SK Telecom Co Ltd (SKM) 2010 Q4 法說會逐字稿

(Interpreted). Good afternoon. Welcome to the conference call for the fiscal year 2010 fourth-quarter earnings results by SK Telecom. This conference will start with a presentation followed by a Q&A session. And now, we will begin the conference of the fiscal year 2010 fourth quarter earnings results by SK Telecom.

(Interpreted). Good afternoon, my name is Kyu Lee, the head of IR at SK Telecom. Today's conference call will consist of the opening remarks by SK Telecom's CEO, Mr. Seong-Min Ha on the annual results for 2010, and the business plan and strategic direction for 2011 followed by a Q&A session. Relevant executives are also taking part in this conference call to assist in deepening your understanding.

Today's conference call will provide consecutive interpretation. Let me also remind you that all the forward-looking statements are subject to change depending on macroeconomic and market conditions. Now, let me invite our CEO, Mr. Seong-Min Ha.

(Interpreted). Good afternoon, my name is Seong-Min Ha, the CEO of SK Telecom. As we usher in the year of rabbit in 2011, I wish all of you good health and happiness. During 2010, SK Telecom further solidified its leadership in the fixed mobile convergence competition against the backdrop of the explosive proliferation of smartphones and the unprecedented hypercompetition era characterized by the emergence of new competitors from diverse sectors.

Leveraging our upper hand in wireless network capabilities, SKT introduced unlimited data services while securing a competitive smartphone lineup. We successfully differentiated our network quality through the expansion of WCDMA capacity and led the wireless internet market by creating an open ecosystem such as T Store.

Also in 2010, we not only confirmed the growth potential for our B2B business including IPE but also crystallized SKT's future growth strategy centering on the platform. Let me now share with you the major earnings highlights for 2010.

Revenue for 2010 marked KRW12,460b despite the introduction of per-second billing and the diverse discount price plan, the wider adoption of wireless internet from increased number of smartphone subscribers and the expanded accumulated subscriber number contributed to the 3% year-on-year growth in revenue.

Especially the wireless internet revenue reached KRW3,010b, up 13.2% year-on-year. Our CapEx expenditure amounted to KRW1,850b including investment in 3G network upgrade and Wi-Fi expansion to support the rapidly growing data traffic.

Since the finalization of the KCC marketing expense guideline, SKT has put in the best of its efforts to comply with the guidelines. As a result, the marketing-to-sales ratio has come down by 0.5 percentage points based on the guideline on a year-on-year basis to KRW2,970b.

Operating income came down 6.6% year on year to $2,040b due to factors including the increased depreciation and the temporary increase in commission from the improvement measures on the structure of the handset installment receivables. However, the Q4 operating income rose 2.3% compared to Q4 last year to KRW450b supported by the marketing expense reduction from the market stabilization efforts and the improved interconnection fees.

Net income for the year stood at KRW1,410b, up 9.5% year on year.

With that, let me now turn to the business plan and strategic direction for year 2011. SK Telecom plans to reach the revenue target of KRW13,250b in 2011 through the wireless internet growth in earnest, supported by the en masse adoption of smartphones, result creation from the platform business and the growth in B2B businesses such as IPE.

The CapEx for 2011 is expected to be KRW2 trillion including the introduction of LTE and further expansion of Wi-Fi. Our operating income target is a 10% increase year on year focusing on market stabilization and optimized cost management.

We believe the year 2011 will be marked by wide adoption of smartphones, stronger influence of global platform players and new market entrants such MVNOs leading to rapid changes in the ICT market.

Based on the strong track record of market leadership amidst numerous challenges in the past, SK Telecom has selected improved execution speed and open collaboration as its strategic direction to charge forward in this fierce competitive landscape.

To meet the market needs in time, SK Telecom will upgrade its network continuously and lead the market in developing differentiated data products and services by creating a new ecosystem of coprosperity. Through the open platform business based on openness and sharing of our core assets, we will offer new added values to customers. Rather than limiting such openness and sharing to the domestic market, we will embrace the global market and partners to be a true global player.

