00:03 Good afternoon. I am [indiscernible] IRO of SK Telecom. Thank you for taking the time amid your busy schedule to attend SK Telecom’s CEO Investor Day. 2022 marks a new starting line for SK Telecom. Today, the Senior Management of SK Telecom led by Mr. Young Sang, the company’s CEO will share the vision and strategy of SK 2.0 with analysts and investors. First, Mr. Ryu will begin by presenting SK Telecom’s new vision and its details, which will be followed by a Q&A session. 00:45 Simultaneous interpretation will be provided for the CEO presentation. Consecutive interpretation will be provided by the following Q&A session. Now, I will give the floor to Mr. Ryu, CEO of SK Telecom.

00:59 Hello, everyone. We had the spin-off in November last year, and it is my first time meeting with investors. We wish to arrange such a meeting earlier than today, but there was COVID situation, and so we are holding this event online. I'd like to ask for your understanding. Today marks the 101st day since the spin-off and for the past 100 days as the CEO of SK Telecom 2.0, I have had many thoughts and I'd like to share with you my thoughts with you in detail. 01:38 We've been listening to the expectations and ideas from the shareholders regarding the SKT after the spin-off. There are many investors and shareholders who are expecting stable dividend income based on earnings growth, but at the same time many shareholders are looking for new growth opportunities by utilizing new growth momentum and as the CEO of SK Telecom 2.0, I'd like to pursue two targets of stability and growth at the same time. And to do so, the SK Telecom has reorganized its businesses and resource operations. 02:15 SK Telecom will continue to generate stable income from MNO, mobile and fixed business, which is the core business of SK Telecom, and at the same time, we're going to pursue new growth in the areas of media, enterprise, AIVERSE, and Connected Intelligence. 02:35 In the following chapters, I'm going to share with you some more specific strategies, but the reason for this reorganization is to basically overcome the limitations of binary operation between the existing business and the growth businesses. It means that while we pursue growth businesses in the five business groups, we will utilize our entire resources so that there will be no loss coming after the spin-off. And we're going to focus on the three management pillars of…

15:49 [Foreign Language] Now our Q&A session will begin. [Operator Instructions] [Foreign Language] The first question will be presented by Hoi Jae Kim from Daishin Securities. Please go ahead with your question.

16:34 [Foreign Language] 17:45 Hello, I am Kim Hoi Jae from Daishin Securities. Thank you for this opportunity. I like to get some more information about the background behind SK Telecom’s decision to reorganize its business into the five business groups? When you look at your competitors KT and LG U+, you can see that they are operating their mobile and fixed business under the same legal entity, but as for SK Telecom, there is a division between SKT and SK Broadband, and as you are reorganizing your business into the five business groups, I wonder if this means that there will be further reorganization or any possible merger with SK Broadband which will lead to a governance change? 18:29 The second question is about potential growth of the five business groups. I understand that the company has huge expectation for growth potentials of the other business groups other than the mobile and fixed. So, they include the media and enterprise and AIVERSE, and there are many diverse sub-sectors under these business groups. So, in the short run, what are the particular business groups that we may need to pay attention to? In other words, what specific business groups do you do as a CEO would like to emphasize to the shareholders and investors?

