KT

Good morning and good evening. Thank you all for joining this conference call. Now we will begin the conference of the first quarter of fiscal year 2026 earnings results by KT. We would like to have welcoming remarks from KT IRO, and then CFO will present earnings result and entertain your questions. This conference will start with a presentation followed by a 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 would like to turn the conference over to KT IRO.

[Non-English content].

Good afternoon. I am Sun Wook Kim, IRO of KT. We will now begin the earnings presentation for the first quarter of 2026.

[Non-English content].

Please note that today's presentation includes estimates of financial and operating performance based on K-IFRS that have not been reviewed by an outside auditor. As such, other than confirmed historical data, we cannot guarantee the accuracy and completeness of financial and business-related information, and such information is subject to change in the future.

[Non-Enlish content].

Now, Min Hye-byung, CFO of KT, will present the 2026 Q1 earnings.

[Non-English content].

Good afternoon. I am Min Hye-byung, CFO of KT. In Q1, KT reorganized the company's growth strategy and implementation system based on stable transition of the management and business structure and developed a new midterm shareholder return policy to solidify the foundation for corporate value enhancement.

[Non-English content].

KT will evolve to become an AX platform company that leads the AI innovation of Korea. AX innovation will be a springboard for our next leap forward. First, we will make utmost effort to regain customer trust while also strengthening our core businesses by innovating information security, network, and IT infrastructure. Second, we plan to secure solid growth drivers with AX innovation-based success models such as sector specific AX, hyper-personalized AX, and new growth AX.

[Non-English content].

At the same time, we will continue to seamlessly implement our corporate value up plan. In order to ensure continuity, the new midterm shareholder return policy, effective from 2026 to 2028, will be equivalent to the previous policy of using 50% of standalone adjusted net income as resources for shareholder return.

[Non-english content].

For 2026, the annual dividend per share will be a minimum of KRW 2,400. The dividend per share for Q1 will be KRW 600. The record date is May 27th and payment date is June 11th. As part of our corporate value up plan for 2026, the share buyback program of KRW 250 billion will be completed by September.

[Non-English content].

The performance and future plan of each business division will be presented by the respective division heads before we dive into the Q1 results.

[Non-English content].

Good afternoon. I am Park Hyun-jin, Head of the Customer Business Group.

[Non-English content].

The B2C business in January experienced temporary decline in both wireless and fixed line subscribers because of the early termination penalty waiver program. Since February, we are observing a net increase in the number of subscribers. The related sales expense, which increased last year, should weigh on this year's results as it is amortized this year. Since February, the related numbers are being managed within our business plan.

[Non-English content].

The most important strategic direction this year is to regain customer trust while also pursuing sustainable growth by offering a hyper-personalized customer experience based on AX. In this regard, since February 1st, we have been running a customer appreciation program to regain customer trust and strengthen customer protection. On April 28th, we launched the Customer Protection 365 task force, to which we are concentrating company-wide resources.

[Non-English content].

We are working to detect risk preemptively by leveraging AI to analyze on and offline VOC while establishing a system to address damages incurred by customers within 24 hours based on a company-wide cooperation system. We also have the customer outreach forum to engage in direct communication with customers.

[Non-English content].

In order to provide an AX-based hyper-personalized customer experience, we are concentrating on the following. First, we will focus on what we do best, which is AI in B2C. MyK, the AI service for B2C customers, will be constantly improved to offer hyper-personalized user experience and convenience. For small business owners, we have the Sajang Easy, which offers specialized AI services for the small business segment. We will continuously develop the platform to support the success of small business owners.

[Non-English content].

Second, we will prepare the next IPTV platform to enhance the media content user experience. The platform will offer hyper-personalized customized services by using AI speakers and TV windows. Content curated to the taste of the user will be recommended while also enhancing overall convenience.

[Non-English content].

Third, AI will be applied to the entire process of customer contact to deliver uninterrupted user service. AI will be introduced to customer consultation, sales, phone activation, and customer service to boost operational efficiency and to ensure that customers use KT in the most convenient manner from beginning to end. By leveraging AI, we will offer products and services tailored to customer needs, provide activation service at the customer's earliest convenience, and ensure continued usage of KT services through customized care.

[Non-English content].

Good afternoon. I am Kim Bong-gyun, Head of the Enterprise Business Division.

[Non-English content].

The strategic goal of KT's B2B business in 2026 is to lead the B2B AX market with specialized AI for the public sector and different industries. The three main pillars are basics and principles, solid growth, and future readiness.

[Non-English content].

Basics and principles will be our top priority in terms of securing strong fundamentals. We will rigorously fulfill our commitment to customers while ensuring a safe working environment for our employees. By doing so, we will strengthen our preemptive risk management system.

[Non-English content].

Solid growth will be driven by KT's uniquely differentiated telco capabilities and AX competitiveness. To this end, we will preoccupy the rapidly growing AX infrastructure market by winning a diverse array of large-scale projects that are expected for this year, and also expand the database business by leveraging group-wide capabilities. We will pioneer new markets step by step by promoting our sector specific AX reference within each customer category, and then expand our presence into neighboring sectors. We will continuously advance our service model to reflect values desired by customers to offer telco and AX services as a package.

[Non-English content].

Lastly, we will prepare for the future to secure sustainable growth. We will combine telco, which is KT's key strength, with AX to deliver a standard model for each industry that addresses the key issues of customers. Based on the standard model, we will lay the foundation for mid, long-term growth by innovating the overall B2B project implementation system across sales, consulting, execution and operations.

[Non-English content].

Good afternoon. I am Park Sang-won, head of the AX Business division. In Q1, KT mobilized company-wide AX capabilities and organically connected AX consulting, AI technology, platforms, and operational skills to develop an AX platform-centered project implementation system that can rapidly and effectively support the customer AX journey.

[Non-English content].

In addition, we have started the execution-based AX consulting service, which works together with customers on diverse sectors to define on-site AX issues and jointly verify applicable solutions.

[Non-English content].

Going forward, KT, AX business will go beyond being a mere AX tech provider to become an AX value partner by working together with customers to deliver business innovation. To this end, in 2026, KT's AX business will focus on four strategic directions.

[Non-English content].

First, we will further cement the business competitiveness of our key strengths, which is Agentic AICC. We are incorporating business task automation based on Agentic AI to develop the next generation AICC. AICC will be more than a simple customer service channel. It will evolve to become a customized marketing tunnel, which we plan to deploy to a wide range of sectors.

[Non-English content].

Second, we will develop a platform that considers industrial characteristics, government regulations, security, and even Sovereign requirements. The five-layer AX end-to-end service will be strengthened with this platform.

[Non-English content].

Customers will be able to apply our AX platform to their business rapidly. It will be offered as a customized service that incorporates sector-specific features. We plan to provide an end-to-end AX service, which encompasses the A to Z of AX, from adoption to operational optimization.

[Non-English content].

Third, we will strengthen the foundation for the data for AI business, which is necessary to secure and leverage data and is a key factor for successful corporate AX adoption. Based on internally accumulated data operation experience in the process of our own AX innovation, we will advance the foundation for data usage for customers to create a key driver for AX growth.

[Non-English content].

Lastly, we will continue to expand the scope of our AX business. With customized product packaging, we will venture into finance, public, manufacturing, defense, and other sectors to continue growth.

[Non-English content].

By commercializing managed services, which enables continuous support and optimization of the overall AX operation of customers, we will build a solid footing for long-term sustainable business growth. Thank you.

[Non-English content].

That was the presentation by the heads of each business division on the first quarter results and the overview of the future strategic direction. We will move on to the financial performance of 2026 Q1.

[Non-English content].

Operating revenue decreased by 1.0% YoY to KRW 6,778 billion. Operating income declined by 29.9% to KRW 482.7 billion due to last year's base effect coming from property sales of the Gwangjin District Development Project and an increase of sales and labor costs.

[Non-English content].

Net income contracted by 31.5% YoY to KRW 388.3 billion due to the decline of operating income. EBITDA decreased by 13.1% to KRW 1,440 billion. I'll go over the operating expense on the next page.

[Non-English content].

Depreciation expense should shrink. However, the amortization of increased sales expense that was incurred last year and the increase in labor cost led to a 2.3% increase year-over-year to KRW 6,295.7 billion. The statement of financial position is on the next page.

[Non-English content].

As of 2026 Q1, debt to equity stayed at 117.6%. Net debt to equity decreased by 3.9 percentage points on YoY basis to 39.9%.

[Non-English content].

The total CapEx executed by KT and major group subsidiaries in 2026 Q1 was KRW 363.7 billion. On standalone basis, CapEx was KRW 304.2 billion. Major subsidiaries executed KRW 59.5 billion. Now I will go over the performance of each business division.

[Non-English content].

Wireless service revenue increased by 0.4% YoY to KRW 1,683 billion. Since the expiry of the early termination fee waiver program in January, the subscriber base turned to net addition. Number of subscribers grew by 2.72 million YoY to reach 29.16 million subscribers. 5G penetration as of Q1 was 82.7%. Next is fixed line.

[Non-English content].

Broadband revenue rose by 1.8% to KRW 640.2 billion, thanks to an increase in both giga internet subscribers and value-added services. The media business grew by 1.3%, which was mainly driven by an increase in both IPTV subscribers and premium plans. Next is B2B services.

[Non-English content].

B2B revenue decreased by 2.2% year-over-year due to the completion of a large-scale data center design and build project and ongoing streamlining of low margin businesses. Moving forward, we will focus on winning B2B AX projects and strengthening the growth portfolio to deliver visible results. I will go over the major subsidiaries.

[Non-English content].

KT Cloud posted KRW 250.1 billion in revenue, which is similar to last year, thanks to winning public sector projects and higher utilization of the Gasan Data Center, despite the base effect coming from last year's completion of a DBO project.

[Non-English content].

KT Estate revenue jumped by 72.9% YoY to KRW 237.4 billion, driven by robust hotel business and the Dunsan apartment complex property sales.

[Non-English content].

The content subsidiaries grew by 1.9% YoY, despite the divesture of PlayD, showing balanced growth across Studio Genie, Nasmedia, and Millie's Library. In particular, Studio Genie had a strong year, generating buzz and viewership with its premium original content lineup, including Honor and Climax. The company is also working to enhance competitiveness by diversifying distribution.

[Non-English content].

Today, I went over the business performance of KT for the first quarter of 2026. In Q1, we set the direction of the company, which is to become an AX platform company. We reviewed our core competitiveness and created a launchpad for growth. Going forward, we will continue to boost corporate value by expanding our AX-driven growth portfolio and implementing rigorous profit management.

[Non-English content].

We look forward to your continued interest and support. Thank you.

[Non-English content].

For further details, please refer to the earnings release materials distributed earlier. We will now begin the Q&A session to answer your questions. To allow as many people as possible to participate, please limit your questions to two per person.

[Non-English content].

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. The first question will be provided by Jae-min Ahn from NH Investment & Securities. Please go ahead with your question.

