KT Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 11, 2025

Key Takeaways

  • Positive Sentiment: Q2 operating revenue rose 13.5% to KRW 7.43 trillion and operating profit jumped 105.4% year-on-year, driving net income up 78.6%.
  • Positive Sentiment: KT completed a KRW 250 billion share buyback on August 13 and increased the Q2 dividend by 20% to KRW 600 per share under a new shareholder-friendly declaration system.
  • Positive Sentiment: Under its AICT transformation, KT launched proprietary LLM bDIMM 2.0 and secured large AI platform projects in the public sector, with open-source and Microsoft models due later this year.
  • Neutral Sentiment: KT plans a KRW 1 trillion, five-year investment in information security to bolster customer trust and secure telecom and cloud services.
  • Negative Sentiment: YTD CapEx reached KRW 1.364 trillion, and while 5G depreciation is declining, there may be headwinds from higher sales commissions and handset subsidy market fluctuations.
AI Generated. May Contain Errors.
Earnings Conference Call
KT Q2 2025
00:00 / 00:00

Transcript Sections

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Operator

Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of the 2025 earnings results by KT. We would like to have welcoming remarks from KT IRO and then CFO will present earnings results and entertain your questions. This conference will start with a presentation followed by a Q and A session.

Operator

Now we would like to turn the conference over to KT IRO.

Moderator

This is KT's IRO, Choi Jae ki. We would like to begin KT's second quarter twenty twenty five earnings presentation. Be reminded that today's presentation includes financial estimates and operating results under the K IFRS standards that are yet to be reviewed by an outside auditor. We therefore cannot ensure accuracy nor completeness of financial and business data aside from the historical actuals. So please note that these figures may be subject to change in the future.

Moderator

With that said, I now invite the company's CFO, Chang Min to run through the second quarter results of 2025. Good afternoon. This is Changmin, KT's CFO. KT continued to drive revenue and operating profit growth this quarter while making the effort towards a complete transformation into an AICT company. Also corporate value enhancement plan is well underway.

Moderator

And as part of that value up program, we plan to complete share buyback of KRW250 billion on August 13. Dividend for the second quarter has been decided at KRW600 per share, an increase of 20% year over year. And starting from this quarter, even for quarterly dividend payouts, dividend amounts will first be declared, which will then be followed by setting of record date, a system that is shareholder friendly. KT as an AICT company has responded actively to company's AX demand, successfully winning large scale projects from large companies and IT enterprises, thereby laying the basis for growth. And under the multi model strategy roadmap, we launched KT's proprietary LLM bDIMM two point zero last July and will be completing AI full lineup with the unveiling of the open source model and Microsoft collaboration model in sequence.

Moderator

Based on KT's proprietary model, Medium two point zero, we won AI platform build projects from large companies, Kyonggi Provincial Government and Korea Water Resources Corporation, further cementing our positioning in the public sector. Microsoft collaboration continues also as we roll out new services. In July, AI Agent powered by Azure OpenAI based LLM was integrated into Genie TV, expanding the AI use case. In the second half, we plan to launch AI model better tailored for Korea that is powered by ChatGPT for Omni and Secure Public Cloud, which uses top notch security protocol, confidential computing in order to kick start our reach into the To proactively strengthen security, KT has a plan to invest cumulative KRW1 trillion in information security over five years To make sure customers can feel safe in using telecom services in their everyday routine, we will innovate our information security system. From now onwards, I will move on to financial results for second quarter twenty twenty five.

Moderator

Operating revenue increased 13.5% year over year, reaching KRW 7,427,400,000,000.0. Operating profit was up 105.4 percent year over year, reaching KRW 1,014,800,000,000.0 on the back of balanced growth from telco business and the group's core portfolio as well as profitability improvement efforts and onetime gains from real estate sales. Net income increased 78.6 percent year over year to KRW733.3 billion, driven by higher operating profit. EBITDA was up 36.3% year over year, reporting KRW 1,990,700,000,000.0. Next page is operating expense.

Moderator

Despite a decline in labor costs due to costs of real estate sales project at Gangbuk division and increase in COGS from growing wireless handset sales, operating expense was up 5.9% year over year, recording KRW6412.6 trillion. Next is on financial statement. Next is CapEx. Total CapEx spend by KT and its major affiliates was in total KRW 1,364,300,000,000,000.0 on a cumulative basis as of 2025.

Moderator

KT separate basis cumulative CapEx as of Q2 was KRW845.8 billion, while CapEx of major group affiliates amounted to KRW518.5 billion. Next is on the breakdown of results by each business segment. Firstly, wireless revenue increased 0.9% year on year, reporting KRW 1,781,700,000,000.0. Wealth five gs subscribers accounted for 79.5% of total handset subscribers due to the impact from subscriber addition through MNP. MNO subscriber increased 3.4% Q on Q.

Moderator

Next, the fixed line business. On the back of Giga Internet subscriber growth and expanded value added services, broadband revenue increased 2.1 year over year, reporting KRW631.4 billion.

Moderator

Subscriber adds and premium plan uptake, media business posted 0.8% growth year over year.

Moderator

Home telephony On revenue recorded KRW176.2 billion, up 0.4% year on year. Next, KT's B2B services. Despite streamlining of low margin businesses, B2B service revenue posted 4.5% year on year growth on balanced growth coming from telecom and AI and IT services. Thanks to the growth of design and build projects and cloud business, AIIT business revenues saw 13.8% year over year growth. Next, moving on to performances of our major subsidiaries.

