KT to diversify portfolio

By Kim Yoo-chul

KT, the nation’s leading fixed-line operator and No. 2 mobile carrier, is opening a new chapter in its corporate history under the helm of its CEO Lee Suk-chae.

The new approach is about KT globalizing its existing businesses and going into non-telecom areas, while moving ahead in technology.

``KT is having some success through investing in telecom networks, but there’s no guarantee that it could maintain sustainability just with strengthening traditional businesses,’’ said Lee during a press conference marking the second anniversary of the merger of KT and its mobile unit KTF at its headquarters in Seoul, Thursday.

Lee wanted sales from its non-telecom and global businesses that include finance and global telecommunication as well as cloud-based computing to grow about 60 percent from 2010 by 2015.

Lee said total corporate revenue will double to 40 trillion won by 2015 from some 20 trillion won last year.

``We’ve seen many changes over the last few years. Amid the converged era in the telecom industry, KT should actively respond to the new trend,’’ the CEO said.

Lee, who is widely tipped to be given a second term as KT CEO, has identified solutions for corporate clients and N-screen as its next targets as well as finance and media.

``KT has agreed with Cisco from the United States to establish a joint venture for U-City projects. Also, announcements for partnership in cloud computing businesses will come from Japan, next week,’’ said Lee, adding its network management ability has reached a global level thanks to higher consumer standards in telecom services by Korean customers.

Spokeswoman Kim Yoon-jeong said the company has seen substantial progress with two European-based telecom companies for cloud computing businesses and investment for a firm in Africa is also underway.

Cloud computing allows users to operate programs and store data in remote data centers that can be accessed over the Web.

When asked whether he wants to continue in the top job, he said, ``What do you think. Should I?’’

Lee lashed out at Seoul’s ongoing plan to require the local telecom industry to lower mobile phone bills because he believes the plan could be the biggest blow to the company’s investment in new services.

The government is set to announce a cut in mobile phone service charges from next week in an apparent move to tame growing inflationary pressure. The announcement has been delayed as the government has failed to agree details with telecom companies.

``If we tide over the new industry, we need investment. KT should give up our plan if the public doesn’t want it. I doubt that,’’ Lee said.

``We are being pressurized to cut mobile charges and we are also being asked to offer Internet-based TV services at cheaper prices. That’s ironic.’’

Lee said investments in other telecom services could create more jobs and other visible benefits to the public and asked the government to be more considerate.

KT plans to cut mobile phone bills to low-income households, adolescents and the elderly, though Lee declined to elaborate further.

A senior official at the Korea Communications Commission (KCC), the nation’s converged telecom regulator, said the government agency will try to reach a consensus with telecoms over the anticipated plan.

Lee’s top lieutenant Pyo Hyun-myung said the company will put more resources into 3G services from 2G and it will offer more incentives to its existing 2G mobile phone users.

Thanks to the acquisition of KTF, the revenue from wireless data rose 30 percent, while the number of smartphone customers spiked, according to the company.

But Lee is also facing a big challenge in terms of stock prices.

The so-called ``iPhone effect’’ is evaporating because KT’s biggest local rival SK Telecom has begun selling the Apple phones.

Share prices are struggling as investors are concerned that the government’s plan to cut phone charges would eventually hurt KT’s earnings momentum.