KT Corporation (KT) Q4 2013 Earnings Report, Transcript and Summary

[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 2013 Fourth Quarter Preliminary Earnings Results by KT. The conference call will start with the earnings results presentation by Mr. Youngwoo Kim, KT IRO, followed by a Q&A session. [Operator Instructions] Now we would like to turn the conference over to Mr. Youngwoo Kim, KT IRO.

[Korean] Good morning. I am Youngwoo Kim, IRO of KT. Due to the company's 2014 organizational revamp and changes in management yesterday, today, I will be leading our conference call for the fourth quarter 2013. [Korean] This call is being webcasted on our website. You can follow the slides as we make the presentation. [Korean] Since the first quarter 2011, KT has been presenting consolidated performance based on IFRS standards. [Korean] Now let me start the presentation for the fourth quarter 2013. During the past year, KT has experienced significant changes. Due to innovative wideband LTE services and efforts to improve the distribution network, subscriber trends, which have been on a net decline, have turned around post net additions from the fourth quarter, thus enabling the company to regain its leadership in the telecom market. [Korean] The non-telecom businesses have continued solid performance. In this backdrop, we are boosting our efforts to realize full-fledged synergies with the telecom business. [Korean] The company's new CEO, Mr. Chang-Gyu Hwang, who was appointed yesterday, announced he would reestablish the telecom business and make KT #1, a leading telecom-based convergence services. [Korean] To this end, leveraging its largest and highest quality wireless and wireline telecommunications network in Korea, KT will preemptively provide top-quality and differentiated services. Moving away from simply competing on subsidies, we will lead service innovation-based competition and focus efforts to create new growth drivers using ITT-based convergence services. [Korean] In addition, the new CEO has requested all employees to put their full commitment behind overcoming the crisis and has declared a crisis management mode for the company. Specifically, the CEO has returned 30% of his annual salary and has deferred his long-term bonus until growth momentum shows signs of recovery. For senior management, they have also returned 10% of salary, while the total number of officers has been decreased. [Korean] Moreover, all investments and costs will be reviewed from square one. The company plans to review the efficiency of each business line and group affiliate to make adjustments as needed. [Korean] Internally, the business organization will be more empowered with clear performance-based compensation and responsibilities, in order to enable better communication and boost employee morale. [Korean] KT is planning to exert all efforts to overcome the current crisis, recover growth potential and profitability to emerge as KT, the #1 telecommunications player in Korea. With that, let me start the presentation on the 2013 results. [Korean] 2013 operating revenue was similar to the previous year at KRW 23,810,600,000,000. Merchandise revenue fell but service revenue increased 3.1% year-on-year to post KRW 19,844,100,000,000. [Korean] Operating income decreased 27.7% year-on-year to KRW 874 billion due to weaker wireline revenue and rising operation -- operating expenses, such as depreciation costs. [Korean] Net income was KRW 181.6 billion, a 83.6% decline year-on-year because of deterioration in nonoperating income due to factors, including less real estate and copper cable sales. EBITDA was similar to the previous year at KRW 4,440,200,000,000. [Korean] This year, we believe wireless revenue will grow at higher levels, but wireline revenue is expected to decrease. Our cost pressure is expected to continue. KT is planning to put the full force of the organization behind efforts to recover its telecom competitiveness and enhance the profit structure. Next, let me discuss the performance of our major subsidiaries. [Korean] BC Card, Kt Skylife and kt Rental all showed robust performance in 2013. Amid declining merchant fees and processing fees, BC Card was able to increase operating income to 0.1% year-on-year by controlling costs and increasing credit card and card usage volumes. [Korean] kt Skylife increased its subscriber base by 390,000 in 2013, which has led to a significant jump in monthly subscription fees, home shopping fees and advertising revenue. As a result, operating income surged 51.2% Y-o-Y. [Korean] kt Rental continues to record high growth, with market share increasing 2.3% points Y-on-Y and revenue and operating income growing 23.6% and 16.7%, respectively. [Korean] Other subsidies, such as kt ens, have also experienced significant performance improvements, leading to subsidiaries as a whole contributing KRW 529.4 billion to operating income, which represents an increase of around 3.6x Y-on-Y. [Korean] This year again, the company plans to strengthen the profitability of our subsidiaries and to focus on realizing group synergies. As a result, we expect stable performance in line with 2013 levels. Next, I'll talk about the breakdown of operating revenue. [Korean] While Media/Contents, Finance/Rental and Other service revenue continued on a growth trajectory, operating revenue remains similar to last year because of the continuous decline in wireline revenue. [Korean] Wireline revenue, amid a challenging environment of subscriber decline, recorded a slight increase of 0.9% Y-on-Y, supported by higher ARPU and the quick