KT rides AI and B2B growth to 4% profit rise

It might be early days in the AI revolution, but the growing hunger for the cloud and data centers has already become a badly needed telco growth driver.

South Korea's KT Corp is the latest to report a healthy revenue boost from AI-driven demand.

Subsidiary KT Cloud, which runs both data center and cloud businesses, grew Q1 revenue by 17.8%, the company said in a filing Friday.

Admittedly, that's off a low base, with total sales of just 172.2 billion Korean won (US$130 million) for the quarter. But over the full year, it aims to improve sales by 26% and profit by 51%, CFO Min Jang told an earnings call Friday. He says the growth is the result of demand for colocation services from global OTT customers, including AWS and Microsoft, as well as new BPO projects.

The B2B business also showed growth, with KRW852 billion ($620 million) in sales, up 5%, while the company’s "five future growth engines," such as AI contact center, IoT and smart mobility, grew 4.9% to KRW93 billion ($68 million).

The Korean telco also has a three-part strategy to become an AI company, Jang said.

One is to combine AI with existing IT capabilities, such as adding AI to customer service centers.

Mobile ARPU growth 

Another one is to identify new enterprise opportunities by applying AI to IT business and data cloud.

"In this area we are planning on developing services and models that are specialized for certain verticals like the financial vertical, the public sector, and other sectors," Jang said.

"We will also be developing business process-specific dedicated solutions and models for instance, like for the use of CRM, ERP and search engine marketing," he added.

The final part is applying AI capabilities to its media and platform businesses. Currently, KT is developing a new and more targeted UX for users based on their viewing patterns.

The company reported operating profit of KRW506.5 trillion ($370 billion), up 4.2%, on 3.3% higher revenue of KRW6.6 trillion ($4.8 billion). Net income was up 27% over last year, which had been impacted by a KRW49 billion ($35.9 million) non-operating loss.

KT's core wireless business showed some growth in the quarter, with topline revenue improving 1.7% and ARPU increasing 2.0%. It now has 9.9 million 5G subs, accounting for almost three-quarters of handset subscribers.

KT Corp stock closed 0.38% higher Friday.