The data usage environment is going through rapid improvement based on the extensive penetration of smartphones since 2010 and the changing ecosystem boding well for the prospects for revenue growth. Leading in such market climate, SK Telecom has accumulated 3.91m smartphone subscribers until the end of 2010 and now, targets 10m smartphone subscribers until the end of 2011.

In order to solidify the leadership in the smart device area, SK Telecom plans to launch top smartphone models of each manufacturer under exclusive arrangement while introducing affordable mid- to low-end smartphones based on our top and mass strategy. We plan to launch over 30 smartphones in total.

In terms of network, SKT will continue pursuing WCDMA capacity expansion by leveraging various solutions to enhance spectrum efficiency while doing its best to secure additional frequency. Moreover, we plan to commercialize LTE services during Q3 of this year, establish additional 45,000 Wi-Fi zones and build 10,000 data femtocells.

The platform business is expected to grow significantly going forward in line with the development of the ICT industry. If we leverage SKT's accumulated assets combining it with an ecosystem open to external business partners, we believe it could create diverse business opportunities further propelling continuous growth.

Last year, SK Telecom set the growth objective to become a global platform player while laying the foundation for open collaboration. This year will mark year one of platform business in earnest. Accordingly, we have created a new platform business organization to foster the platform business into another growth pillar on par with the MNO business.

The N-screen service Hoppin, which was launched today, is the example of such an endeavor. SK Telecom will strive to deliver and discover new services while globally expanding existing services to help create concrete results.

2010 was the year of signaling our entrance into the B2B market integrating capabilities of our telecommunications subsidiaries. Whereas the B2B market of the past simply relied on price differentiation, SKT has helped changed the dynamics of the market competition through proliferation of mobile office solutions and launching of diverse new businesses for SMEs based on ICT. This year, we will more proactively develop IPE-based industry specific solutions and sponsor platform-based ICT businesses while creating IPE success stories in the global market as well.

Moreover, SKT seeks to strengthen new product development R&D based on internal competencies to secure growth engines for the future. To that end, we will create a dedicated organization, acquire necessary manpower and focus our investment to warrant core technologies of the future. We will of course continue to collaborate with the competent business partners in R&D to introduce innovative services.

Lastly, I would like to touch upon the shareholder return policy. We plan to pay out the cash dividend for 2010 in the amount of KRW9,400 per share including the already distributed interim dividend of KRW1,000 upon obtaining the approval from the shareholders' meeting. The management at SKT will pursue both new growth and continuous profitability.

Barring extraordinary circumstances, we plan to maintain a similar level of cash dividend in 2011 as the previous year. Also, we will seriously consider additional shareholder returns if and when profitability improvements become visible.

We believe year 2011 will be a year of new growth manifesting itself for SK Telecom. Based on the future growth strategy accumulated and refined up to last year, we will make our outmost effort to achieve concrete and visible growth that meets the expectations of the investors and analysts.

Lastly, I would like to once again, extend my appreciation to all the investors and analysts for your unwavering support for SK Telecom. Thank you.

(Interpreted). We will now begin the Q&A session. In order to accommodate as many questions as possible, we would like to ask you to limit your questions to two per questioner. Please go ahead with questions.

(Interpreted). (Operator Instructions). The first question will be provided by Mr. Kim Hongseek from NH Investment Securities. And the next question will be provided by Mr. Yang Jong-in from Hankuk Investment Securities .

Mr. Kim, please go ahead with your questions.

(Interpreted). I have the following two questions. The first question has to do with the shareholder return policy. Regarding this upcoming year, we believe that revenue growth will be likely and we expect the current subscriber acquisition cost to be going down slightly and we will go through various changes in terms of the depreciation and amortization treatment as well. Overall, we anticipate growing earnings and profitability for the company going forward.

In that context, could you share with you some more details regarding your expected dividend payout for 2011 and also your plans for treasury share buyback and cancellation plan? Is treasury share buyback and cancellation not possible because of other constraints? Is there any likelihood that you will go through with some special dividend payout instead?

