SKM SK Telecom Co Ltd

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF SEPTEMBER 2010

COMMISSION FILE NUMBER 333-04906

SK Telecom Co., Ltd.

(Translation of registrant’s name into English)

11, Euljiro2-ga, Jung-gu

Seoul 100-999, Korea

( Address of principal executive offices )

     (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F o      Form 40-F o

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

      Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

      Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

     Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.           Yes o       No þ

     If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-                     

 

 

SEMI-ANNUAL REPORT

(From January 1, 2010 to June 30, 2010)

THIS IS A SUMMARY OF THE SEMI-ANNUAL BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED FOR THE CONVENIENCE OF READERS.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A NON-CONSOLIDATED BASIS IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN KOREA, OR KOREAN GAAP, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

Contents

I. Company Overview		4
II. Business		13
III. Financial Information		23
IV. Auditor’s Opinion		25
V. Management Discussion and Analysis		27
VI. Corporate Organization including Board of Directors and Affiliated Companies		27
VII. Shareholders Information		38
VIII. Employees		42
IX. Transactions with Parties Having Interests		43
X. Other Information Relating to the Protection of Investors		46

     Attachment: Korean GAAP Non-consolidated Financial Statements

I. COMPANY OVERVIEW

1. Company Overview

A. Corporate Legal Business Name: SK Telecom Co., Ltd. (The “Company”)

B. Date of Incorporation: March 29, 1984

C. Location of Headquarters

(1) Address: 11 Euljiro 2-ga, Jung-gu, Seoul, Korea

(2) Phone: +82-2-6100-2114

(3) Website: http://www.sktelecom.com

D. Corporate Purpose of the Company

Business Objectives

1.		Information and communication business
2.		Handset sales and lease business
3.		New media business
4.		Advertisement business
5.		Communication sales business
6.		Real estate business(development, maintenance, leasing, etc.) and chattel leasing business
7.		Research and technology development related to Clause 1 through 4
8.		Overseas business and trading business related to Clause 1 through 4
9.		Manufacturing and distribution business related to Clause 1 through 4
10.		Tourism
11.		Electronic financial business
12.		Motion picture business (Production, Importation, Distribution, Screening)
13.		Lifetime education and lifetime educational facilities management
14.		Electric related construction business
15.		Information and communication related work business
16.		Ubiquitous city construction and service business
17.		Any business or undertaking incidental or conducive to the attainment of the objects above

     E. Credit Ratings

(1) Corporate Bonds

						Credit rating entity
Credit rating date		Subject of rating		Credit rating		(Credit rating range)		Rating classification
May 29, 2007		Corporate bond		AAA		Korea Ratings		Regular rating
June 14, 2007		Corporate bond		AAA		Korea Information Services, Inc.		Regular rating
June 27, 2007		Corporate bond		AAA		Korea Investors Service, Inc.		Regular rating
November 5, 2007		Corporate bond		AAA		Korea Ratings		Current rating
November 5, 2007		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
November 5, 2007		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
February 20, 2008		Corporate bond		AAA		Korea Ratings		Current rating
February 21, 2008		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
February 21, 2008		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
June 3, 2008		Corporate bond		AAA		Korea Ratings		Regular rating
June 17, 2008		Corporate bond		AAA		Korea Investors Service, Inc.		Regular rating
June 30, 2008		Corporate bond		AAA		Korea Information Services, Inc.		Regular rating
October 20, 2008		Corporate bond		AAA		Korea Ratings		Current rating
October 20, 2008		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
October 20, 2008		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
January 13, 2009		Corporate bond		AAA		Korea Ratings		Current rating
January 13, 2009		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
January 13, 2009		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
February 23, 2009		Corporate bond		AAA		Korea Ratings		Current rating
February 23, 2009		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
February 23, 2009		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
June 24, 2009		Corporate bond		AAA		Korea Information Services, Inc.		Regular rating
June 26, 2009		Corporate bond		AAA		Korea Ratings		Regular rating
June 30, 2009		Corporate bond		AAA		Korea Investors Service, Inc.		Regular rating
June 22, 2010		Corporate bond		AAA		Korea Ratings		Regular rating
June 29, 2010		Corporate bond		AAA		Korea Investors Service, Inc.		Regular rating
June 29, 2010		Corporate bond		AAA		NICE Investors Service Co, Ltd.		Regular rating

(2) Commercial Paper (“CP”)

						Credit rating entity
Credit rating date		Subject of rating		Credit rating		(Credit rating range)		Rating classification
May 29, 2007		CP		A1		Korea Ratings		Current rating
June 14, 2007		CP		A1		Korea Information Services, Inc.		Current rating
June 27, 2007		CP		A1		Korea Investors Service, Inc.		Current rating
November 5, 2007		CP		A1		Korea Ratings		Regular rating
November 5, 2007		CP		A1		Korea Information Services, Inc.		Regular rating
November 5, 2007		CP		A1		Korea Investors Service, Inc.		Regular rating
June 3, 2008		CP		A1		Korea Ratings		Current rating
June 16, 2008		CP		A1		Korea Information Services, Inc.		Current rating
June 17, 2008		CP		A1		Korea Investors Service, Inc.		Current rating
October 20, 2008		CP		A1		Korea Ratings		Regular rating
October 20, 2008		CP		A1		Korea Investors Service, Inc.		Regular rating
October 20, 2008		CP		A1		Korea Information Services, Inc.		Regular rating
June 24, 2009		CP		A1		Korea Information Services, Inc.		Current rating
June 26, 2009		CP		A1		Korea Ratings		Current rating
June 30, 2009		CP		A1		Korea Investors Service, Inc.		Current rating
December 15, 2009		CP		A1		Korea Ratings		Regular rating
December 30, 2009		CP		A1		Korea Investors Service, Inc.		Regular rating
December 30, 2009		CP		A1		Korea Information Services, Inc.		Regular rating
June 22, 2010		CP		A1		Korea Ratings		Current rating
June 29, 2010		CP		A1		Korea Investors Service, Inc.		Current rating
June 29, 2010		CP		A1		NICE Investors Service Co, Ltd.		Current rating

