KT faces months without CEO

KT Corp expects to have a new board in place by the end of June – but it will be months before it finds a permanent CEO.

The biggest Korean telco, which lost its CEO and all but one of its independent directors in a shareholder revolt earlier this year, has appointed a task force to find new board members.

CFO Young-jin Kim told an earnings call Thursday the task force was made up of independent corporate governance experts recommended by major shareholders.

Its priority was the appointment of outside directors, he said. Right now it is receiving recommendations for potential candidates.

Figure 1: The search for independent board members is underway, but a long delay is likely until new a CEO is appointed.
(Source: Newscom/Alamy Stock Photo)

The company has scheduled an extraordinary shareholders' meeting in late June to appoint the new board, after which the CEO search will begin.

On the current timeline a slate of CEO candidates was likely by the end of July, Kim said, but he could not say how long it would take to fill the post.

He said the task force was working to develop a credible governance structure and to "normalize" corporate management as quickly as possible.

The company has been run by an emergency committee comprising the acting CEO and senior management since the end of March.

Shareholder uprising

The governance crisis was sparked by the uprising of big shareholders, led by the National Pension Service (NPS), over what they saw as government interference in the former state-owned company.

CEO Ky Hyeon-Mo, who had been in the post for three years, withdrew his nomination for a second term of office and resigned in February after NPS said it would oppose his reappointment.

Speaking at a results briefing Thursday, CFO Kim said he did not think the governance vacuum was impacting KT's business.

"Business strategies and decisions are being made as usual. Business plans are being executed as planned," he said.

He cited the completed sale of a 600 billion Korean won (US$452 million) stake of KT's cloud unit as a sign of business as usual.

The telco reported Q1 earnings of KRW310 billion ($232.7 million), down 32% because of the effect of a real estate asset last year, the company said.

But it was well short of the average analyst forecast of KRW337.5 billion ($253.4 million), according to a survey by financial data firm Yonhap Infomax.

Total revenue rose 2.6%, with mobile revenue up just 1.2%, while opex was 5.4% higher. The company reported 8.9 million 5G subs, accounting for 65% of its customer base.

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— Robert Clark, contributing editor, special to Light Reading