[Non-English content] Good morning and good evening. Thank you all for joining this conference call. Now we will begin the conference call on the 2021 fourth quarter earnings results of KT. We would like to have welcoming remarks from Mr. Seung-Hoon Chi, KT IRO, and then Mr. Kim Young-jin, CFO will present earnings results and entertain your questions. This conference will start with a presentation followed by a Q&A session. If you have a question, please press Star one. That is star and one on your phone during the Q&A. Now we would like to turn the conference over to Mr. Seung-Hoon Chi, KT IRO. [Non-English content] Good afternoon. I am Seung-Hoon Chi, KT's IRO. I would like to begin KT's 2021 earnings presentation. For your information, this earnings release call is being webcast live on our website, and you can follow the slides as you listen in on the call. [Non-English content]. Before we begin, please note that today's presentation includes financial estimates and operating results under the K-IFRS standards that have not yet been reviewed by an outside auditor. As we cannot ensure accuracy and completeness of financial and business data aside from our historical performances, please be reminded that these figures are subject to change. [Non-English content]. With that, I would now like to invite our CFO, Kim Young-jin, for his remarks and presentation on year 2021 earnings. [Non-English content]. Good afternoon. This is Kim Young-jin, KT's CFO. Let me run through KT's key performance highlights for year 2021. In 2021, KT set out to transform itself into a DigiCo, driven by successful business structure enhancements and portfolio expansion. Consolidated revenue was reported KRW 24,898 billion. Service revenue, KRW 21,727.5 billion. Operating profit came in at KRW 1,671.8 billion. [Non-English content] On balanced growth from DigiCo and Telco, and revamping of the group's portfolio around growth businesses, revenue was up 4.1% year-on-year and operating profit posted 41.2% year-over-year growth. Separate basis revenue was up 2.8% year-on-year, reporting KRW 18,387.4 billion, with operating profit up 21.6% year-over-year, recording KRW 1,068.2 billion won. [Non-English content] In particular, we saw salient growth in service revenue with separate basis service revenue up KRW 417.8 billion, driving operating profit to break through the KRW 1 trillion mark. We also achieved 2022 OP target ahead of plan in 2021. [Non-English content] This actually is an outcome of steady top line growth as a telco, as well as digital transformation that drove our business expansion in B2B and platform businesses. In B2B business, a total of KRW 3 trillion worth of orders were booked, which is 30% higher year-over-year. While enterprise voice call and cloud and IDC business recorded a growth of 8.6% and 16.6% year-on-year respectively. Wireless and Internet, which are our cash cow businesses, saw both qualitative and volume growth underpinned by sales focusing on premium subscribers. By targeting 5G premium handset market and higher sales of 1G product, 5G penetration was up 20% points year-over-year to 45%, while giga internet subscribers accounted for 66% of the total base. In 2021, we placed momentum behind revamping the group with a strong focus on growth. KT Studio Genie became the focal point of the group's media and content capabilities, and through the acquisition of Millie's Library, we were able to strengthen digital subscription capabilities. K Bank successfully raised capital through rights offerings, reporting KRW 22.4 billion net profit in 2021, achieving a turnaround in four years since the inception of the company. K Bank's customer base went from 2.19 million as of end of 2020 to 7.17 million by end of 2021, going up by 5 million. During the same period, deposit balance went from KRW 3.75 trillion to a whopping KRW 11.32 trillion, while loan increased from KRW 2.99 trillion to KRW 7.09 trillion. K Bank also took its first step towards IPO and retained the lead arranger. We expect growth to gain traction with the planned public offering. Based on profit enhancement and corporate value growth and our confidence therein, we strengthened shareholder return as well. On the back of rise in profit, 19,010 KRW was set as the 2021 dividend, which is up 41.5% year-over-year. Since the announcement of DigiCo KT transformation back in 2020, we've been focusing on the platform-based DigiCo domain. B2C DigiCo business of IPTV and B2B Digico segment, which include AICC, Cloud, and IDC, have all benefited from the spread of digital-based lifestyle patterns since the outbreak of the pandemic. KT moved swiftly to cater to such demand in the B2B market, we saw higher top line growth versus 2019, which was before the DigiCo transition. In tandem with the transformation, DigiCo domain's share of the service revenue has grown from 38% in 2019 to 40% in 2021. Our target is to expand to 50% by 2025. Now let me run through business direction for 2022 and the guidance for the year. With steady revenue stream from Telco B2C domain, we plan to speed up growth as a DigiCo by expanding DX, digital transformation, and New Platform businesses. There are two key directions. [Non-English content] First, on