KT’s Record Profits Shadowed By Security Crisis

• KT Corporation reported significant Q3 growth, with operating revenue up 7.1% and profit climbing 16% year-over-year.
• Key growth drivers were the cloud and real estate segments, which surged by 20.3% and 23.9%, respectively, alongside strong 5G subscriber expansion.
• The company is grappling with serious challenges, including a significant security breach, declining revenue in its AI and home telephony divisions, and a rising debt ratio.
• Despite the hurdles, KT increased its shareholder dividend by 20% and is proceeding with a major share buyback plan.

KT Corporation’s recent third-quarter earnings call painted a complex picture of a company experiencing robust growth while simultaneously navigating significant headwinds. The South Korean telecommunications giant posted impressive financial gains but also disclosed challenges, including a major security incident and weakening performance in several business units.

Financial Performance and Shareholder Value

KT Corporation demonstrated strong financial health with its operating revenue climbing 7.1% year-over-year to KRW 7.1267 trillion. The growth story continued on the bottom line, with operating profit rising by a substantial 16% to KRW 538.2 billion and net income mirroring this with a 16.2% increase to KRW 445.3 billion.

In a clear signal of confidence and commitment to its investors, the company announced a third-quarter dividend of KRW 600 per share. This marks a 20% increase from the previous year, rewarding shareholders amidst the mixed operational environment.

Growth Engines: Cloud, Real Estate, and 5G

The standout performers for the quarter were KT’s strategic growth segments. The cloud business saw its revenue surge by an impressive 20.3% year-over-year. Not to be outdone, KT Estate reported a massive 23.9% revenue increase, reaching KRW 186.9 billion.

The core telecommunications business also showed positive momentum, primarily driven by the expansion of its 5G network. Wireless revenue grew by 4% year-over-year as 5G penetration among its user base hit an impressive 80.7% by the end of the quarter.

Confronting Significant Hurdles

Despite the strong financial results, KT is facing serious challenges. The company acknowledged a significant “unauthorized micropayments and infringement incident,” prompting a comprehensive compensation plan for affected customers and a renewed focus on enhancing security measures.

Not all business segments shared in the growth. The AI and IT division saw a 5.7% decline in revenue due to ongoing structural enhancements. Similarly, the legacy home telephony business continued its downward trend, with revenue falling 6.6%. Compounding these issues, KT’s net debt ratio increased by 4.2 percentage points to 34.5%, a figure that could impact future financial flexibility.

Looking to the Future

KT’s CFO, Jang Min, provided guidance for fiscal year 2025, anticipating continued growth in operating revenue. The company remains focused on expanding its 5G network and bolstering its security infrastructure to prevent future incidents. Furthermore, KT is continuing its shareholder return program, having completed a KRW 250 billion share buyback as part of a larger KRW 1 trillion plan.

In conclusion, while KT Corporation celebrates strong profits and growth in key modern sectors, it must carefully manage the fallout from its security breach and address the decline in its legacy and AI divisions to maintain its trajectory.