recovery in subscribers, following the launch of wideband LTE. [Korean] Wireline revenue weakened 6.7% year-on-year, driven by a continued decline in Telephony revenue. Media/Contents revenue continued robust growth of 25.3% Y-on-Y on the back of a growing subscriber base and higher VOD sales. [Korean] Finance/Rental revenue maintained a strong growth trend by growing 7.4% Y-on-Y, driven by stable BC Card revenue and strong revenue growth from kt Rental. Merchandise revenue dropped 13.8% Y-on-Y due to a decrease on wireless handset sales. [Korean] KT will focus on securing growth by enhancing telecom competitiveness. The company plans to achieve revenues of KRW 24 trillion or more in 2014 by improving wireless, media and subsidiary performance, enough to offset the decline in wireline revenue. Next, let me move on to operating expenses. [Korean] Operating expenses ended up at KRW 22,936,600,000,000, which was a 1.3% increase Y-on-Y. Cost of services provided increased 21.8% from the previous year due to an increase in contents sourcing fees. [Korean] In addition, cost of merchandise fell by 15.6% versus the previous year because of a decrease in handset sales. Marketing costs went up 4.7% year-on-year as a result of more active LTE marketing. Next, let me touch upon nonoperating income. [Korean] Nonoperating income in 2013 recorded a loss of KRW 560.3 billion, caused by less real estate and copper cable sales and more fines and losses on tangible and intangible asset disposals. Now, let me discuss the main highlights of our financial position. [Korean] The company's liability equity ratio as of the fourth quarter was 169.2%, which represents a 11.5% point increase quarter-on-quarter. Net debt stood at KRW 9,408,900,000,000 or a decrease of 2.2% quarter-on-quarter. Consequently, the net debt to equity ratio dropped by 0.3% point quarter-on-quarter. Next, let me talk about CapEx. [Korean] 2013 full year CapEx totaled KRW 3,312,500,000,000, which was a 10.7% decrease Y-on-Y, driven by the savings on wireless investments we enjoyed because we were able to secure wideband LTE spectrum. The breakdown of CapEx is: wireless, KRW 1,293,800,000,000; wireline, KRW 1,282,500,000,000; and others and common CapEx, KRW 736.2 billion. All in all, we executed 93.3% of the KRW 3.5 trillion 2013 CapEx guidance. [Korean] The 2014 CapEx guidance is KRW 2.7 trillion, a decrease of approximately 18% versus 2013. Next, let me delve into the performance of each service line. [Korean] Wireless revenue was up 0.9% year-on-year at KRW 6,976,500,000,000. It was challenging securing subscribers due to the 2 business suspensions, but we still increased ARPU by enlarging our LTE subscriber base. [Korean] As of 2013 end, LTE subscribers totaled 7.87 million subs or 47.9% of our total subscriber base. This January, we surpassed the 8 million LTE subscribers. Wireless subscribers continued to grow on the back of the launch of wideband LTE. Going forward, we believe this growth will drive revenue growth in the wireless business. [Korean] The average wireless ARPU for the year was KRW 31,556, representing a 6.2% increase Y-on-Y. Looking at the quickly improving subscriber trends, I believe there will be no changes in the long-term growth trends of KT's wireless business. [Korean] This year, KT will continue efforts to stabilize the market. In addition, we are going to maintain our leadership in wideband LTE and focus on securing future growth and improving future profitability by recovering our wireless competitiveness. Next is the wireline business. [Korean] Wireline revenue stood at KRW 5,955,400,000,000, which is a decline of 6.7% versus the previous year on the back of a lower number of both Telephony subscribers and minutes of use. However, broadband revenue increased 0.6% year-on-year due to higher ARPU levels as a result of less bundling discounts. [Korean] Total wireline Telephony subscribers as of 2013 stood at 18.02 million. Broadband continued to gain net additions to reach 8.07 million. KT will continue to expand its IP-based subscriber base to minimize the decline in wireless -- wireline revenue as much as possible. Next, the Media/Contents business. [Korean] Media/Contents revenue reached KRW 1,337,800,000,000, which is a 25.3% increase Y-on-Y, fueled by healthy growth in subscribers. [Korean] KT IPTV continues to renew its leadership in the pay TV market. In a strongly competitive market environment, it was able to acquire 940,000 net additions to reach 4.97 million subs. [Korean] In particular, in the Media business, nonsubscription revenues, such as paid content fees, continued to show extraordinary growth at 30.1% Y-on-Y. [Korean] IPTV is targeting net additions of 800,000 subscribers or more this year. Based on the robust growth in nonsubscription revenue such as PPV and home shopping transmission fees, we will continue to pursue qualitative growth via continuous ARPU enhancement. Next, the Finance/Rental and Other services. [Korean] Finance/Rental revenue achieved KRW 3,837,900,000,000 or a 7.4% increase Y-on-Y due to stable BC Card revenue and healthy growth from kt Rental [Korean] Other service revenue was KRW 1,726,600,000,000, up 32% Y-on-Y, driven by an increase in SI revenue from kt ens and consolidation of real estate revenue from KT Estate. And that wraps up my presentation on the fourth quarter 2013. [Korean] For more details, please refer to the materials circulated. We will now begin the Q&A session. [Korean] In addition, today, we have the former CEO, Mr. Bum Joon Kim, with us, who will be available for questions as necessary.

