No. 1 Korean Companies Joined Force to Become World No. 1

KT president Lee Yong-kyeong and Samsung Electronics president Yun Jong-yong signed an agreement Friday for enterprise wide business cooperation between the two companies at Shilla Hotel in Seoul. At the ceremony attended by 30 executives from the two companies including vice president of Samsung Electronics Yun Jong-yong and the president of KT Lee Yong-kyeong, the two companies agreed to have enterprise-wide cooperation in every field to generate new profit models.

The business alliance between the two leading companies is expected to have an enormous impact on the global IT industry as well as domestically.

KT, a provider of a variety of internet services such as Bizmeca, Nespot and Megapass, and equipment maker Samsung Electronics are equipped with the infrastructure, service capabilities, and equipment necessary for the age of digital convergence, when consumer electronics are connected to the internet.

Building on these strong points, the two companies are planning to introduce new products and services. They will create new business models through a working level body which will include CEOs of two companies as its members. Profits and risk will be divided between the two companies.

The two companies planned to strengthen cooperation between their own business areas in the first place. KT`s services such as satellite broadcasting service Skylife, corporate e-business solution Bizmeca, broadband internet service Megapass, will be given a boost through Samsung Electronics` technology, equipment, and overseas network. Services will be able to then compete on the global stage.

The two companies also agreed to share their business models in overall IT service such as System Integration, Network Integration and Solutions, thereby pursuing all businesses together in the age of home networking and digital convergence.

"With consumers` needs for goods and services changing rapidly, it is essential to create a total solution which satisfies customers` needs as soon as new services are launched. Close cooperation between service providers and equipment makers is essential to efficiently respond to these trends." said the president of KT, Lee Yong-kyeong.

The vice president of Samsung Electronics Yun Jong-yong said that a "company`s future competitiveness will come from products and services that are yet to be developed."

"KT and Samsung Electronics are cooperating today to shape the future, not just to predict it," he added.

By September, the working level body will find business areas where the two companies can work together over the mid and long term and the project team on the new agreed upon business models will start to work from October. Then the exploration of new business models and launching of new projects will be regularly done between the two companies.

The CEOs of the two companies, the leaders of the working level body, will have two meetings a year as well as create a Steering Committee, composed of high ranking officials of the two companies, which will hold four regular meetings a year. Working level officials from the two companies will jointly conduct ordinary, day-to-day business.

Seong-Yub Ra cpu@donga.com