(3) International Credit Ratings

				Credit rating		Credit rating company
Date of credit rating		Subject of rating		of securities		(Credit rating range)		Rating type
July 9, 2007		Global Bonds		A		Fitch (England)		Current rating
July 9, 2007		Global Bonds		A2		Moody’s (U.S.A.)		Current rating
July 9, 2007		Global Bonds		A		S&P (U.S.A.)		Current rating
April 7, 2009		Offshore Convertible Bonds		A		Fitch (England)		Current rating
April 7, 2009		Offshore Convertible Bonds		A2		Moody’s (U.S.A.)		Current rating
April 7, 2009		Offshore Convertible Bonds		A		S&P (U.S.A.)		Current rating

2. Company History

     A. Location of Headquarters

- 22 Dohwa-dong, Mapo-gu, Seoul (July 11, 1988)

- 16-49 Hangang-ro 3-ga, Yongsan-gu, Seoul (November 19, 1991)

- 267 Namdaemun-ro 5-ga, Jung-gu, Seoul (June 14, 1995)

- 99 Seorin-dong, Jongro-gu, Seoul (December 20, 1999)

- 11 Euljiro 2-ga, Jung-gu, Seoul (December 13, 2004)

     B. Significant Changes in Management

At the 26th General Shareholders’ Meeting held on March 12, 2010, Cho, Ki Haeng was elected as an inside director, Chung, Jay Young was elected as a member of the audit committee and Shim, Dal Sup was re-elected as an independent director while Sung Min Ha resigned from the Board on March 12.

     C. Other Important Matters related to Management Activities

(1) Interim Dividends

In accordance with the resolution of the Board of Directors on July 22, 2010, the Company decided to distribute interim dividends.

- Amount of interim dividends: Cash dividends of 1,000 Won per share (Total amount of interim dividend: 72,344,999 thousand Won)

- Market dividend rate: 0.61%

- Record date: June 30, 2010

- Dividend payment date: Within 20 days from the date of the resolution of the Board of Directors.

(2) Acquisition of Treasury Stock

In accordance with the resolution of the Board of Directors on July 22, 2010, the Company decided to buy back the shares of the Company (estimated total purchase price: 201,875,000 thousand Won, estimated purchase price per share: 161,500 Won) for the purpose of stabilizing stock price and enhancing shareholder value. The Company will acquire its shares from July 23, 2010 through October 22, 2010 and actual purchase price may be changed subject to the fluctuation of stock price in the future.

      3. Total Number of Shares

     A. Total number of shares

(As of June 30, 2010)														(Unit: shares)
		Share type
Classification		Common shares				—				Total				Remarks
I. Total number of authorized shares			220,000,000				—				220,000,000				—
II. Total number of shares issued to date			89,278,946				—				89,278,946				—
III. Total number of shares retired to date			8,533,235				—				8,533,235				—
a. reduction of capital			—				—				—				—
b. retirement with profit			8,533,235				—				8,533,235				—
c. redemption of redeemable shares			—				—				—				—
d. others			—				—				—				—
IV. Total number of shares (II-III)			80,745,711				—				80,745,711				—
V. Number of treasury shares			8,400,712				—				8,400,712				—
VI. Number of shares outstanding (IV-V)			72,344,999				—				72,344,999				—

On July 22, 2010, the Company publicly disclosed its decision to acquire shares of treasury stock. The Company plans to acquire 1,250,000 shares of its common stock on KRX from July 23, 2010 through October 22, 2010. As of August 15, 2010, the Company accumulatively acquired 338,000 shares of its common stock.

     B. Treasury Stock

(1) Acquisitions and Dispositions of Treasury Stocks

(As of June 30, 2010)																														(Unit: Shares)
										At the																At the
										beginning of				Changes												end of
Acquisition methods						Type of shares				period				Acquired (+)				Disposed (-)				Retired (-)				period				Remarks
Direct acquisition		pursuant to Article 165-2 of the Financial Investment Services and Capital Markets Act of Korea (“FSCMA”)				Common shares					4,436,028				—				—				—				4,436,028				—
						Preferred shares					—				—				—				—				—				—
		based on reasons other than those stipulated in Article 165-2 of the FSCMA				Common shares					77,974				—				—				—				77,974
						Preferred shares					—				—				—				—				—				—
Sub-total						Common shares					4,514,002	*			—				—				—				4,514,002	*			—
						Preferred shares					—				—				—				—				—				—
Indirect acquisition through trust and other agreements						Common shares					3,886,710				—				—				—				3,886,710				—
						Preferred shares					—				—				—				—				—				—
Total						Common shares					8,400,712				—				—				—				8,400,712				—
						Preferred shares					—				—				—				—				—				—

On July 22, 2010, the Company publicly disclosed its decision to acquire shares of treasury stock. The Company plans to acquire 1,250,000 shares of its common stock on KRX from July 23, 2010 through October 22, 2010. As of August 15, 2010, the Company accumulatively acquired 338,000 shares of its common stock.

(2)

Retirement of Treasury Stock

     

		(Unit: in millions of Won, Shares)

Monetary

Amount

Quantity

Retired

Retirement

Retired

(in millions of

Acquisition Period

Retired Date

Purpose

Type of Share

(shares)

Won)

of Retired Shares

Remarks

January 9, 2009

Stabilization of Share Price

Common

—

—

—

—

Total

Common

—

—

—

—

Preferred

—

—

—

—

(3)

Execution of Trust Agreements relating to Treasury Stocks, Etc.

