KT Corp (KT) 2010 Q3 法說會逐字稿

(Interpreted). Good morning and good evening. of all, thank you all for joining this conference call and now we would begin the conference of the 2010 third quarter preliminary earnings results by KT. This conference will start with a presentation followed by a Q&A session.

Consecutive interpretation will be provided for your convenience. (Operator Instructions).

Now we shall commence the presentation on the 2010 third quarter preliminary earning results by KT CFO, Mr. Yeon-hak Kim.

(Interpreted). Good afternoon, I am Yeon-hak Kim, CFO of KT. We now are only a month away from the year end of 2010, a year where we have heralded in an era of data explosion. The smartphone frenzy led by iPhone in the domestic telco market created a new growth story underpinned by wireless data and we have experienced unparalleled dynamic change.

KT is making preparations in multiple aspects with a long term view to stand at the very center of change and opportunity of business dynamics that will play out in the era of data explosion. Based on KT's abundant fixed and mobile network infrastructure, we will provide the most optimized IT services to customers like the cloud computing, thereby creating new customer value.

Domestic smartphone subscribers as of October end has already surpassed 5m. By next year, more than 30% of the total subscriber base will be smartphone users. Also, including the recent launch of K-PAD and soon to be released iPad, once various tablet PCs are introduced, the importance of Wi-Fi and WiBro network based on the fixed line infrastructure will be ever more emphasized.

KT with its world-best fixed and wireless infrastructure will build a mobile wonderland to pursue to become the best quality and service company recognized and chosen by consumers. Now, with that, let me begin the earnings presentation for the third quarter 2010. You can participate in the conference call via the webcasting through our website as well.

Despite the decline in telephony revenue, wireless revenue growth brought 8.6% YoY and 5.0% QoQ growth to KRW5,233.4b in revenue. Operating profit in line with the revenue growth and decline in labor and depreciation costs increased 43.9% YoY to KRW594.5b. However, due to increased competition in the wireless market in the third quarter, marketing expense showed somewhat of an increase with an impact of 1.2% OP reduction q-on-q.

For net income, FX related income increased with stabilization of the FX rate but tangible asset disposition loss from fixed line flat rate plan refund and replacement of outdated facilities increased temporarily so net income recorded KRW350.6b.

In terms of CapEx, KRW647.2b was spent on the third quarter and on an annual cumulative basis, KRW1,818.4b was executed.

I will now walk you through each of the businesses. First is the wireless business. Wireless service revenue increased 7.7% YoY and 0.7% q-on-q to KRW1,766.4b due to a large increase in basic rates and wireless data revenue coming from the growth of smartphone subscribers. Especially wireless data revenue in line with the growth in subscribers taking out the smartphone tariff scheme increased 22.7% and 4.4% year on year and quarter on quarter respectively to KRW371.6b.

As of October end, currently, KT's smartphone subscribers surpassed 2m of which 1.4m are iPhone subscribers. Following the launch of iPhone 4 in September, in the fourth quarter, a total of seven to eight smartphones are waiting to be released including HTC's Desire HD. With this variety of smartphone lineup which will make up for the past insufficiencies, we believe we can safely meet the target of 2.5m smartphone subscribers by the end of the year.

As of October end, around 40% of smartphone users subscribe to a rate plan of above KRW55,000. In particular, for iPhone 4 users, on a cumulative basis, as of end of October, around 60% are subscribing to KRW55,000 and above.

The iPhone's ARPU showed around 5% reduction from last quarter's KRW54,000 to KRW51,000. This is due to certain seasonality factors like holidays and Thanksgiving during which usage volume declined and also partly due to increase in waitlisted iPhone 4 demand in July and August which brought relatively lower acquisition of high ARPU prime subscribers. However, after the iPhone 4 release in September, high ARPU subscribers are continuously coming on board and so we expect ARPU to once again increase in the fourth quarter.

