Good morning, and good evening. Thank you all for joining this conference call. And now we will begin the conference of the 2022 second 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. [Operator Instructions] Now we would like to turn the conference over to Mr. Seung-Hoon Chi, KT IRO.

Good afternoon. I am Seung-Hoon Chi, KT's IRO. Let us begin KT's Second Quarter 2022 Earnings Presentation. This earnings release call is being webcast live on our website, and you can follow the slides as you listen in on the call. 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 historical performances, please be reminded that these figures may be subject to changes. With that, I will hand it over to our CFO, Young Jin Kim, to present on Q2 '22 earnings.

Good afternoon. I am KT's CFO, Young Jin Kim. Let me begin with KT's key highlights for Q2 2022. In 2022, the second quarter, we firmly established the group's portfolio around growth businesses with a successful transition to a digital platform company and the ramping up of our business portfolio around finance, media and content and real estate businesses. 2022 marks the third year since the pledge as a DIGICO, achieving record high performance of first half consolidated operating revenue of KRW12,589.9 billion as we successfully broadened the playing field. In the B2B business, we are leading the market, catering to corporate demand for DX or digital transformation, leveraging our core DX technologies and the biggest fixed and wireless infrastructure that we have in Korea. By offering differentiated services for each customer segment and by bringing AI, big data and cloud capabilities to our existing businesses to drive digital transformation, we plan to further power growth of these services. AICC is where we see an adoption of AI technology by Korea's top-notch customer service centers and a good example of our DX digital transformation coming together in traditional businesses. First half revenue, therefore, has surpassed last year's annual figure, spearheading digital conversion for call centers in Korea. For the B2B business, underpinned by our strength in public, defense and financial sector, we delivered customized services for customers across different sectors, growing the number of orders booked, up by 33% year-over-year for the first half and 45% on a cumulative basis as of July end, solidifying our mid- to long-term growth foundation for B2B business. B2C business is also sustaining its growth in terms of quality and volume by elevating customer experience and values. 5G penetration reached 54% as Internet and IPTV have all maintained growth rate on par with that…

For more detailed information, please refer to the material that we have circulated previously. And we will now begin the Q&A session. [Operator Instructions]

[Operator Instructions] The first question will be provided by Joonsop Kim from KB Securities.

I would like to ask you 2 questions. First has to do with the mid-priced price scheme for the 5G services. And the second question relates to your B2B business. Regarding that 5G mid-range pricing scheme, your competitor has introduced that pricing scheme ahead of everyone else. I would like to get your assessment of what you expect or how you expect the competitive landscape to develop going forward? And if KT also has a plan to adopt this pricing scheme? What impact are you expecting from that release? Second question, if you look at the second quarter's B2B business result, it was quite positive. What is your assessment of the growth potential from the B2B business going forward?

Thank you, Mr. Kim, for your question. I will first respond to your 5G pricing scheme first. We, at KT, were also making preparations to adopt a mid-price range pricing scheme under the view or under the objective to provide more choice, more expanded choice to the customers so that they can select the rate plan that best befit them. So just to remind you that we have a 5G mid-priced tariff scheme upcoming in the near future. With regards to the possible impact that this will have -- because we are still a prelaunching phase, it will be -- I'm quite cautious to provide you with any specific outlook for this. Now having said that, there will be some of the 5G subscribers, who will downgrade to the lower pricing scheme, but we also have quite a bit of LTE subscribers, and I believe that by providing more choice to our subscribers in terms of the rate plans that they can select, this can actually accelerate the speed of migrating the LTE subscribers to move over to this pricing scheme. So once again, I will be able to provide you with a more clearer picture on the outlook in terms of the impact this will have after we release this pricing scheme. Moving on to the second question and what the growth drivers are for B2B and what our projections are. Let me elaborate on that point. Now as I mentioned during my opening presentation, our B2B business is a very critical growth driver for the company. If you look at the first half numbers on a year-over-year basis, we've seen increase in the number of orders booked by 33%. And as of end of July, that year-over-year growth was about 45%. So we are seeing a quite robust…

The following question will be presented by Hoi Jae Kim from Daishin Securities.

