2008CORPORATE SOCIAL RESPONSIBILITY REPORT

Report Outline

● Objective

This is the third issue of KT’s corporate social responsibility(CSR) report which is intended toprovide information on our CSR activities and performance to all stakeholders. We plan topublish the CSR report annually in order to communicate CSR activities to our stakeholders.

● Reporting Guidelines

This report has been created in reference to the G3 standards of GRI(Global ReportingInitiative), the GRI Telecommunications Sector Supplement and the BEST Sustainability ReportingGuideline which is developed in Korea. Our reporting also received external assurance for greatercredibility.

● Reporting Scope and Period

This report covers the period from January 1 to December 31, 2007. Data covering the periodthrough May 2008 were also included when necessary. This report contains CSR activitiescarried out by the KT head office and its business centers across the nation. We will graduallycover such activities conducted by our affiliates and overseas branches.

02 Corporate Overview

Our CHALLENGE04 Internet Addiction

06 Digital Divide

08 Global Environmental Change

BEST Sustainability Reporting GuidelineThe BEST Sustainability Reporting Guideline was jointly developed by the Ministry of Knowledge Economy(MKE), the Korea Chamber ofCommerce and Industry(KCCI), and the Institute for Industrial Policy Studies(IPS)

● Additional Information

Additional information is available at KT’s homepage and other related websites. If you wantto view or download this report and need more information on our CSR activities, please visitour website(http://csr.kt.com/eng) and contact us at the following.

Websites

KT homepage(http://csr.kt.com/eng)Financial Supervisory Service’s electronic disclosure system(http://dart.fss.or.kr)US Securities and Exchange Commission website(http://www.sec.gov)

Contact Information

Corporate Governance Department, Innovation Planning Office206 Jeongja-dong, Bundang-gu, Seongnam-city, Gyeonggi Province 463-711, Korea

TEL: 82-31-727-0661/0667FAX: 82-31-727-0666e-Mail: csr@kt.com

Our BELIEF12 BOD Chairman Message

14 CEO Message

16 Vision and Strategy

17 Social Responsibility Management

19 Stakeholder Engagement

21 Corporate Governance

22 Ethical Management

24 Internal Control

25 Risk Management

Our ACTIONS28 Investors

Growth and Innovation

40 Customers

Customer Value Management

50 Employees

Human Management

60 Business Partners

Win-Win Cooperation

68 Local Communities

Social Contribution

76 Future Generation

Environmental Management

APPENDIX86 Awards in 2007

87 Key Performance Indicators

87 Membership Status

88 Third Party’s Assurance Statement

90 GRI Index(G3)

KT Corporation(KT) was founded in 1981 after being separated from the Ministry of

Communication(currently Korea Communications Commission) with the purpose of ensuring

access to universal and high quality telecom services for all people in Korea. We started off

with merely 4.5 million telephone lines but expanded that to 20 million in just 12 years. KT has

helped advance information technology in Korea in many different ways including the

deployment of Asia’s first advanced Internet network and a satellite communications network

and the launch of Koreasat 1, the first Korean telecommunication satellite.

After being converted to a government-invested entity in 1997, KT’s focus shifted from fixed

line to the wireless and Internet. The takeover of Hansol M.com and the subsequent merger

with KTF led to a full-fledged expansion into mobile telecom business. With the full privatization

of the company in 2002, KT concentrated on the high-speed Internet business. the company

managed to attract 6 million customers only three years after launching its broadband service

and helped usher in the digital network era in Korea.

KT is growing into a global enterprise as it explores opportunities abroad. One of its major

overseas investments is the New Telephone Company(NTC) in the Primorsky Krai of Russia. In

2007, NTC’s subscribers topped one million and it was named the province’s most outstanding

company in social contribution.

The convergence of voice and data, wired and wireless, and telecom and broadcasting has opened

up new opportunities for the company. KT will secure the most advanced service quality and

technology to lead the global market. We will also dutifully fulfill our responsibilities to society and

environment to create a “Great KT” that is admired and trusted by the global community.

Corporate Overview (as of December 31, 2007)

�Company name: KT

�CEO: Joong-Soo Nam

�Date of establishment: December 10, 1981

�Location of head office: 206 Jeongja-dong,

�Bundang-gu, Seongnam-city, Gyeonggi-do

�No. of employees: 37,379 persons

�Operating revenue: KRW 11.94 trillion

�Total assets: KRW 17.95 trillion

�Brand value*: KRW 1.94 trillion

�Stock listing: Korean, New York

�and London stock exchanges

�Credit rating

�S&P: A-(Stable)

�Moody’s: A3(Positive)

�Fitch: A

Corporate Overview

Domestic Market Share(unit: %)

05 06 07

Local callLong distance callHigh-speed Internet

93.2

85.4

51.2

92.1

85.6

45.2

90.4

85.4

44.3

*Source: Korea Communications Commission*Source: “A study on corporate brand value”The Institute for Industrial Policy Studies

Metropolitan WestRBU

Metropolitan SouthRBU

Head Office

Gangwon RBU

Chungbuk RBU

Chungnam RBU

Jeonbuk RBU

Jeonnam RBU

Daegu RBU

Busan RBU

Jeju RBU

Metropolitan North RBU● ●

● ●

●

●

●

●

●

●

●

●

l Head Office and 11 Regional Business Units(RBUs) l

�Overseas Subsidiary: � � � � � � � �

�Overseas Branch: � � � �

�Overseas Office: � �

02...03

l Affiliates l (as of December 31, 2007)

Category Company name Main business Ownership(%)

KTF Cellular mobile 53.0 2,653,067communications using radio frequencies

KTH Internet/contents 65.9 114,403KT Capital Installment financing 100.0 100,043KT Networks Special category telecommunications 100.0 52,900

/NI business

KT Rental IT solutions rental 100.0 48,207(medical solutions, auto lease, etc.)

KT Powertel Special category telecommunications 44.9 28,837/TRS(Trunked Radio Service)

KT Submarine Construction and maintenance 36.9 21,933of submarine cable

Olive 9 Production and distribution 19.2 17,880of digital contents

Sidus FNH Production of moving pictures 35.7 14,409KT Telecop Security services 93.8 10,847

(security systems, facilities, etc.)

New Telephone Local call/Mobile phone service 80.0 125,326CompanyMongolian Telecom Local call/Internet service 40.0 10,020

l Global Network l

Key Services and Brands

High-speed Internet

Mobile Internet

IPTV

Mobile Phone Service

International Call Service

Corporate Solutions

Intelligent Network Service

� �

� �

�

�

�

�

��

�

��

�

�China KT China Corp�Japan KT Japan Co., Ltd.�Russia New Telephone Company �Mongolia Mongolian Telecom�Uzbekistan East Telecom, Super-iMax�USA KT America, Inc.(NJ Office)�USA KT America, Inc.(LA Office)

�Philippines KT Philippines, Inc.�Russia KT Moscow Office�Vietnam KT Hanoi Office�India KT Delhi Office�UK KT London Office�Bangladesh KT Dacca Office�UAE KT Dubai Office

*Includes only affiliates with book value of minimum KRW 10 billion

Overseas

Domestic

Book value(KRW million)

The information era has given rise to various

side effects which are hindering IT development.

Our CHALLENGE...

Status of Internet Addiction(2007)

*Elementary school students grade 3 to 6*Survey on Internet Addition in 2007 by Korea

Agency for Digital Opportunity and Promotion

(unit: %)

Elementary school

students

Middleschool

students

High school

students Adults

12.5

15.0

6.5

16.0

04...05

Many in our society are still left out of

the growing benefits of information technology.

Our CHALLENGE...

Internet Use by Digital Underclass

*Data from survey of digital divide by Ministry of Public Affairs andSecurity(March 2008)

(unit: %)

EntirePopulation Disabled Elders Low-income

class

76.3

49.952.8

Farmers/fishermen

33.434.1

06...07

Global environmental changes present

a threat to all companies as well as humankind.

Our CHALLENGE...

Yellow Sand Occurrence Days

*Korea Meteorological Administration data on yellow sandoccurrence

(unit: day)

2003 2004 2005 2006

3

14

21

2007

22

17

08...09

BOD Chairman Message_12 l CEO Message_14 l Vision and Strategy_16

Social Responsibility Management_17 l Stakeholder Engagement_19 l Corporate Governance_21

Ethical Management_22 l Internal Control_24 l Risk Management_25

Our BELIEF...Ensuring sustainable growth engines, Enriching peoples’ lives through sharing, Leaving our children a clean and pure planet,

These are the values KT is committed to uphold.

BOD Chairman Message

Just as our CSR activities bring light to the dark, neglected corners of

the society, the CSR management will hopefully transform the uncertainties of

today into a brighter tomorrow for KT.

In one of his lectures, BP Chairman John Browne said, “We are in a world without certainty, except for the certainty of change.” His

sentiments are shared by many in the international business community who note that “there has never been this much uncertainty in

the business environment and it has never been this difficult to predict the future.”

Economic fluctuations, globalization, advent of the digital era, convergence of industries prompted by technological innovation, and

changes in the regulatory environment are giving rise to numerous uncertainties. What we are seeing now can be summed up in the

following phrase: the “collapse of boundaries.” This phenomenon is taking on a more complex form for companies like KT which serve

the entire population of a country. IT advances are giving birth to new competitors, while yesterday’s rivals often become today’s

customers. The fast changing dynamics bring to mind the chaos theory and they require the corporate world to approach the market

with new strategies and tactics.

KT has been promoting corporate social responsibility(CSR) to adopt a balanced approach to tackling the complex business environment.

The goal is to pursue mutual benefits with stakeholders and enhance KT’s sustainability by driving the development of our communities.

The KT board of directors believes that CSR presents the most systematic solution for KT, which is engaged in an industry where

boundaries are disappearing faster than in other sectors. The board is also convinced that CSR will help KT uphold the right strategies

and enhance corporate value.

The board mandates that CSR be incorporated when formulating business models so that KT can contribute to seeking long-term

solutions to social and environmental problems. The board also demands that KT fulfill its roles as a telecommunications leader and

demonstrate leadership in CSR.

12...13

KT was the first company in Korea to create a CSR committee and a system for CSR management. KT also built the green IDC(Internet

Data Center) to join global efforts to address climate change and introduced a program that offers consulting on CSR report publication

to partner companies. The board recognizes these efforts as KT’s way of shaping a better world.

Just as our CSR activities are reaching out to the neglected corners of society, CSR will serve as a stepping stone to transform the

uncertainties of today into a brighter tomorrow.

Jeong-Ro Yoon Chairman of the BOD

CEO Message

In recent days, we hear hopeful stories of “good companies thriving.” We are living in an age where socially responsible companies are

enjoying great business success.

Ford Motor CEO William Clay Ford Jr. emphasized the importance of social responsibility by saying “A good company delivers excellent

products and services. A great company delivers excellent products and services and strives to make the world a better place.”

Respected global companies are carrying out socially responsible activities as a part of their long-term sustainable strategy. Going

beyond mere philanthropic endeavors, these companies are building a framework for sustainable growth by leveraging their core

competencies and resources to resolve social issues and making a better world in the process.

KT is also striving to meet many of the world’s needs in a responsible manner. We have systematized our social accountability initiatives

through publication of our CSR report and operation of a companywide CSR committee. Our key capabilities and resources are dedicated

to solving some of the world’s toughest problems such as the digital divide, Internet addiction and environmental problems. To this end,

we are carrying out the Clean Internet Campaign, the 7 major initiatives under Love the Earth Campaign, and Eco-friendly/energy

conserving Green IDC project. Moreover, some 400 KT employees are utilizing their knowledge to provide computer and Internet training

to the underprivileged. Known as IT Supporters, this group of volunteers is presenting a new model for social contribution.

By turning the problems of today into the hope of tomorrow, KT is

taking a step forward to become a great company that helps to make the world

a better place.

14...15

These activities were possible due to common awareness that CSR is not an option but a must. We are building a culture that

encourages our management and employees to understand and act out our CSR mission rather than looking at it as corporate

obligation. At KT, the purpose of CSR management is turning the problems of today into the hope of tomorrow. KT is moving ever closer

towards becoming a great company that helps to make the world a better place.

Joong-Soo NamPresident & CEO

l Mid- to Long-term Strategy Roadmap l

Window Expansion

Olive9

KTP

KTH

KT Rental KT Capital

KTN

KTS

Sidus FNH

Telecom Telecom

mediaentertainment

Global Convergence

�Strengthen KTGroup management �Secure No.1 spot in

IPTV market �Pursue M&A in

related sectors

�Grow mediaentertainment business �Expand into related

sectors �Pursue overseas

expansion

�Global top 10 telco�New businesses

WonderfullLife Partner

~2008

Telecom Business

2009~2010

New Business

2011~

Business Expansion Complete

KT

KTF

Telecom

mediaentertainment

Global Convergence

Vision and Strategy

In keeping with the changing business environment, KT adopted a new vision in December

2006 based on the management philosophy upheld by the CEO. The new vision sets the tone for

the goals, values and future of KT. the company aspires to deliver new values for its customers

to help them achieve their dreams and happiness.

Vision

Our new vision “Wonderfull Life Partner” signifies our commitment to becoming a true partner

that offers various solutions through distinctive means and provides customers with the

convenient and joy-filled life that they dream of. In order to successfully achieve the vision, we

define 4 core businesses; “Delivery”, “New Communication”, “New Window”, and “New BM”.

In addition, we selected CVI(Customer Value Innovation) and 3 core values to define the basic

principles and mindsets of our people.

CVI(Customer Value Innovation)Redesigning businesses and taking relevant action to understand and deliver the values that areimportant to customers

Three Core ValuesThree core values are “Customer’s Perspective,” “Open Culture” and “Self-Ownership.” In otherwords, KT shall endeavor to become a customer-oriented, innovative company that offers creativeservices from a customer’s perspective at the corporate level; establish an open culture in whichdifferent business units respect each other; and encourage employees to adopt a sense ofownership, which involves continuously challenging themselves and working with greater passionat an individual level.

Mid- to Long-term Strategy

Based on our vision for the future, we plan to grow media entertainment business, diversify

convergence services and make inroads into overseas market by 2010, which will strengthen

our competitive edge, thereby contributing to sustainable growth.

l Vision System l

*For more information on 4 core businesses, refer to page 37.

�New Communication �New Window �New BM�Delivery

�Customer’s Perspective�Open Culture�Self-Ownership

CVI(Customer Value Innovation)

Realizing Customers’ Dreams as Wonderfull Life Partner

Vision Statement

Four Core Businesses

Core Values

Basic Principle

New Takeoff Take-off Complete Realize KT Vision

*The word “Wonderfull” was coined by combiningthe meanings of “wonder” and “full” to mean“many marvels.”

Objective

For systematic implementation of social responsibility management, we commissioned an

outside expert in 2007 to derive a CSR objective linked to our corporate vision. That objective is

to be a “responsible partner” that creates a beautiful society. It symbolizes our support for the

triple bottom line approach whereby consideration is given to the economic, environmental

and social aspects to achieve sustainable growth.

To facilitate communication with stakeholders and incorporate major issues into how we

conduct our business, we have decided on six initiatives. The initiatives represent our

responsibilities to investors, customers, employees, partner companies, local communities

and the environment.

CSR Implementation Structure

Our CSR structure has been designed for effective implementation. The CSR Committee, made

up of executives of related departments, promotes information sharing and monitors the

company’s CSR issues and trends. The strong leadership from the CEO helps to embed CSR

throughout our operations, while the board of directors provides counsel to ensure that CSR

policy is in line with the mid- to long-term corporate strategy.

l CSR Objective & Initiatives l

CSR ObjectivesA trustworthy partner that creates a beautiful society

Responsible Partner, KT

Growth and innovation Changing into a digital media operator that leads the convergence age.

Human management Creating a happy workplace that gives employees a balance between work and home.

Customer value management Realizing customer dream by creating innovative values.

Win-win cooperation Maintaining a true win-win relationship with partner companies.

Contributions to the community Creating a heart-warming society full of love and sharing.

Environmental management Taking the lead in creating a clean environment for future generations.

Six Initiatives

Social Responsibility Management

Triple Bottom LineThis terminology stresses the social andenvironmental impact of an organization’sactivities as well as its economic role ofmaximizing shareholder profits.

l CSR Organization l

CSR Task CSR Committee Secretariat

CSR Committee

BOD

l Roles and Responsibilities l

�Decide overall CSR direction �Formulate and revise CSR guidelines and

manual�Review companywide CSR performance

CSR Committee

�Handle domestic and overseas CSRevaluations�Engage in and manage CSR network�Publish CSR report

CSR Task

�Draw up CSR implementation plans persector�Make regular performance briefings to

CSR Committee

Related Departments

Growth andinnovation

Humanmanagement

Customer valuemanagement

Win-wincooperation

Socialcontribution

Environmentalmanagement

CorporateStrategy Group HR Office Customer

Service BUPurchasing

Strategy Office PR OfficeReal Assets

ManagementOffice

16...17

CSR Development

In 2006, KT became the first telecom operator in Korea to publish a CSR report. We have been

fostering a win-win organizational culture to realize balanced growth and development of all

stakeholders. KT practices social responsibility management to create value for all parties

affecting and affected by our activities.

Since 2007, we have been implementing six initiatives under the guidance of the CSR

Committee. We joined the UN Global Compact in May 2008, demonstrating our commitment to

promoting sustainability. We will continue to develop our CSR framework by seeking closer

links between our CSR goals with our mid- to long-term corporate strategy. In addition, we will

set up a mechanism to oversee our CSR activities by adopting CSR indicators and integrating

them into a performance management system.

l CSR Development by Phase l

Application(2009~) �Strategic positioning to discover new businesses�Incorporate CSR indicators in companywide KPI

Expansion(2008)�Reinforce link with mid- to long-term strategy�Declare commitment to CSR(Joining the UN

Global Compact)�Expand CSR

Internalization(2007)�Set the direction for implementation(6

initiatives)�Draw up CSR implementation strategy

Adoption(2006) �Review internal CSR initiatives �Publish CSR report

▲

�▲

▲

Management principles

Management trends

l The Global Compact’s Ten Principles l

Human Rights Businesses should:Principle 1: support and respect the protection of internationally proclaimed human rights; andPrinciple 2: make sure that they are not complicit in human rights abuses.

Labor Standards Businesses should uphold:Principle 3: the freedom of association and the effective recognition of the right to collective

bargaining;Principle 4: the elimination of all forms of forced and compulsory labor;Principle 5: the effective abolition of child labor; andPrinciple 6: the elimination of discrimination in respect of employment and occupation.

Environment Businesses should:Principle 7: support a precautionary approach to environmental challenges;Principle 8: undertake initiatives to promote greater environmental responsibility; andPrinciple 9: encourage the development and diffusion of environmentally friendly

technologies.

Anti-Corruption Principle 10: Businesses should work against corruption in all its forms, including extortionand bribery.

UN Global CompactThe Global Compact launched in July 2000 is aninternational initiative proposed by then UNSecretary General, Kofi Annan. The compact iscomposed of 10 principles regarding humanrights, labor, environment, and anti-corruption.

l 2007 CSR Committee Meeting Results l

Date Agenda

1st Meeting Mar. 27 CSR Committee operation guidelines revision2007 social responsibility promotion plan2007 win-win management promotion plan2007 green management promotion plan2007 ethical management promotion plan

2nd Meeting May 18 KT CSR direction2007 customer value management promotion plan

3rd Meeting June 28 2007 CSR report publishing and utilization plan

*Global Compact implementation and performance will be reflected starting in the 2009 CSR Report

18...19

Significance of Stakeholder Communication

The advent of the Web 2.0 era has given rise to new stakeholders while incumbent

stakeholders are exerting greater influence on corporate policy. These changes call for more

active communication between companies and their stakeholders. Stakeholder

communication is crucial in that it is the best way to finding the path to mutual prosperity and

to identifying and addressing risks, which in turn supports the continuity of a company.

Framework for Stakeholder Communication

Stakeholder communication starts with identifying the stakeholders relevant to KT. Customers

and investors are important in that they have a direct, economic relationship with the company.

Employees and business partners are invaluable for their role in driving innovation and growth.

The local communities where we operate and future generations also have a major impact on

KT.

After classifying the stakeholder groups, we have to identify the major representatives of each

group and pursue diverse forms of communication. Dialogue may take place through a

consultation body that meets regularly or through intermittent means such as surveys. We

also hold periodic internal meetings to address key issues and provide information through

diverse channels.

Materiality Test

We carried out our first stakeholder engagement program in 2007 to find issues that

stakeholders believe are vital to KT and to decide the priority. Materiality test has been

conducted through five steps such as checking company’s policies, expert interview,

investigating sustainability management norms and laws, benchmarking of global advanced

companies, and media research. Through these steps, we could recognize stakeholders’

interests and find areas that KT should change and make improvement.

KT selected issues that we think are or will become material to KT and categorized them in the

following sections. Details on performance and future plans can be found in this report.

Stakeholder Engagement

l Stakeholder Communication Channels l

Channel Shareholders Customers Employees Business Partners Local communities

Consultation Shareholders’ Customer Labor- Meetings with Meetings withbody meetings survey Management partner companies local communities

groups Council

Communication Annual report, KT Plaza, Company newsletter/ Win-win KT Volunteers,channel disclosure, sales and KT News, grievance Cooperation Center, IT Supporters

IR conference after service resolution system, partner companyagents, labor-management forumcall center discussions,

management presentations

Common CSR report, KT homepagechannel

Materiality TestThe process which involves identifying mostrelevant information to our stakeholders,deriving issues high in stakeholder interest andrisk, and selecting priority issues that should bedisclosed first in the sustainability report

l Materiality Test Process l

Carry outmateriality test

throughstakeholderengagement

Provide feedbackbased on

materiality testresults

Incorporate inbusinessactivities

l Major Issues Derived from Materiality Test l

Major issues Relevant page in this report

Material issue CSR performance evaluation 17~18CSR reporting This reportCSR implementation system 17~18, 41, 51, 61, 69, 77Stakeholder communication 19~20Compliance and ethical management 22~23

Customers Material issue Protecting customer information 42~43Customer safety and health 43Preventing side effects 44of the information eraResponsible service management 42~46Stable telecom service 47~48Fair trade 48~49

Employees Material issue Fairness in HRM system 55Uprooting discrimination 55~56Employee training and self development 52~54

Emerging issue Work-life balance 56~57Support for retirees 54

Business Material issue Support for partner companies 62~67Partners Emerging issue Promoting CSR at partner companies 65Local Material issue Giving back to local communities 70~75Communities Continuing universal service and 70~73

narrowing the digital divideEmerging issue Supporting employee volunteerism 73~75

Environment Material issue Considering environmental factors 81~84throughtout products’ life cycleGreen use of resources and energy 79~84

Emerging issue Employee engagement and training 79in environmental managementResponding to climate change 78~82

>

>

>

Material Test Steps

Test 1 Company policies

Test 2 Expert interview

Test 3 Norms and laws

Test 4 Benchmarking

Test 5 Media research

▲

Material IssueIssues that stakeholders have high interest inand pose high risks to the company

Emerging IssueIssues that need preemptive measuresconsidering social awareness, industry trendand legislation although current stakeholderinterest is low

Socialresponsibilitymanagement

20...21

Privatized in 2002, KT is committed to ensuring transparency through its system of

professional managers and an independent board of directors. It has adopted almost all

recommended model standards for corporate governance that are in line with global

standards. In March 2007, we adopted a corporate governance charter as part of efforts to

improve our governance structure. KT has been recognized as a company with outstanding

corporate governance every year since 2002. In 2007, we were among the first to be inducted

into the KCGS(Korea Corporate Governance Service) Hall of Fame.

BOD Composition and Operation

The KT board of directors(BOD) is comprised of 10 members(3 executive directors, 7 outside

directors). Outside directors, who serve three-year terms, are appointed through an objective, three-

step process involving search firms, an advisory group and the Outside Director Recommendation

Committee. The BOD chair serves a one-year term and is chosen from among the outside directors.

We have five committees under the BOD - the Audit Committee, the Outside Director Candidate

Recommendation Committee, the Evaluation and Compensation Committee, the Related

Transactions Committee, and the Executive Committee. Three committees, namely the Audit

Committee, the Outside Director Candidate Recommendation Committee, and the Related

Transactions Committee are composed of only outside directors. To effectively operate the

BOD, KT has evaluated its performances annually since 2006 while personal performance

evaluation was begun in 2007 to enhance the responsibilities of directors.

Responsible Management by Professional Managers

The CEO signs a management contract with the BOD as a means of ensuring responsible

management by professional managers. Performance bonus for the CEO is based on the

company’s performance as measured by quantitative and qualitative assessments determined

by the Evaluation and Remuneration Committee. Quantitative assessment compares figures

such as the EVA, operating profit and shareholders’ return to targets set by the BOD and to the

figures of comparable firms. Qualitative assessment looks at progress related to such matters

as mid- to long-term strategy, innovation and competitiveness. For executive directors and

officers other than the CEO, performance bonus is based on performance evaluation of the

entire company and the pertinent business unit. All other matters related to compensation are

decided by the Evaluation and Remuneration Committee.

