Market interest is growing as speculation mounts that KT could bring back KT Cloud, which it once spun off. In the era of generative artificial intelligence (AI), there is a clear industrial rationale to bundle networks, data centers, cloud, and security capabilities. But there are many hurdles before a remerger can actually happen. The key variables are the issue of recouping the 600 billion won invested in KT Cloud by financial investors (FIs) and concerns among existing KT shareholders about damage to shareholder value.
◇ "Nothing has been decided," but KT leaves the door open to a remerger
As of the 26th, KT is reviewing various options to strengthen competitiveness in its AX (AI transformation) business, including the possibility of a merger with subsidiary KT Cloud, according to the industry. In response to a Korea Exchange (KRX) inquiry disclosure request the same day, KT said, "We are reviewing various options to strengthen competitiveness in the AX business, but nothing has been specifically decided yet."
The disclosure was in response to growing market talk of a KT Cloud remerger. While KT drew a line by saying officially that "nothing has been decided," the fact that it said it is reviewing various options to strengthen AX competitiveness keeps the possibility of a remerger in the market's sights.
Behind KT's renewed look at KT Cloud is competition over AI infrastructure. AI is no longer a contest of models or services alone. Data centers to store and process massive data, clouds to operate them stably, and networks and security capabilities to connect to corporate customers must move in tandem. The view also gains traction from the fact that KT is expanding cooperation with Microsoft (MS) in Korean AI models, cloud, and AX services.
◇ In the AI era, networks, cloud, and data centers act as one
The industrial rationale for a KT Cloud remerger is clear. For corporate customers to adopt AI services, they need more than just cloud servers. They also need networks to move data, data centers to store it, clouds to run services, and security systems to handle external attacks and disruptions. In particular, for customers where security and stability are critical—such as the public sector and finance—or where there is large-scale AX deployment demand, it can be more efficient to receive all these services in an integrated package.
For this reason, telecom companies are reemphasizing their identity as infrastructure corporations in the AI era. If a carrier's core asset used to be fixed and mobile subscribers and the network, now it must bundle data centers, cloud, and AI operations capabilities to lock in corporate customers. From KT's perspective, it may judge that operating KT Cloud within the parent company's strategy is more advantageous for decision-making and business synergy than having it move as an independent legal entity.
KT Cloud is a key pillar of KT Group's AI strategy. With demand rising for AI data centers and the public, finance, and corporate cloud markets expanding, KT Cloud's strategic value has grown since the spin-off. That is why talk of a remerger keeps resurfacing. For KT, which aims to grow its AI business, there is a natural desire to bring cloud and data centers back in as core group assets.
◇ The AI rationale is strong, but the variable for a remerger is the "price tag"
The issue is not industrial logic but capital market logic. KT Cloud is no longer KT's company alone. In 2023, KT Cloud raised a 600 billion won investment from IMM Credit & Solutions. The recognized enterprise value at the time was about 4.6 trillion won. KT separated the cloud and data center business to gain a higher growth valuation, and investors bet on that growth.
Here is where the remerger becomes tricky. An FI aims to grow a company and then recoup its investment through an initial public offering (IPO) or an equity sale. But if KT Cloud is reabsorbed into KT, the route to a standalone IPO as an independent entity virtually disappears. From the investor's perspective, the expected exit scenario at the time of investment changes. For KT to pursue a remerger, it must design an exit structure that covers how to handle the FI's common and preferred shares, how to set the merger consideration, whether to pay cash, and whether to issue new KT shares.
The crux is the price. Since the spin-off, KT Cloud has shown a trajectory that could lift its valuation. KT Cloud's 2022 revenue was 430.4 billion won on a corporate basis, and about 550 billion won on an annual comparison basis including the division's results for the first quarter of 2022 before the spin-off. Revenue in 2025 was 997.5 billion won, approaching 1 trillion won. In three years after the spin-off, revenue grew by more than 80%. Demand for AI data centers is expanding, as is growth in the public cloud business. From the FI's viewpoint, it could ask, "Why sell at the old price when the company has gotten bigger?"
If KT offers an excessively high price, however, it will be hard to avoid backlash from existing shareholders. Settling the FI's equity in cash would raise financial burdens, while paying merger consideration by issuing new KT shares could trigger concerns about dilution for existing shareholders. KT shareholders could ask, "Why buy back a company we spun off at a higher price?" A telecom industry official said, "The merger ratio, how preferred shares are handled, the size of cash outflows, and whether there is a stock exchange are all sensitive variables that can affect the share price."
Ultimately, the core of a KT Cloud remerger is not the AI rationale itself but the price and exit structure to execute it. There is broad agreement on the industrial logic of integrating networks, cloud, and data centers. But narrowing the gap between the FI's expected investment recovery and the merger consideration that existing KT shareholders can accept is another matter. KT needs to complete its AI strategy, the FI wants investment returns, and existing shareholders do not want value erosion. AI infrastructure may be tied together as one, but making investors' calculators align looks far more difficult.