April 20, 2024

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[THE INVESTOR] A fire that broke out at one of telecom giant KT’s underground facilities in central Seoul over the weekend has put the company in the hot seat.

The network meltdown in northwestern and central Seoul on Nov. 24, disabled mobile and internet services as well as credit card payment systems. 

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Some 90 percent of its network services are back on track now, while a full recovery is expected to take a week.

Amid the chaos, still ongoing in some regions, market watchers anticipate the total amount of compensation could account for up to 10 percent of the firm’s operating profit in the third quarter, at 320 billion won (US$281 million).

“Multiplying the firm’s third-quarter average revenue per user for mobile subscribers, at 36,217 won by the 660,000 mobile subscribers in the affected areas, the compensation will likely reach 2.39 billion won,” said Kim Joon-sub, an analyst from KB Securities.

“Combined with the compensation for broadband internet and IPTV subscribers, the total compensation is likely to reach 3.17 billion won.”

The actual amount could vary since not all the residents in the affected regions went through network disconnections and those who are not residing in the areas may have had difficulties in using the mobile services as well.

KT CEO Hwang Chang-gyu vowed that the company would come up with measures to compensate small-sized businesses which experienced inconvenience in using its credit card payment system.

The underground network facility, which houses 168,000 landline phone lines and 220 sets of fiber optic cables, caught fire at 11:12 a.m. on Nov. 24. No casualties have been reported, but the fire was contained after 10 hours, with estimated 8 billion won in damages.

The telecom firm said it will consider installing sprinklers and CCTVs at its underground network tunnels, shorter than 500 meters in length. Such devices at facilities are not mandatory based on the current regulations.

Inspections led jointly by state-run agencies and the company to find the exact cause of the fire are currently underway.

By Kim Young-won (wone0102@heraldcorp.com)