KT

Corporate Strategy & Shareholder Returns

• New management confirmed the company's core vision: evolve into an AX (Artificial Intelligence Transformation) platform company leading AI innovation in Korea, built on two pillars: strong core fundamentals and AX-driven solid growth, which are intended to operate in a virtuous cycle to boost long-term corporate value.
• Top priority is regaining customer trust, which will be achieved through investments to innovate information security, strengthen network infrastructure quality, and optimize IT infrastructure.
• The new 2026-2028 mid-term shareholder return policy maintains the previous framework of allocating 50% of standalone adjusted net income for shareholder returns.
• For 2026, annual dividend per share is set at a minimum of 2,400 won, with a Q1 interim dividend of 600 won per share (record date May 27, payment date June 11). A 250 billion won share buyback program will be completed by September 2026.

B2C Business Operational Update

• A January early termination penalty waiver program caused a temporary large drop in wireless and fixed-line subscribers, but the subscriber base returned to net growth starting in February, and all operating metrics have been managed within plan since that time.
• Company-wide initiatives to regain customer trust include a customer appreciation/protection program launched February 1, and the April 28 launch of the Customer Protection 365 Task Force, which uses AI to analyze customer voice-of-customer data to preemptively detect risks, and has established a 24-hour company-wide response system for customer damages, plus a direct customer outreach forum.
• Strategic focus for 2026 is delivering AX-powered hyper-personalized customer experiences: improving the MyK consumer AI service, developing the Sajang Easy AI platform for small business owners, building a next-generation AI-powered IPTV platform with personalized content recommendations, and rolling out AI across all customer touchpoints (consultation, sales, activation, support) to boost efficiency and convenience.

B2B (Enterprise) Business Operational Update

• 2026 strategic goal is to lead the Korean B2B AX market with industry- and public sector-specific specialized AI, organized around three priorities: strengthening fundamentals, driving solid growth, and preparing for long-term sustainable growth.
• Fundamental strengthening focuses on rigorous customer commitment fulfillment, safe working environments for employees, and enhanced preemptive risk management.
• Growth initiatives include targeting large-scale projects in the fast-growing AX infrastructure (data center) market, expanding database business via group-wide capabilities, rolling out sector-specific AX reference models to enter new adjacent sectors, and offering bundled telco and AX services aligned with customer needs.
• Long-term preparation includes combining KT's core telco strengths with AX to build industry-specific standard models that solve core customer pain points, and overhauling end-to-end B2B project systems (sales, consulting, delivery, operations) to support mid-long term growth.

AX Business Division Operational Update

• In Q1, KT aligned company-wide AX capabilities (consulting, AI technology, platforms, operations) to build an AX platform-centered project delivery system that can quickly and effectively support customers' full AX journey, and launched execution-based AX consulting that partners with customers across sectors to identify on-site challenges and co-verify solutions.
• 2026 strategic priorities for AX business:
  1. Expand next-generation agentic AI-powered AICC (AI Contact Center) beyond customer service to become a customer marketing channel, deployed across multiple sectors
  2. Build a customized 5-layer end-to-end AX platform that accounts for industry characteristics, government regulations, security, and national sovereignty requirements, supporting full AX adoption from initial implementation to operational optimization
  3. Strengthen the data foundation for AI business, leveraging KT's internal AX innovation experience to help customers build their own data utilization capabilities as a core growth driver
  4. Expand AX business scope into finance, public, manufacturing, defense, and other sectors via customized product packages, and commercialize managed services for end-to-end AX operation support to build long-term sustainable growth

• Full-year 2026 adjusted operating income is targeted to reach ~1.5 trillion won, matching 2025's result excluding the one-time impact of the 2025 data breach incident. Management expects improved growth contributions from key subsidiaries (real estate, cloud, data centers, content) to support group-level results, with strict operating expense management (focused on sales costs) starting in Q2 to offset Q1 underperformance.
• KT Cloud is expected to deliver double-digit revenue growth for full-year 2026.
• KT's total data center capacity target is approximately 500 megawatts within the next five years, with AI data center (AIDC) expansion prioritized in line with growing market demand.
• The planned government-related new wireless plan launching in the second half of 2026 is not expected to have a material negative impact on full-year wireless revenue.

Consolidated overall: Operating revenue fell 1.0% year-over-year to 6.778 billion won; operating income declined 29.9% year-over-year to 482.7 billion won; net income contracted 31.5% year-over-year to 388.3 billion won; EBITDA decreased 13.1% year-over-year to 1.44 trillion won; total operating expenses rose 2.3% year-over-year to 6295.7 billion won; total Q1 capex was 363.7 billion won (304.2 billion won standalone, 59.5 billion won for major subsidiaries).

