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KT Doubles Operating Profit: Will the Momentum Continue?
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Key Takeaways
KT's Q2 operating profit surged 105.4% to KRW 1,014.8B, with revenue up 13.5% year over year.
KT Cloud and KT Studio Genie boosted group performance with 23% and 6% revenue growth, respectively.
KT advanced its AICT push with Mi:dm 2.0 launch and new AI deals across public and enterprise sectors.
KT Corporation (KT - Free Report) delivered a standout performance in the second quarter of 2025, reporting a 105.4% year-over-year jump in operating profit to KRW 1,014.8 billion, while revenue rose 13.5% to KRW 7,427.4 billion. This was driven by solid performance from the traditional telecom business and AI-driven efforts.
KT Cloud registered 23% revenue growth, and KT Studio Genie, which posted 6% growth, further strengthened the group’s performance and diversified its income streams. Notably, net income grew 78.6% year over year to KRW 733.3 billion, while EBITDA climbed 36.3% to KRW 1,990.7 billion.
Disciplined cost management and gains from asset rationalization also aided profitability numbers. Moreover, KT’s transformation into an Artificial Intelligence and Information and Communications Technology (AICT) company is gathering pace. Under its multi-model AI strategy, the company launched its proprietary large language model (LLM), Mi:dm 2.0, in July, with plans to unveil additional open-source and Microsoft-based models later this year.
These initiatives are already bearing fruit, as KT has secured AI platform projects with major enterprises and public-sector clients, including the Gyeonggi provincial government and the Korea Water Resources Corporation. The company has expanded AI use cases by integrating Azure-based agents into its Genie TV service, signaling its commitment to embedding AI across business and consumer applications. It also has a licensing partnership with Palantir. Management expects to sustain solid service revenue growth through the second half of the year.
However, operating profit was driven by one-time gains from real estate sales, suggesting that maintaining the same growth momentum may be challenging. Despite lower labor costs from the Gangbuk real estate sales project and higher COGS due to increased wireless handset sales, operating expenses still climbed 5.9% year over year. Moreover, AI investments could also potentially weigh on margins.
However, the company faces execution risk as it transitions to an AICT company, coupled with intense competition from companies like SK Telecom Co., Ltd. (SKM - Free Report) and Telefonica, S.A. (TEF - Free Report) , which remains a key concern.
Taking a Look at Operating Profit for SKM and TEF
SK Telecom, South Korea’s leading telecommunications and ICT service provider, continues to strengthen its position as a key player in the country’s digital transformation ecosystem. The company’s AI Data Center (AI DC) and AIX businesses continue to post strong double-digit growth, highlighting its expanding role in AI-driven infrastructure and services. It aims to achieve KRW 1 trillion in annual AI DC sales by 2030, reflecting its focus on scaling advanced computing and digital platforms. The company reported consolidated revenue of KRW 4.34 trillion, operating profit of KRW 338.3 billion and net profit of KRW 83.2 billion for the second quarter of 2025. Its operating profit declined 37.1% year on year, while net profit dropped 76.2%, mainly due to one-time costs related to customer SIM card replacements and compensation for agency losses.
Telefonica aims to optimize value creation by prioritizing investment in its core operations. The company’s operating model is likely to accelerate the digitization of the Group’s operations. Its momentum in Telefonica Tech and Infra units bodes well. Telefonica’s ability to generate ample FCF anchors its strategic investments. Although the company reported operating income of €1.03 billion, which decreased 6.7% in the second quarter of 2025, its quarterly adjusted EBITDA was €2.9 billion, up 1.2% year over year. For 2025, Telefonica continues to expect year-on-year organic growth in revenues, EBITDA and EBITDAaL minus CapEx.
Image: Bigstock
KT Doubles Operating Profit: Will the Momentum Continue?
Key Takeaways
KT Corporation (KT - Free Report) delivered a standout performance in the second quarter of 2025, reporting a 105.4% year-over-year jump in operating profit to KRW 1,014.8 billion, while revenue rose 13.5% to KRW 7,427.4 billion. This was driven by solid performance from the traditional telecom business and AI-driven efforts.
KT Cloud registered 23% revenue growth, and KT Studio Genie, which posted 6% growth, further strengthened the group’s performance and diversified its income streams. Notably, net income grew 78.6% year over year to KRW 733.3 billion, while EBITDA climbed 36.3% to KRW 1,990.7 billion.
Disciplined cost management and gains from asset rationalization also aided profitability numbers. Moreover, KT’s transformation into an Artificial Intelligence and Information and Communications Technology (AICT) company is gathering pace. Under its multi-model AI strategy, the company launched its proprietary large language model (LLM), Mi:dm 2.0, in July, with plans to unveil additional open-source and Microsoft-based models later this year.
These initiatives are already bearing fruit, as KT has secured AI platform projects with major enterprises and public-sector clients, including the Gyeonggi provincial government and the Korea Water Resources Corporation. The company has expanded AI use cases by integrating Azure-based agents into its Genie TV service, signaling its commitment to embedding AI across business and consumer applications. It also has a licensing partnership with Palantir. Management expects to sustain solid service revenue growth through the second half of the year.
However, operating profit was driven by one-time gains from real estate sales, suggesting that maintaining the same growth momentum may be challenging. Despite lower labor costs from the Gangbuk real estate sales project and higher COGS due to increased wireless handset sales, operating expenses still climbed 5.9% year over year. Moreover, AI investments could also potentially weigh on margins.
However, the company faces execution risk as it transitions to an AICT company, coupled with intense competition from companies like SK Telecom Co., Ltd. (SKM - Free Report) and Telefonica, S.A. (TEF - Free Report) , which remains a key concern.
Taking a Look at Operating Profit for SKM and TEF
SK Telecom, South Korea’s leading telecommunications and ICT service provider, continues to strengthen its position as a key player in the country’s digital transformation ecosystem. The company’s AI Data Center (AI DC) and AIX businesses continue to post strong double-digit growth, highlighting its expanding role in AI-driven infrastructure and services. It aims to achieve KRW 1 trillion in annual AI DC sales by 2030, reflecting its focus on scaling advanced computing and digital platforms. The company reported consolidated revenue of KRW 4.34 trillion, operating profit of KRW 338.3 billion and net profit of KRW 83.2 billion for the second quarter of 2025. Its operating profit declined 37.1% year on year, while net profit dropped 76.2%, mainly due to one-time costs related to customer SIM card replacements and compensation for agency losses.
Telefonica aims to optimize value creation by prioritizing investment in its core operations. The company’s operating model is likely to accelerate the digitization of the Group’s operations. Its momentum in Telefonica Tech and Infra units bodes well. Telefonica’s ability to generate ample FCF anchors its strategic investments. Although the company reported operating income of €1.03 billion, which decreased 6.7% in the second quarter of 2025, its quarterly adjusted EBITDA was €2.9 billion, up 1.2% year over year. For 2025, Telefonica continues to expect year-on-year organic growth in revenues, EBITDA and EBITDAaL minus CapEx.
KT’s Price Performance, Valuation and Estimates
KT stock has increased 18.1% in the past year compared with the Zacks Wireless Non-US market industry's 30% growth.
Image Source: Zacks Investment Research
KT stock is trading at a substantial discount, with a price/book multiple of 0.73X compared with the industry’s 2.32X.
Image Source: Zacks Investment Research
KT’s estimates are marginally revised upwards for the current year.
Image Source: Zacks Investment Research
At present, KT carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.