SK Telecom Co Ltd (SKM) Q1 2021 Earnings Call Transcript

Image source: The Motley Fool.

SK Telecom Co Ltd (SKM 0.20%)
Q1 2021 Earnings Call
May 11, 2021, 3:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

[Foreign Speech]

Good afternoon. First of all, thank you all for joining this conference call and now we will begin the conference call by the Fiscal Year 2021 First Quarter Earnings Results by SK Telecom. This conference will start with a presentation followed by divisional Q&A session. [Operator Instructions]

Now we shall commence the presentation by SK Telecom.

Joong Suk Oh -- Head of Investor Relations Planning

[Foreign Speech]

Good afternoon. I am Joong Suk Oh, Head of IR Planning at SK Telecom. Today's conference call will consist of the presentation on the earnings results for Q1 of 2021 and the future management plans and strategic direction by Poong Young Yoon, CFO and Head of Corporate Center I, and Hyung-il Ha, Head of Corporate Center II, followed by a Q&A session.

[Foreign Speech]

Today, achievements and strategic plans for MNO will be provided by Poong Young Yoon, Head of Corporate Center I, and Hyoung-il Ha, Head of Corporate Center II will discuss that of the New ICT businesses.

[Foreign Speech]

Today's conference call will provide consecutive interpretation. And we have with us executives from relevant business divisions to help deepen your understanding.

Before we begin, we want to remind you that all forward-looking statements are subject to change depending on the macroeconomic and market situations.

Let me now present our CFO.

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech]

Good afternoon, this is Poong Young Yoon, CFO of SK Telecom. First of all, let me express my appreciation to investors and analysts for their continued support.

[Foreign Speech]

On April 14, SK Telecom announced that it was reviewing a plan for a spin-off, which would result in a telecom company and a holding company with semiconductor and new ICT assets.

[Foreign Speech]

We plan to use the spin-off to increase shareholder value and create the most optimal structures for our telecom business and new ICT businesses respectively thereby accelerating their growth. To fulfill the purpose of the spin-off, we completed the cancellation of treasury shares worth KRW2.6 trillion in market value, which account for 10.8% of the total issued stock.

[Foreign Speech]

The planned spin-off was designed to prioritize shareholder value, and we believe that we have gained a good understanding of the investors and the market. We will carry out the plan with a strong conviction and make sure that all the necessary decisions are finalized within the first half of the year.

[Foreign Speech]

Now let me discuss the consolidated earnings highlights for Q1 of 2021.

[Foreign Speech]

Consolidated revenue for Q1 of 2021 recorded KRW4.7805 trillion. All business divisions enjoyed growth year-on-year, and media and safety and care posted a double-digit growth, marking a 7.4% year-on-year increase. But the figure declined 1.2% Q-on-Q due to the base effect of higher seasonal sales in Q4.

[Foreign Speech]

Consolidated operating income increased by 29% year-on-year and 17.4% Q-on-Q to post KRW388.8 billion. MNO and media led the operating income improvement by achieving both revenue growth and cost efficiencies. S&C and commerce also contributed to earnings with their Y-o-Y growth in operating income.

[Foreign Speech]

Net income recorded KRW572 billion, posting an 86.9% growth year-on-year and a 54.2% growth Q-on-Q thanks to equity method income on SK Hynix and sales profit of SK Wyverns.

[Foreign Speech]

Let me now discuss major achievements and strategic direction for each business.

[Foreign Speech]

Non-consolidated MNO revenue for Q1 increased by 1.9% year-on-year and 1.4% Q-on-Q to post KRW2.9807 trillion. Celebrating the second anniversary of 5G on April 3, we saw the number of 5G subscribers reach 6.74 million as of the end of Q1 and record the biggest quarterly net adds, thereby leading MNO revenue growth.

[Foreign Speech]

MNO operating income posted KRW307.3 billion, a 19% growth year-on-year and a 33.1% growth Q-on-Q as the market stabilization trend continued.

