KT's network outage casts doubt on its main business CEO Ku has focused on new businesses since taking office

Translated by Kim So-in 공개 2021-10-28 08:07:17

이 기사는 2021년 10월 28일 08:05 더벨 유료페이지에 표출된 기사입니다.

South Korean telecom giant KT suffered a nationwide network outage on Monday, casting doubt that the company’s efforts to focus on the new growth engine may have had an impact on its mainstay business.

KT said on Tuesday that a massive internet crash and blackout that lasted more than an hour on Monday across the nation was caused by a network routing error, not an outside DDoS attack.

Some analysts expect the latest internet blackout may cost the company more than 36 billion won ($30 million), the amount KT had to provide as compensation when it suffered a network outage after a fire at its Ahyeon branch in central Seoul in 2018.

The Monday’s massive internet blackout is raising doubts about the company’s competitiveness of its mainstay wired and wireless network services. This is because KT CEO Ku Hyeon-mo’s drive to secure new growth engines has resulted in a series of controversies over the quality of its wired and wireless networks.

After taking office last year, Ku has focused on new businesses by creating the future value promotion office and the group transformation division, which will directly report to Ku. The group transformation division, which was established last month, will oversee growth plans for KT affiliates, including initial public offerings, business strategies, domestic and foreign investment strategies, and external partnerships.

Analysts said the company’s efforts to focus on new businesses have grown the size of the organization, weakening its management efficiency. KT further lowered its credibility after it restated that the latest outage was caused by routing errors, not by large-scale DDoS attacks as it initially assumed.

KT has the widest business scope compared to its competitors. LG Uplus pursues a conservative management strategy, focusing on its wired and wireless network and pay TV services. SK Telecom has decided to launch a non-telecom spinoff in the latest move to make aggressive investments in new tech and semiconductor businesses.

KT is actively carrying out restructuring processes, but market experts said the company needs to spin off its B2B business units, including the AI/DX convergence business division and the enterprise division, which operate cloud and internet data center businesses. (Reporting by Pil-woo Choi)
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