SK Telecom Co Ltd (SKM) 2008 Q4 法說會逐字稿

(Interpreted). Good morning and good evening. Welcome to the conference call for the fiscal year 2008 fourth quarter earnings results by SK Telecom. This conference will start with a presentation followed by a Q&A session. And now we begin the conference of the fiscal year 2008 fourth quarter earnings results by SK Telecom.

(Interpreted). Good morning, today's conference call will consist of the earnings presentation on the fourth quarter 2008 by SK Telecom CFO Dong-Hyun Jang followed by a Q&A session. The conference call will last about one and a half hours with consecutive interpretation. And we also remind you that all the forward-looking statements are subject to change depending on the macroeconomic and market conditions.

Now let me present our CFO Dong-Hyun Jang.

(Interpreted). Good morning, my name is Dong-Hyun Jang I'm the CFO of SK Telecom. As we usher in the Year of the Ox in 2009 I wish all of you good health and happiness. I truly appreciate the unwavering support and encouragement for SKT given by the investors and analysts. It is my pleasure to hold today's conference call with all of your participation.

Le me begin with the earnings highlights for 2008. Despite the challenging external environment of economic slowdown stemming from the global financial crisis, 2008 was a year of laying the steady foundation for an anticipated convergence landscape by enhancing the WCDMA competitiveness and business portfolios.

Despite the revenue reduction factors such as the SMS tariff cuts, the introduction of diverse discount price plans and so forth, our continuous efforts to expand the subscriber base and interconnection revenue have lead to a 3.4% year on year growth in the 2008 revenue to KRW11,670b.

Although the WCDMA market competition heated up during the first half of 2008 the market stabilization took hold during the second half, resulting in the total marketing expense of KRW3,060b in 2008 which was 26.2% of revenue.

The operating income edged down by 5.1% year on year to KRW2,060b, affected by the aforementioned marketing expense increase. The net income for the year amounted to KRW1,280b which was a 22.2% reduction compared to the previous year. The EBITDA recorded KRW4 trillion.

In the meantime the CapEx amounted to KRW1,920b which was in line with the annual guidance. The investment was made mainly for securing WCDMA capacity and for enhancing call quality.

Let me now move on to the strategic direction and management plan for 2009. We believe the market stabilization witnessed in the second half of last year will continue into the year 2009. However, the gloomy macroeconomic outlook deriving from the worst ever uncertainties in the global real economy, and the resulting economic recession is likely to persist in magnitudes more severe than the 1997 economic crisis. Especially the challenges such as the volatile competitive dynamics in the telecom industry are deepening the uncertainties surrounding the Company.

Due to such uncertainties in the business environment we regret that we are unable to provide detailed annual guidance for this year. But regardless of the provision of the guidance we will do our best to improve the 2009 revenue and EBITDA compared to last year.

To that end SK Telecom will maintain its existing leadership while maximizing cash generation. We will also secure the growth momentum in the convergence market.

First of all, in order to ensure continuous development of the Company, we will cement the fundamental competitiveness of our core businesses and further expand the profit pool. Notably, we will grow the fixed price plan subscriber base while making WCDMA services more sophisticated in order to make the data business leapfrog once again as it has lead the Company's growth up to date.

By abiding by the principle of select and focus we will enhance the new business profitability while developing various options for new growth platforms. We will proactively take on the era of convergence among industries by pursuing the next generation Internet platform business in the open environment, and by strengthening the content business for the global media era. And by sharpening the competitive edge in our commerce businesses like Open Market 11th Street, Mobile Money, T-cash and Gifticon among others.

Regarding our global businesses, I believe you share not only interest but also concerns about the direction and breadth of our global expansion. However, considering the stagnate growth in the domestic market, opting for convergence and globalization is unavoidable as you know.

Based on such premise our principle has not changed about focusing on securing the existing global businesses' viability while pursuing global businesses, which could benefit from our capabilities transfer and profit improvement capacity. Although our basic principle is unchanged we will exercise even more prudence in terms of the business scale and timing, closely watching various factors such as countries, industries and the global financial market.

