SK Telecom - Q2 2023
August 8, 2023
Transcript
Operator (participant)
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 2023, 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 1, that is star and 1 on your phone during the Q&A. Now, we shall commence the presentation on the fiscal year 2023, second quarter earnings results by SK Telecom.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]
Speaker 7
Good afternoon, I am Hee-Jun Chung, IRO of SK Telecom. Thank you for joining SK Telecom's earnings conference call.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]
Speaker 7
Today, we will first deliver a presentation on major events, quarterly earnings highlights, and business performances, which will be followed by the Q&A session.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]
Speaker 7
The call is attended by our executives from relevant business divisions, including Jinwon Kim, CFO of SK Telecom, and we're providing consecutive interpretation for the call.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]
Speaker 7
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.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]
Speaker 7
Let me now present our CFO.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Good afternoon, this is Jinwon Kim, CFO of SK Telecom.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
SK Telecom has been at the forefront in transforming itself into an AI company. Since we launched A. beta service in May last year, ChatGPT has become a hot topic, creating a global rush for AI technology by global big tech companies, and various large language models and services based on them have been launched competitively.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
These changes in the business environment have resulted in a shared understanding around the world, that companies cannot survive without change and innovation based on AI. Against this backdrop, while continuing to further advance the A. service based on its own LLM, SK Telecom launched the Global Telco AI Alliance in late July to build a comprehensive cooperation framework and jointly access AI markets by mobilizing forces of global telcos. Led by SK Telecom, the alliance consists of major telcos from Europe, the Middle East, and Asia, including Deutsche Telekom, e&, and Singtel.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
The Global Telco AI Alliance entails business cooperation to develop multilingual LLM jointly to gain AI leadership in the global market, and we will continue to create business synergies through broader discussions, including strategic cooperation with major LLM players.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Let me report on the consolidated financial results of Q2 2023.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Consolidated revenue reported KRW 4,306.4 billion, up 0.4% year-on-year, thanks to the growth of both the fixed and mobile business and the new businesses. It reported a decline of 1.5% Q-on-Q, due to the drop in handset sales of the subsidiary company, without new flagship handset launch in Q2. The operating income in Q2 posted KRW 463.4 billion, up 0.8% year-on-year, thanks to the growth in revenue, and down 6.4% Q1Q due to the increase in other expenses.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Net income grew 34.8% year-on-year and 15% Q1Q, to come in at KRW 347.8 billion.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
On a non-consolidated basis, revenue posted KRW 3,119.2 billion, which is a similar level YOY and QOQ. Operating income and net income reported KRW 379.1 billion, and KRW 272.8 billion respectively. Let me now turn to Q2 business highlights and strategic directions of the company that is pursuing transformation into an AI company.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
SK Telecom is expanding its AI technology capabilities and services through active collaboration and partnerships with various domestic and foreign AI companies. In June, we released A.2.0 with a completely revamped UX, added ChatT by utilizing the ChatGPT model, and announced an emotion-based AI agent called A. Friends, in collaboration with Scatter Lab.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Also, we have upgraded our own large language model for A.2.0 to support multi-turn conversations, where the model understands the context and intentions.
With this enhancement, A. is evolving as a more user-friendly conversational AI service.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
With global launch in November last year, ifland has attracted more than 30% of MAU from overseas. It is expanding the scope of global cooperation with various foreign companies, including Deutsche Telekom, T-Mobile US, and Singtel. After a new type of metaverse social media feature called if home, was released in May, a total of more than 400,000 if homes were created as of the end of July, taking the ifland service to the next level. We're well on our way to introduce an economic system based on in-app payments in late September. The global expansion of ifland and popularity of if home, are expected to be a big help in operating this revenue model.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
With MAU exceeding 2 million in Q2, T Universe has further strengthened its competitiveness based on partnerships with big players such as YouTube Premium. It will continue to expand the list of impactful partners and increase the share of voluntary sign-up channels with higher customer retention rates through compelling product partnerships. SK Telecom has acquired approximately 2% stake in Joby Aviation, a global number one UAM manufacturer, with $100 million equity investment. The investment will allow exclusive use of their aircrafts in Korea, UAM-related technology cooperation, and joint entry into overseas markets to create synergies in diverse areas, which will help solidify our leadership in the UAM industry. The enterprise business is maintaining a stable revenue in the lease line business, while showing a noticeable growth trend in data center and cloud businesses.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
The data center business sustained the revenue growth trend of more than 30% year-on-year, thanks to stable increase in the utilization rate of Gasan and Siksa data centers and the opening of Bundang Two Center. As the business expansion of global CSPs in Korea is leading to the growth and demand for data centers, preparations to open new data centers, including securing sites, are well underway.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
The cloud business is expected to be on track to meet its annual target, with its revenue growing more than 60% year-on-year. Additional growth is expected as we benefit from the expanding market for AI services and hybrid cloud. In the second quarter, we secured orders for smart ship development as well as gaming and financial businesses. We're currently exploring additional business opportunities focused on big accounts.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
To meet diverse needs of customers, SK Telecom introduced 25 new 5G price plans in the first half of the year. In particular, 0 Youth Plan has been well received by the market, helping us continue to strengthen our retention of younger customers. Thanks to these achievements, the number of 5G subscribers reached 14.67 million as of the end of Q2.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
As of the end of June, the pay TV subscribers and broadband subscribers of SK Broadband reached 9.46 million and 6.81 million, respectively. We continue to grow the subscriber base by achieving number one net adds for IPTV and Broadband in the first half of the year. We're planning to pursue additional growth by actively targeting niche markets, mixed with B2C and B2B, as well as continuously expanding in the single-person household and second TV markets.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Finally, let me report on our shareholder return policy.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
The board determined the second quarter DPS to be the same as the previous quarter at KRW 831.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
We decided to buy treasury shares of KRW 300 billion and cancel KRW 200 billion worth of shares in order to fulfill the increased shareholder return that we have been communicating to our investors since the beginning of the year.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
We will continue to do our best to ensure that corporate value and shareholder value will be maximized by making our core businesses more efficient and advancing our AI services through transformation into an AI company.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
We ask for your continued support and encouragement. Thank you.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]
Speaker 7
We will now begin the Q&A session.
