Who Will Emerge as Leader in Digital Transformation Era?
The author is an analyst of NH Investment & Securities. They can be reached at jaemin.ahn@nhqv.com. -- Ed.
5G networks to lay technical foundation for Digital New Deal initiatives
The Korean government has announced that it will nurture a wide range of telecom network based-digital businesses as part of its Digital New Deal. Given such, while the Korean economy had been mainly driven by manufacturing industries over the past decades, moving ahead, non-manufacturing arenas (centering on data and network solutions) are likely to spearhead economic growth, with 5G services playing a key role.
The aim of the Digital New Deal is to strengthen Korea’s data, network, and AI (DNA) ecosystem and foster related businesses, amid an accelerating shift towards a digital economy driven by Covid-19. Key initiatives in the Digital New Deal revolve around DNA related industries, with significant emphasis being placed on 5G networks, which are to lay the technical foundation for bolstering the DNA ecosystem.
Telecom networks serve as backbone of data and AI services
The main agenda for the government’s Digital New Deal policy is to promote a variety of data-based industries and to encourage utilization of AI across all industries, ultimately nurturing new growth industries as well as stimulating overall economic growth. For the government to achieve these policy goals, fast and stable 5G networks are to be essential.
The government is expected to allow private access to its accumulated public data, to create a ‘data dam’, and to promote data eco-system, as part of its efforts to nurture the private data industry in Korea. Against this backdrop, telcos’ big data-related businesses such as IDC and cloud services should draw strong market attention, and telcos’ AI services (such as SKT’s NUGU and KT’s GENIE) are to gain wider market penetration. In addition, we believe these efforts will create an environment will strengthen the values of KT’s MyData venture, BC Card-K-Bank’s financial data service offerings, and T-Map Mobility’s location-based AI data business.
In particular, we draw special attention to KT’s new service, KT Works. Being a digital-based work solution combined with AI, KT Works is expected to differentiate itself from its competitors via its connection with KT’s IDC and cloud services. We note that one reason KT Works will likely become popular among SMEs is that it reduces construction costs for remote-working systems. KT Works is to benefit from both the spread of work-from-home culture and the government’s promotion of smart work environments.