Protection of Shareholder Value

KT put in place a cumulative and circular voting system to protect the rights of minority

shareholders. The company is thus returning more than 50% of its net income to its shareholders

every year through treasury stock retirement and dividend payment scheme. From 2006, outside

directors have been acquiring company stock with their monthly expense allowance, based on a

voluntary agreement, as a way of increasing decision-making accountability and shareholder value.

Corporate Governance

2007 Outstanding corporate governance

awards ceremony

l Share Ownership l

Foreign investors 45.49

Domestic institutional 12.30investors

ESOP 5.58

Individual and other investors 10.64

Treasury shares 25.99

(unit: %)

*Corporate governance charter is available at KT*homepage, http://www.kt.com

l Activities and Evaluation l

Category 2005 2006 2007

No. of BOD meetings 9 9 12Rate of participation 96% 96% 92%Evaluation results(point) 4.28 4.49 4.56

*Maximum is 5 points

As of the endof 2007

Shareholder CommunicationChannelKT homepage(http://www.kt.com)Tel: 82-31-727-0950~9

KT recognizes ethical management as a necessity, not an option. Under the leadership of the

CEO, we strive to abide by related laws and incorporate society’s demands into our business

activities to raise the bar in corporate ethics.

Ethical Management Organization

Reporting directly to the CEO, the Ethical Management Office conducts audits on business

operations, accounting and special issues and promotes ethical management throughout KT.

The office’s risk prevention activities are intended to enhance corporate value and prevent

damage to the company image. Within the office is the Ethics Implementation Secretariat

which operates the infrastructure for ethical management and carries out related training. The

office also oversees ethical management teams in the 11 regional business units.

Employees Presented with Guidelines on their Conducts

To present employees with clear guidelines of conducts to help them make rational

judgments, KT has enacted and announced its new “Code of Ethics” in January 2003. It went

further; establishing standards for implementing corporate ethics by formulating detailed

“Guidelines on Conduct for the Implementation of the Code of Ethics” in order to ensure

employee compliance with ethical standards. The information is posted on the ethical

management homepage to help employees understand and adhere to the company’s ethical

standards. KT also distributes a handbook on ethics to provide guidance to employees.

Ethical Management Training

KT offers a wide range of training programs to encourage employees to partake in ethical

management. Moreover, we are steadily expanding ethics training opportunities for our

subsidiaries and partner companies.

Every year, newly-recruited and newly-promoted employees are required to complete an

ethical management course at the company’s training center. In addition, all employees

receive basic ethics education through a cyber training course. Training is also provided to

KT’s business partners, including its partner companies, sales centers and agencies, to

promote participation in ethical management by making use of such opportunities as

management consulting and business meetings.

Ethical Management

Ethical management handbook

l Ethical Management Organization l

Ethical Management Office

Ethics ImplementationSecretariat Metropolitan North RBU, Metropolitan South RBU,

Metropolitan West RBU, Busan RBU, Jeonnam RBU,Daegu RBU, Chungnam RBU, Jeonbuk RBU, GangwonRBU, Chungbuk RBU, Jeju RBU

Head Office Regions

11 Ethical Management Teams at Regional Business Units(RBUs)

CEO

*Ethical Management Homepage*http://ethics.kt.com

22...23

Support Programs for Ethical Management Implementation

Diverse reporting channels

Customers, partner companies and employees may report or make suggestions on ethics

violations, wrongful practices or policies through various channels. These include the Cyber

Reporting Center, e-mail, counseling center, mail, telephone, or making a visit in person.

People who make such reports are assured of strict confidentiality and their identities are

protected. They may also receive a reward of up to KRW 50 million. Employees or partner

companies guilty of wrongdoing are held accountable for their actions. In 2007, the number of

disciplinary actions taken against employees due to violating ethics regulations was 31.

Clean 365 Center

The Clean 365 Center was set up to protect employees and preserve corporate integrity. It

allows workers to report the incident and return the bribery items if they have involuntarily

received money or gifts while carrying out their duties.

Clean Zone designation

The risk of wrongdoing is higher in certain functions like purchasing, placing orders, signing

contracts, conducting reviews and selecting partner companies. Because ethics are

particularly important for departments handling such activities, they are designated clean-

zones(207 departments as of the end of 2007). Employees in clean-zones pay greater attention

to observing ethical standards and rooting out wrongful practices.

Special agreement on ethics for partner companies

The special agreement stipulates forms of unethical conduct and penalty imposed for

violations to promote clean and transparent transactions between KT and partner companies.

All companies that engage in business transactions with KT are required to sign the

agreement.

Periodic campaigns to promote an ethical culture

KT carries out various activities to promote an ethical culture among employees and partner

companies to coincide with special occasions such as the major holidays. The red face test

(employees’ self-analysis of ethics awareness) is conducted on the first workday of each

month and ethical management e-messages(flash animation) are sent out on special

occasions.

Clean Zone poster

Reporting Channels�Cyber Reporting Center�(http://ethics.kt.com)�e-mail(ethics@kt.com)�Counseling Center(080-713-6262)

l Ethical Management Training l

Category

Online training

Trainee

Employees 14,452 3,600 15,500Subsidiaries/Affiliates - 446 1,089Business partners - - -

Sub-total 14,452 4,046 16,589

Classroom training

Employees - 1,520 5,726Subsidiaries/Affiliates - - -Business partners - - 764Sub-total - 1,520 6,490

Total 14,452 5,566 23,079

No. of trainees

2005 2006 2007

Accounting reform legislation such as the Act on External Audit of Stock Companies of Korea

and the Sarbanes-Oxley Act of the US are intended to ensure transparency in financial

reporting and to protect stakeholders. Due to such laws, the corporate world faces greater

accountability for financial statements and internal control. KT faithfully abides by accounting

laws and has adopted internal control procedures to disclose financial information in an

accurate and transparent manner.

Internal Control Evaluation System

KT has set up a system to assess internal control over major work processes. The purpose of

the evaluation system is to ensure efficient and effective work processes, raise credibility of

financial data, and comply with related laws. Our internal control for financial reporting checks

whether approval and recording of transactions are appropriate and whether work processes

abide by related rules. We also have provisions on protecting company assets, prevention of

wrongful conduct, employees’ ethical awareness and corporate governance.

Internal Control System

We have segmented the work processes related to financial reporting and documented about

1,000 control activities. We evaluate the effectiveness of their design and operation and have

the results of the evaluation audited by an outside auditor before submitting them to domestic

and overseas regulatory agencies. The head office and business groups document activities

that significantly affect the financial statements. During each evaluation, the control evaluator

of the head office, business groups and field offices conduct tests. The evaluation results are

certified by the heads of the evaluating departments at the head office and business units. The

internal control department under the Financial Affairs Office certifies to the accuracy of the

evaluation results and checks the validity of internal control.

The evaluation of internal control covers not only KT but also all subsidiaries included in the

consolidated financial statements. The upper management reports the results of evaluation

twice a year to the Audit Committee and the board of directors. Corrective action is promptly

taken when shortcomings in work processes are identified. The Financial Affairs Office, Ethical

Management Office and the pertinent departments carry out constant monitoring to prevent

any problems from recurring.

Internal Control

l CSA(Control Self Assessment) l

>Transmitevaluationplan

Orderevaluationsfor fieldoffices

Dept. overseeingevaluation

Financial ManagementOffice (CFO)

CSA by Head Office & BUs

CSA by RBUs & field offices

Evaluating dept. Dept. subject to evaluation

<Approveevaluation

results

Reportevaluation

results<Draw up improvement plans

>

�KT Subsidiaries(KTF, KTH, KTN .....KTC)

l Internal Control Evaluation Process l

Scoping

Documentation

Testing

Evaluation

Remediation

Reporting

24...25

Market saturation, fierce competition and uncertainties in the marketplace have heightened

management risks. KT has set up a companywide risk management system to maintain close

ties with stakeholders and pave the way toward sustainable growth in an uncertain

environment.

Enterprise Risk Management(ERM)

Risk management activities which had been scattered throughout the company have been

integrated for optimal risk management and effective response to various risks. We set up a

department dedicated to ERM(Enterprise Risk Management) and formulated and declared

guidelines that set forth the principles and direction of risk management as well as preventive

and follow-up procedures.

Management of Key Risks

We have reinforced preventive activities by identifying risk factors based on analysis of the

business strategy, mission and work process of each unit in the organization. Plans were

drawn up to address 10 key risks to our operations and a system has been built for constant

monitoring. To minimize the repercussions in the event a risk does occur, we have prepared

plans for various scenarios to enable prompt and effective countermeasures.

Risk Management

l ERM System l

Monitoring/reporting

Evaluation

Classification

Expected risk Risk management depts.throughout the organization

(RO management)※RO(Risk Owner)

① Possible to handleat dept. level

② Request companywideresponse

Office/group risk managementcommittee(office/group RO)

Risk Deliberation Committee

Risk Management Committee(company CRO)

Dept. level management Companywide management

l Major Risk Management Activities in 2007 l

Risks Activities

�Corrected security shortcomings of telecom facilities�Safety checks on telecom facilities and safety drills to prevent hack attacks

Natural disaster �Relief work after typhoon Nari�Restoration of undersea cable after Taiwan earthquake

�Proclaimed charter for protection of personal information �Encryption of customer information

Legal risk �Legal support system

l 10 Key Risks l

Communications failure, naturaldisaster, void in customer service,Internet infringement, unauthorizeddisclosure of key information, unfairconduct, regulatory risk, legal risk,liquidity risk, securities class-action suit

Major Roles of ERM Department

�Set up risk management plan�Select and manage key risks�Operate Risk Management Committee

CRO(Chief Risk Officer)Person in charge of companywide risk management

Preventing Internetinfringement

Unauthorized disclosure of personal information

Investors Growth and Innovation_28 l Customers Customer Value Management_40

Employees Human Management_50 l Business Partners Win-Win Cooperation_60

Local Communities Social Contribution_68 l Future Generation Environmental Management_76

Going beyond empty slogans,Connecting our beliefs with real world values, Listening and reacting to our surroundings, Sustainable development is within our reach through action.

KT - taking action.

Our ACTIONS...

Creation and Distribution of Economic Performance

Our profits generated from high quality services are distributed to a variety of stakeholders

such as employees, partner companies, creditors, shareholders, local communities, and

government.

Revenue and profits

Our revenue in 2007 grew 0.7% to KRW 11.936 trillion. Although phone subscribers and voice

call revenue dwindled, revenue increased from Internet(IDC, Bizmeka) and PCS resale. With

heightened competition driving up marketing costs, operating income decreased 18.4% to

KRW 1.434 trillion and net income dropped 22.4% to KRW 958 billion. As for our plans for 2008,

we plan to build up a solid business portfolio by expanding the subscriber base in growth areas

such as IPTV and WiBro.

Investors Growth and Innovation

l Distribution of Economic Value l

Customers (Operating revenue in return

for providing services)

Surplus value

Partner companies(Facility investment, fees and

commissions)Employees

(Wages and welfare)Local communities

(Donations)Creditors

(Interest expenses)Government

(Corporate income tax, local tax)

Shareholders(Dividends)

l Operating Revenue Breakdown l (unit: KRW billion)

Category

Phone 4,293 36.2% 4,185 35.1% -2.5%Internet 2,433 20.5% 2,508 21% 3.1%Data 1,615 13.6% 1,628 13.6% 0.8%LM 1,737 14.7% 1,597 13.4% -8.1%Wireless 1,375 11.6% 1,511 12.7% 9.9%Others 403 3.4% 507 4.2% 25.6%

Operating revenue 11,856 100% 11,936 100% 0.7%

2006

Revenue Proportion

2007

Revenue ProportionGrowth rate

IDC(Internet Data Center)Provides maintenance and repair services of ITor network facilities for corporate and individualcustomers

ROA(Return on Assets)(Net income for the year/total assets) X 100

ROE(Return on Equity)(Net income for the year/stockholders’ equity) X100

Operating Income(unit: KRW billion)

05 06 07

1,6601,756

1,434

Operating Revenue(unit: KRW billion)

05 06 07

11,87711,856

11,936

Debt-to-Equity Ratio(unit: %)

05 06 07

122.8110.1

101.8

Current Ratio(unit: %)

05 06 07

111.099.1

110.7

28...29

l Financial Ratios l

Classification 2006 2007

Stability Current ratio 99.1% 110.7%Debt-to-equity ratio 110.1% 101.8%Dependence on borrowings ratio 30.5% 28.7%Interest coverage 5.3 times 4.6 times

Profitability Operating income margin 14.8% 12.0%Net income margin 10.4% 8.0%ROA(Return on assets) 6.9% 5.3%ROE(Return on equity) 14.9% 11.0%Operating cash flow to total assets 20.6% 16.7%Earnings per share(KRW) 5,870 4,635

Growth and turnover Operating revenue growth -0.3% 0.7%Operating income growth 8.8% -18.4%Net income growth 19.5% -22.4%Total assets growth 0.1% -0.1%Assets turnover 0.66 times 0.66 times

l Summary Balance Sheet l

Classification 2006 2007

Assets Current assets 3,239 3,310Non-current assets 14,723 14,640Total assets 17,962 17,950

Liabilities Current liabilities 3,270 2,991Long-term liabilities 6,143 6,066Total liabilities 9,413 9,057

Stockholders’ equity Capital stock 1,561 1,561Capital surplus 1,441 1,441Retained earnings 9,354 9,699Capital adjustment (3,818) (3,816)Total stockholders’ equity 8,549 8,893

Total liabilities and stockholders’ equity 17,962 17,950

(unit: KRW billion)

(unit: KRW billion)l Summary Income Statement l

Classification 2006 2007

Operating revenue 11,856 11,936Operating expenses 10,100 10,503Operating income 1,756 1,434Non-operating income 487 416Non-operating expenses 669 599Income before income taxes 1,574 1,250Income tax expense 341 293Net income 1,233 958

Capital expenditure

In 2007, KT’s capital expenditure totaled KRW 2.223 trillion. We purchased backbone network

equipment such as WDM(Wavelength Division Multiplexing) devices, MSPP(Multi-Service

Provisioning Platform) and routers needed to create a convergence network. We also acquired

devices for the subscriber network such as fiber to the home(FTTH) equipment. Other

purchases include computer equipment for efficient network monitoring and diverse services,

along with terminals for mobile Internet and IPTV.

Wages and employee benefits

Labor costs totaled KRW 2,635 billion in 2007. Wages amounted to KRW 1,856 billion, which

were slightly lower than in 2006. Although wages were raised by 2.6% as agreed between labor

and management, allowance payments decreased. The establishment of a new legal entity

raised the number of retirees and increased reserves for retirement allowance by KRW 116

billion compared to a year earlier. Welfare and benefits went up by KRW 1.0 billion to KRW 453

billion.

Cost of capital

On the back of stable cash flows, KT has maintained financial soundness by lessening the borrowings.

Interest expenses amounted to KRW 310 billion.

l Major Equipment Purchases l

Purchase category Equipment

Backbone network equipment WDM device, router, MSPP, BcN equipmentfor convergence networkEquipment for high-speed Internet FTTH equipment, switches, optic cableComputer equipment for network monitoring, Server, storage, security systemservices and managementTerminals for services Mobile phone, IPTV set-top box, Ann phone,

mobile Internet terminal

l Investment Details l (unit: KRW billion)

Category 2006 2007 Key investment areas

Internet 732 833 WiBro, XDSL equipment, etc.Telephone 156 132 Maintenance of telephone facilitiesData 329 284 ATMs, dedicated lines, etc.Telecommunication Infrastructure 1,000 874 Transmission, line and power facilities, etc.Supporting facilities/Other 154 100 Wireless, R&D, computer facilities, etc.Total 2,371 2,223

*VDSL(Very high bit rate Digital Subscriber Line): High-speed digital subscriber line*ATM: Asynchronous Transfer Mode

l Labor Costs l (unit: KRW billion)

Category 2005 2006 2007

Wages 1,814 1,885 1,856Reserves for retirement allowances 226 210 326Welfare expenses and employee benefits 531 452 453Total 2,571 2,548 2,635

l Interest Expenses l (unit: KRW billion)

Category 2005 2006 2007

Interest expenses 418 330 310

Wages(unit: KRW billion)

05 06 07

1,8141,885

1,856

MSPP(Multiservice ProtocolPlatform)Next-generation optical transmission systemthat supports circuit distribution function andmulti ring. It is a stable TDB-based platform thataccepts voice and data.

FTTH(Fiber to the Home)Optic Internet technology that effectively transmitsoptic signals to the end-users’ home

BCN(Broadband ConvergenceNetwork)Next-generation network providing qualitybroadband multi-service that integrates telecom-munications, broadcasting and Internet.

30...31

Amount of share buyback and retirement reached KRW 196 billion while dividends of KRW 407

billion(KRW 2,000 per share) were paid to the shareholders according to the decision at the

general shareholders meeting held in March 2008.

Taxes

We paid taxes worth a total of KRW 313 billion(national tax KRW 217 billion, local tax KRW 41

billion) in 2007, up slightly over the previous year.

Social contribution spending

Social contribution spending increased by KRW 45 billion to KRW 163 billion in 2007. The sharp

increase were due mainly to reduction in communication fees charged to low-income families

and people of national merit and increase in expenditures for expanding information network

including operation of IT supporters.

l Details on Tax Payments l (unit: KRW billion)

Category 2005 2006 2007

National tax 226 283 217Local tax 25 35 41Other 58 66 55Total 308 384 313

l Details on Social Contribution Spending l (unit: KRW billion)

Category 2005 2006 2007

Information support 97 109 152Social welfare 3 3 3Culture and art 1 1 3Sports 4 3 5Other 3 2 1Total 108 118 163

l Shareholder Return l (unit: KRW billion)

Category 2005 2006 2007

Cash dividends 637 416 407Share buyback and retirement - 214 196

Shareholder Return Ratio(unit: %)

05 06 07

61.7

51.1

63.0

Social Contribution Spending (unit: KRW billion)

05 06 07

108118

163

Management Innovation

Management innovation direction in 2007

KT has pursued innovation for growth and management infrastructure upgrade from 2006 with

the goal of realizing high growth and profits and enhancing its competencies. Our four

innovation initiatives in 2007 were: sharpen competitiveness at the KT Group level, conduct

business activities from the perspective of CVI(Customer Value Innovation), upgrade IP-based

network, and transform our people into high performers.

Innovation for growth

To solidify our growth foundation, we developed convergence services, set up an integrated KT

Group distribution network, upgraded CVI business design, and introduced schemes to better

grasp customer needs and uncover new business ideas. We devoted our energy to identifying

what customers need and seeking ways to increase their value.

Management infrastructure innovation

KT is innovating its organization, people, processes and culture to enhance corporate health

and create a culture of engagement and challenge. That, in turn, should help to maximize

performance. We are implementing process innovation in marketing and customer service to

encourage our workers to take a more customer-oriented approach. We have adopted HR

policies anchored in meritocracy and are promoting the CVI mindset to nurture people who will

drive the company’s growth.

Sharpen competitiveness at the KTGroup level�Group-wide distribution strategy�Group-wide integrated service

Conduct business activities from CVIperspective�CVI business design methodology

upgrade/training�BM redesign from customers’

standpoint�System to manage customer needs

Upgrade IP-based network�FTTH diffusion�2.0 IP-based platform�Backbone network efficiency

Transform our people into highperformers�Shift in workforce toward future core

businesses�Enhanced HR infrastructure for

greater HR value

Mid- to long-termgrowth and transition

l Activities to Solidify Growth Foundation l

Development of convergence service �Determine strategy for KT Group’s convergence services�Launch services that integrate with services of Group affiliates

Integrated Group distribution network �Sell combined wired and wireless products and integrate�distribution network�Derive five distribution innovation tasks

Core business upgrade �Redesign and upgrade business based on CVI for IPTV and WiBro

System to analyze customer needs �Develop companywide system to oversee customer needs�Operate customer needs exploration pool and carry out �customer needs survey

System for uncovering new business �Build idea infrastructure to uncover customer needs and ideas �Set up framework for discovery and decision-making

�for new business ideas

Convergence ServiceA service that bundles several individualtelecommunications services into a singleproduct

32...33

Management innovation program

We are achieving balanced development across the board with our unique model for

management innovation. Our innovation initiatives include management quality innovation

based on the Malcolm Baldrige Model, ongoing Six Sigma activities, and process innovation

(PI). To spur creative innovation, we have introduced knowledge management to facilitate

knowledge sharing which is helping to sharpen the competitive edge of individual employees

and the company as a whole.

◐ MQ(Management Quality) activities

To raise our management quality to world-leading levels(700 points), we adopted the Malcolm

Baldrige Model in 2000 and have been assessing our overall activities. By maintaining a

balanced management system and keeping up with improvement activities, we are upgrading

our organizational competencies for the long run. In 2001, we set up the KT Management

Quality Award presented to our field offices(regional offices, network service centers, etc.) to

enhance our frontline management capabilities. We also created a self-assessment system

called KT-MAS to encourage field offices to voluntarily pursue bolster management quality.

KT’s management quality is improving every year and we achieved a score of 645 in 2007.

l Management Infrastructure Innovation in 2007 l

l Evolution of Management Innovation Program l

Organizational structure &administration�Structural innovation based on CVI�Improvement in administration

(motivation, etc.)

Process�Implement process governance �Adopt standardized companywide

processes/indicators�Six Sigma activities

Fundamental shift

▼

▲Culture of engagement and

challenge taking

Human resources�HR development based on

performance and ability-Nurture frontline professionals-Hire and train core talent

�Promotion and compensation basedon performance-Voluntary bid for promotion

Corporate culture�Diffusion of CVI mindset

- CVI role-playing, vision relay�Create healthy work culture

- Encourage employees to workovertime only when necessary,streamline reporting procedures

Maximizingperformance

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

BPR PIN TO KT New ManagementProgram

▼ ▼

Investment bygovernment Privatization

Lean ▶ PI ▶

Management Quality Score (unit: point, maximum is 1,000 points)

05 06 070403

626567

452

641 645

Malcolm Baldrige ModelSet up in the US in 1987, it is a global standardfor business excellence used as the criteria fornational quality award evaluation in Korea

▶MQ(Management Quality)

Six Sigma ▶

◐ Ongoing Six Sigma activities

We carried out various Six Sigma innovation activities to produce visible results in 2007. We

identified and executed optimization tasks to hone our cost and business competitiveness. We

managed to have outcomes from innovation lead to better performance through budget

rollover and by reflecting the results in the following year. In 2007, we verified KRW 56 billion

of the estimated gains of KRW 222 billion of proven gains through follow-up tasks, with KRW

12 billion allotted for budget rollover and reflection in the next year’s performance.

In terms of boosting HR competency, 47% of the workforce received Six Sigma training and

10% took part in executing related tasks. In 2007, we also established the industry’s first

Master Black Belt(MBB) academy and produced 57 MBBs through 75 days of training. KT

currently has 106 MBBs and aims to raise the figure to about 300 within the next two years.

Moreover, we expanded the scope of our Six Sigma activities to partner companies and local

communities. In particular, we provided Six Sigma consulting to Seoul National University

Bundang Hospital. The resulting gains of KRW 70 million were donated to help the

underprivileged with their medical expenses, presenting a new model for philanthropy.

◐ Customer-oriented process innovation

We have been pursuing process innovation(PI) to promote a customer-oriented approach in

departments that have contact with customers since 2007. With the goal of creating a CVI

implementation system that will help us achieve our vision and mid- to long-term strategy, we

decided on four action plans: expanding customer value, providing differentiated value for each

customer group, achieving excellence at customer contact points, and offering efficient and

swift services. Our initiatives go beyond eliminating work that does not create added value, but

involves innovation of strategy, process and infrastructure from the standpoint of enterprise

transformation.

Innovation tasks derived from PI will initially be handled by the Guri regional office, which was

selected for the pilot run in December 2007. To ensure smooth execution of the Guri office’s

incumbent activities and the new tasks, we will simultaneously conduct a skills enhancement

program for the employees.

Additionally, we will build a process governance system(PG) to standardize and monitor

processes that cannot lead to enhanced performance due to a lack of absence of standards or

lacking control schemes. The PG system will be set up in phases.

Signing of agreement between Seoul National

University Bundang Hospital and KT

MBB(Master Black Belt)Devoted fully to Six Sigma, MBBs are top SixSigma experts in charge of grooming, trainingand instructing in-house Black Belts and GreenBelts.

BB(Black Belt) Leaders in executing Six Sigma tasks, Black Beltsare proficient in using Six Sigma methodologies.

GB(Green Belt)Experts who implement Six Sigma tasks whileexecuting daily work or who are a member ofBB task team.

l Financial Results from Six Sigma l (unit: KRW billion)

Category 2005 2006 2007

Estimated amount 309 131 222Verified amount 110 44 56

l Status of Six Sigma Belt Qualification l (as of Dec. 31, 2007)

Category MBB BB GB Total

No. of qualified employees 106 198 2,849 3,153Proportion 0.3% 0.5% 7.6% 8.4%

Process GovernanceManagement system that maintains optimizedwork processes. It covers the entire process lifecycle including process standardization,standard compliance, performance managementand improvements.

34...35

◐ Knowledge management system

KT has erected a knowledge management system(KMS) to maximize work efficiency and foster

a creative organizational culture. KMS allows knowledge within the company to be shared by

all employees.

