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 fiscal year 2020 first quarter earnings results by KT. We would like to have welcoming remarks from Mr. Seung-Hoon Chi, KT IRO; and then Mr. Kyung-Keun Yoon, CFO, will present earnings results and entertain your questions. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions]. Now we would like to turn the conference over to Mr. Seung-Hoon Chi, KT IRO.

Good afternoon. I am Seung-Hoon Chi, KT IRO. Let us now begin KT's 2020 Q1 Earnings Presentation. This earnings release call is being webcasted via our website, and you can refer to the presentation slides as you listen in on the call. Please note that today's earnings results include pre-audited financial earnings and business results estimates prepared using the K-IFRS standard. Thus, we cannot guarantee the accuracy and consistency of all financial and business performance data other than the fixed past data and note that they may change in the future. We will begin with CFO Kyung-Keun Yoon's opening remarks followed by 2020 Q1 earnings presentation.

Good afternoon. I am KT's CFO Kyung-Keun Yoon. Despite the difficult business environment, including COVID-19 in the first quarter, it has been a meaningful time holding a new-look Board with the new CEO taking office and stable transition of the management amidst support from investors and analysts. In today's ICT market, which includes telecommunications, 5G is becoming the mainstream. All industries are accelerating the pace of digital transformation, and we are experiencing great changes in our daily lives since the outbreak of COVID-19, which includes the greater adoption of the untapped culture. With the new management structure in place from the beginning of this year and in tandem with structural changes, KT has created the AI/DX organization and strengthened its B2B organization. The field organization has also transitioned to the regional HQ system in order to quickly respond to various customer needs. Reflecting these changes, KT has decided to change how we present our revenue categories from this year. While the revenue structure in the past was driven by key B2C core businesses, including Wireless, Fixed-Line and Media, starting from 2020, we have two main categories: B2C and B2B. The new B2B revenue has three business areas: traditional corporate lease line; corporate IT solutions, which includes SI business; and AI/DX, which includes IDC and cloud business. The product revenue has also been simplified by excluding the SI business to represent only the handset revenue. Moreover, we have separated the earnings performance of KT and its affiliated group companies to clearly present the performances of individual group companies. We expect to further raise your understanding of the KT Group with the realignment of the revenue categories. Let me now present our first quarter earnings performance. Q1 total revenue was KRW5.831.7 trillion, a similar level on year, and while handset revenue fell…

[Operator Instructions]. The first question will be provided by Hoi Jae Kim from Daishin Securities. And the next question will be provided by Hong-sik Kim from Hana Financial Investment.

I have two questions. My first question is related to your dividend policy. Taking into consideration the one-off issue, I believe that the dividend payout ratio is set around 40%. So can you provide additional color to what the dividend would look like in the future? And my second question is related to your performance in Wireless service. You already have successfully done the turnaround for the Wireless service revenue, and your wireless ARPU is highest compared to other 2 companies. And that is why I am interested in what sort of guidance you can share with the market related to the KT's performance in Wireless service. If you can give us some information related to the outlook for our 5G subscriber base number or what ARPU or revenue would look like, that would be very helpful.

To address your first question on the dividend policy for next year, currently, the management and the Board of Directors have a consensus that we need to actually come up with a dividend policy that is more predictable for the market. And based on this consensus, the BoD and the management are currently discussing the midterm dividend policy outlook. And once we have closed discussion, and this is confirmed, we will communicate with the market as soon as possible. And to address your second question related to the Wireless service revenue and ARPU, first of all, thank you very much for those kind words. But to be frank, we believe that we need to do better. And in respect to some positive points related to the Wireless service, compared to the past, we see a continued improvement in the areas of net additions of handset subscribers. And furthermore, since the launch of KT's 5G services, we are currently maintaining a much higher market share in 5G compared to the market share we have for the LTE handsets. And first half fundamentally helped us to make the turnaround as early as possible. However, we do believe that we need to further improve the growth potential of our Wireless business. And as - at present, we continue to maintain a very high - a high ARPU for the new 5G subscribers. But as I've mentioned previously, related to the new tariff plans that we have announced and is selling to the market, we are using the upselling opportunities to continue to do better. And furthermore, with the impact of COVID-19, we have seen a drop in the roaming revenue and also a slowdown in the growth of net additions. But we continue to see growth momentum in the 5G services. And in the second half, we also have a greater lineup of handsets available, and we will also anticipate that the growth rate of 5G subscribers will also pick up pace in the second half as well. Of course, on a full year basis, the growth rate may be slightly below what we had anticipated. But in terms of revenue and ARPU, we believe that we'll continue to grow in these two areas. And moreover, we had actually forecasted that by the end of 2020, in terms of the growth rate on a handset basis that we can see a growth of around 25% to 30%, but we believe that the upper - higher level, the 30%, may not be achievable. And so I would say that you should assume the growth rate to be around 25%.