top of existing customers and product offerings, we will create new value and revenue source via timely offering of DX services to new Customer segments. We will also broaden the user base by targeting emerging core segments, i.e., single-member households, SMEs, and local governments. For the cash cow businesses of Wireless and Internet, we will employ the so-called add-on strategy to drive up revenue through customer-centric product packaging and new service development, which will drive both growth and profitability. [Non-English content] Second, through active cooperation and partnerships and M&As, we will accelerate DigiCo portfolio transformation and internalize core capabilities. [Non-English content]. In finance, BC Card will partner with Fintech companies to expand on digital asset management services and use its own balance sheet to broaden into financial asset business and fully initiate My Data services so as to diversify its business portfolio. [Non-English content] K Bank will strike a balance between financial performance and its evolution as a platform. By expanding business horizon beyond bank to digital financial platform, we intend to further notch up the corporate value. Following the turnaround in 2021, we will drive structural earnings expansion in 2022, and by strengthening fee business underpinned by expanded partnerships, we will unleash the value of the platform. [Non-English content] In Media business by securing more than 10 titles in the production lineup as well as through planning and development of AAA content that can succeed on the global stage, KT Studio Genie plans to expand the coverage of the platform. Millie's Library, which became part of the KT Group last year, will work in collaboration with KT and Genie Music to expand the AI Audio Platform business. Through IPO this year, we will secure valuation as well as resources for future growth. [Non-English content] Cloud and IDC business, which became a key platform for enabling digital transformation of different businesses, is now targeting high growth this year. To that end, we will increase market share in the public and financial cloud markets and broaden alliances with outside specialized companies and diversify IDC business portfolio in order to bolster our leading market position. [Non-English content] Last October, with the launch of KT's voice AI secretary, we committed to mainstreaming of our AICC business. We've seen rise in demand for AICC from one man operated stores, hair salons, mom and pop eateries, and other small merchants. We plan on service upgrades and building a bigger product lineup so as to be at the forefront of domestic AICC market. [Non-English content] We also set up a Digital Logistics company called Lolab last June, making a full-fledged entry into the Digital L ogistics business. Lolab provides AI-based logistics, consulting and IT solutions to 3PL companies, and in the first year of its business, booked meaningful performance of KRW 43.5 billion of order volume. Through commercialization of AI logistics platform and sourcing outside investments, we plan to quickly beef up competitiveness this year. [Non-English content] Based on the business direction so far mentioned, I would like to present this year's targets with an emphasis on challenge and growth. Our guidance for 2022 is consolidated revenue of more than KRW 26 trillion and standalone revenue of above KRW 19 trillion. We are also planning to break through KRW 16 trillion of separate basis service revenue. [Non-English content] From this earnings release onwards, we have changed revenue classification to effectively communicate KT's strategy and performance as a DigiCo. We have categorized businesses by customer and business type to four segments, which are Telco B2C, DigiCo B2C, Telco B2B, and DigiCo B2B. Based on this new classification, we will be communicating DigiCo's accelerating growth. [Non-English content]. Let me now turn to FY 2021 full- year results. Total revenue was up 4.1% on year to KRW 24.898 trillion. Operating profit was up 41.2% on year, reporting KRW 1.672 trillion. [Non-English content] Net profit was up 107.5% on year to KRW 1,459.4 billion. EBITDA was up 9.6% on year to KRW 5,279.5 billion. Next page is operating expense. [Non-English content] Driven by rise in labor costs, business expenses and cost of services provided, operating expense was up 2.2% on year to KRW 23,226.2 billion. Next is financial position. [Non-English content] Debt to equity ratio as of end of 2021 was 124.3%, up 7.8% points year-over-year. Net debt ratio was up 2.6 percentage points year-over-year to 32.7%. Next on CapEx. [Non-English content] Total CapEx spend for 2021 was KRW 2,855.1 billion, similar to levels last year. Next is on each of our business lines. [Non-English content] Telco B2C business, on the back of steady growth of wireless revenue and broadband internet revenue, was up 1.7% on year to KRW 9,339.5 billion. [Non-English content] Driven by 5G subscriber growth, wireless revenue was up 2.4% on year to KRW 6,092.4 billion. Total Wireless subscribers as of end of 2021 was 22.8 million, while 5G subscribers reported 6.37 million, accounting for 45% of handset subscribers. [Non-English