Equibles

6-K

SK TELECOM CO LTD (SKM)

6-K 2024-04-18 For: 2024-04-18
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Added on April 04, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OFFOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF APRIL 2024

COMMISSION FILE NUMBER: 333-04906

SK Telecom Co., Ltd.

(Translation of registrant’s name into English)

65, Eulji-ro, Jung-gu

Seoul 04539, Korea

(Address of principal executive office)

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 ☒    Form 40-F ☐

ANNUAL BUSINESS REPORT

(From January 1, 2023 to December 31, 2023)

THIS IS A SUMMARY OF THE ANNUAL BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN WHICH 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.

ALL REFERENCES TO THE “COMPANY” SHALL MEAN SK TELECOM CO., LTD. AND, UNLESS THE CONTEXT OTHERWISE REQUIRES, ITS CONSOLIDATED SUBSIDIARIES. REFERENCES TO “SK TELECOM” SHALL MEAN SK TELECOM CO., LTD., BUT SHALL NOT INCLUDE ITS CONSOLIDATED SUBSIDIARIES.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A CONSOLIDATED BASIS IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS ADOPTED FOR USE IN KOREA (“K-IFRS”) WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. THE COMPANY HAS MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

I. COMPANY OVERVIEW

1. Company Overview

The following table sets forth a summary of the Company’s consolidated subsidiaries:

Number of Consolidated Subsidiaries
Classification Beginning ofthe ReportingPeriod Additions Subtractions End of theReportingPeriod Number ofMaterialSubsidiaries*
Listed Companies 0 0 0 0 0
Unlisted Companies 25 2 2 25 12
Total 25 2 2 25 12
* “Material Subsidiary” means a subsidiary with total assets of Won 75 billion or more as of the<br>end of the previous fiscal year.
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** SAPEON Korea Inc. (“SAPEON Korea”) and SAPEON Inc. (“Sapeon”) have been newly included in<br>the number of Material Subsidiaries, as the total assets of each of these subsidiaries exceeded Won 75 billion on a separate basis as of December 31, 2023.
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For a list of the Company’s subsidiaries as of December 31, 2023, see Note 1(2) of the notes to the Company’s audited consolidated financial statements attached hereto.

Changes in the Company’s consolidated subsidiaries during the year ended December 31, 2023 **** are set forth below.

Change Name Remarks
Additions Global AI Platform Corporation Korea Newly established by SK Telecom Americas, Inc.
Global AI Platform Corporation Newly established by SK Telecom Americas, Inc.
Exclusions SK Telecom Japan Inc. Lost control during the reporting period
SK Planet Japan, K. K. Lost control during the reporting period
A. Corporate Legal Business Name: SK Telecom Co., Ltd.
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B. Date of Incorporation: March 29, 1984
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C. Location of Headquarters
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(1) Address: 65 Euljiro, Jung-gu, Seoul, Korea
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(2) Phone: +82-2-6100-2114<br>
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(3) Website: http://www.sktelecom.com
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D. Major Businesses
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The Company’s businesses consist of (1) the wireless business including cellular voice, wireless data and wireless Internet services, (2) the fixed-line business including fixed-line telephone, high-speed Internet, and data and network lease services, and (3) other businesses including commercial retail data broadcasting channel services, among others.

2

Set forth below is a summary description of each of the Company’s businesses.

Classification Material entities Description of business Proportion of revenue
Wireless business SK Telecom Co., Ltd. Mobile telephone, wireless data, information and communications services, etc. 75%
PS&Marketing Co., Ltd.
Service Ace Co., Ltd.
SK O&S Co., Ltd.
Fixed-line business SK Broadband Co., Ltd. Telephone, high-speed Internet, data, communications network leasing services, etc. 22%
SK Telink Co., Ltd.
Home & Service Co., Ltd.
Other businesses SK stoa Co., Ltd., etc. Operation of commercial retail data broadcasting channel services, etc. 3%
Total 100%

The total number of the Company’s consolidated subsidiaries as of December 31, 2023 was 25, including SK Broadband Co., Ltd. (“SK Broadband”) and PS&Marketing Co., Ltd. (“PS&Marketing”), among others.

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E. Credit Ratings
(1) Corporate bonds and other long-term securities
--- ---
Credit rating date Subject of rating Credit rating Credit rating entity(Credit rating range) Rating classification
--- --- --- --- ---
January 4, 2021 Corporate bond AAA (Stable) Korea Ratings Current rating
January 4, 2021 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
June 15, 2021 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Regular rating
June 16, 2021 Corporate bond AAA (Stable) Korea Investors Service, Inc. Regular rating
June 25, 2021 Corporate bond AAA (Stable) Korea Ratings Regular rating
October 14, 2021 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
October 15, 2021 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
October 15, 2021 Corporate bond AAA (Stable) Korea Ratings Current rating
March 30, 2022 Corporate bond AAA (Stable) Korea Ratings Regular rating
March 30, 2022 Corporate bond AAA (Stable) Korea Ratings Current rating
March 30, 2022 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
March 30, 2022 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
March 30, 2022 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Regular rating
June 15, 2022 Corporate bond AAA (Stable) Korea Investors Service, Inc. Regular rating
July 28, 2022 Corporate bond AAA (Stable) Korea Ratings Current rating
July 28, 2022 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
July 29, 2022 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
December 1, 2022 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
December 2, 2022 Corporate bond AAA (Stable) Korea Ratings Current rating
December 2, 2022 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
February 7, 2023 Corporate bond AAA (Stable) Korea Ratings Current rating
February 7, 2023 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
February 7, 2023 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
March 30, 2023 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
March 30, 2023 Corporate bond AAA (Stable) Korea Investors Service, Inc. Regular rating
March 31, 2023 Corporate bond AAA (Stable) Korea Ratings Regular rating
March 31, 2023 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Regular rating
March 31, 2023 Corporate bond AAA (Stable) Korea Ratings Current rating
March 31, 2023 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
May 22, 2023 Hybrid<br>securities AA+ (Stable) Korea Ratings Current rating
May 22, 2023 Hybrid<br>securities AA+ (Stable) Korea Investors Service, Inc. Current rating
May 22, 2023 Hybrid<br>securities AA+ (Stable) NICE Investors Service, Co., Ltd. Current rating
May 22, 2023 Hybrid<br>securities AA+ (Stable) Korea Ratings Current rating
May 22, 2023 Hybrid<br>securities AA+ (Stable) Korea Investors Service, Inc. Current rating
May 22, 2023 Hybrid<br>securities AA+ (Stable) NICE Investors Service, Co., Ltd. Current rating
October 4, 2023 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
October 5, 2023 Corporate bond AAA (Stable) Korea Ratings Current rating
October 5, 2023 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
February 7, 2024 Corporate bond AAA (Stable) Korea Ratings Current rating
February 7, 2024 Corporate bond AAA (Stable) Korea Investors Service, Inc. Current rating
February 7, 2024 Corporate bond AAA (Stable) NICE Investors Service, Co., Ltd. Current rating
* Rating definition: “AAA” – The certainty of principal and interest payment is at the highest<br>level with extremely low investment risk and is stable such that it will not be influenced by reasonably foreseeable changes in external factors.
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** Rating definition: “AA” – The certainty of principal and interest payment is very high with very<br>low investment risk, but has slightly inferior factors compared to securities that are rated “AAA.”
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*** From ratings “AA” to “B,” “+” and “-” signs are attached depending on<br>the relative superiority within the grade.
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(2) Commercial paper (“CP”) and short-term bonds
Credit rating date Subject of rating Credit rating Credit rating entity(Credit rating range) Rating classification
--- --- --- --- ---
June 15, 2021 CP A1 NICE Investors Service Co., Ltd. Current rating
June 15, 2021 Short-term bond A1 NICE Investors Service Co., Ltd. Current rating
June 16, 2021 CP A1 Korea Investors Service, Inc. Current rating
June 16, 2021 Short-term bond A1 Korea Investors Service, Inc. Current rating
June 25, 2021 CP A1 Korea Ratings Current rating
June 25, 2021 Short-term bond A1 Korea Ratings Current rating
October 14, 2021 CP A1 Korea Investors Service, Inc. Regular rating
October 14, 2021 Short-term bond A1 Korea Investors Service, Inc. Regular rating
October 15, 2021 Short-term bond A1 NICE Investors Service Co., Ltd. Regular rating
October 15, 2021 CP A1 NICE Investors Service Co., Ltd. Regular rating
October 15, 2021 CP A1 Korea Ratings Regular rating
October 15, 2021 Short-term bond A1 Korea Ratings Regular rating
November 3, 2021 CP A1 Korea Investors Service, Inc. Rating update
November 3, 2021 Short-term bond A1 Korea Investors Service, Inc. Rating update
June 15, 2022 CP A1 Korea Investors Service, Inc. Current rating
June 15, 2022 Short-term bond A1 Korea Investors Service, Inc. Current rating
June 20, 2022 CP A1 Korea Ratings Current rating
June 20, 2022 Short-term bond A1 Korea Ratings Current rating
June 21, 2022 CP A1 NICE Investors Service Co., Ltd. Current rating
June 21, 2022 Short-term bond A1 NICE Investors Service Co., Ltd. Current rating
December 2, 2022 CP A1 Korea Ratings Regular rating
December 2, 2022 Short-term bond A1 Korea Ratings Regular rating
December 2, 2022 CP A1 Korea Investors Service, Inc. Regular rating
December 2, 2022 Short-term bond A1 Korea Investors Service, Inc. Regular rating
December 2, 2022 CP A1 NICE Investors Service Co., Ltd. Regular rating
December 2, 2022 Short-term bond A1 NICE Investors Service Co., Ltd. Regular rating
January 2, 2023 Short-term bond A1 Korea Investors Service, Inc. Rating update
January 3, 2023 Short-term bond A1 NICE Investors Service Co., Ltd. Rating update
May 22, 2023 CP A1 NICE Investors Service Co., Ltd. Current rating
May 22, 2023 Short-term bond A1 NICE Investors Service Co., Ltd. Current rating
May 22, 2023 Short-term bond A1 Korea Ratings Current rating
May 22, 2023 CP A1 Korea Ratings Current rating
May 22, 2023 Short-term bond A1 Korea Investors Service, Inc. Current rating
May 22, 2023 CP A1 Korea Investors Service, Inc. Current rating
September 27, 2023 CP A1 NICE Investors Service Co., Ltd. Regular rating
September 27, 2023 Short-term bond A1 NICE Investors Service Co., Ltd. Regular rating
October 4, 2023 Short-term bond A1 Korea Investors Service, Inc. Regular rating
October 4, 2023 CP A1 Korea Investors Service, Inc. Regular rating
October 13, 2023 Short-term bond A1 Korea Ratings Regular rating
October 13, 2023 CP A1 Korea Ratings Regular rating
* Rating definition**:** “A1” – Timely repayment capability is at the highest level with<br>extremely low investment risk and is stable such that it will not be influenced by reasonably foreseeable changes in external factors.
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(3) International credit ratings
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Date of credit rating Subject of rating Credit rating ofsecurities Credit rating agency Rating type
--- --- --- --- ---
March 4, 2021 Bonds denominated in foreign currency A- (Stable) Fitch Ratings Regular rating
March 30, 2021 Bonds denominated in foreign currency A- (Stable) S&P Global Ratings Regular rating
June 16, 2021 Bonds denominated in foreign currency A3 (Stable) Moody’s Investors Service Regular rating
December 8, 2021 Bonds denominated in foreign currency A- (Stable) Fitch Ratings Regular rating
February 25, 2022 Bonds denominated in foreign currency A- (Stable) S&P Global Ratings Regular rating
December 2, 2022 Bonds denominated in foreign currency A- (Positive) Fitch Ratings Regular rating
February 23, 2023 Bonds denominated in foreign currency A- (Stable) S&P Global Ratings Regular rating
August 28, 2023 Bonds denominated in foreign currency A3 (Stable) Moody’s Investors Service Regular rating
November 28, 2023 Bonds denominated in foreign currency A- (Stable) Fitch Ratings Regular rating

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(4) Listing (registration or designation) of Company’s shares and special listing status<br>
Listing (registration or designation) ofstock Date of listing<br><br><br>(registration or designation) Special listing
--- --- ---
KOSPI Market of Korea Exchange November 7, 1989 Not applicable

2. Company History

March 1984: Establishment of Korea Mobile Telecommunications Co., Ltd.

November 1989: Listing on the KOSPI Market of the Korea Exchange

March 1997: Change of name to SK Telecom Co., Ltd.

March 2008: Acquisition of Hanaro Telecom (the predecessor entity of SK Broadband)

May 2018: Acquisition of ADT CAPS Co., Ltd. (“Former ADT CAPS”) through the acquisition of shares of Siren Holdings Korea Co., Ltd.

December 2018: Comprehensive exchange of shares of SK Infosec Co., Ltd. (“SK Infosec”)

April 2020: Merger of SK Broadband and Tbroad

December 2020: Spin-off of T map Mobility Co., Ltd. (“T Map Mobility”)

March 2021: Merger of SK Infosec and Former ADT CAPS

November 2021: Spin-off of SK Square Co., Ltd. (“SK Square”) from SK Telecom (the “Spin-off”)

A. Location of Headquarters
• 22 Dohwa-dong, Mapo-gu, Seoul (July 11, 1988)
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• 16-49 Hangang-ro 3-ga, Yongsan-gu, Seoul (November 19, 1991)
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• 267 Namdaemun-ro 5-ga, Jung-gu, Seoul (June 14, 1995)
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• 99 Seorin-dong, Jongno-gu, Seoul (December 20, 1999)<br>
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• 65 Euljiro, Jung-gu, Seoul (December 13, 2004)
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B. Significant Changes in Management
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Date of change Shareholder meetingclassification Appointment Term Termination orDismissal
--- --- --- --- ---
Newly appointed Re-elected
March 26, 2019 General Meeting of Shareholders Seok-Dong Kim — Dae Sik Oh
March 26, 2020 General Meeting of Shareholders Yong-Hak Kim, Junmo Kim Jung Ho Park, Dae Sik Cho, Jung Ho Ahn Jae Hoon Lee, Jae Hyeon Ahn
March 25, 2021 General Meeting of Shareholders — Young Sang Ryu, Youngmin Yoon —
August 25, 2021 — — — Dae Sik Cho
October 12, 2021 Extraordinary Meeting of Shareholders Kyu-Nam Choi — —
November 1, 2021 — Young Sang Ryu — Jung Ho Park
March 25, 2022 General Meeting of Shareholders Jong Ryeol Kang Seok-Dong Kim —
March 28, 2023 General Meeting of Shareholders Haeyun Oh Yong-Hak Kim, Junmo Kim Jung Ho Ahn
* At the 39th General Meeting of Shareholders held on March 28, 2023, Haeyun Oh was newly elected as<br>independent director and audit committee member, Yong-Hak Kim was re-elected as independent director and audit committee member, and Junmo Kim was re-elected as independent director.
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** The appointments of inside director, non-executive director and<br>independent directors are expected to be decided at the 40th General Meeting of Shareholders, which is scheduled to be held after the date of original submission of this business report.
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C. Change in Company Name

On March 28, 2019, in accordance with a resolution at its general meeting of shareholders, Iriver Ltd. (“Iriver”) changed its name to Dreamus Company, which has been eliminated from the Company’s consolidation scope following the Spin-off.

On April 17, 2019, Network O&S Co., Ltd. changed its name to SK O&S Co., Ltd. (“SK O&S”) pursuant to a resolution at its extraordinary meeting of shareholders.

On March 4, 2021, SK Infosec merged Former ADT CAPS with and into itself and changed its name to ADT CAPS Co., Ltd. (“ADT CAPS”) after the date of the merger. As of October 26, 2021, ADT CAPS changed its name to SK shieldus Co., Ltd., which has subsequently been eliminated from the Company’s consolidation scope following the Spin-off.

D. Mergers, Acquisitions and Restructuring

[SK Telecom]

(1) Acquisition of shares of SK Stoa

On April 25, 2019, the Company’s board of directors (the “Board of Directors”) resolved to acquire the 100% equity interest in SK Stoa owned by SK Broadband, a subsidiary of the Company, in order to expand its T-commerce business and maximize synergies with other information and communications technology (“ICT”) businesses of the Company. On January 3, 2020, the Company acquired 3,631,355 shares of SK Stoa after obtaining governmental approvals.

(2) Acquisition of shares of Tbroad Nowon Broadcasting Co., Ltd. (“Tbroad Nowon”)

On April 26, 2019, the Board of Directors resolved to acquire shares of Tbroad Nowon to enhance the Company’s competitiveness in the media business pursuant to a share purchase agreement with Tbroad Nowon’s largest shareholder, Tbroad. The Company acquired a 55.00% equity interest, or 627,000 shares, of Tbroad Nowon at a purchase price of Won 10.4 billion. See the report on “Amendment Regarding Decision on Acquisition of Tbroad Nowon” filed by the Company on January 23, 2020 for more information.

(3) Disposal of shares of Shopkick Management Company (“SMC”) and Shopkick, Inc. (“Shopkick”)

On June 11, 2019, SKP America, LLC, a subsidiary of the Company, disposed of its 100% equity interest in SMC and SMC’s wholly-owned subsidiary Shopkick.

(4) Acquisition of shares of Incross Co., Ltd. (“Incross”)

On June 28, 2019, the Company acquired 2,786,455 shares of Incross in order to strengthen its digital advertising business. The Company’s equity interest in Incross following the acquisition is 34.6%. See the report on “Decision on Acquisition of Shares of Incross” filed by the Company on April 11, 2019, as amended on June 3, 2019 for more information.

(5) Capital increase of Content Alliance Platform Inc. (“Content Alliance Platform”)

On September 18, 2019, the Company participated in a capital increase by Content Alliance Platform in the amount of Won 90 billion through third-party allotment in order to provide innovative media services and contents to customers and to enhance its competitiveness as a differentiated mobile OTT platform. See the report on “Participation in Capital Increase by Content Alliance Platform” filed by the Company on April 5, 2019, as amended on June 28, 2019.

