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Edited Transcript of 032640.KS earnings conference call or presentation 7-Feb-20 6:00am GMT

Q4 2019 LG Uplus Corp Earnings Call

Seoul Feb 12, 2020 (Thomson StreetEvents) -- Edited Transcript of LG Uplus Corp earnings conference call or presentation Friday, February 7, 2020 at 6:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Hyuk-Ju Lee

LG Uplus Corp. - CFO, VP & Director

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Conference Call Participants

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* Alastair Jones

New Street Research LLP - Analyst of Asia and EMEA

* Hoi Jae Kim

Daishin Securities Co. Ltd., Research Division - Analyst

* Joonsop Kim

KB Securities Co., Ltd., Research Division - Analyst

* Seyon Park

Morgan Stanley, Research Division - Equity Analyst

* Taewon Kim

UBS Investment Bank, Research Division - Director and Research Analyst of Internet and Gaming

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Presentation

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Unidentified Company Representative, [1]

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[Interpreted] Good afternoon. I am [Young-Soo Kwon], Head of IR and LG Uplus. We would like to begin LG Uplus' Earnings Presentation for Q4 2019. Please refer to the Q4 earnings presentation, we have previously circulated. And please be reminded that since we have investors from both home and abroad, we will be providing consecutive interpretation. Also, please be reminded that our future outlook that we will be sharing with you today are subject to change, depending on macroeconomic situation as well as the market backdrop. In the interim income statement we have disclosed, revenue and operating profit from payment gateway business, which is scheduled for sale as of June 1, are classified under profit and loss and discontinued operations, while year-over-year and Q-on-Q figures were also adjusted on the same basis. Also in the 2019 income statement, the date of acquisition for LG HelloVision is deemed as 31st of December, with no bookings of LGHV's revenue and profit for the current period.

In Q4 income statement, portions of our customer membership point, which used to be booked as marketing expense, is now directly deducted from the revenue line. 2019 balance sheet reflects the impact of LG HelloVision's consolidation, while assets and liabilities of the PG business have been reclassified as assets and liabilities held for sale, and they do not impact the liability ratio. To help with the understanding of our investors, please be reminded that in the earnings presentation that we have circulated, it includes the numbers from the Payment Gateway business. Once again, please be reminded that our future outlook, they are subject to changes in macroeconomic and market situation. We will begin with Q4 business and financial highlights, which will be followed by business results and 2020 future outlook. After which, we will entertain your questions.

With that, I would like to invite Lee Hyuk-Ju, our CFO and Executive Vice President at LG Uplus to go over the financial performance as well as the sales figures.

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Hyuk-Ju Lee, LG Uplus Corp. - CFO, VP & Director [2]

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[Interpreted] Good afternoon. I am Lee Hyuk-Ju, the CFO. I extend my thanks to analysts and investors for joining Q4 2019 earnings release call for LG Uplus. I wish you and your families, good health and blessing this year as well.

During the fourth quarter, LG Uplus extended customer value offerings of 5G services into the boundaries of our daily lives and sought to coproduce content with #1 players, both domestic and global, and pursued development cooperation.

In the B2C business, where subscriber net addition and revenue market share continued to rise, we set up a consumer group that integrated what used to be our mobile, home media and the home IoT services. Through seamless links across home and mobile services, we were able to strengthen product competitiveness, unify customer service touch points as a way to prepare for innovative service propositions and digital transformation of the telecom media business.

For Smart Home, we gained the growth engine in the pay TV market via the acquisition of LG HelloVision. While for the B2B business, we decided to carve out and sell off our PG, which is the Payment Gateway business, securing additional funds for the growth of Uplus 5G services and the Media & Content business.

In 2019, in particular, we took the lead in dismissing unsound competition as we sought to stabilize the market and built on customers' trust through offering customer-centric service value propositions and change the paradigm of competition around services. In this regard, 2019 was a meaningful year.

Allow me to now walk through our financial highlights.

Q4 service revenue, including PG business earnings, was up 3.3% year-over-year and 3.4% Q-on-Q, reporting KRW 2,485 billion. Per annum basis, service revenue was up 2.9% year-over-year to KRW 9,205.6 billion, outperforming above 2% growth guidance for the service revenue.

Q4 operating expense was up 1.3% year-over-year and 0.7% Q-on-Q to KRW 3,108.8 billion on efficient spending, including acquisition cost savings. Full year operating expense was up 6.5% year-on-year, reporting KRW 11,695.7 billion, an increase in depreciation and marketing spend.

