KT’s Quarterly Operating Profit Surpasses 1 Trillion Won for the First Time

KT Corp. has doubled its quarterly operating profit in a year, surpassing 1 trillion won for the first time, boosted by apartment sales revenue from its real estate subsidiary and the windfall from SK Telecom’s hacking incident. KT plans to maintain high growth in the second half of the year by expanding its artificial intelligence (AI) business through collaborations with global big tech companies such as Microsoft (MS) and Palantir.

On Aug. 11, KT announced that its operating profit for the second quarter of this year increased by 105.4% year-on-year to 1.0148 trillion won. Sales also grew by 13.5% to 7.4274 trillion won during the same period. This marks the first time in KT’s history that its quarterly operating profit has exceeded 1 trillion won. The company’s subsidiaries showed notable performance, while the parent company significantly increased its subscriber base following SK Telecom’s hacking incident, expanded its 5G-related business, and benefited from reduced labor costs due to large-scale restructuring at the end of last year.

KT’s real estate subsidiary, KT Estate, and AI subsidiary, KT Cloud, significantly contributed to the growth in operating profit. KT Estate generated an operating profit of approximately 390 billion won this quarter through the sale of Lotte East Pole Apartments in Gwangjin-gu, Seoul, accounting for 75% of the group’s annual operating profit growth. KT Cloud increased its sales by 23% year-on-year due to growth in AI data centers and cloud services. As a result, the subsidiaries’ contribution to the group’s operating profit quadrupled from 135.1 billion won in the same period last year to 546.1 billion won.

At the parent company level, KT successfully grew its core telecommunications business by actively attracting subscribers who left SK Telecom en masse. KT’s wireless subscribers in the second quarter reached 27,491,000, an increase of 2,587,000 from 24,904,000 a year ago. Notably, there was a sharp increase of 1,040,600 subscribers compared to the first quarter of this year, just before SK Telecom’s hacking incident. Consequently, revenue from the core wireless business slightly increased to 1.7817 trillion won in the second quarter. The proportion of 5G subscribers reached 79.5% of total subscribers. The AI and information technology (IT) business also saw a 13.8% increase in sales to 317.6 billion won due to growing AI demand. Including this, the “enterprise service” sales, which is the business-to-business (B2B) segment, grew by 4.5% to 922.7 billion won.

Cost reduction in labor expenses also contributed to improved profitability. Labor costs in the second quarter decreased by 7.7% year-on-year to 1.1194 trillion won. KT is seeing the effects of cost savings this year due to the 1 trillion won restructuring, including voluntary retirement packages, implemented at the end of last year. Additionally, the wage collective bargaining, which took place in the second quarter of last year, has been postponed to the second half of this year, deferring the burden of a 66 billion won wage increase.

KT will focus on its AI business in the second half of the year. Following its independently developed AI model “Mi:dm 2.0,” the company will introduce various models in the third quarter, including “GPT-K” co-developed with Microsoft, and “Llama-K” based on Meta’s model. KT also plans to launch services combining cloud, network infrastructure, and data solutions in collaboration with global AI platform company Palantir. To address industry hacking concerns, the company will invest over 1 trillion won in information security over the next five years and establish a zero-trust security system. KT has confirmed a 20% increase in its second quarter dividend to 600 won per share compared to the same period last year and will conduct a 250 billion won share buyback on Aug. 13 to enhance corporate value.

Jang Min, KT’s Chief Financial Officer (CFO), stated, “We were able to achieve a significant improvement in performance through the steady growth of our core telecommunications business and the performance of the group’s key portfolio.” He added, “We will continue to accelerate our transformation into an AICT company to achieve sustainable growth and faithfully implement our plans to enhance corporate value, further elevating KT’s value to the next level.”