Strong First Quarter Performance

KT Corp. (formerly Korea Telecom) has announced a robust start to 2025, reporting notable gains in both consolidated sales and operating profit for the first quarter. The telecommunications giant credits its expansion into Artificial Intelligence (AI) and strategic real estate ventures as key drivers of this growth.

The company’s consolidated sales reached ₩6.84 trillion, while consolidated operating profit soared to ₩688.8 billion. This represents a year-over-year increase of 2.9% and an impressive 36%, respectively. However, on a standalone basis, sales experienced a slight dip of 0.3% to ₩4.68 trillion, while operating profit saw a modest rise of 1.6% to ₩400.1 billion.

AI and Real Estate: The Engines of Growth

The substantial increase in consolidated operating profit can be attributed to the synergistic effect of business expansion and one-time gains from real estate pre-sales, notably in the dialog and AI change (AX) sectors.This strategic diversification appears to be paying dividends for KT.

Business Segment Performance

mixed Results Across Divisions

While some areas thrived, others faced challenges. The wireless business saw a modest 1% increase in sales, fueled by the continued adoption of 5G technology.Notably, 5G subscribers now constitute 78.9% of KT’s total handset subscriber base. In contrast, the wired business experienced a 1.3% increase in high-speed internet sales, driven by the growing popularity of Giga Internet subscriptions and value-added services. However, traditional wired phone sales declined by 10.5% due to decreasing residential demand, a trend observed across the telecommunications industry as consumers increasingly rely on mobile and internet-based communication solutions.

The media business, encompassing Internet TV (IPTV) premium plans and set-top box (STB) fees, remained relatively stable with a marginal increase of 0.1%.

Strategic Focus on AI and Digital Transformation

KT’s AICT Vision

KT is strategically aligning its business with its AICT (AI, Information, and Communication Technology) vision, fostering growth in AI and IT sectors. Sales in these areas surged by 10.2% year-over-year, propelled by the increasing adoption of AI Contact Centers (AICC) and IT infrastructure projects. This strategic pivot is designed to position KT as a leader in the rapidly evolving digital landscape.

KT Cloud continues its impressive growth trajectory, reporting a substantial 42.2% increase in sales compared to the previous year. This growth is fueled by balanced performance across both cloud and data center (DC) businesses. The DC business is benefiting from rising demand for colocation services from global clients, with KT actively pursuing Design, Build, and Operate (DBO) projects. The cloud business has solidified its position in the public sector, and sales of AI cloud solutions based on GPU infrastructure are also on the rise.

Real Estate Investments Yielding Returns

Strategic Asset Management

KT’s real estate ventures are contributing considerably to its bottom line. The commencement of occupancy at Lotte East Paul, a residential development at the Gangbuk Headquarters site in Guui Station, has partially boosted first-quarter earnings. KT Estate maintains a stable growth foundation through a diversified asset portfolio encompassing hotels, offices, and development projects. The company has also achieved 100% sales for an 860-household apartment development project at the KT Daejeon Human Resources Development Institute, securing a reliable revenue stream.

Financial Services Expansion

K-Bank’s Impressive Growth

KT’s financial business is also experiencing positive momentum. BC Card reported year-over-year growth,driven by increased card issuance and expansion of its finance and platform business. K-Bank,the company’s online banking arm,continues to attract new customers,reaching 13.63 million users by the end of March, a 32.0% increase compared to the previous year. Concurrently, the bank’s deposit balance reached ₩27.8 trillion, and its loan balance reached ₩16.9 trillion, representing growth rates of 15.9% and 14.8%, respectively.

Future Outlook and Strategic partnerships

AI-Driven Transformation

Looking ahead to the second quarter, KT plans to leverage its strategic partnerships with companies like Microsoft to accelerate its transformation into an “AICT Company.” The launch of AXD, an AI transformation delivery institution, in March underscores KT’s commitment to providing customized consulting and AX engineering services across various industries. KT and Microsoft are jointly developing a Korean AI model and Secure Public Cloud (SPC), with preparations underway for a second-quarter launch.

KT has also forged a strategic alliance with Palantir,a global AI platform company,to enhance its AX product competitiveness. By integrating palantir’s core AI solutions with KT’s cloud and network infrastructure, the company aims to deliver optimized services tailored to the Korean market.

“We will accelerate the leap into AICT companies by securing new growth engines in the field of B2B AX this year,” said Jang Min, KT’s Chief financial Officer (CFO).

Enhancing Corporate Value

Shareholder-Kind Initiatives

KT is actively implementing measures to enhance corporate value, as outlined in its corporate value-up program announced in November of last year. The company aims to achieve a consolidated return on equity (ROE) of 9-10% by 2028 and is pursuing strategies such as focusing on AICT,improving the efficiency of non-core assets,rationalizing low-profit businesses,and implementing additional treasury stock purchases.

As part of its efforts to optimize its business portfolio, KT divested Initech and Plady earlier this year. Furthermore, the company has committed to purchasing and retiring ₩250 billion worth of treasury stock, with purchases already underway since February.

KT demonstrated its commitment to shareholder returns by paying a dividend of ₩600 per share in the first quarter, a 20% increase compared to the previous year. Additionally,the company amended its articles of incorporation at the regular shareholders’ meeting in March to allow investors to make informed decisions about investing in quarterly dividends,further enhancing its shareholder-friendly approach.