SK Telecom Co., Ltd.

Good afternoon. I am Dong Hee Joon, IRO of SK Telecom. Thank you for taking the time amid your busy schedule to attend SK Telecom CEO Investor Day. 2022 marks a new starting line for SK Telecom. Today, the senior management of SK Telecom, led by Mr. Yoo Young Sang, the company's CEO, will share the vision. and Strategy of SK 2.0 with Analysts and Investors. First, Mr. Yoo will begin by presenting SK Telecom's new vision and its details, which will be followed by a Q&A session. Simultaneous interpretation will be provided for the CEO presentation. Consecutive interpretation will be provided for the following Q&A session. Now, I will give the floor to Mr. Yoo, CEO of SK Telecom. Hello, everyone.

We had the spinoff in November last year, and it is my first time meeting with investors. We wished to arrange such a meeting earlier than today, but there was COVID situation, and so we are holding this event online. I'd like to ask for your understanding. Today marks the 101st day since the spinoff, and for the past 100 days, As the CEO of SK Telecom 2.0, I have had many thoughts, and I'd like to share with you my thoughts with you in detail. We've been listening to the expectations and ideas from the shareholders regarding the SKT after the spinoff. There are many investors and shareholders who are expecting stable dividend income based on earnings growth, but at the same time, many shareholders are looking for new growth opportunities By utilizing new growth momentum. And as the CEO of SK Telecom 2.0, I'd like to pursue two targets of stability and growth at the same time. And to do so, SK Telecom has reorganized its businesses and resource operations. SK Telecom will continue to generate stable income from MNO, mobile and fixed business, which is the core business of SK Telecom. And at the same time, we're going to pursue new growth In the areas of media, enterprise, AI verse, and connected intelligence. In the following chapters, I'm going to share with you some more specific strategies. But the reason for this reorganization is to basically overcome the limitations of binary operation between the existing business and the growth businesses. It means that while we pursue growth businesses in the five We will utilize our entire resources so that there will be no loss coming after the spinoff. And we're going to focus on the three management pillars of customer services and technology and utilize our manpower and resources in these three areas. In other words, we're going to focus on the 5x3 matrix. When you look at the current situation, mobile and fixed revenue accounts for 82% and the growth rate is 3%. The growth businesses account for 18% of the revenue and the growth rate is 15%. The reason for this reorganization of the business into five business groups is based on the following background. When you look at the corporate value of a company that has a high share of the existing business, the existing business multiple would be applied for corporate valuation. This means that growth potential of the growth businesses is not well reflected in the valuation. As for the media and enterprise business, they need to be applied with a different multiple and different matrix compared to the mobile and fixed business. And also, subscription, metaverse, and agent-based AI-verse services require a different approach in valuation. In this regard, we will continue to share with the shareholders specific indicators and progress of the five business groups in a clear manner and on a regular basis so that the corporate value of the growth businesses will be recognized properly in the market. Now, I am going to give you some specific business strategies of the five business groups. First of all, let me talk about the mobile and fixed business. When you think about the key driver of MNO business, as you may know very well, it is 5G. In January, the SK Telecom 5G subscribers reached 10 million, By 2025, we believe that the additional 5G subscriber growth of 8 million is possible, and the wireless ARPU will continue to grow, and as a result, the MNO revenue growth trend will continue for many years to come. In addition, we're building the 5G networks together with the other two telcos, which will Provide us with capex savings. And in doing so, we will be able to expand the 5G coverage earlier than scheduled. And as for marketing and competition, it's not going to be mainly market share competition, but mainly competition based on providing value to customers. And overall, the market stability has been maintained. In addition, we're going to achieve operational excellency by utilizing the network efficiency and online analytics As for the fixed line business, we are going to be able to enjoy a sustained growth of subscribers as the number of single households is increasing and there is a growing demand for the second TVs. And as we have the one team system between the SK Telecom and SK Broadband, we will be able to maintain number one market share in terms of subscriber net ads. Therefore, we are going to be able to enjoy a sustained growth of subscribers. The fixed-line business revenue is going to be record-breaking each year. And at the same time, by designing and offering new customer opportunities and experiences, we'll be able to retain customers in the long run. Next is the media business. We have more than 10 million pay TV subscribers. We have more than 25 million mobile subscribers. By utilizing these subscriber bases, we're going to expand to the value chain, including content, commerce, and advertising. First of all, when we look at the content business, we will continue to expand collaboration in the original content lineup by working with Wave, BTV, and Channel S, and we're going to expand the number of channels. Moving on to SK STOA. In just two years, the GMB recorded 1.3 trillion won, and SK Store has become number one domestic tea commerce player. Currently, we're connecting with tea deals where GMB is about 100 billion won. We're going to develop growth strategies. And we will capitalize on the paid POCs, so wireless PV of more than 100 million views, and A fixed PV of more than 60 million views of SK Telecom. By utilizing a wireless and wired POC, we're going to build advertising business based on the new AI services. Now, next is the enterprise business. The data center business has huge growth potential because of the increasing demand and supply shortage. We'll not only expand capacity, but also we will expand into high value-added Business models including the HDC and MMR platforms based on 5G. And we're going to expand collaboration with the global CSPs to explore global expansion opportunities. By 2025, we plan to increase the data center revenue to more than 1 trillion won. Next, the cloud market is continuing to grow, and we are looking for new business opportunities in the areas of 5G MEC and MSP. In 2021, the cloud revenue was 64 billion won, and the 5G MEC, which was jointly launched with AWS, has produced more than 30 use cases such as AR and VR use cases. In addition, we're going to utilize BestBin Global, where we made equity investment to look for global expansion opportunities. Now, we are seeing new business opportunities in the era of the 5G, together with AI and IoT. Vision AI, Language AI, Data Analytics Platform, and 5G and IoT networks are combined. And these will lead to vertical integrations and expansions in smart factory, finance, security, and Hospital Services.

