SK Telecom Co., Ltd.

Good afternoon. I am Hee Joon Jung, IRO of SK Telecom. Thank you for joining SK Telecom's earnings conference call.

We are providing consecutive interpretation for the call, which will consist of a presentation on fiscal year 2022 earnings highlights, future business plans, and strategic directions, as well as a Q&A session. The call is attended by our executives from relevant business divisions, including Jin Won Kim, CFO and Head of Corporate Planning of SK Telecom.

Before we begin, I would like to remind you that all forward-looking statements are subject to change depending on market situations. Now let me present our CFO.

Hello, I'm Kim Jin-won, CFO of SK Telecom. This is my first time greeting you in the new year. I would like to wish all of you a happy new year. SK Telecom is one of the leading companies in the world Around the world, much attention has been paid to artificial intelligence and mobility technology

and these future-oriented innovative technologies are expected to be part of our daily lives in the near future. Against this backdrop, SK Telecom announced the vision of becoming a differentiated AI company in November last year. This year will be the first year to achieve our AI company vision in earnest through company-wide transformation and innovation. For more specific strategies and roadmaps on AI company, we plan to share them with the market as soon as possible.

Now, let me report on the consolidated financial results for fiscal year 2022. 5G 가입자 확대 및 B2B 등 신성장 사업의 약진으로 Consolidated revenue reported $17,305,001, up 3.3% year-on-year, and the operating income posted $1,612,001, up 16.2% year-on-year.

5G subscriber growth and solid growth of new businesses, including B2B business, resulted in strong revenue growth, while market stability contributed to improved earnings for 2022.

Net income recorded 947.8 billion won on the back of decrease in equity method gains following the spin-off in 2021. On a non-consolidated basis, revenue grew 2.6% year-on-year to $12,414.6 billion won. Operating income and net income reported $1,321.1 billion won,

and 869.5 billion won respectively.

Supported by such solid earnings, we will actively pursue transformation into an AI company that I mentioned earlier,

and lay a strong foundation for future growth businesses to bear tangible and fruitful results.

SK Telecom has been focusing on its role in AI technology for the past few years. Based on this, we are preparing to play a central role in the global AI era by leading the change of various industries in addition to providing innovative services that provide space and time for customers to gain contact with customers.

SK Telecom has been focusing our capabilities on AI technology for the past several years. Based on these efforts, we are securing points of contact with customers, providing innovative services across time and space, and leading changes in diverse industries through which we are preparing ourselves to play a key role in the global AI era. Furthermore, we're making investments in and forge partnerships with leading domestic and global AI companies to ensure that everyone can benefit from this era-defining technology of AI.

AIDAS, which started as an open beta service last year, is preparing an official service launching with the world's first Korean GPT-3 commercialization service in the B2C field, along with the original service function code such as DAEHWA and UX this year.

Launched as an open data version last year, ADOT is the world's first GPT-3 model in Korean applied for B2C services. We're working to enhance the essential service functions of ADOT such as conversation and UX, and planning for an official launch of ADOT within this year. Also, we are making continuous efforts to transform ADOT into a daily digital mate to first achieve the next Internet gateway of our customers.

ADOT was developed on its own based on GPT-3 technology to provide a creative language service. The company is committed to accelerating the development of AI language in the world, and we will continue to work on the development of AI technology We will continue to enhance our own GPT-3 technology in response to the global trend of rapid advancement in AI language.

In addition, incorporating diverse third-party conversation generation models Including new AI technologies is being considered. Through these activities, we aim to lead the super large AI service market in Korea.

Also, ADOT is a multi-modal technology that can use long-term memory technology, not only text, but also voice, image, gesture, and vitality signals, which can be used to output and communicate data like humans.

We will advance ADOT's conversation and service levels by applying long-term memory technology that can remember old information and use it for conversation, and multimodal technology that can comprehensively infer and communicate like humans based on multiple data types such as voice, image, gesture, and bio-signals in addition to text.

