KT Hit by Hacking and Compensation Costs... First-Quarter Operating Profit Down 30%

Reflecting Costs of Penalty Waivers and Customer Compensation Programs
Plans to Expand AX Business Through Collaboration with Microsoft and Palantir

KT announced on May 12 that its consolidated revenue for the first quarter of this year amounted to 6.7784 trillion won, with operating profit at 482.7 billion won. This represents a decrease of 1.0% and 29.9%, respectively, compared to the same period last year. The decline is attributed to a base effect from last year's one-off profit from property sales, subscriber churn following a hacking incident, and costs related to customer compensation programs such as penalty waivers.

KT Gwanghwamun Building. Photo by Yongjun Cho jun21@

By business segment, the wireless division experienced some subscriber churn during the penalty waiver period in January this year, but saw a net increase in subscribers from February onward, resulting in a 0.4% year-on-year increase in service revenue. The wireline business also posted a 0.8% increase in revenue, buoyed by an expansion in the subscriber base. The internet and media businesses grew by 1.8% and 1.3%, respectively.

However, revenue from enterprise services declined by 2.2% compared to the same period last year, despite the expansion of new businesses such as AI Contact Center (AICC), due to the completion of large-scale projects. KT explained that it has secured future growth drivers by winning major public sector contracts such as the disaster safety communication network project and AICC and cloud projects in the financial sector during the first quarter.

Strategic collaborations with Microsoft (MS) and Palantir are also gaining momentum. KT has secured new contracts related to artificial intelligence transformation (AX) primarily in the financial sector, and plans to expand into the financial, public, and manufacturing fields going forward.

Among its subsidiaries, KT Cloud maintained revenue at the previous year's level, supported by demand for data centers and AI and cloud business. The company plans to target the public and enterprise AI cloud market by increasing the utilization rate of the Gasan Data Center, which opened last November, building new data centers, and expanding its AI foundry business.

KT Estate recorded a sharp 72.9% year-on-year increase in revenue to 237.4 billion won, driven by higher profits from apartment sales in Goejeong-dong, Daejeon, and robust performance in the hotel business. Increased hotel room occupancy rates and average daily rates, reflecting higher domestic travel demand, also contributed to improved results.

During the same period, the content subsidiaries grew by 1.9%. KT Studio Genie benefited from a lineup of premium original content such as "Climax" and diversified distribution channels, while KT Millie's Library continued to improve its performance thanks to an increase in subscribers and the expansion of subscription-based revenue.

K-Bank, which was listed on the KOSPI in March, reported deposit balances of 28.22 trillion won and loan balances of 18.75 trillion won as of the end of March. The total number of customers reached 16.07 million, up by 540,000. K-Bank plans to use the capital secured through the listing to enter the SME financial market and strengthen its platform competitiveness.

On the same day, KT also announced its mid-term shareholder return policy for 2026-2028. The company will allocate 50% of its standalone adjusted net income for shareholder returns and will maintain its existing approach of combining cash dividends with share buybacks and cancellations. The minimum annual dividend per share (DPS) for this year is set at 2,400 won, with a first-quarter dividend of 600 won per share. The record date for the dividend is May 27, and the payment date is June 11.

Min Hyebyung, KT's Chief Financial Officer (CFO), said, "In the first quarter, we implemented a customer reward program in response to the customer data breach and enhanced our security system, while also solidifying the competitiveness of our B2C and B2B businesses. Going forward, under our AX platform company vision, we will continue AX-based growth and improve profitability to enhance corporate value."

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