KT Corp announces major restructuring, faces union resistance.

Seoul, South Korea—KT Corp (030200. KS, NYSE: KT) unveiled a sweeping restructuring plan on Tuesday, aiming to transform into an AI and ICT-focused company. However, labor unions immediately opposed the plan.

The plan includes the creation of two new subsidiaries, KT OSP and KT P&M. 

KT OSP will handle communication facility design and customer transmission tasks. 

At the same time, KT P&M will manage power facility design and maintenance within KT buildings and operate suburb and island networks and wireless communication shelves.

KT intends to relocate approximately 5,700 network management employees, transferring 3,780 of the 4,800 employees currently handling network installation, maintenance, and repair to the new entities. 

The company offers a voluntary retirement program for those not seeking relocation.

The telecom giant states that this move is crucial for its evolution into an "AICT (AI+ICT) firm," which combines artificial intelligence with communication technology. 

KT's board of directors approved the restructuring plan on October 15. 

Following labor-management negotiations, the new subsidiaries are expected to be officially established on January 1, 2025.

Union leaders protested outside KT's Seoul headquarters on Wednesday, denouncing the plan. 

Kim In-gwan, head of the KT Labor Union, stated, "This restructuring threatens KT's future by weakening our nationwide network and skilled workforce." 

The union is demanding the withdrawal of the restructuring plan or, if unavoidable, a compensation package that affected employees find acceptable.

A survey conducted by KT's second-largest union found that 95% of 591 respondents opposed the restructuring plan, with 84% believing it would not benefit the company's development. 

The second unions argue that the plan was announced without prior consultation and could lead to job insecurity and reduced wages and benefits.

KT defended the move, stating it is not a "forced large-scale downsizing" but a necessary step for efficiency. 

A KT official told various South Korean media, "We have deeply considered job stability and will pursue job and personnel reassignment based on employee choice, providing reasonable levels of treatment, compensation, and opportunities for extended employment."

KT's CEO, Kim Young-shub, had previously stated at the annual shareholders' meeting in March that there would be no "artificial large-scale restructuring." The company's apparent change in stance has further fueled union opposition.

Employees transferred to the new subsidiaries who have worked for KT for more than ten years will reportedly receive 70% of their base salary and a separate lump sum payment. 

Those with less than ten years of service will maintain their base salary but not receive the lump sum.

(US$1 = KRW1,364.87)