[Non-English content].

Good afternoon. Thank you for the opportunity today. First, I would like to congratulate the new CFO, Min Hye-byung, and IRO, Sun Wook Kim, for their new appointments. We really look forward to communicating with you as we further discuss KT IR issues. I have two questions today. One is regarding the appointment of the new CEO. Mr. Park Yoon-young was appointed as the new CEO. I would like to have a better understanding of his strategic view and whether the company has plans for the CEO to communicate with the market. My second question is regarding the first quarter standalone operating income. I think it did underperform the expectations. What would your annual outlook for operating income be for 2026?

[Non-English content].

Yeah. Thank you for those kind words, and we look forward to working with you as well. I think there were largely two questions. First was regarding the appointment of the new CEO, his strategic direction and communication plans with the market. The second question was regarding the annual operating income outlook. Yes, I will take your first question regarding the strategic direction of the new CEO. The new CEO has emphasized KT's vision as to become a AX platform company. This means that we will be accelerating AX innovation based on the key strengths of KT. In that sense, I think it's largely in line with the previous strategic direction of AICT. The two pillars of the AX platform company is strong fundamentals and solid growth. We are working to establish a virtuous cycle between the two pillars.

The strong fundamentals will drive solid growth, and the solid growth can be reinvested in strong fundamentals. By doing so, we believe KT can be a leader in the AX market going forward. To go into more detail on the strong fundamentals. I think top priority of KT at the moment is to regain customer trust. To do that, we will be focusing on innovating information security, strengthening the quality of network infrastructure and further advancing IT infrastructure as well. We believe that such strong fundamentals will be a cornerstone for sustainable growth.

[Non-English content].

I will go into more detail on solid growth. As you all know, AX innovation has become a essential factor in all industries.

[Non-English content].

To achieve that solid growth, we will be working on not only the B2C and B2C telco markets, but also we'll be expanding the AX success model to new growth areas.

[Non-English content].

Driven by strong fundamentals and solid growth, KT to become a AX platform company would be the key strategic vision of the new CEO.

[Non-English content].

You also asked about communication plans. Our new CEO has consistently emphasized the importance of, you know, communicating and delivering our commitments with the shareholders and the market.

[Non-English content].

Currently, we are internally reviewing the right timing and format for such communication, and so once that is confirmed, we will be communicating that with the market.

[Non-English content].

I will move on to the second question. You asked about the annual outlook for profitability. Also in January, because of the reduction of our subscriber base and the completion of large-scale, the data center build projects, our service revenue declined. In the cost segment, the depreciation expense decreased. However, operating costs such as sales and labor costs increased. Q1 results were relatively lower than previous quarters.

[Non-English content].

Going into Q2, we will be having very strict management of the operating expenses, with a special focus on sales cost.

[Non-English content].

Considering all those factors for the full year, we plan to achieve similar results as last year. If you look at the last year results, if we exclude the impact of the data breach incident, adjusted operating income was around KRW 1.5 trillion. We are working to achieve those levels.

[Non-English content].

If we also talk about the group subsidiaries, the main growth drivers, which are the real estate, DC cloud and content subsidiaries, I believe will continue to generate improved growth. That should also have positive contribution to the overall group numbers.

[Non-English content].

[Non-English content].

The following question will be presented by Seung-Woong Lee from Yuanta Securities. Please go ahead with your question.

[Non-English content].

Good afternoon, thank you for the opportunity today. I largely have two questions. One is regarding the shareholder return policy. KT announced the new midterm shareholder return policy recently. I believe it largely continues the previous one. If profitability recovers, what would be the direction of your shareholder return policy then? Is there a possibility that the return policy can be upsized? There is also the item of the adjustment. In the adjustment, you included non-cash items and non-ordinary P&L. Can you elaborate on specifically what those two items mean? The third question is regarding your wireless business. In the first quarter this year, there was the early termination waiver program that led to a reduction of the subscriber base. That had negative impact on the revenue.

What would be the growth strategy and overall revenue outlook for the full year for the wireless business?

[Non-English content].

Yes. I think largely your question has two sections. The shareholder return policy will be addressed by myself, and your question on the wireless business will be addressed by Mr. Park Hyun-jin, the Head of Customer Business Group. Yeah. Yes. Regarding your question on shareholder return, the mid-long term, 2026 to 2028 shareholder return policy was announced to be 50% of net adjusted income, that will continuously be implemented. Yes. You talked about the overall direction of the return policy. Of course, we will make effort to continuously improve our profitability, which also means that we are making effort to increase the dividend per share. Yes. Yes.

As you would know, according to our Value Up Program, we are buying shares around KRW 250 billion every year. That program will continuously be implemented according to the Value Up Program. I'd like to highlight that we are also working to indirectly increase the shareholder return.

[Non-English content].

Yeah. Your next question was regarding the adjustments that we make to come with the net adjusted income number. Yeah. There are largely two elements. One is non-cash items, and the second is non-ordinary P&L. Yeah. If you first look at the non-cash items, it's the same as the previous policy. For example, there is some valuation gains and losses that may be incurred from some investments or foreign funds, overseas funds that we hold.

These transactions do not actually ensue cash transactions. Regarding the non-ordinary items. For example, we may be divesting a sizable asset, or there may be some penalties that are sizable that we may need to pay. We are trying to remove the impact of one-off to ensure that there is stable visibility of dividend payments.

[Non-English content].

I am Hyun-jin Park, the Head of the Customer Business Group, and I will address your question regarding the wireless service business. First of all, the decrease of subscriber base we experienced in January, I think is largely being offset at the moment, given that February numbers show net additions.

[Non-English content].

As you all know, in the second half, there are some new plans that will be launched, related to government policy. The QoS is around 400 kilobps, so we don't believe that this will have some significant negative impact to our revenue.

[Non-English content].

For the full year outlook, I think I can summarize it into two keywords. It is efficiency and agility.

[Non-English content].

We recently launched a 5G Choice plan that is linked to the YouTube Premium service. KT is the only telco company in Korea that was able to partner with YouTube and launch this type of plan. We will continuously work to understand customer needs and reflect them in the design of our plans, that we can observe an increase of the ARPU.

[Non-English content].

At this point, we are not really concentrating on acquiring new customers by spending large amounts of marketing and sales cost. We will be concentrating on efforts in non-contact channels and other types of services, like the used phone sales service, so that we can reduce the acquisition cost and generate appropriate level of revenue.

[Non-English content].

[Non-English content].

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

[Non-English content].

Thank you for the opportunity today. I have two questions regarding data centers. One is the AI data center. I believe that the customer needs and requirements for AI data centers will be different from existing B2B customers. What are the key needs that you have understood from your discussions with customers, and what is the competitive edge KT has in this area? Second is the securing of power. I believe that power has become the key obstacle in terms of building and securing more data centers. How is KT working to overcome this challenge?

[Non-English content].

Thank you for the question. I think there were largely two questions. One was regarding AIDC. What are the customer needs and characteristics and what are KT's key strengths in this area? Second was regarding the securing of power for the data centers. To address this question, Mr. Kim Bong-gyun, the Head of the Enterprise Business Division, will be answering your question.

[Non-English content].

Yes. I am Kim Bong-gyun, head of the Enterprise Business Division, and I'd like to take your questions. First, regarding the needs of customers in the AIDC, I think there are largely three needs. One is the environment that the GPU is operating. When I say environment, it includes, like you already mentioned today, the securing of power. The heating. When heating occurs, can it be well managed by the facilities there? The overall environment will be one key need. Second will be the build-out. You will have multiple racks, and all those racks will be holding GPUs. Those racks will be connected to each other. We call this the clustering capability, and that is also one key aspect that the customers look at.

[Non-English content].

The third is operations. If there is a failure in one of the GPUs, can you detect it and take that out quickly and reconnect all of the racks? We call that reclustering ability. Largely, there are three aspects. One is the environment, second is the build, and third is the operations.

[Non-English content].

I'll move on to KT's key strengths. We have very long experience and track record in this area going back to IDCs, and we are also operating the largest number of data centers as well. That experience is key strength.

[Non-English content].

Yes. In terms of the accumulation of the experience, the skills and capabilities, I think KT would be by far top-notch. We are also continuously enhancing, the clustering, abilities that I mentioned earlier as well.

[Non-English content].

In terms of the environment, in the past for the DCs, air cooling was sufficient, but because the new data centers use very high voltage, it usually uses liquid cooling.

[Non-English content].

Yes. I would like to highlight that KT is the first company in Korea to commercialize this liquid cooling data center. We mentioned the Gasan Data Center, which has been recently established, and the Gasan Data Center uses this type of cooling system. Currently, we are in the testing period.

[Non-English content].

I will move on to your question regarding securing power.

[Non-English content].

Yes. In relative terms, I believe the power is more, there's more ample power in the areas outside of Seoul rather than Seoul. In the Seoul and largely Seoul metropolitan area, we will be focusing on the expansion of low voltage, so the existing type data centers. Outside of Seoul, where the power can be more abundant, we will be laying out the AIDC infrastructure.

[Non-English content].

In terms of execution strategy, we are planning to buy and lease land that already has secured the necessary power.

[Non-English content].

Yes. To summarize, we have a two-track strategy. We have different strategy for Seoul and metropolitan Seoul and the areas outside of Seoul. As for the execution strategy, we will be securing land that has already confirmed the procurement of power.

[Non-English content].

[Non-English content].

The following question will be presented by Charlie Bay from HSBC. Please go ahead with your question.

Hi. Congratulations on new management's boarding. I have only one follow-up question on AIDC. May I know more about your new AIDC build-up plan? May I know if you have any full-year revenue target for the KT Cloud business? Thank you.

[Non-English conetnt].

[Non-English content].

[Non-English content].

Yes. Thank you for those questions. I think your first question is related to the capacity plans that we have for AIDC. Unfortunately, we are not able to share the exact numbers that we have for AIDC, but we have the goal to achieve around 500 MW within 5 years.

[Non-English content].

Yeah. Regarding your question on KT Cloud. Let me try to answer it this way. I think we will be able to continue double-digit growth this year for the revenue.

[Non-English content].

Yes. The 500 MW number that I just shared with you, I want to clarify that it's for our total data center capacity.

[Non-English content].

[Non-English content].

There are no questions in the queue right now.

[Non-English content].

There are no further questions. We will now conclude the Q&A session. We appreciate your active participation and interest. Thank you for joining us today despite your busy schedules. This concludes the earnings call for the first quarter of 2026. Thank you.

[Interpreted] Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of the fourth quarter of fiscal year 2025 earnings results by KT. We would like to have welcoming remarks from KT IRO, and then CFO will present earnings results and entertain your questions. [Operator Instructions] Now we would like to turn the conference over to KT IRO.