KT, since the new CEO took office early last year, pursued quality based competition through service differentiation, not value-disruptive marketing competition. As a result, although the market share of mobile subscribers showed no change compared to Q1 of last year, market share based on the revenue number increased 1.2%. KT will continue to refrain from value-destructive marketing competition and pursue qualitative competition.

Next is on the telephony business. Due to declines in PSTN subscribers, call traffic and seasonality factors, telephony revenue fell 11.4% and 3.7% YoY and q-on-q respectively to KRW1,087.6b.

VoIP revenue rose 10.5% YoY and 5.1% quarter on quarter to KRW96.4b thanks to the increase in new subscribers. In the third quarter, there was net addition of 270,000 subscribers resulting in 2.49m VoIP subscribers as of the end of September.

Next is the internet business. Despite the fact that broadband revenue increased thanks to the growth in subscribers, with lower WiBro device sales, internet access revenue fell 1.2% quarter on quarter to KRW504b. As for the internet application revenue, revenues for IPTV and Bizmeka and IDC increased by 36.8% YoY to mark KRW172b.

For IPTV especially, increasing QOOK TV which is a hybrid product, QOOK TV Skylife subscribers brought the total subscriber number to 1.79m as of the end of September. Accordingly, revenue increased 106% YoY and 12% q-on-q. Under the current trajectory, we believe meeting the 2m subscriber target by the year end is achievable without any bumps along the way.'

Meanwhile, broadband subscribers continued to increase based on not the competitive marketing spending but on brand power and service competitiveness. As such, during this quarter, we have attracted 126,000 net additions and surpassed the 7.3m total subscriber mark. Also by providing variety of bundled products and customer care programs, churn rate has moved from 1.9% at the end of last year to 1% as of the end of September showing a steady stabilization.

KT, based on its FTTH network, will provide not only IPTV services but also a variety of devices like the tablet PC in order to serve customers with new content values.

Next is on the real estate revenue. In order to utilize idle properties resulting from KT's all-IP initiative, we have established property development and planning subsidiary and are committed to further expanding revenue through real estate development.

As an outcome of such efforts, real estate revenue in the third quarter increased both on YoY and QoQ basis to KRW144.6b. Going forward, we will be more aggressive in undertaking various real estate businesses and revenue will therefore continue to increase accordingly.

And just briefly on the operating expense side, labor cost declined 16.7% YoY and 11.9% QoQ from the impact of large scale early retirement scheme of last year. But with the growth in demand for high end handsets like the smartphones, COGS and cost of service provided increased significantly pushing up the total OpEx by 5.2% year-on-year.

For more details, please refer to the earnings commentary that we have previously circulated. With that, let me end the opening presentation. We will now begin the Q&A session.

(Interpreted). (Operator Instructions).

The first question will be provided by Mr. Kim Hong-seek from NH Investment Securities and the next question will be provided by Mr. Yang Jong-in from Hankuk Investment & Securities. Mr. Kim Hong-seek, please go ahead with your questions.

I would like to ask two questions. The first question has to do with the tablet PC. It seems like the launching of the tablet PCs are under full swing but -- and I believe that KT is trying to control and allocate the traffic by making use of its Wi-Fi and WiBro networks but for those subscribers who have taken out unlimited data plan and those who are tethering those traffic, I believe that it will be very difficult to actually control the 3G traffic in the network so how do you plan to actually control the 3G traffic?

And I would like to ask a question about the recent trend in the broadband subscriber number, what is the percentage of bundled subscribers out of your broadband subscriber and I think, going forward, as broadband expands, there will be smart TVs that will be adopted and that would then create an issue regarding network neutrality. So how do you foresee that to play out in the future?

And also, the potential for paying for the amount of internet that people actually use, for this to actually apply -- apply what are some of the hurdles that would need to be removed and how do you think that this type of approach will actually play out in the future?

(Interpreted). Thank you for the question on the tablet PC. You asked a question about the rate plan for the tablet PC. Underneath the unlimited data usage plan, we are going to restrict OPMD underneath the rate plan.

