Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of the 2023 Fourth Quarter Earnings Results by KT. We will like to have welcoming remarks from Mr. Seung-Hoon Chi, KT, IRO; and then Mr. Young-Jin Kim, CFO, will represent 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 morning, everyone. I would just like to clarify that there has been some organizational changes in KT. The IRO of KT is now Mr. Young-Jin Kim; and the CFO of KT is now Mr. Min Jang. We will now begin the earnings presentation for the full year 2023. 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 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 may change in the future. Now, Min Jang, CFO of KT will present the 2023 annual earnings.

Good morning. I’m Min Jang, CFO of KT. Today I will go over the highlights of the annual performance of KT in 2023. KT recorded KRW26,387 billion in consolidated revenue and KRW18, 371.4 billion in standalone revenue. Both consolidated and standalone revenue generated Y-o-Y growth, thanks to balanced growth of the B2C and B2B businesses and the group -- and the growth of the group's key portfolio including finance, media content, DX, and real estate. On a standalone basis, operating income increased by 1.5% Y-o-Y to KRW1, 185.4 billion, which was mainly driven by revenue growth and efforts to boost profitability such as improving the business implementation system. Consolidated operating income decreased by 2.4% Y-o-Y KRW1,649.8 billion due to the base effect as there was a one-time profit that was reflected in 2022. Excluding the one-off profit recognized the previous year in 2022, consolidated operating income rose by 2.1%. evidencing continued profit growth anchored in strong business fundamentals. Shareholder return in 2023 increased compared to the previous year, based on the midterm shareholder return policy announced on October 17 and enhanced profitability. 50% of the standalone adjusted net income will be used as resources for shareholder return. In result, cash dividend will be 1,961 per share. We have also confirmed a KRW27.1 billion buyback program which will be subsequently cancelled. The total shareholder return per share in 2023 will be 2,071, which is a 5.6% increase from 1,961 in 2022. Cash dividends will be paid after receiving approval from the annual general shareholders meeting in March. KT will continue to work to enhance shareholder value by increasing the size of shareholder return based on profitability improvement. I will now move on to the business strategy and outlook for 2024. Amid global uncertainty surrounding the business environment at both home and…

For more details, please refer to the earnings presentation, which has been previously 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 participants. Thank you.

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

Good morning. I am Hoi Jae Kim from Daishin Securities, and I have two questions. First one is regarding shareholder return policy. The DPS is KRW1,961, and you also mentioned share buyback of KRW27.1 billion, I would like to know how the company came up with these numbers. And also, I would like to know how much of the resources for shareholder return of KT is being obtained by its subsidiaries? My second question is regarding 5G penetration and the B2B business. As 5G penetration reaches and surpasses 70%, I think a slower growth in the wireless business is expected of all of the telco companies, not just KT. And against this backdrop, the B2B business will become of interest of all of the telco companies. However, the growth in B2B business also seems to be slowing down. So what are your expectations and strategy for the B2B business?

Thank you for the questions, and I will answer the shareholder return policy question first. KT has midterm shareholder return policy, which is a cash dividend of KRW1,961 per share, and the remaining resources will be used to buy back shares. While reflecting the non-operating income items such as valuation of financial assets, the adjusted net income on a standalone basis was around KRW1 trillion and KRW510 billion will be used for the return to shareholders. So cash dividend will be KRW1,961 per share. That's a total amount of KRW483 billion and the remaining KRW27.1 billion will be used to buy back and cancel shares. And in the resources for shareholder return, it's around KRW110 billion comes from the subsidiaries. So we received dividends from subsidiaries in 2023, that was around KRW64.7 billion, and we also received some dividends from the financial products and equity investments that we have, that's another KRW52.2 billion. In total, it's around KRW110 billion. Yes. KRW27.1 billion of share buyback and cancellation that we have mentioned is part of the shareholder return policy. Last year, we had a KRW300 billion share buyback and 100 billion cancellation of shares that was on top of the regular shareholder return policy. And for this year, we currently do not have plans for the non-ordinary shareholder share buyback and cancellation of our shares at this moment. KT will continuously make utmost effort to boost shareholder value. And if we have any special plans that are -- that become more concrete in the future, we will be communicating that with the market. And regarding the B2B business. And I think your second question largely touches two points. The slowing growth of B2B and also the 5G penetration rate. So I will try to answer both of them. The B2B business, I think KT has key competitiveness in nationwide infrastructure. And our key strength is the fact that we can offer services all the way up to the specific offices of the customers. And so based on this large nationwide coverage, I think we have competitive edge against our competitors. We will be also working to maintain and strengthen the merits that we have in the telco business. We will be building platforms for the telco services and also combining our services with cloud to innovate and offer a stronger value to our customers. We will also be working to migrate on-premise services to the service type so that we can offer a diverse value to the customers. And I also mentioned five key business areas in my keynote. It includes AICC, mobility, IoT and energy, and we will be working to strengthen IT competitiveness and innovate services in these areas to secure future growth engines. Thank you.

