SK Telecom Co Ltd (SKM) 2011 Q1 法說會逐字稿

(Interpreted). Good afternoon. Welcome to the conference call for the fiscal year 2011 first 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 2011, first quarter earnings results by SK Telecom.

(Interpreted). Good afternoon. Today's conference call will consist of the opening remarks by our CFO, Seung-Yun Ahn on the earnings results for Q1, 2011 and the business plan and strategic direction going forward, followed by a Q&A session. To ensure your better understanding, we have with us executives from relevant divisions. Today's conference call will provide consecutive interpretation. Let me remind you that all the forward-looking statements are subject to change depending on the macroeconomic and market conditions.

Let me now present our CFO Seung-Yun Ahn.

(Interpreted). Good afternoon. I'm the newly appointed CFO of SK Telecom, Seung-Yun Ahn. Before taking on my new position, I have had extensive experience within SKT in major areas including MNO and platform. It is my privilege to take on this important role and to communicate with all the investors and analysts. I ask for your support and encouragement in this new journey.

With that I would like to begin with the earnings highlights for the first quarter and the future strategic direction. The first quarter of 2011 was a period of gearing up for a new leap forward, as we have maintained leadership in the wireless Internet market with efforts such as the first ever pilot servicing of LTE in Korea, while we crystallized the envisioned business areas to be focused on in order to grow as a global platform player.

SK Telecom proved its network prowess once again vis-a-vis competitors in the recently announced KCC quality assessment rating. Also in terms of the NCSI, the National Customer Satisfaction Index, SKT remained number one in the mobile telephony category for 14 consecutive years, further solidifying our dominance in the fundamental service competitiveness.

While maintaining such competitive edge, we made proactive efforts to continue on the market stabilization in the industry following the second half of last year, through which we were able to make meaningful achievements during Q1 of this year.

Let me remind you that the earnings results will be communicated in terms of IFRS from this quarter and, when making comparisons with the previous periods, we will be communicating SKT's non-consolidated numbers for the convenience of investors and analysts.

Revenue for Q1, 2011 marked KRW3.13 trillion expanding 2.7% year-on-year with the growth from the wireless Internet and the resulting increase in the smartphone subscriber number.

Marketing expense contracted 7% year-on-year to KRW790b. The reinforced smartphone line-up, including iPhone, together with our consistent market stabilization effort contributed to such reduction. Such downward trend still continues.

Operating income went up 16% year-on-year to around KRW600b, supported by the top-line growth and the reduced marketing expense. Net income was up 35.7% year-on-year to KRW560b reflecting the disposition gain on SK C&C.

On an IFRS consolidated basis the revenue marked KRW3.9 trillion, while operating income and consolidated net income recorded KRW610b and KRW540b respectively.

This marks the end of the earnings highlights. Let me now move on to the business plan and strategic direction for the future.

As we helped create an era of unmet smartphone adoption, SKT's cumulative smartphone subscriber number currently stands at around 6m, boding well for meeting our annual target of 10m by the year end. During March SKT enabled a wider choice of handsets for customers by launching iPhone 4. During Q2 we plan to further solidify our smart device competitiveness by launching ten additional models, including Galaxy S2.

On April 16, SKT successfully launched the pilot version of 4G LTE for the first time in Korea using the 800 megahertz bandwidth, while starting an all-out preparation for the first domestic commercialization in July this year. Through these efforts we expect to accommodate rapidly growing data traffic more efficiently, as well as enable diverse new services in the wireless environment, including high-quality video services and multimedia games previously available on the fixed line network.

Also we are making diverse efforts for capacity expansion even in the WCDMA area to support the continuously surging data demand. Such efforts include gradual expansion of the 6FA operating area, data preferred FAs and 6 Sector Solution areas.

To upgrade our network competitiveness and to expand our capacity we revised up the CapEx guidance from Q4, 2011 by KRW300b to KRW2.3 trillion. In the platform business area, which is one of the future growth pillars, we are pursuing businesses such as commerce and T Store with viable growth potential, by leveraging the strong subscriber base even under the open platform environment.

In the commerce area the 11th Street, which began its operation only in 2008, is expected to reach breakeven point on an annualized basis this year, owing to its rapid growth. As a matter of fact, it is narrowing the market share gap with the number two player in the industry, with only 1% difference. Also, to ride the tide of wide smartphone adoption, we are launching the mobile 11th Street to pioneer in the mobile commerce category.