[Interpreted] Good afternoon. This is Jaegil Choi, KT's IRO. Let's begin FY 2025 Earnings Presentation of KT Corp. Please be reminded that today's presentation includes K-IFRS-based financial estimates and operating results, which have yet to be reviewed by an outside auditor. We, therefore, cannot ensure accuracy nor completeness of financial and business data, aside from the historical actuals. So please note that these figures may be subject to change in the future. Let me now invite our CFO, Jang Min, to walk through the earnings for FY 2025.

[Interpreted] Good afternoon. This is Jang Min, KT's CFO. Before presenting the earnings for FY '25, I would like to take this opportunity to extend my sincere apologies to shareholders and customers for the inconvenience and concerns caused arising out of last year's data breach incident. This incident is serving as an impetus for KT in solidifying the company's fundamental resilience in network and cybersecurity as we are committed to regaining trust from the customers. Now moving on to 2025 annual performance. Under balanced growth from B2C and B2B, KT's revenue and operating profit both saw significant growth versus last year on strong performance from core businesses, including data center, cloud and the Gwangjin-gu real estate project. Considering the base effect in 2024 of workforce transformation and even if we were to exclude profit from this year's Gwangjin-gu project, both the consolidated and stand-alone operating profit recorded more than a double-digit growth year-over-year, which is a testament to enhanced fundamental earnings capacity. Also, collaborating with global big tech companies, we launched a series of new products, and we will tap into the AX market in earnest moving forward. Following the September rollout of SOTA K, which is an AI model developed in partnership with Microsoft, we also introduced secure public cloud, which is a security enhanced cloud service back in November. We are also starting to gain more visibility in business outcomes from the Palantir partnership, particularly in respect to the financial sector of customers as we explore new business opportunities in offering consulting and solutions application. Also last November, we opened Gasan AI data center, making it the first such center in Korea commercializing the liquid cooling technology. As a large scale AI infrastructure hub located in the metropolitan area capable of running AI computation and data processing, we expect the center will play an important role in making KT Cloud cement its leadership in the market. . 2025 year-end dividend is set KRW 600 per share with a record date of February, the 25th. There was temporary financial impact in the wake of the breach incident, but under a strong commitment towards shareholder value enhancement, annual DPS was increased 20% from KRW 2000 back in 2024, rising to KRW 2,400 in 2025. Following 2025 under the corporate value enhancement plan, we are planning on KRW 250 billion of share buyback and cancellation this year. Efforts are continuing towards enhancing the corporate value at the group level as well. In December, KT Alpha announced its plan on interim dividend and cash payout, which is the first since the establishment of the company. And in January this year, Millie's Library announced its corporate value plan as well. The BoD of KT started the process to appoint CEO as of November, the 4rth and confirmed candidate Park Yoon-young as the next CEO on December, the 16th. He is known for his expertise in B2B in future technologies and is expected to take office as the CEO subject to AGM approval. KT, once again, is committed to strengthening the company's fundamentals and will do its utmost to rebuild customer trust. Regaining trust is our foremost priority under which we are taking necessary steps such as free replacement of USIMs, cancellation fee waivers and implementing customer appreciation package. These measures will increase costs in the short run, but such decisions were made because we believe customers' trust is what matters most in determining corporate value and defining the company's existence in the longer term. Going beyond the simple short-term response, we are making structural improvements across the entire security framework. Information security and innovation task force has been set up directly under the CEO as we are revamping the security governance, including further empowering the authority of CISO and integrating and reorganizing distributed legacy security organization and their roles. We are also planning on around KRW 1 trillion investment into security for 5 years to expand Zero-Trust security scale up, AI-powered integrated monitoring system and beef up access control and encryption, so as to bolster information security system in phases. Through such investment, KT will internalize security capabilities as its sustainable competitiveness. Corporate value up plan will be implemented as planned, including the KRW 250 billion of share buyback and cancellation as previously mentioned. . Now moving on to FY '25 financial performance. Operating revenue increased 6.9% on year, reporting KRW 28,244.2 billion, Operating profit increased 205% year-over-year, reaching KRW 2,469.1 billion and continuing growth from core businesses, including telecom, real estate, cloud, data center and also driven by profitability improvement efforts and one-off gains from real estate projects. On higher operating profit, net income was up 340.4% year-over-year to KRW 1,836.8 billion. EBITDA was up 35.5% year-over-year to KRW 6,349.3 billion. Next, operating expense. Operating expense was flat year-on-year, recording KRW 25,775.1 billion, due to lower labor cost and depreciation and efficient general spending despite the rise in selling expense following the growth in subscribers. Next is on the financial position, the balance sheet. Debt-to-equity ratio as of end of 2025 recorded 120.7% while net debt-to-equity ratio fell 0.4 percentage points year-over-year, reaching 37.4%. Next is CapEx. Total CapEx spend by KT and its major subsidiaries in 2025 was KRW 2,939.7 billion. KT separate basis was KRW 2,143.9 billion, while major subsidiaries spent KRW 795.8 billion in CapEx. Moving on to breakdown of business performance. Wireless revenue was up 2.8% on year to KRW 7,155.4 billion. Revenue growth was driven by subscriber expansion around 5G and 5G penetration as of end of '25 recorded 81.8%. Next, fixed line. Broadband revenue posted 1.9% year-over-year growth, reporting KRW 2,533.5 billion on the back of GiGA subscriber growth and value-added service expansion. Media business revenue grew 1.7% on year, driven by higher IPTV subscriber net addition and growth in OOH revenue. Home Telephony revenue was down 5.8% year-over-year to KRW 658.9 billion. Next, on B2B services. B2B service revenue was up 1.3% year-over-year on the back of balanced growth from telecom and AI and IT business despite the impact from streamlining of low-margin businesses. And against the backdrop of stable growth from such network-based businesses, such as enterprise messaging and enterprise Internet, AI IT has seen growth of 3.1% year-on-year on the back of AICC design and build business, et cetera. Moving on to major subsidiaries. Now despite the divestment of PlayD, our content subsidiaries revenue stayed flat year-over-year, following top line growth from StudioGenie, Nasmedia and Millie's Library. KT Cloud revenue saw rise in data center usage by global customers and with AI cloud demand expanding, revenue increased 27.4% year-on-year, reporting KRW 997.5 billion. KT Estate revenue was up 15.9% year-on-year to KRW 719.3 billion on the impact of strong hotel business and new property development projects. This brings me to the end of the FY 2025 full year performance briefing for KT. Once again, we would like to sincerely apologize for the data breach incident and the concerns it would have caused. KT will take this opportunity as a turning point in redefining itself as a company worthy of trust. On the back of growth from its core telecom business, visible results from AX business with the underpinning of the group's core portfolio, KT will yet again fortify its fundamentals in 2026. We will also implement the plan on corporate value enhancement so as to drive a step-wise increase in corporate value. We ask for continued interest from investors and analysts. For more details, please refer to the earnings presentation that we shared.

[Interpreted] We will now take your questions. [Operator Instructions] The first question will be provided by Wonseok Hwang from Shinhan Securities.

[Interpreted] I have 2 questions that I would like to ask. The first one, I would like to understand as to what the financial impact is of your customer compensation package regarding the data breach incident? And my second question is with the incoming new CEO, I would like to understand as to whether he will be keeping to the previous shareholder return stance that the company has shown?

[Interpreted] I would like to first respond to the first question that you pose regarding the customer appreciation package that the company has implemented and its impact on the financials. We originally said that the benefit that the customers would actually feel will amount to about KRW 450 billion. But not all of that expense is going to be booked as cost under our accounts because it would actually depend on to what extent the customer actually uses up those benefits. So in terms of the cost that was actually incurred in 2025 and what is most certain to be accrued in 2026 has already booked -- has already been booked in our 2025 numbers. And with regards to additional incurrence of cost come 2026, in consultation with our external auditor, we will come up with an appropriate accounting treatment. But what I can tell you with certainty is that our performance or earnings in 2026 is going to be better compared to 2025. That is the plan that we are currently working under, and we will do our utmost to actually achieve that. Moving on to your second question. I understand that the question relates to the future approach or direction regarding our shareholder return policy and the sustainability of the company's past growth strategy going forward. Now first or first mentioned in my opening presentation, we've actually increased the DPS by 20% from the 2024 KRW 2000 per share to KRW 2,400 in 2025. In terms of the shareholder plan to be applied from 2026, it will be something that the new incoming CEO and the BoD would have to finalize on. As you would appreciate, the company's shareholder return policy has been progressive. It's been expanding year-over-year. And as I've also mentioned, our objective for this year is going to be a higher level of profit versus what we've seen last year. So the dividend plan or the shareholder return plan to be devised by the new CEO and the BoD, we expect will be in line with those -- in line with those stance. In terms of whether the growth strategy that we currently have will continue to be implemented going forward, I'm sure you could appreciate that the AX driven innovation is something that is essential across all of the industry sectors. So in light of that aspect, the new CEO has practical experience in the B2B domain and he values the commitment and the promise that the company has made to the market as well as to the shareholder. Hence, we do not expect that there will be any significant change to our strategic approach. Now having said that, with him taking the office in light of certain strategies or certain tactical approaches, those will reflect the philosophy of the new CEO. Next question, please?

[Interpreted] The following question will be presented by Minha Choi from Samsung Securities.

[Interpreted] I am [indiscernible] from Samsung Securities. I would also like to ask you 2 questions. First is on the outlook for your wireless business going forward. Since the data breach incident, I understand that there was a 14 days of cancellation fee waiver period starting from the end of last year up until the beginning of this year, and I understand that there was some churn of your subscribers, I would like to know under that backdrop for this year, what is your outlook for your wireless business growth? . My second question is compared to your peers in the industry, your B2B growth seems to be much slower. Would like to understand as to the reason why and what your outlook for your B2B business going forward is?

[Interpreted] So first off, regarding the 14 days of cancellation fee waiver, during that period of time, we had about 230,000 subscribers leave the company. But because of the net addition that we actually achieved previously, the actual all-in impact was on a full year basis, a net addition of subscribers. So that basis of net addition is what creates the revenues going forward for our wireless business in 2026. Now having said that, it is hard to look forward to, for instance, a very high level of growth of double digit from the wireless business at this point. That's why we are going to focus on more -- making our operations more efficient through rationalizing the selling expenses and distribution and improving on the offerings, which will be the efficiency measures that will help us defend our bottom line. Responding to the second part of the question, in terms of the reason why our B2B growth rate is lower compared to the industry peers and what our outlook is for 2026, first, in looking at our B2B business, you have to also incorporate our enterprise Internet, our lease line business, data center and AI business as well. And as you know, for us, we have a separate subsidiary entity under KT Cloud. So you also need to take that aspect into consideration. So if you were to also combine the KT Cloud revenue on a combined basis, you will see that our revenue growth on a year-over-year basis is 6%. And in light of the total size of the B2B market and the market share that we have in that market, 6%, does not look that low. And also on KT Cloud separate basis, the growth rate was 27.4% year-over-year, which is a quite steep uptrend, and we expect this trend to continue this year as well.

