KT Corporation vs. AT&T: Which Telecom Stock Is the Better Pick?

Core Viewpoint - KT Corporation is transitioning into an AICT company, focusing on integrating IT and AI with telecommunications, while AT&T is enhancing its core wireless business and expanding 5G and fiber coverage in the U.S. [2][7] KT Corporation - KT is developing an AI lineup anchored by its proprietary Mi:dm2.0 large language model, with early contract wins from government and water resource sectors [2] - The company has partnered with Microsoft to integrate AI into its services and plans to introduce a tailored AI model by late 2025 [3] - KT's AI IT business revenues increased by 13.8% year over year, and KT Cloud revenues rose by 23% due to data center growth [3] - The company has a stable dividend policy and a KRW 1 trillion share buyback plan, reflecting confidence in future cash flows [4] - Management has committed KRW 1 trillion over five years for cybersecurity, which may pressure near-term profitability [5] - The domestic telecom market is heavily penetrated, limiting organic growth opportunities, and competition from SK Telecom and LG Uplus poses risks [6] AT&T - AT&T is focusing on its core wireless business and expanding its 5G and fiber coverage, with a strategy based on mobile 5G, fixed wireless, and edge computing [7] - The acquisition of mid-band spectrum from EchoStar is expected to enhance 5G performance and reduce capital investment needs [8] - AT&T reported 270,000 net adds for Internet Air, doubling year over year, and over 550,000 new subscribers to advanced broadband services [9] - The company aims to reach over 60 million fiber customer locations by 2030, with significant growth in fiber subscribers [10] - AT&T generated $4.9 billion in free cash flow in Q3 2025 and returned $3.5 billion to shareholders, indicating strong cash flow generation [11] - The wireline division faces persistent losses, with revenues down 7.8% year over year due to competitive pressures [12] Share Performance and Valuation - Over the past month, KT and AT&T shares declined by 1.9% and 9%, respectively [14] - KT's shares are trading at a price/book ratio of 0.75X, lower than AT&T's 1.45X [16] - Analysts have revised earnings estimates downward for KT, while AT&T's estimates remain unchanged [17][19] Consensus Estimates - Current earnings estimates for KT show a downward revision of 3.21% for F1 and 2.53% for F2 [18] - AT&T's earnings estimates have seen a positive revision trend, particularly for Q1 and F2 [19] Investment Outlook - AT&T holds a Zacks Rank of 3 (Hold), while KT Corporation has a rank of 4 (Sell), suggesting AT&T may be a better investment choice at this time [20]