[Concall] KT: "'MS Collaboration' AX Corporation Starts with About 100 Employees... Will Increase Our Sales"

KT Q3 Earnings Conference Call
"Although PoV, it connects to the main business, increasing headquarters sales"
Cloud gradually expanding to public sector considering regulations

Jung Chan-ho, Executive Vice President of KT's Technology Innovation Division, stated during the Q3 earnings conference call on the 8th, "The AI Transformation (AX) corporation established through cooperation with Microsoft (MS) is planned to start with a scale of about 100 employees."

Jung said, "The services provided by the AX corporation differ from cloud management services (MSP) in that they technically consult client companies willing to undergo AX transformation," adding, "The reason I say technical consulting is because we can present the PoV (Proof of Value) showing what results and effects can be achieved through AX transformation."

PoV refers to verifying whether a new product or service is more useful compared to the existing one and whether it provides value commensurate with its cost.

Jung further stated, "Although it is an early-stage PoV in the market, it will lead to the main business, thus playing a role in increasing KT's own sales."

He added, "Recently, through AX PoC (Proof of Concept) in ESG (Environmental, Social, and Governance) tasks, we confirmed that AI can bring innovation to work, and there have been requests from external strategic partners as well," emphasizing, "I believe the market will definitely grow."

Kim Young-seop, CEO of KT, attended the 'AICT Business Strategy Press Conference' held on the 10th at Novotel Ambassador Dongdaemun in Jung-gu, Seoul, where he spoke about the background of cooperation with Microsoft, future plans, and business strategies toward becoming an 'AICT Company.' Photo by Jo Yong-jun jun21@

KT aims to triple its AI and IT sales by 2028. A consulting firm estimated that cooperation between KT and MS could generate sales of 4.6 trillion KRW over five years. Jung commented, "It is estimated that the sales proportion in the AI and cloud sectors will be about half and half."

He said, "Regarding cloud, there are government regulations, but in the financial sector, regulatory easing is expected, making external cloud adoption possible." However, he noted, "The public sector might be slower," adding, "The initial market will be approached with sovereign cloud centered on strategic customers, and will expand to public and financial sectors as regulations ease."

Regarding the on-site workforce restructuring conducted for the transition to an AICT (Artificial Intelligence + Information and Communication Technology) company, about 1,700 employees were transferred to a newly established technology-specialized subsidiary, and approximately 2,800 employees applied for voluntary retirement, resulting in a total workforce reduction of about 4,500 employees.

Chief Financial Officer (CFO) Jang Min stated, "We plan to account for all severance pay this year," and added, "The labor costs for the 2,800 retirees will be compensated, and the labor costs for the transferred employees will be paid as fees to the established company, so it is expected to be lower than the current labor costs."