[Interpreted] With no questions in the line, we would now like to close the Q&A session. Once again, thank you very much for your questions and for your interest in the company and thank you all for joining us despite your very busy schedules. This brings us to the end of KT's Full Year 2025 Earnings Conference Call. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]

[Interpreted] Good morning and good evening. Thank you all for joining this conference call. And now we will begin the conference of the third quarter of fiscal year 2025 earnings results by KT. We would like to have welcoming remarks from KT IRO, and then CFO will present earnings results and entertain your questions. [Operator Instructions] Now we would like to turn the conference over to KT IRO.

[Interpreted] Good afternoon. This is Choi Jaegil, KT's IRO. We will begin the third quarter 2025 earnings presentation. Please be reminded that today's presentation includes K-IFRS-based financial estimates and operating results, which have not yet been reviewed by an outside auditor. We, therefore, cannot ensure accuracy nor completeness of financial and business data, aside from the historical actuals. So please note that these figures may be subject to change in the future. With that said, let me now invite our CFO, Jang Min, to discuss KT's Q3 2025 earnings.

[Interpreted] Good afternoon. This is Jang Min, KT's CFO. Before going into the earnings for Q3 2025, I would like to extend my sincere apologies to our customers and investors for the unauthorized micro payments and infringement incident perpetrated through the illegal base station connection. KT is currently implementing a comprehensive plan to compensate customers affected by such unauthorized micro payments and personal information breach. Starting November 5, KT is replacing used SIM free of charge for all of its customers. Going forward, KT will do its utmost to put in place technical and system-based guardrails to protect customers, and to ensure that such incidents are prevented through preemptive and far-reaching security measures. On November 4, we officially began the process for CEO nomination. KT's Director Candidate Nomination Committee, comprising of all of the independent auditors, will select a pool of candidates from various different channels to recommend one candidate to the Board of Directors before the end of the year. BOD will then make the final confirmation and the new CEO will be appointed at the General Meeting of Shareholders. Now I will move on to KT's third quarter earnings for 2025. Based on our telco business and continuing growth of group's core portfolio, as well as real estate profit gained from Gwangjin District development, KT sustained growth in revenue and operating profit this quarter. We are also collaborating with global big tech companies to launch specific services, and have secured a solid footing for AX business execution by opening KT Innovation Hub, placing momentum behind the transformation towards an AICT company. We released consecutively our proprietary model, Mi:dm2.0, SOTA K, which is a model developed in collaboration with Microsoft, as well as Llama K, based on Meta's open source technology, introducing AI LLM lineup catering to Korean requirements. Under the AI multimodal strategy, we will expand AI-driven usage base across various verticals including media press, education, public and financial domains. In October, we opened KT Innovation Hub under strategic partnership with Microsoft, where we can hold exhibitions on AX and AI experience and provide industry-specific consulting services. AI experts of both companies, together with our clients, will be working together in the hub to explore new AX business opportunities. Third quarter dividend is KRW 600 per share as we maintained 20% higher dividend payout year-over-year as was the case in Q1 and Q2. Corporate value enhancement plan also is ongoing as planned. We had concrete results in securing capacity required for structural transformation into becoming an ICT company, with SOTA K launch being one of such endeavors. We continue to work on streamlining assets and driving profitability enhancements through rationalizing low-margin businesses and liquidation of noncore assets. As part of the value enhancement plan, we also completed KRW 250 billion share buyback on 13th of August. Next on financial performance for Q3 of '25. Operating revenue was up 7.1% year-over-year, reporting KRW 7.1267 trillion and sustained growth from core businesses, including telecom, real estate, cloud and data center and profitability improvement efforts as well as onetime real estate sales gains. Operating profit was up 16% Y-o-Y, reporting KRW 538.2 billion. Net income was up 16.2% Y-o-Y, recording KRW 445.3 billion, driven by increase in operating profit. EBITDA increased 5.2% Y-o-Y, reaching KRW 1.5039 trillion. Next page, I will walk through the operating expense items. Operating expense increased 6.4% year-on-year to KRW 6.5886 trillion, an increase in cost of goods sold, cost of services and selling expense. Next is the financial position of the company. Debt-to-equity ratio at end of September 2025 was 123.3%, while our net debt ratio went up 4.2 percentage points year-over-year, reaching 34.5%. Next, on CapEx. Total CapEx up to the third quarter of '25 of KT and its main subsidiaries accounted for KRW 1.9637 trillion. KT's separate basis CapEx was KRW 1.3295 trillion, while major subsidiaries spent KRW 634.2 billion. Next, performance breakdown by business. Wireless revenue was up 4% year-on-year, reaching KRW 1.8096 trillion. Subscriber base expansion around 5G drove the top line growth, with 5G penetration as of third quarter end reaching 80.7%. Next is fixed-line business. Broadband internet revenue increased 2.3% year-on-year to KRW 636.7 billion on the back of GiGA Internet subscriber growth and value-added services. Backed by higher IPTV subscriber net addition and sale of premium plans, media business posted growth of 3.1% year-over-year. Home telephony revenue fell 6.6% year-over-year to KRW 160.9 billion. Next is B2B business. B2B service revenue reported 0.7% year-over-year growth on the back of enterprise messaging, corporate broadband and network-based business growth, despite streamlining of low-margin businesses. For the AI and IT business, revenue came down 5.7% year-over-year due to structural enhancement work done on certain businesses in line with our selective focus strategy, notwithstanding AICC project wins from large customers and ongoing monetization. Next is performance of major subsidiaries. Revenue from content subsidiaries dipped 1.8% year-over-year due to less number of original title production. KT cloud revenue was up 20.3% year-on-year, following higher data center usage by global clients and AI cloud demand growth. KT Estate revenue was up 23.9% year-on-year to KRW 186.9 billion, backed by good performance from hotel business and new development projects. This ends report on KT's third quarter earnings results. Once again, I would like to extend my sincere apology for causing concern over unauthorized micro payments and the infringement incident. KT will cooperate with the government's investigation process and exert our utmost effort in ensuring network security and stronger customer protection. Also, we will bring true AI CT transformation. And by successfully implementing corporate value enhancement plan, we'll endeavor to drive stepwise upgrade in KT's corporate value. Once again, thank you to our investors and analysts for your continued interest and support.

[Interpreted] For more information, please refer to the document and materials that we had previously circulated. We will now begin the Q&A session. To give as much opportunity as possible, I would like to ask that you limit your questions to 2 per person.

[Interpreted] [Operator Instructions] The first question will be provided by Hoi Jae Kim from Daishin Securities.

[Interpreted] I'm Kim Hoi Jae from Daishin Securities. You were able to record good financial performance up until the third quarter. I know that for the fourth quarter, usually there is a seasonality expense-related impact, so it will be hard to make that projection. But still I would like to get some color as to what your projection is going forward for the fourth quarter. And you've decided to pay out dividend per share of KRW 600 up until Q3. Just wondering whether there is further upside to the dividend payment for -- when the fourth quarter comes? And also until -- so in 2025, you had decided to do a share buyback and cancellation in the amount amounting to KRW 1 trillion. Just wondering whether in 2026, you will be able to grow that size of share buyback and cancellations?

[Interpreted] Thank you for that question. Responding to the question on Q4 outlook. As you have correctly mentioned, in the fourth quarter, there are usually seasonality issue. And also, we have to consider all the measures to compensate for customers. And also, there are certain uncertainties that currently exists relating to the fines or the penalties that we will be subject to. So at this point, we are making a quite conservative stance when it comes to making a forecast going forward, but we are putting our utmost efforts to minimize any impact or any damage to our customers and also to our financials. Now, however, because we were able to report a quite solid performance up until Q3, if we were to make projections on the full year 2025 financials, thanks to our efforts in growing our top line growth, at the same time, improving the profitability and considering that there was also a one-off gain from the NCP business, the real estate, and also due to the fact that we are able to drive our core business-centric group affiliate growth, we believe that both on a consolidated and separate basis, we could achieve a year-over-year growth. On the second question, basically, when it comes to the dividends, yes, there will be a onetime impact coming from this hacking incident, and there will be certain uncertainties in terms of its impact on the financials. However, we will be considering the annual based financial performance as well as the expectations that the shareholders have, based upon which I am most certain that our BoD will make a reasonable decision. So lastly, regarding our announcement of the plan to do the share buyback and the cancellation amounting to a total size of KRW 1 trillion, so for this year, we had already conducted the buyback and cancellation amounting to KRW 250 billion. And your question was whether for next year, can you expect about the same amount or more bigger as we go forward. I can tell you that our value up plan will continue to be implemented. And in consideration of the confidence that the market is giving us, we will make sure that either this could happen on the same size basis as it was for this year, for next year or there could be certain adjustments. We will very flexibly and nimbly respond to changes in the overall operational backdrop and deciding on the specific size. Next question, please.

[Interpreted] The following question will be presented by Chan-Young Lee from Eugene Investment & Securities.

[Interpreted] I am Lee Chan-Young from Eugene Investment & Securities. My question relates to the recent hacking incident. I would like to understand as to what the financial impact will be in line with your compensation to the customers and your subscribers, and also for the measures that you are putting in place to make sure that you prevent a recurrence of such incident going forward. And I would like to know the extent of this expense that is currently captured in Q3 numbers. And also going forward, what will be the timing or the scope of that expense?

[Interpreted] Thank you for that question. As I've mentioned before, we have put in place a measure and a compensation plan to compensate for any harm that has been inflicted due to the unauthorized micropayment incident as well as the data breach issue. Now -- and also on November 5, we had made the announcement that we will be replacing the used SIM cards of all of the KT customers. And if and when we go through this investigation process by the government as well as the police, if additional harm is identified, then the -- eventually, the final amount of the compensation will be determined. Now in terms of the timing as well as the size of this expense, we cannot make a perfect prediction based on where we are today. However, we believe that in terms of the used SIM chip replacement, the relevant costs will be recognized under Q4 figures. There is also free data that we are planning to provide and KRW 150,000 discount on the handset tariff as well as certain other expenses. Now these expenses, when they are actually incurred, that would be the timing upon which it will be booked in our financials. Now we've also already made an announcement to the market that for the coming 5 years, that we have put in place an information security-related investment in the amount that exceeds KRW 1 trillion. We've actually communicated that plant was into the market. And looking back at our track record, we've been investing about KRW 120 billion to KRW 130 billion on a per annum basis for this security purposes. So we believe that this KRW 1 trillion, which we'll be investing in the upcoming 5 years, is not going to be overly burdensome for the company. Next question, please.

[Interpreted] The following question will be presented by Eun Jung Shin from DB Securities.

[Interpreted] I just have one question. Your CEO appointment process has just begun. Can you just walk us through the process under which your new CEO will be appointed? And when there is a new CEO that comes into office, will there be any changes to the current value of program that the company has?

