Merged KT Moves Faster
By Kim Tae-gyu
When people gain weight, they likely move slower than before, as gravity has more of an effect. But this appears not to be the case for KT, the country's top telecom operator.
Last June, KT merged with its mobile arm, KTF, to launch a mammoth telecom company with projected annual sales of up to 20 trillion won. Before the merger, KTF was the country's second-ranked wireless carrier.
This prompted watchers to predict that KT might lose steam due to its bloated size. But the critics were silenced by the firm's shrewd strategies, which surprised not only market watchers but also its competitors.
``KT is not what it used to be. In the past, the firm felt like a dinosaur that was too big to move fast. While other telecom firms ran, it walked very slowly,'' said a Seoul analyst who declined to be named.
``However, KT has come up with smart strategies and proactive marketing tactics. Rivals of the company now worry about the nimbleness of KT ― a company is good if it makes its competitors sweat,'' he said.
Its business showings improved after the high-profile corporate marriage, as packaged products are selling well. For example, the real-time internet protocol TV dubbed QOOK TV has attracted almost 1 million subscribers in about a year after its full-fledged launch last November.
It has also shored up its income statements and balance sheets.
During the first quarter, ahead of the merger, KT and KTF combined to rack up 4.5 trillion won in sales but the figure jumped to 4.9 trillion won in the second quarter and 4.8 trillion won in the third quarter.
Experts expect things to continue to go well for the time being.
``Traditionally, KT recorded disappointing performances during the fourth quarter due to depreciation and excessive spending on marketing. But those negative factors are unlikely to happen this year,'' said Daniel Jin, an analyst at Shinhan Investment Corp.
``KT is expected to put up good performances beyond next year, too. Accordingly, the firm would outperform the markets in share prices in the foreseeable future,'' he said.
KT has proven that it can offer sophisticated services, amply demonstrated by QOOK TV and the introduction of iPhones here.
The former state monopoly, which was fully privatized in 2002, forged a consortium with Kookmin Bank, the country's top lender, Shinhan Card and BC Card of late to cooperate in the so-called T-commerce industry.
Starting next year, KT plans to enable QOOK TV watchers to buy items on TV using an integrated chip card. This means that shoppers can pay without offering their card details using their remote control.
In addition, KT plans to sell the iconic Apple iphone, which is expected to attract a flurry of customers later this month.
``A few years ago, KT's services and policies were highly predictable. It scarcely surprised the market. But now it is different. I don't know now what products they will debut tomorrow,'' said Kim Jang-won, an analyst at IBK Securities.
``After the mergers, the company has become very preemptive, armed with quick decision making and innovative products,'' he said.
Many market watchers point out that Chief Executive Lee Suk-chae has played a pivotal role in KT's changes. He is the former Information-Communication minister and took the helm of the company early this year.
``As soon as Lee took the reins, he started sending people to the forefronts of our businesses, such as our sales or after-service teams, while keeping just a skeleton staff in the head office,'' a KT insider said.
``As he puts field experience on the front burner, the back-office organizations get slimmer. This appears to enable KT move faster,'' she said.
She added that Lee has built up a meritocracy: ``Rather than a seniority-oriented system, Lee stresses merits. In my view, this has overhauled the corporate culture and atmosphere across the company over the past several months.''
Lee became a bureaucrat in 1969 and worked in important financial jobs through 1984. In the mid-1980s, he served as an advisor to the president.
Shortly after taking charge of the Ministry of Information and Communication, Lee again served as an economic advisor, this time to then-President Kim Young-sam in 1996 and 1997.
Double-Digit Operating Profit Ratio
The KT Group, which has 28 subsidiaries under its arm, is striving to chalk up 24 trillion won in sales and 2 trillion won in operating profit to achieve the operating profit rate of 8.1 percent this year.
In other words, its profitability will remain in single-digit territory even if the Bundang, Gyeonggi Province-headquartered conglomerate accomplishes its goals for this year.
However, it seeks to crank up its overall sales and operating revenues to 27 trillion won and 3.1 trillion won, respectively, by 2012 for a profit ratio of 11.4 percent.
Toward that end, KT is eying not only the domestic market but also the potential-laden overseas markets.
In particular, it strives to wade into emerging markets down the road, such as central Asian and African countries, teaming with Korean companies having cutting-edge technologies.
``KT will continue to make innovative changes in order to achieve green growth, create jobs, contribute to national economic growth and become a global IT leader by promoting the IT industry as a well-loved national company,'' Lee said.