May 19, 2024

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A logo of KT

The share price of South Korean telecommunications firm KT hit the highest level in a year on Friday, as its shareholders meeting and a carve-out of its key business draw closer.

A KT common share, which trades on the Korea Exchange, hit a 52-week high at 35,300 won ($28.80) during intraday trading Friday. The closing price came to 35,000 won, up 1.2 percent from a day earlier. KT’s market cap on Thursday exceeded 9 trillion won for the first time in seven months.

KT’s share price rose 14.4 percent from January through Friday.

KT said in a statement the recent stock price surge is attributable to its new growth engine with artificial intelligence and digital transformation efforts under the Digico brand, with businesses ranging from smart speakers to media content, finance, the cloud, an automated secretary and service robots.

Market watchers are anticipating a carve-out of KT’s operations dedicated to its cloud and internet data center targeting the domestic market. KT projects this market to grow 15 percent on a yearly basis over the next five years.

Following the carve-out, scheduled to take place on April 1 after board approval in February, KT will acquire the full stake of the new entity mainly through contribution in kind, a move aimed at turning KT into a holding company.

This mechanism is likely to keep the corporate value of the listed parent company KT unaffected, unlike other schemes like a split-off of the unit. This buoys investor confidence in KT, analysts said.

“A shareholder protection process is now being announced, as we expect significant benefits from the carve-out,” Kim Hong-sik, an analyst at Hana Financial Investment, noted Friday.

KT’s shareholders meeting will revolve around the extension of KT co-Chief Executive Officer Park Jong-ook and inclusion of digital transformation head Yun Kyoung-lim to the company boardroom.

By Son Ji-hyoung (consnow@heraldcorp.com)