My second question has to do with the competitive landscape. In the first half of 2011, we anticipate a lot of new smartphone models being launched in the market by different players so we believe that competition in the market will be quite fierce going forward as well so first of all, how do you anticipate the competitive landscape for this year? And also relatedly, do you plan to continue on with your efforts to meet the marketing expense guidelines given by KCC?

(Interpreted). Let me first answer your first question regarding the shareholder return policy. Regarding dividend payout, as I mentioned in the opening remarks, we have plans to maintain the previous year's level of cash dividend payout level and regarding the treasury share buyback and cancellation, I believe that it is a little too early for me to comment on that likelihood or a possible replacement with some special dividend at this point. We will definitely consider various financial situations and come to the decision that would be most beneficial to shareholders.

To answer your second question regarding the competitive landscape that we anticipate in the smartphone area, yes, there is some likelihood that the competition will become more intense with the launching of various smartphones going forward but considering the KCC marketing expense guidelines, and seeing how we are offering various competitive solutions to customers such as various data -- unlimited data usage price plans and also considering the competitive lineup of smartphone handsets of SK Telecom, we believe that we currently have fundamental competitive edge in the market as it is.

So we will be able to maintain our marketing efforts relying on such fundamentals so we definitely plan to abide by the marketing expense guideline going forward.

(Interpreted). The next question will be presented by Mr. Yang Jong-in from Hankuk Investment Securities and the following question will be presented by Mr. Josh Bae from UBS.

Mr. Yang, please go ahead with your question.

(Interpreted). I have the following two questions. First of all, you mentioned earlier that you plan to spend about KRW2 trillion in terms of CapEx this year so could you actually break it down between 3G expenditure versus LTE? If you could share with us some numbers, that would be appreciated.

And the second question has to do with your revenue guidance. You said that the annual guidance for revenue will be KRW13,250b which seems to be about 6.3% growth year-on-year compared to 2010. Considering how back in 2010, you grew by about 3% year-on-year, this figure seems rather aggressive. So out of that KRW13,250b revenue target, could you share with us the share of the data revenue versus the fixed-line revenue of which means the lease line as well as the resale portion of the fixed-line services.

And relatedly, in 2011, do you anticipate the ARPU to be going up or down compared to 2010 and if you could share with us some assumptions associated with that number or that direction, it would be appreciated.

(Interpreted). Let me answer your questions in the following order. First of all, regarding the breakdown of the CapEx, it would be difficult for us to share with you the detailed number regarding the breakdown expenditure anticipated for LTE versus 3G at this point because we are planning to introduce LTE within this year. And the price of the equipment associated with the LTE technology are likely to change going forward as well. So we cannot actually give you that breakdown at this point.

However, one thing that we could promise you at this point is that we will be making the most effective expenditure execution of CapEx to keep abreast with the growth of the data demand.

And regarding the second question about revenue guidance, well, looking back at 2010, it was the first year of introducing the per-second billing and other types of changes that were for the first time, and I think that SKT was a little bit affected by such changes. But this year, we believe that we already have all the data fixed rate plans in place and we feel that 6% revenue growth can be achievable.

And regarding your related question on ARPU, I don't think that it is meaningful at this particular juncture to break it down between voice versus data ARPU because voice is only likely to go down in the future whereas data will go -- will be going up. So with the further introduction of the data fixed rate plans in the market and with the introduction of the mid- to low-end smartphones going forward, we believe that the data ARPU will be going up, so in short, the overall ARPU trend will be upward.

(Interpreted). The next question will be presented by Mr. Josh Bae from UBS and the following question will be presented by John Kim from Deutsche Bank. Mr. Bae, please go ahead with your question.

Thank you for the call. My first question is regarding the regulatory guidelines for marketing cost of sales. May I confirm that the guideline for 2011 is 20%? I ask because 10% increase in OP seems a bit low if we consider that you'd abide by a 20% marketing cost to sales guideline.

My second question is regarding the smartphone tariffs. We are seeing the regulators say that the telcos should offer more free voice for the smartphone tariffs. Could you please share with us what you think the impact might be? Thank you.

