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SK Telecom Co., Ltd.
11/8/2023
Good afternoon. I am Heejun Jung, IRO of SK Telecom. Thank you for joining SK Telecom's Earnings Conference Call.
Today, we will first deliver our presentation on major events, quarterly earnings highlights, and business performances, which will be followed by a Q&A session.
The call is attended by our executives from relevant business divisions, including Jinwon Kim, CFO of SK Telecom, and we are providing some consecutive interpretation for the call. As you may know, I would like to remind you that all forward-looking statements are subject to change depending on various factors such as market and macro situations. Let me now present our CFO.
Good afternoon, this is Chin-Won Kim, CFO of SK Telecom.
SK Telecom announced its AI pyramid strategy to become a global AI company in September. Through its own AI technology and AI service, it will create a close relationship with customers, and through cooperation with various domestic partners such as KI Alliance, Global Telco AI Alliance, Entropiq, OpenAI,
In September, SK Telecom announced the AI Pyramid Strategy to become a global AI company. It aims to lead industrial innovation and achieve its vision of a global AI company through efforts to strengthen its own capabilities to deepen customer relationships by advancing its own AI technologies and launching AI services, and through cooperation with diverse domestic and foreign partners, including the KAI Alliance, the Global Telco AI Alliance, Anthropic, and OpenAI. We ask for your continued interest and support for our new endeavors.
First, I would like to talk about the financial performance of the 3rd quarter of 2023.
Now, let me report on the consolidated financial results for Q3 of 2023.
SK Telecom and SK Broadband's performance improvement ratio sales increased by 1.4% compared to the previous year and increased by 2.2% compared to the previous quarter, which is 4.026 trillion won. Sales profits increased by 7% compared to the previous year and increased by 7.5% compared to the previous quarter, which is 4985 trillion won.
Thanks to improved earnings of SK Telecom and SK Broadband, consolidated revenue reported 4,402,600,000,000 won, up 1.4% year-over-year and 2.2% Q&Q. Operating income in Q3 posted 498,000,000,000 won, up 7% year-over-year and 7.5% Q&Q. The short-term profit was also recorded at 3,082,000,000 won, which increased by 25.5% compared to the previous year.
Net income posted $308.2 billion, up 25.5% year-over-year, but down 11.4% QOQ due to the base effect of one-off gains in Q2. Net income posted $308.2 billion, up 25.5% year-over-year, On a non-consolidated basis, revenue posted 3,148.4 billion won thanks to gains in roaming business.
Operating income and net income reported 407.1 billion won and 250.4 billion won respectively. Let me now turn to Q3 business highlights and strategic directions in accordance with the AI pyramid strategy.
First, serving as the foundation of the AI pyramid, AI infrastructure is an area where SK Telecom's technological capabilities are concentrated
including AI data centers, AI semiconductor, and multi-LLM.
The data center business has continued to increase sales growth by more than 30% compared to the previous year in the third quarter, and new data center opening preparations are in full swing with the increase in demand for data centers that have been launched in the AI market. The company has introduced energy solutions such as liquid cooling systems that help reduce data centers' energy, We plan to increase the efficiency of operation through AI-based data center infra management.
Data center revenue continued its growth trend up more than 30% year-over-year in the third quarter. Preparations for the opening of new data centers are well underway to meet the growing demand for data centers triggered by the AI market. We plan to introduce energy-saving solutions like immersion cooling system and hydrogen fuel cells and enhance data center operational efficiency through AI-based data center infrastructure management.
SK Telecom's AI semiconductor company, Sapio, is planning to launch the next-generation X330 AI chip. The X330 is a product that is about 2 times more powerful and 1.3 times better than the latest model of the competitor.
An AI semiconductor company established by SK Telecom will launch a next-generation inference AI chip X330 at the end of this year. X330 has approximately twice the computational performance and 1.3 times the power efficiency compared to the latest inference chips in the market. Sampion will also cooperate with diverse companies to secure competitiveness in software.
