[Non-English content] Good afternoon. First of all, thank you all for joining this conference call. Now we will begin the conference call by the fiscal year 2021 first quarter earnings results by SK Telecom. This conference will start with the presentation followed by divisional Q&A session. Now we shall commence the presentations by SK Telecom. [Non-English content] Good afternoon. I am Joong Suk Oh, Head of IR Planning at SK Telecom. Today's conference call will consist of the presentation on the earnings results for Q1 2021 and the future management plans and strategic direction by Poong Young Yoon, CFO and Head of Corporate Center I and Hyung-il Ha, Head of Corporate Center 2, followed by a Q&A session. [Non-English content] Today, achievements and strategic plans for MNO will be provided by Poong Young Yoon, Head of Corporate Center I and Hyung-il Ha, Head of Corporate Center 2 will discuss that of the New ICT businesses. [Non-English content] Today's conference call will provide consecutive interpretation, and we have with us executives from relevant business divisions to help deepen your understanding. Before we begin, we want to remind you that all forward-looking statements are subject to change depending on the macroeconomic and market situations. Let me now present our CFO. [Non-English content] Good afternoon. This is Poong Young Yoon, CFO of SK Telecom. First of all, let me express my appreciation to investors and analysts for their continued support. [Non-English content] On April 14th, SK Telecom announced that it was reviewing a plan for a spin-off, which would result in a telecom company and a holding company with semiconductor and New ICT assets. [Non-English content] We plan to use the spin-off to increase shareholder value and create the most optimal structures for telecom business and New ICT businesses respectively, thereby accelerating their growth. To fulfill the purpose of the spin-off, we completed the cancellation of treasury shares worth KRW 2.6 trillion in market value, which account for 10.8% of the total issued stocks. [Non-English content] The planned spin-off was designed to prioritize shareholder value, and we believe that we have gained a good understanding of the investors and the market. We will carry out the plan with a strong conviction and make sure that all the necessary decisions are finalized within the first half of the year. [Non-English content] Let me discuss the consolidated earnings highlights for Q1 of 2021. [Non-English content] Consolidated revenue for Q1 of 2021 recorded KRW 4,780.5 billion. All business divisions enjoyed growth year-on-year, and Media and Safety and Care posted a double-digit growth, marking a 7.4% year-on-year increase. The figure declined 1.2% Q-on-Q, due to the base effect of higher seasonal sales in Q4. [Non-English content] [Non-English content] Consolidated operating income increased by 29% year-on-year and 17.4% Q-on-Q to post KRW 388.8 billion. MNO and Media led the operating income improvement by achieving both revenue growth and cost efficiency. S&C and Commerce also contributed to earnings with their Y-o-Y growth in operating income. [Non-English content] Net income recorded KRW 572 billion, posting an 86.9% growth year-on-year and a 54.2% growth Q-on-Q thanks to equity method income on SK hynix and sales profit of SK Wyverns. [Non-English content] Let me now discuss major achievements and strategic direction for each business. [Non-English content] Non-consolidated MNO revenue for Q1 increased by 1.9% year-on-year and 1.4% Q-on-Q to post KRW 2,980.7 billion. Celebrating the second anniversary of 5G on April 3rd, we saw the number of 5G subscribers reach 6.74 million as of the end of Q1, and record the biggest quarterly net adds, thereby leading MNO revenue growth. [Non-English content] MNO operating income posted KRW 307.3 billion, a 19% growth year-on-year and a 33.1% growth Q-on-Q as the market stabilization trend continued. [Non-English content] Recently, we introduced five new 5G price plans to strengthen the 5G price options. They include three online-only Untact plans that offer more benefits at lower prices, and two additional 5GX plans at KRW 69,000 and KRW 79,000. We will continue to promote the transition to 5G services based on a variety of price plans that cater to diverse customer needs. [Non-English content] Subscription services newly pursued by MNO division are expanding partnerships and launching diverse subscription services for daily lives, including education, rental, and F&B. In the second half of the year, we plan to introduce an integrated subscription services based on a new subscription marketing platform where customers can enjoy optimal subscription life at reasonable prices. We're developing flagship products that will raise customers' expectations for subscription services. We will do our best to ensure high quality of these services. [Non-English content] Moving on to Media, SK Broadband's consolidated revenue recorded KRW 967 billion. With the T-broad merger and IPTV subscriber growth, it rose by 17.6% year-on-year, declined by 4.1% Q-on-Q due to the base effect of seasonal sales in Q4. Thanks to revenue growth and operational process improvements, operating income increased by 