(Interpreted). Let me address your first question regarding the marketing expenses. I believe that the regulatory policies are being discussed and being decided upon within KCC at the moment and we believe that the position of the government is to encourage telcos from refraining from unnecessary war of attrition in terms of marketing and to ultimately bring down the overall marketing expense by the telcos.

SKT is going to go with that line of the policies given by the government and we would rather focus more of our investment on content as well as technology development instead.

We believe that SKT has fundamental competitiveness in terms of the handset lineup and its network as well so we will definitely move away from the war of attrition in terms of marketing and try to abide by the government guideline.

Regarding your second question, I believe that you are actually referring to the government's suggestion which was mentioned regarding the 20 minute free voice which is to be offered and I believe that KCC has not come to the final decision on this matter either. I believe that they would be reviewing various implications regarding the introduction of MVNO as well as the autonomous market dynamics and also the competitive landscape upon which they will come to final decision. So SKT at the moment is closely watching such development because nothing final has come out yet.

Okay, just a couple of follow-up confirmations please. First of all, am I correct to understand that we should expect further announcement from the regulator regarding their policy on marketing cost?

And secondly, may I just confirm that the guidance you have given for 2011 is not based on IFRS?

(Interpreted). To answer your first follow-up question, yes, I believe that KCC will be announcing its marketing expense guideline going forward and SKT would be closely monitoring such results coming out to abide by the regulations to the best of our ability.

To answer your second follow-up question, our guidance numbers were not based on KIFRS but rather on KGAAP.

Thank you.

(Interpreted). The next question will be presented by John Kim from Deutsche Bank and the following question will be presented by Stanley Yang from Nomura Securities.

Mr. Kim, please go ahead with your questions.

Yes, thank you for the opportunity. CEO Ha, welcome back to interacting with investment community and congratulations on your new role. I have two questions.

First on your strategy and execution, since you already were a member of senior executive team at SKT, can you share some color on what didn't go according to the management objectives over the last two years to warrant the top management change at the end of last year? And under your team's leadership, how might the strategies or goals of SKT going forward be different versus that of your predecessors?

And second on division of responsibilities within the top management, can you talk about the responsibilities will be divided between you and your Co-President, Mr. Seo? What mechanisms do you have in place to sort out if there are disagreements between the two of you and if you use your recent reported interest in Indonesian cable business that was recently reported in Wall Street Journal, could the market assume that there is mutual agreement amongst the top management team to pursue overseas growth projects at this stage?  Thank you very much.

(Interpreted). First of all, thank you for your remarks. It's been three years since I was involved with the IR activities; it's good to be back. To answer your question, I believe that the overall strategic direction will not be changing. As I mentioned in the press conference earlier, I believe that, going forward, we need to address our biggest shortcomings right now, which happen to be the speed and execution capability.

And, as you have mentioned, I have been involved in the SK Telecom management for many years and, according to my own experience, I also came to the conclusion that, despite the numerous assets and key talents that we own at SK Telecom, our execution capability was lagging behind slightly. So we want to change all that by improving upon the execution capacity, as well as the speed at doing it.

So the changes that I anticipate would be the following. First of all, we won't be just talking. We will be walking the talk basically. In other words, rather than simply focusing on acquiring new subscribers as the major competition area, we will be competing more in the service offerings.

And secondly, as the network operator of choice in Korea, we will be evolving into a smart type of provider and we will be executing on that as well.

And thirdly, we will be improving upon our position as a global platform player. Despite our important assets, such as Cyworld, owned through our subsidiary SK Communications, I believe that we have been lagging behind companies such as Facebook and Twitter, perhaps because we have been inadequate in terms of our global thinking or the overall paradigm thinking.

So, again, to summarize, we will become faster and we will be executing more and we will be refining and also making our strategy more sophisticated going forward.

And you asked about our role of division and responsibility division, with CEO Seo. And what I can tell you is that Mr. Seo is in charge of the platform growth business mainly. So including that particular business, I will be in charge of the overall company as a whole. That's why my title is the overall CEO, whereas Mr. Seo's title is Platform CEO.

