KT Corp., South Korea's second-largest mobile operator, said on Tuesday that third-quarter consolidated operating profit fell 6.1% from a year earlier to 505.3 billion won, short of what analysts had expected. Revenue slipped 1.8% to 6.9975 trillion won, according to the earnings presentation the company filed with the U.S. Securities and Exchange Commission.

The miss matters for investors who own Korean telecoms as dividend plays under Seoul's corporate value-up push. KT paired the weak quarter with new medium-term targets, including a 1 trillion won share buyback and a consolidated return on equity of 9% to 10% by 2028, betting that capital returns and artificial intelligence infrastructure can carry a stock whose core mobile business is shrinking.

The Korea Times reported in October that KT was forecast to post an operating profit of 549.6 billion won for the quarter, up about 2% from a year earlier. The actual figure came in roughly 8% below that. Net income fell 17.5% to 367.3 billion won, and operating profit was down 22.1% from the second quarter's 648.3 billion won. The operating margin narrowed to 7.2% from 7.6% a year earlier.

KT attributed the year-on-year decline in part to a base effect: the third quarter of 2025 included a one-off gain from a real estate project. It also cited a fall in operating profit at the parent company.

KT wireless revenue hit by subscriber program

The weakest line was mobile. Wireless service revenue at the parent company fell 3.9% from a year earlier to 1.6668 trillion won. KT said the drop reflected a customer appreciation program that ran from February to July and subscriber churn during a period when early-termination penalties were waived.

There were signs of stabilization late in the quarter. KT said its mobile network subscribers, excluding internet-of-things lines, rose to 14.831 million in September from 14.807 million in July. Average revenue per user climbed to 34,711 won in September from 33,963 won in July. The company said 5G users made up 83.5% of its handset base.

Fixed-line revenue fell 1.8% to 1.3082 trillion won. Broadband was flat, while media revenue declined 2.4% as weaker advertising and pay-per-view sales offset gains in IPTV subscribers, which reached 9.565 million.

Subsidiaries did better. KT said they contributed 206.2 billion won of operating profit, up 4.5% from a year earlier, or 40% higher excluding the prior year's real estate gain, led by data center, real estate and content units.

Data centers, Palantir and a 2028 buyback target

KT is trying to persuade investors that it can grow as what it calls an "AX Platform Company," its term for AI transformation. Cumulative AX revenue for the first nine months rose 11.9% to 1.1119 trillion won, covering its cloud unit, subsea cable capacity and AI solutions, and the company said it aims to more than double that business from 2025 levels by 2028.

The plan leans on hardware. KT said it intends to add 1 gigawatt of AI data center capacity by 2031, with six sites due to open by 2029, starting with two centers in Bucheon in 2027. It also plans to add 90 terabits per second of subsea cable capacity for AI traffic by 2031. On the software side, KT launched a "Token Factory" AI platform on Oct. 30 offering more than 500 AI models, and listed a main financial-sector contract in August under its Palantir partnership. Rival SK Telecom has drawn attention with its own AI infrastructure deals with Nvidia.

The 2028 targets also include a consolidated operating margin above 9% and the sale of non-core assets such as idle real estate and investment holdings. The 1 trillion won buyback would be in addition to existing returns, the presentation said.

For 2026, KT reiterated a minimum dividend of 2,400 won per share and declared a third-quarter dividend of 600 won, payable on Nov. 12. It said it carried out a 250 billion won buyback and cancellation under this year's value-up plan through a trust contract that ran from March to September.

Spending is running below last year's pace. KT's parent company spent 1.2282 trillion won on capital expenditure in the first nine months, against 2.144 trillion won for all of 2025, while major subsidiaries spent 370.9 billion won.

KT held its earnings call with analysts at 3 p.m. Seoul time on Tuesday, according to an earlier filing. The next test is the fourth quarter, the first full period since the subscriber program ended, and whether the September rise in revenue per user holds through year-end.