[Interpreted]. 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 2016 First Quarter Preliminary Earnings Results by KT. We would like to have welcoming remarks from Mr. Youngwoo Kim, KT, IRO and then Mr. Gwang-Seok Shin, CFO who will present earnings results and entertain your questions. This conference will start with a presentation followed by a Q&A session. [Operator Instructions]. Now we would like to turn the conference over to Mr. Youngwoo Kim, KT IRO.

[Interpreted]. Good afternoon. I am Youngwoo Kim, KT’s, IRO. Thank you for joining our Q1 2016 earnings presentation. Our call is being webcasted via the company’s website. So, please refer to the presentation slide as we present the business results. Please note that since the first quarter of 2011, KT has been presenting consolidated numbers under the IFRS accounting standards. Now, our CFO would deliver his remarks on Q1 2016 earnings results.

[Interpreted]. Good afternoon. I am Gwang-Seok Shin, CFO of KT. In Q1, based on stronger competitiveness in core telecom business, we saw growth in revenue and subscribers from wireless, broadband, internet and IPTV. And driven by structural cost savings efforts, we enhanced overall efficiency thereby achieving quite steady quarterly results. For the wireless business, we introduced private LTE that is optimal for a company’s business environment as well as Y24 which offers value added data service to subscribers below 24 years of age. We optimized services that befit the mobile use patterns of the data generation and so are able to continue with net addition trends, thanks to the leadership wielded in marketing. For the fixed line business by employing core competitiveness underpinned by GiGA infrastructure we are solidifying market leadership in broadband and the IPTV market. In broadband GiGA internet net additions recorded 300,000 in the quarter surpassing, 1.3 million mark. We are also seeing continuous growth in high quality subscribers for the IPTV as well. In particular, GiGA internet is not only contributing to overall internet subscriber net addition trends but also making positive impact on facilitating fixed and wireless bundling. On top of strengthening our core competitiveness, KT is committed to bringing tangible results from new business areas of future convergence, platforms and global business. We will first focus on energy and security under the convergence initiatives and deploy platform business in five areas of IoT, Big Data, O2S, Syntex contents where we would focus on key values regarding customers lifestyles, time spent and essential needs. For global business, we will expand areas of cooperation and strengthen local sales channel to aggressively identify revenue opportunities. In Q1, we commercialized for the first time in the world LTEN which is most optimal and standardized network for internet of…

[Interpreted]. [Operator Instructions]. The first question will be provided by Jong-In Yang from Korea Investment securities. And the next question will be provided by Hue Jae Kim from Daishin Securities. Mr. Yang, please go ahead sir.

[Interpreted]. Thank you for the opportunity to ask questions. I have two questions. The first question has to do with ARPU. You communicated in the beginning of the year that you expect ARPU growth rate for this year to be around 2%. I would like to understand if you have made any changes to this projection for this year and I think that this level of ARPU growth is relatively higher compared to what is projected by your competitors. I would like to understand what you think is the driver behind the ARPU growth is it - does it have to do with the LTE penetration or the expansion of the second device or with or because of different types of handsets? Second question, I see that your broadband revenue had increased quite significantly and you mentioned that it is due to the reflection of the interconnect revenue. So, in the first quarter number what is the actual amount of revenue that is attributable to interconnect?

[Interpreted]. So, let me first respond to the question about ARPU. Q1 ARPU stands at KRW36,128. We’ve seen that there has been a continuous increase in the share of subscribers who are taking out the high-end tariff plan. But in the first quarter there were some other variables that came into play, the first being that we had seen lower level of handset sales which actually impacted on the slower growth of the LTE penetration. And the second aspect is that with the start of the new semester we saw higher share of adolescence or young people in terms of our - coming into our subscriber base. And also on a Q-o-Q basis, because there is a base effect coming from the fact that last quarter there was an iPhone launch on a Q-o-Q basis there was a slight dip in the ARPU. Now, for the full-year ARPU, on a Q-o-Q basis, I mentioned there was a slight decline in ARPU and I say that that is because of some seasonality factors. Therefore it is a temporary impact. We believe that we’re continuously going to see increases in LTE subscribers as well as subscribers taking out high-end tariff plans. And also, we see increase in the data usage as well as other value-added services for multimedia services. So, we believe that as we go into the second quarter, the ARPU level will start to normalize and we will exert our utmost effort to make sure that we do attain that 2% growth per annum basis for the ARPU growth. Now, going forward, in order to achieve our ARPU target, we will continue to provide differentiated services underpinned by data. And also we would focus more on improving the quality of subscribers rather than just purely competing on number of subscribers.…