For the marketing expense, driven by 13.1% year-on-year growth of new subscribers, including 5G subscribers, annual marketing expense was up 8.7% year-on-year to KRW 582.9 billion. But unsustained SAC savings, subscriber acquisition cost savings, Q4 marketing expense was down 0.5% Q-on-Q, reporting KRW 582.9 billion.

Rise in marketing expense is driven by increase in SAC on the back of overheating of competition in the first half, growth in annual sales of handsets and increase in the share of 5G handset customers to 11% as well as increases in size of deferrals for sales commission expense from IFRS 15.

However, in Q4, we've seen positive development, i.e., decline in the size of deferral amount compared to Q3. As such, on top of our efforts to continually reduce SAC, we project the upward trend for total marketing expense for the full year of 2020 will be subdued compared to the previous year.

Operating profit for Q4 was up 18.7% Q-on-Q and 77.8% year-over-year, reporting KRW 185.1 billion on service revenue growth and efficient marketing spend, with the full year figure down 7.4% year-on-year, coming in at KRW 686.2 billion.

On 5G investments, Q4 CapEx was up 27.5% year-on-year and 4.2% Q-on-Q, reporting KRW 817.3 billion, with per annum figure at KRW 2,608.5 billion.

EBITDA was up 36.4% year-on-year and 8.6% Q-on-Q to KRW 725.6 billion, with full year EBITDA up 13.4% year-on-year, reporting KRW 2,726.9 billion.

As of end of the period with LGHV consolidation accounting for PG gateway businesses assets and liabilities held for sale and increase in relevant asset and liability following adjustments in this contract period, total assets stands at KRW 17,941.1 billion, total liability, KRW 10,591.4 billion, with liability-to-equity ratio and net debt ratio recording 144.1% and 63.8%, respectively. For your information, liability ratio uplift was 6.8 percentage points from consolidation of LGHV.

Please allow me to make one correction. I've communicated a mistaken figure. For the marketing expense, there was an year-on-year increase of 8.7%, with the figure coming in KRW at 2,246 billion.

That ends the report on Q4 and full year financial business highlights. We now move on to earnings and outlook for individual businesses.

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Unidentified Company Representative, [3]

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[Interpreted] My name is (inaudible). First on the consumer group. I'll begin with the mobile business. Despite the impact of deductions of membership revenue, Q4 service revenue was up 2.4% year-on-year, driven by growth of high-quality subscribers, while down 0.1% Q-on-Q to KRW 1,310.1 billion per annum, and was up 2.1%, reporting KRW 5,164.1 billion. With the membership impact removed, service revenue was up 4.1% year-on-year and 1.5% Q-on-Q to KRW 1,330.9 billion, with the 2019 annual figure up 2.5%, recording KRW 5,184.9 billion. Under the same basis, on 5G subscriber growth, Q4 ARPU recovered from 3.2% decline in Q3 improving 1.9% year-on-year, reporting KRW 31,139, giving more clarity to ARPU turnaround in 2020.

Also, the MVNO business by achieving 42.1% year-on-year subscriber growth is becoming one of the growth pillars for our mobile business and through KB Bank alliance and new channel expansion through LGHV, we were able to solidify foundation for qualitative and volume growth and further lifted the MVNO market.

Based on the number of circuit lines as of 2019 end, we outperformed the annual growth guidance of 7% as subscriber numbers grew by 8%, which is driven by 19.4% year-on-year growth of net additions, which is equivalent to 1,128,000 subscribers.

Also, 5G subscribers account for 11% of handsets, overachieving the planned target of 10%, coming in at 1,165,000 subscribers in Q4, sustaining the trend of high-quality subscription.

In Q4, our mobile 5G service extended customer value from sports, entertainment, games to areas close to our daily lives, upgrading 9 core services of Uplus 5G around AR and VR functionalities. We also exported 5G solutions to telcos overseas, differentiated our services through a strategic collaboration with global and domestic players and startups with best technical capabilities, further solidifying our 5G leadership and growth driver for the mobile business.

In services, through differentiations in the previous 5 main essential services that include VR, AR, Pro Baseball launched last year, we bolstered customer experience. And based on our 5G product competitiveness, unique to LG Uplus, such as by presenting new service offerings that reflect specific characteristics of target customers and cloud games, Smart Home training, we continued to outperform the market in terms of user views and data usage.

