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KT Corporation is embarking on a restructuring program that includes the creation of two subsidiaries and the elimination of thousands of jobs as the South Korean telecom operator shifts its focus to the more lucrative AI business.
Local media reported that KT’s board of directors approved the plan at a general meeting last week.
The two subsidiaries are tentatively named KT OSP, which will design and construct communication lines, and KT P&M, which will design power facilities within KT’s network stations.
Both entities, wholly owned by KT, will be registered by January 1 next year. KT OSP will have a capital investment of 61 billion Korean won (US$44.8 million) while KT P&M will have a capital investment of KRW10 billion ($7.3 million).
According to Business Korea, the restructuring plan will include the reallocation of employees involved in field operations such as line and power management for telecommunications and broadcasting facilities, as well as those in customer contact centers.
A total of 3,780 headquarters employees are expected to be transferred to the new entities. KT OSP will have approximately 3,400 employees, while KT P&M will start with around 380 employees. In addition, approximately 170 customer contact center employees will be transferred to KT IS or KT CS – the company affiliates that operate customer centers.
Reassignment of affected employees will be underway as early as this month.
Voluntary retirement
The restructuring plan also reportedly will include the implementation of KT’s first large-scale voluntary retirement scheme to streamline operations as the company pivots to AI.
With 19,370 employees, KT has a larger workforce than rivals SK Telecom and LG Uplus, which have 5,741 employees and 10,695 employees, respectively.
The Korea JoongAng Daily reported that up to 6,000 employees will be given the opportunity to take voluntary retirement with severance pay of up to KRW430 million ($314,329).
“This work force restructuring is part of our transformation into an AICT company, aimed at streamlining on-site operations by forming specialized companies,” KT reportedly said in a statement. “We will do our best to have the benefits of this transformation contribute to industrial development and ultimately strengthen the nation’s competitiveness.”
Applications for early retirement will start on November 4.
After the restructuring, it was reported that KT’s workforce may be reduced to between 13,000 and 15,000 employees.
The restructuring plan was approved three weeks after KT signed a five-year multibillion-dollar AI and cloud partnership with Microsoft. The two companies will jointly develop customized AI models and services for the South Korean market, as well as launch sovereign cloud services for the domestic market.
KT will also establish an AX (AI Transformation) specialist services company to support the local adoption of the latest AI technologies, with Microsoft providing professional consulting resources over the next three years to build core practices and capabilities for the new company.