																										(Amounts: in millions of Won)
		At Start of Period								Executed (+)								Cancelled (-)								At End of Period
						No. of								No. of								No. of								No. of
Category		Amount				Transactions				Amount				Transactions				Amount				Transactions				Amount				Transactions				Remark
Specified Money Trust			982,000				4				—				—				—				—				982,000				4			1. Extension Date: Oct. 26, 2007 Extension Amount: Won 631,200 2. Extension Date: October 29, 2007 Extension Amount: Won 350,800
Trust Contracts with Asset Management Companies			—				—				—				—				—				—				—				—
Acquisition Contracts with Investment Companies			—				—				—				—				—				—				—				—
Total			982,000				4				—				—				—				—				982,000				4				—

4. Status of Voting Rights

(As of June 30, 2010)		(Unit: shares)

Classification						Number of shares				Remarks
Total shares (A)		Common share					80,745,711				—
		Preferred share					—
Number of shares without voting rights (B)		Common share					8,400,712			Treasury shares
		Preferred share					—
Shares with restricted voting rights under the Korean law (C)			—				—				—
Shares with reestablished voting rights (D)			—				—				—
The number of shares with exercisable voting right s (E = A – B – C + D)		Common share					72,344,999				—
		Preferred share					—

5. Dividends and Others

A. Dividends

	(1)		Distribution of cash dividends was approved during the 23rd General Meeting of Shareholders held on March 9, 2007.
	-		Distribution of cash dividends per share of Won 7,000 (exclusive of an interim dividend of Won 1,000) was approved.
	(2)		Distribution of interim dividends of Won 1,000 was approved during the 283rd Board of Directors’ Meeting on July 27, 2007.
	(3)		Distribution of cash dividends was approved during the 24th General Meeting of Shareholders held on March 14, 2008.
	-		Distribution of cash dividends per share Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.
	(4)		Distribution of interim dividends of Won 1,000 was approved during the 295th Board of Directors’ Meeting on July 18, 2008.
	(5)		Distribution of cash dividends was approved during the 25th General Meeting of Shareholders held on March 13, 2009.
	-		Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.
	(6)		Distribution of interim dividends of Won 1,000 was approved during the 305th Board of Directors’ Meeting on July 23, 2009.

	(7)		Distribution of cash dividends was approved during the 26th General Meeting of Shareholders held on March 12, 2010.
	-		Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.
	(8)		Distribution of interim dividends of Won 1,000 was approved during the 318th Board of Directors’ Meeting on July 22, 2010.

B. Dividends for the Last 3 Fiscal Years

(Unit: in millions of Won, except per share value)

		As of and for				As of and for				As of and for
		the six months				the year ended				the year ended
		ended June 30,				December 31,				December 31,
Classification		2010				2009				2008
Par value per share (Won)			500				500				500
Net income			685,726				1,288,340				1,277,658
Net income per share (Won)			9,479				17,808				17,559
Total cash dividend			72,345				680,043				681,996
Total stock dividends			—				—				—
Percentage of cash dividend to available income (%)			10.6				52.8				53.4
Cash dividend yield ratio (%)
Common share			0.61				5.6				4.5
Preferred share			—				—				—
Stock dividend yield ratio (%)
Common share			—				—				—
Preferred share			—				—				—
Cash dividend per share (Won)
Common share			1,000				9,400				9,400
Preferred share			—				—				—
Stock dividend per share (share)
Common share			—				—				—
Preferred share			—				—				—

II. BUSINESS

1. Business Overview

A. Industry Characteristics

As of June 30, 2010, the number of domestic mobile phone subscribers reached 49.61 million and, with more than 100% penetration rate, the Korean mobile communication market can be considered to have reached its maturation stage. However, the penetration rate is expected to increase further due to increased use of mobile phones by corporate users resulting from the rapid growth of smart phone markets, as well as the increasing popularity of high-tech mobile devices based on wireless data services such as tablet PC.

The Korean mobile communications market continues to improve in the quality of services with the help of advances in network-related technology evidenced by the world’s first commercialization of CDMA2000 1x, CDMA 1x EV-DO, and the development of highly advanced handsets, including various smart phones, that enable the provision of convergence services for multimedia contents, mobile commerce, telematics, satellite Digital Multimedia Broadcasting (“DMB”), digital home services, connected workforce services and other related services. In addition, through HSPA+ network to be commercialized within this year and the LTE network to be introduced from the next year, the “industry productivity enhancement” (“IPE”) business directly resulting in the enhancement of productivity, such as the corporate “connected workforce” business, is expected to grow rapidly.

B. Growth Potential

(Unit: 1,000 persons)
				As of June				As of December 31,
Classification				30, 2010				2009				2008				2007				2006
Number of subscribers		SK Telecom			25,146				24,270				23,032				21,968				20,271
		Others (KT, LGT)			24,462				23,675				22,575				21,529				19,926
		Total			49,609				47,944				45,607				43,497				40,197

(Source: Korea Communications Commission website)

C. Domestic and Overseas Market Conditions

The Korean mobile communication market includes the entire population of Korea with mobile communication service needs, and almost every Korean is considered a potential user. Although

demand has primarily been in the domestic market, as the business territory expands to overseas market, the size of overseas sales is expected to grow in the near future. In addition, sales revenue related to data services is expected to increase due to the increasing popularity of smart phones and wireless Internet. Business-to-business segment that creates added values by adding additional solutions and applications is also growing. Seasonal and economic fluctuations have much less impact on the Korean mobile communication market compared to other industries.

