[Korean] Good morning and good evening. First of all, thank you, all, for joining this conference call. And now we will begin the conference of the 2012 Fourth Quarter Preliminary Earnings Results by KT. This conference will start with a presentation followed by a Q&A session. Consecutive interpretation will be provided for your convenience. [Operator Instructions] Now we shall commence the presentation on the 2012 fourth quarter preliminary earnings results by KT's CFO, Mr. Bum Joon Kim.

[Korean] Good afternoon. I am Youngwoo Kim, IRO of KT. We will begin the fourth quarter 2012 earnings conference call. You can join the conference call via the website and can look through the presentation slide as we make the presentation. Since Q1 of 2011, KT has been presenting consolidated numbers based on IFRS accounting standards. But from Q4 of 2012, pursuant to the revisions to the corporate accounting guidelines announced on October 17, gains and disposition of assets such as real estate have been taken out from operating profit to be included in the nonoperating revenue side. [Korean] Also, in Q4 2012 consolidated figure, business result of a total of 61 companies, including KT and KT SEC [ph], which was spun off from KT last December and new entities like the Media Hub and KMP Holdings, which KT Music acquired, are all-inclusive. With that, our CFO, Bum Joon Kim, will begin the presentation.

[Korean] Good afternoon. I am Bum Joon Kim, CFO of KT. In recent years, the world, Korea included, has been undergoing a transformative change known as the smart revolution. There's a change were fixed and wireless broadband connect to the entire world with the joining of cutting-edge ICT technologies. As a result, connection is possible anytime, anywhere in the huge global single market with no borders, tariffs and constraint to transportation cost has been created. And the product that are traded in this market are the virtual goods. [Korean] In 2012, we learned for certain that we have the competitiveness and leadership required for opening up a new era of virtual goods based on KT's world's best fixed wireless broadband network and biggest All-IP subscriber base in Korea. [Korean] We solidified our #1 position by securing All-IP subscriber base of more than 26 million, which includes more than 6 million media subscribers, 10 million smartphone subs and 8 million for both end and smart home subs, including K-Pad. [Korean] Also, through the mobile payment service, MoCa service [Moneta Cash] , with strong base of membership companies and Genie K-Pop, which is Korea's first global music service and olleh tV now, which is the end-screen service with the best content space. We have launched a variety of virtual goods services, further strengthening our service competitiveness. [Korean] Based on KT's top-quality All-IP network infrastructure and the biggest IP customer base, we will lead the fixed and wireless convergence market, were virtual goods will be consumed seamlessly, anytime, anywhere by launching diverse array of handsets, services and rate plans. Through such efforts, in 2013, we plan to generate more than KRW 25 trillion in revenue on a consolidated basis. [Korean] And we now move on to 2012 business results. [Korean] In 2012, with…

[Korean] Please refer to the materials which are circulated for more details. We will now begin the Q&A session.

[Korean] [Operator Instructions] [Korean] The first question will be provided by Yang Jong In from Korea Investment and Securities. And our next question will be provided by Josh Bae from UBS.

[Korean] I would like to ask 2 questions. The first question has to do with your 2013 outlook for LTE business. Basically, how much -- how many subscribers are you planning to target in Q4? And also, ARPU actually increased 2.4% on a Q-o-Q basis, which was quite encouraging. So in 2013, how far do you think that the ARPU will go? Second question has to do with KT's view regarding the market's competitive landscape to come in the first quarter, and also, any forecast for second quarter as well.

Thank you for the question. Our '13 outlook for LTE, we're looking at close to 50% of our total network being LTE subscribers. [Korean] And I think for the ARPU, it's safe to say that we'll probably increase by the year end about 8% from the current level. [Korean] In terms of your question regarding our outlook for this first quarter and second quarter, I think it's important to point out what was the difficulty that we had last year, which was actually late entry into the LTE market. So now we have everything ready, including handsets, network, pricing schemes. It will not, in our view -- our plan is to not be as expensive as last year. [Korean] Also, I'd like to point out that we look for a market that is much more stable than last year. From our perspective, I think, as I mentioned earlier, we're much more competitive standing now. And the changes in some of the contracts between the subscriber and network operators are getting more tighter, so I think it'll reduce churn rates. So overall, we hope to see a much cooler market this year. [Korean] And just to add a little more, I think, I just want to point out to our investors that the ARPU of the new sign-ups of LTE is still quite strong, so we're quite happy with that. And we hope that we will continue to see increasing trend in ARPU like we did last year, as we promised earlier. [Korean]

[Korean] The next question will be presented by Josh Bae from UBS. And the following question will be presented by Kim Hongseek from NH Securities.

