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By Kim Hyun-bin
The three major telecom companies ― SK Telecom (SKT), KT and LG Uplus ― have been searching for new growth engines to reduce their reliance on the conventional telecom sector. This is because they predict difficulties competing in the post-coronavirus era and entering the Fourth Industrial Revolution with just their traditional fixed and wireless communication businesses.
According to the industry, the companies have been enhancing their telecom services while expanding new growth engines, including artificial intelligence (AI), big data and cloud services.
"Innovative change is inevitable in the post-coronavirus world and is the reason why telecom companies are brainstorming ways to create profit aside from their traditional businesses, mostly through contactless, digital transition and other new growth industries," an industry official said.
The three major firms are working to reduce their strong telecom image. SKT is contemplating cutting "telecom" from its official company title, while KT has been calling itself an "AI company" or "digital platform company" in the hope of appealing more to business-to-business (B2B) clients.
LG Uplus has long taken out the word "telecom" from its name and the company's initiatives in the non-telecom sector have shown strong growth in recent years.
SKT aims to become a global big-tech company with new ICT (information and communications technology) as its base. The company plans to increase its non-telecom businesses to over 35 percent of total sales this year.
SKT's three major new growth engines are in the media, security and commerce sectors, and the firm enjoyed double-digit growth in the third quarter with an 18.9 percent increase in sales compared to the same period last year. Operating profit rose a whopping 40.3 percent, exceeding 100 billion won for the first time.
The media sector saw a sales surge of 20.3 percent compared to the same period last year with the growth in internet protocol TV (IPTV) and the positive effects from its acquisition of T-broad. IPTV subscribers increased by 129,000 compared to the previous quarter.
The security sector rose 15.5 percent compared to last year, with strong backing from ADT Caps, SK Forensics and Walk-Through, an AI facial recognition system that checks a person's temperature, which became important for businesses during the COVID-19 pandemic.
SKT also plans to establish a mobility-specialized business on the back of its popular T Map platform.
The newly established company aims to provide all-in-one mobility as a service (MaaS) and expand it to include a taxi call service through strategic partnerships with Uber.
"Since 2017, our strategy was to transition into a new ICT company and we have found tangible results through our new businesses in commerce, security and mobility," an SKT official said. "In addition to our traditional telecom businesses, we are working to expand our 5G and AI operations and new projects that include innovative technologies."
KT aims to expand its B2B market share through digital transformation which will become the base for its future growth, and help it lead the industry by providing diversified AI, big data and cloud services. The company is scheduled to launch a platform this month.
In October, the company announced it would become an "AI company," embedding AI technology in all sectors.
KT has launched its AI robotics team and a digital and bio healthcare department to establish a medical platform and its AI healthcare business.
Through their efforts, they have increased sales in the IT and future growth sector by 50 percent and diversified business to offer 94 services, including local currency, security and energy.
KT recently unveiled its B2B brand KT Enterprise in an effort to become the leader in the B2B digital transformation field. It also opened its 13th digital center in Yongsan, Seoul.
"We have selected B2B DX as the best digital innovative partner in efforts to lead the industry and for continuous growth," KT CFO Yoon Kyung-keun said.
KT also has moved to sell affiliates not related to the telecom sector to raise capital to invest in new growth engines, with CEO Koo Hyun-mo leading the efforts.
"I have grown into an M&A expert here at KT, so I have been contemplating structural changes," Koo said during a press conference last month. "The deals are expected to pan out next year."
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