KT s Business Strategies toward the UBB Era

Transcription

1 KT s Business Strategies toward the UBB Era Kae Soo Lee KT Management Research April, 2008

2 I Korean Telecom Market III Strategic Directions of KT 1. Major Players 2. Broadband and FTTH 3. IPTV 1. Customer Base Expansion 2. Media-Telco Transformation 3. Advertisement BM 4. Network Investment II Today s Issues of KT IV New Business on IP Network 1. Growth 2. Competitive Environment 3. New IT Governance 1. IPTV Plan 2. SoIP Plan V Long Term Strategic Goals of KT 1. New Business Domain 2. IT Embedded Service 1

3 Issues in Korean Telecom Market Today Broadband Coverage Expansion Speed Competition Contents Competition Approval of Bundling Service Approval of bundling service for major telcos in Korea speeded up the restructuring of the telecom industry (Jul. 07) Passage of IPTV Bill IPTV bill, which had been controversial for a long time, was eventually passed (Nov. 07) Merger between Hanaro Telecom and SKT Merger between Hanaro (2nd largest BB provider in Korea) and SKT, created another integrated telco leaving LG group far behind the two giant telcos, KT and SKT Emergence of Super Regulator New administration (Feb. 08) separated telecom and broadcasting from IT by placing them together under control of a reshaped regulatory commission 2

4 I Korean Telecom Market Major Players Korean telecom market is a global leader in terms of penetration and technology adoption. Both the size and market share have stabilized somewhat through the years. Size of Market (Subscribers) Market Share (Subscribers) PSTN Households (16M) Hanaro (8%) Broadband (14M) PSTN (22M) (92%) Mobile Broadband Population (48M) Mobile (42M) LGT (17%) SKT (51%) (32%) Others (19%) Powercomm (10%) Hanaro (26%) (45%) 3

5 I Korean Telecom Market BB and FTTH Number of subscribers for leading broadband providers have stabilized Number of subscribers for Powercom (a new comer) is growing rapidly Broadband Subscribers K T Unit: ten thousand (FTTH: 710thousand) H T (FTTH: 270thousand) Cable Powercom Jan July December Source : Ministry of Information and Communication 4

6 I Korean Telecom Market IPTV Regulation has delayed launching of IPTV service Hanaro Telecom has been a leader in the Pre-IPTV business KT has been aggressive since last year, and it s number of customers are growing rapidly IPTV Subscribers Unit: ten thousand HT KT Nov Dec. Jan Feb

7 I Korean Telecom Market IPTV CATV players are expanding digital TV coverage to compete with Telco s IPTV Digital CATV will replace the analogue TV in the long run Projected IPTV Subscribers Unit: million 20,000 18,000 16,000 14,000 A-CATV D-CATV 위성 IPTV 161 1,163 Satellite 2,785 4,123 5,064 5,838 6,705 12,000 10,000 8,000 6,000 4,000 2, E 2008E 2009E 2010E 2011E 2012E Source: Hannuri Securities(Dec.2007) 6

9 Today s Issues of KT Transcend Growth Limit KT s revenue has not seen substantial growth for over five years This year s target is $12bn Innovative Approaches to Competitive Environment Full-scale VoIP service launch Acquisition of contents and advertising companies Network investment for IPTV infrastructure Responding to New Policy Environment Build role model for new IT era 8

10 II Today s issues of KT Growth Revenue growth has stalled without new and innovative growth engines KT s stock price has also remained at around $45 for the last several years Stalled Figures for KT 14,000 12,000 10,000 8,000 revenue Market cap No.1 KT 6,000 시가총액 1위 4,000 2,000 Market cap No.6 Market cap No 년 2005년 2006년 2007년

11 II Today s issues of KT Competitive Environment In today s convergence environment, industry borders are meaningless Alliances with relevant players are very critical 경쟁 패러다임의 흐름 삼성물산 TPS,QPS Competition with MSO 2 Strategic relations with broadcasting 4 Collaboration or Competition? Competitors Incumbent carriers Degree of relevance To Telecom 1 VoIP competition with LG3Com Bundling competition with SKT 3 Competition with conglomerates In SI, U-City, Home-Network R&D Network 상품개발 Investment/Operation Solutions/ Competition area Application Marketing/Distribution Contents Competition Domain 10

12 I Korean Telecom Market Competitive Environment Roll out of bundled services has brought about a price war KT is currently positioned between SKT s high-end strategy and LGT s low-end strategy Bundled Services of Major Players Price War through Bundled Services Players Bundling Discount rate Plans KT PSTN+BB+IPTV 24.78% $44.8 Hanaro Telecom PSTN+FTTH(100M Hz)+IPTV 20% $36.53 High-End Strategy Low-End Strategy LG Dacom PSTN+BB+IPTV BB: 10% IPTV: 20% $35.56 Pressure from both sides * March,

13 II Today s issues of KT Competitive Environment Portals with extensive customer base and powerful search engines emerged as KT s competitors DAUM: Open IPTV Independent IPTV Player NAVER Affiliate with other Platform Players DAUM contents NAVER Platform STB 12

14 II Today s issues of KT Competitive Environment KT is making every effort to provide contents variety for its IPTV service Acquired 5 contents developing firms such as Sidus FNH, Olive9 and etc. KT s Efforts to Secure Contents for New Business M&A for Securing Competitive Contents 13

15 II Today s issues of KT New IT Governance A super regulator of broadcasting and telecommunication emerged under the new IT governance with recent change in government administration Restructuring of Governance Implications for KT Media / Telco Industry Broadcasting and Communication Commission Regulation Policy IT Policy (R&D) Ⅰ Ⅱ Separate broadcasting and telecom from IT industry Emergence of super regulator of broadcasting and telecom Ministry of Knowledge Economy IT-embedded Industry Ⅲ Knowledge economy emerging as a new growth area 14