The timing of adopting OPMD, we have reviewed potential for providing free data depending on the type of product that the customers take out but it's very important to consider the amount of contribution that that certain customer makes on the revenue base and the amount of network traffic that that customer would generate.

So for example, we have actually tested our wireless data on equipment and according to the test results, compared to iPhone, the iPad would generate ten times the traffic as compared to the iPhone so there is concern with regards to the wasting of the network resources and also, there is need to set a very reasonable level of pricing. So in consideration of all of those different factors, there will therefore be need to restrict the amount of data.

And of -- we have conducted consumer surveys on this type of corporate policy and we were able to find that there is not significant claim or complaints coming in from consumers against these types of policies.

With regards to adopting a price plan as you know, a pay-as-you-go type of a price plan for broadband internet, one has to consider the position of the various different stakeholders and KT at this point do not have plans to adopt this type of pricing approach.

But with new devices like the smart TV that would create massive amount of data traffic, this, yes, could trigger the issue of network neutrality. So from the telco's perspective, there needs to exist ample incentive for the telcos to make investment into the data network and also for the usage of this network, there needs to be adequate amount of compensation that is given to the telcos but at this point, with regards to how these new types of devices are going to look like, it's not very clear or is it very explicit at this point and so because of that, we do not have any specific policies and we are not yet in any specific discussion with the regulatory authority.

Yes, and there is another question with regards to the percentage of bundled subscribers. Out of the total broadband subscriber base, as of the end of the quarter, the total broadband subscribers stands at 7.3m and 57% of that which is around 4.17m are bundled subscribers.

(Interpreted). I'm sorry, just a follow up question. My question actually was not really about the OPMD but about tethering. Are you going to restrict tethering is the question.

(Interpreted). I do not have the rate plan in front of me but for tethering against our existing devices, then it is possible, yes.

But with regards to more specific rate plan related information, we will provide you with more information.

(Interpreted). The next question will be presented by Mr. Yang Jong-in from Hankuk Investment Securities and the following questions will be presented by Mr. Stanley Yang from Nomura Securities.

Mr. Yang Jong-in, please go ahead with your questions.

Yes, I would like to ask two questions. With regards to your mobile new subscribers, I understand it's about 2.04m as of third quarter. I would like to know how many people have taken out the discount rate plan and how much percentage of people have taken out the sponsor -- the revenue discount pricing scheme and I think that the ARPU on the calls aspect has declined by 8.4%, what is the impact of such discount rate plan in the decline of the ARPU?

The second question is that I read a news article saying that KT is preparing to start a handset business as well and that it's preparing to launch an Android-based phone. Can you tell us and provide us more color as to how that is going to play out? And also, what is the number of users for K-PAD?

(Interpreted). In the third quarter, out of the total new subscribers, 30% has taken out discount rate plans. With regards to the impact of such revenue discount pricing scheme on the ARPU trajectory, this has an impact on the discounting on the revenue side but at the same time, by attracting the high ARPU subscribers, it also increases the ARPU level.

So it's a compounded factor and also in the third quarter, there was the Thanksgiving holiday during which the voice traffic would of course, decline. So this is not an aspect where we could just provide a simple answer.

With regards to whether KT is planning to enter into a handset device business, even during the times of KT and KTF, there was a subsidiary called KTF Technology but with the merger, the name of that company has changed to KT Tech so we already have that line of business.

This is a small company with an annual production unit of about 1m, they have been up to this point, usually manufacturing feature phones but with the coming of the smartphone era, they are now trying to increase the smartphone lineup. I think that is what that article was trying to say. And at the beginning, I said that we have about seven to eight product lineups that is scheduled to come out in the fourth quarter for the smartphones and one of those is developed by KT Tech.

In terms of K-PAD, I understand that up to now, about 10,000 units have been sold; we are going to continue to upgrade its quality so that we can have a very competitive tablet PC.