This is Kim Hoi Jae from Daishin Securities. My first question relates to your content business. With the recent hit of the Extraordinary Attorney Woo on TV, there has been growing interest on your company's content investment. And we are seeing a lot of changes on the content side. You've decided to merge Tving with Seezn, and we are curious as to what your future collaboration would look like with CJ ENM. And also in that light, I would like to understand whether you have other plans to merge Media Genie plus SkyTV going forward? Second question relating to your wireless business. We are seeing very good measures for 5G penetration as well as ARPU. But because the penetration is so high, there is concern that maybe the ARPU up trends may start to slow. So from a long-term perspective, what are your strategies in place to make -- for you to make sure that you can actually sustain that elevated level of ARPU and wireless revenue going forward?

I will first respond to the first question about the content business. Since we've merged Tving with Seezn, what are our future collaboration plans with ENM, I will respond to that first. Yes, let me first provide you with the background as to why we entered into partnership with CJ ENM. As one of the very key pillars for us to transition into a DIGICO for a media content business is a very important pillar that's going to play a key role. And we've been continuously reviewing possibilities of entering into a mega alliance for us to very quickly gain competitive edge and also scale up our business through outside partnerships. Hence, we've decided to enter into an all-around partnership with CJ ENM, which is a front runner in the media and content business equipped with content production capabilities as well as distribution competitiveness. And also CJ ENM had also decided to make KRW100 billion of investment into Studio Genie. KT and CJ ENM have agreed to these investments as well as scheduling and purchasing of the content and key executives of the 2 companies through a council of business collaboration and cooperation have really ramped up cooperation and collaboration across the board. In terms of the content sourcing and scheduling of the content, there was an agreement made so that KT Genie's original content and certain titles that it produces will be scheduled through the platforms that CJ ENM has in terms of its channel and platform, including TV and channel and Tving. Also, in terms of coproducing AAA titles, KT Studiogenie and CJ ENM will engage in joint and coproduction in order to produce a global AAA content. In terms of the merger and integration between Seezn and Tving, everything is on a smooth sale with an objective…

The following question will be presented by Seyon Park from Morgan Stanley.

I would like to submit two questions. First has to do with the spun-off of your cloud business, ktcloud. If you look at the impact that it had on the operating profit on a separate basis, we'd like to gain some understanding as to the extent of what the impact was on operating profit line? And second question is in connection with this. If you look at KT's dividend payout policy, basically, it is 50% of adjusted net profit on a separate basis. And with ktcloud being carved out, there, of course, is going to be impact on the profit. So at the end of the year, when you actually distribute the dividend, would you also consider for this corporate income tax element as well when you determine the amount of dividend to be paid out at the end of the year.

Thank you, Mr. Park, for your question. Yes, let me tackle your first question. You asked a question on the separate basis, operating profit impact with the carve out or spinoff of ktcloud. Let me first talk about the top line revenue. With ktcloud being spun off, we expect there to be about KRW100 billion of impact on the top line revenue. So just assuming that the ktcloud is still included within the KT Group under that assumption, if you look at, so that's pre spin-off, cloud and IDC growth of Y-o-Y 11.4%, with on a separate basis, service revenues 3.8%. So as just mentioned, basically, the top line growth trend is continuing. But with the carve-out of cloud and IDC business, this will have an impact in terms of lowering the top line revenue, but we also need to consider for the lower level of operating expense, which includes the labor cost, depreciation and power expenses. So if you think of both of these elements, there is -- we expect there's not going to be that big of an impact on the operating profit, the size much less than the reduction in the top line revenue. So typically, in the past, our cloud and IDC business, their operating profit margin typically was higher compared to the company-wide average. But recently, there has been a steep surge in demand, which entailed in -- a rise in initial investment as well as other investments, for instance, hiring of additional headcount, which weighed down on the current OPM margin. But from a long-term perspective, we believe that this margin will start to also improve as we more preemptively respond to the market and as we expand our capacity. Now moving on to your second question. With the establishment of ktcloud as a separate special entity in terms of the corporate income tax that we had paid and whether that's going to be used as an item for adjustment for our adjusted net profit. So when it comes to expense items, for non-cash expense items and P&L, this was, yes, it was an item that we considered in adjusting the net profit. In the spin-off of our cloud business, also this is an accounting-based treatment. There was no actual cash out regarding the corporate income tax. So yes, because it's a non-cash expense item, it will be considered in the adjustment of the net profit for distribution purposes.

Well, with no further questions, we would like to now close the Q&A session for the day. Thank you very much for your interest and for your questions, and thank you for joining us. If you don't have any more questions, we would like to end the Q&A session. Thank you very much for your interest and your questions and also for joining us despite your very busy schedules. This brings us to the end of Second Quarter 2022 Earnings Conference Call. Thank you.