content] By strengthening the benefits to customers and activating sales to single member households, which drove subscriber growth, broadband revenue was up 2.2% year-on-year to KRW 2,317.7 billion. [Non-English content] Fixed line telephony was down 3.9% year-over-year to KRW 929.4 billion on higher sales of flat rate plans. Revenue erosion eased. Next is DigiCo B2C business. On the back of growth from Media business and mobile platform business, DigiCo B2C revenue was up 5.8% year-over-year to KRW 2,144.4 billion. On sustained growth from IPTV subscriber base and platform-based revenue, Media business was up 6.1% year-over-year to KRW 1,938.7 billion. Impacted by kids content and release of OLED TV tab, IPTV subscribers reported net addition of 380,000 year-over-year, reaching 9.14 million subscribers. Next is on the Telco B2B business. With enterprise data and voice call reporting an even growth, Telco B2B business was up 5.1% year-over-year to KRW 1,981.2 billion. On growing demand from businesses' digital transformation and growing data traffic, enterprise internet and data revenue was up 3.5% year-over-year. Driven by growth in SIM-only phones and MVNO revenue and higher revenue from enterprise intelligent network, including enterprise VoIPs and Call Check-ins, enterprise voice call reported a steep growth of 8.6% year-over-year. Next is on DigiCo B2B business. On the back of high growth of cloud and IDC, DigiCo B2B business was up 2.5% on year to KRW 2,038.9 billion. Despite double-digit enterprise messaging revenue due to declines in system Infrastructure business, including the global business, enterprise DX was down marginally Q-on-Q. With the securing of public and financial cloud projects and higher IDC demand driving upselling to current customers, as well as IDC DBO revenue growth, cloud and IDC business was up 16.6% year-over-year, reporting a steep growth. Despite AICC and smart mobility growing double- digits on decline in blockchain, video security and other System Infrastructure business, AI new business was down 1% year-on-year. Next is on subsidiary performance. On increase in domestic card acquiring volume, BC Card revenue was up 5.7% on year to KRW 3,579.6 billion. SkyLife revenue was up 9.2% on year to KRW 763.2 billion on the back of growth in MVNO business and internet resale, as well as HCN acquisition. On top of higher revenues from digital ads and T-commerce subsidiaries and revenue, and revenue stream from original drama produced and distributed by KT Studio Genie, as well as consolidation effect from KT Seezn and Millie's Library, content subsidiary revenue was up 20.4% year-over-year to KRW 929.3 billion. [Non-English content] Estate revenue posted a sizable rise, reporting KRW 576.7 billion on the back of disposition gains from K-Realty Number One, which was set up in 2011 as part of KT's asset securitization plan. [Non-English content] I have just provided KT's year 2021 earnings update. In 2021, we took customer-centric approach to incumbent business in order to drive up satisfaction and laid the basis for, to bring DigiCo transformation. Thanks to such efforts, we drew meaningful results from platform and the B2B domain. [Non-English content] In the year 2022, underpinned by stable earnings from our incumbent businesses, we will expand DX digital transformation and new platform businesses and endeavor to further enhance the company value. I look forward to your support and interest. Thank you. [Non-English content] For more details, please refer to the earnings presentation, which we circulated previously. We will now be taking your questions and please make sure that you ask no more than two questions per person. [Non-English content] Now, Q&A session will begin. Please press Star one, star and one if you have any questions. Please press Star two, star and two if you want to cancel questions. In order to allow as many Q&A chances as possible within the restricted time, we would appreciate only two questions per each participant. [Non-English content] The first question will be presented by Kim Hoe-jae from Daishin Securities. Please go ahead with your questions. [Non-English content] Good afternoon. I'm Kim Hoe-jae from Daishin Securities. My first question relates to your dividend decision. If the DPS is around KRW 1,910, I think that is 45% of your standalone net profit. Were there any one-off impacts? If you could actually provide some details with regards to one-off items, that will be helpful. Second question, we've seen that your Wireless ARPU had risen by 2.3%, which is quite favorable. Can you provide some more color as to what the guidance for wireless ARPU will be for year 2022? [Non-English content] Well, thank you, Mr. Kim for your question. Your question related to our dividend payout of 45% of net profit on a separate basis. You've asked whether there were any one-off items that were used to adjust this figure. [Non-English content] To begin, as you know, we previously communicated that we will be paying out 50% of our adjusted net profit. For financial year 2021, there were some adjustment items. They relate to non-cash items, non-cash related adjustments. [Non-English content] These are one-off items. For instance, in