Next, I will go on to our service business, which is AIverse. First, T-Universe was launched September last year, and it has been well received by both our customers and the market. Last year, our subscription GMB surpassed $350 billion, and the 11th Street GMB The 11th Street oversees direct purchase GMB when over 100 billion Korean won. In terms of customer profile, we see higher contribution of the 20s and 40s age group and also subscription via contactless channels. This year, first, we will work on expanding the product portfolio of Amazon Global Store. Second, we will be increasing subscription partnerships and packages. In July last year, our MAU went over 1.13 million, Duration was around 61 minutes, which are meaningful results. Recently, we have been receiving more than 1,500 partnership requests, and we believe that this is recognition of our metaverse as a new communication platform. This year, we will make effort to build open content platform, second, establish economic system including NFT, and third, venturing into global markets. In 2025, we plan to secure more than 30 million global MAU. For the AI agent, we are targeting to create an unprecedented new service based on characters and also based on conversational AI service. In Q2 this year, we are planning to launch new services and therefore we are currently conducting product development and tests. Lastly, I will be talking about how we are preparing to develop the growth engines for the next decade. Telecom has continued to evolve, and also technology such as AI, robots, mobility will also continue to develop, which will lead to the emergence of a diverse array of devices. This means that We will have to see what kind of devices will appear after the smartphone, and SKT will focus on how to provide additional services other than connection. We believe that in this respect, connected intelligence is a role that SKT can play because it is adding intelligence to our existing strengths. Our first business is UAM. UAM is a newly emerging urban air mobility service. There are some uncertainties surrounding its demand, regulation, and technology. But for Korea, we believe that there is visibility in terms of business license and commercialization in 2025. We are working together with Hanwha Systems, Korea Airport Corporation, and our recently announced partnership with Joby. And we believe that we will be able to offer UAM services and become a total service provider in this area. We will continue to explore new growth engines for the next decade in areas where SKT can leverage key strengths other than UAM. Next, I will go over our shareholder return policy. In 2021, we implemented the spin-off. We also retired 2 trillion won of treasury stock, we introduced quarterly dividends, and also implemented 5-2-1 stock split. We have been continuously implementing shareholder-friendly policies and this trend should continue this year. Our pre-spin-off total dividend level should be maintained in 2022 as well and we will also maintain our dividend guideline that has been already announced to the market. Lastly, I will talk about the future envisioned by SK Telecom. We believe that the robust growth of the five business groups will enable us to achieve 23 trillion KRW in terms of revenue in 2025 from the current 16.7 trillion. The growth businesses should contribute 36% in 2025 from the 18% of current levels SKT is now moving on from connecting people. We are transitioning into a company that expands time and space for customers with technologies such as AI, metaverse, and universes. We are shifting from distance to dimension. We will be continuously identifying new businesses that can boost the value of customers and shareholders by leveraging our key strengths. We will be achieving both targets of stability and growth. Thank you. This will conclude our presentation. We will move on to the Q&A session.