[Interpreted] Thank you for that question. Let me walk you through our CEO appointment process. We've actually officially kick started the discussion process on appointment of the new CEO as of the November 4. And under the BoD rules, there is going to be a director candidate recommendation committee that's going to be comprised of all of our independent directors, who are 8 of them in total, and they will go through the relevant processes. So first off, we begin with the candidacy pool of the CEO, who's going to be recommended by a third party and outside entity. And also, we will go through an open call process as well and also receive recommendation from the current shareholders as well as include a candidate from the -- internally from inside the company. So the Director of Candidates Recommendation Committee will then go through the screening and vetting process based upon the documentation, and we'll also engage in interviews. And by the end of the year, the committee is going to select one CEO candidate to be tabled at the BoD. So this one candidate that is recommended by the recommendation committee is going to be tabled at the BoD, BOD making the final confirmation on that candidate, and this candidate will go through the General Meeting of Shareholders deliberation process in 2026 to be finally appointed as the CEO of the company. Lastly, your question on the consistency of the sustainability of the current value up plan that's in place. Now the company went through the BoD resolution last November and had made appropriate market disclosure. And we also went through the disclosure on the implementation progress in May as well. And so I do not think that there is a correlation between the CEO change and the changes to the value up plan. Basically, because of a new CEO, there is not -- the value up plan itself is going to be made invalid for instance, because the BoD understands the direction for the company that is deflated in the value up plan and actually, the value up plan is a commitment and promise that we make to the market. And therefore, I believe the action plans that are included in the plan itself is going to be sustained.

[Interpreted] There are no questions in the queue right now.

[Interpreted] With no questions in the queue. We would now like to close the Q&A session. Thank you, everyone, for your interest and for your questions. And once again, thank you very much for joining us despite your very busy schedules. This ends KT's third quarter 2025 earnings call. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[Foreign Language] Good morning, and good evening. Thank you all for joining this conference call. And now we will begin the conference of the second quarter of fiscal year 2025 earnings results by KT. We would like to have welcoming remarks from KT IRO, and then CFO will present earnings results and entertain your questions. This conference will start with a presentation followed by a Q&A session. [Operator Instructions] Now we would like to turn the conference over to KT IRO.

[Interpreted] This is KT's IRO, Jaegil Choi. We would like to begin KT's Second Quarter 2025 Earnings Presentation. Be reminded that today's presentation includes financial estimates and operating results under the K-IFRS standards that are yet to be reviewed by an outside auditor. We, therefore, cannot ensure accuracy nor completeness of financial and business data, aside from the historical actuals. So please note that these figures may be subject to change in the future. With that said, I now invite the company's CFO, Chang Min, to run through the second quarter results of 2025.

[Interpreted] Good afternoon. This is Jang Min, KT's CFO. KT continued to drive revenue and operating profit growth this quarter while making the effort towards a complete transformation into an AICT company. Also, corporate value enhancement plan is well underway. And as part of that value-up program, we plan to complete share buyback of KRW 250 billion on August 13. Dividend for the second quarter has been decided at KRW 600 per share, an increase of 20% year- over-year. And starting from this quarter, even for quarterly dividend payouts, dividend amount will first be declared, which will then be followed by setting of the record date, a system that is shareholder friendly. KT, as an AICT company, has responded actively to company's AX demand, successfully winning large-scale projects from large companies and IT enterprises, thereby laying the basis for growth. And under the multi-model strategy road map, we launched KT's proprietary LLM, Mi:dm2.0 last July and will be completing AI full lineup with the unveiling of the open source model and Microsoft collaboration model in sequence. Based on KT's proprietary model, Mi:dm2.0, we won AI platform build projects from large companies, Gyeonggi provincial government and Korea Water Resources Corporation, further cementing our positioning in the public sector. Microsoft collaboration continues also as we roll out new services. In July, AI agent, powered by Azure open AI-based LLM, was integrated into Genie TV, expanding the AI use case. In the second half, we plan to launch AI model better tailored for Korea that is powered by ChatGPT for Omni and secure public cloud which uses top-notch security protocol, confidential computing in order to kick-start our reach into the market. To proactively strengthen security, KT has a plan to invest cumulative KRW 1 trillion in information security over 5 years. To make sure customers can feel safe in using telecom services in their everyday routine, we will innovate our information security system. From now onwards, I will move on to financial results for second quarter 2025. Operating revenue increased 13.5% year-over-year, reaching KRW 7,427.4 billion. Operating profit was up 105.4% year-over- year, reaching KRW 1,014.8 billion on the back of balanced growth from telco business and the group's core portfolio as well as profitability improvement efforts and onetime gains from real estate sales. Net income increased 78.6% year-over-year to KRW 733.3 billion, driven by higher operating profit. EBITDA was up 36.3% year- over-year, reporting KRW 1,990.7 billion. Next page is operating expense. Despite a decline in labor costs due to costs of real estate sales project at Gangbuk division and increase in COGS from growing wireless handset sales, operating expense was up 5.9% year-over-year, recording KRW 6,412.6 billion. Next is on financial statement. Debt-to-equity ratio as of June end of '25 was 123.5%, while net debt ratio edged up 3.3 percentage points year-over-year, reaching 36.8%. Next is CapEx. Total CapEx spend by KT and its major affiliates was, in total, KRW 1,364.3 billion on a cumulative basis as of Q2 of '25. KT's separate basis cumulative CapEx as of Q2 was KRW 845.8 billion, while CapEx of major group affiliates amounted to KRW 518.5 billion. Next is on the breakdown of results by each business segment. Firstly, wireless revenue increased 0.9% year-on-year, reporting KRW 1,781.7 billion. Whilst 5G subscribers accounted for 79.5% of total handset subscribers due to the impact from subscriber addition through MNP, MNO subscriber increased 3.4% Q-on-Q. Next, the fixed line business. On the back of GiGA Internet subscriber growth and expanded value-added services, broadband revenue increased 2.1% year-over- year, reporting KRW 631.4 billion. On net IPTV subscriber adds and premium plan uptake, Media business posted 0.8% growth year-over-year. Home telephony revenue recorded KRW 176.2 billion, up 0.4% year-on-year. Next, KT's B2B services. Despite streamlining of low-margin businesses, B2B service revenue posted 4.5% year-on-year growth on balanced growth coming from telecom and AI and IT services. Thanks to the growth of design and build projects and cloud business, AI IT business revenue saw 13.8% year-over-year growth. Next, moving on to performances of our major subsidiaries. BC Card revenue fell 6.9% year-on-year to KRW 909.8 billion as acquiring volume declined, but operating profit was kept flat year- over-year through risk management and profitability enhancement efforts. Content subsidiaries reported 6% year-on-year revenue growth on the back of production and distribution expansion by KT StudioGenie and increase in subscribers of KT Millie's Library. KT Cloud saw its revenue grow 23% year-on-year, driven by growing data center usage by global customers and expanded DBO project wins. KT Estate revenue increased 2.0% year-on-year reaching KRW 160.4 billion, driven by growth in rental revenue from office and hotels. This has been an update on KT's earnings for second quarter 2025. KT will endeavor to complete the transformation into AICT company. And through successful execution of corporate value-up plans, we will drive KT's corporate value a notch higher. We look forward to your ongoing support and interest from the investors and analysts. Thank you very much.

[Interpreted] For details, I do refer to the earnings material that we have given out. We will now take your questions from the participants. [Operator Instructions]

[Interpreted] [Operator Instructions] The first question will be provided by Joonsop Kim from KB Securities.

[Interpreted] I would like to ask 2 questions. First, on AI business direction going forward and second is a question relating to how you see the MNP market following the repeal of the Handset Subsidy Act. Regarding the AI business direction, you've talked about the full AI lineup as well as your estimates as to a steep growth going forward from your AI and IT business. Because AI scope really includes wide-ranging aspects, I would like to know where KT wants to focus on going forward? That will help us understand better in terms of your AI business direction into the future. Second question, how do you see the MNP market following the repeal of the handsets -- lifting of the Handset Subsidy Act because different people see the market differently so I would like to understand as to what KT's thoughts are regarding the MNP market going forward.

[Interpreted] Well, thank you for those questions. So regarding the first question on our AI business direction forward, I would like to just summarize that point into 3 main items. Now the first strategy that we have is through the partnerships with global big techs like Microsoft as well as the partnership that we have, the exclusive licensing partnership that we have with Palantir. We've been able to really enhance our competitiveness and fill up the gap that we internally did not have. And by leveraging these aspects, we want to be able to provide new AI services to our customer base that includes secure public cloud as well as K-GPT, the more Korean tailored type of GPT services. The second strategy is, as I've mentioned during my opening presentation, we have taken on a multi-model-based strategy. So not only will we be using the Microsoft collaboration model, but as you know, over the past year, we've been developing our internal model, which is Mi:dm2.0. We will continuously make enhancements to that so that we can come closer to the needs that our customers have. We will also be leveraging open source models like Llama to provide and build the AI services that our customers require. Moving on to the third strategy. We will be leveraging such AI capabilities and services and managing -- and managing the network that we have and also providing media-related services. A good case in point is we've basically installed an AI agent that is based upon Microsoft Azure open service into our Genie TV set-top box as well as using such AI capabilities and enhancing the operational efficiency of our 5G base stations. So we will be continuously leveraging such AI capabilities. Responding to your second question about what impact there was following the lifting of the Handset Subsidy Act as well as the market impact. Firstly, as you know, even though there was a launch of Galaxy flagship handset model, we did not see any overheating of competition in the market. But of course, if -- when the iPhone, the next versions, are introduced into the market, competition in the market may heat up. So there is that possibility. But having said that, we do not believe -- it is our belief that it is not going to be long-lasting, even if that happens. Now I say that because of 3 main reasons. First being already the 5G penetration is above 80%. And also, the handset replacement cycle has gotten longer compared to the past. And right now, it is an important timing for all the telcos to really focus and invest into the new business areas relating to AI and IT. So that is the basis upon which I believe that, that's why the competition in the wireless market, even if it exists, it's not going to be long lasting.

[Interpreted] The following question will be presented by Hoi Jae Kim from Daishin Securities.

[Interpreted] I'm Kim Hoi Jae from Daishin Securities. Before asking the question, I would like to first congratulate Jaegil Choi, the new IRO. I look forward to very good and productive communication going forward as we've done in the past. So my 2 questions are: The first is your second quarter results have been quite outstanding. I would like to know what your therefore outlook is for the second half of the year. And regarding the value-up plan, you've made the implementation disclosure already. Would like to understand as to what the update is. Would you be considering any changes to your dividend or your share buyback plans?