And also you were worried about possible adjustment of different opinions between the two of us and we do have a system in place to fully address such possibilities. First of all, we have a weekly meeting of the top team management meeting, which comprises also the CIC presidents as well. So we get together each week to adjust any differences of opinion. So you don't have to worry about such a conflict.

And I believe that it is because we have different organizations that we divide between ourselves, that you were asking that question earlier. But in Korea we have to register different names for the overall CEO versus the representative of the Company in the overall registry of the Company itself. And so in English I could be called the CEO and Mr. Seo can be called Co-CEO, in that structure.

And you also asked about our possible interest in Indonesia and, as you mentioned, I do know exactly what to improve upon in terms of our global investment strategies at SK Telecom, because I have been the CFO of the Company, back when we were going through some of those global investment initiatives that you are referring to.

And so considering what we need to improve upon, we will be reflecting all those things into our future investment decisions and we will continue to definitely have interest in global investment going forward, but only within the means of our stable financial structure.

Thank you.

(Interpreted). The next question will be presented by Mr. Stanley Yang from Nomura Securities. And the following question will be presented by Mr. Byun Sung Jae from Daewoo Securities.

Mr. Yang, please go ahead with your questions.

(Interpreted). I would also like to take this opportunity to congratulate you on your new position and seeing how you have such an extensive experience at SK Telecom as the CFO, as well as the CIC President of the MNO President, we have high hopes that you will, as the CEO, will help boost the stock price of the Company going forward as well. And seeing how when you were a CFO of SK Telecom in the past, the Company's dividend policy has improved for the better. So, I also look forward to the possible upside potential in that regard.

So regarding the dividend policy, I have the following two questions. First of all, looking at your balance sheet, it seems your Q4 balance sheet status has improved quite a bit. And it is namely because of the transfer of the receivables on handset installment payment arrangement being transferred to SK Hana Card instead. So that has brought down your account receivable line items quite a bit and also illiquid asset line items as well.

And it seems most of that proceeds were spent on paying back your borrowing. So looking ahead into 2011, or more into the long term, I would like to ask you what type of cash flow improvement effect can we anticipate from last year's decision to transfer the account receivable management activities on the handset installment payment arrangement?

And also, with that improved cash flow, what kind of cash flow spending policies do you have in mind? In other words, between paying back your borrowing and also shareholder return and also further investment in other businesses, can you actually break it down in terms of percentage between those items?

And the second question has to do with your earlier guidance mentioning on operating income. You mentioned 10% year-on-year growth on operating profit and -- but in the market we were anticipating a little larger improvement prospects in that regard. So, first of all, we appreciate your providing us with the guidance in the first place but we definitely do anticipate some more improvement in that regard as well.

So you said that -- earlier mentioning numbers were all based on Korean GAAP. So if you are to apply Korean IFRS instead, would it actually bring up the earnings or bring it down further? And also if you achieve higher than 10% year-on-year growth on operating income, can we possibly anticipate a little more shareholder return, such as dividend payouts?

(Interpreted). Regarding your first question about the account receivables on handset installment payments arrangement, now after we initially introduced that scheme within SK Telecom, it is true that our financial structure was impacted somewhat. So initially we will be spending the proceeds in order to improve our financial structure in the short run.

Of course, in terms of dividend policy, we will be considering various aspects in the shoes of the shareholders going forward as well. But initially we would be working on improving various financial ratios.

And your second comment was regarding the earnings growth prospects going forward. And -- but realistically-speaking, within 2011, we have various plans for a lot of CapEx investment, which means our depreciation and amortization would be increasing going forward as well.

Because of that pressure, I believe that our operating profit will not be significantly shooting up. So, of course, we do hope to outperform our initial annual guidance in this regard. But if -- this would be too early for us to mention how we would be using that extra outperformance portion on operating profit.

And relatedly you were asking about IFRS impact on our earnings. Of course, it will have some impact on the bottom line. But we will be communicating with you the details about the actual impact on our overall financial status, during the earnings conference call for the first quarter of this year.