Operator (participant)
[Foreign language]
Speaker 7
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 press the number star one. For cancellation, please press star two, that is star and two on your phone.
Operator (participant)
[Foreign language]
Speaker 7
The first question will be presented by Seungwoo Lee from eBEST Investment & Securities. Please go ahead with your question.
Speaker 8
[Foreign language]네, 안녕하세요. 이베스트투자증권 Lee Seungwoo입니다. 일단 질문 2가지 있고요. 첫 번째 같은 경우는 이제 자사주 방금 말씀해 주셨는데, 일단은 자사주 같은 경우는 이제 올해 KRW 300 billion 자사주 매입 하시고 KRW 200 billion 추가 하신다고 하셨고, 혹시 내년에도 이러한 기조가 계속될 수 있는지 궁금하고요. 또 하나는 아무래도 자사주 매입과 소각이 진행되다 보니까 현금 배당에 대한 영향이 있는지 좀 궁금합니다. Second 질문은 AI, AI와 관련된 얘기를 계속해서 해주시는데, 최근에 뉴스 보면은 Global Telco AI Alliance를 좀 출범을 한 걸로 알고 있고요. 그거에 대한 배경이랑 뭐 계획, 효과 같은 것들을 좀 설명해 주시면 감사하겠습니다. 감사합니다.
Speaker 7
I am Lee Seungwoo from Invest. Thank you for this opportunity. I would like to ask you 2 questions. First of all, you mentioned that you are going to purchase treasury shares worth KRW 300 billion and retire KRW 200 billion of treasury shares for this year. I wonder if you will continue to do so next year or going forward. I wonder if there is going to be any impact of such action on your cash dividend. Secondly, you've been talking about your AI related plans, and the news media reported on the launch of the Global Telco AI Alliance recently. I'd like to understand the background behind this alliance and the future plans and expected benefits.
Jinwon Kim (CFO)
[Foreign language]네, 먼저 그 자사주에 대해서 먼저 설명을 좀 드리고 이후에 에, 글로벌 텔코의 얼라이언스에 대해서 말씀드리도록 하겠습니다.
Speaker 7
Thank you for the questions. I would like to first address your question regarding our plan for treasury shares and secondly, responding to your question on the Global Telco AI Alliance.
Jinwon Kim (CFO)
[Foreign language]지난 연간의 실적 설명회하고 1st quarter 실적 설명회 때 이제 자사주와 관련된 질문을 해주셨고, 그때 저희가 아무래도 이제 저희가 기업 가치가 좀 저평가되는 상황에서 자사주에 대한 어떤 매입에 대한 어떤 그 시기적으로 매입할 가치가 있다는 말씀을 좀 드렸었고요. 시기와 규모, 방법 등에 대한 고민들이 있다라고 말씀을 드린 바 있는데, 지난 July 이사회에서 뭐 공식 말씀드린 것처럼 KRW 300 billion 규모의 자사주 매입과 KRW 200 billion의 소각을 결정하였습니다.
Speaker 7
There were questions related to our potential, share buyback and cancellation at the first quarter earnings call, as well as the year-end earnings call. We mentioned that we are positively considering the option of share buyback and cancellation, but we did not specify the specific timing or the size of such action. The board in July decided that we are going to purchase KRW 300 billion worth of treasury shares and cancel KRW 200 billion of them going forward.
Jinwon Kim (CFO)
[Foreign language]어, 매크로적인 측면에서 봤을 때 금리 인상이 여전히 좀 지속되고 있고, 경기 침체 등의 쿼터적인 프랙셔스성이 여전히 존재하지만, 추가적인 주주 환원과 이를 통한 기업 가치 제고가 필요하다라는 점에 대해서 이사회 어떤 공감대가 좀 형성이 되었고요. 그 결과로 자사주의 취득과 소각을 결정하게 되었습니다.
Speaker 7
While macro uncertainties are still present, including interest rate hikes and economic downturn, the board agreed that it was necessary to enhance corporate value through additional shareholder return, which is why we decided to go ahead with share buyback and cancellation.