In terms of marketing, we will focus on experiential marketing, which will allow you to experience our distinctive products and services with ease and convenience and through partnering with Google in digital channels, such as the YouTube platform, we will continue to enhance the brand value of Uplus 5G.

In terms of 5G network coverage, we completed the build-out of 85 base stations, in line with the beginning year target. From Q4, we've set up in-building sales to improve quality of calls, commercialize technology for remote optimization of 5G wireless network, built up NMS, network management system, based on big data and AI as we accelerated digital transformation to provide the optimal services in terms of 5G data quality.

Next is on consumer Smart Home business.

For the Smart Home business, following the impact from home shopping commission settlement and increase in premium rate plans and giga subscribers, revenue in Q4 was up 12.8%, generating KRW 538.5 billion in revenue, with annualized growth at 10.9%, with full year figure recording KRW 2,046.2 billion.

For the IPTV business, increase in the number of high-value customers in Q4 supported the uptrend in basic fee revenue as well as UHD set-top and advertising revenue. And with the inclusion of home shopping revenue, growth trend was recovered with year-over-year growth of 16.6%, with the revenue reporting KRW 1,032.3 billion.

Driven by Giga Internet and higher share of 1 Giga Internet customers, Q4 broadband business was up 13.1% year-over-year and 6.8% Q-on-Q to KRW 215.3 billion. On a full year basis, revenue was KRW 813.5 billion, up 9% year-on-year, supporting further profitability for the Smart Home business.

For Kids World, which has become a core service of LG Uplus' IPTV, we launched Service 3.0 last August, clearly differentiating itself among other kids education products. As seen from Bravo Life, Home IoT, Home Keeper and Pet Care, we were able to offer value propositions to various customer segments by identifying their specific needs.

In 2020, our competitiveness in product offerings will continue to strengthen.

We will add more content to Kids World platform and continue to work on differentiation and will also upgrade functions in UX to improve user convenience. For specialized services, they cater to customer needs and specific characteristics of a particular household, like the Pet Care, by providing day-to-day services that are intuitive. We will continue to enhance our Uplus brand value and customer satisfaction in the consumer market.

Also, we plan to strengthen partnerships with OTT players and by launching bundling packages for premium service rates, we expect to gain competitiveness in Giga Internet with the support of the IPTV product basis and create additional advertisement-based revenue sources.

Also for Home IoT, by entering into business partnerships, we plan to gain device and platform competitiveness and improve profit-making structure through gaining cost efficiencies, and we are currently working on a new platform so that users can enjoy more diverse IoT features. We are also planning to upgrade user convenience through offering unrestrained connection between home and the mobile platform.

Underpinned by such product capabilities, we plan to grow home service revenue by more than a double-digit in the year 2020.

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Unidentified Company Representative, [4]

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[Interpreted] Next is on the B2B business, and I am [Ku Jong Cho], in charge of B2B planning.

To help investors gain a clear picture for the B2B business, I will present on the Q4 figures, inclusive of the PG business.

Q4 B2B revenue was up 6.1% year-on-year and 11.1% Q-on-Q to KRW 539.7 billion. Annual revenue reported KRW 1,982.7 billion, which is down 1.3% year-on-year.

Within the E business, we've made a disclosure on our plans to carve out and sell off the PG business with a view to focus on our core telecom business. So 2019 B2B revenue, after the exclusion of the PG business, was flat year-over-year as the impact from the decline in the relevant revenue item was removed.

The IDC revenue was up 14.4% year-on-year in Q4 on growth and acquisition of global and large-scale domestic customers with per annum growth reporting 20.7%. Even on a recurring revenue basis, there was a high growth of 15% year-on-year.

For the lease line business, despite the decline in the selling price, revenue was flat year-on-year on new acquisitions and demand for capacity additions. But as ESS and photovoltaic market contracted, the corresponding revenue fell year-on-year.

We expect a tough competitive environment in 2020 for the B2B market on lower corporate investments and lower-priced bidding trends in the public sector projects. Having said that, we will actively uncover demand in the redundancy market for public and financial customers and IDC demand from global footprint.

Meanwhile, for the SOHO business, we would be, for product competitiveness, expand on the new business opportunities in connected cars, smart school, drones, et cetera, so as to achieve revenue growth of no less than that of 2019. In B2B business, that leverages 5G, we will expand proof-of-concept projects in areas such as in smart factory and remote control and identify business opportunities for us to improve year-on-year profitability.

