KT - Q4 2025
February 10, 2026
Transcript
Operator (participant)
Good morning, and good evening. Thank you all for joining this conference call, and now we will begin the conference of the Fourth Quarter of Fiscal Year 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&A session. If you have a question, please press star one, that is star and one on your phone during the Q&A. Now, we would like to turn the conference over to KT IRO.
Speaker 4
Good afternoon, this is Jae-gil Choi, KT's IRO. Let's begin FY 2025 earnings presentation of KT Corp. Please be reminded that today's presentation includes K-IFRS-based financial estimates and operating results, which have 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. Please note that these figures may be subject to change in the future. Let me now invite our CFO, Min Jang, to walk through the earnings for FY 2025. Good afternoon, this is Min Jang, KT's CFO. Before presenting the earnings for FY 2025, I would like to take this opportunity to extend my sincere apologies to shareholders and customers for the inconvenience and concerns caused arising out of last year's data breach incident.
This incident is serving as an impetus for KT in solidifying the company's fundamental resilience in network and cybersecurity, as we are committed to regaining trust from the customers. Now moving on to 2025 annual performance. Under balanced growth from B2C and B2B, KT's revenue and operating profit both saw significant growth versus last year on strong performance from core businesses, including data center, cloud, and the Gwangjin-gu real estate project. Considering the base effect in 2024 of workforce transformation, and even if we were to exclude profit from this year's Gwangjin-gu project, both the consolidated and standalone operating profit recorded more than a double-digit growth year-over-year, which is a testament to enhanced fundamental earnings capacity. Also, collaborating with global big tech companies, we launched a series of new products, and we will tap into the AX market in earnest moving forward.
Following the September rollout of SOTA K, which is an AI model developed in partnership with Microsoft, we also introduced Secure Public Cloud, which is a security-enhanced cloud service, back in November. We are also starting to gain more visibility in business outcomes from the Palantir partnership, particularly in respect to the financial sector customers, as we explore new business opportunities in offering consulting and solutions application. Also, last November, we opened Gasan AI Data Center, making it the first such center in Korea, commercializing the liquid cooling technology. As a large-scale AI infrastructure hub located in the metropolitan area, capable of running AI computation and data processing, we expect the center will play an important role in making KT Cloud cement its leadership in the market.
Min Jang (CFO)
[Foreing language].
Speaker 4
2025 year-end dividend is set at 601 per share with record date of February 25. There was temporary financial impact in the wake of the breach incident, but under a strong commitment toward shareholder value enhancement, annual DPS was increased 20% from 2,000 back in 2024, rising to 2,400 in 2025. Following 2025, under the Corporate Value Enhancement Plan, we are planning on KRW 250 billion of share buyback and cancellation this year.
Min Jang (CFO)
[Foreign language]
Speaker 4
Efforts are continuing towards enhancing the corporate value at the group level as well. In December, KT Alpha announced its plan on interim dividend and cash payout, which is the first since the establishment of the company. In January this year, Millie's Library announced its corporate value plan as well.
Min Jang (CFO)
[Foreign language].
Speaker 4
The Board of KT started the process to appoint CEO as of November the fourth, and confirmed candidate Park Yoon-young as the next CEO on December the sixteenth. He is known for his expertise in B2B and future technologies, and is expected to take office as the CEO, subject to AGM approval.
Min Jang (CFO)
[Foreign language].
Speaker 4
KT, once again, is committed to strengthening the company's fundamentals and will do its utmost to rebuild customers' trust.
Min Jang (CFO)
[Foreign language].
Speaker 4
Regaining trust is our foremost priority, under which we are taking necessary steps, such as free replacement of USIMs, cancellation fee waivers, and implementing customer appreciation package. These measures will increase cost in the short run, but such decisions were made because we believe customers' trust is what matters most in determining corporate value and defining the company's existence in the longer term.
Min Jang (CFO)
[Foreign language].
Speaker 4
Going beyond the simple short-term response, we are making structural improvements across the entire security framework. Information Security and Innovation Task Force has been set up directly under the CEO as we are revamping the security governance, including further empowering the authority of CISO and integrating and reorganizing distributed legacy security organizations and their roles.
Min Jang (CFO)
[Foreign language].
Speaker 4
We are also planning on around KRW 1 trillion investment into security for five years to expand Zero Trust security, scale up AI, AI-powered integrated monitoring system, and beef up access control and encryption so as to bolster information security system in phases. Through such investment, KT will internalize security capabilities as its sustainable competitiveness.
Min Jang (CFO)
[Foreign language].
Speaker 4
Corporate Value Plan will be implemented as planned, including the KRW 250 billion of share buyback and cancellation, as previously mentioned.
Min Jang (CFO)
[Foreign language].
Speaker 4
Now, moving on to FY 2025 financial performance.
Min Jang (CFO)
[Foreign language].
