KT's Q3 2025 Earnings Call Reveals Contradictions in Dividend Strategy, AI Investments, and MNP Market Outlook

Date of Call: November 7, 2025

Financials Results

• Revenue: KRW 7.1267 trillion, up 7.1% Y-o-Y

Guidance:

• Conservative Q4 outlook due to seasonality and uncertainties from customer compensation and potential fines.
• Management expects full-year 2025 consolidated and separate year-over-year growth driven by core businesses and one-off real estate gains.
• SIM replacement costs to be recognized in Q4; additional compensation (free data, KRW150,000 handset discounts, etc.) will be booked when incurred and final amounts depend on investigations.
• Committed >KRW 1 trillion for information-security investment over the next 5 years.
• Dividend and buyback levels will be decided by the Board based on annual results and market/shareholder expectations; buyback program to continue flexibly.

Business Commentary:

* Financial Performance Growth: - KT Corporation reported operating revenue of KRW 7.1267 trillion for Q3 2025, up 7.1% year-over-year, and operating profit of KRW 538.2 billion, up 16% year-over-year. - Growth was driven by sustained core business performance, including telecom, real estate, cloud, and data center, as well as profitability improvement efforts and one-time real estate sales gains.

• 5G and Subscriber Expansion:
  
• Wireless revenue increased by 4% year-over-year to KRW 1.8096 trillion, with 5G penetration reaching 80.7% as of the end of Q3.

• The growth was fueled by subscriber base expansion around 5G services, which positioned KT as a leader in the 5G market.

• AICT Transformation and Initiatives:

• KT opened the KT Innovation Hub under a strategic partnership with Microsoft, marking a step towards transforming into an AICT (AI, IoT, Cloud, and Technology) company.

• The company introduced its proprietary AI models, such as Mi:dm2.0 and Llama K, and secured a solid footing for AI business execution to expand its AI-driven usage base across diverse verticals.

• Dividend and Share Buyback Strategy:

• KT maintained a 20% higher dividend payout year-over-year, with a third-quarter dividend of KRW 600 per share.

• The company completed a KRW 250 billion share buyback in August, aligning with its corporate value enhancement plan to drive stepwise upgrades in KT's corporate value.

• Hacking Incident and Customer Compensation:

• KT acknowledged and apologized for the unauthorized micro payments and data breach incident, implementing measures such as SIM card replacements and potential fines.
• The company is investing over KRW 1 trillion in information security over the next five years to prevent similar incidents and maintain customer trust.

Sentiment Analysis:

Overall Tone: Neutral

• Company reported revenue up 7.1% Y-o-Y to KRW 7.1267 trillion and operating profit up 16% Y-o-Y to KRW 538.2 billion, while management repeatedly apologized for the unauthorized micro-payments breach and took a conservative stance on Q4 outlook due to compensation and potential fines.

Q&A:

• Question from H.J. Kim (Daishin Securities Co. Ltd., Research Division): What's your projection for Q4 given seasonality; will dividends increase in Q4 beyond KRW600; and can buyback/cancellation reach KRW1 trillion in 2026?
  Response: Management will adopt a conservative Q4 forecast due to seasonality and uncertainties from compensation/fines; full‑year growth is still expected; dividend and future buyback sizes will be decided flexibly by the Board, with the value‑up program continuing.

• Question from Chan-Young Lee (Eugene Investment & Securities Co Ltd., Research Division): What is the financial impact and timing of compensation for the hacking incident, what portion was in Q3, and what prevention measures/costs are planned?
  Response: SIM replacements for all customers will be booked in Q4; total compensation amounts are still uncertain pending government investigation and will be recognized when incurred; KT committed >KRW1 trillion to information‑security investment over five years (historical annual spend ~KRW120–130bn).

• Question from Eun Shin (DB Financial Investment Co., Ltd., Research Division): Describe the CEO appointment process and whether a new CEO would alter the current value‑up plan.
  Response: An independent directors' recommendation committee will source and vet candidates, select one by year-end for Board approval, and the candidate will be finalized at the 2026 shareholders' meeting; the value‑up plan is expected to be sustained regardless of CEO change.

