SK Telecom Co., Ltd.

Good afternoon. I am Hee-Joon Chung, Investor Relations Officer at 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 the first quarter 2023 earnings highlights, future business plans, and strategic directions, as well as the Q&A session. The call is attended by our executives from relevant business divisions, including Chinwon 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.

Let me now present our CFO.

Good afternoon. This is Chinwon Kim, CFO of SK Telecom. . SK Telecom participated in MWC 2023 held in Barcelona, Spain in late February and presented its concrete plans for the AI company vision and recent achievements. It was an opportunity to introduce AI startups that were closely cooperating with

and engage in active discussion with overseas telcos and big tech companies to build a global cooperative framework. SK Telecom will strive to lead AI transformation to ensure that all generations, businesses, and industries can enjoy the benefits of AI to the fullest.

Now, let me report on the consolidated financial results of the first quarter 2023. Consolidated revenue reported $4,372.2 billion, up 2.2% year-over-year, thanks to the growth of both the fixed and mobile business and the new businesses.

It reported a decline of 0.5% due to the drop in handset sales of the subsidiary company.

The operating income posted 494.8 billion won, up 14.4% year-over-year,

and 94.4% Q&Q mainly due to the base effect of one-off labor costs recognized in Q1 of the previous year and seasonal expenses recognized in the previous quarter.

The short-term net profit was 37.3% compared to the previous year, and 35.2% increased to 3,025 billion won compared to the previous year.

That income grew 37.3% year-over-year and 35.2% year-on-year to come in at 302.5 billion won on the back of increase in dividend income from the invested companies. On a non-consolidated basis, revenue grew 1.3% year-over-year and 0.7% Q&Q to $3,117.3 billion won. Operating income and net income reported $415.7 billion won and $422.2 billion won respectively. Next, I would like to talk about the main business achievements and strategic direction of the company in the first quarter of 2023. Let me now turn to the first quarter business highlights and strategic directions of the company that is pursuing transformation and leap forward into an AI company.

SK Telecom is providing a differentiated AI service based on its built-in super-large internal technology that has been accumulated for many years. Not only AIDA services, but also core business and other existing five major businesses are applying the AI technology to their respective locations to maximize the growth and profitability of each business.

SK Telecom is providing differentiated AI services based on its own hyperscale language technology accumulated over the years. In addition to the ADOT service, we are actively applying our AI technology to the five business groups, wherever appropriate, to identify and implement concrete ways to maximize growth and profitability of each business.

As you're aware, AI is advancing rapidly, and the scope of AI-powered services is getting wider.

Against this backdrop, SK Telecom will continue to scale up its AI capabilities and services through partnerships with diverse Korean and foreign AI companies in areas where such partnerships are necessary, including the use of CHAP-GPT, while further advancing its own AI technology.

As a result, SK Telecom established a strategic partnership with 150 billion shares of ScatterUp in April. As part of the strategy, SK Telecom signed a strategic partnership with ScatterLab in April with an equity investment of 15 billion won, known for its eRUDA chatbot that can hold empathetic conversations.

ScatterLab is an AI startup that uses deep learning to develop a relationship-oriented AI agent that can have human-like conversations with users.

ScatterLab is a startup that uses deep learning to develop a relationship-oriented AI agent that can have human-like conversations with users.

The partnership with Scatter Labs aims to jointly develop an AI agent service capable of holding empathetic conversations for the ADOT service, which is optimized for personalization through long-term memory and multimodal technology. The joint development will support the evolution of ADOT to be more human-like than humans. The two companies have also agreed to pursue close cooperation to develop a hyperscale language model that is equipped with emotion and knowledge domains.

The two companies have also agreed to pursue close cooperation to develop a hyperscale language model that is equipped with emotion and knowledge domains. The two companies have also agreed to pursue close cooperation to develop a hyperscale language model that is equipped with emotion and knowledge domains.

