[Korean] Good afternoon. Welcome to the conference call for the fiscal year 2012 first (sic) [fourth] quarter earnings results by SK Telecom. This conference will start with a presentation followed by Q&A session. And now, we'll begin the conference of the fiscal year 2012 fourth quarter earnings results by SK Telecom.

[Korean] Good afternoon, my name is Young-Gyu Park, the IRO at SK Telecom. Today's conference call will consist of the presentation by our CFO, Seung Yun Ahn, on the earnings results for Q4 2013 and the management plan and strategic direction followed by a Q&A session. [Korean] To help deepen your understanding, we also have relevant executives participating in the call. [Korean] Consecutive interpretation will be provided for the call for your convenience. Let me also 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.

[Korean] For SK Telecom, year 2012 was a year of meaningful achievement while boosting our quality upper hand through accelerated nationwide LTE rollout, the world's first commercialization of multi-carrier technology, we successfully secured 7.53 million subscribers despite fierce market competition, further anchoring our market initiative even in the LTE space. Furthermore, our target solutions bases [ph] were crystallized, our healthcare portfolio was set up and new business -- growth businesses led by semiconductors and global business along with their implementation approach were better defined. [Korean] With the launching of SK Planet and SK Hynix, SKT reshuffled its structure to emerge as the integrated ICT company. Under such overarching change, SK Telecom not only put forth a future direction for the company, but also proactively dealt with data-centric industry and competitive landscape change and ultimately established its growth strategy, vision 2020. [Korean] Let me now discuss the earnings highlights for Q4 and 2012 on a consolidated basis. [Korean] Revenue for Q4 2012 recorded KRW 4,197.4 billion, up 1.7% quarter-on-quarter. Operating income marked KRW 544.6 billion, surging 81.1% compared to the previous quarter. EBITDA posted KRW 1,248.3 billion, rising 30.1% quarter-on-quarter while net income jumped 195.5% quarter-on-quarter to KRW 519.1 billion. [Korean] Next are the annual result. Revenue reached KRW 16,300.5 billion, gaining 2.3% year-on-year backed by the growth of the LTE subscriber base. These numbers slightly exceeded our annual guidance announced in the beginning of the year. [Korean] Operating income came in at KRW 1,760.2 billion, mainly affected by the higher marketing spend in line with the rapidly increasing LTE subscribers adding investment to support the data traffic surge, as well as the resulting expansion in depreciation. EBITDA and net income marked KRW 4,338.8 billion and KRW 1,115.7 billion, respectively. [Korean] The parent-only CapEx for SKT recorded KRW 2,858.4 billion, exceeding…

[Korean] We will now begin the Q&A session. Please go ahead with questions.

[Korean] [Operator Instructions] [Korean] The first question will be provided by Jong In Yang from Korea Investment & Securities and the next question will be provided by Seyon Park from Barclays. Jong In Yang - Korea Investment & Securities Co., Ltd., Research Division: [Korean] I have the following 2 questions. First of all, despite the suspension of new subscriber acquisition that is imposed for Q1, if you look at the recent Q1 numbers, I guess, the number of MMP subscribers seems to be higher than anticipated. So how does the company's management assess the current competitive landscape for the first quarter and how do you foresee the outlook for the second quarter? And my second question has to do with your ARPU outlook. During the fourth quarter, you have achieved quite a stellar ARPU number increase. So going into the 2013 period, how much of an ARPU growth are you anticipating? For your information, your competitors have answered about 8% to 10% growth to the same question.

[Korean] Let me first address your first question regarding the competition in the first quarter. As you are well aware, right before the actual implementation of the suspension of the new subscriber acquisition ban in the beginning of January, there has been a temporary pickup in terms of heated competition. But as you're well aware, starting from LG U+, the 3 operators are consecutively implementing their implementation of the suspension of the new subscriber acquisition. So in actuality, if you look at company by company, we are given between 20 to 24 days of new acquisition suspension period. So during those particular periods, we anticipate the overall expense to come down and, therefore, for the first quarter, as a whole, we believe that the competitiveness in the market will weaken. [Korean] Typically speaking, usually, every first quarter of the year has been showing a moderately higher competition compared to the rest of the quarters because what -- each company seeks to set a good first step in terms of expanding the revenue for the entire year. Therefore, typically, every first quarter has seen an increased competition in subscriber acquisition. And also, we believe that there will be some competition nevertheless regarding the acquisition of the new LTE subscribers in order to secure an upper hand for the long-term growth. [Korean] However, seeing how the LTE penetration in the entire market has already exceeded 30%, I believe that there is much lower incentive for heated competition in the market, as I see it. And also, the competition to secure the second position in this competitive dynamics in the LTE arena will be pretty much finished off during the second quarter, I anticipate. [Korean] And in addition to the point that I have made, I believe that the government's ongoing market monitoring…

