Privacy watchdog to rule on KT fine next week as penalty scale draws scrutiny

The Personal Information Protection Commission is set to discuss a fine against KT Corp at a plenary session as early as next week.

With record-breaking penalties handed down against SK Telecom last year and Coupang Inc this year, KT is watching the proceedings closely. Meanwhile, the company's second-quarter sales and operating profit outlook suggest it has yet to fully shake off the fallout from last year's hacking incident.

According to industry sources Monday, the Personal Information Protection Commission plans to take up the KT fine at its plenary session next week.

Commission Chair Song Gyeong-hui had signaled the move at a briefing last month on the Coupang Inc fine, saying the agency had issued a prior notice to KT and was reviewing the company's submitted response, adding that a ruling would come "in the not-too-distant future."

The central question is the size of the fine. A string of personal data breaches last year triggered a succession of record penalties.

Under current law, the commission calculates fines by multiplying relevant sales by a penalty rate of up to 3 percent, depending on the severity of the violation. Severity is assessed by weighing factors including the company's efforts to implement data security measures and the scale of harm suffered by affected individuals.

A proposal to raise the penalty ceiling to 10 percent has been in the works, but the higher cap will not apply retroactively to the KT case.

Additional adjustments — upward or downward — are made based on the nature of the violation, any obstruction of the investigation, and the existence of victim compensation programs.

KT is on high alert particularly after the commission levied record fines of 134.8 billion won ($89.4 million) against SK Telecom and 624.68 billion won against Coupang Inc in quick succession.

The number of KT customers whose data was compromised has been revised down to approximately 16,000 — lower than initially reported, though the Ministry of Science and ICT's joint public-private investigation team had put the figure at 22,227. Even so, the company cannot take comfort in the revision: poor management of femtocell equipment and the resulting data leak led to actual financial losses for customers, a factor that can serve as an aggravating element in calculating the fine.

Meanwhile, KT's second-quarter sales are forecast at 6.89 trillion won, with operating profit projected at 615.3 billion won — a drop of roughly 40 percent from the same period last year.

Analysts say the lingering effects of the hacking incident last September are partly to blame. Marketing costs rose as the company rolled out a customer reward program that included 100 gigabytes of free monthly data for all subscribers from February through July, along with OTT service support.

Samsung Securities said that while net wireless subscriber additions had continued since February, the customer reward program had prompted some subscribers to downgrade their service plans.