(Interpreted). The next question will be presented by Mr. Stanley Yang from Nomura Securities and the following question will be presented by Mr. Sean Oh from Merrill Lynch.

Mr. Stanley Yang, please go ahead with your question.

(Interpreted). I would like to ask two questions. The first has to do with your performance. I think your performance that you communicated today is actually better than market expectation and then the share price is also showing a good pickup in the market.

And I think all of these movement actually reflect the expectations that the market has and that is being reflected on your -- with regards to the performance. And I think as of the third quarter, your operating profit actually increases by 17% compared to the last year.

I'm wondering whether you can continue on with this trend in the fourth quarter as well because usually, in the fourth quarter, KT has experienced some seasonality variability factors and your earnings were typically quite weak during the fourth quarter. So are we to expect -- can we expect lower level of volatility or differential in the fourth quarter and expect a strong trend in the fourth quarter as well?

The second has to do with the ARPU, you mentioned there were some seasonality factor in the third quarter but when we look at the ARPU trend, we cannot just look at the data ARPU, we have to also look at the voice and the interconnection aspect as well. And in the third quarter, your ARPU declined and showed a quite weak trend. And you said that with the launching of the iPhone 4, that this is going to -- the ARPU trend is going to rebound in the fourth quarter. Do you think that with stronger penetration of smartphones into next year and from two years now that you will be able to continue on with the increasing trend for the ARPU?

(Interpreted). With regards to your question about whether we can continue on with the good performance in the fourth quarter, yes, we hope so. We hope we could continue to do that. In the past, KT was known for such large seasonality factor. That is because of the characteristics with regards to the fixed line business. The Fixed-Line business has usually showed lower level in the latter half compared to the first quarter as opposed to the fourth quarter. And also by the year-end, there were more investments that were concentrated as well as depreciation costs which was skewed to the end of the year.

But once again, it's the characteristic from the Fixed-line business side. After the merger you will see that the merged entity, as against the revenue number, Wireless business actually takes up more than 50% of the total business pie. And we are seeing continuous growth in the Wireless business line. And so we expect that the seasonality factor is not going to be as big going forward.

But of course on the Wireless business side, there is at times quite a fierce competition in the market. But compared to the third quarter, we are now seeing the market stabilize and so in the fourth quarter we expect that stabilization trend to continue. And as a result, we expect that the seasonality factor would decline quite significantly.

Now you asked a question about the ARPU trend and we have to admit that the third quarter was actually a quite difficult quarter for KT. As you know about 2.5 months delay took place with regards to iPhone 4 and also KT with its -- in its other smartphone lineups experienced some insufficiency.

And during that period of time, competitors actually tackled the market quite aggressively and KT tried to defend its market share by using inevitably our feature phone. So on top of the seasonality factor that I've mentioned previously, feature phones inherently have lower level of ARPU. So that is why in the third quarter we were not able to continue on with the high level of ARPU growth.

But after the launch of iPhone in September 10, we are seeing high ARPU subscribers continuing to come on board. And if you look at the percentage of high ARPU subscribers who take out rate plans above KRW55,000, it's about 44% out of the total base. But if you look at the number for the month of October, the iPhone subscribers taking out the rate plan above KRW55,000 is actually around or more than 70%. So we expect that in the fourth quarter we will be able to witness a significant rebound in the ARPU numbers.

And also as I mentioned before, other than iPhone 4, the smartphones, the other competitive smartphones like HTC's Desire HD, as well as seven or eight other smartphone lineups are being prepared to be launched in the fourth quarter. So I think you can expect a higher trend for ARPU in the fourth quarter.

(Interpreted). The next question will be presented by Mr. Sean Oh from Merrill Lynch and the following questions will be presented by Mr. Sam Min from Morgan Stanley. Mr. Sean Oh, please go ahead.

(Interpreted). Yes. You will be implementing the per-second billing system from December, so what is the impact of that in your ARPU trend?