Sampion will also cooperate with diverse companies to secure competitiveness in software. Sampion will also cooperate with diverse companies to secure competitiveness in software. It is important to have a platform that combines various lineups and works. Currently, various projects are underway, and the Global AI Platform Corporation, which was newly established in the United States, is planning to present AI platforms that can effectively utilize telco specialized LLM and multi-LLM and develop them next year.
SK Telecom is also pursuing a multi-LLM strategy where a two-track approach is taken to secure diverse LLM lineup and overall platform that encompasses the LLMs. To this end, we're advancing our own LLM based on our AI technology brand, A.X., and high-quality data accumulated over several decades. Simultaneously, we're collaborating strategically with a wide range of domestic and foreign AI companies, including Anthropic, OpenAI, and Conan Technology. Currently, diverse projects are underway, and during next year, the Global AI Platform Corporation, newly established in the U.S., is planning to release an LLM customized for telcos and launch an AI platform to support effective utilization of the multi-LLM.
In the area of AIX,
which is the middle layer of the AI pyramid, we will innovate customer experience and boost productivity by applying AI to our internal core businesses, such as MNO, broadband, and enterprise, while expanding the use of our AI capabilities to various external business areas, such as mobility, healthcare, and media, to create added value.
First of all, AIX's internal area, mobile, will be expanded Among the internal areas of AIX, our M&O business has an established customer base with 15.15 million 5G subscribers as of the end of September.
We will solidify our superb mobile business competitiveness by using AI technology to conduct marketing, establish AI-based mobile networks, and enhance operational efficiency.
In the case of broadband, as of the end of September, we have acquired 9.52 million paid broadcast subscribers and 6.87 million super-speed internet subscribers. In the future, we will continue to develop AI curation, AI home,
As of the end of September, the pay TV subscribers and broadband subscribers of SK Broadband reached 9.52 million and 6.87 million respectively. Going forward, SK Broadband's pay TV service will evolve into an AI TV that offers diverse AI services such as AI curation and AI home.
In the enterprise, AI CC, big data analysis platform, and construction type and platform type AI business will be in charge of the big axis of market growth in the future, and AI solutions such as vision AI, language AI, big data AI, and multi-LLM will be provided. The cloud business has been growing by about 40% compared to the previous year.
As for enterprise business, AICC, big data analytics platforms, and custom and platform-type generative AI models will be major growth drivers of the market. Here, the multi-LLM will be combined with AI solutions like Vision AI, Language AI, and Big Data AI. The cloud business is on track to meet its annual target, with revenue in Q3 growing nearly 40% year-over-year.
Moving on to the external areas for AIX,
SK Telecom signed a collaboration agreement with Jovi Aviation in September to jointly participate in the KUAM Grand Challenge, which marks a concrete step to secure a stable supply of UAM aircraft for the first commercialization of UAM service in Korea by 2025. We will combine AI technology and UAM to lead the way in an era of AI mobility that will change the paradigm of mobility.
In addition, AI-based pet X-ray analysis solution, Excalibur, has been established as a representative pet care AI service used by more than 300 pet hospitals across the country in the first year of its launch. SK Telecom continues to improve its Excalibur performance, and in October, we are making a major global progress through a partnership with Anycom Holdings, the largest pet insurance group in Japan.
In addition, Excalibur, an AI-based veterinary X-ray analysis solution, was launched only a year ago, but it is currently used in over 300 veterinary clinics around the country, making it a representative veterinary AI service. SK Telecom is further enhancing the performance of Excalibur and pursuing global expansion by entering a partnership with Anicom Holdings, the largest provider of pet insurance in Japan, in October.
In the AI service area at the top of the AI pyramid, we are planning to expand globally through global PAA, that is, Personal AI Assistant Development, along with AIDA Service Activation, which was officially released in September. We believe that there will be a time when PAA and Metaverse services will be combined in the future, and I think that Next Commerce, including subscription, will ultimately enter this AI service area.