(6) Acquisition of newly-issued shares of Kakao Corp. (“Kakao”)

In order to pursue a strategic alliance with Kakao, the Company acquired newly-issued common shares of Kakao in the aggregate amount of approximately Won 300 billion through third-party allotment on November 5, 2019. Kakao acquired treasury shares of the Company. See the report on “Results of Disposal of Treasury Shares” filed by the Company on November 5, 2019 for more information.

(7) Spin-off of T Map Mobility

In order to strengthen the business expertise and enhance the efficiency of the Company’s mobility business, the Company engaged in a vertical spin-off of such business into T Map Mobility. The spin-off was a simple vertical spin-off, whereby the shareholder ownership composition remained the same, and it had no effect on the Company’s consolidated financial statements. The spin-off registration date was December 30, 2020.

* See the report on “Decision to Spin Off Mobility Business” filed by the Company on October 16,<br>2020, for more information.

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(8) Spin-off of SK Square

The Company engaged in the Spin-off, comprising a horizontal spin-off of its business of managing the equity interests in certain investees engaged in, among other things, semiconductor and new ICT businesses and making new investments into a newly established company, SK Square. The Spin-off was conducted in order to (i) strengthen the competitiveness of, and concentrate capabilities relating to, the spun-off investments, (ii) increase the transparency of corporate governance and management stability and (iii) efficiently allocate management resources through changes in the corporate governance structure of the Company and SK Square, thereby facilitating appropriate market valuation and ultimately enhancing the corporate and shareholder values of the Company and SK Square. The Spin-off registration date was November 2, 2021.

* See the report on “Decision on Spin-Off” filed by the Company<br>on June 10, 2021, for more information.

(9) Transfer of artificial intelligence (“AI”) semiconductor business

On December 21, 2021, the Board of Directors resolved to approve an agreement for the transfer of the Company’s AI semiconductor business to facilitate the commercialization of the Company’s AI semiconductor technology and to improve management efficiency. The transfer was completed on January 4, 2022.

* See the report on “Decision on Business Transfer” filed by the Company on December 22, 2021, for<br>more information.

[SK Broadband]

(1) Transfer of business

On April 5, 2019, SK Broadband’s board of directors resolved to approve an agreement for the transfer of its OTT service, oksusu, to Content Alliance Platform (POOQ), a joint venture among KBS, MBC and SBS. The transaction was completed on September 18, 2019.

(2) Transfer of subsidiary shares

On April 24, 2019, SK Broadband’s board of directors approved the transfer of its 100% equity interest (3,631,355 shares) in SK Stoa, a subsidiary of SK Broadband, to SK Telecom. On December 30, 2019, the Ministry of Science and ICT (“MSIT”) approved the change in the largest capital contributor, and the transaction was completed on January 3, 2020.

(3) Merger of Tbroad, Tbroad Dongdaemun Broadcasting Co., Ltd. (“Tbroad Dongdaemun”) and Korea Digital Cable Media Center (“KDMC”) with and into SK Broadband (the “Tbroad Merger”)

On April 26, 2019, SK Broadband’s board of directors resolved to enter into a merger agreement pursuant to which Tbroad, Tbroad Dongdaemun and KDMC merged with and into SK Broadband. On January 23, 2020, the parties entered into an amendment to the merger agreement due to changes in the merger timeline, and on March 26, 2020, the entry into the merger agreement was approved as proposed at the extraordinary general meeting of shareholders. The Tbroad Merger was completed as of April 30, 2020.

(4) Transfer of business

On July 30, 2020, SK Broadband’s board of directors resolved to approve a certain mobile virtual network operator (“MVNO”) Business Transfer Agreement in connection with the sale of its MVNO business to Korea Cable Telecom Co., Ltd. The sale was a follow-up measure to, and a condition to MSIT’s approval of, the Tbroad Merger, and was carried out pursuant to the terms of the merger agreement for the Tbroad Merger. The transfer was completed on August 31, 2020.

(5) Acquisition of business

On December 4, 2020, SK Broadband entered into a certain business transfer agreement to acquire the business-to-business (“B2B”) business of SK Telink Co., Ltd. (“SK Telink”) with the purpose of strengthening the market competitiveness of the B2B business through a reorganization of such business within the wider ICT business of the SK Group. The transfer was completed on March 31, 2021.

(6) Establishment of a subsidiary and acquisition of shares

On January 5, 2021, SK Broadband established Media S Co., Ltd., a subsidiary engaged in the production and supply of broadcasting programs, through a capital contribution of Won 23.0 billion (representing a 100% equity interest), and the subsidiary was added as a member of the SK Group as of March 2, 2021. On June 22, 2022, SK Broadband acquired 5,000,000 additional shares of Media S Co., Ltd. for Won 25 billion through a capital increase by allocation to shareholders.

(7) Merger

On March 30, 2022, SK Broadband’s board of directors approved the merger contract with Broadband Nowon Broadcasting Co., Ltd., as originally proposed. On October 5, 2022, the merger was completed.

(8) Transfer of business

On December 27, 2023, the board of directors and the shareholders of Home & Service Co., Ltd. (“Home & Service”), a subsidiary of SK Broadband, resolved to transfer Home & Service’s electric vehicle standard-charge business.

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[SK Telink]

(1) Change in location of headquarters

As of April 20, 2020, SK Telink changed the location of its headquarters to 144 Mapo T-town, Mapo-daero, Mapo-gu, Seoul pursuant to a resolution of its board of directors on April 16, 2020.

(2) Transfer of access ID business

On May 22, 2020, the board of directors of SK Telink resolved to transfer its access ID business and related assets to Former ADT CAPS, a related party, for Won 0.4 billion, effective as of May 31, 2020.

(3) Transfer of device business

On May 22, 2020, the board of directors of SK Telink resolved to transfer its device business and related assets to SK Networks Co., Ltd., a related party, for Won 4.4 billion, effective as of July 1, 2020. As such transfer qualified as a simplified business transfer, the board resolution served as requisite approval in lieu of approval by the general meeting of shareholders.

(4) Transfer of B2B business

On December 2, 2020, SK Telink held an extraordinary general meeting of shareholders, which resolved to transfer its B2B business and related assets to its affiliated company, SK Broadband. The transfer was completed on March 31, 2021, and the value of the transfer was Won 20.3 billion.

[PS&Marketing]

(1) Acquisition of shares of SK m&service Co., Ltd. (“SK M&Service”)

PS&Marketing acquired 3,099,112 shares of SK M&Service (representing a 100% equity interest) to strengthen its competitiveness in distribution and promote synergies within the ICT businesses of SK Telecom and its affiliates. The transaction was completed on February 9, 2022.

3. Total Number of Shares

A. Total Number of Shares
(As of December 31, 2023) (Unit: in shares)
--- --- --- --- --- --- --- --- ---
Classification Share type Remarks
Commonshares Preferredshares Total
I. Total number of authorized shares 670,000,000 — 670,000,000 —
II. Total number of shares issued to date 304,927,159 — 304,927,159 —
III. Total number of shares retired to date 86,094,015 — 86,094,015 —
a. reduction of capital — — — —
b. retirement with profit 86,094,015 — 86,094,015 —
c. redemption of redeemable shares — — — —
d. others — — — —
IV. Total number of issued shares (II-III) 218,833,144 — 218,833,144 —
V. Number of treasury shares 6,133,414 — 6,133,414 —
VI. Number of outstanding shares (IV-V) 212,699,730 — 212,699,730 —
* Following the stock split of October 28, 2021 (the “Stock Split”) and the split-off of November 1, 2021, the total number of issued shares changed from 72,060,143 shares (par value of Won 500 per share) to 218,833,144 shares (par value of Won 100 per share).
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** Number of treasury shares includes 54,032 treasury shares acquired relating to fractional shares from the Spin-off.
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B. Treasury Shares
(As of December 31, 2023) (Unit: in shares)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Acquisition methods Type of shares At thebeginningof period Changes At theend ofperiod
Acquired(+) Disposed(-) Retired(-)
Acquisition<br><br><br>pursuant to<br><br><br>the Financial Investment<br><br><br>Services and<br><br><br>Capital<br><br><br>Markets Act<br><br><br>of Korea Directacquisition Direct acquisitionfrom market Common shares — — — — —
Preferred shares — — — — —
Directover-the-counteracquisition Common shares — — — — —
Preferred shares — — — — —
Tender offer Common shares — — — — —
Preferred shares — — — — —
Sub-total (a) Common shares — — — — —
Preferred shares — — — — —
Acquisitionthrough trustand otheragreements Held by trustee Common shares — 5,773,410 — — 5,773,410
Preferred shares — — — — —
Held in actualstock Common shares 801,091 — 441,087 — 360,004
Preferred shares — — — — —
Sub-total (b) Common shares 801,091 5,773,410 441,087 — 6,133,414
Preferred shares — — — — —
Other acquisition (c) Common shares — — — — —
Preferred shares — — — — —
Total (a+b+c) Common shares 801,091 5,773,410 441,087 — 6,133,414
Preferred shares — — — — —
* On February 9, 2023, the Company disposed 324,580 treasury shares for bonus payment purposes.<br>
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** On February 27, 2023, the Company disposed 109,508 treasury shares for bonus payment purposes.<br>
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*** On April 21, 2023, the Company disposed 6,999 treasury shares for bonus payment purposes.<br>
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**** In 2023, the Company repurchased 5,773,410 treasury shares pursuant to a trust agreement dated July 27,<br>2023 (the “Trust Agreement”) which allowed for the repurchase of treasury shares of up to Won 300 billion.
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4. Status of Direct Acquisitions and Disposal of Treasury Shares

(As of December 31, 2023) (Unit: in shares and percentages)
Classification Expected Acquisition (Disposal)Period ExpectedNumber ofShares (A) ExecutedNumber ofShares (B) ExecutionRatio (B/A) Reporting Date
Start Date End Date
Direct Disposal Feb. 3, 2021 Feb. 3, 2021 604,950 604,950 100 % Feb. 8, 2021
Direct Disposal Jun. 21, 2021 Jun. 21, 2021 2,500 2,500 100 Jun. 22, 2021
Direct Disposal Oct. 25, 2021 Dec. 16, 2021 2,526,553 2,526,553 100 Dec. 20, 2021
Direct Disposal Jan. 24, 2022 Jan. 24, 2022 413,080 413,080 100 Jan. 27, 2022
Direct Disposal Feb. 25, 2022 Feb. 25, 2022 7,598 7,598 100 Feb. 28, 2022
Direct Disposal May 2, 2022 May 2, 2022 5,984 5,984 100 May 17, 2022
Direct Disposal May 13, 2022 May 13, 2022 23,239 23,239 100 May 17, 2022
Direct Disposal Feb. 9, 2023 Feb. 9, 2023 324,580 324,580 100 Feb. 13, 2023
Direct Disposal Feb. 27, 2023 Feb. 27, 2023 109,508 109,508 100 Mar. 2, 2023
Direct Disposal Apr. 21, 2023 Apr. 21, 2023 6,999 6,999 100 Apr. 24, 2023
* The expected number of shares and executed number of shares reflect the effect of the Stock Split, where<br>applicable.
--- ---

10

5. Status of Trust Agreement on Repurchase of Treasury Shares

(As of December 31, 2023) (Unit: in Won, percentages and number of instances)
Agreement Period Maximum Valueof TreasuryShares to beAcquired underAgreement (A) Actual Value ofTreasury SharesAcquired underAgreement (B) ExecutionRatio (B/A) Change of SalesDirection Reporting Date
Classification Start Date End Date Number ofInstances Date
Trust Agreement Execution Aug. 28,<br>2020 Apr. 30,<br>2021 ~~W~~ 500,000,000,000 ~~W~~ 499,646,025,000 99.93 % 0 — Apr. 30, 2021
Trust Agreement Execution Jul. 27,<br>2023 Jan. 26,<br>2024 ~~W~~ 300,000,000,000 ~~W~~ 285,486,911,850 95.16 % 0 — Jan. 26, 2024
* The Company completed the repurchase of treasury shares pursuant to the Trust Agreement and reported the<br>results of the termination of the Trust Agreement on January 26, 2024. The above value (B) reflects the acquisition cost of treasury shares as of December 31, 2023.
--- ---

6. Matters Concerning Articles of Incorporation

Date of Revision General Meeting of Shareholders Key Revisions Reason for Revisions
March 25, 2021 37^th^ General Meeting of Shareholders Corporate governance charter, term of office of independent directors, dividends, etc. To provide basis for adopting a corporate governance charter and quarterly dividends in the Articles of Incorporation and to reflect applicable amendments to the Korean Commercial Code
October 12, 2021 1^st^ Extraordinary General Meeting of Shareholders Total number of authorized shares, par value per share Stock Split from par value of Won 500 per share to par value of Won 100 per share
March 25, 2022 38^th^ General Meeting of Shareholders The Company’s areas of business To reflect the Company’s pursuit of new businesses including data and medical equipment businesses

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II. BUSINESS

1. Business Overview

Each company in the consolidated entity is a separate legal entity providing independent services and products. The Company’s business is primarily separated into (1) the wireless business consisting of cellular voice, wireless data and wireless Internet services, (2) the fixed-line business consisting of fixed-line telephone, high-speed Internet, data and network lease services, among others and (3) other businesses consisting of commercial retail data broadcasting channel business, among others.

Set forth below is a summary description of the business of each of the Company’s material consolidated subsidiaries.

Classification Company name Description of business
Wireless SK Telecom Co., Ltd. Wireless voice and data telecommunications services via digital wireless networks
PS&Marketing Co., Ltd. Sale of fixed-line and wireless telecommunications products through wholesale, retail and online distribution channels
SK O&S Co., Ltd. Maintenance of switching stations
Service Ace Co., Ltd. Management and operation of customer centers
Service Top Co., Ltd. Management and operation of customer centers
Fixed-line SK Broadband Co., Ltd. High-speed Internet, TV, telephone, commercial data and other fixed-line services and management of the transmission system for online<br>digital contents<br> <br><br> <br>Various media-related services, such as channel management services<br>including video-on-demand services
Home & Service Co., Ltd. System maintenance of high-speed Internet, Internet protocol TV (“IPTV”) and fixed-line services
SK Telink Co., Ltd. International wireless direct-dial “00700” services and MVNO business
Other business SK stoa Co., Ltd. Operation of commercial retail data broadcasting channel services
Atlas Investment Investments
SK Telecom Innovation Fund, L.P. Investments
SK m&service Co., Ltd. Database and online information services
SAPEON Inc. Manufacture of non-memory and other electronic integrated circuits

[Wireless Business]

A. Overview

Wireless telecommunications companies provide services based on competitive strengths in handheld devices, affordable pricing, network coverage and an extensive contents library. The Company continues to maintain its reputation as the unparalleled premium network operator in the 3G, 4G and 5G markets on the basis of its technological leadership and network management technology. With the world’s first commercialization of 5G technology in 2019, the Company continues to maintain its position as the top network operator in the 5G era and strives to provide differentiated services to its customers.

In order to strengthen its sales channels, the Company has been offering a variety of fixed-line and wireless telecommunications convergence products through its subsidiary, PS&Marketing. PS&Marketing provides differentiated service to customers through the establishment of new sales channels and product development. Through its subsidiaries Service Ace Co., Ltd. (“Service Ace”) and Service Top Co., Ltd., the Company operates customer service centers and provides telemarketing services. Additionally, SK O&S, the Company’s subsidiary responsible for the operation of the Company’s networks, provides customers with quality network services and provides the Company with technological know-how in network operations.

The Company has been maintaining solid profitability based on the stable sales generated from its 5G subscribers, together with efficient investments in, and operation of, its wireless networks and stabilization of market competition. In addition, the Company has been promoting growth in its enterprise business by developing various AI-related business items, including AI contact centers, vision AI and big data, while continuing efforts to increase demand for the Company’s IoT lines.

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The Company seeks to procure additional offerings of attractive products for “T Universe,” the Company’s subscription business, which has solidified its position as a leading subscription service in Korea through diverse partnerships with domestic and international businesses, and to promote its continued substantial growth by transforming T Universe into an AI-based commerce subscription platform.

“A. (Adot),” the Company’s Korean language GPT-3 based service, has resonated with the market by introducing call recording and summarization features, and it continues to innovate customers’ communication experience, including by introducing real-time interpretation service during calls.

“Ifland,” driven by the popularity of “Ifhome,” has been experiencing notable growth in the global market, including in India. In addition, the introduction of an economic system has contributed to enhancing the vitality of the platform, including through an increase in the time spent by users on Ifland.

B. Industry Characteristics

The telecommunications services market can be categorized into telecommunications services (such as fixed-line, wireless and leased line services, as well as sales intermediary services relating thereto and value-added services) and broadcasting and telecommunications convergence services (including IPTV and integrated fixed-line and mobile telecommunications services). Pursuant to the Telecommunications Business Act, the telecommunications services market can be further classified into basic telecommunications (fixed-line and wireless telecommunications), special category telecommunications (resale of telecommunications equipment, facilities and services) and value-added telecommunications (Internet connection and management, media contents and others).

The size of the domestic telecommunications services market is determined based on various factors specific to Korea, including the size of the population that uses telecommunications services and telecommunications expenditures per capita. While it is possible for Korean telecommunications service providers to provide services abroad through acquisitions or otherwise, foreign telecommunications services markets have their own characteristics depending, among others, on the regulatory environment and demand for telecommunications services.

C. Growth Potential

The Korean mobile communications market is considered to have reached its maturation stage with more than a 100% penetration rate. However, the Korean mobile communications market continues to improve in the quality of services with the help of advances in network-related technology and the development of highly advanced smartphones which enable the provision of new ICT services for advanced multimedia contents, mobile commerce, mobility and other related services. In addition, the ultra-low latency and high capacity characteristics of 5G networks as well as the advancement of AI are expected to accelerate the introduction of new services and the growth of IoT-based B2B businesses.

