Inserted, Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>.

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996]

Article 37-2 (Imposition, etc. of Penalty Surcharge on Prohibited Acts)

(1) The Korea Communications Commission may, in case where there exists an act under paragraph 1 of Article 36-3 or any act in violation of paragraph 1 or 6 of Article 36-4, impose a penalty surcharge not exceeding 3/100 of the turnover as prescribed by the Enforcement Decree on the relevant telecommunications business operator. If the telecommunications business operator refuses to submit the data used for calculation of the amount of turnover or submits erroneous data, an estimate of the amount can be assessed based on the financial statement of those who provide similar services in the same industry (accounting documents, number of subscribers, usage fee and business operation status): Provided, That where there is no turnover or it is difficult to calculate the turnover as prescribed by the Enforcement Decree, it may impose the penalty surcharge not exceeding one billion won. <Amended by Act No. 6822, Dec. 25, 2002, Mar. 24, 2006, Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission shall, in the event of imposing a penalty surcharge under paragraph (1), take each of the following into consideration. <Newly Inserted, Mar. 29, 2007; Amended by Act No. 8867, Feb. 29, 2008>

1. details of violation and the extent thereof;

2. duration and frequency of violation;

3. amount of profit obtained in connection with the violation; and

41

4. the amount of turnover obtained as a result of the prohibited activities of the telecommunications business operator.

(3) A penalty surcharge under paragraph (1) shall be calculated taking paragraph (2) into consideration, provided specific calculation standard and procedure shall be set forth by the Enforcement Decree. <Newly Inserted by Act No. 6230, Jan. 28, 2000; Act No. 6822, Dec. 26, 2002, Mar. 29, 2007; Amended by Act No. 8198, Jan. 3, 2007; Act No. 8324, Mar. 29, 2007>

(4) The Korea Communications Commission shall, where a person liable to pay a penalty surcharge under paragraph (1) fails to do so by the payment deadline, collect an additional due equivalent to 6/100 per year, with respect to the penalty surcharge in arrears, from the day following the expiry of such payment deadline. <Newly Inserted, Jan. 28, 2000, Dec. 26, 2002, Mar. 29, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(5) The Korea Communications Commission shall, where a person liable to pay a penalty surcharge under paragraph (1) fails to do so by the payment deadline, demand him to pay it with fixing a period, and if he fails to pay the penalty surcharge and an additional due under paragraph (4) within the fixed period, collect them according to the example of a disposition taken to collect the national taxes in arrears. <Amended by Act No. 6230, Jan. 28, 2000; Act No. 6822, Dec. 26, 2002, Mar. 29, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(6) In the event the penalty surcharge imposed under paragraph (1) is to be returned pursuant to the court order, an additional due equivalent to 6/100 per year with respect to the penalty surcharge in arrears (accrued from the day of payment to the day of payment) shall be paid. <Newly Inserted, Act No. 8198, Jan. 3, 2007, Mar. 29, 2007>

[This Article Newly Inserted, Sep. 17, 1998] [Article 27-2 from the previous version of the Act is moved to Article 28 Act No. 5564, Sep. 17, 1998] [Article Heading Amended by Act No. 6230, Jan. 28, 2000]

Article 37-3 (Relations with Other Acts)

In case where a measure is taken under Article 37 or a penalty surcharge is imposed under Article 37-2 against the acts of a telecommunications business operator under any subparagraph of Article 36-3 (1) or the acts in violation of paragraph (1) or (6) of Article 36-4, a corrective measure or an imposition of penalty surcharge under the Monopoly Regulation and Fair Trade Act shall not be made under the same grounds against the same acts of the relevant business operator. <Amended, Jan. 28, 2000, Mar. 24, 2006, Jan. 3, 2007>

42

[This Article Newly Inserted by Act No. 5564, Sep. 17, 1998]

Article 38 (Compensation for Damages)

In case where a correction measure has been taken under Article 37 (1), a person who is damaged by the prohibited act may claim for compensation against the telecommunications business operator who conducted the prohibited act, and the relevant telecommunications business operator may not shirk liability unless he can prove that there was no malicious intention or negligence.

[This Article Newly Inserted by Act No. 5220, Dec. 30, 1996 and moved from Article 37-2, Act No. 5564, Sept. 17, 1998]

Article 38-2 (Quality Improvement of Telecommunications Services)

(1) A telecommunications business operator shall endeavor to make a quality improvement of the telecommunications services he provides.

(2) The Korea Communications Commission shall devise the required policy measures, such as an evaluation of quality of the telecommunications services, in order to improve a quality of telecommunications services and to enhance the conveniences of users. <Amended by Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission may order the telecommunications business operator to furnish data necessary for an evaluation of quality of the telecommunications services, etc. under paragraph (2). <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6230, Jan. 28, 2000]

Article 38-3 (Prior Selection Systems)

(1) The Korea Communications Commission shall perform the systems in which the users may select in advance the telecommunications business operator from whom they desire to receive the telecommunications service (hereinafter referred to as the “prior selection systems”). In this case, the telecommunications service shall refer to the telecommunications service as determined by the Enforcement Decree from among the same telecommunications service provided by the plural number of telecommunications business operators. <Amended by Act No. 8867, Feb. 29, 2008>

43

(2) The telecommunications business operator shall not force the users to select in advance a specified telecommunications business operator, or commit the acts to recommend or induce by unlawful means.

(3) The Korea Communications Commission may, for the purpose of performing the prior selection systems efficiently and neutrally, designate the specialized institutes performing the registration or alteration affairs of the prior selection (hereinafter referred to as the “prior selection registration center”). <Amended by Act No. 8867, Feb. 29, 2008>

(4) The Korea Communications Commission shall determine and publicly notify the matters necessary for performing the prior selection systems and for the designation of the prior selection registration center and the method of dealing with its affairs, etc. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6346, Jan. 8, 2001]

Article 38-4 (Mobility of Numbers)

(1) The Korea Communications Commission may, in order that the users are able to maintain their previous telecommunications numbers despite of the changes of the telecommunications business operators, etc., devise and perform the plans for mobility of telecommunications numbers (hereafter in this Article, referred to as the “plans for mobility of numbers”). <Amended by Act No. 8867, Feb. 29, 2008>

(2) The plans for mobility of numbers shall contain the contents falling under any of the following subparagraphs:

1. Kinds of services subject to the mobility of telecommunications numbers;

2. Time for introduction by service subject to the mobility of telecommunications numbers; and

44

3. Matters on sharing the expenses required for the performance of mobility of telecommunications numbers by telecommunications business operator.

(3) The Korea Communications Commission may, in order to perform the plans for mobility of numbers, order the relevant telecommunications business operators to take the necessary measures. <Amended by Act No. 8867, Feb. 29, 2008>

(4) Deleted. <by Act No. 8867, Feb. 29, 2008>

(5) The Korea Communication Commission may designate an institution specializing in the work of registration and alteration of the mobility of numbers (hereinafter referred to as the “mobility of numbers management institution”) to efficiently and neutrally implement the mobility of numbers of the telecommunications. <Newly Inserted by Act No. 6822, Dec. 26, 2002; Amended by Act No. 8867, Feb. 29, 2008>

(6) The Korea Communication Commission shall prescribe and publish necessary matters concerning the implementation of the mobility of numbers of the telecommunications, the designation of any mobility of numbers management institution and its work, etc. <Newly Inserted by Act No. 6822, Dec. 26, 2002; Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 6346, Jan. 8, 2001]

Article 38-5 (Restrictions, etc. on Mutual Possession of Stocks)

(1) Where a key communications business operator falling under Article 34 (3) 1 or 2 (including the specially-related persons) possesses in excess of 5/100 of the gross number of voting stocks issued by the mutually different key communications business operators, shall not be allowed to exercise any voting rights with regard to the stocks in excess of the relevant ceiling.

(2) Provisions of paragraph (1) shall not apply to the relation of possessions between a key communications business operator falling under Article 34 (3) 1 or 2 and the key communications business operator established by the said key communications business operator by becoming the largest stockholder.

[This Article Newly Inserted by Act No. 7165, Feb. 9, 2004]

45

Article 38-6 (Provision of Number Guidance Service)

(1) The telecommunications business operator shall provide an information service of guiding the general public to the telecommunications numbers of the users by means of voice, booklets or Internet, etc. (hereinafter referred to as the “number guidance service”) by obtaining a consent of the users: Provided, That the same shall not apply to the minor business determined and publicly announced by the Korea Communications Commission by taking account of the numbers of the users and the turnovers, etc. <Amended by Act No. 8867, Feb. 29, 2008>

(2) If necessary for the protection of private personal information, the Korea Communications Commission may limit the provision of the number guidance service as referred to in paragraph (1). <Newly Inserted, Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(3) Matters necessary for a provision of the number guidance service as referred to in paragraph (1) may be stipulated by the Enforcement Decree. <Amended, Jan. 3, 2007; Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 7165, Feb. 9, 2004]

CHAPTER V INSTALLATION AND PRESERVATION OF TELECOMUNICATIONS FACILITIES

Article 39 (Use of Land, etc.)

(1) A key communications business operator may, when necessary for the installation of line tracks, aerial lines and the appurtenant facilities to be available for telecommunications service (hereinafter referred to as the “line tracks, etc.”), make use of others’ land, or buildings and structures appurtenant thereto, and surface and bottom of the water (hereinafter referred to as the “land, etc.”). In this case, a key communications business operator shall make a consultation with owners or possessors of the relevant land, etc. in advance.

(2) Where a consultation under paragraph (1) is not or cannot be made, a key communications business operator may use the land, etc. owned by others, pursuant to the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor. <Amended, Feb. 4, 2002, Jan. 3, 2007>

46

(3) Deleted. <by Act No. 5986, May 24, 1999>

Article 40 (Temporary Use of Land, etc.)

(1) A key communications business operator may, when necessary for the measurement of line tracks, etc. and the installation or preservation works of the telecommunications facilities, temporarily use the private, national or public telecommunications facilities, and the land, etc., within the limit of not substantially impeding a current use.

(2) A key communications business operator shall, when intending to temporarily use the private, national or public property under paragraph (1), notify the possessors, in advance, of the purposes and period of such use: Provided, That in case where it is difficult to make a prior notification, a prompt notification shall be made during or after its use, and in case where such notification may not be made due to an obscurity of address and whereabouts of possessors, a public notice thereof shall be made.

(3) The temporary period of use of the land, etc. under paragraph (1) shall not exceed six months.

(4) A person who temporarily uses the private, national or public telecommunication facilities or the land, etc. under paragraph (1) shall carry the certificate indicating the authority, and present it to the persons related.

Article 41 (Entry to Land, etc.)

(1) A key communications business operator may enter others’ land, etc., when necessary for a measurement, examination, etc., for the installation and preservation of his telecommunications facilities: Provided, That in case where the place intended for such entry is a residential building, a consent from residents shall be obtained.

(2) The provisions of Article 40 (2) and (4) shall be applied mutatis mutandis to the entry into the private, national or public land, etc., by those engaged in a measurement or examination, etc. under paragraph (1).

47

Article 42 (Request for Elimination of Obstacles, etc.)

(1) A key communications business operator may request the owners or possessors of gas pipes, water pipes, drain pipes, electric lamp lines, electricity lines or private telecommunications facilities, which impede or are likely to impede the installation of line tracks, etc. or telecommunications facilities themselves (hereinafter referred to as the “obstacles, etc.”), for the removal, remodeling, repair and other measures with respect to the relevant obstacles, etc.

(2) A key communications business operator may request the owners or possessors to remove the plants, when they may impede or are likely to impede the installation or maintenance of line tracks, etc. or telecommunications themselves.

(3) A key communications business operator may, when the owners or possessors of the plants do not comply with the request under paragraph (2) or there exist any other unavoidable reasons, fell or transplant the relevant plants by obtaining permission from the Korea Communications Commission. In this case, a prompt notification shall be made to the owners or possessors of the relevant plants. <Amended by Act No. 5220, Dec. 30, 1996; Amended by Act No. 8867, Feb. 29, 2008>

(4) The owners or possessors of the obstacles, etc., which impede or are likely to impede the telecommunications facilities of a key communications business operator, shall make a consultation in advance with the key communications business operator, when they are in need of a new construction, enlargement, improvement, removal or alteration of the relevant obstacles, etc.

Article 43 Deleted. <by Act No. 8425, May 11, 2007>

Article 44 (Obligation for Restoration to Original State)

A key communications business operator shall restore the relevant land, etc. to its original state, when a use of the land, etc. under Articles 39 and 40 is finished or a need of providing the land, etc. for telecommunications service is gone, and in case where a restoration to the original state becomes impossible, make a proper compensation for damages suffered by the owners or possessors.

Article 45 (Compensation for Damages)

A key communications business operator shall, in case of incurring damages on others in case of Article 40 (1), 41 (1) or 42, make a proper compensation to the suffered person.

48

Article 46 Deleted. <by Act No. 8425, May 11, 2007>

Article 47 (Procedures for Compensation for Damages on Land, etc.)

(1) A consultation with the suffered party shall be made, in case where a compensation under Article 44 or 45 is made due to a use of or an entry into the land, etc., a removal of the obstacles, etc., or an impossibility of restoration to the original state under Article 40 (1), 41 (1), 42 or 44.

