Do KT Chairman Lee's Reforms Work?

His six-month drive to overhaul KT surpasses the changes it has undergone in the seven years since its privatization.

KT Chairman and CEO Lee Suk-chae has been pulling out all the stops to reform KT since he took the helm at the nation's largest fixed line and high-speed internet service provider this past January.
Six days after his inauguration, Lee moved quickly to declare KT's merger with its subsidiary KTF, Korea's second largest mobile service provider.
A former minister of information and telecommunications under the Kim Young-sam government, Lee is still breaking the mold. Lee? reforms, now six months since his inauguration and one month since the launch of the merger, surpasses the depth of the changes KT has undergone since its privatization seven years ago.
While delivering his inaugural speech, Lee called for his executives and staff members to be on an emergency management footing with a focus on nurturing an employer? mind among employees and ensuring innovation and efficiency.
In a bid to inject new blood into the organization, CEO Lee replaced his top brass with outside experts, including a prosecutor, a journalist, an applied mathematician and a cosmetics marketing expert. For instance, Suk Ho-ik, who was a former director-general in charge of information and telecommunication policies and public relations at the now-defunct Ministry of Information and Telecommunications, was appointed to be a vice chairman in charge of external affairs. Chung Sang-bok, a prosecutor at the Seoul High Prosecutor's Office, and Oracle Korea President Pyo Sam-soo were hired to serve as the president in charge of ethical management and the president of technology strategy, respectively.
Lee's replacement of KT's top brass with outside experts is designed to graft creative ideas into the telecommunications sector, industry analysts said.
He conducted a massive reorganization of the consolidated KT, eliminating 18 regional headquarters and reassigning approximately 3,000 employees at the Seoul head office and regional headquarters to on-the-scene positions. KT now has an organizational structure based on the classification of clients ― home, individuals and business clientele ― departing from the division of product classifications ― home telephone, Internet telephony (Voice over Internet Protocol) and mobile telephone.
The company is in an ethical management mode. Six KT officials, including executives, have been referred to the prosecution for their indictment on suspicions of taking bribes from subcontractors, while 18 others have been referred to the in-house disciplinary committee.
Among reform measures KT has introduced under the leadership of Chairman Lee are the elimination of the annual wage raise system based on seniority, the introduction of a teleconference system, the provision of payments in cash to subcontractors and the development of convergence products combining fixed line and wireless services.
Chairman Lee stressed a dramatic change in the way KT operates, saying, "The fixed-line business looks like a nose-diving airplane." KT aims at achieving a target of 22 trillion won in sales in 2012 by developing diverse convergence services and making a foray into emerging markets such as Africa. He made the remark at a news conference at the KT head office in Bundang on June 1, following a ceremony to inaugurate the company consolidating KT and KTF.
At that time, KT demonstrated the "hand-over" technology that can allow users to view moving images by freely alternating between the 3-G mobile telecommunications network and the WiBro (mobile Internet) network.
Lee said the fixed line business sees its revenues falling steeply, while the Internet telephone business is waging a severe turf war. Now that KT finds it harder to reverse a decline in sales in these sectors, he said, the company will focus on maintaining profit levels by leveling off the declining pace and taking stringent measures to cut costs while trying to lay a foundation toward future growth by releasing diverse convergence products.
KT will not resort to the intentional restructuring of manpower, and in return, it will introduce a variety of constitutional schemes including an annual wage system to raise productivity, Lee said. While taking time by buying time like this, KT will aggressively strive to develop new value-added products catering to clients, he added. As former Chief of the Marketing Strategy Office at Shinhan Bank Yang Hyun-mi, who was appointed KT's executive director in charge of marketing strategy, said, "KT will recruit more gifted manpower from areas other than the telecommunications field."Concerning KT's global business scheme, Lee said, KT will put more energy into developing and building such IPTV and services tailored to improve corporate productivity by combining telecommunication networks and information technology since such businesses are not subject to each country's regulatory restrictions. While exploring businesses abroad, he said, KT will seek to find ways of teaming up with Korean IT equipment makers. nw

KT's 'SHOW' Subscribers Top 10 Mln Mark
Surpasses the mark 28 months after its debut

KT's mobile service brand SHOW subscribers have surpassed the 10 million mark.
KT announced on July 6 that the number of SHOW subscribers has topped the 10 million mark in only two years and four months since the 3-G mobile telecommunications brand "SHOW" made its debut in March 2007.
In celebration of breaking the 10-million-subscriber mark, KT and Kia Motors plan to hold an event in which Kia's Soul model cars designed by clients are rented to selected SHOW subscribers free of charge for one year.
KT has been aggressively marketing the 3-G telecommunications service that allows image communications. The high-pitched marketing strategy has prompted its rival SK Telecom to push its own 3-G telecommunications service.
A KT official said SHOW has greatly contributed to shifting Korea's telecommunications paradigm from a 2-G voice-oriented service to a 3-G data-oriented one. KT plans to offer differentiated terminals and services so that customer satisfaction can be ensured to turn the tide, he said. nw

KT Chairman and CEO Lee Suk-chae