KT Corp, South Korea’s largest telephone and Internet company, will eliminate 5,992 jobs, or 16 percent of its workforce, to save about 460 billion won (US$393 million) a year in labor costs.
The cuts will apply to employees having worked at KT for more than 15 years who have applied for early retirement, the Seongnam, South Korea-based company said in a statement yesterday. The compensation package would lead to a one-time charge of about 840 billion won in KT’s fourth-quarter results, spokesman Lee In-won said by telephone.
The reduction would help profits rise next year, said Choi Nam-kon, an analyst at Tong Yang Securities Inc.
KT had said it planned to scale back labor-related costs by 500 billion won over five years after merging with its mobile-phone unit KT Freetel Co this year.
“Investors should focus on next year’s earnings recovery and the company’s strong intent to seek efficiency,” Choi wrote in a report yesterday.
Choi, who has a “buy” rating on KT, raised his share-price estimate by 10 percent to 53,000 won and projected the company would post an operating profit of 2.1 trillion won next year, compared with an earlier prediction of 1.8 trillion won.
At the end of September, KT had 37,026 employees, the company’s latest financial statements showed.
KT’s labor union said on Dec. 9 it had asked for an early retirement program to help support employees who wanted “new opportunities” after leaving the company.
KT shares fell 0.6 percent to close at 40,700 won on the Korea Exchange yesterday.
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