(Unit: in 1,000 persons)
Classification As of December 31,
2023 2022 2021
Number of subscribers SK Telecom 31,276 30,452 29,696
Others (KT, LG U+) 35,643 32,676 31,869
MVNO 15,851 12,829 10,355
Total 82,770 75,957 71,920
* Source: Wireless telecommunications service data from the MSIT as of December 31, 2023.<br>
--- ---

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D. Domestic and Overseas Market Conditions

The Korean mobile communications market includes the entire population of Korea with mobile communications service needs, and almost every Korean is considered a potential user. Sales revenue related to data services has been growing due to the increasing popularity of smartphones and high-speed wireless networks. There is also a growing importance of the B2B segment, which creates added value by selling and developing various solutions. The telecommunications industry is a regulated industry requiring license and approval from the MSIT.

In the wireless business, industry players compete on the basis of the following three main competitive elements:

(i) brand competitiveness, which refers to the overall sense of recognition and loyalty experienced by customers with respect to services and values provided by a company, including the images created by a company’s comprehensive activities and communications on top of the actual services rendered;

(ii) product and service competitiveness, which refers to the fundamental criteria for wireless telecommunications services, including voice quality, service coverage, broad ranges of rate plans, diversified mobile Internet services, price and quality of devices, and customer service quality, as well as the ability to develop new services that meet customer needs in a market environment defined by convergence; and

(iii) sales competitiveness, which refers to novel and diversified marketing methods and the strength of the distribution network.

Set forth below is the historical market share of the Company (excluding MVNO subscribers).

(Unit: in percentages)
Classification As of December 31,
2023 2022 2021
Mobile communications services 46.7 48.2 48.2
* Source: Wireless telecommunications service data from the MSIT as of December 31, 2023.<br>
--- ---
E. Competitive Strengths
--- ---

In 2021, the Company successfully completed the Spin-off in order to maximize shareholder value. In the same year, the Company also unveiled its “SKT 2.0” vision to pursue the maximization of its overall enterprise value centered around five major business areas. In November 2022, the Company announced its differentiated “AI Company” vision to further organize and clarify the direction of SKT 2.0 and combine AI with connectivity technologies based on its main telecommunications business. In September 2023, as part of the Company’s effort to transform into a “global AI company,” the Company announced its new “AI Pyramid” strategy, which aims to bring innovation across various industrial and lifestyle areas centered around three key aspects. The AI Pyramid strategy is in the form of a pyramid and integrates a “self-reinforcement model,” which seeks to strengthen the Company’s relationship with its customers through advances in the Company’s AI technology and the creation of AI services, with a “cooperation model,” which focuses on AI-related alliances. Through these initiatives, the Company is striving to transform into a global AI company.

For the year ended December 31, 2023, the Company recorded Won 17.6 trillion in operating revenue and Won 1.75 trillion in operating profit on a consolidated basis. The increased competitiveness of telecommunications services and the rapid progress in new growth businesses such as B2B have enabled the Company to continue to improve its operating results.

SK Telink, a consolidated subsidiary of the Company, operates its MVNO service, “SK 7Mobile,” which is offered at reasonable rates and provides excellent quality. SK Telink is increasing its efforts to develop low-cost distribution channels and create niche markets through targeted marketing towards customers including foreign workers, middle-aged adults and students.

SK O&S, a subsidiary of the Company responsible for the operation of the Company’s base stations and related transmission and power facilities, offers quality fixed-line and wireless network services to customers, including mobile office products to business customers. In addition, Service Ace is developing its competence as a marketing company while providing top-quality customer service.

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PS&Marketing, a subsidiary of the Company, provides a sales platform for products of the Company and SK Broadband including fixed-line and wireless telecommunications products that address customers’ needs for various convergence products. PS&Marketing provides differentiated service to clients through the establishment of new sales channels and product development.

[Fixed-line Business]

A. Overview

For the year ended December 31, 2023, SK Broadband recorded Won 4.27 trillion in revenue on a consolidated basis, which represented a 2.9% increase from Won 4.16 trillion for the year ended December 31, 2022. Such increase was primarily attributable to the growth of SK Broadband’s media business resulting from an increase in the number of subscribers and the growth of its B2B business primarily focused on new data centers.

SK Broadband’s business is divided into the media business segment, which provides IPTV and cable TV services, and the fixed-line business segment, which provides high-speed Internet, telecommunications, leased lines and data center services.

For the year ended December 31, 2023, the media business segment recorded Won 1.91 trillion in revenue, which represented a 1.2% increase compared to the year ended December 31, 2022. For the year ended December 31, 2023, the fixed-line business segment recorded Won 2.37 trillion in revenue, which represented a 4.2% increase compared to the year ended December 31, 2022.

B. Industry Characteristics

The domestic telecommunications service industry displays the typical characteristics of a domestic industry given that its coverage area is limited to Korea. As a result, the size of the industry is greatly affected by the domestic economic factors including the domestic user population and the level of telecommunications service expenditures in light of the domestic income level. Domestic telecommunications companies may expand overseas through acquisitions or direct expansion, but the overseas telecommunications service industries are subject to inherently different industry characteristics from the domestic one, depending on the regulatory and demand characteristics of each country.

The broadcasting business involves the planning, programming or production of broadcasting programs and transmission to viewers through telecommunications facilities. The broadcasting market can be categorized into terrestrial broadcasting, fixed-line TV broadcasting, satellite broadcasting and programming-providing businesses, in each case pursuant to the Broadcasting Act, as well as Internet multimedia broadcasting business pursuant to the Internet Multimedia Broadcast Services Act. The Company engages in the fixed-line TV broadcasting business, which is defined as the business of managing and operating fixed-line TV broadcasting stations (including their facilities and employees for the purpose of providing multi-channel broadcasting) and providing broadcasts through transmission and line facilities. The Internet multimedia broadcasting refers to the broadcasting of programs through a combination of various contents including data, video, voice, sound and/or e-commerce, including real-time broadcasting, while guaranteeing a consistent service quality through a bidirectional Internet protocol using a broadband integrated information network.

As a result of the government’s direct and indirect control over the fixed-line telecommunications industry, ranging from service licensing to business activities, the industry’s overall growth potential and degree of competition are greatly affected by the government’s regulatory policies. The fixed-line telecommunications industry is also a technology-intensive industry that evolves rapidly and continuously through the development of communications technology and equipment, which requires proactive responses in meeting the needs of subscribers by developing new services and penetrating the market. Fixed-line telecommunications services have become universal and essential means of communication and act as the foundation for integration and convergence with various other services. The essential nature of such services provides stable demand, resulting in low sensitivity to economic conditions.

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In addition, the Korean fixed-line services industry is marked by a high level of market concentration, as the government is highly selective in granting telecommunications business licenses. While the competitive landscape of the fixed-line and wireless services markets is dominated by its three leading operators, the Company (including SK Broadband), KT and LG U+, the intensity of competition is growing as digitalization of communication technologies and devices leads to the convergence of fixed-line and wireless services, as well as broadcasting and telecommunications, and technology for faster data communications services is developed.

In the high-speed Internet services market, the demand for Giga Internet services has been continuing to increase due to the popularization of mobile and home IoT devices and the expansion of large media services including video streaming services.

In the paid broadcasting market, competition for content has been intensifying, at the center of which are large over-the-top operators with strength in exclusive content. Reflecting a rapid change in content consumption patterns and behaviors of viewers, the Company is preparing for new growth in the home platform domain by providing customized services using ICT convergence technologies such as AI and big data in addition to differentiated contents.

In the corporate business market, the Company expects to see growth in new business areas, following the emergence of new services powered by new technologies including AI and metaverse. The Company is continuing its efforts to generate stable returns by strengthening its competitiveness in the traditional fixed line-based business through expansion of core infrastructure including data centers and leased lines, for which market demand has been continually growing.

C. Growth Potential
(Unit: in persons)
--- --- --- --- --- --- --- ---
Classification As of December 31,
2023 2022 2021
Fixed-line Subscribers High-speed Internet 24,098,164 23,537,333 22,944,268
Fixed-line telephone 10,973,838 11,621,413 12,211,954
IPTV 20,814,402 20,203,451 19,346,812
Cable TV 12,631,281 12,824,704 12,986,039
* Source: MSIT website.
--- ---
** High-speed Internet and fixed-line telephone subscribers represent the number of subscribers as of<br>December 31, 2023, while IPTV and cable TV subscribers represent the average number of subscribers in the first half of 2023.
--- ---
D. Cyclical Nature and Seasonality
--- ---

High-speed Internet and fixed-line telephone services operate in mature markets that are comparatively less sensitive to cyclical economic changes as the services provided by different operators have become less differentiated. TV services have become necessities that provide broadcasting, and the market, which is subject to a subscriber-based business model, has little sensitivity to cyclical economic changes. Overall, the telecommunications services market is not expected to be particularly affected by economic downturns due to the low income elasticity of demand for telecommunications services.

E. Domestic and Overseas Market Conditions

Set forth below is the historical market share of the Company.

(Unit: in percentages)
Classification As of December 31,
2023 2022 2021
High-speed Internet (including resales) 28.7 28.5 28.7
Fixed-line telephone (including Voice over Internet Protocol (“VoIP”) 18.0 17.8 17.5
IPTV 31.6 30.9 30.6
Cable TV 22.3 22.2 22.2
* Source: MSIT website.
--- ---
** With respect to Internet telephone, the market share was calculated based on market shares among the<br>Company, KT and LG U+ and is based on the number of IP phone subscribers.
--- ---
*** Since April 2021, VoIP subscribers of SK Telink have been included in the total clients of the Company.<br>
--- ---
**** Market shares of High-speed Internet and Fixed-line telephone represent the market shares as of<br>December 31, 2023 and market shares of IPTV and Cable TV represent the average market shares in the first half of 2023.
--- ---

16

The Company is engaged in a number of business areas including high-speed Internet, home telephone, corporate business, IPTV and cable TV pursuant to the relevant communications regulations such as the Telecommunications Business Act, the Internet Multimedia Broadcast Services Act and the Broadcasting Act. In each of its principal business areas, the Company competes on the basis of price, service quality and speed. In the IPTV business, the ability to offer complex services and differentiated contents are becoming increasingly important. General telecommunications businesses operate in a licensed industry with a high barrier of entry, which is dominated by the Company, KT and LG U+.

[Other Businesses]

A. Other businesses

The commercial retail data broadcasting channel business offers an interactive service that integrates television home shopping and data home shopping services. Such integrated service allows television viewers to organize various product categories on the television screen and select and purchase desired products using a television remote control or mobile device, unlike traditional home shopping services that only allowed for real-time purchase through the relevant broadcast.

In order to secure core competencies at an early stage and achieve differentiation, the Company has been actively searching for high-efficiency television channels while increasing the competitiveness of its content production capacity by building the Company’s own media center and adopting a media wall with the objective of transforming it into an eco-friendly digital studio. In addition to enhancing the convenience of shopping experience by offering various media content on its mobile live platform, the Company provides personalized digital television shopping services through “Stoa ON,” the industry’s first cloud-based television application service. Furthermore, the Company has been establishing itself as a leading shopping channel service provider by securing a diverse product portfolio and engaging in product development in areas ranging from fashion to health food.

Sapeon, an AI semiconductor company, launched “X330,” its next-generation inference AI chip. Sapeon has been in discussions with global server manufacturers regarding potential cooperation to expand the sales of X330, and it plans to cooperate with businesses relating to next-generation AI data centers.

2. Key Financial Data by Business Line

A. Assets
(Unit: in millions of Won and percentages)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Classification As of December 31,
2023 2022 2021
Amount Ratio Amount Ratio Amount Ratio
Wireless 25,608,563 77 % 27,078,021 79 % 27,126,972 80 %
Fixed-line 6,825,342 20 % 6,588,076 19 % 6,319,019 19 %
Other 910,020 3 % 762,028 2 % 462,021 1 %
Subtotal 33,343,925 100 % 34,428,124 100 % 33,908,011 100 %
Consolidation Adjustment (3,224,698 ) — (3,119,862 ) — (2,996,734 ) —
Total 30,119,227 — 31,308,262 — 30,911,277 —
B. Revenue
--- ---
(Unit: in millions of Won and percentages)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Classification For the year ended December 31,
2023 2022 2021
Amount Ratio Amount Ratio Amount Ratio
Wireless 13,123,166 75 % 12,942,316 75 % 12,718,473 76 %
Fixed-line 3,928,020 22 % 3,812,989 22 % 3,677,706 22 %
Other 557,325 3 % 549,668 3 % 352,406 2 %
Total 17,608,511 100 % 17,304,973 100 % 16,748,585 100 %

17

C. Operating Profit
(Unit: in millions of Won and percentages)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Classification For the year ended December 31,
2023 2022 2021
Amount Ratio Amount Ratio Amount Ratio
Wireless 1,463,934 84 % 1,334,306 81 % 1,123,147 78 %
Fixed-line 329,072 19 % 311,083 19 % 294,070 21 %
Other (42,771 ) (2 )% (2,102 ) 0 % 14,550 1 %
Subtotal 1,750,235 100 % 1,643,287 100 % 1,431,767 100 %
Consolidation Adjustment 2,969 — (31,216 ) — (44,605 ) —
Total 1,753,204 — 1,612,070 — 1,387,162 —

3. Updates on Major Products and Services

(Unit: in millions of Won and percentages)
Business For the year ended December 31,
2023 2022 2021
Major Companies Items MajorTrademarks ConsolidatedSalesAmount Ratio ConsolidatedSalesAmount Ratio ConsolidatedSalesAmount Ratio
Wireless SK Telecom Co., Ltd.,<br>PS&Marketing Co., Ltd.,<br>Service Ace Co., Ltd.<br> SK O&S Co., Ltd.<br>SK<br>M&Service Co., Ltd. Mobile<br>communications<br>service, wireless<br>data service,<br>ICT service T, 5GX, T<br>Plan and<br>others 13,123,166 75 % 12,942,316 75 % 12,718,473 76 %
Fixed-line SK Broadband Co., Ltd.,<br> SK Telink Co., Ltd.<br>Home & Service Co.,<br>Ltd. Fixed-line<br>phone, high-<br>speed Internet,<br>data and<br>network lease<br>service B tv, 00700<br>international<br>call, 7mobile<br>and others 3,928,020 22 % 3,812,989 22 % 3,677,706 22 %
Other SK stoa Co., Ltd. Commercial<br>retail data<br>broadcasting<br>channel services<br>and others Stoa ON 557,325 3 % 549,668 3 % 352,406 2 %
Total 17,608,511 100 % 17,304,973 100 % 16,748,585 100 %

4. Price Trends for Major Products

[Wireless Business]

As of December 31, 2023, based on the Company’s standard monthly subscription plan, the basic service fee was Won 12,100 (including value-added tax) **** and the usage fee was Won 1.98 per second. Among the 4G-based plans, the “T-Plan Safe 4G” provides 4 GB of data and unlimited voice calls at Won 50,000 per month (including value-added tax). Among the 5G-based plans, the “Basic” plan provides 8 GB of data and unlimited voice calls at Won 49,000 per month (including value-added tax).

On June 1, 2023, the Company newly launched the “5G 0 Youth” plan, which actively reflects the data usage patterns and lifestyle trends of the younger demographics. The Company plans to continue to introduce new services that reach out to different customer segments. The Company provides a variety of other subscription plans catering to subscriber demand, which may be reviewed on the Company’s website at www.tworld.co.kr.

18

[Fixed-line Business]

On May 15, 2023, SK Broadband newly launched the Internet Protocol Cable TV (“IP CATV”) product. Existing cable TV services were allowed to transmit broadcasting contents only through the radio frequency (“RF”) method. However, pursuant to recent amendments to the Broadcasting Act which recognize technology neutrality, cable TV services are now allowed to transmit broadcasting contents through non-RF methods, thereby allowing the Company to introduce the new IP CATV product.

Compared to the RF method, the Internet protocol method provides diverse and high-quality services on a more stable basis. The Company expects these factors will lead to greater customer satisfaction and competitiveness of its cable TV services products through improvement in broadcasting quality.

In order to cater to the diverse needs of the customers, the IP CATV product is offered through three plans. The “B tv pop 100” plan offers basic channels (109 channels), the “B tv pop 180” plan offers channels with high viewer ratings (184 channels) and the “B tv pop 230” plan offers all cable TV channels (231 channels). Based on a three-year contract, the plans cost Won 7,700, Won 11,000, and Won 13,200, respectively. As for the B tv pop 180 and B tv pop 230 plans, customers can receive an additional discount of Won 3,300 if they combine the plans with the broadband Internet service.

In addition, in October 2023, SK Broadband launched the “Cable Family Combination” plan which offers a discount when bundling cable Internet and wireless subscription plans. This plan is similar to its “Modern Family Combination” plan which bundles Internet and IPTV services, and provides enhanced benefits compared to the existing “Whole Family Cable” plan which bundles fixed-line and wireless services. Depending on the chosen cable Internet subscription product (cable optical local area network, cable Giga light and cable Giga), subscribers are eligible for a discount ranging between 20% and 30% of the three-year contract fee for cable Internet services. Subscribers are also eligible for a discount ranging between Won 3,500 for one wireless telephone line and Won 24,000 for five lines.

SK Broadband also provides a variety of other subscription plans based on consumer demand, which may be reviewed on SK Broadband’s website at www.skbroadband.com.