17 Strategic Directions of KT Customer Base Expansion Expand customer base from households to individuals Media-Telco Transform itself into a Media-Telco company Advertisement BM Secure new cash flow from advertisement BM based on robust platform Network Investment All-IP network infrastructure will support all future services 16

18 III Strategic Directions of KT Customer Base Expansion Customer base expansion for new services such as WiBro, IPTV, VoIP From households to individuals Satellite 2,010,000housholds(100%) WiBro Broadband 6,552,631housholds(45.2%) VoIP Mobile 13,511,560(31.9%) IPTV PSTN 21,237,961housholds(91.4%) (July 2007)

19 III Strategic Directions of KT Media-Telco Company Contents diversification ranging from movie/soap opera to news/publications transforming itself into a true Media-Telco Company Media-Telco KT Telecom Media KT Broadcasting + News SK CJ LG Samsung Non-broadcasting Non-telecom 18

20 III Strategic Directions of KT Advertisement BM Advertisement market is a strategic source of income given KT s service platform diversity that can effectively reach the relevant market sectors Sponsors Digital Ads Ads Agency Media Management KT New Media Ads Ads Solution Tailored cross media advertisement Media Internet Media IP-TV WiBro Mobile VoIP Window 19

21 III Strategic Directions of KT Network Investment To support these new business models, KT is heading for an all-ip network transformation Simple Network with Structured Architecture Application-1 Application-2 Application-3 Application-N One Control, Multi Services IMS All-IP Network Wired Access Mobile Access 20

22 III Strategic Directions of KT Network Investment Customer value creation through QoS Bandwidth provision for QPS Integrate nodes and improve reliability Drive FTTH Rollout (53% Coverage, $440 mil.) Expanding Coverage for QPS+ (67% Coverage, $790 mil.) Establishing Nation-wide (92% Coverage, $1.3 bn) 21

23 III Strategic Directions of KT Network Investment Reduction in Capex/Opex and labor cost Utilization of telephone office space for other value added purposes Benefits of the All-IP Network CAPEX OPEX Accumulated savings of $1.0bn Accumulated savings of $1.9bn $1.2bn 42% $0.72bn 2bn 35% 1.3bn Labor Cost (telephone office) Space (telephone office) 20,067 workers 13,044 workers 1,110 thousandm2 320thousandm2 35% decrease 71% decrease

25 IV New BM on IP Network IPTV Plan KT plans to develop IPTV as its representative window by personalizing the services and contents - Open UCC (UGC) upload portal - Establishment of a market place for free flow of IPTV contents Individuals Expand customer base through personalization Customization of UI and contents for individuals Connection to WiBro to enhance personalization Target Households TV Window IP-TV Implement open media marketplace Seamless contents service with VoIP and WiBro Closed Contents Sourcing Open 24

26 IV New BM on IP network IPTV Plan KT will launch advanced service features such as IP hosting, PPV and T-commerce - Number of KT s IPTV subscribers is projected at 2.8 million by the year 2012 Advanced IPTV features and expected # of subscribers IP Hosting Expand customer base through B2B and B2B2C 3,000 2,640 2,819 PPV Enhance utilization of IPTV by various PPV rate plans 2,500 2,000 1,927 2,366 unit: thousand Linking channels Develop new advertisement models 1,500 1,260 가입자 규모 1,000 Distinctive T- commerce Develop VoD type commerce T-commerce model linking channels E 2008E 2009E 2010E 2011E 2012E 25

27 IV New BM on IP network SoIP Plan Linking IPTV to SoIP service will develop SoIP into a window of other services. Secure fixed IP device and premium video phone Video Phone SoIP Seamless service with 3G phone Sync the protocol between SoIP device and IPTV STB Develop UI for SoIP, SMS/MMS on IPTV screen Linkage between SoIP and IPTV connection Video Phone VoIP device STB connection 할머니, 지금 수업 있어요.. SMS 26

28 IV New BM on IP network SoIP Plan Adding mobility to SoIP by utilizing KT s fixed and wireless network - Life style contents will differentiate SoIP from other similar services MoIP Life style contents through SoIP window <LBS Service> Yellow Pages Personalized service tailored for customer s residence 1 School 2 Bank 4 Pharmacy 5 Restaurant 3 6 Hospital Bookstore Mobility Convergence USB type 3G, WiBro, VoIP device SoIP equipped WiBro Phone VoIP, BB, 3G / WiBro: QPS Full Line-Up 27

30 V Long Term Strategic Goals of KT New Business Domain Telecom market is saturated and inter-industry convergence is on the rise Telcos need to expand its business domain M&A in the convergence era Opportunities in other industries H/W Construction Energy Super Company Telecommunication centered mind Expanding its business domain Distribution Finance Medical Postal Telecom S/W Service Telecom Media Service Short-term Long-term 29

31 V Long Term Strategic Goals of KT IT Embedded Service The new administration aims to support growth industries facilitated by IT rather than revive the IT industry itself KT will seek growth through embedding IT to these industries New Administration s Interests KT s IT Embedded Service Growth Engines Selected by New Administration I Next Generation Semi-Conductor 2 Hybrid Cars Robots 3 Bio/Nano 4 5 New Recycled Energy 6 World Class Products NIT Construction Finance NIT Previous Growth Engines I 3 u-city u-home 2 4 u-health RFID Automobiles NIT IT Embedded Education NIT USN 5 IT Service 6 Health Industry 30