이와 함께 2025년 The UAM project, which is preparing for the first commercialization in Korea, is the main focus of the future innovation service, and it is the field that the company is focusing on for the selection of leadership. The company is participating in the domestic UAM certification project, consisting of the KUAM Dream Team Consortium, and through the successful demonstration project in 2025, which started with commercialization, the company and the world-renowned UAM flagship company, Joby Aviation, which has made exclusive partnerships with the company,

Next, with the goal of servicing Korea's first commercial UAM in 2025, SK Telecom is focusing on the UAM business as its key innovative future service to gain leadership in this area. We have formed the KUAM Dream Team Consortium and participated in UAM demonstration projects in Korea. For the success of the pilot program in 2025, a target year for UAM commercialization, we will make earnest efforts to secure differentiated competitiveness, including developing a framework for hyper-collaboration with Jovi Aviation, a global leader in UAM aircraft, with which SK Telecom has formed an exclusive partnership.

In November of last year, E-Friend, which started a full-scale global movement, 2022년 말 기준 누적 다운로드 2,127만 건을 기록하였으며 12월 전체 MAU 중 10% 이상을 해외에서 유치하는 등 공무적인 성과를 거두었습니다. 올해에는 수익 모델 구축에 토대가 되는 인앱 절제 도입을 통해 경제 시스템을 강화할 계획이며 선택과 집중을 통해 글로벌 성공 스토리를 만들어 나가고자 합니다.

With global expansion started in November last year, Iceland recorded 21.27 million cumulative downloads as of the end of 2022, and more than 10% of the total MAU in December came from overseas, an encouraging achievement. This year, we plan to strengthen Iceland's economic system by introducing in-app transactions, which serve as a foundation for building a profit model. We strive to create a global success story through selection and concentration.

On the other hand, T-UZU has achieved more than 1.6 million real users per month for about 5,700 billion won per year of GMV in 2022, and has become one of Korea's representative subscription products. From now on, T-UZU is planning to continue to grow as a subscription commerce platform based on AI and build a smooth structure of the platform through seller benefits through expansion of market control through critical mass acquisition and open market construction.

T-Universe became Korea's leading subscription service with the average MAU of more than 1 million and annual GMV of approximately 570 billion won in 2022. Going forward, T-Universe aims to evolve as an AI-based subscription commerce platform and build a virtual cycle of the platform by expanding market dominance through securing critical mass and attracting more sellers through the creation of an open market.

Moving on to our data center business. Thanks to the increase in the utilization rates of 가산 and 식사 data centers,

Revenue for 2022 saw more than 30% growth year-over-year. We are preparing for additional data centers while closely monitoring macroeconomic situations and changes in market demand.

Cloud business in 2022 focused on MSP, cloud transfer demand and traffic growth, which led to a double growth compared to last year. In 2023, we will focus on MSP scale-up and added value expansion,

Our cloud business enjoyed a two-fold revenue growth year-on-year on the back of growing demand for cloud migration centered on MSP and traffic growth in 2022. We aim to sustain the revenue growth trend through aggressive MSP scale-up and expansion of added value in 2023.

We aim to sustain the revenue growth trend through aggressive MSP scale-up and expansion

As for the enterprise business, we are supporting our clients' AI transformation using a diverse array of AI technologies and solutions, such as robotics and vision AI, and reaching out to new customers in the distribution and manufacturing sectors to pursue opportunities for additional growth. Let me now present the performance of the fixed and mobile business which serves as a foundation for our transformation into an AI company.

As of the end of 2022, the number of 5G subscribers reached 13.39 million, accounting for more than 50% of the total subscribers, an indication that we now have the 5G mass market.

As the share of 5G subscribers is expected to reach 80% by 2025, we will focus on acquiring quality subscribers through AI-based digital transformation, which will drive sustained earnings improvement.

