Will KT be able to restructure its business?

By Baek Byung-yeul

KT is inching toward announcing its annual reshuffle of executives this month and attention is growing over whether the telecommunications company will roll out a business restructuring plan.

For KT, transforming its business structure has become an urgent task given its arch-rival SK Telecom has been successfully morphing into a big tech company with business operations in various emerging sectors such as e-commerce, future mobility and even chips used in data centers.

Regarding restructuring, a KT official said Friday nothing has been decided yet as the company hasn't announced the list of changes in its annual reshuffle of senior officials.

“The company is set to announce its annual reshuffle of executives no later than the third week of December. We will be able to provide more detailed information about the restructuring of the business after that,” the official said.

Investors have called on KT to come up with a drastic way to improve shareholder value as the company has been heavily dependent upon the highly-competitive ― and increasingly thinner margins ― of the telecommunications business here.

Given its CEO Ku Hyeon-mo revealed he would speed up restructuring of the telecom giant when he was ushered in as new head early this year, industry analysts said KT is likely to work toward this transformation before the end of the year.

Since Ku took the helm of the mobile carrier, KT has tried to boost its stock value but things haven't worked out well. In November, KT offered to buy back 300 billion won of its own shares in order to increase the stock price, but investors showed a chilly reaction to the move with the price remaining below 25,000 won per share.

“If the company succeeded to transform itself into a holding company, spinning off its business divisions such as fixed-line telephony, mobile telecommunications and media, or decided to phase out the traditional wired telephone business, there would be a huge impact on the company's stock price,” Kim Hong-sik, an analyst at Hana Financial Investment.

Stating that KT has been criticized for spending too much on operating expenses, Kim said the company will be able to reduce expenditure by becoming a holding company and this would become a positive factor in attracting the interest of investors.

“If the company decides to gradually reduce the size of the home phone business and focuses on beefing up fixed-line telephony for the business-to-business market, mobile telecom and media businesses, KT could attract a better response from investors,” he further noted.