[KT Privatization 20th Anniversary] The Next 10 Years Ahead

"Not Korea Telecom but Korea Technology"
Successful transition from public to private enterprise and from Telco to Digico

KT CEO Koo Hyun-mo is delivering a greeting at the '2022 KT Group Innovation Performance Sharing Meeting for the First Half of the Year' held last month at the Sofitel Ambassador Hotel in Songpa-gu, Seoul. Photo by Yonhap News

[Asia Economy Reporter Oh Su-yeon] "I hope people no longer see KT as just a telecommunications company. KT will be known not as Korea Telecom, but as Korea Technology, Korea Transformation."

This was emphasized by KT CEO Koo Hyun-mo at the Mobile World Congress (MWC) held in Barcelona, Spain, last March. Marking the 20th anniversary of privatization, KT is accelerating efforts to solidify its position as a digital platform company (Digico) rather than a telecommunications company (Telco).

KT is speeding up the development of new non-telecom business sectors such as artificial intelligence (AI), big data, cloud, and media to find new growth engines beyond the stagnating telecommunications market.

Repeated Telecommunication Failures

The transformation into a Digico is not without challenges. There have been criticisms that focusing on non-telecom areas has led to neglect of its core telecommunications business.

Last year, the telecommunications sector faced a series of setbacks. In October, while upgrading network facilities in Busan, KT experienced a routing error that caused nationwide wired and wireless communication outages for about 89 minutes. This disruption paralyzed phone calls, text messages, card payments, and corporate operations, drawing public ire. Ultimately, CEO Koo apologized and initiated compensation and measures to prevent recurrence.

Earlier in April, YouTuber 'Itsseop' revealed that although he subscribed to KT's 10-gigabit internet plan, the actual speed was only 100 Mbps, one hundredth of the promised speed, sparking controversy.

Additionally, during the KT Ahyeon branch fire in November 2018, wired and wireless communications were cut off in nearby areas such as Mapo-gu, Yongsan-gu, and Seodaemun-gu in Seoul, virtually paralyzing local businesses. Communications remained down until the day after the incident, causing significant damage to residents and merchants in the vicinity.

Since then, KT has taken steps to strengthen network stability. The ESG report published last July devoted four pages to measures for securing network stability. KT established its own 'Network Innovation Task Force (TF)' and the Ministry of Science and ICT-led 'Network Stability Assurance Council' to implement recurrence prevention and ensure network reliability.

Before field operations, work procedures will be enhanced and virtualization test beds will be established at major centers nationwide to detect errors. To prevent partial errors from spreading across the entire network as happened in last year's outage, methods such as limiting the number of routing redistributions on routers will be sequentially applied by the end of the year to curb network failure propagation.

The Next 10 Years: Embarking on a Second Transformation

KT is actively investing for the next decade. Learning from last year's telecommunications failures, the company plans balanced investments in networks, Digico, and ventures/startups to avoid overextending in non-telecom areas that could backfire. KT envisions a future where stable telecommunications underpin its leap into new Digico businesses. This vision is embedded in the 27 trillion won investment plan announced by CEO Koo in June.

First, KT will invest 12 trillion won over five years in telecommunications. This investment is essential to maintain global leadership in the anticipated 6G era around 2028-2030. As a national backbone telecommunications operator, KT will enhance the stability of wired and wireless networks, expand 5G next-generation infrastructure, and proactively develop core 6G technologies.

KT will also invest 12 trillion won in new Digico businesses, matching the telecommunications investment. This includes AI, robotics, cloud and Internet Data Centers (IDC), media, and content sectors, with a total investment of 1.2 billion won. To acquire new capabilities, KT will invest 3 trillion won in ventures and startups. Alongside large-scale investments, KT plans to accelerate its transformation by concretizing plans to become a holding company by the end of this year. This strategy aims to allow non-telecom new businesses, which have been overshadowed by telecommunications, to demonstrate their true value.

In a recent earnings announcement, KT stated it aims to increase the revenue share of its business-to-business (B2B) and Digico sectors from the current 41% to 50% by 2025, three years from now. KT Cloud, launched in April, targets 2 trillion won in sales by 2026.

Over the past 20 years, KT has successfully transitioned from a public telecommunications enterprise to a private company. While maintaining global telecommunications leadership with the world's first 5G commercialization, KT is also pursuing a Digico transformation to discover new growth engines. KT's efforts have begun to show results, as seen in the unprecedented hit of the drama "Extraordinary Attorney Woo."

The next decade will be a period to accomplish the second transformation?from 'Korea Telecom' to 'Korea Technology.' KT is expected to write a new growth story in the Digico domain following its telecommunications legacy.