(2) When a consultation under paragraph (1) is not or cannot be made, an application for adjudications shall be filed with the competent Land Expropriation Commission under the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor. <Amended, Feb. 4, 2002, Jan. 3, 2007>

(3) Except for those as otherwise prescribed by this Act, the provisions of the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor shall be applied mutatis mutandis to the criteria, methods and procedures regarding a compensation for damages, etc. to the land, etc. under paragraph (1), and an application for adjudications under paragraph (2). <Amended, Feb. 4, 2002, Jan. 3, 2007>

Articles 48 and 49 Deleted. <by Act No. 5986, May 24, 1999>

Article 50 (Protection of Telecommunications Facilities)

(1) No person shall destruct the telecommunications facilities, and obstruct the flow of telecommunications by impeding the function of telecommunications facilities by means of having other objects contact them or by any other devices.

(2) No person shall stain the telecommunications facilities or damage the measurement marks of the telecommunications facilities by means of throwing objects to the telecommunications facilities or fastening an animal, vessel or a log raft thereto.

(3) A key communications business operator may, if necessary for the protection of submarine communications cable and their peripheral equipment (the “Submarine Cable”), file an application to the Korea Communications Commission for the designation of alert areas for the Submarine Cable. <Newly Inserted by Act No. 8425, May 11; Amended by Act No. 8867, Feb. 29, 2008>

49

(4) Upon receiving an application pursuant to paragraph (3), the Korea Communications Commission may consider the necessity of such designation and may designate and publicly notify the alert areas for the Submarine Cable through consultation with the relevant state administrative agency. <Newly Inserted by Act No. 8425, May 11; Amended by Act No. 8867, Feb. 29, 2008>

(5) Designation applications, methods and procedures of such designation and its public notification, and methods of alert area indication shall be determined by the Enforcement Decree . <Newly Inserted by Act No. 8425, May 11; Amended by Act No. 8867, Feb. 29, 2008>

Article 51 (Moving of Facilities, etc.)

(1) The owners or possessors of the land, etc. may, in case where the telecommunications facilities of a key communications business operator have become an obstacle to a use of the land, etc. due to changes in the purpose of use or in the methods of using the land, etc. where such facilities are located, or the land adjacent to it, request a key communications business operator to move the telecommunications facilities, and take other measures necessary for removing the obstacles.

(2) A key communications business operator shall, upon receipt of a request under paragraph (1), take necessary measures, except for the cases where such measures are difficult to be taken for a business performance or technologies.

(3) Expenses necessary for taking the measures under paragraph (2) shall be borne by the person who provided the cause for the move or taking other measures necessary for removing the obstacles after the installation of the subject telecommunication facilities: Provided, That in the event the person who bears the expenses is the owner or possessor of the land and falls under any one of the following subparagraphs, the key communication business operator may reduce or exempt the person’s expenses, considering the indemnification amount paid at the time of installation of the telecommunication facilities and the amount of time it took to build the telecommunication facilities:

1. where the key communication business operator establishes and implements a plan to move the telecommunication facilities or remove other obstacles;

50

2. where the moving the telecommunication facilities or removal of other obstacles is beneficial to other telecommunication facilities;

3. where the state or a local autonomous entity demands such moving of telecommunication facilities or removal of other obstacles; or

4. where the telecommunication facilities within private land are being removed because they greatly obstruct the use of such land.

Article 52 (Cooperation of Other Organizations, etc.)

A key communications business operator may ask the related public agencies for a cooperation, in case where the operation of vehicles, vessels, airplanes and other carriers for the installation and preservation of his telecommunications facilities is necessary. In this case, the public agency in receipt of a request for cooperation shall comply with it, unless there exist any justifiable reasons.

CHAPTER VI SUPPLEMENTARY PROVISIONS

Article 53 Deleted. <Jan. 26, 2007>

Article 53-2 Deleted. <Jan. 26, 2007>

Article 54 (Protection of Communication Secrecy)

(1) No person shall infringe on or divulge the secrecy of communication dealt with by telecommunications business operator.

(2) A person who is or has been engaged in the telecommunications service shall not divulge others’ secrecy obtained with respect to communication while in office.

(3) A telecommunications business operator may comply with a request for the perusal or the provision of the data falling under each of the following subparagraphs (hereinafter referred to as the “supply of communication data”) from a court, a prosecutor, the head of an investigation agency (including the head of any military investigation agency, the commissioner of the National Tax Service and the commissioners of regional Tax Offices); hereinafter the same shall apply) and the head of an intelligence and investigation agency, who intends to collect information or intelligence for the purpose of the prevention of any threat to a trial, an investigation (including an investigation of any transgression taken place during commission of any crime falling under Article 10(1), (3) or (4) of the Punishment of Tax Evaders Act), the execution of a sentence or the guarantee of the national security: <Amended, Dec. 26, 2002, Jan. 3, 2007, Jan. 1, 2010>

51

1. Names of users;

2. Resident registration numbers of users;

3. Addresses of users;

4. Phone numbers of users;

5. IDs (referring to the identification codes of users that are used to identify the rightful users of computer systems or communications networks); and

6. Dates on which users subscribe or terminate their subscriptions.

(4) The request for supply of communication data under paragraph (3) shall be made in writing (hereinafter referred to as a “written request for data supply”), which states a reason for such request, relation with the relevant user and the scope of necessary data: Provided, That where an urgent reason exists that makes a request in writing impossible, such request may be made without resorting to writing, and when such reason disappears, a written request for data supply shall be promptly filed with the telecommunications business operator. <Newly Inserted by Act No. 6230, Jan. 28, 2000>

(5) A telecommunications business operator shall, where he has supplied the communication data pursuant to the procedures of paragraphs (3) and (4), keep the ledgers as prescribed by the Enforcement Decree, which contain necessary matters such as the facts of supplies of communication data, and the related data such as the written requests for data supply, etc. <Newly Inserted by Act No. 6230, Jan. 28, 2000; Amended by Act No. 8867, Feb. 29, 2008>

52

(6) A telecommunications business operator shall report, to the Korea Communications Commission, twice a year the current status, etc. of supplying the communication data, by the methods prescribed by the Enforcement Decree, and the Korea Communications Commission may check whether the content of a report made by a telecommunications business operator is authentic and the management status of related data according to paragraph (5). < Newly Inserted by Act No. 6230, Jan. 28, 2000; Amended by Act No. 8425, May 11, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(7) A telecommunications business operator shall, by the methods prescribed by the Enforcement Decree, notify the contents entered in the ledgers according to paragraph (5) to the head of a central administrative agency whereto a person requesting supply of communications data according to paragraph (3) belongs: Provided, That in the event that a person who asks for providing the communications data is a court, the relevant telecommunications business operator shall notify the Minister of the Court Administration thereof. <Newly Inserted by Act No. 6230, Jan. 28, 2000; Act No. 6822, Dec. 26, 2002; Amended by Act No. 8425, May 11, 2007; Amended by Act No. 8867, Feb. 29, 2008>

(8) A telecommunications business operator shall establish and operate a setup in full charge of the affairs related to the users’ communication secrets; and the matters concerning the function and composition, etc. of the relevant setup shall be prescribed by the Enforcement Decree. <Newly Inserted by Act No. 6230, Jan. 28, 2000; Amended by Act No. 8867, Feb. 29, 2008>

(9) Matters necessary for the scope of persons holding the decisive power on the written requests filed with the telecommunications business operators under paragraph (4) shall be prescribed by the Enforcement Decree. <Newly Inserted by Act No. 6230, Jan. 28, 2000>

Article 54-2 (Notice of Transmitter’s Telephone Number)

(1) The telecommunications business operator may, upon request from the recipient, notify him of the transmitter’s telephone number, etc.: Provided, That this shall not apply to the case where the transmitter expresses his content to refuse the transmission of his telephone number. <Amended, Mar. 29, 2007>

(2) The telecommunications business operator may, in case where the recipient requests according to the requisites and procedures set by the Enforcement Decree for national security, crime prevention, disaster relief and etc. and for the telephone services with the special numbers, when the Enforcement Decree for national security, crime prevention, disaster relief and etc. so requires, notify the recipient of the transmitter’s telephone number, etc. in order to protect the recipients from the violent language, intimidations, harassments, etc., notwithstanding the proviso of paragraph (1). <Amended by Act No. 8425, May 11, 2007; Act no. 8867, Feb. 29, 2008>

53

(3) No person shall alter the caller’s telephone number or display an erroneous telephone number for profit or for the purpose of inflicting harm on others violent language, intimidations, harassments, etc. <Newly Inserted, Mar. 29, 2007>

(4) No person shall provide services that enable another to alter the caller’s telephone number or display an erroneous telephone number for profit. Provided, this provision under paragraph (4) shall not apply in the event any justifiable grounds for exception exist (e.g., for public interest or recipient’s convenience).

[This Article Newly Inserted by Act No. 6346, Jan. 8, 2001]

Article 55 (Restriction and Suspension of Business)

The Korea Communications Commission may order the telecommunications business operators to restrict or suspend the whole or part of telecommunications service under the conditions as prescribed by the Enforcement Decree, when there occurs or is likely to occur a national emergency of war, incident, natural calamity, or that corresponding to them, or when other unavoidable causes exist, and when necessary for securing important communications. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

Article 56 Deleted. <by Act No. 5220, Dec. 30, 1996>

Articles 57 and 58 Deleted. <by Act No. 5986, May 24, 1999>

Article 59 (Approval for International Telecommunications Services)

(1) When there exist special provisions in the treaties or agreements on international telecommunications business joined by the Government, those provisions shall govern.

54

(2) A telecommunications business operator shall, where he intends to conclude an agreement or a contract with a foreign government or a foreigner with respect to the adjustments of fees following the handling of international telecommunications services (excluding the case of a value-added communications business operator) and other international telecommunications business as prescribed by the Enforcement Decree, obtain approval from the Korea Communications Commission fulfilling the requisites prescribed by the Enforcement Decree. The same shall apply to the case where he intends to alter or abolish such agreement or contract. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5986, May 24, 1999; Act No. 6230, Jan. 28, 2000; Act No. 8425, May 11, 2007; Act No. 8867, Feb. 29, 2008>

(3) Standards for approving an agreement or a contract with respect to fees on the handling of international telecommunications services shall be determined and publicly announced by the Korea Communications Commission. <Newly Inserted by Act No. 6230, Jan. 28, 2000; Act No. 8867, Feb. 29, 2008>

[Article Heading Amended by Act No.5986, May 24, 1999]

Article 59-2 (Transboundary Provision of Key Telecommunications Services)

(1) A person, who intends to provide key telecommunications service from abroad into the homeland without establishing a domestic business place (hereinafter referred to as the “transboundary provision of key telecommunications services”), shall conclude a contract on transboundary provision of key telecommunications services with a domestic key communications business operator or a specific communications business operator who provides the same key telecommunications service.

(2) The provisions of Articles 29, 30, 33 through 33-3, 36-3 through 37, 38, 53 through 55, 62 and 65 shall apply mutatis mutandis to the provision of services as determined in a contract by a key communications business operator or a specific communications business operator who has concluded the contract under paragraph (1). <Amended by Act No. 5564, Sep. 17, 1998; Act No. 5986, May 24, 1999>

(3) Where a person, who intends to provide a transboundary key telecommunications service under paragraph (1), or a key communications business operator or a specific communications business operator, who has concluded a contract with him, violates the relevant provisions which applies mutatis mutandis under paragraph (2), the Korea Communications Commission may cancel approval under Article 59 (2), or issue an order to suspend a transboundary provision of the whole or part of key telecommunications services as determined in the relevant contract, with fixing a period of not more than one year. <Amended by Act No. 8867, Feb. 29, 2008>

55

(4) Criteria and procedures for dispositions under paragraph (3) and other necessary matters shall be determined by the Enforcement Decree. <Amended by Act No. 8867, Feb. 29, 2008>

[This Article Newly Inserted by Act No. 5385, Aug. 28, 1997]

Article 60 Deleted. <by Act No. 5220, Dec. 30, 1996>

Article 61 Deleted. <by Act No. 6822, Dec. 26, 2002>

Article 62 (Report, etc. on Statistics)

(1) A telecommunications business operator shall report the statistics on a provision of telecommunications service as prescribed by the Enforcement Decree, such as a current status of facilities by telecommunications service, subscription record, current status of users, and the data related to telephone traffic required for the imposition and collection of fees, to the Korea Communications Commission under the conditions as determined by the Enforcement Decree, and keep the related data available. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) A key communications business operator and stockholders thereof, or the specific communications business operator and stockholders thereof shall submit the related data necessary for a verification of the facts of Article 6, pursuant to the provisions of the Enforcement Decree. <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 5986, May 24, 1999; Act No. 7165, Feb. 9, 2004; Act No. 8867, Feb. 29, 2008>

(3) The Korea Communications Commission may, in order to verify the facts under paragraph (2), or to examine the genuineness of the data submitted, request the administrative agencies and other related agencies to examine the data submitted or to submit the related data. In this case, the agencies in receipt of such request shall accede thereto unless there exist any justifiable reasons. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

56

Article 63 (Hearing)

The Korea Communications Commission shall, in case where he intends to make a disposition falling under any of the following subparagraphs, hold a hearing: <Amended by Act No. 8867, Feb. 29, 2008>

1. Cancellation of license for a key communications business operator under Article 15 (1);

2. Cancellation of registration of a specific communications business or closedown of a value-added communications business under Article 28 (1) and (2); and

3. Cancellation of approval under Article 59-2 (3).

[This Article Wholly Amended by Act No. 5385, Aug. 28, 1997]

Article 64 (Imposition, etc. of Penalty Surcharge)