In the case of T Store, we are delivering visible results such as entry into China and Taiwan. We anticipate such global market entries to accelerate going forward.

In addition, we will continue discovering and fostering additional new businesses with high growth potential such as messaging, SMS and personal media based on N-Screen to name a few.

In the B2B area we are strengthening our market dominance in the corporate business, leveraging the converged capabilities of SK Telecom and its subsidiaries SK Broadband and SK Telink. In the mobile office category we have completed implementation at over 640 corporate sites. This year we will create visible results in the IPE area, as well through the development and commercialization of industry-specific vertical solutions such as healthcare and education, based on the strategic alliances built to date.

As mentioned earlier, SK Telecom will continue achieving revenue growth with the prevalent adoption of smartphones which began last year, as well as grow in the new business areas. Also leveraging the firm across-the-board competitive edge in network quality, handset line-up and customer service, we will help end the price competition by way of market stabilization.

We will do our utmost to reinforce the encouraging potential as a platform player, as shown through the 11th Street and T Store, so that year 2011 will be a year of new leap forward in earnest and a year of turnaround in profit.

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

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

(Interpreted). Now Q&A session will begin. (Operator Instructions). The first questions will be presented by Mr. Jeff Kahng from Credit Suisse. And the next question will be presented by Mr. Yang Jong-in from Hankuk Investment Securities. Mr. Jeff Kahng, please go ahead with your question.

(Interpreted). I have the following two questions. First of all, last quarter you have communicated with us the annual guidance under the K GAAP basis. Now that you are introducing the IFRS system of accounting, how would you revise or change the guidance based on IFRS. Could you communicate the numbers? And also, relatedly, how do you look at the CapEx trend going forward in the mid to long-term perspective.

My second question has to do with your ARPU which seems to have edged down slightly again during this quarter. So I was wondering when you feel that the turnaround of ARPU would be possible, because we believe that with the wider adoption of smartphones eventually the ARPU is going to go up, but I would like to get some color about what time period you are looking at.

(Interpreted). Let me answer your first question regarding the guidance under the IFRS term. I believe that overall management plan for the revenue and operating income target have not really changed in principle. But if I may communicate with you the unconsolidated version under IFRS, the revenue guidance will be KRW13.5 trillion while operating income will be KRW2.4 trillion.

And let me also address the second part of your first question regarding the mid to long-term CapEx trend. Because we have revised up the CapEx guidance by KRW0.3 trillion this time, I'm sure that you are curious about the mid to long-term perspective. If you look at it from the mid- to long-term perspective, with the development of new technologies and more efficient utilization of investment, we believe that in the mid to long term we will be able to stabilize the CapEx figures in a downward trend. So going forward we will do our utmost to develop further more efficient technologies to enable that.

Regarding your question about ARPU trend, during the first quarter of this year, on a year-on-year basis, we had some differences in that. We now apply per second billing and also we have more growing number of the bundled subscriber base as well. That is why, on a year-on-year basis, it has edged down slightly. And, even compared to February of this year when we had the seasonal effect, we were not able to grow on a quarter-on-quarter basis either.

However, on an annualized basis, since we are anticipating the smartphone subscriber number by the year end to reach about 10m which would amount to about 40% of the total subscriber base, we believe that the ARPU overall will be improving. Because during this process the relatively low ARPU feature phone subscribers will be converting to smartphones instead, which will in turn raise the ARPU figure overall. So barring any major external factors, we believe that ARPU will be turning around as well.

(Spoken in Korean).

(Interpreted). The next questions will be presented by Mr. Yang Jong-in from Hankuk Investment Securities. And the next question will be presented by Mr. Kim Hongseek from NH Investment Securities. Mr. Yang Jong-in, please go ahead with your questions.

(Interpreted). I have the following three questions. First of all, during your opening remarks you mentioned about the positive effect coming from the T Store and 11th Street related business. But you have not communicated with us any specific numbers regarding such businesses. So, on a first quarter basis, could you share with us some more detailed figures such as revenue figure or the revenue growth rate percentage perhaps?

And the second question is regarding the shareholder return policy. Since you are the newly appointed CFO of SK Telecom, I was wondering how you anticipate the increase in earnings due to the change of accounting system to the IFRS system and how that would possibly impact the shareholder return. In terms of dividend and shareholder buyback plan, do you have any revisions or changes in your plan?