Please press Start 1 if you have any questions. Questions will be taken according to the order you have pressed, Start and No. 1. For cancellation, please press Start 2, that is, Start and 2, on your phone. The next person to ask a question is Chairman Kim of Daeshin Jeungkwon. The first question will be presented by Hwae Jae Kim from Daeshin Securities. Please go ahead with your question.

Hello, I'm Hwae Jae Kim from Daeshin Securities. I'd like to ask you to explain why you changed your company into a 5-billion-dollar business. In the case of KT and LGU Plus, we operate a company that uses only one line of communication. In fact, we operate with SKT and Broadband, right? I'd like to ask if you are aware of the change in governance such as organization reform or collaboration with SK Broadband. Secondly, from what you explained about the five major business groups, it seems that the company has a little more expectation of growth for other business groups other than the communication field. Hello, I am Kim Hye Jae from Daeshin Securities. Thank you for this opportunity.

I'd like to get some more information about the background behind SK Telecom's decision to reorganize its business into the five business groups. When you look at your competitors, KT and LG U+, you can see that they are operating their mobile and fixed business under the same legal entity. But as for SK Telecom, there is a division between SKT and SK Broadband. As you are reorganizing your business into the five business groups, I wonder if this means that there will be further reorganization or any possible merger with SK Broadband which will lead to a governance change. The second question is about potential growth of the five business groups. I understand that the company has huge expectation for growth potentials of the other business groups other than Thank you, Mr. Kim. I'd first like to thank Mr. Kim for your questions. Let me answer the first question first.

The background behind the reorganization of SK Telecom into the five business groups was, as was mentioned in the presentation,

must maximize corporate value for each business group.

As you may know very well, we need different valuation matrix for mobile and fixed line business versus media, enterprise, and AIverse. It is because otherwise in the past we've seen cases where

The growth of the promising growth businesses was not well reflected in the valuation or multiple of the Telecom Co., Ltd. That is why we've decided to reorganize our business into separate business groups and communicate our strategies to the market.

In terms of telecom and broadband, Telecom Co., Ltd. is actually a virtual one-body system, and as a result, there is a lot of synergy, so I can tell you that we are not yet reviewing any additional governance changes such as merger.

And because mobile and fixed line business are combined in one business group, you may wonder if there is going to be any governance change going forward. However, SK Telecom and SK Broadband have already been operating as virtually one body or single entity, and we have been producing a lot of synergies in the past. Therefore, we do not have any specific governance change plan at this point.

Let me now cover the second question.

In addition to our mobile and fixed business group, we have huge expectations for the remaining four business groups. But let me point out some of the highlights for these four business groups.

First is advertising. As you may know, when you look at the history of SK Telecom, you can say that SK Telecom is very good at conducting subscription business. When you consider the wireless POC and wired POC of SK Telecom, and given the current MAU level of the entire services we provide, we believe that we have enormous potential for ad sales business. So we're going to capitalize on these strengths of SK Telecom and combine them

So that we offer an integrated advertising platform that covers both SKT and SKB. And this, I believe, advertising business is going to be a new growth driver for us. The second highlight that I want to emphasize is, as was mentioned in the presentation, is data center business.

As was mentioned in the presentation, in the data center market, there is a huge demand while supply is in shortage. And at the same time, we are capable of offering high-value ID services such as Edge DC. For some time, we are going to pursue organic growth in the data center market domestically, but in the future, we believe that we can explore global inorganic growth opportunity as well.

The third highlight I want to emphasize is subscription business.

It's been five months since we launched the new subscription service and there has been a very positive feedback from the customers and the brand recognition.

We also have learned a lot of lessons for the past five months.