[Korean] [Operator Instructions] The first question will be provided by Kim Hoe Jae from Daishin Securities, and the next question will be provided by Yang Jong In from Korea Investment & Securities. Mr. Kim Hoe Jae, please go ahead with your question.

[Korean] So let me ask you a few questions. I think that the most urgent thing that KT needs to deal with right now is to normalize its wireless business. If you look at the net addition trends and in terms of subscribers, there has been continuous improvement. However, from March of last year, in terms of the overall performance, there has been deterioration. So I think that there needs to be some normalization of this area. In terms of the market share and in terms of your strategy, for example, the overall number of subscribers, is it to maintain the situation? Or what would that be? For example, what would the overall strategy be for the wireless business? And if you have any ARPU guidance for this year, that would also be appreciated. The second question I have is with regards to your Media business. If you look at the government's overall strategy to develop the broadcasting market, it is now being focused on commercializing UHD services. If you look at KT, KT right now has IPT -- KT IPTV and also kt Skylife. So how will these business lines be involved in the UHD services, commercial services going forward? In addition, if you look at the net addition trends in 2013, it seems that versus 2012, there has been more growth on the OTS side rather than the olleh tv side. So in terms of the support for Skylife, what would be the strategy? Is the joint marketing still something that is valid? Or is there a change in the spend? And lastly, I would like to ask a question about the new CEO's business strategy for the company and when there will be an opportunity for there to be a communication about the market, about that strategy.

