Not Carried Away by 'Strong Performance'... KT CEO Koo Hyun-mo Says "We Must Return to Basics"

Mention of Ultra-High-Speed Internet Quality Controversy
Emphasis on Visible Digico Achievements

[Asia Economy Reporter Seulgina Jo] "We must not fall into the illusion that everything is going well. We need to acknowledge that there are areas falling short of customer expectations and return to the basics."

KT CEO Koo Hyun-mo, who recorded an earnings surprise in the first quarter, emphasized to employees the importance of revisiting the 'basics.'

In a letter sent to employees on the 12th, the day after the quarterly earnings announcement, CEO Koo stated, "This year, the transformation into a Digico (digital platform company) KT is becoming concrete, and the results are also becoming visible."

He mentioned, "Both sales and profits in the first quarter showed better performance than in previous years," adding, "Qualitatively, the performance of existing core businesses is solidifying, and changes are occurring such as growth in B2B orders and sales in AI and DX sectors, which differ from the past." KT announced a 15.4% increase in operating profit for Q1 compared to the same period last year. This balanced improvement in performance is due to the sharp growth of platform businesses such as artificial intelligence (AI), digital transformation (DX), media, and content, as well as the expansion of existing core businesses like 5G and ultra-high-speed internet.

Specifically, CEO Koo explained, "Platform sales including AI and cloud grew by more than 7%. B2B orders in the first quarter increased by over 50% compared to the same period last year," and added, "In the content media sector, we have completed the process of establishing capabilities and substance as the number one player through the founding of Studio Genie and the acquisition of Altimedia." Meanwhile, the internet-only bank K Bank is rapidly establishing itself, and preparations for new growth businesses such as robotics and digital logistics are progressing smoothly.

Thanks to these efforts, KT's stock price surpassed 30,000 KRW per share, rising more than 25% since the beginning of the year. CEO Koo said, "Investors' perspectives on KT are also turning positive." He also did not forget to express gratitude, saying, "I thank all of you who are quietly taking ownership and doing your best in your work despite the ongoing impact of the coronavirus."

However, CEO Koo believes that it is precisely at times like these that the basics must be emphasized. He said, "We must not fall into the illusion that everything is going well because of the positive changes appearing throughout the company," directly addressing the recent controversy over ultra-high-speed internet quality.

The controversy spread after a famous IT YouTuber, 'Itsseop,' revealed on his YouTube channel that the KT 10-gigabit (10 Gbps) internet service he was using was actually provided at speeds only about 1/100th of that, around 100 megabits (Mbps). During this process, KT's attitude was also criticized, including the rude response of customer service staff who seemed to shift blame onto customers. As the issue escalated, CEO Koo personally issued an official apology.

CEO Koo reflected, "The recent issue regarding ultra-high-speed internet quality has become an opportunity to revisit our basics," adding, "Although we have strengthened investments and maintenance in stable operation and safety management over the past few years and have laid the foundation, we must admit that there are still areas falling short of customer expectations."

Furthermore, he urged, "As customer expectations are also changing, our internal processes, A/S systems, investment methods, and training content must change together. We need to make efforts to view things not only from our customers' perspective but also from that of general consumers, and we must have a flexible mindset that allows us to change whenever necessary." He added, "Let's take care of the basics in every task we are responsible for. I will also work together with you to ensure this."

CEO Koo also emphasized his policy of people-centered management. He said, "People are at the center of everything," and added, "We will become a company that highly values and rewards members who take ownership of their work and work diligently with a sense of responsibility." He continued, "If you have the will, we will support you to become talent recognized at the highest level in Korea," and stated, "Not only the company will grow, but the members will grow together."

Meanwhile, KT recorded consolidated sales of 6.0294 trillion KRW and operating profit of 444.2 billion KRW for Q1 2021 under Korean International Financial Reporting Standards (K-IFRS). Compared to the same period last year, sales increased by 3.4% and operating profit by 15.4%. On a separate basis, sales were 4.5745 trillion KRW and operating profit was 366 billion KRW, up 3.3% and 21.4% respectively from a year earlier.

By sector, balanced growth between platform and telecommunications businesses stood out. The B2B market, including IDC and cloud, continued to expand due to the spread of untact (contactless) services, and wireless ARPU in the core telecommunications business turned around. In particular, AI and DX business sales, which KT has been driving, increased by 7.5% year-on-year, leading the growth of the 'Digico.'

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