Ovum believes that Korea Telecom’s (KT) recently announced restructure will make it more responsive and better position it to focus on key growth drivers. As part of the restructure announced on August 13, 2012, KT will create three new entities to help realize the growth potential of its media/content, satellite, and real estate business areas. The operator will also reorganize its fixed and wireless telecoms business units into the “Telecom & Convergence Group” (T&C Group) and the “Customer Group”.
The T&C Group will bring together the previously separate fixed and mobile business units with a view to finding synergies between the two. The Customer Group will combine the fixed and mobile sales/customer service business areas, and will consolidate 42 KT branches into 11 provincial one-stop service centers.
Telcos need to get serious about content and other new revenue opportunities
If telcos are to successfully compete outside of traditional voice and data services, they need to recognize that their new business areas require adaptability, adequate resources, and management accountability. KT believes that separating its core and non-core telco businesses will allow each division to better focus on its own area of expertise, and will help to streamline decision-making processes. Timely decision making and faster time to market for new services will be particularly important for KT’s new content and media business, which competes with over-the-top players that are often more nimble and powerful in the market than KT.
Ovum also believes that the decision to consolidate the management of the fixed and mobile networks is a good one. Leading telcos have been organized by segment rather than technology for a long time, and KT’s move to organize its business according to technology will facilitate an improved customer focus. The integration of the fixed and mobile networks will also be important in exploiting the emerging opportunities in the heterogeneous network era.
KT’s reorganization is partly inspired by SK Telecom’s restructure
Ovum believes that KT’s restructure was partly inspired by SK Telecom’s decision to split its core telecoms and Internet services businesses in October 2011. As part of the reorganization, SK Telecom created the SK Planet business to manage its Internet services portfolio, while responsibility for the core telecoms business remained with SK Telecom.
SK Telecom launched the independently managed SK Planet in an attempt to streamline its decision-making process and increase management accountability for its Internet services business. While it is still too early to make a definitive judgment on the success of SK Telecom’s reorganization, the early signs have been positive, with SK Planet reporting that its operating profits increased by 117% quarter-on-quarter to $15.1m in 2Q12.
Since its restructure, several of SK Planet’s platforms have reported strong growth. The operator has also been active in pursuing international expansion opportunities in Japan and Turkey, and has collaborated with companies such as Korean Air to expand its smart wallet mobile payment platform. These indicators suggest that SK Telecom’s services and platforms strategy is benefiting from the new streamlined business structure and faster time to market made possible by its reorganization. However, it remains to be seen whether this will translate into a major new revenue stream for the operator.
Source:Ovum
