KT Corp (KT) Q3 2024 Earnings Call Highlights: Strong Operating Income Growth Amid Revenue ...

GuruFocus.com11-09

Total Consolidated Revenue: KRW 6 trillion 654.6 billion, slight decrease year-over-year. Separate Revenue: Increased by 2.0% to KRW 4 trillion 765 billion. Consolidated Operating Income: Increased by...

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GuruFocus has detected 5 Warning Signs with KT.\n\nRelease Date: November 08, 2024\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.\n Positive Points \n\nKT Corp (NYSE:KT) has set a strategic direction to transform into an ACIT company, aiming for sustainable growth by innovating core businesses and expanding customized offerings.\nThe company has entered a strategic partnership with Microsoft to collaborate on AI and cloud services, including the development of a Korean AI cloud service.\nKT Corp (NYSE:KT) reported a significant increase in operating income, with a 44.2% year-over-year growth, driven by profitability enhancements in core businesses.\nThe company announced a shareholder return program, including a share buyback and cancellation plan worth KRW1.1 trillion, aiming to boost shareholder value.\nKT Corp (NYSE:KT) is experiencing growth in its cloud and real estate businesses, with cloud revenue increasing by 6.8% year-over-year and real estate revenue growing by 3.6%.\n\n Negative Points \n\nKT Corp (NYSE:KT) reported a slight decrease in total consolidated revenue due to weak performance in its content subsidiary.\nThe media business faced challenges with a decline in PV and advertising revenue, resulting in a 1.2% year-over-year revenue decrease.\nHome telephone revenue decreased by 7.6%, indicating a decline in traditional telecommunication services.\nThe content subsidiary experienced an 18.3% year-over-year decline in revenue due to a shrinking market.\nBC Card, a major subsidiary, posted a 6.5% decrease in revenue year-over-year, mainly due to a decline in credit card sales.\n\n Q & A Highlights \nQ: Can you provide more details on how KT plans to achieve the ambitious ROE target of 9-10% by 2028? Also, how will the share buyback and cancellation program be implemented? A: Min Jang, CFO: We aim to achieve the ROE target through three main strategies: transforming into an AIC T company, enhancing asset efficiency by disposing of non-core assets, and utilizing excess cash for investments or shareholder returns. The share buyback and cancellation program will be implemented gradually and steadily over the years, with the current shareholder return policy remaining effective until next year. Future decisions on the mix between buybacks and dividends will be made by the board.\nQ: What types of services will the new AX subsidiary with Microsoft offer, and what is the expected size of this business? A: Tao, Open Tech Innovation Lead: The AX subsidiary will focus on offering high-level technological consulting services to help clients transform their business processes using AX. While specific service details are still being developed, the subsidiary will provide C-level consulting and pre-consulting services. The initial size is estimated to be around 100 employees, but this may change based on market needs.\nQ: How does KT plan to triple its AI and IT revenue by 2028, and what role will the AX company play in achieving this? A: Min Jang, CFO: We plan to transform from an ACT company to an AI and B2B IT service company, aiming for AI and IT revenue to reach KRW 3 trillion by 2028. The AX company, developed with Microsoft, will contribute significantly to this growth, particularly in AI and cloud services, with a projected revenue split of 50-50 between these segments.\nQ: Can you provide an update on the workforce reassignment and its financial impact? A: Min Jang, CFO: We are reassigning 1,700 employees to new subsidiaries, with 4,500 employees in total being reduced from the headcount. The financial impact includes immediate savings from next year, as payments to reassigned employees will be lower than current salaries.\nQ: What is the revenue outlook for the AI and cloud business, and how will KT navigate regulatory challenges in the cloud sector? A: Unidentified Company Personnel: The AI and cloud business is projected to reach KRW 4.6 trillion, with growth driven by AI advancements and cloud partnerships with Microsoft. We will initially target strategic large customers for sovereign cloud services and monitor regulatory changes to expand into finance and public sectors.\nFor the complete transcript of the earnings call, please refer to the full earnings call transcript.This article first appeared on \nGuruFocus.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482421555"}