KT decides to replace USIM cards for all customers

Mobile carrier KT will provide free universal subscriber identity modules (USIMs) for all of its customers, in response to a string of unauthorized mobile payment fraud cases that exploited rogue cellular base stations and compromised user information.

CEO Kim Young-shub will also not seek a second term and will step down when his current term ends in March next year. KT’s board has officially launched the process of selecting his successor by forming a recommendation committee, which plans to finalize a single candidate within this year.

The telecom company said in a press release that it will offer free USIMs to all customers who wish for a replacement, in an effort to ease growing security concerns following recent incidents.

Starting at 9 a.m. on Wednesday, KT will begin accepting applications for the free USIM replacement service through its official website. Customers who wish to replace their USIM cards can make a reservation online and visit KT branches to receive a new card.

To prevent an initial surge in requests for replacement, KT will first provide the replacement service to customers in Seoul’s Geumcheon District and Gwangmyeong, Gyeonggi Province — the areas where the rogue base stations were active. It will then expand the program to Seoul and surrounding Gyeonggi Province on Nov. 19 and nationwide on Dec. 3.

KT CEO Kim Young-shub, left, speaks during a National Assembly audit in Seoul, Oct. 29. Yonhap

KT has been struggling with the payment fraud and user data leak, which happened in September. The incident especially alarmed the public after initial investigations revealed that attackers had used miniaturized rogue cellular base stations, known as femtocells, to intercept verification messages sent to users during payment processes.

As the company faced criticism for its poor management of femtocell networks and suspicions that it was downplaying the impact of the recent incidents, CEO Kim said in October, “I should take due responsibility for the incidents.” He is expected to complete his current term without stepping down early.

As Kim is set to depart, former KT Chairman Hwang Chang-gyu remains the only CEO to have completed a second term since the company’s privatization in 2002.

Although KT is a private company, the appointment of its CEOs has often been influenced by incumbent governments, frequently accompanied by political noise and controversy, due to its shareholding structure. Currently, its largest shareholder is Hyundai Motor Group, which holds an 8.07 percent stake, followed by the National Pension Service with 7.54 percent.

Along with the process of appointing a new CEO, hurdles remain over how the telecom company will secure enough USIM cards to meet demand. KT reportedly holds around 900,000 USIMs in stock, while its mobile phone subscribers totaled 13.7 million as of July. Including IoT devices, remote monitoring systems and vehicle communication services, the company’s total number of connections reaches about 27 million.

Given the case of its rival SK Telecom, which earlier this year calculated 200 billion won ($139 million) as the total cost for its own USIM replacement program for its 20 million users, the total cost for KT’s USIM replacement program will likely reach 145.5 billion won.