That ends the presentation by each business unit. Now the CFO will present on 2020 business objectives.

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Hyuk-Ju Lee, LG Uplus Corp. - CFO, VP & Director [5]

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[Interpreted] For 2020, on a consolidated basis, LG Uplus' service revenue target is 17%, and on a stand-alone basis, we are targeting above 5% growth.

For the wireless service revenue in 2020, basically, we are targeting twofold that of the previous year of around 2%. Meaning, we are targeting for 5%. And for the consumer business, our objective is to shoot for 10%.

Annual CapEx is expected to decline to around KRW 2.5 trillion, one level as we have put in investments on 5G base station-related equipment investment in 85 different cities back in 2019.

Now for this year, since there continues to be a pressure in terms of depreciation cost for 5G investment as well as marketing spend, we will try to bring about service differentiation and innovation in marketing so as to maximize our revenue. And through our innovation in the way we operate our business, we will target to improve our operating profit.

In terms of the dividend for year 2020, as we have announced through our cash dividend disclosure previously, basically, as off our existing dividend payout policy, which based -- which excludes the one-off impact from our financial statement, basically, we will continue to stick to our payout policy of paying out 30% -- above 30% of our net profit based on the one-off excluded financial statement.

In 2020, I assure you that LG Uplus will do our best to maximize shareholder value. Thank you.

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Questions and Answers

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Operator [1]

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[Interpreted] Now Q&A session will begin. (Operator Instructions) The first question will be provided by Hoi Jae Kim from Daishin Securities.

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Hoi Jae Kim, Daishin Securities Co. Ltd., Research Division - Analyst [2]

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[Interpreted] I would like to submit 2 questions. I'd like to first congratulate you on the better-than-expected business performance, different from the concerns that the market had.

I would like to pose 2 questions. My first question is, with the launch of the 5G services, we've seen upticks in the marketing expense as well as depreciation costs, which undermined your profit base. I would like to ask you, when do you think the timing for turnaround or improvement in your wireless profit will be in light of such higher marketing and depreciation expenses, and also in light of your subscriber trend going forward? And if possible, could you also share with us what your thoughts are in terms of the timing for the turnaround in the performance of the 5G business? My second question is compare -- I mean if you look at other telcos as well, each company seems to have their own formula for calculating the wireless ARPU, so a direct apples-to-apple comparison of the ARPU figure may not be reasonable. Having said that, your other 2 competitors have reported a rebound in the ARPU trend while LG had not displayed that trend. When do you foresee the rebound in the declining ARPU will take place?

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Hyuk-Ju Lee, LG Uplus Corp. - CFO, VP & Director [3]

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[Interpreted] Yes. I'm the CFO, I will respond to both of your questions. Well, the first question, yes, that is a very tough task that really exists right before us. And so we would need to run some more calculations. But my basic thoughts are as follows. Now since marketing expense is more of a variable expense, let's take that aside. Just looking at the fixed cost or fixed expense aspect and assuming that the 5G build-out is complete, we believe that the amount of fixed cost burden that we can handle on a per annum basis will be around KRW 1 trillion. If you look at the basic characteristics and profile of profit contribution on the mobile, the percentage will be hovering around 50%.

So if you think of that aspect, that means that we would need to be generating more than KRW 1 trillion of profit contribution for us to actually generate profit after taking the fixed cost out.

So that said, then I believe that the revenue that we generate from 5G services should be slightly higher than KRW 2 trillion in order for us to cover the common cost element and then still be able to generate profit.

And according to my calculation, we need to be able to generate above KRW 2 trillion in per annum revenue and that actually is equivalent to around 4.5 million or 5 million subscribers, which will enable us to hit the breakeven point.

And I believe that the projection on the timing of that turnaround or improvement would have to take into consideration emergence of different services that could accelerate the adoption of 5G services and also the penetration of the devices.

So I have to admit it, it's a very difficult task for us, but we will continue to really think hard of different approaches.

Relating to your question on ARPU, I have to admit, I actually do not know as to why other companies ARPU are showing an upward trend.

I'm in no way trying to cast out to the upward trend. I'm not questioning or doubting that. It's just that I find it quite difficult in terms of the calculations and finding the relationship between the service revenue growth and the subscriber growth.

Just looking at our company's figure on the MNO side, the MNO handset basis, in terms of the origination-based ARPU, it is showing an upward trend on Q-o-Q and Y-o-Y basis.

