KT's Long-Awaited 'De-Telecommunication'... CEO Koo Hyun-mo Receives A+ Report Card

Non-telecom Revenue Hits 1.7482 Trillion in Q2
Exceeds 40% of Total Sales
Non-telecom Accounts for 30% of Service Income
AI and Digital Transformation Mitigate Losses
AI One Team Formed, HCN Acquisition
Effective ICT Investment and Business Diversification
Evolving into a Platform Business Operator

[Asia Economy Reporter Koo Chae-eun] KT's long-cherished goal of 'de-telecommunication' is shining under CEO Koo Hyun-mo's leadership. With the non-telecommunication revenue ratio surpassing 40%, it is being evaluated as a successful milestone toward de-telecommunication. The AI One Team formation, investment in Hyundai Robotics shares, and acquisition of HCN, all initiatives launched by CEO Koo, are drawing industry attention as decisions aimed at diversifying KT's business portfolio.

Non-telecommunication Revenue Ratio Exceeds 40%

According to the industry on the 14th, KT's standalone non-telecommunication revenue (excluding wireless, wired, and internet businesses) in the second quarter was 1.7482 trillion KRW, exceeding 40% of KT's standalone revenue of 4.3396 trillion KRW. The non-telecommunication revenue ratio, which was around 28% in 2011, surpassed 30% in 2017 and approached 40% at 39% in 2018. Since CEO Koo's inauguration, it has consistently exceeded 40% each quarter this year, establishing a stable portfolio.

Looking at non-telecommunication revenue limited to subscriber-based 'service revenue,' it amounted to 1.1087 trillion KRW (second quarter standalone basis), accounting for nearly 30%. Service revenue is based on subscriber fee services, which have traditionally been dominated by household communication expenses such as wired, wireless, and high-speed internet. However, with continuous investment in AI, cloud, and solutions sectors, the customer base has diversified, raising the non-telecommunication revenue ratio from 28.2% (half-year basis) last year to 29.4% this year, an increase of 1.2 percentage points in one year.

This expansion of non-telecommunication revenue played a decisive role in defending against performance declines in finance (BC Card) and real estate (Estate) sectors caused by the spread of COVID-19. In fact, BC Card's revenue in the second quarter of this year decreased by 1.5% due to the direct impact of COVID-19, and real estate revenue also fell by 7.9% due to a decrease in hotel guests. On the other hand, AI business revenue grew by 16%, and B2B (business-to-business) business revenue increased by 2.4%. CEO Koo stated in his inauguration speech that "to grasp the inflection point of ICT development and lead the trend, we will invest evenly in AI, cloud, and big data," and he is fulfilling that promise through results.

"We Must Transform into a Platform Business to Grow"

KT's 'de-telecommunication strategy' has a long history. Former Chairman Lee Seok-chae, who took office in 2009, focused on group expansion by acquiring BC Card and Kumho Rent-a-Car. Although it appeared to be a de-telecommunication move on the surface, the group became a giant with 53 affiliates (currently 43), leading to criticism of sprawling management. Former Chairman Hwang Chang-gyu, who took office in 2013, focused more on the core telecommunications business rather than de-telecommunication, receiving criticism for "not escaping the red ocean."

Compared to them, CEO Koo differentiates himself by concentrating on ICT business investment and ultra-collaboration for de-telecommunication. This is because he collaborates with businesses that can create synergy regardless of industry, such as manufacturing, finance, and online video services (OTT). By focusing on convergence ICT, considered the core of the 4th Industrial Revolution, he is building a 'Koo Hyun-mo style de-telecommunication.' A representative example is the formation of an AI One Team alliance with Hyundai Heavy Industries Group, LG Electronics, LG Uplus, Korea Investment & Securities, and Dongwon Group. In June, KT invested 50 billion KRW in Hyundai Robotics shares, signaling ultra-collaboration in the AI robot field. To respond to non-face-to-face finance, CEO Koo also partnered with Sohn Tae-seung, Chairman of Woori Financial Group, aiming for 'digital innovation.' Acquiring the prized cable TV asset HCN and partnering with Netflix to establish a dominant 35.47% market share in the paid broadcasting market is also expected to be a future growth driver.

This de-telecommunication strategy aligns with CEO Koo's strategy of "becoming a platform business." In a recent email to employees, CEO Koo stated, "We must transform from a telecommunications operator to a 'platform business based on telecommunications' to continue growing and developing," adding, "5G and AI are core platforms driving innovation in other industries, so we will continuously seek growth opportunities in the B2B market through them."

This content was produced with the assistance of AI translation services.