19:05 [Foreign Language] 19:13 I'd first like to thank Mr. Kim for your questions. 19:16 [Foreign Language] 19:19 Let me answer the first question first. 19:22 [Foreign Language] 19:35 The background behind the reorganization of SK Telecom into the five business groups was, as was mentioned in the presentation, was to maximize corporate value for each business group. 19:46 [Foreign Language] 20:01 As you may know very well, we need different valuation matrix for mobile and fixed line business versus media enterprise and AIVERSE. 20:12 [Foreign Language] 20:36 It is because otherwise, in the past, we've seen cases where the growth of the promising growth businesses was not well reflected in the valuation or multiple of the telecom company. That is why we've decided reorganize our business into separate business groups and communicate our strategies to the market. 20:55 [Foreign Language] 21:32 And because mobile and fixed line business are combined in one business group, you may wonder if there is going to be any governance change going forward. However, SK Telecom and SK Broadband have already been operating as virtually one body or single entity, and we have been producing a lot of synergies in the past. Therefore, we do not have any specific governance change plan at this point. 21:56 [Foreign Language] 22:00 Let me now cover the second question. 22:03 [Foreign Language] 22:11 In addition to our mobile and fixed business group, we have huge expectations for the remaining four business groups. 22:19 [Foreign Language] 22:21 But let me point out some of the highlights for these four business groups. 22:26 [Foreign Language] 22:26 First is advertising. 22:32 [Foreign Language] 22:42 As you may know, when you look at the history of SK Telecom, you can say that Telecom is very good at conducting subscription business. 22:49…

27:40 [Foreign Language] 27:45 Next question please.

27:46 [Foreign Language] 27:52 The next question will be presented by [indiscernible] from Citigroup. Please go ahead with your question.

27:59 [Foreign Language] 28:50 I am [indiscernible] from Citigroup. Thank you for this opportunity. I would like to ask two questions The first question relates to your dividend policy. You mentioned dividend policy in your presentation, but I wonder if the dividend level for 2022 is going to be similar to the previous year? In other words, can you clarify on whether the last year's dividend amount of KRW 717 billion is going to be maintained for 2022 as well? And also, I'd like to learn more about the medium and long-term dividend policy after 2023. 29:24 The second question is regarding the M&A investment plans, and after the spin-off last year, you became a pure telecom company, and I wonder if you have any specific M&A plans to pursue growth and if you do have such plans in what areas and in for what reasons are you going to pursue an M&A?

29:44 [Foreign Language] 29:50 Mr. Lee from Citigroup, thank you for your questions. 29:54 [Foreign Language] 29:57 Let me first cover the first question. 30:00 [Foreign Language] 30:14 As for your first part of the question, for 2022, as was mentioned in the presentation, we're going to be able to maintain a dividend amount that is similar to what we had before the spin off. 30:26 [Foreign Language] 30:47 As for the medium and long term dividend guidance, it's going to be based on the EBITDA and the CapEx and we expect our EBITDA earnings to continue to grow in the medium to long term, while CapEx level will either decline or stabilize. 31:02 [Foreign Language] 31:10 Therefore, in the medium to long term, we believe that there is enough dividend upside. 31:15 [Foreign Language] 31:23 And regarding our medium to long term dividend policy, as soon as we have some specific decisions and guidelines, we'll communicate them with the market. 31:32 [Foreign Language] 31:35 Let me now cover the second question. 31:38 [Foreign Language] 31:48 I understand that there's a lot of interest in whether the pure telecom SKT after the spin-off will pursue an M&A or not. 31:56 [Foreign Language] 32:05 I like to make it very clear that SK Telecom will pursue strategic M&A opportunities. 32:11 [Foreign Language] 32:14 And there can be three main directions. 32:16 [Foreign Language] 32:28 The first direction is to acquire technology companies for the business such as AI and metaverse. 32:37 [Foreign Language] 32:54 The second type of M&As would be acquisitions for the purpose of acquiring talent because it is quite challenging to secure competent developers in the market. 33:06 [Foreign Language] 33:15 And the final direction is when we become competent in these growth business groups, so we will pursue global M&As to expand into the global market. 33:25 [Foreign Language] 33:45 And in terms of pursuing these M&As, our preference is not – or our intention is not to do a IPO of subsidiaries after M&A’s, but rather combine and integrate these companies into the existing businesses of SK Telecom. 34:02 [Foreign Language] 34:03 Thank you.

34:07 [Foreign Language] 34:15 The next question will be presented by [indiscernible]. Please go ahead with your question. 34:22 [Foreign Language] 34:49 I am [indiscernible] from Hana Asset Management. Thank you for your presentation. And also, thank you for this opportunity to ask you questions. I have two questions. The first question is related to any potential regulatory risks as a result of the presidential election. And the second question relates to your position of SK Telecom with respect to additional frequency allocation.