(1) The Korea Communications Commission may impose a penalty surcharge equivalent to the amount of not more than 3/100 of the sales amount that is calculated under the conditions as prescribed by the Enforcement Decree in lieu of the relevant business suspension, in case where he has to order a business suspension to a telecommunications business operator who falls under subparagraphs of Article 15 (1) or subparagraphs of Article 28 (1) and (2), or a suspension of relevant business is likely to cause substantial inconveniences to the users, etc. of relevant business or to harm other public interests. If the telecommunications business operator refuses to submit the data used for calculation of turnover or submits erroneous data, an estimate of the turnover can be assessed based on the financial statement of those who provide similar services in the same industry (accounting documents, number of subscribers, usage fee and business operation status): Provided, That in the event that the sales amount is nonexistent or difficult to calculate the sales amount, as prescribed by the Enforcement Decree, the Minister of Information and Communication may impose a penalty surcharge not exceeding 1 billion won. <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 5564, Sep. 17, 1998; Act No. 6822,, Dec. 26, 2002, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

(2) Specific standards for the imposition of penalty surcharge under paragraph (1) shall be determined by the Enforcement Decree. <Jan. 3, 2007, Mar. 29, 2007>

57

(3) The provisions of Article 37-2 (3) and (4) or (6) shall apply mutatis mutandis to the penalty surcharge under paragraph (1). <Amended by Act No. 5564, Sep. 17, 1998; Act No. 6230, Jan. 28, 2000, Jan. 28, 2007, Mar. 29, 2007>

(4) Deleted. <by Act No. 5385, Aug. 28, 1997>

[Article Heading Amended by Act No.6230, Jan. 28, 2000]

Article 64-2 (Extension of Time Limit of Payment of Penalty Surcharge and Payment in Installments)

(1) Where a penalty surcharge to be paid by a telecommunications business operator under Articles 37-2 and Article 64 exceeds the amount as prescribed by the Enforcement Decree, and where deemed that a person liable for a payment of penalty surcharge finds it difficult to pay it in a lump sum due to the reasons falling under any one of the following subparagraphs, the Korea Communications Commission may either extend the time limit of payment, or have him pay it in installments. In this case, the Korea Communications Commission may, if deemed necessary, have him put up a security therefor : ,<Amended, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

1. Where he suffers a severe loss of property due to natural disasters or fire;

2. Where his business faces a serious crisis due to an aggravation of his business environments; and

3. Where it is expected that he will be in great financial difficulty if he pays the penalty surcharge in a lump sum.

(2) Matters necessary for an extension of the deadline for payment of a penalty surcharge, the payment in installments and the laying of a security shall be prescribed by the Enforcement Decree.

[This Article Newly Inserted by Act No. 5564, Sep. 17, 1998]

Article 65 (Correction Orders, etc.)

(1) The Korea Communications Commission shall issue correction orders in case where a telecommunications business operator falls under any of the following subparagraphs: <Amended by Act No. 4441, Dec. 14, 1991; Act No. 5220, Dec. 30, 1996; Act No. 5835, Feb. 8, 1999; Act No. 6360, Jan. 16, 2001, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008, May. 22, 2009>

58

1. Where he violates this Act, the Telecommunications Basic Law, the Radio Waves Act, the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc., the Framework Act on National Informatization, or the orders issued under these Acts;

2. Where the procedures for business performances of telecommunications business operator are deemed to inflict significant harms on the users’ interests; and

3. Where he fails to take swift measures necessary for removing obstructions such as repairs, etc. when impediments have occurred to the supply of telecommunications services.

(2) The Korea Communications Commission may order a telecommunications business operator to conduct the matters of the following subparagraphs, when necessary for development of telecommunications: <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

1. Integrated operation and management of telecommunications facilities, etc.;

2. Expansion of communications facilities for the enhancement of social welfare;

3. Construction and management of communications networks for important communications to achieve efficient performance of State’s functions; and

4. Other matters as prescribed by the Enforcement Decree.

(3) The Korea Communications Commission may order the persons falling under any of the following subparagraphs to take measures, such as the suspension of acts to provide telecommunications service or the removal of telecommunications facilities, etc.: <Newly Inserted by Act No. 6346, Jan. 8, 2001>

1. Persons who operate a key communications business without obtaining a permit under Article 5 (1);

2. Persons who operate a specific communications business without making a registration under Article 19 (1); and

59

3. Persons who operate a value-added communications business without making a report under Article 21 (1).

Articles 66 and 67 Deleted. <by Act No. 5220, Dec. 30, 1996>

Article 68 (Delegation and Entrustment of Authority)

(1) The authority of the Korea Communications Commission under this Act may be delegated and entrusted in part to the head of the affiliated agencies or of the Korea Post, under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(2) The Korea Communications Commission may entrust a part of affairs related to reports under Article 21(1) to a telecommunications business operator or to the Korea Information Communication Promotion Association under the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc., under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 4439, Dec. 14, 1991; Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5835, Feb. 8, 1999; Act No. 6360, Jan. 16. 2001, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

CHAPTER VII PENAL PROVISIONS

Article 69 (Penal Provisions)

A person falling under any of the following subparagraphs shall be punished by imprisonment for not more than five years or by a fine not exceeding 200 million won: <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 6230, Jan. 28, 2000; Act No. 6822, Dec. 26, 2002>

1. A person who runs a key communications business without obtaining a license under Article 5 (1);

60

2. A person who obstructs the flow of telecommunications by impeding a function of telecommunications facilities by means of damaging telecommunications facilities, or having the objects contacted thereon and other methods, in violation of Article 50 (1);

3. A person who divulges other’s secrets with respect to communications which have been known to him while in office, in violation of Article 54 (2); and

4. A person who supplies communication data, and person who receives such supply, in violation of Article 54 (3).

Article 70 (Penal Provisions)

A person falling under any of the following subparagraphs shall be punished by imprisonment for not more than three years or by a fine not exceeding 150 million won: <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 6822, Dec. 26, 2002; Act No. 8425, May 11, 2007>

1. A person who refuses a provision of telecommunications service without any justifiable reasons, in violation of Article 3 (1);

2. A person who violates a disposition taken to suspend his business under Article 15 (1);

3. A person who operates a specific communications business without making a registration under Article 19 (1);

4. A person who commits any of the prohibited acts under Article 36-3 (1) 1-4 (excluding the act of providing telecommunications services in a manner different from the terms of use);

5. A person who fails to implement an order under Article 37 (2);

6. A person who obstructs the measurement of line tracks, etc. and the installation and preservation activities of telecommunications facilities under Article 40 (1); and

7. A person who encroaches upon or divulges a secret of communications handled by telecommunications business operator, in violation of Article 54 (1).

61

Article 71 (Penal Provisions)

A person falling under any of the following subparagraphs shall be punished by imprisonment for not more than two years or by a fine not exceeding 100 million won: <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 5564, Sep. 17, 1998; Act No. 5986, May 24, 1999; Act No. 6822, Dec. 26, 2002, Jan. 26, 2007; Act No. 8324, Mar. 29, 2007; Act No. 8425, May 11, 2007>

1. A person who fails to obtain a modified license or to make a report thereon under Article 10;

2. A person who fails to obtain approval under Articles 11 (1) and 34-4 (4);

3. A person who fails to obtain an authorization under the text of Article 13 (1) or approval according to Article 13 (2) or 14 (1);

4. A person who violates Article 13 (10) by unifying communication networks, appointing officers, executing any other activities such as transferring, consolidating, enforcing a facilities sales contract or taking follow-up measures relating to establishment of a company;

5. A person who violates user protection measures ordered under Article 14-2;

6. A person who runs the value-added communications business without making a report under Article 21;

7. A person who violates a disposition taken to suspend his business under Article 28 (1);

8. A person who fails to execute the order given to discontinue his business under Article 28 (2);

9. A person who discloses, uses or provides the information, in violation of the text of Article 34-5 (1) or paragraph (2) of the same Article;

10. A person who fails to implement the measure ordered pursuant to Article 55; and

11. A person who fails to obtain approval, approval for alteration, or approval for abolition, under Article 59 (2).

62

Article 72 (Penal Provisions)

A person falling under any of the following subparagraphs shall be punished by imprisonment for not more than one year or by a fine not exceeding 50 million won: <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 5564, Sep. 17, 1998; Act No. 5986, May 24, 1999; Act No. 6230, Jan. 28, 2000; Act No. 6822, Dec. 26, 2002; Act No. 7165, Feb. 9, 2004, Jan. 3, 2007; Act No. 8425, May 11, 2007>

1. A person who fails to execute the order given under Articles 6-3 (5) or 7 (2) (including a case where the provisions are applied mutatis muandis under Article 4 (4) of the Addenda of the Telecommunications Business Act amended by Act No. 5385) or Article 13(9);

2. A person who fails to make a report under provisos of Article 13 (1);

3. A person who fails to make a modified registration or a modified report under Article 22;

4. A person who fails to make a report under Article 25;

5. A person who violates a disposition taken to suspend his business under Article 28 (2);

6. A person who provides telecommunications service without making a report or receiving an authorization under Article 29 (1); and

7. A person who intermediates other person’s communication or furnishes for use by other person, by making use of telecommunications services rendered by the telecommunications business operator, in contravention of the provisions of the text of Article 32-2.

<The provisions of this subparagraph declared unconstitutional by the Constitutional Court on Sep. 19, 2002 were amended in accordance with the amendment of Article 32-2 made by Act No. 6822 on Dec. 26, 2002>

Article 73 (Penal Provisions)

A person falling under any one of the following subparagraphs shall be punished by a fine not exceeding 50 million won: <Amended by Act No. 5220, Dec. 30, 1996; Act No. 5986, May 24, 1999; Act No. 6822, Dec. 26, 2002, Mar. 24, 2006, Mar. 29, 2007>

63

1. A person who violates the provisions under Article 36-4 (1) 36-4 (2) or 36-4(4) or 36-4(6);

2. A person who refuses or impedes a temporary use of private telecommunications facilities or lands under Article 40 (1), without justifiable reasons;

3. A person who refuses or impedes an entry to the land, etc. under Article 41 (1), without justifiable reasons;

4. A person who refuses the moving, alteration, repair and other measures on the obstacles, etc. under Article 42 (1), or the request for removal of the plants under Article 42 (2), without justifiable reasons;

5. Deleted. <by Act No. 8425, May 11, 2007>

6. A person who deceives another for profit or alters his telephone number or displays a fraudulent telephone number for the purpose of inflicting harm through violent language, intimidations, harassment, etc. in contravention of Article 54-2(3) <Newly Inserted, Mar. 29, 2007>; and

7. A person who provides services that enable another to alter the caller’s telephone number or display an erroneous telephone number for profit in violation of Article 54-2(4).

Article 74 Deleted. <by Act No. 6230, Jan. 28, 2000>

Article 75 (Penal Provisions)

A person who stains the telecommunications facilities or damages the measurement marks of the telecommunications facilities, in violation of Article 50 (2) shall be punished by a fine not exceeding one million won.

[This Article Wholly Amended by Act No. 5220, Dec. 30, 1996]

64

Article 76 (Attempted Criminal)

An attempted criminal under subparagraphs 2 and 3 of Article 69 and subparagraph 7 of Article 70 shall be punished. <Amended by Act No. 5385, Aug. 28, 1997; Act No. 6822, Dec. 26, 2002>

Article 77 (Joint Penal Provisions)

When a representative of a juristic person or an agent, an employee or any other employed person of the juristic person or individual commits violation under Articles 69 through 73 in connection with the business of such juristic person or individual, then a fine under the related Article shall be imposed on the juristic person or individual, in addition to the punishment of the violator except in cases where such juristic person or individual has not been lax in exercising due care and supervision in regard to the relevant business to prevent such violation. <This Article Wholly Amended by Act No. 9702, May 21, 2009>

Article 78 (Fine for Negligence)

(1) A person who falls under any one of the following subparagraphs shall be punished by a fine for negligence not exceeding ten million won: <Amended by Act No. 4903, Jan. 5, 1995; Act No. 5220, Dec. 30, 1996; Act No. 5385, Aug. 28, 1997; Act No. 5564, Sep. 17, 1998; Act No. 5986, May 24, 1999; Act No. 6230, Jan. 28, 2000; Act No. 6822, Dec. 26, 2002; Act No. 7165, Feb. 9, 2004; Act No. 7916, Mar. 24, 2006; Act No. 8324, Mar. 29, 2007; Act No. 8425, May 11, 2007>

1. A person who fails to make a report as referred to in Article 6-3 (2) or to comply with a request for providing the data or an order to attend as referred to in Article 6-4 (3) or (4);

2. A person who, in violation of Article 14 (1), fails to notify the user 60 days prior to the expected date of termination;

3. A person who fails to make a report under Article 27;

4. A person who fails to implement an order for modification in the standardized use contract under Article 30;

5. A person who violates the obligation concerning the protection of users under Article 33 (2);

65

6. A person who fails to make a public announcement of the technical standards, and the standards for use and provision, or the standards for a creation of fair competitive environments, in violation of Article 34-4 (4);

7. A person who fails to observe the publicly announced matters, in violation of Article 36 (3);

8. A person who fails to adjust the accounting, to submit a business report, or to keep the books or evidential data, in violation of Article 36-2 (1);

9. A person who fails to implement an order for the submission of related data under Article 36-2 (4);

10. A person who refuses, avoids or hampers an order for submission, or an investigation, of the data or articles according to Article 36-5 (2);

10-2. A person who refuses, avoids, or intervenes with the order to submit information or object under Article 26-5 (5), or the order for temporary custody of the information or object submitted under the same Article;

11. A person who fails to execute orders given to furnish related data under the provisions of Article 38-2 (3);

12. A person who fails to keep related data or makes false entries in such data, in contravention of the provisions of Article 54 (5);

13. A person who fails to notify the head of central administrative agency, in contravention of the provisions of Article 54 (7);

14. A person who fails to make reports or submit the data under Article 62, or falsely do such acts; and

15. A person who fails to follow correction orders, etc., under Article 65.

66

(2) The fine for negligence under paragraph (1) shall be imposed and collected by the Korea Communications Commission, under the conditions as prescribed by the Enforcement Decree. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(3) A person who is dissatisfied with the imposition of the fine for negligence under paragraph (2) may make an objection to the Korea Communication Commission within thirty days from the notification date of such imposition. <Amended by Act No. 5220, Dec. 30, 1996; Act No. 8867, Feb. 29, 2008>

(4) When a person subjected to the imposition of the fine for negligence under paragraph (2) makes an objection under paragraph (3), the Korea Communications Commission shall notify a competent court of the fact without delay, and the court so notified shall bring the case of fine for negligence to trial under the Non-Contentious Case Litigation Procedure Act. <Amended by Act No. 5220, Dec. 30, 1996, Jan. 3, 2007; Act No. 8867, Feb. 29, 2008>

(5) When neither the objection against nor the payment of the fine for negligence is made within the specified period under paragraph (3), it shall be collected in accordance with examples of disposition for the national taxes in arrears.