[Korean] So as you have just pointed out, in 2013, in terms of our MNO subscribers, there has been a net decrease. However, if you look at the situation after September, after we have launched our wideband LTE services, in terms of our network competitiveness, I think that there has been a recovery. And using this as an impetus, I think that there has been an improvement in the brand awareness and also our distribution network. [Korean] So I think that there is 3 different areas in which we can actually prove that there are signs of a recovery in our wireless competitiveness. First would be with regards to our customer awareness. Second is in the distribution network. And lastly would be the recovery that we see in our subscriber trends. [Korean] So first of all, maybe to talk about our customer awareness, since we launched our wideband LTE services in September, for various customer surveys that have been focused on the wideband LTE, we have been a dominant #1 in terms of customer awareness. [Korean] So we do believe that this change in awareness will be one of the drivers in the recovery of our wireless competitiveness. And for the distribution networks, we do believe that this is something that is deeply related to the fundamental competitiveness of our business. And therefore, for the incentives that we provide to our sales agents or for the competencies that we have on the wholesale and also retail side, we do believe that there have been various achievements that we have been able to enjoy to see improvements in this area. [Korean] So lastly, I think I can talk about the subscriber trends right now in terms of the MMP subscribers. Up until the third quarter, we have seen around 50,000 in net decrease. However, that has significantly dropped in the fourth quarter to around 10,000. [Korean] In addition, if you look at the new subscribers MMP market share, it has gone from 27% in the third quarter to 32% in the fourth quarter, and we believe that this recovery momentum is something that we will see continue going forward. [Korean] In addition, if you also look at the handset sales trends, if you compare the fourth quarter to the third quarter, we see a 20% increase in handset sales, and this was all achieved without any large increase in the subsidies that we had provided. So all in all, we believe that across the board, with regards to our wireless competitiveness, that we do see gradual changes of improvement, and we believe that this momentum will continue going forward. [Korean] So to talk about maybe the subscriber target or the market share target that we would have, in terms of the number of subscribers, of course, it is difficult for us to share the target number that we would have. However, we do believe that in terms of market share, maintaining the 30% level that we have right now is something that is very critical for us to maintain the minimum amount of competitiveness or growth potential that we would acquire for this business. [Korean] So amidst this market environment, we do believe that it is very challenging for us to increase our market share to overheated competition. Therefore, we do want to change the paradigm of competition from one that is based upon the number of subscribers to one that is more focused on the level of service competitiveness that we can provide. Therefore, by achieving this quality to growth, we do believe that, that will help us maintain the subscriber base that we enjoy. [Korean] And lastly, to talk about our outlook for the wireless business, of course, the fundamental basic target that we would have is to have an opportunity to recover the growth potential of this area that was temporarily weakened. Therefore, in terms of the service revenue, the growth target would be to have a growth of around 3% or more. [Korean] In addition, as the percentage of LTE subscribers that we have out of our total subscriber base continues to increase and as we gain more and more healthier customers, we do believe that in terms of ARPU growth, that we will be able to achieve around 5% to 6% growth. [Korean] Next, to address the question that you had on the Media/Contents side about our UHDTV and the strategy that we have, for our new set-top boxes for IPTV, we are planning to have UHDTV compatibility. [Korean] In addition, we also do believe that for the UHD channels to the very pilot programs that we have, we will -- on the VOD side, we will be able to secure the platform technology that is required. [Korean] So as we are able to beef up our technical capacity, and also, we are able to have more content in this area, we do believe that there will be a natural progression to provide commercial UHD services. [Korean] So from the group level for UHDTV services, we do believe that Skylife has the upper hand. However, because structurally speaking, it is a technology that is more appropriate for satellite services. However, from KT as a whole, we are able to provide both IPTV and satellite TV services to our customers. Therefore, we do believe that as the network becomes more and more advanced, that from both sides, we will be able to provide UHD services. [Korean] In addition, to maybe talk about the net addition trends for last year on the OTV side versus the OTS side, one thing that I can say, I think, is that in terms of the net addition, the drivers behind that, I think, is more what the customers prefer in terms of the product competitiveness of either side. So in terms of where there is more growth or less growth in terms of the number of subscribers is less driven by the activities of the company and more driven by customer preference. [Korean] However, with this area, I think that there are just 2 factors that we would like to highlight. First is that in the case of our OTS services, this is a hybrid very unique service that only KT is able to provide. So being able to provide satellite, plus IPTV services, I think, enables us to enjoy a competitiveness that none of our competitors have. Secondly, in terms of the network efficiency and using our network more efficiently, as we have more OTS service subscribers use our satellite services, that actually decreases the burden that we have on our network, and therefore, that also leads to a cost savings in terms of the investments that we are -- that we require for this network. [Korean] And from a KT group perspective, I do believe that with regards to the balance between OTS and OTV services, that this is something that will naturally take place and naturally migrate.

This is Bum Joon Kim, the past CFO. I'll take the final call -- question on the new CEO issue. As you know, he was selected by a very fine group of selection committee, and everybody knows his background and coming back from Samsung. [Korean] He has been officially become a CEO as of yesterday. Prior to that, he spent about 30-plus days on transitioning and getting to know what's going on in the company. And as you might have seen, he has made some very big decisions in terms of the human resource. [Korean] And this morning, in the executive meeting, he decided to go into a state of crisis management. [Korean] And in the meeting, he has decided to give back 30% of his pay. [Korean] And there will be no bonus until we see a turnaround in the company. [Korean] So the point I'm trying to make is he is very serious about turning this company around. He's in the midst of getting his rein around the company's issues. And in terms of communicating with the market, coming from Samsung's background, he is very, very shareholder-knowledgeable. [Korean] So I've had my discussions with him, and he has expressed the need to speak with shareholders and with analysts in the near future. However, that will be at a time where he feels appropriate once the strategy of the company is firmly in place and he feels comfortable in discussing about the future and how we're going to have to turn the company around. So in short, he will agree to and will speak to the investors and also the analysts in the very near future, and he has expressed the interest in doing so. [Korean]

