KT Corporation (ADR)
Communication Services · Integrated Telecommunication Services
Structural: Korean telecom is a stable three-player oligopoly ($SKM, KT, LG Uplus) with ~100% smartphone penetration and regulated ARPU - KT's mobile + fixed + IPTV mix throws off steady FCF that funds a high-single-digit dividend yield. 4B multi-year, Azure + GPT + sovereign AI for Korean enterprise) and the IDC/cloud arm reframe KT from utility into the local AI-infrastructure landlord, alongside a 5G-Advanced upgrade cycle into 2027.
(1) dividend + buyback yield ~7-8%, rare in EM telecom; (2) Microsoft deal monetises latent fiber/IDC footprint without heavy capex; (3) AI Contact Center, AICC, and B2B cloud revenue scaling off a captive chaebol customer base; (4) SK Telecom's 2024 USIM breach is a multi-quarter share-shift tailwind; (5) KRW weakness has already compressed the USD ADR - entry at trough multiple.
(1) Korean regulator (MSIT) caps tariff hikes and forces fee cuts - terminal ARPU growth structurally low; (2) AI revenue is small vs telecom base, narrative-rich but slow to move the EPS line; (3) KRW/USD translation risk on the ADR; (4) capex creep from GPU/IDC build could pressure the dividend; (5) governance discount - government + NPS stakes, chaebol-style cross-holdings, lower payout discipline than US telcos.
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