Collected information is accumulated as the company’s knowledge assets. After determining

whether the information needs to be shared, it is registered under KMS according to its

classification. Registered knowledge is evaluated and reexamined by knowledge masters in

the respective fields before being utilized as the organization’s knowledge. As of the end of

2007, there were roughly 47,500 registered knowledge items and knowledge usage amounted

to about 1.4 million.

◐ Idea bank

Idea bank represents a novel way of unearthing new ideas and is designed to foster a creative

work environment in which everyone is encouraged to participate. It allows ideas to be

collected throughout the year, as opposed to being gathered intermittently by each business

group. Outstanding employee suggestions filed with the idea bank are promptly incorporated

in our operations. A reward of up to KRW 100 million is given for exceptional ideas. In 2007,

totally 4,736 suggestions were registered including ideas for new product development and

profit improvement. After reviews, KT adopted 56 ideas to improve existing businesses and 23

ideas for new businesses. Commercialization is being considered for 66 ideas.

◐ Toward zero human error

We have to stay true to the basics and enhance the way we work to resolve complaints from

internal and external customers and to achieve customer value innovation that satisfies

customer needs. Human error refers to mistakes by employees that cause inconvenience to

customers. KT has been carrying out the following innovation activities to realize zero human

error: amending incorrect processes, preventing error, and reforming our mindset. We pay

special attention to improving areas associated with frequent customer complaints. We have

set standards for work activities and carry out training and monitoring to ensure compliance

with the standards. We are keeping constant watch to detect and remedy any errors.

◐ 5S activities

KT has adopted 5S activities(sort, stabilize, shine, standardize, and sustain), which originated in

the manufacturing sector, to overhaul our basic attitude on how we do our work, uncover

hidden problems, and identify improvement activities. In 2008, we will expand 5S activities to

telecom facilities of our business customers to provide stable telecom services and increase

customer value.

l 5S Activities l

▼

Removal of all wasteful factors in theworkplace

5S is at the root of all innovationactivities

Seiri, Sort

Seiton, Stabilize

Seiso, Shine

Seikesu, Standardize

Shitsuke, Sustain

Mid- to Long-term Business Strategy

The information and telecommunications(IT) business is rapidly shifting from delivery, KT’s

long standing strength, to related fields such as media, contents and portals. The breaking

down of walls between industries and the convergence trend, such as the merging of telecom

and broadcasting, is setting a new paradigm in the IT market and creating new value. Over the

past five years, KT has steered advances in IT with continued successes in PCS and high-speed

Internet. To overcome the sense of crisis stemming from stalled growth and to fuel a new

takeoff, KT has devised a new mid- to long-term strategy that calls for realigning the business

portfolio and exploring innovative new growth businesses. We plan to go one step further and

adopt an approach centered on customer base expansion to propel growth.

Mid- to Long-term business direction

Our business direction for mid- to long-term growth is personalization and a window as a

platform of our services. From the perspective of 49 million individual customers, rather than

17 million households, we may see a decline in individual service ARPU. However, by

personalizing services such as VoIP, WiBro and IPTV, we expect the customer base to grow

over the long run and ARPU per customer to increase.

With a window serving as our service platform, we are turning services that left only an

auditory impression on customers into a window that supports visual images. We will then add

on new business concepts like advertising, commerce and content distribution.

KT has selected four mid- to long-term business areas to suit the growth direction noted

above. Specifically, we will pursue three additional businesses that form the axis of future

growth(ie, “New Communication”, “New Window”, “New BM”) in addition to our existing

delivery business.

ARPUAverage Revenue Per User

l Mid- to Long-term Business Strategy l

Axis of growth

Business direction

Businessexecution style

Personalize

Customer Value Innovation

Transition Corporatecustomer Organization Distribution IT

KT Groupmanagement

system

Shift towardwindow

Offer communicationbased on new technology�VoIP�Convergence service

New Communication

Deliver contents throughwindow

�WiBro�IPTV

New Window

Provide window-basedcustomer value�Advertising�Commerce

New BM

36...37

Fostering core growth businesses

◐ WiBro

WiBro, a mobile high-speed Internet service, is Korea’s leading IT technology. It is a

homegrown technology of Korea and has been adopted as an international standard. KT

became the first company in the world to successfully commercialize the technology in June

2006. WiBro was approved as a global 3G standard in October 2007.

In order to foster the service as our future growth engine to lead the telecommunications

market, we started commercial service in 2007. WiBro coverage was expanded all across

Seoul, to subways, and to the vicinity of major universities in the Seoul metropolitan area.

Furthermore, KT is leading the mobile 2.0 culture with its W Style Shop in the Shinchon district

in Seoul. The W Style Shop is a place where people can get firsthand experience with WiBro.

We will expand WiBro coverage in Korea in 2008. Specifically, WiBro will be available in 17

cities near Seoul including Incheon, Suwon, Seongnam, Yongin and Anyang. The launch of

WiBro Wave 2 network, which doubles the current speed and quality, will allow users to enjoy

enhanced mobile Internet service. KT intends to spearhead future trends in mobile

telecommunications with WiBro which enables “high-speed Internet on the go.”

KT has been taking WiBro technology overseas, providing technical consulting for Neupara of

the US, setting up a WiBro business entity in Uzbekistan and building a WiBro network in

Rwanda. We also launched WiBro-Mobile WiMAX Community(WMC), an alliance of telecom

operators, to promote WiBro global roaming, discover WiBro business models and foster

international cooperation. Japan, Taiwan and Malaysia are set to commercialize WiBro in the

near future. The same is expected by Sprint-Nextel of the US. We expect our WiBro business to

gain pace led by global roaming and emergence of global vendors.

◐ IPTV

IPTV has received the spotlight as the leading model of telecom-broadcasting convergence.

The Korean National Assembly passed a law allowing the launch of IPTV at the end of 2007.

That presents an opportunity for growth to KT. For the successful launch of IPTV based on

broadband technology, we have increased investments to set up a media center and link

transmission equipment to the backbone network.

University Campus

Subway

KT and Sprint-Nextel of the US sign MOU

l Four Business Scopes for the Mid- to Long-term l

Business Description

Delivery �Fixed line and wireless telephony and high-speed Internet access�Provide customers with more convenient, cheaper and high-quality services

New Window �Digital entertainment which provides customers with fun and enjoyment throughvisual screens �Provide a wide range of interactive media and entertainment in areas such as

education, health and cooking through IPTV

New Communication �Evolve voice call services into VoIP-based window services to provide convergenceservices that deliver customized contents such as visual images, education andhealth�SoIP, MoIP(Multimedia over IP), and mobile WiBro VoIP

New BM �Creative businesses such as advertising and commerce that provide new value toboth customers and the company by drawing on the customer base of MegaTV,WiBro and VoIP. �Media advertising, interactive commerce and contents distribution

WiBro Service Demonstration

KTand NHN sign business ties

KTand SCEK sign alliance agreement

As a result, we have laid the necessary groundwork, from contents and price to customer

management, for commercial IPTV. The preparations have been made together with roughly

200 SMEs that supply equipment, solutions and contents.

We made strategic alliance and collaboration with key IT players such as NHN, Sony and

Samsung Electronics to provide optimal IPTV service. At the same time, we promoted ITPV

through participation in Pusan International Film Festival and expansion of VoD contents, and

development of interactive services. Through our IPTV service, we will help to bridge the

information gap between regions and social brackets, give consumers more choice in pay-per-

view broadcasting, stimulate t-commerce, and create added value in diverse segments of the

business and cultural worlds.

◐ SolP

KT is taking the telephone to the next level with SoIP(Service over Internet Protocol). SoIP is an

innovative service that will make life more convenient than ever before for our customers. The

addition of a screen to telephones commonly found in people’s homes will enable voice and

video telephony as well as data and contents delivery. That means users can take care of

routine chores and obtain information faster, giving them more time for leisure.

We plan to introduce nine voice-based value-added services and follow up with the launch of

nine video-based SoIP services in 2008. Regarding terminals, we plan to begin with the launch

of a low-cost voice terminal. Thereafter, voice terminal and video terminal are scheduled to be

launched successively. We also plan to expand our lineup of premium models.

Strategic Alliance

KT-NHNIn July 2007, KT signed an agreement with Korea’s leading Internet portal company, NHN, forstrategic cooperation in IPTV. Under the agreement, NHN’s services including real time search,UCC, Hangame and Junior Naver will be provided via KT’s IPTV platform. As a model of telecom-broadcasting convergence, the two-way cooperation is aimed at boosting IPTV competitivenessand expanding the IPTV market. As the first phase of this initiative, we launched a real time TVsearch and the TV portal service “Naver Channel” in January 2008.

KT-SCEK(Sony Computer Entertainment Korea)On October 8, 2007, KT and SCEK inked a deal under which the PlayStation 3 console will act as aset-top box for KT’s Mega TV IPTV service. A demonstration of the joint service was given on thefollowing day at the Korea Electronics Show(KES) held at KINTEX in Ilsan near Seoul. Followingjoint development, the two companies launched the commercial service on November 20, 2007.

l Value of SoIP Service l

Category Details

Technology Ensure high-quality service based on premium network and platform

Service Provide a wide range of video-based value-added services such as banking and contents,in addition to voice and video telephony, to raise the utility of SoIP

Terminal Enhance customer convenience by providing customized terminals and user-friendly UI

38...39

Global operation

◐ Overseas investment

Harnessing our experience in Russia(New Telephone Company; NTC), Mongolia(Mongolian

Telecom; MT) and Vietnam, we acquired a telecom company in Uzbekistan in 2007. The

acquisition has paved the way for KT to provide high speed wireless Internet service to people in

Central Asia. We will continue to explore opportunities in high speed wireless Internet,

telecommunications, and value-added service and content in emerging markets with strong

growth potential. Through our overseas investment, we not only aim to generate revenues in

global marketplace, but also contribute to developing local communities by taking our technology

and know-how to regions that suffer low Internet penetration and a lack of telecom services.

◐ Overseas IT business

KT has developed highly-competitive solution platforms that comply with global standards and

is exporting such products to overseas markets. It provides a wide array of services, including

consulting and telecom network construction services, to overseas carriers and telecom

service providers.

In 2007, KT won orders for a project to modernize the telecom network in Paraguay, construct

GIDC(Government Integrated Data Center) in Nepal and Mongolia, build a WiBro network in

Rwanda(capacity: 70,000 subscribers), and carry out an ICT project in Indonesia financed by the

Korean government’s Economic Development Cooperation Fund. While exporting its cutting

edge IT technology, KT is also supporting efforts to raise IT service levels in developing

countries.

◐ Global service network

To grow its global operation, KT is strategically nurturing its hubbing business under which it

works with about 270 companies around the world to relay traffic through access to various

networks such as TDM and VoIP. Based on hubbing, we offer customized wholesale service,

which refers to distribution of customized products to overseas customers, to expand our pool

of international clients. Moreover, KT offers global data services to corporate customers over

its global PoP data networks that are located in key areas across the globe. The company is

also expanding the supply of IP traffic relaying services over its high-quality global Internet

network for Internet service providers at home and abroad.

NTC(Vladivostok, Russia) presents prize money

to the one millionth subscriber

NTC, RussiaKT acquired managerial control of NewTelephone Company(NTC) in 1997 and currentlyholds an 80% stake. NTC has grown to becomethe largest mobile telecom operator in theMaritime Province. NTC had been sufferingfrom chronic losses prior to the takeover. ButKT turned the company around into profitableoperation in three years on the back ofmanagement innovation, high call quality andunique value-added services. Since then, NTChas been posting growth and claimed thehonors of being named the most outstandingcompany and brand of the Primorsky Krai.

Penetration into Overseas ITBusiness in 2007

China

Provided a high-speed network managementsystem CNCG

Japan

Provided CellTrek to KDDI

Mongolia/Nepal

Constructed GIDC

Indonesia

Constructed ICT center

Paraguay

Upgraded telecommunications network

Rwanda

Constructed WiBro network and FOC network

l Key Overseas Investments l

Category Details

Russia �Acquired shares of the New Telephone Company(NTC)�No. 1 company in terms of its GSM market share in the Maritime Province of Siberia

(2001~2007)

Mongolia �Acquired shares of MT, the No. 1 wired service provider(1995)�Became the first to launch high-speed Internet services in Mongolia(2001)

Vietnam �Concluded a business cooperation contract with Vietnam National Posts andTelecommunications Corporation(VNPT), a wired service provider in Vietnam and madeinvestments�Project to expand the basic telecommunications network of Vietnam(1997)

Uzbekistan �Acquired equity stakes in East Telecom and Super iMAX(2007)�Set to launch high speed wireless Internet service(2008)

Outside Expert Opinion

The complaints related to KT that we receive at Korea Consumer Agency are mostly regarding broadband Internet and landline phoneservices. With broadband Internet service providers, the most frequent complaint is related to new subscriber acquisition, accounting for 70-80% of all the complaints we receive. The same is true with KT. In particular, telemarketing activities generate many complaints. Becausetelemarketers speak for and in favor of operators, consumers find it difficult to accurately understand the contract terms or are subject topenalties and other problems when wanting to cancel their contracts. Many measures have been taken to address contract-related problemsthis year, but there is still a room for further improvement. Going forward, I believe that KT, as a dominant force in the IT industry, should getan accurate view of consumer preferences and invest more into CSR to transform into a company that is genuinely favored by customers.

Eun-Sil Choi

Spokeswoman, Korea Consumer Agency

Customers Customer Value Management

Result of Stakeholder SurveyKT is trying to provide better customer service to enhance customers’ convenience.

Highlydisagree

0.8%

Disagree1.2%

Neutral36.6%

Highly agree18.1%

Agree43.3%

40...41

Material

Issues

Key

Performances

in 2007

Responsible

Organizations

Goal and

Strategy

After analyzing the materiality of customer related issues, we decided to concentrate our resources on the following

areas-protecting customer information, customer safety and health, preventing side effects of the information era,

responsible service management, stable telecom services, and fair trade. These issues are categorized into four parts

(customer protection, creating heart-touching moments for customers, responsibility on service quality and fair trade)

and reported accordingly in this section.

To put a more systematic customer value management in place, KT formulated an implementation objective: “A

Wonderfull Service Creator that values customer dreams.” Through innovating customer value, the company has drawn

up plans to offer new services that result in a paradigm shift in customer lives and focus on customer services that

create heart-touching moments in their lives.

Chairperson: Head of CustomerService BU

Customer Value CSR Committee

�Information Protection Dept.�WiBro Marketing Dept.

Customer Protection

�Process Innovation Dept.�Customer Process Dept.

Customer Satisfaction

�Network Management PlanningDept.�Megapass Dept.

Service Responsibility

�Fair Competition Dept.�Marketing Strategy Dept.

Fair Trade

�Strengthen the process of developing valuesthat are unique to customers�Establish and strengthen the capacities of a

distribution infrastructure�Enhance the competencies of departments

at customer contact points

Innovate customer services

�Strengthen protection of customerinformation�Activities to prevent the side effects of IT

adoption�Clean marketing

Improve customer trust

�Expand customer infrastructure based onoptical system�Customer care through preventive measures�Optimize operational quality

Strengthen the customer base

KT, a Wonderfull service creator that values customer dreams

Disclosure on Management Approach

Customer Service Infrastructure Dept.

Secretariat

▶ Protecting customer information �Announced Personal Information Protection Charter�Introduced “Customer Information Safety Certification System”▶ Enhancing network quality: Acquired international quality certificate(CMMI, ISO2000) for IT system▶ Innovating customer value�Introduced CCMS, operated a voluntary compensation system, established integrated online channel, operated

“Wonderfull Before Service”▶ Awards & recognitions �Received Korea Customer Satisfaction Management Award�Rated no.1 in external customer satisfaction surveys

-NCSI(National Customer Satisfaction Index) / KS-SQI(Korea Standard Service Quality Index) / KCSI(KoreanCustomer Satisfaction Index)

Customer Protection

Based on a sense of responsibility as a leading company in the IT industry, KT focuses on

addressing the side effects of IT such as unauthorized disclosure of personal information,

circulation of unhealthy information, Internet addiction and privacy intrusion. KT is therefore

devoting much effort to enable our customers to use the Internet without worrying about the

harmful aspects of the cyber environment.

Protecting customer information

According to a Korea Information Security Agency report, the number of incidents of personal

information leak and abuse/misuse has been growing exponentially in recent years. Such leak

is mainly attributed to hack attack and lack of management. KT deeply regrets that an incident

of customer information leak took place last year stemming from lax management by outside

sales agencies. In an effort to better protect customer information as part of our valuable

assets, we are taking a wealth of actions such as increasing employee awareness on the

importance of protecting personal information and strengthening in-house security system

and management of our sales agencies.

◐ Personal information protection charter

In December 2007, we unveiled the “KT Personal Information Protection Charter.” All

employees swore to faithfully follow the charter which outlined guidelines for protecting

customer information, such as obtaining customer consent, rigorously managing customer

information, and protecting customer rights. Additionally, to collect diverse opinions on

customer information protection, we appointed experts from diverse fields to the Customer

Information Protection Advisory Board. The Board will convene twice a year to collect and

reflect opinions on the company’s information protection policy and services.

◐ Service to check for theft of ID number

KT provides a free National Identification Number confirmation service that enables our Internet

customers to check the websites that have their National Identification Number registered. Customers

can personally check the sites to see if their personal data have been used without their knowledge by

accessing the Personal Information Protection Menu on our homepage(www.megapass.net).

◐ Raising employee awareness on customer information protection

KT runs diverse educational programs on information protection for employees to raise their

awareness on the issue and to enhance their skills in handling customer information. Training

methods include on-site visit, training customized to different positions and jobs, and online training.

For marketing personnel who directly work with customer information and other employees with

close customer contact, the company regularly monitors their management of customer information.

More effective training programs are being developed to prevent the leak of any information to third

parties. In January 2008, we distributed Personal Information Protection e-handbooks to employees

to aid their understanding and encourage the best practice in customer information protection. We

incorporated into the handbook the amendments to the related government regulations such as the

Act on Information and Communication and added search functions as well.

◐ Customer information management system

KT has a customer information safety certification system for each of its branch offices, call

centers, business partners and websites. The system evaluates the technical/management

levels of customer information protection and awards those that meet KT standards with a

safety certificate. Starting in 2008, we plan to expand the service to outside distribution

partners that directly deal with customer information.

Personal information protection

e-Handbook

Declaration of KT Personal Information

Protection Charter

*Full text of KT Personal Information Protection*Charter is on the following website.*http://privacy.kt.com

Furthermore, KT strictly limits access to the company computer system that contains

customers’ personal data. We have put in place the technology to fundamentally block the leak

of customer information from within. The company is currently building a system to encrypt all

of the newly created data on our company work servers and PCs so as to make it impossible to

view data from outside the company. In the unlikely case of a data leak due to hack attacks, the

relevant content will still be locked up.

Complying with legal standard on electromagnetic wave

Mobile phones and other mobile telecommunications devices have undoubtedly brought about

many conveniences but there is still ongoing debate over the possible harmful effects of the

electromagnetic waves they transmit. Despite scientific uncertainties, concerns persist over

the effect of the waves on the human body. In 2002, the government introduced a bill to

regulate exposure levels to electromagnetic waves. KT has fully complied with legal

standards.

◐ Mobile handsets

The handsets sold by KT must pass an electromagnetic wave test called Specific Absorption

Rate(SAR) according to public notice no.2000-93 from the Ministry of Information and

Communication before they are eligible for registration and sale to the public. The stated

exposure limits are 1.6W/Kg, even more stringent than 2.0W/Kg followed by Europe and Japan.

Since March 2003, based on the voluntary disclosure agreement between handset makers, the

SAR figures of each new handset model are revealed on their website.

◐ Wireless base stations

The expansion of WiBro services is leading to a greater number of base station installations

every year. This is also a cause of growing concern over electromagnetic emissions for nearby

residents. Every year, KT selects a base station with strong signal strength and entrusts

external authorities to take assessments to quantitatively evaluate and control

electromagnetic emissions. Our electromagnetic evaluation results in 2007 satisfied all

electromagnetic safety standards in Korea which are based on the most stringent standards

set by the ICNIRP.

◐ Other outdoor fixed line telecommunications facilities

Compared to wireless facilities, fixed line facilities emit markedly lower levels of

electromagnetic waves. However, to ensure customer safety, KT conducts quantitative

evaluations and manages electromagnetic emission levels by taking on-site measurements

with public agencies on small telecommunications facilities located near residential areas. We

inspected 11 sites in four areas in 2007, and confirmed levels to be 1/100~1/1000 of domestic

safety standards.

42...43

Safety Standards by Country

SAR limit : 1.6W/Kg

Country : Korea, US, Australia, Taiwan

SAR limit : 2.0W/KgSAR limit : Internationally recommended

levels

Country : Europe, Japan, Singapore

l Results of Electromagnetic Wave Measurement l

Classification

Wireless base station 8 0.123~0.197

WiBro base station 1 2.88

0.0003~0.0005

0.0076

59

61

0.159

0.16

No. of

measurements

Measurements Safety standards

Electric fields(V/m)

Electric fields(V/m)

Magnetic fields(A/m)

Magnetic fields(A/m)

*Source: Northern Seoul Radio Management Office, Report on Radio Environment Measurement Results(July 19, 2007)

ICNIRPThe International Commission on Non-IonizingRadiation Protection

SAR(Specific Absorption Rate)A measure of the maximum rate at which radiofrequency(RF) energy is absorbed by the body.The international recommended standards andindividual country’s national standards stipulatethat the maximum SAR level not exceed themaximum exposure rate.

e-Clean activities

KT conducts research and development on various value-added services to establish a “clean”

Internet environment wherein customers can use the Internet freely without having to worry

about harmful sites in cyber space. Since 2002, KT has developed and provided “Megapass

Clean-i,” which blocks harmful websites and “Megapass TimeCodi”, which prevents Internet

addiction. Additionally, starting from 2006, we worked with Korea Internet Safety Commission

(KISCOM) to shut off access to 1,100 overseas sites that feature unsound contents such as

nudity and gambling in the Korean language. In 2008, we plan to build a system that can block

indirect access to such sites from the source.

Meanwhile, we have been providing “MegaDoctor 2” free-of-charge to customers to protect

them from diverse cyber threats. MegaDoctor 2 includes vaccine functions to treat existing

viruses and malicious codes, in addition to other functions like personal firewalls, PC self-

diagnoses, patch management and system optimization. In particular, we added an anti-

phishing feature to combat the growing problem of the email fraud.

Preventing side effects of the information era

The rapid diffusion of Internet has generated serious side effects. To help resolve some of

those problems, KT conducted education on sound Internet habits to 12,000 persons over 44

occasions in 2007. Since we began the program in 2003, more than 44,000 people have

benefited from the 142 education courses. Additionally, we held the “Internet Love, Family

Love” campaign involving a competition of theses and essays on the theme “Boosting the

positive effects and preventing side effects of the Internet.” We received 108 theses and 1,135

essays which were then published as a book. In February, we hosted an academic forum of the

Internet Ethics Promotion Committee, while in November, 300 students, parents and teachers

attended our Ethical Internet EXPO that included a musical performance, mock dispute

resolution over defamation on the Internet, and presentation of awards to the schools with the

best courses on online ethics and to UCC competition winners.

Creating Heart-touching Moments for Customers

We strive to touch our customers’ hearts by offering differentiated value. KT believes that to

win over their hearts, we must follow through on promises made with our customers and

minimize customer inconvenience to forge a relationship of trust. To swiftly deal with

customer complaints, KT created an integrated Voice of Customer(VOC) management system

to better listen to our customers. In 2007, KT introduced the Consumer Complaints Management

System(CCMS).

CCMS

Adopted in May 2007, CCMS communicates a clear set of guidelines to our employees

regarding consumer complaints and damages. By doing so, we are promoting the prevention

of consumer damages and working to bring quick relief to reduce unnecessary costs and

improve customer satisfaction.

l e-Clean Services to Prevent Negative Effects of the Internet l (as of the end of 2007)

Item Service details No. of users

Megapass Clean-i Block access to harmful websites, such as lewd 451,361or violent websites

Megapass TimeCodi Set and manage Internet usage by time period and day 33,441Mega Doctor Block and cure viruses and malicious code attacks 2,630,270Encryption of information Ensure protection from hacking by encrypting information entered through the keyboard entered through the keyboard 49,017

Education on healthy Internet habits

CCMSInternal system set up to prevent consumercomplaints and damages and to provide speedyrelief measures

44...45

Recognizing that CCMS is a key Customer Value Innovation(CVI) tool to achieving a new vision,

KT named its most senior executive for customer service as a dedicated officer to oversee the

operation, maintenance, promotion and improvement of CCMS. Additionally, we formed a

CCMS secretariat to ensure the system’s smooth implementation and a Wonderfull Center at

each customer contact point to deal with customer complaints.

As basic, preventive response to consumer complaints, KT created and distributed a Code of

Conduct, improved the quality of its products and services, implemented sound sales

practices, and took action to protect personal information. In order to promptly deal with those

consumer complaints that do arise, we have a set of rules that includes filing of the complaint,

corrective measures and notice within three days of the complaint filing, and compensation

standards that are adjusted to the customer’s viewpoint.