This year, we're going to increase and expand the Amazon Global Store lineup and improve the product lineup as well and offer more convenient services

So that we can produce tangible results for the subscription products. Finally, I'd like to comment more about the Metaverse business. These days, a lot of companies are talking about Metaverse. In Korea, we are the second business or a second company to enter the metaverse market.

In Korea, we are the second business or a second company to enter the metaverse market. In Korea, we are the second business or a second company to enter the metaverse market. In Korea, we are the second business or a second company to enter the metaverse market.

For our metaverse business, we will act quickly and we will continue to expand our existing strategies and add more IT resources so that we can create a new growth momentum. Thank you.

Next question, please.

Next question is from Lee Seung Hyun of City Group. The next question will be presented by Sean Lee from City Group. Please go ahead with your question.

Thank you for the question. I have two questions. The first question is related to dividend. You mentioned dividend policy. I am curious about the dividend level in 2022. What do you think about the medium-term dividend direction after 2023? The second question is about M&A investment. After the division, you became a pure telecom company. Are you actively planning M&A for future growth? If you have a plan, I am Lee Seung Hyun from Citi Group.

Thank you for this opportunity. I would like to ask two questions. The first question relates to your dividend policy. You mentioned dividend policy in your presentation, but I wonder if the dividend level for 2022 is going to be similar to the previous year. In other words, can you clarify on whether The last year's dividend amount of 717 billion won is going to be maintained for 2022 as well. And also, I'd like to learn more about the medium and long-term dividend policy after 2023. The second question is regarding the M&A investment plans. And after the spin-off last year, you became a pure telecom company. And I wonder if you have any specific M&A plans Mr. Lee from Citigroup, thank you for your questions. Let me first cover the first question. As for your first part of the question, for 2022, as was mentioned in the presentation, we're going to be able to maintain the dividend amount that is similar to what we had before the spin-off. As for the medium and long-term dividend guidance, it's going to be based on the EBITDA and the CAPEX, and we expect our EBITDA earnings to continue to grow in the medium to long term, while CAPEX level will either decline or stabilize.

Therefore, in the medium to long term, we believe that there is enough dividend upside.

And regarding our medium to long term dividend policy, as soon as we have some specific decisions and guidelines, we will communicate them with the market. Let me now cover the second question.

I understand that there is a lot of interest in whether the Pure Telecom SKT after the spin-off will pursue an M&A or not.

I understand that there is a lot of interest in whether the Pure Telecom SKT after the spin-off will pursue an M&A or not. I'd like to make it very clear that SK Telecom will pursue strategic M&A opportunities.

And there can be three main directions.

The first direction is to acquire technology companies for the business such as AI and Metaverse. The second type of M&As would be acquisitions for the purpose of acquiring talent because it is quite challenging to secure competent developers in the market.

And the final direction is when we become competent in these growth business groups, we will pursue global M&As to expand into the global market. In terms of pursuing these M&As, our preference is not or our intention is not to

Do an IPO of subsidiaries after M&As, but rather combine and integrate these acquired companies into the existing businesses of SK Telecom.

The next question will be presented by Hyun Joon-ho from Hanwha SM Management. Please go ahead with your question.

Hello, my name is Noh Young-Joo. Thank you for listening to my explanation and giving me a chance to ask questions. I have two questions. First, I'm curious if there is a possibility of a fiscal risk associated with the loan contract. Second, I'm curious about the position of our side regarding the promotion of the additional expansion of 5G. That's all.

I am Noh Hyun Joo from Hanwha Asset Management. Thank you for your presentation and also thank you for this opportunity to ask you questions. I have two questions. The first question is related to any potential regulatory risks as a result of the presidential election. And the second question relates to your position of SK Telecom with respect to additional frequency allocation.

Thank you for your question, Noh Hyun Joo. Thank you.

Ms. Noh from Hana Asset Management, thank you for your questions. Let me first comment on the impact of the presidential election on SK Telecom. I believe that now we're living in the era of digital and there are many aspects of the lives of the people or citizens in Korea where we not only have to emphasize the role of telecommunications but also platforms and other elements. Therefore, I believe that there has been a lessening of burden on communication-related costs by having an increased MB&O business and also better regulations regarding tariff and price plans.