5. Investment Status

[Wireless Business]

A. Investment in Progress
(Unit: in billions of Won)
--- --- --- --- --- ---
Purpose of investment Subject of investment Investment<br>period Expected investmentamount Amount already invested Investment effect
Upgrade/ New installation Network, systems<br>and others Year ended<br>December 31, 2023 1,743 1,743 Upgrades to the<br>existing services and<br>expanded<br>provision of network<br>services including 5G

B. Future Investment Plan

Purpose of investment Subject of investment Expected investment for each year Investment effect
2024 2025 2026
Upgrade/ New installation Network, systems and others To be<br><br><br>determined To be<br><br><br>determined To be<br><br><br>determined Upgrades to the existing services and expanded provision of network services including 5G

19

[Fixed-line Business]

A. Investment in Progress and Future Investment Plan
(Unit: in billions of Won)
--- --- --- --- --- ---
Purpose of investment Subject of investment Investment<br>period Amount<br>already<br>invested Future<br>investment Investment effect
Coverage expansion, upgrade of media platform Network, systems,<br>Internet data center<br>and others Year ended<br>December 31,<br>2023 999.5 To be<br>determined Securing subscriber network and equipment; quality and system improvement

6. Revenues

(Unit: in millions of Won)
Business Sales type Item For the yearended December 31,2023 For the yearended December 31,2022 For the yearended December 31,2021
Wireless Services Mobile communication, wireless data, information communication Export 169,885 140,642 143,149
Domestic 12,953,281 12,801,674 12,575,324
Subtotal 13,123,166 12,942,316 12,718,473
Fixed-line Services Fixed-line, high-speed Internet, data, lease line service Export 178,824 183,812 139,846
Domestic 3,749,196 3,629,177 3,537,860
Subtotal 3,928,020 3,812,989 3,677,706
Other Services Commercial retail data broadcasting channel services Export — — —
Domestic 557,325 549,668 352,406
Subtotal 557,325 549,668 352,406
Total Export 348,709 324,454 251,502
Domestic 17,259,802 16,980,519 16,497,083
Total 17,608,511 17,304,973 16,748,585
(Unit: in millions of Won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
For the year ended December 31, 2023 Wireless Fixed-line Other Sub total Consolidationadjustment Afterconsolidation
Total sales 14,664,180 5,095,704 603,493 20,363,377 (2,754,866 ) 17,608,511
Internal sales 1,541,014 1,167,684 46,168 2,754,866 (2,754,866 ) —
External sales 13,123,166 3,928,020 557,325 17,608,511 — 17,608,511
Depreciation and amortization 2,743,448 971,628 24,390 3,739,466 (124,700 ) 3,614,766
Operating profit (loss) 1,463,934 329,072 (42,771 ) 1,750,235 2,969 1,753,204
Finance profit (loss) **** (279,025 )
Gain from investments in associates and joint ventures **** 10,928
Other non-operating profit(loss) **** 3,072
Profit before income tax **** 1,488,179

7. Derivative Transactions

A. Current Swap Contract Applying Cash Flow Risk Hedge Accounting

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Currency and interest rate swap contracts under cash flow hedge accounting as of December 31, 2023 are as follows: ****

[SK Telecom]

Borrowing date Hedged item Hedged risk Contract type Financial institution Duration of contract
July 20, 2007 Fixed rate foreign currency denominated bonds Foreign currency risk Cross currency swap Morgan Stanley and four other banks July 20, 2007 – July 20, 2027
Mar. 4, 2020 Floating rate foreign currency denominated bonds Foreign currency and interest rate risks Cross currency interest rate swap Citibank Mar. 4, 2020 – June 4, 2025
June 28, 2023 Fixed rate foreign currency denominated bonds Foreign currency risk Cross currency interest rate swap Citibank, Shinhan Bank, KDB, J.P. Morgan June 28, 2023 – June 28, 2028

[SK Broadband]

Borrowing date Hedged item Hedged risk Contract type Financial institution Duration of contract
June 28, 2023 Non-guaranteed foreign currency denominated bonds (face value of USD 300,000,000) Foreign currency risk Cross currency swap Citibank, Shinhan Bank, KDB, J.P. Morgan June 28, 2023 – June 28, 2028

8. Major Contracts

None.

9. R&D Investments

Set forth below are the Company’s R&D expenditures.

(Unit: in millions of Won except percentages)
Category For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 For the year endedDecember 31, 2021 Remarks
Raw material 48 23 48 —
Labor 140,790 113,297 122,445 —
Depreciation 137,264 135,604 147,249 —
Commissioned service 51,749 46,447 55,917 —
Others 61,992 78,989 48,048 —
Total R&D costs 391,843 374,360 373,707 —
Government Subsidies — — — —
Accounting Sales and administrative expenses 369,507 340,864 347,711 —
Development expenses (Intangible<br>assets) 22,334 33,495 25,996 —
R&D cost / sales amount ratio (Total R&D costs / Current sales<br>amount×100) 2.23 % 2.16 % 2.23 % —

10. Other information relating to investment decisions

A. Brand Management Policies

The Company manages its corporate brand and other product brands in a comprehensive way to protect and increase their value. The Company operates an intranet system called “Comm.ON” in order to implement consistent communication with consumers across various areas including branding, design, marketing and public relations, and systematically manages the development, registration and licensing of brands through such system.

21

B. Business-related Intellectual Property

[SK Telecom]

As of December 31, 2023, the registered patents and trademarks held by the Company included 3,256 Korean-registered patents, 1,709 foreign-registered patents and 730 Korean-registered trademarks. The number of registered patents and trademarks is subject to constant change due to the acquisition of new rights, expiration of terms, abandonments and dispositions.

[SK Broadband]

As of December 31, 2023, SK Broadband held 274 Korean-registered patents and 69 foreign-registered patents (including those held jointly with other companies). It also holds 312 Korean-registered trademarks. SK Broadband owns intellectual property rights to its proprietary graphic design of the alphabet “B” representing its brand. The designed alphabet “B” is registered in all business categories for trademarks (total of 45). The number of registered patents and trademarks is subject to continual change due to the acquisition of new rights, expiration of terms, abandonments and dispositions.

C. Business-related Pollutants and Environmental Protection

[SK Telecom]

The Company does not directly engage in any manufacturing and therefore does not undertake any industrial processes that emit pollutants into the air or industrial processes in which hazardous materials are used. Nevertheless, the Company clearly recognizes the severity of the climate crisis and has been diligently fulfilling its social obligations by establishing a systematic and practical environmental management strategy system. Under the vision of “realizing a sustainable future based on ICT” and to achieve Net Zero by 2050, the Company is making efforts to (1) preemptively respond to climate change, (2) improve its environmental management system and (3) create an eco-friendly green culture. To this end, the Company was one of the first information technology companies in Korea to join the RE100 (Renewable Electricity 100%) initiative and signed a green premium contract with Korea Electric Power Corporation. The Company has been implementing company-wide adoption of renewable energy through efforts such as installing solar power generation equipment in its office buildings and base stations. In addition, the Company leads in energy savings and environmental protections based on ICT technology, and recently became the first company in the telecommunications industry to obtain carbon emission rights by reducing greenhouse gas through integration of telecommunications equipment and technology upgrades.

[SK Broadband]

SK Broadband does not directly engage in any manufacturing processes that emit environmental pollutants, and more than 99% of its greenhouse gas emissions is indirect emissions from its use of external electricity. SK Broadband was selected as a business subject to allocation of emission permits as part of Korea’s greenhouse gas emissions trading scheme that commenced in 2015, and it actively fulfills its obligations and consistently achieves the targets set by the government.

In 2021, SK Broadband declared its goal to achieve Net Zero by 2045 in an effort to actively participate in the international community’s response to climate change. Prior to the declaration, SK Broadband had already subscribed to the RE100 initiative in 2020. Since 2021, SK Broadband has participated in Korea Electrical Power Corporation’s renewable energy power purchase program, “Green Premium,” to purchase renewable energy and has installed additional solar power generation facilities to increase the self-production and use of renewable energy.

22

III. FINANCIAL INFORMATION

1. Summary Financial Information (Consolidated and Separate)

A. Summary Financial Information (Consolidated)

Below is the summary consolidated financial information of the Company as of December 31, 2023, 2022 and 2021 and for the years ended December 31, 2023, 2022 and 2021. The Company’s consolidated financial statements as of December 31, 2023 and 2022 and for the years ended December 31, 2023 and 2022, which are prepared in accordance with K-IFRS, are attached hereto.

(Unit: in millions of Won except number of companies)
As of<br>December 31, 2023 As of<br>December 31, 2022 As of<br>December 31, 2021
Assets
Current Assets 6,585,602 7,219,196 6,352,665
•   Cash and Cash Equivalents 1,454,978 1,882,291 872,731
•   Accounts Receivable – Trade, net 1,978,532 1,970,611 1,913,511
•   Accounts Receivable – Other, net 344,350 479,781 548,362
•   Others 2,807,742 2,886,513 3,018,061
Non-Current Assets 23,533,625 24,089,066 24,558,612
•   Long-Term Investment Securities 1,679,384 1,410,736 1,715,078
•   Investments in Associates and Joint Ventures 1,915,012 1,889,289 2,197,351
•   Property and Equipment, net 13,006,196 13,322,492 12,871,259
•   Goodwill 2,075,009 2,075,009 2,072,493
•   Intangible Assets, net 2,861,137 3,324,910 3,869,769
•   Others 1,996,887 2,066,630 1,832,662
Total Assets 30,119,227 31,308,262 30,911,277
Liabilities
Current Liabilities 6,993,980 8,046,541 6,960,435
Non-Current Liabilities 10,896,848 11,106,525 11,615,704
Total Liabilities 17,890,828 19,153,066 18,576,139
Equity
Equity Attributable to Owners of the Parent Company 11,389,046 11,318,320 11,579,346
Share Capital 30,493 30,493 30,493
Capital Surplus (Deficit) and Other Capital Adjustments (11,828,644 ) (11,567,117 ) (11,623,726 )
Retained Earnings 22,799,981 22,463,711 22,437,341
Reserves 387,216 391,233 735,238
Non-controlling Interests 839,353 836,876 755,792
Total Equity 12,228,399 12,155,196 12,335,138
Total Liabilities and Equity 30,119,227 31,308,262 30,911,277
(Unit: in millions of Won except per share data and number of<br>consolidated subsidiaries)
--- --- --- --- --- --- ---
For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 For the year endedDecember 31, 2021
Operating Revenue 17,608,511 17,304,973 16,748,585
Operating Profit 1,753,204 1,612,070 1,387,162
Profit Before Income Tax 1,488,179 1,236,152 1,718,191
Profit from Continued Operations 1,145,937 947,831 1,271,395
Profit from Discontinued Operations — — 1,147,594
Profit for the Period 1,145,937 947,831 2,418,989
Profit for the Period Attributable to Owners of the Parent Company 1,093,611 912,400 2,407,523
Profit for the Period Attributable to Non-controlling<br>Interests 52,326 35,431 11,466
Basic Earnings Per Share (Won) 4,954 4,118 7,191
Diluted Earnings Per Share (Won) 4,950 4,116 7,187
Total Number of Consolidated Subsidiaries 25 25 23

23

B. Summary Financial Information (Separate)

Below is the summary separate financial information of the Company as of December 31, 2023, 2022 and 2021 and for the years ended December 31, 2023, 2022 and 2021. The Company’s separate financial statements as of December 31, 2023 and 2022 and for the years ended December 31, 2023 and 2022, which are prepared in accordance with K-IFRS, are attached hereto.

(Unit: in millions of Won)
As of December 31,2023 As of December 31,2022 As of December 31,2021
Assets
Current Assets 4,703,844 5,498,460 4,681,493
•   Cash and Cash Equivalents 631,066 1,217,504 158,823
•   Accounts Receivable – Trade, net 1,495,617 1,425,695 1,514,260
•   Accounts Receivable – Other, net 343,036 435,096 520,956
•   Others 2,234,125 2,420,165 2,487,454
Non-Current Assets 20,292,088 20,933,661 21,707,572
•   Long-Term Investment Securities 1,426,290 1,155,188 1,476,361
•   Investments in Subsidiaries and Associates 4,670,568 4,621,807 4,841,139
•   Property and Equipment, net 9,076,459 9,519,663 9,318,408
•   Goodwill 1,306,236 1,306,236 1,306,236
•   Intangible Assets, net 2,250,829 2,693,400 3,203,330
•   Others 1,561,706 1,637,367 1,562,098
Total Assets 24,995,932 26,432,121 26,389,065
Liabilities
Current Liabilities 5,505,470 6,236,135 5,426,477
Non-Current Liabilities 9,054,369 9,812,604 10,099,732
Total Liabilities 14,559,839 16,048,739 15,526,209
Equity
Share Capital 30,493 30,493 30,493
Capital Surplus and Other Capital Adjustments (4,766,147 ) (4,506,693 ) (4,576,271 )
Retained Earnings 15,032,473 14,691,461 14,770,618
Reserves 139,274 168,121 638,016
Total Equity 10,436,093 10,383,382 10,862,856
Total Liabilities and Equity 24,995,932 26,432,121 26,389,065
(Unit: in millions of Won)
--- --- --- --- --- --- ---
For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 For the year endedDecember 31, 2021
Operating Revenue 12,589,220 12,414,588 12,102,830
Operating Profit 1,455,870 1,321,131 1,114,323
Profit Before Income Tax 1,354,939 1,146,250 1,369,347
Profit for the Period 1,059,750 869,490 1,073,823
Basic Earnings Per Share (Won) 4,798 3,921 3,183
Diluted Earnings Per Share (Won) 4,794 3,919 3,181

2. Dividends and Others

A. Dividend Policy

The Company seeks to enhance its enterprise value through distribution of cash dividends based on stable business performance and by increasing long-term shareholder returns based on sustainable growth. To this end, the Company has been prioritizing its capital management principle of balancing investment for growth and shareholder returns.

The Company determines the amount of its shareholder return in consideration of a comprehensive set of factors including its business performance, investment plans, financial status and prospects, and the Company may make shareholder return in the form of cash or shares in accordance with its articles of incorporation. Cash dividends are determined based on the Company’s consideration of investment needs for its continued future growth as well as its annual business performance and overall cash flow status. In the case of share dividends, the type of the shares to be distributed may be determined pursuant to the resolution of the Company’s general meeting of shareholders, to the extent there are multiple classes of shares outstanding.

24

In accordance with the global trend towards stable dividend distribution, the Company adopted a quarterly dividend distribution policy in place of its previous interim dividend distribution policy through the approval of certain amendments to the Company’s articles of incorporation at the 37^th^ General Meeting of Shareholders held in March 2021 and has been distributing quarterly dividends since the second quarter of 2021.

In August 2021, the Company disclosed its medium- to long-term dividend policy aimed at enhancing the predictability of shareholder returns, according to which the total amount of dividends is determined within 30% to 40% of its “EBITDA – capital expenditures” on a separate basis. Since then, the Board of Directors have made determinations on dividends in accordance with such policy.

Furthermore, the Company has engaged in repurchases and cancelations of its own shares from time to time to enhance its enterprise value in consideration of the market price of the Company’s shares and its financial resources. From 2020 to 2021, the Company purchased approximately Won 500 billion of treasury shares, and in May 2021, the Company canceled 8,685,568 units of previously acquired treasury shares (10.76% of the total number of shares issued at the time) to enhance shareholder value. In addition, in 2023, the Company purchased approximately Won 300 billion of treasury shares, and in February 2024, the Company canceled 4,043,091 units of treasury share (1.85% of the total number of shares issued at the time).

B. Dividends for the Past Three Fiscal Years
(Unit: in millions of Won, except per share data and percentages)
--- --- --- --- --- --- --- ---
Classification As of and for the year endedDecember 31, 2023 As of and for the year endedDecember 31, 2022 As of and for the year endedDecember 31, 2021
Par value per share (Won) 100 100 100
(Consolidated) Net income 1,093,611 912,400 2,407,523
(Separate) Net income 1,059,750 869,490 1,073,823
Net income per share (Won) 4,954 4,118 7,191
Total cash dividend 765,618 723,843 716,990
Total stock dividends — — —
(Consolidated)<br><br><br>Percentage of cash dividend to available income (%) 70.0 79.3 29.8
Cash dividend yield ratio (%) Common<br>shares 7.1 7.0 5.7
Preferred<br>shares — — —
Stock dividend yield ratio (%) Common<br>shares — — —
Preferred<br>shares — — —
Cash dividend per share (Won) Common<br>shares 3,540 3,320 3,295
Preferred<br>shares — — —
Stock dividend per share (share) Common<br>shares — — —
Preferred<br>shares — — —
* The total amount of cash dividends was calculated by adding the total amount of cash dividends resolved at the<br>general meeting of shareholders for the relevant fiscal year and any quarterly cash dividends paid during such fiscal year in accordance with applicable disclosure requirements.
--- ---
** Consolidated net income is based on equity attributable to owners of the parent company.
--- ---
*** Cash dividend for the year ended December 31, 2021 includes quarterly dividends of Won 5,000 per share<br>(not reflecting the effects of the Stock Split and the Spin-off) declared for the second and third quarters of 2021 and quarterly dividend of Won 1,660 per share (after reflecting the effects of the Stock<br>Split and the Spin-off) declared for the fourth quarter of 2021.
--- ---
**** Cash dividend for the year ended December 31, 2022 includes quarterly dividends of Won 830 per share<br>declared for the first, second, third and fourth quarters of 2022.
--- ---
***** Cash dividend for the year ended December 31, 2023 includes quarterly dividends of Won 830 per share<br>declared for the first, second and third quarters of 2023, and quarterly dividend of Won 1,050 per share declared for the fourth quarter of 2023.
--- ---
****** Cash dividend per share for the year ended December 31, 2021 reflects the effect of the Stock Split and<br>was calculated by dividing the total amount of cash dividends for the period by the number of shares as of December 31, 2021.
--- ---

