[Foreign Language] Good morning. I am Jeong Hwan Choi the IRO of SK Telecom. Today's conference call will consist of the presentation on the earnings results for Fiscal Year 2019 and the future management plans and strategic direction by Poong-Young Yoon, CFO and Head of Corporate Center I; and Ha Hyoung-il, Head of Corporate Center II, followed by a Q&A session. Late last year the company adopted a dual operating system in order to optimize the operation of two business areas that were different from one another in nature. The MNO business and the new business arena consisting of Media, Security, Commerce, and et cetera. MNO is headed by Poong-Young Yoon Head of Corporate Center 1 and new businesses are headed by Ha Hyoung-il, Head of Corporate Center II and as such, they will be presenting the achievements and strategic plans of their respective divisions for today's conference call. Today's conference call will provide consecutive interpretation and we also have here with us executives from relevant business divisions to help deepen your understanding. Before we begin, we want to remind you that all forward-looking statements are subject to change depending on the macroeconomic and market situations. Let me now present our CFO.

[Foreign Language] Good morning. This is Poong-Young Yoon, CFO of SK Telecom. Let me first discuss the annual consolidated earnings highlights for 2019. Consolidated revenue recorded a record high of KRW17,743.7 billion, a 5.2% increase year-on-year. Larger 5G-related gains minimized the MNO revenue decline while new businesses such as Media and Security achieved significant growth contributing to the consolidated revenue increase. New business revenue accounted for 36% this year, which was a five percentage point year-on-year growth, attesting to SK Telecom's transformation into a new ICT company. Operating income recorded KRW1,110 billion, down 7.6% year-on-year. This was mainly due to a KRW357.4 billion decrease in MNO operating income. But due to the growth of our new ICT portfolio, the decline recorded KRW91.8 billion on a consolidated basis. With new businesses now generating stable operating income, we believe that our ICT portfolio has successfully entered into a stable phase. Net income decreased by 72.5% year-on-year due to the effect of the equity method income on SK Hynix. Let me now move on to major business achievements and strategic plans for each business division. Annual non-consolidated MNO revenue of SK Telecom recorded KRW11,416.2 billion, down 2.5% year-on-year. Membership points deducted from revenue and the continued tariff cut effect were among the negative factors that led to a revenue decline. But MNO revenue has picked back up from Q2 when 5G service started in full scale and has been accelerating its growth momentum since. MNO operating income recorded KRW950.1 billion, down 27.3% year-on-year due to 5G-related marketing costs and depreciation and amortization costs. In 2019, MNO launched the world's first commercial 5G service, which was followed by various 5G service offerings, including 5G-based media and game services, as well as building of 5G clusters with a premium network and innovative services. As of…

[Foreign Language] Good morning. I am Ha Hyoung-il, Head of Corporate Center II. Let me discuss the achievements and plans for the new business division. Up first Media. In 2019, SK Broadband's IPTV business focused on strengthening its service competitiveness by providing personalized customer experiences through database viewing pattern analysis and as a result it recorded an annual net addition of 464,000 subscribers opening a new era with 5.2 million subscribers in total. As for the merger with t-broad, we obtained government approval in January, and are currently undergoing the necessary follow-up processes, including AGMs for both companies to prepare for the merged entity to launch on April 30 this year. We will successfully conclude PMI within the first half of the year, and do our best to transform SK Broadband into a comprehensive media company with eight million pay-tv subscribers. Wavve the result of hyper-collaboration with the three major broadcasters is seeing rapid growth in service usage rates. As of the end of 2019, the UV recorded 2.7 million the highest in domestic market as well as a near 200% increase compared to April of 2019 when SKT and POOQ first began joint marketing. Wavve was valued at KRW1.2 trillion post-money in November last year and secured KRW200 billion in new funds. The funds will be invested in creating original content and sourcing hit content from home and abroad to strengthen content competitiveness thereby accelerating Wavve subscriber growth. Moving on to Security business. In 2019, ADT Caps achieved the highest subscriber net adds in the industry in the CMS market based on the distribution network synergy created with SK ICT family companies and launched convergent security products that encompass information security with SK infosec thereby refreshing the industry. In 2020, ADT Caps and SK infosec will continue to strengthen leadership in the existing CMS market as well as enhance competitiveness in new business areas, such as, unmanned parking, home security, senior care and convergence security. Now moving on to Commerce business. As I mentioned before 2019 was a monumental year for us as we turned to profit amidst the battlefield of e-commerce. Moving onto Commerce business. As I mentioned before, this year 11ST will differentiate its product competitiveness through external partnerships and become an indisputable advanced commercial commerce portal that brings entertainment to shopping. And through these efforts, we will flexibly operate both the growth target and profitability target and continue to grow in 2020. Lastly, let me discuss ONE Store and T1. In 2019, ONE Store was valued at KRW 500 billion post-money and attracted KRW 100 billion in new funds. T1 was valued at $91 million post-money and attracted $41 million and was reborn as the global joint venture SK Telecom CS T1. Under the single theme of games, the two entities will achieve meaningful growth by utilizing their competitiveness. We ask for your continued interest in our journey. And now, our CFO will discuss the dividend for 2019 and guidance for 2020. Thank you.