Jinwon Kim (CFO)
[Foreign language]자사주 매입, 매입이 내년에는 어떻게 될 것이냐라는 부분에 대해서 관심이 좀 많으실 것 같은데요. 최근에 여러 가지 기업들의 케이스를 봤을 때, 지속적으로 자사주를 매입하고 소각해 나가는 회사들에 대해서 기업 가치를 제고한 케이스들이 시장에서의 피드백이 굉장히 좋고, 리소스 측면에서도 이제 저희가 영업 현금 외에 Broadband를 포함한 자회사 및 투자회사들로부터의 배당이 이제 올해부터 좀 꾸준히 들어오고 있어서 이를 재원으로 해서 자사주를 매입할 만한 여력은 충분히 있다고 판단하고 있습니다.
Speaker 7
I understand that the market is interested in whether we will continue to go in this direction next year and going forward. We understand that there are many companies who continue to purchase and retire treasury shares to enhance corporate value. Such measures have been well received in the market. In addition, we have the stable operating cash flow. We are starting to receive dividends from SK Broadband and the invested companies this year and onward, which can be used as funds for share buyback in the future.
Jinwon Kim (CFO)
[Foreign language]앞으로도 좀 자사주 매입과 소각을 꾸준히 가져가는 방향성에 대해서는 진지하게 좀 검토할 생각이고요. 이제 매입의 어떤 소각, 매입과 소각 규모와 시기, 이런 세부적인 사항들은 제반 경영 환경을 감안해야 될 상황이고, 또 이사회의 어떤 논의를 통해서 결정될 것이기 때문에, 뭐 추후에 좀 시기를 좀 봐야 될 것 같고요. 주주 환원에 대한 시장 친화적인 프랙티스를 꾸준히 쌓아 나간다고 한다면, 어떤 쌓아 나가면서 기업 가치 제고에 대한 회사의 의지를 시장에 확인시켜 드릴 수 있는, 확인시켜서 있도록 지속적으로 노력해 나가겠습니다.
Speaker 7
Against this backdrop, we will seriously and positively consider the option of continued, continued share buyback and cancellation going forward. Of course, regarding details concerning timing and size of share buyback and cancellation, these need to be determined at the board through discussions and in consideration of the overall business environment. We will continue to accumulate market-friendly practice around shareholder return to show the market that the company has strong commitment to increasing corporate value.
Jinwon Kim (CFO)
[Foreign language]어, 추가적으로 해서 현금 배당 부분에 대해서는 예, 뭐 저희가 이미 이제 분기 배당을 좀 실시를 하고 있고, 이런 분기 배당과 같은 어떤 것들이 글로벌 스탠다드로서 어떤 안정적인 어떤 현금 흐름을 주주에게 돌려준다는 측면에서 이제 저희가 그 분할을 시기를 기점으로 해가지고 이 제도를 도입을 했는데요.
... 자사주 매입과 관련해서는 자사주 자체는 여러 가지 이제 조정하는 규모를 확장한다는 측면에서 결정을 했지만, 기본적으로 안정적인 배당 수준을 유지한다는 원칙에, 방향성에는 변함이 없다는 걸 다시 한 번 말씀드립니다.
Operator (participant)
Regarding its potential impact on our cash dividend. As you know, we are already practicing a dividend policy in line with global standards by paying out quarterly dividends to our shareholders. Therefore, this decision for share buyback was, of course, to increase the total size of shareholder return, and this has been our practice since the split, since the spin-off, and we're committed to the direction and principle of maintaining a stable cash dividend level.
Jung Seok-geun (Head of Global AI Tech Business Division)
[Foreign language]추가해서 작년부터 저희가 AI 컴퍼니로의 비전을 이미 말씀드린 바 있고요. 그 A. 서비스와 같은 구체적인 서비스를 이미 출시를 해서 시장에 테스트를 지속하고 있고, 전반적인 AI의 전략 방향에 대한 고민들, 그리고 그런 내용들이 구체화되면서 시장에 여러 가지 뉴스 플로우들이 나오고 있는데, 최근에 있었던 Global Telco AI Alliance에 대해서는, Global Telco AI Alliance를 직접 주도하고 계시는 Mr. Jung Suk-kun, Head of Global AI Tech Business Division께서 추가적으로 설명을 해주시겠습니다.
Speaker 7
Moving on to your second question on our AI-related vision. Since last year, we've been talking about our vision of transforming SK Telecom into an AI company, and we have been launching various services, including A., to test the market. There have been many news announcements about specific AI strategies and detailed plans. Regarding your question on the Global Telco AI Alliance, I'd like to ask Mr. Jung Suk-kun, Head of Global AI Tech Business Division, who has been leading this initiative, to provide you with more details.
Jung Seok-geun (Head of Global AI Tech Business Division)
[Foreign language]그 최근 웹이나 모바일에서 AI로 큰 패러다임이 변화하고 있는 것들은 여러분들 많이 알고 계실 것 같습니다. 특히 생성형 AI를 얼마나 잘 쓰느냐가 회사들의 밸류나 고객과의 그 관계 설정에 굉장히 중요한 모멘텀이 되고 있고요. 그, 그런 것들을 보면 과거의 통신사들은 지난 20년 동안 모바일이나 혹은 그 전에 인터넷이나 이런 흐름이 올 때마다 저희가 갖고 있는 여러 가지 고객과의 접점이라고 하는 장점을 잘 활용하지 못하고, 인터넷 상의, 인터넷 사업자 혹은 모바일 사업자들에게 굉장히 많은 고객과의 접점, 고객에 대한 헤게모니를 많이 뺏겨 온 것 같습니다. 이번에 이 AI, 생성형 AI의 성장을 통해서 저희가 다시 한 번 과거와 같은 실수를 하지 않고, 실패를 하지 않고, 이 AI를 좀 더 잘 활용하는 그런 사업 변화에 대한 니즈가 크게 있습니다.