Moderator

PC Card revenue fell 6.9% year on year to KRW 909,800,000,000.0 as acquiring volume declined, but operating profit was kept flat year over year through risk management and profitability enhancement efforts. Content subsidiaries reported 6% year on year revenue growth on the back of production and distribution expansion by KT Studio Genie, an increase in subscribers of KT Millie's library. KT Cloud saw its revenue grow 23% year on year driven by growing data center usage by global customers and expanded DBO project wins. KT Estate revenue increased 2% year on year reaching billion, driven by growth in rental revenue from office and hotels. This has been an update on KT's earnings for second quarter twenty twenty five.

Moderator

KT will endeavor to complete the transformation into AICT company and through successful execution of corporate value of plans, we will drive KT's corporate value a notch higher. We look forward to your ongoing support and interest from the investors and analysts. Thank you very much. For details, do refer to the earnings material that we have given out. We will now take your questions from the participants.

Operator

The first question will be provided by Jeon Seok Kim from KB Securities. Please go ahead with your question.

Moderator

Thank you for taking my question. I would like to ask two questions. First on AI business direction going forward. And second is a question relating to how you see the M and P market following the repeal of the handset subsidy act. Regarding the AI business direction, you've talked about the full AI lineup as well as your estimates as to a steep growth going forward from your AI and IT business.

Moderator

Because AI scope really includes wide ranging aspects, would like to know where KT wants to focus on going forward that will help us understand better in terms of your AI business direction into the future? Second question, how do you see the M and P market following the repeal of the handsets lifting of the handset subsidy ads? Because different people see the market differently. I would like to understand as to what KT's thoughts are regarding the M and P market going forward. Thank you for those questions.

Moderator

So regarding the first question on our AI business direction forward, I would like to just summarize that point into three main items. Now the first strategy that we have is through the partnerships with global big techs like Microsoft as well as the partnership that we have, the exclusive licensing partnership that we have with Palantir, we've been able to really enhance our competitiveness and fill up the gap that we internally did not have. And by leveraging these aspects, we want to be able to provide new AI services to our customer base that includes secure public cloud as well as KGPT or the more Korean tailored type of a GPT services. The second strategy is, as I've mentioned during my opening presentation, we have taken on a multi model based strategy. So not only will we be using the Microsoft collaboration model, but as you know, over the past year, we've been developing our internal model, which is medium two point zero.

Moderator

We will continuously make enhancements to that so that we can come closer to the needs that our customers have. We will also be leveraging open source models like LAMA to provide and build the AI services that our customers require. Moving on to the third strategy, we will be leveraging such AI capabilities and services and managing the network that we have and also providing media related services. A good case in point is we've basically installed an AI agent that is based upon Microsoft Azure Open Service into our Genie TV set top box as well as using such AI capabilities and enhancing the operational efficiency of our five gs base stations. So we will be continuously leveraging such AI capabilities.

Moderator

Responding to your second question about what impact there was following the lifting of the handset subsidy act as well as the market impact. Firstly, as you know, even though there was a launch of Galaxy flagship handset model, we did not see any overheating of competition in the market. But of course, if when the iPhone, the next versions are introduced into the market, competition in the market may heat up. So there is that possibility. But having said that, we do not believe it is our belief that it is not going to be long lasting even if that happens.

Moderator

Now I say that because of three main reasons. First being already the five gs penetration is above 80 and also the handset replacement cycle has gotten longer compared to the past. And right now, it is an important timing for all the telcos to really focus and invest into the new business areas relating to AI and IT. So that is the basis upon which I believe that that's why the competition in the wireless market even if it exists is not going to be long lasting. Next question please.

Operator

The following question will be presented by Hoji Kim from Daishin Securities. Please go ahead with your question.

Moderator

Thank you. I'm Kim Hye jae from Taishan Securities. Before asking the question, I would like to first congratulate Chejekyu, the new IRO. I look forward to very good and productive communication going forward as we've done in the past. So my two questions are, the first is your second quarter results have been quite outstanding.

Moderator

Would like to know what your therefore outlook is for the second half of the year. And regarding the value of plan, you've made the implementation disclosure already. Would like to understand as what the update is? Would you be considering any changes to your dividend or your share buyback plans? Responding to your question, the first one on the second half outlook, in Q2, there was yes, a significant one off gain from our real estate business.

Moderator

So that had a big impact on bringing a good performance. But even aside from that, if you look at our separate basis statements, you will see that our year over year performance had been quite was quite good. It was very good. And we think that we will be able to continue on with that good momentum into the second half of the year, considering the fact that we will be able to sustain a very solid service revenue uptrend. Now on the cost side, we were able to drive an improvement in our headcount.

Moderator

And so we are keeping our labor costs, we're managing that quite well. And on the depreciation side, we have completed the depreciation on our five gs. So we see the depreciation costs coming down. But there may be some concern on the commissions paid as well as selling related expenses. There may be slight risk there, but these are numbers that are linked to our earnings performance.

Moderator

So we're not at all greatly worried about this item. Regarding the second question about our dividend payout plan, first off, basically our basis upon which we make the dividend decision is 50% of adjusted net profit. And already we have declared and made the decision on dividend per share of million already, which is actually in excess of that criteria. Having said that, as long as we and as we are confident that we'll be able to carry on with the performance levels into the Q3 and Q4, I believe that at minimum the BOD will continue to make such decisions in alignment with the market expectations. In terms of how our shareholder return program will look like after next year, of course, the BOD will make appropriate decision as we go forward.

Moderator

But in light of the fact that we are seeing an improvement on our bottom line and the fact that our dividend program is shareholder friendly and market friendly, I can tell you that you can expect that we will not in any circumstances fail the expectation of the market. In terms of the value of program, under the value of program, we will be making additional share buyback in the size of trillion. We've already done KRW250 billion and over the coming three years, we will in sequence be making that share buyback in the amount of KRW750 billion. This ends the Q and A for today. Thank you for your time and interest.

Moderator

We will close the earnings call for the 2025. Thank you for joining us despite your very busy

Analysts
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