The overall communication policy is to reduce the burden

Therefore, overall, I believe that telecommunications-related policies are putting focus on the early 5G rollout to the entire nation as well as building data center capacity. So these will all strengthen the national infrastructure. Following these policy directions, the telecom operators, including SK Telecom, are working to expand the 5G coverage nationwide and making digital investments. As for the second question relating to the frequency acquisition, I believe that the same approach can be applied.

We are not in a position to accelerate the pace of frequency allocation.

As for SK Telecom, we are not in a position to accelerate the pace of frequency allocation.

But when we consider benefits to the citizens as well as fairness in the market, rather than pursuing a 20 MHz allocation of frequency

I believe that it is better to allocate three levels of frequencies by 20 MHz for the benefit of the citizens.

The next question will be presented by Steve Jung from CRSA Korea.

Please go ahead with your question. Thank you for the question.

I don't think CapEx is as good as I thought last year, but please give us a guideline for this year. I'm curious if it's going to be safe if we think we're done with our initial 5G investment. And secondly, please update us on how the 3-4 joint network construction is currently going on. Please give us your opinion on how much you can expect from CapEx.

I'm Jung Yoon Hwa from CLSA. Thank you for this opportunity. I have two questions. The first question is related to your CapEx. I understand that the level of CapEx last year did not change much, and do you think it will continue in this trend? And as we have the initial 5G investments coming to an end, do you think that the CapEx level will continue to stabilize downward? The second question is related to the joint rule that 5G network construction with telecom companies. What is the update and can you give us some update and do you think that there will be a positive impact on your CAPEX?

I am Kim Jin Won, head of corporate planning. Let me answer the first question regarding CAPEX. When you look at the capex level of last year for SK Telecom, it was 2.18 trillion won. And for SK Broadband, it was 820 billion won. So in total, it was about 3 trillion won. Yes. The KPEX level for this year is going to be similar to that of last year.

The KPEX level for this year is going to be similar to that of last year. For SK Telecom, first of all, the top priority for KPEX is increasing 5G customers' telecommunications quality and expand the coverage and network quality for our customers.

SK Broadband is also expecting to invest in IPTV, which is a key business, and in the area of ultra-high-end internet. We are also expecting to invest in content, which is in the area of growth, and in expanding the enterprise budget.

And for SK Broadband, they will continue to make investments for IPTV and broadband businesses as well as making investments for content and enterprise business.

In the medium term, the company has been investing in 5G for several years to improve the quality of 5G. Recently, the coverage of the population has been significantly increased, and at the same time, 5G common network investments are predicted. Moving on to medium to long-term CAPEX projection, we have been making constant investments for 5G. As a result, the coverage based on population has improved dramatically.

We're going to utilize the joint 5G networks together with the other telecom companies. So overall, I can say that in the medium term, the CAPEX level is going to be stabilizing downward. As for the 5G joint construction, the other executive in charge of ICT infrastructure will cover that question.

Hello, I'm Kang Jong-ryul, ICT infrastructure manager at SK Telecom.

I am Kang Jong Yeol, the head of ICT infrastructure at SK Telecom.

Let me answer your question regarding the 5G joint network. Last year, the three telecom companies in Korea

successfully did a pilot commercialization of 5G in 12 areas. So continuing on with this initiative, the three companies will expand the commercialization to the first level areas. And down the road, it is our target for the three companies to divide and conquer 131 rural areas for 5G coverage by the end of the first half of 2024. Because of this joint construction of 5G network, there is definitely medium to long-term positive impact on KPEX saving. But as Mr. Kim mentioned, our 5G subscribers are demanding rapid expansion of the 5G coverage. So we're going to continue making relevant investments. So the KPEX level for 2022 is going to be similar to that of last year. Thank you.

The next question will be presented by Seung Woong Lee from EVEST Investment and Securities. Please go ahead with your question.

Hello, I'm Lee Seung Woong from EVEST Investment and Securities. First of all, thank you for the opportunity to ask a question. In my case, I would like to ask a question regarding the performance of U-MUSUN communications. First of all, you gave us about 17.4 trillion won for this year's sales guidance, and I'm curious about the mobile phone sales. I'm Lee Seung Woo from eBest Investment Securities. Thank you for this opportunity.

