Exploring untouched territory
KT ups reliance on corporate clients
By Kim Yoo-chul
KT has been increasing its dependence on corporate clients, following intense competition between existing rivals in the saturated local telecom market amid rising regulatory pressure.
Along with industry leader SK Telecom, KT is seeking new revenue sources as investors believe that if the firm’s current stalling business situation worsens, there is a greater probability that it will further lose confidence in the stock markets, which will eventually hurt Chairman and CEO Lee Suk-chae’s leadership.
Now, Lee Sang-hoon, head of the company’s enterprise customer group, is playing a key role in soothing such uncertainties. He is confident that the company will create more revenue from business with corporate customers.
KT is leading the local market for corporate customers, which has helped it surpass local rivals in the business sector.
``KT is confident that it will achieve 4.5 trillion won in revenue from corporate clients by the end of this year,’’ said Lee Sang-hoon, who’s been managing KT’s business-to-business (B2B) ventures, in a recent interview with The Korea Times at the company’s main office in downtown Seoul, Tuesday.
He stressed that the company is desperately seeking a more sustainable business model to effectively overcome continuing fiercer price-related battles in the local consumer market.
For all telcos, price really matters. It’s no surprise that KT’s consumer business has to continuously offer much better prices and even pricing packages to consumers to prevent them from moving to its rivals.
As all three of the nation’s telcos offer discount rates, their average per-user revenues (APPUs) remains low.
``Based on our stronger network-related infrastructure, KT’s vigorous push to create more revenue from corporate clients has been yielding tangible results,’’ Lee said.
KT, which is the nation’s dominant fixed-line company, has already identified smart enterprise, smart small office, home office (SOHO) and small and medium business, smart government, smart buildings, smart zones and smart green as its new business initiatives. It is looking to cushion the impact of the battle for lower prices and advanced long-term evolution (LTE) networks.
Under the initiatives, KT is currently offering various in-house software solutions to local small- and medium-sized enterprises (SMEs) and even much bigger companies and is closely collaborating with major shipyards in Korea to help them integrate telecom systems.
``Mobile carriers are already locked in what I describe as head-to-toe price competition in the consumer market. Also, telcos shouldn’t be freed from regulatory pressure. We need to invest future telecom technologies with money earned from non-consumer businesses. That’s why I’m seeking to improve profitability in businesses with corporate clients,’’ Lee told the English-language daily.
Various KT services for firms, buildings, universities, hospitals, banks, financial institutions and state-owned companies are less volatile with higher growth potential.
Lee is one of three KT presidents. Pyo Hyun-myung handles the company’s consumer business, while Seo Yu-yeol manages KT’s fixed-line business.
Credit-rating agency Standard and Poor’s (S&P) recently said it may lower KT’s rating. However, it did not rule out the possibility of keeping the outlook at ``stable’’ if KT further improves its profitability and financial risk profile on a sustainable basis.
Focus on mobile office
It’s obvious that smartphones and tablets have influenced a new generation of mobile workers, new ways of doing business and the emergence of the mobile office.
During the interview, Lee emphasized the evolution of the mobile office trend in Korea and spending more time figuring out how businesses’ bottom lines can benefit by becoming more mobile.
``By steadily offering qualified and customized mobile platforms according to market demand, KT will bolster its presence in the highly-lucrative market for mobile offices,’’ said Lee. But he declined to unveil revenue targets for that area.
KT is partnering 40 universities across the nation to help them establish smart campuses via mobile offices using its solutions, while an increasing number of major local hospitals were using them, enabling doctors and nurses to check on the condition of their patients via smartphones.
``KT isn’t alone in the initiatives. We are jointly developing such solutions with subcontractors and suppliers. Nothing is possible without help from them,’’ said Lee, adding KT will develop solutions by using other Internet-enabled devices such as tablets as he believes they will become electronic textbooks, providing business opportunities in the educational sector.
With the emergence of a new consumer pattern, digital signage has established a firm foothold as a ubiquitous life-based media in almost every out-of home environment including commercial sites ranging from apartment elevators, subways, buses and taxis to schools, banks, theaters and retailers including convenience stores and franchises.
``This is another it sector. Our own analysis shows that digital signage will use various visual technologies. It’s a two-way communication not just a board on which to advertize products. Because we have a solid network infrastructure and good sales channels, we can expand the business quite easily,’’ said Lee.
KT plans to increase the number of its digital signs in the country to 42,000 by the end of this year from 39,000 as of the end of April, according to Lee.
``A growing popularity of social commerce companies such as Coupang is also positive in helping the local digital sign market grow,’’ he said, stressing the trend is leading consumers to become personally involved. ``This has become a good interactive marketing tool for companies,’’ said Lee.
He added that KT is keen to sell its platforms and solutions to overseas companies, however, it won’t rush for short-term profit gain.