98.8% year-on-year and 12.6% Q-on-Q to record KRW 75.4 billion. [Non-English content] As for Safety and Care business, with the merger of ADT Caps and SK Infosec, we changed the name of the division from Security Division to Safety and Care Division to expand the scope of business. After the merger, the consolidated revenue, including ADT Caps, recorded KRW 350.5 billion. It increased by 20.3% year-on-year, thanks to the solid growth of new businesses such as home security, integrated security and cloud security. It declined 5.5% Q-on-Q, due to the characteristic of Safety and Care business, in which revenue tends to peak into Q4. The new businesses enjoyed both top line growth and bottom line improvement, resulting in the quarterly operating income of KRW 27.8 billion, a 9.4% year-on-year and 14.9% Q-on-Q increase. [Non-English content] Commerce revenue posted KRW 203.7 billion. It increased by 7% year-on-year, based on the continued contactless consumption trend, but decreased by 9.3% Q-on-Q due to concentrated promotions in Q4, including the 11th day event. Marketing expenses for 11Street and SK Stoa increased in Q1, but operating income maintained the BEP level, thanks to volume growth. [Non-English content] Next, Hyung-il Ha, Head of Corporate Center 2 will discuss the achievements and strategic direction for the New ICT businesses. [Non-English content] Good afternoon. I am Hyung-Il Ha, Head of Corporate Center 2. Allow me to discuss the achievements and plans for the new ICT businesses. [Non-English content] First is the media business. [Non-English content] The number of paid TV subscribers of SK Broadband stands at 8.69 million as of the end of Q1. [Non-English content] Established by SK Broadband in January as a multi-program provider, Media S began regular broadcasting in April. In partnerships with Kakao Entertainment and SM C&C, 70% of the programs are exclusive content unavailable on other TV channels. [Non-English content] SK B roadband will strengthen the value chain in the media business that encompasses content, channels and platforms. [Non-English content] Wavve will further enhance competitiveness of original content such as Taxi Driver that is enjoying high viewer rating. We recently hired Chief Producer Chan-ho Lee, well known for dramas such as Signal and Stranger, as Chief Content Officer, and we're in the process of establishing a content planning studio. [Non-English content] Next is the Security Division, which is renamed as Safety and Care Division. [Non-English content] Launched in March, the merged entity of ADT Caps and SK Infosec will leap forward as Korea's number one integrated security company. In addition to achieving growth in the existing security domains, we will expand technology-based business models in new security domains such as security for home, unmanned stores, and cloud. [Non-English content] ADT Caps recently signed an agreement to cooperate with AWS for cloud security business. By combining ADT's cloud security services with AWS solutions, we will promote business together to gain market share in the financial and public sectors where there is high demand for transition to cloud. [Non-English content] We're in the process of selecting a lead underwriter for IPO of ADT Caps, and we will do our best to prepare for the IPO. [Non-English content] Next is Commerce business. [Non-English content] Despite intensifying market competition, Commerce achieved growth in both revenue and profitability year-on-year. [Non-English content] 11Street started order today, deliver tomorrow service through Fulfillment service together with Korea Post. It is also selling popular products including daily necessities in partnerships with major domestic and global brands such as Amorepacific and P&G Korea. [Non-English content] In collaboration with Amazon, we are making preparations to allow customers to buy Amazon products on 11Street. We plan to announce more details as soon as the service is ready to be launched. [Non-English content] In addition to investment from Uber, TMAP Mobility has received KRW 400 billion of investments from financial investors based on a valuation of KRW 1.4 trillion. [Non-English content] UT was launched through joint investment of TMAP Mobility and Uber, and its differentiated services are expected to offer customers more choices and provide drivers with more revenue. [Non-English content] Finally, let me move on to ONE Store, which is preparing for an IPO. [Non-English content] With continued GMV growth for 11 consecutive quarters, ONE Store received investments from KT and LG U+, thereby solidifying its position as Korea's representative app market. [Non-English content] We acquired ROK Media and established a content studio as a joint venture with YES24. All of which are our efforts to secure K-content IPs and develop them in a variety of formats. [Non-English content] I will now hand it back to the CFO. Thank you. [Non-English content] Thank you, Mr. Ha, for your presentation. [Non-English content] Dear investors and analysts, we are pleased to have delivered earnings that exceeded the market consensus in this quarter. We announced the spin-off plan and canceled treasury shares to enhance shareholder value. We also demonstrated that the