My first question is a follow-up regarding your wireless business. 2012 looks to have been a tough year, as you mentioned, with your wireless subscribers recording a net loss. Could you please let us know what your planned targets are for 2013 in terms of overall wireless subscribers? Your competitor that announced results earlier this week looks to be targeting another strong year in terms of subscribers, so how do you plan to respond to that? And are you comfortable with being the -- being #3 in terms of LTE subscribers? My second question is on your investment plans. There were press reports that KT submitted a bid for Maroc Telecom, which I think was a bit of a surprise to the market. If you could share with us what your criteria are when you're considering M&A opportunities? How much capital are you willing to commit to M&A opportunities, what your hurdle rate is, what kind of geographical areas or business areas you're looking for? That will be very helpful. [Korean]

[Korean] To answer your first question, wireless business last year was pretty tough. I mean, I mentioned it many times, without a network, it's hard to sell something that's good. So it's ready. And if you look at our marketing cost expenditure on a half-year-half-year basis, we did a lot of saving in the beginning and then we actually spent some money last year and towards the second half. I think what I'm trying to say is that, all in all, we have an internal target for LTE, as I mentioned earlier, 50% of our total subs. It's hard to say about the overall growth of the market because it is very, very penetrated at this time. And -- I know your comments regarding our competitor, but I really can't really address that. [Korean] But I think overall, we're hoping that the market calms down. And we have a very good, competitive offering to our subscribers including TV, wireless, fixed line, everything. So we will find the fundamental benefits that KT can sell to our subscribers. [Korean] With your question on what you saw in the newspaper regarding Maroc Telecom, Maroc Telecom would be one of many things that we look at. I know you've heard that we were looking to Telkom South Africa. All those things we look at in terms of a sort of a co-source management. It's much like Telkom South Africa, we look at opportunities for not just equity ownership, but we want to go out and sell our business, our corporate business. [Korean] So Maroc Telecom came in to our radar screen, and it's in very early stages. So there's really nothing more I can say about Maroc Telecom. [Korean] In terms of how we look at the investments, yes, much like any business opportunity that we see, we have our own hurdle rate. We also have additional premiums in hurdle rates for various parts of the world, as well as even internally in Korea. We define it by risk factors, and we have various stages from A, B, C or D. And we add up on much more tighter hurdle rates for the more risky ones. So this is including everything, countries [ph] , [indiscernible], all that. So we have our own internal guideline, and this one, again, we will consider all that stuff. [Korean]

If I may just follow up, should we be thinking that it is possible for KT to make a multibillion dollar investment outside of the core business? [Korean]

That will be difficult to say. That answer would require how much resources we have and what investment target would be. But I think out of -- the key part of your question is, out of our core area, and I think that's very slim, I think we will stick with our core as we did, like I said, in Telkom South Africa where we want to sell our products to them, as well as having equity ownership. [Korean]

[Korean] The next question will be presented by Kim Hongseek from NH Securities. And the following question will be presented by Stanley Yang from Nomura Securities. Hongseek Kim - NH Investment & Securities Co., Ltd., Research Division: [Korean] I would like to ask 2 questions. The first, KT had -- you spun off your real estate subsidiary. And my question is, if we were to look out 4, 5 years along the road, what would be your real estate subs contribution to your operating profit on an annual basis? And second question is that KT does have a very good asset value, but from, I guess, from the investors' perspective, there are some, I guess, less than a satisfactory utilization of that asset value to pump up your prices. So what -- or going forward, what are some of the measures that you're going to use to really try to make use of these good asset values to really be reflected in the equities market?

Thank you for the question. Yes, we spun off the real estate business in order to find more expertise in this business, as well as not be stuck inside KT, we think it will be much better run. And we brought in a new CEO to run this business. [Korean] We -- overall, revenue for the real estate business should be greater than that of 2012. [Korean] And it should be a slow increase, with the current plan that we have for the next few years. [Korean] Now because it was recently spun off, I think they will probably have more ideas. And when that idea is release to us, we will relay it to the market. [Korean]

[Korean] The next question will be presented by Stanley Yang from Nomura Securities.

[Korean] I have a question related to your 2013 guidance for depreciation, labor cost and marketing cost. If you could provide us with a range, that would be appreciated. Second question is about your fixed line revenue continues to decline. And once it did show -- I mean, the speed did slow down to a certain extent, but in the third quarter and in the fourth quarter, the trend turned more aggravated. And I think that this is the -- the fall in the fixed line revenue is one of the biggest factors behind the lower profitability. But -- and I also think that OTT players like Kakao Talk, they not only cannibalize the wireless space, but they could also impact the fixed line aspects, which does concern me. So do you think that the decline in the fixed line revenue would be further accelerated because of such OTT players? And for 2013, so do you also project that your fixed line revenue to decline? And if so, to what extent? And also, what is your long-term view?