[Korean] The next question will be presented by Yang Jong In from Korea Investment & Securities. And the following question will be presented by Sean Oh from Merrill Lynch. Jong In Yang - Korea Investment & Securities Co., Ltd., Research Division: [Korean] There are 2 questions that I would like to ask you. The first question would be with regards to the long-term CapEx trends. If you look at your CapEx guidance for 2014, right now, you have presented KRW 2.7 trillion, which is a decrease of around 18% versus the previous year, and therefore, I believe that this is a very impressive number. However, if you look further down the road, for example, if we were to look at 2015 and 2016, and you were to be allocated new frequencies and there would be more investments required for that, do you believe that the KRW 2.7 trillion number in terms of CapEx is something that could be maintained? Or what would you believe would happen at that time? So that's the first question. And the second question that I would like to ask you is about the fourth quarter in terms of your wireline telephony trend. So on a quarter-on-quarter basis, the decrease was only around 0.2%, and therefore, I think that this is very impressive, and also, it is very positive for the company. But actually, I would like to understand better the reason behind why the decline has been less than previously, if you believe that this is a meaningful turnaround or that this would be a meaningful trend in terms of what it actually signified [ph].

[Korean] So maybe to take the second question first about the fourth quarter in terms of the wireline telephony revenue and why there, we have seen less of a decline. Actually, this is driven because in the fourth quarter, there was a temporary increase in our VoIP and other telephony revenue. [Korean] However, to talk about the future in terms of our wireline telephony revenue and the trends going forward and whether we actually believe that there will be a slowdown, I think that the company's general stance is to be a bit cautious about that. Because if you look at the situation last year, the decline was around KRW 400 billion, and we do believe that this year, it will be less, so somewhere in the mid-KRW 300 billion level. However, for the actual level and how we see this going down, if at all, I think as of this point, it's something that we believe it is too early to tell.

Let me address the issue on the CapEx. Yes, it was a dramatic reduction in CapEx from last year to this year's guidance, which is, last year, it's around KRW 3.5 trillion to now it's KRW 2.7 trillion. It's basically driven by the fact that we have to now be concerned about our cash flow and the ability to create the revenues in the future, and we believe that we can still do it with KRW 2.7 trillion. Now that being said, it's also safe to say that we will be focusing a lot on telecommunications, the excellence in telecommunications. We want to bring back and win back what we lost in telecommunications in the last 3 years. [Korean] So obviously, within the company, we do a lot of pulling and pushing to figure out which dollar makes the best rate of return. And at this point, we are omitting those that we find not to be any revenue-driven CapEx in the short term. So we are focusing on our revenue and our growth for the time being. [Korean] And lastly, internally, it shows tremendous corporate value increase only to continue to reduce CapEx and keep it down from our past amounts. So in essence, we're trying to increase corporate value. [Korean]

[Korean] The next question will be presented by Sean Oh from Merrill Lynch. And the following question will be presented by Sam Min from Morgan Stanley.

[Korean] So there are 2 questions that I would like to ask you. First, the question will be about your mobile ARPU. So if you look at the ARPU growth on a Q-o-Q basis, it was 2.6%. On a Y-on-Y basis, it was 4.8%. However, if you look at the revenue growth during the same period, on a Q-o-Q basis, it only went up 1.1%, and on a Y-on-Y basis, it only went up 0.6%. However, if you look at the subscriber numbers, in terms of subscribers, there actually hasn't been a significant difference. There was a slight decrease but not very significant. So I don't understand why the revenue growth has not been as healthy as your ARPU growth. Where is the gap and what is the reason behind that? That's the first question. And the second question is that if you look at your commissions line item, there seems to be a very large increase on a Q-on-Q basis. And what would be included in this commissions line item?

[Korean] Now to address the first question that you have between what the gap is with regards to our wireless service revenue and the ARPU, and you know why the growth numbers are not in line, there would be 2 reasons behind that. One is that in terms of the MVNO network usage fees that we received, that, that has not been -- that, that has been weakening. And then on the MNO side, that in terms of subscribers, we still don't see any increase in the number of subscribers yet. [Korean] So maybe to give you more of the specifics, for example, in terms of the MVNO network usage fees that we receive on a Q-on-Q basis, the decline has been around 37%. And in terms of the MNO subscribers, if you look at the quarterly average, it actually has decreased around 0.7%. So these 2 factors have actually had an impact, and therefore, they are the main reasons between the gap in terms of our growth on the ARPU side versus the revenue side. [Korean] In terms of the commissions line item that you mentioned, the main reason why there has been a significant increase there is because of the seasonality that KT has in terms of its business nature. So in the fourth quarter, there tends to be a significant increase, which has led to the healthy increase in commissions.