Like this, SK Telecom is stepping up efforts on all fronts to transform itself into an AI company by strengthening cooperation with leading AI companies in Korea and actively pursuing partnerships with global top-tier AI companies.

E-FRIEND, which secured a global presence through its 49th launch last year, has achieved more than 10% of its revenue overseas even in the first quarter, and we are also working with Deutsche Telekom, T-Mobile, Axiata, etc. 다양한 해외 업체와의 MOU 체결로 글로벌 협력 범위를 넓혀가고 있습니다.

With global presence secured through its launch in 49 countries last year, IFLAND has attracted more than 10% of MAU from overseas in the first quarter. It is expanding the scope of global cooperation through MOUs signed with several global companies including Deutsche Telekom, T-Mobile and Exiada.

또한 IFLAND는 5월 Furthermore, this land is evolving into a metaverse-type social media platform centered on 3D virtual spaces by launching IfHome in May, a personalized 3D space.

It also plans to strengthen its economic system in order to secure a new monetization structure by introducing a content marketplace based on in-app transactions in the second half of this year.

On the other hand, T.O.J. has achieved more than 1.8 million real-time users in the first quarter of the year, and has announced the entry of the country's representative subscription product. Following last year's subscription product, T.O.J. has also introduced a new subscription product The universe has solidified its position as a leading subscription product in Korea, with the average MAU of more than 1.8 million in Q1. Following the introduction of an annual subscription service last year,

T-Universe continues to launch new service features to enhance customer experience and convenience, including a topping function where users can add extra services to their subscription and a gifting function. It is also reinforcing competitiveness in product differentiation by leveraging partnerships with big players, which resulted in the recent launch of YouTube Premium in addition to Amazon Free Shipping.

SK Telecom is a total service provider in the UAM business, which is preparing for the first commercialization in Korea in 2025, and has a diverse capacity, including domestic exclusive cooperation, mass platform, and 5G aircraft communication network, as well as a total service provider that covers the service area of the mobile network and the service area. We are doing our best to select the right to control, such as securing early license through the success of the real estate business.

In the UAM business that aims to launch Korea's first commercial UAM service in 2025, SK Telecom aims to be a total service provider that covers aircraft, telecommunications, and services. We have secured differentiated capabilities based on MOS platform, 5G aerial network, and an exclusive partnership with Jovi Aviation, global number one UAM aircraft manufacturer. We're doing our best to gain leadership in the industry by securing a license early through successful demonstration projects. In addition, we continue to showcase interactive items, such as immersive VR content to experience UAM at various exhibitions and events, including MWC, Seoul Mobility Show, and World IT Show, to boost public interest and familiarity, which is essential to secure social acceptance in the early stages of UAM commercialization.

Enterprise business represents a steady growth rate of sales, focusing on data centers and the cloud. In particular, data center business

The enterprise business is enjoying continued revenue growth centered on data centers and cloud business. In particular, stable increase in the utilization rate of 가산 and 식사 data centers is supporting steady revenue growth.

In the first quarter, we have secured the largest order in AICC business, which started last year.

Using this as a reference, we plan to expand AI transformation of the call center industry, which has been in the spotlight recently. In addition, we intend to utilize various AI technologies and solutions to support customers' AI transformation and continue to explore further growth opportunities through new customer acquisition.

Next, I would like to talk about the Yomuson telecommunications business, which is at the forefront of the company's business. The number of 5G users per minute Let me now report on the performance of the fixed and mobile business, which is the basis of our company. As of the end of Q1, the number of 5G subscribers reached 14.15 million

accounting for more than 60% of the total subscribers. We plan to attract high-quality subscribers through continuous digital transformation based on AI to sustain earnings improvement.

The number of paid broadcasts is 9.4 million by the end of the first quarter, and the number of ultra-fast internet subscribers is 6.76 million. The company achieved the No. 1 MS in IPTV and ultra-fast internet in the U.S. and continued to grow.