Now I would like to discuss our shareholder return policies. As was previously committed the 2008 dividend is KRW9,400 including the interim dividend of KRW1,000, which is at a level similar to 2007. Regarding the treasury share buy back, which began last year I would like to inform you that the share cancellation of reported 448,000 shares has been completed during January this year.

Being fully aware of the importance of the shareholder value creation and the uncertainties in the recent business environment, the management at SK Telecom plans to maintain last year's level of cash dividend in 2009 as well, barring any unexpected circumstances. As for a share buy back plan for this year, we will make a flexible decision according to future market situation and management environment.

Dear investors and analysts, we anticipate unprecedented difficulties on all fronts during the year 2009. Nevertheless all the management and employees at SKT, including myself, will do our utmost to rise above the ongoing trends by turning them into opportunities by collectively mustering our efforts as one.

I ask all our investors and analysts for your continuous interest and support for SK Telecom in the coming year. Thank you.

(Interpreted). We will now begin the Q&A session, please go ahead with questions.

(Interpreted). (Operator Instructions). The first question will be provided by Mr. Jae Kyung Song of Eugene Investment & Securities. Mr. Song, please go ahead with your question.

(Interpreted). I have the following two questions. First of all the recent buzzword in the industry is the possible merger between KT and KTF and it is our understanding that SKT is strongly against this possible merger.

So I would like to ask you to provide SKT's position on this matter and also your outlook about the future. And if by any chance such a merger proceeds as is planned, I would like to ask how that would impact SKT's strategy regarding SK broadband related activities.

And the second question is as follows. With the expected merger between KT and KTF there are concerns in the market that the wireless telephony related competition will heat up again. So could you give us some clarity on the profitability for year 2009?

(Interpreted). Thank you very much for the questions. Let me begin with the Company's perspective and how the Company looks at the outlook regarding KT and KTF merger. As was communicated by the top management of SK Telecom in recent weeks, we believe that KT's dominant position in the fixed telephony market is being strongly maintained as it is.

Amidst such background, if KT's merger with KTF should proceed I believe that KT's current dominant possession of the essential telecommunications related facilities in the country will present a lot of fair competition in the following manner.

For instance, their current dominance in the fixed telephony market will naturally spill over into the wireless and also the broadcast, and more over into the convergence area. And I believe that such a dominant expansion into other categories will fundamentally prevent fair competition in both the telecom and broadcast industry in Korea.

And moreover, we believe that KT's intention for this planned merger with KTF is to overcome their past several years' growth stagnation, by entering into the wireless telecom industry, therefore, expanding the revenue growth in that regard.

Therefore, such a merger is bound to lead to some of the unnecessary heated marketing competition in the market, which will erode the profitability in those relevant telecom industries, therefore, eroding the value that can be generated in the telecom industry. So to the investors as well I believe that this will not be beneficial.

Since SKT is against the possible merger between KT and KTF, I would like to ask your understanding that we will not be able to share with you our view regarding the possible assumptions, assuming that there would be such an M&A in the future. So I ask for your understanding on that.

Regarding our policy or strategy with regard to SK broadband, for now SKT does not have any plans for a possible merger with SK broadband. Even without such a merger we believe that we could sufficiently create the necessary synergies through activities such as bundling. Therefore we believe that the time right now is to focusing on maximizing the synergy effect with SK broadband rather than discuss a possible M&A.

Let me now comment on your second part of the question regarding our providing you more clarity on the profitability prospects for year 2009. First of all we believe that the market stabilization, which was witnessed in the second half of last year, is going to continue into 2009.

However, we are also facing the unprecedented global [real] economy contraction as well as economic recession, and I believe that such magnitude could actually far exceed the level that we have experienced back in 1997 crisis.

Especially in the telecom industry, the volatility regarding the competitive dynamics and landscape is seemingly exacerbating it right now. Therefore, the uncertainties surrounding SKT is actually deepening even further.

So what we could share with you at this particular point is the following. Regarding the direction of the management for 2009, we are working on achieving higher levels of revenue and EBITDA compared to the previous year. And also assuming that the market stabilization trend will proceed into this year we are targeting a less -- a lower ratio of marketing to revenue ratio for this year.

