December 04, 2024

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KT's headquarters in Jongno, central Seoul. (KT Corp.)

South Korean telecom carrier KT is reportedly set to carry out an organizational revamp focused on artificial intelligence while elevating profitability and efficiency, according to industry sources Monday.

KT plans to hold a board meeting on Tuesday, with organizational restructuring and personnel relocation likely topping the agenda. The board is expected to approve the establishment of two subsidiaries dedicated to network operation and maintenance, KT OSP and KT P&M, to start operation from Jan. 1 next year.

As part of the process, some 3,800 workers out of the total 5,700 employees working in the headquarters’ network management division will be relocated to the new subsidiaries. The remaining workers will be transferred to other units or offered a voluntary retirement program.

This is the first voluntary retirement program since CEO Kim Young-shub took office in March last year.

Employees with more than 10 years in office and at least one year left until retirement are eligible, and some are expected to receive over 300 million won ($221,400) in severance benefits.

The planned restructuring aligns with the KT chief’s AI vision. While significant investments are being made in AI, KT eyes to reduce labor costs and streamline the organization to improve management efficiency.

In a saturated telecom market, KT, the No. 2 in terms of membership, has faced growing financial burdens to hire the largest number of employees compared to its key rivals. As of the first half of the year, KT had 18,617 employees. SK Telecom and LG Uplus, the No. 1 and 3 players, hired 5,431 and 10,469, respectively, according to their regulatory filings.

KT’s labor union, however, has criticized the cost-cutting push as a “hasty and unilateral” move to boost Kim’s financial performance to extend his tenure. The union plans to hold protests starting Thursday this week.

By Jie Ye-eun (yeeun@heraldcorp.com)