[Foreign Speech]

Recently, we introduced five new 5G price plans to strengthen the 5G price options. They include three online only on-tech plans that offer more benefits at lower prices and two additional 5Gs plans at KRW69,000 and KRW79,000. We will continue to promote the transition to 5G services based on the variety of price plans that cater to diverse customer needs.

[Foreign Speech]

Subscription services newly pursued by MNO division are expanding partnerships and launching diverse subscription services for daily lives, including education, rental and F&B. In the second half of the year, we plan to introduce integrated subscription services based on a new subscription marketing platform where customers can enjoy optimal subscription life at reasonable prices. We're developing flagship products that will raise customers' expectations for subscription services. We will do our best to ensure high quality of these services.

[Foreign Speech]

Moving on to Media. SK Broadband's consolidated revenue recorded KRW967 billion. With the T-broad merger and IPTV subscriber growth, it rose by 17.6% year-on-year but declined by 4.1% Q-on-Q due to the base effect of seasonal sales in Q4. Thanks to revenue growth and operational process improvements, operating income increased by 98.8% year-on-year and 12.6% Q-on-Q to record KRW75.4 billion.

[Foreign Speech]

As for safety and care business, with the merger of ADT Caps and SK Infosec, we changed the name of the division from Security division to Safety and Care division to expand the scope of business. After the merger, the consolidated revenue, including ADT Caps, recorded KRW350.5 billion. It increased by 20.3% year-on-year thanks to the solid growth of new businesses such as home security, integrated security and cloud security, but it declined 5.5% Q-on-Q due to the characteristic of safety and care business in which revenue tends to peak in Q4. The new businesses enjoyed both top line growth and bottom line improvement resulting in the quarterly operating income of KRW27.8 billion, a 9.4% year-on-year and 14.9% Q-on-Q increase.

[Foreign Speech]

Commerce revenue posted KRW203.7 billion. It increased by 7% year-on-year based on the continued contactless consumption trend but decreased by 9.3% Q-on-Q due to concentrated promotions in Q4, including the 11th day event. Marketing expenses for 11st and SK-Stoa increased in Q1, but operating income maintained the BEP level thanks to volume growth.

[Foreign Speech]

Next, Hyoung-il Ha, Head of Corporate Center II, will discuss the achievements and strategic direction for the new ICT businesses.

Hyoung-il Ha -- Head of Corporate Center II

[Foreign Speech]

Good afternoon. I am Hyoung-il Ha, Head of Corporate Center II. Allow me to discuss the achievements and plans for the New ICT businesses.

[Foreign Speech]

First is the Media business.

[Foreign Speech]

The number of pay-TV subscribers of SK Broadband stands at 8.69 million as of the end of Q1.

[Foreign Speech]

Established by SK Broadband in January as a multiple program provider, MediaS began regular broadcasting in April. In partnerships with Kakao Entertainment and SM C&C, 70% of the programs are exclusive content unavailable on other TV channels.

[Foreign Speech]

SK Broadband will strengthen the value chain in the media business that encompasses content, channels and platforms.

[Foreign Speech]

We will further enhance competitiveness of original content such as Taxi Driver that is enjoying high viewer rating. We recently hired chief producer, Chan-ho Lee, well-known for dramas such as Signal and Stranger as Chief Content Officer and we're in the process of establishing a content planning studio.

[Foreign Speech]

Next is the security division which is renamed as Safety and Care division.

[Foreign Speech]

Launched in March, the merged entity of ADT Caps and SK Infosec will leap forward as Korea's number one integrated security company. In addition to achieving growth in the existing security domains, we will expand technology based business models in new security domains such as securities for home, unmanned stores and cloud.

[Foreign Speech]

ADT Caps recently signed an agreement to cooperate with AWS for cloud security business. By combining ADT's cloud security services with AWS solutions, we will promote business together to gain market share in the financial and public sectors where there is high demand for transition to cloud.