35:14 [Foreign Language] 35:20 Ms. [indiscernible] from Hana Asset Management, thank you for your questions. 35:24 [Foreign Language] 35:27 Let me first comment on the impact of the presidential election on SK Telecom. 35:33 [Foreign Language] 35:51 I believe that now we're living in the era of digital and there are many aspects of the lives of the people or citizens in Korea where we not only have to emphasize the role of telecommunications but also platforms and other elements. 36:06 [Foreign Language] 36:21 Therefore, I believe that there has been a lessening of burden on communication related costs by having an increase MB&O business and also better regulations regarding tariffs and price plans. 36:34 [Foreign Language] 36:52 Therefore, overall, I believe that our telecommunications related policies are putting focus on the early 5G rollout the entire nation, as well as building data center capacity. So, these will all strengthen the national infrastructure. 37:07 [Foreign Language] 37:20 Following these policy directions at the telecom operators including SK Telecom are working to expand the 5G coverage nationwide and making digital investments. 37:31 [Foreign Language] 37:37 As for the second question relating to the frequency acquisition, I believe that the same approach can be applied. 37:44 [Foreign Language] 37:54 As for SK Telecom, we're not in a position to accelerate the pace of frequency allocation. 38:00 [Foreign Language] 38:27 But when we consider benefits to the citizens, as well as fairness in the market, rather than pursuing a 20 megahertz allocation for frequency as it is now, I believe that it is better to allocate to three levels of frequencies by 20 megahertz for the benefit of the citizens. 38:46 [Foreign Language] 38:47 Thank you.

38:52 [Foreign Language] 38:57 The next question will be presented by [indiscernible] Korea. Please go ahead with your question. 39:04 [Foreign Language] 39:34 I'm [indiscernible] from CLSA. Thank you for this opportunity. I have two questions. The first question is related to your CapEx. I understand that the level of CapEx last year did not change much, and do you think it will continue in this trend? And as we have the initial 5G investments coming to an end, do you think that the CapEx level will continue to stabilize downward? The second question is related to the joint rule, 5G network construction with the telecom companies. What is the update and can you give us some update and do you think that there will be a positive impact on your CapEx?

40:13 [Foreign Language] 40:20 I am Kim Junmo, Head of Corporate Planning. Let me answer the first question regarding CapEx. 40:25 [Foreign Language] 40:39 When you look at the CapEx level of last year for SK Telecom it was KRW 2.18 trillion, and for SK Broadband it was KRW 820. SO, in total it was about KRW 3 trillion. 40:51 [Foreign Language] 40:57 The CapEx level for this year is going to be similar to that of last year. 41:02 [Foreign Language] 41:22 For SK Telecom first of all, the top priority for CapEx is increasing 5G customers, telecommunications, quality, and expand the coverage and network quality for our customers. 41:34 [Foreign Language] 41:49 And for SK Broadband, they will continue to make investments for IPTV and broadband businesses, as well as making investments for content and enterprise business. 42:01 [Foreign Language] 42:27 Moving on to medium-to-long-term CapEx protection, we have been making constant investments for 5G as a result, the coverage based on population has improved dramatically and we have – we're going to utilize the joint 5G networks together with the other Telco companies. So, overall, I can say that in the medium-term, the CapEx level is going to be stabilizing download. 42:51 [Foreign Language] 42:56 And as for the 5G joint construction, the other executive in charge of ICT infrastructure will cover the question.