Regarding CapEx we believe that, when it comes to WCDMA investment, it is going to edge down slightly. However if you look at the overall CapEx expenditure we will have to deal with the upcoming situations, as we proceed, in a flexible manner.

Once again, because of such management environment uncertainties, we are unable to provide you with a detailed annual guidance. And once again we ask for your kind understanding on that. And when it comes to more detailed guidance as the uncertainties get lifted into the future we will do our best to provide as much guidance as possible.

(Interpreted). The following question will be presented by Mr. [Joo Ick-Chan], from [Hankuk] Investment Securities. Mr. Chan, please go ahead with your question.

(Interpreted). Following three questions, first of all you just mentioned that you will be running your CapEx plan in a flexible manner into this year. And I have a question about the WiBro related investment plans for this year, because the government is currently discussing the possibilities of launching voice services enabled through the WiBro technology. So what is SKT's plan regarding WiBro related CapEx?

And second question has to do with the expected mandate for WIPI being eliminated in the near future. And regarding such WIPI mandate elimination, which is anticipated, how will that impact the handset sourcing strategy for SK Telecom in terms of smartphones procurement as well as foreign handset procurement? I would appreciate some detailed information on that.

And thirdly within the market at the moment there are talks that SK Telecom will be somehow affording either SK broadband, even networks in some of the business areas and possibly even Telink. So if you have any discussions that are continuing I would appreciate if you could share with us the big picture on such a possible consolidation.

(Interpreted). Let me begin with our WiBro investment plan. Basically our Company's position is that we would like to develop WiBro as a data centric business model, which would enable high-speed, high volume content delivery.

For your information as of the end of 2008 including the areas such as Seoul and [P'ohang], in 42 cities in total we have installed an established hot zone. During the year 2009 including all five metropolitan areas in Korea in total 84 cities we plan to finish establishing the hot zones.

For your reference the WiBro related CapEx investment expended in '08 amounted to KRW400b, and in an accumulated basis the entire WiBro investment up to date has been KRW620b. And our future expenditures on WiBro CapEx it will follow the originally set up plan for WiBro that was established earlier.

Let me now comment on our strategy regarding handset sourcing. As you are well aware the WIPI mandate is to be eliminated as of the month of April this year. In the mid to long term we expect the emergence of diverse types of platforms in the market. However, in the immediate one to two year period we still believe that WIPI will be the more dominant form of platform.

Nevertheless, we anticipate that sourcing handsets from overseas will become much easier going forward. So SK Telecom is working on sourcing more high-end handsets such as smartphones and other foreign handsets as we speak.

Although there are some market changes and uncertainties regarding the foreign exchange rate changes etc., we will closely monitor the market changes as we proceed with developing ways to source overseas handsets.

In the first part of your questions you talked about the WiBro being able to embed the voice services as well. And during the month of December there has been discussions with the relevant parties regarding allowing such voice services on the WiBro platform, as well as allowing the usage of 010 prefix for such services.

SKT at this particular juncture is reviewing various options regarding the types of marketing activities we could muster as well as other types of strategies. So we are reviewing various options. And SKT is currently focusing on securing more product differentiation and competitiveness, utilizing the special features, which is enabled through WiBro.

Let me now move on to SKT's position regarding its several subsidiaries that you asked about. SK's major subsidiaries such as SK Broadband, Telink and TU Media at the moment are focusing on enhancing their inherent competitive edge in their respective business areas.

So in the near future for some time we do not have any plans for any mergers or business consolidations, but rather we plan to focus on individual subsidiaries, enhancement of competitive edge and possibly creating more synergies between the subsidiaries.

(Interpreted). The following question will be presented by Mr. Sam Min from BNP Paribas. Mr. Min, please go ahead with your question.

Yes, hi thank you. My question is on the dividend. You guided that in 2009 you're expecting dividends of roughly KRW9,400, similar to 2008. I wanted to point out that the payout ratio based on 2008 was in excess of 50%.

If market stabilization continues this year, and perhaps with your net profit normalizing to maybe a higher level, is it possible for management to consider raising the absolute amount of dividend, basically maintaining that 50% payout that we got in 2008? Thank you.

