Korea’s telecoms face leadership turmoil after hacking fiascos

Korea’s top telecom companies — SK Telecom, KT and LG Uplus — are facing leadership turbulence following a series of massive hacking incidents, prompting management reshuffles and intensified scrutiny over executive accountability.

SK Telecom took the first decisive action on Thursday, appointing Chief Governance Officer Jung Jai-hun as the new CEO, replacing Ryu Young-sang, who had served since 2021.

The company’s leadership change accompanied the release of its third-quarter earnings, which revealed its first-ever operating loss since quarterly reporting began in 2000. It reported an operating loss of 52.2 billion won ($36.5 million), with revenue sliding 16.8 percent year-on-year to 2.66 trillion won. The company also suspended its third-quarter dividend.

The financial setback was primarily due to sizable one-off costs from the massive hacking incident that leaked the information records of nearly 27 million users. The costs included around 500 billion won in customer compensation and contract cancellation fee waivers, and a 134.8 billion won fine from the Personal Information Protection Commission.

SK Telecom’s appointment of a new CEO is widely interpreted as a move to bolster risk management and restore public confidence to minimize further impact, in hopes of rebounding in the final quarter.

Jung is the company’s first leader with a legal background, having served as a senior judge before joining SK Telecom to head its legal team, overseeing external affairs.

“CEO Jung was recognized as the right leader for SK Telecom’s artificial intelligence (AI) and telecommunications businesses by establishing an AI governance system to ensure trustworthy and safe AI, and by spearheading efforts to restore customer trust and strengthen information protection security after the cybersecurity incidents,” the company said.

KT is also experiencing leadership turmoil following its recent mobile payment breach incident. Its CEO, Kim Young-shub, came under intense scrutiny during last month’s National Assembly audit, facing harsh criticism for the company’s inadequate response to the situation.

As the scale of mobile payment fraud continued to escalate during the investigation, pressure mounted for his resignation. With authorities launching an initial probe into KT’s possible obstruction of a government investigation, the calls for him to step down further intensified.

A customer enters KT’s retail store in Seoul, Oct. 16. Yonhap

Amid the turmoil, KT’s board is set to vote on its process to appoint a new CEO on Tuesday, drawing focus on whether Kim will seek another term, which is otherwise set to end in March.

Kim’s admission during the audit that the CEO holds “ultimate responsibility for management” fueled speculation that he may opt to not seek another term.

On the other hand, there is a relatively lower likelihood of leadership change at LG Uplus, despite the company’s belated confirmation of a possible cyberattack on its servers.

The company has been facing suspicions of leaked data since August, when the global cybersecurity journal Phrack Magazine reported that two anonymous white-hat hackers had obtained LG Uplus information from 8,938 servers, 42,526 user accounts and 167 employees.

The company initially denied the allegation; however, during the parliamentary audit, it was confirmed that the company will report the suspected hacking to the cybersecurity watchdog for further investigation.

However, as there is no concrete evidence of data loss despite the detection of a possible server breach, LG Uplus CEO Hong Bum-shik is likely to retain his position, in which he has served for only about a year.