Contradiction Point 1

Dividend and Shareholder Return Strategy

It highlights differing perspectives on the company's approach to dividend payments and shareholder returns, which are crucial for investor expectations.

Can you provide Q4 guidance considering seasonality and potential dividend upside? Will 2026 include a share buyback and cancellation of similar or greater size to this year's KRW 1 trillion? - H.J. Kim (Daishin Securities Co. Ltd., Research Division)

2025Q3: Dividend decisions will be made considering annual financial performance and shareholder expectations. For share buybacks, we'll continue our value up plan, potentially maintaining or increasing the KRW 1 trillion size based on market confidence. - Min Jang(CFO and Executive VP of Financial Management Office)

What are the company's strategic initiatives to increase shareholder value and the specifics of the share buyback program announced last quarter? - Kim Hoi Jae (Daishin Securities)

2024Q4: Shareholder return will depend on profit growth, and specifics will be decided later. KRW 250 billion share buyback in 2025, with potential for continued buybacks until 2028. - Jang Min (CFO)

Contradiction Point 2

AI Business Focus

It involves the company's strategic focus in the AI sector, which is crucial for understanding future growth prospects.

What is the financial impact of the recent cyberattack and preventative measures taken? What is the expense's impact on Q3 results and future timing? - Chan-Young Lee (Eugene Investment & Securities Co Ltd., Research Division)

2025Q3: We are planning to invest KRW 1 trillion in information security, including cybersecurity, over the next 5 years. - Min Jang(CFO and Executive VP of Financial Management Office)

Where is KT focusing its AI business strategy? How does KT view the MNP market post-repeal of the Handset Subsidy Act? - Joonsop Kim (KB Securities)

2025Q2: KT's AI strategy includes partnerships with global tech firms, a multi-model approach, and leveraging AI capabilities for operational efficiency. KT's focus is on secure public cloud and Korean-tailored AI services. - Min Jang(CFO & Executive VP of Financial Management Office)

Contradiction Point 3

MNP Market and Handset Subsidy Act

It relates to the company's market strategy and competitive positioning, which affects revenue projections and competitive dynamics.

What is the financial impact of the recent cyberattack and what steps have been taken to prevent recurrence? How is this expense reflected in Q3 results and what are the timelines for future expenses? - Chan-Young Lee (Eugene Investment & Securities Co Ltd., Research Division)

2025Q3: We are anticipating that there will be increased competition in the MNP market due to the release of new iPhones. However, we expect the long-term impact to be minimal due to high 5G penetration and increased handset replacement cycles. - Min Jang(CFO and Executive VP of Financial Management Office)

What is KT's focus for its AI business and outlook for the MNP market after the Handset Subsidy Act repeal? - Joonsop Kim (KB Securities)

2025Q2: Competition may increase with new iPhone versions, but long-term impacts are unlikely due to high 5G penetration and longer handset replacement cycles. - Min Jang(CFO & Executive VP of Financial Management Office)

Contradiction Point 4

Dividend and Share Buyback Strategy

It pertains to the company's financial strategy regarding dividend payments and share buybacks, which are critical for investor expectations and shareholder returns.

Can you discuss your Q4 projections, including seasonal impacts and potential upside for dividend payments? Will there be a 2026 share buyback and cancellation similar to or larger than this year's KRW 1 trillion? - H.J. Kim (Daishin Securities Co. Ltd., Research Division)

2025Q3: Dividend decisions will be made considering annual financial performance and shareholder expectations. For share buybacks, we'll continue our value up plan, potentially maintaining or increasing the KRW 1 trillion size based on market confidence. - Min Jang(CFO and Executive VP of Financial Management Office)

Can you provide guidance on Q4 and full-year profit outlook, as well as the dividend outlook? - Hoi Jae Kim (Daishin Securities)

2022Q3: The dividend will be 50% of adjusted net profit for 2022. - Kim Young Jin(CFO)