KT Corporation Bets Big on AICT: Can This Fuel Sustainable Growth?

KT Corporation KT is rapidly shifting beyond its traditional telecom origins, embarking on a bold transformation into an Artificial Intelligence and Information and Communications Technology (“AICT”) company. As an AICT firm, KT combines IT and AI with its telecommunications capabilities to provide unique services and added value to customers.

Under its AICT roadmap, KT is developing a comprehensive AI lineup anchored by its proprietary Mi:dm2.0 large language model (“LLM”). The model, launched in July, serves as the foundation for AI platform build projects for the enterprise and public sectors, with early contract wins from Gyeonggi provincial government and Korea Water Resources Corporation.

For its AICT push, KT Corporation has also teamed up with Microsoft. It has integrated an AI agent, powered by Azure OpenAI-powered LLM, into Genie TV, boosting the AI use case. The company plans to introduce an AI model tailored for Korea, powered by ChatGPT for Omni and secure public cloud, in the second half of 2025. It also has a licensing partnership with Palantir. To reinforce this digital evolution, KT is committing KRW 1 trillion over five years to cybersecurity.

Its second-quarter 2025 results underscore both financial strength and strategic progress toward the AICT goal. Revenues surged 13.5% year over year to KRW 7,427.4 billion, while operating profit more than doubled to KRW 1,014.8 billion, reflecting robust performance from telecom and AI-driven businesses. AI IT business revenue was up 13.8% year over year, while revenues from KT Cloud were up 23%, driven by growing data center momentum and DBO project wins. One-time gains from real estate benefited profitability.

KT’s AICT pivot positions it to capture emerging opportunities in AI infrastructure, cloud computing and enterprise digital transformation.

Taking a Look at the AI Efforts for SKM and TEF

In this AI-driven tech upheaval, competition has amped up with other telecom giants, both domestic rivals like SK Telecom Co., Ltd. SKM and industry peers like Telefónica, S.A.TEF, are pursuing an AI-first strategy.

SK Telecom is also rapidly shifting into a global AI company. Through AI Pyramid 2.0, the telco is accelerating its AI strategy. AI Pyramid strategy includes AI Data Centers (“DC”), AI B2B and AI B2C solutions. SKM has four AI DC models: GPUaaS (subscription-based AI cloud), small modular AI DC, AI DC for single clients and hyperscale AI DC to deliver services for the AI data center needs of all customers. Strategic alliance with SK Inc has enhanced its B2B AI solutions and services. Other alliances with Anthropic, Lambda and Penguin Solutions bode well. It has also launched an independent, in-house Company-in-Company unit to consolidate company-wide AI business capabilities.

Based in Madrid, Spain, Telefonica, S.A. provides mobile and fixed communication services in Europe and Latin America. Telefonica has advanced its Autonomous Network Journey toward Hyper-Automation, improving efficiency and customer experience. In 2024, AI-driven systems began optimizing network performance in real time. The Fractal project in Brazil is streamlining network design by removing manual inventory checks and cutting deployment time from 60 days to under a week. It made the company the first in the group to reach Level 4 autonomy in transmission planning under TM Forum standards.

To accomplish this, the company has expanded its use of AI. Technicians are utilizing AI-powered assistants to increase productivity and decision-making. In addition, the company is integrating both traditional and generative AI, including Digital Twins and LLMs, in targeted projects.

KT’s Price Performance, Valuation and Estimates

KT stock has lost 7.4% in the past month compared with the Zacks Wireless Non-US market’s industry's 0.2% decline.

KT stock is trading at a substantial discount, with a price/book multiple of 0.73X compared with the industry’s 2.22X.

KT’s estimates are marginally revised upwards for the current year.

At present, KT has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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