[Foreign Language – Korean] Good afternoon. Welcome to the conference call for the Fiscal Year 2014 First 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 2014 first quarter earnings results by SK Telecom.

[Foreign Language – Korean] Good afternoon. And my name is Hong-Kyu Park, the IRO of SK Telecom. Today’s conference call will consist of the earnings presentation by our CFO, Soo-Cheol Hwang, on the earnings results of Q1 2014, as well as future management plans and strategic direction followed by a Q&A session. To help deepen your understanding, we also have executives from the relevant business units with us today. The conference call will proceed with consecutive interpretation. Let me remind you that all the forward-looking statements are subject to change depending upon the macroeconomic and market conditions. With that, let me invite our CFO.

[Foreign Language – Korean] Good afternoon. My name is Soo-Cheol Hwang, the CFO of SK Telecom. Let me start with the consolidated financial results for Q1. Owing to the consistent subscriber migration to LTE to-date, as well as the positive results from our growth businesses, our top line recorded KRW 4,201,900,000,000, up 3.4% year-on-year. EBITDA posted KRW 955.6 billion for Q1 due to the temporary marketing expense hike to counter the overheated competition decreasing 11.8% year-on-year. Operating income declined 37.6% year-on-year to KRW 252.4 billion, while net income contracted 22.7% year-on-year to KRW 267.3 billion. I would like to discuss our strategic direction and performance by business lines. Our efforts to change the marketing competitive paradigm into a product and service-oriented one are being pursued in a steadfast manner. Despite our commitment and actions for market stabilization, we regret the fact that the fierce market competition persisted during Q1. However starting from Q2, the government’s market stabilization policies are further taking root leading to a more benign competitive landscape. We expect such changes to result in earnings enhancement as well. In spite of the one-off negative factors including the network outage in March, the billing ARPU for Q1 came in at KRW 35,309, rising 4.9% year-on-year. This growth is quite meaningful since it exceeded the annual average growth of 4.6% from last year. Through ongoing LTE subscriber share expansion, as well as the launching of diverse products and services optimized for the evolving network environments, we plan to sustain the upward ARPU trend in the future and maintain our market leadership position. In early April, we launched a price scheme offering additional data volume for the specific high-end price plans in order to stimulate the high-end subscriber acquisition through more compelling consumer data usage environment, and to effectively and rapidly…

[Foreign Language – Korean] Now Q&A session will begin. (Operator Instructions) The first question will be provided by Jong-in Yang from Korea Investment & Securities. And the next question will be provided by Kim Hoi-Jae from Daishin Securities. Mr. Jong-in Yang, please go ahead with your question. Jong-in Yang – Korea Investment & Securities: [Foreign Language – Korean] I have the following two sets of questions. Post the lifting of the rotational operational suspension on the three telcos, we believe that the market dynamics will turn to intensify competition. There is that ongoing concern in the market at the moment. So what is the management’s view about the outlook for marketing competition for the second half? My second question has to do with your LTE launching, which would have the capacity for 220 mega-bps speed support, and what is your plan for that rollout. And also, what impact will it have on your handset line up as well?

[Foreign Language – Korean] I believe your first question has to do with our outlook on the market competition after the rotational operational suspension is lifted. I regret the fact that because of the competitive proactive measures taken by our competitors during this first quarter, the earnings results overall for Q1 was rather a lackluster, so we regret that fact, but Q2 onwards, we believe that – of course we cannot completely rule out the possibilities of our competitors launching guerrilla-type marketing or ambush marketing at time to time. However, considering the fact that the government is quite committed in market stabilization through actions such as subsidy limit regulation, and also the fact that LTE market is entering into a new maturing stage, I believe that the second half marketing landscape will be relatively benign compared to Q1. To elaborate a little bit more about the government’s strong commitment to stabilize the market going forward, I believe that that will play a very significant role. And on top of that, as a leading market player in this industry, we also have a strong commitment for market stabilization. And I believe that throughout our society, various sectors or various opinion leaders have certain expectations for market stabilization. And on top of that, if you consider the financial limitations of our competitors, I believe that the likelihood of the subsidy marketing competition becoming even more fierce going forward would be quite unlikely. To address the ongoing competition, we are very committed to enhancing our competitive dynamics focusing more on the product and services and network capabilities. And we would do very much our efforts. We’ll make full efforts so that we could perhaps close to end the subsidy-oriented competition in the market. And we will therefore focus more on the retention-oriented marketing activities to defend our existing high-quality customers instead. Regarding your second question about our company’s plan, if you commercialize the 225 megahertz system network and how you will have an impact on the handset line up going forward. As for the second half of this year, we have plans to launch the 225 mega-bps downlink speed combining 10 megahertz plus 20 megahertz component carriers together. Regarding the LTE-A service for the drive from the 225 mega-bps downlink speed, we have already made a proactive preparation to fully go ahead with the development. So we have pretty much completed the preparation stage. And we are also closely collaborating with the manufacturers of the handset, so that we could preemptively launch these handsets going forward for the benefits of the consumers.