The third question has to do with your recent reduction, large reduction at that, regarding the net borrowing amount. So I was wondering whether you have any end of the year target figures for the liability ratio or any net borrowing related figures.

(Interpreted). Let me first address your question regarding some numbers regarding T Store and the 11th Street. Regarding T Store, based on the first quarter it has maintained a steady growth on a quarter-on-quarter basis. And as of Q1 the number of subscribers stands at 6.6m and accumulative download cases amounts to about 200m. And also the registered applications amount to 87,000. The revenue stood at KRW3.8b, which is a 121% growth quarter-on-quarter.

Regarding the 11th Street, as of Q1 the transaction volume stood at KRW0.9 trillion, revenue KRW61.1b, and our market share stood at 29.3%. And that actually is 1% shy from the second player's figure which happens to be Auction.

And also in terms of the cumulative subscriber number, actually it stands at about 15.1m subscribers. Most notably in terms of the transaction amounts as well as the revenue, on a year-on-year basis the business has actually doubled the results.

Next let me answer your question regarding the shareholder return. As you are well aware, our CEO has communicated with you in the beginning of the year regarding the basic direction regarding the shareholder return policy. So that trend will be maintained going forward. So, in other words, this year like the previous year we will maintain the similar level of cash dividend.

And as you mentioned, with the introduction of the IFRS system we are seeing some major differences from the previous year's figures. But as you are well aware this is actually a temporary, one-off type of change which will be impacted because of the accounting standard changes. However, going forward, once we begin to experience more visible performance improvement from the actual businesses, considering our financial situations we will actively consider additional shareholder return, including treasury share buyback.

Let me now talk about your third question regarding the annual target for the liability ratio or the net borrowing amount. At the moment we do not have any plans for further funding or borrowing so, assuming that the current FX -- exchange ratio remains by the year end, our net borrowing amount will be standing at about KRW3 trillion.

(Interpreted). The following questions will be presented by Mr. Kim Hongseek from NH Investment and Securities. The next questions will be presented by Mr. Stanley Yang from Nomura Securities. Mr. Kim Hongseek, please go ahead with your questions.

(Interpreted). I have the following three questions. Actually the first two questions are simply confirming what was answered previously, and I have one additional question.

First of all, you have communicated with us earlier that under the IFRS non-consolidated basis the annual guidance for 2011 in terms of revenue will be KRW13.3 trillion and OP will be KRW2.4 trillion. Is that correct? That's just one confirmation question.

And secondly, from the shareholder's perspective we would like to know what targets or what objectives has to be achieved by SK Telecom going forward for us to expect enhanced shareholder return or dividend.

And the third question has to do with your unlimited price plan for the data usage. There has been numerous coverage by the press and the media regarding the likelihood of the unlimited data plan taking place going forward. So I was wondering how that is likely from the perspective of SK Telecom because, as you are well aware, last year your network differentiating point in terms of marketing was that unlimited data plan. So I was wondering whether there's a likelihood that you could initiate such abolition of the unlimited plan.

(Interpreted). Let me confirm your first question first. Under the IFRS system basically our annual guidance does not really effectively change in terms of the revenue and OP targets. When we (inaudible) translates under the IFRS non-consolidated portion, yes, that is correct, our revenue target will be KRW13.3 trillion, OP would be KRW2.4 trillion.

And your question about the data unlimited price plan, as you are well aware we have launched this product based on our network -- as you are well aware, we have launched the data unlimited price plan leveraging our 3G network competitiveness. And we believe that competitiveness still remains effective as we speak. And, as a matter of fact, after we launched this new unlimited data price plan, out of the all-in-one fixed price plan adopting subscribers, over 67% has opted for the all-in-one 55 or above price plan which happens to fall under the unlimited price plan. And I believe that such effect proves that it is actually supporting the upselling effect which would eventually boost the ARPU. Therefore, at the moment, we are not reviewing the possibility of stopping or suspending the offering of the data unlimited price plan.

Let me now move on to your question regarding per share dividend. As you are well aware, our per share cash dividend stands at about KRW9,400. In terms of payout ratio it's about above 50% or almost 50% that is. At the moment we are not reviewing the possible increase of the cash dividend amount. However, like I mentioned before, if we achieve notable improvement in terms of the earnings going forward, we will prudently consider additional shareholder return, including the treasury share buyback.

