SK Telecom - Q2 2022

Transcript

Operator (participant)

안녕하십니까? 오늘 참석해 주신 여러분께 감사의 말씀을 드리며, 지금부터 SK텔레콤 2022년 2분기 실적발표 컨퍼런스콜을 시작하겠습니다. 오늘 컨퍼런스콜은 SK텔레콤의 발표가 있은 후 참석해 주신 여러분을 모시고 질의응답 시간을 가질 예정입니다. 질문을 하실 분은 전화기 버튼의 별표와 1번을 누르시기 바랍니다. 그럼 지금부터 SK텔레콤의 발표가 있겠습니다.[Foreign language]

Speaker 11

Good morning and good evening. First of all, thank you all for joining this conference call. Now we will begin the conference of the fiscal year 2022 second quarter earnings results by SK Telecom. This conference will start with a presentation followed by a divisional Q&A session. If you have a question, please press star one that is star and one on your phone during the Q&A. Now we shall commence the presentation on the fiscal year 2022 second quarter earnings results by SK Telecom.

Hee Joon Jung (Head of Investor Relations)

네, 안녕하십니까? SK텔레콤 IR 담당 정희준입니다. 바쁘신 와중에 오늘 SK텔레콤 실적발표 컨퍼런스콜에 참석해 주신 여러분께 진심으로 감사의 말씀을 드립니다.[Foreign language]

Speaker 11

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

Hee Joon Jung (Head of Investor Relations)

오늘 컨퍼런스콜은 순차통역 방식을 통해서 2022년 2분기 실적 및 향후 경영계획과 전략 방향을 말씀드린 후에 질의응답 시간을 갖는 순서로 진행될 예정입니다.[Foreign language]

Speaker 11

We are providing consecutive interpretation for the call, which will consist of a presentation on Q2 earnings highlights, future business plans, and strategic directions, as well as the Q&A session.

Hee Joon Jung (Head of Investor Relations)

오늘 이 자리에는 SK텔레콤 CFO 겸 Corporate Planning 담당이신 김진원 센터장을 비롯하여 각 사업부별 관련 임원들이 함께 참석하고 있습니다.[Foreign language]

Speaker 11

The call is attended by our executives from relevant business divisions, including Jinwon Kim, CFO and Head of Corporate Planning Team of SK Telecom.

Hee Joon Jung (Head of Investor Relations)

시작하기에 앞서서 모든 사업 전망은 시장 상황 등의 변수에 따라 달라질 수 있다는 점을 고려해 주시기 바랍니다.[Foreign language]

Speaker 11

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

Hee Joon Jung (Head of Investor Relations)

자, 그럼 CFO의 말씀이 있겠습니다.[Foreign language]

Speaker 11

Let me now present our CFO.

Hee Joon Jung (Head of Investor Relations)

네, 안녕하십니까? SK텔레콤 CFO 김진원입니다.[Foreign language][Foreign language]

Operator (participant)

Good afternoon. This is Jinwon Kim, CFO of SK Telecom.

Jinwon Kim (CFO and Head of Corporate Planning Group)

SK텔레콤은 지난 7월 하나금융과의 4천억 원대 규모의 지분을 교환하고 이와 함께 전략 파트너십을 체결하였습니다. 금번 파트너십 체결은 SKT 2.0 환경하에서 SKT ICT 패밀리와 하나금융그룹이 ICT와 금융 전반을 아우르는 폭넓은 영역에서의 초협력을 추진하는 출발점이라는 점에서 중요한 의미를 가진다고 생각합니다.

Speaker 11

SK Telecom signed a stock swap deal with Hana Financial Group in July to exchange shares worth over KRW 400 billion and formed a strategic partnership. The partnership is significant as it marks the beginning of hyper collaboration between SK ICT Family companies and Hana Financial Group in a wide range of areas including ICT and finance under the framework of SKT 2.0.

Jinwon Kim (CFO and Head of Corporate Planning Group)

특히 당사는 금융의 디지털 전환과 통신과 금융 데이터를 활용한 새로운 비즈니스 모델 발굴 등 여섯 개 영역에서의 양사 협력을 추진해 나갈 계획이며, 다양한 서비스 간 융합을 통해 고객 혁신을 추구해 나가고자 합니다.[Foreign language]

Operator (participant)

We will pursue strategic cooperation with Hana Financial Group in six areas, including digital transformation of finance and development of new business models utilizing telecom and finance data. We aim to innovate value for customers through convergence among various services.

Jinwon Kim (CFO and Head of Corporate Planning Group)

그러면 먼저 2022년 2분기 연결 기준 재무실적에 대해 말씀드리겠습니다.[Foreign language]

Speaker 11

Now let me report on the consolidated financial results for the second quarter of 2022.