In the AI service area, located at the top of the AI pyramid, we will continue to promote ADOT service, which was officially launched in September, and pursue global expansion through the development of personal AI assistance, or PAAs, for the global market. We believe that PAAs and metaverse services will be integrated in the future, and that next commerce services, including subscription, will ultimately be part of the AI service domain.
First of all, ADOT wants to innovate the customer's communication experience and evolve into its own AI personal secretary through the expansion of daily and AI service connection. Based on the AI service and know-how verified in Korea, such as call recording summary, sleep management, and real-time call transfer, which are about to be released in order, through cooperation with Global Telco AI Alliance members, we will launch PAA simultaneously in the global market
AI ADOT will evolve into a personal AI assistant by innovating customers' communications experience and expanding the use of AI services for daily lives. Capitalizing on our know-how and domestically proven AI services, including call recording and summary, sleep management, and real-time interpretation during a call, which will be launched soon, We will localize and advance these services through cooperation with the Global Telco AI Alliance members. Then, we will launch PAAs in many parts of the global market simultaneously to quickly gain leadership in the AI service market.
E-FRIEND is showing a performance of 50% of the overall MAU in overseas, and we are working with various overseas companies such as Deutsche Telekom and T-Mobile US Ifland has attracted nearly 50% of MAU from overseas,
and global cooperation with various partners including Deutsche Telekom and T-Mobile US is on track. The large subscriber base of IFLAN will begin to use the in-app transaction-based economic system that was introduced in October, which will facilitate the creation of a virtual cycle of premium content production and consumption as well as monetization, thereby contributing to the expansion of the Metaverse platform.
K-UZU has reached more than 2.2 million real users in the third quarter of the month. In addition to YouTube Premium, K-UZU continues to expand its availability, such as Netflix, which is preparing for next year, and is evolving into an AI-based subscription commerce platform. On the other hand, TDL is preparing for next commerce through big data and AI-based customized service optimization, such as breaking through 1 billion won in the first half of the deal.
With MAU exceeding 2.2 million in Q3, T-Universe is expanding the list of impactful partners such as YouTube Premium and preparing to include Netflix next year to transform T-Universe as an AI-based subscription commerce platform. Also, T-Deals GMB in the first half of 2023 surpassed 100 billion won. We are preparing for next-generation commerce through advanced personalized services based on big data and AI. 마지막으로 주주 환원에 대해 말씀드리겠습니다. Finally, let me report on our shareholder return policy.
The Board determined the third quarter DPS to be the same as the previous quarter at 831.
In addition, as we announced in July, our plan to purchase Treasury shares worth $300 billion is well underway. We will complete the share buyback within the six months of the trust contract period and then cancel $200 billion worth of Treasury shares. We will continue to do our best to ensure that corporate value and shareholder value will be maximized through transformation into a global AI company.
We ask for your continued support and encouragement. Thank you. We will now begin the Q&A session.
질문을 하실 분은 전화기 버튼의 별표와 1번을 눌러주시기 바랍니다. 질문을 취소하시려면 별표와 2번을 눌러주시면 됩니다. 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 have pressed on number star 1. For cancellation, please press star 2, that is star N2, on your phone. The first question will be provided by Soojin Kim from Mirae Assets Securities.
I have two questions. When you talked about Pyramid, the CEO of Pyramid proposed the goal of selling AI for 28 years. What are the AI-related projects and where do you want to achieve the fastest results? I'm Kim Soojin from Mirror Asset. Thank you for the opportunity. I would like to ask two questions.
The first question has to do with your guidance on AI-related revenue. You mentioned about promoting AI businesses, and can you share with us any specific revenue target by 2028, and what kinds of businesses will be able to generate revenue in the near term among various AI-related businesses? The second question has to do with the ADOT service. ADOT was officially launched about a month ago, and I understand that there is very positive response in the market. So if you can, please share with us specific numbers, including the number of subscribers and the MAU. Also, I'd like to know if there are any specific business models or features that you are planning to include for ADOT in the future.
