KT won’t cancel treasury shares

KT does not have any immediate plans to cancel its treasury shares, the company said Tuesday. Its remarks came as the company struggles to boost its share price.

“The cancellation of treasury shares is currently not under review,” KT’s Chief Financial Officer Kim Young-jin said in a conference call announcing the firm’s first-quarter earnings. He said treasury shares could be used to further strengthen KT’s competitiveness, to enter strategic partnerships and for corporate acquisitions.

There has been increased attention on the possibility of KT canceling treasury shares as a means to boost its stock price following a similar move by rival SK Telecom.

Instead, KT reaffirmed its plan for a 50 percent dividend payout ratio.

“In May 2020, we unveiled a medium- to long-term plan that, on a standalone basis, based on an adjusted net profit, we will pay 50 percent as a dividend payout,” Kim told investors. “This is a commitment we have made to investors and shareholders and we intend to keep it.” The CFO also said the company will try to achieve the target of having its non-fixed-line business account for 4 percent of sales by the end of this year, a move seen by many as KT’s efforts to cut its heavy reliance on the fixed-line business.

KT shares advanced 3.57 percent to close at 30,500 won, Tuesday.

The company achieved an

“earnings surprise” for the first quarter of this year. Its sales on a consolidated basis totaled 6.03 trillion won in the first three months of this year, up 3.4 percent from the same period a year earlier. Operating profit totaled 444.2 billion won, up 15.4 percent year-on-year.

On a separate basis, KT as a telecom firm posted 4.57 trillion won in sales and 366 billion won in operating profit, growing 3.3 percent and 21.4 percent respectively, year-on-year.

Earnings were driven by an expansion in 5G subscribers and growth of its platform businesses. Sales at KT’s businesses in artificial intelligence and digital transformation grew 7.5 percent year-onyear, as demand from clients for internet data centers increased, the company said. KT’s affiliates in the content business also saw substantial year-on-year growth of 12.2 percent.

KT is restructuring its vast portfolio of businesses to focus on future growth engines. The company has over 40 affiliates in sectors ranging broadcasting, finance, security, real estate development, advertising and submarine cables.

The firm is seeking to sell off businesses unrelated to core drivers of growth, such as artificial intelligence and media content. In January, it launched its new content production affiliate, KT Studio Genie. Last month, KT took over Alticast’s affiliate Altimedia, a tech firm offering security solutions for media businesses.

KT is also focusing on artificial intelligence (AI)-powered robots and services. The company is developing AI robots for hotels and restaurants and AI services for call centers at financial firms as well as retailers and the public sector.

This is part of its transition from a conventional telecom firm to a digital platform company, as the local market for telecom services has reached a saturation point.

“Boosted by KT’s progress in transitioning to a digital company, we have achieved operating profits exceeding market expectations in the first quarter,” Kim said.