The following question will be presented by Joonsop Kim from KB Securities. Please go ahead with your question.

Good morning. My name is Joonsop Kim from KB Securities. I have two questions. First one is regarding to the key growth areas. I look at the annual CAGR growth rate that you are expecting and it was quite impressive. So including the AICC business, if you can go over the key growth businesses that you have mentioned in the keynote talk about the current performance and also the strategic direction and outlook for the future, it will be very helpful. Second question is regarding the online plans that you have launched last year. I would like to know how the market is responding, how that would change the distribution strategy of KT and how that will impact the telco market in the larger sense and that will help me better understand the wireless revenue in the future. Thank you.

Thank you for the questions, and I will first go over the five key growth areas. So AICC, we plan to continue our leadership and maintain our position as the first mover. For on-premise, we plan to improve profitability. For subscription model, we have launched ASIM [ph], the cloud service, and so we will be making efforts to secure meaningful references in this area. And then regarding IoT, we are the #1 player in terms of net growth for two consecutive years in the wireless payment market. So, we will be strengthening our position here. And in the remote control area, we will be working to generate the volume growth so that we can secure more customers and more volume. And then in the energy business, it is still quite small market, but the growth is very visible. So in the DR, demand response and energy brokerage businesses, I think we will be working to secure meaningful MS. In the mobility area, we have leadership in the connected car business. So, we will be solidifying our position there and we are also exploring venturing into overseas markets. And lastly, in the smart space business, we will be working to develop relationships and businesses with government and local governments regarding their smart city infrastructure layout, industrial complexes and more control area. I will go over our online direct plan. In January, we launched [indiscernible], which is a plan that does not require a contract and it's at the same time, enables the customer to enjoy larger amounts of data with less financial burden. So, it was just launched last month, and it is a little bit early to discuss about how the market is responding. We are monitoring the market and the customer response very closely. And like I mentioned, one key merit of this plan is to offer 5G at reasonable price. And we believe that this will help us to expand the subscriber base for 5G. Thank you.

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

Good morning. I am Jae-min Ahn from NH Securities. Thank you for the opportunity today. I have two questions. First one is regarding the outlook of the Wireless business. I think all of the three telco companies have given quite conservative guidance for 2024. And we also have a similar view. So, it will be great if you can elaborate on the outlook and the strategy that you have for the company in 2024, especially in the Wireless business. Second question is regarding some media reports. I read that KT is going to restructure health care, M-mobile and also telecom as well. So, I was wondering how this process is progressing at the moment.

Yes. So I will answer your second question first. So I understand there are some talks in the market regarding how we are going to approach telecom and M-mobile. But at this point, we have not made any specific and concrete decisions yet. And then regarding your first question, in 2023, we saw the 5G subscription increase, and also we saw the ARPU increase as well. So Wireless business was quite robust for KT in 2023. 5G penetration has reached 73%. So inevitably, although growth can slow down, but we will continue our efforts to offer diverse products to cater to the needs of the customers. And we are also working to offer customized projects to customers as well. We will make utmost effort to implement value implementation in the different pricing schemes, distribution channels and products as well so that we can continue to satisfy our customers. To go into a little bit more detail. In terms of pricing and plans, we are planning to offer a more diverse array of plans to customers by launching mid, low-end plans and also online direct plans. In distribution, we will be working to expand the contactless distribution channel. And in product, we will be having more meticulous customer segmentation to ensure that we can offer customized products. And based on these efforts, we are hoping to reach 80% in 5G penetration this year. We will continue to develop strategies and products to better satisfy our customers so that we can continue growth in the Wireless business. Thank you.

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 schedules. We will conclude the earnings call of KT for the full year 2023. Thank you.