SK Telecom Co.,Ltd
Q4 2013 Earnings Call Transcript

Published: 28 Jan 2014

[Operator:]

[Korean] Good afternoon. Welcome to the conference call for the Fiscal Year 2013 Fourth Quarter Earning 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 2013 fourth quarter earning results by SK Telecom.

[Young-Gyu Park:]

[Korean] Good afternoon, and my name is Young-Gyu 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 Q4 2013, as well as future management plans and strategic direction followed by a Q&A session. [Korean] To help deepen your understanding, we also have executives from the relevant business units with us today. [Korean] 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.

[Soo Cheol Hwang:]

[Korean] Good afternoon. My name is Soo Cheol Hwang, the CFO of SK Telecom. [Korean] 2013 was a year of meaningful achievements for SK Telecom, marked by the resulting competitive paradigm shift for the telecom industry towards a service and product-centric approach and are laying the foundation for the growth businesses. Under the management principle maximizing customer value, we cemented our LTE leadership through the world's first commercialization of LTE-Advanced in addition to the differentiated network quality. We also helped reshape the competitive paradigm by crystallizing diverse retention policies and also preemptively launching innovative price plans, such as the unlimited in-network calling T&T Sharing. [Korean] The B2B solution business gaining scale, the climbing IPTV subscriber base and the diversifying health care business have also boosted our growth momentum. The business expansion of SK Planet and the sharpened competitiveness of SK Hynix have also solidified our position as the leading integrated ICT company. [Korean] Let me now brief you on the consolidated earnings results for 2013, as well as the fourth quarter. [Korean] Revenue for Q4 rose 4.1% quarter-on-quarter to KRW 4,294,800,000,000 while the annual revenue increased 2.9% year-on-year to KRW 16,602,100,000,000 supported by the growing LTE subscriber base and the solid expansion of the B2B solutions business, among others. [Korean] Operating income and EBITDA for Q4 edged down slightly quarter-on-quarter due to seasonality, posting KRW 509.7 billion and KRW 1,237,800,000,000 respectively. However, the annual operating income climbed to 16.2% year-on-year to KRW 2,011,100,000,000. Thanks to factors such as the revenue gain and the lower marketing expense. EBITDA for the year also rose 12.4% year-on-year to KRW 4,830,900,000,000. [Korean] Net income for Q4 stood at KRW 293.7 billion, while the annual net income jumped 44.3% year-on-year to a record KRW 1,609,500,000,000, boosted by the pickup in SK Hynix equity method gain among others. [Korean] The stand-alone CapEx for SKT came in at KRW 2,316,500,000,000 down 19% year-on-year. From the mid- to long-term perspective, a stable downward trend is anticipated assuming technological advancements and efforts to enhance investment efficiency. [Korean] That was the overview of the business and financial results for 2013. Let me now move on to the management plan and strategic direction for 2014. [Korean] As we celebrate the 30th anniversary of SK Telecom in 2014, we will build upon the foundation for change implemented in 2013 and lead and boldly pursue growth befitting the data era to ensure another leap forward into the next 30 years. [Korean] For 2014, SKT is targeting the revenue of KRW 17,400,000,000,000 through continuously reinforced LTE value, as well as the accelerated growth business activities. As for CapEx, now that we are nearing the finalization of the LTE network infrastructure rollout, we seek to continue the downward trend from last year by expanding the stand-alone CapEx for SKT of KRW 2,100,000,000,000. Even against such backdrop of the downward stabilization of CapEx, we are committed to maintaining our upper hand in LTE services and network through further enhancement of the investment efficiency. [Korean] As for the products and services, which will play a pivotal role in the competitive dynamics going forward, we introduced our future roadmap at the press event on the 23rd through the announced launching of over 20 strategic products in 5 key areas, such as Communication Platform comprising T Phone, the Home Service centering on the B Box. In addition to media, entertainment and security, we will maintain a lead in the service competition landscape. [Korean] Especially in the T Phone, which is scheduled to be preloaded on the future handsets in the pipeline, is expected to bring about a Communication Platform innovation by opening up and evolving the