KT, the country’s No. 2 mobile carrier, is undergoing big changes to establish an independent financing system for each division that will improve efficiency and enhance the financial transparency of the firm.

A key KT executive recently told a pool of reporters that the company was in the process of running a new financing system for its three divisions ― Telecom & Convergence, Customer and Global & Enterprise.

The divisions currently are headed by three different chiefs ― Pyo Hyun-myung for T&C, Seo Yu-yeol for Customer and Kim Hong-jin for G&E.

Such a transformation is believed to be a first for a local telecom. 

An independent financing system serves to offer more responsibility to the enterprise’s independent divisions for it calculates the profit and loss for each of them. The units will also separately manage their own assets, liabilities and capital.

This indicates that employees belonging to a certain business unit will be rewarded if that department gains profit, whereas they will be asked to take full responsibility in the opposite scenario.

The implementation of the new independent finance structure will also trigger competition among the three business sectors within KT, leading to further growth along with more transparency, according to the company executive.

“With the new system in place, the firm’s common costs, which went up to as much as 60 percent in the past, are expected to be reduced to a one-digit figure of about 5 percent by the end of this year,” said the executive. “The system will be fully ready for implementation by the first quarter of this year.”

The systemic changes KT is pursuing were made possible due to the introduction of the firm’s project called Business Information Transformation beginning in November 2010.

The BIT project has enabled KT to establish a smart working system based on cloud computing services. The firm’s finance as well as Enterprise Resource Planning systems have also been revamped through the effort.

The project is a large-scale one that was taken forward to combine the information and technology infrastructures of KT and KTF. The two companies merged in June 2009.

By Cho Ji-hyun (sharon@heraldcorp.com)