AI Contact Center Expanding Business Scope
The author is an analyst of KB Securities. He can be reached at joonsop.analyst@kbfg.com. -- Ed.
Maintain BUY, target price of KRW44,000
We maintain BUY and TP of KRW44,000 on KT. The company should maintain its upward trajectory through 2023, propelled by its non-telco DIGICO business and steady wireless telecommunications business. We forecast 2023 revenue at KRW25.8tn (+2.0% YoY) and OP at KRW1.97tn (+8.3% YoY), with earnings growth at the media business of DIGICO’s B2C/B2B segments to stand out.
Digitalized DIGICO B2C media business is promising
DIGICO B2C business is based on data accumulated by Genie TV, which is KT’s IPTV service. KT identifies customers’ lifestyle patterns using over 3.0bn usage records per day, including real-time viewing channels acquired from its 13mn-subscriber base pay TV service. DIGICO B2C is based on a model of selling personalized ads (addressable TV advertising) by using content-producing subsidiaries’ IP along with information on customers’ latest viewing patterns. KT’s personalized TV ad inventory seems to sell out faster than that of competitors; viewership ratings for individual content are important for ad business. What we see as more noteworthy, though, is that, based on its accumulated data, KT has established a business model that monetizes across the entire media value chain.
AI Contact Center expanding business scope
DIGICO is expected to continue expanding the scope of its AI Contact Center. As first mover in this area, KT has primarily focused on projects in banking, but it recently expanded its client base into home shopping channels and hospitals. Accordingly, AI Contact Center revenue is anticipated to grow from KRW83.0bn in 2021 to KRW200.0bn in 2022. KT targets increasing the business unit’s revenue to KRW500.0bn by 2025.
Plans to provide solutions in market for 5G specialized network services
Amid the blooming market for 5G specialized network services, KT is expected to provide solutions for smart factories and robotics. For example, it plans to provide specialized services for medical applications (e.g., unmanned transfer robots) to Seoul National University Bundang Hospital and Samsung Medical Center.