[Foreign Speech]

Also, we are in the process of selecting a lead underwriter for IPO of ADT Caps, and we will do our best to prepare for the IPO.

[Foreign Speech]

Next is commerce business.

[Foreign Speech]

Despite intensifying market competition, commerce achieved growth in both revenue and profitability year-on-year.

[Foreign Speech]

11st started order today, delivered tomorrow service through fulfillment service together with Korea Post. It is also selling popular products, including daily necessities, in partnerships with major domestic and global brands such as Amore and P&G Korea.

[Foreign Speech]

In collaboration with Amazon, we are making preparations to allow customers to buy Amazon products on 11st. We plan to announce more details as soon as the service is ready to be launched.

[Foreign Speech]

In addition to investment from Uber, T Map Mobility has received KRW400 billion of investments from financial investors that's based on a valuation of KRW1.4 trillion.

[Foreign Speech]

UT was launched through joint investment of T Map Mobility and Uber and its differentiated services are expected to offer customers more choices and provide drivers with more revenue.

[Foreign Speech]

Finally, let me move on to one store which is preparing for an IPO.

[Foreign Speech]

With continued GMV growth for 11 consecutive quarters, one store received investments from Katie and LG Uplus thereby solidifying its position as Korea's representative at markets.

[Foreign Speech]

We acquired ROK Media, an established content studio as a joint venture with YES24, all of which are our efforts to secure key content IPs and develop them in a variety of formats.

[Foreign Speech]

I will now hand it back to the CFO. Thank you.

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech]

Thank you, Mr. Ha, for your presentation.

[Foreign Speech]

Dear investors and analysts, we are pleased to have delivered earnings that exceeded the market consensus in this quarter. We announced the spin-off plan and canceled treasury shares to enhance shareholder value. We also demonstrated that the fundamentals in all our businesses have been strengthened.

[Foreign Speech]

I understand that many people want to know more about our dividend policy. After final decisions concerning the spin-off are made at the Board in the first half of the year, we will share with you more details, including a decision on the quarterly dividend.

[Foreign Speech]

We will continue to do our best for a successful spin-off. Let me reassure you that all the decisions we make will be to maximize shareholder value.

[Foreign Speech]

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

Questions and Answers:

Operator

Now the Q&A session will begin. [Operator Instructions]

[Foreign Speech]

The first question will be provided by Joang [Phonetic] Oh [Phonetic] from Korea Investment & Securities. Please go ahead.

Joang Oh -- Korea Investment & Securities -- Analyst

[Foreign Speech]

Thank you very much for this opportunity. I would like to ask two questions. The first question is regarding the spin-off plan. Wavve and flow were not mentioned in your recent disclosure. So I'd like to learn how these businesses and subsidies -- other subsidiaries will be divided between the survival -- the surviving company and the spin-off company after the spin-off.

The second question is related to your subscription service plan. You mentioned that in the second half of the year, you are going to launch an integrated subscription service. So can you provide us with some updates on your subscription service business plan?

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech].

Mr. Oh, thank you very much for your questions.

[Foreign Speech]

Let me first answer your question regarding where Wavve and Flo will go after the spin-off.

[Foreign Speech]

After the spin-off, the surviving company will grow as an AI-based infra company by combining the fixed and wireless telecommunication infrastructure and pursuing growth based on AI-centered subscription, marketing and data center business.

[Foreign Speech]

And the spin-off company will grow as an ICT investment company that is specialized in making aggressive investments in semiconductor, life platforms and global tech [Indecipherable] thereby making various investments that will drive value up.

[Foreign Speech]

In your question you asked about Wavve and Flo. They belong to media and content assets thereby falling under the life platform area. So under the spin-off company, they will become global businesses that will lead new lifestyles of customers.

[Foreign Speech]

As for the specific business portfolios of the surviving company and the spin-off company, these will be finalized at the Board within the first half of the year.

[Foreign Speech]

Let me now address your question regarding the subscription services.