To answer your questions, I can't go into exact details of the 2013 question you asked, but I can give that the depreciation was increased slightly on a stand-alone basis, and it will increase more on a consolidated basis. Marketing cost, we're expecting it to go down slightly this year. And labor cost, will, for the KT standalone, it will increase slightly. [Korean] Could you repeat your second question for me? I didn't understand the connection between fixed line and Kakao Talk? [Korean]

[Korean] So I guess, the logic there is that, of course, Kakao Talk will eat into the SMS revenue. But also, I was wondering whether Kakao Talk is actually having an impact in the decline in the PSTN revenue because people are using less of their home phones. They will just send, for instance, Kakao Talk text messages. So mobile to fixed or fixed to mobile, I think that is also being impacted by the widespread use of Kakao Talk so -- Kakao Talk services, and that will have a negative impact on your top line as well. So that is where I was coming from.

Oh, I see now. Okay, I understand. You're right, anything that products that are made to make it -- to make usage more easier on the wireless side, will definitely cannibalize fixed line. And that's true. If you look at the subscriber trend, it's actually improving for us -- subscriber losses in the fixed line is improving. However, the ARPU has been slowly falling for the last 3 years. I think in 2008, there was around KRW 16,000 for fixed line, but now it's down to about KRW 10,800 -- KRW 10,900. So it's coming down and that's the tough part that we're trying to overcome right now. [Korean] But if you look at the year-on-year decrease in fixed line, it is improving in terms of slower reduction. So I think this year, we see it falling from -- I think last year, we lost KRW 330 billion to roughly around maybe a little over KRW 220 billion, it will be the total loss. [Korean]

[Korean] Currently, there are no participants with questions.

[Korean]

[Korean] Next question will be presented by John Kim from Deutsche Securities. And the following question will be presented by Seyon Park from Barclays.

I just have one. I understand that in spite of the operating suspension during the month of January, the mobile number portability traffic, despite the fact that LGU was not participating, remained at an extremely high level. So Mr. Kim, given that you've also observed the sector for a very long time, what do you think, or what kind of measures would be necessary in order for the industry to sustain an extended period of stabilized marketing environment? [Korean]

Thank you for the question. Whenever a new -- you're right, I've been here for a long time. Whenever a new network is launched, there is kind of a fervor of operators trying to switch over the subscribers, and that's probably what you're seeing right now. I think in the beginning, it was -- last year was our operator -- our competitors, this year, sort of we are ready for LTE. But I believe that we are going to try as much as we can to cool down the market and focus on profitability this year. Last year was just -- we had to sort of sustain because of our network issue. But this year, it's better, and we hope that it will bring a much stabler market, as we go towards more of second quarter, third quarter. [Korean] There has been some regulatory measures like more stiffer contract. But beyond that, I think it is really up to the operators. Like us, we are focused on profitability, so hopefully that will kind of proliferate into the other carriers and we will see a cool down in the market. [Korean]

[Korean] The next question will be presented by Seyon Park from Barclays. And the following question will be presented by Kim Hongseek with NH Securities.

I have 2 questions. First of all, due to the reclassification related to the accounting changes, what would have been your operating profit if we stick to the old standard? And can you provide us some details as to what the other operating gains and the other operating losses are? I did notice that it did increase significantly on both accounts coming into the fourth quarter. And then secondly, can you just provide us some CapEx breakdown for 2013 guidance, please? [Korean]

[Korean] To respond to your second question first, for CapEx, this year, we are -- the guidance is KRW 3.5 trillion, KRW 200 billion less than the previous year. To break that down, wireless is KRW 1.1 trillion -- fixed is KRW 1.1 trillion, and others is KRW 500 billion. To answer your first question, the fourth quarter operating profit would have been in the old IFR version, it would have been KRW 200.4 billion. [Korean] To give you the breakdown for the 2013 CapEx guidance, for wireless, it was previously KRW 2.6 trillion -- KRW 2.1 trillion. That will come down to KRW 1.6 trillion, around KRW 1.6 trillion. For 3G and LTE, the CapEx will decline, but there's also investment into multi-carrier networks. So that will make up for that. [Korean] In terms of the wireline or fixed line, from previous years, KRW 1.1 trillion. There will be a slight increase to around KRW 1.2 trillion. That's because last year, we were focused on LTE, so fixed line investments kind of lagged. But come this year, we're going to make some improvements in the broadband network or broadband equipment facilities and also make investments in the lease lines as well. [Korean] And in others line item, we're looking at about KRW 700 billion, so it's about KRW 200 billion more than the previous year.

