A030200 AI Data Center Partnership Will Drive Long-Term Upside Potential

Analysts have trimmed their fair value estimate for KT from approximately $85,900 to $84,000 per share as they factor in a higher discount rate, slightly slower revenue growth, and modestly lower profit margins, partially offset by expectations for a higher future P/E multiple.

What's in the News

• DigitalBridge Group signed a Memorandum of Understanding with KT to collaborate on next generation AI data centers in Korea, marking DigitalBridge's first partnership with a major Korean telecom operator (Key Developments)
• The partners will explore large scale AI and cloud infrastructure projects, including AI factory type data centers that could scale to gigawatt level facilities and require multi billion dollar investments (Key Developments)
• This collaboration extends DigitalBridge's global data center platform into Korea and supports its Asia focused deployment strategy following the $11.7 billion close of DigitalBridge Partners III (Key Developments)
• KT plans to leverage its nationwide high speed network, stable data center operations, and high performance GPU clusters to build energy efficient, AI specialized infrastructure and strengthen Korea's AI data center ecosystem (Key Developments)
• KT executives indicated they are reviewing multiple options to secure resilient and efficient AI data center capacity and will pursue both domestic and global AI data center opportunities with DigitalBridge to offer tailored solutions for customers (Key Developments)

Valuation Changes

• Fair Value Estimate: Reduced slightly from approximately ₩85,900 to about ₩84,000 per share, reflecting a modest downward revision in intrinsic value.
• Discount Rate: Increased meaningfully from about 6.8 percent to roughly 8.1 percent, indicating a higher required return and risk premium applied to future cash flows.
• Revenue Growth: Trimmed slightly from around 4.9 percent to about 4.4 percent annually, signaling a more conservative outlook on top line expansion.
• Net Profit Margin: Lowered moderately from roughly 6.9 percent to about 6.3 percent, incorporating expectations for somewhat weaker profitability.
• Future P/E Multiple: Raised from approximately 11.0 times to about 12.1 times, partially offsetting fundamental headwinds by assuming a higher valuation multiple over time.