[Foreign Speech]

We have been accumulating know-how and expertise in the subscription market by utilizing our telecommunication services. We believe that MNO is very competitive in providing subscription services.

[Foreign Speech]

In various areas such as telecommunications, media and e-commerce, we have accumulated a large amount of data and we have the digital infrastructure that can cover product planning all the way to offering, and we also have marketing competitiveness in both online and offline channels.

[Foreign Speech]

Based on such expertise and capabilities, we believe that we can produce a sizable revenue, not only based on SK Telecom customers but also 50 million Korean people.

[Foreign Speech]

Currently, we have been expanding the scope of subscription products to media, games, delivery and education and we are now in the process of developing product curation and offering based on AI technology in order to offer optimal packages for our customers.

[Foreign Speech]

Furthermore, we are going to transform the existing team membership platform into a subscription marketing platform that is provided for entire population in Korea in the second half of the year.

[Foreign Speech]

The subscription market in Korea was KRW49 trillion inside last year and it is expected to grow to KRW100 trillion market by 2025.

[Foreign Speech]

Our target for the subscription products and services is having the number of subscribers reach 35 million by 2025 and achieve the revenue size of KRW1.5 trillion by 2025. By expanding partnerships and business models, I believe that we can take up about 20% of the market share of the subscription market that we can address.

[Foreign Speech]

Thank you.

Operator

[Foreign Speech]

The next question will be provided by Mina [Phonetic] Choi [Phonetic] from Samsung Securities. Please go ahead.

Mina Choi -- Samsung Securities -- Analyst

[Foreign Speech]

Thank you very much for this opportunity. I would like to ask two questions. The first question is, in April, you made a disclosure that you would carry out a spin-off. And you mentioned that decisions related to the spin-off will be made in the first half of this year. Can you share with us the upcoming schedule regarding the spin-off? The second question is related to the T Map Mobility. Recently you received financial investments, and I believe that T Map Mobility will start to accelerate its growth trajectory. So what is the current status of T Map Mobility? And as for UT, which was launched in collaboration with Uber, can you provide us with some specific growth strategies on this recently launched business?

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech]

Thank you very much for these questions.

[Foreign Speech]

I'm going to answer your question regarding the schedule for the spin-off, and Hyoung-il Ha will answer questions related to the T Map Mobility.

[Foreign Speech]

Currently, we are reviewing the overall process regarding the spin-off, and we aim to table the spin-off plan to the Board of Directors within the first half of the year. In consideration of the Board resolution process and the overall process for the spin-off and relisting, we believe that the relisting can be completed within November after the General Shareholders Meeting in October.

Hyoung-il Ha -- Head of Corporate Center II

[Foreign Speech]

I am Hyoung-il Ha, Head of Corporate Center II. I'd like to address your question related to the status of business of T Map Mobility after the spin-off.

[Foreign Speech]

After officially launched in December last year, T Map Mobility is carrying out business in four key areas, including the T Map Life platform, T Map Auto, Mobility On-Demand and Mobility-as-a-service.

[Foreign Speech]

In the first quarter of the year, we built the foundation for T Map Mobility by receiving KRW400 billion of financial investments from financial investors. And we have launched UT in collaboration with Uber in order to offer differentiated services centered around taxis.

[Foreign Speech]

In the second quarter, we plan to introduce a completely new type of subscription membership services in the business area of T Map Life platform, and we also plan to launch a driver-on-demand service as a pilot for B2C customers.

[Foreign Speech]

These new services on the four core business areas will be launched as scheduled, which are expected to provide differentiated customer experience.

[Foreign Speech]

Now I'd like to discuss the future strategy and the upcoming schedules for UT.

[Foreign Speech]

On April 1, UT was officially launched based on the joint investment of Uber and T Map Mobility.

[Foreign Speech]

In the second half of the year, UT plans to launch a new service by combining Uber taxi and T Map taxi. Initially, services will center around contracted taxi drivers and premium taxi services. But going forward, we plan to offer various mobile services and additional value-added services based on the Taxi platform.

