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KT Cloud could be worth $2 billion

KT is reportedly mulling selling off a chunk of its recently-created cloud business, a move that could value the unit as a whole at US$2 billion.

The South Korean telco, which now styles itself as a digital platform company, separated out its cloud and data centres assets into KT Cloud in February. According to Bloomberg, it is now making plans to sell a minority stake in the business.

The newswire’s unnamed sources claim that the company is on the verge of selecting a financial advisor for the sale process. They posit that the sale of a 20% stake in KT Cloud to a strategic partner could fetch US$400 million, speculating that financial investors in the digital infrastructure space would be the most likely candidates.

An IPO at some point in the future is also an option, the sources said, adding the usual caveat that the telco might decide not to pursue any deal at this time.

A spokesperson for KT told Bloomberg that it continues to look at various ways of growing KT Cloud, but has made no decision yet.

When it created KT Cloud earlier this year the operator made it clear that it is looking to enhance the value of both the spin-off and it’s core business.

“With the launch of this new corporation, we will prepare new growth opportunities through aggressive investment, and pre-emptive alliances and cooperation in the rapidly growing cloud/IDC market,” said Yoon Dong-sik, CEO-elect of KT Cloud, at the time.

KT believes that operating KT Cloud as an independent business will help it to be more competitive in the cloud and data centres market. Its reasoning is that it will be quicker to respond and facilitate flexible decision-making; essentially, we’re talking about a model that’s closer to the hyperscaler or DevOps approach than it is the traditional telco way of working. Separating out the business also makes it easier for KT Cloud to seek out and engage in alliances and investment opportunities for business growth, it said.

Areas for growth include investing in AI infrastructure to enable it to compete in that market on a global basis; a focus on public cloud projects valued at 800 billion won or around $630,000 (and presumably higher); expand its customised service offering; and set up a public sector unit.

Specifically on data centres, it is looking to scale up its offer, as well as looking at energy-saving solutions and renewable energy.

Ultimately, there’s nothing in here that differs from what most major telcos are looking to achieve, to one extent or another. But it will be interesting to see whether KT Cloud attracts major investment in the coming months and to what degree. There could be big bucks involved.

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