Yuribangseong Gaipje는 연말 기준 932만 명을 기록하였습니다. 올해에도 SK텔레콤과 SK보드밴드 양사 간 시너지를 바탕으로 한 굳건한 유료방송 가입자 기반 위에 영화 신작을 포함한

The pay TV subscribers reached 9.32 million as of the end of 2022. On the back of the strong pay TV subscriber base, supported by the synergies between SK Telecom and SK Broadband, efforts to supply a wide range of contents including newly released films are expected to result in revenue growth.

In addition, the company has decided to invest 3 trillion won in content for IPTV 3.4 to strengthen global OTT response and content competitiveness last year. This year, the company plans to effectively connect various media assets such as SK Store, MediaS, and Team Studio, which it owns, and to strengthen its portfolio to secure synergy.

In addition, three IPTV providers, including SK Broadband, decided to make joint investments last year in content worth $300 billion won for the next three years to compete with global OTT service providers and strengthen content competitiveness. This year, we will effectively link our diverse media assets, including SK SOA, Media S, and Team Studio, and strengthen our portfolio to secure more synergies.

2022년 대당금은 The amount of dividend for 2022 was determined by the Board at $3,321 including $2,491 that was already paid out and $831 for Q4.

It is subject to the approval at the general meeting of shareholders in March.

Hanpyeon SK Broadband 역시 관목할 만한 사업 성장과 실적 개선에 기반하여 2022년 결산기 이사회에서 현근배당을 실시하기로 의결하였으며 SK텔레콤으로 하는 데는 배당 수익은 약 1,500원 규모로 예상됩니다.

Meanwhile, the board of SK Broadband resolved to pay cash dividend for 2022 based on outstanding growth of business performance and earnings, which is expected to deliver approximately 150 billion won of dividend income to SK Telecom.

마지막으로 2023년 경영계획 가이던스에 대해 말씀드리겠습니다. 올해 연결 매출은 AI 기반 디지털 트랜스포메이션을 통한 유무선 통신과 신성장 사업 전반에서의 고른 성장에 따라

Finally, let me share with you our management guidance for 2023. We project our consolidated revenue to be 17 trillion 800 billion won, up approximately 3% year-on-year, supported by overall growth in both new growth businesses and fixed and mobile business, Through AI-based digital transformation, we will do our best to exceed the guidance.

We will do our best to exceed the guidance.

SK Telecom will continue to accelerate transformation into an AI company that benefits customers with technology and services. We will strive to ensure that such transformation and innovation of SK Telecom will contribute to earnings improvement and tangible results from the new growth businesses to maximize corporate value and shareholder value.

We ask for your continued support and encouragement. Thank you.

We'll now begin the Q&A session. Now, Q&A session will begin.

Please press star 1, that is star N1, if you have any questions. Questions will be taken according to the order you've pressed the number star 1. For cancellation, please press star 2, that is star and 2 on your phone. The first question will be provided by Sun Jung Lee from Bank of America. Please go ahead with your question.

Hello, I'm Mary Lynn T. Sun Jung. Thank you for the opportunity to ask a question. I have two questions. The first is a question related to wireless business. The 5G penetration rate is over 50%, and I think there is a thought about the 23-year wireless sales growth rate. As the wireless ratio of our business department is high, I would appreciate it if you could share the prospects for the 23-year wireless business department sales. Also, the marketing cost has greatly contributed to the actual growth as it decreased to YOY last year. I would appreciate it if you could share the prospects for the marketing cost, whether the marketing cost decrease trend will continue in 23 years. I am Lee Sun Jung from Bank of America. Thank you very much for this opportunity to ask you questions. I do have two questions. The first question is about your MMO business.