(Interpreted). The next questions will be presented by Mr. Stanley Yang from Nomura Securities. And the following questions will be presented by Mr. Sun Chung from BNP Paribas. Mr. Stanley Yang, please go ahead with your question.

(Interpreted). Yes. I have one confirmation about the previously given answer and two additional questions. First of all, one confirmation about your guidance figures. In the beginning of the year, the guidance was that your operating profit would be growing at least by about 10%. And that of course was under K-GAAP basis. And if we convert that amount into the IFRS basis, in the non-consolidated basis for year 2010, your operating income was about KRW2.3 trillion. So if you were to grow that by more than 10% under the IFRS portion, your operating profit should be as high as KRW2.58 trillion. But nevertheless you said KRW2.4 trillion. So I think that's the reason for the confusion on our part. So could you elaborate?

And second question has to do with your CapEx. You have increased up the CapEx guidance by KRW300b and it hasn't been that long since you have given us the original annual guidance in the first place. So can you share with us the reasons why a sudden increase in the CapEx guidance? For instance, is it because of the faster-than-expected smartphone subscriber increase or is it because of the bigger demand for the traffic coming from unified communications side such as Kakao Talk and other players. So could you be more specific about the reasons?

And also the third question. If the shipping price of smartphones are to go down going forward, by how much reduction are you looking at? And how will that impact the overall marketing expense of SK Telecom?

(Interpreted). Let me answer your first question regarding the operating income growth by 10%. Of course that was under the K-GAAP methodology. As we transitioned into the IFRS methodology, as you are well aware, during 2010 that was a bigger operating income boosting effect which was more one-off coming from the trimming off of the depreciation and amortization expense, compared to that of 2011. So the difference for 2010 was much bigger. And also based on that fact, if we were to calculate the actual increase or growth on the operating income under the IFRS adjustment by 10%, our figure comes down to KRW2.4 trillion.

Regarding your question about the reasons for the CapEx expansion, basically this is a more pre-emptive action on our part to further enhance our network competitiveness in order to accommodate rapidly growing data traffic.

Therefore, I believe that the impact coming from specific services such as Kakao Talk will be quite limited on the network. So basically this investment is to further improve our fundamental competitiveness. So by furthering enhancing our network competitiveness I think that we will be able to move away from the marketing-expense-related competition to a more fundamental competition instead. So this is more of a preemptive move.

And also related to your question about the shipping prices of handsets going down possibly, that is something that the manufacturers or the vendors should decide. Therefore, you should assume that its impact on the overall marketing expense of SK Telecom will be almost none.

(Spoken in Korean).

Thank you for the opportunity to ask these questions. Actually it's related directly to Mr. Ahn. As the new CFO, if you could give us and share your philosophy on financial engineering. As we can see that earnings this year will grow and improve, what is the priority from the management to use the operating cash flow? We can see that marketing expense will come down. At the same time you will be investing more into improve the network and capacity. But in terms of long-term target margin, what is the management's idea of normalized EBITDA margin going forward?

(Interpreted). First of all, I must thank you for this question because that question tells me that you have high expectations from the newly appointed CFO. So thank you.

Basically, I believe that the roles of CFOs do not only involve the short-term management target achievement or the earnings improvement in the short run but also to ensure long-term growth going forward. So I believe that the most important role of a CFO is to strike the right balance between the two.

Therefore, through the improvement of the fundamental competitiveness and by leading the market stabilization in the short run, I will do my utmost to achieve the revenue and also the earnings targets. And at the same time I would like to ensure the growth of the Company by fostering and supporting new business areas such as platform and new businesses. And I will be allocating right resources at the right places.

So what I'm trying to tell you is that I will be doing my best to come up with the right balance between the investment for growth versus the shareholder return. And also I will do my best to maximize the enterprise value to the benefit of the interests of shareholders.

And regarding the EBITDA margin related question, I will do my utmost to improve the profitability going forward and also we will make various efforts internally to make sure that these targets are achieved across the board. And at the same time, I will do my best to heed to the opinions of the investors and analysts.

Thank you very much and good luck to your new endeavor.

Thank you.

(Interpreted). The next questions will be presented by Mr. Sam Min from Morgan Stanley. Following questions will be presented by Mr. Kim Dong-June from Eugene Investment Securities. Mr. Sam Min, please go ahead with your questions.