Customer claims management

KT believes that our customers’ opinions are an important asset to our operations and thus

handle customer complaints on a real-time basis through our VOC system. We sorted the most

common complaints filed by customers and are paying special attention to addressing the 10

most frequent types of claims. As part of efforts to reduce these claims, we selected and made

improvement on 63 cases of most frequently-raised claims in 2007. As a result, claims

decreased 18.1% over the previous year. According to Korea Communications Commission

data released in 2007, KT received the lowest number of civic complaints despite having the

highest number of subscribers in comparison to rival communications service providers. We

will continue to seek ways to improve work processes associated with customer complaints to

shape KT into a truly customer-oriented company.

Customer value innovation activities

KT is pursuing diverse customer value innovation activities to provide our customers with

services that touch their hearts and exceed their expectations. Some of our activities in 2007

include the introduction of a voluntary compensation system, Wonderfull B/S, consolidated

online channel and Wonderfull Letter.

◐ Voluntary compensation system

In line with our service innovation program to faithfully carry out promises made with our

customers, KT operates a voluntary compensation system in which we voluntarily offer

compensation to our customers for a complaint at which we are at fault, before they file for

compensatory damages.

l CCMS Framework l

On-site Wonderfull Center

Head Office Wonderfull Center

Autonomous management system

FilingFiling Transfer

Presentation

Filing Deliberation

Processing Presentation

Presentation Deliberation

Request for improvements

Request for improvements

FeedbackProcessing Feedback

Processing Feedback

Head Office /Department

Branch Office

Center

Working committee

Customer

Working committee

Call CenterDistribution

CenterRegional office

(branch)

▼

▼

▼ ▼

▶

▶

▲

▲

▶

▶◀ ◀ ◀

CEO

Compliance Officer

CCMS Office

Award ceremony for no.1 NCSI company

10 Major ClaimsNot fulfilling customer promise, Excessive TMactivities, Unreasonable billing practices,Complaints related to promotional gifts, Denyingmaking application, Mishandling/misinformation,Double/excessive/erroneous billing, Oversight inhanding, Bills, Delay in call-backs

Status of 10 Major ClaimsOccurrence

(unit: thousand cases)

06 07

923

756

◐ Wonderfull B/S(Before Service)

KT shifted from its A/S(After-Sales Service) system to a preventative B/S(Before Service)

system so that customers suffer no discontinuation in services. We secure a list of customers

with inferior quality service through our quality management system and visit them before any

problems arise and take preventative measures. Additionally, for customers who frequently

experience troubles, a special task force of skilled employees(dubbed “Internet Doctors”)

performs remote checks of customer PCs.

◐ Consolidated online channel

With the Internet assuming an integral part of our daily lives, KT felt the need for an online

channel of communication with our customers. This led us to consolidate all the previously

dispersed sites for individual products under KT100.com for a one-stop solution. In 2007, we

created a consolidated online channel by combining our company homepage(http://www.kt.com)

and KT100.com to offer greater accessibility and convenience to our customers. The new

online channel offers information and terms of use for all KT offerings to minimize any

confusion that customers may feel when applying for services. Based on an integrated web

platform, KT will further complement content, benefits and customer services so that our

customers continue to visit our site.

◐ Wonderfull Letter

KT branded its bill statement into the “Wonderfull Letter” to provide greater customer

convenience. Wonderfull Letter employs a differentiated method of showing the bill and more

customer-friendly language.

Evaluation of customer satisfaction

KT conducts an annual CVA(Customer Value Added) evaluation, which involves measuring the

company’s customer satisfaction level in comparison to its competitors to improve customer

services and carry out impartial and reasonable evaluation on customer satisfaction activities.

CVA evaluation results are managed as KPIs(Key Performance Indicators). Our CVA scores

have improved continuously since 2004 and it reached 1.06 points in 2007. The company took

first place in all telecom services in the level of customer satisfaction and quality evaluations

performed by outside organizations. It is the first in the industry to be ranked first in all

evaluations related to the level of customer satisfaction.

l Voluntary Compensation Standards l

Category Details

Delay in initiating services When delay exceeds 24 hours from the ready for service(RFS) date

Delay in A/S When delay exceeds 24 hours from the filing of after-sales service※However, the standard time is subject to change if a customer requests

the service to be delivered at least after 8 hours

Delay in canceling services When delay exceeds 3 days after request for cancellation

CVA Score Trend(unit: point)

05 06 07

1.03 1.05 1.06

*CVA = KT’s score in customer satisfaction/ No. 1 competitor’s score in customersatisfaction

*Classification according to the CVA scorerange;

*Top-level competitiveness(1.1 or more),outstanding competitiveness(1.03 or moreand less than 1.1), average levelcompetitiveness(0.97 or more and lessthan 1.03), low-level competitiveness(lower than 0.97)

Awards ceremony for no.1 KS-SQI company

46...47

Responsibility on Service Quality

Reliable telecommunication services

The IT network is like the lifeblood of a company and any disruption can lead to major

economic losses, not to mention social confusion. As the operator of Korea’s largest IT

network, KT assumes a great responsibility and is constantly striving to provide stable and

reliable telecom services.

◐ Dual network monitoring system

KT conducts dual real-time monitoring of its telecom services through its national network

center in Gwacheon and ten regional network control centers. Technicians are sent to fix the

facility equipment that is judged to be at risk of malfunction as part of preventive measures.

When any problems arise during service, action is quickly taken to minimize communication

disruption by opting for alternative communication channels.

◐ International quality certification for IT system

Our diverse IT systems, including Enterprise Resource Planning(ERP) and New & Next

Operation Support System(NeOSS), greatly contribute to our providing stable and customer-

oriented services. To offer high quality telecom services and stable system management, we

continue to pursue software development and process innovation. In recognition of such

efforts, in August 2007, we became the first Korean telecom operator to receive CMMI Level 5

certification. Level 5 is the top level of software quality certification offered by the prominent

US-based Software Engineering Institute. In November, we received ISO20000 certification on

IT service management from the British Standards Institute(BSI). The certifications attest to

the international standards of our IT service quality.

◐ Emergency recovery training

To be ready for occasions when services are disrupted by natural disasters or accidents, KT

engages in annual emergency training sessions with other telecom operators led by Korea

Communications Commission. We maintain a cooperative system with other operators which

include KTF, SKT and LGT at all times for an emergency recovery system in the event of an

explosion of traffic due to major events such as national holidays, the year’s end or the

announcement of university entrance exam results.

KT has also equipped itself with 1,200 units of roughly 50 types of different emergency recovery

equipment such as switchboards, Internet devices, transmission devices, engine-generators

and SNGs using the Koreasat Satellite and regularly performs emergency recovery training.

l Dual Network Monitoring System l

10 regional network centers

Nationwide network center

Consolidated operation center

Exchangemanagement center

Internet datamanagement center

Transmissionmanagement center

Power management center

Telecommunications facilities of network service center

CMMI Level 5 certification

ISO20000 certification on IT service management

Emergency recovery training

Responding to Internet infringement

The Internet has brought numerous conveniences such as information sharing, education and

e-commerce. On the other hand, downsides include exposure to infringement such as hack

attacks and other system attacks for monetary gains. Recently, the spreading of new/mutant

forms of worm viruses in addition to hack attacks has infected customer PCs, generated mass

traffic and created discomfort in Internet use among customers.

KT has set up Internet security measures to minimize online threats and built a response

system against malicious BOT and other attacks to boost its ability to counter Internet

infringement. In addition, by working closely and sharing information with Korea Information

Security Agency(KISA), and domestic and overseas ISPs, we established an active response

system against the nationwide attack. We recorded a 200% increase in our security breach

response compared to 2006 and made 1,500 cases of preliminary response to potential

attacks, preventing major breaches on KT’s Internet service network.

Fair Trade

KT introduced a fair trade compliance program(CP) to prevent economic losses for society and

the company by voluntarily complying with regulations and preventing unfair activities. We

conduct diverse educational programs and activities to enhance employees’ awareness of fair

trade and promote a culture of fair trade compliance within the company.

Fair trade compliance program

In 2001, KT became the first in the domestic telecom industry to adopt the compliance

program that encourages fair competition and voluntary observation of anti-competitive laws

and regulations.

◐ Fair trade compliance regulations and distribution of compliance manual

KT has devised internal rules to ensure effective implementation of our fair trade compliance

program as a way of embedding fair trade practices into how we conduct our business. In

addition, the company has created compliance manual that specifies internal guidelines. These

guidelines are designed to enable employees to consider laws and regulations when doing

their jobs.

l Telecommunications Troubles l

Category 2004 2005 2006 2007

Class A - 1 - -Class B 52 29 13 11Class C 1,080 517 348 233Class D 9,013 5,892 4,547 3,739Total 10,145 6,439 4,908 3,983

*Defects are classified according to the number of VOCs:*Class A(3,000 or more); Class B(300 to 3,000); Class C(30 to 300); Class D(Less than 30)

BOTA program or code that cannot perform by itselfbut can be controlled or executed remotelythrough user commands

Fair Trade Compliance Program Corporate rules to promote companies’ voluntaryobservation of fair trade laws and regulations

l Response to Internet Infringement in 2007 l

Category

KISA 720 567KT 104 38

URL blockade IP blockade

*Preventative response: Blocking malicious BOT host servers and sites that spread malicious codes

(unit: case)

(unit: case)

48...49

◐ Operation of Fair Competition Deliberation Center

KT opened Fair Competition Deliberation Center that is comprised of fair trade experts. We have

made it mandatory to conduct deliberations on various anti-competitive issues in advance

including unfair business conducts and regulatory risks, with the aim of preventing the possibility

of unfair activities. In 2007, a total of 403 cases of deliberations were audited in advance.

Establishing a culture of fair competition

◐ Promoting an environment for fair competition

Establishing a culture of fair competition requires the interest of everyone at KT from the CEO

as well as continuous education. KT is pursuing an effective fair competition compliance

program by conducting diverse training and activities to strengthen employees’ commitment to

fair competition.

◐ Strengthening education on fair trade

KT provides training on fair trade every quarter. A total of 2,742 employees have received

online training in 2007. In particular, a regular workshop is being held for personnel in charge

of fair competition while experts from regulatory organizations are invited to provide special

lectures, so that employees have quick access to information on recent trends in laws and

systems on fair trade.

Fair competition workshop

*Others: Related to Contract Terms Regulation Act, Labeling & Advertising Act, Door-to-Door Sales Act, e-commerce ConsumerProtection Act

l Corrective Measures for Unfair Trade Practices l (unit: KRW billion)

Type

CartelCorrection(case) 5 - -

140 - -- - -- - -

-

5

2

2

-

--

140

0

0

-

-

Fines

Correction(case)Fines

- - -- - -

Correction(case)Fines

Correction(case)

Correction(case)Fines

Fines

Forced transaction

Unfair internal transaction

Others

Total

2005 2006 2007

No. of Pre-auditedDeliberations

(unit: case)

05 06 07

113

393403

Items for Pre-audit

�Business plans with potential anti-competitive risks in pursuant to legal regulations�Companywide marketing plans, ad campaigns, PR materials�Internal transactions among affiliates�Entry into and activities at the business associations�Contracts with suppliers/outside distributors/subcontractors �Other critical matters related to regulation risk

Outside Expert Opinion

KT is not the only company faced with employee grievance and communication problems. Since corporate culture has a lot to do with such issues,it is quite tricky to use a systematic approach. Even if a company has many systems and communications channels, a solution may be hard to findif the corporate culture does not support it. Compared to other firms, KT has introduced many communications-related systems and programs.However, it remains to be seen whether KT adopted systems that are genuinely needed, and whether or not there was sufficient consensusbetween stakeholders before the introduction of such programs. It is a well known fact that KT offers one of the longest terms of employment.This may give the impression that KT is a company with secure employment. However, reality may be different. KT currently has many olderemployees who feel nervous about being asked to leave because of their age. Such concerns would affect their job performance. Therefore,systematic support is required to maintain an open channel of communication and relieve such uncertainty.

Jong-Seong Kim

Researcher, New Paradigm Center

Employees Human Management

Result of Stakeholder SurveyKT is trying to encourage employees to generate the best performance.

Highlydisagree

0.7%

Disagree4.8%

Neutral26.7%

Highly agree18.1%

Agree49.7%

50...51

Material

Issues

Key

Performances

in 2007

Responsible

Organizations

Goal and

Strategy

After analyzing the materiality of employee related issues, we decided to concentrate our resources on the following

areas - fairness in human resource management(HRM) system, uprooting discrimination, employee training and self

development, work-life balance and support for retirees. These issues are categorized into six parts(human resource

development, organizational harmony and human rights, employee welfare and benefits, labor-management

cooperation, open culture, and safety and health) and reported accordingly in this section.

Based on its new vision system of Customer Value Innovation, KT shifted the focus of its human resource management

from the company-based to employee-centered value. We set our mid- to long-term HRM goal as “a workplace that is

full of trust, passion and fun, and where work and life create a balance.” We plan to realize human resource

management centering on employee value.

led by Head of Human Resource Office

HRM Committee

�Work-centered employee careermanagement�Unearthing and nurturing talent�Reinforcing learning contract program

A workplace that guarantees growth and opportunities

�Strengthening family-friendly management�Expanding employee welfare�Encouraging productive, efficient meetings

A workplace where work and lifeform a balance

�Uncovering programs to address employeeproblems�Invigorating internal communication�Expanding zero-accident safety activities

A workplace full of trust

A workplace that is full of trust, passion and fun, and where work and life form a balance

Disclosure on Management Approach

General Affairs Dept., Human Resource Office

HRM Secretariat

▶ Establishing a HR development program centering on capabilities�Ideal KT employee, Companywide capability assessment, introduction of learning contract program ▶ Solving employees’ difficulties: operating the Psychological Counseling Center ▶ Safety and health�Conducting physical inspection of all business sites, holding the writing competition on workplace safety ▶ Awards & recognitions�Obtained “SCORM” certificate(global e-Learning standard) �Obtained “A” rating in Internet & Telecommunications Training Institution Evaluation by Ministry of Labor

�Personnel Management Dept.�HRDC

Passion

�General Affairs Dept.�Employee Satisfaction Dept.

Trust

�General Affairs Dept.�Employee Satisfaction Dept.

Fun

Human Resource Development

For KT to grow into a comprehensive media entertainment company that creates unrivaled

customer value, it is paramount to nurture and retain the best people. Accordingly, we have defined

the ideal KT employee and HRM philosophy, and established a master plan for nurturing human

resources. Additionally, we are continuing efforts to cultivate creative professionals by adopting a

HR development program centering on capabilities, building a self-directed learning culture in

which employees can pursue work and studies, introducing a life-plan program for employees to

map out their post-retirement future, and building a performance-based compensation system.

Ideal KT employee and HRM philosophy

The ideal KT employee is a “Customer Value Innovator” who thinks of creative ways to realize

customers’ dreams from the customers’ standpoint and who turns their passion into action to

earn the trust and gratitude of customers. The ideal KT employee has the highest levels of

expertise and spirit of challenge.

The KT HRM philosophy and system centers on fostering individuals with the following four

values: customer-oriented, originative, passionate and able to execute, and trustworthy.

Employee development

◐ Competency-based HRD

KT has come up with a mid- to long-term master plan on cultivating human resources in order to

foster experts who are able to achieve the goal of creating customer value and sustainable

growth in response to drastically changing business environment. Under the plan, we have

drawn core capabilities required for achieving the company’s vision and human resources policy.

In addition, we have established competency-based HRD system, which is classifying personnel

by job position and duty, specifying competencies that are needed to carry out roles and

responsibilities. And it can make employees check the gap between where they are and where

company wants them to be and improve their competencies step by step. In particular, KT is

assessing the employees’ competencies with personal characteristic and job aptitude every year

based on an assessment system, so as to support employees in developing core competencies

that are required to meet the organization’s objectives.

Customeroriented

Passionateand able to

execute

Ideal KTemployee

HRM philosophy

HR values

CustomerValue

Innovator

Trustworthy Originative

New recruiting seminar

l HR Development Based on Capabilities l

Derive key capabilities Capabilities modeling Capabilitiesdevelopment guide Execute learning

�Domestic and overseasbusiness environment�Vision and mission�Future strategy 2015

�Leadership capabilities�Duty capabilities�Common capabilities

�Self-learning�Company-led education

�Method to enhance eachcapability

▶ ▶ ▶

KT conducts education and training programs fit for each employee capability. The company

offers a variety of programs in the category of common training for all employees, leadership

enhancing training, specialized duty training, and online education. Additionally, we have a

support system to help employees receive masters and doctorate degrees from domestic and

overseas schools and finish MBA courses in order to nurture key personnel.

Our programs to manage and develop HR have continuously received the highest marks in

numerous evaluations by public agencies and other external institutes. KT will spare no support

and investment to support our employees’ development.

52...53

�Education to foster ideal KT employee and improve key capabilities�Change/innovate education to realize “Wonder” management

Common training for allemployees

�Education to enhance management abilities and leadership of executives andmanagers-Executive-level vision management school, executive director strategymanagement school

-Leadership enhancement for department/senior managers

Leadership enhancingtraining

�Education to quickly nurture experienced/rookie employees as key KTpersonnel-3-week initiation training program, 3-week duty program by sector, 3-monthjob-rotation

�1:1 mentor program with model senior employees or key managers

New recruit training

�Specialized education to improve consulting capabilities at customer contactpoint -IT Supporters, consultant academy, CVI leader �Education to enhance specialized capabilities by sector that surpass market

demand

Specialized duty training

�E-learning: 314 courses on basic knowledge by duty and common(management, OA, etc) training�Language academy: 359 courses for English, Japanese, Chinese, etc.�210 reading correspondence courses, mini-clip contents, etc

Online learning

l Education Overview l

Category 2005 2006 2007

Costs(KRW thousand/person) 740 740 760Hours(Hour/person) 107 106 152Classroom education(No. of participants) 42,048 48,016 70,621e-Learning education(No. of participants) 89,716 83,955 186,116

*Number of participants in classroom education and e-Learning education is cumulative.

l Education and Training Programs l

Learning Support System�Support for acquiring degrees-masters/doctorate

degrees�Support for acquiring qualification-support for

professional qualifications

Learning Groups

*KT e-Learning website*http://ktedu.kt.co.kr

Learning Communities(unit: No. of teams)

05 06 07

234444

1,845

Mentoring(unit: No. of teams)

05 06 07

255240

184

Learning contract system

KT introduced a learning contract program in January 2007 to build an on-demand, self-

directed learning culture where work and learning co-exist and to promote balanced

development among employees by providing equal learning opportunities. Having set a target

of having each individual clock up more than 100 hours of voluntary learning each year, the

results showed that learning hours, acquisition of qualifications and HRD satisfaction levels all

increased compared to 2006. Additionally, diverse on-site learning programs were also

boosted, such as learning communities and mentoring.

Life plan program

KT introduced the “Life Plan” program in October 2005 in order to establish the conditions

required for employees to design their future by themselves even after retirement and to

change the employees’ mindsets with regard to their jobs. The program consists of three

courses(self-innovation I, II and III) that are tailored to the age group of current employees.

Moreover, KT opened a Career Design Center in 2006 to offer the education, training and

consulting required for employees to successfully make way for their future including courses

on identifying and developing one’s experiences; counseling; re-employment; opening

businesses; and acquiring certificates. Currently, 86% of former employees are enjoying life

after retirement thanks to our Life Plan program that grants the leave to employees seeking a

change in career and helps employees find new jobs or start new businesses.

l Results Gained from Learning Contract System l

Category 2006 2007

No. of learning hours per person - 181.3Qualifications acquired 2,245 3,886- Company 785 2,879- Outside 1,460 1,007

* The learning contract system acknowledges time spent for lecturing/tutoring, attending external seminars and acquiring qualificationsas learning hours.

l Operational Process of Learning Contract System l

�Provides learning guidance basedon development path�Provides guidance on appropriate

education courses�Provides individual consulting

The subordinate signs contractwith his/her superior oncontent and timing of learning,as well as support method, inorder to improve capabilities.

Learning contract (over 100 hours per year)Superior Underling

LearningLearning designer

Performance evaluation Reflect in personal record

No. of Life Plan EducationRecipients (unit: person)

05 06 07

7,486

10,052

2,617

HRD Satisfaction Level (unit: point, maximum is 100 points)

06 07

78.882.6

*KT life plan website*http://www.ktlifeplan.com

(unit: person)

Life Plan Trainees

“The Life Plan program was a big help. My only regret is that I didn’t take advantage of such anopportunity before my retirement. Had I received training when I was younger, I may haveprepared for my future earlier.”

KT retiree Byung-Deuk Min

“When I opted to quit the company rather than seek reemployment, I decided to enter theprogram in hopes of changing my way of thinking. The program helped me gain inner peace andobtain great information on choosing the right business for me to start. “

KT retiree Suk-Soon Kim

54...55

Performance-based compensation system

To ensure fair evaluation and compensation, KT operates an HR system based on ability and

performance that is linked to our business performance. Every quarter, each employee

undergoes a job evaluation in connection with the company’s strategic direction and goal. In

addition, after fairly and objectively reviewing employees’ abilities and performance through a

capabilities evaluation, multilateral evaluation and AC evaluation, we provide differentiated

compensation based on our findings. Since 2006, we abolished the minimum years of service

needed to qualify for a promotion, introduced a system for special, selective promotion,

nurtured experts in each sector, and expanded the difference in compensation based on

performance, in order to promote meritocracy and encourage employees to achieve more.

Organizational Harmony and Human Rights

KT does not discriminate against its employees for any reason such as regional or school

background, gender, religion, or physical disability. Additionally, we have embraced policies

that support equal opportunities for men and women, the coexistence of work and family, and

equal opportunities, recognizing that such elements play a key role in forming a sustainable

society. As the most basic, normative approach to practicing sustainable management, KT

stipulates these policies in its Code of Ethics. Moreover, KT strictly abides by forced and child

labor regulations set forth by the International Labor Organization(ILO) and in the Korean

Labor Standard Act.

Equal employment

When hiring new employees, KT does not discriminate applicants by their gender, educational

level or age. We also provide equal employment opportunities to the disabled and state

meritorious persons. Newly hired employees are equally treated in terms of compensation and

promotion. As of December 2007, the number of employees totaled 37,379. The proportion of

women has steadily gone up while the total number of employees is going down. The

percentage of physically challenged employees was 3.2% as of the end of 2007, which exceeds

the legally stipulated percentage of 2%. Our hiring takes into account balanced regional

development, with 52.7% of all employees working outside of Seoul, Incheon and the

metropolitan area.

l Work Performance Management Evaluation Process l

Staff in charge ofpersonnel records

�Designate evaluationgroup for eachindividual

Evaluator

�Enter evaluation policy�Enter quantitative goal

Evaluatee

�Confirm evaluationpolicy�Enter non-quantitative

goal

Evaluatee

�Confirm evaluationpolicy�Evaluate non-quantitative

performance

Evaluator

�Enter quantitativeperformance�Evaluate non-quantitative

performance

Designation ofindex group

Notify evaluationstandard

Confirm evaluationstandards/enter non-

quantitative goalSelf-evaluation ofwork performance

Performanceevaluation

l Employment Status by Gender l

32,609

5,631(14.7%)

2005(38,240)

32,208

2006(37,813)

31,696

2007(37,379)

Male Female

(unit: person)

5,605(14.8%)

5,683(15.2%)

Employment of the Disabled (unit: person)

05 06 07

788

2.1%2.2%

2.3%

809

841

*Legally stipulated guideline for employmentof the disabled is 2%

AC(Assessment Center)A simulation-based assessment method thatevaluates employee behaviors throughindividual interviews, psychological andproblem-solving tests.

Status of Hire and Retirement(unit: person)

05 06 07

182263

445

205

769

186

HireRetirement

Human rights

While respecting the principle of equal opportunities for both sexes, KT also guarantees

protection of minors and motherhood. We provide support to female employees so that they

can work in a comfortable work environment by fully implementing relevant human rights

regulations, such as prohibiting female workers and young employees under 18 from working

at night; prohibiting pregnant employees from working overtime and being assigned to

physically-challenging work; allowing one day special leave per month for women(without

pay); and giving a 90-day vacation before and after giving birth. In addition, we have in place

systematic support to prevent sexual harassment, including online training, awareness

training, preventive guidelines, as well as the selection and operation of consultants.

Employee Welfare and Benefits

Our employee benefits are largely divided into an employee welfare system and family-friendly

system to maximize employee satisfaction. Going forward, KT plans to introduce more diverse

programs to raise employees’ satisfaction levels at work and in their family lives.