Consumer (B2C) segments:

• Wireless service: Revenue increased 0.4% year-over-year to 1.683 billion won; total subscribers grew 2.72 million year-over-year to 29.16 million; 5G penetration reached 82.7% as of Q1 end.
• Fixed-line broadband/internet: Revenue rose 1.8% year-over-year to 640.2 billion won, driven by growth in subscribers and value-added services.
• Media/IPTV: Revenue grew 1.3% year-over-year, driven by increases in both IPTV subscribers and premium plan adoption.

Enterprise (B2B) segment: Revenue decreased 2.2% year-over-year, due to completion of a large-scale data center design-and-build project and ongoing streamlining of low-margin businesses.

Major subsidiaries:

• KT Cloud: Revenue reached 250.1 billion won, flat year-over-year, supported by new public sector project wins and higher utilization of the Ka Sanh data center despite a year-over-year base effect from 2025's large DBO project completion.
• KT Estate: Revenue jumped 72.9% year-over-year to 237.4 billion won, driven by strong hotel business performance and property sales from the Doonsan apartment complex.
• KT Contents: Revenue grew 1.9% year-over-year, with balanced growth across Studio Genie, NAS Media, and Millie's Library even after the divestment of PlayD.

• Amortization of higher sales expenses incurred in 2025, combined with rising labor costs, created ongoing margin pressure in 2026 that management is addressing via targeted cost control starting in Q2.
• Power availability is a key constraint for new data center construction, particularly in the Seoul metropolitan area, which has forced KT to adopt a two-track regional expansion strategy.
• The temporary Q1 subscriber decline caused by the early termination penalty waiver program negatively impacted Q1 wireless revenue, though management expects this impact to be fully offset by ongoing net subscriber growth through the rest of the year.
• Unaudited K-IFRS estimates presented in the earnings call are subject to future change, and the company cannot guarantee the accuracy of non-historical forward-looking estimates.

Q: What is new CEO Yoon Young Park's core strategic direction, and do you have plans for the CEO to communicate with the market? Also, Q1 2026 standalone operating income underperformed expectations — what is your full-year 2026 operating income outlook? / A: The new CEO's core vision is for KT to become an AX platform company, accelerating AX innovation aligned with KT's existing strengths. This is broadly consistent with KT's prior AICT strategy, built on two pillars: strong fundamentals (top priority is regaining customer trust via infrastructure and security improvements) and solid growth (expanding AX success models into new areas). Management is internally reviewing timing and format for the CEO to communicate directly with the market, and will announce details once confirmed. For full-year 2026, management targets ~1.5 trillion won in adjusted operating income, matching last year's result excluding the 2025 data breach impact. Cost control will be tightened starting in Q2, and key subsidiaries will deliver improved growth to offset Q1 weakness.

Q: Your new mid-term shareholder return policy maintains the prior 50% of adjusted net income framework. If profitability recovers, will you increase shareholder returns, and can you explain what non-cash and non-ordinary items are included in adjusted net income? Also, what is your full-year wireless business growth strategy after the Q1 subscriber decline? / A: The 50% return framework will remain in place through 2028, and management will work to grow profitability to support higher dividend per share over time. The annual 250 billion won share buyback program will continue as planned, indirectly increasing shareholder returns. Adjusted net income excludes non-cash items (such as valuation gains/losses on investment and overseas funds) and non-ordinary one-off items (such as large asset divestments or material penalties) to provide stable visibility for dividend planning. For wireless, the January subscriber decline has been offset by net growth starting in February, and the upcoming H2 government-mandated plan will not materially impact revenue. The 2026 strategy focuses on efficiency over costly subscriber acquisition: KT will leverage its exclusive YouTube Premium-linked 5G plan to grow ARPU, and cut acquisition costs by expanding non-contact channels and used phone sales.

Q: What core needs do AI data center (AIDC) customers have, what are KT's competitive advantages for AIDC, and how is KT addressing power constraints for new data center construction? / A: AIDC customers have three core requirements: a properly engineered operating environment (stable power, effective cooling for high-density GPUs), high-performance inter-rack clustering capability, and fast operational response (quick detection and replacement of failed GPUs with re-clustering). KT's key advantages include decades of data center operating experience as Korea's largest data center operator, and we were the first Korean company to commercialize liquid cooling for high-density AIDC, which is currently being tested at our new Kasan data center. To address power constraints, KT uses a two-track strategy: expand existing lower-density conventional data centers in the power-constrained Seoul metropolitan area, and build new AIDC infrastructure in regions outside Seoul with more ample available power, prioritizing purchases and leases of land that already has secured power approvals.

Q: Can you share your AIDC build-out plans, and what is your full-year revenue target for KT Cloud? / A: Management cannot disclose specific near-term capacity numbers for AIDC, but KT has a five-year target to reach 500 megawatts of total data center capacity. KT Cloud is expected to deliver double-digit revenue growth for full-year 2026.