KT Corp unveils 6,000 job cuts

KT Corp, South Korea's largest fixed-line telecommunications carrier, has unveiled its biggest job cuts yet, with 16 per cent of its workforce set to leave this week through an early retirement programme.

The company said on Monday 5,992 staff were to quit the organisation on Wednesday.

KT, which is struggling to boost profits, estimates that the early retirement programme will help it save about Won460bn ($393m) in annual labour costs.

The retirement package is being offered to workers who have spent more than 15 years with the company and 65 per cent of those leaving are in their fifties.

The union had supported the deal because the terms were favourable, it said last month.

KT is South Korea’s dominant fixed-line group, with 90 per cent market share and is the second-largest mobile-phone operator, with 31 per cent market share. It is also the country’s largest broadband provider, with 42 per cent market share.

As revenues from fixed-line phone calls are on the decline, the company has had to increase its marketing budget to stave off competition from SK Telecom and LG Telecom.

KT is trying to generate revenue growth by launching converged products and bundling fixed-line, mobile and internet services.

The company aims to achieve a 2009 sales target of Won19,000bn, with an operating profit of Won1,800bn.

KT reported a 12 per cent fall in third-quarter operating profit because of intensifying competition in one of the world’s most developed telecoms markets.

South Korea boasts one of the highest wireless penetration rates in the world, with 97 per cent of the population carrying a mobile phone.

KT, which dominates the lower-margin fixed-line market in South Korea, hopes that the job cuts will help breathe fresh life into the organisation as it plans to attract younger employees.

It will hire about 700 new workers and interns partly to replace those who leave.

“The retirement package will serve as a trigger for KT, which was seen as a slow dinosaur, to become a fast, efficient and strong organisation,” said Kim Han-suk, KT’s vice-president in charge of human resources. “We will continue to reform our management to become a global convergence leader.”

KT made 5,500 workers redundant in 2003 through a similar scheme to streamline its organisation.

A voluntary retirement scheme is often used by South Korean companies to cut jobs, as it is difficult to lay off people in the country, given the strong presence of trade unions.

KT’s shares fell 0.61 per cent on Monday after having risen more than 6 per cent this month.