However, for us, if you look at our MVNO subscribers, they have posted a significant growth of 40%, and the ARPU level is 12,000. And also, there is the M2M ARPU, which also has a very low level of ARPU at around 5,000 to 6,000, and also we've seen a quite salient growth in the number of M2M subscribers as well, which all had an impact of increasing the denominator figure. And that is why I believe that on a Q-on-Q basis, we have seen a downward trend for that ARPU data.

And basically, on the company's service revenue line item, one has to take into consideration multiple factors, the quality and quantity of the MNO subscribers as well as MVNO subscribers and also calculate the M2M impact as well.

So we will be mindful of making a very optimal combination of these 3 different factors. So eventually, we will be able to achieve a more superior service revenue performance as against our peers.

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Operator [4]

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[Interpreted] We will take the next question. The following question will be presented by Taewon Kim from UBS Securities.

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Taewon Kim, UBS Investment Bank, Research Division - Director and Research Analyst of Internet and Gaming [5]

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[Interpreted] I would like to thank you for sharing with us your 2020 CapEx guidance before I ask my question. My question is last year, basically, your CapEx -- the level of your CapEx increase was higher than what the market had expected. For this year's CapEx guidance, what do you see are some of the uncertainties that exist in the overall backdrop, if there are any? And also, can you give us some more color in terms of your wireless CapEx?

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Hyuk-Ju Lee, LG Uplus Corp. - CFO, VP & Director [6]

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[Interpreted] I'm the CFO. I will respond to your question. I believe that it is a reasonable approach to look at this network investment from the perspective of a return on investment. However, having said that, we have had just launched our 5G services, and including the 85 cities, where we have set up our base stations as well as the outer areas and the other regions, I believe that it is our obligation to actually provide the service to our subscribers.

So whether we would want to invest our first secure or acquire the subscribers or make initial or prior investment and then move on to expand on our subscriber base, that will be a decision point for an entity or a company to make. I believe that for our current subscribers as well as the future potential subscribers, wherever they are in the country, I believe that they have the right to receive the right for 5G services. And in order to be able to offer those services, there are investments that are required.

And I expect that of the total planned budget, about half of those CapEx budget most likely will be used for 5G.

And also, as we operate our business as a company, there are need for us to expand on our business horizon, which requires investment. And also in light of the current trend of convergence where various different services are coming together, it does also require some investment on the back-end infrastructure side.

So on the fixed-line side as well, we need to continuously make investments in order for us to further enhance our services and up our network capacity or capabilities. So based on the planned budget, 50%, around half would be invested for 5G, while the remaining 50 will be for the back-end infrastructure as well as further enhancing the existing fixed-line network and also the continuous maintenance investment for the existing overall infrastructure.

As such, we expect to make a certain strategic decision relating to a different type of network deployment to come. And in terms of the expenditures, we will revisit all these different items from a 0 base, and we will be regressing controlling the cost. So -- and we will continue to exert our first so that we may offset any uptick or increase in the depreciation cost.

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Operator [7]

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[Interpreted] We will take the next question please. The following question will be presented by Joonsop Kim from KB Securities.

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Joonsop Kim, KB Securities Co., Ltd., Research Division - Analyst [8]

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[Interpreted] I am from KB Securities. I would like to ask 2 questions on Smart Home. Your acquisition of LG HelloVision has now been completed in terms of the process, and people are expecting synergies. Can you give us some guidance as to what types of synergies you'll be able to enjoy? And globally, there are growth and develop growth and a lot of OTT services are coming out into the market. I would like to understand what your strategy is for the media business?

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Hyuk-Ju Lee, LG Uplus Corp. - CFO, VP & Director [9]

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[Interpreted] I'm the CFO. I will respond to your first question.

Now if you look at the recent business results of HelloVision, I believe that they were somewhat subdued.

The first reason is that for the past 2, 3 years, this company was at the very center of the whirlwind around the M&A and so they were not able to truly focus their efforts.

The second reason is that other than the cable TV services that they were providing, they did not have enough ammunition in terms of services and products that they could provide to their subscribers. And also, they had weak infrastructure.

In terms of the first issue, all the approval process and also acquisition process is now complete, so there will be resolutions or we won't be seeing any additional impact from this.