So can you provide some breakdown on what the other gains and the other losses were that kind of made up for the KRW 150 billion or so in operating profit? [Korean]

In the fourth quarter, we had a real estate disposal gains of KRW 110 billion. And also, cable sales, copper sales, copper cable sales of KRW 153 billion. [Korean]

[Korean] Next question will be presented by Kim Hongseek from NH Securities. Hongseek Kim - NH Investment & Securities Co., Ltd., Research Division: [Korean] Yes, I think one of my previous questions was not answered, so let me reiterate the question. My question was, like KT has very good home assets. So how are you going to realize the value of these assets, for instance, you could actually set up a real estate sales company to which you will sell your assets and actually realize the value? Or you could actually conduct reevaluation of the assets that you hold, so what are your plans? And also, last year, although your results weren't all that great, you did pay out KRW 2,000 per share as dividend. This year, we are hoping and expecting a better profit numbers to come in. So if the profit actually improves, then can we actually expect better dividend payout?

First of all, I apologize for not addressing your second question the first time. To address it, yes, we will capitalize on a lot of the buildings that we have. And this is through our initiatives in the All-IP. So as we go All-IP, we are not going to need all these buildings that we have, and we will use the real estate company to develop it. [Korean] In terms of assets revaluation, no, we have no plans to revalue assets at this time. [Korean] And we will continue to extract cables going forward as well. [Korean] To address your question on dividends, we have committed to a minimum of KRW 2,000 per share starting last year and up to next year, 3 years during this [ph] term. [Korean] And having said that, it could be theorized that, yes, it could go up. But I think more -- closer answer would be that we have to look at all our growth strategies and our financials at that time for addressing higher than KRW 2,000, but it's not say that -- it's not -- it's out of the question. [Korean]

[Korean] Currently, there are no participants with questions. [Korean] Next question will be presented by Sam Min from Morgan Stanley.

I guess I wanted to go back to your guidance on essentially, marketing, labor cost and depreciation. It appears that with your parent business, with marketing expected to fall only slightly and depreciation going up slightly from last year, it seems that profit improvement from your core operation will likely sort of remain pretty much the same year-over-year. Correct me if I'm wrong there. And if you could share with us any sort of profit guidance, if you have any. And if you don't, I just wanted to know why, as a sector, we have not been able to get the EBITDA guidance, not just from KT, but from all telcos? [Korean]

Yes, thanks for the question. I would like to give a profit guidance, but we have done -- we have not done that in a while. It's mainly just the fact that it makes it very easy for our competitors to figure out marketing cost. It's simple as that. Our marketing department is very sensitive of the issues, so we haven't been in a while. [Korean] But to just address your other questions, just a couple of big headlines. We do see increase in wireless revenue because of that fact that we will have more LTE subscribers, which leads to higher ARPUs. [Korean] Also on the fixed line side, we see decrease in PSTN by roughly around KRW 300 billion. But we should have that being made back up by IPTV's revenue growth of roughly around KRW 200 billion. [Korean] We should also see some slight increase in our broadband business. [Korean] And I think I've mentioned earlier, regarding the marketing cost which we should see a slight decrease since last year. [Korean] So overall, we do see increased expansion in margins this year over last year. [Korean]

That was extremely helpful. If I can follow up, what do you think would be the regulatory environment this year in regards to the potential tariff cuts? [Korean]

I guess the first one I could address is the elimination of the subscriber sign-up fee. [Korean] Any kind of tariff rate cut is very painful for us. It goes directly down to the profit line. So whatever happens, and we have to make it up somehow, so it's tough. If this happens, I think we could see an annual profit -- I'm sorry, revenue reduction of roughly KRW 120 billion [Korean] And there's really nothing I can add about how we are dealing with that, I mean, that's for our CR department. And as we get -- as I get more clarity on that, I would let the market know. [Korean] But overall, I mean, our stance is we look for a no-tariff reduction because natural competition itself is bringing down tariff anyway. So it's difficult to say exactly how this will play out. [Korean]

[Korean] Our next question will be presented by Kim DongJoon from Eugene Investment & Securities. DongJoon Kim - Eugene Investment & Securities Co Ltd., Research Division: [Korean] In terms of the sales of the corporate line and real estate, I think last year, it all amounted to about more than KRW 400 billion. But I think this year, we will continuing to oversee the sales of copper lines and real estate. But overall on the profit side, would this have an increasing impact or a decreasing impact? Can you give us some guidance?

[Korean] Now the real estate and the copper line market is very unstable, so it's hard to give you a specific guidance per se. But I can provide you with a direction. For this year, according to our plan, of the amount or the degree of, I guess, sales coming from these 2 would be lower than the previous year. [Korean]

[Korean] If there are no further questions, we will close the Q&A session. Thank you very much for your interest and time and for joining us today. This has been Olleh KT's Q4 2012 Earnings Conference Call. Thank you very much.