My first question is related to the performance of your M&O business. This year, the guidance for the mobile and fixed business, the revenue guidance is 17.4 trillion won. And can you break it into M&O revenue guidance versus the other? And also, what is the wireless ARPU trend and marketing expense that you are expecting for this year from M&O business? Moving on to the second question that is related to the IPTV. Last year, at the end of last year, the number of IPTV subscribers reached 9 million, which is a very good result. And what is your outlook for the subscriber growth this year, and what is your overall IPTV strategy?

Yes, thank you for the question. I'm Myung-Jin Han, Director of Corporate Strategy at SK Telecom. I'll answer your question.

Thank you for your question. I am Han Myung-Jin, head of corporate strategy. Let me answer your questions.

As for MNO revenue in 2021, thanks to the growth of the 5G subscribers, the MNO revenue grew by 2.7% to... As for the 5G subscribers, it increased by 4.4 million to reach 9.9 million at the end of last year.

We believe that this 5G subscriber growth trend will continue this year to mark the number of 5G subscribers to be around 13 million.

As a result of such subscriber-based growth, the ARPU has increased from low 30,000 to an upward trend. The ARPU number that was communicated in the presentation includes ARPU for IoT, which has lower margin. However, when you look at the 5G handset-based ARPU growth, there is a very clear growth trend, and we believe that this trend will continue. So, 결과적으로 2022년 이동전환 매출도

As a result of such positive developments, we expect M&O revenue for this year to continue to grow, and it's going to be a very positive result on a standalone basis as well. As for marketing expense in 2021, because of the 5G market expansion and the accounting impact of IFRS 15, there was a slight increase. However, starting from the fourth quarter of last year, the marketing expense trend has been stabilizing and going downward, and there is also a market consensus that cost competition is not necessary and there was a need for market stability. We believe that market stability will continue this year, and by utilizing contactless distribution channels, we'll be able to increase cost efficiency. All in all, the marketing expense for this year is going to have a YOY decline. Let me now move on to the question related to the IPTV subscribers and business strategy.

The pay TV market continues to grow with subscribers reaching 9 million last year.

And this growth has been driven by the increasing number of single-person households and the growing demand for second TVs. In addition, we have been offering various services and contents that can appeal to the younger generation, the millennials and Gen Z, that have huge demand for individual and customized content. And as a result, we were able to increase our ARPU.

As a result, we were able to increase our ARPU.

As the market continues to grow and there's growing demand for various services and content, we expect the growth from IPTV to continue starting from last year. Thank you.

The next question will be presented by Junseop Kim from KB Securities. Please go ahead with your question.

Thank you for the question. My name is Jun-seop Kim from KB Securities. I would like to ask you two questions about the enterprise business. First, about the ITC. You have presented that the supply market is important in the ITC business. In the same situation, what is the priority ranking for the investment in the ITC? And if the investment is carried out, what do you think is the scale? Second, I would like you to highlight the 22-year performance of the enterprise business. I am Kim Jun-seop from KB. I'd like to ask two questions related to your enterprise business group. The first question is related to your data center business. You mentioned that in the market, there is a supply shortage of the data center capacity.

So this is rather a good situation for the suppliers. So in making data center-related investments, what are your priorities? And as you make data center investments, what's the size of the investment planned for this year? The second question is related to your enterprise revenue highlights. In 2021, the main revenue source was connectivity for enterprise business. But In this year of 2022, what will be the key business areas in the enterprise business group where you will generate revenue?

Hello, I am Chul Il-hwan from SK Broadband, which is in charge of the enterprise market of SK Telecom. First of all, thank you for your question.

I am Choi Jin Hwan, President of SK Broadband and also Head of SKT Enterprise CIC. Thank you for your questions.

Let me answer the first question.

As for data center, as you may know, it requires massive amounts of investments. So in consideration of cost efficiency and in consideration of financial risks to be hedged, we are pursuing both direct DC investments, IDC investments, as well as lease or TRS-related investments.

For example, the KASAN and Bundang IDCs that are operated by SK Telecom

They were built based on the collateral borrowings and equity investment from a real estate PE. And we have the total return swap agreement with the SPC that has made this investment. And also we have the long-term lease agreement for these properties.

