South Korea's second-largest mobile carrier, KT Corp, released its first-quarter 2026 financial results on Tuesday. The company's core profit metrics saw a significant year-on-year decline, primarily due to compensation costs related to an unauthorized micro-payment data breach from last September and a high base effect from one-time real estate presale gains in the same period last year. However, the results still surpassed market expectations.

Profit Metrics Decline but Beat Expectations The financial report shows that KT Corp's consolidated revenue for the first quarter was 6.78 trillion won, a decrease of 1.0% compared to the previous year. Operating profit was 482.7 billion won, a sharp decline of 29.9% year-on-year. Net profit stood at 388.3 billion won, down 31.5% from the same period last year.

Despite the profit decline, the performance was better than market expectations. According to a survey by Yonhap Infomax, analysts had an average net profit forecast of 349 billion won; the actual result was approximately 11% higher. Analyst Kim Joonsop from KB Securities noted during the earnings call that, excluding one-time factors, the company's core business profitability was actually better than anticipated.

Ongoing Fallout from Data Breach Incident The financial impact of the data breach was a key factor dragging down this quarter's performance. The unauthorized micro-payment incident last September forced the company to overhaul its security systems comprehensively and initiate a compensation plan for affected customers. KT Corp stated in its report that costs related to the customer reward program implemented since February and expenses associated with the breach were fully reflected this quarter.

Furthermore, in the same quarter last year, KT Corp recorded one-time real estate presale gains related to a development project in Gwangjin District, creating a high base effect of approximately 300 billion won. This amplified the year-on-year decline in operating profit for this quarter.

Wireless Business Shows Resilience with Steady 5G Growth Despite pressure from potential customer churn due to the data breach, KT Corp's core business demonstrated resilience. Wireless service revenue increased slightly by 0.4% year-on-year. After waiving cancellation fees for affected users in January, net user additions turned positive starting in February. As of the end of the first quarter, 5G subscribers accounted for 82.7% of all mobile users.

In the fixed-line business, revenue grew by 0.8% year-on-year. Internet service revenue increased by 1.8%, mainly driven by growth in GiGA Internet subscribers and increased usage of value-added services. Media business revenue rose by 1.3%, primarily fueled by an increase in IPTV subscribers and higher adoption of advanced set-top boxes.

Enterprise service revenue decreased by 2.2% year-on-year, largely due to the completion of major construction projects. However, new business orders, represented by areas like AICC, continued to grow.

Accelerated AI Transformation Strategy; KBank Performs Steadily KT Corp is accelerating its strategic shift towards AI transformation to improve profitability and reposition itself as a leading global AI partner. The company's strategic collaborations with Microsoft and Palantir are beginning to show results, with new orders related to AX solutions secured primarily from financial clients in the first quarter. KT Corp plans to continue expanding its B2B AX business by establishing benchmark cases in sectors such as finance, public services, and manufacturing.

KT Corp's internet-only bank subsidiary, KBank, was officially listed on the main KOSPI board in March this year. As of the end of March, the bank's deposits reached 28.22 trillion won, loans amounted to 18.75 trillion won, and its total customer base grew to 16.07 million.

Shareholder Returns and Future Outlook As part of its shareholder return plan, KT Corp stated it will continue to allocate 50% of its independently adjusted net profit for shareholder returns, maintaining cash dividends while proceeding with share buybacks and cancellations. The company has committed to a minimum annual dividend per share of 2,400 won for this year.

The company indicated it will accelerate the development of its AX business by upgrading its agent-type AICC and offering it as a customized marketing channel. Looking ahead, KT Corp expects profitability to gradually improve with the expansion of its AiDD and AX businesses. As part of efforts to rebuild customer trust, the company initiated a six-month customer reward program starting in February.