Speaker 7
As you may know very well, the tech paradigm is being shifted from web and mobile to AI, especially generative AI. For the past 20 years, whenever there was such a tech paradigm shift from the internet to mobile, many telcos failed to maintain their points of contact with customers, and they have lost the hegemony and leadership to internet companies and mobile companies. In this regard, in preparation for this new era of generative AI, we are taking action preemptively so that we can utilize AI for our business enhancement.
Jung Seok-geun (Head of Global AI Tech Business Division)
[Foreign language]통신사, 그 AI 기술은 기존의 여러 가지 산업에 들어가서 효율을 높여주는 거로 큰 value를 만들 수 있는데요. 통신사들의 경우에는 가장 많은, 전 세계적으로도 정말 많은 고객을 가지고 있고, 특히 고객들은 유료 고객들이기 때문에 이들과의 관계 설정, 그들에 대한 서비스에 대한 난이도가 굉장히 높은 사업자라고 볼 수 있습니다. AI를 통해서 내부 사업의 운영 효율을 한다든지, 혹은 이걸 잘 활용해서 고객과의 관계를 바꾼다든지 했을 경우에, AI를 가지고 가장 큰 수혜, 가장 큰 value를 만들 수 있는 인더스트리가 이 Telco 산업이다라고 저희는 이해를 하고 있습니다. 이런 저희가 만약에 이런 가장 난이도가 있는 산업에서 성공적으로 AI를 적용한 트랜스포메이션을 만들어낼 경우에, 저희 산업 자체에서 큰 value를 만들 수 있는 것뿐만 아니라, 이걸 가지고 다른 산업에서도 활용이 가능할 수 있는 플랫폼이라든지, reference를 만들고, 이를 사업화까지 할 수 있겠다라고 생각을 하고 있습니다.
Speaker 7
We understand that AI technology can enhance value in a diverse number of industries, but when it comes to the telecommunications industry, telcos around the world have the largest customer base, and these customers are paying customers, and there's a high level of customer relations management and customer service. Therefore, we understand that telecoms, telecommunications industry can benefit the most from using AI by increasing their business efficiency and innovating their customer relations. In this regard, if we can successfully use AI and go through AI transformation in this particular telecommunications industry that has the highest level of difficulty in managing the customers, we believe that we can prove the value of using AI, and we can apply these references to other industries by providing platforms and successful references.
Jung Seok-geun (Head of Global AI Tech Business Division)
[Foreign language]특히나 최근에 이 AI 변화에서 가장 큰 변화라고 보면 LLM 기술의 포텐셜이 크다는 거고요. 이거에 대한 수요가 굉장히 늘었는데. 이 LLM 기술 자체가 글로벌 big tech companies를 중심으로 주로 이루어지고 있고. 특히 이걸 잘 활용해야 되는 저희 telcos는 이 기술을 많이 확보하기 어려운 그런 현실에 있습니다. 저희 SK Telecom은 지난 몇 년 동안 AI에 대해서 굉장히 많이 투자를 해오기도 했고. 저희가 이걸 주도해서 글로벌에 맞는 통신사들을 묶어서 alliance를 만들고, 이걸 통해서 규모의 경제를 만들고자 합니다. 첫 번째는 이 규모의 경제를 통해서 글로벌 big tech companies를 대비해서 협상력을-...
[Foreign language]규모를 통한 협상력을 확보할 수 있다고 보고 있고, 두 번째는 저희가 기존에 갖고 있던 자체적인 LLM 기술 기반을 가지고 이 텔코들이 잘 활용할 수 있는 AI 플랫폼, 그리고 저희가 텔코들을 위한 여러 가지 LLM 기술 자체 개발, 그리고 마지막으로는 이들이 활용할 수 있는 AI 어시스턴트 서비스, 이런 것들을 만들어서 제공을 함으로써 텔코들이 이 LLM이라는 흐름에 쉽게 참여할 수 있도록 그런 그 연합체를 만들고 있다라고 말씀드릴 수 있겠습니다.
Speaker 7
In the AI industry, we are seeing a great potential of utilizing LLM, and there is growing demand for large language models. Currently, the large language model technology has been led mainly by global big tech companies, which means that telcos are struggling to secure LLM-related technology. As you may know, SK Telecom has been making investments in AI for the past couple of years, so we believe that we can lead this particular alliance with global telcos so that we can gain the economies of scale. By doing so, we can strengthen the negotiating power of the telcos as part of the alliance, and we can use our own LLM technology to build AI platforms for global telcos, develop LLM technologies together, and provide AI assistant services for telcos to utilize.
In this way, we can help telcos around the world to utilize LLM more successfully. This is the purpose of this alliance.