The next question will be provided by Hong-sik Kim from Hana Financial Investment.

I have two questions related to the profit outlook for the company. Related to the first question, I want to actually know a little bit more about what the outlook of the KT's stand-alone profit will be on a full year basis. I know that originally, we had anticipated KT to actually post higher depreciation cost, but that wasn't the case in Q1 as much as we anticipated. As a result, we're seeing a very - better-than-expected performance when it comes to posting operating profit, and you have enjoyed a Y-o-Y growth. But can you give us additional information related to what the stand-alone KT's full year operating profits would look like? And also, if possible, give a little bit more information to us related to what the depreciation will be for this year? My second question is related to the overall turnaround that KT will be recording. Of course, in Q1, it did not happen. But of course, if you look at what's going to happen in Q2, Q3, you will be starting off with a base - low base effect. So can you actually give us in terms of how we should be looking at the KT's bottom line performance in 2020?

You asked two questions, but since they all deal with profits, I'll just give you the answer for both. And if you look at what's happening for this year, the KT's primary focus is to improve its bottom line. For our labor cost and depreciation, we'll control it at a 1% to 2% level. And we also have to deal with the deferral effect of the last year's selling expenses. We believe that we'll be able to overcome this. And thus, we will continue to do a very tight cost control in terms of reducing the marketing spend as well. And so in so doing, in terms of stand-alone basis, we will exert great efforts so that we'll be maintaining the performance in profit to last year's level.

The next question will be provided by Sean Lee from Citi Group.

This is the first earnings call we're having after the appointment of new CEO, Mr. Hyeon-Mo Ku. And thus, I'm interested to know in terms of KT strategic direction. With the new CEO, have there been any new changes? Is there any specific areas that KT is now focusing on?

To talk about the key focus of our new CEO and to do this by business, in terms of the Wireless, the focus is to really realize a market stability in 5G and to make sure that we are very prudent in terms of how we present our products and marketing. So through product and marketing differentiation, we will able to drive our revenue and ARPU. If we move on to fixed line, we want to leverage the leadership that we have in GiGA Internet and to continue to drive the growth of IPTV and also to expand our GiGA Genie AI platform. When we move on to the B2B, AI/DX area, this is where we believe that it's going to serve as a new growth driver for KT. And for the group management, in terms of our business size, our capabilities, growth and synergy, taking all of these into consideration, we will continue to be working on improving our portfolio. And in the near future as soon as feasible, our new CEO will communicate with the market related to the overall corporate vision, strategy and shareholder return policy.

The next question will be provided by Taewon Kim from UBS Securities.

I have a question related to the dividend policy. I have heard that the company is considering also doing a quarterly dividend payout. And my fundamental question is why the company is considering quarterly dividend payment? Is it possibly because of the dividend windfall that you can get and ultimately to be able to stabilize KT's share prices? But for the market investors, what's most important is really the total annual dividend payout amount. And so just wondering if you can actually share the management view on whether it's a quarterly dividend payment? Whether we can anticipate full year dividend payment amount to increase?

I think that there was a misunderstanding of what I commented earlier. When I mentioned our dividend policy going forward, I said midterm, not quarterly dividend payment. And so just to repeat what I said that, once the company is able to finalize its midterm dividend policy outlook, we will reach out to the market as soon as possible and communicate what we have decided.

If there are no more questions, we will close the Q&A session. Thank you once again for your questions and interest. Thank you, participants, for your time despite your busy schedules. And we will close the 2020 first quarter earnings conference call.