KT to reduce executives by 27%

KT CEO Hwang Chang-gyu listens during a shareholders’ meeting at KT’s technology development center in Woomyeon-dong, southern Seoul, Monday. Hwang was approved as CEO of the company at the meeting. / Yonhap

By Kim Yoo-chul

New KT CEO Hwang Chang-gyu decided Monday to cut the number of the firm’s executives by 27 percent in order to turn the Korean telecommunications giant into a more efficient company.

“We have too many executives. Management has full responsibility for the current difficulties KT is facing,” Hwang said after he was approved at a shareholders’ meeting.

KT said in a statement later that as many as 35 executives, or 27 percent of its total 130 executives, will be affected by the decision. In particular, 50 percent of executives at back office divisions, such as personnel, finance and planning, will lose their titles.

“KT plans to terminate contracts with some of them, while others will be given different roles in other divisions,” according to the company.

“I will give full authority to the heads of each business division. But that also means they should take much more responsibility,” Hwang said.

KT is the nation’s second-largest mobile carrier and also the country’s dominant fixed-line operator. Owing to its former CEO Lee Suk-chae’s focus on expanding its non-telecommunication businesses, the firm saw a hike in the number of its executives.

A KT official said the firm spends 2.5 trillion won on salaries of some 32,600 employees annually.

“KT has become too big. It’s a difficult task to change it,” said the official.

KT, formerly state-owned, was privatized in 2002. As of the end of last year, it had 54 affiliates and posted 23.8 trillion won in revenue.

Hwang said he will return to basics.

“This means more resources will be allocated to improving our competitiveness in telecommunication-related businesses,” he said. “I can assure you that KT will see positive changes. I will make KT a company loved by people. I am fully ready to sacrifice myself.”

The chief executive reshuffled top-level management on the same day.

He named Executive Vice President Nam Kyu-taik as head of marketing. Nam is an expert in telecommunications-related businesses. Lim Hun-moon, a professor at Chungnam University, was appointed to head the firm’s customers division.

Shin Kyu-sik, a vice president, will lead the global enterprise division, replacing outgoing President Kim Hong-jin

In line with the management reshuffle, Hwang also established a so-called future integration strategy office, an in-house think tank.

The company said that its main role will be to find a future growth engine and maximize synergy by ensuring the integration of key capabilities among affiliates.

Ties with Samsung

The new CEO stressed that the telecom giant is aiming for growth in its international business amid connectivity in the technology industry via strategic alliances.

“Challenge, integration and communication are my three principles. We should go global for new cash cows. I believe KT is ideally-positioned to push for that goal,” said Hwang, a former Samsung Electronics executive.

Samsung officials said the firm will boost its partnership with KT because of the strategic relationship the two firms share.

The new KT CEO was a former head of Samsung Electronics’ memory chip division. Under his reign, Samsung significantly expanded its market shares of memory chips.

“Things will get better. We have expectations about KT’s new CEO as he has shown his capability while managing our chip business,” said a Samsung official.

The two companies were estranged following KT’s decision to introduce Apple’s iPhone in Korea in late 2009, which annoyed Samsung.

The decision pushed Samsung to side with KT’s rival, SK Telecom.

“The past is the past. KT will actively cooperate with Samsung in various business fields from developing content to hardware,” said a KT official.

Woori Investment, a leading local brokerage house, forecasts that KT will report 119 billion won in operating profit, while the net profit during the last three months of 2013 is expected to be 56.4 billion won, down 61 percent and 58.6 percent respectively from the previous quarter.