As of now, by acquiring a new center in this way, we are making a large-scale initial investment

By utilizing this approach, we were able to secure additional IDC capacity, and we were also able to reduce potential financial risks that may incur due to massive large-size investments. And we were also able to reduce the lease costs by utilizing the TRS agreement.

Other than constructing the data centers, other kinds of CAPEX expenditures related to the equipment and related infrastructure supply,

These may incur when customers enter and start using the data centers. And these are demand-linked investments which are linked to new revenue.

In this case, the total investment is $5 billion. In fact, the investment amount from our balance sheet is about 10%, which is about $5 billion.

Our plan is to expand the data center capacity by 50 megawatts each year. And when you translate this into an investment, it will require a total of 500 billion won. But on our balance sheet, it will account for 10%. So this is going to be 50 billion won.

Let me now answer the second question. Our enterprise business comprises of four main business areas and the total revenue last year was 1.34 trillion won.

And for more detail, connectivity counts for 70%, IoT and energy solutions, 17%, and data center and cloud business, 13%. While the connectivity business is a cash cow business, the other three businesses are growing rapidly. Especially for data center and cloud, the annual compound growth rate is more than 30% or 50%. So these are part of the start portfolio.

So the data center and cloud businesses are the areas where investors can pay a key attention to. As the CEO said, the data center business is a growing business that is expected to be in poor supply and demand for the future. After the last Capacit Double Up, it is aiming to be No. 1 in the country in the next five years. In the big picture, the company's 5G MEC business, MSP, SaaS business synergy, and global CSPs have led to As was mentioned by the CEO in his presentation, the data center market will continue to experience supply shortage. As we doubled up our capacity last year, our aim is to become number one in Korea in five years.

So when you look at the big picture, we're going to continue to create synergies with our 5G, MEC, MSP, and SaaS business players, as well as collaboration with global CSPs, so that we can become a main player in the cloud economy, and it's going to be a key business area.

Cloud business is based on 5G, MEC, and integrates integrated cloud service providers. Main business models are MEC, Cloud Network, MSP,

As for cloud business, we aim to become an integrated cloud service provider based on 5G MEC, and we're pursuing growth through collaboration with global players for our main business models of MEC, Cloud Network, MSP, SaaS, and PaaS.

Thank you.

We will entertain the final question.

The last question will be presented by Seung Hyun Im from Sinyoung Asset Investment. Please go ahead with your question.

Hello, I'm Seung Hyun Im from Sinyoung Asset Investment. Thank you for the opportunity. During the presentation, you told us that you are going to use UAM in Korea as a growth power. I'm curious about the role we can play in this business and what kind of business model you are thinking of. And I'd like to know if there's an investment or cost that we need to make in the process of doing this business.

I'm Im Seung Hyun from Sinyoung Asset Management. I have a question related to your UAM initiative. You mentioned in your presentation that UAM will be a key growth driver in the future. So what roles do you think SKT can play in providing UAM? What business models do you have in mind? And if you need to make investments or need to make some cost spending, how much of such investment are you anticipating?

Thank you for your question.

Im Seung Yeon from Shin Yong Asset Management, thank you for your question. As for our UAM initiative, it's not been materialized yet.

However, we can expect a synergy between SK Telecom's communication platform and service capacity and Joby's machine development capacity.

But we can express some synergies between SKT and Joby because SKT has capabilities in terms of communications, network, platform, and services while Joby can contribute in terms of UAM device development.

Also, since Joby has acquired the UAM operating business of Uber, the company has been continuously

Also, I'd like to mention that Joby has acquired the UAM operational business of Uber, so we will continue to collaborate with Joby for future opportunities. The particular structure of the cooperation has not been decided yet, but I imagine that we can be part of a consortium to gain a business license for UAM in Korea.

In the short term, we're going to continue to participate in the Grand Challenge, which is a demonstration project led by the government.

Thank you. Thank you. This is the end of the Q&A session. Thank you.

This is the end of the SK Telecom CEO Investor Day. I'd like to thank the investors and analysts for your participation. As SK Telecom is making a new start in 2022, I'd like to ask for your continued support. Thank you.