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

I have 2 questions. First, on CapEx. Can you give a little bit more breakdown as to how that is consisted of? And in particular, does that include potential investments in spectrum? And my second question would be regarding your shareholder returns, given where the foreign ownership limit is, is management considering potentially any share buyback and cancellation? [Korean]

[Korean] To address your question regarding the CapEx-related breakdown, as I told you before, the anticipated annual guidance for CapEx for the entire year amounts to about KRW 2.1 trillion, of which the network-related allocation would be around KRW 1.6 trillion while the nonnetwork-related CapEx will be around KRW 500 billion. [Korean] And you also asked whether this particular amount contains the spectrum-related expenses possibly. If we are to incur extra expenses for the spectrum allocation, we will actually put up [ph] the bill within the overall CapEx guidance of KRW 2.1 trillion by reallocating different breakdowns in -- among the overall CapEx amount. [Korean] And regarding the shareholder buyback issue, I believe that this is something that we have to review more comprehensively, looking at the total picture of the financial status.

[Korean] The next question will be presented by Hongseek Kim from NH Investment Securities. And the following question will be presented by Neale Anderson from HSBC. Hongseek Kim - NH Investment & Securities Co., Ltd., Research Division: [Korean] I also have 2 questions. First of all, SKT has also introduced the unlimited data price plan for the LTE subscribers. Of course, if you simply look at the ARPU perspective, this is not entirely bad. However, we do have some regulatory considerations to make, I believe. And within the market, there is an anticipation that SK Telecom will be introducing price plans linked to the traffic of growth and traffic flow overall. So against that backdrop, we wonder whether introduction of the unlimited data price plan is a good decision. So what is your view on this? And the second question is the following: As the subscribers are purchasing more high-end handsets recently, I believe that more number of subscribers are opting for higher price plans as they purchase the new phones. But going forward, if the handset prices trend down in the future, what do you think will be the impact on the overall price plans that are opted for by the subscribers?

[Korean] To answer your question regarding the LTE unlimited data price plan that has been launched, let me remind you that this was an unavoidable price plan related decision that we had to make amidst the heated competition that is ongoing at the moment. And also, let me remind you that this price plan introduction is intended to be there for 3-months period. So during those 3-months period, I'm sure we will be able to identify various potential issues. So after reviewing such issues, I'm sure that we will be able to introduce much more improved and enhanced price plans into the market. [Korean] And if you recall, within the 3G customer base, all-in-one, 52 or above customers were given the unlimited data usage right, whereas in the LTE arena, the unlimited data price plan is only available from the very top price plan, which is above KRW 100,000 per month. So considering the excessive usage of data for those LTE 100 and over subscribers and also if you look at the average data usage of these users, I don't think that the traffic growth impact will be that significant. [Korean] You also asked about the relationship between the ongoing decline possibly on the handset prices and how that will impact the overall price plan policies of the company. But frankly speaking, I see very low correlation between the price of the handset with the service -- price plan related policies of the company. [Korean] And frankly speaking, when the smartphones were first introduced into the market, it was set at such a high price to begin with. So in order to proliferate the wider adoption of the smartphones in the market as soon as possible, as an operator's perspective, we had to provide special discounts so that we could encourage more adoption. [Korean] And to elaborate a little bit, I believe that at the end of October period, that's when we were introducing various special discounts, such as special discounts and special subsidy discounts for the LTE subscribers as well. But starting from the month of November last year, we introduced the fixed price plan-related special discount program which actually significantly aligns the price plan, characteristics and also the subscriber opted price plan level and providing the relevant services according to the price plan that they chose, and we eliminated unnecessary discounts in the process. So rather than actually aligning to the pricing of the handset itself, already, we are aligning price plan-related policies to the quality of those subscribers involved. So because we are implementing such efficient strategies as we speak, we do not anticipate any major changes going forward.

[Korean] The next question will be presented by Neale Anderson from HSBC. And the following question will be presented by John Kong (sic) [Kim] from Deutsche Securities Korea.