[Foreign Language – Korean] The next question will be presented by Kim Hoi-Jae from Daishin Securities. Mr. Kim Hoi-Jae, please go ahead with your questions. Kim Hoi-Jae – Daishin Securities: [Foreign Language – Korean] I have the following two sets of questions actually. First of all, regarding the LTE-related unlimited price plans recently launched. There are mighty concerns about the possible capacity shortage regarding the data traffic that is expected to grow quite a bit. So I was wondering within your current spectrum capacity, how much data usage can you actually handle? If you could provide us with some specific numbers, that would be appreciated. And relatedly, I believe that out of the 3G-related spectrum allocated to SK Telecom before, I believe about 20 megahertz dedicated to 3G may be converted to LTE purposes. So I’m wondering whether that actually can be converted indeed. My second question has to do with your marketing. I believe that most important cost for the longest ever rotational operation suspension on the telcos recently was the competition for market share in your industry. So what is your market share related position going forward? And also could you give us some specific details about the current status and prospects about T Phone initiatives as well?

[Foreign Language – Korean] You asked about our capacity to accommodate the data demand growth arising from the LTE unlimited price plan. And relatively I will also address your questions about the possible conversion of our existing 2.1 gigahertz spectrum. To answer the first part of your first question, I believe that the increased data usage that is expected from the launching of the LTE unlimited price plans launched, I believe that with the current spectrums and network capacities we currently have, we will be able to sufficiently address the growing demand. As mentioned earlier, in our annual business plan already drafted, we have already reflected the expected data demand growth coming from such unlimited price plans. Therefore, we do not anticipate any major issues arising from the data traffic increase going forward. And regarding your question about the possible conversion of the part of the existing 2.1 gigahertz spectrum previously allocated to WCDMA and how it can be used for LTE data usage. To answer that question, I could tell you that among the 2.1 gigahertz spectrum allocated, all of that amount about 10 megahertz has been already converted to the dedicated use for LTE. To elaborate just a little bit, even if the data traffic demand goes up even further in the future, we believe that we have more than sufficient spectrums available. And because we have already begun the initiative of converting the existing 2.1 gigahertz bandwidth to LTE-preferred spectrum, I believe that we are pretty much prepared for the three band carrier aggregation capacities or technologies already. You also asked about our policies and positions about our market share related policies. Regarding the market share, as you all are aware, for a long time to-date, we have been maintaining over 50% market share in the market.…

[Foreign Language – Korean] The next question will be presented by Tong Yang [ph] from CIMB. Please go ahead with your question. Tong Yang [ph] – CIMB: [Foreign Language – Korean] Two questions for me. First of all, in your earlier earnings presentation made, you talked about the high growth coming from the B2B business areas. So for this year and the next year, if you could cite particular types of B2B business areas that you are expecting the highest growth going forward. Could you be more specific about those areas? And also relatedly, can you talk about your competitive upper hand in those respective solutions or B2B businesses compared to your competitors? My second question has to do with the following. In April, you have launched the unlimited LTE data price plan. So of course in the short-term and the long-term perspective, this could offer you an up-selling opportunities on your existing subscribers, but we have to also look at next year and the following year in the long-term perspective. So what are your strategies to further defend your ARPU growth going forward in the long-term perspective? So if you had any blueprint at least, could you give us a big picture about that?

[Foreign Language – Korean] Let me first address your first question, regarding our B2B business. As you are well aware in the B2B solutions business, our annual revenue target is KRW 1 trillion. During the first quarter of this year, we have already achieved KRW 115.5 billion in top line, which was a very encouraging growth year-on-year by 38%. You asked about our competitive edge vis-à-vis our competitors. I believe that our strongest acquisition areas include Smart Work as well as Green business. These are particular areas where we are quite ahead of our competitors we believe .So we recently acquired new customers such as Korea Cyber University as well as Cosmo Chemical Company. And in the Safety area, as you are already aware, we have recently acquired a safety company called NSOK. And we will be further maximizing the synergy between NSOK and the rest of the SK Telecom Group, so that we could further boost the growth going forward. In addition to that, in the IOT, internet of things, as well as cloud sectors, our plan is to further enhance our capability, so that we could not only achieve near-term targets, but also to ensure future growth potential. As you’re well aware, compared to our competitors’ position, we have a very high-end high quality customer base, through which we are collecting quite a bit of data. As you are well aware, compared to our competitors, our customer base is quite high quality, and on this customer base, we have collected and accumulated quite a bit of data to-date. And by enhancing by data analysis capabilities on those existing customer base we believe that we could further ensure future profitability as well. Next, I believe that your questions has to do with our long-term strategy to help grow the…