Yes, hi. I'd like to ask you on guidance once again because I'm trying to reconcile how your revenue is going to increase by about KRW700b to KRW800b year over year on a non-consolidated IFRS basis, but how your OP could remain the same or flat year over year. So I'm assuming then perhaps because you mentioned depreciation then that the EBITDA could increase. So if you can give us more details and color on that, I would appreciate it.

And secondly, on regulation, so we're all waiting for the tariff cut measures to come out and I asked this question to your competitor as well. But what is your base case assumption for tariff cuts and what is your worst case assumption. Thank you.

(Interpreted). Regarding your question about the differential that you are looking at between the revenue growth year on year versus the operating income growth year on year, basically with the transition towards the IFRS accounting system there have been numerous depreciation and amortization adjustments which were made. Therefore, at a glance, I'm sure for many analysts it might be quite confusing to understand. So I would like to ask you to please refer to our IR team so that we could provide to you some of the more details, so that we could give you some more color on that.

As you are well aware, there has been an ongoing demand for tariff reduction on the telecommunications expenses. And I believe that there are numerous discussions ongoing at the moment regarding this topic. But at the same time, there are some discussions that with the wider adoption of smartphones in the industry, we should perhaps reclassify telecom expense under the cultural leisure expenses instead. So I believe that more diverse opinions will be reflected in the current ongoing discussions.

However, because there are ongoing discussions as we speak, involving various interested groups as well as there are many complex market dynamics as well, so please understand the fact that we cannot share with you more the detailed numbers at this point.

(Interpreted). The following questions will be presented by Mr. Kim Dong-June from Eugene Investment Securities and the next question will be presented by Mr. John Kim from DSK. Mr. Kim Dong-June, please go ahead with your questions.

(Interpreted). I have the following three questions. First of all, regarding LTE, out of the total CapEx amount allocated to this year, amounting to KRW2.3 trillion, I was wondering what is the amount allocated for LTE or the percentage out of the total CapEx. And also next year you are planning for a nationwide rollout, so what will be the total LTE related expenditure.

The second question has to do with investment efficiency. In the month of July you will be actually launching LTE services in a commercial way. So I was wondering whether that will have an impact on the existing price plans. In other words, would this network be differentiated in terms of data price plans compared to 3G? And if you consider the fast speed of LTE network, I was wondering whether you would apply the same rules of the all-in-one 55 or above price plan in the same manner for the 3G network versus LTE.

And if you have completed a certain level of capacity expansion for LTE already, I was wondering compared to 3G network, what is the maximum capacity for data that you could accommodate on the LTE network.

(Interpreted). Let me answer both of your questions, regarding LTE about the portion of LTE-related CapEx expenditure, out of the total CapEx guidance and also how much the total amount will be for the nationwide rollout.

First of all, what I could tell you at this point is that in the month of July as we launch the LTE commercial service, we will be targeting the Seoul area only. Therefore -- and it is because we want to consecutively make the necessary investment in building the right ecosystem including the LTE-specific handsets. So when it comes to this year's CapEx, because it will be limited to the area of Seoul, we believe that LTE-related expenditure would be limited to a small amount.

And regarding your question about the nationwide rollout and how much LTE total expenditure will be mid to long term, I believe that we will have to actually complete the rollout of the networks to a certain critical mass for us to give you a better rational assessment or predictions about the total LTE-related expenditure going forward.

And one thing that I must mention about our differentiating point regarding the relevant investment. Because we will be able to reuse a lot of the components already being used in the 8-megahertz network such as the repeaters as well as antennas, I believe that compared to other competitors we will be able to significantly limit the investment.

And let me answer your question regarding the price plan impact on the LTE. Because compared to 3G network, LTE will be definitely faster with higher quality, so we anticipate better enhanced service quality for the users. And because of specific characteristics of the LTE-specific network, we believe that there might be a demand or a need for LTE dedicated price plans. So we are at the moment in the reviewing process of all the possibilities.

And lastly, regarding LTE capacity, if you assume that we are using the same frequency spectrum, we could anticipate almost three times as large capacity that we could provide with the LTE network.

(Interpreted). The following questions will be presented by Mr. John Kim from DSK. Mr. John Kim, please go ahead with your questions.

