[2022 Hot IT Companies④] KT Ku Hyun-mo, Digital Platform Company 'Undergoing Transformation'ing

Expansion of Businesses in Cloud, AI, Robotics, Mobility, and New Media
Operating Profit Expected to Increase by 28% This Year
Strengthening the 'Core' Telecommunications Business Also Needed

Koo Hyun-mo, CEO of KT

[Asia Economy Reporter Cha Min-young] "We will make KT the national company that the people need the most." This was the inaugural statement made by KT CEO Koo Hyun-mo in March last year. From the beginning of his tenure, CEO Koo, who has led KT's transformation with the core slogan of transitioning into a digital platform company (DIGICO), is tightening the reins on business ahead of his final term next year.

According to market research firm FnGuide on the 23rd, KT's revenue consensus (average estimate) for this year is 24.6513 trillion KRW, a 3.1% increase compared to the same period last year. Operating profit is estimated to rise 27.9% to 1.5148 trillion KRW, and net income attributable to controlling shareholders is expected to increase 56.6% to 1.0304 trillion KRW.

Expanding from Cloud to AI

After a tumultuous year, KT plans to continue various structural changes next year, covering areas from cloud and Internet Data Center (IDC) sectors?which have been key contributors in business-to-business (B2B) transactions?to artificial intelligence (AI), robotics, mobility, and new media.

In line with the blossoming cloud market, KT plans to steadily strengthen its core infrastructure IDC business. The establishment of the Cloud & IDC Business Promotion Office in the organizational restructuring this November is interpreted as part of preparatory work. The Institute for Information & Communications Technology Planning & Evaluation (IITP) named cloud as one of the top 10 issues next year. KT holds a 41% market share in the IDC industry, operating 14 domestic data centers?the most in the country. Daishin Securities expects KT to record sales of 340 billion KRW in this sector this year.

The AI One Team led by KT, which will celebrate its second anniversary next year, will continue AI collaboration. This large-scale industry-academia-research consortium includes 11 companies and institutions such as Hyundai Heavy Industries Group, LG Electronics, LG Uplus, Korea Investment & Securities, Dongwon Group, Woori Bank, Hanjin, KAIST, Hanyang University, and the Electronics and Telecommunications Research Institute (ETRI). They are jointly developing a super-large AI model with over 2 trillion parameters and are strengthening the 'Startup Open Innovation' program to foster the AI ecosystem, while expanding AI-related academic departments linked to recruitment to broaden the pool of practical talent.

Empowering Independent Affiliates

Separating and making affiliates within the KT Group independent is also a key task. Under the leadership of President Yoon Kyung-rim, who returned to KT this year, the spin-off of major business units and initial public offerings (IPOs) will be sequentially pursued. To support President Yoon, the Group Transformation Division was newly established. Market observers predict that enhancing corporate value and boosting stock prices through this will be the key to CEO Koo’s reappointment.

However, strengthening the core wired and wireless telecommunications business cannot be overlooked. KT faced difficulties due to the internet speed degradation issue of the 10Gbps plan raised by famous IT YouTuber ‘Itsub’ in April this year. In October, a nationwide network outage caused customer damage, and investigations revealed that the incident was due to human error, leading to strong public criticism. As a lump-sum compensation payment for user damages will be reflected in the fourth quarter, profitability deterioration is inevitable.

Jeong Ji-soo, a researcher at Meritz Securities, said, "With continued growth in 5G subscribers and strong B2B business next year, separate operating profit is expected to increase 8.6% year-on-year to 1.1943 trillion KRW. The headquarters’ B2B business will drive growth in AI and digital transformation (DX) sectors through new IDC supply responding to increased digital transformation demand from clients, while subsidiaries’ operating profits will also recover."

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