Currently there are no participants with questions. (Operator Instructions) [Foreign Language – Korean] The next question will be presented by Sean Oh from Merrill Lynch. Please go ahead with your question. Sean Oh – Bank of America/Merrill Lynch: [Foreign Language – Korean] I have two questions. First of all, could you share with us your expected effective tax rate for the entire year 2014 as well as the first quarter of 2014? And secondly, I believe that your competitors have already reflected the interconnection fee-related results in their books. I was wondering whether SKT has similar plans to do so, or whether your current numbers reflect it already.

[Foreign Language – Korean] To answer your first question about the effective tax rate for this quarter, during Q1, it stood at about 20%, which is flat year-on-year. And even on a quarter-on-quarter basis, it was edged down slightly. Of course we anticipate some minor changes because of the accounting treatment changes regarding the corporate tax rate. However, I believe that those expected changes in the application of the residential taxes has been already reflected in our calculations. Could you actually repeat the second part of your question regarding the interconnection fee? Could you be a little more specific in your question? Sean Oh – Bank of America/Merrill Lynch: [Foreign Language – Korean] Maybe actually repeat my second question. Regarding the interconnection fee, at yesterday’s conference call by one of your competitors, they mentioned that interconnection fee-related income as well as expense came down significantly, and they mentioned that they are reflecting the expected interconnection fees settlement which would take place at the end of this year or beyond. So I was wondering whether SKT has similar plan to reflect it earlier, or would you be reflecting it once everything is decided all at once during the fourth quarter? The way I look at your numbers, I don’t think that your interconnection fee projections reflect such changes in the interconnection fee. So my guess is that you would be reflecting it in Q4. So could you give us some guidance as to how much we should anticipate for Q4?

[Foreign Language – Korean] As far as the interconnection fee-related conclusions on 2014 and 2015, currently I believe that MSIP, the Ministry of Science, ICT and Future Planning is currently conducting the review on this matter as we speak. And I believe that the final decision period had not been determined yet. So once things are finalized, we will be reflecting it and recognizing it all at once.

[Foreign Language – Korean] The next question will presented by Dan Kong with Deutsche Bank. Please go ahead with your question. Dan Kong – Deutsche Bank: [Foreign Language – Korean] I have the following questions about the launching of the unlimited LTE price plans recently. I’m wondering out of many price plans available in the high-end segment of your price plans, which particular price point is attracting the most number of subscribers? In other words, do you have a larger portion of subscribers opting for this unlimited plan in the price point higher than let’s say KRW 100,000 or some price point lower? And relatedly, among your existing subscribers, what’s the percentage of the subscribers actually downgrading in terms of the price plan, and also relatedly, how much are actually upgrading?

[Foreign Language – Korean] To answer your question, since we launched this unlimited data price plan in the month of April, among the total handset upgrading and new subscribers, over 60% of such subscribers are opting for price plan higher than KRW 80,000 and higher. We also have with us our marketing division head. So he will actually further answer your question.

And let me help answer your question. My name is Sun-Jung Kim, in-charge of marketing strategy. Regarding the price plans available for unlimited data usage, we have the price points at about KRW 80,000 and also KRW 85,000 packages. So among those two price plans, about 80% is opting for the KRW 80,000 price plan, whereas the remaining 20% is actually opting for the KRW 85,000 price plan. You also asked about the movement coming from our existing subscriber base. Those subscribers opting for such unlimited data price plans recently launched, about 80% of those changing their price plans are actually up-selling. In other words, they are upgrading higher to the KRW 80,000 or higher price plans. Regarding new acquisition of subscribers, because we are under the operation suspension at the moment, it’s difficult to give you a very accurate trend estimates going forward, but once the suspension of operation is lifted, we believe that over 60% of the new subscribers acquired will be opting for price plans either KRW 80,000 or KRW 85,000 price plans.

[Foreign Language – Korean] If there are no further questions. We will conclude the Q&A session and hand it over to our CFO for his closing remarks.

[Foreign Language – Korean] Thank you for your participation in SKT’s earnings call until the very end. All your questions and interest shared today will help enrich the management activities of our company going forward. As mentioned earlier, SK Telecom will ceaselessly rise to new challenges to further strengthen its competitiveness, while doing it at most to ensure continuous growth and shareholder value enhancement.

[Foreign Language – Korean] With that, we would now conclude the earnings conference call for SK Telecom for Q1 2014. Thank you.