May 24, 2024

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Recently, as Hyundai Motor Group became KT’s largest shareholder, hope and pessimism have been raise..

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Hopeful and Pessimistic Coexistence…Will the ownership-distributed corporate structure collapse? KT’s new union is concerned about independence, judicial risks, and shareholder rights violations. Expectations such as synergy of new businesses in the future and strengthening management efficiency “Limited intervention by Hyundai Motor”…”Telecommunications.” It must be burdensome.

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KT [Photo source = Yonhap News]

Recently, as Hyundai Motor Group became KT’s largest shareholder, hope and pessimism have been raised at the same time.

According to the industry on the 1st, attention is focusing on how Hyundai Motor Group’s decision to become KT’s largest shareholder will affect KT’s corporate structure and new business direction in the future.

Earlier on the 2nd of last month, the National Pension Service, KT’s largest shareholder, sold 2,884,281 KT shares, leaving it as the second-largest shareholder, with its stake changing from 8.53% to 7.51%. As a result, Hyundai Motor Group (4.75% by Hyundai Motor and 3.14% by Hyundai Mobis), which holds a 7.89% stake, has become KT’s largest shareholder.

KT’s new union, the Public Transport Workers’ Union, condemned in a statement, saying, “A change in KT’s ‘ownership distributed company’ structure could affect the company’s independence and neutrality.” Ownership distributed companies are companies that do not have controlling shareholders because their ownership shares are distributed. Controlling shareholders refer to major shareholders who can control management rights, which are major decisions of the company, by securing voting rights at the general shareholders’ meeting.

KT’s new labor union pointed out, “If KT becomes subordinate to Hyundai Motor Group, the symbolism and historicity that KT has had as a national company under a governance structure that is distinct from chaebol conglomerates will be damaged.”

In particular, the new union took issue with the judicial risk between KT and Hyundai Motor and urged the Ministry of Science and ICT to make a reasonable judgment. KT is currently submitting an application for public interest review related to the change of the largest shareholder to the Ministry of Science and ICT and is waiting for the results. This is because in order for Hyundai Motor to become the largest shareholder of KT, a key telecommunications service provider, it must obtain approval from the Minister after being reviewed by the Ministry of Science and ICT.

Recently, Hyundai Motor and KT have been under investigation by the prosecution over allegations of “Boeun Investment.” KT Group is suspected by the prosecution of purchasing a stake in Spark & Associates (currently Open Cloud Lab), which was established by Park Sung-bin, an east-west member of Hyundai Motor Group Chairman Chung Eui-sun, at a higher price than the normal price (under the Act on Aggravated Punishment of Specific Economic Crimes). The prosecution is conducting an investigation into Hyundai Motor’s purchase of a company (air plug) established by the twin brother of former KT CEO Oh Hyun-mo, which it believes is a boon investment.

KT’s new labor union also stressed, “We should also examine whether the change in major shareholders does not violate the rights of shareholders such as minority shareholders.”

At the same time, some expect that KT and Hyundai Motor’s cooperative relationship will be further strengthened.

Hyundai Motor Group and KT have formed a strategic partnership to lead the future mobility market and are cooperating with each other. It is continuing close cooperation by promoting vehicle technology advancement such as autonomous driving and forming a ‘K-UAM One Team’ consortium to commercialize urban air transportation (UAM).

Some say that Hyundai Motor’s rise to become KT’s largest shareholder could rather stabilize KT’s management rights and benefit the company and its shareholders.

Seo Yong-gu, a business professor at Sookmyung Women’s University, said, “There have been various problems caused by the strong influence of the government on KT,” adding, “If Hyundai Motor Group, which has successfully stabilized its third-generation management and is working hard on ESG management, participates in KT management, management efficiency may be further improved.”

Some analysts say that Hyundai Motor, which involuntarily became the largest shareholder, is less likely to take on the telecommunications industry, which is a tricky regulatory business.

Shin Min-soo, a business professor at Hanyang University, said, “From Hyundai Motor’s point of view, it would be burdensome to become KT’s largest shareholder,” adding, “I think it is best for both Hyundai Motor and KT to position themselves as strategic investors.”

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