most popular telephony apps. It will not only offer SKT's internally developed functionalities but also accommodate third-party services through which our differentiated competitive edge can be further refined, along with the improved customer convenience and ease-of-use. Through such efforts, we will strive for shared growth in the ICT industry. [Korean] Together with our innovative products and services and strengthened fundamental competitiveness, we seek to stabilize the market by fortifying retention focus initiatives, which began last year. We believe the government's commitment towards market stabilization will also play a positive role in creating a rational market sentiment. Under the rational market environment, our leadership based on service quality, innovation and efficiency will be highlighted even further. [Korean] Alongside the growth of such telecom arenas, we will also continue to foster new growth businesses. [Korean] During 2013, the B2B solutions business top line posted KRW 434.4 billion, jumping 60% year-on-year. In 2014, we plan to expand the business revenue to over KRW 1 trillion, further reinforcing its growth momentum. Notably, the work Green and Safety Solutions area, which has been validated last year will be the core businesses in our overall efforts to pursue an evolution into a bonafide platform business structure. Geovision, which is a commercial district analysis service, already being provided, together with Smart insight, which is a customer preference analysis service will serve as the starting point for our big data initiatives to strengthen our platform business. [Korean] IPTV is consistently ramping up its subscriber base, leveraging our unparalleled bundled offering competitiveness. Our fixed line-based subscriber target for 2015 is 3.1 million. B TV is also expected to significantly grow in both the subscriber number and data usage, boosted by the real-time terrestrial TV streaming and the 3 major sporting events slated this year. In addition, the launching of the most state-of-the-art home hub device in the market, B Box, will ensure our lead in the Home Service market. [Korean] In the health care business, we selected health management, hospital solution and diagnostic device hardware as the 3 major areas. We commercialized Health-On service and Smart Hospital solutions, while obtaining FDA approval for the prostate cancer diagnostic device, FREND, thereby securing its business foundation. Especially in the hardware business, the broadening diagnostic types and distribution channels are expected to bolster the relevant reagent revenue as well, signaling a positive growth potential. We will also pursue entry into strategic markets, such as the U.S., China, Southeast Asia. And through such efforts to bring diverse businesses onto a stable trajectory in addition to entry into the global market, we plan to grow this business into a KRW 1 trillion business by 2020. [Korean] SK Planet is displaying more growth potential than ever following by the upcoming trend of mobile offline interlink and increasing growth opportunities in the e-commerce arena. The 11th Street will fortify its differentiated competitive edge, such as the mobile capabilities, while OK CashBag will create visible results by extending diverse on-offline integrated business areas and strengthening mobile services utilizing mobile applications. In the global market, we will further beef up our e-commerce business base in existing markets, such as Turkey and Indonesia, while continuing to discover new business opportunities in core markets like the U.S. [Korean] Lastly, I would like to touch upon the shareholder return. [Korean] The KRW 9,400 per share cash dividend for 2013, including the already paid out interim dividend of KRW 1,000, is scheduled to be issued upon obtaining approval from the VOD and the general shareholders meeting. As was mentioned earlier, for 2014, we will consider stable shareholder return, while being mindful of the necessary investments for the platform, B2B and health care businesses, among others. We plan to maintain the cash dividend for 2014 on par with the previous year. By delivering enhanced enterprise value through today's investment into our growth businesses, we would do our utmost to realize further improved total shareholder return going forward. [Korean] If 2013 was a period of setting the stage and direction for growth, 2014 will be a year of solidifying our corporate soundness by refining changes and delivering results. I would like to express my appreciation to all the investors and analysts once again for your unwavering support for SK Telecom. Thank you.

