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Additional costs and subscriber churn to remain limited

4Q25 preview: Service revenue growth vs. cost impact from cybersecurity incident

For 4Q25, we expect KT to report consolidated revenue of around W7tr (+6.7% YoY; 2% above consensus), operating profit of W191.0bn (turning positive YoY; 24.9% below the consensus), and an OP margin of 2.7%.

Operating profit likely declined 64.5% QoQ, due to costs related to a cybersecurity incident. Excluding one-off items, we estimate adjusted operating profit at W421.0bn.

We expect the earnings uptrend at major subsidiaries to continue, led by KT Cloud and KT Estate. For KT Cloud, we estimate revenue grew around 16% YoY, supported by higher data center utilization and increased cloud usage. We estimate utilization at the Yongsan data center at 100%. KT Estate likely saw double-digit growth on both a QoQ and YoY basis, driven by higher operating revenue. We also believe that profitability at content-related subsidiaries improved, with lower amortization at ENA and expanding non-captive revenue at KT Studio Genie acting as key drivers.

Outlook: Additional costs and subscriber churn to remain limited

From 1Q26 onward, we expect subscriber churn related to the cybersecurity incident to gradually stabilize, with related cost outlays remaining limited. Considering ongoing cost-efficiency efforts, stronger shareholder return policies, and continued B2B revenue growth, we expect the uptrend in profitability to continue. For 2026, we look for consolidated revenue of W28.0tr (-1.5% YoY) and operating profit of W2.3tr (-4.8% YoY; OP margin of 8.2%).

Maintain TP of W63,000; portfolio-driven competitive edge intact

We maintain our Buy rating on KT with a target price of W63,000. From 2026 onward, we expect the company to deliver structural improvement in profitability through portfolio optimization and reductions in major cost items. In addition, KT’s ample free cash flow is likely to support an expansion in shareholder returns, while continued B2B business growth should provide further revenue upside.