Historical market share of the Company:

(Unit: %)
		As of				As of December 31,
Classification		June 30, 2010				2009				2008				2007
Mobile communication services			50.7				50.6				50.5				50.5

Comparative market share:

(As of June 30, 2010)

(Unit: %)

Classification

SK Telecom

KT

LG Uplus

Market share

50.7

31.4

17.9

(Source: Korea Communications Commission website)

D. Business Overview and Competitive Strengths

The Company’s revenue in the first half of 2010 amounted to Won 6,106.8 billion, an increase of Won 162.5 billion compared to the first half of 2009. This increase in revenue was meaningful since it was achieved despite a number of negative factors, including the charging of voice calls on a per-second basis from March 2010 and the reduction of sign-up fees by 28% from December 2009. Operating income in the first half of 2010 amounted to Won 1,062.5 billion, which was lower than the same period of 2009, due among others to the increase in marketing and depreciation expenses. In the first half of 2010, however, the Company achieved meaningful business performance such as securing 25 million subscribers in May 2010 for the first time. Net income in the first half of 2010 amounted to Won 685.7 billion, an increase of Won 57.3 billion from the same period of 2009.

In June 2010, the Company met the guideline set by the Korea Communications Commission that limits marketing expenses of mobile communication business operators to 22% of their revenue. The Company will comply with the guideline going forward, which will help stabilize the competition in the mobile service markets, while maintaining its competitive advantage based on fundamental

strengths deriving from handsets, price plans, networks and contents. In addition, the “Galaxy S” handset introduced in the end of June 2010 has acquired over 500,000 subscribers in 33 days from its debut, due to the Company’s marketing superiority, and broke all historical record of Korea handset sales, which reconfirmed the competitive edge of the Company in the field of smart phones. Wide penetration of smart phones has led to the vitalization of the Company’s T-Store, which has grown rapidly in the numbers of subscribers, contents and downloads, enhancing the Company’s competitiveness in the wireless data market.

As of June 30, 2010, the Company reached a subscriber number of approximately 25,150,000 and a 50.7% market share of the wireless market in Korea in terms of the number of subscribers. The Company plans to establish its leadership among users of smart phones by introducing various mobile platforms and streamlining the subscription process and pricing structures to enable subscribers to easily access their mobile content from multiple devices. The Company also plans to maintain its leadership in wireless Internet market by providing innovative user interface for content access and through investment in data networks, network sharing and support of the content production.

In 2010, the Company intends to continue its efforts to seek growth in business-to-business markets, such as “industry productivity enhancement” (“IPE”) business in domestic and foreign markets. As IPE business creates added values by adding additional solutions and applications to the existing infrastructure, it is more cost effective compared to traditional business-to-business model. The Company’s business-to-business sales in the first half of 2010 increased meaningfully from the same period of 2009.

The Company will also continue its efforts to become a global leader in information and communication technology. It plans to actively respond to secular changes such as the growing popularity of smart phones and wireless Internet, as well as gaining competitive strengths in the IPE business. In particular, the Company intends to pursue opportunities to grow the wireless broadband and IPE businesses in Korea and abroad. In case of overseas businesses, the Company will maintain its disciplined approach under its “Start Small Scale Fast” principle.

2. Major Products & Services

A. Updates on Major Products and Services

								(Unit: in millions of Won, %)
										Sales amount
Business fields		Sales type		Item		Specific Usage		Major trademarks		(ratio)
Information and communication		Services		Mobile communication		Mobile Phone		NATE, T store and others		5,917,684(96.9%)
—		—		Others		—		Others		189,134(3.1%)

B. Price Fluctuation Trend of Major Products and Services

Previously, based on the Company’s Basic Plan for monthly subscription, the basic service fee was Won 13,000 per month and the usage fee was Won 20 per 10 seconds and based on the Company’s Standard Plan, basic service fee was Won 12,000 per month and the usage fee was Won 18 per 10 seconds. As of June 30, 2010, based on the Company’s Standard Plan, basic service fee is Won 12,000 per month and the usage fee is Won 1.8 per 1 second.

3. Investment Status

A. Investment in Progress

(Unit: in 100 millions of Won)

Amount

Investment

Subject of

Total

already

Future

Business field

Classification

period

investment

Investment effect

investments

invested

investment

Network/Common

Upgrade/New installation

2010

Network, systems and others

Capacity increase and quality improvement; systems improvement

To be determined

3,736

To be determined

Total

—

To be determined

3,736

To be determined

B. Future Investment Plan

(Unit: in 100 millions of Won)

Expected investment amount

Expected investment for each year

Business field

Asset type

Amount

2010

2011

2012

Investment effect

Network/Common

Network, systems and others

18,500

18,500

To be determined

To be determined

Upgrades to the existing services and provision of new services

Total

18,500

18,500

To be determined

To be determined

Upgrades to the existing services and provision of new services

								(Unit: in millions of Won)
								First Half
Business field		Sales type		Item				2010				2009				2008
Information and communication		Services		Mobile communication		Export			—				—				—
						Domestic			5,917,684				11,820,202				11,492,832
						Subtotal			5,917,684				11,820,202				11,492,832
		—		Others		Export			422				2,339				5,855
						Domestic			188,712				278,643				175,975
						Subtotal			189,134				280,982				181,830
Total						Export			422				2,339				5,855
						Domestic			6,106,396				12,098,845				11,668,807
						Total			6,106,818				12,101,184				11,674,662

5. Derivative Transactions

In order to hedge risks related to fluctuations in currency exchange rates and interest rates, the Company enters into currency swap contracts and interest rate swap contracts. The gain or loss generated from the derivatives contracts is recognized as the gains/losses for the current period or other comprehensive income/loss, in accordance with Korean GAAP. Fair value of the Company’s derivatives is calculated using the Company’s valuation models. In accordance with the derivatives contracts, the Company’s estimated gain/loss on the date of expiration is zero.