[Young-Gyu Park:]

[Korean]

[Operator:]

[Korean] [Operator Instructions] [Korean] The first question will be provided by Josh Bae from UBS. And the next question will be provided by Jae-min Ahn from Kiwoom Securities.

[Josh J. Bae:]

I have 2 questions. First is on your strategy. If you could share with us SKT's strategic focus for 2014, especially on the competition front, it seems there's some worrying signs regarding competition early in the year. So if you could share with us your thoughts on marketing and competition strategy for the year that would be very helpful. My second question is regarding the government looking to pass a new legislation regarding handset distribution system. If you could share with us when you expect this legislation to be passed and how this could impact SKT's operations? That would be helpful. [Korean]

[Soo Cheol Hwang:]

[Korean] Let me first address your question regarding SK Telecom's marketing strategy direction for 2014. As you recall, and as was mentioned in my opening remarks, we have been operating under the slogan of maximizing customer value during 2013 under which we have implemented various measures including the first ever preemptive unlimited in-network price plans, calling plans, and also for the first time in the world, we have commercialized LTE-Advanced services. And rather than simply trying to take away customers of other players, we have successfully shifted the competition paradigm to focus more on the fundamental product side competitiveness. So if 2013 can be dubbed a year of laying the foundation for new growth for MNOs, I would like to say that 2014 will be a year of actually anchoring on whatever that have been established during the 2013 period and thereby, fully pushing for actual and visible growth that befits the data era. [Korean] To elaborate, although we do anticipate some onset of aggressive marketing activities from some of our competitors going forward, again, we will be very much focused on our existing retention policies focusing and leveraging on our existing fundamental competitive edge. And as we've expressed during the press event on the 3rd -- 23rd of this month, we are launching products and services which are very innovative, such as T Phone and B Box and such. And we will continue to launch such leading-edge products and services in the market going forward, thereby not losing our grip on the market leadership in the future. [Korean] And also, yes, we have witnessed somewhat overheated competition taking place in the beginning of January this year. But it has quickly stabilized, I believe. So I believe that this will be a year, which is marked by a shift away from the subsidy-oriented competition into a competition focusing more on products and services instead. And as you are well aware, the regulatory body is quite committed to further stabilizing the market as well. So I believe that we will work further into efforts to further stabilize the market for the rest of 2014. And I believe that such efforts will lead to actual fruit. [Korean] To address your second question regarding the expected passing of the law called Handset Distribution Act, you asked about our company's view and our outlook and how it could possibly impact our business in the future. I believe that within the market, there has been some high level of consensus already reached regarding the necessity of such a law in the market. So at SK Telecom, we anticipated this particular law to be at least discussed at the extraordinary session of the Congress, which will be held in the month of February. [Korean] I believe that the anticipated passing of the Handset Distribution Act, which is under discussion, could have a very significant impact on curbing the overheated competition centering on subsidy. [Korean] Assuming that the implementation of the scheduled and planned act goes as planned, I believe that rather than simply opting for after-the-fact regulation and penalties imposed by the regulators, it could actually lead to a more positive environment in which operators will self-impose some extra measures to help stabilize the market.

[Operator:]

[Korean] The next question will be presented by Jae-min Ahn from Kiwoom Securities. And the following question will be presented by Hoe Jae Kim from Daishin Securities.

[Jae-min Ahn:]

[Korean] Ask the following 2 sets of questions. First of all, aside from today, I believe that one of the reasons for the sluggish stock price trend of your company recently has been the market concerns surrounding the possibility of your market share going down below the 50% level in the future. So I was wondering whether you could share with us some specific countermeasures to address this issue. And if you could also interlink that answer with the increasing subscriber number for MVNO players in the market as well, that would be appreciated. And my second part of the question is the following. You talked about the importance of enhancing product competitiveness in order to further solidify and cement your fundamental competitors of the company during which time you also mentioned products, such as T Phone and B Box. But could you elaborate a little bit further as to your more specific plans?

[Soo Cheol Hwang:]

[Korean] Let me answer your question regarding our countermeasures to address the market share issue. As mentioned earlier, SK Telecom since 2013, has been very much focused on enhancing our fundamental competitiveness by focusing more on the data-centric or data preferred price plans, or by focusing on the retention-based focusing strategies as well. And I believe that such actions prove to be quite valid, because we are beginning to see some meaningful results in terms of the profitability. [Korean] And as we were pursuing the retention policies in our overall marketing efforts, temporarily it is true that some of the market share has turned to net reduction temporarily. However, let me remind you that the level of market share reduction has actually slowed down quite a bit in recent period. [Korean] And recently we have been, in continuous series, have been launching innovative products that are unparalleled by any other players in the market. So I believe that such continuous launching of innovative solutions in the market will help us definitely outpower our competitors going forward. So through such efforts, we believe that our market leadership will remain solid in the future, and I don't think that our market share will go down below 50% for those reasons. [Korean] Let me also add that our company's position that we should maintain at least 50% market share, that policy has not changed. Therefore, that policy should be considered quite valid going forward as well. [Korean] As for your follow-up question regarding the MVNO subscriber increase, I believe that MVNO business has the purpose of meeting diverse needs of the subscribers in the market. So I believe that we are already creating a very healthy win-win situation between both the MVNO players and the telcos. [Korean] Let me also elaborate from the business division aspect, regarding your comments about T Phone initiatives. As we've mentioned earlier, we are going to be introducing a preloaded apps. But then again, our intention is not to simply replace other apps with our apps instead. But our ultimate aim is to evolve into an integrated platform player and position ourselves as such players. And also through such app initiatives, we're not trying to win all the profit in the process, but we are quite open to having an ecosystem that could embrace third-party solutions so that we could come up with a shared growth model as such. And as a telecom operator, we're not at all trying to, I guess, misuse our position as one of the leading players in the market. But rather we are very much keen on the need to grow together with our suppliers and third-party application providers so that we could together come out as a win-win situation. [Korean] Led by the T Phone initiative, SK Telecom is set to emerge as a platform company indeed by coming out with an ecosystem that could actually embrace various partnerships as a platform player. [Korean] SK Telecom as a platform operator will not be simply relying on the price plans for subscribers that are operating the market. But we will continue to help create a whole new ecosystem and a whole new business models, so that we could come up with a shared growth models with other players in the market as well.