(Interpreted). Yes. Let me answer your question regarding the dividend. As was mentioned in the previous opening remarks, unless there are extraordinary circumstances that beg for such changes, we plan to maintain the level of cash dividend that we had in 2008 into 2009 as well.

As you recall, starting from 2002 when our overall payout ratio stood at 10% by 2008, we were successfully able to provide a higher payout ratio, excluding treasury shares buy back and cancellation it reached up to 53%. However, in order to ensure more long term stable dividend profitability for the shareholders, SKT is running current share dividend policy.

So at this particular juncture we do not have any particular factors leading us to change the current level of shareholder return. Therefore, based on our robust balance sheet as well as financial flexibility, we will do our utmost to appropriately balance between investment as well as shareholder return into the future as well.

(Interpreted). The following question will be presented by Harrison Cho from Mirae Asset Securities. Mr. Cho, please go ahead with your question.

(Interpreted). Yes, I have the following two questions. First of all you earlier briefly talked about the foreign handset sourcing strategies, but I would like to ask for some more details.

For instance, your competitor is discussing the introduction of iPhone during the month of April or May this year. And if you look at other advanced markets, when such a killer handset is introduced in the market, usually other competitors counter such action by introducing the same model or by introducing something similar in terms of the platform capacity in an aggressive manner.

So although I do realize that WIPI impact might be minimal, in the minds of the consumers they might be more drawn to certain Telco's, not because of the brand of the Telco itself but rather because of the handset itself. So I would like to ask whether SKT has more specific strategies regarding the smartphone plans for the Company.

And the second question is as follows. It doesn't matter if it's hardware or software, but in '09 I am wondering what killer applications you have in mind in order to differentiate in both the wired and wireless areas. So if you have anything specific in the pipeline I would like to ask you to share that with us.

(Interpreted). Let me first answer your question regarding the global handset sourcing. SKT is currently reviewing the possibility of introducing iPhone as well. But at the same time we will closely monitor the smartphone market in Korea and also the exchange rate trends before we make the final decision.

I believe that the actual timeframe when the non-WIPI handset can be fully introduced in the market will be after the month of April this year. So then it would mean that it is 10 months after the initial launching of iPhone into the market. So we will check regarding the possible follow up models with an Apple brand as well as other competitors' models to counter against iPhone as we finalize the decisions on the smartphones.

And for your information, internally we are reviewing the possibility of introducing Google's open platform, Android platform into the market. But since we have not entered into any specific dialogue with Google, we will not be able to, at this point, discuss the possible time frame for such an introduction because we are currently simply reviewing that option.

And for your information there is the TOmnia as well, which combines not only the advanced services provided by SK Telecom, but also the technologies from Samsung and Microsoft as well. So I believe that this would be a very ideal Korean smartphone which could help us gauge the trends of the Korean smartphone market in the initial stage as well.

And for your information, SKT hopes that introduction of a smartphone will significantly enhance the data ARPU for SK Telecom. And to give you some numbers, compared to non-smartphone handsets, smartphone handsets tend to have 124% higher data ARPU.

Seeing how globally the smartphone's share in the entire handset segment is expected to reach up to 30% by year 2011, we expect similar trend in Korea as well. So targeting mainly the business segment, we expect the market to expand quite significantly. So in line with such trends, SKT is strengthening the smartphone strategy as we speak.

Let me now move on to the pure applications in the fixed, mobile areas. Our basic position in the Internet business is to provide the fixed, mobile integration platform so that we can provide seamless services for our subscribers as well as personalized platform. So we hope to deliver the nice integrated services for these subscribers.

Let me give you some examples. In terms of the fixed, mobile areas, we hope to create a seamless integration and alignment in terms of the messaging type of services provided through various services. And secondly, in terms of multi-media content, by integrating these platforms we hope to enable the three-screen plays between the TV, PC and also handsets.

(Interpreted). The following question will be presented by Ms. Angela Hong from JPMorgan. Ms. Hong, please go ahead with your question.