[Foreign Speech]

As a result, customers will be able to have more options in terms of taxi rides depending on the brand, price plans and services, and at the same time, taxi drivers will benefit from these new services by increasing their sales through differentiated services and by reducing the time to drive around to spot customers.

[Foreign Speech]

We're not really able to give you any more details today, but we will be sure to communicate them with the market when the services are ready.

[Foreign Speech]

Thank you.

Operator

[Foreign Speech]

The next question will be provided by Hoi Jae Kim from Taishin Securities. Please go ahead.

Hoi Jae Kim -- Taishin Securities -- Analyst

[Foreign Speech]

Thank you for this opportunity. I would like to ask two questions. The first question is related to your dividend policy. You mentioned that even though you start the quarterly dividend payout, the total amount of dividend payout would not go down. I'd like to know from when your quarterly dividend payout would begin and what is the overall dividend payout policy for the two companies after the spin-off.

The second question is related to your investment plan and business plan for Wavve. You mentioned that by 2025 you are going to receive KRW1 trillion of investment and you have various plans for Wavve, but this is quite different from what you mentioned previously when you're communicating with us regarding Wavve plan by 2023. So the amount of investment and the amount of revenue seems to have declined slightly when you're adjusting your target for 2025. So can you provide us with some color on what is your overall investment plan for Wavve, which you mentioned is going to be around KRW1 trillion and what is your revenue plan and schedule for Wavve going forward?

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech]

Thank you very much for your questions. I'm going to address your question regarding the dividend policy, and Mr. Ha from Corporate Center II will address your question regarding Wavve.

[Foreign Speech]

Even after the spin-off, we will continue to maintain the shareholder-friendly management principle.

[Foreign Speech]

We will make sure that regardless of the spin-off, the surviving company's level of dividend payout will be at least similar to that of last year.

[Foreign Speech]

As Korea's number one fixed and wireless telecommunications company, as the rollout of 5G is accelerating, we believe that our operating income and the cash flow will be sustained going forward. As such, we will make sure that we have the shareholder return policy so that earnings growth will lead to increased shareholder returns, including dividend payouts.

[Foreign Speech]

At the Annual General Shareholders' Meeting, we created a basis for quarterly dividend payout. And after discussions at the Board of Directors, we will carry out this new dividend policy plan so that we can start paying out the quarterly dividend starting from the end of second quarter.

[Foreign Speech]

The timing for the quarterly payout for the first quarter has already passed, but this portion will be combined for the fourth quarter dividend payout so that we can maintain the level of dividend payout to our shareholders to be at least same or similar to that of last year.

[Foreign Speech]

As for the spin-off company which will become a specialized investment company, we will make sure that their growth potential of the investment portfolio will be recognized. And by actively attracting investment and pursuing IPOs, we'll make sure that the corporate value of these businesses will be rightly recognized in the market.

[Foreign Speech]

As for the dividend policy of the new company, after the spin-off is finalized and after the Board of Directors is composed, we will be able to communicate to the market more details later.

Hyoung-il Ha -- Head of Corporate Center II

[Foreign Speech]

I am Hyoung-il Ha, Head of Corporate Center II. Let me first comment on the subscriber target and the revenue targets of Wavve for 2023.

[Foreign Speech]

As we increase the original content lineup and the popularity of Penthouse Season 2 and as a result of the successful advertising with IU that began at the end of last year, Wavve was able to enjoy the growth in its pay-TV -- paid subscribers by reaching 2 million within last year. And this subscriber growth trend is continuing.

[Foreign Speech]

As we continue to differentiate Wavve services based on content from terrestrial broadcasting stations and original content, we believe that we can achieve the initial target of having 5 million paid subscribers and the revenue of KRW500 billion by 2023 and we believe that we can achieve this earlier than the original target.

[Foreign Speech]

Let me now comment on the ways we want to secure KRW1 trillion of investment for Wavve.

[Foreign Speech]

In March, Wavve made an announcement of making an investment in original content, which is worth KRW1 trillion which will be done by 2025.