And second question is your dividend plan. Can we expect the same level of dividend payout as last year or could we expect some sort of change? Can we provide us with more confirmative answer on that?

(Interpreted). We project that the per-second billing system would actually have on an annual basis about KRW100b of loss impact on our revenue base. However, with the increase in penetration of smartphones and if you look at the subscriber profile, a lot of these subscribers are taking out flat rate systems. So the actual impact could be much lower than that.

And regarding dividend, first of, our policy is the same as before. Our dividend policy is to pay out about 50% against net income.

And with regards to the actual or the specific dividend amount, please understand that we are not at this point able to provide you with the specific number. And just to remind you, last year there was a one-off large-scale ERP program, but we are not planning for any such restructuring plan for this year.

(Interpreted). The next questions will be provided by Mr. Sam Min from Morgan Stanley and the following questions will be provided by Mr. Kim Dong-jun from Eugene Investment Securities. Mr. Sam Min, please go ahead with your questions.

Yes, hi. I have two questions. My first question is on your real estate revenue. I guess in the first three quarters, your real estate revenue has already reached the level of last year. I wanted to know what percentage of the revenue is sustainable going forward. Also if you can provide us an understanding how profitable these real estate revenues are, that would be very helpful.

My second question is on mid-end smartphones. I was wondering how well the Optimus One is currently doing in the month of October.

And then looking out for 2011, I was wondering how the economics of mid-end smartphones will differ from the economics of your current iPhone 4 for example.

(Interpreted). As I mentioned during the opening speech and as I have communicated a number of times to the market, within five years, KT is going to reduce the number of its KT branches from 450 to 50. Now that is going to result in significant amount of idle property. That is why from the beginning of this year we wanted to maximize our real estate development and also have been exerting efforts toward that direction, so that actually we could improve and expand the revenue base from this.

And if you look at the characteristics of the real estate market it's very difficult to make exact predictions. There are times when you'll be able to sell them well. At times it will be quite difficult to sell those properties. But what I can say for certain is that there is going to be a significant amount of idle real estate that's going to be generated and there will be significant possibility for it to contribute quite a bit to our revenue base. But I think it would be more appropriate to set up another occasion where we could communicate to the market more specifically about our real estate strategies.

(Multiple Speakers).

I understand -- I'm sorry to jump in here. But I understand that it's quite profitable. So I was wondering if you can comment on that as well. I would appreciate that.

(Interpreted). Yes, when it comes to the real estate, because the acquisition costs for the real estate is very different and the type of regulations that gets applied to real estate is also quite rigid. For instance, if you're talking about a very central zone in the Gangnam area and you want to develop that lot of property, then sometimes the city will ask about 40% from that initiative. And if the acquisition cost is lower, then that will mean the profitability will be high. If the acquisition cost is high, then of course the profitability will be low.

So there is just too big of a discrepancy depending upon which property you're talking about. It differs case by case. So it's quite hard to generalize and just provide you with one answer. So I believe that with regards to this topic, because we're in the stage of developing real estate strategies, at the right time, we will be communicating with you what that strategy is in the future.

For Optimus One sales, in the month of October, we have sold about 45,000 units and on a daily basis, we are selling about 2,000.

Regarding the ARPU it's around, it's lower than iPhone. Yes, it's around KRW40,000. So the subscribers for this type of phones will take out a one-notch lower rate plan, compared to the iPhone. But compared to feature phones, the profitability is high. So for these types of phones it's lower in terms of ARPU compared to iPhone, but higher as against the feature phone.

(Interpreted). The next questions will be presented by Kim Dong-jun from Eugene Investment Securities. And the following questions will be presented by Mr. John Kim from Deutsche Bank. Mr. Kim Dong-jun, please go ahead with your questions.

(Interpreted). My first question has to do with your CapEx. To date, on a cumulative basis, you have about KRW1.8 trillion of capital expenditures. Are you going to actually use up the KRW3 trillion or KRW3.2 trillion which you have communicated as an annual guidance?