[Interpreted] Responding to your question, the first one on the second half outlook. In Q2, there was, yes, a significant one-off gain from our real estate business. So that had a big impact on bringing a good performance. But even aside from that, if you look at our separate basis statements, you will see that our year-over-year performance had been quite good -- it was quite good. It was very good. And we think that we will be able to continue on with that good momentum into the second half of the year considering the fact that we will be able to sustain a very solid service revenue uptrend. Now on the cost side, we were able to drive an improvement in our head count. And so we are keeping our labor costs. We're managing that quite well. And on the depreciation side, we have completed the depreciation on our 5G. So we see the depreciation costs coming down. But there may be some concern on the commissions paid as well as selling-related expenses. There may be slight risk there, but these are numbers that are linked to our earnings performance. So we're not at all greatly worried about this item. Regarding the second question about our dividend payout plan. First off, basically, our basis upon which we make the dividend decision is 50% of adjusted net profit. And already we have declared and made the decision on dividend per share of KRW 600 already, which is actually in excess of that criteria. Having said that, as long as we -- and as we are confident that we'll be able to carry on with the performance levels into the Q3 and Q4, I believe that a minimum the BoD will continue to make such decisions in alignment with the market expectations. In terms of how our shareholder return program will look like after next year, of course, the BoD will make appropriate decision as we go forward. But in light of the fact that we are seeing an improvement in our bottom line and the fact that our dividend program is shareholder-friendly and market-friendly, I can tell you that you can expect that we will not, in any circumstances, failed -- fail the expectation of the market. In terms of the value-up program, under the value-up program, we'll be making additional share buyback in the size of KRW 1 trillion. We've already done KRW 250 billion. And over the coming 3 years, we will, in sequence, be making that share buyback in the amount of KRW 750 billion.

[Interpreted] This ends the Q&A for today. Thank you for your time and interest. We will close the earnings call for the second quarter of 2025. Thank you for joining despite your very busy schedule. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Good morning, and good evening. Thank you all for joining this conference call. And now we will begin the conference of the fourth quarter of fiscal year 2024 earnings results by KT. We would like to have welcoming remarks from KT IRO, and then CFO will present earnings results and take your questions. [Operator Instructions] Now, we would like to turn the conference over to KT IRO.

Good afternoon. I'm KT's IRO, Young-Kyun Yoon. We will begin KT's 2024 full-year earnings presentation. This earnings release call is being webcast live on the company's website, so you can listen in on the call and follow the presentation slides as we go along. Let me remind you that today's presentation includes financial estimates and operating results under the K-IFRS standards that are yet to be reviewed by an outside auditor. We, therefore, cannot ensure accuracy, nor completeness of financial and business data, aside from the historical actuals. So, please note that these figures may be subject to change in the future. With that, I invite the company's CFO, Jang Min, to run through our annual results of FY 2024.

Good afternoon. I'm CFO of KT, Jang Min. In 2024, under the goal of AICT transformation, KT pushed forward with innovating its workforce and business structure. And through our partnership with Microsoft and by cultivating our IT professionals, we strive to build up a driving force behind the future growth. On the back of balanced growth between B2C and B2B and good performances from data center, cloud and other core businesses, consolidated revenue reported KRW 26,431.2 billion, which is a historical record since the company went public in 1998. Also, we entered into a strategic partnership with Microsoft to effect a complete transformation as AICT company, focusing on structural profitability improvements such as innovating the workforce structure and rationalizing underperforming businesses. Following workforce innovation in Q4, operating profit fell 50.9% year-on-year, coming in at KRW 809.5 billion. But if one-off impact is removed, OP stands at KRW 1,811.8 billion, increasing 9.8% year-on-year, showing stronger fundamentals. Also in terms of corporate value, last November, we put in place mid- to longer-term corporate value enhancement goal, presenting a progressive action plan. We will speed up structural innovation to transition to AICT company in 2025. And by actively implementing the plan on corporate value enhancement, we intend to yield results from core growth businesses, including AICT, cloud and elevate shareholder return. And so we've set consolidated revenue target for the year at above KRW 28 trillion. Also under the strategic partnership with Microsoft, we will commence with the launch of products that are distinct to KT in the first half of the year, such as AI models specialized for Korea and secure public cloud, et cetera, to place full force behind sales and order wins to build a basis for B2B AX business growth. Fixed and wireless business and the media business will continue its growth by delivering differentiated customer experience underpinned by AX technology. While through technology innovation and scale-up of IT, we plan to optimize system for business operations and management. As an AICT company, KT is endeavoring on making improvements in growth and profitability and translate them into enhancing shareholder value. Through the revision of articles of incorporation in 2024, we adopted quarterly dividend as part of our shareholder-friendly management policy, with KRW 150 billion of cumulative dividend paid out up to Q3. DPS for Q4 '24 is KRW 500 per share and dividend record date is February 28. On the back of effort on structural profit improvements, we increased annual DPS from KRW 1,961 back in 2023 to KRW 2,001 in FY '24. Q4 dividend will be paid out after the approval from March General Meeting of Shareholders. Under the corporate value enhancement plan, as part of the KRW 1 trillion share buyback and cancellation plan we have for until 2028, we plan on KRW 250 billion buyback and cancellation this year. KT will continue to drive fundamental innovation as an AICT company to ensure sustainable growth and corporate value enhancement. I will now move on to 2024 annual earnings. Operating revenue was up 0.2% year-on-year to KRW 26,431.2 billion, while operating profit declined 50.9% year-on-year, coming in at KRW 89.5 billion on the back of one-off labor costs following structural enhancement of the workforce. Following the decrease in operating profit, net profit fell 54.5% year-on-year to KRW 450.1 billion, and EBITDA was down 14.2% year-on-year to KRW 4,687.2 billion. Next is on operating expense. On the back of workforce revamping, which led to an increase in one-off labor cost and on higher depreciation, operating expense was up 3.6% year-on-year, reporting KRW 25,621.7 billion. Next is on the financial position of the company. Debt-to-equity ratio as end of December '24 was 12.3%, and net debt-to-equity ratio dipped 1.9 percentage points year-over-year, reporting 37.7%. Next is on CapEx. KT Group's total CapEx spend in 2024 was KRW 3,123.4 billion. KT, on a separate basis, its cumulative annual CapEx was KRW 2,299.9 billion, and CapEx from key growth businesses of finance, media, DX, real estate reported KRW 823.5 billion. Next is on the performance of each of our business segments. Wireless revenue was up 1.3% year-on-year, reporting KRW 6,959.9 billion. With the launch of many different rate plans offering greater choice to customers, 5G subscriber count exceeded 10.4 million subscribers, accounting for 77.8% of total handset subscriber base. We are also seeing solid growth continuing from roaming and MVNO business. Next is on the fixed line business. On the back of growth in GiGA Internet subscribers, Internet revenue was up 1.1% year-on-year, reporting KRW 2,486.9 billion. Media business saw 1.2% year-on-year growth on IPTV subscriber expansion, mainly around high ARPU plans and higher-quality set-top boxes. The new media division set up end of 2024 is going to be a pivot for all of our group's media business-related competencies, and we plan to push forward with media business innovation driven by AX. Home fixed line telephony revenue was down 7.3% year-on-year to KRW 699.4 billion. Next, on B2B services. Despite rationalization of unprofitable businesses driven by solid growth of enterprise Internet and data business and growing demand for AX services, B2B revenue posted 2.9% year-over-year growth. It's worth noting that AI/IT business revenue increasing 11.9% year-on-year, following AICC expansion and Thailand's LLM project. In 2025, we will continue to streamline businesses yielding low performance while driving volume and quality growth through having a core focus on strategic customers and product launches based on the partnership with Microsoft. Next, moving on to the results of our major subsidiaries. On the back of decline in acquiring volume, BC Card revenue was down 5.4% year-on-year to KRW 3,805.8 billion. And operating profit, however, posted sizable year-over-year increase driven by private label cards, financial business expansion as well as profitability enhancement efforts. Despite growth from Internet resale and MVNO business growth due to pay TV subscriber declines, KT Skylife revenue was down 1.5% year-on-year, coming in at KRW 1,022.9 billion. Impacted by contracting market, content subsidiary saw its revenue fall by 13.6% year-on-year. But despite the industry depression, crash, Your Honor, To My Harry were box office successes, attesting to future potential for growth. Supported by growing data center usage by global customers and an increase in traffic for cloud-based CDN, KT Cloud posted 15.5% year-over-year growth. KT Estate posted 1.7% year-over-year increase, reporting KRW 604.9 billion on the back of rental revenue growth from office and hotel. This was an update on KT's 2024 annual performance. KT will continue to drive structural transformation as an AICT company. And through successful implementation of corporate value enhancement, we'll make sure we take the leap towards driving KT's corporate value a notch higher. We, hence, look forward to your ongoing support and interest from all of our investors and analysts. Thank you.

For more details, please refer to the presentation deck, which we previously circulated. We would now like to begin the Q&A. [Operator Instructions]

[Operator Instructions] The first question will be provided by Shin Eun Jung from DB Financial and Investment.

I have a couple of questions. First one relates to your 2025 outlook. If you could guide us on what your forecast is in terms of revenue, profit and shareholder return, that would be helpful. And I would also like to understand as to when we will be able to see either revenue and profit come through from your real estate development located in the north of the river site.

Responding to your second question first, with regarding the real estate development-related profit, you're asking the timing under which we will be recognizing that profit. With respect to the apartment that's been built on site, we will start to book the revenues from that business. People will start to move into that apartment starting March, and we will be recognizing and booking the profit across Q1 and Q2. And also regarding the guidance for revenue, operating profit and shareholder return, I've mentioned in my presentation, the revenue guidance is on a consolidated basis above KRW 28 trillion. In terms of the profit guidance, you would understand that we won't be able to share with you any specific figure per se. But if you look at the size of the profit for 2024 and the effect that we will get from structural improvements that we've undertaken and also based on the expansion of the revenue that comes from AICT business and initiative, I think you can make an appropriate estimation. As part of managing our bottom line, we are planning to make sure that all the workforce-related improvements that we've made over the past year will really materialize into profit for us this year. And also, we're going through a rationalization process for unprofitable or underperforming business. So, we continuously endeavor to bring improvements on the structural profitability of the company. So responding to the question on shareholder return, once we are able to materialize the impact from profit improvement, that will give us some room in terms of resources that we need in order to provide a shareholder return. So in terms of the method of that shareholder return, the mix between actual cash payout versus share buyback and cancellation, the specifics will be decided based on -- from the upcoming BOD meeting, but we will make sure that we maintain the minimum level of return that the market is expecting and we'll make a decision in line with that expectation.

The following question will be presented by Kim Joonsop from KB Securities.

I'm Kim from KB Securities. My questions relate to your AX business and the partnership that you have with Microsoft. First on AX business, I understand from press articles that KT will focus on providing business process innovation solutions to your customers and clients. And I understand that this is a domain where there are not many number of competitors. So, I would like to understand the unique point that KT has in terms of its AX business strategy, your road map and what your top line revenue projection is from this business? Second question relates to your cooperation and partnership with Microsoft. You talked about a more Korea specialized AI model, and you also talked about SPC, secure public cloud. For this year, where would your focus be and what is the milestone like? And also what do you project to be the financial impact from these initiatives?