[Foreign Speech]

The financial sources for these investments will come from a variety of sources, including the rights offering of KRW100 billion of SK Telecom as well as external investments and reinvestment of profit from content business.

[Foreign Speech]

As for raising external investments, we already received KRW200 billion of financial investments in 2019, and we are now in the process of preparing for the second round of funding. As for this second round, as soon as details are prepared, we're going to communicate them with the market.

Hoi Jae Kim -- Taishin Securities -- Analyst

[Foreign Speech]

Thank you.

Operator

[Foreign Speech]

The next question will be provided by Sean Lee from Citigroup. Please go ahead.

Sean Lee -- Citigroup -- Analyst

[Foreign Speech]

Thank you for this opportunity. I would like to ask two questions. The first question is related to your security business. The ADT Caps and SK Infosec were merged in the first quarter. So what's the current status and the operation of this merged entity and what kinds of synergy are you expecting from this merger? The second question is related to your MMO business. What is your 5G subscriber target by the end of this year? I understand that your initial target by the end of this year was 9 million, but there was a very big net adds in the first quarter. So I'm asking this question.

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech]

Thank you very much for your questions.

[Foreign Speech]

I will address your question related to the 5G subscriber growth trends, and Mr. Ha from Corporate Center II will answer your question related to the security business.

[Foreign Speech]

As we have made continued efforts to offer new 5G products and improve the service quality of 5G services, and as we were improving the 5G ecosystem with new flagship handset launches, we were able to achieve the 5G subscriber number to 6.74 million by the end of this quarter compared to last year. So there was a net add of 1.26 million compared to the end of last year.

[Foreign Speech]

At the beginning of the year, we mentioned that our 5G subscriber target for this year was 9 million. But considering the current trend, we think that we can achieve even 10 million.

[Foreign Speech]

The new tariff schemes for 5G and Untact price plans that SK Telecom has recently offered to satisfy various customer needs are expected to provide customers with more choices and reasonable prices, thereby accelerating 5G migration.

Hyoung-il Ha -- Head of Corporate Center II

[Foreign Speech]

Let me now respond to your question regarding the synergy of ADT Caps and SK Infosec.

[Foreign Speech]

We successfully completed the process of merging ADT Caps and SK Infosec in March. As a result, we have merged ADT Caps with the revenue size of KRW1.3 trillion and EBITDA of KRW357 billion.

[Foreign Speech]

Now various activities are under way in earnest in order to maximize synergies from these two entities based on our infrastructure for security and various capabilities. We expect the annual revenue for '21 to be KRW1.6 trillion.

[Foreign Speech]

In addition, in order to become a global cloud security provider, we have signed an agreement to pursue strategic cooperation with Amazon AWS in April.

[Foreign Speech]

I can discuss the effect of synergy from the customer perspective and product perspective.

[Foreign Speech]

First of all, from a customer perspective, SK Infosec has a large volume of B2B customers, including large enterprises and ADT Caps has B2C customers, including small and medium enterprises and single businesses, and by combining these different customer segments, we can create cross-selling opportunities.

[Foreign Speech]

From the product perspective, we are expected to provide customized one-stop services that combine physical security, information security and building management as combined solutions.

[Foreign Speech]

For instance, when there is a cyber intrusion or detection of malicious codes, we can do video analysis by utilizing the platform data and by leveraging on our access control system, we can detect any intruders to buildings and assets and such flexible response will become more possible.

Sean Lee -- Citigroup -- Analyst

[Foreign Speech]

Thank you.

Operator

[Foreign Speech]

The next question will be provided by Neale Anderson from HSBC. Please go ahead.

Neale Anderson -- HSBC -- Analyst

Thank you very much and good afternoon. I just have one question, please, and it relates to the media business and the sequential improvement in operating margin in the first quarter. So, for the three quarters last year, it was around 6.7% and it's increased to 7.8% in the first quarter. So my question is, how sustainable is that and what are your margin targets for this year? Thank you.