ADDENDUM <Act No. 9919, Jan. 1, 2010>

Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation.

Article 2 and Article 3 Omitted.

Article 4 (Amendments to Other Laws)

<1> Telecommunications Business Act shall be amended as follows:

In Article 54(3), all references to Article 11(2)(1), (4) and (5) of the Punishment of Tax Evaders Act shall be amended to refer to Article 10(1), (3) and (4) of the Punishment of Tax Evaders Act.

<2> and <3> are omitted.

Article 5 Omitted.

67

EX-15.4

Exhibit 15.4

ENFORCEMENT DECREE OF THE TELECOMMUNICATIONS BUSINESS ACT

As amended by Enforcement Decree No. 22151 of May 4, 2010, effective May 5, 2010.

Chapter 1. General Provisions

Article 1 (Purpose)

The purpose of this Decree is to provide for matters delegated under the Telecommunications Business Act and matters necessary for its enforcement.

Article 2 (Contents of Universal Service)

(1) Pursuant to Article 3-2(3) of the Telecommunications Business Act (the “Act”), the contents of universal services shall be as follows:

1. Wire telephone services;

2. Telephone services for emergency communications; and

3. Telephone services of which fees are reduced or exempted for the disabled and the low income class.

(2) The detailed contents of universal services under paragraph (1) shall be as follows. <Amended by Enforcement Decree No. 21060, Oct. 1, 2008>

1. Wire telephone services are telephone services within an area publicly notified by the Korea Communications Commission based on methods and conditions of use (the “Calling Area”), falling under any one of the following:

(a) a local telephone service which is a telephone service (excluding, throughout this Enforcement Decree, the island communication service referred to in (c) below) enabling communication through subscription telephones;

1

(b) a local public telephone service which is a telephone service enabling communication through public telephones; or

(c) an island communication service which is a telephone service enabling radio communication between shore and an island or between islands.

2. Telephone services for emergency communications are telephone services necessary for maintaining social order and securing human life, falling under any of the following:

(a) a special telephone number service, among the key communications services under Articles 7.1 and 7.2 hereof, publicly notified by the Korea Communications Commission; or

(b) a wireless telephone service for vessels which is a telephone service, among the key communications services under Article 7(2) hereof, enabling communication between shore and a vessel or between vessels.

3. Telephone services of which fees are reduced or exempted for the disabled and the low income class are telephone services offered to the disabled and the low income class for the purpose of improving social welfare, falling under any of the following:

(a) a local telephone service and a telephone service between the Calling Areas (the “Long Distance Telephone Service”);

(b) a directory assistant service which is a service incidental to a local telephone service and the Long Distance Telephone Service;

(c) a mobile telephone service, a personal communication service, IMT-2000 service or a wireless call service among the key communications services prescribed under Article 7.2 hereof; or

(d) an Internet subscriber connection service.

2

(3) Any of the following shall be entitled to the telephone services of which fees are reduced or exempted pursuant to subparagraph 3 of paragraph (2); provided, however, that the telephone services for which fees are reduced or exempt pursuant to subparagraph 8 below shall be limited to the mobile telephone service, the personal communication service and the IMT-2000 service <Amended by Enforcement Decree No. 21060, Oct. 1, 2008; No. 22075, Mar. 15, 2010>:

1. the disabled or welfare institutions or groups for the disabled under the Welfare of Disabled Persons Act;

2. special schools under the Elementary and Secondary Education Act;

3. child welfare institutions under the Child Welfare Act;

4. among the recipients of assistance under the National Basic Livelihood Security Act (the “Recipients of Assistance”), persons falling under any of the following (or households composed of such persons in the event of a local telephone service, the Long Distance Telephone Service or an Internet subscriber connection service):

(a) the Recipients of Assistance who are either under 18 or 65 or older; except that for the mobile telephone service and the IMT-2000 service, the Recipients of Assistance including those who are 18 or older and below 65;

(b) persons with severe disabilities under Article 2.2 of the Employment Promotion and Vocational Rehabilitation of Disabled Persons Act;

(c) persons in need of a treatment or recuperation lasting 3 months or longer due to a disease, an injury or an aftereffect of a disease or an injury not designated by the Minister for Health and Welfare under Article 7.2 of the Enforcement Decree of the National Basic Livelihood Security Act; or

(d) persons deemed unable to work by the Minister for Health and Welfare under Article 7.5 of the Enforcement Decree of the National Basic Livelihood Security Act.

5. the Korean Association of Wounded Soldiers and Police Officials or the Association Commemorating the April 19 Democratic Revolution under the Act on Establishment of Organizations for Persons, etc. of Distinguished Services to the State;

3

6. soldiers or policemen wounded in action, soldiers or policemen wounded on duty, wounded activists of the April 19 Revolution, public officials wounded on duty, wounded special contributor to national and social development or wounded anticommunist captive under the Act on Honorable Treatment and Support of Persons, etc. of Distinguished Services to the State;

7. wounded activists of the May 18 Democratization Movement among the persons of distinguished services to the May 18 democratization movement under the Act on Honorable Treatment of Persons of Distinguished Services to the May 18 Democratization Movement; or

8. members of a family having at least one of its members fitting any of the descriptions below qualifying as a member of the next needy class under Article 2(11) of the National Basic Livelihood Security Act; and the number of family members eligible for fee reduction or exemption for such family shall be determined by the Korea Communications Commission:

(a) a person taking part in the project required for self-support pursuant to Article 9(5) of the National Basic Livelihood Security Act;

(b) a person having a rare and serious disease as described item (c) of section 4 in Table 2 and is eligible for reduction in his or her share of fees;

(c) a person receiving medical allowances pursuant to Article 2 of the Medical Allowance Act;

(d) a person receiving necessary expenses for infant care pursuant to Article 34(1) of the Infant Care Act;

(e) a person receiving necessary expenses for early childhood education pursuant to Article 26(1) of the Early Childhood Education Act;

(f) a person receiving disability allowances pursuant to Article 49 of the Welfare of the Disabled Persons Act and a person receiving allowances for raising and protecting disabled children pursuant to Article 50(1) of the same Act; and

(g) a person requiring protection under Article 5 of the Single-Parent Family Assistance Act, including a person who has ratio of recognized income to minimum living expense of 130 or below to 100.

4

Article 3 (Designation of Telecommunications Business Operator who Provides Universal Services)

(1) If the Korea Communications Commission intends to designate a telecommunications business operator who provides universal services (the “Business Operator Providing Universal Services”) under Article 3-2(4) of the Act, the Information and Communications Policy Deliberation Council as prescribed in Article 44-2 of the Telecommunications Basic Law shall deliberate thereon.

(2) A telecommunications business operator who is designated as a Business Operator Providing Universal Services under paragraph (1) shall submit to the Korea Communications Commission, every year by no later than the last day of the year preceding the provision of the relevant services, a written plan for provision of universal services which includes the method of, and the expenditures for, providing the relevant services.

Article 4 (Compensation for Losses Incurred through Provision of Universal Services)

(1) The Korea Communications Commission may have the telecommunications business operators who are not Business Operators Providing Universal Services bear part of the expenses for compensating whole or part of the losses incurred through a provision of universal services by Business Operators Providing Universal Services (the “Compensation For Losses Incurred Through Universal Services”) in proportion to their respective sales.

(2) A Business Operator Providing Universal Services who intends to receive the Compensation For Losses Incurred Through Universal Services shall submit a report on the actual results of a provision of universal services, including expenditures for, and incomes and losses from, the provision thereof, to the Korea Communications Commission within three months after the expiration of the relevant fiscal year.

(3) The Korea Communications Commission may, if deemed necessary for the verification of the report on the actual results of a provision of universal services submitted pursuant to paragraph (2), consult a professional institution to examine it.

5

Article 5 (Universal Services Entitled To Compensation For Losses Incurred Through Universal Services)

(1) The scope of universal services entitled to the Compensation For Losses Incurred Through Universal Services shall be any of the following:

1. among local telephone services pursuant to Article 2(2)1(a) hereof, a local telephone service offered in areas where, as a result of provision of such service, the expenditures (meaning, here as well as in subparagraph 2 and Article 6(1) hereof, the expenses calculated in accordance with the method publicly notified by the Korea Communications Commission considering such factors as the population density, number of lines and efficiency of managing communication lines) exceed the incomes (including, here as well as in subparagraph 2 and Article 6(1) hereof, any indirect advantages such as improved brand value and user preference as a result of provision of universal services);

2. among local public telephone services pursuant to Article 2(2)1(b) hereof, a local public telephone service offered in areas where, as a result of provision of such service, the expenditures exceed the incomes;

3. an island communication service pursuant to Article 2(2)1(c) hereof; or

4. a wireless telephone service for vessels pursuant to Article 2(2)2(b) hereof.

(2) In Article 3-2(2) of the Act, “the telecommunications business operators prescribed under the Enforcement Decree” means specific communications business operators, value-added communications business operators or regional wireless call operators, and “the amount prescribed under the Enforcement Decree” means 30 billion won.

Article 6 (Methods for Computing the Compensation For Losses Incurred Through Universal Services)

(1) Losses incurred through provision of the universal services prescribed under each of the paragraphs in Article 5(1) hereof shall be the amount of expenses of providing the relevant service less the relevant income.

6

(2) The provisional Compensation For Losses Incurred Through Universal Services shall be computed by multiplying the amount obtained under paragraph (1) and the rate of compensation for losses determined and publicly notified by the Korea Communications Commission; provided that, with respect to a wireless telephone service for vessels under Article 5(1)4 hereof, the target amount for efficient management determined and publicly notified by the Korea Communications Commission shall be the provisional Compensation For Losses Incurred Through Universal Services.

(3) The Compensation For Losses Incurred Through Universal Services shall be the amount of the provisional Compensation For Losses Incurred Through Universal Services computed pursuant to paragraph (2) subtracted by each of the amounts described below:

1. the amount paid by telecommunications business operators providing any of the universal services prescribed under each of the subparagraphs of Article 5(1) hereof based on their sales from telecommunications services other than the relevant universal service provided (excluding value-added communications services); and

2. the amount computed by the Korea Communications Commission considering the payment capacity of telecommunications business operators paying for the Compensation For Losses Incurred Through Universal Services (the “Business Operators Paying For Losses”).

(4) The Business Operators Paying For Losses shall pay for the Compensation For Losses Incurred Through Universal Services computed pursuant to paragraph (3) in proportion to their respective sales relating to telecommunications services (excluding value-added communications services).

(5) The Korea Communications Commission shall determine and announce all other necessary details with respect to the rates by which telephone services fees are reduced or exempted for the disabled and the low income class and the methods for computing the Compensation For Losses Incurred Through Universal Services.

7

Chapter 2. Telecommunications Business

Article 7 (Types and Contents of Key Communications Services)

The types and contents of key communications services pursuant to Article 4(2) of the Act are as follows; provided that, a telecommunications service which sends or receives electromagnetic signals, such as voices, data or images, using any of the following services without changing the form or content of such electromagnetic signals shall be excluded:

1. a transmission service: a telecommunications service sending or receiving electromagnetic signals, such as voices, data or images, i.e. telegraph, telephone or connecting to the Internet, without changing the form or content of such electromagnetic signals;

2. a service provided upon being assigned frequencies: a telecommunications service sending or receiving electromagnetic signals, such as voices, data or images, without changing the form or content of such electromagnetic signals utilizing the radio stations that use the frequencies assigned pursuant to Article 11 or 12 of the Radio Waves Act; and

3. a telecommunications line facilities and equipment rental service: a telecommunications service renting out telecommunications line facilities and equipment.

Article 8 (Scope of Premises)

The “premises determined under the Enforcement Decree of the Act” in Article 4(3)2 of the Act means any of the following:

1. a building;

2. a site (limited to that owned by one person or owned through common ownership) and any building located on such site;

3. two or more buildings possessed by one person and the site on which such buildings are located, limited to those buildings the distance between which is not more than 500 meters; or

8

4. any buildings or sites adjacent to the buildings or sites prescribed under paragraphs 1-3 and publicly notified by the Korea Communications Commission upon deliberation by the Information and Communications Policy Deliberation Council pursuant to Article 44-2 of the Telecommunications Basic Law.