As you mentioned, the 5G subscribers has reached about 50% of the total subscribers. So there are some concerns that there will be a slowdown in the revenue growth trend for MNO business. And as your MNO business takes up a large portion of your earnings, I'd like to know overall outlook for MNO revenue going forward for 2023. In addition, I understand that there was a decreasing trend of marketing expenses, which led to improved earnings. and I wonder if this trend will continue in 2023. The second question has to do with the shareholder return policy. You announced that the 2022 dividend payout level is similar to that of the previous year and what is your outlook for dividend payout for 2023? And I would also like to know if you are considering other options for shareholder return including share buyback. Thank you.

Thank you for your question.

You have asked two questions. The first question was concerned with our dividend guidance and our plans for shareholder buyback. And the second question had to do with outlook on M&O revenue and marketing expenses. Answer your question regarding the dividend policy first.

This year, the dividend policy will be determined by the dividend policy. However, as you can see from the company's past, the number of shareholders of SK Telecom has never decreased in the past year.

As for the dividend payout level for 2023, this is something that is subject to the quarterly performance as well as the year-end performance of our businesses, which is also subject to the discussion and resolution by the Board. Therefore, I'm not in a position to give you any specific number as to the 2023 dividend guidance. However, what I can say is that, as you know very well, SK Telecom has been dedicated to shareholder returns, and the size of the shareholder return has never decreased in the past. So I would like to assure you that we will like to maintain that level.

If you look back in the past, there was a time when we had 2,000,000 won worth of self-serviced goods in the process of division of human resources, and at this point, we have acquired the mobility of the stock market through the distribution of the stock market, and after the division, we have maintained the total volume of the stock market, so through this division, we have actually increased the stock market by about 65% from 2,000 won to 3,300 won per share.

Moving on to our plans, future plans for share buyback or treasury shares, I would like to say that SK Telecom has been implementing shareholder return policies on par with global standard. And in the process of the spinoff, we canceled treasury shares worth $2 trillion, one in the past, and we have introduced a quarterly dividend payout and a stock split as well. And we have maintained the overall dividend size after the spinoff. As a result, we were able to increase the dividend per share from 2,001 to 3,301, which is about 65% increase.

As a result, we were able to increase the dividend per share from 2,000 to 3,301, which is about 65% increase.

In terms of the dividend payout ratio and the dividend yield, you can say that our dividend return policy is the best in the industry. But considering that our earnings continue to improve and our cash flow continues to improve, we believe that we need to return more to the shareholders.

In terms of the recent financial situation, the macro is unstable. I think it's a good time to look at self-sufficiency in this context. I think it's a good time to look at self-sufficiency in this context. I think it's a good time to look at self-sufficiency. When we take a look at the overall situations in the financial markets, we can see that there's still a lot of macroeconomic uncertainty and we're no longer in the low interest rate environment as interest rates have been continuing to increase.

Therefore, it is true that dividend income is not as appealing as in the past to the shareholders. And we see that the current stock price of SK Telecom is way undervalued considering the potential value that we're aiming for. So against this backdrop, when it comes to our shareholder policy, we can consider seriously the option of shareholder, the option of share buyback. Our performance continues to improve. Our cash flow continues to improve. And starting from this year, we have been enjoying the new dividend income coming from SK Broadband. In addition, Hana Financial Holding, with which we swapped shares, has been continuing to pay out dividends on an yearly basis. So we can consider using these resources and these gains as financial resources for share buybacks.

Of course, we are still in the process of thinking about a variety of options for this year's stock exchange, so it is difficult to say for sure at this point. I will tell you in detail about the stock exchange policy in the big picture, including the stock market and the internal process, as the market tells you.

But once again, we're now considering various options for shareholder return policies for 2023, including share-by-back, so I cannot give you any definite answer. But we will continue to consider and deliberate on various options for shareholder returns, and we will go through the internal processes, including the deliberation at the board. And as soon as we have a specific idea, we will share them with you.

The second question is about what kind of sales I told you that 5G is now in the top 50% of the market, but there is still a long way to go for 5G. As the mid-price line-ups get stronger, I expect LTE customers to expand to 5G.

