[EDITORIALS]Next step for privatized KTThe government has succeeded in selling its 28.4 percent stake in KT Corp., the nation's largest fixed-line operator. Established as Korea Telecom Authority 20 years ago, when the Ministry of Communication spun off its telephone operation, KT has met the formal requirements of privatization. Considering that the government failed in an attempt to sell its KT stake last year, it deserves some credit for the latest success. As the government's holdings were the people's assets, we believe that the stocks were properly priced near the market value.
But selling the government's stake does not guarantee KT's success. No longer protected by the government, the company must make itself competitive against foreign telephone giants. KT can no longer enjoy its telephone monopoly as in the past. It must find new profit models.
The sale cleared the government's holdings, but there still are problems in KT's governance structure. In its privatization plan for KT, the government has chosen the Posco-style management structure, under which a professional chief executive is in charge of management, and board members, most of them independent outsiders, have control on behalf of shareholders. The scheme aims at preventing a single conglomerate from gaining control of the telephone company. But it may leave KT vulnerable to political influence: Consider the case in which Posco's top management allegedly bought stock of a start-up at an above-market price after meeting with President Kim Dae-jung's third son and a lobbyist.
The company should also prepare to cope with the possibility that SK Telecom, the country's biggest mobile service provider and now the largest shareholder of KT, might buy more KT shares from the market in order to get management control, or that its labor union attempts to participate in management. Only by securing a management structure free from pressure from government, a single conglomerate or the labor union, can KT expect to succeed.
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