A. Currency Swap

(1) Purpose of Contracts: Hedging of risks related to fluctuations in currency exchange rates and interest rates

(2) Contract Terms

- Currency swap contract applying cash flow risk hedge accounting

The Company has entered into a currency swap contract with three banks including Citibank in order to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds (face amounts totaling US$300,000,000) issued on April 1, 2004. As of June 30, 2010, in connection with the unsettled foreign currency swap contract to which the cash flow risk hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won 5,004,645,000 (excluding tax effect totaling Won 1,952,601,000 and foreign exchange translation loss arising from unguaranteed U.S. dollar denominated bonds totaling Won 18,347,695,000) was accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a currency and interest rate swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated floating rate long-term borrowings with face amounts totaling US$100,000,000 borrowed on October 10, 2006. As of June 30, 2010, in connection with this unsettled currency and interest rate swap contract, an accumulated loss on valuation of derivatives amounting to Won 5,019,112,000 (excluding tax effect totaling Won 973,790,000 and foreign exchange translation loss arising from U.S. dollar denominated long-term borrowings totaling Won 26,230 million) was accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a currency and interest rate swap contract with two banks including HSBC in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen dominated bonds (56-2) with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of June 30, 2010, in connection with this unsettled currency and interest rate swap contracts, an accumulated loss on valuation of derivatives amounting to Won 175,585,000 (excluding tax effect totaling Won 1,576,167,000 and foreign exchange translation loss arising from unguaranteed Japanese yen denominated bonds totaling Won 66,516,501,000) was accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a currency and interest rate swap contract with two banks including DBS in order to hedge the foreign currency risk and interest rate risk of U.S. dollar denominated floating rate bonds with face amounts totaling US$150,000,000 issued on November 20, 2008. As of June 30, 2010, in connection with this unsettled currency and interest rate swap contract, an accumulated gain on valuation of derivatives amounting to Won 4,557,249,000 (excluding tax effect totaling Won 1,454,952,000 and foreign exchange translation gain arising from U.S. dollar

denominated bonds totaling Won 35,560,853,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency and interest rate swap contract with Mizuho Corporate Bank in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen dominated bonds (59-2) with face amounts totaling JPY 3,000,000,000 issued on January 22, 2009. As of June 30, 2010, in connection with this unsettled currency and interest rate swap contract, an accumulated gain on valuation of derivatives amounting to Won 1,912,486,000 (excluding tax effect totaling Won 539,419,000 and foreign exchange translation gain arising from unguaranteed Japanese yen denominated bonds totaling Won 5,195,228,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency and interest rate swap contract with The Bank of Tokyo-Mitsubishi in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen dominated bonds (60-2) with face amounts totaling JPY 5,000,000,000 issued on March 5, 2009. As of June 30, 2010, in connection with this unsettled currency and interest rate swap contract, an accumulated gain on valuation of derivatives amounting to Won 308,727,000 (excluding tax effect totaling Won 87,077,000 and foreign exchange translation gain arising from unguaranteed Japanese yen denominated bonds totaling Won 10,384,862,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency swap contract with six banks including Morgan Stanley to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds (with face amounts totaling US$400,000,000) issued on July 20, 2007, and has applied cash flow risk hedge accounting to this foreign currency swap contract starting from May 12, 2010. Accordingly, as of June 30, 2010, in connection with this unsettled foreign currency swap contract, an accumulated gain on valuation of currency swap of Won 10,830,444,000 that has accrued since May 12, 2010 (excluding tax effect totaling Won 3,054,740,000 and foreign exchange translation loss arising from unguaranteed U.S. dollar denominated bonds totaling Won 26,142,424,000) was accounted for as accumulated other comprehensive gain. Meanwhile, a loss on valuation of currency swap of Won 17,527,578,000 incurred prior to the date of applying cash flow risk hedge accounting in the first half of 2010 and a loss on valuation of currency swap of Won 64,533,708,000 for the first half of 2009, respectively, were charged to current operations.

B. Interest Rate Swap

(1) Purpose of Contracts: Hedging of risks related to fluctuations in interest rates

(2) Contract Terms

- Interest rate swap contract to which the cash flow risk hedge accounting is applied:

The Company has entered into an interest rate swap contract with three banks including Nonghyup Bank in order to hedge the interest rate risk of long-term borrowings (totaling Won 500 billion) borrowed between July 28, 2008 and August 13, 2008. As of June 30, 2010, in connection with unsettled interest rate swap contract to which the cash flow risk hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won 10,575,915,000 (excluding tax effect totaling Won 2,982,950,000) was accounted for as accumulated other comprehensive loss.

- Interest rate swap contract to which the hedge accounting is not applied

The Company has entered into an interest rate swap contract with two banks including DBS in order to hedge the interest rate risk of floating rate foreign currency bonds with face amounts totaling US$220,000,000 issued on April 29, 2009. In connection with this unsettled interest rate swap contract, losses on valuation of interest rate swap of Won 2,816,075,000 and Won 2,897,336,000 for the six months ended June 30, 2010 and June 30, 2009, respectively, were charged to current operations.