[Foreign Language] Dividend for 2019 has been decided by the Board at KRW 10,000, including the paid-out KRW 1000 interim dividend. The amount will be confirmed after the approval of the March AGM. While the decision was made to maintain the dividend as the amount of the previous year to meet the trust of our shareholders, we do believe that we are at a time that calls for a new dividend policy, considering where SK Telecom stands today and where it is headed. Going forward, we plan to hold an in-depth discussion at the meeting of the Board of Directors from a viewpoint of maximizing shareholder value. Once details are made concrete, we will communicate with the market. Annual consolidated revenue is expected to exceed KRW 19 trillion for the first time ever to reach KRW 19.2 trillion, based on MNO achieving growth yet again in 5G -- with 5G and accelerated growth momentum of Media, Security and Commerce businesses. While much like last year, it is difficult to provide you an accurate CapEx guidance due to flexible and efficient CapEx rolling; our goal is for it to be less than that of last year. By active CapEx cutting efforts in areas outside of 5G, we will do our best to achieve both 5G leadership and improved earnings. For the past three years, SK Telecom has been creating a new feature in not only MNO, but also in new businesses, such as Media, Security and Commerce. We now stand at a new starting point. With MNO growing once again and new businesses growing more than ever, we will make this year the starting point of SK Telecom being rightly valued for the enterprise value that we have been building and we'll continue to be increasing in the future. We ask for the continued interest and support from our investors and analysts. Thank you.

[Foreign Language] Now, Q&A session will begin. [Operator Instructions] The first question will be provided by Hoi Jae Kim from Daishin Securities. Mr. Kim, please go ahead, sir.

[Foreign Language] So I have two questions. The first question is ever since you began commercial launch of 5G service due to marketing costs and your depreciation and amortization, we've seen a negative impact on the profit. Taking into consideration your outlook in terms of the 5G subscriber growth, as well as CapEx rollout, when will we be able to see MNO profit turnaround? My second question is we know that you went through some reorganizing internally and divided it into a dual operating system of MNO and new ICT portfolio. Does this – is this directly related in any way to your governance restructuring? And can we also get an update on your plans regarding the governance restructuring?

[Foreign Language] Thank you, Mr. Kim for your questions. Let me first talk about the MNO turnaround that you asked. As all of you know, when we adopt a new network, a new generation network, because initial CapEx precedes subscriber acquisition, the initial profitability of the service can be not up to standards. But as we go on with the subscriber base growth profitability is enhanced. We believe that the continued subscriber growth for 5G subscribers, as well as the according data usage growth will gradually bring positive contribution to our profit. We have seen the market stable a lot more beginning from Q4 last year, and we expect the stabilizing trend to continue into this year. So we believe that the negative impact that it has had on our MNO profit will stop. And also with Media and new businesses generating greater revenue, we believe that we are looking forward to the MNO revenue turning around. By utilizing our efficient investment strategies and marketing cost spending, we expect the MNO profit to indeed improve and we are expecting the profit to turn around within the second half of 2020 and we hope for a more accelerated growth in terms of the MNO profit beginning from next year. Let me now address your second question regarding our plans in terms of the governance restructuring. As you said, last – at the end of late last year, we created a dual operating system in terms of our internal business operation. And this was a part of the company-wide strategy to make sure that not just our MNO business, but the value of our new business is rightly valued in the market. And this was a part of our efforts regarding our goal of optimizing the operations. So by that, we mean the target setting operational resources, evaluation and compensation of two very different business areas namely MNO and that of the new businesses encompassing Media, Security and Commerce. So this is not in any way directly related to governance restructuring. So regarding any plans for the governance restructuring, at this particular juncture, no details or schedule has been set yet. So once we have the optimal method, as well as environment for such endeavors, we will be sure to communicate it with the market with a package that can be satisfying for all stakeholders. Thank you.