Moving on to your question on the MNO outlook, as we mentioned, the portion of 5G subscribers has reached more than 50%, so we now have the 5G mass market. However, we still see a lot of potential for growth in the MNO business because there are more price options available for customers and there's increasing trend from migration from LTE to 5G going forward.

In addition, as restrictions related to COVID-19 are being lifted, we see recovery of the roaming revenue as well

So given these various positive factors, we will do our best to maintain the growth trend of M&O business in the future as well.

Now, regarding your question on the marketing expense outlook, Mr. Kim Ji-hyung, Head of Integrated Marketing Strategy Office, will answer this question.

Hello, I'm Kim Ji-young in charge of integrated marketing strategy.

Recently, the market has been quite stable. 5G is moving to 5G, so there is an increase in the number of subscribers, so I don't think there is a high possibility of a competition for the position of subscribers.

Currently, in the entire market, we have more than 30 million 5G subscribers, so the 5G market has become more mature, and there's an increasing number of subscribers switching from one 5G to another 5G, so we do not see any high potential for subscriber acquisition competition.

We plan to continue to search for cost-efficient solutions such as online distribution competitiveness, while maintaining this market security.

While we continue to make sure that the market will stay stable, we will employ various options to increase cost efficiency, including the strengthening of online distribution competitiveness.

Thank you.

The following question will be presented by Soo Jin Kim from Mirae Asset Securities. Please go ahead with your question.

Hello. Thank you for the question. I would like to ask two questions. The first question is about MVNO. Recently, the MVNO market has been expanding in the financial sector as well. I'm curious about how you will respond to the reduction in market value. Secondly, the market and the world are very interested in the chat GPT recently. In a situation of high expectations that the generative AI era will come in the future, SKT now has ADOT, which is known to have been developed based on GPT-3. Kim Soo-jin from Mirror Ascent.

Thank you for this opportunity. I have two questions. The first question is related to the MVNO market. Recently, even a financial institution entered the MVNO market. and the MBNO market size continues to grow. So I would like to know how you are going to respond to the potential declining the market share in the MNO business. The second question has to do with the ChatGPT and your ADOT business. Globally and also in Korea, there is a growing attention and interest in ChatGPT and they're saying that there will be a new era of generative AI. SK Telecom already has ADOT, which, as far as I know, is based on GPT-3. So how are you going to utilize ADOT, and how are you going to pursue the growth of ADOT going forward?

Yes, first of all, regarding the question about M&O, I think there are some concerns about M&O in the market as the market share of M&O has been reported recently. Regarding your first question, there have been some media reports on the increasing market share of MVNO businesses, and I understand that there are some concerns over MNO businesses in the market.

Regarding this question, Mr. Kim Ji-hyeong, Head of Integrated Marketing Strategy Office, will explain the current market situation and our responses.

First of all, the market situation in the market is a number that includes both IOT and technical management. Since 2020, the IOT of vehicle management has been added to MVNO, and MVNO MS has increased significantly.

First of all, I would like to mention that the market share that was mentioned in the media reports include IoT lines and auto control lines as well. And starting from 2020, the IoT lines for auto control has been recognized as part of MVNO. That is why there was an increase in the market share for them.

However, as you know, in the case of Hennessey, which has a great influence on profitability, SK Telecom's MS is 42% by the end of last December.

However, the handset accounts cater to the earnings for profitability of the M&O business, and as of the end of December last year, our market share is 42%, and since 2018, the change in our market share has been less than 1%. Also, our 5G market share was 48% as of the end of last year, so since the launch of 5G, our market share has been continuing to increase. To respond to competition from MVNO, we will continue to strengthen services and products that cater to specific needs of our customers, and we're going to continue to offer new and additional benefits, including subscription that SK Telecom has, and we're going to strengthen trendy membership benefits for our customers, and in doing so, we will be able to offer differentiated customer experiences and benefits that cannot be provided by MVNO providers.