C. Currency Forward

(1) Purpose of Contracts: Hedging of risks related to fluctuations in currency exchange rates

(2) Contract Terms

- Currency forward contract to which the hedge accounting is not applied

The Company has entered into a currency forward contract with DBS in order to hedge the foreign currency risk of foreign currency account receivable totaling MYR 323,000,000 that the Company expected to collect on August 2, 2010. In connection with this unsettled currency forward contract, a loss on valuation of currency forward of Won 721,471,000 for the six months ended June 30, 2010 was charged to current operations.

6. Major Contracts

						Completion		Contract		Contract Amount
Category		Vendor		Start Date		Date		Title		(Won 100M)
Construction		SK E&C		January 1, 2010		December 31, 2010		2010 Cell Site Facility Construction (Seoul Area)		694
		SK E&C		January 1, 2010		December 31, 2010		2010 RF Relay Facility Construction (Seoul Area)		420
		SK E&C		May 7, 2010		December 31, 2010		2010 N/W Facility Construction (Daegu SORO)		151
Service		SK C&C		January 1, 2010		December 31, 2010		2010 IT SM Contract		2,010
		TU Media, Ltd.		January 1, 2010		December 31, 2010		2010 Satellite DMB Collaboration Contract		916
		SK Marketing & Company		January 1, 2010		December 31, 2010		2010 Membership Collaboration Program		691
Product/ Equipment		SK Telesys		March 12, 2010		December 24, 2010		2010 1st Optical Relay Facility Investment		314
		SK Telesys		March 12, 2010		December 24, 2011		2010 1st RF Relay Facility Investment		297
		Samsung Electronics		May 31, 2010		September 20, 2010		2010 2nd Main Equipment W 5/6FA UHPA Samsung		222
				Subtotal						5,715

7. R&D Investments

(Unit: in millions of Won)

						For the year				For the year
		For the six				ended				ended
		months ended				December				December
Category		June 30, 2010				31, 2009				31, 2008				Remarks
Raw material			12				55				89				—
Labor			25,170				47,183				38,063				—
Depreciation			69,102				134,201				138,512				—
Commissioned service			28,121				69,750				85,837				—
Others			19,028				39,593				34,540				—
Total R&D costs			141,434				290,782				297,040				—
Accounting            Sales and administrative expenses			140,471				288,997				293,443				—
Development expenses (Intangible assets)			963				1,785				3,597				—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)			2.32	%			2.40	%			2.54	%

8. Other information relating to investment decisions

A. Trademark Policies

The Company manages its corporate brand and other product brands such as “T” in a comprehensive way to protect and increase their value.

The Company’s ‘Brand Management Council’ in charge of overseeing its systematic corporate branding operates full time to execute decisions involving major brands and operates ‘Brandnet’, an intranet system to manage corporate brands which provides solutions including licensing of the brands and downloading of the Company logos.

B. Business-related Intellectual Properties

The Company owns intellectual property rights to the design of alphabet “T”. The rights are based on domestic trademark laws and the Company has proprietary and exclusive use of the trademark for 10 years and the rights are renewable. The designed alphabet “T” is registered in all business categories for trademarks (total of 45) and is being used as the primary brand of the Company.

III. FINANCIAL INFORMATION

1. Summary Financial Information (Non-consolidated)

(Unit: in millions of Won)

		As of and for the six
		months ended				As of and for the year ended December 31,
Classification / Fiscal Year		June 30, 2010				2009				2008				2007				2006
Current assets			5,294,568				4,983,052				3,990,503				4,094,059				4,189,325
• Quick assets			5,279,244				4,960,396				3,976,576				4,075,378				4,172,887
• Inventory			15,324				22,656				13,927				18,681				16,438
Non-current assets			13,863,549				14,314,581				14,626,992				14,038,451				11,624,728
• Investments			5,059,707				5,107,653				5,668,127				5,940,045				3,547,942
• Property and Equipment			4,825,880				5,196,521				4,698,214				4,594,413				4,418,112
• Intangible assets			2,491,155				2,665,936				2,941,592				3,174,942				3,405,158
• Other non-current assets			1,486,807				1,344,471				1,319,059				329,051				253,516
Total assets			19,158,117				19,297,633				18,617,495				18,132,510				15,814,053
Current liabilities			3,807,231				3,294,633				3,412,490				2,484,548				2,985,620
Non-current liabilities			4,155,234				4,761,550				4,475,998				4,221,016				3,522,006
Total liabilities			7,962,466				8,056,183				7,888,488				6,705,564				6,507,626
Capital			44,639				44,639				44,639				44,639				44,639
Capital surplus			3,032,916				3,032,009				2,957,095				2,954,829				2,962,699
Capital adjustment			(-)2,709,256				(-)2,708,407				(-)2,147,530				(-)2,072,486				(-)2,019,568
Other Cumulative Profit and Loss			790,034				913,919				373,784				1,594,099				473,904
Retained earnings			10,037,318				9,959,290				9,501,018				8,905,865				7,844,753
Total stockholders’ equity			11,195,652				11,241,450				10,729,007				11,426,946				9,306,427
Sales			6,106,818				12,101,184				11,674,662				11,285,900				10,650,952
Operating Income (or Loss)			1,062,532				2,179,337				2,059,896				2,171,543				2,584,370
Income (or Loss) from continuing operation			685,726				1,288,340				1,277,658				1,642,451				1,446,598
Current Period’s Net Income (or Loss)			685,726				1,288,340				1,277,658				1,642,451				1,446,598

(Unit: Won)

		For the six months
		ended				For the year ended December 31,
Classification / Fiscal Year		June 30, 2010				2009				2008				2007				2006
Earnings per share			9,479				17,808				17,559				22,607				19,734
Diluted earnings per share			9,336				17,599				17,395				22,289				19,458

2. Summary Financial Information (Consolidated)

(Unit: in millions of Won)

