Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of the 2021 third quarter earnings results by KT. We would like to have welcoming remarks from Mr. Seung-Hoon Chi, KT IRO; and then Mr. Young Jin Kim, CFO, will present earnings results and entertain your questions. This conference will start with a presentation, followed by a Q&A session. [Operator Instructions] Now we would like to turn the conference over to Mr. Seung-Hoon Chi, KT IRO.

Good afternoon. I am Chi Seung-Hoon, KT's IRO. This earnings release call is currently being webcasted live on our website, and you can follow the slides as you listen in on the call. Let us now begin KT's Q3 2021 earnings presentation. Before we begin, please note that today's presentation includes financial estimates and operating results under the K-IFRS standards and have not yet been reviewed by an outside auditor. As we cannot ensure accuracy and completeness of financial business data, except for historical performances, please be reminded that these figures are subject to possible changes. I will now invite the CFO, Young Jin Kim, for his remarks and presentation on Q3 '21 earnings.

Good afternoon. This is Kim Young Jin, KT's CFO. Let's begin with key earnings highlights for Q3 2021. Consolidated revenue was KRW 6,217.4 billion, while service revenue reported KRW 5,402.4 billion, and operating profit reported KRW 382.4 billion. Driven by growth from legacy telecom business, including 5G and Internet as well as platform businesses, which include B2B, media, content and financial services, there was overall performance improvement for KT and its affiliates, which drove revenue up 3.6% on year and operating profit up 30% year-over-year. On a separate basis, revenue was up 3.2% on-year, reported KRW 4,664.7 billion, with operating profit up 24.3% on-year to KRW 259.1 billion. In particular, there was a salient service revenue growth as standalone service revenue increased KRW 114.1 billion, with Q3 cumulative revenue of KRW 312.7 billion. This is attributable to steady top-line growth from KT's traditional telco business and expansion of its B2B and platform business. KT has classified its business domain into 4 segments: Digico and telco in accordance with the characteristics of the business, and B2C and B2B based on the customer. KT's legacy business was in B2C telco business, which comprises of wireless Internet, fixed-line telephony, and they account for around 61% of the top-line revenue. Since KT's Digico transformation announced back in 2020, we've been focused on the platform-based Digico domain, especially B2C-based Digico domain exemplified by IPTV and B2B-based digico, which represents cloud and IDC, have benefited from the content free habits becoming prevalent following the pandemic and on greater digital demand from the corporate market to which KT responded swiftly, we've seen greater revenue uptrend versus 2019, the pre-Digico era. With Digico KT transformation, we plan to expand this domain from 39% as of today to 50% by 2025. Yet again, in Q3, we've seen meaningful results…

Now Q&A session will begin. [Operator Instructions] The first question will be provided by Hoi Jae Kim from Daishin Securities.

I'm Kim Hoi Jae from Daishin Securities. I'd like to first ask you a question on your results. If you look at Q3 performance result, it was quite good. But usually, when the fourth quarter comes, there are some individual cost impact and non-OP impact that kind of slowed the performance trend. The extent of that did alleviate last year. However, do we -- should we expect more significant or any one-off factors upcoming in Q4? And second, regarding StudioGenie, you've mentioned that you released an original content called Crime Puzzle. What is the lineup for next year as well as do you have any outlook on top-line revenue?

Thank you for those questions. You asked 2 questions. First, regarding our Q4 outlook, any seasonality factor or non-OP impacting factors and what our forecast is for Q4. Now first factor to mention is that with regards to the network failure that we experienced and the relevant compensation expense that we've set aside, that figure had not been reflected in Q3 numbers. So that impact is going to come through in Q4 figure. KT Traditionally has seen seasonality factors that emerged in Q4, for instance, those would be fees and commissions paid in terms of repair costs, service costs and IT and outsourcing related expenses that would feed through usually in Q4. Regarding our projection on one-off upcoming in Q4, back in 2020, there was impairment that was booked regarding the 28 gigahertz spectrum. So there was quite a significant one-off nonoperating expense factor. But this year, we do not foresee any such massive or significant one-off factors that would come into play. Having said that, usually, at the end of the year, there is an accounting-based valuation done on invested equities and assets. So there is always a possibility that there may be some slight expense. The second question you asked related to StudioGenie's upcoming lineup for next year and revenue outlook. In order to have a very stable backdrop to be able to produce content comfortably, we've recently conducted a rights offering capital increase in the amount of KRW 175 billion. This year, we started off with Crime Puzzle, and we plan to produce about 6 different titles. And of those, 2 titles will be released in the second half of the year. Midnight Thriller is scheduled to be released through OTV and season after end of November. So next year, we are planning to produce about 15 different original content titles. And by 2023, we want to make sure we have capability and system in place that could enable us to produce about 20 different titles every year. Based on those capabilities, we want to make sure that we secure an IP library of -- which comprises of about 1,000 and about 100 drama IPs by 2025. So the content that we produce from StudioGenie would, of course, be distributed through KT Group's platforms, such as OTV Season, Sky TV and Media Genie. But we also plan to distribute such content to other platforms as well as program providers depending on the characteristics of the content. You did ask us about our top-line outlook for next year. But for the time being, rather than focusing on financial performance for StudioGenie, we are at this point emphasizing laying the appropriate environment for content production as well as driving synergy across the group affiliate. Next question, please.