[Operator:]

[Korean] The next question will be presented by Hoe Jae Kim from Daishin Securities. And the following question will be presented by Jong In Yang from Korea Investment Securities.

[Hoe Jae Kim:]

[Korean] I have the following 2 questions. Every time there are M&A activities that are taking place in the market, often times SK Telecom's name is one of the short list or possible potential list and that's often been discussed in the market. So I was wondering whether you could give us some color as to your plan for business portfolio building in the future. In other words, even if it has nothing to do with the telecom business, are you willing to aggressively enter into the M&A opportunities and initiatives in the future? My second question has to do with SK Planet. So far SK Telecom has been emphasizing the fact that SK Planet is in the stage where you still have to very much focus on the volume growth rather than focusing too much on the bottom line. Now that we are beginning the year of 2014, I was wondering whether your stance on SK Planet has changed at all. Do you still believe that it is too early for you to start monetizing from SK Planet, thereby contributing to the bottom line?

[Soo Cheol Hwang:]

[Korean] Let me address your question regarding SK Telecom's strategy and direction going forward regarding our business portfolio. If we look at the recent development of the ICT landscape, we are not only being asked to choose between what to actually give up on or what to select. It's not simply select and focus type of decision that we are imposed on. But rather, the entire telecom business framework itself is actually evolving into something completely different. [Korean] And if you look at the recent trends, I believe that the emergence of Internet of Things, IOT, or the expansion of the wearable devices and the emergence of smart vehicles are auguring for a new change that has been never been witnessed before. In other words, I believe that the distinction between network and devices and services no longer are valid, actually. And so we are evolving into an ecosystem where mobile is at the center of the entire ecosystem. [Korean] Therefore, SK Telecom is well aware of the need to address and actually deal with such rapidly changing environment in a preemptive manner. So in so -- in doing so, we are going to continue to help change the paradigm shift in to competition in the telecom industry, while maintaining our leadership and protecting the customer values and we will continue to seek to identify new growth business opportunities as well. And such efforts will only accelerate. [Korean] As you're well aware in areas, such as shared solutions business, health care and IPTV, SK Telecom is continuing to identify more growth opportunities and growth engines, so that we could continue to maintain our leadership in the new business areas. [Korean] Earlier in your question, you mentioned that SK Telecom's name seems to be popping up everywhere whenever there are discussions about M&As, and perhaps that is a bit exaggerated. I don't think we are mentioned in every deals, actually. However, we will continue to clarify our growth areas in the future. And in those respective new potential areas, we will continue to seek opportunities as they arise. [Korean] And your second question had to do with the timing and our views regarding SK Planet's contribution to SK Telecom's bottom line in the future. As far as SK Planet is concerned, it is no longer just a domestic business company, but rather a company that is seeking to become a global player. I believe that SK Planet is equipped to create more success stories abroad. And together with SK Telecom, I believe that there is an ample room for win-win synergistic opportunities. So I believe that SK Planet is ultimately working towards and adding to the value of SK Telecom Group as a whole through such efforts already. [Korean] Until 2013, SK Planet has been quite busy actually going through the integration process and merger with SK marketing and company and also dealing with Box net and the sale of low end was another matter that it had to deal with. So through such efforts, SK Planet has been streaming line -- streamlining the portfolio and also the focus of the business areas. Going forward, as we enter into the rest of 2014, I am sure that SK Planet will do its best to emerge as not only the total leading integrated commerce player in the domestic market, but also in the global market, linking both the online and offline areas. [Korean] We also have with us Mr. Young Chul Kim from SK Planet to help you better understand the situation about SK Planet. So let me actually hand it over to him right now.