(Interpreted). I have two questions. The first question has to do with the loss based on equity method. As for the 2008 equity method loss, its total is about KRW260b. And that loss size does not seem to be improving. So could you give us more detailed breakdowns in terms of equity method loss for Q4? And also, going into 2009, can we expect that your equity method losses will narrow into this year?

And the second question has to do with CapEx. I do understand that you are unable to provide the more detailed guidance for this year, but I do recall that in the second quarter and third quarter conference calls you had mentioned that we could anticipate less CapEx expenditure for 2009. But at the same time Korea Communications Commission, KCC is recommending expanded investments rather. So how can the investors reconcile such different views being posed?

(Interpreted). Let me first answer your question regarding the profitability on equity method. As you are well aware, most of our subsidiaries that are subject to equity method gain and loss valuation such as SK Broadband, SK Communications and LoEn as well as iHQ, these are all listed companies.

Therefore because of disclosure issues, I would like to add, for your understanding, that we will not be able to provide the very detailed equity method gain or loss information at this particular conference call.

However there are some elements that you should also consider the surrounding circumstances when assessing about the overall size of the equity method loss for year 2007 and 2008. Naturally SKT will do its utmost to improve the equity method gain or loss figures for 2009.

Let me now move on to your question regarding CapEx. We do understand the reasons for the investors' concerns about the possible expansion of CapEx going forward. However the Company will emphasize prudence when deciding on the CapEx issues, when we're looking at the market issues, as well as profitability and growth potential as well.

(Interpreted). The following question will be presented by Mr. Hongseek Kim from NH Investment Securities. Please go ahead with your questions.

(Interpreted). I have the following three questions. First of all the new President has been appointed for SK Telecom. And I believe that the incoming CEO of SK Telecom has many good ideas. And so I would like to ask what particular business areas or particular issues the Company is newly focusing on nowadays.

And the second question has to do with your data product promotion. It seems your promotional activities in that particular area has become less active than before. So at a glance it almost looks as if your competitiveness in the data products has been eroded as opposed to the competitors.

So could you share with us your data product strategy for the future? And if you have any specific promotions in mind, if you could share with us the details that would be appreciated as well.

The third question has to do with your D&A. It seems your depreciation and amortization has increased compared to our original expectations. So can we assume that your D&A figure will continue to increase into 2009 as well?

(Interpreted). Let me first address your first question regarding the newly appointed CEO. He has taken office in the month of January. And up to now there are no changes placed on the existing competition-related plans as well as global market-related plans. Nevertheless the new strategies and visions to be introduced by the newly appointed CEO will be communicated with you on a separate occasion.

Regarding your question about the depreciation and amortization, we anticipate that the depreciation level will remain at the similar level as last year. And when it comes to more detailed D&A figures, we will not be able to provide that right now because depending on when you expand certain CapEx expenditures, such D&A figures would differ.

Let me now move on to your question regarding our data product strategy. Currently the share of the fixed price plan subscribers for wireless Internet services only remains at a 10% level of the entire subscriber base. So we believe that the growth potential for the wireless Internet business is still quite large.

And we will do our utmost to continue to grow the wireless Internet business through various initiatives such as more strengthened integration between the fixed, mobile services as well as the open network businesses and the introductions of smartphones.

We are in the process of developing a very competitive data product in the pipeline. So we plan to introduce these data products consecutively throughout the year.

To be more specific, within this year we plan to introduce services such as open type content distribution as well as the LBS business based on the integrated map service. And on top of that 3D based social network services will be introduced within this year as well.

(Interpreted). The following question will be provided by Mr. Jeff Kahng from CS Securities. Mr. Kahng, please go ahead with your question.

(Interpreted). These are the two questions I have. First of all, the first question has to do with your global business strategy. So far SKT has been mainly focusing on countries such as China, the US and Vietnam. But starting from last year into the beginning of this year the global Telco share prices are dropping quite significantly. So, therefore, we are wondering whether you are possibly reviewing the likelihood of entering into other markets as well. If so, which areas are you focusing on?

The second question has to do with the pending merger between KT and KTF. And it seems that regulatory bodies will have to go through the review process, through KCC and FTC as well. But in the market there are talks that there is a possibility that such a merger will be approved without any restrictions.