As of the end of Q1, the pay TV subscribers and broadband subscribers reached 9.4 million and 6.76 million, respectively. We continue to grow the subscriber base by achieving No. 1 net ads market share for IPTV and broadband. Based on our strong subscriber base, We plan to pursue growth centered on efforts to acquire high-value-added subscribers, such as increasing the share of Giga Internet users.

Finally, for shareholder returns, the Board determined the first quarter DPS to be the same as the previous quarter at 831.

We will do our best to ensure that transformation into an AI company will lead to maximization of corporate value and shareholder value.

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

We will now begin the question and answer session. Now, Q&A session will begin.

Please press star 1, that is star and 1 if you have any questions.

Questions will be taken according to the order you have 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 Soojin Kim from Mirae Asset Securities. Please go ahead with your question.

Hello, I'm Mirae Asset Securities Kim Soojin. Thank you for the question. The first question is, I would like to ask you a question about the 23-year state-owned policy. You mentioned it at the last conference call, but you said that you are considering an additional state-owned policy such as self-sufficiency through the support of the Hanwha Financial Fund and the SK Broad Fund, but you haven't mentioned it yet, so I would like to ask you about the future plans in what way. As for the second question, last week, we launched an individual space similar to Cyworld called EAPHOME of Metaverse Platform EAPHRENDS, and I am wondering what kind of impact these new services such as EAPHOME will have on the creation of Metaverse platform profits and business models in the future.

I am Kim Soojin from Mira Asset. Thank you very much for giving me this opportunity to ask you questions. The first question is related to your shareholder return policy for the year 2023. At the last conference call, you mentioned that you would consider the possibility of share buyback by utilizing income coming from Hana Financial Group and SK Broadband. but you did not mention about this in your initial presentation. So, I'd like to understand what your plans are regarding the shareholder return policy in terms of the timing and the method. The second question is related to the recently launched if-home service that you announced last week. And I can see that if-home is very similar to a side world in a sense that users will have their personalized spaces on your Metaverse platform. So I'd like to understand how this will lead to your monetization of the metaverse business and your business model development. Thank you.

Yes, thank you for the question. First of all, I think you will be very curious about the self-sufficiency that I mentioned in my previous presentation. As I said before, we currently have a self-sufficiency rate of 7%

Thank you very much for your question. As per your question on our shareholder return policy, we mentioned yes about the potential share buyback at the last conference call, so the market would like to know more about this. Currently, we have the dividend yield of more than 7%, which means that our stock price is rather undervalued. So we still have in mind a potential share buyback program going forward.

As per specific timing and the size of share buyback, these are subject to a board approval, so I cannot really give you specific details at this point in time.

But as you mentioned, we have enough pool of financial resources, including the dividend income coming from SK Broadband and Hana Financial Group, and we have improvement in the earnings over the past year. So when it comes to the specific details, we will consider various factors, including the stock market or stock price trend, and the overall business environment and the cash flow to determine the optimum time of the share buyback.

One thing I would like to add about the share buyback is that I talked about the dividend policy at the point of division, and this is the third year of the policy. In terms of self-sufficiency, especially in the past experience, if self-sufficiency is implemented in a short period of time, it has the effect of temporarily increasing the stock price, but it is a bit of a concern about whether it will affect the value of the company in the medium term. There is also a need, and there is a need for a sustainable self-sufficiency policy In addition, we introduced a new shareholder return policy at the time of the split-off, and this year is the third year since we have been implementing the existing shareholder return policy.

Based on our past experiences, we understand that if a share buyback is done on a temporary basis, it may drive up the stock price momentarily, but it has some limitations as to increasing the corporate value in the medium to long term. So in consideration of our new shareholder return policies, including dividend payout, we are considering how we can create more sustainable shareholder return policy, including a share buyback. And after... and active discussions at the board, we will come up with a decision.

And we will make sure to communicate with the market when we have more details and concrete plans after the board discussions.

