KT Strives to Start Afresh
By Kim Tong-hyung
Staff Reporter
It remains to be seen whether Lee Suk-chae will guide KT's rebuilding process forward or derail it. Unfortunately, his predecessor isn't available to offer expert advice.
Nam Joong-soo, of course, currently sits in a prison cell for taking bribes from equipment makers and subsidiaries.
Lee, who is expected to succeed as president and chief executive after a shareholders' meeting on Wednesday, is now being challenged to prove that he is the strong dose of medicine the ailing telecom giant has been calling for.
The two men couldn't be more different. Nam, who branded a squeaky-clean image before the corruption scandal erupted, was seen as a reserved, thoughtful man who measured his words carefully.
In contrast, Lee, formerly the minister of information and communication under the Kim Young-sam government, has a reputation for stubbornness and bold decision making.
As the top information technology (IT) policymaker in 1996, it was Lee's call that the country bet on then-unproven CDMA (code division multiple access) technology for mobile communications, rather than GSM (Global System for Mobile communications), a decision that triggered massive debate.
In picking the former bureaucrat as Nam's successor, the board virtually declared that KT needs an enforcer more than a thinker to guide itself out of troubled waters, although Lee's close connections to Cheong Wa Dae were apparently considered as well.
Lee, who had been studying the details of KT's sprawling empire in recent weeks at an office in Umyeon-dong, Seoul, doesn't intend to waste any time in having his presence felt.
A major overhaul seems to be on the way, as more than 70 of the company's senior executives have already submitted resignation letters and are waiting for their new boss to decide whether to roll with them or to just take their heads.
Although KT has yet to officially announce any changes to its organization, industry sources say that the company's seven business divisions are likely to be consolidated to five ― individual, enterprise, household and network customer units, and a design division.
The planned reshuffling somewhat represents the competitive environment of the telecommunication industry, where the focus seems to be shifting to scale from technology. A trimmed body will also help KT absorb its wireless unit, KTF, as the company plans to complete the merger during the first-half of the year.
KT, which manages about 90 percent of the country's fixed-line telephony customers and nearly 45 percent of broadband subscribers, has been reeling from its declining traditional telephone business and is looking to expand to other markets.
Swallowing KTF will allow KT to grow into a mega company with around 20 trillion won in revenue, which is why SK Telecom, the country's No. 1 mobile operator, isn't about to let that happen without a fight.
KT plans to file for approval of its merger with KTF by the end of the month, but Jung Man-won, himself the new CEO of SK Telecom, has already made his opposition public.
The KT-KTF merger is not the only item on Lee's to-do list. KT has to make a difficult decision on balancing its focus on traditional public switched telephone networks (PSTNs) and voice over Internet protocol (VoIP) services, proving to be effective for rival carriers in eroding the company's vast fixed-line customer pool.
It's also debatable whether the company's lavish investment in new markets such as Internet protocol television (IPTV) will come close to making up for the erosion in the voice business, and there are worries that the company could be backing the wrong fourth-generation (4G) technology in WiBro, the local variant of mobile WiMAX.