[Korean] The next question will be presented by Sam Min from Morgan Stanley. And the following question will be presented by Moon Jee-Hyun from KDB Daewoo Securities.

I have 2 quick questions. First would be on your dividend announcement of KRW 800 per share. We're kind of curious as to how KT came up with KRW 800, what the logic or rationale was, if there was some benchmark in calculating that amount. In addition, can we presume that perhaps future dividends will be at least higher than KRW 800 per share, considering that your capital expenditure will be falling this year? My second question is on marketing cost. We've seen a pretty big jump Q-over-Q in the fourth quarter. And could you perhaps kind of explain what kind of drove the increase in marketing cost during the fourth quarter? Lastly, just wanted to thank CFO Kim for all the participation and help with the sell side, as well as buy side, and I wanted to ask where CFO Kim will be heading next. [Korean]

[Korean] So maybe to address the first question that you have with regards to the dividend, if you look at 2013, on a nonconsolidated basis, there has been a net loss of the company, and therefore, in such a situation, it is a bit burdensome for KT to be paying dividends amidst this environment. However, we do have a commitment that we had made to our shareholders, and therefore, internally, we had looked at the appropriate amount of resources that we could allocate to dividends, and therefore, that is how we came up with the KRW 800 per share dividend level. [Korean] So if you look at the total dividends that is being paid in terms of the total amount in 2013 on a consolidated and nonconsolidated basis versus the net income that we have been able to generate, actually, we do believe that it is a meaningful amount. And please understand that this is the best effort that we have been able to put forth. However, we do feel sorry to the market that we have not been able to deliver the KRW 2,000 per share commitment that we had made. [Korean] In terms of our dividend policy going forward, we do believe that this policy will be established in consideration of our mid- to long-term business plan and also our financial position improvement plan that we are right now establishing. Once these plans have been fully finalized, then I do believe that there will be an opportunity for us to communicate to the market what our intentions are. [Korean] So to talk about the fourth quarter, the sales expenses that we had, this is actually related to our wireless capacity increase versus, for example, the handset sales increase that we have had. So if you look at it on a quarterly basis, it is around KRW 150 billion. So that represents around 20.7% increase. So that would be KRW 707.6 billion. [Korean] And one thing that we would like to highlight here is that if you look at our wireless capacity from the third quarter to the fourth quarter, it has increased 25%. However, in terms of our sales expenses, actually, it has not increased at the same rate. So this is something that we would like to highlight. [Korean] So we do believe that the core right now of what we would like to emphasize is that if you look at the per person sales acquisition cost, that this has not increased. So that is what we would like to highlight.

And this is Thomas Kim again. Mr. Min, thank you for that question. After 8 quarters of doing conference call, this has to be the easiest question I have received. [Korean] I'll be moving on, laterally, to a department called synergy management, which is a fancy word for taking care of all the subsidiary companies. [Korean] But more importantly, I'd like to introduce a name for the new oncoming CFO, and his name is [indiscernible] Kim. [Korean] And I would very much appreciate all buy side and sell side give him as much respect as you have given me in the last 2 years. Thank you. [Korean]

[Korean] The last question will be presented by Moon Jee-Hyun from KDB Daewoo Securities.

[Korean] There are 2 questions that I would like to ask you, and they are both related to the recent developments that have took place in the wireless area. First about -- is about the tariff package that you have. You recently set forth or launched a tariff package for the wideband LTE services that provided 4x more data than had been provided under existing packages. So what I would like to understand is that is this package just something that you are temporarily promoting as a package? Or is this something that will be a main tariff plan that you are going to promote in line of moving in the direction of unlimited data being provided to your customers? So that is the first question. And the second question that I have is with regards to the MVNO services that you have. So right now, in terms of the number of MVNO subs, you have the largest number of subscribers amongst the various carriers that are operating in Korea. In addition to that, there has been some news articles or news reports that maybe one of your subsidiaries may be engaged in the MVNO services going forward. So therefore, I think that as a carrier, you have the largest exposure to this market. So I would like to ask you what your forecast is about the MVNO market going forward. And will there be any changes in terms of strategy for this business?