And at the same time, we will continue to make efforts to find a good and fine balance between the retention of MNO subscribers and co-growth with smaller MBNO players. Thank you. First of all, I would like to ask about the AIDA related to the first PT that Kim Soo-jin explained.

Recently, I think it's probably the same for everyone, but I think it's probably living in the flood of news related to ChatGPT. As the number of subscribers expands to 100 million people in two months at a very fast rate, the interest in ChatGPT is increasing explosively, and if you look at it this morning, it's a big tech. MS, Bing, Google, and so on. Every day, there are articles related to Chachipita that are being published in newspapers and news. I think it's important to talk about the current situation of AIDAP that we published last year and our technical characteristics through this opportunity. And your second question regarding ChatGPT. As we all know, there has been a flood of news reports on ChatGPT recently, and there has been a report that the number of subscribers to ChatGPT has exceeded more than 100 million very quickly.

So even this morning, there was news about MS, one of the big tech companies, announcing a new approach to ChatGPT for their Bing search engine, and there was also a report about a new initiative using ChatGPT by Google. So you can see that there are many news reports about ChatGPT. SK Telecom launched ADOT last year, and I believe it is very meaningful for us to share with you how we're going about ADOT development and what kinds of characteristics we have for ADOT technology. So for that, we have Mr. Son In-hyuk and Mr. Kim Yong-joon, who are in charge of the ADOT project, and they're going to give you some more details.

Hello, I'm Son In-hyuk, and I'm in charge of PMO at ADOT. Hello, I am Son In-young, Head of Project Management Office. As was announced before, SK Telecom was able to launch the first

The world's first commercial B2C of services using Korean GPT-3, which is a super large language model that we developed in our own. And this was faster than other global big tech companies because it was released in May last year.

As you mentioned, we were able to launch AI dialogue services a little faster than the chat GPT, which has been a hot topic lately. We have been preparing and researching AI for a long time with the will of SK Telecom.

And SK Telecom was able to launch an AI conversation service much faster than ChatGPT, which has been receiving a lot of attention these days, is thanks to our long-term commitment to AI and the AI technologies and platforms and database that we have been accumulating for many years.

Since the launch of ADOT in May last year, we have been implementing a total of nine updates in order to identify and offer the necessary services that are demanded by our customers. So we have been quickly expanding the domain of services including ADOT game, ADOT photo, and ADOT TV.

Furthermore, currently we are in the process of strengthening not only the services but also AI technology itself in order to gain fundamental competitiveness of the ADOT service.

In this regard, we will continue to improve our UX to be more customer-friendly based on user feedback.

and we're going to expand to AI-based daily services and telco services. And through partnerships with external partners, we're going to build a relevant ecosystem by using various characters and in collaboration with technology and services. So in line with this, ADOT will continue to add new and meaningful functions based on AI so that ADOT can become a daily bait for our customers. And we're planning to launch ADOT as an official service, no longer an open beta version, and we will consider various monetization business models. Next, I would like to invite Mr. Kim Young-Joon, head of ADOT Conversation, to share with you some details about AI technology and conversation technology.

Long-term memory technology. I'm Kim Young-Joon, head of ADOT Conversation. In February, so this month, we're going to apply the long-term memory technology, which is able to store customer information in a separate memory.

In addition, we're planning to adopt the multimodal technology so that ADOT can understand not only text, but also photos and voice and other types of information. And in doing so, ADOT will be able to offer an interface that is more natural and more friendly for users.

Next, regarding chat GPT, we are already applying GPT-3, and we are using a lot of customer data

And moving on to ChatGPT, we already have the GPT-3 in ADOT service, so we have accumulated a large amount of customer data. So by using this data, we are advancing the ChatGPT type technology. So there is fierce competition with big tech companies globally. So in order to ensure rapid upgrades and improvement of ADOT, we are considering various options and solutions, including those from the overseas.