Article 9 (Permit Application, etc.)

(1) A person who wishes to obtain a permit under Article 5(1) of the Act may make an application in the name of the representative of a corporation or the representative, such as a shareholder, etc., of a corporation to be established.

(2) Prior to any public notification issued by the Korea Communications Commission under Article 5(4) of the Act, the subject matter shall be deliberated by the Information and Communications Policy Deliberation Council, as stipulated in Article 44-2 of the Telecommunications Basic Law; provided that, such requirement shall not apply to permits for minor businesses as provided for in proviso of Article 5(2) of the Act.

Article 10 (Documents to be Attached to Permit Application)

(1) A person who wishes to obtain a permit for a key communications business under Article 5(1) of the Act shall submit to the Korea Communications Commission a key communications business permit application with each of the following documentation attached thereto:

1. articles of incorporation of the corporation (including, throughout this Article 10, the corporation to be incorporated);

2. shareholder register, or documentation relating to ownership of shares, etc. by shareholders, etc., of the corporation; and

3. a business proposal.

(2) A public official who receives a permit application pursuant to paragraph (1) shall verify the corporate registry by using the public administrative information made available under Article 36(1) of the E-Government Act; provided that, in the event the applicant does not consent to such verification method, such applicant shall be required to attach the corporate registry to its license application. <Amended by Enforcement Decree No. 22151 of May 4, 2010>

9

Article 11 (Exception to Deliberation by the Information and Communications Policy Deliberation Council)

“Minor businesses prescribed under the Enforcement Decree of the Act” in proviso of Article 5(2) of the Act means businesses providing the services publicly notified by the Korea Communications Commission, among the services prescribed under Article 7.2 hereof.

Article 12 (Issuance of License)

(1) When permitting a key communications business under Article 5(1) of the Act or an additional key communications service under Article 10(1) of the Act, the Korea Communications Commission shall issue a key communications business operator’s license upon making recordations of each of the following in a license registry of key communications business operators:

1. number and date of license;

2. title or trade name of the business and name of the representative;

3. type and details of the telecommunications service and the areas where the telecommunications service is offered;

4. location of the principal office;

5. capital or asset valuation amount;

6. details of major business facilities and equipment and the locations where such facilities and equipment are installed;

10

7. details concerning technical personnel; and

8. any conditions upon which the license is issued.

(2) A key communications business operator whose license, issued pursuant to paragraph (1), is either lost or worn out to the extent it can no longer be used may apply for reissuance of the license to the Korea Communications Commission by writing the reason for such loss or damage in its application thereto.

Article 13 (Criteria for Examination of Public Interest Aspect)

(1) The term “public interests as prescribed under the Enforcement Decree of the Act” in parts other than each subparagraph of Article 6-3(1) of the Act means the maintenance of national security, public peace and social order.

(2) The term “important management matters prescribed under the Enforcement Decree of the Act” in Article 6-3(1)3 of the Act means the matters falling under each of the following subparagraphs:

1. appointment and dismissal of the representative director of a key communications business operator, or appointment and dismissal of one third or more of the officers;

2. transfer and takeover of a key communications business; and

3. entrance by a key communications business operator into a new key communications business.

(3) The term “case prescribed under the Enforcement Decree of the Act” in Article 6-3(1)4 of the Act means the case where a de facto change is made in the management right of a key communications business operator by an agreement of shareholders who are not the largest shareholder of such key communications business operator to jointly exercise voting rights.

11

Article 14 (Scope of Key Communications Business Operators subject to Examination of Public Interest Aspect)

The scope of key communications business operators who must file a report or who may request a screening pursuant to Article 6-3 of the Act shall be any of the following:

1. a key communications business operator managing or supervising a significant communication under Article 64(1) hereof;

2. a key communications business operator who owns an artificial satellite with a space station under Article 27 Subparagraph 30 of the Enforcement Decree of the Radio Waves Act; or

3. a key communications business operator determined and publicly notified by the Korea Communications Commission under Article 39(2) hereof.

Article 15 (Procedures for Examination of Public Interest Aspect)

(1) A person who wishes to file a report or request a screening pursuant to Article 6-3(2) or 6-3(3) of the Act shall submit to the Korea Communications Commission documentation indicating each of the following:

1. name and address of the person filing a report or requesting a screening (in the case of a corporation, the name and address of (i) such corporation and (ii) the representative of such corporation);

2. purpose of, and reason for, the report or screening request; and

3. details of any of the facts falling under each of the subparagraphs of Article 6-3(1) of the Act.

(2) The Korea Communications Commission may, where it deems necessary, request for the documentation already submitted to it to be supplemented within a period reasonably fixed.

(3) Except under special circumstances, with respect to any matter the Korea Communications Commission referred to the public interest aspect examination committee, the public interest aspect examination committee shall notify the Korea Communications Commission of the result of its screening within 3 months of the date of such referral.

12

(4) The Korea Communications Commission shall notify the person filing a report or requesting a screening of the result of examination of public interest aspect under paragraph (3).

Article 16 (Composition etc. of Public Interest Aspect Examination Committee)

(1) The term “related central administrative agencies prescribed under the Enforcement Decree of the Act” in parts other than each subparagraph of Article 6-4(2) of the Act means the agencies falling under each of the following:

1. the Ministry of Strategy and Finance;

2. the Ministry of Foreign Affairs and Trade;

3. the Ministry of Justice;

4. the Ministry of National Defense;

5. the Ministry of Public Administration and Security; and

6. the Ministry of Knowledge Economy.

(2) The term of office of the members shall be two years and consecutive appointment may be permitted; provided that, the term of office of the members who are public officials shall be the period of service in their positions as public officials.

Article 17 (Operation etc. of Public Interest Aspect Examination Committee)

(1) The chairman of the Public Interest Aspect Examination Committee shall represent the Public Interest Aspect Examination Committee and exercise an overall control of its affairs.

13

(2) If the chairman is inevitably unable to perform his duties, a member previously appointed by the chairman shall act on her or his behalf.

(3) The chairman shall convene and preside over a meeting of the Public Interest Aspect Examination Committee.

(4) Deliberation of a meeting of the Public Interest Aspect Examination Committee shall start by the attendance of a majority of all incumbent members, and its resolution shall require the consent of a majority of those present.

(5) The Public Interest Aspect Examination Committee shall have one secretary general in order to deal with its affairs, but the secretary general shall be appointed by the chairman among the public officials belonging to the Korea Communications Commission.

(6) Any matters necessary for the operation of the Public Interest Aspect Examination Committee shall be determined by the chairman through a resolution of the Public Interest Aspect Examination Committee.

Article 18 (Imposition and Payment etc. of Charges for Compelling Execution)

(1) When determining the amount of charges for compelling execution pursuant to Article 7-2 of the Act, the Korea Communications Commission shall take into account such factors as the reasons for failure to comply with corrective orders and the scale of benefits to be gained by such failure.

(2) The date of compliance with corrective orders pursuant to Article 7-2(2) of the Act shall be determined by the classifications falling under each of the following:

1. delivery date of shares in the case of disposal of shares;

2. date of executing a contract in the case of amending details of a contract; and

3. date of suspending the relevant acts in the case of suspending the acts impeding public benefits.

14

(3) Where the Korea Communications Commission wishes to impose charges for compelling execution pursuant to Article 7-2 of the Act, it shall furnish a notification thereof in writing, indicating such matters as the amount of charges for compelling execution per day, reasons for imposition, payment term and receiving agency, methods of raising objections, and agencies to where such objections must be directed.

(4) Any person who has been notified under paragraph (3) shall pay the charges for compelling execution within 30 days of the date of receiving such notice; provided that, in the event such person is unable to pay the charges for compelling execution within said period due to a natural disaster or other unavoidable circumstances, such person shall pay the charges for compelling execution within 30 days of the day on which said causes have disappeared.

(5) In collecting charges for compelling execution and in the event a corrective order has not been complied with after 90 days elapsed from the date of expiration of the period set by the corrective order, the Korea Communications Commission may collect charges for compelling execution based on the dates on which each 90 day period elapses from said expiration date.

(6) Article 49 hereof shall apply mutatis mutandis to any reminder of charges for compelling execution.

Article 19 (Permit to Change)

(1) A person who wishes to obtain a permit to change to a key communications business pursuant to Articles 10(1) and 10(2) of the Act shall submit to the Korea Communications Commission an application for a permit to change to a key communications business with each of the following documentation attached thereto:

1. a business proposal - for adding a key communications service; and

2. documentation demonstrating the plan to change to a key communications business - for changing any material aspect for which a permit was issued.

(2) The Korea Communications Commission shall issue public notice with respect to the application guidelines for a permit to change under Article 10(1) of the Act, such as the detailed criteria for examination of an application for a permit to add a key communications business, application deadline and relationship with an application for a new permit.

15

(3) The “key communications service prescribed under the Enforcement Decree of the Act” in the proviso of Article 10(1) of the Act means the telecommunications line facilities and equipment rental service under Article 7(3) hereof.

(4) The “material aspects prescribed under the Enforcement Decree of the Act” in Article 10(2) of the Act means the aspects relating to Article 12(1)8 hereof.

Article 20 (Approval Application for Transfer, Merger, etc.)

(1) A person who wishes to obtain approval of the transfer of the whole or part of a key communications business pursuant to Article 13(1)1 of the Act shall submit to the Korea Communications Commission an approval application for the transfer of a key communications business with each of the following documentation attached thereto:

1. a copy of the transfer agreement;

2. articles of incorporation of the transferor and the transferee, and documentation supporting the transfer;

3. shareholder register, or documentation related to ownership of shares, etc. by shareholders, etc., of the transferee;

4. present status of the transferor and the transferee; and

5. post-transfer business proposal.

(2) A person who wishes to obtain approval of the merger with a corporation that is a key communications business pursuant to Article 13(1)2 of the Act shall submit to the Korea Communications Commission an approval application for the merger with a key communications business with each of the following documentation attached thereto:

1. a copy of the merger agreement;

16

2. articles of incorporation of the parties to the merger agreement, and documentation supporting the merger;

3. shareholder register, or documentation related to ownership of shares, etc. by shareholders, etc., of the corporation that shall continue to exist after the merger or be incorporated through the merger;

4. present status of the parties to the merger agreement; and

5. post-merger business proposal.

(3) A key communications business operator who wishes to obtain approval of the sale of telecommunications line facilities and equipment pursuant to Article 13(1)3 of the Act shall submit to the Korea Communications Commission an approval application for the sale of line facilities and equipment with each of the following documentation attached thereto:

1. a copy of the sale and purchase agreement concerning telecommunications line facilities and equipment, and other documentation supporting such agreement;

2. articles of incorporation of the seller and the purchaser, and documentation supporting the sale and purchase;

3. shareholder register, or documentation related to ownership by shareholders, etc., of the purchaser;

4. present status of the seller and the purchaser; and

5. post-sale business proposal.

(4) A person who wishes to own 15% or more of the total outstanding shares of a key communications business operator or become the largest shareholder of a key communications business operator pursuant to Article 13(1)4 of the Act shall submit to the Korea Communications Commission an approval application for the ownership of shares, or for becoming the largest shareholder, of a key communications business with each of the following documentation attached thereto:

1. documentation supporting the share purchase, such as a copy of the share purchase agreement;

17

2. articles of incorporation of the share purchaser, or the person seeking to be the largest shareholder, and the counterparty to the share purchase agreement;

3. present status of the shareholders of the share purchaser, or the person seeking to be the largest shareholder, and the counterparty to the share purchase agreement;

4. present status of the share purchaser, or the person seeking to be the largest shareholder, and the counterparty to the share purchase agreement;

5. purpose of, reasons for and an analysis of the effect of acquisition of the shares;

6. proposal for dual appointment of officers (only when considering dual appointment of an officer of the counterparty); and

7. post-share acquisition business proposal (only when seeking to become the largest shareholder).

(5) A public official who receives an approval application for transfer, merger, sale, share acquisition or changing the largest shareholder pursuant to paragraphs (1)-(4) shall verify the corporate registry of the party seeking to transfer, merge, sell, acquire shares or become the largest shareholder by using the public administrative information made available under Article 21(1) of the E-Government Act; provided that, in the event the applicant does not consent to such verification method, such applicant shall be required to attach the corporate registry to its approval application.

(6) The Korea Communications Commission shall issue a key communications business operator’s license upon approving the approval application for transfer or merger pursuant to paragraph (1) or (2).

18

Article 21 (Criteria for Major Telecommunications Line Facilities and Equipment)

The “major telecommunications line facilities and equipment prescribed under the Enforcement Decree of the Act” in provisos other than each subparagraph of Article 13(1) of the Act means facilities and equipment for exchange, transmission and wire pursuant to Article 3(8)-(10) of the Regulations on Telecommunications Facilities and Equipment of which the sum of the sales prices is not less than 5 billion won.

Article 22 (Report on Sale of Telecommunications Line Facilities and Equipment)

A person who wishes to file a report on sale of telecommunications line facilities and equipment pursuant to provisos other than each subparagraph of Article 13(1) of the Act shall submit to the Korea Communications Commission a report on sale of telecommunications line facilities and equipment with each of the following documentation attached thereto:

1. documentation supporting the sale, such as a copy of the sales agreement concerning telecommunications line facilities and equipment;

2. types, details and prices of the facilities and equipment being sold; and

3. plans for service provision and user protection subsequent to the sale.

