[KT Privatization 20th Anniversary] Shedding the 'Telephone Office' Label to Become 'Digico KT'

20th Anniversary of Privatization on August 20
Grew to 37 Trillion KRW in Assets and 25 Trillion KRW in Sales
Growth Faster Than KOSPI's 4.2x Increase

Organizational DNA Changed Since Privatization
Employees Strive for 'Privatization of Mindset'
Diversification into Finance, AI, Content, and Cloud Businesses

KT, which has developed alongside the history of telecommunications in South Korea, will celebrate the 20th anniversary of its privatization on the 20th. The photo shows a media facade view using the remodeling construction barricade of the KT Gwanghwamun West building.

[Asia Economy Reporter Cha Min-young] KT, which has developed alongside the history of telecommunications in the Republic of Korea, will mark the 20th anniversary of its privatization on the 20th of this month. Assets, which were 7.8 trillion won in 1990, grew to 37 trillion won on a consolidated basis in 2021. Last year, KT Group's sales reached 25 trillion won, more than seven times the 3.44 trillion won recorded in 1990. Considering that the KOSPI index rose only 4.2 times over the past 20 years, this is a remarkable growth.

There have also been significant achievements in organizational aspects since privatization. KT saw the appointment of an internal employee as CEO for the first time in 12 years. Under the leadership of CEO Koo Hyun-mo, KT is shedding the label of a 'telephone company' and accelerating its transformation into a Digico (digital platform company).

Privatization to Revitalize Competition in the Telecommunications Market

Discussions on the privatization of the Korea Electric Telecommunications Corporation, the predecessor of KT, began in the mid-1980s. The main policy goal was to activate competition in the telecommunications market. Korea Telecom was listed on the stock exchange (now Korea Exchange) at the end of 1998. In May 2002, all remaining government-held shares were sold, transforming it from a government-owned public enterprise into a 'fully private company.' KT was regarded as a representative case of public enterprise privatization. As such, it was not free from scrutiny by the government, the National Assembly, and civic groups.

The start of privatized KT began with 'changing the mindset of employees.' Lee Yong-kyung, the first president of KT and former president of its subsidiary KTF, emphasized 'privatization of consciousness' in an interview with a media outlet at the time, stating, "We are conducting a company-wide 'One In, One Out' campaign to adopt one advantage of private companies while eliminating one public enterprise mindset." The process began by eliminating hierarchical relationships and changing public enterprise terminology to break the customs prevalent in public enterprises. In an interview on the third anniversary of privatization, he also cited the dispersion of ownership, establishment of transparent governance, and building a culture of trust with labor unions as the most rewarding achievements during his term.

Applying AI solutions at the KT Cloud IDC Center

KT, which was the second-largest wireless and the largest fixed-line operator, also experienced intense business days. In 2002, KT commercialized VDSL (Very-high-bit-rate Digital Subscriber Line) for the first time in Korea, and in June 2006, it succeeded in commercializing WiBro, the world's first. In June 2009, KT merged with KTF to become an integrated corporation, operating both wired and wireless communications. Entering the 2010s, competition in 4G (LTE) and 5G technologies became a hot topic in the telecommunications industry.

KT commercialized the first nationwide gigabit internet network in Korea in 2014 and showcased 5G trial services at the 2018 Pyeongchang Winter Olympics. During this process, former Chairman Hwang Chang-gyu delivered a keynote speech at the global IT and mobile festival 'Mobile World Congress (MWC),' announcing the world's first 5G service commercialization and earning the nickname 'Mr. 5G.' Korea succeeded in commercializing 5G ahead of the United States in 2019, showcasing its telecommunications technology prowess to the world.

No Longer Just a Telecom Company... Expanding into Finance and Content

KT's AI-based contact center AICC solution applied to the customer center.

KT has also actively pursued business diversification. In 2017, it opened the door to Korea's first internet-only bank, K Bank. As of the end of 2021, the sales composition shows that the Information and Communication Technology (ICT) sector accounts for 18 trillion won (72%), followed by finance at 3.6 trillion won (14.4%). Last year, KT established KT Studio Genie, a content and media control tower, laying the foundation for a vast KT content media ecosystem.

Earlier this year, KT spun off its future growth engines, the cloud and Internet Data Center (IDC) divisions, to establish KT Cloud. CEO Koo Hyun-mo, appointed in 2020 as the first internal executive in 12 years, declared the 'Digico transformation' centered on ABC (Artificial Intelligence (AI), Big Data, and Cloud) as his inaugural policy. He set forth plans to build AI-based call centers and become a digital transformation (DX) partner for enterprises. CEO Koo is also a living witness who marked a turning point in KT's history, which had been rife with political parachute appointments.

Content business, in particular, was a controversial core from the time of its announcement. The blueprint announced directly by CEO Koo was met with market skepticism, described as a 'reckless challenge.' This was because during former Chairman Lee Seok-chae's tenure, KT had established KT Media Hub dreaming of a 'Korean Paramount,' but it failed after three years. There was a prevailing view that KT, unlike CJ, which continuously invests, would find it difficult to sustain a content business without a committed owner.

KT Studio Genie’s first drama, Extraordinary Attorney Woo

However, the atmosphere changed when KT Studio Genie's first drama, 'Extraordinary Attorney Woo,' led by CEO Kim Cheol-hyun, became a hit this year. With this work ranking first globally on Netflix and showing tangible results, the ENA channel, launched as an integrated brand, also gained momentum. KT is strengthening its external cooperation system by forming strategic alliances through equity swaps with major partners such as Shinhan Bank and CJ ENM. Since just after privatization, KT has consistently maintained a dividend payout ratio of around 50%, solidifying its position as a 'K-dividend stock.' Thanks to these efforts, KT closed at 38,350 won on the 1st, regaining a market capitalization in the 10 trillion won range for the first time in about nine years.

Now, as KT approaches the 20th anniversary of privatization, it plans to invest a total of 24 trillion won, with 12 trillion won each in the Digico and telecommunications (Telco) sectors. It also expressed its intention to expand infrastructure to provide stable telecommunications services and to develop core 5G and 6G technologies to advance infrastructure. KT plans to continue investing in future growth engines such as AI, big data, and cloud to lead digital transformation. It also plans to expand its scope by investing in areas such as bio and logistics in the future.