Jinwon Kim (CFO and Head of Corporate Planning Group)

매출은 전년 동기 대비 4.0%, 전분기 대비 0.3% 증가한 4조 2,899억 원을 기록하였습니다.[Foreign language]

Speaker 11

Consolidated revenue reported KRW 4.2899 trillion, up 4% year-over-year and 0.3% QoQ.

Jinwon Kim (CFO and Head of Corporate Planning Group)

영업이익은 5G 도입 초기 마케팅 비용에 대한 회계적인 인식이 종료됨에 따라 전년 동기 대비 16.1% 증가한 4,596억 원을 기록하였습니다. 전분기 대비로는 주식 상여금 관련 일회성 인건비 제거 효과 등으로 6.3% 증가하였습니다.[Foreign language]

Speaker 11

Operating income posted KRW 459.6 billion, up 16.1% year-over-year, primarily driven by the end of the accounting recognition of marketing expenses incurred at the beginning of 5G rollout. It grew by 6.3% QoQ, mainly because of the elimination of one-off labor costs related to stock bonuses.

Jinwon Kim (CFO and Head of Corporate Planning Group)

당기순이익은 2,581억 원을 기록하였습니다. SK하이닉스 지분법 이익 제외에 따른 기저효과 등으로 전년 동기 대비 67.6% 감소했으나 전분기 대비로는 17.2% 증가했습니다.[Foreign language]

Speaker 11

Net income came in at KRW 258.1 billion, posting a 67.6% decline year-over-year, mainly due to the base effect of excluding equity method gains from SK hynix, but it grew by 17.2% QoQ.

Jinwon Kim (CFO and Head of Corporate Planning Group)

별도 기준 매출은 전년 동기 대비 3.2%, 전분기 대비 1.3% 증가한 3조 1,182억 원을 기록하였고, 영업이익과 당기순이익은 각각 3,809억 원과 2,245억 원을 기록하였습니다.[Foreign language]

Speaker 11

On a non-consolidated basis, revenue grew 3.2% year-over-year and 1.3% QoQ to post KRW 3,118.2 billion. Operating income and net income reported KRW 380.9 billion and KRW 224.5 billion respectively. Having reported on the financial highlights of the second quarter of 2022, let me now move on to major business achievements and strategic directions. As 5G became the major network in the industry with 5G penetration rate reaching 50%, we made a preemptive move of introducing five new 5G price plans on August 5th to offer more choices to customers. As of the end of Q2, our 5G subscribers stand at 11.68 million.

As more customers can enjoy 5G services with the new price plans, we believe that we can reach our goal of 13 million 5G subscribers by the end of the year. The pay TV subscribers of SK Broadband reached 9.17 million as of the end of Q2. Going forward, we expect content sales to recover as the pay TV subscriber base continues to expand and new movies are being released with the easing of COVID-19 related restrictions. Utilization rate growth is on track for the new data centers that opened in Gasan and Siksa in July last year, which is expected to bring about sustained revenue growth. Preparations to open additional data centers in areas such as the Seoul metropolitan area and Busan are well underway.

As for our cloud business, we focus on MSP services that offer specialized solutions, primarily based on our network competitiveness and capabilities on MEC, AI, and big data. The strategic partnership with Hana Financial Group is expected to accelerate mutual cooperation in areas including digital transformation of finance. A new growing AI service named A. was launched in May as an open beta version. It aims to be a daily digital mate that can have human-like conversation with customers. In addition to the media and daily information services already available, A. tv and A. game were recently launched with many more useful services to be released going forward. Especially, A. will evolve as a service that offers more valuable experiences in terms of communication, which is the killer feature of mobile and foundation of SK Telecom services. Moving on to T Universe.

Universe Pass life focused on daily benefits, and Universe Pass slim, centered on online shopping benefits, were launched in late June and July respectively. In the second half of this year, new functions such as sharing and gifting will also be added as part of our efforts to expand the subscription product lineup and customer convenience. By enhancing usage value of customers going forward, T Universe will reinforce its position as a subscription commerce platform focused on four pillars of action, namely product diversification, customer experience innovation, marketing based on AI and DT, and business model expansion.