Article 23 (Establishment of Corporation for Providing Key Communications Services)

(1) A key communications business operator who wishes to obtain authorization for establishing a corporation for the purpose of providing part of the key communications services such key communications business operator is permitted to provide pursuant to Article 13(2) of the Act shall submit to the Korea Communications Commission an authorization application (including an electronic authorization application) for establishing a corporation for providing key communications services with each of the following documentation (including electronic documentation) attached thereto; provided that, in the event the information contained in any of the following documentation can be verified through the public administrative information available pursuant to Article 36(1) of the E-Government Act, such verification may substitute for the relevant documentation: .<Amended by Enforcement Decree No. 22151 of May 4, 2010>

19

1. articles of incorporation of the corporation to be established;

2. shareholder register, or documentation related to ownership of shares, etc. by shareholders, etc., of the corporation to be established;

3. present status of the services to be provided (only for key communications business operators who are already providing the services they seek to provide by establishing a corporation); and

4. business proposal prepared by the corporation to be established.

(2) The Korea Communications Commission shall issue a key communications business operator’s license upon authorizing the authorization application for establishing a corporation pursuant to paragraph (1).

Article 24 (Application for a Permit to Suspend Business, etc.)

A person who wishes to obtain authorization to suspend or discontinue business pursuant to Article 14(1) of the Act shall submit to the Korea Communications Commission each of the following documentation:

1. details of the business to be suspended or discontinued, and drawings of such business’s territories;

2. documentation indicating details of major telecommunications facilities and equipment relating to the business to be suspended or discontinued;

3. written permission (only where the whole business is discontinued); and

4. statement of reasons for such suspension or discontinuation.

20

Article 25 (Criteria, Procedures, etc. for Revocation of Permits)

(1) The criteria for revocation of permits, cancellation of registration and suspension or discontinuation of business pursuant to Articles 15(2) and 28(3) of the Act are as provided in Table 1 attached hereto.

(2) In the event a telecommunications business operator commits several violations and:

1. the heaviest penalty for those violations is revocation of the permit or discontinuation of business, such heaviest penalty shall be imposed; or

2. the penalty for each violation is suspension of business, all such suspension periods shall be aggregated; provided that, the aggregated suspension period may not exceed 1 year.

(3) Upon revocation of permits, cancellation of registration or suspension or discontinuation of business under paragraph (1), the Korea Communications Commission shall issue public notification thereof without delay, and notify the relevant telecommunications business operator in writing.

Article 26 (Application for Registration)

(1) A person who wishes to register as a specific communications business operator pursuant to Article 19(1) of the Act shall submit to the Korea Communications Commission an application (including an electronic application) to register as a specific communications business operator with each of the following documentation (including electronic documentation) attached thereto:

1. a business proposal relating to a specific communications business;

2. articles of incorporation of the corporation (including, throughout this Article, the corporation to be established);

3. details, installment locations and a network map of major business facilities and equipment;

21

4. terms of use containing provisions relating to user protection (including a provision for the aggregated issue amount of prepaid calling cards), and details of, and a management proposal for, an office for user protection; and

5. a copy of surety insurance certificate.

(2) A public official who receives a registration application pursuant to paragraph (1) shall verify the corporate registry and national technical qualification certificates of the technical personnel by using the public administrative information available pursuant to Article 36(1) of the E-Government Act; provided that, in the event the applicant does not consent to such verification method, such applicant shall be required to attach the relevant documentation (in the case of national technical qualification certificates, copies thereof) to its license application. <Amended by Enforcement Decree No. 22151 of May 4, 2010>

Article 27 (Issuance of Certificates of Registration)

(1) Upon receipt of a registration application under Article 26(1) hereof, the Korea Communications Commission shall verify whether such registration application meets the registration requirements under Article 28 hereof, make recordations of each of the following in a registration registry of specific communications business operators and issue to the applicant a certificate of registration as a specific communications business operator within 30 days of the date of application:

1. number and date of registration;

2. title or trade name of the business and name of the representative;

3. location of the principal office;

4. capital;

5. types of services provided;

6. details of major business facilities and equipment and the locations where such facilities and equipment are installed;

22

7. details concerning technical personnel;

8. any conditions upon which the registration is authorized; and

9. aggregated issue amount of prepaid calling cards (for specific communications business operators only).

(2) The Korea Communications Commission may, where it deems necessary, request for a registration application already submitted to it under Article 26 hereof to be supplemented or revised by no later than 7 days thereafter; provided that, such period may be extended upon request of the applicant and may not count towards the processing time referred to in paragraph (1).

(3) A specific communications business operator whose certificate of registration, issued pursuant to paragraph (1), is either lost or worn out to the extent it can no longer be used may apply for reissuance of the certificate of registration to the Korea Communications Commission.

Article 28 (Registration Requirements for Specific Communications Business)

The registration requirements for a specific communications business pursuant to Article 19(4) of the Act are as provided in Table 2 attached hereto.

Article 29 (Reporting Procedures, etc. of Value-Added Communications Business)

(1) A person who wishes to file a report of a value-added communications business under the text of Article 21 of the Act shall submit to the Korea Communications Commission a value-added communications business report (including an electronic report) with a network map diagram (including an electronic diagram, but applicable only where new types of value-added communications services are reported and the Korea Communications Commission deems such diagram to be necessary and requests for it) attached thereto.

(2) A public official who receives a report pursuant to paragraph (1) shall verify the corporate registry by using the public administrative information available pursuant to Article 36(1) of the E-Government Act; provided that, in the event the person filing the report does not consent to such verification method, such person shall be required to attach the corporate registry to its report. <Amended by Enforcement Decree No. 22151 of May 4, 2010>

23

(3) When there is an error in a value-added communications business report or the documentation attached to such report is insufficient, the Korea Communications Commission may request for such report to be supplemented by no later than 7 days thereafter; provided that, such period may be extended upon request by the person filing the report.

(4) Upon receipt of a value-added communications business report under paragraph (1), the Korea Communications Commission shall issue a report certificate to the person filing such report.

(5) A value-added communications business operator whose report certificate, issued pursuant to paragraph (4), is either lost or worn out to the extent it can no longer be used may apply for reissuance of the certificate of report to the Korea Communications Commission.

Article 30 (Exemption from Value-added Communications Business Operator Report)

(1) The “small-scale value-added communications business meeting the criteria prescribed under the Enforcement Decree of the Act” in the proviso of Article 21 of the Act means value-added communications business operators who provide value-added communications services using the Internet and who satisfy each of the following criteria:

1. where the capital is 100 million won or less; and

2. where the scale of the telecommunications facilities and equipment complies with the standards publicly notified by the Korea Communications Commission.

(2) In the event a value-added communications business operator who did not file a report under paragraph (1) no longer satisfies all of the criteria set forth in paragraph (1), such value-added communications business operator shall file a report, within 1 month of the date on which it ceased to satisfy such criteria, in accordance with the text of Article 21 of the Act.

24

Article 31 (Amendment of Registration or Report)

(1) “As prescribed under the Enforcement Decree of the Act” in Article 22 of the Act means each of the following:

1. title or trade name, and address;

2. representative;

3. types of services provided;

4. capital (for specific communications business operators only); and

5. aggregated issue amount of prepaid calling cards (for specific communications business operators only).

(2) In order to amend any of the information set forth in paragraph (1), an application to register amendment to the specific communications business, or a report of amendment to the value-added communications business (including an electronic application or report), and documentation (including electronic documentation) supporting the relevant amendment shall be submitted to the Korea Communications Commission.

(3) Upon receipt and registration, or receipt and processing, of an application to register amendment or a report of amendment, the Korea Communications Commission shall issue either a registration certificate on which the relevant amendment is recorded or a report certificate.

(4) A public official who receives an application to register amendment or a report of amendment pursuant to paragraph (2) shall verify the corporate registry (only if an amendment is made with respect to the trade name, title, address, representative or capital of a corporation) or business registration certificate (only if an amendment is made with respect to the trade name, title or address of an individual) by using the public administrative information available pursuant to Article 36(1) of the E-Government Act; provided that, in the event the applicant or person filing the report does not consent to such verification method, such applicant or person shall be required to attach the corporate registry or business registration certificate to its report. <Amended by Enforcement Decree No. 22151 of May 4, 2010>

25

Article 32 (Report on Transfer of Business)

(1) A person who wishes to file a report on transfer of a specific communications business or a value-added communications business pursuant to Article 25 of the Act shall submit to the Korea Communications Commission a business transfer application (including an electronic application) with each of the following documentation (including electronic documentation) attached thereto:

1. a copy of the business transfer agreement;

2. documentation prescribed under each of the subparagraphs of Article 26(1) hereof, or documents to be attached under Article 29(1) hereof; and

3. a registration certificate or a report certificate.

(2) A person who wishes to file a report on merger of a corporation that is either a specific communications business operator or a value-added communications business operator pursuant to Article 25 of the Act shall submit to the Korea Communications Commission a merger application (including an electronic application) with each of the following documentation (including electronic documentation) attached thereto:

1. a copy of the merger agreement;

2. documentation prescribed under each of the subparagraphs of Article 26(1) hereof, or documents to be attached under Article 29(1) hereof; and

3. a registration certificate or a report certificate.

(3) A person who wishes to file a report on inheritance of a value-added communications business operator pursuant to Article 25 of the Act shall submit to the Korea Communications Commission an inheritance report (including an electronic application) with documentation (including electronic documentation) demonstrating that she or he is the heir attached thereto.

26

(4) A public official who receives a report under paragraphs (1)-(3) shall verify, through the information sharing channel under Article 36(1) of the Electronic Government Act, the corporate registry of the transferor or party to a merger agreement (meaning the existing or newly established corporation), national technical qualification certificates of the technical personnel or a certificate of the heir’s family register; provided that, in the event the person filing the report does not consent to such verification method, such person shall be required to attach the relevant documentation (in the case of national technical qualification certificates, copies thereof) to its report. <Amended by Enforcement Decree No. 22151 of May 4, 2010>

(5) Upon receipt of a report to register on transfer or merger of a specific communications business or a value-added communications business under paragraph (1) or (2), the Korea Communications Commission shall issue either a specific communications business registration certificate or a value-added communications business report certificate.

Article 33 (Report on Suspension or Discontinuation of Business)

A person who wishes to file a report on either (i) suspension or discontinuation of a specific communications business or a value-added communications business or (ii) dissolution of a corporation that is a specific communications business operator or a value-added communications business operator shall submit to the Korea Communications Commission a report on suspension, discontinuation or dissolution of a specific communications business or a value-added communications business (including an electronic application) with documentation (including electronic documentation) demonstrating that users have been notified of such suspension or discontinuation attached thereto; provided that, in the event the information contained in any of such documentation can be verified through the public administrative information available pursuant to Article 36(1) of the E-Government Act, such verification may substitute for the relevant documentation. <Amended by Enforcement Decree No. 22151 of May 4, 2010>

27

Chapter 3. Telecommunications Operation

Article 34 (Approval of Terms of Use)

(1) The services for which key communications business operators must obtain approval of terms of use pursuant to the proviso of Article 29(1) of the Act shall be any of the following <Amended by Enforcement Decree No. 21060, Oct. 1, 2008>:

1. among the services provided by the key communications business operator with the highest market share with respect to the aggregate national sales based on sales from each service in the preceding year, the service from which sales in the preceding year reach or exceed the amount determined and publicly notified by the Korea Communications Commission with respect to each service; or

2. if a key communications business operator providing the service prescribed under subparagraph 1 completes business consolidation with another key communications business operator pursuant to Article 12(1)1 or 12(1)4 of the Monopoly Regulation and Fair Trade Act, the service prescribed under subparagraph 1 provided by such other key communications business operator.

(2) By the end of June each year, the Korea Communications Commission shall designate and issue public notification of the key communications business operators and services prescribed under paragraph (1); provided that, the Korea Communications Commission shall designate and issue public notification of the key communications business operators and services falling under subparagraph 2 of paragraph (1) immediately after the date of report on business consolidation thereunder.

(3) Notwithstanding the provisions under paragraph (1), a key communications business operator who wishes to amend minor aspects of terms of use as prescribed by the Korea Communications Commission may file a report with the Korea Communications Commission.

Article 35 (Application for Approval of Terms of Use)

A person who wishes to file a report (including a report on amendment) or obtain an approval (including an approval of amendment) on terms of use with respect to telecommunications services pursuant to Article 29(1) of the Act shall submit to the Korea Communications Commission terms of use containing each of the following with documentation demonstrating the bases for price computation attached thereto:

1. types and details of telecommunications services;

28

2. areas in which telecommunications services are provided;

3. prices of telecommunications services, including fees and actual expenses;

4. details concerning the responsibilities of telecommunications business operators and users of telecommunications services; and

5. any other information necessary the provision or use of the relevant telecommunications services.

Article 36 (Services Entitled to Reduction or Exemption of Fees)

Telecommunications services entitled to the reduction or exemption of fees pursuant to Article 32 of the Act shall be as follows: <Amended by Enforcement Decree No. 22003 of Jan. 27, 2010>

1. Telecommunications services for the communications concerning the rescue of human lives and properties in danger, and the rescue from disasters or for the communications by the victims of disasters;

2. Telecommunications services for the whole or part of exclusive line communications used by such agencies, in case where the exclusive line communications of agencies which are fully responsible for military, public order and national security, and a part of self-communications network of the State, local governments or government-invested institutions are integrated into the telecommunications net-work of a key communications business;

3. Telecommunications services for the communications required for military operations in wartime;

4. Telecommunications services for the newspapers under the Act on the Promotion of Newspapers, etc., and for communication for news reports by the broadcasting stations under the Broadcasting Act;

29

5. Telecommunications services for a communication which is required for facilitating the use, and for diffusing the distribution, of information communications;

6. Telecommunications services for a communication by those who are in need of the protection for the improvement of social welfare;

7. Telecommunications services for a communication which is required for the promotion of interchange and cooperation between North and South Korea; and

8. Telecommunications services for a communication which is specially required for the operation of postal and telegraphic services.

