[Foreign Language] Good afternoon, I am Chi Seung-Hoon, 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. [Foreign Language] Before we begin, please note that today's presentation includes financial estimates and operating results under the K-IFRS standard 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. [Foreign Language] With that, I would now like to invite our CFO, Kim Young-Jin for his remarks and presentation on year 2021 earnings.

[Foreign Language] 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, hence, reported KRW24.898 trillion; service revenue, KRW21.7275 trillion; and operating profit came in at KRW1.6718 trillion. [Foreign Language] On balanced growth from Digico and Telco and revamping of the group's portfolio around growth businesses, revenue was up 4.1% on year and operating profit posted 41.2% year-over-year growth. Separate basis revenue was up 2.8% on year, reporting KRW18.3874 trillion, with operating profit up 21.6% year-over-year, recording KRW1.0682 trillion. [Foreign Language] In particular, we saw salient growth in service revenue with separate basis service revenue up KRW417.8 billion, driving operating profit to break through the KRW1 trillion mark. We also achieved 2022 OP target ahead of plan in 2021. [Foreign Language] This actually is an outcome of steady top-line growth as a telco as well as digital – Digico transformation that drove our business expansion in B2B and platform businesses. In B2B business, a total of KRW3 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% on year, respectively. [Foreign Language] 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 1 GiGA product, 5G penetration was up 20 percentage points year-over-year to 45%, while GiGA Internet subscribers accounted for 66% of the total base. [Foreign Language] In 2021, we placed momentum behind revamping the group with a strong focus on growth. KT StudioGenie became the focal point of…

[Foreign Language] 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.

[Foreign Language] [Operator Instructions] The first question will be presented by Kim Hoi Jae from Daishin Securities. Please go ahead with your questions.

[Foreign Language] Good afternoon. I’m Kim Hoi Jae from Daishin Securities. My first question relates to your dividend decision. If the DPS is around KRW1,910, 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?

[Foreign Language] Well, thank you, Mr. Kim, for your question. Your question related to our dividend payout of 45% of net profit on a separate basis. And you’ve asked whether there were any one-off items that were used to adjust this figure. [Foreign Language] So 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. [Foreign Language] So 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. And also as part of our subsidiaries, there were invested equities where there were impairments. And those impairments were also reflected and added. And also 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. [Foreign Language] 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. But 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. So it had an impact on a pretax basis – pretax profit basis of bringing down that level by KRW110 billion. [Foreign Language] 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 68%. And 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

[Foreign Language] The following question will be presented by Kim Joonsop from KB Securities. Please go ahead with your questions.

[Foreign Language] Yes, I am Kim Joonsop from KB Securities. I would like to post two questions. First question has to do with your Digico B2B business. Can you explain who your key customers are for your enterprise DX business and AI new business? And how – what your plans are to win the market in each of these business segments? Second question. For this year, what do you think are some of the opportunities you can explore in cloud and IDC? And what do you think is the growth potential of this business?

[Foreign Language] Thank you for your question. You asked who our key customers are for enterprise DX and AI and new business. And 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. And unlike our peers, we basically have the channel based off of the key metropolitan headquarters, and we have various experience in running different projects in both the enterprise and in public. [Foreign Language] And so that really works as an asset for the company. And 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 product 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. [Foreign Language] So in tandem with the spread of the trend for digital transformation on top of the existing network and telecommunication services, we are seeing 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. [Foreign Language] So, as we were able to expand the voice call DX services for the enterprises, the – 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 year 2021. And this was a testament to the growth potential of our DX services. [Foreign Language] We will continue to explore new revenue streams very aggressively by utilizing our existing and incumbent telecom services and putting on top of that…

[Foreign Language] The following question will be presented by Ahn Jae-min from NH Investment & Securities. Please go ahead with your questions.

[Foreign Language] Hello, this is Ahn Jae-min from NH Investment & Securities. I'd like to first thank you for good performance. In 2021, you are 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? And 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 your subsidiaries. I understand that you're 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 back to shareholders?

[Foreign Language] Well, thank you, Mr. Ahn, 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 line. As I mentioned at the beginning, on a consolidated basis, our guidance for the revenue is KRW26 trillion. And on a separate basis, service revenue objective is to actually hit over KRW16 trillion level. Now please 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 will 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. And so through those efforts, we will make sure we can defend and also secure bottom line as much as possible. [Foreign Language] 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. [Foreign Language] You also asked about the subsidiary IPOs and once they are listed and once we have some cash ins where will we be using those proceeds. The priority area will be to first use those proceeds in business areas where there is 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.

[Foreign Language] Next question, please.

[Foreign Language] The following question will be presented by Neale Anderson from HSBC. Please go ahead with your question.

Thank you. Good afternoon. I had two questions, please. The first relates to the wireless market, and particularly competition at the low cost or value conscious end of the market. And particularly, I wonder how KT might compete against 5G plans from MVNOs. The second question also relates to 5G. And 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. [Foreign Language]

[Foreign Language] Thank you for your question. I will respond to the 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 trend that we are seeing in the market is we see growth in consumer needs or increasing consumer needs who want reasonable and value-based pricing tariffs in the MVNO market. And we see telcos actually acquiring their subscribers through their MVNO companies. And that had triggered a quite solid growth of the MVNO segment. And we think this trend will continue for the time being. [Foreign Language] 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 that it's basically underpinned by these two pillars, MVNO and MNO, which we think that could actually help and support to maximize KT's value. For the MVNO subscribers through the MVNO – excuse me, 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. [Foreign Language] In terms of our pricing policy, rather than responding to the low-end priced 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.…

[Foreign Language] We'll move on to next question.

[Foreign Language] The following question will be presented by Park Seyon from Morgan Stanley. Please go ahead with your question.

[Foreign Language] I would like to ask two questions. First question relates to CapEx, how shall we actually – what should we expect from CapEx spend going forward? If you look at 5G, the rollout for 3.5 gigahertz, we're now in the latter half of that entire phase. But looking at the CapEx as against the total service revenue, all of the 3 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. But 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?

[Foreign Language] Thank you for your question. Your first question relates to our CapEx outlook and whether we will be able to 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. [Foreign Language] Back in 2012, when there was nationwide investment for the LTE network, CapEx shoot 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. [Foreign Language] Now KT will need to continue to 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. So we will make sure we manage our CapEx, as you've mentioned, with the profitability or the margin aspect or profit aspects in mind. [Foreign Language] Your second question related to our dividend payout outlook for 2022. As mentioned, we will keep true to the 50% payout of a standalone basis adjusted net profit. [Foreign Language] So we shared with you our top line revenue guidance, but not the operating profit guidance. But 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. So 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. [Foreign Language]

[Foreign Language] Currently, there are no participants with questions.

[Foreign Language] 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.