Two questions for me, please. Firstly on your M&A strategy this year, it seems the SK Planet and also verticals such as healthcare are your main new business priorities. But would the company consider large acquisitions in these areas in 2013 or will debt repayment be the focus? Secondly, in the past, SKT has had a clearly defined subscriber market share target. Does the company still hold this target or do you now focus on a different metric? [Korean]

[Korean] As you are well aware, in our new growth business areas, our companies [indiscernible] -- in our new growth business areas, if necessary, we have been pursuing both internal capability development as well as inorganic acquisition of capabilities necessary depending on the situation. So under that big umbrella of policies, last year, although these M&As have been not too large in size but in a couple of areas, we have conducted a couple of M&As. [Korean] With regard to our plans for M&As in the future, we will be quite flexible and quite proactive whenever opportunities arise in the future. But at this particular juncture, we do not have any clear plan as to a particular M&A that we will be pursuing this year. [Korean] Regarding the targeting of the subscriber-related strategy for the company, we still believe that maintaining a certain level of market share is quite critical and quite -- much of a prerequisite for us to maintain future revenue foundation. Therefore, we will continue to maintain such policies when it comes to the targeting but focusing on the LTE subscribers as well as subscriber qualities in the process. [Korean] As you are well aware, the 3 telcos in Korea are subject to the suspension of new subscriber acquisition at the moment consecutively. So as this implementation continues within the first quarter, in between certain periods, we will see some fluctuations as to the market share of the market, temporarily. But by the end of Q1, when all 3 telcos complete their allocated suspension period for new subscriber acquisition, I believe that the market share equilibrium will be going back to the previous level. [Korean] And we believe that the level of market share held by SK Telecom is only the result of the competitive edge that we have from the fundamental competitiveness.

[Korean] The next question will be presented by John Kong (sic) [Kim] from Deutsche Securities Korea. And the following question will be presented by Josh Bae from UBS.

[Korean] Yes, my first question has to do with your subsidiaries. So for year 2013, with regards to your subsidiaries, including SK Planet and SK Broadband, do you have any earnings guidance that you could provide to us? And secondly, my question has to do with the more detailed breakdown or the detailed numbers of the gain on the sale of your assets. Could you be more specific about the size of the gain? And also, regarding the remainder of your residual assets, such as Posco shares, do you have any immediate plans to sell such holdings?

[Korean] The only guidance that I could share with you regarding next year that involves subsidiaries, what I could tell you is the following: As I mentioned in the beginning for the entire year, including all the subsidiaries, our revenue guidance is KRW 17.2 trillion, which comprises all the subsidiaries. So at this point, we will do our best to meet this ultimate total target in terms of the revenue, but when it comes to the actual allocation company by company in the subsidiary group, I will not be able to share that with you, and I don't think you should be too concerned about that. [Korean] And of course, as for those listed subsidiaries of ours, they will each go through the IR process through which they will be sharing with you their revenue guidance when it is possible to do so. So I ask you to please refer to those numbers. [Korean] Let me answer your second question. Last year, as you have mentioned, there has been some sales gain on the assets that we held. To be more specific, there was a sales gain of KRW 270 billion on Posco shares and about KRW 20 billion regarding the sales of certain buildings. [Korean] And with regards to the remainder of the Posco holdings and other types of asset holdings we have, we do not have any immediate plans for the sale of such assets.

[Korean] The next question will be presented by Josh Bae from UBS. And the following question will be presented by Kevin Kwok from Turiya Capital Hong Kong.

My first question is on your LTE subscribers. You mentioned 8% higher ARPU in fourth quarter this year versus fourth quarter last year. If you could let us know what your LTE subscriber targets are for this year and to achieve this, that would be very helpful. My second question is on your marketing cost sales. It was good to see a meaningful decline in the fourth quarter. If you could give us some indication on what we should expect in the coming quarters or for the full year 2013, that'd be helpful. My third question is on your Hynix stake. There were some press reports recently that you have first rights to acquire remaining stake of the creditors and that these rights would expire this month. If you could let us know what your thoughts are on increasing your stake in Hynix. [Korean]