Yes, thank you for the opportunity. I have one follow-up plus two questions. First, this has come up many times in the previous questions. It's more of a request. I think it would be useful to have clear explanation with some numbers that helps us understand why going from KRW2.35 trillion in 2010 to KRW2.4 trillion in 2011 under K-IFRS would be equivalent to going from KRW2.03 trillion to KRW2.23 trillion under K-GAAP.

My two questions are, first regarding spectrum. Based on management's expectations, how long do you think your existing spectrum might remain sufficient? This is on the back of your increased CapEx plan to cope with rising data traffic. Do you think you have enough spectrum at the moment to operate your 3G and LTE services that are sufficient to your standard of operations for the next three to five years?

Second question is on the tariff cut. The mobile industry as you know have been coping with tariff cut pressures almost every year for the past several years. In your view, have tariff cuts benefited shareholders in any way? And what might be the rationale for the industry to cooperate with such demands going forward?

(Interpreted). Regarding the operating income related guidance, whereas we communicated the guidances on operating income before under K-GAAP, now this time around we are communicating with you in terms of IFRS. And also the last time it was under -- it was 10%, which was a percentage figure and now this time we are giving you certain set value. So I'm sure that that's causing some confusion on your part and that's the reason for your request.

Basically, on a year-on-year basis, the IFRS-based percentage differential seems to be quite minimal I understand. And it is mainly due to various depreciation and amortization adjustments that was required by K-IFRS. And as a result during 2010, the earnings boosting impact from IFRS change was much larger compared to that of 2011. That is the reason for a seemingly very minimal difference between last year's and this year's operating income. But I cannot go into all the line item details at this particular point. So I would like to once again invite you to please contact our IR department or we will contact you so that we could sufficiently communicate with you about the differences.

Next, let me answer your question regarding our spectrum and how our capacity support is being handled at the moment.

First of all, in order to fully accommodate rapid increase of data traffic demand, we are making various investments and developing diverse solutions to keep abreast with such changes.

More specifically, we are making investments into data preferred [FAs] and six sector solutions and we are also trying to distribute -- diversify and distribute traffic between Wi-Fi network and femtocells as well. In the mid to long term perspective, we will be launching our commercial service of LTE in July this year and beyond that we are also planning for the rollout of LTE Advance. Therefore, we do have plans in place to further develop our solutions and to enhance our network to fully accommodate the data traffic increase.

And so at the moment, in order to accommodate such demand we are allocating KRW300b additional CapEx this year in order to further maximize the capacity within our existing network. But not only do we need to make investment in the facilities or the network, I do believe that it is also important to secure spectrum when these arise.

Therefore, looking at the current rapid growth of traffic on the network, we believe that simply using our current spectrum will not -- will have some limitations. Therefore during the second half, we plan to proactively seek to acquire additional spectrum.

Lastly, let me address your questions regarding tariff cuts. First of all, the fact that we are having to discuss about the ongoing pressure on the tariff cuts each year, we also feel sorry about that situation ourselves. So at this particular juncture please understand our position in not being able to share with you very clear cut answers on these questions.

However, let me remind you that despite the fact that we have actually implemented tariff cuts each year, we were able to actually offset the reduction amount in revenue by further improving our revenue efforts so that we could actually offset it and further increase the revenue despite such reductions.

So as we have in the past, we will continuously use our wisdom and prudence in order to deal with this pressure in a wise manner. So I could reassure you that you could anticipate further enhancement of earnings going forward.

Especially this year, by way of further market stabilization, we will do our utmost to further improve the profitability.

Thank you.

(Interpreted). With that we will conclude the Q&A session. Now let me invite the closing remarks of our CFO.

(Interpreted). Let me extend my deepest appreciation to all of you for staying with us until the very end of the conference call and thank you for your level of interest.

SK Telecom is making meaningful achievements as a market leader by maintaining its competitive edge while leading the market stabilization efforts. We will continue to do our utmost to realize full-fledged growth in wireless Internet and to bring about visible results in new growth areas including the platform business.

I ask all the investors and analysts for your continuous interest and support for SK Telecom.

The SKT top management will make extensive efforts to ensure diverse communications with the investors and analysts in order to exchange ideas and opinions.

Once again, thank you for your participation.

(Interpreted). This concludes the earnings conference call for the first quarter 2011. Thank you.

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.