43:07 [Foreign Language] 43:09 I am Kang Jong-ryeol, the Head of ICT Infrastructure at SK Telecom. 43:15 [Foreign Language] 43:19 Let me answer your question regarding the 5G joint network. 43:23 [Foreign Language] 43:32 Last year, the three telecom companies in Korea successfully did a pilot commercialization of 5G in 12 areas. 43:41 [Foreign Language] 43:48 So, continuing on along with this initiative, the three companies will expand the commercialization to the first level areas. 43:56 [Foreign Language] 44:07 And down the road, it is our target for the three companies to divide and conquer 131 rural areas for 5G coverage by the end of the first half of 2024. 44:21 [Foreign Language] 44:28 Because of this joint construction of 5G network, there is definitely medium-to-long term positive impact on CapEx saving. 44:37 [Foreign Language] 44:53 But as Mr. Kim mentioned, our 5G subscribers are demanding rapid expansion of the 5G coverage. So, we're going to continue making relevant investments. So, the CapEx level for 2022 is going to be similar to that of last year. 45:07 [Foreign Language] 45:08 Thank you.

45:14 [Foreign Language] 45:19 The next question will be presented by [indiscernible] Investment and Securities. Please go ahead with your question.

45:28 [Foreign Language] 46:10 I am [indiscernible] Investment Securities. Thank you for this opportunity. My first question is to the performance of your MNO business of this year, your – the guidance for the mobile and fixed business, the revenue guidance is KRW 17.4 trillion, and can you bring into revenue guidance versus the other? And also, what is the wireless ARPU trend and marketing expense that you are expecting for this year from MNO business. 46:40 Moving on to the second question that is related to the IPTV, last year, at the end of last year, the number of IPTV subscribers reached 9 million, which is a very good result. And what is your outlook for the subscriber growth this year and what is your overall IPTV strategy?

46:59 [Foreign Language] 47:07 Thank you for your question. I am [indiscernible] Head of Corporate Strategy. Let me answer your questions. 47:13 [Foreign Language] 47:26 As for MNO revenue in 2021 thanks to the growth of the 5G subscribers, the MNO revenue grew by 2.7% to exceed KRW 10 trillion. 47:38 [Foreign Language] 47:46 As for the 5G subscribers, it increased by 4.4 million to reach 9.9 million at the end of last year. 47:53 [Foreign Language] 48:02 We believe that this 5G subscriber growth trend will continue this year to mark the number of 5G subscribers to be around 13 million. 48:11 [Foreign Language] 48:16 As a result of such subscriber base growth, the ARPU has increased from low-30,000 to an upward trend. 48:25 [Foreign Language] 48:43 The ARPU number that was communicated in the presentation includes ARPU for IoT, which has lower margin. However, when you look at the 5G handset based ARPU growth, there's is a very clear growth trend, and we believe that this trend will continue. 49:00 [Foreign Language] 49:09 As a result of such positive developments, we expect MNO revenue for this year to continue to grow, and it's going to be a very positive result on a standalone basis as well. 49:21 [Foreign Language] 49:32 As for marketing expense in 2021 because of the 5G market expansion and the accounting impact of IFRS 15 there was a slight increase. 49:42 [Foreign Language] 49:56 However, starting from the fourth quarter of last year, the marketing expense trend has been stabilizing and going downward, and there's also a market consensus that costs competition is not necessary and there was a need for market stability. 50:11 [Foreign Language] 50:22 We believe that market stability will continue this year and by utilizing contactless distribution channels, we will be able to increase cost efficiency. 50:30 [Foreign Language] 50:35 All-in-all, the marketing expense for this year is going to have a yoy decline. 50:41 [Foreign Language] 50:45 Let me now move on to the question related to the IPTV subscribers and business strategy. 50:51 [Foreign Language] 51:00 The Pay TV market continues to grow with the subscribers reaching 9 million last year. 51:06 [Foreign Language] 51:14 And this growth has been driven by the increasing number of single person households and a growing demand for second TV’s. 51:22 [Foreign Language] 51:39 In addition, we have been offering various services and contents that can appeal to the younger generation, the millennials and Gen Z that have huge demand for individual and customized content. And as a result, we're able to increase our ARPU. 51:53 [Foreign Language] 52:06 As the market continues to grow and there's growing demand for various services and content, we expect the growth from IPTV to continue starting from last year. 52:17 [Foreign Language] 52:18 Thank you.

