KT Corporation Q3 FY2024 earnings call

• KT aims to transform into an AICT company, partnering with Microsoft for AI and cloud cooperation, and innovating HR structure.
• Financial highlights: Total consolidated revenue slightly decreased Y-o-Y to KRW6,654.6 billion; separate revenue rose 2.0% to KRW4,765 billion; consolidated and separate operating income jumped 44.2% and 75.1% Y-o-Y respectively; operating expense decreased 2.9% Y-o-Y; debt ratio was 122.8% as of September 2024, net debt ratio decreased to 30.3%; cumulative CapEx by KT and main subsidiaries as of 2024 Q3 was KRW2,033.8 billion.

Wireless revenue increased by 1.9% Y-o-Y to KRW1,740.4 billion. Broadband revenue stood at KRW618.5 billion, a 0.4% Y-o-Y growth. Media business revenue declined 1.2% Y-o-Y. Home telephony revenue decreased by 7.6% to KRW172.2 billion. B2B service revenue grew 2.5% Y-o-Y. BC Card posted a revenue of KRW931.4 billion, a 6.5% decrease Y-o-Y. Skylife revenue declined by 1.4% to KRW246.9 billion Y-o-Y. Content subsidiary revenue fell 19.3% Y-o-Y. KT Cloud revenue grew by 6.8% Y-o-Y. KT Estate experienced a revenue growth of 3.6% Y-o-Y.

• Mid-term target: Reach consolidated ROE of 9% to 10% by 2028; triple AI and IT business revenue compared to 2023; generate consolidated operating profit margin of 9%; liquidate noncore assets and implement KRW1 trillion share buyback and cancellation program; declared cash dividend of KRW500 per share for Q3.
• Share buyback and cancellation program to be implemented gradually increasing from 2025 to 2028.

• Regulatory risks for cloud business due to government regulations.
• Market volatility impact on content subsidiary's revenue.
• Labor cost adjustments and operational impacts from workforce reassignment.

Q: Regarding the ROE target and share buyback program, how KT plans to achieve ROE and if share buyback is equally across years?

A: To achieve ROE, KT is transforming into AICT company, enhancing asset efficiency, and using capital; share buyback will be gradually increasing.

Q: About AX subsidiary services, size, and workforce reassignment?

A: AX company development is in phase, offering technical consulting; 1,700 employees reassigned, 28 retired, impact on financials includes retirement payment booked and lower salary payment from next year.

Q: About AI and IT revenue strategy, KT's role in revenue outlook, and workforce reassignment impact?

A: Tripling AI and IT revenue by transforming to B2B AI DX service; KT's role in revenue outlook is through AI and cloud partnership; workforce reassignment has 4,500 employees reduced, impact on financials as mentioned.