Jung Seok-geun (Head of Global AI Tech Business Division)
[Foreign language]그래서 좀 더 구체적으로는 통신사들이 이 생성형, generative AI 기술을 이용해서 기존에 하고 있던 오퍼레이션들의 효율화를 꾀할 수 있을 것 같고요. 그래서 이를 통해서 마케팅이나 네트워크 관리, 아웃소싱 효율화 등을 통해서 비용 절감, cost reduction을 첫 번째 할 수 있을 것 같고, 그 외에도 AI 어시스턴트 서비스를 통해서 기존의 고객과의 관계를 새로 설정하고, 이들을 통한 새로운 비즈니스 모델을 확보할 수 있을 것으로 기대합니다.
Speaker 7
To be more specific, the telcos in the alliance will be able to utilize the generative AI-based AI transformation to increase efficiency in their marketing, network management and outsourcing, and they can further develop new business models using AI assistance and innovate the customer experiences.
Jung Seok-geun (Head of Global AI Tech Business Division)
[Foreign language]이를 위해 지난 올해 2월에 MWC 이후에 지속적으로 논의를 해왔던 주요한 통신사들 중에 유럽이나 중동, 아시아를 가장 대표하고, 많은 고객과 자회사들을 가지고 있는 대표적인 통신사들과 founding members로 해서 저희가 이번에 alliance를 결성했습니다. 그들은 Deutsche Telekom, e&, Singtel 등이고요. 그들과 MOU를 맺고, 이를 실제로 실행하기 위해서 필요한 어떤 공동 투자라든지, 이런 것들을 함께 하기 위한 논의들을 지속하고 있고, 이 외에도 그들의 자회사, 그리고 그 외에 선진국 시장 중심으로 주요한 통신사들 중심의 2차 파트너 멤버를 모집하고 규모 확대를 하기 위한 논의들을 진행하고 있습니다.
Speaker 7
Discussions for such, the formation of such an alliance began since February, when we attended the MWC, and we decided to join hands with the leading telco companies representing Europe, Asia and the Middle East. They participated as the founding members. They include the Deutsche Telekom, e&, and Singtel. We signed an MOU together, and we are currently carrying out discussions on various issues, including joint investments. We will further invite other telcos to join us, and we're going to utilize their subsidiaries and the advanced markets so that we can increase the size of the alliance.
Jung Seok-geun (Head of Global AI Tech Business Division)
[Foreign language]이 Telco AI Alliance를 통해서 저희는 Telco AI Platform과 LLM을 만들어 갈 거고, 이걸 바탕으로 여러 가지 AI 서비스를 만들고, 이걸 글로벌 서비스 및 각 telcos들이 각국에서 현지화, 고도화해서 로컬 서비스들도 만들어 갈 예정입니다. 이걸 구체화하기 위해서 지난 그 Alliance CEO Summit 이후에 향후 공동 워킹그룹 운영을 위해서, 운영을 통해서 거버넌스 구조나 사업 기획, 그리고 개발 방안 구체적으로 논의하고, 논의하려고 하고 있고요. 이를 위해 각 사들의 C-level 임원들을 중심으로 운영 책임자를 정해서 여러 가지 협력을 논의를 하고 있습니다.
Operator (participant)
Through the Global Telco AI Alliance, we will develop the Telco AI Platform and large language model, so that we can offer diverse AI services, which can be provided at the global level and also localized and further advanced for the respective local markets. The Global Telco AI Alliance, ever since the CEO summit, will create the joint working group to discuss specific matters related to governance and business plan and development direction. C-level executives will be designated for this alliance so that they can pursue extensive cooperation. Thank you.
[Foreign language] The following question will be presented by Hoe-jae Kim from Daishin Securities. Please go ahead with your question.
HJ Kim (Equity Analyst and Team Leader)
[Foreign language]네, 안녕하세요, 대신증권 김혜자입니다. 어, 두 가지 질문이고요. 첫 번째는 이 정부의 통신 시장 경쟁 촉진 방안 발표와 관련해서 궁금한 사항이 있는데, 어, MNO 시장이 확대되는 그런 상황에서 우리 SK 텔레콤의 MNO 사업에는 어떤 영향이 있을지 궁금하고요. 어, 두 번째는 T 우주에 최근에 그 유튜브 프리미엄을 선택할 수 있는 옵션이 추가된 것으로 알고 있습니다. 어, 이 유튜브 프리미엄 출시 이후에 T 우주 성과랑 향후 전망에 대해서 말씀해 주시면 감사하겠습니다.
Speaker 7
I am Kim Hyeja from Daishin Securities. Thank you for this opportunity. I have two questions. First of all, the government recently announced plans to promote competition in the telecommunications industry. As the MNO market has been growing, I wonder what kind of impact these government announcements will have on your MNO business going forward? Secondly, the YouTube Premium has been added as an option for T Universe subscription. I'd like to know the impact of such addition of YouTube Premium on T Universe and its outlook going forward.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Thank you for the questions. Let me first address your question on the impact of the government's decision to promote competition in the industry.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Since the launch of 5G, the number of 5G subscribers has been on the rise, and we've been leading market competition by announcing measures to expand benefits and choices for users. During the pandemic, we were the first company to launch the most affordable untact price plan, and we added more 5G price plans in August last year and early this year to offer more choices for customers, which has been helping growing the 5G market.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Based on the differentiated customer choices and benefits, we have secured a large 5G subscriber base and contributed to the government's effort to stabilize the livelihood of the public by enhancing the welfare of the customers. The government's announcement in July to promote competition in the telecom market is in line with the company's value pursued, value pursued through market leadership, in that it aims to enhance user benefits and convenience through service quality competition among the telcos.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
The government's announcement includes various measures, including a potential introduction of another telco player and measures related to MVNO players. Some of the measures announced by the government may have the potential to impact our revenue, but some of the measures require relevant laws to be revised, so it may take some time for us to understand the details and their potential impact on our revenue. At the same time, we have this stance that we will continue to offer more choices and differentiated benefits for our customers, and we're going to engage in conversation with the government continuously. At the same time, while some of the measures may have an impact on our revenue, we will continue to improve efficiency in our operation so that we can maintain a solid level of earnings continuously.