terms of the overseas fund, there are valuation gains on a fair value basis, which is grossed up under financial assets, and there were adjustments related to that. As part of our subsidiaries, there were invested equities where there were impairments, and those impairments were also reflected and added. In terms of the operating as well as non-operating items where there are non-cash ins or cash outs, those items have also been subject to adjustments. [Non-English content] To provide you with a bit more detail regarding the fair value assessment of the financial assets. This is an accounting treatment that is conducted at the end of the year. This relates to the funds that we've invested in, whose NAV pricing would fluctuate. None of this has been actually realized. It's just an accounting treatment, and is booked in our financial statement as a one-off impact. It had an impact of, on a pre-tax basis, pre-tax profit basis of bringing down that level by KRW 110 billion. Your second question related to our guidance or projection relating to our wireless ARPU and wireless service revenue for 2022. If you look at 2021, at the beginning of the year, we communicated that our target for 5G subscribers will be 45% of the handset base, and we were able to achieve that target. At the end of 2022, we expect that percentage to rise to 60%. Underpinned by that 5G subscriber base, we believe that our wireless service revenue as well as wireless ARPU will be able to report a growth rate that is similar to that of the previous year. We will take the next question. The following question will be presented by Kim Jun-seop from KB Securities. Please go ahead with your questions. Thank you for your question. You asked who our key customers are for enterprise DX and AI new business. Responding to that question, as you know, KT's B2B platform, we are underpinned by Korea's largest fixed and wireless infrastructure that has the broadest coverage in the nation. Unlike our peers, we basically have a channel based off of the key metropolitan headquarters. We have various experience in running different projects in both the enterprise and in public. That really works as an asset for the company. Just to elaborate more on key competitive edges as well as the strategies that we have in regards to this very fast spread of digitalization that we're witnessing in Korea, KT has the enterprise products that could provide customized services depending on the Customer segment and depending on different industry sectors, underpinned by our core technologies in DX, which include AI, big data and cloud. In tandem with the spread of the trend for digital transformation, on top of the existing Network and Telecommunication services, we are seeing a higher demand for digital transformation services that require the AI, big data, cloud and other types of solutions converging on top of those telecom services. [Non-English content]. As we were able to expand the voice call DX services for the enterprises, including the enterprise messaging and Call Check-in services, we were able to see a revenue growth of the enterprise voice call business actually rising 8.6% year-over-year in 2021. This was a testament to the growth potential of our DX services. [Non-English content] We will continue to explore new revenue streams very aggressively by utilizing our existing and incumbent Telecom services and putting on top of that the DX component continuously. We will endeavor to do that in 2022 in the areas of messaging DX and intelligence network DX. Also, the solutions that we provide underpinned by the hardwares as well as the network and the security we will expand into cloud-based service DX, where the solution is provided in the form of SaaS. [Non-English content] You also asked who our key customers will be. Recently, we've seen emergence of new potential customer segments, such as SMEs and local governments, and we are very aggressively seeking after them, so that we can secure them as our customers. To these Customer segments, we will provide a customized DX services to these more broader customer base so that we can accelerate growth. [Non-English content] Your second question related to growth potential, and some of the advantages of cloud and IDC business. [Non-English content] Now, the cloud and IDC business has continuously been posting double-digit growth on a per annum average basis. We think that with a strong customer focus and digital transformation as we evolve, we believe there to be more, there will be more growth to follow. [Non-English content] Under the current market backdrop, we are seeing a very fast spread of digital transformation within Korea, and hence we see a lot of cloud as well as internet companies have a lot of interest and the need for IDC support. Hence, we think the growth potential exists. [Non-English content] Now, the strength that KT has in its cloud and IDC is not just network, but our capability in being able to provide the solution in an integrated manner. [Non-English content] Also recently under Korean government, the Digital New Deal, as well as the Green New Deal initiative, these are areas where KT can really utilize its capabilities. As supported by our enterprise