		As of and for the year ended December 31,
Classification / Fiscal Year		2009				2008				2007				2006				2005
Current assets			6,370,631				5,422,447				4,813,072				4,663,962				4,598,580
• Quick assets			6,250,741				5,387,473				4,766,020				4,644,184				4,590,796
• Inventory			119,890				34,974				47,052				19,778				7,784
Non-current assets			16,835,625				17,051,224				14,235,863				11,576,006				10,106,193
• Investments			3,059,902				4,025,429				5,446,711				3,236,783				1,989,934
• Property and Equipment			8,165,879				7,437,689				4,969,353				4,507,335				4,663,369
• Intangible assets			3,992,325				3,978,145				3,433,962				3,518,411				3,452,889
• Other non-current assets			1,617,519				1,609,961				385,836				313,477				—
Total assets			23,206,256				22,473,671				19,048,935				16,239,968				14,704,772
Current liabilities			4,894,936				4,628,821				3,016,874				3,208,416				2,863,373
Non-current liabilities			5,966,695				6,020,410				4,344,428				3,548,464				3,513,860
Total liabilities			10,861,631				10,649,231				7,361,302				6,756,880				6,377,233
Capital			44,639				44,639				44,639				44,639				44,639
Capital surplus			3,031,947				2,958,854				2,956,106				2,950,327				2,954,840
Capital adjustment			-2,746,885				(-)2,159,389				(-)2,072,723				(-)2,019,567				(-)2,048,515
Other Cumulative Profit/Loss			915,306				356,192				1,591,258				490,010				—
Retained earnings			9,909,752				9,448,185				8,914,970				7,847,434				7,267,649
Total stockholders’ equity			12,344,625				11,824,440				19,048,935				9,483,088				8,327,540
Sales			14,555,465				13,995,924				11,863,357				11,027,977				10,721,820
Operating Profit (or Loss)			1,878,544				1,751,227				2,101,955				2,621,132				2,670,616
Profit (or Loss) from continuing operation before tax			1,400,498				1,260,366				2,285,765				2,021,578				2,561,567
Current Period’s Net Profit			1,055,606				972,338				1,562,265				1,449,552				1,868,307
Net income attributable to majority interests			1,247,182				1,215,719				1,648,876				1,451,491				1,872,978
Number of Consolidated Companies			29				35				26				18				17

IV. AUDITOR’S OPINION

1. Auditor

Six months ended		Year ended December 31,
June 30, 2010		2009		2008
Deloitte Anjin LLC		Deloitte Anjin LLC		Deloitte Anjin LLC

2. Audit Opinion

Term		Auditor’s opinion		Issues noted
Six months ended June 30, 2010		—		—
Year ended December 31, 2009		Unqualified		—
Year ended December 31, 2008		Unqualified		—

3. Remuneration for Independent Auditors for the Past Three Fiscal Years

A. Audit Contracts

(Unit: in thousands of Won)

Term		Auditors		Contents		Fee		Total hours
Year ended December 31, 2010		Deloitte Anjin LLC		Semi-annual review
				Quarterly review
				Non-consolidated financial statements audit		1,470,000		16,135
				Consolidated financial statements audit
				IFRS-based financial statements review
Year ended December 31, 2009		Deloitte Anjin LLC		Semi-annual review
				Quarterly review
				Non-consolidated financial statements audit		1,308,356		13,982
				Consolidated financial statements audit
Year ended December 31, 2008		Deloitte Anjin LLC		Semi-annual review
				Quarterly review
				Non-consolidated financial statements audit		1,310,097		13,346
				Consolidated financial statements audit

B. Non-Audit Services Contract with External Auditors

(Unit: in thousands of Won)

Service

Term

Contract date

Service provided

duration

Fee

Year ended December 31, 2009

May 13, 2009

Tax consulting

30 days

40,000

May 22, 2009

Tax consulting

10 days

10,000

May 22, 2009

Tax adjustment for fiscal year 2008

20 days

34,000

May 22, 2009

Review of deferred corporate income tax for 1Q and 2Q

10 days

14,000

September 14, 2009

Review of quarterly tax adjustments

5 days

7,000

September 14, 2009

Tax consulting

20 days

20,000

December 28, 2009

Review of quarterly tax adjustments

5 days

7,000

December 28, 2009

Tax consulting

10 days

12,000

Year ended December 31, 2008

November 20, 2007

Set up services for agency tax manual

60 days

48,000

March 3, 2008

Tax adjustment for fiscal year 2007

10 days

33,000

May 15, 2008

Tax consulting

5 days

7,500

June 24, 2008

Foreign tax consulting re indirect taxes

4 days

6,000

August 13, 2008

Tax consulting

10 days

9,400

November 1, 2008

Tax consulting

4 days

5,000

November 19, 2008

Tax consulting

10 days

10,800

November 19, 2008

Review of deferred corporate income tax for 1Q and 2Q

10 days

18,000

December 24, 2008

Review of deferred corporate income tax for 3Q

3 days

6,000

December 24, 2008

Tax consulting

3 days

3,600

December 24, 2008

Tax consulting

3 days

3,000

Year ended December 31, 2007

March 30, 2007

Tax adjustment for fiscal year 2006

10 days

30,000

September 28, 2007

Tax consulting for denial of deductions for corporate income tax

1 day

2,000

September 28, 2007

Review of deferred corporate income tax for 1Q and 2Q

6 days

10,000

September 28, 2007

Tax consulting

5 days

9,000

December 31, 2007

Review of deferred corporate income tax for 3Q

2 days

5,000

December 31, 2007

Tax consulting

3 days

3,000

V. MANAGEMENT DISCUSSION AND ANALYSIS

Not required in quarterly and half year reports under the Korean disclosure rules.