fundamentals in all our businesses have been strengthened. [Non-English content] I understand that many people want to know more about our dividend policy. After final decisions concerning the spin-off are made at the board in the first half of the year, we will share with you more details, including a decision on the quarterly dividend. [Non-English content] We will continue to do our best for a successful spin-off. Let me reassure you that all the decisions we make will be to maximize shareholder value. [Non-English content] We ask for your continued support and interest. Thank you. [Non-English content] [Non-English content] Now the Q&A session will begin. Please press one and four. If you have any questions. Questions will be taken according to the order you have pressed the number one and four. Please press one and five if you want to cancel your questions. [Non-English content] The first question will be provided by Joang Oh from Korea Investment & Securities. Please go ahead. [Non-English content] Thank you very much for this opportunity. I would like to ask two questions. The first question is regarding the spin-off plan. Wavve and FLO were not mentioned in your recent disclosure. I'd like to learn how these businesses and other subsidiaries will be divided between the surviving company and the spin-off company after the spin-off. The second question is related to your subscription service plan. You mentioned that in the second half of the year, you are going to launch an integrated subscription service. Can you provide us with some updates on your subscription service business plan. [Non-English content] Mr. Oh, thank you very much for your questions. [Non-English content] Let me first answer your question regarding where Wavve and FLO will go after the spin-off. [Non-English content] After the spin-off, the surviving company will grow as an AI-based infra company by combining the fixed and wireless telecommunication infrastructure and pursuing growth based on AI-centered subscription marketing and data center business. [Non-English content] The spin-off company will grow as an ICT investment company that is specialized in making aggressive investments in semiconductor life platforms and global tech seeding, thereby making various investments that will drive value up. [Non-English content] In your question you asked about Wavve and FLO. They belong to media and content assets, thereby falling under the life platform area. Under the spin-off company, they will become global businesses that will lead new lifestyles of customers. [Non-English content] As for the specific business portfolios of the surviving company and the spin-off company, these will be finalized at the board within the first half of the year. [Non-English content] Let me now address your question regarding the subscription services. [Non-English content] We have been accumulating know-how and expertise in the subscription market by utilizing our telecommunication services. We believe that MNO is very competitive in providing subscription services. [Non-English content] In various areas such as telecommunications, media, and e-commerce, we have accumulated a large amount of data, and we have the digital infrastructure that can cover product planning all the way to offering. We also have marketing competitiveness in both online and offline channels. [Non-English content] Based on such expertise and capabilities, we believe that we can produce a sizable revenue not only based on SK Telecom customers, but also 50 million Korean people. [Non-English content] Currently, we have been expanding the scope of subscription products to media, games, delivery, and education, and we're now in the process of developing product curation and offering based on AI technology in order to offer optimal packages for our customers. [Non-English content] Furthermore, we are going to transform the existing T Membership platform into a subscription marketing platform that is provided for entire population in Korea in the second half of the year. [Non-English content] The subscription market in Korea was KRW 49 trillion in size last year, and it is expected to grow to KRW 100 trillion of market by 2025. [Non-English content] Our target for the subscription products and services is having the number of subscribers reach 35 million by 2025 and achieve the revenue size of KRW 1.5 trillion by 2025 by expanding partnerships and business models. I believe that we can take up about 20% of the market share of the subscription market that we can address. [Non-English content] Thank you. [Non-English content] The next question will be provided by Mina Choi from Samsung Securities. Please go ahead. [Non-English content] Thank you very much for this opportunity. I would like to ask two questions. The first question is, in April, you made a disclosure that you will carry out the spin-off, and you mentioned that decisions related to the spin-off will be made in the first half of this year. Can you share with us the upcoming schedule regarding the spin-off? The second question is related to TMAP Mobility. recently, you received financial investments, and I believe TMAP Mobility will start to accelerate its growth trajectory. What is the current status of TMAP Mobility? As