Because it is not only important to respond to the MNO market, but also to realize the vision of becoming an AI company, we need to have a solid earnings basis to pursue these measures, pursue future measures to achieve this vision. That is our overall stance.
Jinwon Kim (CFO)
[Foreign language]
Speaker 7
Your second question is related to the benefit or impact of YouTube Premium on the performance of T Universe. In this regard, I'd like to invite Mr. Na, Ms. Na Seo-Young, the Subscription Service Planning Team Leader, to comment on this question.
Speaker 10
[Foreign language]저희도 마케팅을 열심히 하고 있지만 그 이상으로 고객들의 자발적인 바이럴이 확산되면서 T Universe 가입자 성장에 기여를 잘 하고 있습니다.
Speaker 7
The YouTube Premium was included as an option in March, in May this year, this has been very successful and there is much more to expect in the future. We've been carrying out some marketing activities, it has rather become more viral by the customers on social media. It's been contributing to the increase of subscriber base of T Universe.
Speaker 10
[Foreign language]이렇게 고객들이 좋아하는 주요 이유 중에 하나는 독보적인 가성비 때문인데요. Universe Pass의 옵션으로 YouTube Premium을 가입하면 YouTube Premium 하나랑 같은 가격으로 최대 KRW 60,000의 추가 혜택을 받을 수 있는 게 가장 큰 장점입니다.
Speaker 7
The reason why this has been well received by the market is because of the value that it offers.
When you sign up for U PASS, Universe Pass, that includes the YouTube Premium, you can get the benefit of maximum KRW 60,000 per month for the same price that you would pay for the YouTube Premium subscription only.
Speaker 10
[Foreign language]이런 상품의 매력도는 바로 실적으로 연결되고 있는데요. 지금 우주패스 가입자 중에 유튜브 프리미엄을 선택하는 비중은 이미 우주패스 한 100여 개의 옵션 상품 중에 top three 안에 듭니다. 고객들의 유지율도 굉장히 높을 것으로 기대하고 있습니다.
Speaker 7
Because of this wonderful benefit in terms of value, there has been very good result, YouTube Premium has become already one of the top three most popular selections of Universe Pass.
Speaker 10
[Foreign language]이런 유튜브 출시 효과가 반영이 잘 돼서 2분기까지 T Universe 가입자는 2 million 이상을 돌파했고, 누적 올해 누적 거래액도 KRW 630 billion 이상을 달성했습니다.
Speaker 7
Thanks to this, the number of T Universe subscribers has already reached 2 million in the second quarter, and in the first half of this year, the GMB amounts to about KRW 630 billion.
Speaker 10
[Foreign language]에, 사실 지금 YouTube Premium 외에도 고객 선호도가 높은 상품군을 중심으로 해서 딜 협상을 꾸준히 진행 중입니다. 그래서 계속 좋은 상품을 시장에 선보일 예정이니까 앞으로도 기대 많이 해주셨으면 좋겠습니다.
Speaker 7
In addition to the YouTube Premium service, we are condstantly engaging in negotiations and discussions to include popular products and services as part of the subscription package. We're going to continue to introduce and add impactful partnerships and products going forward. I'd like to ask for your continued interest.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]아, 교환, 혹시 지금 질문 대기하고 계신 분이 더 계실까요?
Operator (participant)
[Foreign language]네, 현재 한 분 대기 중이십니다.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
[Foreign language]아, 네, 그럼 한 분 질문까지 받고, 어, 마무리하도록 하겠습니다.
Operator (participant)
[Foreign language] 네, 알겠습니다. 다음으로 질문해 주실 분은 KB증권의 김준섭님입니다.
Speaker 7
The following question will be presented by Jun-seob Kim from KB Securities. Please go ahead with your question.
Jun-seob Kim (Analyst)
[Foreign language]Yes, 질문 기회 주셔서 감사합니다. KB Securities Jun-seob Kim입니다. 마케팅 비용과 클라우드 사업 전략 관련해서 2가지 질문을 드려보고 싶은데요. 먼저 마케팅 비용 관련해서는 무선 통신 시장 전반적으로 마케팅 비용 안정화가 지속되고 있는데, 일단 하반기 출시될 플래그십 단말기에 대한 기대를 하시는 분도 좀 있으신 것 같습니다. 무선 통신 신규 가입 시장 활성화를 예상하시는 동향인데요. 저희 SK Telecom이 보고 계시는 하반기 마케팅 시장 전망 및 마케팅 비용에 대한 가이드라인을 주신다면, 저희 SK Telecom의 수익성을 가늠하는 데 도움이 될 것 같습니다. 다음은 클라우드 사업의 성장성 및 사업 전략 관련해서 저는 질문을 해보고 싶습니다. 전분기 대비 클라우드 매출액이 20% 성장하였고, CFO께서 AI service 및 hybrid cloud 시장 확대 수혜를 볼 것이라고 말씀을 주셨는데요. 좀 더 구체적인 내용을 공유해 주신다라고 하면, 2027년까지 클라우드 사업에서 KRW 500 billion+라는 연매출 목표를 좀 더 잘 이해할 수 있을 것 같습니다.