communication platform capabilities, we will continuously expand into this business domain. [Non-English content] Just to sum up, KT Cloud is the only cloud provider that could truly integrate network, IDC, and cloud all together. KT has a competitive edge in public and in financial cloud. By 2025, all of the public institutions or public agencies in Korea are to migrate to cloud. Therefore, we're going to focus on that very segment for our business. [Non-English content] Another strength that KT has in cloud is that recently we have introduced HyperScale AI Computing capabilities. Basically, this is immense amount of GPU resources that anyone can use at any time, and basically this is a pay as you use or pay as you go scheme. This is something that differentiates us truly from any of our peers. Next question, please. The following question will be presented by Ahn Jae-min from NH Investment & Securities. Please go ahead with your questions. Hello, this is Ahn Jae-min from NH Investment & Securities. I'd like to first thank you for a good performance. In 2021 you were able to continuously grow your operating profit. You've given some guidance on 2022 numbers. We expect top line to grow and also bottom line to follow that growth. Can you provide some more color, therefore, on what your 2022 operating profit outlook is? For each of your business lines, where do you think that you will be able to gain and have visibility on the profitability side most out of all the businesses that you operate? Second question relates to your subsidiaries. I understand that you are planning to go IPO with some of the subsidiaries. When the proceeds of the listing actually comes in, what are your plans and where would you use those proceeds? Would you also consider returning that to shareholders? Well, thank you, Mr. Hong, for your question. Your first question related to our operating profit outlook for year 2022, and our outlook if possible for each of the business lines. As I mentioned at the beginning, on a consolidated basis, our guidance for the revenue is KRW 26 trillion and on a separate basis, service revenue objective is to actually hit over KRW 16 trillion level. Now, please first understand that we won't be able to specify any operating profit guidance number as of now. But in regards to the growth in the top line revenue, as there would be expenses and investments that would be needed for the new growth businesses, we would be, however, very much mindful of cost efficiency, and make sure that such spending is well stabilized. Through those efforts, we will make sure we can defend and also secure bottom line as much as possible. Now, on a consolidated basis, on the operating profit side in 2021, there were some one-off factors, but even setting aside the one-off factors, we will make sure that we can bring about an improvement in operating profit on a year-over-year basis. You also asked about the subsidiary IPOs and once they are listed, and once we have some cash in, where will we be using those proceeds? The priority area will be to first use those proceeds in business areas where there's great growth potential and areas where it is required for us to beef up our competitiveness. From the KT mother company level, we will continue to revamp our portfolio of business with a strong focus on growth, and it will also be used for that purpose. Next question, please. Neale Anderson. The following question will be presented by Neale Anderson from HSBC. Please go ahead with your question. Thank you. Good afternoon. I have two questions, please. The first relates to the Wireless market, and particularly competition at the low cost or value conscious end of the market. Particularly, I wonder how KT might compete against 5G plans from MVNOs. The second question also relates to 5G. Really my question is when we will see 5G services which are priced based on the new capabilities of 5G, such as lower latency or network slicing, either for businesses or consumers? Thank you. Well, thank you for your question. I will respond to first question first on the low-cost pricing or low-end, low-tier pricing, especially from the MVNOs, how we are planning to compete against that. The current trends that we are seeing in the market is we see growth in consumer needs or increase in consumer needs who want reasonable and value-based pricing tariff in the MVNO market. We see telcos actually acquiring their subscribers through their MVNO companies, and that had triggered a quite solid growth of the MVNO segment. We think this trend will continue for the time being. KT's growth strategy in this area is that we will not just look at MNO subscribers or MVNO subscribers alone. We will continue to utilize to drive revenue growth through our MVNO business, as well. Our Wireless strategy is basically underpinned by these two pillars, MVNO and MNO, which we think that could actually help and support to maximize KT's value. These MVNO subscribers, through the MVNO subsidiaries, we will further segment the customers and have a fine or refined targeting of the right Customer segment, so that we could employ both the MNO and the MVNO engine behind maintaining our wireless subscriber base. In terms of our pricing policy, rather