Yes, last September, at the Analyst Day event, our CEO There is something I want to explain about AI pyramid strategy. As you all know, AI pyramid strategy is divided into AI infrastructure, AIX, and AI service areas. This includes not only the largest source of income, but also new growth areas where sales have not yet occurred.
As you know, at the analyst day in September, our CEO mentioned and introduced the AI pyramid strategy that SK Telecom is going to pursue. And the AI pyramid strategy includes largely AI infrastructure, AIX, and AI service. They include not only the fixed and mobile business that we have, which is the largest profit source, but also new growth businesses, which may not necessarily generate significant revenue at this time.
In the area of AI-related business, in addition to traditional wireless communication, in the area of high-level AI in the area of new growth, currently, as of 2022, we have set a goal of increasing the level of AI-related business by about 9% to 36% in 2028.
In addition to our existing fixed and mobile business, the AI-related domains aim to advance new growth businesses utilizing AI. Its revenue contribution was roughly 9% in 2022, but our ambitious goal is to increase this number to 36% by 2028.
If you were to name the area where you would like to see the fastest growth in this area, I think it would be the AI core infrastructure data center. We are also looking forward to X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330, which is based on X330,
When it comes to the specific businesses and areas that may be able to produce tangible results in the near term, I would say, first of all, that we have data center business and AI semiconductor business, which is being pursued by Zepion with the new X330. In addition, we have many businesses as part of the AI service area, which is the top of the AI platform, AI pyramid. They include personal AI assistant and AI-based subscription commerce platform, and we are planning to evolve our subscription service utilizing AI. In addition, we will continue to use AI to strengthen customer engagement.
Yes, so in terms of each area, our Choi Hyun-suk, who is in charge of the management strategy, will give additional answers. Recently, we launched the market As for specific details by each category or each domain, Mr. Choi Hwan-seok, head of the Corporate Strategy Office, will provide more details.
In addition, we launched the iPhone call recording service recently, and it is gaining good response in the market. And regarding this, Mr. Kim Ji-hoon, Head of Growth, will provide more details.
Yes, hello. I'm Choi Hyun-suk, CEO of Gyeongheung Contact. As you just mentioned, the area of expectation for growth in AI export by 2028 is data center, AI semiconductor, enterprise solution,
Hello, I am Chae Won-seok, the head of Corporate Strategy Office. As the CFO just mentioned, among the AI businesses and areas, we are expecting high growth from several businesses, including the data center business, AI semiconductor, enterprise solutions, and subscription commerce business model that is linking AI and other services.
First of all,
With respect to data centers, we expect a big growth in demand for GPU data centers with the advent of the AI era. NSK Telecom will scale up the data center business through AI DCIM for operational efficiency, an immersion cooling system for energy efficiency, and expanding sites and partnering with other industries and expanding into the global market.
AI Bandoche, SAPIO, is expected to Next, Sypion, our AI semiconductor company, will launch X330, an inference AI accelerator chip
And after securing diverse references, such as the use in global hyperscale data centers, we expect to generate more meaningful sales starting from 2025.
Thirdly, the enterprise solution market is a field where large changes and growth are expected due to AI. At the moment, we are working with various industries, such as public, financial, and manufacturing, based on existing Vision AI technology and newly developed LLM technology,
The enterprise market is expected to grow and change dramatically due to AI, and we will utilize our own Vision AI and LLM technology capabilities to expand a specialized AI enterprise solution business targeting various industries like the public sector, finance, and manufacturing.
For AI service, we are getting positive responses regarding ADOT, which was officially launched at the end of September, thanks to its many useful features related to phone calls.
And so, we will drive growth by linking AI-based new business models with the subscription commerce service model.
In addition to the new AI-related growth, there are still a considerable amount of wireless communications. In the existing business field, I think we can strengthen the relationship with customers through AI technology and focus on profitability improvement at the same time. AI marketing is also strengthened through AICC,
Other than new businesses related to AI, our fixed and mobile business, our existing business, will continue to account for a significant portion of the company's earnings. And for these existing businesses, we will use AI technology to deepen customer relations and focus on improving profitability. And we will strengthen AI marketing through AICC and reduce expenses by improving network operation efficiency also using AI. Yes, thank you. Thank you.