Relating to the second factor, we at LG Uplus, we have services that is well reputed in the market, and we believe that we can leverage the services through HelloVision. And also, we could use our infrastructure and also further up their infrastructure capabilities. As a result, both companies will be able to enjoy a win-win outcome. And we expect the synergy to be quite sizable.

Now from the timing of the decision to acquire and up to the timing of the approval, there was quite a bit of time. And so from a PMI perspective, there were multiple projects and thoughts that we were able to develop.

Since we prepared very thoroughly, we believe that we will be able to enjoy synergy above and beyond the price that we had paid for acquiring that entity.

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Unidentified Company Representative, [10]

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[Interpreted] I will respond on the OTT strategy. I'm (inaudible) the Head of the Consumer Group. Well, up until now, based on the exclusive agreement that we have with Netflix, we were able to offer a very distinguished services to our subscribers.

Based on the exclusive service arrangements that we have with Netflix, we will continuously develop various different types of services and also continuously offer a good value customer proposition to our subscribers. And also going forward, as there will be more OTT platforms that may emerge in the future, we will keep to a very open mindset and develop business strategies that could cater to that trend.

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Operator [11]

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[Interpreted] We will take the next question. The following question will be presented by Seyon Park from Morgan Stanley.

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Seyon Park, Morgan Stanley, Research Division - Equity Analyst [12]

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[Interpreted] I have a follow-up question. You've mentioned that your wireless service revenue growth target is 5%. Can you also give us a breakdown of what your target is for ARPU growth as well as subscriber growth?

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Hyuk-Ju Lee, LG Uplus Corp. - CFO, VP & Director [13]

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[Interpreted] We have some internal discussions.

Now when it comes to ARPU calculation, there are different factors that come into play like the M2M and MVNO, so it's quite difficult to be very exact. But on an ARPU basis, for year 2020, we're planning to grow around 2%. And for subscribers, basically, we want to be able to continue the base of growth of around 8%.

Now so if you do a simple arithmetic of 2% ARPU growth and 8% subscriber growth that lands at 10% service revenue growth, but that is not the case because you have to consider the M2M subscriber base as well as the MVNO base. Basically, we will -- we have considered the MNO, MVNO and M2M elements all in all. And hence, once again, as I previously said, we're targeting to bring about above 5% service revenue growth.

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Operator [14]

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[Interpreted] The last question will be presented by Alastair Jones from New Street Research.

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Alastair Jones, New Street Research LLP - Analyst of Asia and EMEA [15]

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Just wanted to ask you if you're still anticipating around 30% of your handsets to be on 5G by the end of this year. If that's still a target for you? And then just on the HelloVision, LG HelloVision acquisition. Just trying to understand the KRW 2.6 trillion CapEx guidance you've given for 2020, does that -- If you hadn't acquired LG HelloVision, is there some sort of estimate as to what the CapEx would have been, excluding that investment? And then just sort of very finally, I don't know -- on the EBITDA, I mean, you reported around about 13% growth for EBITDA for this year. If you were to exclude the adjustment to the lease accounting, do you have any estimates as to how EBITDA would have trended in 2019 versus 2018? That's the 3 questions.

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Unidentified Company Representative, [16]

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[Interpreted] Thank you for the question. Responding to your first question on 5G handset. As you know, in 2019, the 5G premium phones, the assortment of or the lineup of those phones were very much limited. But in 2020, we expect 5G lineup to actually increase to more than 20. And in light of that, then, we expect that 5G subscriber portion by the end of this year will actually be higher -- will be able to go up and be higher than 30%.

Your second question relates to the any CapEx difference. If we were to include HelloVision as -- or if we were to exclude the impact of HelloVision. Basically, our CapEx investments were undertaken with a view to further upgrade and enhance our network. So the acquisition of HelloVision does not work to actually increase the CapEx figure.

Rather based on the upgraded network that we can provide and HelloVision could share, this would give more business opportunity for HelloVision to engage in a better business operation.

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Hyuk-Ju Lee, LG Uplus Corp. - CFO, VP & Director [17]

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[Interpreted] I will respond to your third question. I'm in charge of accounting.

If you look at EBITDA for 2019, excluding the lease account-related adjustments, the level is similar, flat compared to 2018.

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Unidentified Company Representative, [18]

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[Interpreted] This brings us to the end of the Q4 2019 earnings conference call for LG Uplus. If you have further questions, please contact our IR team. Thank you very much for joining us this afternoon.

[Portions of this transcript that are marked Interpreted were spoken by an interpreter present on the live call.]