Kim Ji-hyung (Head of the Integrated Marketing Strategy Office)

지난 7월 출시 1주년을 맞이한 이프랜드는 이 분기 말 기준 누적 다운로드 870만 건을 기록하였으며, 오프라인과 메타버스 전시회의 연결을 통해 고객의 관람 경험을 극대화하고 혁신적인 공연 모델 등 다양한 시도로 MZ세대를 공략하고 있습니다. 또한 올 하반기 유럽, 북미, 중동, 아시아 등 주요 지역별 대표 통신사와의 긴밀한 협력을 통해 순차적인 글로벌 진출을 추진하고 있습니다.[Foreign language]

Speaker 11

Celebrating the first anniversary in July, Ifland recorded 8.7 million cumulative downloads at the end of Q2. The platform is attracting millennials and Gen Z by connecting offline and metaverse exhibitions to maximize customers viewing experiences and by making various attempts like piloting innovative concert models. We are also working for gradual expansion into the global market in the second half of the year through close cooperation with leading telecom companies in major regions including Europe, North America, the Middle East and Asia.

Jinwon Kim (CFO and Head of Corporate Planning Group)

마지막으로 주주 환원과 관련해서는 금번 이사회에서 이 분기 배당금을 일 분기와 동일한 주당 830원으로 확정하였습니다.

Speaker 11

Finally, for shareholder return, the board determined the second quarter DPS to be the same as Q1 at KRW 830.

Jinwon Kim (CFO and Head of Corporate Planning Group)

당사는 SKT 2.0 기반 하에 다양한 파트너십 구축을 통해 재무실적을 개선하고 신사업 성과를 확보하기 위해 노력하고 있으며, 이러한 노력이 기업가치와 주주가치 극대화로 이어질 수 있도록 최선을 다하겠습니다.[Foreign language]

Speaker 11

We're doing our best to improve financial performance and produce results from new businesses by building diverse partnerships under the framework of SKT 2.0. We will make sure that these efforts will result in maximizing corporate value and shareholder value.

Jinwon Kim (CFO and Head of Corporate Planning Group)

투자자와 애널리스트 여러분들의 지속적인 관심과 성원을 부탁드립니다. 감사합니다.[Foreign language]

Speaker 11

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

Operator (participant)

네, 그럼 지금부터 Q&A 세션을 시작하도록 하겠습니다.[Foreign language]

Speaker 11

We will now begin the Q&A session.

Operator (participant)

지금부터 질의응답을 시작하겠습니다. 질문을 하실 분은 전화기 버튼의 별표와 1번을 눌러주시기 바랍니다. 질문을 취소하시려면 별표와 2번을 눌러주시면 됩니다.[Foreign language] Now, Q&A session will begin. Please press star one, that is star and one if you have any questions. Questions will be taken according to the order you have pressed the number star one. For cancellation, please press star two, that is star and two on your phone. 처음으로 질문해 주실 분은 씨티그룹의 이승현 님입니다. [Foreign language] The first question will be provided by Seung Lee from Citigroup. Please go ahead with your question.

Seung-Hyun Lee (Director of South Korea Research)

질문 기회 감사드립니다. 두 가지 질문드리겠습니다. 첫 번째는 최근 출시된 5G 신규 요금제에 대한 질문입니다. 도입 취지와 전체 서비스 매출에 대한 영향이 궁금합니다. 두 번째 질문은 하반기 전망에 대한 내용입니다. 하반기 마케팅 경쟁 구도에 대해 어떻게 예상하시는지, 그리고 전체적인 비용 지출은 어떻게 계획하고 계시는지 말씀해 주시면 감사하겠습니다. [Foreign language]

Speaker 11

I'm Seung Lee from Citigroup. Thank you for taking my questions. I have two questions. The first question is related to your new 5G price plans. Can you provide us with some more information about the background behind introducing these new price plans? What is your estimation of the impact of such new price plans on your revenue? The second question is about the outlook for the second half of the year. What is your understanding of the marketing landscape of the industry going forward? What is your plan for expense management? Thank you.

Jinwon Kim (CFO and Head of Corporate Planning Group)

네, 질문에 우선 답하기에 앞서서 이 자리에는 지금 각 사업을 직접 담당하고 계신 구독, 메타버스, 그다음에 우리 MNO의 통합 마케팅 전략을 담당하는 임원들께서 나와 계시고요. 스태프 쪽에서는 SK Broadband의 CFO를 비롯한 우리 사업 CFO, 각 스태프 조직의 담당 임원들이 함께 자리하고 계십니다. 가능하다면 이분들께 답변에 동참해서 답변을 드리도록 하겠습니다. [Foreign language]

Speaker 11

Thank you for the question. Before I address your questions, I'd like to remind you that we have executives from the relevant business divisions, including Subscription, Metaverse, MNO, and Integrated Marketing. We also have CFO of SK Broadband and other executives from the relevant divisions. If deemed necessary, I'm going to hand over to these executives for the answers.

