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| Employees stand in front of KT's office in central Seoul in this file photo. Korea Times file |
By Kim Bo-eun
For years, angry shareholders have been creating a scene at KT's general shareholders' meetings held every March.
This is because the telecom company's stock has been on a downward trajectory since May 2013 when it peaked at 41,250 won.
Under the leadership of CEO Ku Hyeon-mo, KT has stepped up efforts to boost its share price and Ku has delivered results. KT's stock closed at 29,100 on Tuesday after plummeting to 17,250 won during the pandemic-triggered stock market crash in March 2020. But KT still has more work to do.
A company's stock goes up when investors recognize its potential and decide to invest. This means KT needs to convince investors that it is more than a conventional telecom firm.
This is essentially what KT has been doing as it prepares to transform into a digital platform company, including investing in artificial intelligence and developing a media content business.
CEO Ku bought back 9,000 of the company's shares last year, as part of efforts to boost KT's stock price. Chief executives purchase company shares to show investors their confidence in their firm's future.
KT has also pledged to increase dividend payouts by 22 percent this year, which raises the dividend per share to 1,350 won from 1,100 won. This plan was unveiled with KT's 2020 earnings results on Feb. 9 and drove up the company's stock price more than 7 percent the following day.
But the moves have so far been unable to bring KT's share price closer to its all-time high. The sheer volume of KT's issued stocks is viewed as a huge obstacle. KT has a total of 261,111,808 outstanding shares.
This is why it would make sense for KT to consider canceling a large amount of its treasury shares. Reducing the number of issued stocks usually has the effect of bringing up stock prices.
This is a move SK Telecom chose in a plan unveiled Tuesday to cancel 8.69 million stocks worth 2.6 trillion won.
This will bring down SKT's total outstanding stocks to 72.06 million from 80.75 million. The latest measure triggered a positive response from investors, as SKT's stock price rose 1.15 percent to close at 307,500 won the same day.
Given the No. 1 mobile carrier carried out this move, KT may feel pressured to follow suit.
But regardless of what its competitor is doing, ensuring and increasing shareholder returns is a key task for a responsible company engaging in ESG management. This is why KT should opt for the last viable option that will bring up its stock price.