And as for shareholder return in this year, 2023, as I mentioned in my presentation, we are considering a very stable quarterly dividend, and the first quarter dividend amount, DPS, is 831 per share. Therefore, our annual dividend payout size is going to be similar to the previous year, and we continue to discuss various options to maximize shareholder value and shareholder return, including the potential share buyback, and we will continue to do our best to return more to our shareholders.

Regarding your question on our plans for the Metaverse platform, Mr. Yang Meng-seok, head of Metaverse Company, will address the question. Hello, I am Yang Meng-seok, head of Metaverse Company.

Thank you for your question.

The IfHome service that we recently launched is basically a social networking or a social media platform utilized the 3D spaces.

So in iF-Home, users can create their own 3D virtual space, and they can decorate their space using various items. And this is basically creating their own space virtually.

Yes, and by utilizing the 3D frame functions provided by iF-Home, users can easily collect and share feeds based on their daily experiences and various interests.

There in this if-home space, users can post various writings, and they can use 3D frames to share photos. In this way, they can continue to share their everyday experiences and their thoughts and their views, and they can share these feeds with others.

Through these features, you can invite your friends, or go to your friend's if-home, and enjoy new social activities with your friends through various entertainment.

By utilizing these features, users can invite their friends over to their If Homes, and they can also visit other homes of their friends. In this way, they are engaged in new types of social activities.

It is still in the early stages of launch, but there is a positive virality that the service has advanced to one stage, such as the fun of decorating the space, the fun of going to visit a friend's If Home, and the fun of singing with friends.

Even though this is a very new product, we are receiving various positive feedback because users find a lot of enjoyment in decorating their own spaces and visiting their friends' homes and singing together in these spaces.

Through my own space and the social activities within it, we will strengthen our customers' attachment to the service and the motivation to visit repeatedly. As users continue to decorate and nurture their virtual spaces and engage in various social activities, they will be motivated to utilize various services and keep coming back to this platform

And in this way, there will be increasing needs to have unique items and differentiated items to express their own personality. And such demand and need is expected to bring about benefit in terms of the economic system that we're planning to introduce in the second half of the year.

In the second half of the year, we are planning to bring about benefit in terms of the economic system that we're planning to introduce in the second half of the year.

As for the economic system that we're planning to introduce in the second half of the year, there are three main parts. The first part is offering a 3D content marketplace where users can create and sell avatars and spaces and other motion-related features. And the second part is where they can purchase premium access and premium privileges, such as getting access to singing rooms and other paid spaces. And the third part is about sponsoring influencers and celebrities that they want to support.

Also, by supporting NFTs such as avatars, costumes, and decoration items, In addition, we're planning to apply the NFT technology in terms of content, including avatar costumes and other decorative items.

And users can purchase unique content created by creators using NFT. And this is expected to bring about more revenue coming from this platform. And this will also attract a larger number of creators joining this platform, which will lead to creation of more of a creator-centered platform as well. Thank you.

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

Thank you for your question. My name is Junseop Kim from KB Securities. I would like to ask two questions. The first question is about the fund. If possible, please share the influence of the recently released fund and tell us the plan or direction to release additional funds. The second question is about the AI business update. In the last MWC, I am Kim Junseo from KB Securities.

Thank you for the opportunity to ask questions. I have two questions. The first question is the impact of the recent price plans that you've introduced. So I'd also like to know if you have any plans to introduce any new additional price plans going forward. The second question has to do with your AI business. Recently, there was a presentation by SK Telecom at the MWC 2023. And since that presentation, I wonder if there have been any major updates. Thank you.

Yes, thank you for the question. First of all, Kim Ji-young, who is in charge of the call marketing team, will explain and answer the first question about the launch of the new fund. Then, I will answer additional questions related to this.

Thank you for the questions. As for the first question regarding new price plans, Kim Ji-young, Head of Integrated Marketing Strategy Office, will address the question, and then the second question will be addressed accordingly. Hello, I am Kim Ji-young, Head of Integrated Marketing Strategy Office.