Speaker 4
Operating revenue increased 6.9% year-on-year, reporting KRW 28,244.2 billion. Operating profit increased 205% year-over-year, reaching KRW 2,469.1 billion, and continuing growth from core businesses, including telecom, real estate, cloud, data center, and also driven by profitability improvement efforts and one-off gains from real estate projects.
Min Jang (CFO)
[Foreign language].
Speaker 4
On higher operating profit, net income was up 340.4% year-over-year to KRW 1,836.8 billion. EBITDA was up 35.5% year-over-year to KRW 6,349.3 billion. Next, operating expense.
Min Jang (CFO)
[Foreign language].
Speaker 4
Operating expense was flat year-on-year, recording KRW 25,775.1 billion, due to lower labor cost and depreciation and efficient general spending, despite the rise in selling expense following the growth in subscribers. Next is on the financial position, the balance sheet.
Min Jang (CFO)
[Foreign language].
Speaker 4
Debt-to-equity ratio as of end of 2025 recorded 120.7%, while net debt-to-equity ratio fell 0.4 percentage points year-over-year, reaching 37.4%. Next is CapEx.
Min Jang (CFO)
[Foreign language].
Speaker 4
Total CapEx spent by KT and its major subsidiaries in 2025 was KRW 2,939.7 billion. KT separate basis was KRW 2,143.9 billion, while major subsidiaries spent KRW 795.8 billion in CapEx. Moving on to breakdown of business performance.
Min Jang (CFO)
[Foreign language].
Speaker 4
Wireless revenue was up 2.8% on year to KRW 7,155.4 billion. Revenue growth was driven by subscriber expansion around 5G, and 5G penetration as of end of 2025 recorded 81.8%. Next, fixed line.
Min Jang (CFO)
[Foreign language].
Speaker 4
Broadband revenue posted 1.9% year-over-year growth, reporting KRW 2,533.5 billion, on the back of GiGA subscriber growth and value-added service expansion. Media business revenue grew 1.7% year-on-year, driven by higher IPTV subscriber net addition and growth in OOH revenue.
Min Jang (CFO)
[Foreign language].
Speaker 4
Home telephony revenue was down 5.8% year-over-year to KRW 658.9 billion. Next on B2B services.
Min Jang (CFO)
[Foreign language].
Speaker 4
B2B service revenue was up 1.3% year-over-year on the back of balanced growth from telecom and AI and IT business, despite the impact from streamlining of low margin businesses. Against the backdrop of stable growth from such network-based businesses, such as Enterprise Messaging and Enterprise Internet, AI, IT has seen growth of 3.1% year-over-year on the back of AICC Design and Build business, et cetera. Moving on to major subsidiaries.
Min Jang (CFO)
[Foreign language].
Speaker 4
Now, despite the divestment of PlayD, our content subsidiaries revenue stayed flat year-over-year, following top-line growth from StudioGenie, Nasmedia, and Millie's Library. KT Cloud revenue saw a rise in data center usage by global customers and with AI cloud demand expanding, revenue increased 27.4% year-over-year, reporting KRW 997.5 billion. KT Estate revenue was up 15.9% year-over-year to KRW 719.3 billion, on the impact of strong hotel business and new property development projects.
Min Jang (CFO)
[Foreign language].
Speaker 4
This brings me to the end of the FY 2025 full year performance briefing for KT. Once again, I would like to sincerely apologize for the data breach incident and the concerns it would have caused. KT will take this opportunity as a turning point in redefining itself as a company worthy of trust.
Min Jang (CFO)
[Foreign language].
Speaker 4
On the back of growth from its core telecom business, visible results from AX business with the underpinning of the group's core, core portfolio, KT will yet again fortify its fundamentals in 2026. We will also implement the plan on corporate value enhancement so as to drive a stepwise increase in corporate value. We ask for continued interest from investors and analysts. Thank you.
[Foreign language].
For more details, please refer to the earnings presentation that we shared. We will now take your questions and please, to give ample chance to everyone, do limit your questions to no more than two per person.
Operator (participant)
[Foreign language].
Speaker 4
Now Q&A session will begin. Please press star one, that is star and one, if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone.
Operator (participant)
[Foreign language].
Speaker 4
The first question will be provided by Won-seok Jeong from Shinyoung Securities. Please go ahead with your question.
Speaker 3
[Foreign language].
Speaker 4
Good afternoon. Thank you for taking my question. I have two questions that I would like to ask. The first one, I would like to understand as to what the financial impact is of your customer compensation package regarding the data breach incident. My second question is, with the incoming new CEO, I would like to understand as to whether he will be keeping to the previous shareholder return stance that the company had shown.
Min Jang (CFO)
[Foreign language].
Speaker 4
Thank you. I would like to first respond to the first question that you posed regarding the customer appreciation package that the company has implemented and its impact on the financials. We originally said that the benefit that the customers would actually feel will amount to about KRW 450 billion, but not all of that expense is going to be booked as cost under our account, under our accounts, because it would actually depend on to what extent the customer actually uses up those benefits.