25

******* Cash dividends shown above for the year ended December 31, 2023 are expected to be approved at the 40th<br>General Meeting of Shareholders to be held on March 26, 2024. In the event that the dividend distribution does not become approved or terms of the distribution are amended, a report on such event will be disclosed.
(1) Distribution of cash dividends of Won 9,000 per share (exclusive of an interim dividend of Won 1,000 per share)<br>was approved during the 37th General Meeting of Shareholders held on March 25, 2021.
--- ---
(2) Distribution of quarterly dividends of Won 2,500 per share was approved during the 453rd^^Board of Directors’ Meeting on July 22, 2021.
--- ---
(3) Distribution of quarterly dividends of Won 2,500 per share was approved during the 458th^^Board of Directors’ Meeting on November 1, 2021.
--- ---
(4) Distribution of cash dividends of Won 1,660 per share (after reflecting the effects of the Stock Split and the Spin-off and excluding the quarterly dividends distributed in 2021) was approved during the 38th General Meeting of Shareholders on March 25, 2022.
--- ---
(5) Distribution of quarterly dividends of Won 830 per share was approved during the 466th^^Board of Directors’ Meeting on April 28, 2022.
--- ---
(6) Distribution of quarterly dividends of Won 830 per share was approved during the 469th^^Board of Directors’ Meeting on July 28, 2022.
--- ---
(7) Distribution of quarterly dividends of Won 830 per share was approved during the 471st^^Board of Directors’ Meeting on October 27, 2022.
--- ---
(8) Distribution of cash dividends of Won 830 per share was included in the agenda for the 39th General Meeting of<br>Shareholders on March 28, 2023.
--- ---
(9) Distribution of quarterly dividends of Won 830 per share was approved during the 477th^^Board of Directors’ Meeting on April 20, 2023.
--- ---
(10) Distribution of quarterly dividends of Won 830 per share was approved during the 479th^^Board of Directors’ Meeting on July 26, 2023.
--- ---
(11) Distribution of quarterly dividends of Won 830 per share was approved during the 481st^^Board of Directors’ Meeting on October 25, 2023.
--- ---
(12) Distribution of cash dividends of Won 1,050 per share was included in the agenda for the 40th General Meeting<br>of Shareholders to be held on March 26, 2024. In the event that the dividend distribution does not become approved or terms of the distribution are amended, a report on such event will be disclosed.
--- ---
C. Past Distributions of Dividends
--- ---
Number of consecutive dividends Average dividend yield (%)
--- --- --- ---
Quarterly (or interim) dividends Annual dividends Past three years Past five years
25 30 6.4 5.4

3. Use of Direct Financing

A. Use of Proceeds from Public Offerings

[SK Telecom]

(As of December 31, 2023) (Unit: in millions of Won)
Category Bond<br>Series Payment Date Planned Use of Proceeds Actual Use of Proceeds Reasons forDifference
Use Amount Use Amount
Corporate bond Series<br>80-1,2,3,4 January 15, 2021 Repayment of debt 310,000 Repayment of debt 310,000 —
Corporate bond Series<br>81-1,2,3 October 28, 2021 Repayment of debt 200,000 Repayment of debt 200,000 —
Corporate bond Series<br>82-1,2,3 April 12, 2022 Repayment of debt 350,000 Repayment of debt 350,000 —
Corporate bond Series<br>83-1 August 10, 2022 Repayment of debt 395,000 Repayment of debt 395,000 —
Corporate bond (ESG bond) Series<br>83-2 August 10, 2022 Other (fund investment, etc.) 95,000 Other (fund investment, etc.) 95,000 —
Corporate bond Series<br>84-1,2,3,4 December 14, 2022 Repayment of debt 310,000 Repayment of debt 310,000 —
Corporate bond Series<br>85-1,2 February 17, 2023 Repayment of debt 300,000 Repayment of debt 300,000 —
Corporate bond Series<br>86-1,2,3 April 12, 2023 Repayment of debt 350,000 Repayment of debt 350,000 —
Hybrid securities Series 3 June 5, 2023 Repayment of debt 400,000 Repayment of debt 400,000 —
Corporate bond Series<br>87-1,2,3,4 October 18, 2023 Repayment of debt 295,000 Repayment of debt 295,000 —
* Series 83-2 issued as of August 10, 2022 is an ESG bond. Series 83-2 was issued in furtherance of the Company’s ESG goal to achieve Net Zero by 2050, and covers solar energy generation equipment in the environment sector, mutual growth funds in the social sector and the SK<br>Telecom-Kakao ESG Fund. The proceeds from the bond offering were intended to refinance prior investments and new investments, and were used for the intended purpose.
--- ---

26

[SK Broadband]

(As of December 31, 2023) (Unit: in millions of Won)
Category BondSeries Payment Date Planned Use of Proceeds Actual Use of Proceeds ReasonsforDifference
Use Amount Use Amount
Corporate bond Series<br>51 July 13, 2021 Repayment of debt 100,000 Repayment of debt 100,000 —
Corporate bond Series<br>52-1 January 25, 2022 Repayment of debt 100,000 Repayment of debt 100,000 —
Corporate bond (green bond) Series<br>52-2 January 25, 2022 Repayment of debt 50,000 Repayment of debt 50,000 —
Corporate bond Series<br>53-1 March 2, 2023 Operation fund 5,000 Operation fund 5,000 —
Corporate bond Series<br>53-1 March 2, 2023 Repayment of debt 45,000 Repayment of debt 45,000 —
Corporate bond Series<br>53-2 March 2, 2023 Operation fund 55,000 Operation fund 55,000 —
Corporate bond Series<br>53-2 March 2, 2023 Repayment of debt 45,000 Repayment of debt 45,000 —
Corporate bond Series<br>53-3 March 2, 2023 Operation fund 46,900 Operation fund 46,900 —
Corporate bond Series<br>53-3 March 2, 2023 Repayment of debt 43,100 Repayment of debt 43,100 —
Corporate bond Series<br>54-1 October 30, 2023 Facility fund 100,000 Facility fund 100,000 —
Corporate bond Series<br>54-2 October 30, 2023 Facility fund 60,000 Facility fund 60,000 —
* Series 52-2 issued as of January 25, 2022 is an ESG bond (green<br>bond). Series 52-2 was issued in furtherance of the Company’s ESG goal to achieve Net Zero by 2045 (reduction of carbon emission) for the purpose of repayment of funds raised to be invested in the<br>conversion of hybrid fiber-coaxial network to fiber-to-the-home network, which has a positive impact on the environment,<br>including the reduction of greenhouse gas emissions. The proceeds from the bond offering were used for the intended purpose.
--- ---
B. Use of Proceeds from Private Offerings
--- ---

[SK Telecom]

None.

[SK Broadband]

None.

C. Operation of Unused Proceeds

[SK Telecom]

None.

[SK Broadband]

None.

27

4. Other Matters Related to Financial Information

A. Restatement of the Financial Statements

Pursuant to the resolutions of the Board of Directors and the General Meeting of Shareholders on June 10, 2021 and October 12, 2021, respectively, the Company conducted the Spin-off effective as of November 1, 2021. As a result of the Spin-off, the Company discontinued certain parts of the security, commerce and other businesses operated by its major subsidiaries, which were transferred to the newly established company. Accordingly, certain of the Company’s material subsidiaries, including One Store Co., Ltd., SK Planet Co., Ltd., Eleven Street Co., Ltd., Dreamus Company, SK shieldus Co., Ltd., Incross, T Map Mobility and SK M&Service, were excluded from the scope of the Company’s consolidation. The Company classified and separately showed profit (loss) from such discontinued businesses in its consolidated statement of profit and loss for the year ended December 31, 2021 in the Company’s audit report and annual business report as of and for the year ended December 31, 2021 pursuant to the application of K-IFRS 1105. The consolidated statement of profit and loss for the year ended December 31, 2020 was restated accordingly for comparative purposes. Furthermore, the Spin-off caused a change in the Company’s business segments, which led to a restatement of prior years’ segment information, and the business of SK Stoa, which had previously been classified as part of the Company’s commerce segment, was reclassified as part of the Company’s other business segment.

B. Loss Allowance

(1) Loss Allowance of Trade and Other Receivables

(Unit: in millions of Won, except percentages)
For the year ended December 31, 2023
Gross amount Loss Allowance Percentage
Accounts receivable – trade 2,233,586 242,737 10.9 %
Loans 150,671 42,087 27.9 %
Accounts receivable – other 690,157 33,276 4.8 %
Accrued income 4,295 — —
Guarantee deposits 286,520 300 0.1 %
Total 3,365,229 318,400 9.5 %
(Unit: in millions of Won, except percentages)
--- --- --- --- --- --- --- ---
For the year ended December 31, 2022
Gross amount Loss Allowance Percentage
Accounts receivable – trade 2,219,695 234,923 10.6 %
Loans 151,155 45,592 30.2 %
Accounts receivable – other 897,920 44,188 4.9 %
Accrued income 1,732 — —
Guarantee deposits 280,945 300 0.1 %
Total 3,551,447 325,003 9.2 %
(Unit: in millions of Won, except percentages)
--- --- --- --- --- --- --- ---
For the year ended December 31, 2021
Gross amount Loss Allowance Percentage
Accounts receivable – trade 2,160,498 238,881 11.1 %
Loans 138,181 45,385 32.8 %
Accounts receivable – other 870,225 46,625 5.4 %
Accrued income 762 — —
Guarantee deposits 278,759 — —
Total 3,448,425 330,891 9.6 %

28

(2) Movements in Loss Allowance of Trade and Other Receivables

(Unit: in millions of Won)
For the year ended<br>December 31, 2023 For the year ended<br>December 31, 2022 For the year ended<br>December 31, 2021
Beginning balance 325,003 330,891 365,063
Effect of change in accounting policy — — —
Increase of loss allowance 43,162 30,064 37,547
Reversal of loss allowance — — —
Write-offs (49,764 ) (35,955 ) (57,215 )
Other — 3 (14,504 )
Ending balance 318,400 325,003 330,891

(3) Policies for Loss Allowance

The Company establishes loss allowances based on the likelihood of recoverability of trade and other receivables based on their aging at the end of the period and past customer default experience for the past three years. With respect to trade receivables relating to wireless telecommunications services, the Company considers the likelihood of recovery based on past customer default experience and the length of default in connection with the type of default (e.g., whether the customer’s service has been terminated or is continued). Consistent with customary practice, the Company writes off trade and other receivables for which the prescription period has passed or that are determined to be impossible or economically too costly to collect, including receivables that are less than Won 200,000 and more than six months overdue and receivables that have been determined to be the subject of identity theft.

(4) Aging of Accounts Receivable

(Unit: in millions of Won, except percentages)
As of December 31, 2023
Six months orless From sixmonths to oneyear From one yearto three years More thanthree years Total
Accounts receivable – general 1,968,155 63,734 153,387 48,310 2,233,586
Percentage 88.1 % 2.9 % 6.9 % 2.2 % 100.0 %
C. Inventories
--- ---

(1) Detailed Categories of Inventories

(Unit: in millions of Won, except percentages)
Account Category For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 For the year endedDecember 31, 2021
Merchandise 166,614 151,303 201,126
Goods in transit — — —
Other inventories 13,195 15,052 3,511
Total 179,809 166,355 204,637
Percentage of inventories to total assets<br><br><br>[Inventories / Total assets] 0.60 % 0.53 % 0.66 %
Inventory turnover<br><br><br>[Cost of sales / { ( Beginning balance of<br>inventories + Ending balance of<br>inventories ) / 2}] 7.32 6.84 6.20

(2) Reporting of Inventories

The Company holds handsets, ICT equipment for offline sales, etc. in inventory. The Company conducts physical due diligence of its inventories with external auditors at the end of each year.

29

D. Fair Value Measurement

See Notes 2, 22 and 36 of the notes to the Company’s audited consolidated financial statements attached hereto for more information.

E. Key Terms of Debt Securities

[SK Telecom]

The following are key terms and conditions of bonds issued by the Company. The compliance status is as of the date of the latest financial statements including the audit opinion of the independent auditor applicable to the determination of compliance status, except for the compliance status of the restriction on changes of ownership structure, which is as of the end of the reporting period.

Name Issue Date Maturity Date Principal Amount(millions of Won) Date of FiscalAgencyAgreement Fiscal Agent
Unsecured Bond – Series 62-3 Aug. 28, 2012 Aug. 28, 2032 90,000 Aug. 22, 2012 Meritz Securities Co., Ltd.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 100% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed Won 2 trillion
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Not applicable
Compliance Status Not applicable
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>Agency Agreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 63-2 Apr. 23, 2013 Apr. 23, 2033 130,000 Apr. 17, 2013 Korea Securities Finance Corp.
Unsecured Bond – Series 64-2 May 14, 2014 May 14, 2024 150,000 Apr. 29, 2014 Korea Securities Finance Corp.
Unsecured Bond – Series 65-3 Oct. 28, 2014 Oct. 28, 2024 190,000 Oct. 16, 2014 Korea Securities Finance Corp.
Unsecured Bond – Series 66-2 Feb. 26, 2015 Feb. 26, 2025 150,000 Feb. 11, 2015 Korea Securities Finance Corp.
Unsecured Bond – Series 66-3 Feb. 26, 2015 Feb. 26, 2030 50,000 Feb. 11, 2015 Korea Securities Finance Corp.
Unsecured Bond – Series 67-2 July 17, 2015 July 17, 2025 70,000 July 9, 2015 Korea Securities Finance Corp.
Unsecured Bond – Series 67-3 July 17, 2015 July 17, 2030 90,000 July 9, 2015 Korea Securities Finance Corp.
Unsecured Bond – Series 68-2 Nov. 30, 2015 Nov. 30, 2025 100,000 Nov. 18, 2015 Korea Securities Finance Corp.
Unsecured Bond – Series 68-3 Nov. 30, 2015 Nov. 30, 2035 70,000 Nov. 18, 2015 Korea Securities Finance Corp.
Unsecured Bond – Series 69-3 Mar. 4, 2016 Mar. 4, 2026 90,000 Feb. 22, 2016 Korea Securities Finance Corp.
Unsecured Bond – Series 69-4 Mar. 4, 2016 Mar. 4, 2036 80,000 Feb. 22, 2016 Korea Securities Finance Corp.

30

Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 100% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed Won 2 trillion
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Not applicable
Compliance Status Not applicable
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>AgencyAgreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 70-3 June 3, 2016 June 3, 2026 120,000 May 24, 2016 Korea Securities Finance Corp.
Unsecured Bond – Series 70-4 June 3, 2016 June 3, 2031 50,000 May 24, 2016 Korea Securities Finance Corp.
Unsecured Bond – Series 71-3 Apr. 25, 2017 Apr. 25, 2027 100,000 Apr. 13, 2017 Korea Securities Finance Corp.
Unsecured Bond – Series 71-4 Apr. 25, 2017 Apr. 25, 2032 90,000 Apr. 13, 2017 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed Won 5 trillion
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Not applicable
Compliance Status Not applicable
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>AgencyAgreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 72-3 Nov. 10, 2017 Nov. 10, 2027 100,000 Oct. 31, 2017 Korea Securities Finance Corp.
Unsecured Bond – Series 73-2 Feb. 20, 2018 Feb. 20, 2023 100,000 Feb. 6. 2018 Korea Securities Finance Corp.
Unsecured Bond – Series 73-3 Feb. 20, 2018 Feb. 20, 2028 200,000 Feb. 6. 2018 Korea Securities Finance Corp.
Unsecured Bond – Series 73-4 Feb. 20, 2018 Feb. 20, 2038 90,000 Feb. 6. 2018 Korea Securities Finance Corp.
Unsecured Bond – Series 74-2 Sept. 17, 2018 Sept. 17, 2023 150,000 Sept. 5, 2018 Korea Securities Finance Corp.
Unsecured Bond – Series 74-3 Sept. 17, 2018 Sept. 17, 2038 50,000 Sept. 5, 2018 Korea Securities Finance Corp.
Unsecured Bond – Series 75-2 Mar. 6, 2019 Mar. 6, 2024 120,000 Feb. 21, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 75-3 Mar. 6, 2019 Mar. 6, 2029 50,000 Feb. 21, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 75-4 Mar. 6, 2019 Mar. 6, 2039 50,000 Feb. 21, 2019 Korea Securities Finance Corp.

31

Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of FiscalAgencyAgreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 76-2 July 29, 2019 July 29, 2024 60,000 July 17, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 76-3 July 29, 2019 July 29, 2029 120,000 July 17, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 76-4 July 29, 2019 July 29, 2039 50,000 July 17, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 76-5 July 29, 2019 July 29, 2049 50,000 July 17, 2019 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of FiscalAgencyAgreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 77-2 Oct. 22, 2019 Oct. 22, 2024 70,000 Oct. 10, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 77-3 Oct. 22, 2019 Oct. 22, 2029 40,000 Oct. 10, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 77-4 Oct. 22, 2019 Oct. 22, 2039 60,000 Oct. 10, 2019 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023

32

Name Issue Date Maturity Date Principal Amount(millions of Won) Date of FiscalAgencyAgreement Fiscal Agent
Unsecured Bond – Series 78-2 Jan. 14, 2020 Jan. 14, 2025 130,000 Dec. 31, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 78-3 Jan. 14, 2020 Jan. 14, 2030 50,000 Dec. 31, 2019 Korea Securities Finance Corp.
Unsecured Bond – Series 78-4 Jan. 14, 2020 Jan. 14, 2040 70,000 Dec. 31, 2019 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>Agency<br><br><br>Agreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 79-1 Oct. 19, 2020 Oct. 19, 2025 140,000 Oct. 6, 2020 Korea Securities Finance Corp.
Unsecured Bond – Series 79-2 Oct. 19, 2020 Oct. 19, 2030 40,000 Oct. 6, 2020 Korea Securities Finance Corp.
Unsecured Bond – Series 79-3 Oct. 19, 2020 Oct. 19, 2040 110,000 Oct. 6, 2020 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>Agency<br><br><br>Agreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 80-1 Jan. 15, 2021 Jan. 14, 2024 80,000 Jan. 5, 2021 Korea Securities Finance Corp.
Unsecured Bond – Series 80-2 Jan. 15, 2021 Jan. 15, 2026 80,000 Jan. 5, 2021 Korea Securities Finance Corp.
Unsecured Bond – Series 80-3 Jan. 15, 2021 Jan. 15, 2031 50,000 Jan. 5, 2021 Korea Securities Finance Corp.
Unsecured Bond – Series 80-4 Jan. 15, 2021 Jan. 15, 2041 100,000 Jan. 5, 2021 Korea Securities Finance Corp.