And there's continuous concern about the explosion in traffic. And I would like to know whether for next year or from two years from now, would you be able to maintain KRW3 trillion CapEx level, which was the level for this year and last year.

Second question has to do with your labor cost. Your retirement payments or retirement benefits, usually they were in the range of KRW70b. But in the third quarter, they have dropped significantly to KRW15b. I understand this is partly due to the early retirement plan that you have initiated. Would you be able to sustain this retirement payout number going forward, that you have posted in the third quarter? Or is this just a one-off phenomenon? Are we going to have to expect an increase in the retirement payment going forward?

(Interpreted). On CapEx, with this year we will be expending CapEx within KRW3.2 trillion limit. It's hard to be more specific than that, at this point, because with the increase in data traffic there could be some investments in the fourth quarter with regards to the wireless space. But what is certain is that we will not be going over that KRW3.2 trillion level.

Now with regards to the next year's CapEx plan, currently we are in the process of devising the CapEx plan, so I cannot provide you with a definitive number at this point. But we will probably maintain about the same level of CapEx next year as we did this year. But if there is any change we will come back to you.

With regards to the retirement payment, this year there was a significant decline and yes, partly because of in the third quarter, the number of retirees were quite low in the third quarter. But on top of that, we have actually improved on our wage system, wage scheme. So there were improvements in the way we actually calculate the retirement benefit payment. So in the formula, there were certain changes. So that's why you see such an extensive increase in the amount of decline in that line item.

So in the fourth quarter, compared to third quarter, there could be slight increases. But once again, because we have significantly improved on our wage system, that impact is here to last. So it will be sustained. And on a year-on-year basis, compared to last year, at the year-end of this year, there will be more than KRW300b of labor cost savings.

(Interpreted). The next questions will be presented by Mr. John Kim from Deutsche Bank and the following questions will be presented by Mr. Jay Park from Samsung Securities. Mr. John Kim, please go ahead with your questions.

Yes, thank you for the opportunity. I have two questions. First is on your Fixed-line revenue. I understand your line losses started decelerating. However, your ARPU for your Fixed-line voice products is still declining. So my question is what efforts are you making, if any, to get consumers to use your Fixed-line voice services more? Does the management have any ideas on how to curb the falling ARPU, or is this something that you just have no solution for? I'd appreciate it if you can provide some specific examples or data points.

Second is on your tariff discount program. Your tariff discounts are effectively working as handset subsidies. So how might these sales discounts influence the regulator's perception of mobile tariffs? Does it work favorably or unfavorably in terms of the regulator's perception of the mobile tariffs levels in Korea? And also given, a good part of your monthly fee is applied towards wireless data, what kind of impact does this have on public perception on the mobile voice tariff level in Korea? Does the management have any opinion? Thank you.

(Interpreted). On your first question, I can tackle it in two aspects. First, KT is committed and exerting efforts to make sure that the reduction in PSTN revenue is narrowed, by providing like bundled products and also providing unified rate plans nationwide for instance.

However, although that is the situation, basically with -- PSTN usage is going to decline. That is the trend. And it is going to gradually fade out. That's inevitable. However, it does not mean that KT is just going to sit still and let it happen. No. As you know we are quite aggressive in the VoIP space and also there is the concept of the intelligent VoIP. So we are targeting the home product market so that we can actually increase revenue from this home space.

So it's bringing together the VoIP as well as tablet PC providing intelligent service within the realm of households. So we are providing -- we are planning to provide various different product offerings that could actually target this market. So within the household it will not just be PSTN but new devices will come into the market, combined with VoIP to provide intelligence-based services.

And your question about how the regulatory authority sees this revenue discount type of pricing scheme, because I'm not the regulator myself, I don't know exactly. However, as compared to the subsidies that have been provided, I think that because this type of revenue discount pricing is actually giving benefit to the customer, I think the regulators are quite favorable against this approach.

