KT Corporation: Q3 revenue and profit rose, with AICT transformation and security investments underway

Q3 2025 saw strong revenue and profit growth, driven by telecom, real estate, and cloud, while AI and IT segments faced selective restructuring. Security incidents prompted major compensation and investment plans, and the CEO selection process is underway.

Based on KT Corporation [030200] Q3 2025 Audio Transcript — Nov. 7 2025

Revenue and profit grew strongly year-over-year, led by telecom, real estate, and cloud segments. Security investments and AI initiatives were prioritized following hacking incidents. Dividend and share buybacks enhanced shareholder returns.

Original document: KT Corporation [030200] Slides Release — Nov. 7 2025

KT Corporation (KT) will report its third-quarter 2025 results on Nov. 7, after market close.

Based in South Korea, the company is one of the largest wireless carriers in the country, offering a host of telecommunications and data communications services.

KT is rapidly shifting beyond its traditional telecom origins, embarking on a bold transformation into an Artificial Intelligence and Information and Communications Technology (“AICT”) company. As an AICT firm, KT combines IT and AI with its telecommunications capabilities to provide unique services and added value to customers.

The company delivered a solid second-quarter 2025 performance, powered by strong operational execution and expanding AI businesses.

Revenues surged 13.5% year over year to KRW 7,427.4 billion, while operating profit was up 105.4% to KRW 1,014.8 billion, reflecting robust performance from the traditional telecom business and AI-driven efforts. Disciplined cost management and gains from asset rationalization aided profitability numbers.

Factors Influencing KT Corporation’s Q3 Results

A steady telco business, as well as increasing AI efforts, is likely to have buoyed performance in the third quarter. In the last reported quarter, wireless service revenue was up 1.6% with 5G penetration at 79.5%. AI IT business revenues increased 13.8% year over year.

The company is accelerating its AI pivot. Under the AICT roadmap, KT is developing a comprehensive AI lineup anchored by its proprietary Mi:dm2.0 large language model (“LLM”). The model, launched in July, serves as the foundation for AI platform build projects for the enterprise and public sectors, with early contract wins from the Gyeonggi provincial government and Korea Water Resources Corporation.

For its AICT push, KT Corporation has also teamed up with Microsoft. It has integrated an AI agent, powered by Azure OpenAI-powered LLM, into Genie TV, boosting the AI use case. The company plans to introduce an AI model tailored for Korea, powered by ChatGPT for Omni and secure public cloud, in the second half of 2025. KT Corporation also has a licensing partnership with Palantir.

Its subsidiary, KT Cloud, is likely to have gained from surging demand for cloud infrastructure, AI training workloads and digital transformation projects. In the second quarter, revenues from KT Cloud were up 23%, driven by growing data center momentum and DBO project wins. B2B revenues were up 4.5% on growth from telecom and AI/IT businesses.

KT’s AICT pivot positions it to capture emerging opportunities in AI infrastructure, cloud computing and enterprise digital transformation. Management expressed confidence in maintaining momentum into the second half of 2025, citing a “solid service revenue uptrend.”

Nonetheless, KT’s ambitious push into AI demands significant upfront capital investment and also entails execution risk. Competition from SK Telecom (SKM) and LG Uplus remains a concern as each invests aggressively in an AI-first strategy.

Headwinds from a heavily penetrated domestic telecom market offer limited scope for organic expansion. While second-quarter operating profit was impressive, a portion stemmed from one-off real estate gains. This raises questions about profit sustainability. Broader macroeconomic uncertainty and its impact on spending cycles remain concerning.

KT Stock Declines

KT stock has declined around 5.7% over the past six months, underperforming the Zacks Wireless Non-US Markets growth of 20.6%.

KT’s Price Performance vs. Peers

In comparison, SKM was down 3.5% while other industry peers like América Móvil, S.A.B. de C.V. (AMX) and Ceragon Networks (CRNT) were up 33.8% and 11.7%, respectively.

America Movil offers enhanced communications solutions in 25 countries in Latin America, the United States and Central and Eastern Europe. Headquartered in Rosh HaAyin, Israel, Ceragon provides wireless backhaul and fronthaul solutions that enable cellular operators and other wireless service providers to increase operational efficiency

Key Valuation Metric for KT

KT stock is trading at a substantial discount, with a price/book multiple of 0.72X compared with the industry’s 2.28X.

In comparison, SKM, AMX and CRNT trade at multiples of 0.95X, 2.83X and 1.28X, respectively.

How to Approach KT Before Q3 Earnings Release

At present, KT carries a Zacks Rank #4 (Sell).

Despite ongoing AICT transformation, the stock’s near-term outlook appears somewhat clouded. Rising AI investment and stiff competition from SK Telecom and LG Uplus remain concerns. Limited growth prospects in South Korea’s penetrated telecom market constrain upside potential.

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

South Korean telecom giant KT's AI-powered growth could accelerate from 2H, Daiwa Capital analysts Thomas Y. Kwon and Joon Lee write in a note. The analysts are positive about KT management's upbeat outlook on solid earnings growth from 2H 2025 through 2027, amid growing revenues from artificial-intelligence related products and non-telecom services. They also expect KT's tight control on operating costs and capital expenditure to support earnings. They raise their 2025 EPS estimate for KT by 3.5% to reflect stronger-than-expected 1H results. Daiwa raises the stock's target price by 14% to 63,500 won and keeps a buy rating. Shares are 1.3% higher at 54,800 won. (kwanwoo.jun@wsj.com)