[Foreign Language] [Interpreted] Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of the 2023 First 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.

[Foreign Language] [Interpreted] Good afternoon. I am Seung-Hoon Chi, IRO of KT. We will now begin the earnings presentation of KT for 2023 Q1. This earnings call is being webcast live on the company website. Slides are also available for you to follow while listening to the call. Please note that today's presentation includes estimates of financial and operating performance based on K-IFRS that have not yet been reviewed by an outside auditor. As such, other than confirmed historical data, we cannot guarantee the accuracy and completeness of financial and business-related information and these figures may change in the future. Now Mr. Young-Jin Kim, CFO of KT will give some welcoming remarks and present the earnings of Q1 2023.

[Foreign Language] [Interpreted] Good afternoon. I am Young-Jin Kim, CFO of KT. I will go over the highlights of KT in 2023 Q1. KT has continued robust growth in the first quarter of 2023 by making efforts to provide stable customer-oriented services. Consolidated revenue in Q1 grew by 2.6% Y-o-Y to reach KRW6,443.7 billion. Standalone revenue increased by 0.2% Y-o-Y to KRW4, 619 billion despite the spin-off of KT Cloud. Consolidated operating income stood at KRW486.1 billion and standalone operating income recorded KRW388.1 billion. These numbers were not far from market expectations despite the base effect coming from a one-off profit generated by the sale of real estate, namely the Mapo Solution Center last year and cost increases due to inflation. B2B business is continuing growth backed by corporate demand for digital transformation or DX. DX platform and smart space businesses are starting to generate revenue in earnest, while the expansion of customer base of corporate Internet and data and the strong growth of the MVNO market led to a well-balanced growth in all areas of Digico and Telco. In the AI business, we are developing MIDEUM, our hyperscale AI, while further advancing the existing AICC and smart mobility services. In particular, we are pursuing mobility DX services in four segments of smart mobility, which are connectivity, infotainment, CITS and digital logistics. As for AICC, the business is starting to take off, evidenced by KT winning Shinhan Financial Group's Integrated AICC project. In B2C, premium subscribers drove robust growth. Roaming service revenue is on the rise as global travel picks up post COVID-19. Wireless revenue also grew by 1.9% Y-o-Y as 5G penetration rose to 65%. Both broadband and IPTV observed Y-o-Y revenue growth by 2.8% each supported by rise in subscribers. Group subsidiaries are growing as well mainly driven…

[Foreign Language] [Interpreted] For more details, please refer to the earnings presentation, which has previously been circulated. We will now begin the Q&A session. In order to allow as many Q&A opportunities as possible, we would appreciate only two questions from each participant. Thank you.

[Foreign Language] [Interpreted] Now Q&A session will begin. [Operator Instructions] The first question will be provided by Jaemin Ahn from NH Investment & Securities. Please go ahead with your question.

[Foreign Language] [Interpreted] Good afternoon. I am Ahn Jaemin from NH Securities and thank you for the opportunity today. The Q1 earnings were slightly lower than market expectations. And so I'm wondering whether the full year operating income will be able to still grow Y-o-Y? And also regarding to the performance in earnings, what are your plans for the dividends for this year? Thank you.

[Foreign Language] [Interpreted] Thank you, Mr. Ahn for the question. So as I briefly mentioned during the presentation, in Q1, the Telco business and the Digico B2B business continued robust growth. So in consolidated terms, the service revenue grew by around 2.7%. However, in terms of profitability, there were some base effect issues coming from Q1 of last year. We already mentioned the sale of Mapo Solution Center last year. That was around KRW74.6 billion. And there was some accounting treatment for the receivables of handset sales. That's another KRW50 billion. So due to these one-offs, the operating income slightly decreased. And you also asked for the annual outlook. So from Q2 onwards, both KT in terms of consolidated and on standalone basis, we'll be working hard to balance the growth and profitability. And we will be making utmost effort to improve the profitability situation so that we can grow in 2023 for the full year compared to the previous year. So on a standalone basis, if I can go into more detail, we will be focusing in largely three areas. For the first one is the Mobile Internet and TV business. This has been a solid cash cow for the company and we plan to continue quality growth in this area. Not only we will be focusing on expanding the premium customer base, we will be segmenting our customers to have better targeted services. We will be developing value-adding services such as the coloring, the dual numbers, catch call and OTT, so that we have more value-added services that we can bundle together to satisfy our customers. And we are hoping that this will continue to generate stable revenue growth for the company. And then second is the Digico B2B business. We have already won major projects like the…

[Foreign Language] [Interpreted] Next question, please.