Yes, I would like to add something about the AI service. My name is Kim Ji-yoon, and I am in charge of AI service growth. First, I would like to talk about the market response after the official launch of ADOT.
Moving on, I am Kim Jae-hoon, Head of Growth, and I'd like to provide you with some more details regarding AI service, in particular, ADOT.
After the official launch in September, ADOT continues to add new functions such as call recording, recommendation of music, and sleep management as the goal to evolve as an AI personal secretary. This leads to high interest and customer response from the market. Since official launch, new features such as call recording and sleep management have been added to ADOT.
to evolve it as a personal AI assistant, and they've been receiving much interest and positive customer responses in the market. In particular, the iPhone call recording function that we recently introduced has been leading the growth of ADOT, thanks to its popularity. So recently, ADOT ranked number one in the free app category of Apple App Store, and number one in lifestyle category of Google Play Store. It is still ranked high with sustained user acquisition.
In the future, in order to continue the customer experience innovation, we are going to proceed with the parts that can be connected to various contents of ADOT, such as recommendations and AI functions. In order to do this, ADOT is currently promoting cooperation with the outside world, not only in terms of internal capacity enhancement, but also in terms of
And going forward, we will add other functions including personalized recommendations and diverse AI features to continue to innovate customer experience and to help the experience of using ADOT phone to lead to the use of diverse ADOT content. And to build capabilities as a personal AI assistant, ADOT is not only strengthening internal capabilities, but also forging collaboration with external partners. We are reinforcing the existing cooperation with startups such as ScatterLab and Asleep, and preparing for new partnerships with diverse companies.
After the official launch in September, we are focusing on experiments and verification for customer experience innovation for a month. For the first month since the official launch, we have been focusing on experimenting and validating diverse aspects for customer experience innovation
So there are additional features that we will add during the rest of the year, so please understand that we would like to report on the market responses on a later occasion, rather than giving you any numbers at this point in time. And I'd like to also comment on your question regarding business models related to ADOT.
ADOT, as I mentioned earlier, has a wide range of functions such as sleep management and photo profile, and we would like to focus on the possibility For ADOT, we are considering the possibility of bundling up various services including sleep management and photo profile to offer them as bundled subscription model.
In the market, already some companies are charging on a monthly basis or per usage regarding AI content, including photo profile, and we are considering similar business models for ADOT.
In addition to this, we believe that ADOT will become a major B.M. in terms of the sales model that counts the number of services that occur in the service use process based on content offering or the transactions that occur in the service use process. However, after the official launch, we are focusing on the introduction of new features and high-end services to provide better user experience. That's all.
Another potential business model is to take profit by charging fees on various transactions and services that occur in the process of using various ADOT services and as well as charging fees on advertising which is based on personalized content offering. However, at this point in time, we are more focused on expanding the user convenience after the official launch to enhance our service experience for customers. We are constantly introducing new features and advancing them.
Thank you. The following question will be presented by Junseop Kim from KB Securities. Please go ahead with your question.
Thank you for the question. I am Kim Jun-seo, KB Securities. This quarter's performance seems to be a good performance compared to the expected value of the market. I'd like to ask you about it. And I'll ask you about the low-income income. If I ask you about the quarter's performance, this quarter's performance seems to be quite good. What do you see as the factors for improving the performance like this? And I'm also curious about whether the 4th quarter's profitability will be able to make a profit like the 3rd quarter. Recently, it seems to be a situation where electricity bills and business expenses control are the main focus due to inflation effects. Please share with us if you have any strategies to deal with this or the future prospects of SK Telecom. And secondly, I would like to talk about the roaming revenue that Director Kim Ji-won mentioned. It seems that the roaming revenue is greatly increasing due to the recent post-COVID-19 and retaliation consumption.
