KT Stock Surges 60% in 2 Years Since Declaring 'DIGICO' Amid KOSPI Downtrend

[Asia Economy Reporter Park Soyeon] KT's stock price has risen by about 60% two years after declaring its transition to a digital platform company (DIGICO).

According to the Korea Exchange on the 16th, KT's stock price, which was in the low 20,000 won range at the time of the DIGICO declaration in October two years ago, is currently in the 35,000 won range as of mid-September. The closing price on October 28, 2020, was 22,850 won, and as of 9:45 a.m. on the 16th, it rose about 56.9% to 35,850 won.

Despite the continued sluggishness of the KOSPI, KT's stock price has steadily trended upward, at one point surpassing a market capitalization of 10 trillion won.

While the KOSPI, which hovered around the 3,300 level last June, continued to decline and fell below the 2,400 level as of 9:45 a.m. on September 16, KT's stock price showed a decoupling movement from the KOSPI, rising about 20% compared to the beginning of the year. The KOSPI index was 2,988.77 on January 3, but as of 9:45 a.m. on the 16th, it recorded 2,384.99, a drop of about 20%. In contrast, KT's stock price rose about 18% from 30,350 won at the close on January 3 to 35,850 won as of 9:45 a.m. on the 16th.

KT's stock price was able to move against the KOSPI trend and rise due to successful securing of future growth engines through corporate portfolio adjustments.

Since CEO Koo Hyun-mo took office in March 2020, he has been working to transform KT from a traditional telecommunications company into a digital platform company. Approximately 2.7 trillion won has been invested in securing future strategies. Instead of competing in the stagnant telecommunications market, the strategy is to lead platform and B2B (business-to-business) industries based on IT capabilities such as artificial intelligence, big data, and cloud.

In July, KT invested 30 billion won in Rebelion, a domestic AI semiconductor design startup, and recently introduced an 'AI quarantine robot' that combines quarantine technology with AI robot technology. It plans to sell about 3,000 to 4,000 units this year to hospitals, local governments, and educational institutions. KT is also focusing on its cloud business. KT Cloud recorded sales of about 456 billion won last year, and KT plans to grow KT Cloud, a 100% subsidiary, to 2 trillion won in sales by 2026. It will focus on an 800 billion won public cloud transition project to strengthen customized services.

KT is also showing prominence in the media content sector. KT announced a growth strategy to increase media content sales to 5 trillion won by 2025, and this plan is recently materializing. Through acquisitions such as the subscription-based reading platform Millie's Library, the top domestic digital broadcasting solution company RT Media, and HCN and Media Genie, KT has solidified its position as a media content provider.

In particular, "Extraordinary Attorney Woo" is cited as a representative success case of KT's media content. The drama, produced by KT subsidiary KT Studio Genie, started with a 0.9% viewership rating for the first episode but ended with a remarkable 17.5% in the final episode, creating the "Woo Young-woo syndrome."

In the content sector, KT is also expanding partnerships and collaborations with capable domestic and international operators. In March, KT signed a partnership with CJ ENM for comprehensive cooperation in the content field. CJ ENM invested 100 billion won in KT Studio Genie.

KT has also gained an advantage over other telecommunications companies in the mobility sector. Recently, it formed a strategic alliance with Hyundai Motor Group, which is seen as planting seeds for future industries once again. KT and Hyundai Motor Group plan to jointly develop a 6G communication standard optimized for autonomous vehicles to secure next-generation cutting-edge technology. To this end, KT announced that it will acquire mutual shares by exchanging 7.7% of its treasury stock (about 750 billion won) for 1.04% of Hyundai Motor shares (445.6 billion won) and 1.46% of Hyundai Mobis shares (300.3 billion won).

Researcher Kim Hoe-jae of Daishin Securities evaluated, "In company collaborations, exchanging shares is more effective than simple memorandums of understanding (MOUs), and KT was able to exchange shares with Hyundai Motor Group because it holds treasury stock. The collaboration between KT, the 5G leader maintaining the number one 5G penetration rate for 25 months, and Hyundai Motor Group, a top global automaker, will greatly contribute to the activation of the autonomous driving and UAM (urban air mobility) markets."

This content was produced with the assistance of AI translation services.