KT, a Company Without Growth and Old-Fashioned? CEO Koo Hyun-mo's Rebuttal

[Asia Economy Reporter Seulgina Jo] "When people think of KT, many have the perception that it is a company without change or growth. They say KT is just a company that does mobile, internet, IPTV, and so on, and question how it could lead innovation in other industries. But we are confident."

KT CEO Koo Hyun-mo declared that the company will lead 'Korea's Digital Transformation (DX)' by advancing as a digital platform business. At the core is KT's differentiated platform based on so-called 'ABC'?Artificial Intelligence (AI), Big Data, and Cloud. Through this, KT aims not to remain confined to existing business areas such as mobile and IPTV but to lead innovation in other industries within the B2B (business-to-business) market, known as the 'land of opportunity.'

Koo Hyun-mo: "Transforming into a Digital Platform Company... Will Lead Innovation in Other Industries"

At the 'Digital-X Summit 2020' online briefing held on the 28th at the Grand Intercontinental Seoul, CEO Koo emphasized, "KT's AI, Big Data, and Cloud-based platform services are being applied across many industrial sectors, contributing to discovering new growth engines," and added, "We will lead the paradigm shift in Korea's industries based on our proactively prepared DX capabilities and mutual growth and cooperation."

In his first official briefing since taking office over six months ago, CEO Koo said, "Many people think of KT as a company without change or growth," and stressed, "We will transform from a telecom company to a digital platform company." He explained, "KT used to generate 100% of its revenue from telecommunications, but now about 40% comes from non-telecom sectors," and stated, "Starting this year, we will leverage digital innovation to create new growth engines." His ultimate goal is to become a platform company that leads innovation in other industries and drives changes in customers' lives.

To this end, KT unveiled a new B2B brand, 'KT Enterprise.' The slogan of KT Enterprise is 'Digital Transformation Partner.' This is interpreted as a declaration to accelerate the discovery and expansion of the B2B DX market based on KT's ABC platform. To expand the B2B DX market, KT has identified successful models in seven major sectors including finance and logistics, and plans to extend DX businesses to regions and small and medium-sized enterprises, aiming to create exemplary cases of Korea's New Deal. Additionally, next month, KT will launch the 'KT DX Platform,' which integrates innovative services such as AI, Big Data, and Blockchain.

CEO Koo stated, "KT's strategy to leap into a digital platform company and target the B2B market is supported by the 'ABC+X' capabilities and experience, which combine network infrastructure superiority and ABC technological prowess with specific industrial sectors to create business value," and emphasized, "We will lead innovation in other industries and realize Korea's 'DX Dream.'"

"We Have Differentiated Capabilities"?The Source of KT's Confidence

CEO Koo introduced KT's capabilities as a digital platform business in ▲media ▲finance ▲B2B based on ABC.

First is the media platform, including IPTV. CEO Koo said, "KT is overwhelmingly number one in the media industry. One in four Koreans is affiliated with KT," and explained, "Media is the platform that has the greatest influence inside homes." Currently, KT's IPTV subscribers reach 8.69 million. Including Skylife and the acquisition of Hyundai HCN, the number expands to 12.56 million.

IPTV is one of the fastest-growing businesses within KT. Revenue grew from 700 billion KRW in 2014 to 1.6 trillion KRW last year, with expectations of 1.8 trillion KRW this year. With the acquisition of Hyundai HCN, the business scale will reach 2.8 trillion KRW, and including OTT service Season, it will be a 3 trillion KRW business. CEO Koo said, "People ask why we are acquiring cable TV company Hyundai HCN; it is to secure a definite number one position and a solid platform base," and added, "Starting next year, we will fully enter the content business."

CEO Koo cited finance as the second capability and differentiation. He began by noting that the K-Bank issue was resolved with BC Card becoming the largest shareholder, and evaluated, "BC Card has a merchant base of 3.1 million, which shows the potential of a data company." He declared, "K-Bank will position itself differently from Kakao Bank," and said, "By combining BC Card, the number one payment platform, with KT, we will create value beyond finance."

Alongside this, CEO Koo mentioned the B2B market as a new growth area, emphasizing, "We have ABC capabilities that can lead innovation in other industries." He explained that KT has sufficient ability and assets to combine AI, Big Data, and Cloud technologies with specific sectors to create social value.

Currently, in the AI sector, KT is preparing to enter the AICC (AI Call Center) platform business starting in 2021. Regarding the cloud sector, CEO Koo emphasized, "People ask who does cloud in Korea, and KT is the number one domestic cloud IDC operator." KT has invested over 2 trillion KRW in this sector for more than ten years. Next month, KT will open the largest capacity IDC in Yongsan. He expressed confidence, saying, "Compared to global operators, KT Cloud's competitiveness lies in integrated network services."

Refuting the Image of "KT = A Company Without Growth, An Old Company"

On this day, CEO Koo actively refuted concerns surrounding KT. Regarding criticism that KT's growth rate has been only 1% over the past five years, he pointed out, "There are surprisingly fast-growing businesses," citing media (20%, based on the last five years), enterprise IT solutions (18%), and AI/DX (8%). He explained, "The overall growth rate is 1% because revenue from landline and international calls has decreased by over 1 trillion KRW in five years," calling it an unavoidable mega trend. He also explained that in the mobile sector, due to the timing of investment, growth, and profit recovery, prices had to be lowered, which inevitably led to sluggish growth over the past five years.

CEO Koo also addressed the perception that KT is an old company with an average age of 47. He added, "We have 4,500 employees in their 20s and 30s, 1,500 employees related to ABC, and 420 core AI talents," and said, "Breaking it down, we are confident." Regarding core AI talents, KT plans to increase the number by more than 300 annually, expanding to 1,200 by 2022. On the image of being bureaucratic and not agile, he said, "Our way of working is changing," and introduced a customer-centric agile management system.