But instead, in return for such an approval there is a high likelihood that KT will be providing some type of national services. And there is even a talk about possible tariff reduction in line with that as well.

So regarding such an M&A between KT and KTF, what type of Government policy changes do you think can be expected? And, if such policy changes take place, how do you expect those policies to impact SKT? So in line with the merger possibilities I would like to ask for the company's position.

(Interpreted). Let me begin by answering your globalization strategy related question. For quite some time SKT plans to simply focus on our core hubs, in other words, China and the US, and SKT will continue to be mindful of the ongoing financial crisis as well as exercise various investment principles and prudence in making any such globalization decisions.

And, of course, SKT will continue to strengthen its competitive edge by expanding the scope of alliances with various telcos globally. However, when it comes to more direct investment we will limit our investment in the core markets such as China, the US and Vietnam, which are the markets we have already presence.

Let me now talk about your comment regarding KT, KTF merger. I am always also aware of the various talks that are going on in the market. However, as you are well aware, SKT has made it quite clear that we are opposed to such a merger.

Therefore we believe that it would be quite inappropriate for us to comment on the possible future Government regulatory changes anticipated. I believe that the Government will be gathering various voices and opinions within the industry, and I believe that the Government will be making the rational decisions.

(Interpreted). The following question will be provided by Mr. Josh Bae from UBS. Please go ahead with your question.

Yes. Thank you for the opportunity. I have two questions. First, is on the shareholder trends. I think you mentioned earlier that it hasn't been decided yet whether you would buy back shares this year or not. I understood this as that your total shareholder return amount may decline in '09 versus '08.

Considering that you mentioned your profits may directionally increase this year, could you please share with us what was the rationale when deciding that the total shareholder return amount may decline?

My second question is on your ARPU trends. You mentioned earlier that you expect revenues to increase this year. Could you give us a sense on your views on ARPU trends for this year as well? Should we expect the 2008 trends to continue?

(Interpreted). Let me first comment on the shareholder returns. Regarding the possibility of our further treasury share buyback and cancellation for '09, we will approach it in a flexible manner watching closely the market and the management environment.

Although the total shareholder size -- shareholder return volume will be dependent upon whether or not we conduct share buyback and cancellation, we will nevertheless do our best to maximize shareholder return for this year as well.

Let me now comment on the ARPU trend. For your information, during 2008 ARPU has come down slightly because of various factors, such as on-net discount and various tariff cuts including SMS tariff cuts. And also the maximum chargeable amount for the juvenile subscribers, as well as various customer protection activities such as preventing SPAM mail etc.

When it comes to the wireless internet related ARPU trend, it came down slightly because of various customer value improvement efforts made, such as putting a cap on the juvenile teenagers' tariff per month, as well as the prevention of SPAM mails. So please understand that this is a transitional growing pain that the company is going through temporarily.

For year 2009 regarding ARPU outlook, of course the economy is slowing down and the number of new customers for the market is decreasing. And there are some tariff cut pressures, such as giving more discounts for the low income subscribers. So if you look at those factors only, there are reasons to believe that there can be a slight edging down of the ARPU trend.

However, at the moment SKT is doing its best to increase the number of fixed price plan subscribers for wireless internet services and various other efforts as well. So on an overall basis we will do our utmost to maintain the ARPU level at least at the level of last year or improve it even further.

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

(Interpreted). I have three questions. First of all it has to do with the data ARPU. You have just briefly mentioned something about data ARPU. But as you are well aware your current fixed price plan of KRW20,000 per month, offering certain gigabytes worth of data services in relation to your competitor's products is not as competitive, I believe.

So in order to secure more number of fixed price plan subscribers, as you have said in order to promote the wireless internet business, it would be necessary for you to introduce more affordable and low price and highly packed wireless internet data packages. But if you do so then it will erode into the data ARPU for the company. So could you elaborate on that particular perspective?

And secondly, earlier the CFO has said that you plan to introduce more diverse products in the data area within this year. So when you said that, did it include also even lower priced products that I have just mentioned in mind?