[Foreign Language] The next question will be presented by Joonsop Kim from KB Securities. Mr. Kim, please go ahead, sir.

[Foreign Language] Thank you for the opportunity. I have two questions. The first question is regarding your media strategy. We are facing the merger of SK Broadband and t-broad at the end of April this year and we're seeing a lot of new global OTTs in the market. So I would like to hear about SK Telecom's media strategy regarding the M&A. And my second question is, it seems to me that a lot of investors are getting more and more interested in your IPO plans for your subsidiary companies. What is your outlook in terms of the planned IPOs? And as shareholders of SK Telecom, what can we look forward to in terms of the IPO plans?

[Foreign Language] This is the Head of Corporate Center II Ha Hyoung-il and I want to thank you for your questions. Let me first address your question regarding the M&A of t-broad. We have obtained government approval regarding the merger and acquisition of t-broad. And after we go through the AGM for SK Broadband, we plan to have the merged entity launched on April 30, 2020. The merged entity for 2020 is expected to have a subscriber base of 8 million -- over 8 million pay-TV subscribers and we expect the revenue to reach over KRW 4 trillion. We look forward to utilizing the platform and content competitiveness as well as successful M&A synergy to pursue with continued growth in the pay-TV subscriber base as well as growing share of high-value subscribers and based on this to creating growing revenue and profit. After merging with t-broad, we expect to enhance our investment efficiency due to larger growing coverage as well as doing away with redundant investments. And also we expect a growing subscriber base utilizing the integration synergy of the distribution channels. And also we expect a larger platform business model opportunities, which may include ad sales, which can utilize the pay-TV subscriber base. So we are expecting a lot of synergies to be generated. And let me now move on to discuss some of the more higher -- overarching media strategy for the company including wavve. Wavve which is the result of hyper-collaboration with the three terrestrial broadcasters, it reached 2.7 million in unique visitors by the end of December last year, which was the highest in domestic markets. And that's actually a threefold growth compared to last April when SK Telecom went into joint marketing for the first time with POOQ. And also Wavve was valued at KRW…

[Foreign Language] The next question will be presented by Jae-min Ahn from NH Securities. Mr. Ahn, please go ahead sir.

[Foreign Language] Thank you for the opportunity. I have two questions. So the first is regarding your 2020 outlook for ARPU. Your ARPU in Q4 looked pretty good. So what is the outlook on ARPU going forward? And also, can you tell us a little bit about your outlook in terms of competition? The second question is, I think we heard you talk briefly about a possibility of changing your dividend policy. So could you give us a little more detail on that?

[Foreign Language] Thank you Mr. Ahn for your questions. First of all, regarding the ARPU, yes, we have been seeing the ARPU pick up again, since the commercial launch of 5G and we are looking at about a mid single digit growth this year. And as for the competition outlook, we are seeing the market stable a lot more since September of last year and we believe that this stabilizing trend will continue into the New Year as well. And as I briefly talked about, in terms of the dividend policy, nothing -- a discussion hasn't yet taken place at the Board of Directors. However, we -- I said what I said in the context that the current DPS was more adequate or it was more befitting to a business operation where MNO was the main business model. Until now, we have successfully made investments and grown or diversified our business models to really be able to call ourselves an evolved company that shifted from MNO being the core business function to a wider ICT -- to having a wider or more diverse ICT portfolio. And as such, I do believe that it is the right time to possibly review a change to our dividend policy. And so, we will be looking at all options in a very multifaceted way, in order to enhance shareholder value. And once it is determined, we will communicate it with the market.

Thank you.