어떤 클라이언트들을 주목하고 있으신지, 저희 SK Telecom 클라우드는 어떤 전략을 갖고 있으신지 공유해 주신다면 분석하기가 더 용이할 것 같습니다. 감사합니다.
Speaker 7
I'm Kim Jun-seob from KB Securities. I have two questions. The first question is related to your marketing related outlook, and the second is related to your cloud business. First of all, we see that there has been a stabilization, stabilization trend for marketing expenses in the MNO market, and there are some expectations for flagship handset launches in the second half of the year, and there may be some competition to acquire additional 5G or new subscribers. In the second half of the year and going forward, how much marketing expense are you planning to execute? What is the overall guideline for marketing-related expenses? The second question has to do with your cloud business, and I'd like to understand more in terms of cloud business growth potential and business strategies.
As the CFO mentioned, there has been a 60% growth Q on Q of your cloud business revenue, and the CEO mentioned that the company may benefit from increasing demand for AI and hybrid cloud. To be more specific, what kinds of clients are you targeting and what kinds of cloud strategies are you going to pursue so that you could achieve KRW 500 billion or alpha of revenue by 2027? Thank you.
Jinwon Kim (CFO)
[Foreign language]네, 김 위원님께서 말씀해 주신 것처럼 아무래도 이제 시장 경쟁을 어떤... 뭐라 그럴까요? 시금석이라고 그럴까요? 어떤 리트머스 시험지로 할 수 있는 부분들이 이제 저희 ESP 측면에서 보자면 마케팅 비용이 아닐까 생각이 듭니다. 그래서 마케팅 비용의 어떤 정도의 어떤 증감 여부를 좀 따져보는 게, 뭐, 말씀하신 질문의 취지에 좀 맞을 것 같은데.
또한 분기 단위로 보면 이제 플래그십 단말의 출시라는 것들이 이제 어떻게 보면 각 제조사들의 출시 일정들이 연관이 좀 된 것들이 있어서.
quarterly, 분기 단위로 이렇게 비교하는 건 조금 어려울 것 같고요. 작년 이제 동기로 대변하는 게 좀 의미가 있을 것 같은데, 저희가 이제 2Q 올해 방, 마케팅 비용을 전년 동기비로 보면 약 0.6% 정도 감소한 걸로 보이고 있어서, 약간 안정적인 기조가 계속 유지되고 있다라고 저는 판단하고 있고요. 현재 어떤 저희가 지금 추구해 온 어떤 시장 안정화를 통해서 어떤 수익성 중심의 효율적인 시장 운영 기조, 이거 자체는 현재도 변함이 없다라는 말씀을 드리고요. 최근의 어떤 시장 분위기에 대해서는 우리 저기 Kim Ji-hyeong 통합 마케팅 전략 담당께서 추가적인 설명을 해주시고, 이어서 저기 클라우드 사업 관련된 질문에 대해서는 이제 저희 클라우드 사업을 리드하고 계시는 Kim Myeonguk 클라우드 삼룩, 사업 담당께서 추가적인 설명을 좀 해주시겠습니다.
Speaker 7
Thank you for your questions. Yes, looking at the trend of marketing expenses is a litmus test to see how much of competition there is in the market. Therefore, it may be meaningful to, to take a look at the overall trend of marketing expenses. When it comes to the comparisons, because of the flagship handset launch schedules announced by the manufacturers, the quarter-over-quarter comparison may not be meaningful that much compared to the year-over-year comparison. In terms of the year-over-year basis, I would like to say that the marketing expenses for the second quarter declined by 0.6%, and it has been maintaining a stable level. Going forward, we will continue to stick with the existing stance of focusing more on margin and profitability while engaging in efficient market operation.
Regarding the overall market landscape, I'm going to invite Kim Ji-hyeong, Head of the Integrated Marketing Strategy Office, to comment more on that. Moving on to your second question, I'm going to invite Kim Myeonguk, Head of Cloud Business Office, to comment on our cloud related strategies.
Kim Ji-hyeong (Head of the Integrated Marketing Strategy Office)
[Foreign language]네, 통합 마케팅 전략 담당 김지영입니다.
Operator (participant)
Hello, I'm Kim Ji-hyeong, Head of Integrated Marketing Strategy Office.
Kim Ji-hyeong (Head of the Integrated Marketing Strategy Office)
최근 시장이, 단말 교체 주기 증가 등의 영향으로 안정적인 모습을 유지하고 있습니다.
Speaker 7
When we look at the current market, it has been maintaining a stability because of the lengthening of the handset replacement period.
Kim Ji-hyeong (Head of the Integrated Marketing Strategy Office)
[Foreign language]말씀하신 대로 하반기에 플래그십 단말이 출시되더라도, 5G가 이제 성숙 단계에 진입함에 따라서 5G에서 5G를 이동하는 고객의 비중이 점차 늘고 있습니다. 따라서 이러한 여러 가지 환경을 고려를 했을 때, 5G IoT 경쟁이 크게 격화될 가능성은 높지 않다라고 보고 있습니다.