And so when we actually take this type of a discount rate plan contract to actually report it or register it with the regulatory body, they accept it without much hesitation.

But when it comes to how the masses actually consider this, I think that they consider discount and subsidy as one and the same.

(Interpreted). The following questions will be provided by Mr. Jay Park from Samsung Securities. Mr. Jay Park, please go ahead with your questions.

(Interpreted). My first question has to do with your net addition number for your smartphones and if you have that projection for iPad, could you also share that with us. And you mentioned that in the fourth quarter the ARPU is going to rebound. Can you tell us as to how much of an increase it's going to be?

Second question has to do with the fact that you mentioned there's going to be seven or eight different smartphone line-ups which will be introduced in the fourth quarter. How about for next year? How many smartphone line-ups do you have in mind? And what's the percentage of Samsung handsets out of your next year's smartphone product offering?

And you've started selling Galaxy K from the beginning of October. I would like to know how many units you have sold to date.

(Interpreted). With regard to the smartphone subscribers, as of end of this year, we're expecting 2.5m. And there will be net addition of 3.5m subscribers to reach 6m by the end of next year. For iPad and tablet PC devices, by end of next year, we're projecting about 1m units.

And the smartphone subscribers as of end of this year accounts for about 15% out of the total base and by the end of next year, we're expecting above 30%.

For ARPU growth trend it's very difficult to make exact predictions -- projections. But in consideration of what happened this year, we're expecting about a little more than 3% growth.

I think it is a little too premature to talk about the smartphone lineups for next year. One could say that it could probably be more than what was introduced this year, but it's not yet finalized.

I understand after Galaxy K, we are discussing with Samsung, with possibility of a new handset. So there is discussion going on. But it's too early to say when and what type of smartphones would be -- would transpire out of this discussion.

And regarding the number of Galaxy K as of month of October, we have sold 12,000 units. So per day about 2,000 units are being sold. But I understand there is -- the problem is that there is some shortage of supply meaning that AMOLED which is the component that needs to go in, is quite -- there is shortage of AMOLED for both Galaxy S, K, U as well. But as much as the supply exists all of those supplies are being sold.

(Interpreted). The next questions will be presented by Mr. Hwang Seung Taek from Hana Securities. Mr. Hwang Seung Taek, please go ahead with your question.

(Interpreted). I would like to ask questions about the iPad. I would like to know what your rate plan for iPad is, that you're considering internally for the iPads with WCDMA modules and the ones with WiBro, with Wi-Fi features. What would be your breakout between the two in terms of the rate plan?

And for WiBro, I understand that you have a KRW10,000 to KRW27,000 rate plan that exists for WiBro. Are you just going to take that and apply it to your iPad or you're going to increase that rate before you apply that rate plan to iPad?

And other than the rate, the tariff aspect, what are some of your other revenue generating model in terms of contents or other aspects?

(Interpreted). Regarding iPad other than the fact that it's going to be launched within the month of November, please understand that I cannot disclose any further specific information. But it will come to you and it will be announced within a couple of days.

And not just with the iPad, but we're also preparing various different types of media devices. So for these types of so-called pads or tablet PCs from many months ago we've been putting in efforts to develop various contents like the movies, the books, the magazines and newspapers. And those contents could be provided either on an individual basis or they could be packaged. So we have been preparing to really have a firm competitiveness. Once the time comes for us to introduce these devices, we will also provide you more information on these.

Operator? Hello?

Yes, sir.

Is there anybody else waiting?

No, there are no people waiting.

Then we will conclude this meeting with the final comments by the CFO. Is that okay?

Okay, sure you can.

Okay, thank you.

(Interpreted). I would like to thank you once again for your questions and interest. Thank you for joining us today and I wish you good luck and achievements in the remainder of the year. This has been Olleh KT's 2010 third quarter earnings conference call. Thank you.

Portions of this transcript that are noted "interpreted" were interpreted on the conference call by an Interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.