On January 27, Hwang Chang-gyu took office as the new leader at KT. During his tenure as president of Samsung Electronics, he confirmed ‘Hwang’s Law’ (that flash-type memory transistor count doubles every year), making Samsung Electronics the world’s leading chip maker. The public expects that he will make the country’s No.2 mobile carrier take the top spot.
The economic world forecasts that Hwang’s abundant experience, determination, and spirit can lead KTto bold innovation.
However, many internal staff at KT are on edge of large-scale integration and restructuring. Hwang executed an intensive reshuffle, changing executive officers in large numbers after his inauguration. Most executives appointed under the leadership of former Chairman Lee Suk-chae have been replaced and around 30% of the existing executives have been culled. Moreover, he streamlined the organization by disbanding or combining the existing 22 divisions and headquarters.
Hwang has been out of contact and has drawn a future plan for KT at the telecom’s research and development center in Seocho, Seoul, with a few task forces in charge of management and human resources.
Pre-conditions to achieve `Hwang’s Second Law’
Newly inaugurated Hwang is facingtasks to be resolved first and foremost.
First on order is business normalization. Due to executives appointed through a so called ‘Parachute-style appointment’ under former Chairman Lee Suk-chae, KT is now divided into ‘Lee Suk-chae’s camp’ and ‘existing KT personnel’, and consequently, the rift between the two has deepened, the morale having been compromised. In addition, as the industries expect that the prosecutors will continue to investigate Lee Suk-chae’s camp related to Lee’s personal irregularities, wise restructuring has been requested.
The second concerns bold reorganization. KT currently has over 32,000 employees. Although former Chairman Lee laid off over 5,000 through a self-restructuring effort, KT is still too large compared with its competitor SK Telecom (at about 10,000). An official at the Ministry of Science, ICT and Future Planning said that “if sprawling KT does not go through an organizational reshuffle at a large scale, it cannot move forward. In particular, even Chairman Hwang, who helped Samsung Electronics expand its chip business, will see it easy to lay off employees against the powerful labor union at KT.”
Third, wise decisions are needed in overseas business sectors. During the tenure of Chairman Lee, KT launched the most controversial LTE project to spur Africa’s ICT advancement centered on Rwanda, which was carried out in terms of nurturing a global business. The project stirred up controversy in Korea because it required a huge investment as a long-term plan while its return was uncertain.
Under the Rwanda LTE Project, KT would establish LTE there and would exclusively operate it and the concerned frequency for the next 25 years. Yet even when the initial investment required for establishment of the LTE network was estimated to be ₩150 billion, the yearly minimal net profit of ₩7.5 billion should be secured for the next 25 years to float the business, making it feasibly low. While in industry, some are wondering how many users will use LTE services in Rwanda, which generates little video content unlike in Korea.
Fourth, it needs to regain a top ranking by using its overwhelming wired and wireless infrastructures. KT is boasting the second largest LTE subscribers at over 8 million. On the other hand, in a situation where KT has incompatible wired and wireless infrastructures, Hwang, who helped Samsung Electronics to be the global chip maker, will never be satisfied with a second rank. Some are expecting that as a man who has broken through business difficulties, new Hwang will execute various new growth engines with which his competitors will not compete by utilizing the strong wired and wireless infrastructures.