Article 37 (Provision of Transmission or Line Facilities and Equipment, etc.)

Pursuant to Article 32-4(1) of the Act, a CATV broadcasting business operator, signal transmission network business operator or CATV relay broadcasting business operator under the Broadcasting Act may provide transmission or line facilities and equipment or the CATV broadcasting facilities and equipment (the “Transmission or Line Facilities and Equipment, etc.”) to key communications business operators in a manner falling under one of the following:

1. sale or lease of transmission or line facilities, etc.;

2. commissioned performance of the communications or exchange operations, etc. by making use of transmission or line facilities, etc.; or

3. manners corresponding to subparagraphs 1 and 2, which are determined by a consultation between a CATV broadcasting business operator, a signal transmission network business operator, or a CATV relay broadcasting business operator.

30

Chapter 4. Promoting Competition In Telecommunications Business

Article 38 (Criteria and Procedures for, and Methods of, Evaluating Competition Status)

(1) When making determination concerning unit markets for the purpose of evaluating competition status pursuant to Article 33-4(2) of the Act, all of the following factors shall be considered:

1. demand substitutability and supply substitutability of the services;

2. geographical scope of the services provided;

3. transaction stages of the services provided such as retail (meaning transactions between telecommunications business operators and ultimate users of the services provided by such telecommunications business operators) and wholesale (meaning transactions through which telecommunications facilities and equipment, etc., installed to provide wholesale services, are offered to other telecommunications business operators); and

4. special characteristics of users such as differences in purchasing power and negotiating edge or uniqueness of demand.

(2) Evaluation of competition status with respect to the unit markets determined under paragraph (1) shall be implemented by comprehensively considering each of the following factors:

1. market structure such as market share and entrance barrier;

2. response capacity of users such as accessibility of information related to service use and ease of switching service providers;

3. activities of telecommunications business operators such as those relating to price and quality competition and technology innovation; and

4. market performances such as the level of price and quality and the size of excess profits made by telecommunications business operators.

(3) Where it deems necessary for evaluating competition status, the Korea Communications Commission may invite opinions from relevant professionals and related parties.

31

Article 39 (Criteria applicable to Key Communications Business Operators)

(1) The “key communications business operators satisfying the criteria prescribed under the Enforcement Decree of the Act” in Articles 33-5(2)2, 34(3)2, 34-3(3)2 and 34-4(3)2 of the Act means, where sales of certain key communications business operators in each service from the preceding year exceed the amount determined and publicly notified by the Korea Communications Commission with respect to each service, those business operators whose market share in relation to the national aggregate sales from the relevant service is 50% or higher.

(2) By the end of June each year, the Korea Communications Commission shall designate and issue public notification of the key communications business operators prescribed under Articles 33-5(2), 34(3), 34-3(3) and 34-4(3) of the Act.

Article 40 (Report on Accord, etc. concerning Interconnections, etc.)

(1) A person who wishes, under Article 34-6(1) or 34-6(2) of the Act, to file a report on, or obtain an approval of (i) the provision, common use or interconnection of telecommunications facilities and equipment or (ii) the execution or termination of, or an amendment to, an accord on provision of information on shall submit to the Korea Communications Commission each of the following documentation:

1. copy of the accord;

2. documentation demonstrating the amounts due from, or payable to, the parties to the accord, the computation methods with respect to such amounts and how the accord shall be implemented;

3. documentation demonstrating provision, common use or interconnection of, or conditions upon which information shall be provided on, telecommunications facilities and equipment, and any other costs related to the accord;

4. drawings indicating provision, common use or interconnection of, or a summary of the information to be provided on, telecommunications facilities and equipment; and

32

5. documentation comparing the new accord against the old (applicable only to filing of a report of amendment or applying for an approval of amendment).

(2) Upon receipt of documentation under paragraph (1), the Korea Communications Commission shall examine whether such documentation comply with the criteria for provision, common use or interconnection of, or provision of information on, telecommunications facilities and equipment pursuant to Article 33-5(3), 33-7(3), 34(2), 34-3(2) or 34-4(2) of the Act.

(3) Pursuant to Article 21(3) of the Telecommunications Basic Law, upon receipt of documentation under paragraph (1), the Korea Communications Commission shall examine whether such documentation complies with the criteria for provision, common use or interconnection of, or provision of information on, telecommunications facilities and equipment pursuant to Article 33-5(3) of the Act, and whether the private telecommunications facilities and equipment provided were installed by an individual to be used for her or his own telecommunications.

Article 41 (Reporting Offenses)

(1) Any person recognizing any of the offenses prescribed under Article 36-3(1) of the Act may report to the Korea Communications Commission of such act and request any measures prescribed under each of the subparagraphs of Article 37(1) of the Act to be taken.

(2) A person who wishes to make a report under paragraph (1) shall submit to the Korea Communications Commission documentation indicating each of the following:

1. name (if a corporation, the name of the corporation and its representative) and address of the person making the report;

2. trade name, or name (if a corporation, the name of its representative), and address of the person being reported;

33

3. details of the offense; and

4. measures necessary for addressing the offense.

(3) The Korea Communications Commission may, where it deems necessary, request that the documentation submitted to it under paragraph (2) be supplemented within a period reasonably fixed.

Article 42 (Types of and Criteria for Offenses)

(1) The types of, and criteria for, the offenses pursuant to Article 36-3(3) of the Act shall be as provided in Table 3 attached hereto.

(2) The Korea Communications Commission may, where it deems necessary for the purpose of applying to specific telecommunications fields or specific offenses, determine and issue public notification of the details concerning the types of, and criteria for, the offenses under paragraph (1).

Article 43 (Investigation of Facts)

A public official who intends to enter and investigate an office and business place of a telecommunications business operator, or a business place of a person who is entrusted with the affairs of a telecommunications business operator, pursuant to Article 36-5(2) of the Act shall have the parties concerned from the relevant office or business place be present at the time of investigation.

Article 44 (Measures Taken, etc. on Offenses)

The term “other matters necessary for implementation of the provisions under subparagraph 1 or 9 as prescribed under the Enforcement Decree of the Act” in Article 37(1)10 of the Act refers to each of the following:

1. submission of a plan for implementing the provisions under Article 37(1)1-9 of the Act; and

2. report on the results of the implementation of the provisions under Article 37(1)1-9 of the Act.

34

Article 45 (Implementation Period of Corrective Orders)

The period by the end of which telecommunications business operators shall implement the corrective order issued by the Korea Communications Commission pursuant to Article 37(2) of the Act shall be as provided in Table 4 attached hereto.

Article 46 (Offenses Subject to Imposition of Penalties and Amount of Such Penalties, etc.)

The classifications of offenses subject to imposition of penalties, the upper limit of such penalties and the criteria for imposition of such penalties pursuant to Article 37-2(3) of the Act shall be as provided in Table 5 attached hereto.

Article 47 (Computation Methods of Penalties)

(1) The term “sales as prescribed under the Enforcement Decree of the Act” in the text of Article 37-2(1) of the Act means the average annual sales for the 3 preceding fiscal years of the telecommunications services related to the offense committed by the relevant telecommunications business operator; provided that, if, as of the first day of the applicable fiscal year, less than 3 years have elapsed since the commencement of the relevant business as of the first day of the relevant fiscal year, such term shall mean the sales of the period from the commencement of the relevant business until the last day of the preceding fiscal year, converted into annual average sales, or if the relevant business has been commenced in the applicable fiscal year, such term shall mean sales of the period from the commencement date of the relevant business until the date of commission of the offense, converted into annual sales.

(2) The term “where there has been no sales or it is difficult to compute sales as prescribed under the Enforcement Decree of the Act” in the proviso of Article 37-2(1) of the Act means any of the following:

1. where there has been no sales result due to such reasons as non-commencement or suspension of business; or

35

2. where it is difficult to make an objective computation of sales.

Article 48 (Imposition and Payment of Penalties)

(1) The Korea Communications Commission shall, where it intends to impose penalties pursuant to Article 37-2 of the Act and subsequent to its investigation and verification of the relevant offense, notify, in writing, the person subject to such penalties of the fact of offense, the amount thereof and the method of, and the period for, raising objection thereto.

(2) A person who receives a notification under paragraph (1) shall pay the relevant penalties to a financial institution designated by the Korea Communications Commission within 20 days from the date of receiving such a notification; provided that, if the person is unable to pay the penalties within such period due to a natural disaster or other unavoidable circumstances, the person shall pay the penalties within 7 days from the date on which said reason ceases to exist.

(3) A financial institution in receipt of a payment of penalties under paragraph (2) shall deliver a receipt thereof to the person who paid the penalties.

Article 49 (Demand for Penalties)

(1) A demand for penalties pursuant to Article 37-2(5) of the Act shall be made in writing within 7 days from the date on which the payment deadline expires.

(2) Where a demand note is issued under paragraph (1), a deadline for payment of any penalties in arrear shall be within 10 days from the date on which such demand note is issued.

Article 50 (Services Subject To Prior Selection)

The “telecommunications services prescribed under the Enforcement Decree of the Act” in the latter part of Article 38-3(1) of the Act means the Long Distance Telephone Service.

36

Article 51 (Provision of Directory Assistant Service)

(1) Telecommunications business operators providing a directory assistant service pursuant to Article 38-6(1) of the Act may furnish any of the following information:

1. name or trade name of the user;

2. telephone number of the user; or

3. address of the user up to Eup/Myeon/Dong.

(2) Telecommunications business operators shall obtain users’ consent to a directory assistant service through a method that can be used to verify as to whether such consent has been indeed given by the user, such as the user’s handwritten or electronic signature, and to prove at a later date that such consent has been given.

(3) Users may withdraw their consent given under paragraph (2) at any time, and telecommunications business operators shall, without any delay, take the necessary measures so that a directory assistance service shall not be provided with respect to such users who withdrew their consent; provided that, where the pertinent directory assistance service is provided through a written material, a user shall have to withdraw her consent at least 30 days prior to the print date of such written material for the withdrawal to take effect.

Chapter 5. Protection of Telecommunications Facilities and Equipment

Article 52 (Designation of Alert Areas for Submarine Cable)

(1) A key communications business operator who wishes to apply for designation of alert areas for submarine cable under Article 50(3) of the Act shall submit to the Korea Communications Commission documentation demonstrating each of the following:

1. need to designate alert areas; and

2. legs and width of the alert areas indicated by using coordinates of latitude and longitude.

37

(2) The Korea Communications Commission may, where necessary for designation of alert areas for submarine cable, request additional information further to the documentation prescribed under paragraph (1) from any key communications business operator who applies for such designation.

(3) Upon receipt of the documentation submitted to it under paragraphs (1) and (2), the Korea Communications Commission shall send such documentation to the heads of the relevant state administrative organs prescribed under Article 50(4) of the Act for consultation.

(4) Except under ordinary circumstances, the Korea Communications Commission shall, within 60 days of the date of application for designation of an alert area for submarine cable, notify the key communications business operator making such application, and if such designation is approved, issue, without any delay, public notification of the newly designated alert area.

(5) Once the Korea Communications Commission designates and issues public notification of a new alert area under paragraph (4), the key communications business operator who applied for such designation shall disclose the location of the new alert area on its website, etc., and may place buoys, etc. in the new alert area for marking purposes.

Chapter 6. Supplementary Provisions

Article 53 (Protection of Communication Secrets)

(1) Telecommunications business operators shall preserve the ledger of communications data supplied, prescribed under Article 54(5) of the Act, for a period of 1 year.

(2) Reports on, and notification of, the status of communications data supplied pursuant to Articles 54(6) and 54(7) of the Act respectively, must be provided within 30 days after the expiration of each half-year.

(3) An office dedicated to protection of communication secrets pursuant to Article 54(8) of the Act (the “Dedicated Office”) shall undertake to perform each of the following:

1. oversee tasks related to communication secrets of users;

38

2. regulate illegal or undue infringement of communication secrets of users by employees of telecommunications business operators or third parties;

3. report on the present status of communications information supplied under Article 54(6) of the Act;

4. furnish notification of the recordations in the ledger of communications data supplied under Article 54(7) of the Act;

5. address complaints or opinions from users with respect to communication secrets;

6. train the employees in charge of tasks connected with communication secrets; and

7. any other matters necessary for protection of communication secrets of users.

(4) The Dedicated Office shall be based at the headquarters of each telecommunications business operator with the officers thereof in charge.

(5) An authorized signatory for documentation under Article 54(9) of the Act shall be either (i) a judge, a prosecutor or an investigatory entity (including, throughout this Enforcement Decree, a military investigatory body, the National Tax Service and regional tax services) (ii) a public official of Grade 4 or higher who belongs to an intelligence agency (including a public official of Grade 5 who is the head of an investigatory body or intelligence agency) or (iii) a public official who belongs to senior executive service; provided that, (x) with respect to the police or marine police, such authorized signatory shall be a public officer whose position is senior superintendent or higher (including a superintendent who is the head of a district policy agency) and (y) with respect to a military investigatory body, it shall be a military prosecutor or a person whose rank is lieutenant colonel or higher (including a major with respect to a military investigatory body at which a major is the commanding officer).

