Changes at Hanaro just the beginning

Hanaro Telecom Inc., Korea’s second-largest provider of high-speed Internet service, has already undergone a major overhaul, with nearly half of its 55 executives resigning in September as part of the restructuring. But to hear the head of its new management consortium tell it, the reorganization is far from over. “Initially, we planned to cut 25 percent of some 1,500 workers, but we lowered that figure to 15 percent,” said Park Byung-moo, president of Newbridge Capital Korea. “So far, about 8 percent have signed up for our voluntary redundancy program.” Mr. Park also said the management group will discuss the issue with Hanaro’s labor union, which has threatened to go on strike over the company’s plans for job cuts, but insisted that the company will still try to meet the 15 percent mark. The consortium of Newbridge Capital and American International Group Inc., which invested $1.1 billion in Hanaro in 2003, is the largest shareholder with a 39.6 percent stake. The union has charged that the major shareholders’ voluntary redundancy program is part of a management plan to cut costs and later sell the company at a higher price. However, Mr. Park defended the move, arguing that Hanaro needs to regain competitiveness even if the process entails letting go of employees. “The high-speed Internet market is saturated, and we need to keep up with the speed of changes in the industry by making quick decisions,” he said. “We feel that Hanaro could become viable again through cost-saving measures such as job cuts. The management committee is here to carry out that task.” Mr. Park also denied Hanaro is up for sale. “Our consortium [of Newbridge and AIG] invested in Hanaro with a long-term strategic outlook,” he said. “There have been absolutely no discussions regarding a sale with any companies, domestic or foreign.” by Lee Weon-ho