[Korean] So first, to talk about the question that you asked about our wideband unlimited [indiscernible] tariff package that was actually launched today, this is a tariff package that we are providing under wideband LTE that is focusing on data usage and data traffic so that we can strengthen our leadership in this area. [Korean] So I think that in terms of this package or product, that we can actually describe this better versus the unlimited voice package that we had existing, because I think that these 2 are very good comparison. So, for example, for the unlimited voice package that we had launched, this is actually something that we have created to accommodate the customer usage patterns. For example, for heavy voice-using customers, that was the package that we had to deal with that demand. And for the new package that we launched today, this is for customers that are more focused on data usage. So if you actually look at the voice minutes of use that is being provided, it is much less than what we have had under other traditional packages. [Korean] So ultimately, who we are targeting with this package would be data-heavy users, and mostly, it would be people who are of a younger age. So rather than this being a promotional package, I think that it should be looked at as a more customized or specialized package that we are providing for this target customer base. [Korean] So next, to move on to the question that you had about our MVNO subscribers, the performance and the outlook for the future. As of the year end 2013, if you look at our MVNO subscriber base, it is 1.17 million, which accounts for 7.1% of the subscriber base. [Korean] And in terms of the overall trend for 2014, I think that taking into consideration the target that we have to strengthen our retention of MNO customers and also taking into consideration the fact that we do believe that there is limitations for the low end of the market to continue to grow, whether the MVNO market will continue growth in 2014, I think, is something that we will have to wait and continue to monitor. [Korean] So I think that one thing that is very clear is that for the MVNO market as a whole in terms of nature, that this is a market that is more specialized or geared to low ARPU customers. Therefore, these customers, we believe, are very different from our general MNO customers. [Korean] So we tend to continue to internally monitor customer movement patterns. And therefore, if you look at who is moving around in this area, it tends to be the lower ARPU customers who move over to MVNO. In addition to that, if you look at the competitive landscape of between the MVNO service providers, the competition is actually heating up. [Korean] So at the end of the day, for the MVNO service providers, these providers actually pay a network usage fee to us, which contributes to the revenues of the company of KT. And therefore, within the scope that it does not have a burden on our network capacity, we do believe that MVNO does help our overall network utilization and improving that utilization. So even if there is a user who is working off of a different service provider and they use our MVNO network, then I do believe that in terms of increasing the actual utilization value of the network, that this actually maximizes it.

[Korean] The next question will be presented by Dan Kong from Deutsche Securities.

[Korean] I would like to ask a very simple question to you. If you look at your LTE subscribers only and then would look at the LTE-A subscribers versus the wideband LTE subscribers, is there any difference in the data usage volume between these 2 different type of subscribers?

[Korean] So from the company's perspective, since we have launched our wideband LTE out of the 1.8 frequency bandwidth, most of the existing customer base that we have had is able to enjoy wideband LTE services. And therefore, from the company's perspective, we actually don't do a separate analysis in comparison of the wideband LTE service users versus LTE service users. From our perspective, a customer is a customer, and therefore, we don't actually segregate them or split them into different groups.

[Korean] So actually, to be more specific about the question, one thing that I was actually very curious about is that if you compare just the generic LTE services versus the wideband LTE services that you have recently launched, do you see the data usage increasing with wideband LTE? That was the question. So could you maybe address that?

[Korean] So I do understand the gist of the question that you were asking. Taking into consideration that the wideband LTE services started in the third quarter, if you look at the data usage before that point of time and after that point of time, there actually has been an increase in data usage. However, rather than this being driven by the wideband LTE services that have been provided, it's actually part of the general trend of data usage growing on a quarter-on-quarter basis continuously. So therefore, to say that the average data volume has increased because of our wideband LTE service launch, I think as of this point of time, it's too early to say. [Korean] However, one thing that should be taken into consideration is that we do believe that if you look at the situation since October when we completed our double data promotion, we do believe that, that has had an impact. Therefore, if you look at the trend starting in the fourth quarter of last year going into the first and second and third quarter of this year, after the effects of the double data promotion has actually been eliminated, I think that we would have a better idea or better judgment about how much data volume has been increasing. [Korean] So if there are no further questions, we will wrap up the Q&A session here. Thank you for your questions and interest. Once again, I would like to thank you for taking time out of your busy schedule to participate in today's call. With this, we would like to conclude the fourth quarter 2013 earnings release of KT. Thank you very much.