(Interpreted). The next question will be presented by Mr. Byun Sung Jae from Daewoo Securities and the following question will be presented Mr. Sam Min from Morgan Stanley. Mr. Byun, please go ahead with your question.

(Interpreted). I have the following two questions. You mentioned the following plan of the Company in various descriptions but basically you are talking about open ecosystem, allowing access by external players and a lot of developers. And you were talking about collaboration and creating value-added [returns] for the customers going forward. But this all sounds rather difficult for us to fathom at the moment. So, can you share with us some specific cases of the actual projects you are pursuing or planning, so that we can better understand your plans?

And secondly, today even, your competitor had to activate their QoS control system and you also talked about in the -- the expansion plans on the network capacity for the future as well. So my question is, looking at your current capacity and current traffic, how much of your capacity is the current traffic taking up? In other words, how much of future growth can your current capacity take, as it is?

(Interpreted). Let me first answer your question regarding the definition or description about the open ecosystem. In short, I could say that it would be what we can do in Korea that Apple and Google are doing currently in the global market. In other words we would be allowing third-party developers and various customers to utilize our platform to help create an open and collaborative ecosystem for the future.

For example, let's say T Store; actual developers can develop -- add -- can develop their products after registering at T Store as one of the members. And through that activity they could create their BP and we would open up our APIs and also we would provide training and education for a single person entrepreneur who would like to take part in this ecosystem.

And, for instance, if there are a small and medium-sized companies with let's say five to 10 different developers within the company, for those companies, already back in December of last year, we have opened up our APIs for location-based services as well. And, based on such APIs, they could develop their own business model.

So, of course, we are still in an infant stage, so the utilization rate -- ratio is not that high. However, I believe that that should be the direction for the Company going forward. Because the era of SKT doing everything on our own is over, we believe that we should really open up to our partners in the future.

You all are very curious about the traffic volume of SK Telecom, I'm sure. And if I may give you some benchmark figures, we have launched our unlimited data plans back in July of last year. So if you compare last July figure with the December figure, it was an increase of data usage by eightfold, which was a little more than we anticipated, of course.

However, SKT is quite strong in its network capabilities and technologies, as you are well aware. So we have established data preferred [FAs] and we have introduced 6 Sector Solution. And, as I mentioned in the opening, we will be further expanding the Wi-Fi zones as well.

But rather than Wi-Fi zone expansion only, we believe that we should perhaps more focus on the data femtocell expansion instead because, according to our initial figures, customers and subscribers seem to be using more of the 3G network at this point. So perhaps data femtocell expansion would be more of the priority, it seems.

And also, going forward, we have various plans to further distribute and also dilute the data traffic load. For instance, starting from Q3 of this year, LTE, Long Term Evolution, would be fully launched, or partially launched, in other words. And that will further distribute a lot of the traffic load in our systems.

And I think that you are actually wondering whether we have plans to initiate the QoS control in case there are overload of our network. At this particular juncture we are not considering that option. Of course, relatively-speaking, if a single subscriber uses up 10 times as much data compared to another or average subscriber that would be unfair indeed. However, at this particular juncture, we are not (technical difficulty) considering the activation of the QoS control.

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

Hi, so my first question is on your revenue growth. I wanted to ask you how much of your revenue growth is -- would you attribute that to smartphone and ARPU upside? Do you think this accelerated growth could continue into 2012?

My second question is on iPhone and I don't want to ask you -- or speculate on whether SKT will get iPhone or not. I just wanted your thoughts on what would be the benefit and the cons of getting an iPhone in Korea as a second operator launching iPhone? Thank you.

(Interpreted). Let me answer your first question first. I believe that you are asking about the impact on the ARPU increase and the revenue increase from the smartphone subscription increase. Of course, the wider adoption of smartphones are definitely leading to revenue growth. However, we believe that a lot of growth will be coming from the data usage, whilst voice portion would be edging down slightly.

However, it will be difficult for us to give you a detailed breakdown as to how much of the revenue growth is actually coming from smartphones at this point. So if we could actually find or come to such a calculation, our IR Department will get back to you because we know who you are and get back to you with some more details.