And the second real large question is regarding your competitor's recent announcement to the media that they hope to introduce WiFi combined with 3G type of handsets, therefore being able to lower the handset tariff even further. And, we believe, that perhaps gains them more favor from the government as well. So if, indeed your competitor goes ahead and launches such a WiFi plus 3G type of services, then is SKT willing to counter by introducing something similar?

The third question is regarding your fourth quarter results regarding the monthly fees and also the call charges results. It seems your monthly fees went up but your call charges results came down. So is that trend bound to continue into the future? Because during Q4, because of seasonal factors, we actually anticipated higher call charge results, but actually to the contrary it came down. So how do you look at that trend?

(Interpreted). Let me answer your data ARPU question first. First of all the number of fixed priced plan subscribers in the KRW10,000 per month price plan is increasing quite smoothly. Regarding the possibility of launching even more affordable price plans, we plan to proceed with such a possible plan looking at the data competitive landscape as well as the network load. So we will proceed accordingly.

However, rather than simply trying to secure more subscribers by simply lowering the price even further, we plan to enhance the customer value further, and securing the customers that way through the supplying of more competitive wireless internet services and by the introduction of more rational price plans.

On top of that we hope to provide more complete value packages combining both the handset services as well as rational price plans. So we plan to introduce more number of handsets that could further enhance the subscriber user experience.

Therefore, the diverse types of data services and products that we have in the pipeline, that I have mentioned, are being developed with all those thoughts in mind.

Your second question had to do with WiBro not WiFi. So to answer your question regarding WiBro, currently we are reviewing various marketing impacts that we could anticipate as well as the market direction. So for year 2009 in terms of the subscriber number target we are looking at about 100,000 subscribers. So regarding the more specific products introduction by SK Telecom, it will be dependent upon the market situation. So it will be more flexible.

Your other question had to do with the basic monthly fees as well as the call charges trends. And according to our internal analysis of the past trend it seems that ARPU is not directly correlated with the economic cycle. However the year 2009 is expected to be the unprecedented year with economic difficulties, therefore we are assuming a little bit of MOU reduction to which we are providing counter measures.

And regarding the dynamics between the monthly fees and the call charges, because of various discount plans that are provided to each subscriber, such as on-net discounts and other types of price plans, call charges are coming down slightly. So it seems to be the global trend that the monthly fees go up while the call charges come down slightly. And I believe that this type of price plan, which includes higher monthly fees and -- or sometimes free call charges are bound to stay with us into the future.

(Interpreted). The next question will be provided by Mr. Han Joon Kim from Goldman Sachs. Please go ahead with your question.

(Interpreted). I have two questions. First of all in the broadcast industry, a lot of the restructuring and reshuffling is expected. So I'm wondering whether SKT has any intention about entering into the broadcast industry.

The second question has to do with the distribution channel related changes taking place in your competitor's KTF. Currently they are integrating their distribution channels between KT and KTF and also the anticipated merger is pending as well.

So what type of marketing impact do you anticipate? Do you think that it will have significant marketing impact? If not, well why not? And also how is KT's move different from SK Telecom and SK Broadband's efforts to integrate the distribution channel?

(Interpreted). Let me first answer your question regarding the possibility of us entering into the broadcast industry. SK Telecom currently does not have any plans to enter into the broadcast market.

Let me now answer your question regarding the distribution related competitiveness. SKT currently has very high a quality distribution structure. And namely we have most of the distribution channels at the right place throughout the country, and even in the wholesale market our competitiveness is quite sound. And we also believe that the level of customer service is quite high and we have earned the customer trust.

(Interpreted). If there are no further questions we would like to hear the closing remarks by our CFO, Dong-Hyun Jang.

(Interpreted). Thank you for staying with us until the end of today's conference call. All your questions and interest will contribute greatly to the improved management activities of our company.

As was mentioned earlier, despite the formidable business challenges ahead, SK Telecom will do its best to sharpen the fundamental competitiveness, enhance our profitability and increase the shareholder value.

Once again, we ask for your unwavering support and cooperation during 2009 to help SKT turn the threats into opportunities. Thank you very much.

(Interpreted). This concludes the CFO Conference Call for the fourth quarter 2008.

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.