for UT, which was launched in collaboration with Uber, can you provide us with some specific growth strategies on this recently launched business? [Non-English content] Thank you very much for these questions. [Non-English content] I'm going to answer your question regarding the schedule for the spin-off, and Hyung-il Ha will answer questions related to TMAP Mobility. [Non-English content] Currently, we are reviewing the overall process regarding the spin-off, and we aim to table the spin-off plan to the board of directors within the first half of the year. In consideration of the board resolution process and the overall process for the spin-off and relisting, we believe that the relisting can be completed within November after the general shareholders meeting in October. [Non-English content] I am Hyung-il Ha, Head of Corporate Center 2. I'd like to address your question related to the status of business TMAP Mobility after the split off. [Non-English content] After officially launched in December last TMAP Mobility is carrying out business in the four key areas, including the TMAP Life Platform, TMAP Auto, Mobility on Demand, and Mobility as a Service. [Non-English content] In the first quarter of the year, we built a foundation TMAP Mobility by receiving KRW 400 billion of financial investments from financial investors. We have launched UT in collaboration with Uber in order to offer differentiated services centered around taxis. [Non-English content] In the second quarter, we plan to introduce a completely new type of subscription membership services in the business area of TMAP Life Platform, and we also plan to launch a driver on-demand service as a pilot for B2C customers. [Non-English content] These new services on the four core business areas will be launched as scheduled, which are expected to provide differentiated customer experience. [Non-English content] I'd like to discuss the future strategy and the upcoming schedules for UT. [Non-English content] On April 1st, UT was officially launched based on the joint investment of Uber and TMAP Mobility. In the second half of the year, UT plans to launch a new service by combining Uber Taxi and TMAP Taxi. Initially, services will center around contracted taxi drivers and premium taxi services, but going forward, we plan to offer various mobile services and additional value-added services based on the taxi platform. As a result, customers will be able to have more options in terms of taxi rides, depending on the brands, price plans, and services. At the same time, taxi drivers will benefit from these new services by increasing their sales through differentiated services and by reducing the time to drive around to spot customers. We're not really able to give you any more details today, but we will be sure to communicate them with the market when the services are ready. [Non-English content] Thank you. [Non-English content] The next question will be provided by Hoi Jae Kim from Daishin Securities. Please go ahead. [Non-English content] Thank you for this opportunity. I would like to ask two questions. The first question is related to your dividend policy. You mentioned that even though you start the quarterly dividend payout, the total amount of dividend payout will not go down. I'd like to know from when your quarterly dividend payout would begin, and what is the overall dividend payout policy for the two companies after the spinoff? The second question is related to your investment plan and business plan for Wavve. You mentioned that by 2025, you are going to receive KRW 1 trillion of investment, and you have various plans for Wavve, this is quite different from what you mentioned previously when you were communicating with us regarding Wavve plan by 2023. The amount of investment and the amount of revenue seems to have declined slightly when you are adjusting your target for 2025. Can you provide us with some color on what is your overall investment plan for Wavve, which you mentioned is going to be around KRW 1 trillion, and what is your revenue plan and schedule for Wavve going forward? [Non-English content] Thank you very much for your questions. I'm going to address your question regarding the dividend policy, Mr. Ha from Corporate Center 2 will address your question regarding Wavve. [Non-English content] Even after the spinoff, we will continue to maintain the shareholder-friendly management principle. [Non-English content] We will make sure that regardless of the spinoff, the surviving company's level of dividend payout will be at least similar to that of last year. [Non-English content] As Korea's number one fixed and wireless telecommunications company, as the rollout of 5G is accelerating, we believe that our operating income and the cash flow will be sustained going forward. As such, we will make sure that we have the shareholder return policy so that earnings growth will lead to increased shareholder returns, including dividend payouts. [Non-English content] After discussions at the board of directors, we will carry out this new dividend policy plan so that we can start paying out the quarterly dividend by starting from the end of second quarter. [Non-English content] The timing for the quarterly payout for the first quarter