After a Year of Hyper-Collaboration and Decentralization, Ku Hyun-mo's Focus Next Year is B2B and Stock Price Boosting

Appointment of Presidents Kang Guk-hyun and Park Jong-wook
Establishment of Troika President System
Reorganization of Headquarters for Slimming Down
Challenge of Achieving 50% Non-Telecom Revenue Share
Need for Comprehensive Investment in B2B Sector
Stagnant Stock Price Also a Challenge

[Asia Economy Reporter Koo Chae-eun] Gu Hyun-mo, CEO of KT, the 'telecom giant' with 43 affiliates and 60,000 employees, has marked his first year in office. Appointed on December 27 last year and inaugurated in March, Gu's performance has generally met expectations. He not only presented KT's new vision of transforming from a telecommunications company (Teco) into a digital platform company (Digico), but also established a solid decision-making system to create a 'KT Group resilient to external pressures,' which he emphasized as his inaugural message?an achievement recognized by many.

However, from next year onward, there is pressure to translate these efforts into tangible results such as earnings and stock price performance. The transformation into a digital platform company based on ABC (Artificial Intelligence, Big Data, Cloud), which Gu has stressed, must be reflected in concrete figures like the expansion of non-telecom revenue share. Additionally, gaining momentum in the B2B (business-to-business) 5G market and boosting KT's long-standing challenge of raising its stock price remain tasks ahead.

Gu Hyun-mo Style Reform Implemented

Gu was appointed CEO on December 27 last year, succeeding former bureaucrat Chairman Lee Seok-chae and semiconductor expert Chairman Hwang Chang-gyu. Gu is the first internal appointment to KT's CEO position in 12 years since Nam Joong-soo, who took office in 2005 and stepped down in November 2008. Although KT was privatized in 2002 and is effectively an 'ownerless company,' it has long faced criticism for political interference and parachute appointments.

As Gu, who built a 'salaryman myth,' became the captain of the KT ship, expectations rose that he would strategically manage KT with deep insight into internal issues, while concerns lingered about potential lukewarm responses to restructuring or reform. However, immediately after his appointment, he set 'customer-centric KT' as a goal and launched a bold reform drive.

First, he lowered the CEO rank from chairman to president and experimented with a 'two-top system' by appointing Park Yoon-young, his running mate, as president in the first round of personnel changes. In the second round this month, he appointed Kang Guk-hyun and Park Jong-wook as presidents, establishing a 'troika president system.' A KT official said, "The joint president system is intended to prevent decision-making from concentrating in one place and to enable efficient strategy formulation and investment. It is significant in that KT's streamlined independent management system is taking root without external interference." Additionally, to slim down the headquarters organization, responsibilities and authority were strengthened in six major regional headquarters. Gu's field-oriented balanced personnel appointments have been praised.

Strengthening Non-Telecom and B2B

Gu declared the principle of 'selection and concentration,' making B2B a core strategic business. He aims to break away from being a telecom company (Telco) trapped in a saturated market by focusing solely on telecommunications and transform KT into a digital platform company (Digico). To this end, he is exploring ways to integrate media, finance, and B2B industries. In October, he launched the B2B brand KT Enterprise and announced plans to lead the 5G market. At that event, Gu stated, "The goal is for the ratio of telecom to non-telecom revenue to be 5 to 5 by 2025."

Expanding business agreements (MOUs) with companies in other industries aligns with this strategy. Industry convergence is essential in the 5G market, where B2B market penetration is key. Since Gu's inauguration, KT has formed the 'AI One Team,' a coalition of nine domestic academia-industry-research institutions including LG Electronics, LG Uplus, and Hyundai Heavy Industries. In addition, KT has strengthened all-around cooperation by forming the 'Cloud One Team,' which includes 19 companies and institutions.

Eyes on Next Year's Performance

If this year was a 'practice game,' next year is the 'real game.' To achieve a 5-to-5 split in non-telecom revenue, comprehensive investment and ecosystem building in the B2B sector are necessary. On a standalone basis, KT's non-telecom revenue (excluding wireless, wired, and internet businesses) in Q3 reached 1.9105 trillion KRW, accounting for 42.3% of KT's standalone revenue. The non-telecom revenue share, which was around 28% in 2011, surpassed 30% in 2017 and approached 40% at 39% in 2018. Since Gu's appointment, the share has consistently exceeded 40% each quarter this year, stabilizing the portfolio. However, strategic investments are still needed in core business areas such as AI, digital transformation (DX), cloud, and solutions.

KT's stock price, which has been sluggish even before Gu's appointment, remains a hurdle to a leap forward. As of the previous day's closing price, KT's stock stood at 25,500 KRW, less than half of the 54,000 KRW IPO price 18 years ago. Restructuring of the governance structure, including share buybacks and subsidiary listings, will accelerate from next year. Candidates for value-up paths involving 'subsidiary spin-off → investment attraction → initial public offering (IPO)' include K-Bank, which announced its IPO plan by 2023, BC Card, and the B2B business division. A telecom industry insider said, "Next year, effectively the midpoint of Gu's three-year term as he enters his second year, is crucial. Showing clear results to the market and stakeholders next year will give more momentum to the ongoing reforms."

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