Launch of KT Kim Young-seop Administration... Task of Establishing Government Relations (Comprehensive)

Approval of CEO Appointment at General Meeting... Launch of Kim Young-seop Administration
Interest in Meeting with Minister Lee Jong-ho of Ministry of Science and ICT
KT Internal Reform and Rate Reduction Plans Expected to be Discussed

Kim Young-seop, the newly appointed CEO of KT, has passed the shareholder meeting hurdle and risen to lead the KT Group. Accordingly, KT is expected to quickly return to normal operations, ending a nine-month leadership vacuum. Attention is also focused on whether a meeting between the new CEO Kim and Lee Jong-ho, Minister of Science and ICT, will take place.

[Image source=Yonhap News]

On the 30th, KT held the 2nd Extraordinary General Meeting of Shareholders for 2023 at the KT Research and Development Center in Seocho-gu, Seoul, and appointed former LG CNS CEO Kim Young-seop as the new CEO.

In June, at the 1st Extraordinary General Meeting, KT raised the voting threshold for appointing a CEO from 25% of total issued shares and 50% of attending shareholders’ voting rights to 25% of total issued shares and 60% of attending shareholders’ voting rights. Although the requirements became stricter, Kim was smoothly appointed as CEO with support from major shareholders including the largest shareholder, the National Pension Service (holding 7.99% as of June 30), and labor unions.

In his inaugural speech, the new CEO Kim stated, "Going forward, through KT Group’s top-tier network infrastructure, technological capabilities, and business competencies in South Korea, we will do our utmost to establish a sustainable growth foundation and enhance corporate value."

With this, KT has completely resolved the risks associated with the nine-month management vacuum. Kim has experience in the telecommunications industry as the Chief Financial Officer (CFO) of LG Uplus and served as CEO of LG CNS for seven years. Based on this experience, he is expected to quickly reorganize and initiate strong reforms.

Industry insiders point to normalizing relations with the government as one of the key challenges Kim must address. Therefore, a meeting with Minister Lee Jong-ho of the Ministry of Science and ICT is also anticipated soon. The government has emphasized cracking down on cartel practices in the telecommunications industry. The prosecution is currently conducting a forced investigation into allegations of preferential treatment by former KT executives. This indicates that government trust in KT has plummeted to the lowest point.

Minister Lee is expected to urge the new CEO Kim to accelerate internal reforms at KT. Previously, Minister Lee emphasized, "The telecommunications market must break away from the entrenched cartel-like situation stemming from a monopolistic structure," and added, "We will continuously monitor market conditions to promote price competition and also review telecommunications infrastructure."

Minister Lee Jong-ho of the Ministry of Science and ICT is speaking at the 'Next-Generation Reactors and Regional Science and Technology Innovation' working party-government meeting held at the National Assembly Members' Office Building on the 8th. Photo by Kim Hyun-min kimhyun81@

Initially, there were expectations inside and outside the company that the new CEO Kim would focus on organizational stability and proceed with reforms gradually. However, as the prosecution recently intensified pressure by raiding KT headquarters and affiliates in connection with embezzlement allegations against former CEO Koo Hyun-mo and others, it is expected that internal reforms will be expedited.

CEO Kim also shows strong determination for reform. Recently, he signed a management contract proposed by the board of directors, agreeing to a recommendation that "if the CEO causes financial damage to the company due to accepting improper demands or illegal acts related to duties during the term and is sentenced to a fine or higher in the first trial, he will not seek reappointment." This is interpreted as his intention to break the chain of cartel interests and avoid repeating the mistakes of former executives.

Discussions on lowering the price plans are also expected. The Ministry of Science and ICT is currently negotiating with telecommunications companies on measures to reduce household communication expenses, such as lowering the 5G plan floor from the 40,000 KRW range to the 30,000 KRW range and introducing a system to carry over unused data. Although a decline in Average Revenue Per User (ARPU) is anticipated, KT, as the leading domestic telecommunications operator, is expected to be the first to comply with the government’s policy to reduce communication fees.

Experts have expressed expectations for KT’s growth under the new leadership. Shin Min-soo, a professor in the Department of Business Administration at Hanyang University, said, "I hope that through the advancement and innovation of KT’s business model and service improvement, KT will not only develop but also contribute more to the growth of the domestic information and communication technology (ICT) industry."

Yu Young-sol, a researcher at Hanwha Securities, stated, "The role of information system integration (SI) is important in the non-telecommunications sectors currently pursued by telecom companies. The new CEO, who served as CEO of LG CNS, an SI specialist company, could play a meaningful role. As an external private-sector CEO, organizational changes and revitalization are expected."

Meanwhile, at the extraordinary general meeting held on the same day, agenda items such as the appointment of Seo Chang-seok as an inside director (head of KT Network Division), approval of the management contract, and revision of executive retirement pay regulations were also approved as originally proposed.

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