[Young Chul Kim:]

[Korean] Let me elaborate a little bit. This is Young Chul Kim from SK Planet, in charge of finance. You asked about the performance and also the contribution to SK Telecom from the perspective of SK Planet. In 2014, SK Planet will be focusing on the growth of the e-commerce business through which we could emerge as a truly integrated commerce player that combines both the online and offline businesses, both domestically and globally. To that end, domestically, in Korea, we would be emerging as a commerce player, linking the mobile capabilities together with OK CashBag. And overseas, mainly focusing on the U.S. and other major markets, we would be launching new business initiatives that links both online and offline initiatives. [Korean] And also, SK Planet, rather than focusing on the short-term profitability, it will focus more on securing the growth engines for the long-term development and growth of the company. And in 2014, on a year-on-year basis, we will be -- we believe that financially even on the top line and the bottom line basis, our numbers are expected to grow as well. And we will work towards securing the necessary power indicators as such in terms of the performance indicators.

[Operator:]

[Korean] The next question will be presented by Jong In Yang from Korea Investment Securities. And the following question will be presented by Sam Min from Morgan Stanley.

[Jong In Yang:]

[Korean] I have the following 2 sets of questions. Number one, in 2013, I guess, I believe, that the LTE penetration rate in the market has reached 49%. So in 2014, what is your anticipated outlook as far as the LTE penetration rate or in terms of the LTE subscriber number? And also during Q4, your ARPU has gone up by 2.1% and also your cellular telephony revenue has increased by 2.2% as well. But looking back into Q3, there was a period when your ARPU has gone up but then again your top line has come down, so I was wondering why such gap has been narrowed for Q4?

[Soo Cheol Hwang:]

[Korean] To answer your question regarding our anticipated outlook for the LTE penetration rate for 2014. As you recall, as of the end of Q4 2013, we have acquired approximately 13.5 million LTE subscribers. And for 2014, we are anticipating between 170 to -- actually, excuse me, 17 million to 18 million subscribers for 2014, which means about 67%, or up to 70% almost. So that is our anticipated outlook for 2014. [Korean] Let me answer your second question regarding ARPU and the cellular revenue trends. You could basically assume that the direction between ARPU and also the cellular revenue tend to go hand-in-hand. However, if you look at 2013 as a whole, the overall cellular revenue has gone up. And also that trend was pretty much in line with the rising trend of the sign-up fees as well. However, as for the makeup or the composition of ARPU, I believe that I mentioned it some time ago, however, let me elaborate one more time. The structure is a little bit complicated because SK Planet is not officially part of SK Telecom. So when we calculate some of their revenue that contributes to ARPU, that particular SK Tele -- the Planet revenue may not be reflected in the cellular revenue. So it is included in one line item but not the other. So that's one thing that you should keep in mind. And also, we do not include the MVNO subscriber numbers in our ARPU calculation. And as you could imagine, such MVNO subscribers tend to have lower ARPU. So we have the effect of actually deducting the lower ARPU subscribers in this calculation. As you said, during the third quarter of last year, there was a temporary drop of the cellular revenue. However, that was a one-off situation. And in Q4, you could assume that things have normalized instead.

[Operator:]

[Korean] The next question will be presented by Sam Min from Morgan Stanley and the following question will be presented by Jae Kyoung Song from KTB Investment Securities.

[Sam Min:]

So on behalf of existing shareholders, I guess your plan to keep dividend policy unchanged is quite disappointing. Given that your parent fundamentals continue to improve, especially if you strip out the one-offs in the non-operating side. Through that, I have 3 questions. First, do you have any plans for share buyback this year? Secondly, can you explain the rationale for keeping the dividend policy unchanged? And then third, how much do you plan to invest into these new growth areas this year? [Korean]

[Soo Cheol Hwang:]

[Korean] Let me actually shift the order of answering your questions. Let me address the reasons or the rationales for our keeping the dividend policy into next year on a year-on-year basis on par with the previous year. And then I will move on to the other questions that you raised. From SKT's perspective, as you are well aware, we have been maintaining the same DPS since 2007. And over this period, even when our earnings results were lower than 2013, we defended our DPS level at the current level. So please understand the fact that we are a company that is striving to maintain a position as a very shareholder-friendly policy maintaining company in terms of DPS by maintaining consistency. [Korean] And as you can imagine, when it comes to earnings prospects going forward, there always exists quite a bit of uncertainties. Despite such uncertainties, we are trying to maintain and defend at least the current level of dividend policy. So at this particular juncture, we believe that this is the best that we could deliver to the shareholders at the moment. [Korean] And regarding your question about our plans for treasury share buyback this year, I believe that our position is pretty much the same as the previous year. In that, we have to consider things in a very comprehensive manner. We have to consider not only the cash flow and also the stock price trend, but also various financials for us to come up with a final decision on that. [Korean] And as you are well aware, our dividend policy for the company has been always focused on the following principles

[Operator:]

[Korean] The next question will be presented by Jae Kyoung Song from KTB Securities. And the following question will be presented by Dan Kong from Deutsche Securities.

