[KT Privatization 20 Years] Koo Hyun-mo, Internal CEO After 12 Years... '10 Trillion Club' in 9 Years

Appointing an Internal CEO After 10 Years of Controversy Over Political Appointees
Pursuing Substantial Growth Over Size, Urging Competitiveness Enhancement

[Asia Economy Reporter Lim Hye-seon] KT re-entered the '10 trillion won market capitalization club' after 9 years and 2 months. The KT stock price (closing price of 19,700 won) on March 30, 2020, the day CEO Koo Hyun-mo took office, has risen by 94.7%. Analysts say that focusing on the structural reform into a 'digital platform company (Digico),' which CEO Koo has emphasized since his inauguration, was effective.

Stepping down from the chairman title and cutting salary... Creating the true era of private KT

CEO Koo is a figure who created the myth of an 'internal CEO' after 12 years. KT, which started as the Ministry of Communications (now the Ministry of Science and ICT), became independent as the public enterprise Korea Electric Telecommunications Corporation in 1981 and succeeded in privatization in 2002. However, KT has been evaluated as not free from political influence. For 10 years after the Lee Myung-bak administration, the position of 'KT head' suffered from controversies and turmoil. Former KT Chairmen Lee Seok-chae and Hwang Chang-gyu were respectively known as 'pro-Lee faction' and 'pro-Park faction' figures. Both former chairmen were investigated by prosecutors at the end of their terms. KT's competitiveness declined due to leadership shaken by changes in political power.

To reform, KT abolished the chairman position, switched to a CEO president system, and cut salaries by half. This was based on the judgment that political figures sought the KT CEO position because it guaranteed a status comparable to a minister and a high salary. The chairman appointment process was also phased through the Governance Committee, Chairman Candidate Screening Committee, Board of Directors, and General Meeting of Shareholders. A framework was established to minimize the influence of the CEO on board operations. The first 'KT head' appointed in line with these changes is CEO Koo Hyun-mo. CEO Koo joined KT in 1987 as a researcher at the KT Economic Management Research Institute and has walked a single path at KT for 34 years as a true KT man.

Focusing on solid growth instead of external expansion... 'Digico (Digital Transformation)' achievements stand tall in 2 years

Since taking office, CEO Koo has focused solely on solid management. He grew as a strategy expert through roles such as head of the Investment Management Team at the Management Strategy Office, strategic investment officer at the Strategic Investment Office, Group Strategy Officer 1, and Corporate Center Management Strategy Officer. True to his reputation as a 'strategy expert,' he declared the transformation from a telecommunications company 'TELCO' to a digital platform company 'DIGICO' just seven months after taking office. Instead of competing in the stagnant telecommunications market, the strategy is to lead the platform and business-to-business (B2B) industries based on ABC capabilities: Artificial Intelligence (AI), Big Data, and Cloud.

To achieve the Digico transformation, CEO Koo focused on securing future growth engines such as AI, robotics, media content, and digital finance. In June 2020, KT invested 50 billion won in Hyundai Robotics to acquire a 10% stake and strengthened media and content business capabilities by acquiring Hyundai HCN and Hyundai Media. In September last year, KT acquired Epsilon, a global data specialist company, to enhance global data competitiveness. KT also announced a mutual acquisition of shares worth 437.5 billion won with Shinhan Bank, promising DX business cooperation for future growth.

Shareholder-friendly dividend policies are also analyzed to have contributed to increasing corporate value. Last year, KT raised the dividend per share by 22.7% from the previous year to 1,350 won and confirmed a dividend per share of 1,910 won this year, a 41.5% increase from last year. The dividend yield is 5.9%, and the total dividend amount is about 450 billion won.

Qualitative growth was also achieved. Last year's operating profit was 1.6718 trillion won, a 44.1% increase from 1.1595 trillion won in 2019, two years earlier. Sales slightly increased to 24.342 trillion won. This year's performance continues to show steady growth.

CEO Koo said, "From the customer perspective, we will expand KT's playground into the B2B sector and the Digico area in business terms to continuously increase KT's value."