[Korean] Let me first address your question regarding the current status of LTE subscribers and our outlook for the rest of the year. [Korean] After actually exceeding 7.53 million subscribers at the end of last year, as of January, the number of subscribers increased to 8.3 million. [Korean] So if you look at the outlook for 2013, I believe that because the adoption of LTE smartphones is becoming so proliferated and wide throughout the country, I believe that the subscriber migration to LTE will persist for the rest of the year. Although we do not have any set target, per se, regarding the subscriber number by the year end this year, we anticipate at least about 14 million subscribers by the end of this year, however. [Korean] To address your second question regarding our marketing expenses trend. As you're well aware in 2012, there was an overheated competition to gain an upper hand in the LTE arena among all the operators. And because of that, there has been quite a bit of marketing expenses. However, going forward, due to market stabilization and marketing spend decrease, we anticipate a lot more stabilization in terms of the marketing expenditure. However, we can't quite share with you right now just exactly how much reduction in marketing expense that we could anticipate because we have to look at the market dynamics. However, what I could share with you is that SK Telecom will do its best to lead the overall market sentiment towards market stabilization, thereby reducing the marketing expenses further. [Korean] To answer your third question briefly, we do not have any plans to further accumulate shares of Hynix at the moment.

[Korean] The next question will be presented by Kevin Kwok from Turiya Capital Hong Kong.

I have 4 questions. I think the first question would be on the data usage per 4G subs so I would like to know the data usage per 4G subs in terms of the trend and the amount from first quarter 2012 to fourth quarter 2012, whether it's still going up or not. So that's the first question. The second question would be on the subscriber acquisition cost. So I think the marketing or the competition level has been cooling down in fourth quarter, so I would like to know how much it went down in terms of the SAC costs in the fourth quarter 2012 and how the management will view on the SAC cost going forward in 2013. The third question would be on the 4G ARPU. So I understand that the fourth quarter 2012 4G ARPU is going down from KRW 52,000 to KRW 50,000. So based on the fact that the new subscriber is 30% of the average 4G subscriber for fourth quarter 2012. So the implied ARPU in fourth quarter for the new subscriber is coming down quite significantly in fourth quarter. So I just want to get some highlights on what actually happens on the tariff plan offering in the fourth quarter, like whether there is a like-for-like plan tariff cuts or not in the fourth quarter. So the fourth question would be on the overall mentality of the subscriber additions. So I would like to know the management's mentality on how they're going to balance between declining in the marketing cost versus the ARPU decline, the like-for-like 4G ARPU decline. So how would that work? So is it going to be lower marketing cost? And you -- at the same time, you actually forego some of the ARPU for the new subscriber in 2013. Is that right picture to expect? So those are the 4 questions. [Korean]

[Korean] Let me first answer your question regarding the 4G data usage traffic-related question. [Korean] If I may share with you the trend of the data usage traffic for 4G LTE subscribers. As of the end of December 2011, the average usage was about 1 gig, whereas it increased to 1.6 gig or 1.7 gig by mid-2012 and by the year end last year which was 2012, it actually grew to 1.8 gig. [Korean] And regarding the SAC-related question, if I may compare Q3 and Q4 of last year, between those 2 quarters, the SAC actually decreased in addition by about KRW 80,000. [Korean] And then you'd also asked about the ARPU trend within the realm of 4G. [Korean] Of course, compared to the very beginning adoption period for the LTE service in the beginning, as the overall number of LTE subscribers grows in the market, it is true that we are seeing a slightly downward trend in terms of the average ARPU. [Korean] Of course, it is true that the LTE-related ARPU will be going down slightly in the future, but you have to also consider the overall inflow of new LTE subscribers. And as I told you before, our current penetration rate of LTE subscribers currently stands at 30%, and we anticipate this number to increase to 50% by the year end. So as I told you before, between this time period from now until the end of the year, we believe that the overall average ARPU will be going up about 8% year-on-year. [Korean] If I may elaborate, as I told you before, at the end of last year, our average ARPU stood at KRW 33,761. So compared to that average amount, as we have a bigger inflow of the higher ARPU LTE subscribers into the total…

[Korean]

[Korean]

[Korean] With that, we will conclude the Q&A session and invite our CFO for his closing remarks.

[Korean] I would like to thank you once again for your participation in today's earnings call. All of your valuable comments and interest will help enrich our management activities. [Korean] As mentioned earlier, SK Telecom will continuously challenge itself to fortify our competitiveness while doing its best to achieve both consistent growth and shareholder value enhancement. [Korean] Thank you.

[Korean] This concludes the earnings conference call for Q4 2012. Thank you very much.