Employee welfare system

To ensure a stable life and to improve the welfare of all employees, KT operates a variety of

programs regarding children education, self-development, leisure activities and health

management. In-depth discussions on welfare performance and issues are carried out

between the labor and management every year. Through this process, issues in welfare

schemes and operations are addressed so that balanced welfare benefits can be enjoyed in

every aspect of an employee’s life.

l Ratio of Temporary Employees l

301(0.8%)

2005(38,240)

2006(37,813)

2007(37,379)

Temporary employees

(unit: person)

(unit: person)

216(0.6%) 180(0.5%)

l Status of Employment by Region l

No. of employees Proportion(%)

Gangwon 1,564 4.2%

Gyeonggi 6,668 17.8%

Gyeongnam 1,943 5.2%

Gyeongbuk 1,603 4.3%

Gwangju 1,274 3.4%

Daegu 1,966 5.3%

Daejeon 1,724 4.6%

Busan 2,392 6.4%

No. of employees Proportion(%)

Seoul 10,164 27.2%

Ulsan 560 1.5%

Incheon 1,602 4.3%

Jeonnam 1,403 3.8%

Jeonbuk 1,548 4.1%

Jeju 582 1.6%

Chungnam 1,278 3.4%

Chungbuk 1,108 3.0%

2007(37,379)

No. of Female Employees witha Managerial Post or Higher

(unit: person)

05 06 07

236266

322

37,939 37,597 37,199

56...57

Family-friendly system

Our family-friendly program is intended to promote the morale of our employees by helping

them achieve a healthy work-life balance. It is largely grouped into support for new births,

family health, and family participation programs. The introduction of such activities has

improved employee loyalty and furthermore, enhanced employees’ concentration and

productivity at work. In February 2007, KT was cited as a model example in the Presidential

policy meeting on “Creating a corporate environment for work-life balance.” During the

meeting, our diverse family-friendly programs were introduced to related government

agencies and other companies.

Labor-Management Cooperation

KT has created a model labor-management culture based on mutual trust. Moving forward, we

will continue our efforts to create win-win labor-management relations in which the two parties

are able to grow together, creating value for and ensuring the satisfaction of our employees.

Win-win labor-management culture

KT recognizes the labor union as a representative of employees and a key partner in

management. We aim to achieve win-win labor-management relations to create value for

employees while adding to their level of satisfaction. To this end, we discuss major

management issues with labor union. In particular, labor and management share their

thoughts and reach a consensus on corporate policy and managerial issues through business

presentations or labor-management discussion forums, thereby preventing labor-

management disputes and conflicts. Such results have already born fruit: allowing KT to reach

peaceful conclusions in collective bargaining negotiations for the seven consecutive years from

2001 to 2007.

Labor union

Formed in 1982, KT’s labor union consists of a central headquarters as well as 433

subdivisions and branches of the company’s operation around the nation. KT guarantees the

employees’ right to establish a labor union and other representative bodies. The adoption of

the union shop scheme, which requires new employees to be labor union members upon

joining the company, has led to 80.7%(29,852 persons as of the end of 2007) of all employees

becoming members of the labor union.

Welfare Spending (unit: KRW billion))

05 06 07

347336

363

*Including donation to employee welfarefund

l Family Programs l

Category Details

Facilitation of childbirth �Financial support for childbirth-congratulating fund�One-year parental leave given to employees who have a two-year-old or

younger child�Financial support for education expenses for a preschool child�Provide daycare services to infants and children of employees

Family health �Financial support for medical expenses given to families of employees withan incurable disease(KRW 2 million per person)�Subsidy for health checkup of employees and spouses

Family participation �Professional language education for the children of employees�Cultural events for the employees’ families

l Welfare Programs l

�Monthly pension contribution support�Loans to employees who do not own a house�Financial support for congratulatory and condolatory events�Medical expenses for employees, their spouses and children�Tuition fees for the children of employees who are in middle school, high school or college�Disaster recovery funds when an employee’s house is damaged or flooded due to a natural disaster�Cultural centers, summer rest homes and condos�National Pension, National Health Insurance, Employee Insurance System and Work Injury Insurance

2007 labor-management conference

Labor-management communication

KT operates several councils, including the Labor-Management Relations Improvement

Council, Job Security Committee, and HR & Remuneration Scheme Improvement Committee

for mutual understanding and bi-directional communication. From each organization,

including the company head office, five to ten labor and management representatives come

together every three months to hold a labor-management council meeting in order to

incorporate employee opinions into management.

Open Culture

KT aims to create an open culture where smooth communication takes place between the

company and its employees as well as among employees based on mutual respect and

consideration. KT does more than reflect the results of annual employee satisfaction

assessment into management: It operates the Blue Board and Cool Box so that employees

have more opportunities to raise matters of concern or state their opinions and more

proactively participate in management.

Employee satisfaction

KT is convinced that only the motivated employees can enhance customer value as well as

corporate value. Based on such a conviction, KT has been carrying out annual assessment on

the satisfaction level of all its employees since 1999. Our employee satisfaction level in 2007

retreated to 77.1 points. This was linked to lower satisfaction in the areas of “wages/welfare &

benefits” and “inclination to quit one’s job” stemming from a wage freeze and a major

organizational restructuring. The survey results are disclosed to all employees and reflected in

diverse measures to address shortcomings. In an effort to improve communication, which

consistently receives the lowest mark in annual employee satisfaction surveys, we conducted

participatory training to promote open communication in 2007. All heads of regional offices

nationwide were required to take three classes per person. In addition, we promoted change

through various events for the entire staff including corporate culture cartoon drawing contest

and fun quizzes.

Other programs for open corporate culture

Since 2002, KT has operated the “Blue Board” which consists of young and talented employees

to facilitate internal communication and expand opportunities to participate in management.

They present creative ideas on how to sustain company growth. “Cool Box” refers a theme-

oriented discussion room that allows employee to state their opinions freely on various themes

of interest and share their thoughts. Moreover, KT operates the Psychological Counseling

Center which helps employees resolve various kinds of difficulties.

Employee Satisfaction Level (unit: point)

05 06 07

77.179.8

77.1

2007 collective bargaining

l Employee Satisfaction Level by Category l

100

90

80 87.6 83.6 83.2 82.7 81.9 80.6 78.8 76.8 76.169.7 68.6 66.4 66.2 61.7

70

60

50

40

30

20

10

0

2007

Attitude

Leadership

Jobfunction

Work

absorption

Working

condition

Senioroftheteam

Colleague/Team

work

Education

Change/Strategy

Changeofoccupation

Evaluationsystem

Promotion

/Careerdevelopm

ent

Compensation

/Benefits

Comm

unication

2006

(unit: point, maximum is 100 points)

2008 launch of KT Group Blue Board

58...59

Safety and Health

KT works to assure the safety and health of all employees. Every year, each business site

establishes and implements an industrial safety & health plan and actively takes measures to

prevent accidents and maintain a safe and clean working environment. In 2007, we held the

Safety Experience Essay competition to promote safety awareness among employees. We also

conducted a physical inspection of each business site in conjunction with Korea Occupational

Safety and Health Agency(KOSHA). We will continue promoting safety and health in the

workplace to minimize economic losses from worksite accidents, and will implement

occupational safety and health activities to protect our human assets.

Industrial safety and health system at each business site

To comply with the Industrial Safety and Health Act and to create a safe workplace, each

business site designates a safety and health officer from an agency noted for its exemplary

record in related duties. KT also convenes an Occupational Safety & Health Committee every

quarter to discuss related measures. Safety and health training is conducted online for field

workers(three hours per month, over 20 hours per year for supervisor). Our advanced disaster

management system also ensures that reports of any accidents and related information are

swiftly disseminated to employees and all business sites to prevent future accidents and

promote employee safety. As a result, injury rate in 2007 recorded 0.16%, lower than the

industry average of 0.23%.

Joint labor-management activities to prevent accidents

Safety measures are devised and implemented for vulnerable areas in each season, while an

Industrial Safety and Health Conference is convened every year to learn about advanced

industrial health activities and discuss relevant issues. In addition, we implement various

voluntary, disaster-prevention measures, including hosting a joint labor-management safety

inspection in July, the month of occupational safety and health.

Clean working environment

Every year, we assess our working environment to take a leading role in creating a clean

business site. In 2007, KT conducted a study on duties that carry a risk of musculoskeletal

disease. The study showed that there was no risk related to any duties at KT. Additionally, to

prevent food poisoning that occurs more often in summer, KT improved the sanitary

management of its cafeterias and used the internal broadcast system to frequently inform and

educate employees on how to better deal with diseases and accidents.

Health management

KT manages the status of employees’ health through annual checkups for all employees. The

checkup includes tests for major adult diseases like cancer and infectious diseases including

HIV testing. The results are used to manage employee health by making early diagnosis and

effectively preventing illness.

Furthermore, we provided basic physical tests, promoted a smoking-cessation campaign and

invited external lecturers to speak on health and wellbeing.

Injury Rate (unit: %)

05 06 07

0.17

0.19

0.16

l Counseling Center Activities l

Category Psychological review Face-to-face Online Telephone Total

2006 - 135 13 21 1692007 319 392 18 29 758

(unit: case)

Joint labor-management safety inspection

Occupational Accidents(unit: person)

05 06 07

61

6

70

3

61

3

Fatalities

Injuries

Number of Grievances Resolved

05 06 07

96.5

143 12247

96.793.6

No. of reports received(case)Resolution rate(%)

Outside Expert Opinion

With active pan-government level support, win-win cooperation is expanding across industries. The trend, however, has yet to fully impactSMEs. This means that effective win-win partnerships are yet to be forged for SMEs. In today’s global business environment, KT needs toreestablish ties with SMEs to secure competitiveness at home and abroad. KT’s role is even more prominent given its dominant marketposition and influence. I propose a couple of suggestions for win-win cooperation. First, KT should select competitive SMEs to promote faircompetition. Second, KT must promote fair transactions between large corporations and SMEs. Third, KT should prevent technology leaks andpromote an environment that can reinforce the competitiveness of SMEs by protecting the technical ownership rights of SMEs.

Seung-Il Kim

Researcher, Korea Small Business Institute

Business Partners Win-Win Cooperation

Result of Stakeholder SurveyKT employees do not ask for money or other items when dealing with partner companies.

Highlydisagree

2.9%

Disagree4.3%

Neutral13.7%

Highly agree43.1%

Agree36.0%

60...61

Material

Issues

Key

Performances

in 2007

Responsible

Organizations

Goal and

Strategy

After analyzing the materiality of supplier related issues, we decided to concentrate our resources on the following

areas-support for partner companies and promoting CSR at partner companies. These issues are categorized into

three parts(win-win partnerships, win-win support for business partners, and open communication) and reported

accordingly in this section.

The mid- to long-term goal of KT for win-win cooperation with its partner companies is “Wonderfull Family

Partnership.” KT plans to come up with a wide variety of programs to achieve joint growth with its 4,000 partners and

build a sound corporate ecosystem

�Expand benefits that result from joint effortswith partner companies�Pursue mid- to long-term competitiveness

rather than short-term performance

Maximize benefits based on mutual trust

�Encourage partner companies to strengthentheir competitiveness and give them motivation�Establish long-term business relations through

nurturing capabilities of partner companies

Enhance competitiveness of partner companies

�Build trust through fair trade and valuesharing �Identify in advance and resolve complaints

and hardships faced by partner companies

Establish an open corporateecosystem

Wonderfull family partnershipEstablish a creative corporate ecosystem that enables value creation with partners

Disclosure on Management Approach

▶ Strengthening support for partner companies�Transferring 47 patented technology rights, Support for TL9000 quality consulting and certification(16 partner

companies)�Expanding the scope of our financial aid program to secondary partners▶ Promoting fair trade culture: fair trade agreement regarding subcontractors with the Fair Trade Commission in

Korea▶ Awards and recognition�Presidential citation for large company-SME cooperation in group(overall) category�Beautiful Companion Award(SMBA administrator)

Win-Win Cooperation CenterPurchasing Support Manager

General/equipment Purchasing Support Dept. External distribution network

Marketing Relations Dept.

Customer service Customer Process Dept. R&D Technology Planning Dept.

IT IT Business Unit Overseas business Overseas IT Business Dept.

Facility construction Network Planning Dept. Subsidiaries Win-Win Cooperation Dept. of KTF, KTP, KTH

▲

Win-win Partnership

With the understanding that a true win-win situation with partner firms occurs when there is

sharing of benefits, KT is actively pursuing a benefit-sharing system for localizing and

enhancing imported equipment, providing financial aid for small ventures to develop new

technologies, and transferring rights to use KT’s patented technologies.

Benefit-sharing system

The Ministry of Knowledge Economy is pursuing a benefit-sharing system as a key task of win-

win partnership so that both large corporations and SMEs can work together to produce

results such as cost reductions and quality improvement. To respond to this policy, KT adopted

the benefit-sharing system in 2006 and prepared related systems. Four projects were carried

out in a pilot run and six projects selected in 2007.

KT provides Six Sigma education and consultations by KT’s Six Sigma innovation experts(MBB:

Master Black Belt) to partner companies participating in the scheme. We also support their

efforts to develop equipment by providing environmental testing and measuring devices.

Successful development of equipment was compensated through purchases by KT(KRW 2.28

billion in 2007). KT plans to continue with additional benefit-sharing model development and

strengthen partnerships with outstanding suppliers to further advance the system.

Support for SME new technology development

In coordination with the Small and Medium Business Administration’s “New Technology

Purchasing Assurance” program, KT has been supporting the development and commercialization

of new technology and products by small venture businesses.

In 2007, KRW 630 million(KT: KRW 211 million, government: KRW 419 million) was extended to

promising small ventures for three projects whose combined development cost was KRW 1.05

billion. KT also purchased the developed product or jointly searched for domestic/overseas

sales channels. As a result, KT also realized cost savings and increased revenues through

commercialization of the new products and technologies.

l 2007 Benefit-sharing Projects l

Partner company Project

Korea Technology Develop closed-type heat exchanger to improve temperature managementin telecom equipment centers

JinHwa E&C Develop P-type fire alarm system activation memory deviceSigmalink Develop DS-3 grade digital multiplex equipmentGoldtel Develop FTTH field assembly optical connectorNanoTronix Develop FTTH fault locator(OTDR)eXwave Develop dedicated synchronous microwave equipment

l Financial Support for SME Technology Development in 2007 l

KT Gov’t SME

Integrated navigation system 342 70 145 127with USB CDMA moduleMini-navigation system with WiBro function 500 100 163 237Development of intelligent combined 203 41 111 51certification systemTotal 1,045 211 419 415

(unit: KRW million)

Totaldevelopment

costProject

Details

Presentation on benefit-sharing projects

Large company-SME cooperation awards

ceremony

Securing patented technology and transferring patent rights

KT is expanding its patent cooperation with companies and universities that possess superior

technologies in order to secure key technologies that will drive future growth businesses. By

actively employing the key patents, we are strengthening our business competitiveness.

Furthermore, in respect to win-win cooperation, KT grants the right to use the patent at low

royalties to small- to medium-sized venture companies that wish to do so, thereby offering

them with new business opportunities such as advancements into overseas markets.

In 2007, support was given for a total of 47 cases including 20 cases of patent licensing and 27

cases of technology transfer. In particular, KT transferred key patented technologies, such as

the “KT Naratguel,” to 17 SMEs based on exceptional conditions, such as exemption of initial

payment and free source program support. KT is now in the process of transferring usage

rights for 375 patents.

Win-win Support for Business Partners

KT is fully aware that the competitiveness of our business partners is directly linked to our own

competitiveness. We therefore offer a multiple range of support measures to help our

suppliers enhance their competitiveness, including quality consulting, free employee training,

financial support and aid in opening up new overseas sales channels.

Quality improvement of partner companies

◐ Quality(TL9000) consulting and certification support

KT initiated the “TL9000 Quality Consulting and Certification Support” program to help our small-

and medium-sized suppliers improve the quality of their equipment and ultimately, improve our

customer satisfaction levels. As a result, 16 partner firms were able to acquire TL9000

certification. This led to the standardization of quality management process, greater employee

awareness of quality, and improvement in quality index at partner firms. KT plans to conduct

follow-up reviews to ensure that our partners maintain their enhanced quality standards.

62...63

l Transfer of Patented Technology Usage Rights l

Year Licensing Technology transfer Total

2005 - 19 192006 38 74 1122007 20 27 47

(unit: case)

Signing ceremony pledging support for partner

firms’ quality certification

Signing of win-win patent licensing contract

between large companies and SMEs

LicensingAuthorizing the use of intellectual propertyrights to another company

Technology TransferIncludes usage rights, technology transfereducation, know-how education

TL9000(TelecommunicationsLeadership 9000)Quality certification standard for the telecom-munications industry

Quality management of suppliers’ products equals KT’s service quality management

WinsTechnet is the only domestic network security service provider to possess TL certification, aninternational telecommunications standard. The partnership with KT was the engine behindWinTechnet’s success. The company took part in the quality certification internal auditor trainingcourse, one of KT’s free training programs designed to strengthen mutual benefits with itspartner firms, and obtained TL9000 certification last year. The certification enables the companyto handle all quality-related work from development, production and service of network securityproducts in accordance with verified international standards to ensure consistent product andservice quality.

Managing Director In-Hang Lee, who heads WinsTechnet’s marketing department said, ”It isn’teasy for a small company to run an in-house training program to groom TL9000 auditors. Bytaking part in the free KT program, we were able to obtain the certification and ensure qualityproduct development and service.”

Source: Excerpt from “Win-win partnership guidebook for advancement of telecommunications business” published by Korea IT Business Association

◐ Support for telecommunications infrastructure and evaluation facilities

KT provides facilities at no extra cost to reduce the R&D cost burden of partner firms. We open

our comprehensive model center which is similar to our actual telecommunications

infrastructure environment and provide the evaluation equipment needed for performance

tests on partner firms’ equipment. In this way, KT supports efforts by partner companies to

successfully develop superior equipment.

Offering free training to partner companies

KT provides free training to partner company employees to strengthen the skills of partner

company personnel and resolve difficulties faced by SMEs in terms of human resource

development. In 2007, we newly set up 37 courses on technology, quality and management and

conducted on/offline training to 12,672 persons. These courses give employees of partner

companies, who often have fewer educational opportunities than their counterparts at large

corporations, a chance to enhance their capabilities.

The online courses are operated by KT HRDC(Daejeon and Wonju) and each regional business

group’s field training center. Classrooms, textbooks, lodging and meals are all provided at no

cost. The management course “KT Win-Win Management School” which included outside

experts coaching middle and senior management at partner firms, and the quality education

course “Nurturing internal experts in information-telecommunications,” were especially well

received by partner firms.

Financial support for partner companies

KT operates various financial support programs to promote the financial stability of SMEs,

which are in a dire situation resulting from the rise in raw material prices, increase in oil

prices and drastic plunge in the exchange rate. The company concluded agreements with

financial institutions so that partner companies can receive loans at low interest rates based

on their performance.

In particular, we expanded the scope of our financial aid program in 2007 from primary

partners to include secondary partners. To support companies further down the supply chain,

we give extra points to primary partners that recommend secondary partners for our partner

company evaluations.

l Facility and Equipment Support in 2007 l

Classification No. of partner firms No. of cases Remarks

Comprehensive model center 18 32 WiBro, IPTV, backbone transmission etcEvaluation equipment 6 7 Surge simulator, packet generator etcTotal 24 39

l Partner Firm Education l

Training type

Online

ClassroomTotal

2006 200711 19

13 1824 37

2,087 2,299

1,385 3,2493,472 5,548

9,031 8,113

1,969 4,60011,000 12,713

2006 2007 2006 2007

No. of courses No. of participating partner firms No. of trainees

Primary PartnersPartner companies that KT directly trade with

Secondary PartnersPartner companies that KT’s primary companiestrade with

64...65

Since 2006, KT has stopped settling payments in promissory notes and has been providing

cash settlements for deliveries by SME partners, regardless of the sum. In 2007, we paid SMEs

KRW 2,637.5 billion in cash and by doing so, largely contributed to improving their cash flow.

Support for overseas expansion of exemplary partner companies

KT works with exemplary partner companies to expand their business and sales channels. In

2007, we pursued ten system integration(SI) projects with SMEs that have superior technology

which resulted in KRW 13.6 billion in gains. Additionally, the joint pursuit of overseas IT

projects with partner firms led to gains of KRW 12.6 billion.

Working with the Korea Communications Commission to assist outstanding partners enter the

global market, we participated in purchasing negotiations with the US firm Sprint and the

European telecom operator Telefonica.

Promoting CSR at partner firms

Upholding a strong commitment to corporate social responsibility, KT decided to expand its

CSR program to partner firms from 2008 under the belief that a change in perception was also

necessary among our partners to build a sustainable supply chain.

First, KT plans to survey partner companies that want to publish CSR reports. Those firms

would then receive KT case studies and know-how, in addition to working-level training for

CSR evaluation and report publication. We also plan to gradually encourage our partners to

engage in CSR management by offering diverse incentives, such as giving extra points to

partner companies that set up environmental management systems(ISO14001) and publish

CSR reports.

Open Communication

Open communication is a key to creating a win-win partnership and improving corporate

competitiveness. To this end, KT implements various policies including a partner company

grading system, agreement for fair subcontract trade as well as the operation of our on/offline

Win-Win Cooperation Center.

Fair trade

KT is committed to practicing fair and transparent transactions. In particular, we use an

electronic bidding system for selecting partner firms and computerize the entire selection

procedure to prevent arbitrary intervention. In October 2007, we became the first company in

the industry to sign an agreement for fair subcontract trade with the Fair Trade Commission of

Korea and the implementation of this agreement is helping us build an efficient cooperative

system with partner firms.

l Financial Support for Partner Companies l

Category No. of partner companies Loan amount(KRW billion) Commencement date

Network Loan 326 89 Dec. 2004Family Loan 147 42 Jan. 2007KB Partnership Loan 173 137 Apr. 2006Total 646 268

(as of the end of 2007)

Signing of agreement on fair subcontract trade

The Agreement on Fair SubcontractTradeIt is a promise by KT to comply with relevantsubcontract regulations and take mutuallybeneficial measures in dealing with subcontractorswith the intent to voluntarily promote fair tradeand lay the foundation for win-win cooperation.

、

Partner company grading system

KT prepared supplier differentiation strategy guidelines based on item/supplier analysis and

evaluation of suppliers’ delivery performance over the past year based on our Supplier

Performance Management system. In 2007, we provided guidelines on 158 suppliers to related

divisions to award exemplary suppliers with benefits such as preferential rights to take part in

projects and strengthen win-win cooperation. As for suppliers with low grades, penalties such

as reduction in contract volume are levied. In the meantime, the company that failed to comply

with contract is banned from joining the bid over the sanction period.

Assessment of supplier satisfaction level

Since 2005, KT has performed multi-dimensional evaluations on its partner companies every

year to assess the company’s general purchasing process from the point of view of partner

companies and to make improvements accordingly. In 2007, KT conducted an online survey on

a total of 173 partner companies. The survey showed a satisfaction score of 80.2 points(out of a

total of 100 points), indicating considerable improvements compared to the previous years

(66.4 points in 2005, 75.4 points in 2006) and proving that the purchasing policies of KT is better

received by partner companies.

Operation of the Win-win Cooperation Center

As part of efforts to put our win-win cooperation policy into practice, we have operate the “Win-

win Cooperation Center” since 2006. The center is exclusive space for our partner companies

where business cooperation and open communication take place. The Win-win Cooperation

Center addressed the inconveniences felt by partner companies when visiting KT because

there was no dedicated space available for them to engage in business discussions. The center

which provides meeting rooms, consulting rooms, business rooms and rest areas, also serves

as a one-stop service center where general win-win cooperation activities are conducted.

l Benefits and Penalties by Partner Company Grade l

Grade Proportion No. of suppliers Matters applied by grade

20% 35 Given preferential treatment in contracting; Exemptedfrom non-financial evaluations, payment of guaranteemoney for contracts and bidding; Eligible for voluntaryinspections

60% 102 Given support in quality consulting and certification;free training; and new product development costs

Given priority for win-win programs, such as the “KTfamily loan” and access to the general model room

Bottom(Grade C or lower) 20% 33 Required to implement KT requests for improvementBe subject to more rigorous product inspection

l Supplier Satisfaction Level l

100

80

60

40

20

0

2005

Process Program Organization System

2006 2007

66.6 76

.6 81

.0

64.0 73

.8

78

.9

68.0 73

.0 80

.8

69.6 79

.8

81

.0

(unit: point, maximum is 100 points)

Supplier Satisfaction Level (unit: point)

05 06 07

66.475.4

80.2

Top (Grade A or higher)

Middle (Grade B)

66...67

Extending communication channels

Smooth communication is paramount when working on projects with partner companies. If

there is a lack of information sharing, both KT and its partners could face several problems

including delays and deterioration in quality. KT has established various communication

channels through which the opinions of partner companies are heard. They help us promote

fair and transparent business cooperation, facilitate the exchange of information and improve

unreasonable systems. In particular, communities dedicated to different categories of telecom

equipment have opened anonymous debate rooms with relevant partners to share more in-

depth information in their particular fields. A KT employee with expert knowledge is

designated to help promote two-way information exchanges. Additionally, the VOS(Voice of

Supplier) receives suggestions and comments on difficulties facing partner companies and

provides swift feedback.