Jong Seok Park (CFO)

이번 신규 요금제 출시와 관련해서는 8월 5일에 저희가 언택트 플랜 2종을 포함해서 5개의 신규 5G 요금제를 출시하였습니다.[Foreign language]

Speaker 11

Regarding the new 5G price plans, on August 5th, we launched five new 5G price plans that include two Untact plans.

Jong Seok Park (CFO)

보통 그 새로운 세대의 서비스를 론칭한 이후에 가입자가 확대됨에 따라서 다양한 요금제를 출시하는 것은 지극히 자연스러운 일입니다.[Foreign language]

Speaker 11

Whenever we have new network rollout, as the number of subscribers increase, it is very natural that we offer more diverse price plans.

Jong Seok Park (CFO)

모두에 말씀드린 것처럼 현재 5G 가입자가 전체 가입자의 거의 50%에 지금 육박하고 있고요. 그만큼 5G 서비스도 성숙기에 접어든 만큼 다양한 데이터 사용 패턴과 고객의 니즈를 반영할 수 있는 요금제가 필요하다고 이제 판단을 했고요. 고객의 선택권을 강화하는 취지에서 중저가와 고가, 그리고 온라인 전용의 다양한 요금제를 이번에 선보이게 되었습니다.[Foreign language]

Speaker 11

As I mentioned in the beginning of my presentation, the 5G market is becoming more mature, with 5G subscribers taking up more than 50% of the total handset subscribers. As a result, we concluded that there should be more diverse price plans that can cater to different data usages and customer preferences. As a result, we introduced diverse price plans, including low, medium and high-end price plans and online-only plans in order to offer more choices for our customers. Now, I would like to hand over to Mr. Kim Ji-hyung, Head of Integrated Marketing Strategy Office, who will discuss the details and expected benefits.

Kim Ji-hyung (Head of the Integrated Marketing Strategy Office)

Hello, I am Kim Ji-hyung, Head of Integrated Marketing Strategy Office.

First of all, as for the regular 5G plans, we have 49 price plan that offers 8 GB of data and 59 price plan that offers 24 GB of data and 99 price plan that offers daily essential service benefits and unlimited data. As a result, we have a 5G price plan lineup that covers the price range of KRW 40,000 all the way to KRW 100,000 with the interval of KRW 10,000. The two new online-only Untact price plans include Untact 34 that offers 8 GB of data and Untact 42 that offers 24 GB of data. With these new 5G price plans, we expect that now customers can enjoy more diverse and economical plan choices in terms of price, data and benefits.

As a result, we expect that the 5G subscriber base will continue to grow. I understand that there was a question about the potential impact of price plans on ARPU. Can you elaborate more on that? As you can see, we now have more price plans for low and medium end compared to before. As a consequence, some customers may downgrade their price plans depending on their data usage, and other customers may upgrade their price plans depending on the increased trend of data usage. What is even more important is that we expect 5G migration to be accelerated, as now LTE users can choose more price plans.

As for their impact on our revenue trend, because all five price plans were launched all at once, we believe that we can share with you more details after we get more data from actual customer feedback and usage patterns. Based on the new 5G price plans that offer more choices for our customers, we will continue to expand our 5G network and improve our services and offer more convenient and useful services. As a result, we will continue to make sure that 5G becomes mainstream and sustain our MNO growth.

Jinwon Kim (CFO and Head of Corporate Planning Group)

Now moving on to the second question regarding our marketing expenses in the overall landscape. For the second quarter, marketing expenses grew slightly quarter-over-quarter due to the increase in ad expenses.

As we previously communicated with respect to the MNO market operation, the MNO related marketing fees have been declining since the third quarter of last year. Moving on to the second half of this year, we will continue to maintain the trend of market stabilization and cost reduction. As for the second half of this year, we will continue the trend of market stabilization and cost reduction, and we will reinforce the downward trend of marketing expenses through efficient market operation focused on profitability. Now regarding the overall industry market landscape, Mr. Kim Ji-hyung, Head of Integrated Marketing Strategy Office will provide more details.

Kim Ji-hyung (Head of the Integrated Marketing Strategy Office)

Let me comment on the overall marketing landscape. Recently, the market landscape has been pretty stable. In addition, the total number of 5G subscribers has reached 24 million in Korea, and the 5G market is becoming more mature.

As a result, we see that there's very low likelihood of competition heating up again to attract 5G subscribers. Earlier this year, there was a flagship handset launch and the market was quite stable. Along the same line there is another flagship handset launch expected or scheduled in mid-August, and we do not expect the market to heat up once again. Recently, SK Telecom has been focusing on strengthening the competitiveness of our products and services that cater to our customers' needs. One example is launching these new 5G price plans and likewise we will continue to maintain our position and lead the 5G market.

