KT considers shift to ‘holding company-like structure’ Move aimed to increase corporate value and continue to have holdings in financial units

Translated by Ryu Ho-joung 공개 2022-04-04 08:05:42

이 기사는 2022년 04월 04일 08:02 더벨 유료페이지에 표출된 기사입니다.

KT Corp, one of South Korea’s major mobile carriers, is considering changing its corporate structure to one that is similar to a holding company system as it steps up efforts to increase its market value by splitting business units with a high growth potential into separate entities.

“I’m certainly interested in transitioning KT to a holding company-like structure,” Ku Hyeon-mo, the telco’s chief executive officer, said during an annual general meeting on March 31.

The proposed plan is seen as part of efforts by Ku to drive up the value of the company, which he says is undervalued. KT runs diverse businesses, including not only its mainstay telecom but media and financial services.

KT’s price-to-book ratio remains below 0.6, compared to 1.07 for SK Telecom, another major telco in the country.

Since taking the helm in 2020, Ku has pushed to speed up digital transformation and a restructuring of the company. Last year KT created KT Studio Genie, an assembly of its media and content businesses. It also plans to take some of its units public later this year, including K bank, a digital lender that KT owns through its subsidiary BC Card, and Book Club Millie, an audio book service owned by KT Studio Genie.

“(The CEO’s remarks) do not mean KT is considering shifting to a holding company system, but a structure similar to it,” a KT official said. “This is part of efforts to improve the value of the company and the broader group and increase shareholder value.”

A shift to a holding company structure is not an option for KT because that would force the telco to sell its financial services units.

Under South Korean law, a general holding company is not allowed to own shares in companies in the financial services and insurance industries. That was the reason Lotte Corp offloaded its holdings in Lotte Card and Lotte Non-Life Insurance when it shifted to a holding company in 2017.

However, KT’s financial services units –K bank and BC Card – are one of the company's key growth drivers. Ku said during this year’s general meeting that he wants to take BC Card public as well in the future.

The creation of KT Cloud is also part of KT’s plan to transition to a holding company-like system. KT Cloud, which was established on April 1, was created after KT’s cloud and internet data center businesses were separated in a bid to speed up decision making and expand partnerships and investment for growth.

As part of efforts to increase shareholder returns, KT voted to change its articles of incorporation at this year’s general meeting so that dividends can be paid in not only cash and the company’s shares but also shares in the company’s subsidiaries. (Reporting by Jang-jun Lee)
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