has already passed, but this portion will be combined for the fourth quarter dividend payout so that we can maintain the level of dividend payout to our shareholders to be at least same or similar to that of last year. [Non-English content] As for the spin-off company, which will become a specialized investment company, we will make sure that their growth potential of the investment portfolio will be recognized. By actively attracting investment and pursuing IPOs, we will make sure that the corporate value of these businesses will be rightly recognized in the market. [Non-English content] As for the dividend policy of the new company, after the spin-off is finalized and after the board of directors is composed, we will be able to communicate to the market more details later. [Non-English content] I am Hyung-il Ha, Head of Corporate Center 2. Let me first comment on the subscriber target and the revenue targets of Wavve for 2023. [Non-English content] As we increase the original content lineup and the popularity of Penthouse Season 2, as a result of the successful advertising with IU that began at the end of last year, Wavve was able to enjoy the growth in its paid subscribers by reaching 2 million within last year. This subscriber growth trend is continuing. [Non-English content] As we continue to differentiate Wavve services based on content from terrestrial broadcasting stations and original content, we believe that we can achieve the initial target of having 5 million paid subscribers and the revenue of KRW 500 billion by 2023, and we believe that we can achieve this earlier than the original target. [Non-English content] Let me now comment on the ways we want to secure KRW 1 trillion of investment for Wavve. [Non-English content] In March, Wavve made an announcement of making an investment in original content, which is worth KRW 1 trillion, which will be done by 2025. [Non-English content] The financial sources for these investments will come from a variety of sources, including the rights offering of KRW 100 billion of SK Telecom, as well as external investments and reinvestment of profit from content business. [Non-English content] As for raising external investments, we already received KRW 200 billion of financial investment in 2019, and we're now in the process of preparing for the second round of funding. As for this second round, as soon as details are prepared, we're going to communicate them with the market. [Non-English content] Thank you. [Non-English content] The next question will be provided by Sean Lee from Citigroup. Please go ahead. [Non-English content] Thank you for this opportunity. I would like to ask two questions. The first question is related to your security business. The ADT Caps and SK Infosec were merged in the first quarter. What's the current status and the operation of this merged entity, and what kinds of synergy are you expecting from this merger? The second question is related to your MNO business. What is your 5G subscriber target by the end of this year? I understand that your initial target by the end of this year was nine million, but there was a very big net add in the first quarter. I'm asking this question. [Non-English content] Thank you very much for your question. [Non-English content] I will address your question related to the 5G subscriber growth trend, and Mr. Ha from Corporate Center 2 will answer your question related to the security business. [Non-English content] We have made continued efforts to offer new 5G products and improve the service quality of 5G services, and as we were improving the 5G ecosystem with new flagship handset launches, we were able to achieve the 5G subscriber number to 6.74 million by the end of this quarter compared to last year. There was a net add of 1.26 million compared to the end of last year. [Non-English content] At the beginning of the year, we mentioned that our 5G subscriber target for this year was 9 million, but considering the current trend, we think that we can achieve even 10 million. [Non-English content] The new tariff schemes for 5G and untact price plans that SK Telecom has recently offered to satisfy various customer needs are expected to provide customers with more choices and reasonable prices, thereby accelerating 5G migration. [Non-English content] Let me now respond to your question regarding the synergy of ADT Caps and SK Infosec. [Non-English content] We successfully completed the process of merging ADT Caps and SK Infosec in March. As a result, we have the merged ADT Caps with the revenue size of KRW 1.3 trillion and EBITDA of KRW 357 billion. [Non-English content] Now, various activities are underway in earnest in order to maximize synergy from these two entities based on our infrastructure for security and various capabilities. We expect the annual revenue for 2021 to be KRW 1.6 trillion. [Non-English content] In addition, in order to become a global cloud security provider, we have signed an agreement to pursue strategic cooperation with Amazon AWS in April. [Non-English content] I can discuss the effect of synergy from the customer perspective and product perspective. [Non-English content] First of all, customer perspective, SK Infosec has a large volume of B2B customers, including