than responding to the low-end price market by simply introducing a low-end tariff plan, on the MNO side, we will expand on our subscriber base supported by customer services, customer benefits that we provide, as well as value-added services and adopting a membership type of a scheme. It will be through the MVNO side, through the subsidiary, we will cater to the demand and need of Customer segment who are more sensitive to pricing. We will employ the strategy accordingly based on our customer segmentation. Your second question, Neale, was on how we're going to reflect low latency and network slicing, these new capabilities to the 5G rate plan. At KT, as part of our 5G new value creation, starting July the 15th, we've started commercialization services for SA Standalone 5G. [Non-English content] Because we're only at the infant stage, the users or the customers can't really feel the difference as of today, in terms of the services that are being offered. From mid- to long-term perspective, as Internet of Things actually further evolves, we believe that we will be able to further provide more differentiated value through, for instance, autonomous driving, smart factory, AR, VR, and other 5G convergence services. [Non-English content] SA standalone basically is an essential and necessary condition in order to have people benefit from the benefits of 5G network slicing, as SA entails low power, low latency, and has very fast transmission speeds. [Non-English content] Government also released network neutrality exception guidelines, and we believe that's going to form the basis of 5G B2B policies going forward. We think that we will be able to once again distinguish and emphasize the value that 5G networks can provide. [Non-English content] We will be able to come up with more differentiated pricing schemes for all these different types of customized products, which will really help us further improve on our bottom line. We will plan for differentiated and different types of, or varied pricing plans that really align with the type of products that we offer. [Non-English content] We'll move on to the next question. [Non-English content] The following question will be presented by Park Se-yeon from Morgan Stanley. Please go ahead with your question. [Non-English content] [Non-English content] Thank you. I would like to ask two questions. This first question relates to CapEx. What should we expect from CapEx spend going forward? If you look at 5G, the rollout for 3.5 GHz, we're now in the latter half of that entire phase. Looking at the CapEx as against the total service revenue, all of the three telcos in Korea seem to have quite high CapEx burden of about 20%. Going forward, can we expect that level to actually go down to around 15%, which may be considered the global standard? Second question, the investors are very happy to see that your dividend payout has increased for 2021. As we go into 2022, for any reason, if the profit does decline, can we also assume that the dividend will stay the same or do we have to assume that there will be some cut in the dividend payout? As long as the decline in profit is manageable, is the company willing to keep to the current dividend level? [Non-English content] Thank you for your question. Your first question relates to our CapEx outlook and whether we will be able to, you know, meet the global standard. As you know, in a Telecom business, when there is a new generation of wireless or mobile service that is released, then there is significant increase in CapEx, after which there will be a phased reduction. [Non-English content] Back in 2012, when there was nationwide investment for the LTE network, CapEx shot up to KRW 3.7 trillion, after which there was a gradual decline. I believe that for 5G we will see more or less the same picture. [Non-English content] Now, KT will need to continuously make network investment for B2C services so that we make sure we comply with the required satisfaction level of our customers in terms of our quality of our network and also on the DigiCo B2B side, we do need to make continuous investment for growth of those businesses. We will make sure we manage our CapEx, as you've mentioned, with the profitability or the margin aspect or profit aspect in mind. [Non-English content] Your second question related to our dividend payout, outlook for 2022. As mentioned, we will keep to the 50% payout of a standalone basis adjusted net profit. [Non-English content] We shared with you our top line revenue guidance, but not the operating profit guidance. With the growth of our DigiCo business and with an efficient control of our expenses and spending, we believe that we will be able to bring about year-over-year growth in our profit and profitability as well. What I can say is that we will do our utmost to make sure we can further expand on a shareholder return or dividend payout in year 2022. [Non-English content] [Non-English content] Currently there are no participant with questions. [Non-English content] If there are no further questions, we would now like to close the Q&A. Once again, thank you very much for joining us this afternoon. This brings us to the end of KT's earnings presentation for FY 2021. Thank you.