This time, the company has released three new 5G credit cards, focusing on expanding the choice of credit cards so that customers can enjoy benefits suitable for their personal use.

The three new 5G price plans that we introduced recently are related to broadening the options for price plans so that customers can decide on a price plan according to their own usage patterns. We expect that these new price plans will help lessen the burden on the part of the customers and increasing benefits that they can enjoy, and this will lead to a higher level of satisfaction in terms of the use of 5G services, and it will bring about very positive benefits.

The 5G customized payment system, which was released on May 2nd following the Senior Payment System, made the gap between the 5G and 6G payment systems narrower, and made it more reasonable to choose a payment system based on the 6G payment system users. Following the price plan for senior customers, we launched a new 5G customized price plan on May 1st. And this is about bringing down the gap between 59 price plan and 69 price plan

And so that 69 price plan users can choose a more reasonable price plan depending on their usage pattern. And the price plan for the youth that will be introduced in June are focused on providing more customized benefits for the needs of the young customers so that this will gain more support and more participation from younger customers of SK Telecom.

In short, the diversification of the 5G price plans can lead to higher utilization of 5G services and better customer retention.

Therefore, when it comes to the impact of such new price plans on our performance, it is not easy to give you any specific answer in terms of whether it is positive or negative, but we'll have to see the trend in the medium and long term.

Yes, you asked about the additional release of the new fund. The new fund that we announced in March is still in the process of being released in Japan, and the Youth Fund is scheduled to be released in June. As for your question on our future price plan related initiative, we

announced a new set of price plans in March, and some of them are not yet launched, including the youth price plan that is going to be introduced in June. So I believe it is a little too early for us to discuss any further price plan-related ideas, and we have not yet made any internal review about this. But as I mentioned before, the 5G market has become more mature now. So it is only natural that we come up with more variety of price lineups and price plans so that we can attract more subscribers and offer more competitive prices.

We have already released direct funds, youth funds, and senior funds, and segment funds. We have already released direct funds, youth funds, and segment funds. Please keep that in mind. On the other hand, there are a lot of customers who want to enjoy 5G services without being affected by data usage and want to enjoy various benefits. And when we look at the trend in which customer data usage is continuously increasing, I think we can consider the time to review the new revenue.

So that is why we have offered new price plans and data plans depending on our refined customer segments, including the direct price plan and price plans for the youth and senior customers. And in our price plan package, we already have price options that are in the ranges of 30,001 to 40,001. But at the same time, we understand that a lot of customers prefer to go for unlimited data plans because they want to enjoy 5G services and variety of 5G-related benefits without having to be concerned about data limit. And we also see that the size of customers' data usage continues to increase. So these are some of the factors that we will consider when we design new price plans in the future.

Next, I would like to answer questions related to AI. As I said in the speech, we introduced AI company strategy last year, and as the chat GPT became a hot topic, the market itself is moving around AI, and I think that various new technologies are being released and changing very quickly.

And moving on to your question regarding our AI strategy, last year, yes, SK Telecom announced our new AI vision, and that was also when the chat GPT became a big buzzword in the market, and now the market is being led by AI, and AI technology is advancing very rapidly.

If you look back, the strategy and movement of the company related to AI is not the story of yesterday and today. In 2016, we launched artificial intelligence speaker Nougat, and in 2019, we launched Based on our self-developed large language model, the chatbot of the customer center that applied Covert has also been released. I think that AI services and technology have been prepared and the capacity has been accumulated for several years. Based on this self-developed internal technology, we have moved relatively quickly, such as releasing ADOT based on the advanced language model. Recently, I think that AI-related movements that came with the boom of chat GPT have been on the rise.