33

Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>Agency<br><br><br>Agreement Fiscal Agent
--- --- --- --- --- ---
Unsecured Bond – Series 81-1 Oct. 28, 2021 Oct. 28, 2024 90,000 Oct. 18, 2021 Korea Securities Finance Corp.
Unsecured Bond – Series 81-2 Oct. 28, 2021 Oct. 28, 2026 70,000 Oct. 18, 2021 Korea Securities Finance Corp.
Unsecured Bond – Series 81-3 Oct. 28, 2021 Oct. 28, 2041 40,000 Oct. 18, 2021 Korea Securities Finance Corp.
Unsecured Bond – Series 82-1 April 12, 2022 April 12, 2025 240,000 March 31, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 82-2 April 12, 2022 April 12, 2027 70,000 March 31, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 82-3 April 12, 2022 April 12, 2042 40,000 March 31, 2022 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>Agency<br><br><br>Agreement Fiscal Agent
--- --- --- --- --- ---
Unsecured Bond – Series 83-1 August 10, 2022 August 8, 2025 300,000 July 29, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 83-2 August 10, 2022 August 10, 2027 95,000 July 29, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 84-1 December 14, 2022 December 13, 2024 100,000 December 2, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 84-2 December 14, 2022 December 12, 2025 110,000 December 2, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 84-3 December 14, 2022 December 14, 2027 60,000 December 2, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 84-4 December 14, 2022 December 14, 2032 40,000 December 2, 2022 Korea Securities Finance Corp.

34

Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of FiscalAgencyAgreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 85-1 February 17, 2023 February 17, 2026 110,000 February 7, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 85-2 February 17, 2023 February 17, 2028 190,000 February 7, 2023 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of FiscalAgencyAgreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 86-1 April 12, 2023 April 10, 2026 80,000 March 31, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 86-2 April 12, 2023 April 12, 2028 200,000 March 31, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 86-3 April 12, 2023 April 12, 2030 70,000 March 31, 2023 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023

35

Name Issue Date Maturity Date Principal Amount(millions of Won) Date of FiscalAgencyAgreement Fiscal Agent
Hybrid Securities Series 3 June 5, 2023 June 5, 2083 400,000 May 23, 2023 Eugene Investment & Securities Co., Ltd.
Maintenance of Financial Ratio Key Term Not Applicable
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term Not Applicable
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Not Applicable
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Not Applicable
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on August 17, 2023
Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>Agency<br><br><br>Agreement Fiscal Agent
--- --- --- --- --- --- ---
Unsecured Bond – Series 87-1 October 18, 2023 October 16, 2026 115,000 October 5, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 87-2 October 18, 2023 October 18, 2028 100,000 October 5, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 87-3 October 18, 2023 October 18, 2030 50,000 October 5, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 87-4 October 18, 2023 October 18, 2033 30,000 October 5, 2023 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 300%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 50% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction of cross-shareholding<br><br><br>Exclusion from corporate group
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status To be submitted following the filing of this annual business report

36

[SK Broadband]

The following are key terms and conditions of bonds issued by SK Broadband.

Name Issue Date Maturity Date Principal Amount(millions of Won) Date of Fiscal<br><br><br>Agency Agreement Fiscal Agent
Unsecured Bond –<br><br><br>Series 47-2 Mar. 26, 2019 Mar. 26, 2024 160,000 Mar. 14, 2019 Korea Securities Finance Corp.
Unsecured Bond –<br><br><br>Series 48-2 Sept. 24, 2019 Sept. 24, 2024 100,000 Sept. 10, 2019 Korea Securities Finance Corp.
Unsecured Bond –<br><br><br>Series 48-3 Sept. 24, 2019 Sept. 23, 2026 50,000 Sept. 10, 2019 Korea Securities Finance Corp.
Unsecured Bond –<br><br><br>Series 49-2 June 11, 2020 June 11, 2025 100,000 June 1, 2020 Korea Securities Finance Corp.
Unsecured Bond – Series 50 Sept. 25, 2020 Sept. 25, 2025 160,000 Sept. 15, 2020 Korea Securities Finance Corp.
Unsecured Bond – Series 51 July 13, 2021 July 12, 2024 100,000 July 1, 2021 Korea Securities Finance Corp.
Unsecured Bond – Series 52-1 Jan. 25, 2022 Jan. 24, 2025 100,000 Jan. 13, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 52-2 Jan. 25, 2022 Jan. 25, 2032 50,000 Jan. 13, 2022 Korea Securities Finance Corp.
Unsecured Bond – Series 53-1 Mar. 2, 2023 Feb. 28, 2025 50,000 Feb. 17, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 53-2 Mar. 2, 2023 Feb. 27, 2026 100,000 Feb. 17, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 53-3 Mar. 2, 2023 Mar. 2, 2028 90,000 Feb. 17, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 54-1 Oct. 30, 2023 Oct. 30, 2026 100,000 Oct. 18, 2023 Korea Securities Finance Corp.
Unsecured Bond – Series 54-2 Oct. 30, 2023 Oct. 30, 2028 60,000 Oct. 18, 2023 Korea Securities Finance Corp.
Maintenance of Financial Ratio Key Term Debt ratio no greater than 400%
--- --- ---
Compliance Status Compliant
Restriction on Liens Key Term The total amount of secured debt not to exceed 200% of share capital as of the end of the previous fiscal year
Compliance Status Compliant
Restriction on Disposition of Assets Key Term Disposal of assets per fiscal year not to exceed 70% of total assets
Compliance Status Compliant
Restriction on Changes of Ownership Structure Key Term Restriction on changes of ownership structure
Compliance Status Compliant
Submission of Compliance Certificate Compliance Status Submitted on September 11, 2023

37

IV. MANAGEMENT’S DISCUSSION AND ANALYSIS

1. Forward-Looking Statements

This section contains forward-looking statements with respect to the financial condition, results of operations and business of the Company and plans and objectives of the management of the Company. Forward-looking statements are not statements of historical facts and include statements about the Company’s beliefs and expectations. Such forward-looking statements include known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from any future results or performance expressed or implied by such forward-looking statements.

The Company does not make any representation or warranty, expressed or implied, as to the accuracy or completeness of the information contained in this section, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Such forward-looking statements were based on current plans, estimates and projections of the Company and the political and economic environment in which the Company will operate in the future, and therefore you should not place undue reliance on them.

Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events.

2. Overview

A. Summary of Business Performance

In 2023, difficult business conditions persisted in light of high interest and inflation rates and a slowdown in economic growth. Despite such adverse conditions, the Company’s revenue increased by 1.8% from 2022 to Won 17.61 trillion in 2023, and operating profit increased by 8.8% from 2022 to Won 1.75 trillion in 2023, mainly due to a continual increase in the number of the Company’s 5G wireless subscribers and visible realization of growth businesses such as B2B.

The Company’s 5G wireless services, which recorded over 15.67 million subscribers as of December 31, 2023, accounted for 68% of the Company’s total number of subscribers. The Company also maintained the growth of its paid television subscribers at 9.55 million subscribers and high-speed Internet subscribers at 6.93 million subscribers, in each case as of December 31, 2023.

The Company’s assets as of December 31, 2023 decreased by 3.8% from the end of the previous year mainly due to a decrease in current assets including cash and cash equivalents, as well as a decrease in non-current assets including property and equpment and intangible assets. Liabilities as of December 31, 2023 decreased by 6.6% from the end of the previous year mainly due to a decrease in current liabilities including short-term borrowings and accounts payable — trade.

Although an overall slowdown in economic growth is expected to continue in 2024, the Company plans to navigate through such headwinds by focusing on enhancing profitability through operational efficiency, while nurturing growth businesses, including data centers, based on innovations in AI technology.

B. Key Indicators of Consolidated Business Performance

[SK Telecom]

(Unit: in billions of Won, except percentages)
For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 Percentage Changefrom 2022 to 2023
Operating Revenue 17,608.5 17,305.0 1.8 %
Operating Profit 1,753.2 1,612.1 8.8 %
Operating Profit Margin (%) 10.0 9.3 0.7 %p
EBITDA 5,502.9 5,367.4 2.5 %
EBITDA Margin (%) 31.3 31.0 0.3 %p

38

[SK Broadband]

(Unit: in billions of Won, except percentages)
For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 Percentage Changefrom 2022 to 2023
Operating Revenue 4,274.7 4,155.8 2.9 %
Operating Profit 313.7 309.1 1.5 %
Operating Profit Margin (%) 7.3 7.4 —
EBITDA 1,273.8 1,279.2 (0.4 )%
EBITDA Margin (%) 29.7 30.7 —
C. Analysis of Change in Key Indicators
--- ---

The Company’s revenue increased in 2023 due mainly to increases in the number of SK Telecom’s 5G subscribers and SK Broadband’s paid-TV subscribers, as well as growth in sales centered around the B2B business, resulting in a 1.8% increase compared to 2022.

The Company’s operating profit increased by 8.8% in 2023 compared to 2022 due mainly to the growth of the Company’s businesses and the Company’s efforts in stabilizing key costs.

3. Analysis of Consolidated Financial Position

A. General Factors Impacting Financial Position

In 2023, the global economy experienced mild growth as the impact of high interest rates continued, and a rapid turnaround of this trend appears unlikely in 2024. Future macroeconomic environment is expected to be affected by various uncertainties including monetary policies of major countries, geopolitical conflicts, international oil prices and fluctuations in the prices of raw material.

Under such circumstances, the Company has set forth its vision to transform into an “AI Company,” and systemized its businesses into three key aspects of AI infrastructure, AI transformation and AI service. The Company has redefined its core business as AI and has been focusing its capabilities in maximizing enterprise value by enhancing its AI technology and service capabilities.

Although it is possible that the Company’s growth rate may slow down as the 5G market approaches maturity, the Company aims to maintain its competitiveness by providing differentiated products and services to users and to develop growth businesses such as B2B into key sources of revenue.

B. Analysis of Financial Position

(1) Analysis of Consolidated Financial Position

(Unit: in billions of Won, except percentages)
As of December 31,2023 As of December 31,2022 Percentage Changefrom 2022 to 2023
Current Assets 6,586 7,219 (8.8 )%
Non-Current Assets 23,534 24,089 (2.3 )%
Total Assets 30,119 31,308 (3.8 )%
Current Liabilities 6,994 8,047 (13.1 )%
Non-current Liabilities 10,897 11,107 (1.9 )%
Total Liabilities 17,891 19,153 (6.6 )%
Total Equity 12,228 12,155 0.6 %
* The financial statements as of and for the year ended December 31, 2023 are subject to approval at the<br>40th General Meeting of Shareholders to be held on March 26, 2024. In the event that the statements are not approved or are amended, a report on such event will be disclosed.
--- ---

(a) Assets

The Company’s total assets as of December 31, 2023 decreased by 3.8% from the end of the previous year, primarily as a result of decreases in cash and cash equivalents, property and equipment and intangible assets.

39

(b) Liabilities

The Company’s total liabilities as of December 31, 2023 decreased by 6.6% from the end of the previous year primarily due to a decrease in current liabilities including short-term borrowings, accounts payable — trade and accounts payable — other.

(2) Assets by business segment

(Unit: in millions of Won and percentages)
As of December 31,
2023 2022 2021
Classification Amount Ratio Amount Ratio Amount Ratio
Wireless 25,608,563 77 % 27,078,021 79 % 27,126,972 80 %
Fixed-line 6,825,342 20 % 6,588,076 19 % 6,319,019 19 %
Other 910,020 3 % 762,028 2 % 462,021 1 %
Subtotal 33,343,925 100 % 34,428,124 100 % 33,908,011 100 %
Consolidation Adjustment (3,224,698 ) — (3,119,862 ) — (2,996,734 ) —
Total 30,119,227 — 31,308,262 — 30,911,277 —
C. Analysis of Results of Operations
--- ---

(1) Consolidated Results of Operations

(Unit: in billions of Won, except percentages)
For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 Percentage Changefrom 2022 to 2023
Operating Revenue 17,609 17,305 1.8 %
Operating Expense 15,855 15,693 1.0 %
Operating Profit 1,753 1,612 8.8 %
Profit for the Year 1,146 948 20.9 %
* The financial statements as of and for the year ended December 31, 2023 are subject to approval at the<br>40th General Meeting of Shareholders to be held on March 26, 2024. In the event that the statements are not approved or are amended, a report on such event will be disclosed.
--- ---

(a) Operating Revenue

The Company’s operating revenue in 2023 increased by 1.8% compared to 2022 mainly due to increases in the number of SK Telecom’s 5G wireless subscribers and SK Broadband’s paid television subscribers, as well as growth of the B2B business. SK Telecom’s operating revenue increased by 1.4% compared to 2022 mainly due to stable and continued growth based on the B2B business, including its cloud services. SK Broadband’s operating revenue in 2023 increased by 3.0% compared to 2022 primarily due to favorable B2B business conditions focused on data centers and an increase in the number of paid television subscribers.

(b) Operating Profit

The Company’s operating profit in 2023 increased by 8.8% compared to 2022, mainly due to a stabilization in the Company’s key costs, as well as the growth of its businesses. SK Telecom’s operating profit increased by 10.2% in 2023 compared to 2022 primarily due to the stabilization of key costs, including marketing expenses and depreciation. SK Broadband’s operating profit increased by 1.1% in 2023 compared to 2022 mainly due to revenue growth, growth of its B2B business and an increase in the proportion of high-tier plan subscribers.

(c) Profit

The Company’s profit for the year increased by 20.9% in 2023 from 2022, primarily due to an increase in non-operating income including gains from its investment in Joby Aviation Inc.

(2) Operating performance by business

40

Each company in the consolidated entity is a separate legal entity providing independent services and products. The Company’s business segments consist of (1) the wireless business consisting of cellular voice, wireless data and wireless Internet services, (2) the fixed-line business consisting of fixed-line telephone, high-speed Internet, data and network lease services, among others, and (3) other businesses consisting of commercial retail data broadcasting channel business, among others.

Set forth below is a summary description of the business of each of the Company’s material consolidated subsidiaries.

Classification Company name Description of business
Wireless SK Telecom Co., Ltd. Wireless voice and data telecommunications services via digital wireless networks
PS&Marketing Co., Ltd. Sale of fixed-line and wireless telecommunications products through wholesale, retail and online distribution channels
SK O&S Co., Ltd. Maintenance of switching stations
Service Ace Co., Ltd. Management and operation of customer centers
Service Top Co., Ltd. Management and operation of customer centers
Fixed-line SK Broadband Co., Ltd. High-speed Internet, TV, telephone, commercial data and other fixed-line services and management of the transmission system for online<br>digital contents<br> <br>Various media-related services, such as channel management services including VOD
Home & Service Co., Ltd. System maintenance of high-speed Internet, IPTV and fixed-line services
SK Telink Co., Ltd. International wireless direct-dial “00700” services and MVNO business
Other business SK stoa Co., Ltd. Operation of commercial retail data broadcasting channel services
Atlas Investment Investments
SK Telecom Innovation Fund, L.P. Investments
SK m&service Co., Ltd. Database and online information services
SAPEON Inc. Non-memory and other electronic integrated circuits

The Company’s wireless business, fixed-line business and other businesses accounted for 75%, 22% and 3%, respectively, of the Company’s operating revenue in 2023. The following table shows the breakdown of the Company’s operating revenue by business segment:

(Unit: in millions of Won and percentages)
For the year ended December 31,
2023 2022 2021
Classification Amount Ratio Amount Ratio Amount Ratio
Wireless 13,123,166 75 % 12,942,316 75 % 12,718,473 76 %
Fixed-line 3,928,020 22 % 3,812,989 22 % 3,677,706 22 %
Other 557,325 3 % 549,668 3 % 352,406 2 %
Total 17,608,511 100 % 17,304,973 100 % 16,748,585 100 %

(a) Wireless Communications Business

[1] Market Conditions

Wireless communications service has the characteristics of a domestic industry because its business area is limited to Korea. As a result, the size of the industry is greatly affected by domestic market conditions, including the population using domestic telecommunications services and the level of telecommunications expenditures by income level.

The Korean mobile communications market is considered to have reached its maturation stage with more than a 100% penetration rate. However, the Korean mobile communications market continues to improve in the quality of services by leveraging advances in network-related technology and the development of highly advanced smartphones which enable the provision of new ICT services for advanced multimedia contents, mobile commerce, mobility and other related services.

41

[2] Analysis of Changes in Factors Affecting Results of Operations

[Number of Subscribers]

(Unit: in 1,000 persons, except percentages)
For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 Percentage Changefrom 2022 to 2023
Wireless Subscribers 31,276 30,452 2.7 %
Monthly Churn Rate (%) 0.8 % 0.7 % 0.1 %p
5G Subscribers 15,670 13,393 17.0 %

The number of SK Telecom’s wireless subscribers recorded 31.28 million and a market share of 46.7% in 2023 due to the increase in the number of IoT lines and the expansion of 5G network services.

The Company recorded an annual churn rate of 0.8% in 2023, mainly attributable to innovations in distribution channels and rational market operations.

The number of 5G subscribers recorded 15.67 million and a market share of 48.2% in 2023 mainly due to the launch of various new handsets, continual improvements in quality and customer service, and the introduction of additional 5G pricing plans.

• Average Monthly Revenue per Subscriber

The billing Average Revenue Per User (“ARPU”) decreased by 2.2% in 2023 compared to 2022 primarily due to an increase in the number of IoT and second device lines.

For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 Percentage Changefrom 2022 to 2023
Billing ARPU (Won) 29,874 30,546 (2.2 )%
* The billing ARPU is derived by dividing total revenue of SK Telecom from voice service and data service<br>(excluding revenue from MVNO subscribers) for the period by the average number of subscribers that are not MVNO subscribers for the period.
--- ---
1st Quarter of2023 2nd Quarter of2023 3rd Quarter of2023 4th Quarter of2023
--- --- --- --- --- --- --- --- ---
Billing ARPU (Won) 30,101 29,920 29,913 29,562
• Capital Expenditures (SK Telecom on a separate basis)
--- ---
(Unit: in billions of Won)
--- --- --- --- --- --- --- --- ---
New investments and expansions For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 Percentage Changefrom 2022 to 2023 Method offinancing
Network investment 1,381 1,837 (24.8 )% Internal<br>Cashflow
Other investment 362 378 (4.2 )%
Total 1,743 2,215 (21.3 )%

In 2023, the Company invested Won 1.74 trillion in network facility to primarily expand 5G service coverage, maintain network quality and invest in other new businesses.