Operator (participant)

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

Joonsop Kim (Research Analyst)

I'm Kim Joonsop from KB Securities. I have two questions.

The first question is related to monetization of Ifland, and the second question is related to your partnership with Hana Financial Group. Regarding the first question, in June, SK Telecom communicated with the market-specific monetization models for Ifland. I wonder if there has been any change in terms of the priorities of such monetization models and if you are planning to work on any new monetization models or business models. The second question is regarding your partnership with Hana Financial Group. In the presentation, CFO mentioned that there are six particular areas where the two parties will cooperate, so I'd like to learn more about the specific plans for cooperation that will help me better understand this partnership. Thank you.

Jinwon Kim (CFO and Head of Corporate Planning Group)

Regarding your first question about Ifland, I'd like to hand over to Mr. Yang Maeng-seok, Head of Metaverse CO, for answers and then I'm going to cover the second question.

Yang Maeng-seok (Head of Metaverse CO)

Hello, I am Yang Maeng-seok, Head of Metaverse CO. Up to this point, our priority for Ifland has been expanding the user base. Now we will soon enter the stage of monetization by utilizing the user base. In some B2B areas, we have been generating income by holding corporate events and creating avatars and spaces. Going forward, we're going to plan for monetization through various functions, including the function of sponsoring creators that host meetings, the function of trading avatars and space creations, and in-service advertising. One example, in the third quarter of this year we're going to offer points to sponsors and participants as bonuses, and these points can later be used for Ifland services.

In addition, we're going to add more elements of the Ifland economic system. In order to link virtual goods inside Ifland with real world value, we are planning to introduce a crypto economic system in connection with SK coin, and we will provide support so that Ifland can become an important service that helps to develop the ecosystem of SK coin. This crypto economic system will be one element of many parts of the Ifland economic system, and we are going to continue to closely monitor the market because we want to launch the crypto economic system at the optimal time, when the effect of introducing Ifland crypto system can be maximized. Thank you.

Jinwon Kim (CFO and Head of Corporate Planning Group)

Now I would like to discuss the background behind establishing a strategic partnership with Hana Financial Group and our future plans.

SK Telecom has been co-collaborating with Hana Financial Group in many areas, starting with the Hana Card joint venture in 2010 and including various partnership cards and business developments or business models, we were able to produce good results. At the same time, as you may know very well, the telecommunications industry and the financial industry has been going through many changes. In particular, as for the telecommunications market, we have new players, including Kakao and Naver, that are competing with us. In the financial sector, there's an urgent need and challenge for digital transformation. Against this background, there was a common recognition between SK Telecom and Hana Financial Group for a need to form a new partnership.

In that sense, this strategic partnership is very meaningful, it goes beyond the scope of cooperating just for credit card business, but rather to create a framework that allows us to cooperate in a wide range of areas, that enables comprehensive cooperation between SK ICT Family companies and Hana Financial Group. We see that there are many areas for cooperation. First of all, we can build financial services based on AI and cloud to accelerate digital transformation of finance. Secondly, we can develop new business models by combining telecom and finance data. As you may know, data, is becoming more important, and there are many data-driven services, so this is an area that we can cooperate. In addition, we can integrate products and services tailored for customers of SK Telecom at Hana Financial Group and utilize the infrastructure jointly.

We can conduct joint marketing based on digital technology, and we can also pursue cooperation for ESG management. We will not just remain as strategic partners on paper. We're going to strengthen mutual engagement to produce tangible results. For that, we are going to form and operate a synergy consultative body that is attended by key executives from the two parties, and we are going to come up with concrete plans for cooperation.

당사 입장에서도 기존에 저희가 지금 설정해 놓은 5대 사업군의 성장 모멘텀을 전략적 파트너십을 통해서 한층 강화시키는 계기가 될 수 있도록 긴밀하게 협조해 나갈 계획입니다. 이상입니다.[Foreign language]

Speaker 11

On our part, SK Telecom will actively utilize this strategic partnership with Hana Financial Group so that we can strengthen the growth momentum of the five business groups that we have defined earlier this year. Thank you.

Operator (participant)

다음으로 질문해 주실 분은 대신증권의 김회재님입니다.[Foreign language]

Speaker 11

The following question will be presented by Kim Hoi-jae from Daishin Securities. Please go ahead with your question.