52:24 [Foreign Language] 52:27 The next question will be presented by Joonsop Kim from KB Securities. Please go ahead with your question.

52:35 [Foreign Language] 53:19 I am Kim Joonsop from KB. I like to ask two questions related to your enterprise business group. The first question is related to your data center business. You mentioned that in the market, there is a supply shortage of the data center capacity in the market. So this is rather a good situation for the suppliers. So, in making data center related investments, what are your priorities? And as you make data center investments what’s the size of the investment planned for this year? The second question is related to your enterprise revenue highlights. In 2021, the main revenue source was connectivity for enterprise business, but in this year of 2022 what will be the key business areas in the enterprise business group where you will generate revenue?

54:09 [Foreign Language] 54:24 I am Choi Jin-Hwan, President pf SK Broadband and also Head of SKT Enterprise CIC. Thank you for your questions. 54:33 [Foreign Language] 54:36 Let me answer the first question. 54:39 [Foreign Language] 55:00 And as for data center, as you may know, it requires massive amounts of investments, so in consideration of cost efficiency and in consideration of financial risks to be hedged, we are pursuing both direct DC Investments, IDC Investments, as well as a lease or TRS related investments. 55:20 [Foreign Language] 55:44 So, for example, the [indiscernible] IDC's that are operated by SK Telecom, they were built based on the collateral borrowings and equity investment from a real estate PE, and we have this – we have the total return swap agreement with the SPC that has made this investment and also, we have the long-term lease agreement for this properties. 56:10 [Foreign Language] 56:24 By utilizing this approach, we're were able to secure additional IDC capacity and we're also able to reduce potential financial risks that may incur due to massive large size investments and we were also able to reduce the lease costs by utilizing the TRS agreement. 56:46 [Foreign Language] 57:04 Other than constructing the data centers, other kinds of CapEx expenditures related to the equipment and related infrastructure supply. These may incur when the customers enter and start using the data centers and these are demand linked investments, which are linked to new revenue. 57:25 [Foreign Language] 57:47 Our plan is to expand the data center capacity by 50 gigawatts each year and when you translate this into an investment, it will require a total of KRW 500 billion, but on our balance sheet it will account for 10%. So, this is going to be KRW 50 billion.…

61:30 [Foreign Language] 61:37 We will entertain the final question.

61:41 [Foreign Language] 61:45 The last question will be presented by [indiscernible]. Please go ahead with your question.

61:53 [Foreign Language] 62:26 I am [indiscernible] Asset Management. I have a question really to your UAM Initiative, you mentioned in your presentation that UAM will be a key growth driver in the future. So, what roles do you think SKT can play in providing UAM? What business models do you have in mind? And if you need to make investments or need to make some cost spending, how much of such investment are you anticipating?

62:53 [Foreign Language] 62:57 [Indiscernible] Asset Management, thank you for your question. 63:03 [Foreign Language] 63:12 As for our UAM initiative, it's not been material yet. 63:15 [Foreign Language] 63:27 But we can express some synergies between SKT and Joby because SKT has capabilities in terms of Communications Network Platform and Services, while Joby can contribute in terms of UAM device development. 63:43 [Foreign Language] 64:01 Also, I like to mention that Joby has acquired the UAM operational business of Uber, so we will continue to collaborate with Joby for future opportunities. 64:11 [Foreign Language] 64:24 The particular structure of the corporation has not decided yet, but, I imagine that we can be part of a consortium to gain a business license for UAM in Korea. 64:35 [Foreign Language] 64:46 In the medium – in the short-term, we're going to continue to participate in the grand challenge, which is in demonstration project led by the government. 64:55 [Foreign Language] 64:56 Thank you.

64:58 [Foreign Language] 65:05 Thank you. This is the end of the Q&A session.

65:09 [Foreign Language] 65:27 This is the end of the CEO – SK Telecom CEO Investor Day, I like to thank the investors and analysts for your participation. As SK Telecom is making a new start in 2022 I like to ask for your continued support. Thank you.