A logo of KT
The share price of South Korean telecommunications firm KT hit the highest level in a year on Friday, as its shareholder meeting and a carve-out of its key business is drawing to a close next week.
A KT common share, which trades on the Korea Exchange, hit the 52-week high at 35,300 won ($28.84) during the intraday trade Friday. The closing price came to 35,000 won apiece, up 1.2 percent from Thursday. 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 until Friday.
KT said in a statement the recent stock price surge is attributable to its new growth engine with artificial intelligence and digital transformation effort under Digico brand, with businesses ranging from smart speakers to media content, finance, cloud, automated secretary and serving robots.
Moreover, market watchers anticipate 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 a February board approval, KT will acquire the entire stake in 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 toward 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 shareholder 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, among others.
By Son Ji-hyoung (email@example.com