Kim Hoi‑jae (Research Analyst)

네, 안녕하십니까. 대신증권 김회재입니다. 저는 두 가지 질문드릴 텐데요. 먼저 T 우주 관련해서 업데이트 좀 부탁드리는데, PT 자료에는 MAU랑 GMV 정도가 공개되어 있는데, 매출 추이랑 향후 매출 전망도 한 번 더 업데이트 부탁드리겠습니다. 두 번째는 배당 관련한 내용이고요. 지금 1분기랑 2분기에 분기 DPS를 830원을 결정해 주셨는데, 이거는 작년하고 동일한 수준이고 최저 보장 배당금액 수준인데요. 올해 지금 실적 개선세를 감안하고, 또 하나금융지주 지분 출혈에 따른 배당금 유입을 SKT의 주주 환원으로 연계한다면, 배당의 상승 여력이 있다라고 판단을 하고 있는데, 연간 배당에 대한 가이던스 한 번 더 부탁드리겠습니다. 감사합니다.[Foreign language]

Speaker 11

I am Kim Hoe-jae from Daishin Securities. I would like to ask two questions. The first question is related to your T Universe business, and I'd like to get some more updates. When I look at the presentation material, it only gives us numbers about MAU and GMV. Can you share with us your revenue projection and the current revenue trend? The second question is related to your dividend payout. Your DPS has been set at KRW 831 for the first quarter as well as the second quarter. This is the same level as last year, and this is what we consider the minimum guaranteed dividend that we'd expect from SK Telecom.

As we see this upside potential for your earnings, and also if you take into account the dividend income coming from Hana Financial Group, I believe that there is an upside potential for dividend payout. Can you give us the overall guidance for the annual dividend payout? Thank you.

Jinwon Kim (CFO and Head of Corporate Planning Group)

우선 구독사과 관련해서는 여기 참여해 계시는 윤재웅 구독 마케팅 담당자께서 답변을 주시고요. 배당과 관련해서는 이후에 제가 답변드리도록 하겠습니다. [Foreign language]

Speaker 11

Thank you for the questions. The first question regarding the T Universe will be addressed by Mr. Yoon Jae-woong, Head of Subscription Service Marketing Office, and then I will cover the second question.[Foreign language]

Yoon Jae-woong (Head of Subscription Service Marketing Office)

안녕하십니까. 구독 마케팅 담당 윤재웅입니다.[Foreign language]

Speaker 11

Hello, I am Yoon Jae-woong, Head of Subscription Service Marketing Office.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

T 우주는 2021년 8월에 론칭한 이후로 론칭 10개월 만인 이 분기 말에 실사용자 기준으로 약 120만 명을 기록했습니다.[Foreign language]

Speaker 11

The T Universe was launched in August 2021, and in just 10 months at the end of second quarter, our T Universe users reached 1.2 million.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

T 우주는 당사가 출시했던 역대 비통신 서비스 중에서 가장 빠르고 큰 규모로 이용자를 확대하고 있는데, 고객의 사용 가치 제고를 통해서 향후에도 큰 성장을 기대하고 있습니다.[Foreign language]

Speaker 11

As you can see, the user base growth of T Universe is the highest among all the non-telecom services that SK Telecom has launched so far. We expect significant growth going forward by enhancing usage value for customers.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

그리고 상품 측면에서는 T 우주는 지난달에 일상혜택 기반의 우주패스 라이프와 이커머스에 특화된 우주패스 슬림 같은 다양한 상품도 추가로 출시를 했습니다.[Foreign language]

Speaker 11

As for our product offerings, last month, we introduced Universe Pass Life focused on daily benefits and Universe Pass Slim, which is focused on online shopping.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

또한 하반기에는 공유하기, 구독 상품 선물하기 등 편의성 강화도 예정되어 있는데 이 같은 사용 가치 제고를 통해서 향후 더 큰 성장이 기대되고 있습니다.[Foreign language]

Speaker 11

In the second half of this year, we plan to add more convenient features such as sharing and gifting, which are expected to bring about more significant growth in the future by creating more value for customers.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

아까 말씀하신 GMV랑 매출 측면에서는 구독 사업이 2022년 올해는 상반기에 GMV가 2,600억을 돌파했는데요. 출시한 이후에 지속적으로 유의미한 실적을 확보하고 있습니다. [Foreign language]

Speaker 11

Moving on to the size of the business, the subscription business has been producing meaningful results since its launch with the GMV surpassing KRW 260 billion in the first half of the year.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

매출은 작년 대비 한 1.5배 정도 트랙으로 가고 있고요. 이게 일회성 transaction이 아니고 recurring 매출이라는 측면에서 좀 의미를 가진다고 볼 수 있을 것 같습니다. [Foreign language]

Speaker 11

As for the sales revenue, we see a 1.5-fold track of growth. This does not include not just one-off sales, but it includes mostly recurring sales. It is quite significant.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

추가적으로 그 채널 측면에서 보면 오프라인 유통망을 제외한 뭐, 컨택센터, T world, T Membership, 11번가 같은 비대면 채널 가입 비중이 약 42%에 달하고요. [Foreign language]

Jinwon Kim (CFO and Head of Corporate Planning Group)

Moving on to the distribution channel. The subscription through online channels such as Contact Center, T World, T Membership, and 11Street account for about 42%.