large enterprises, and ADT Caps has B2C customers, including small and medium enterprises and single businesses. By combining these different customer segments, we can create cross-selling opportunities. [Non-English content] From the product perspective, we are expected to provide customized one-stop services that combine physical security, information security, and building management as combined solutions. [Non-English content] For instance, when there is a cyber intrusion or detection of malicious codes, we can do video analysis by utilizing the platform data, and by leveraging on our access control system, we can detect any intruders to buildings and assets, and such flexible response will become more possible. [Non-English content] Thank you. [Non-English content] [Non-English content] [Non-English content] [Non-English content] [Non-English content] The next question will be provided by Neale Anderson from HSBC. Please go ahead. Thank you very much. Good afternoon. Just have one question, please. It relates to the media business and the sequential improvement in operating margin in the first quarter. For the three quarters last year, it was around 6.7% and it's increased to 7.8% in the first quarter. My question is, how sustainable is that? What are your margin targets for this year? Thank you. [Non-English content] [Non-English content] Neale Anderson, thank you very much for your question. [Non-English content] We believe that there are various factors that have contributed to improvement in the operating margin of SK Broadband. [Non-English content] These various factors include the effect of the T-broad merger. That's the first factor. The second factor is the increase in the subscriber base and increase in the commissions income from home shopping broadcasting. The third factor is the continued increase in the IPTV subscriber base. The final factor would be effective Capex implementation and cost efficiency. [Non-English content] Going forward, we will continue to make efforts to increase the subscriber base and carry out our business in a more efficient manner so that we can maintain and increase profitability of the media business. Thank you. [Non-English content] The next question will be provided by Stanley Yang from JP Morgan. Please go ahead. [Non-English content] Thank you for this opportunity to ask questions. The first question is related to your dividend policy. You mentioned that detailed decisions regarding the payout, the dividend policy for the spin-off company will be made soon. Can I safely assume that given the MNO dividend payout level of KRW 10,000 per share, and in assuming that there will be dividend payout from the new spin-off company, can we anticipate that the total amount of dividend payout from SK Telecom will increase going forward? The second question is related to your subscription business model. There are high expectations for subscription services, and I'd like to know if your subscription model will be to push several subscription models and services separately, or to follow the model of Amazon, where you have one single subscription platform where multiple services are provided. If you continue to launch these new subscription services, are they going to be linked with your MNO Telecom subscribers or are they going to be operated separately? [Non-English content] Thank you very much for your questions. I'm going to respond to your question on the dividend policy, and Han Myung-j in, Head of Subscription Service Company, will answer the second question. [Non-English content] As for the first question on our dividend policy, your understanding is correct. The dividend payout from the MNO business as part of the surviving company will be similar or more than the previous level of dividend payout. On top of that, we have not yet decided on the dividend policy of the spinoff company. If they start to pay out dividend, it's going to be a plus alpha. [Non-English content] As I mentioned earlier, when the board of directors is composed for the spinoff company and when discussions on the dividend policy are made, we're going to communicate them with the market. [Non-English content] I am Han Myung-jin, I'm the Head of Subscription Business, and let me address your second question. [Non-English content] As you may understand, we have many family businesses under the ICT umbrella, and there are many different services and products that we're preparing that will help enhance the livelihood of customers. [Non-English content] Basically, I can say that our model will be similar to Amazon Prime, where there will be an integrated subscription paradigm. In addition to that, we are planning to offer additional services and products for subscription. [Non-English content] We're planning to charge a monthly subscription fee for the subscription customers. [Non-English content] As for your question regarding the connection with MNO services, we are currently planning this subscription platform to reach out to 50 million Korean population. We're currently not considering any linkage between the subscription services and the MNO fees. [Non-English content] Thank you. [Non-English content] We would now like to close our conference call for the first quarter of 2021. Thank you.