In retrospect, I would like to say that SK Telecom has rather a long history of being involved in AI development and AI services. For one, in 2016, we launched an AI speaker, Nugu, and in 2019, we applied Colbert, which is our own large language model, to the customer service chatbot. And so it shows that for the past several years, SK Telecom has been accumulating capabilities by developing its AI services and technology products. So based on our own capabilities and technology, we were able to launch ADOT, which is based on a hyperscale language model. And this was a preemptive move that allowed us to quickly ride on the wave of AI, including ChatGPT.

In terms of technology, it's still a bit early, but in terms of AI technology, it's still a bit early, but in terms of technology, it's still a bit early, Against this backdrop, we would like to employ a two-track strategy

On one part, it may be a little too early to talk about this, but we also need to respond to the potential technology dependency issue at the national level. And there are more specific domain-related large language models that are being developed. So in response to these developments, we need to continue to advance and develop our own hyperscale language model. So that's one track. And the other track is utilizing partnerships and collaboration with big tech companies because AI technology is advancing rapidly and hyperscale language models, including TAP-GPT, are being introduced in the market.

Recently, we invested in ScatterLab, so it's a two-track strategy to secure elements technology that we don't have. Also, as you can see on the screen, So the recent investment in ScatterLab is also part of this two-track strategy

This has brought us a new core technology that we did not have in the past. So likewise, we will continue to ride the waves of technological development by investing in advancing our own hyperscale AI model. And at the same time, we'll explore collaborative opportunities with external partners. And in this way, we will be able to accumulate AI capabilities in a more efficient manner so that we can expand service business models based on AI that can be favored and enjoyed by our customers. Regarding more technical aspects of our AI business, we haven't had much of an opportunity in the past, so I would like to use this opportunity to introduce Son In-hyuk and Kim Young-joon, who are in charge of ADOT Strategy and ADOT Technology, to give you more details.

Hello, I am Son In-hyuk, a member of ADOT. ADOT continues to grow in service, global, and tech. Today, I will talk about the current situation and plans.

Hello, I am Sonin Hyuk, Head of Project Management Office and in charge of ADOT Advancement. I'd like to give you some more details in terms of service, global expansion, and technology.

First of all, the service has been launched and operated by ADOT, a leading AI service in the past year. Through this, we have been focusing not only on understanding the needs of various customers, but also on the latest AI tech. Based on this, we are preparing a large-scale update in order from June.

First of all, regarding our service, we made a preemptive move of launching and operating ADOT last year, and we have been utilizing ADOT and using advanced AI technology. So we are preparing for a major update consecutively starting from June this year.

First, we are going to fully reform UX based on customer behavior. Home screen based on individualization, customer-friendly UX reform,

First of all, we're going to have an overhaul of UX based on customer behaviors. This includes a more personalized home screen and a more user-friendly UX transformation, as well as allowing younger users under the age of 14 to join the platform, as well as providing social ID feature. So these will help bring down the entry barriers.

We will continue to launch AI tech-based services that only a telco operator can provide.

So in the first quarter, we already launched various services, including English language learning and professional baseball, multiplayer game, and collaborative character. And in the second half of the year, we're going to offer new services, including AI telephone, where you can get briefed on the content of the conversation by utilizing the unique assets that only telcos have.

Third, we're going to create a more natural and smart conversation. As I mentioned, we're going to create a more natural Third, we would like to offer more natural, smart conversations using an AI agent. So we have this strategic partnership with ScatterLab,

And through this partnership, we are planning to launch a new agent or AI agent that is able to hold empathetic conversation in June. So this will offer conversations not only in terms of knowledge, but also emotion and empathy. And at the same time, we are going to have a major update of the large language model that SK Telecom based on the accumulated experiences, and it is going to be presented in June.

The next topic is global. We are going to pursue global expansion by expanding the AI ecosystem and global presence expansion through collaboration with global telco companies and big tech companies. First of all, we would like to establish a global telco alliance.

At the MWC in February, we had meetings with various overseas telecom operators, and we made a proposal to create an alliance to jointly build differentiated AI services by utilizing their own services and technology capabilities. We were received very positively from these potential telco partners, and we're going to soon announce this alliance officially.