*Business partner portal website*http://partner.kt.co.kr

l Communication Channels l

Communication channel Objectives Cycle

Special community by equipment group

Channel to exchange technologies and information by equipment group At all times

VoS(Voice of Supplier) Gather various opinions from partner companies andprovide feedback At all times

Multi-dimensional evaluations of partner companies

Conduct surveys on the satisfaction level of partnercompanies and provide feedback Once a year

Meetings with CEOs of partner companies

Gather opinions and give presentations on business plans and purchasing schemes Once a year

Regular presentations Make improvements to current polities through council meetings by area, Exchange information and have Q&A sessions Twice a year

On-line Win-win Cooperation Center

Introduce the win-win cooperation program (on-line application is available) At all times

Suggestion box Deliver opinions and feedback, e.g., improvements to bemade as a result of the equipment evaluation At all times

Win-win cooperation CEO meeting

Outside Expert Opinion

The focus of social contribution should be in helping the local community thrive and coexist with the company, rather than providing atemporary fix for publicized issues. While companies cannot fully resolve all issues of the local community, they could come up with CSRactivities that could help resolve some of those issues. For instance, donating several computers to an isolated region is not a fundamentalsolution. While that could provide financial support to the given community, it cannot fill the void in education, i.e., someone to teach the localshow to use computers. In that sense, IT Supporters represent a more evolved form of social contribution. By making greater effort to identifylocal communities’ needs and stepping up communication, KT should be able to establish an advanced model of social contribution.

Tae-Yoon Han

Secretary, The Beautiful Foundation

Local Communities Social Contribution

Result of Stakeholder SurveyKT is well aware of local communities’ needs.

Disagree19.6%

Neutral54.9%

Highlyagree5.9%

Agree19.6%

68...69

Material

Issues

Key

Performances

in 2007

Responsible

Organizations

Goal and

Strategy

After analyzing the materiality of issues related to local communities, we decided to concentrate our resources on the

following areas-giving back to local communities, supporting employee volunteerism, continuing universal service, and

narrowing the digital divide. These issues are categorized into four parts(IT sharing, Love sharing, Culture sharing and

Green sharing) and reported accordingly in this section.

Our goal of social contribution is “realizing a Wonderfull Korea through love and sharing.” To this end, we will sharpen

our focus on three key initiatives-fostering a digital knowledge base in connection with our operation, improving quality

of life in our communities, and helping our underserved neighbors.

�Promote IT knowledge contribution�Prevent side effects of the information era�Nurture IT talent

Foster a digital knowledge base

�Strengthen ties with local communities�Help resolve regional issues�Promote culture/sports/education

Contribute to advancing localcommunities

�Expand assistance to the underserved�Diversify ways to raise social contribution

funds�Help resolve social issues

Help underserved neighbors

Realizing a Wonderfull Korea through love and sharing

Disclosure on Management Approach

▶ Conducting public works�Launch of IT Supporters, training by IT Supporters(no. of beneficiary: 30,785)�Six rounds of creating IT-literate villages, conducting IT project for traditional market▶ Strengthening love sharing activities for the underprivileged�Restoring hearing for hearing impaired people, operating KT Study Center �Support for disaster recovery including telecommunications fee reduction or exemption ▶ Awards & recognitions�2007 Korea Volunteer Award, Grand Prize�2007 Korea Mecenat Award, Distinguished Service Prize

Head Office SecretariatPublic Relations Dept., Public Relations Office

JejuRBU

Metropolitan

SouthR

BU

Metropolitan

West

RB

U

Busan

RB

U

JeonnamR

BU

ChungnamR

BU

JeonbukR

BU

Gangwon

RB

U

ChungbukR

BU

Daegu

RB

U

DepartmentCenter

Business

unit(head

office/lab)

Metropolitan

North

RB

U

Branch offices, NSC(In-house volunteer groups, gatherings, etc)

IT Sharing

IT Supporters

Launched in February 2007, KT’s IT Supporters are committed to building a strong digital

knowledge-based society by helping to improve technology literacy and facilitating Internet

use. IT Supporters are a part of the company’s volunteer corps and comprise employees with

computer/IT certifications or related professional background. They offer free computer and

Internet training for the underprivileged to help them harness the power of technology to

improve their lives. The first group of IT Supporters, numbering 400 volunteers, has been

dispatched to 26 locations around Korea. Over 30,000 people benefited from our IT sharing

imitative in 2007 alone.

◐ Activities

IT Supporters primarily focus their efforts on two areas - offering IT education and optimizing

the PC environment. Free IT classes cover a wide range of subjects on utilizing Internet

resources, various OA programs and multimedia technologies like UCC and creation of

personal websites.

These endeavors offer greater public convenience by allowing people to use the Internet for

emails, banking, shopping and more. The programs help people become active members of

the digital ecosystem to produce and use information through such activities as creating digital

albums, UCC, blogs and using instant messaging services. Optimizing the PC environment

results in safe, secure IT experience by allowing early detection and elimination of malicious

codes and viruses. Moreover, these activities are customized to match recipients’ computer

literacy levels and offered first to the society’s underserved who lack technology access.

◐ Achievements

IT Supporters have been changing the lives of our underserved and underprivileged neighbors.

The senior citizens, with the help of IT Supporters, are no longer IT illiterate but now

communicate with their grandchildren online. Also, IT consulting and training for the disabled

is helping them build the foundation for financial independence.

l Sharing by IT Supporters l

No. of beneficiaries Rate(%)

Disabled 2,298 7.5

Farmers/fishermen 1,344 4.4

Low income brackets 2,541 8.3

Seniors 7,267 23.6

Foreign immigrants 1,006 3.3

Youths 3,446 11.2

General population 12,883 41.7

Total 30,785 100

Total30,785

(as of the end of 2007)

Launch of second group of IT Supporters

Contact info to Request Help from IT Supporters�Phone: 1577-0080�Website: www.itsupporters.com

Creating IT-literate villages

The project to create IT-literate villages is aimed at building infrastructure for high speed

Internet connection in the remote parts of Korea. This will allow the locals to use the Internet for

e-commerce to generate profits and help revitalize the local economies. The project initiated and

pursued by KT since 2001 is sponsored by the Ministry of Public Administration and Security.

KT started the pilot project in 2001 and successfully carried out a total of six rounds of IT-

literate village projects. As a result, a total of 338 villages now enjoy the benefits of information

technology. We plan to build 800 additional IT villages by the year 2014 and gradually increase

FTTH facility investment which is currently concentrated in urban areas.

Universal service

As a universal service provider, KT is committed to delivering land line, pay phone,

telecommunication in island regions and maritime mobile services as well as offering

discounted rates for the disabled and low income households despite incurring KRW 144.1

billion(based on 2006 figures) in losses.

In particular, KT is providing landline services to rural and remote parts of the country which

our competitors have abandoned due to a lack of profitability. To prepare for emergencies, we

also operate 130,000 pay phones that are incurring massive losses due to the recent nosedive

in usage. By providing landline services to 78,000 subscribers in 441 remote islands, KT is

helping to resolve the regional digital divide and promote safety of local residents. Moreover,

we are currently providing maritime mobile service to 4,280 ships including small fishing

vessels operating in coastal waters at an affordable rate to ensure their safety.

70...71

IT Supporters activities

Universal ServiceAccording to the Telecommunications Law,universal service refers to the basic telecom-munication service that all users are entitled toreceive anytime, anywhere at reasonable rates.

lIT-literate Villages Project l

Category 1st stage 2nd stage 3rd stage 4th stage 5th stage 6th stage

Construction period Mar. 2001~ Jun. 2002~ Jan. 2004~ Jun. 2005~ Dec. 2006~ Nov. 2007~May 2005 Jun. 2003 Oct. 2004 Feb. 2006 Feb. 2007 Mar. 2008

No. of villages 24 78 87 89 26 34Internet connection(circuits) 2,700 7,482 7,037 6,303 1,427 1,672

Outside Expert Opinion

“IT Supporters are presenting a new paradigm in philanthropy, moving away from conventionaldonation method to gives the expertise and knowledge of its employees back to communities.KT’s long-term perspective on CSR activities based on its corporate philosophy and vision is anexemplary case of how businesses are enhancing their corporate value through philanthropicendeavors.”

Dong-Sung Cho, Professor, Seoul National University

“IT Supporters represent a new way of giving that prevents a malicious cycle of widening disparitybetween the information-rich and information-poor. I believe it is an innovative way of socialcontribution that is a hundred, thousand times more valuable than donating money.”

Won-Soon Park, Executive Director, Beautiful Foundation

“Learning to use the Internet and computer, I am able to communicate with my fans and have myown online fan club. I am living in a whole new world”

Yoo-Jin Kim, Visually challenged singer

Building high-speed networks in farming and fishing villages

To spread the benefits of information technology and increase the competitiveness of farming

and fishing villages, KT has formed fund matching programs and built high-speed networks in

such villages in cooperation with the government and local autonomies since 2002. In 2007,

high-speed networks were deployed for 57,895 households in farming and fishing villages

previously without access to the Internet and in 2008 construction of high-speed networks will

be completed for about 1,500 villages, each with less than 50 households, to provide Internet

access to all rural farming and fishing villages.

Traditional markets go digital

KT is working to strengthen IT capabilities of traditional market merchants to help them

engage in e-commerce and other online activities. In January 2007, we signed a memorandum

of understanding(MOU) with Small and Medium Business Administration(SMBA) and Korea

Merchant Association for a joint “IT project for traditional market.” In partnership with SMBA,

we distributed 4,822 low-end computers to traditional market merchants in 2007 alone. We

also offered e-business training such as how to run online shopping malls to 1,500 merchants.

Moving forward, we plan to foster computer savvy merchants who can harness digital

opportunities to stay competitive in the Internet age.

IT training for the underprivileged

KT holds the “IT skills contest for the disabled,” in which disabled people compete in five

areas-including, data search on the Internet, Korean typing, web design, document creation-

for the purpose of improving the Internet literacy of the disabled. The company has taken a

step further by opening free IT education centers for the underprivileged neighbors in the local

community through which the company educates teenagers from low-income families and

orphaned youths.

For seniors who limit the use of their mobile phones to a simple call making and receiving, KT

volunteers group has taught them how to use text messaging, Caller ID(CID) services and

camera and MP3 player functions. This education course was provided to a total of 512 seniors

at 25 welfare centers for the elderly in the Seoul and Gyeonggi Province in 2007.

IT Master Scholarship

To nurture excellent IT human resources into the future leaders of the IT industry in Korea, KT

has implemented an “IT Master Scholarship” since 1988. KT awarded scholarships of about

KRW 12.5 billion to students studying information and telecommunication at four-year

universities until 2007. Moving forward, we will do our utmost to nurture talents in IT field to

contribute to society through the program.

*cumulative base

l High-speed Networks Construction in Farming and Fishing Villages l

Category 2005 2006 2007No. of total households 3,768,225 3,768,225 3,768,225No. of households connected 3,577,399 3,681,355 3,739,250to high-speed networks*Penetration ratio(%) 94.9 97.7 99.2Investment budget(KRW billion) 16 41 35

Computer lessons for senior citizens

IT Master Scholarship

05 06 07

1,070

266243 242

740 760

No. of recipients(person)Supported amount(KRW million)

72...73

Global IT sharing activities

KT continues to pursue global outreach programs to serve Korean descendants in such

overseas regions as Yanbian Prefecture in China and Uzbekistan. We built an e-learning center

at Yanbian’s Korea town in April 2007 and donated IT equipment such as computers to Sejong

Korean Language School in Uzbekistan and Tashkent Information Technology College in July.

In September, we provided IT equipment to IT colleges in Algeria and Tunisia.

Love Sharing

KT Volunteer Corps of Love

KT employees are at the heart of our philanthropic endeavors. Our Volunteer Corps of Love

was founded in 2001 to promote greater efficiency and generate more corporate support. As of

2008, the volunteer corps, headed by the CEO, consists of 234 teams with 24,790 employees

donating their time to thousands of causes like supporting the underprivileged, assisting relief

efforts and extending a helping hand to farming & fishing villages.

Love sharing fund

To promote a sound contribution culture and raise money for social contribution activities, KT

has run the Love Sharing Fund since 2003, led by the voluntary participation of its employees.

The company matches the donations raised by employees to support our mid-to-long-range

social contribution initiatives and employee volunteerism.

Support for disaster recovery

In case of a disaster, KT not only quickly restores telecommunications facilities and returns

telecommunications service back to normal but also installs free telephones and reduces or

exempts telecommunications fees to ease the suffering of disaster-stricken people. Also, KT

Volunteers are dispatched to the stricken area to deliver relief supplies and donations and

engage in voluntary activities for disaster recovery.

In 2007, we delivered KRW 200 million to Jeju Island devastated by Typhoon Nari and

supported relief works. Over 1,000 employees also volunteered in oil cleanup efforts off the

coast of Taean, which was hit by Korea’s worst oil spill disaster.

Helping to find the sound for the hearing impaired

KT has carried out the hearing-restoring project to offer free surgery for hearing-impaired

people since 2003. KT is helping with the restoration for hearing-impaired children and

teenagers of the low-income families by providing artificial cochlea implants, rehabilitation

treatment aids and digital hearing aids every year. In 2007, we hosted a UCC competition for

those with hearing disabilities and gave them an opportunity to express their creativity and

talent in the digital world.

Activities of KT VolunteerCorps of Love

05 06 07

143,922

2,541

3,955 3,937

165,632

226,270

No. of voluntary activities(case)Volunteer hours(hour)

Activities of Love SharingFund

05 06 07

3,238

7376 77

3,7004,000

Rate of participation of KT employees(%)

Amount of money raised(KRW million)

Supporting relief efforts

l Hearing Restoration Support l

Category 2003 2004 2005 2006 2007 Total

Artificial cochlea implants 10 10 40 20 17 97Digital hearing aids - 10 40 10 68 128Total 10 20 80 30 85 225

(unit: person)

KT Study Center

KT provided IT devices including PCs, printers, and beam projectors to the 51 extra-curricula

organizations nationwide in 2007. In addition, KT volunteers takes children of such

organizations to museums, performance theaters, broadcasting stations and local heritages

as extracurricular activities. Every August, we invite 300 youths from study centers to the

“Youth Love Camp” held at KT training centers in five locations across the country. In addition,

we hosted 254 fun-filled after school events and weekend schools.

Joining hands with Beautiful Store

We have held the “Beautiful Store” event in the basement of KT head office every year since

December 2002. In March 2005, we opened a “Beautiful Store with KT” in the Imaedong area of

Bundang, Gyeonggi Province to participate in environment preservation through resources

recycling. Including a bazaar for the second anniversary of the store opening, 80 special

bazaars engaging Bundang citizens, companies and organizations were held in 2007. The

events drew huge participation from local residents, with citizens donating 63,000 goods, and

generated KRW 320 million in annual revenue.

Establishing sister village relationship

KT has established sister village relationship with about 200 farming and fishing villages

throughout the country and strengthened its ties with local residents by helping them in the

busy farming season and buying indigenous products. Exchange between the company and

local residents under the sisterhood ties helps KT listen to the opinions of local communities

and increase mutual understanding. In 2007, our past three years of efforts to pump life into

rural areas were recognized with an award from the Prime Minister of Korea.

Customer involvement programs

KT supports YMCA’s Dream House program which aims to offer communal living space and

basic living expenses to neglected teens. In 2007, we matched the KRW 17 million in KT points

(mileage granted according to KT home phone usage) donated by our customers and gave a

total of KRW 35 million to aid the project.

“Call hope with your home phone” campaign

KT has been carrying out the “Call hope with your home phone” campaign since 2002. Under

the campaign, the company donates 1% of all home phone bills(calls within the city and to

mobile phones) to 27 charitable organizations related to the environment, life and

reunification.

l KT Study Center’s Major Activities in 2007 l

Category Description

Chuncheon Folk village field trip Pyeongtaek IT Supporters’ PC class Cheonan Concert going experience

Youth Love Camp for KT Study Center youths

Goods donated to Beautiful Store

Donation raised by “Call hopewith your home phone”campaign

(KRW thousand)

05 06 07

67,79666,386

58,397

74...75

Culture Sharing

KT Art Hall

In June 2006, KT opened its multi-faceted cultural center, the KT Art Hall, in the 1,653 m2 area

located in Sejongno, Seoul. The Hall is a space where the general public are given easy access

to culture and arts performance. In 2007, our “Share $1” jazz benefit concert drew more than

160,000 fans looking to enjoy a night of music while sharing love with the community’s

underserved. All proceeds from ticket sales were used to help our neighbors in need. We are

also working to improve access to arts and culture by holding art exhibitions, free cultural

classes and UCC studio.

Protecting cultural assets

KT concluded the “One Protector for One Cultural Asset” agreement with the Cultural Heritage

Administration in May 2006, to preserve Korea’s precious cultural properties and leave them to

the next generation. Since then, we have participated in voluntary activities every month to

preserve 12 cultural assets located across the nation including Dokdo Island and Deoksugung

Palace. In 2007, we took part in 31 volunteer activities including spring cleaning and

maintenance work.

Sports sponsorship

To promote unpopular sports, KT operates women’s hockey and shooting teams and spares no

effort to nurture up-and-coming athletes. With our subsidiary KTF, KT has been an official

sponsor of Korea’s national football team since 2001.

Green Sharing

Environmental preservation activities for the Dong River

KT has protected the Dong River, which boasts stunning scenery and sponsored projects such

as the restoration of a traditional house in Jejang Village, Jeongseon-gun, Gangwon Province.

We have also participated in raising funds to purchase land of 17,190m2 since 2003. Then, we

carried out volunteer activities to complete the construction of a traditional house, “Loving

Dong River” in August 2005.

Activities to protect ranunculus kazusensis makino in Ganghwa

Ranunculus kazusensis makino, a wild plant that only grows in Ganghwa Island, Korea, is the

No. 1 citizen’s natural heritage designated by the National Trust of Korea and is on the verge of

extinction. To protect the plant, KT has been leading the “Movement on Protecting Colonies of

Ranunculus kazusensis makino” since 2003. It created mountain paths near the colonies to

prevent the plants from being damaged.

Production of green calendar

In collaboration with the National Trust of Korea, KT produced the 2008 green calendar and

distributed copies to kindergartens and primary schools in Seoul and Seongnam area. The goal

was to promote the importance of protecting our natural resources to children. The calendar

contains photos of unique and precious natural heritage, plants and wildlife as well as

locations that were designated by our “Save the environment” campaign and where National

Trust of Korea is involved in.

Distribution of green calendar

“Share $1” concert at KT Art Hall

Signing ceremony for official sponsorship of

national football team

*KT Art Hall website:*http://www.ktarthall.com

Outside Expert Opinion

The general view is that the information and telecommunications industry has little to do with the environment. But overseas, the industry isshowing much interest in reducing CO2 emission and recycling. Curbing CO2 emission is not a major issue yet since Korea is not required tomeet emission targets under the Kyoto Protocol, but it would be advisable to prepare ahead of time.

Leadership is important to promoting KT’s environmental protection activities. I believe employees’ response will vary depending on the CEO’scommitment. If the CEO takes the initiative and takes part in such activities, employees are also likely to participate voluntarily. The decisionmaker’s role is crucial not only for environmental protection activities, but also for energy conservation within the company.

Tae-Yong Jung

Director, Korea Green Foundation

Future Generation Environmental Management

Result of Stakeholder SurveyKT is leading environmental protection activities.

Disagree11.8%

Neutral58.8%

Highly agree3.9%

Agree25.5%

76...77

Material

Issues

Key

Performances

in 2007

Responsible

Organizations

Goal and

Strategy

After analyzing the materiality of environmental issues, we decided to concentrate our resources on the following areas

-responding to climate change, green use of energy and resources, Employee engagement and training in

environmental management, and considering environmental factors throughout products’ life cycle. These issues are

categorized into four parts(building a framework for environmental management, responding to climate change and

conserving energy, taking action for environmental management, and developing green technology) and reported

accordingly in this section.

At KT, we believe our greatest responsibility is to minimize the impact of our operations on the environment for future

generations. That is why KT has been reviewing our overall operations from the vantage point of environment

accountability since 2006. As a result, we received the industry’s first environmental management system accreditation

in 2007. We are also in the process of devising a step-by-step strategy and action plan to protect the environment.

Chairperson: Head of Real AssetsManagement Office

Environmental Management Promotion Committee

�Backbone Network Operation Dept.�IDC Business Dept.�Customer Service Infra Dept.

Responding to climate change

�Strategy Purchasing Dept. �General Affairs Dept., Human

Resource Office

Saving and recycling resources

�FTTH & U-City Development Dept.�MOS Business Dept.

Developing green technologies

�Public Relations Dept.

Preserving environment

�Earth Love campaign �Promote environmental awareness

Promoting environmentalmanagement awareness

�Join CDM(Clean DevelopmentMechanism)�Innovate energy efficiency using

existing assets �Reduce waste

Responding to climate change

�Consistently pursue clean projects �Expand green purchasing -Realize

green IT service

Eco-friendly sustainable growth

�Study adoptability of renewableenergy�Commercialize IT-based solution

Securing green technology

Partner in building a greener society

Disclosure on Management Approach

Real Assets Planning Dept.

Secretariat

▶ Environmental management system certification: ISO 14001 certification in the asset management category ▶ Expanding energy-saving facility investment �Constructing energy-saving IDC, increasing offices with high energy-efficiency equipment to 21 KT buildings ▶ Upgrading disused materials processing system: materials are disposed in a lump at logistic center ▶ Development of eco-friendly technologies�Technologies such as recycling disused cables, heating system that uses the heat generated from telecom

equipment, and renewable energy ▶ Compliance with environmental laws and regulations: No violation of the laws for the recent three years

▲

Building a Framework for Environmental Management

Environmental management system

KT is operating a number of committees for responsible stewardship of our natural resources.

The Environmental Management Promotion Committee is responsible for reviewing and

deciding on major environment related issues. The Working Committee, meanwhile, shares

departmental information and evaluates performance relative to targets to facilitate quick

decision making. The Energy Value Creation Committee was set up in 2006 to carry out

effective energy conservation measures. In 2007, the committee drew up a basic roadmap on

creating energy value and discussed measures to stabilize power supply in preparation for the

summertime power demand surge. The Asset Management Office oversees overall

environmental management tasks such as devising strategies and implementing green

management schemes.

Environmental management system certification

On December 26, 2007, KT became Korea’s first telecommunications company to obtain ISO

14001 certification in the asset management category. To facilitate greater communication

with employees on environmental management and strengthen KT’s eco-friendly brand image,

we are moving forward with unified efforts to promote environmental improvement activities.

l ISO14001 Inspection in 2007 l

Inspected departments Asset development center/Asset operation center

Internal inspection Date Nov. 19-20, 2007Results �Strengthen environmental management awareness training

Outside inspection Inspector Korea Standards Association Date Dec. 17-18, 2007 Results �Secure additional inspectors for independent & efficient audits

�More systematic training needed for continued improvement

ISO 14001 certification

l Environmental Management System l

EnvironmentalManagement

PromotionCommittee

�Review and decide on key environmental issues�Discuss internal environmental policies and principles

EnvironmentalManagement

Working Committee

�Review environmental management items prior to CSR Committeedeliberation �Exchange information on environmental management related businesses

(Including domestic and overseas case studies and information surveys)

Energy ValueCreation Committee

�Discover tasks for effective energy conservation campaign �Analyze energy performance �Establish companywide energy conservation plan and conduct regular

performance evaluation

Environmentalmanagement

supervisor(AssetManagement Office)

�Plan environmental management & set up strategies for implementation�Build and promote environmental management schemes and systems such

as ISO14001�Strengthen environmental management competency

Environmental Accounting

In 2007, KT invested a total of KRW 14 billion in protecting the environment. This includes KRW

13.01 billion invested in energy conservation and environmental preservation facilities to

reduce greenhouse gas emissions and prevent pollution. KT spent a total of KRW 990 million in

environmental costs such as environmental penalties.

Promoting environmental awareness

KT carries out a range of environmental campaigns and training programs for our employees

in an effort to incorporate environmental awareness as an integral part of our corporate

culture. On the fourth Energy Day, we switched off all the lights in 470 KT buildings across the

country in support of Korea NGO’s Energy Network-sponsored “Turn off the light and gaze at

the stars” campaign. We are also promoting active engagement in environmental stewardship

through company mails, magazines and newspapers.

Responding to Climate Change and Conserving Energy

While KT does not produce direct pollutant emissions, the company is a heavy energy user that

operates various telecom facilities. We are, thus, very much dedicated to solving global climate

challenges. To respond to climate change, KT signed a government-led Voluntary Agreement

and is taking a wide range of actions aimed at reducing greenhouse gas emissions through

energy conservation and by using high-efficiency energy equipment.