We are planning to make ADOT suitable for our services, and we will continue to work with ADOT

And the direction of advancing our technology will be in line with the kinds of services that we want to offer to our customers. So the adoption of long-term memory technology and the multimodal technology are very much in line with this direction. In doing so, we will be able to offer differentiated services to our customers based on a differentiated conversation in AI technology. Thank you.

The following question will be presented by Seyeon Park from Morgan Stanley. Please go ahead with your question.

Thank you for the opportunity to ask a question. I have a question related to GPT. It's a question related to the demand for data centers, not ADAT. Looking at the reports that American analysts write, ChatGPT requires a lot of computing capabilities, In the end, I saw an analysis that the cost went up a lot. Assuming that many AI technologies, including GPT technology, become much more common, I would like you to share with us the proportion of demand for a data center that can increase much more than the current prediction. While actually operating the GPT engine at ADOT, I would appreciate it if you could comment on the demand for a special server or a server with more GPUs compared to our existing internet service.

I'm Park Se-yeon from Morgan Stanley. I also have a question related to GPT. It's not directly related to ADOT, per se, but it has to do with the demand outlook for data center. According to some analyst reports, it seems that chat GPT requires much more computing than other engines, so it may incur more cost. And so if we assume that in the future there will be more utilization of GPT and other AI engines and solutions, then it may lead to higher demand for data centers. So what is your view on the potential increase of data center demand going forward? And also, as you are already using GPT engine for your ADOT, I wonder if it has any specific technical requirements Yes, Mr. Park. Regarding the demand for data centers related to CHAT-GPT, CHAT-GPT has become an issue.

and many more.

Okay, thank you very much, Mr. Park Se-yeon, for your question. And when it comes to the link between the use of CHAT-GPT and demand for data center, as you know, CHAT-GPT has been recently receiving attention, only recently. So we don't have any specific information as to how such utilization of CHAT-GPT will lead to demand for our data center services in the short term or medium or long term.

I heard this in the seminar today. As the chat GPT became a hot topic, the first thing that was influenced was NVIDIA, which uses a lot of GPUs, so the demand will increase rapidly. I'm hearing that the stock price has skyrocketed, but the primary demand will probably go that way. We think that if AI services like this are expanded, of course, the data center and cloud will expand. I think it will be connected to the demand for data centers. Even if you are interested in the demand for data centers, in addition, even if you talk about it in general terms, in terms of demand, the current cloud market is growing so fast. And I think the demand for data centers will continue to increase because there are a lot of demand for DC dualization of platforms such as Kakao and other platforms.

And I also heard from a seminar this morning that ChatGPT will have a direct impact on the business performance of companies like NVIDIA because it will lead to more demand for CPU. So that is going to be the first line of impact. But going forward, as we get to use more AI engines and AI services, it is definitely going to increase demand for cloud services, which will have a positive impact on the demand for data centers. And as you mentioned, the demand outlook for data centers, generally speaking, cloud market is rapidly growing, and there is a requirement for platform companies to increase redundancy and backup for data centers, as was in the case of the incident of Kakao. So overall, I can say that there will be increase in the demand for data centers going forward.

Now, I would like to invite Mr. Kim Young-Joon, head of ADOT Conversation, to discuss the potential impact of ChatGPT utilization and demand for data centers. Hello, I'm Kim Young-Joon. As you mentioned, in order to develop a GPT-3 or ChatGPT model,

We need GPU servers in a poor environment. The company has already built high-performance computing servers, including portals, over the course of four years. Of course, if the demand for these gets higher and higher, we'll have to expand it more recently, but like any technology, if it starts to become more popular,

As you mentioned, GPT-3 and ChatGPT, they require specific GPU servers and other technological environments for development. So I can say that SK Telecom has a large-scale, high-performing computing service That may be equivalent to those processed by other quarter companies or other big tech companies. And of course, in the future, if there is growing demand for more computing resources, we may need to increase our CAPEX. But I would like to say that with more utilization of technology and popularization of such technologies, there will be cost reduction drives in the market, which will lead to lower costs for these developments.