Yoon Jae-woong (Head of Subscription Service Marketing Office)

그 20대부터 40대 사이의 고객의 비중이 65% 이상을 그 계속 유지하고 있어서 비대면 채널과 젊은 세대 중심으로 가입이 좀 이루어진다고 볼 수 있을 것 같습니다. [Foreign language]

Customers in their twenties all the way to the forties continue to account for more than 65%. These figures show that young customers have been signing up for T Universe mainly through online channels. As for T Universe partnerships, the number of partners has been surpassing 60, and we've been expanding the scope and breadth of benefits. Among the partners, there is very strong demand and preferences for benefits related to daily life and the media benefits. Thank you.

Jinwon Kim (CFO and Head of Corporate Planning Group)

Now, I'd like to comment about the question regarding using dividend gains from Hana Financial Group as part of SK Telecom's dividend payout.

I discussed the significance of strategic partnership with Hana Financial Group, and when we take a look at the financial impact of this deal, I can see that we used to hold shares of Hana Card that does not pay dividends, but now these were exchanged with the shares of Hana Financial Group Holding, they pay dividends. Currently, the stock swap deal is underway, so I cannot give you the exact amount. Last year, the DPS for Hana Financial Group was KRW 3,100 per share. Given that as a reference point, we can expect about KRW 20 billion of dividend gains from Hana Financial Group. Of course, with the increase in dividend income coming from Hana Financial Group, it's going to be helpful for our cash flow generation. This means that we will be capable of increasing shareholder return.

As for a direct impact on our shareholder dividend payout, I cannot give you any detail at this point in time. I hope that you will consider this as a very important means to enhance and maximize shareholder value. Going forward, we're going to consider the market situations and our financial structure before we finally decide on the annual dividend size.

Hee Joon Jung (Head of Investor Relations)

Kyohan?

There is one person with a question.

Operator (participant)

The last question will be followed by Seung Woong Lee from eBEST Investment & Securities. Please go ahead with your question.

Seung Woong Lee (Equity Analyst)

I'm Seung Woong Lee from eBEST Investment & Securities. I would like to ask two questions. The first question is about your CapEx trend. In the first half of this year, your CapEx size was KRW 850 billion. I wonder if it's going to be similar in the second half of the year on a year-over-year basis. You're engaged in building joint 5G networks together with the other telecom companies to increase the 5G coverage. I understand that this will continue until the end of the first half of 2024.

Up to that point, what is going to be your CapEx trend for next year and the year after? As for the second question, it is about your pay TV business. I can see that there has been a slowdown in the net adds of pay TV subscribers, and your pay IPTV subscriber growth rate has been in high single digits on a year-over-year basis. I'd like to know if this trend can be sustained.

Jinwon Kim (CFO and Head of Corporate Planning Group)

네, 유료방송 사업 관련된 질문에 대해서는 저희 SK Broadband CFO께서 먼저 답변을 주시고, 이어서 제가 CapEx에 대한 질문에 대한 답변을 드리도록 하겠습니다. [Foreign language]

Speaker 11

Regarding your question about Pay TV business, I'd like to hand over to Mr. Park Jong-seok, CFO of SK Broadband, and then I will cover your question regarding CapEx.

Jong Seok Park (CFO)

네, 안녕하십니까? SK Broadband CFO Park Jong-seok입니다. [Foreign language]

Speaker 11

Hello, I am Park Jong-seok, CFO of SK Broadband.

Jong Seok Park (CFO)

유료방송 시장은 IPTV 시장을 중심으로 가입자 성장세를 지속하여 지난 2021년에도 70만 명의 가입자가 증가하는 등 유료방송 시장 전체로 3,600만 고객에 육박하고 있습니다. [Foreign language]

Speaker 11

The pay TV market in Korea has been enjoying a rapid subscriber growth, driven by the IPTV market growth. In 2021 alone, 700,000 subscribers were added to the subscriber base. In total, we have 36 million customers in the pay TV market.

Jong Seok Park (CFO)

이 중 IPTV 시장은 최근 5년간 연평균 100만 명 이상의 가입자가 증가하여 현재는 전체 유료방송 시장의 60%를 점유할 정도로 고속 성장하였습니다. [Foreign language]

Speaker 11

In particular, the IPTV market has seen subscriber growth of more than 1 million each year for the past five years, and the IPTV market accounts for more than 60% of the total Pay TV market.