39

(6) The documentation prescribed under Article 54(9) of the Act shall clearly indicate the authorized signatory’s name and rank; provided that, with respect to intelligence agencies prescribed under Article 2(6) of the Regulation on Planning and Coordination of Information Security, only the title of the authorized signatory shall be indicated, and with respect to courts, the title and name of the authorized signatory shall be indicated.

Article 54 (Caller Identification, etc.)

(1) Telecommunications business operators may not impose charges on users who choose, pursuant to the latter part of Article 54-2(1) of the Act, not to allow their telephone numbers to be identified when making telephone calls.

(2) A person who wishes to be informed of the telephone number of the caller pursuant to Article 54-2(2) of the Act shall make a written request therefor to the pertinent telecommunications business operator with any of the following documentation demonstrating in detail that the person has been subjected to abusive language, threats or harassment over the telephone attached thereto:

1. written records of the date, time and contents of threats, etc. over the telephone;

2. voice records of threats, etc. over the telephone;

3. documentation supporting that a crime report has been filed with the police in connection with threats, etc. over the telephone;

4. documentation supporting that advice has been sought from a clinic with respect to the damages incurred from threats, etc. over the telephone; and

5. any other documentation equivalent or similar to those set forth in subparagraphs 1-4.

(3) “As prescribed under the Enforcement Decree of the Act” in Article 54-2(2) of the Act means where each of the following telephone services is used:

1. to report international terror-related crime (111);

40

2. to report crime (112);

3. to report spies (113);

4. to report cyber terror and seek advice in relation thereto (118);

5. to report fire or seek emergency rescue (119);

6. to report marine accidents or crime (122);

7. to report smuggling (125); or

8. to report drug offenders (127).

Article 55 (Restriction on and Suspension of Service)

(1) Where the Korea Communications Commission issues, under Article 55 of the Act, an order to restrict or suspend the whole or part of the telecommunications business of telecommunications business operators, it may allow communications for undertaking the matter falling under each of the following in the order of their priority, in proportion to the scope and severity of the relevant restriction or suspension:

1. top priority

(a) national security;

(b) military affairs and public security;

(c) transmission of the civil defense alarm; and

(d) electronic wave control;

41

2. second priority

(a) disaster relief;

(b) telecommunications, navigation safety, weather, fire fighting, electricity, gas, water service, transportation and the press;

(c) affairs of the State and local government, except for those mentioned in items (a) and (b); and

(d) affairs of the foreign diplomatic missions and the organizations of the United Nations in Korea;

3. third priority

(a) affairs of the enterprises subject to resources control and the firms of defense industry; and

(b) affairs of government-invested institutions, and medical institutions; and

4. forth priority: matters other than those listed in subparagraphs 1 through 3.

(2) The restriction or suspension on the telecommunication services under paragraph (1) shall be the least of those required for securing the important communications.

(3) A telecommunications business operator shall, in case where he restricts or suspends the whole or part of telecommunications services under paragraph (1), report the content thereof without delay to the Korea Communications Commission.

Article 56 (Approval, etc. for International Telecommunications Services) <Amended by Enforcement Decree No. 21060, Oct. 1, 2008>

(1) The term “international telecommunications business as prescribed under the Enforcement Decree of the Act” in Article 59(2) of the Act means the services falling under any of the following:

1. installation and lease of a satellite for providing international telecommunications services; or

42

2. transboundary provision of key communications services under Article 59-2 of the Act.

(2) A person who intends to obtain approval under Article 59(2) of the Act shall submit the following documents to the Korea Communications Commission:

1. duplicate copy of written agreement or contract;

2. comparative table between new and old agreements or contracts (limited to the cases where an application for modified approval is filed); and

3. document certifying the fact that the agreements or contracts have been abrogated (limited to the cases where an application for approval of abrogation is filed).

Article 57 (Revocation of Approval for Agreement to Provide Transboundary Key Communications Services)

(1) The criteria for revocation of approval for agreements to provide transboundary key communications services and for suspension of provision of transboundary key communications services pursuant to Article 59-2(3) of the Act shall be as follows:

1. first violation shall result in suspension of 6 months or less, or suspension of invitation of new users; and

2. second violation shall result in revocation of approval.

(2) Upon revoking approval or ordering suspension, the Korea Communications Commission shall issue public notification and notify the relevant telecommunications business operator in writing thereof.

43

Article 58 (Report on Statistics)

(1) The types of statistics telecommunications business operators must report to the Korea Communications Commission pursuant to Article 62(1) of the Act are as follows:

1. present status of telecommunications facilities, including those for exchange, transmission, wire and power per service;

2. use records of telecommunications, including sales and times of use per service, period, distance stage, time zone, country (including the use records per foreign telecommunications business operator) and Calling Area and between Calling Areas;

3. present status of telecommunications users, including the number of subscribers per service, city and province and Calling Area;

4. information related to call volume, including (i) call volume between Calling Areas and per service, period, distance stage, time zone, city and province, country (including the call volume per foreign telecommunications business operator) and Calling Area and (ii) information on provision of facilities and equipment and on interconnection;

5. information related to accounting, including a sales report prepared for each service and business provided; and

6. aggregated issue amount of prepaid calling cards and use records of the Calling Areas (applicable only to specific communications business operators).

(2) The Korea Communications Commission shall determine the format, submission method and reporting deadline of the relevant statistics under paragraph (1) and any other matters related thereto.

Article 59 (Submission of Documentation)

(1) Pursuant to Article 62(2) of the Act, key communications business operators and their shareholders shall submit to the Korea Communications Commission each of the following:

1. present status of the corporation’s outstanding shares (including, throughout this Article, equities);

44

2. present shareholding (including, throughout this Article, equity investment ratios) status of shareholders owning the corporation’s outstanding shares (including, throughout this Article, equity investors) and their related parties;

3. purpose of shareholding and reasons for the change (applicable only to shareholders of key communications business operators);

4. date of acquiring the shares and details of capital used for such acquisition (applicable only to shareholders of key communications business operators);

5. form of shareholding (applicable only to shareholders of key communications business operators); and

6. documentation supporting any of the information set forth in subparagraphs 1-5.

(2) Business operators obliged to submit documentation under paragraph (1) shall submit such documentation to the Korea Communications Commission by the following date <Amended, Jul. 29, 2008>:

1. if the business operator is a key communications business operator whose share certificates are listed on a stock exchange under Article 9(15)3 of the Financial Investment Services and Capital Markets Act, within 30 days from the date its shareholder registry is closed; or

2. if the key communications business operator does not fall under subparagraph 1, by January 30 of each year.

Article 60 (Methods for Computing Penalties)

(1) The term “sales calculated under the conditions prescribed under the Enforcement Decree of the Act” in the main sentence of Article 64(1) of the Act means the annual average sales for 3 fiscal years immediately preceding of the telecommunications services by the relevant telecommunications business operator; provided that, where 3 years have not elapsed since the start of business as of the first day of the relevant fiscal year, it shall mean sales from the period from the start of the relevant business until the end of the immediately preceding fiscal year, converted into annual average sales; and where a business was started in the relevant fiscal year, it shall mean sales from the period from the date of starting the business until the date of an offense, converted into annual sales.

45

(2) The term “where there exists no sales or the computation of sales is difficult, and where it is prescribed under the Enforcement Decree” in the proviso of Article 64 (1) of the Act means the case falling under any of the following:

1. where there exists no business record due to a failure of starting a business or a suspension of business, etc.;

2. where a telecommunications business operator has refused to submit the data for computing sales or has submitted false data; or

3. other cases where it is difficult to compute the amount of objective sales.

Article 61 (Offenses Subject to Imposition of Penalties and Amount of Penalties, etc.)

(1) Classifications of offenses subject to the imposition of a penalty and the amount of a penalty under Article 64(2) of the Act shall be as provided in Table 6 attached hereto.

(2) In determining the amount of penalties under paragraph (1), the Korea Communications Commission shall take into account such factors as the peculiarities of providing telecommunications services and the severity and frequency of each offense.

(3) The provisions under Articles 48 and 49 hereof shall apply mutatis mutandis to the imposition, payment and demand of penalties under Article 64 of the Act.

46

Article 62 (Extension of Payment Due Date, and Installment Payment, of Penalties)

(1) A person who intends to extend the payment due date of a penalty or pay it in installments under Article 64-2 of the Act shall make an application to the Korea Communications Commission along with the document certifying grounds of the extension of payment due date or the payment in installments not later than 10 days prior to the relevant due date of payment.

(2) The term “amount as prescribed under the Enforcement Decree” in Article 64-2(1) of the Act means either the amount equal to the sales under Article 47 multiplied by 1%, or 300 million won.

(3) The extension of the payment due date of a penalty under Article 64-2 of the Act shall not exceed 1 year from the day immediately following said payment due date.

(4) When making installment payments under Article 64-2 of the Act, the intervals between the respective installment payment due dates shall not exceed 4 months, and the frequency of installments shall not exceed three times.

(5) The Korea Communications Commission may, if a person liable for a payment of a penalty for whom the payment due date has been extended or installment payments have been permitted under Article 64-2 of the Act comes to fall under any of the following, revoke such extension of payment due date, or the decision to allow such installment payments, and collect it in a lump sum:

1. where the person fails to pay a penalty for which the payment in installments has been decided, within the payment due date thereof;

2. where the person fails to implement an order necessary for a change of security or other security integrity, which is given by the Korea Communications Commission; or

3. where it is deemed that the whole or remainder of a penalty is uncollectible, such as the compulsory execution, commencement of auction, adjudication of bankruptcy, dissolution of a juristic person or dispositions on national or local taxes in arrears, etc.

47

Article 63 (Classification and Appraisal, etc. of Securities)

The provisions of Articles 29 through 34 of the Framework Act on National Taxes, and of Articles 13 through 17 of its Enforcement Decree shall apply mutatis mutandis to the provision of security under Article 64-2 of the Act.

Article 64 (Important Communications)

(1) The term “important communications” in Article 65(2)3 of the Act means:

1. business telecommunications related to the national security, military affairs, public peace and order, civil defense alarm transmission and radio wave control; or

2. other communications publicly notified by the Korea Communications Commission in order to efficiently perform the State affairs.

(2) The government may grant a subsidy for the expenses required for the construction and management of the important communications in order to secure the important communications under paragraph (1).

Article 65 (Delegation of Authority) <Amended, Jul. 3, 2008>

The Korea Communications Commission shall delegate the authority falling under any of the following to the Director General of the Central Radio Management Office pursuant to Article 68 (1) of the Act <Amended, Jul. 3, 2008; Amended by Enforcement Decree No. 21060, Oct. 1, 2008>:

1. registration of specific communications business under Article 19(1) of the Act;

2. acceptance of a report on the value-added communications business under the text of Article 21 of the Act;

3. acceptance of a modified registration for the specific communications business, and of a modified report for value-added communications business, under Article 22 of the Act;

48

4. acceptance of a report on the transfer or takeover of a specific communications business or a value-added communications business, and on the merger or succession of a juristic person, under Article 25 of the Act;

5. acceptance of a report on the suspension or discontinuation of a specific communications business or a value-added communications business, and on the dissolution of a juristic person under Article 27 of the Act;

6. order to cancel registration of or suspend a specific communications business under Article 28(1) of the Act;

7. order to closedown or suspend a value added communications business under Article 28(2) of the Act;

8. permission for a felling or transplanting of the plants under the former part of Article 42 (3) of the Act;

9. hearing on the order to cancel registration of a specific communications business or to closedown a value-added communications business under Article 63(2) of the Act;

10. imposition and collection of surcharge under Article 64 of the Act and permission for extension of time limit for payment of and payment in installment of such surcharge under Article 64-2 of the Act, except against a key communications business operator;

11. correction order under Article 65(1) of the Act, except against a key communications business operator;

12. order to suspend the provision of telecommunications service or to remove telecommunications facilities under Article 65(3) of the Act, except against a key communications business operator; or

13. imposition and collection of surcharge under Article 78 of the Act, except against a key communications business operator.

49

Chapter 7. Deleted. <As amended by Enforcement Decree No. 21060, Oct. 1, 2008>

Article 66 Deleted. <As amended by Enforcement Decree No. 21060, Oct. 1, 2008>

Article 67 Deleted. <As amended by Enforcement Decree No. 21060, Oct. 1, 2008>

ADDENDA <Enforcement Decree No. 22151, May 4, 2010>

Article 1 (Enforcement Date) This Decree shall take effect on May 5, 2010.

Article 2 and Article 3 Omitted.

Article 4 (Amendments to Other Laws)

<1> through <140> are omitted.

<141> Enforcement Decree of the Telecommunications Business Act shall be amended as follows:

In Article 10(2), Article 20(5), Article 23(1), Article 26(2), Article 29(2), Article 31(4), Article 32(4), Article (33), each reference to Article 21(1) of the Electronic Government Act shall be amended to refer to Article 36(1) of the Electronic Government Act.

<142> through <192> are omitted.

50

EX-15.5

Exhibit 15.5

June 29, 2010

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549-7561

Dear Sirs/Madams:

We have read the information required by Item 16 F of Form 20-F dated June 29, 2010 of KT Corporation, and have the following comments:

1. We agree with the statements made in the paragraphs two and four in the section “Change in Registrant’s Certifying Accountant” on pages 108 and 109.

2. We have no basis on which to agree or disagree with other statements of the registrant contained therein.

Yours sincerely,

/s/ DELOITTE ANJIN LLC

Deloitte Anjin LLC