[Interpreted]. The next question will be presented by Hue Jae Kim from Daishin Securities. And the following question will be presented by Jee-hyun Moon from New Asset Daweoo Securities. Mr. Kim, please go ahead sir.

[Interpreted]. I would like to pose two questions. I would like to first understand what your strategy is for your real-estate business and what do you foresee as your financial performance from this business. I heard that you are getting involved in the rental housing business as well as hotel development. So could you provide some color with regards to this topic? And second, I see that your GiGA Internet subscriber is growing quite quickly. Hence I would like to understand what your investment plan is for the coming three to four years in terms of your network coverage?

[Interpreted]. Responding to your first question about our real-estate business, our basic business strategy is that we will consider the specific characteristics of the assets that we have based on which we will decide whether we will embark in the renting business or in the real-estate development business. All of these efforts are to make sure that we can maximize the asset value. In the case of the rental business, we have recently announced that we will expand on the corporate type of a rental housing business. And also we would focus on hotel, real-estate development which can work as a very stable revenue source. We will also look at remodeling of the existing assets and existing property assets. And also most efficiently make use of the existing space that we have. So, and also for development, for the development project we will consider the characteristics of the each site and also we’ll be in-line with the trend of the real-estate market. We’ll identify the most optimal development related products in order to eventually maximize the value of such property assets. Now, if you look at the property assets that KT owns, we have currently 450 sites and KT estate owns 90 sites out of those. So, excluding the assets that we need for our telecom business as well as for the support of our business management we can categorize 170 property assets as ones that could actually generate profit. And of those, we have identified 50 assets that could actually increase in its value after going through some development projects. If you look at the current real-estate site that, are under development or under-planning, it is about, there are about 20 sites. And also if you consider the project that we are undertaking for the sales and rental of…

[Interpreted]. The next question will be presented by Jee-hyun Moon from New Asset Daweoo Securities. And the following question will be presented by Sam Min from Morgan Stanley. Ms. Moon please go ahead, ma’am.

[Interpreted]. I would like to post two questions. First has to do with your expenditures. In Q1 on a standalone basis we think that the expense had dipped, whereas, on a consolidated basis there was a slight increase. So going forward, is your position still that you wish to rigorously control the expense and cost. I would like to ask you to provide some color in light of the fact of maybe potential new investment into spectrum as well as your new business initiatives. Second question has to do with dividend, currently KT's dividend yield stands at around 2% to mid-3%. Going forward with the higher level of profit could we maybe expect a higher level of dividend yield?

[Interpreted]. Now, first, regarding to your question about our cost reduction, this quarter we saw decline in our marketing expense due to the lower level of fixed line selling expenses. And also with the elimination of one-off seasonal elements of the previous quarter that also had an impact. So, on a Q-o-Q basis, our expense did decline. Going forward, in light of the fact that we would see paradigm changes based on a service based competitiveness and with more of a market stabilization trend, we believe that a stable level of marketing expense or marketing control will continue. Now for the depreciation cost, it may vary depending on the outcome of the spectrum auction. But for the OpEx, the operating expense, we will continue to focus on enhancing structural efficiencies. You asked about our dividend, just as we did for 2015, for 2016 as well, once we get some clear visibility on the year-end performance and once we were able to eliminate some of the uncertainties regarding the business operation environment as well as the regulatory environment, we will be able to communicate with you on the specifics of the dividend. We continue to focus our priorities on enhancing the profitability and improving the cash flow. And we will do our best that this will not truly flow through to shareholder return.