[Foreign Language] The next question will be presented by Chang Yang [ph] from JPMorgan. Mr. Yang, please go ahead sir.

[Foreign Language] I have two questions. The first is we saw your marketing cost rise quite substantially in Q4. Can you tell us why this happened? And does this mean that, our concerns in terms of your marketing costs continuing to increase in order to maintain your net addition levels, is that valid? Or is it to say that if you lowered your marketing cost, we will see your MNO net adds actually reverse? So, in a nutshell, I think I would like to hear about your 2020 marketing cost outlook. And secondly, if you could give us an outlook in terms of the net adds for MNO smartphones as well please?

[Foreign Language] Thank you, Mr. Yang for your questions. And I will hand the mic over to Mr. Han Myung-jin, Head of the MNO Marketing Group to address your questions.

[Foreign Language] First of all, the marketing cost for 2019 on a quarter-on-quarter basis and a cash spending basis, it actually decreased. However, due to the initial market adoption-related competition, it did increase slightly. And as we did mention before, we have been seeing the market be a lot more stable -- begin to become a lot more stable from September of last year and the trend continued into Q4 as well as into the New Year. So we expect this trend to last for the meantime. Going forward, we plan to continue to shift away from price competition and focus on enhancing our efficiency in our marketing efforts, as well as pursue cluster-based marketing endeavors and differentiate our services and products as well as find new 5G business models in our marketing efforts. And through these efforts we do believe that we will be able to maintain the certain level of net additions with our cost-efficient marketing efforts. And as for the very detailed numbers, I hope that you can understand that we cannot disclose the details.

[Foreign Language] The next question will be presented by Neale Anderson from HSBC. Mr. Anderson. Please go ahead, sir.

Thank you and good morning. I have questions related to the IPO candidates you identified earlier. So my first question relates to 11st. Now I understand that given high competition in the market 11st is focused more on breakeven rather than GMV or revenue growth. So you've got relatively slow top line growth and breakeven. Do you think that the market needs to change before that changes for 11st? Or is there something that SKT can do to drive an improvement in the revenue or profitability there? Second question is on ADT Caps and it's really a similar question. So profitability has been quite steady but there hasn't been a step change. So I was wondering if there are more synergies to come in terms of the relationship with other SKT group companies? Or whether it's the possibility of 5G services that you think is the main potential growth driver for ADT Caps? Thank you.

[Foreign Language] This is Ha Hyoung-il, Head of Corporate Center II and I want to thank you Mr. Anderson for your questions. Let me first address your question regarding 11st. SK Telecom continues to stand by our principle in targeting both growth and profitability. However considering the situation of the e-commerce market we are taking a flexible manner in terms of focusing on the growth and profitability. So while maintaining our BEP operating – BEP for operating profit, we will continue to focus on strengthening our subscriber base. This is not to say that we have given up on profitability but rather it is a strategic choice that we are taking in terms of the current strategy for 11st. 11st will focus on strengthening the commerce portal competitiveness as well as expanding our external partnerships so that we move away from pricing competition including issuing discount coupons to one that focuses on the core fundamentals. We will provide more purchase – more sales content as well as enhance the search engine's efficiency. And so we will be providing further services to increase the competitiveness of 11st as a commerce portal. And as for expanding our partnerships with external partners we will work with both domestic top brands as well as global players so that we can expect growing GMV both at home and abroad. Let me now move on to talk about the outlook for our Security business. We expect to reach a Security business revenue of KRW 1.3 trillion for the year 2020 based on our technological leadership. And as for ADT Caps revenue target, we're looking at KRW 1 trillion as ADT Caps continues to solidify its CMS leadership as well as strengthen its other business areas including home security unmanned parking and personal care. We expect 2020 to be the beginning year for SK Infosec and ADT Caps to really create significant synergies. In the major five technology areas including AI and DT, we will continue to pursue innovation thereby sophisticating our services and we expect new offerings of sophisticated services as such. And as for SK Infosec, we expect continued growth in its partnership collaboration as well as remote management utilizing its cloud service thereby excelling in the area of convergence security, which will lead to the first ever in the information security industry for a company to exceed KRW 300 billion in revenue.

Thank you.

This concludes the earnings conference call for the fiscal year 2019. Thank you.