(b) Fixed-Line Communications Business

[1] Market Conditions

The domestic telecommunications service industry is a domestic industry whose coverage area is limited to Korea, and the size of the industry is significantly affected by domestic economic factors, including the domestic user population and the level of telecommunications service expenditures by income level.

42

Fixed-line telecommunications services have become universal and essential means of communication and act as the foundation for integration and convergence with various other services. It is a mature market where the impact of general economic fluctuations is relatively low as the level of competition has stabilized due to a reduced degree of differentiation among players.

The price, quality and speed of services are the primary competitive factors, and in the case of IPTV business, advanced services based on new technology and content differentiation are emerging as competitive factors.

[2] Analysis of factors and impact of changes in operating revenue

[Market Share]

(Unit: in percentages)
Operating revenue For the year endedDecember 31, 2023 For the year endedDecember 31, 2022 Percentage Changefrom 2022 to 2023
High-speed Internet (including SKT resale) 28.7 28.5 0.2 %p
Local calls (including Internet calls) 18.0 17.8 0.2 %p
IPTV 31.6 30.9 0.7 %p
Cable TV 22.3 22.2 0.1 %p
• Media
--- ---

SK Broadband’s media business consists of IPTV and cable TV services, with the IPTV market driving consistent subscriber growth. SK Broadband recorded the largest net increase in the number of IPTV subscribers in 2023, which served as the primary factor for the company reaching a total of 9.55 million paid broadcasting subscribers as of December 31, 2023.

• Fixed-line Telecommunications

SK Broadband’s fixed-line telecommunications business consists of high-speed internet services, corporate business and residential telephone services. In its high-speed internet services, the number of subscribers to premium plans such as Giga Internet has been increasing, reaching 6.93 million as of December 31, 2023. For corporate business, growth is being driven primarily by an increase in new orders and datacenter operational efficiency.

D. New and Discontinued Operations

(1) New Operations

None.

(2) Discontinued Operations

(a) Reasons for Discontinuation

Pursuant to the resolution of the Extraordinary General Meeting of Shareholders on October 12, 2021, the Company conducted the Spin-off of certain of its operations for the purpose of managing the Company’s equity investments in semiconductor and new ICT companies as well as making new investments relating thereto. The effective date of the Spin-off was November 1, 2021. As a result of the Spin-off, the Company discontinued certain parts of its security, commerce and other businesses, which were transferred to the newly established company, SK Square.

Accordingly, certain of the Company’s material subsidiaries, including One Store Co., Ltd., SK Planet Co., Ltd., Eleven Street Co., Ltd., Dreamus Company, SK shieldus Co., Ltd., Incross, T Map Mobility and SK M&Service Co., Ltd., were excluded from the scope of the Company’s consolidation.

43

(b) Effects on Financial Position

The assets and liabilities excluded from the Company’s scope of consolidation pursuant to the Spin-off are as follows. As a result, the Company lost control of the businesses related to the Spin-off, and the difference in the book value of the transferred assets and liabilities was recognized as other paid-in capital in the Company’s consolidated financial statements.

(Unit: in millions of Won)
Amount
Current Assets 2,608,601
Non-Current Assets 19,269,615
Total Assets 21,878,216
Current Liabilities 2,161,458
Non-current Liabilities 4,676,324
Total Liabilities 6,837,782
Total Equity 15,040,434

(c) Effects on Results of Operations

Financial information related to the businesses that were spun off pursuant to the Spin-off is as follows:

(Unit: in millions of Won)
For the Year endedDecember 31, 2021
Operating Revenue 2,383,083
Operating Expense 2,370,758
Operating Profit 12,325
Net profit before corporate tax 1,352,746
Profits from discontinued operations 1,147,594

(d) Effects on Liquidity

Cash flow information related to the businesses that were spun off pursuant to the Spin-off is as follows:

(Unit: in millions of Won)
For the Year endedDecember 31, 2021
Cashflow from operating activities 59,255
Cashflow from investing activities (967,053 )
Cashflow from financial activities (88,872 )

(e) Actions Taken on Discontinued Operations

The Company’s discontinued operations were transferred to SK Square pursuant to the resolution at the extraordinary shareholders’ meeting held on October 12, 2021.

E. Corporate Reorganization

SK Telecom has announced its AI Pyramid strategy, which aims to bring innovation across various industrial and lifestyle areas centered around three key aspects including AI infrastructure, AI transformation and AI service and to promote global expansion, and is seeking to transform into a global AI company through self-reinforcement and cooperation.

Accordingly, in 2024, SK Telecom reorganized its businesses into four units comprising AI Services, Global and AI Technology, T-B Customer and T-B Enterprise, in order to enhance its execution capabilities by clearly assigning responsible organizations to each strategic aspects of the AI Pyramid strategy.

44

F. Effects of Exchange Rate Fluctuation

The Company has exchange positions due to its income and expenditure from global operations. Foreign currencies in which exchange positions primarily are generated are U.S. dollars and Euros.

See Note 36(1) of the notes to the Company’s audited consolidated financial statements attached hereto for further information regarding the company’s exchange rate risk.

G. Asset Impairment and Write-downs
(1) Impairment assessment of goodwill in cash-generating units of fixed-line businesses
--- ---

As described in Notes 3(10) and 16 of the notes to the Company’s audited consolidated financial statements attached hereto, the Company assesses impairment of goodwill allocated to a cash generating unit (“CGU”) at least annually or when there is an indication of possible impairment by comparing the carrying amount of a CGU to its recoverable amount based on value-in-use (“VIU”). The amount of goodwill allocated to the fixed-line telecommunications services CGU was Won 764,082 million as of December 31, 2023.

In carrying out the goodwill impairment assessment, the Company compares the carrying amount of the fixed-line telecommunications services CGU and its VIU based on discounted cash flow forecasts. The Company’s independent auditor has identified the goodwill impairment assessment for the fixed-line telecommunications services CGU as a key audit matter due to inherent uncertainties and significant judgment involved in management’s estimates of major assumptions such as estimates of future operating revenue, perpetual growth rate and discount rate, all of which have a significant impact on the determination of a VIU. The primary audit procedures performed by the independent auditor for this key audit matter include:

• Assessing the competence and objectivity of the external specialist utilized by management;<br>
• Evaluating the appropriateness of the valuation method and assumptions applied by management by involving the<br>independent auditor’s internal specialist;
--- ---
• Performing a sensitivity analysis for both the discount rate and the perpetual growth rate applied to discounted<br>cash flow forecasts to assess the impact of changes in these key assumptions on the conclusion reached by management in its impairment assessment;
--- ---
• Evaluating the reasonableness of management’s future cash flow forecasts by comparison with financial<br>budgets approved by management; and
--- ---
• Performing a retroactive assessment of the prior periods’ cash flow forecasts by comparison with the actual<br>results.
--- ---
(2) Impairment assessment of non-financial assets
--- ---

The carrying amounts of the Company’s non-financial assets other than contract assets recognized for revenue arising from contracts with a customer, assets recognized for the costs to obtain or fulfill a contract with a customer, employee benefits, inventories, deferred tax assets and non-current assets held for sale are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amounts to their carrying amounts.

For more information on asset impairment, see the notes to the Company’s audited consolidated financial statements attached hereto.

H. Annual Business Plan for 2024

The Company released the following management plan for 2024 through its earnings announcement on February 5, 2024.

45

(1) Guidance for Fiscal Year 2024
• Operating revenue (consolidated): Won 17.9 trillion
--- ---
I. Other Factors that Affect Financial Position and Operating Results
--- ---

The Company is exposed to market risk, credit risk and liquidity risk. Market risk is further divided into exchange rate risk and interest rate risk. To manage these risk elements, the Company operates risk management policies and programs that closely monitor and respond to each risk element.

The Company’s financial assets subject to financial risk management include, among others, cash and cash equivalents, long- and short-term financial instruments, long- and short-term investment securities, accounts receivable – trade and accounts receivable – other. The Company’s financial liabilities include, among others, accounts payable — other, borrowings, debentures and lease liabilities.

For more information on financial risk management, see Note 36 of the notes to the Company’s audited consolidated financial statements attached hereto.

4. Liquidity, Financing and Expenses

A. Liquidity

The Company’s cashflow status is as follows:

(Units: in millions of Won)
For the Year endedDecember 31, 2023 For the Year endedDecember 31, 2022 For the Year endedDecember 31, 2021
Cash flow from operating activities 4,947,205 5,159,317 5,031,279
Cash flow used by investing activities (3,352,905 ) (2,807,795 ) (3,486,189 )
Cash flow used by financial activities (2,020,990 ) (1,349,882 ) (2,053,611 )
Increase (decrease) in cash and cash equivalents (426,690 ) 1,001,640 (508,521 )
Cash and cash equivalents at the beginning of the period 1,882,291 872,731 1,369,653
Effects of exchange rate fluctuations on foreign-currency denominated cash and cash<br>equivalents (623 ) 7,920 11,599
Cash and cash equivalents at the end of the period 1,454,978 1,882,291 872,731

The Company classifies cash and cash equivalents to comprise cash balances, call deposits and investment securities with maturities of three months or less from their acquisition dates that are easily convertible to cash and subject to an insignificant risk of changes in their fair value.

As of December 31, 2023, the Company had cash and cash equivalent of Won 1,455.0 billion, a decrease of Won 427.3 billion compared to the end of the previous year.

As of December 31, 2023, the Company’s debt-to-equity ratio (as calculated by dividing the interest-bearing financial debt by total equity) was 74.0%, compared to 76.5% as of December 31, 2022 and 71.6% as of December 31, 2021. The net debt-to-equity ratio (as calculated by the interest-bearing financial debt minus cash and marketable securities, divided by total equity) was 59.6%, 59.1% and 60.4% at the end of 2023, 2022 and 2021, respectively. Interest coverage ratio (EBITDA divided by interest expense) was 14.1, 15.9 and 14.8 at the end of each of 2023, 2022 and 2021, respectively. The Company continues to have sufficient liquidity.

The Company strives to secure sufficient liquidity by maintaining a sufficient level of cash and cash equivalents and securing credit limits from financial institutions. The Company maintains sufficient liquidity within its credit limit through active business activities.

46

B. Financing
(1) Status and conditions of financing
--- ---
(a) Short-term borrowings
--- ---

For information on short-term borrowings as of December 31, 2023 and 2022, see Note 18(1) of the notes to the Company’s audited consolidated financial statements attached hereto.

(b) Long-term borrowings

For information on long-term borrowings as of December 31, 2023 and 2022, see Note 18(2) of the notes to the Company’s audited consolidated financial statements attached hereto.

(c) Debentures

For information on debentures as of December 31, 2023 and 2022, see Note 18(3) of the notes to the Company’s audited consolidated financial statements attached hereto.

(2) Maturity of borrowings

The contractual maturity of the Company’s financial liabilities as of December 31, 2023 is as follows:

(Units: in millions of Won)
Classification Book value Cash flow accordingto the contract Less than one year One to five years More than five years
Account payables 139,876 139,876 139,876 — —
Borrowings* 718,078 739,791 417,056 322,735 —
Debenture* 8,325,643 9,532,468 1,493,063 5,800,210 2,239,195
Lease liabilities 1,611,433 1,899,929 386,202 1,026,475 487,252
Other non-trade payables* 4,539,838 4,614,608 3,642,356 972,202 50
Total 15,334,868 16,926,672 6,078,553 8,121,622 2,726,497
* Includes interest payments.
--- ---

The Company does not expect this cash flow to occur significantly earlier or to be significantly different in amount.

As of December 31, 2023, periods in which cash flows from derivatives are expected to occur are as follows:

(Units: in millions of Won)
Classification Book value Cash flow accordingto the contract Less than one year One to five years
Assets 116,210 123,260 30,928 92,332
Liabilities (9,212 ) (10,610 ) 2,970 (13,580 )
Total 106,998 112,650 33,898 78,752
(3) Fulfillment conditions related to financing
--- ---

The debentures issued publicly by the Company between 2012 and 2023 are subject to certain covenants for investor protection, including maintaining specified financial ratios and limitations on liens, disposal of assets and changes in control.

The Company is currently in compliance with all such covenants.

C. Expenditures
(1) Capital Expenditures
--- ---
(Unit: in trillions of Won)
--- --- --- --- --- --- --- --- ---
For the Year endedDecember 31, 2023 For the Year endedDecember 31, 2022 Increase/Decrease Percentage ofIncrease/Decrease
Capital Expenditures 2.74 3.03 (0.29) (9.6)

47

In 2023, the Company executed Won 2.74 trillion of capital expenditures to enhance the competitiveness of its wireless and fixed-line network infrastructure as well as to invest in growth businesses, including data center and AI-based services.

In the future, additional capital expenditures will be required to enhance the quality and competitiveness of the Company’s 5G network. However, the expected size, timing and source of funding of such expenditures remain pending subject to market conditions.

5. Commitments andContingencies

For information on the Company’s commitments and contingencies, see Note 38 of the notes to the Company’s audited consolidated financial statements attached hereto.

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V. AUDITOR’S OPINION

1. Independent Auditors and Audit Opinions

A. Independent Auditor and Audit Opinion (Separate and Consolidated)
Period Independent auditor Audit opinion Emphasis of Matter Critical Audit Matters
--- --- --- --- ---
Year ended<br> <br>December 31, 2023 Ernst & Young Han Young Unqualified — Timing of revenue recognition related to the Company’s cellular services; impairment assessment of goodwill for the fixed-line telecommunications services cash generating unit
Year ended<br> <br>December 31, 2022 Ernst & Young Han Young Unqualified — Timing of revenue recognition related to the Company’s cellular services; impairment assessment of goodwill for the fixed-line telecommunications services cash generating unit
Year ended<br> <br>December 31, 2021 KPMG Samjong Accounting Corp. Unqualified Spin-off and disclosure of discontinued operations in the consolidated financial statements Revenue recognition; impairment assessment of goodwill for the fixed-line telecommunications services cash generating unit
* Note: All consolidated subsidiaries of the Company that are subject to audits and whose audits have been<br>completed received unqualified audit opinions.
--- ---
** The audit opinion is on the consolidated and separate financial statements.
--- ---
B. Audit Services Contracts with Independent Auditors
--- ---
(Unit: in millions of Won except number of hours)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Period Auditors Contents Audit Contract ActualPerformance
Fee Totalnumberof hours Fee Totalnumberof hours
Year ended December 31, 2023 Ernst &<br>Young Han<br>Young Quarterly and semi-annual review 2,780 24,800 2,780 24,800
Separate financial statements audit
Consolidated financial statements audit
English financial statements review and other audit task
Internal accounting system audit
Year ended December 31, 2022 Ernst &<br>Young Han<br>Young Quarterly and semi-annual review 2,700 24,100 2,700 24,100
Separate financial statements audit
Consolidated financial statements audit
English financial statements review and other audit task
Internal accounting system audit
Year ended December 31, 2021 KPMG<br>Samjong<br>Accounting<br>Corp. Quarterly and semi-annual review 2,450 24,500 2,450 24,500
Separate financial statements audit
Consolidated financial statements audit
English financial statements review and other audit task
Internal accounting system audit

49

C. Non-Audit Services Contracts with Independent Auditors
(Unit: in millions of Won)
--- --- --- --- --- ---
Period Contract date Service provided Service duration Fee
Year ended December 31, 2023 — — — —
Year ended December 31, 2022 — — — —
Year ended December 31, 2021 May 17, 2021 Confirmation of financial information in connection with frequency reallocation application May 17, 2021 – May 24, 2021 2
May 26, 2021 Audit and review of financial statements of the newly established company and subsidiaries involved in the Spin-off May 26, 2021 – July 28, 2021 1,143
August 5, 2021 Review of carve-out financial statements in connection with the Spin-off August 5, 2021 –  August 13,2021 10
D. Discussions between Audit Committee and Independent Auditors
--- ---
Date Attendance Method Key Matters Discussed
--- --- --- ---
February 22, 2022 Company’s Audit Committee: 4<br><br><br>Accounting Firm’s Independent Auditor: 1 In-person Report on 2021 critical audit matters and results of audit of financial statements; report on results of 2021 internal accounting management system audit
April 27, 2022 Company’s Audit Committee: 4<br><br><br>Accounting Firm’s Independent Auditor: 1 In-person Report on 2021 Public Company Accounting Oversight Board audit results; report on 2022 audit plan and selection of critical audit matters
July 27, 2022 Company’s Audit Committee: 4<br><br><br>Accounting Firm’s Independent Auditor: 1 In-person Report on results of external auditors’ 2022 semi-annual review
December 19, 2022 Company’s Audit Committee: 4<br><br><br>Accounting Firm’s Independent Auditor: 2 In-person Report on the 2022 financial report internal control test result; report on audit plans at the end of the period
February 22, 2023 Company’s Audit Committee: 4<br><br><br>Accounting Firm’s Independent Auditor: 2 In-person Report on 2022 results of audit of financial statements; report on results of 2022 internal accounting management system<br>audit
April 19, 2023 Company’s Audit Committee: 4<br><br><br>Auditor: 1 In-person Report on 2022 Public Company Accounting Oversight Board audit results; report on audit plans for 2023
July 26, 2023 Company’s Audit Committee: 4<br><br><br>Auditor: 1 In-person Report on results of external auditors’ 2023 semi-annual review
December 18, 2023 Company’s Audit Committee: 4<br><br><br>Auditor: 1 In-person Report on the 2023 financial report internal control test result; report on audit plans at the end of the period
February 20, 2024 Company’s Audit Committee: 4<br><br><br>Auditor: 1 In-person Report on 2023 results of audit of financial statements; report on results of 2023 internal accounting management system audit

50

VI. CORPORATE ORGANIZATION INCLUDING BOARD OF DIRECTORS

1. Board of Directors

A. Overview of the Composition of the Board of Directors

The Board of Directors is composed of eight members: two inside directors, five independent directors and one non-executive director. The Board of Directors operates the following five committees: Independent Director Nomination Committee, Audit Committee, Future Strategy Committee, Compensation Committee, and ESG Committee.