Thank you for that question. When we say AICT transformation, basically, the overarching approach to AX strategy for KT is, first off, focusing on B2B customers, and that is through our IT business. And also there is B2C domain, which is the core fundamental of KT's business. So that is the CT, the communication technology business. And the third prong is our media business. So, our strategy is to enable transformation that is driven by AI capabilities. So, I take it that you must have read some press articles that dealt with the AX, the B2B business side of our endeavors. And basically, all of the B2B IT businesses that KT is providing, these are areas that cannot develop or where we cannot generate performance without the element of AI piece in it. So it is all AI-powered or AI-enabled. So as such, based on such AX strategy, we will be providing new service offerings to our B2B customers. So, AI and IT piece combined in 2024, their financial impact was KRW 1 trillion. And in 2025, basically, we will be -- our objective is to have a double-digit growth. Moving on to the other question on Microsoft. So, I will divide this answer into 3 pieces. One on service. Second on the customer. And third, on our internal organization capacity. So first, on the service offering side, basically, our plan is to launch a Korea specialized secure public cloud within the Q1 of this year so that we can provide that to our B2B customers and very quickly carry on with proof of concept so that we could actually secure reference point and have the basis for us to be established in the market early on. And second service is, basically, this is an AI model that is trained on data that is specific to Korea. It will be a model that is based on GPT-4. So, our objective is to release this model within the second quarter of this year. And right now, the model is undergoing training on Korean history, politics and the legal aspect as well. Now second, in terms of the customer breakdown, what we are doing, and we have actually selected about 3 strategic key customers together with Microsoft, and we are currently in the proposal stage. Basically, these 30 or so strategic customers will be the first batch of clients that we will focus on in delivering the services that we are developing. The third aspect is our internal organizational capabilities in order to address the needs of our customers from a more professional perspective. We've been able to really strengthen the consulting capabilities of our existing consulting organization. And we've also set up AX specialized organization, and we've been cultivating and beefing up talent within that group so that we can better meet the requirements of our customers in regards to AX.

The following question will be presented by Kim Hoi Jae from Daishin Securities.

I'm Hoi Jae Kim. I'm covering telecommunication services at Daishin Securities. I would like to first ask about your CapEx. I would like to know the current CapEx level has been coming down. I would like to know the future forecast for CapEx. And when will be the timing for us to see another increase in CapEx due to additional investment in 5G or maybe 6G network? And also, you've mentioned that you're currently training your AI models. Does that entail significant amount of investment? Second question is that you've announced your shareholder return or value enhancement related plan back in November of 2024, and you've listed many objectives in improving and enhancing shareholder return, increasing ROE. I would like to understand as to what are the specific plans that will drive that or make that possible. And also another question is on your share buyback. You've disclosed that you will be buying back and making cancellation of KRW 250 billion of treasury shares. Up until 2028, your objective is to do share buyback and cancellation in the amount of KRW 1 trillion. So, does that mean that from 2025 up to '28, you will be making KRW 250 billion every single year? I just want to check whether that understanding is correct.

Now first, responding to the question on CapEx and depreciation. CapEx for KT and all of its subsidiaries, basically, our plan is to maintain it at 2024 levels. So on a standalone basis, although investment into B2C is going to go down because of AICT business growth and further scaling up of IT, we think that the level is going to be flat year-over-year basis. Now, regarding the next question on CapEx for 5G and 6G cycle. For 5G investment, depreciation period has ended. And for 6G investment, I think there is not big of a probability for an investment into 6G in 2 to 3 years' time. I say that because the technical standard is going to be standardized in 2028 or '29 and then investment will follow. So, this is quite far out into the future. You also talked about a possibility of an additional spectrum allocation for 5G network. At this point, in terms of the necessity of having that additional spectrum, that's not very, I guess, substantive. And also the government at this point does not have a clear government policy on spectrum allocation. So, we do not consider that as one-off risk factors for CapEx investment. And moving on to your question about the implementation of the value-up plan that we disclosed in November. At that time, we also shared specific 4 action plans. And over the course of this year, we will faithfully carry on with those action plans. And also just to elaborate, these are nothing new, but in order to make sure that we implement the value-up plan as was communicated, we are mindful of 2 aspects. One is how we can drive an improvement in bottom line, the profit so that we may facilitate and take an appropriate form of shareholder return. And the specifics, we will, of course, decide as we go through the Q1 dividend approval through the BOD. And yes, we did make the disclosure that we will be canceling KRW 250 billion of treasury shares. But because our foreign ownership limit has been fully reached at above 40% level, we will make appropriate market communications, and we will come up with ways to maintain the corporate value because there are some technicalities that we need to be mindful of. So in light of all of that, we will make the appropriate decision. And that KRW 250 billion that we've disclosed and you asked whether out of that KRW 1 trillion over the course of 4 years, will there be same amount that will be canceled or bought back every single year. Of course, we -- there -- it's pending BOD approval, but I can say at this point that there is quite a bit of possibility that, that may be the case. But of course, it will depend on the growth and the size of the profit that we are able to generate. But I'm sure -- I believe that we do have an upside.

The following question will be presented by Kim Hong-sik from Hana Securities.

I have two questions I would like to ask. On the back of reorganization that the company undertook, there was an impact on cost savings. I would like to understand, you could basically give me a labor cost figure or also the overall expense or cost impact since you were able to reduce the headcount, both on headquarter basis as well as consolidated basis. I would like to get some color as to what the impact on the cost savings were? And second question is that usually, if we look at past practices at the HQ level, the parent company level, the KT has paid back or did shareholder return, taking about half of the profit that was generated. And recently, there's a saying -- people are saying that the dividend inflow that you get from the subsidiaries will also be used as resources for shareholder return. So, I would like to understand as to what the logic behind this thinking is? If you could clarify that, that would be quite helpful because the dividend inflow with regards to the subsidiaries may fluctuate and does fluctuate. So if you could provide a bit more color, that will help us making our forecast easier.

In regards to the cost impact, the cost-saving impact from the organization-related revamping, it's difficult to give you a specific figure per se, but there were 4,400 people who left the retirees. So, that will be the basis upon which we could build our estimation. So, out of that 4,400 headcount that was the headcount reduction, 2,700 people completely left. There was a complete retirement and 1,700 people transferred to the subsidiary that we set up. So, that 1,700 people that moved to the subsidiary, they will be receiving 70% of their previous wage level and the difference had been settled all at once. So, I believe that these elements could help you make that calculation in terms of the labor cost savings as well as the expense that is attached to these headcounts that move to the subsidiary. And the second question, we lost your connection in the middle. So, I don't know if my understanding of your question is completely correct. But I take it to be the adjusted net profit on a separate basis and the logic behind dividend. So the dividend income that we get from our subsidiaries, it will come under our net profit. And yes, it does qualify for -- qualify as resources that could be used for dividend payout to our shareholders. And in terms of the adjusted net profit, the elements that actually is going to be adjusted are, for instance, the non-cash invested securities valuation gain or valuation loss. So basically, these elements work to offset or smooth out volatilities and fluctuations in profit. So based on our calculation, if you look at the size of the adjustment that was reflected for 2024 numbers, it was plus KRW 120 billion. I hope this answered your question. Did it?

Currently, there are no participants with questions. [Operator Instructions]

With no more questions in the queue, we would like to now close the Q&A session. Thank you, everyone, for your questions and your interest, and thank you once again for joining us despite your busy schedules. This brings us to the end of FY 2024 earnings release. Thank you.

Good morning, and good evening. Thank you all for joining this conference call. And now, we will begin the conference of the Third Quarter of Fiscal Year 2024 Earnings Results by KT. We would like to have welcoming remarks from KT IRO, and then CFO will present earnings results and entertain your questions. This conference will start with a presentation followed by a Q&A session. [Operator Instructions] Now, we would like to turn the conference over to KT IRO.

Good morning. I am Young-Kyun Yoon, IRO of KT. We will now begin the earnings presentation for the third quarter of 2024. This earnings call is being webcast live on the Company website. Slides are also available for you to follow while listening to this call. Please note that today's presentation includes estimates of financial and operating performance based on K-IFRS that have not been reviewed by an outside auditor. Therefore, other than confirmed historical data, we cannot guarantee the accuracy and completeness of financial and business-related information and may change in the future. Now Min Jang, CFO of KT will present the earnings for the third quarter of 2024.