Min Jang (CFO)
[Foreign language].
Speaker 4
So in terms of the cost that was actually incurred in 2025 and what is most certain to be accrued in 2026, has already been booked in our 2025 numbers. And with regards to additional incurrence of cost come 2026, in consultation with our external auditor, we will come up with an appropriate accounting treatment.
Min Jang (CFO)
[Foreign language].
Speaker 4
But what I can tell you with certainty is that our performance or earnings in 2026 is going to be better compared to 2025. That is the plan that we are currently working under, and we will do our utmost to actually achieve that.
Min Jang (CFO)
[Foreign language].
Speaker 4
Moving on to your second question. I understand that the question relates to the future approach or direction regarding our shareholder return policy and the sustainability of the company's past growth strategy going forward.
Min Jang (CFO)
[Foreign language].
Speaker 4
Now, first off, as mentioned in my opening presentation, we've actually increased the DPS by 20% from the 2024, KRW 2,000 per share to KRW 2,400 in 2025. In terms of the shareholder plan to be applied from 2026, it will be something that the new incoming CEO and the BOD would have to finalize on.
Min Jang (CFO)
[Foreign language].
Speaker 4
As you would appreciate, the company's shareholder return policy has been progressive. It's been expanding year-over-year. And, as I've also mentioned, our objective for this year is going to be higher level of profit versus what we've seen last year. So the dividend plan or the shareholder return plan to be devised by the new CEO and the BOD, we expect will be in line with those, in line with those, stance.
Min Jang (CFO)
[Foreign language].
Speaker 4
In terms of whether the growth strategy, growth strategy that we currently have will continue to be implemented going forward, I'm sure you could appreciate that the AX driven innovation is something that is essential across all of the industry sectors. So in light of that aspect, the new CEO has practical experience in the B2B domain, and he values the commitment and the promise that the company has made to, the market as well as to the shareholder. Hence, we do not expect that there will be any significant change to our strategic approach.
Min Jang (CFO)
[Foreign language].
Speaker 4
Now, having said that, with him taking the office in light of certain strategies or certain tactical approaches, those will reflect the philosophy of the new CEO.
Min Jang (CFO)
[Foreign language].
Speaker 4
Next question, please.
Operator (participant)
[Foreign language].
Speaker 4
The following question will be presented by Min-ha Choi from Samsung Securities. Please go ahead with your question.
Min-ha Choi (VP)
[Foreign language].
Speaker 4
Thank you for taking my question. I am Min-ha Choi from Samsung Securities. I would also like to ask you two questions. First is on the outlook for your wireless business going forward. Since the data breach incident, I understand that there was a 14 days of cancellation fee waiver period starting from the end of last year up until the beginning of this year, and I understand that there were some churn of your subscribers. Would like to know, under that backdrop for this year, what is your outlook for your wireless business growth? My second question is, compared to your peers in the industry, your B2B growth seems to be much slower. I would like to understand as to the reason why and what your outlook for your B2B business going forward is.
Min Jang (CFO)
[Foreign language].
Speaker 4
So first off, regarding the 14 days of cancellation fee waiver. During that period of time, we had about 230,000 subscribers leave the company. But because of the net addition that we actually achieved previously, the actual all in all impact was on a full year basis, a net addition of subscribers.
Min Jang (CFO)
[Foreign language].
Speaker 4
So that basis of net addition is what creates the, the revenues going forward for our wireless business in 2026. Now, having said that, it is hard to look forward to, for instance, a very high level of growth of double digit from the wireless business at this point. That's why we are going to focus on more, making our operations more efficient through, rationalizing the selling expenses and distribution and improving on the, you know, offerings, which will be the efficiency measures that will help us defend our bottom line.
Min Jang (CFO)
[Foreign language].
Speaker 4
Responding to the second part of the question in terms of the reason why our B2B growth rate is lower compared to the industry peers and what our outlook is for 2026. First, in looking at our B2B business, you have to also incorporate our enterprise internet, our leased line business, data center, and AI business as well. And as you know, for us, we have a separate subsidiary entity under KT Cloud. So you also need to take that aspect into consideration.
Min Jang (CFO)
[Foreign language].
Speaker 4
So if you were to also combine the KT Cloud revenue on a combined basis, you will see that our revenue growth on a year-over-year basis is 6%. And in light of the total size of the B2B market and the market share that we have in that market, 6% does not look that low.
Min Jang (CFO)
[Foreign language].
Speaker 4
Also on KT Cloud separate basis, the growth rate was 27.4% year-over-year, which is a quite steep uptrend, and we expect this trend to continue this year as well.
Min Jang (CFO)
[Foreign language]?
Operator (participant)
[Foreign language].
Min Jang (CFO)
[Foreign language].
Speaker 4
With no questions in the line, we would now like to close the Q&A session. Once again, thank you very much for your questions and for your interest in the company. Thank you all for joining us, despite your very busy schedules. This brings us to the end of KT's full year 2025 earnings conference call. Thank you.