78...79

Energy Saving FacilityHigh efficiency lighting device, Automaticlighting control, High-efficiency motor, Inverter,High-efficiency pump, Heat pump, Gas orabsorption cooling systems

Environmental Preservation FacilitySilencer, Dust collector, Soundproof facility,Sound absorption system, Vibration preventionfacility

l Lectures by Outside Experts l

l Poster to Promote Energy Saving l

Date Lecture Participants

Jan. 2007 Economic benefits of solar power and renewable energy KT employeesFeb. 2007 Viability of Bali climate change conference KT employeesAug. 2007 Environmental management and ISO14001 Head and staffs in environment teamNov. 2007 Environmental management at KT Head and staffs in environment team

l 2007 Environmental Expenditure l

Energy facility investment Environmental costEnergy saving facility Environmental Environmental levy Waste handling charge

preservation facility11,895 1,171 943 43

Lectures by outside experts

(unit: KRW million)

Voluntary AgreementAn agreement between energy consumingcompanies and the government to achieveenergy conservation and greenhouse gasemission targets

Participation in voluntary agreement

Since 2005, KT has been involved in the Ministry of Commerce, Industry and Economy(current

Ministry of Knowledge and Economy)-led Voluntary Agreement and focusing on improving

energy efficiency of 23 company buildings with high energy use. In 2007, we introduced a

building energy efficiency rating system for telecom-related buildings and reflected the

outcome in new construction, expansion and renovation projects. The result was energy

savings of 4,600 tons, equivalent to 0.6% of total GHG emissions in 2007. In particular, our

North Gwangju business site was honored as the best VA compliance workplace from the

Korea Energy Management Corporation.

Eco-friendly buildings

To maintain ideal inside temperature(20~28°C), we have optimized the central and individual

cooling and heating systems in our buildings. To maximize energy efficiency, we leverage VE

methods in building expansion and renovation and use insulating glass, three element glass,

double skin facade system, high efficiency insulator, and cold energy storage system.

Moreover, we signed an MOU for technology partnership with the outside energy consulting

firm to have the legally-required exhaustive inspections conducted on our buildings. For 20

smaller buildings, we take part in the Korea Energy Management Corporation-sponsored PNS

(Public institution building & Small business) auditing.

Electricity management system by worksite

Coal-fired electricity is the greatest contributor to global warming. For efficient use of

electricity in worksites across Korea, each KT branch has in place an individual energy

consulting team while an energy saving promotion committee inspects and oversees overall

energy conservation efforts. To automate electricity control and share relevant information,

the energy management system is in operation real-time.

High efficiency energy equipment

When replacing old cooling/heating systems or lighting devices, KT is committed to using high-

efficiency equipment certified by the Korea Energy Management Corporation. To improve our

energy performance, we made it mandatory for 21 KT buildings to install high-efficiency equipment.

l Energy Efficiency Actions and Results l

Category Key tasks

Participation & use Foster energy experts 64 people receiving training as energyof government-led policies consultants

Energy saving project(ESCO) Install energy saving facility at Gwangjinregional office, etc.

Summertime voluntary energy Daebang branch and others take part saving(generator) in KEPCO-led voluntary energy saving

program Voluntary Agreement(VA) 23 units including central branch Direct Load Control(DLC) 212 units including central district office

Installation of high efficiency Mandatory use of high-equipment efficiency equipment Solar power generator 172 locations including Maemul-do Islandin island regions

Energy conservation Six Sigma energy innovation Identify and improve 171 BB/GB tasks actions and innovations 3M(Minimum) campaign Electricity costs, power usage, maximum power

Automation/computerization Build energy management system of energy managementEnergy BSC index Energy saving rate, OPEX improvement Analyze performances and Strengthen execution ability and give out discover exemplary cases excellence awards Energy consulting activities 10 branches including Hyehwa

Using insulation film(Banpo branch)

PNS(Public institution building &Small business)Korea Energy Management Corporationperforms free energy auditing on publicbuildings

High Efficiency Energy EquipmentAvailable Lighting device, motor, pump, waste heatrecovery ventilation system, absorption typewater cooler/heater, boiler

80...81

Reducing hazardous air pollutants

◐ Company vehicles

To minimize environmental pollution caused by car exhaust emission, all KT vehicles undergo

regular inspections(environmental inspection for vans and diesel-fuel freight vehicles-once

every year after initial four years). For diesel-fuel vehicles, we plan to gradually install exhaust

emission reduction devices(DPF, DOC) or switch to LPG-fueled cars in accordance with the

government’s emission reduction policy.

◐ Ozone depleting chemicals

Halons used as a fire extinguishing agent in KT communication centers, are CFC

(chlorofluorocarbon)-based gas designated as an ozone depleting substance. Halon leaks in

case of a fire or equipment malfunction can be damaging to air quality. Given the gravity of the

situation, KT is doing its best to promote fire safety and minimize malfunction of fire-fighting

equipment by taking such actions as designating a special fire watch period and fostering fire

prevention experts. In addition, we plan to gradually switch from halon gas to clean agents in all

KT buildings that undergo renovation or are newly constructed. The next-generation ICC

(Internet Computer Center) opened in Mokdong in May 2008 was the first to adopt clean agents.

Energy performance data

◐ Energy consumption

Energy auditing, aggressive use of high-efficiency systems and other efforts geared towards

reducing energy consumption resulted in lowering direct energy consumption by 3.5% in 2007

from the previous year. On the other hand, indirect energy consumption went up 3.6% due to

an increase in Internet facilities such as IDC and a rise in regions designated to receive

collective energy supply in accordance with government policy.

High-efficiency stabilizer

Energy saving fluorescent light

Gas absorption cooling device

l Energy Consumption Trend l

Category 2005 2006 2007

Direct energy Fuel 856,787 1,029,449 1,004,774Indirect energy Electricity 4,759,200 4,791,600 4,964,400

Local heating(hot water) 86,663 86,843 91,607Total 5,702,650 5,907,892 6,060,781

(unit: GJ)

*Fuel includes diesel, gasoline, kerosene, city gas, byproduct fuel oil and LPG. The figures have been converted based on theInternational Energy Agency’s total emission benchmark.

*1 liter of LPG(converted to butane) is calculated as 0.58kg

Electricity Consumption(unit: GJ)

05 06 07

4,75

9,20

0

4,79

1,60

0

4,9

64

,40

0

l Consumption of Direct Energy by Type l

Fuel(GJ) Rate(%)

Gasoline 56,308 6

Diesel 179,641 18

City gas 658,226 66

Byproduct fuel oil 73,926 7

LPG 21,901 2

Others 14,772 1

Total1,004,774

◐ Geenhouse gas emissions

As power consumption increased by extension of infrastructure for Internet service and office

buildings, CO2 emissions rose 3.1% year-on-year to 710 tons in 2007 while emissions per

building unit area(1m2) dropped 9.3%.

◐ Water usage

Water used in KT buildings are treated at local sewage treatment facilities. For efficient water

usage, we track our performance by establishing a baseline, setting goals and measuring

progress. In 2007, total water usage rose slightly from 2006. However, given the increases in

building floor space, tenants, the number of workers in the building, and water rates, there was a

1.1% decrease from the previous year in water usage per person.

Taking Action for Environmental Management

Purchase of eco-friendly telecom equipment

KT strives to fulfill its obligation as a corporate citizen when it comes to the environment. In order

to create an eco-friendly purchasing culture, we have set up standard guidelines that take

environmental issues under consideration when specifying our technology requirements in

telecommunications equipment purchases.

◐ Telecommunications equipment environmental standards

In June 2007, we came up with the environmental standard for telecom equipment that defines the

acceptable levels of harmful substances by referring to guidelines in developed economies such as

the US and Europe. We set up the related testing method in October 2007. The environmental

standards not only sets limits for various harmful substances, but also defines permissible limits

for noise, vibration, energy efficiency(including standby power), and electromagnetic waves.

Currently, the standards are partially utilized when purchasing telecom equipment.

◐ Eco-friendly design guidelines

KT created the eco-friendly design guidelines that approach product design from the viewpoint of

a product’s disassembly and reuse, steering away from the traditional approach that tends to

narrow the emphasis on quality and cost. The guidelines serve to encourage our suppliers to

consider environmental issues from the design to the development process of the product, such

as the creation of an eco-friendly finish, a product’s recycle/reuse potential, and reduction of

packaging waste.

Green purchasing

KT has been an active pursuer of green purchasing for consumable products since agreeing to

participate in the Voluntary Agreement for Green Purchasing in September 2005. KT operates a

special system to encourage the purchase of green products. The purchasers can verify whether a

consumable good(MRO products) is considered a green product by conducting a search query on eco-

friendly marks. The database is updated twice a month based on the list generated by the Korea Eco-

Products Institute. We have also conducted training to encourage the purchase of eco-friendly

products. In 2007, our green product purchases jumped 86% from the previous year to KRW 10.4 billion

(1,600 items), and the number of registered items rose 20% to 3,560 items. We will formulate the

green product purchasing guideline to secure high quality green products for internal use,

continuously update the list of green products, and seek alternative green products.

Water Usage (unit: thousand ton)

05 06 07

3,3102,728 2,756

*SCOPE 1: CO2 emissions from directenergy use

*SCOPE 2: CO2 emissions from indirectenergy use(hot water, electricity)

CO2 Emissions by Unit Area(unit: T-CO2/m2)

05 06 07

0.009

0.15

2

0.13

8

0.1

26

0.0100.008

SCOPE 2SCOPE 1

(unit: T-CO2)

Green Purchasing Amount(unit: KRW billion)

05 06 07

2.5

5.6

10.4

l CO2 Emissions l

2005 2006 2007

Emissions 682,320 693,364 714,869

82...83

e-Office environment

E-Office refers to an optimal working environment that minimizes environmental impact by

adopting information technology. KT’s e-Office campaign involves the shift towards an

electronic business approval system from a paper-based offline approval process, and an e-

cabinet system whereby various documents are stored and managed as electronic files rather

than as paper printouts stored in file cabinets.

Wireless base station sharing and eco-friendly base stations

The number of wireless base stations has been increasing every year with the expansion of the

wireless broadband(WiBro) business. However, installing them is a challenge as the stations

are often criticized for damaging city skylines and generating electromagnetic waves. In

consideration of these issues and to save companies from making redundant investments, KT

is aggressively pursuing the idea of sharing wireless stations. We are also trying to minimize

the disruption to city skylines and damage to the environment by setting up eco-friendly base

stations that are in harmony with their natural surroundings.

e-Billing

The number of paper bills mailed by KT totals roughly 250 million per year in 2007. In order to

reduce paper use and enhance customer convenience, KT is changing its billing system to e-

billing from the paper-based one. In 2007, around 13% of paper bills were replaced by e-mail

bills, enabling the company to achieve cost reductions of around KRW 7.4 billion and save

around 30 million sheets of paper.

Reusing telecom equipment

When customers subscribe to high-speed Internet services, KT rents modems and reclaim

them back when customers cancel services. Returned modems go through an internal quality

performance test process. Modems that are reusable are repaired, cleaned and recycled.

(unit: %)

* Electronic approval rate =(Number of total approval - Number of paper approvals)/Number of total approvals

l Status of e-Office Activities l

Category 2005 2006 2007 RemarkElectronic approval rate(%) 94.3 99.6 99.7 0.1% point increase

Shared and Eco-friendly WirelessBase Stations

(unit: sites)

070605

68

7

215

1,67

8

169

10

7

396

No. of shared wireless base stationsNo. of eco-friendly wireless base stations

l Cost Reduction through e-Billing l

Year Number of e-mail bills sent Unit price for Cost reduction

(thousand) sending paper bills(KRW) (KRW million)

2005 23,694 210 4,9762006 25,538 247 6,3332007 29,972 247 7,403

l Recycling of Internet Modems l

Category 2005 2006 2007Internet modems Collected 581,136 815,449 819,731

Recycled 476,336 564,200 658,002

(unit: piece)

Recycling Rate of Internet Modems

(unit: %)

05 06 07

82.0

69.2

80.3

The volume of discarded mobile handsets is growing due to the widespread penetration of

mobile phones and frequent phone replacements stemming from number transfers. Those

phones which are not recovered can pose a serious environmental risk in the future. To

increase the collection rate of old phones, KT provides a set amount in subsidy for new phone

purchases when a customer returns their old handset. We joined a nationwide “Give Phone

Campaign” to collect used phones. In 2007, KT collected a total of about 113,000 used mobile

phones, among which 56,000 phones were reused.

Disposal of disused materials

KT disposes of disused materials such as storage batteries that contain harmful substances

and construction waste according to pertinent laws. Although we have seen a high increase in

construction waste materials with the remodeling of KT office buildings, the actual amount of

construction waste created per 1m2 of work area fell dramatically with the designation of

guidelines for the disposal and recycling of waste. General waste materials such as

communication cables and scrap iron are sold or sent to recycling companies for reuse. From

2008, an upgraded disused materials processing system will have the logistics center

gradually handle vehicles, PCs, measuring instruments, and designated waste materials.

l Enhancing the Handling of Disused Materials l

l Recycling of Internet Modems l

Category 2005 2006 2007Mobile phones Collected 72,000 124,035 113,854

Recycled 19,000 67,713 56,023

(unit: piece)

l Disused Materials Handled l

Category 2005 2006 2007

Construction waste 42,005 29,581 52,160Cables 8,853 8,735 9,027Scrap iron 1,775 2,575 4,034Waste storage battery - - 2,205Other 870 1,704 2,142Total 53,503 42,595 69,568

*Cables, scrap iron, and empty drums are sold to recycling companies and are 100% reused. *The volume of waste storage battery has been monitored since 2007.

Logisticscenter

Processingcompany�

�

�

�

Starting Year

From 2007

From 2008

Recycling Rate of Mobile Phones

(unit: %)

05 06 07

26.4

54.649.2

*Mobile phone data is based on KT’s mobile phone standards

(unit: ton)

Designated waste materials

Tools, vehicles

Cables and equipment

84...85

Developing Green Technology

Energy-saving, next generation IDC

KT is constructing a revolutionary next generation IDC that conserves energy to help

dramatically reduce the amount of electricity we use. The new IDC employs the technology that

converts AC(alternate current) to DC(direct current) for its power supply. We have already seen

more than a 13% reduction in power consumption through a test trial conducted in our South

Suwon IDC in 2006 and the technology will be gradually applied to all of our IDCs.

Flood and landslide monitoring system

Torrential downpours triggered by extreme weather conditions have led to more frequent

disasters on a greater scale such as floods and landslides. The four biggest rivers in Korea

including the Han River and Nakdong River have flood warning systems through their flood

control offices. However, this is not the case with rivers in smaller cities, thus creating

extensive flood damage in these areas. For this purpose, KT developed a real-time city flood

forecast system that monitors mid-sized rivers and set up a test bed in Bundang, located in the

drainage basin near Tan Stream in Gyeonggi-do. In the meantime, KT developed the landslide

detection and monitoring system based on wireless sensor network to help people in the

affected area quickly evacuate. We have built a test bed on a sloping area at the KT research

center in Daedeok and five wireless sensors are currently monitoring the area.

R&D for eco-friendly infrastructure

◐ Technology to convert disused cables into a resource

The rapid advancement of telecom materials and technology has decreased the length of time

telecom facilities and equipment is actually used and resulted in more frequent replacements.

This has also driven up the number of waste cables every year. To find a way to reuse them, in

2007, we developed a high temperature furnace device that uses the heat to separate the jelly

that surrounds the wiring within a cable. To further advance this technology, we plan to

analyze and research the recycling status, processing technology, and yield improvement.

◐ Renewable energy supply system

In order to study the utility of renewable energy, we set up a solar energy system with a 6 kW

per hour capacity and a geothermal supply system that can provide 45,300 kcal of air-

conditioning and heating at our research center in Daedeok. The operation of this pilot system

last year led to the reduction of about 41 tons of carbon dioxide emissions.

◐ Heating system utilizing heat from telecom equipment

The IDC operates 24/7 air conditioning system to prevent the overheating of its hosted telecom

equipment and the air conditioning outdoor unit generates waste heat, which is used to heat

offices in the winter, thereby allowing us to save energy and prevent global warming. This

heating system can generate 22,570 kcal of heat with just about 1.1 kW of power needed to run

a fan. If this new system is expanded throughout our company, we expect a dramatic increase

in energy conservation.

Wireless landslide monitoring sensor

Awards in 2007

Award Sponsor Organization Award Date

K-BPI(Korea Brand Power Index)-No. 1 in the Internet / Int’l call category KMAC Mar. 13, 2007Obtained “SCORM” certificate(global e-Learning standard) ADL Co-Lab of the USA Apr. 19, 2007Beautiful Cooperation Award Large & Small Business Cooperation Foundation Jun. 19, 2007Corporate Governance Award-Hall of Fame Korea Corporate Governance Service Jun. 22, 2007Corporate Governance Award-Award of Best Winner in BOD category Korea Corporate Governance Service Sep. 17, 2007No. 1 in Korea’s Service Quality Index(KS-SQI) Korean Standards Association Oct. 15, 2007Korea Customer Satisfaction Management Award KMAC Oct. 15, 2007Management Innovation Grand Prize KMAC Oct. 25, 2007No. 1 in Korean Customer Satisfaction Index(KCSI)-in all categories of telecommunication services KMAC Oct. 31, 2007Presidential Citation for Support for Business Partners Federation of Korean Industries Oct. 31, 2007Ethical Management and Fair Business Award-Grand Prize Citizens’ Coalition for Economic Justice Oct. 31, 2007Korea Volunteer Award-Grand Prize Ministry of Health, Welfare and Family Affairs Nov. 21, 2007LOHAS Management Award-Best Company in the telecommunication area Korea Green Foundation Nov. 23, 2007Korean Advertising Award-Grand Prize in advertisement for public good Korea Federation of Advertising Association Nov. 23, 2007Segye Advertisement Award-Gold Prize Segye Ilbo Nov. 27, 2007Korea Mecenat Award, Distinguished Service Prize Federation of Korean Industries Nov. 28, 2007National Customer Satisfaction Index(NCSI) Award-Telecommunication sector Korea Productivity Center Dec. 11, 2007Obtained “A” rating in Internet & TelecommunicationsTraining Institution Evaluation Ministry of Labor Dec. 21, 2007Presidential Award for Excellence in Corporate Sustainability Management-CEO category Ministry of Knowledge Economy Dec. 21, 2007Personal Information Protection Award(Minister of Information and Communication Award) Ministry of Information and Communication Dec. 27, 2007

86 Awards in 2007

87 Key Performance Indicators

87 Membership Status

88 Third Party’s Assurance Statement

90 GRI Index(G3)

86...87

Membership Status

In Korea Business Institute for Sustainable Development, U-Korea Forum, Korea Listed Company AssociationKorean Society for Journalism & Communication Studies, Korean Association for Broadcasting & Telecommunication StudiesFederation of Korean Industries, Korea Chamber of Commerce & Industry, Korea IT Leaders ForumKorea Association of Information and Telecommunication, Korea Fair Competition Federation, Korea Employers FederationEconomic Group Council, Korea Industrial Safety Association, Korea Association for Chief Executive Officer, 21 Century Business FormKorea Home Network Industries Association, Network Security Forum, AIPPI Korea, Korea Institute of Information Security & CryptologyKorea Advanced Intelligent Robot Association

International Parlay Group, FMCA(Fixed-Mobile Convergence Alliance), Open Mobile Alliance(OMA), WiMAX Forum, VoiceXML ForumDSL Forum, WBA(Wireless Broadband Alliance), TMF(Telecommunication Management Forum), APT(Asia Pacific Telecommunity), ITU(International Telecommunication Union)

Category Indicator Unit 2005 2006 2007

Economy Operating revenue KRW billion 11,877 11,856 11,936Net income KRW billion 1,032 1,233 958Brand value KRW billion 1,745 1,838 1,939Interest expenses KRW billion 418 330 310Shareholder return ratio % 61.7 51.1 63.0Capital expenditure KRW billion 2,025 2,371 2,223Tax payment KRW billion 308 384 313

Society CVA(Customer Value Added) score point 1.03 1.05 1.06Telecommunications troubles case 6,439 4,908 3,983No. of unfair trade practices case 5 2 -Proportion of female employees % 14.7 14.8 15.2Proportion of the disabled % 2.1 2.2 2.3Education hours per employee hour 107 106 152Employee satisfaction level point 77,1 79.8 77.1Welfare spending KRW billion 347 336 363Resolution rate of employee grievances % 96.5 96.7 93.6Injury rate % 0.17 0.19 0.16Supplier satisfaction level point 66.4 75.4 80.2Volunteer hours hour 143,922 165,632 226,270Social contribution spending KRW billion 108 118 163High-speed networks penetrationratio in farming and fishing villages % 94.9 97.7 99.2

Environment Energy consumption GJ 5,702,650 5,907,892 6,060,781CO2 emissions by unit area T- CO2/m2 0.161 0.148 0.134Disused materials ton 53,503 42,595 69,568Recycling rate of mobile phones % 26.4 54.6 49.2Recycling rate of Internet modems % 82.0 69.2 80.3Green purchasing amount KRW billion 2.5 5.6 10.4

Key Performance Indicators

Conclusions

The Institute for Industrial Policy Studies 1(The Auditor) was engaged by KT to review information specified in its 2008 CorporateSocial Responsibility Report(The Report) to provide independent third-party assurance on its contents. KT is responsible for thecollection and presentation of all information within The Report as well as the maintenance of the underlying data collection systemand internal controls. The key objective of our review is to provide independent assurance that all statements and data cited in TheReport are free of material misstatement or bias and that the data collection systems used are robust. On the basis of the above,The Auditor presents the following third-party statement of assurance.

In The Report, KT describes efforts and progress made toward sustainability management as well as its plans for the future. TheAuditor’s review examined the following. ●Reasonable assurance on whether:�the financial data specified in ‘Investors/Growth & Innovation’ under ‘Our ACTIONS’ is properly derived from KT’s audited Annual

Report for 2007;●Limited assurance on whether:�the data specified in ‘Customers/Customer Value Management’, ‘Employees/Human Management’, ‘Local Communities/Social

Contribution’, ‘Business Partners/Win-Win Cooperation’, ‘Future Generation/Environmental Management’ under ‘Our BELIEF’and ‘Our ACTIONS’ of The Report are stated adequately and in full and are free of material misstatement or bias. * Reasonable assurance constitutes a higher level of assurance than limited.

The Auditor was not involved in the preparation of any part of The Report, and with the exception of this work has no other affiliationwith KT that might compromise our independence or autonomy or place The Auditor under its influence, therefore ruling out anypossible conflicts of interest. The Auditor has no relationship with KT regarding any of its for-profit operations and activities.

The Auditor reviewed whether The Report was written in accordance with the following reporting guidelines: (1) The AA1000 Assurance Standard’s(AA1000 AS)* three core principles of Materiality, Completeness and Responsiveness; (2) The Global Reporting Initiative’s(GRI) G3 Sustainability Reporting Guidelines Version 3.0**; and(3) The BEST Sustainability Reporting Guidelines***.

*** AA1000 AS is an assurance standard for social and sustainable reporting developed by the U.K.-based Institute of Social and EthicalAccountAbility in November 1999. A nonprofit organization that promotes corporate social responsibility, business ethics and responsiblebusiness practices, AccountAbility aims to improve the quality of social and ethical accounting, auditing and reporting through the AA1000 AS.

*** The Global Reporting Initiative(GRI)’s Sustainability Reporting Guideline was jointly convened by the Coalition for Environmentally ResponsibleEconomies(CERES) and UNEP in 1997. The newly revised G3 version was launched in October 2006.

*** The BEST Sustainability Reporting Guideline was jointly developed by the Ministry of Knowledge Economy(MKE), the Korea Chamber ofCommerce and Industry(KCCI), and the Institute for Industrial Policy Studies(IPS) and provides for five levels of reporting rigor(Level 1 ~ 5).

The Auditor reviewed the Materiality, Completeness, and Responsiveness of The Report through the process outlined below: ● a review of media reports relating to KT ● a review of information contained in The Report as well as the underlying data collection system(validation of internal sustainability-

related organizations, systems, and activities)●data sampling and assessment of high-risk areas to support intensive review of key statements in The Report, internal policies,

documentation, and information systems ● a reconciliation of financial data stated in The Report against the audited Annual Report● interviews with managers and staff in charge of sustainability management and reporting, as well as persons responsible for The

Report’s source information ● on-site reviews from May 19 to May 26, 2008

On the basis of the above we provide the following conclusions.

The Auditor did not find The Report to contain any material misstatements or bias. All material findings of The Auditor are includedherein, and detailed review findings and follow-up recommendations have been submitted to the management of KT.● Materiality: Does The Report cover economic, social and environmental issues of the greatest importance to KT?

The Auditor does not believe that KT has omitted or excluded any information of the greatest importance to its stakeholders. Wewere able to verify efforts by KT to identify and provide priority reporting on matters of the greatest risk, importance, and impactto its multi-stakeholders through Materiality Testing(i.e. examination of internal rules, expert interviews, review of laws andregulations, benchmarking, media analysis). Going forward, The Auditor recommends that KT continue to conduct MaterialityTesting on a regular basis to best reflect characteristics unique to its organization and to better define and highlight new issuesof great interest and importance to itself in future Corporate Social Responsibility Reports.

Third Party’s Assurance Statement

To the Management

of the KT 2008 CSR

Report

Context and Scope

Independence

Criteria

Work Undertaken

and Scope

88...89

● Completeness: How reliable is the information and data stated in The Report, and is the underlying information and datacollection system complete and robust?The Auditor took note of responsible actions by KT toward achieving its CSR objective of becoming a ‘Trustworthy Partner thatCreates a Beautiful Society’ led by its CSR committee, CSR Task Force Teams, and relevant departments and personnel.Moreover, we confirmed that KT has been undertaking systematic and responsive efforts to introduce an advance risk controlmechanism as it moves to adopt an ERM system. We also verified that improvements in KT’s management innovation programssuch as Six Sigma and MQ were having a positive impact on management activities. Although KT has been working to build anenvironmental management system by designating personnel and organizations to be responsible for specific environment-related issues such as climate change, conservation of resources and recycling, development of environmentally-friendlytechnologies, environmental preservation etc., while committing to system validation and voluntary agreements, The Auditorrecommends setting quantifiable environmental targets to further establish a system of performance tracking and management.

