New Street Research - KT Corp (ADR) (KTC) New Street: KT Corp (Buy, TP: USD 24, +77%) Current CEO poised to serve a second term; positive implications

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New Street Research

Chris Hoare

EUR 9306.00 For Business Accounts Only

New Street: KT Corp (Buy, TP: USD 24, +77%) Current CEO poised to serve a second term; positive implications

Yesterday, KT’s current CEO, Ku Hyeon-mo, was officially nominated as the next CEO candidate by the Representative Director Candidate Examination Committee ("RDCEC"). This bodes well with us as KT’s recent growth is reflective of its successful execution as it diversifies away from the traditional fixed and wireless telco into a Digico, focused on higher growth areas such as B2B, media and content. At its 7.3x FY24E P/E, it is currently our top pick given the risk/reward

03/01/2023 1 EN

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KT Corp (ADR)

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US48268K1016 Berlin Stock Exchange South Korea

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New Street Research

Provided by our team of experienced analysts, our work is idea driven, based on independence of thought, sector expertise, and firmly focussed on fundamentals and valuation.

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Pan European Telecom Services and Cable

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Analysts

Chris Hoare

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South Korean Telcos Takeaways from Meetings with the Korean Telcos in Seoul

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South Korean operators were slower across the board at service revenue on softer Fixed growth, although mobile and Enterprise kept pace. Both LG and SKT saw an acceleration in Enterprise this quarter as the former opened a new DC in Q4. Both SKT and KT saw improvements in EBITDA while LG was pressured by higher labour costs.

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Airtel Africa (Buy, TP: GBP1.5, +42%) Q4 24: Decent, Solid top line but slower EBITDA; positive message on HoldCo cash

Airtel Africa has published a decent set of Q4 results. Top line performance remained strong, service revenue growth in local currency came in above consensus expectations and above our expectations. EBITDA trends slowed (but remained decent given the macro context in Q1) and margins came in 1pp below consensus and us.

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Softbank Corp (Buy, TP: ¥2,500, +33%) Q4 23 Quick Take: Bottom-line beat; mixed near-term guidance impacted by investments into Generative AI

Softbank delivered a strong beat on EBITDA and net profit this quarter, with mobile accelerating as the benefits of financial integration into mobile plans continued to flow through. Guidance was mixed however, impacted by the ¥150bn investments going into generative AI. As a result, compared to a scenario without these investments, the guided EBIT was lower by ¥30bn/year for FY24 and FY25, but in line with previous figures.

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MTN (Buy, TP: ZAR130, +38%) MTN Uganda – Q1 24 Quick Take: Good start to the year

MTN Uganda has reported a good set of Q1 numbers with both service revenue and EBITDA trends accelerating vs. Q3. The company has maintained its medium-term guidance.

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New Street: KT Corp (Buy, TP: USD 24, +77%) Current CEO poised to serve a second term; positive implications

South Korean Telcos What could the telcos do to address the “Value-up” programme?

South Korean Telcos Takeaways from Meetings with the Korean Telcos in Seoul

South Korean Telcos Q4 23 review: EBITDA improved despite softer service revenue; Enterprise continues to drive growth

Airtel Africa (Buy, TP: GBP1.5, +42%) Q4 24: Decent, Solid top line but slower EBITDA; positive message on HoldCo cash

Softbank Corp (Buy, TP: ¥2,500, +33%) Q4 23 Quick Take: Bottom-line beat; mixed near-term guidance impacted by investments into Generative AI

MTN (Buy, TP: ZAR130, +38%) MTN Uganda – Q1 24 Quick Take: Good start to the year

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