[Jae Kyoung Song:]

[Korean] I have the following 2 sets of questions. First of all, what is your view on your ARPU growth potential in the future? I was wondering whether you could give us some color as far as your guidance where ARPU is concerned. And in your opening remarks, you mentioned that the upcoming 3 major sporting events will definitely prove to be very beneficial for your ARPU enhancement. So can I assume that the mobile streaming of these events will increase going forward? And what are some of the more specific measures you have in mind in order to boost and bolster the ARPU numbers? My second set of question is the following. In 2013, I believe that you have pushed for new business growth and I believe that the growth has been about 33% quite high. So I was wondering what is the profitability from those new growth businesses. And also, I was wondering whether you could give us some guidance as to the revenue prospects and also the revenue drivers for those new business revenue in the 2014 as well?

[Soo Cheol Hwang:]

[Korean] To answer your question regarding ARPU trend going forward, as you have alluded, during the fourth quarter, our ARPU has gone up by 2.1% quarter-on-quarter. And I believe that such ascending trend is expected to continue into the future as well. And as I mentioned before, at the year-end 2013, the share of LTE subscribers out of the total subscribers stood at about 50%. And by the year end of this year, we anticipate this number to increase up to 70%. And that, in and of itself, will help boost the ARPU number continuously. And in addition, to that, we are trying to stimulate more data usage by introducing diverse services and products in the market. And I believe that such actions will also help support the value of ARPU. So although I cannot provide you with very detailed guidance numbers at this juncture, I could assure you that we could successfully attain at least the growth number that we have witnessed last year. [Korean] To answer your question regarding the profitability and the revenue drivers for our new growth businesses. As for the B2B solutions business, as I mentioned in the opening remarks, our revenue number has gone up quite significantly during 2013. On a year-on-year basis, the top line grew by about 70%. Although I cannot share with you the particular profitability number at this particular point because of the infant stage of this particular business, I could tell you that internal contribution to the overall profitability can be seen as at least 10% profit margin on the overall bottom line. [Korean] And as for the B2B solutions business, the growth drivers mainly would be coming from the Smart Work and Green and Safety areas. And as for the health care business, although we cannot talk about monetization and profitability at this point yet, we are pursuing these businesses with a mid- to long-term view. [Korean] As for IPTV business last year, we have also witnessed quite robust growth in this segment as well. During the past one year period, leveraging the bundled product offering competitiveness between SK Telecom and SK Broadband, we have successfully added new subscribers of about 700,000. On a cumulative basis, our number of bundled subscribers stood at 2.08 million. [Korean] As we enter into 2014, we will continue to further reinforce the bundled product capabilities, while providing more diverse content for IPTV, so that we could further add new net addition in terms of the subscribers. [Korean] And also as can be seen in the newly launched B Box, which is targeting the high tier subscribers, we will continue to launch new services, so that we could help enhance the customer satisfaction and thereby further increasing the ARPU numbers as well.

[Operator:]

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

[Dan Kong:]

[Korean] Yes, I have a very simple question. Between the LTE subscribers versus LTE-Advanced subscribers, I was wondering whether do you have any data that you could share with us as to the data usage volume differential?

[Soo Cheol Hwang:]

[Korean] To answer your question, on average, according to our recent data, the LTE subscribers’ average usage of data on -- stood at about 2.2 gigabytes which is -- and it is pretty much on par with the previous quarter. As for the LTE-Advanced subscribers, we have recently conducted sample tests to see the data volumes and it seems that compared to the normal LTE subscribers, they tend to use at least twice as much data.

[Operator:]

[Korean] Currently, there are no participants with questions. [Operator Instructions]

[Young-Gyu Park:]

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

[Soo Cheol Hwang:]

[Korean] Let me extend my deepest appreciation to all of you for staying with us until the very end of the conference call. All your questions and interest expressed today will help enrich the company's management activities going forward. [Korean] As mentioned earlier, SK Telecom is fully committed to further sharpening its competitiveness by ceaselessly rising to new challenges, while ensuring continuous growth and shareholder value enhancement. As we usher in the Lunar New Year, I wish all of you a restful and a Happy New Year.

[Young-Gyu Park:]

[Korean] With that, this concludes the earnings conference call for Q4 2013. Thank you.