Good morning. I am Min Jang, CFO of KT. The business direction that KT has set for the future is transformation into an AICT company. We plan to lay the foundation for sustainable growth by innovating our core businesses with AICT transformation and expanding customized offerings to customers as an AX partner in the B2B segment. To this end, we have been striving to achieve structural innovation in our skills, businesses and workforce this year. On September 28, in order to strengthen our capacity as an AICT company, we aimed a strategic partnership with Microsoft. The two companies will be engaging in a full range of cooperation in the AI and cloud areas for the next five years, such as jointly developing the Korean AI cloud service. We will also be working together to preoccupy new markets in the AI IT sector by jointly establishing a company specializing in AX and jointly implementing talent fostering programs. In addition, we are improving the business portfolio to achieve fundamental and sustainable growth. As these efforts lead to stronger profitability of the B2B business in earnest, the mid- long-term profitability improvement should become more evident. More recently, as part of the AICT transformation efforts, we are innovating the HR structure. To strengthen the competitiveness of the data business, we are planning to merge KT NXR, a subsidiary specializing in big data while redistributing core capabilities by establishing two new subsidiaries specializing in network services. On November 5, KT announced the value of program, which includes the mid-term plan to boost shareholder and corporate value. The mid-term target is to reach a consolidated ROE of 9% to 10% by 2028. To this end, we plan to triple the AI and IT business revenue compared to 2023, generate a consolidated operating profit margin of 9%, liquidate noncore assets and implement a share buyback and cancellation program of KRW1 trillion in cumulative terms. Also, on October 15, we declared a cash dividend of KRW500 per share for Q3. In Q4, we will continue to implement a stable shareholder return program based on the mid- and long-term shareholder return policy. Next, I will go over the financial highlights of 2024 Q3. The group's total consolidated revenue slightly decreased on a Y-o-Y basis to KRW6,654.6 billion due to weak performance of the content subsidiary despite the growth of the core businesses such as real estate, IDC and cloud. On a separate basis, revenue rose by 2.0% to KRW4,765 billion, thanks to stable growth of the B2C and B2B businesses. Consolidated and separate operating income jumped 44.2% and 75.1%, respectively, on Y-o-Y basis, which was mainly driven by the base effect from wage negotiations of 2023 Q3 and profitability enhancement of core businesses. Now, I will go into more detail. Operating revenue amounted KRW6,654.6 billion, which is similar to the previous year. Operating income increased by 44.2% to KRW464.1 billion, which was mainly driven by the base effect of the 2023 Q3 wage negotiations. Net income rose by 32.9% to KRW383.2 billion, thanks to the growth of operating income. EBITDA increased by 13.4% to KRW1,428.9 billion. I will go over the operating expense on the next page. Operating expense decreased by 2.9% Y-o-Y to KRW6,190.5 billion due to the reduction of labor cost, SG&A and cost of service. I will now move on to the balance sheet on the next page. As of September 2024, the debt ratio was 122.8%. The net debt ratio decreased by 8.2 percentage points Y-o-Y to 30.3%. Next, I will go over CapEx. Cumulative CapEx by KT and main subsidiaries as of 2024 Q3 amounted to KRW2,033.8 billion. On a separate basis, cumulative CapEx expenditure as of Q3 was KRW1.416 billion. The cumulative CapEx of subsidiaries was KRW617.8 billion. Next, I will go over the performance of each business unit. Wireless revenue increased by 1.9% Y-o-Y to KRW1,740.4 billion. 5G subscribers take up 76% of total handset subscribers and is continuing to grow. KT is expanding the contactless distribution channels to increase customer convenience and boost profitability. We already have Yogo, a direct online brand, which encompasses eight types of payment plans. In August, we released Yogo Season 2 and launched a promotion campaign for online-only flagship devices. We will continuously work to expand our customer base on contactless channels. Now, I will move on to the fixed line business. Broadband revenue stood at KRW618.5 billion, which is a 0.4% Y-o-Y growth, supported by an increase of the portion of Giga subscribers. In the Media business, IPTV subscribers maintained a net growth trend. However, PPV and advertising revenue declined, which resulted in a revenue decrease of 1.2% on Y-o-Y basis. In Q4, we will be launching the on-device AI setup box to recover revenue and proactively apply AI technology to the entire process of production and distribution of content. Home telephony revenue decreased by 7.6% to KRW172.2 billion. Next is B2B service. The increase of demand for AX and the steady growth of services, including dedicated lines have contributed to a 2.5% Y-o-Y growth of B2B service revenue. I'd like to note that AICC, one of the main drivers of AX is generating double-digit growth with the expansion of the subscription model, [indiscernible] Cloud. We will continue to pursue quality growth by improving the profitability of low-profit businesses. The next page is on major subsidiaries. BC Card posted a revenue of KRW931.4 billion, which is a 6.5% decrease Y-o-Y, mainly due to the decline of credit card sales. However, in contrast, operating income jumped, thanks to diligent management of the soundness of financial assets. Revenue of Skylife declined by 1.4% to KRW246.9 billion Y-o-Y due to reduction of pay TV subscription base. The content subsidiary experienced a 19.3% Y-o-Y decline in revenue due to a shrinking market. Despite the slow market, drama series that were released in Q3, namely Your Honor and Dear Harry were successful, showing strong future growth potential. Revenue of KT Cloud grew by 6.8% Y-o-Y, thanks to higher IDC utilization by global customers and stronger retention of public sector customers and cloud services. KT Estate experienced a revenue growth of 3.6% Y-o-Y, mainly driven by lease revenue from offices and hotels. The occupancy and average room rate of the five hotels in Seoul that the Company operates are continuously on the rise, solidifying the foundation for revenue growth. This concludes the earnings presentation for 2024 Q3. KT will strive to jump to the next level in terms of corporate value by structurally transforming into an AICT company and successfully implementing the corporate value up plan. I ask for the continued support and interest of investors and analysts. Thank you.

For more details, please refer to the earnings presentation, which has been circulated already. We will now begin the Q&A session. Today, we have [indiscernible] Mr. [Tan Ho Tong], OpenTech Innovation Lead joining us to take questions. In order to allow as many Q&A opportunities as possible, we will appreciate only two questions per participant. Thank you.

Now, Q&S session will begin. [Operator Instructions] The first question will be provided by Hoi Jae Kim from Daishin Securities.

I am Kim Hoi Jae from Daishin Securities. And I have two questions regarding the corporate value plan. The first question is regarding your ROE target. You have said 9% to 10% for 2028. The current number is around 6%. So, I believe this can be a quite ambitious goal. So, I would like to have a little bit more color on how KT plans to achieve these targets. Second question is regarding the share buyback and cancellation program. From 2025 to 2028, you mentioned that the buyback and cancellation will be around KRW1 trillion in cumulative terms. Will this program be implemented equally across the years? That is my first question regarding this. And if you look at the current shareholder return policy of KT, it's currently 50% of the adjusted net income and you pay a minimum DPS and the resources remaining after the minimum DPS payment is to be used for share buyback. And given that you have launched a 2025, 2028 share buyback and cancellation program, I would also like to recommend that you may think about increasing your dividend payments with the resources that you have. So, I would like to hear some of your thoughts on that.

Yes. Thank you for your question. And regarding the ROE target, so we try to lay out the details in the presentation, but I think there are largely three ways that we are trying to achieve this target. The first strategy that we have is transformation into an AICT company. And I believe that this pillar of the strategy can be the most challenging for KT. So, we are trying to transform ourselves from a CT company to an AICT company. And to that end, we have been innovating the businesses, the capacities that we have and also our workforce so that we can successfully adjust our business portfolio. The second part is about enhancing the efficiency of our assets. So, we may dispose or develop some of the real estate that are not considered to be core to the business. Also, we have some assets in equity as well that may be disposed or used to boost the efficiency of our assets. The last one is about the use of capital. So, until 2028, as mentioned in the presentation, we will be using the excess cash to make investments to enhance ROE or we can also use those resources in the KRW1 trillion shareholder return program. So these are largely the three ways that we are trying to achieve the ROE target. And then your second question regarding whether the share buyback and cancellation program up to 2028 will be implemented equally across the years. So we don't believe that it will be volatile, but we think it will be gradually increasing across the next couple of years. So we plan to implement the buyback and cancellation program in a gradually increasing and stable manner. And then your last comment was regarding the mix between the share buyback cancellation and dividend payment. So, until next year, the current shareholder return policy is effective. So that's 50% of adjusted net income, a minimum DPS of KRW1,961 per share. We pay quarterly dividend. So annually, currently, it's around KRW2,000. So, this policy will continue until next year. And then as to the mix after that, the Board of Directors will be making the decision and how to move forward. But we do believe that the shareholder return policy will become stronger in future years.

The following question will be presented by Joon-Sop Kim from KB Securities.

I am Kim Joon-Sop from KB Securities. And I have two questions regarding the AX subsidiary. So, you are working with Microsoft to establish an AX specializing subsidiary. I would like to have better understanding on types of services that this company will be offering. And also, what is the size of the business that you are expecting that will be derived from this company? And maybe you can also talk about the number of employees that will be reassigned to the AX company as well.

Yes. Thank you for the question. My name is [Tan Ho Tong] from the OpenTech Innovation Lead. And currently, we are discussing and cooperating with MS to develop and establish the AX company. But currently, we are still in the development phase. So unfortunately, we are not able to talk about the exact details of the services that we are planning to offer. So today, I think I can give you a more overall picture on this cooperation. And so AX is different from MSP. So if you assume that there is a customer or a client that has the demand to transform some of its businesses, tasks and projects to AX, they may have the need to do so, but they may not know where to start. So they may need some help in developing the approach or trying to come up with concrete service types that they can use AX to transform their business. And so, I think the biggest role will be offering technical consulting. So, it will be mainly C-level consulting services or pre-consulting service, understanding the AX needs of the customer and giving advice on how they can leverage technology to achieve their AX goals. Yes. So, when I say consulting, you may think of more conceptual consulting, but this is the reason why I mentioned that it will be a technological consulting service because the customer will be having a clear idea on the final output all the way up to the POV stage. And so, I think this type of additional service is something that we can differentiate ourselves from other competitors in the market. So, this type of service offering requires high level of expertise. This is why we will be fostering talent within KT. We will be recruiting experts from the market, and we will be working together with Microsoft to ensure that we have the technology and the ability to foster talent in this area. You asked about the size. So, the size has not been confirmed yet, but maybe just a preliminary and ballpark number will be around 100 employees, although even that number can subject to change based on the needs of the market that we can identify at the establishment of the Company. And lastly, this is a high-performing or high expertise-based consulting. So, the level of consulting that we provide to the customers, I believe, will be differentiated in the market. Therefore, while it is too early to talk about revenue, I think the value that we can put on this consulting services will be significantly high. While the Company subsidiary will work until the POV stage, the customer will have to find a partner for the main project as well. And I think this will be a very significant opportunity for KT. So this business can ultimately contribute to higher revenues of KT as well. And just to give you a little bit more color within KT, we have tried these type of services for the ESG parts of the Company, and we have been usually working on the AX POC. The AI innovation that is possible for the customers, I think, therefore, has been already proven. And I think there is significant potential here. We are already receiving calls from some of our customers. So, I believe that this market can grow considerably in the future.

The following question will be presented by Eun Jung Shin from DB Financial and Investment Securities.

I have three questions. First, regarding the value of program. One measure is that you will be tripling revenue of AI and IT by 2028. So, I would like to have a better understanding on your strategies to achieve the goa? And then second, you just went through the AX company that you are developing together with Microsoft. And I think earlier, you also mentioned revenue outlook around KRW4.6 trillion. So, what would be the role of KT in achieving that? And then third, there is reassignment of workforce that is currently being implemented by KT. So, I would appreciate a status update and how much the budget or impact it will have on the financials? If you can share color on that, that will be helpful, too.

Thank you for the questions. I will be taking the first and third question, and Mr. Jang will be taking the second question. So regarding the tripling the revenue of AIIT, base assumption is that we will be transforming ourselves from a CT and LINE-based company to a B2B AI DX service company. On a separate basis, the AI IT revenue is currently around 6%, and we plan to increase this number significantly by 2028. The absolute number will be around KRW3 trillion. And regarding the reassignment of workforce, the process of receiving the request have almost come to completion now. So there will be 1,700 employees that will be reassigned to the newly established subsidiaries, two of them and 28 employees have signed up for retirement program. So a total of 4,500 employees will be reduced from the headcount. And so in terms of the impact on financials, the payment for retirement will be booked in this year's accounting. And then the payment for the salaries of the employees that are being reassigned to the new two subsidiaries will be paid as a fee from KT to the subsidiary. And this amount should be lower than what we are making as payment at the current stage. So for the payment to the employees that are being reassigned to the new subsidiaries, that amount can be saved immediately from next year.

Yes. And I will be taking the second question. Your question was regarding the revenue outlook. So when we mentioned KRW4.6 trillion, it was based on projections from consulting firm, and there are largely two pillars, AI and cloud. It is not an accurate number, but we believe that the breakdown between AI and cloud will be largely 50 to 50. And as the AI technology evolves and the AX market takes off, we think that the growth in this segment can be quite exponential in the next couple of years. But regarding the cloud business, so this will be driven by partnership with Microsoft, and it will be mainly the sovereign secure public cloud business. And this business is largely impacted by government regulations. While the finance sector is experiencing more relaxed regulations and there should be, therefore, higher demand for external cloud usage. On the public sector, I think it may take longer for this market to open up to other companies. So early on, we will be mainly targeting strategic large customers who have demand for sovereign cloud services, and we will be monitoring the regulatory environment to expand into finance and the public sector later on.

There are no further questions. We will conclude the Q&A session. Thank you for your interest and questions.