[Interpreted]. The next question will be presented by Sam Min from Morgan Stanley. And the following question will be provided by In-Young Chung from Goldman Sachs. Mr. Min, please go ahead, sir.

Hi, thank you for this opportunity. I have two questions. The first one is on your subsidiary OP contribution. It appears that in the first quarter it was close to about KRW100 billion. Could you detail which subsidiaries are contributing to this profitability? Can you also mention mass media as well as KTH their contributions as well? And my second question is on the real estate, I'd like to follow up on your target of KRW750 billion, real-estate revenue by year 2020. And I'm assuming that this will be sort of sustainable rental revenue that you're targeting. Could you also provide what you think would be the profit contribution from those revenue streams? Thank you.

[Interpreted]. Responding to your first question about our subsidiaries’ contribution to our operating profit, we continuously thanks to the enhanced competitiveness of - enhanced business competitiveness as well as cost innovation. In the Q1, at the subsidiary side we had seen some very robust profitability impact. On a quarterly basis, depending on the business structure and the characteristics of that certain industry, there could be some fluctuations on a quarterly basis but on a per annum yearly basis, we believe that we can achieve that mid-KRW300 billion target of contribution we are expecting from subsidiaries. And just as we are doing a KT at our subsidiary level, we are exerting our efforts to make sure that we have a very stable trend of performance. And we expect that soon those efforts will come to fruition. Yes, you also asked about the details of the operating profit contribution from our subsidiaries. The total contribution is KRW98 billion. And if you look at the breakdown, BC Card is KRW60 billion and Skylife is KRW25 billion, KT Estate is KRW2 billion, KT Sat KRW9 billion and Hightel KRW1 billion. Responding to your second question about the OP contributions from our real-estate business, at this point it’s quite hard to provide you with a specific number for this specific business. But I can say that the real-estate contribution level is higher than the Telco business.

[Interpreted]. The next question will be presented by In-Young Chung from Goldman Sachs. Mr. Chung, please go ahead, sir.

[Interpreted]. I would like to ask two questions. The first, after the spectrum auction do you have plan to realign or reshuffle your current wireless tariff plan or are you planning to just maintain the current level of tariff? Second question, recently your competitor has very strongly voiced that it will pursue 5G. I would like to first understand what KT's competitive edge is in terms of 5G vis-à-vis your peers, and also when it comes to the 5G, what is the current level of your fixed line backbone capacity and also any potential upgrades?

[Interpreted]. You first asked about any potential changes to our overall tariff plan after the spectrum auction. Basically our overarching framework is that we would continue on with a data-centric tariff plan. But of course with the increase in the data use, we will continuously launch variety of products. Moving on to your second question, as at this point, there has not been a final determination with regards to 5G standardization or the spectrum, it would be difficult for me to say, talk about the potential size of the network and the capacity of that network. Considering the fact that for the benefit of multiple devices and for data processing under the network, the network would have to be a different network compared to that of LTE. So, I would think that both approaches will have to go in parallel, meaning using making use of the existing network and a build-out of a new network on a new spectrum. Also, from the CapEx side, in order to provide 5G services, there would need to be equipments and relevant investments that would support that specific spectrum. But in order to alleviate the burden by the Telco operators with regards to the increase in CapEx, we will continue to focus on efficient investment. Especially if you get KT, KT already has a GiGA infrastructure nationwide when it comes to the fixed line network. So going forward in the wireless with the introduction of the 5G, we believe that we can reduce the CapEx on the fixed line infrastructure. And hence we will be able to implement CapEx investment in a more efficient manner compared to our peers.

Thank you. With no further questions we will close the Q&A session. Thank you very much for your questions as well as your interest. Thank you for joining us. This brings us to the end of Q1 2016 earnings conference call. Thank you.