Hello, I am Kim Jun Seo from KB Securities. Thank you for this opportunity. I'd like to ask two questions. The first one is about third quarter earnings results, and the second question has to do with your roaming business. So when we look at the earnings results for the third quarter, they are very good and better than what the market had expected. So I'd like to understand your forward projection for the following quarters in terms of earnings, because there are various factors that may impact your earnings results, including the power prices, as well as inflation and other factors. The second question has to do with your roaming business. Now the pandemic is over and more people are traveling overseas. So I'd like to understand to what degree your roaming revenue has recovered and what is your outlook going forward?
Yes, as I mentioned, we have a sales profit of 4,980 won. It's about 10% growth compared to the previous year. I can tell you that the profits of telecoms, broadband, and other self-employed companies have grown evenly. In terms of telecoms, as you said, there is an impact on the cost of electricity and other general prices in terms of cost, but it has grown strongly thanks to the mobile phone sales such as roaming. In particular, the marketing cost, which occupies the largest area among our costs, the low-cost stabilization of the costs have been a great help to maintain the business value structure. Broadband also continues to increase B2B sales at the center of the data center, and IPTV and other Alps B2B investors continue to show good results, so I can say that we were able to maintain the growth rate in comparison to the previous year because of the growth growth and cost efficiency.
Thank you for the question. As you understand, our Q3 operating income posted 498 billion won, up 7% year over year. And it is thanks to a profit growth of both SK Telecom and SK Broadband, as well as earnings improvements of other subsidiaries. As you mentioned, there have been several cost factors, including higher energy prices and inflation. However, SK Telecom was able to grow its operating income thanks to solid growth of MNO revenue, including roaming. And we were able to continue the stabilizing trends of major expenses, such as marketing and depreciation. And as a result, our operating income grew 4.7% year over year. Moving on to SK Broadband, its operating income also was able to grow, thanks to B2B revenue growth centered on data centers and the growth of high ARPU B2C subscribers for IPTV, which contributed to revenue growth and cost efficiency.
Also, if you look at it from a big perspective, we can say that we are focusing on improving the overall sales cost, which has been maintained for a long time, such as marketing cost and price-to-value ratio.
Moving on to the outlook for the fourth quarter, it is a short-term outlook, but we need to be more cautious because the fourth quarter is typically when seasonal factors lead to higher expenses, including outsourcing service costs, advertising expenses, and other fees. However, when we look at the overall picture, major operating expenses such as marketing and depreciation have been quite stable, so we are focusing on improving our earnings on a year-over-year basis.
If it's a big variable, I don't think we can miss the macro variable. According to the recent inflation rate, the impact of global interest rates continues to be maintained, and the uncertainty of the international situation due to the war between Israel and Hamas following the war between Ukraine and Ukraine is expanding. As you know, in the case of our business, the cost structure and other things are very important Another factor would be macroeconomic and macroexternal uncertainty. Recently, external uncertainties are growing due to global interest rate hikes to respond to rising inflation.
and unstable global geopolitics triggered by Israel-Hamas war following the war in Ukraine. But as you may know, our business and our cost structure has only limited exposure to external risks such as inflation, interest rates, and exchange rates. So we will utilize our management resources and capabilities to make sure that our earnings in the future will be managed stably.
Moving on to your second question, as you mentioned, roaming has been a major driver of our revenue growth.
So with respect to the recent recovery trend of roaming revenue as well as related outlook, I'd like to hand over to Mr. Kim Ji-hyung, Head of Integrated Marketing Strategy Office. Hello, I'm Kim Ji-hyung, Head of Integrated Marketing Strategy Office. For the first time since the pandemic, roaming revenue is expected to recover to the pre-COVID level. While the number of overseas travelers in this quarter is just 76% of the number before the pandemic in 2019, roaming usage has increased 1.5 times. So, this year's roaming revenue is expected to surpass the 2019 level.
It was important to expand the customer base through marketing activities such as increasing data supply and family roaming promotion.
We believe that this result is attributed to customer-based expansion through marketing efforts that help customers pay less, such as increasing data at existing rates and family roaming promotions.