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현재 두 분 대기 중이십니다.

네, 그럼 두 분 질문까지 받고 마무리하도록 하겠습니다.

네, 다음으로 질문해 주실 분은 KB증권의 김준섭님입니다. The following question will be presented by Junseop Kim from KB Securities. Please go ahead with your question.

네, 질문 기회 주셔서 감사합니다. and Jun Seo Kim. I would like to ask you a question related to enterprise. In particular, it is actually ideal to see high growth in data center business and cloud business. I think it will be a great help to understand the business if you tell us how to see the growth rate of sales in the business sector in 2023 based on what customers are growing rapidly. Thank you.

I'm Kim Jun-seok from KB Securities. Thank you for this opportunity. I can see that your data center business growth and the cloud business growth are quite impressive. And I'd like to know more about your target customers for data centers and cloud businesses and your overall outlook for the revenue growth for these businesses. Thank you.

Yes. Regarding the enterprise business, last year, as you know, our business was structured Thank you for the question.

When you look at our enterprise business, as was in the case of last year, it can be broken down into lease lines, IoT lines, and data center business and cloud business.

As you said, the area that led the biggest growth was the data center. As the data center's operation rate increased, the sales increased, and as the cloud business traffic increased, the sales increased significantly. So, in terms of each quarter, the enterprise business as a whole increased by about 4,000 billion, and in terms of last year's YOY, it increased by about 10%. In terms of annual sales, the enterprise business area has grown evenly,

As for the entire enterprise business, growth has been driven by data center business and cloud business. As for data center, the utilization rates of data centers increased, which led to higher revenue. And for cloud, traffic increase led to higher revenue from the cloud business. So on a quarterly basis, the enterprise business division's revenue was $400 billion won, which is a 10% growth, YOY. And for the entire year, the enterprise business division revenue is $1.5 trillion won, which represents 12.5% growth year-over-year.

If you're talking about the net profit, what we're expecting is at least a year-over-year

As for the guidance for revenue for enterprise business, we will do our best to make sure that our revenue growth is on par with that of last year. Thank you.

The last question will be presented by Hwe Jae Kim from Daesin Securities. Please go ahead with your question.

I'm Kim Ye-jae from Patient Securities.

I have one question. I can see that SK Telecom is dedicated to pursuing the UAM business with the target of commercializing the UAM service in 2025. So when it comes to a business model, I can see that there will be income coming from network usage fees, But you can also consider other business models. So I wonder what kinds of business models you have in mind for the UAM business. Thank you.

Thank you.

Thank you for your question. We have been communicating with the analysts about the progress and plans for the UAM business, so I'm sure you're well aware of what we have been doing. And as for more details, I'd like to invite Mr. Ha Min-young, Head of Corporate Development, for more information.

Hello, I'm Ha Min-young. You asked about UAM-BM. To carry out the UAM business, According to the timeline of the Ministry of Land and Geospatial Affairs, we are going through a lot of trial and error stages. As we go through these trial and error stages, we plan to create a specific BM if the network, the connection to land traffic, and the protection of the port become visible.

Your question was about a potential business model for UAM. Currently, we are in the process of carrying out demonstration projects in line with the timeline of the Ministry of Land, Transport, and Infrastructure, and we will be able to have some more specific ideas about business models as we have more networks and communications with the ground control centers and securing of port reports. We will have conversations and consultations with various partners in order to decide on specific routes for UAM services and the pricing plans. These are components of the business model, so after such reviews, we will be able to share with you more details in the future.

Thank you.

Thank you for your question. This concludes the earnings conference call for fiscal year 2022.