Jong Seok Park (CFO)

이러한 IPTV의 성장 기조는 1인 가구, 세컨 TV 수요 등을 중심으로 해서 성장률은 다소 둔화되더라도 가입자 증가 추세는 지속될 것으로 기대하고 있습니다. 당사의 경우 지난 상반기 가입자 순증 19만 명을 확보하면서 시장 내 마켓셰어 1위를 지속하고 있습니다. [Foreign language]

Speaker 11

The IPTV growth rate may slow down, but there is a continued demand coming from single person households and demand for second TV. As a result, we expect that the IPTV subscriber growth trend will continue. As for SK Telecom, in the first half of this year, we have added more than 190,000 people to our IPTV subscriber base, and we have maintained number one in terms of net add market share.

Jong Seok Park (CFO)

또한 이러한 가입자의 양적 확대를 기반으로 광고와 콘텐츠 등의 플랫폼 경쟁력 강화 노력을 병행함으로써 유료방송 사업 전체의 ARPU 성장도 지속 추진해 가고 있습니다. 감사합니다. [Foreign language]

Speaker 11

Based on the continued growth of the subscriber base of the Pay TV business, we continue to strengthen the platform competitiveness in terms of advertising and content to pursue ARPU growth of the entire Pay TV business. Thank you.

Jinwon Kim (CFO and Head of Corporate Planning Group)

네, 이어서 CapEx에 대한 질문 답변드리도록 하겠습니다. [Foreign language]

Speaker 11

I would now like to address your question regarding CapEx.

Jinwon Kim (CFO and Head of Corporate Planning Group)

CapEx에 대해서는, 저희가 연초에 연간 실적 발표, 그리고 1분기 때도 비슷한 답변을 드렸던 걸로 기억이 되는데요. 금년도에 저희 CapEx의 기본적인 목표는 효율적 관리를 통해서 전년과 유사한 수준에 집행할 계획을 갖고 있습니다.[Foreign language]

Speaker 11

As for our CapEx plan, as we communicated at the annual earnings conference call, as well as for the first quarter conference call, we are planning to maintain the CapEx level to be similar to that of last year through efficient management.

Jinwon Kim (CFO and Head of Corporate Planning Group)

현재 5G망을 전국망으로 계속 깔고 있는 상황인데요. 그런 5G 시장에서의 마켓 리더십을 확보하기 위한 네트워크 품질 그리고 경쟁력 유지를 위해서는 네트워크 투자가 계속 지속되어야 되는 필요성이 분명히 있고요. 그런 와중에 이제 공동망 구축을 통해서 CapEx를 좀 효율적으로 집행하겠다라는 것이 저희들의 현재 계획입니다.[Foreign language]

Speaker 11

Our activities for nationwide 5G rollout continue, and we need to continue to invest in network in order to improve 5G network competitiveness and quality so that we can maintain 5G market leadership. At the same time, we're going to pursue an efficient execution of CapEx, mainly by utilizing the joint network.

Jinwon Kim (CFO and Head of Corporate Planning Group)

또한, 성장 사업에 대한 투자도 게을리할 수 없어서, 5G 네트워크 투자와 균형을 고려해서 적절한 범위 내에서 효율적으로 이루어질 수 있도록 하겠습니다.[Foreign language]

Speaker 11

At the same time, we need to continue to invest in growth businesses. We're going to make these investments efficiently in connection with and in consideration of 5G network investments.

Jinwon Kim (CFO and Head of Corporate Planning Group)

중장기 CapEx 수준에 대해서도 동일한데요. 전국망 구축이 완료되는 시점까지는 꾸준한 네트워크 투자와 함께 성장 사업에 대한 투자를 병행하면서 효율적인 집행과 관리를 통해서 중장기적으로는 전체적인 CapEx 규모가 안정화될 수 있는 수준에서 저희가 유지할 계획입니다.[Foreign language]

Speaker 11

As for our CapEx, trend and outlook in the medium term, our position is the same. Until the nationwide 5G network is completed, we will have to continue to invest in network expansion. At the same time, we're going to invest in growth businesses. Through efficient execution and management, we'll be able to stabilize the CapEx trend in the medium term.

Jinwon Kim (CFO and Head of Corporate Planning Group)

네, 이상입니다.[Foreign language]

Speaker 11

Thank you.

Hee Joon Jung (Head of Investor Relations)

네, 감사합니다. 오늘 참석해 주신 분들께 다시 한번 감사의 말씀드리고요. 이상으로 2022년 2분기 실적에 대한 컨퍼런스 콜을 모두 마치도록 하겠습니다. 감사합니다. [Foreign language]

Speaker 11

Thank you for joining us for SK Telecom second quarter conference call. Thank you.