VI. CORPORATE ORGANIZATION INCLUDING BOARD OF DIRECTORS AND AFFILIATED COMPANIES

1. Board of Directors

A. Overview of Board of Directors Composition

The Company’s Board of Directors is comprised of eight members: five independent directors and three inside directors. Within the Board, there are five Committees: Independent Director Nomination Committee, Audit Committee, Compensation Committee, CapEx Review Committee, and Corporate Citizenship Committee.

B. (1) Significant Activities of the Board of Directors

Meeting		Date		Agenda		Approval
312 nd (the first meeting of 2010)		January 27, 2010		-   Financial Statements as of and for the year ended December 31, 2009. -   Annual Business Report as of and for the year ended December 31, 2009 -   Report for Internal Accounting Management System -   Report for Subsequent Events following 4Q 2009		Approved as proposed Approved as proposed
313 rd (the second meeting of 2010)		February  11, 2010		-   Convocation of the 26 th Annual General Meeting of Shareholders -   Result of Internal Accounting Management System Evaluation		Approved as proposed
314 th (the third meeting of 2010)		March 12, 2010		-   Appointment of Committee Members -   Fund Management Transaction with Affiliated Financial Company (SK Securities) -   Establishment of SPC and Limited Partnership Agreement between SPC and Offshore Private Equity Fund		Approved as proposed Approved as proposed Approved as proposed

Meeting		Date		Agenda		Approval
315 th (the fourth meeting of 2010)		April 26, 2010		-    Establishment of SKT Customer Contact Channel Subsidiary -    Establishment of SKT Cell Site Maintenance Subsidiary -    Business Plan for Joint Venture with Disney -    Acquisition of Additional WCDMA Frequency -    Extension of KIF (Korea IT Fund) Maturity -    Partial Disposition of Shares of IHQ, Inc. -    Report for Subsequent Events following 1Q 2010		Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
316 th (the fifth meeting of 2010)		May 26, 2010		-    Investment in Packet One Networks -    Investment in Harbinger Global Wireless (HGW)		Approved as proposed Approved as proposed
317 th (the sixth meeting of 2010)		June 24, 2010		-    Fund Management Transaction with Affiliated Financial Company (SK Securities) -    Additional investment in network equipment in 2010		Approved as proposed Approved as proposed
318 th (the seventh meeting of 2010)		July 22, 2010		-    Proposal for Interim Dividend -    Proposal for acquisition of treasury stock -    Financial performance during 1H 2010 -    Report for Subsequent Events following 2Q 2010 -    Performance review of compliance program for 1H 2010 and planning for 2H 2010		Approved as proposed Approved as proposed

(2) Independent Directors’ Activities at the Board of Directors’ Meetings

				Independent
Meetings		Dates		Directors Attended		Description
The first meeting of 2010		January 27, 2010		5 / 5		—
The second meeting of 2010		February 11, 2010		5 / 5		—
The third meeting of 2010		March 12, 2010		5 / 5		—
The fourth meeting of 2010		April 26, 2010		5 / 5		—
The fifth meeting of 2010		May 26, 2010		4 / 5		—
The sixth meeting of 2010		June 24, 2010		5 / 5		—
The seventh meeting of 2010		July 22. 2010		5 / 5		—

C. Committees within Board of Directors

     (1) Committee Structure

          a) Independent Director Nomination Committee

(As of August 16, 2010)

Number of		Members
Persons		Inside Directors		Independent Directors		Remarks
4		Man Won Jung, Ki Haeng Cho		Rak Yong Uhm, Jae Ho Cho		—

          b) Audit Committee

(As of August 16, 2010)

Number of		Members
Persons		Inside Directors		Independent Directors		Remarks
4		—		Dal Sup Shim, Hyun Chin Lim, Jay Young Chung, Jae Ho Cho		—

          c) Compensation Review Committee

(As of August 16, 2010)

Number of		Members
Persons		Inside Directors		Independent Directors
5		—		Dal Sup Shim, Rak Yong Uhm, Hyun Chin Lim, Jay Young Chung, Jae Ho Cho

          d) Capex Review Committee

(As of August 16, 2010)

Number of		Members
Persons		Inside Directors		Independent Directors		Remarks
4		Ki Haeng Cho		Dal Sup Shim, Rak Yong Uhm, Jay Young Chung		—

e)

Corporate Citizenship Committee

(As of August 16, 2010)

Number of		Members
Persons		Inside Directors		Independent Directors		Remarks
4		Ki Haeng Cho		Rak Yong Uhm, Hyun Chin Lim, Jay Young Chung		—

(2)

Activities of the Committees of the Board of Directors (As of August 16, 2010)

								Independent Directors
								Rak Yong
								Uhm		Jae Ho Cho
		Date of						(Attendance:		(Attendance:
Committee Name		Activity		Agenda		Approval		100%)		100%)
								Vote
Independent Director Nomination Committee		February 11, 2010		26th General Meeting of Shareholders: Proposal to nominate an Independent Director Dal Sup Shim		Approved as Proposed		For		For
		April 26, 2010		Election of Chairman of Committee — Man Won Jung		Approved as Proposed		For		For

Independent Directors

Dal Sup

Rak Yong

Jay Yung

Shim

Uhm

Chung

Date of

(Attendance:

(Attendance:

(Attendance:

Committee Name

Activity

Agenda

Approval

100%)

100%)

100%)

Vote

CapEx Committee

February 10, 2010

Business plan and pending agenda for major investment

—

—

—

—

March 11, 2010

Business plan and pending agenda for major investment

—

—

—

—

April 26, 2010

Election of Chairman of Committee — Rak Yong Uhm

Approved as proposed

For

For

For