[Foreign Language] [Interpreted] The following question will be presented by Soojin Kim from Mirae Asset Securities. Please go ahead with your question.

[Foreign Language] [Interpreted] Good afternoon. My name is Soojin Kim from Mirae Asset Securities. Today, I read in the news that KT Cloud attracted KRW600 billion investment from IMM based on a KRW4 trillion valuation. So I'm wondering how the company plans to spend the KRW600 billion investment. And second, I would also like to know more about the growth strategy of KT Cloud.

[Foreign Language] [Interpreted] Ms. Kim, thank you for the question. As you read in the press release, KT Cloud received KRW600 billion in investment from IMM Credit and Solution in just one year of establishment. So before the spin-off of KT Cloud, the book value of the assets in KT Cloud was around KRW800 billion. As you know, because the company was undervalued, the PBR was only around 0.5 million. So while the book value was KRW800 billion, the valuation was only around KRW400 billion. And so in pre-money terms, the valuation has gone up by around 10 times fold to around KRW4 trillion. You were wondering about how the company will be spending this investment. So it will be allocated to strengthen and increase the competitive edge it has in the market and also to secure future growth drivers. As the number one, the dominant market player in the IDC industry, the company will work to diversify its portfolio, strengthen its global business and increase its technological capacity to boost the operational efficiency. We are also planning to quickly increase the capacity of IDCs. So not only we will be building new data centers, but we are also looking into master lease schemes and acquiring existing data centers as well. So within the next five years, we plan to have a capacity of around 100 megawatts. We are also looking to venture into global markets geographically, mainly in Southeast Asia. We are also looking to strengthen our AI remote technology, so that we can boost the operational efficiency of IDCs. In the cloud business, we are making effort to preoccupy and become dominant player in the AI cloud market. So we are developing the full stack of AI capabilities, including designing the chips and also working to establish an ecosystem of the AI services. As for -- we are also quite strong in the public sector at the moment. So based on this competitiveness, we will be venturing into finance and other corporate segments. So I believe that the investment -- the recent investment will solidify the growth drivers of KT Cloud. We plan to have a revenue of KRW2 trillion by 2026 and maintain our strong leadership as the number one company in the DX market.

[Foreign Language] [Interpreted] Next question, please.

[Foreign Language] [Interpreted] The following question will be presented by Sean Lee from Citigroup. Please go ahead with your question.

[Foreign Language] [Interpreted] Good afternoon. My name Sean Lee from Citi. And thank you for the opportunity today. I have largely two questions. First question is related to the corporate governance improvement. So during the presentation today, you already updated us on how this is unfolding, but I would like to know more specifically what parts of the corporate governance of the past is being changed, how it is being changed. So if you can give us the comparison of the past and the current or more improved version, that will be very helpful. And I would also like to know the time line as to how this is going to unfold in the future. Second is regarding the absence of the CEO. So apparently, the first half of this year, the CEO vacancy will continue. So how will this absence impact the fundamentals of the company. Usually, in a company, the CEO is the final decision-maker. And currently, this final decision-maker is absent at the moment. And I would think that this would naturally cause some disruptions in the business management of the company. So what efforts are being made to minimize any business disruptions? And how will this unfold in the future?

[Foreign Language] [Interpreted] Thank you for the question, Mr. Lee. So KT is working to establish a corporate governance structure that is even higher than the global standard. And as a first step, on April 17th, we launched the new governance establishment task force. So we received recommendations from shareholders that have 1% or higher in equity ownership and seven shareholders made recommendations for a total of nine potential candidates. So the KT Board of Directors reviewed the potential candidates based on expertise and the diversity of the corporate governance structure and came up with five external or outside directors. Your also question asked us to compare the past and present of the corporate governance structure and how this will unfold in the future. So the most urgent task was to develop an improved appointment process for outside directors. So in the past, the committee to recommend outside directors candidates was formed by one outside director and all of the inside directors, excuse me, one inside director and all of the outside directors, but now all of the outside directors. Only the outside directors formed this committee. And in the past, when we were looking at the candidates, potential candidates for the outside directors, we had a pool of potential candidates, and we also worked with a search firm to attract the right candidates. However, after the change, we also received recommendations from shareholders. So if a shareholder has one or more share of the company and has held that share for six months or longer, they can make recommendations. And as to who makes the major -- who does the major reviews for the candidates. So in the past, it was mostly done by the committee. But now while the committee makes the final decision, we have the advisory…

[Foreign Language] [Interpreted] If there are no further questions, we will conclude the Q&A session. Thank you for your questions and interest in KT. Thank you once again for attending today's earnings call despite your busy schedule. We will now conclude the earnings call of KT for the first quarter of 2023. Thank you.