[Foreign Speech]

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech]

Neil Anderson, thank you very much for your questions.

[Foreign Speech]

We believe that there are various factors that have contributed to improvement in the operating margin of SK Broadband.

[Foreign Speech]

So these various factors include the effect of the T-broad merger. That's the first factor. The second factor is the increase in the subscriber base and increase in the commissions income from home shopping broadcasting. The third factor is the continued increase in the IPTV subscriber base. And the final factor would be effective capex implementation and cost efficiency.

[Foreign Speech]

Going forward, we will continue to make efforts to increase the subscriber base and carry out our business in a more efficient manner so that we can maintain an increased profitability of the media business. Thank you.

Operator

[Foreign Speech]

The next question will be provided by Stanley Yang from JPMorgan. Please go ahead.

Stanley Yang -- JPMorgan -- Analyst

[Foreign Speech]

Thank you for this opportunity to ask questions. The first question is related to your dividend policy. You mentioned that detailed decisions regarding the payout of the dividend policy for the spin-off company will be made soon. But can I safely assume that given the MMO dividend payout level of KRW10,000 per share and in assuming that there will be dividend payout from the new spin-off company? Can we anticipate that the total amount of dividend payout from SK Telecom will increase going forward? The second question is related to your subscription business model. There are high expectations for subscription services, and I'd like to know if your subscription model would be to push several subscription models and services separately or to follow the model of Amazon where you have one single subscription platform where multiple services are provided? And if you continue to launch these new subscription services, are they going to be linked with your MNO telecom subscribers or are they going to be operated separately?

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

[Foreign Speech]

Thank you very much for your questions. I'm going to respond to your question on the dividend policy and Han [Phonetic] Yan [Phonetic] Jing [Phonetic], head of subscription service company will answer the second question.

[Foreign Speech]

As for the first question on our dividend policy, your understanding is correct. The dividend payout from the MNO business as part of the surviving company will be similar or more than the previous level of dividend payout. And on top of that, we have not yet decided on the dividend policy of the spin-off company, but if they start to pay out dividend, it's going to be a plus alpha.

[Foreign Speech]

As I mentioned earlier, when the Board of Directors is composed for the spin-off company and when discussions on the dividend policy are made, we're going to communicate them with the market.

Han Yan Jing -- Head of Subscriptions

[Foreign Speech]

I am Han Yan Jing [Phonetic]. I'm the Head of the subscription business. And let me address your second question.

[Foreign Speech]

As you may understand, we have many family businesses under the ICT umbrella and there are many different services and products that we're preparing that will help enhance the likelihood of customers.

[Foreign Speech]

Basically I can say that our model will be similar to Amazon Prime where there will be an integrated subscription paradigm. In addition to that, we are planning to offer additional services and products for subscription.

[Foreign Speech]

So we are planning to charge a monthly subscription fee for the subscription customers.

[Foreign Speech]

As for your question regarding the connection with MNO services, we are currently planning the subscription platform to reach out to 50 million Korean population. So we're currently not considering any linkage between the subscription services and the MNO fees. Thank you.

Joong Suk Oh -- Head of Investor Relations Planning

[Foreign Speech]

We would now like to close our conference call for the first quarter of 2021. Thank you.

Duration: 64 minutes

Call participants:

Joong Suk Oh -- Head of Investor Relations Planning

Poong Young Yoon -- Chief Financial Officer and Head of Corporate Center I

Hyoung-il Ha -- Head of Corporate Center II

Han Yan Jing -- Head of Subscriptions

Joang Oh -- Korea Investment & Securities -- Analyst

Mina Choi -- Samsung Securities -- Analyst

Hoi Jae Kim -- Taishin Securities -- Analyst

Sean Lee -- Citigroup -- Analyst

Neale Anderson -- HSBC -- Analyst

Stanley Yang -- JPMorgan -- Analyst

More SKM analysis

All earnings call transcripts