Secondly, we're going to continue to pursue collaboration with big tech companies.

We are currently pursuing partnerships and collaboration with not only the telecom operators but also big tech companies including those specialized in large language models and AI. And in doing so, we can further advance our technology, and we will be able to accelerate global expansion at a scale by pulling off capabilities of our partners.

Hello, I am Kim Young-joon, head of ADOT Technology.

As was mentioned previously, for ADOT, we will employ a two-track strategy in which on one part we will continue to advance our own technology and at the same time pursue technology partnership with external partners. When it comes to the generative language model, you may see that the amount of innovation that we used to have in one year is taking place in just one week. So the speed of development is very rapid. In order to catch up to this rate of development, we will continue to evolve our own technology and accumulate data while at the same time actively pursuing collaboration with external partners.

First of all, about how we will advance our own technology.

As for our own technology, we're applying data and learning models used by big tech companies to expand domain-related expertise.

We're going to upgrade our large-edged model, which was $18 billion, to a $39 billion model in the first half of the year. We're going to use human feedback-based reinforcement learning, which is the core technology of language model technology, to continue to upgrade.

Specifically, we used to have our own large language model that was 18 billion. We're going to upgrade that to 39 billion in the first half of this year, and we will continue to evolve our language model by utilizing the reinforcement learning method based on human feedback, which is critical for advancing language models.

In addition, we expect a large language model to appear in various forms in the future, We're also planning to develop an integrative ranker within this year so that we can connect customers with very specific tasks that they need and also can provide an integration and lead customers to the right language model

because we expect that there will be multiple large language models in the future.

Next, I'd like to comment on our plans for external partnerships.

We are currently in the process of having conversations with various domestic and overseas companies so that we can pursue cooperation with generative AI leading companies.

As mentioned earlier, Scatterwork will continue technical cooperation, such as co-development of language models with both social skills and intellectual dialogue skills.

We will jointly develop a language model that has strong social features and is able to provide conversation in the knowledge domain by working together with ScatterLab.

Thank you. The last question will be presented by Jaemin Ahn from NH Investment and Securities. Please go ahead with your question.

Hello, I'm Jae-min Ahn from NH Digital. Thank you for the question. Recently, there has been a lot of talk about mobile telecommunications. If you are aware of the current situation or the position of the government, please let us know. I would appreciate it if you could mention our position.

I'm Ahn Jae-min from NH Securities. Thank you for the opportunity. Recently, there have been some talks on the potential of the fourth telco in Korea. So, I'd like to ask you to give us some update on the current situation, your take on the government's position, and your response strategy.

Yes, regarding the fourth telecommunications company, it's becoming more and more of an article, so I'm sure you're interested in it. Regarding this part, the person in charge of this work,

Yes, there have been some media reports about the introduction of a potential No. 4 telco in Korea, so I can see that there is some interest in the market. Regarding that, Kwon Yongsang, Head of CR Strategy Office, will address the question.

I'm Kwon Yong-Sang, Head of CR Strategy Office. In January this year, the government mentioned that

They are considering the potential license to another, a new telco in Korea in order to facilitate competition in the market and utilize a 28 GHz bandwidth. However, this is something that the government is pursuing at the policy level, so I hope that you will understand that it is not our position as a telco to express any explicit view.

And the current situation is that a new business plan was announced in January this year, So in January, the government announced a plan to invite a new player for the telecom market, and they're planning to announce

announced that the frequency allocation plan in June. We understand that some businesses are considering this, but we will have to wait and see until June when the specific announcement is made by the government.

Thank you. This concludes the conference call for the 1st quarter of 2023. This concludes the earnings conference call for the first quarter of 2023 of SK Telecom.

I'm sure you may have some additional inquiries and questions. Please contact the investor relations team at SK Telecom. We'll do our best to address your questions. Thank you very much.