Speaker 7
As you mentioned, in the second half of the year, flagship handset releases are to be scheduled. However, as the 5G market becomes more mature, we see increasing share of customers switching from 5G to 5G. Therefore, it is our view that competition to acquire additional new 5G subscribers will not be fierce.
Kim Ji-hyeong (Head of the Integrated Marketing Strategy Office)
[Foreign language]SK Telecom은 앞으로도 시장 상황에 맞춰서 전략적이고 효율적으로 마케팅 비용을 운영해 나갈 계획입니다. 네, 이상입니다.
Speaker 7
Therefore, we will continue to manage our marketing expenses in a strategic and efficient manner in consideration of the market situations. Thank you.
Speaker 9
[Foreign language]안녕하십니까? Cloud Business Office Kim Myeonguk입니다.
Speaker 7
I am Kim Myeonguk, Head of Cloud Business Office.
Speaker 9
[Foreign language]이십삼년 이분기 클라우드 매출은 전년 동기 대비 육십칠 프로 이상 증가한 삼백구십팔억 원을 달성했습니다.
Speaker 7
In the second quarter of 2023, the Cloud revenue recorded KRW 39.8 billion, up 67.67% year-on-year.
Speaker 9
[Foreign language]특히 MSP는 리커링 매출 비중이 5분기 연속 90% 이상을 기록 중이며, 이는 국내 1위 유무선 네트워크 역량과 AI big data, data center, 보안 등 경쟁력 있는 Telco asset을 결합하여 제공하는 것을 기반한 것으로, 향후 고객의 hybrid cloud 전환 이후에도 MSP 중심의 안정적인 BM이 유지될 수 있는 토대로 생각하고 있습니다.
Speaker 7
In particular, as for MSP, the recurring revenue takes up more than 90% of the total revenue for 5 consecutive quarters. This has been made possible thanks to our fundamental strengths, including being number 1 in terms of mobile and fixed telecommunications business in Korea, we have the AI and big data and other very high quality telecommunications assets, which have been the basis for such a success. Going forward, as there will be increasing demand for hybrid cloud, we believe that we can continue to utilize these assets and serve as the sophisticated MSP.
Speaker 9
[Foreign language]당사는 CSP 자원의 단순 재판매가 아니라 산업별 맞춤 클라우드 전환 컨설팅, AI 기반의 비용 최적화, 맞춤형 클라우드 컨테이너, 토탈 솔루션 같은 SKT만의 고도화된 MSP 역량, 이 기술을 바탕으로 리커링 중심 비즈니스를 더욱 공고히 할 계획입니다.
Speaker 7
We will not just doing the reselling as CSP, but rather provide a customized cloud-related consulting services and help customers maximize their cost efficiency using AI, and provide more tailored total solutions to our clients, so that we can continue to increase the portion of recurring revenue from MSP business.
Speaker 9
[Foreign language]예를 들어 금융사에는 데이터 분석, AICC (AI Contact Center) 정보 보안 등을 통합 패키지로 제공할 수 있고. Computing 자원 사용량이 많은 AI 개발사에는 GPU에 특화된 edge cloud 인프라를 제공하여 효율적인 클라우드 환경을 제공할 수 있습니다.
Speaker 7
For instance, for the financial institutions, we can provide support in terms of data analysis and information security using AICC (AI Contact Center). For AI developing companies, we can provide a GPS-supported cloud infrastructure.
Kim Ji-hyeong (Head of the Integrated Marketing Strategy Office)
[Foreign language]당사가 보유한 AI 클라우드 설계 구축 역량을 활용하고 SAPEON과 활용하여 ChatGPT가 촉발한 AI and hybrid cloud 수요를 적극 공략하기, 하도록 하겠습니다.
Speaker 7
We will continue to utilize our own AI cloud and design capabilities and collaborate with SAPEON, so that we can actively address and respond to public and hybrid cloud demand triggered by ChatGPT.
Speaker 9
[Foreign language]이러한 SKT만의 차별화 포인트를 기반으로 국내 CSP 사업자들이나 리세일 중심의 MSP 사업자들이 진입하기 어려운 영역 중심으로, 중장기적인 고성장을 이루도록 노력하도록 하겠습니다.
By utilizing these capabilities and strengths, SK Telecom will continue to pursue, high growth in the medium to long term by operating in the markets where CSPs or reselling MSPs cannot enter easily.
Kim Ji-hyeong (Head of the Integrated Marketing Strategy Office)
[Foreign language]예, 이상입니다. 감사합니다.
Speaker 7
Thank you.
Hee-Jun Chung (Managing Director and Head of Investor Relations)
네, 그럼, 2023년 2분기 실적 발표 컨퍼런스 콜은 여기서 마치도록 하겠고요. 혹시, 오늘 답변이 좀 미진했다거나 추가적으로 궁금한 점이 있으시면, 언제든지 저희 I.R. 조직에 문의해 주시기 바랍니다. 오늘 컨퍼런스 콜 여기서 마치도록 하겠습니다. 감사합니다.
Speaker 7
This concludes the earnings conference call for the second quarter of 2023. If you need further explanations or have additional questions, please feel free to contact IR. Thank you.