● Responsiveness: How well does The Report address information of importance to KT stakeholders? The Auditor determined that KT recognizes the importance of establishing a win-win relationship with its stakeholders as well asidentifying and responding to potential risk factors in securing its sustainability. KT has been diversifying stakeholder-specificcommunication channels and conducting internal and external stakeholder surveys as well as expert interviews to help identifymajor issues. To better highlight KT’s commitment and efforts, however, The Auditor suggests providing a system for definingand categorizing KT’s diverse stakeholders as a basis for its multi-stakeholder communication channels, particularly amid theemergence of many different types of stakeholders; reporting on KT’s response to stakeholder comments and future plans; andproviding information on evolving perception trends.

● Relative to the BEST Guidelines, in view of the level of reporting rigor and intensity of information provided, The Auditor finds TheReport to fulfill 93.4% of the reporting requirements necessary to qualify for a Level 4 Report(from among Level 1 ~ 5).

As the third Corporate Social Responsibility Report by KT, The Report is stronger than earlier reports as it gives priority to issuesidentified to be of the highest self-importance via stakeholder perception surveys, expert input, and systematic Materiality Testing.We also confirmed efforts by KT to better satisfy ‘additional’ reporting indicators specific to the telecommunications industry.

For future publications, in the interest of continued qualitative improvements in social responsibility management performance andreporting, The Auditor recommends the following.

● In future reports, focus on highlighting new key issues for the said reporting period, identified through regular MaterialityTesting, while providing general and less material content already covered in previous reports on Web channels.

● Present quantified social responsibility management performance results to support time-series analysis of each year’s findingsand establish future targets for major issues and indicate the percentage of actual performance achieved against stated targetsto better demonstrate KT’s commitment to keeping its promise to stakeholders.

● Based upon the above review and recommendations, The Auditor suggests that KT establish a more systematic program ofsocial responsibility management and reporting, and continue to follow up with ongoing improvements going forward.

June 10, 2008

Yoon-Chul LeePresident, The Institute for Industrial Policy Studies

The Institute for Industrial Policy Studies(IPS)

Established in 1993, the Institute for Industrial Policy Studies has accumulated broad expertise in the area of sustainability managementsince 2002. ‘The Auditor’ is composed of seven individuals(Sung-pil Park, Cheol-ho Shin, Seok-young Lee, Dong-won Lee, Ji-yeon Ahn,Jeong-eun Park, Yong-in Kim) who are professors at Korea’s top universities or practitioners with professional accreditation and extensiveexperience in sustainability management after majoring in business management, accounting, environmental science etc.

Issues for Future

Consideration

PROFILE GRI Index Indicators Page BEST Index

Strategy and Analysis

1.1 Statement from the most senior decision-maker of the company 14~15 A_1(e.g. CEO, chair, or equivalent senior position) on the importanceof sustainability to the organization and its strategy

1.2 Description of key impacts, risks and opportunities 4~9, 25 A_2

Organizational Profile

2.1 Name of the organization 2 A_3

2.2 Primary brands, products and / or services 3 A_4

2.3 Operational structure of the organization, including main divisions, 2~3 A_5operating companies, subsidiaries and joint ventures

2.4 Location of organizations’ headquarters 2 A_6

2.5 Number of countries where the organization operates and names of 3 A_6countries with either major operations or that are specificallyrelevant to the sustainability issues covered in the report

2.6 Nature of ownership and legal form 2 A_8

2.7 Characteristics of markets(including geographic breakdown, 36~39 A_9sectors served and types of customers / beneficiaries)

2.8 Scale of the reporting organization 2 A_10

2.9 Significant changes during the reporting period regarding size, structure or ownership C2 B_8

2.10 Awards received in the reporting period 86 CO8

Report Parameters

3.1 Reporting period(e.g. fiscal / calendar year) C2 B_3

3.2 Date of the latest report(if any) 2007 CSR Report B_8

3.3 Reporting cycle(annual, biennial, etc.) C2 B_6

3.4 Contact point for questions on report 1 B_9

3.5 Process for defining report content 19~20 B_4

3.6 Boundaries of the report(e.g. countries, divisions, subsidiaries, suppliers) C2 B_1

3.7 State any specific limitations on the scope of the report C2 B_2

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, - A_6outsourced operations and other entities that can significantly affectcomparability from period to period and/or between organizations

3.9 Data measurement techniques and the bases of calculations, including 2007 CSR Report -assumptions and techniques underlying estimations applied to thecompilation of the Indicators and other information in the report

3.10 Explanation of the effect of any re-statements of information provided 19 -in earlier reports, and the reasons for such re-statement

3.11 Significant changes from previous reporting periods in the scope,boundary or measurement methods applied in the report 19~20 B_5

3.12 Table identifying the location of the Standard Disclosures in the report 90~94 B_10

3.13 Policy and current practice with regards to seeking external assurance 88~89 B_7

Governance, Commitments and Engagement

4.1 Governance structure of the organization 21 GR1

4.2 Indication of whether the Chair of the highest governance body is also 21 GR1an executive officer

4.3 For organizations that have a unitary board structure, state the number 21 GR2of members of the highest governance body that are independent and /or non-executive members

4.4 Mechanisms enabling shareholders and employees to provide 21recommendations or direction to the highest governance body

4.5 Link between the company’s performance and compensation for members 21 GR7of the highest governance body, senior managers and executives

4.6 Processes for the highest governance body to prevent conflicts of interest 21 -

4.7 Process for determining the qualifications and expertise of the members Business Report GR4of the highest governance body to guide the organization’s strategy oneconomic, environmental, and social topics

4.8 Internally developed statements of mission or values, codes of conduct 21, 22, 42 GR10and principles relevant to economic, environmental and socialperformance and the status of their implementation

GRI Index(G3)

PROFILE GRI Index Indicators Page BEST Index

4.9 Procedures of the highest governance body for overseeing the organization’s 17~18, 21 GR5identification and management of economic, environmental and social performance,including relevant risks and opportunities and adherence or compliance withinternationally agreed standards, codes of conduct and principles

4.10 Processes for evaluating the highest governance body’s own performance, 17~18, 22 GR6particularly with respect to economic, environmental and social performance

4.11 Explanation of whether and how the precautionary approach or principle 25 GR11is addressed by the organization

4.12 Externally developed economic, environmental and social charters, principles, 18 GR10or other initiatives to which the organization subscribes or endorses

4.13 Membership in associations(such as industry associations) and / or national / 87 A_11international advocacy organizations

4.14 List of stakeholder groups engaged by the organization 19 C_1, C_2

4.15 Basis for identification and selection of stakeholders 19 C_1

4.16 Approaches to stakeholder engagement, including frequency of 19 C_2engagement by type and by stakeholder group

4.17 Key topics and concerns that have been raised through stakeholder engagement 19 C_3and how the organization has responded to those key topics and concerns,including through its reporting

PERFORMANCE GRI Index Indicators Page BEST Index

INDICATOR Economic

Performance Disclosure on Management Approach 32, 36

EC1 Direct economic value generated and distributed 28~31 EC1

EC2 Financial implications and other risks and opportunities for the 79~82, 85 EC2organization’s activities due to climate change

EC3 Coverage of the organization’s defined benefit plan obligations 2007 CSR Report EC3

EC4 Significant financial assistance received from government 62, 72 EC5

EC5 Range of ratios of standard entry level wage compared to local minimum wage Supplementary information EM4at significant locations of operation

EC6 Policy, practices and proportion of spending on locally-based suppliers Supplementary information EC4at significant locations of operation

EC7 Procedures for local hiring and proportion of senior management hired Supplementary information EC4from the local community at significant locations of operation

EC8 Development and impact of infrastructure investments and services provided 70~75 EC6primarily for public benefit through commercial, in-kind, or pro bono engagement

EC9 Understanding and describing significant indirect economic impacts 32~39 EC7including the extent of impacts

Environment

Performance Disclosure on Management Approach 77

EN1 Materials used by weight or volume 81 EV7

EN2 Percentage of materials used that are recycled input materials 83~84 EV8

EN3 Direct energy consumption by primary energy source 81 EV9

EN4 Indirect energy consumption by primary source 81 EV10

EN5 Energy saved due to conservation and efficiency improvements 79~80, 85 EV5

EN6 Initiatives to provide energy-efficient or renewable energy-based products and 79~80, 85 EV5services and reductions in energy requirements as a result of these initiatives

EN7 Initiatives to reduce indirect energy consumption and reductions achieved 79~80, 86 EV5

EN8 Total water withdrawal by source 82 EV11

EN9 Water sources significantly affected by withdrawal of water Supplementary information EV24

EN10 Percentage and total volume of water recycled and reused Supplementary information EV25

EN11 Location and size of land owned, leased, managed in, or adjacent to, protected Supplementary information EV12areas and areas of high biodiversity value outside protected area

EN12 Description of significant impacts of activities, products and services on biodiversity Supplementary information EV13in protected areas and areas of high biodiversity value outside protected areas

EN13 Habitats protected or restored 75 EV27

EN14 Strategies, current actions and future plans for managing impacts on biodiversity 75 EV29

EN15 Number of IUCN Red List species and national conservation list species with Supplementary information EV28habitats in areas affected by operations, by level of extinction risk

90...91

PERFORMANCE GRI Index Indicators Page BEST Index

INDICATOR EN16 Total direct and indirect greenhouse gas emissions by weight 82 EV14

EN17 Other relevant indirect greenhouse gas emissions by weight 82 EV30

EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved 79~82 EV3

EN19 Emissions of ozone-depleting substances by weight 81 EV15

EN20 NOx, Sox and other significant air emissions by type and weight Supplementary information EV16

EN21 Total weight discharge by quality and destination 82 EV18

EN22 Total weight of waste by type and disposal method 84 EV17

EN23 Total number and volume of significant spills Supplementary information EV19

EN24 Weight of transported, imported, exported, or treated waste deemed hazardous Supplementary information EV31under the terms of the Basel Convention Annex I, II, III and VIII and percentageof transported waste shipped internationally

EN25 Identity, size, protected status and biodiversity value of water bodies and Supplementary information EV32 related habitats significantly affected by the reporting organization’sdischarges of water and runoff

EN26 Initiatives to mitigate environmental impacts of products and services and 79~85 EV20extent of impact mitigation

EN27 Percentage of products sold and their packaging materials that are reclaimed by category 83~84 EV21

EN28 Monetary value of significant fines and total number of non-monetary sanctions 75 EV22for noncompliance with environmental laws and regulations

EN29 Significant environmental impacts of transporting products and other goods and materials 84 EV33used for the organization’s operations and transporting members of the workforce

EN30 Total environmental protection expenditures and investments by type 79 EV1

Labor Practice & Decent Work

Performance Disclosure on Management Approach 51

LA1 Total workforce by employment type, employment contract and region 55~56 EM1

LA2 Total number and rate of employee turnover by age group, gender and region 55~56 EM5

LA3 Benefits provided to full-time employees that are not provided to temporary or 56~57 EM20part-time employees, by major operations

LA4 Percentage of employees covered by collective bargaining agreements 57~58 EM12

LA5 Minimum notice period(s) regarding significant operational changes including 57 EM13whether it is specified in collective agreements

LA6 Percentage of total workforce represented in formal joint management-worker 2007 CSR Report EM14health and safety committees that help monitor and advise on occupationalhealth and safety programs

LA7 Rates of injury, occupational diseases, lost days and absenteeism and total 59 EM19number of work-related fatalities by region

LA8 Education, training, counseling, prevention and risk-control programs in place to 59 EM18 assist workforce members, their families, or community members regardingserious diseases

LA9 Health and safety topics covered in formal agreements with trade unions 59 EM15

LA10 Average hours of training per year per employee by employee category 53 EM27

LA11 Programs for skills management and lifelong learning that support the continuedemployability of employees and assist them in managing career endings 54 EM28

LA12 Percentage of employees receiving regular performance and career 52~54 EM29development reviews

LA13 Composition of governance bodies and breakdown of employees per category according to 54 EM2gender, age group, minority group membership and other indicators of diversity

LA14 Ratio of basic salary of men to women by employee category 55 EM3

Human Rights

Performance Disclosure on Management Approach 51, 61

HR1 Percentage and total number of significant investment agreements that Supplementary information PN2include human rights clauses or that have undergone human rights screening

HR2 Percentage of significant suppliers and contractors that have undergone Supplementary information PN3screening on human rights and actions taken

HR3 Total hours of employee training on policies and procedures concerning aspects of human 23 EM30rights that are relevant to operations, including the percentage of employees trained

HR4 Total number of incidents of discrimination and actions taken 55 EM7

HR5 Operations identified in which the right to exercise freedom of association and collective 57~58 EM8bargaining may be at significant risk and actions taken to support these rights

92...93

PERFORMANCE GRI Index Indicators Page BEST Index

INDICATOR HR6 Operations identified as having significant risk for incidents of child labor and 56 EM9measures taken to contribute to the elimination of child labor

HR7 Operations that are likely to have forced labor and measures taken 56 EM10

HR8 Percentage of security personnel trained in the organization’s policies Supplementary information EM31or procedures concerning aspects of human rights that are relevant to operations

HR9 Total number of incidents of violations involving rights of indigenous people and actions taken 70~75 CO2

Society

Performance Disclosure on Management Approach 22~23, 69

SO1 Nature, scope and effectiveness of any programs and practices that assess and manage 70~75 C_2 the impacts of operations on communities, including entering, operating and exiting

SO2 Percentage and total number of business units analyzed for risks related to corruption 22~23 CO5

SO3 Percentage of employees trained in organization’s anti-corruption policies and procedures 22~23 CO5

SO4 Actions taken in response to incidents of corruption 22~23 CO5

SO5 Public policy positions and participation in public policy development and lobbying 71~72 CO6

SO6 Total value of financial and in-kind contributions to political parties, Supplementary information CO7politicians and related institutions by country

SO7 Total number of legal actions for anti-competitive behavior, anti-trust and monopoly 48~49 CS3practices and their outcomes

SO8 Monetary value of significant fines and total number of non-monetary sanctions for 49 CO9non-compliance with laws and regulations

Product Responsibility

Performance Disclosure on Management Approach 41

PR1 Life cycle stages in which health and safety impacts of products and services are 42~43 CS4 assessed for improvement and percentage of significant products and servicescategories subject to such procedures

PR2 Total number of incidents of non-compliance with regulations and voluntary codes 42~44 CS11concerning health and safety impacts of products and services, by type of outcomes

PR3 Type of product and service information required by procedures and percentage of 46 CS5 significant products and services subject to such information requirements

PR4 Total number of incidents of non-compliance with regulations and voluntary codes 49 CS12concerning product and service information and labeling, by type of outcomes

PR5 Practices related to customer satisfaction, including results of surveys 46 CS9measuring customer satisfaction

PR6 Programs for adherence to laws, standards and voluntary codes related to marketing 48~49 CS13 communications, including advertising, promotion and sponsorship

PR7 Total number of incidents of non-compliance with regulations and voluntary 49 CS14 codes concerning marketing communications, including advertising,promotion and sponsorship, by type of outcomes

PR8 Total number of substantiated complaints regarding breaches 42 CS15of customer privacy and losses of customer data

PR9 Monetary value of significant fines for non-compliance with laws and regulations 49 CS12concerning the provision and use of products and services

TELECOM- GRI Index Indicators Page BEST Index

MUNICATIONS Internal Operation

SECTOR IO1 Capital investment in telecommunication network infrastructure broken down by country / region 30, 71~72 -

SUPPLEMENT IO2 Net costs for service providers under the Universal Service Obligation when extending service 71~72 -to geographic locations and low-income groups, which are not profitable.Describe relevant legislative and regulatory mechanisms

IO3 Practices to ensure health and safety of field personnel involved in the installation, operation 59 -and maintenance of masts, base stations, laying cables and other outside plant. Relatedhealth and safety issues include working at heights, electric shock, exposure to EMFand radio frequency fields and exposure to hazardous chemicals

IO4 Compliance with ICNIRP(International Commission on Non-Ionising Radiation Protection) 43 -standards on exposure to radiofrequency(RF) emissions from handsets

IO5 Compliance with ICNIRP(International Commission on Non-Ionising Radiation Protection) 43 -guidelines on exposure to radiofrequency(RF) emissions from base stations

IO6 Policies and practices with respect to Specific Absorption Rate(SAR) of handsets 43 -

IO7 Policies and practices on the siting of masts and transmission sites including stakeholder 83 - consultation, site sharing and initiatives to reduce visual impacts. Describe approach toevaluate consultations and quantify where possible

IO8 Number and percentage of stand-alone sites, shared sites and sites on existing structures 83 -

GRI Index Indicators Page BEST Index

Providing Access

PA1 Polices and practices to enable the deployment of telecommunications infrastructure 71~72 -and access to telecommunications products and services in remote and low population density areas. Include an explanation of business models applied

PA2 Policies and practices to overcome barriers for access and use of telecommunication 70~72 -products and services including: language, culture, illiteracy and lack of education,income, disabilities and age. Include an explanation of business models applied

PA3 Policies and practices to ensure availability and reliability of telecommunications 46~48 -products and services and quantify, where possible, for specified time periods andlocations of down time

PA4 Quantify the level of availability of telecommunications products and services in 2, 6, 71~72 -areas where the organization operates. Examples include: customer numbers/market share, addressable market, percentage of population covered, percentageof land covered

PA5 Number and types of telecommunication products and services provided to and 71 -used by low and no income sectors of the population. Provide definitions selected.Include explanation of approach to pricing, illustrated with examples such as priceper minute of dialogue/bit of data transfer in various remote, poor or low populationdensity areas

PA6 Programmes to provide and maintain telecommunication products and services 47~48, 73 -in emergency situations and for disaster relief

PA7 Polices and practices to manage human rights issues relating to access and use of 42~43 -telecommunications products and services

PA8 Policies and practices to publicly communicate on EMF related issues. 43 -Include information provides at points of sales material

PA9 Total amount invested in programmes and activities in electromagnetic field research. Supplementary information -Include description of programmes currently contributed to and funded by thereporting organization

PA10 Initiatives to ensure clarity of charges and tariffs 46, 2007 CSR Report -

PA11 Initiatives to inform customers about product features and applications that will 2007 CSR Report -promote responsible, efficient, cost effective and environmentally preferable use

Technology Applications

TA1 Provide examples of the resource efficiency of telecommunication 44, 83 -products and services delivered

TA2 Provide examples of telecommunication products, services and applications 37~38, 83 -that have the potential to replace physical objects(e.g. a telephone book by a databaseon the web or travel by videoconferencing)

TA3 Disclose any measures of transport and/or resource changes of customer use of the 83, 85 -telecommunication products and services listed above. Provide some indication of scale,market size, or potential savings

TA4 Disclose any estimates of the rebound effect(indirect consequences) of customer 42~44, 83 -use of the products and services listed above and lessons learned for futuredevelopment. This may include social consequences as well as environmental

TA5 Description of practices relating to intellectual property rights and open source 63 -technologies

GRI Index Supplementary Information

EC5 At present time, only entry level wage standards are disclosed on the employment page of our website. Goingforward, we will report on our wage system in comparison to the local minimum wage and our peers.

EC6 KT will build a system to expand spending on local suppliers at major operation sites to indirectly contribute to localcommunity’s efforts to attract investments.

EC7 At present time, we only manage the performance of local employees but going forward, we will evaluate and managethe local hiring procedure and ratio of senior management hired from the local community.

EN9 The water used at our business sites is supplied from waterworks, and there are no water sources significantlyaffected.

EN10, EN25 KT does not directly recycle the water used at our sites of operations. The water is discharged to a nearbysewage treatment plant where it is treated.

EN11, EN12 KT does not own, lease or manage land in, or adjacent to, protected areas and areas of high biodiversity valueoutside protected areas.

EN15 At present time, KT’s activities do not negatively impact biodiversity in adjacent areas.

TELECOM-

MUNICATIONS

SECTOR

SUPPLEMENT

GRI Index

Supplementary

Information

GRI Index Indicators

EN20 At present time, KT does not measure or manage NOx, SOx and other significant air emissions, with theexception of CO2. Going forward, we plan to systematically manage and report such emissions.

EN23 Hazardous waste is treated following legal procedures and there have been no accidental discharges.

EN24 KT has not transported hazardous waste internationally.

HR1, HR2 KT screens suppliers’ compliance with occupational safety and health standards, prohibition of forced/child labor,employee turnover rate and other items related to human rights, and reflects the observation in the supplier evaluationprocess. KT will continue to manage our transaction and investment with suppliers based on such results.

HR8 An education program on human rights related issues for all KT employees is currently in place. However, noseparate data is collected regarding education for security personnel. KT plans to include its performance inthis area in future reports.

SO6 KT officially prohibits any participation in political activities in addition to financial and in-kind contributions topolitical parties, politicians and related institutions.

PA9 KT will expand its R&D activities and investment into programs regarding electromagnetic waves in an effort tominimize the impact of electromagnetic waves.

KT’s 2008 Corporate Social Responsibility Report was prepared based on the GRI G3 guidelines. In

addition, the GRI Telecommunications Sector Supplement indicators were used as reference. This report

fully satisfies the quality and quantitative requirements of level “A+” in the GRI G3 Application Level Table.

As such, KT self declares that the GRI G3 Application Level of the 2008 Corporate Social Responsibility

Report is at Level “A+”. This self-declaration has been verified as being appropriate by IPS.

C C+ B B+ A A+Report Application Level

Report on: 1.1, 2.1-2.10, 3.1-3.8,3.10-3.12, 4.1-4.4, 4.14-4.15

Rep

ort E

xter

nally

Ass

ured

Not Required

Report on a minimum of10 PerformanceIndicators, includingat least one fromeach of: social, economic,and environment

Report on all criterialisted for Level C plus:1.2, 3.9, 3.13, 4.5-4.13, 4.16-4.17

Management ApproachDisclosures for eachIndicator Category

Report on a minimum of10 PerformanceIndicators, including atleast one from each of:economic, environment,human rights, labor,society, productresponsibility

Same as requirement forLevel B

Management ApproachDisclosures for eachIndicator Category

Respond on each core G3and Sector Supplement*indicator with due regardto the materialityPrinciple by either: a)reporting on the indicatoror b) explaining thereason for its omission.

Rep

ort E

xter

nally

Ass

ured

Re

po

rt E

xte

rna

lly

Ass

ure

d

Stan

dard

Dis

clos

ures

G3 Profile

Dis

clos

ures

G3 Management Approach

Dis

clos

ures

G3 Performance Indicators& Sector SupplementPerformance Indicators

Dis

clos

ures

Self-declaration of

the GRI G3

Application Level

GRI Application Levels Table

94...95

You can access this report in PDF format at our website(http://csr.kt.com/eng).Please refer to the following contact information if you need more details onthe social responsibility activities of KT.

Corporate Governance Department under the KT Innovation Planning OfficeAddress: 206 Jeongja-dong, Bundang-gu, Seongnam-city, GyeonggiProvince, 463-711 KoreaPhone: 82-31-727-0661 / 0667 Fax: 82-31-727-0666 e-mail: csr@kt.com

KT values the views and opinions of our stakeholders. If you have any suggestions or comments regarding this report,

please fill out the form below and send it to us by fax or mail. Your feedback will be incorporated to improve our

future editions of the corporate social responsibility report.

Corporate Governance Department under the KT Innovation Planning OfficeAddress: 206 Jeongja-dong, Bundang-gu, Seongnam-city,

Gyeonggi Province, 463-711 Korea

1. Which of the following groups do you belong to?

2. Which key areas are you interested in(multiple answers are possible)?

3. Which part(s) of this report did you find most useful? Which part(s) were inadequate?

3. Useful

3. Inadequate

4. Please specify your satisfaction level on each of the following:

3.○ The terms used are easy to understand and clear.

3.○ Sufficient information is provided on material issues.

3.○ The design is appealing and helps me to understand the information.

5. Please give us your opinions on this report and make suggestions for improvement.

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Our CHALLENGE

Our BELIEF

Phone: 82-31-727-0661 / 0667Fax: 82-31-727-0666e-mail: csr@kt.comHomepage: http://csr.kt.com/eng

Shareholder and investment organization

Partner company

Government ministry and office/National assembly

CSR personnel

KT employee

Local resident and local government

Media

Others ( )

General customer

Civic group

Academia

BOD Chairman Message CEO Message Vision and Management Strategy

Social Responsibility Management Stakeholder Engagement Corporate Governance

Ethical Management Internal Control Risk Management

Our ACTIONSInvestors

Growth and Innovation

Highly disagree Disagree Neutral Agree Highly agree

Business Partners

Win-Win Cooperation

Customers

Customer Value ManagementLocal Communities

Social Contribution

Employees

Human Management Future Generation

Environmental Management