KT vows cultural shift in management

iPhone seller plans overseas expansion through acquisitions

By Kim Yoo-chul

South Korea's telecom giant KT, led by chief executive Lee Suk-chae, has bolstered its corporate image over the last two years partly because of its then controversial decision to sell Apple's iPhone here.

The bold decision made sense as the nation's second-biggest mobile carrier secured the right springboard to enjoy more first-mover advantages in the rapidly growing local smartphone and wireless data-related segments.

At a time when South Korea’s top carriers including market leader SK Telecom are unexpectedly busy looking for their next revenue sources in the local telecom markets by announcing fine-tuned data and platform strategies, KT is looking to make bigger breakthroughs outside the peninsula.

Market analysts still have questions whether local telecom companies will successfully penetrate overseas markets, citing unlikely attempts and lack of competitiveness.

Even the market leader SK Telecom has failed to yield any visible results to expand its profile in the United States, Vietnam, or China.

But the KT Chairman is quite upbeat to write an inspiring story as the cultural shift is under way at KT spanning from hiring to business management.

``Regardless of gender, nationality or age, KT will give more authority to employees who have higher potential to bring us sizable profit,’’ the chairman said in a news conference to unveil its 2011 business strategy held at the Press Center, downtown Seoul, Thursday.

``KT is being challenged with achieving sustainable corporate growth. It’s impossible to go on with just existing business models and employees. We will be more aggressive about bringing in human resources from outside. I will directly manage this,’’ the chairman said.

Lee didn’t necessarily and immediately intend to hire a bunch of back-talking know-it-alls, but he understood that KT needed change.

By the time Lee took over the top job two years ago, KT was struggling. Its revenue sources were heavily dependent upon unprofitable broadband-related businesses and investors were shying away from KT shares due to an uncertain business outlook.

The Chairman Lee just believed it needed to find suitable momentum if it wanted to prosper in the convergence era.

To shake things up, Lee took massive restructuring measures in the firm’s units and in human resources despite controversies and endured the deteriorating corporate ties with Samsung Electronics by partnering with Apple, one of Samsung’s biggest rivals.

``KT has experienced many turning points over the last two years. The three months delay for the iPhone 4 was also a burden on us, and the cap on marketing expenses hindered KT shares from rising,’’ said the chairman.

KT has secured 3 million smartphone users, including two million from iPhones, said Pyo Hyun-myung, a KT president.

Lee said KT is aiming to overcome business uncertainties in the local market by expanding its global networks and stressed the recent partnership with ChinaMobile and NTT DoCoMo of Japan will allow the firm to lead the way.

``ChinaMobile has stronger interests in KT’s recent moves. Our cloud service and 3W (WCDMA, Wi-Fi and WiBro) network strategies are gaining credential,’’ said the chairman.

The three companies have formed a united front to accelerate the spread of smartphones in the Northeast Asian region.

Under the collaboration, the carriers will develop infrastructure technology for high-speed communications, while targeting to proliferate corporate service business in Asia.

M&A appetite

At the conference, the chairman said KT is planning to make sizable acquisition deals capitalizing on countries in South America, former Soviet Bloc and Africa, though he declined to elaborate.

``One thing that I want to say is KT will step up efforts to expand our convergence solution and mobile platform businesses,’’ Lee said.

When asked about the fate of its cloud computing-related businesses, KT vice president Kim Il-young said it’s been in talks with four major telecom companies in Europe and an official announcement will come soon.

``Among the four, talks with one European telecom company has progressed well. KT is considering establishing a joint venture,’’ Kim told reporters.

With a competitive edge in broadband networks, KT is pushing the cloud computing business as one of its next growth engines. It recently gave out Apple’s iPad to all employees to spur the ``smart working’’ drive.

The KT Chairman also vowed to improve customer satisfaction of iPhone users as the telecom company has placed customer satisfaction as the top catchphrase for this year.

``I will lead the way. Although I can’t guarantee 100 percent satisfaction regarding improving the after-sales service policy of iPhones, KT will boost after-sales related services,’’ the top company executive said.

After sales service-related issues surrounding iPhones are a chronic issue for KT as Apple doesn’t have a plan to change its stubborn anti-customer policy despite mounting calls from South Korean customers.

Apple’s local representative Steve Park wasn’t available to comment on the chairman’s remarks.

KT said it expects over 20.5 trillion won in total sales within this year by releasing seven or eight tablet PCs and doubling smartphone subscribers to 6.5 million.

``We will release 30 smartphone models this year and raise the ratio of smartphone users to 40 percent of our mobile subscribers,’’ president Pyo said.