And, regarding iPhone strategy, we have no change of our existing stance.

Yes, I'm sorry, just to interject here. I understand that and I just wanted your opinion as to what would be the benefits of bringing in iPhone as a second vendor here? And what would be the negative aspects of that as well? Perhaps in rising marketing cost or what have you? Thank you.

(Interpreted). Perhaps such a question can be addressed in a private setting, because it would be very difficult for me to mention something about that as the CEO of SK Telecom. Of course, I have my personal opinion but perhaps that would not be appropriate to comment on that at this point.

I understand, thank you.

(Interpreted). The next question will be presented by Mr. Sean Oh from Merrill Lynch and the following question will be presented by Mr. [Rom Yu Tanas] from Barclays Capital. Mr. Oh, please go ahead with your question.

(Interpreted). During the second half of this year we believe that MVNOs will be launching in the Korean market. If that is the case, would SK Telecom still maintain your market share target of above 50% into the future? And also exactly at which timeframe do you anticipate the entrance by MVNOs in the market?

And second question has to do with your platform business. Could you be a little bit specific as to what the platform business is and how you plan to compete against the existing players in the market?

(Interpreted). To answer your question regarding MVNOs, we believe that there are about six players that are preparing for such launching, but mostly these are players that are targeting data MVNO business or the prepaid business as well. So these are mostly niche market players.

So, ultimately, we believe that SKT will also benefit by working closely with these players. So, at the moment, these MVNO candidates and SK Telecom are already collaborating and by doing so we believe that customers can access benefits that SKT cannot provide, through these niche players.

And also at the moment SK Telecom is also working closely with a particular data MVNO for a launching in March of this year. And by the end of the second quarter this year we are planning for another launching as well.

(Interpreted). Actually, what I was asking was basically do you also plan to maintain the 50% or above market share target going forward as well, with the introduction of MVNOs?

(Interpreted). I believe I did address that question indirectly by saying that these players are mainly targeting the niche markets, which means we will be able to maintain our market share. And so we have no plans to lose our market shares.

Actually, regarding your second question about the platform business, I think that it's quite difficult for us to give you a single definition of what a platform business is because, depending on who you talk to, they would all have their own definition about that.

From SK Telecom's perspective, I don't think that there is any absolute player that is dominating the market at the moment in the platform area. And we believe that SK Telecom has various competitive edge as a network operator. For instance, we could provide anything and everything in real time and also, secondly, we are able to personalize and customize different services, depending on the users. And also we could leverage our location-based services as well.

So considering those advantages that SK Telecom currently has, as a network operator, we believe that we are sufficiently well-positioned to further develop the business models fit for this market. So rather than me trying to describe something that doesn't quite exist yet, I would ask you to please be patient and just look at what type of business model would be launched in the market, so that you could better understand what we can deliver to the market.

(Spoken in Korean).

(Interpreted). The last question will be presented by Mr. Rom Yu Tanas from Barclays Capital. Please go ahead with your question, sir.

Okay, thank you for taking my question. I would like to ask if SK Telecom have any plans to refinance the $200m [loan] that is coming due this April? Thank you.

(Interpreted). Actually we will be watching the market climate and changes quite closely, to come to that final decision. We have not come to any final decision on that yet.

(Interpreted). We would now like to close the conference call with a closing remark by our CEO.

(Interpreted). Thank you for staying with us until the very end of the earnings conference call for SK Telecom. As was asked by various questioners, we believe that a lot of the analysts and investors are quite curious as to how the new management at SK Telecom will be leading the Company going forward. As I mentioned before, in terms of the overall direction, there will not be a major change. However, the new management at SK Telecom will be crystallizing the strategies and objectives even further as we go forward.

And also it is fine to talk to and communicate with the analysts and investors through the conference calls but we believe that we should utilize other channels and other methodologies to have further discussions and dialogue with all of you. So we will be arranging such opportunities going forward. So we would like to expand the communication channels.

We promise that we will be growing as a company to become a stronger and healthier company going forward. So I ask for your continued support in this regard. Once again, thank you very much for taking part.

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.