The following question will be presented by Joonsop Kim from KB Securities.

Hello. I am Kim Joonsop from KB Securities. My first question relates to IDC, which is that I would like to understand what the company's take is on the IDC market. We see a lot of players entering into the market. Compared to those other players, what is KT's position? And what is your strategy? Second question relates to your OTT service season. There will be Disney+ will be soon launched in Korea. So would there be any financial impact on season? And with regards to strategy for season, what is your strategic direction?

Thank you for those questions. First question relates to KT's IDC positioning and strategy. As you've correctly pointed out, if you look at the IDC providers, including global providers, we see the number of players actually increase. And I think that is a good testament to the fact that this market outlook is quite bright. Now companies are really speeding up their digital transformation. And accompanying that, we have a significant increase in the demand for data center and there's this explosive growth there. KT as a #1 market player, I think we have around 40% of market share. We are responding to that demand. And in order for us to solidify our market leadership, we will continue to make investments into additional IDCs. Now in terms of new IDCs, one has to seek out the appropriate location in sight, which is quite time-consuming. So providing new IDC, supplying that into the market, it cannot happen overnight. It cannot happen over a short period of time. Hence, we also developed a branded IDC business model, where we provide KT's network and command and control capabilities to other companies IDCs. And we, for the first time, successfully opened the South Curo IDC, which is KT's first branded IDC, and we plan to continue to expand on such business model. Also, in the face of such exclusive demand growth, we are seeing new opening and new opportunities in various different types of business models, such as designing, building and operating IDCs. We call this type of model DBO, for short, design, build and operation. So by adopting this business model, we will continue to strengthen our market dominance. Second question related to Disney+ launch in Korea and what impact that will have on the outlook of season's financials. KT also will launch…

The following question will be presented by Hong-sik Kim from Hana Financial Investments.

I would like to ask you 2 questions. First, if you look at your earnings results up to Q3 and the mother company basis, operating profit and a cumulative asset basis was up by 29%. But considering that there are some expense factors that's upcoming in Q4, investors are a bit concerned. So under the current trend, do you think that you'll be able to continue with the upward trend of dividend payout? And Q3 CapEx up to date have been quite slow from a bondholder's perspective. This may be something that's positive. But us as an equity investor and equity analyst, it's not something that we could actually welcome wholeheartedly because we feel that in order to drive top-line growth, there needs to be investments -- that there needs to be investment. So could you provide some color as to what your outlook for CapEx planning is like going forward?

Thank you for those questions. First question related to in light of the operating profit up-trend, can the market expect a higher dividend payout. That was your question. As I said previously, in Q4, there is going to be the network failure related conversation figure that will be reflected and paid out in Q4 as well as some of the seasonality factors. But there are no non-OP operating profit items that will have any significant impact this year. So the growth in operating profit, we believe will be connected to increases in dividend. Responding to your question on the slowness of the CapEx spend due to the impact of COVID, as well as the shortage of semiconductor supply, it is true that CapEx spend somewhat was pushed back. But if you were to look at the size of the CapEx comparing last year's Q3 and this year in terms of the size of the orders placed, it is actually quite flat Y-o-Y. So because of these reasons, we think that CapEx spend is going to be focused mostly in Q4. And so on a per annum basis, we would most likely see a flat CapEx spend on a year-over-year basis. As you have correctly mentioned, CapEx is important in order for us to operate our telco business in a stable manner and also to bring an improvement in quality as well as CapEx is important for us to make investment focused on our digico business expansion. So we expect CapEx to be spent in accordance with plan.

Currently, there are no participants with questions. We'll wait for a second until there is another question.

Thank you. With no further questions, we would now like to close the Q&A session. Once again, thank you for joining us and giving us your interest as well as questions. This brings us to the end of earnings call for Q3 2021. Thank you.