Telecom giant KT aims for 30 pct growth in operating income, CEO says

(ATTN: CORRECTS figures in 4th para)
SEOUL, April 8 (Yonhap) -- KT Corp., South Korea's telecom powerhouse, is looking
to grow its operating income this year by 30 percent, spurred by its recent
merger with a mobile phone affiliate, its top executive said Wednesday.
Installed as new CEO of KT in January, Lee Suk-chae, 63, former minister of
information and communications, successfully closed a merger between KT and the
country's second-largest mobile carrier KTF Co. two months later in an effort to
boost the company's competitiveness, as its customer base was shrinking. The
merged entity is scheduled to launch on June 1.
The newly merged company will be divided into independent operating units called
"Company in Company" (CIC), including units serving home customers, individual
customers and business customers.
In an interview with Yonhap News Agency, Lee said the company has set a goal of 2
trillion won (US$1.51 billion) in operating income, up almost 30 percent from
1.55 trillion won, the combined operating profit of KT and KTF Co. in 2008.
To achieve the ambitious objective, KT will shift some of the focus of its
marketing activities from retail customers to industrial customers.
"If KT remains just a telecommunications company, feeding only on the network
users' fees, it is doomed to disappear," Lee said. "It needs to evolve into an IT
solution company, such as BT (British Telecom). The company will have to seek new
revenue sources on top of existing business models."
As one example of the sources, a mobile Internet Protocol Television (IPTV)
service, a broadband-based television service channeled through mobile phone
networks, will be soon developed, Lee said.
"If IPTV can go mobile, it can be an inexpensive and better way to utilize the
Internet in countries where it is difficult to establish (wired) Internet
connection," Lee said.
He added that the company is further seeking to export its wireless technology to
other parts of Asia, the Middle East and Africa in further partnership with the
Japanese companies NTT DoCoMo Inc. and Sumitomo Corp.
KT and Sumitomo jointly bought 85 percent of Uzbeki telecom operator East Telecom
in 2007, while KTF and its 11-percent stakeholder DoCoMo took a 33 percent stake
in Malaysia's U Mobile Sdn. in the same year.
Asked if the company's alliance with U.S. companies such as Qualcomm Inc. and
Microsoft Corp. will be affected by the merger, Lee noted a long-standing
relationship with the companies, and said they will remain important
stakeholders.
Qualcomm and Microsoft own 1.78 percent and 1.08 percent of KTF's stake,
respectively. Under the proposed terms of the merger, KT will offer 0.719 shares
of its stock for each KTF share.
"Quamlcomm and Microsoft nodded their approval to the merger. They will be
offered KT's share, but their share ratio will certainly drop," Lee said.
"In the early stage of its business, KTF adopted many technologies developed by
the two companies. As the new KT is aiming beyond being just a telecommunications
company, our tie-ups with these companies, leading providers of global
technologies, are inevitable," he said.
KT, a former state-run company, controls more than 90 percent of South Korea's
wired telephone market and services nearly 45 percent of broadband Internet
users. It has a nearly 30 percent share of the mobile phone market, compared with
South Korea's No. 1 mobile carrier SK Telecom Co.'s 50 percent.
In 2008, KT's net profit plunged 54 percent to 449.3 billion won, with sales
falling 1.3 percent to 11.7 trillion won. KTF posted a net profit of 164.6
billion won, with sales climbing 14.4 percent to 8.35 trillion won.
ygkim@yna.co.kr
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