In particular, after the launch, the number of accumulated users has increased to 280,000, and the roaming usage of customers under the age of 34 who did not use roaming through a 50% discount in June has increased by more than 2 times.
And since launched in June, the youth price plan has gained nearly 280,000 users cumulatively, and this plan offers 50% discount for roaming, resulting in a two-fold increase in roaming usage by customers younger than the age of 34, a segment which did not really use roaming much in the past.
The number of users who used roaming in the past shows a pattern of reuse of roaming the next time they leave the country, so the number of users who used roaming
23년 실적 회복에서 더 나아가서 중장기 매출 성장에 기반이 될 것으로 기대하고 있습니다. Furthermore, almost half of first-time roaming users continue to use roaming for next trips. Therefore, the current growth in roaming usage is not just contributing to revenue recovery in 2023, but also is expected to become a major growth driver in terms of revenue in the medium to long term.
T-Roaming이 해외여행의 필수품으로 자리 잡을 수 있도록
We will continue to introduce affordable price plans and convenient services to make tea roaming a necessity for overseas travel. Thank you.
The next question is from Kim from Daesin Securities. The last question will be presented by Kim from Daesin Securities. Please go ahead with your question.
Hello, I'm Kim from Daesin Securities. Today, the Ministry of Foreign Affairs announced a plan to reduce the burden of the Ministry of Communications. If the 5G short-circuit system can be applied to LTE, Today, the Ministry of Science and ICT announced measures to lessen the communications-related burden for citizens.
So in this regard, I'd like to know if you have any plans to allow 5G handsets to use LTE price plans, and how is this going to impact your overall trend of 5G subscriber acquisition in the future? And I'd also like to know if you have any plans to offer more affordable lower-end 5G price plans in the future.
Great. I remember last July, the government announced a number of ways to promote the competition in the telecommunications market. In fact, regarding 5G, we are constantly expanding customers' options and benefits, and we are leading the market competition and expanding the 5G service side. Of course, these activities promote the quality competition of our service and increase user convenience.
Back in July, the government announced measures to facilitate competition in the telecom market, and we have been implementing our market operation strategy, which is based on leading market competition and expanding the base of 5G services by constantly increasing customers' choices and benefits. And we mentioned at the previous earnings call that these business strategies and activities are well aligned with the government's policy goals and directions, which aim to increase benefits for users by promoting competition over service quality.
So, this is a way to increase the number of users by increasing the number of users by increasing the number of users by increasing the number of users
So from this perspective, regarding today's government announcement, in an environment where 5G subscribers continue to grow, we are positively considering to sign up for LTE price plans with 5G handsets and vice versa to promote benefits for users. And regarding more details, I'd like to hand over to Mr. Kim Ji-hyung, Head of Integrated Marketing Strategy Office.
I am Kim Ji-hyung, Head of Integrated Marketing Strategy Office.
As the number of 5G subscribers increases, we are positively considering to allow 5G handsets to use LTE price plans and vice versa, and we will be able to offer these plans as early as within November.
In September, the 5G subscription rate for handsets is 66%. With the introduction of 5G in four and a half years, the speed of subscription expansion is getting slower, but there is a steady increase.
As of the end of September, the share of 5G subscribers in terms of handsets is 66%. Since it's been four and a half years since the 5G launch, the rate of 5G subscriber growth has been slowing, but the upward trend is still very clear, and we expect this upward trend to continue. And in terms of their revenue impact, we will need to consider and monitor both cases of going up the price plans and down the price plans.
Next, I'd like to comment on our plans regarding affordable lower-end price plans.
As the 5G market continues to mature, it is very natural that there are more diverse price plans and options available in the market. With putting top priority on enhancing customer convenience and satisfaction, we will make necessary preparations by comprehensively considering market competition situations and our capacity and our capabilities. We will also aim to produce positive results such as improved customer perception and product competitiveness. Thank you.
This concludes the earnings conference call for the third quarter of 2023 of SK Telecom. If you need further explanations or additional questions, please contact the IR team anytime. Thank you.