(As of December 31, 2023)
Total numberof directors Inside directors Non-executivedirector Independent directors
8 Young Sang Ryu, Jong Ryeol Kang Kyu-Nam Choi Yong-Hak Kim, Seok-Dong Kim, Youngmin Yoon, Junmo Kim, Haeyun Oh
* At the 39th General Meeting of Shareholders held on March 28, 2023, Haeyun Oh was newly elected as<br>independent director and audit committee member, Yong-Hak Kim was re-elected as independent director and audit committee member, and Junmo Kim was re-elected as independent director.
--- ---
B. Significant Activities of the Board of Directors
--- ---

(As of March 15, 2024)

Meeting Date Agenda Approval
474th (the 1st meeting of 2023) February 7, 2023 •  Financial statements as of and for the year ended December 31, 2022<br><br><br>•  Annual business report for the year ended December 31, 2022<br><br><br>•  2023 health and safety plan<br><br><br>•  Disposal of treasury shares<br><br><br>•  Donations for ESG management (creation of social value)<br><br><br>•  2022 KPI evaluation<br><br><br>•  Transaction with SK Broadband Inc.<br><br><br>•  Report for the period after the fourth quarter of 2022<br><br><br>•  Public communication of 2023 business plans Approved as proposed<br> <br><br><br><br>Approved as proposed<br> <br><br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>—<br><br><br>—
475th (the 2nd meeting of 2023) February 23, 2023 •  Report of internal accounting management system<br><br><br>•  Convocation of the 39th General Meeting of Shareholders<br><br><br>•  Compensation of representative director and inside director<br><br><br>•  Disposal of treasury shares<br><br><br>•  2023 donations to the Korea Fencing Federation<br><br><br>•  Results of evaluation of internal accounting management system —<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>—
476th (the 3rd meeting of 2023) March 28, 2023 •  Election of the chairman of the Board of Directors<br><br><br>•  Appointment of committee members<br><br><br>•  Determination of KPIs for 2023<br><br><br>•  Transactions with SK Inc. in the second quarter of 2023<br><br><br>•  Adjustments to allotment of 2023 operating expenses for SK Academy<br><br><br>•  Results of personal credit information management and protection status inspection Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br><br><br><br>—
477th (the 4th meeting of 2023) April 20, 2023 •  Disposal of treasury shares<br><br><br>•  Dividends for the first quarter of 2023<br><br><br>•  Capital investment in SK Telecom Americas, Inc. for the global promotion of A.<br><br><br>•  Payment of special Korea Chamber of Commerce and Industry membership fee to support the hosting of<br>Busan World Expo<br> <br>•  Payment of operating expenses of SUPEX Council for 2023<br><br><br>•  Report for the period after the first quarter of 2023 Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br><br><br><br>Approved as proposed<br> <br><br><br><br>Approved as proposed<br><br><br>—

51

Meeting Date Agenda Approval
478th (the 5th meeting of 2023) June 22, 2023 •  Transactions with SK Inc. in the third quarter of 2023<br><br><br>•  Delisting of ADRs from the London Stock Exchange Approved as proposed<br> <br>Approved as<br>proposed
479th (the 6th meeting of 2023) July 26, 2023 •  Report for the first half of 2023<br><br><br>•  Dividends for the second quarter of 2023<br><br><br>•  Entry into trust agreement for the repurchase of treasury shares<br><br><br>•  Disposal of treasury shares<br><br><br>•  Compensation of representative director and inside director<br><br><br>•  Report for the period after the second quarter of 2023 —<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br><br><br><br><br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>—
480th (the 7th meeting of 2023) September 20, 2023 •  Capital investment in Atlas Investment for the expansion of investment resources<br>of SK Telecom Innovation Fund, L.P.<br> <br>•  Transactions with SK Inc. in the fourth quarter of<br>2023 Approved as proposed<br> <br><br><br><br>Approved as proposed
481st (the 8th meeting of 2023) October 25, 2023 •  Dividends for the third quarter of 2023<br><br><br>•  Report for the period after the third quarter of 2023 Approved as proposed<br> <br>—
482nd (the 9th meeting of 2023) November 23, 2023 •  Establishment of policy for the recovery of erroneously awarded compensation<br><br><br>•  Additional 2023 donations to the Korea Fencing Federation Approved as proposed<br> <br><br><br><br>Approved as proposed
483rd (the 10th meeting of 2023) December 6, 2023 •  Re-appointment of representative<br>director Approved as proposed
484th (the 11st meeting of 2023) December 6, 2023 •  2024 organizational changes and appointment of executive officers —
485th (the 12nd meeting of 2023) December 18, 2023 •  Issuance and delegation of electronic short-term bonds<br><br><br>•  Procurement and delegation of long-term borrowings<br><br><br>•  Extension of contract for the usage of the SK brand<br><br><br>•  IT system maintenance contracts in 2024<br><br><br>•  Allotment of operating expenses for business aircraft in 2024<br><br><br>•  Allotment of 2024 operating expenses for SK Academy<br><br><br>•  Transaction with SK Pinx in 2024<br><br><br>•  Transaction with SK Inc. in the first quarter of 2024<br><br><br>•  Business plans for 2024<br><br><br>•  Health and safety plan for 2024<br><br><br>•  Results of compliance activities in 2023 and plans for 2024 Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br><br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>—
486th (the 1st meeting of 2024) January 19, 2024 •  2023 KPI evaluation<br><br><br>•  Report for the period after the fourth quarter of 2023 Approved as proposed<br> <br>—
487th (the 2nd meeting of 2024) January 25, 2024 •  Compensation of representative director<br><br><br>•  Compensation of inside director, Jong Ryeol Kang<br><br><br>•  Disposal of treasury shares Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed
488th (the 3rd meeting of 2024) February 2, 2024 •  Financial statements as of and for the year ended December 31, 2023<br><br><br>•  Annual business report for the year ended December 31, 2023 Approved as proposed<br> <br><br><br><br>Approved as proposed
489th (the 4th meeting of 2024) February 21, 2024 •  Report of internal accounting management system<br><br><br>•  Convocation of the 40th General Meeting of Shareholders<br><br><br>•  Determination of KPIs for 2024<br><br><br>•  2024 donations to the Korea Fencing Federation<br><br><br>•  Results of evaluation of internal accounting management system —<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>—
* Line items that do not show approval are for reporting purposes only.
--- ---

52

C. Committees within Board of Directors
(1) Committee structure
--- ---
(a) Independent Director Nomination Committee (as of December 31, 2023)
--- ---
Total numberof persons Names of Member Directors Task
--- --- ---
4 Yong-Hak Kim, Seok-Dong Kim, Junmo Kim, Kyu-Nam Choi Nomination of independent directors
* Under the Korean Commercial Code, a majority of the members of the Independent Director Nomination<br>Committee must be independent directors.
--- ---

(b) Strategy Committee (as of December 31, 2023)

Total numberof persons Names of Member Directors Task
8 Yong-Hak Kim, Seok-Dong Kim, Youngmin Yoon, Junmo Kim, Haeyun Oh, Young Sang Ryu, Kyu-Nam Choi, Jong Ryeol Kang Discuss mid- to long-term strategic direction, establish management goals and evaluate performance
* The Future Strategy Review Committee is a committee established by the resolution of the Board of Directors.<br>
--- ---

(c) Compensation Committee (as of December 31, 2023)

Total numberof persons Names of Member Directors Task
4 Yong-Hak Kim, Seok-Dong Kim, Youngmin Yoon, Kyu-Nam Choi Nomination of CEO candidate(s) and review of CEO and inside director remuneration amount
* The Compensation Committee is a committee established by the resolution of the Board of Directors.<br>
--- ---

(d) ESG Committee (as of December 31, 2023)

Total numberof persons Names of Member Directors Task
4 Youngmin Yoon, Junmo Kim, Haeyun Oh, Jong Ryeol Kang Deliberation of plans and performance in the major areas of ESG, mandatory ESG disclosure matters and ESG stakeholder communication
* The ESG Committee is a committee established by the resolution of the Board of Directors.<br>
--- ---

(e) Audit Committee (as of December 31, 2023)

Total numberof persons Names of Member Directors Task
4 Seok-Dong Kim, Yong-Hak Kim, Haeyun Oh, Youngmin Yoon Review of financial statements and supervision of independent audit process, etc.
* The Audit Committee is a committee established under the provisions of the Articles of Incorporation and<br>the Korean Commercial Code.
--- ---

53

2. Audit System

The Company’s Audit Committee consists of four independent directors, Seok-Dong Kim (chairman of the Audit Committee and financial and accounting expert), Yong-Hak Kim, Haeyun Oh and Youngmin Yoon.

Major activities of the Audit Committee as of March 15, 2024 are set forth below.

Meeting Date Agenda Approval
The 1^st^ meeting of 2023 February 6, 2023 •  Collective approval of the services provided by external auditors in 2023<br><br><br>•  Ethical management performance for fiscal year 2022 and<br>mid-term business audit plan for fiscal year 2023<br><br><br>•  Status and results of evaluation of the Company’s ethical management disclosure Approved as proposed<br> <br>Approved as proposed<br><br><br><br> <br>—
The 2^nd^ meeting of 2023 February 22, 2023 •  Evaluation of the operational status of internal accounting management<br>system<br> <br>•  Audit committee’s opinion on internal monitoring apparatus<br><br><br>•  Confirmation of agenda of the 39th General Meeting of Shareholders and opinions on document<br>investigation<br> <br>•  Audit report for the 39th period<br><br><br>•  Contracts related to the distribution of free gifts to fixed-line clients in 2023<br><br><br>•  Operation of internal accounting management system<br><br><br>•  Audit results for fiscal year 2022<br><br><br>•  Internal accounting management system audit results for fiscal year 2022 Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br><br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>—<br> <br>—<br><br><br>—
The 3^rd^ meeting of 2023 March 27, 2023 •  Contributions to company employee welfare fund for 2023<br><br><br>•  Contract for maintenance services of optical cables in 2023<br><br><br>•  Contract for maintenance services of transmission equipment in 2023 Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed
The 4^th^ meeting of 2023 April 19, 2023 •  Appointment of committee chairman<br><br><br>•  PCAOB audit results for fiscal year 2022<br><br><br>•  Audit plan for fiscal year 2023<br><br><br>•  Regular business audit plan of subsidiaries Approved as proposed<br> <br>—<br><br><br>—<br> <br>—
The 5^th^ meeting of 2023 May 24, 2023 •  Smart ship machinery supply contract with SK Oceanplant<br><br><br>•  Results of first regular business audit of 2023 Approved as proposed<br> <br>—
The 6^th^ meeting of 2023 July 26, 2023 •  Review of ethical management and business audit performance for the first half<br>of 2023 and plans for the second half of 2023<br> <br>•  Evaluation of results of the 2022 external audit<br>service<br> <br>•  Review of results of external auditor’s review for the first half of<br>2023 Approved as proposed<br> <br><br><br><br>—<br> <br>—
The 7^th^ meeting of 2023 September 19, 2023 •  Results of second regular business audit of 2023 —
The 8^th^ meeting of 2023 October 25, 2023 •  Key audit areas for the internal accounting control system of the audit<br>committee —
The 9^th^ meeting of 2023 November 22, 2023 •  Results of ethical management evaluation for 2023<br><br><br>•  Results of leadership initiative evaluation for 2023<br><br><br>•  Compliance status of audit committee’s authority and duties<br><br><br>•  Approval of audit contracts for subsidiary companies<br><br><br>•  Approval of internal audit director’s evaluation for 2023<br><br><br>•  Approval of internal audit department’s organization for 2023 —<br> <br>—<br><br><br>—<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as<br>proposed

54

Meeting Date Agenda Approval
The 10^th^ meeting of 2023 December 18, 2023 •  Results of 2023 financial statement internal control test and end of the period<br>audit plans<br> <br>•  Approval of external audit contract<br><br><br>•  Transaction with PS&Marketing in 2024<br><br><br>•  Transaction with SK Broadband in 2024<br><br><br>•  Goods and service transaction with SK Planet in 2024<br><br><br>•  Goods and service transaction with SK Hynix in 2024<br><br><br>•  Goods and service transaction with 11 Street in 2024<br><br><br>•  Goods and service transaction with Wavve in 2024<br><br><br>•  Goods and service transaction with Dreamus Company in 2024<br><br><br>•  Goods and service transaction with One Store 2024<br><br><br>•  Base station maintenance services in 2024<br><br><br>•  Exchange equipment operational support service in 2024<br><br><br>•  Delegation of consultations for unpaid amounts and collection of accounts receivable in 2024<br><br><br>•  Service management of client contact channels in 2024<br><br><br>•  Fixed-line and wireless infrastructure construction service transactions in 2024<br><br><br>•  Goods transaction with Happy Narae in 2024 —<br> <br><br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br><br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed
The 1^st^ meeting of 2024 February 1, 2024 •  Collective approval of the services provided by external auditors in 2024<br><br><br>•  Results of first regular business audit of 2024 Approved as proposed<br> <br>—
The 2^nd^ meeting of 2024 February 20, 2024 •  Operation of internal accounting management system<br><br><br>•  Audit results for fiscal year 2023<br><br><br>•  Internal accounting management system audit results for fiscal year 2023<br><br><br>•  Ethical management performance for fiscal year 2023 and business audit plan for fiscal year<br>2024<br> <br>•  Audit committee’s opinion on internal monitoring apparatus<br><br><br>•  Evaluation of the operational status of internal accounting management system<br><br><br>•  Confirmation of agenda of the 40th General Meeting of Shareholders and opinions on document<br>investigation<br> <br>•  Audit report for the 40th period<br><br><br>•  Contracts related to the distribution of free gifts to fixed-line clients in 2024 —<br> <br>—<br><br><br>—<br> <br>Approved as proposed<br><br><br><br> <br>Approved as proposed<br><br><br>Approved as proposed<br> <br>Approved as proposed<br><br><br><br> <br>Approved as proposed<br><br><br>Approved as proposed
* The internal accounting manager reported in writing the plans for the evaluation of internal accounting<br>management system operation to the audit committee in April 2023.
--- ---

3. Shareholders’ Exercise of Voting Rights

A. Voting System and Exercise of Minority Shareholders’ Rights

(As of December 31, 2023)

Classification of Voting System Cumulative voting system Written voting system Electronic voting system
Adoption status Selected Not adopted Adopted
Implementation status — — Conducted during the 39th General Meeting of Shareholders

The Company implemented a proxy solicitation procedure for the 39th General Meeting of Shareholders, pursuant to which shareholders were permitted to provide written proxy to exercise their voting rights.

55

VII. SHAREHOLDERS

1. Shareholdings of the Largest Shareholder and Related Persons

A. Shareholdings of the Largest Shareholder and Related Persons
(As of December 31, 2023) (Unit: in shares and percentages)
--- --- --- --- --- --- --- --- --- --- ---
Name Relationship Type of share Number of shares owned and ownership ratio
Beginning of Period End of Period
Number ofshares Ownershipratio Number ofshares Ownershipratio
SK Inc. Largest Shareholder Common share 65,668,397 30.01 65,668,397 30.01
Tae Won Chey Officer of the Company Common share 303 0.00 303 0.00
Dong Hyun Jang Officer of affiliated company Common share 762 0.00 762 0.00
Jung Ho Park Officer of the Company Common share 21,530 0.01 21,530 0.01
Young Sang Ryu Officer of the Company Common share 7,340 0.00 11,974 0.01
Yong-Hak Kim Officer of the Company Common share 1,711 0.00 3,358 0.00
Seok-Dong Kim Officer of the Company Common share 1,447 0.00 2,785 0.00
Youngmin Yoon Officer of the Company Common share 1,447 0.00 2,785 0.00
Haeyun Oh Officer of the Company Common share 0 0.00 1,338 0.00
Junmo Kim Officer of the Company Common share 1,447 0.00 2,785 0.00
Kyu-nam Choi Officer of the Company Common share 455 0.00 455 0.00
Poong Young Yoon Officer of affiliated company Common share 2,733 0.00 2,733 0.00
Jong Ryeol Kang Officer of the Company Common share 3,484 0.00 5,758 0.00
Total Common share 65,712,503 30.03 65,724,963 30.03
* The number of shares owned and ownership ratio as of the beginning of the period account for the 1,447 shares<br>owned by Jung Ho Ahn, whose term expired in March 2023.
--- ---
** The number of shares owned and ownership ratio as of the beginning of the period do not account for the shares<br>owned by Haeyun Oh, who was newly appointed in March 2023.
--- ---
B. Overview of the Largest Shareholder
--- ---

As of December 31, 2023, the Company’s largest shareholder was SK Inc. SK Inc. was established on April 13, 1991 and was made public on the securities market on November 11, 2009 under the identification code “034730.” SK Inc. is located at 26, Jong-ro, Jongno-gu, Seoul, Korea. SK Inc.’s telephone number is +82-2-2121-5114 and its website is https://www.sk-inc.com/.

C. Changes in Shareholdings of the Largest Shareholder and Related Persons

56

Changes in shareholdings of the largest shareholder are as follows:

(As of December 31, 2023) (Unit: in shares and percentages)
LargestShareholder Date of the change Shares Held* HoldingRatio Remarks
SK Inc. February 4, 2021 21,628,971 26.79 Jung Ho Park, representative director of the Company, purchased 1,000 additional shares; Young Sang Ryu, inside director of the Company, acquired 500 additional shares.
May 6, 2021 21,628,971 30.02 Changes in equity ratio due to cancellation of treasury shares
June 21, 2021 21,629,471 30.02 Independent directors, Yong-Hak Kim, Seok-Dong Kim, Jung Ho Ahn, Youngmin Yoon and Junmo Kim, each acquired 100 shares (total of 500 shares)
October 12, 2021 21,629,621 30.02 Kyu-Nam Choi, independent director of the Company, acquired 150 shares.
October 25, 2021 21,629,821 30.02 Jung Ho Park, representative director of the Company, and Young Sang Ryu, inside director of the Company each acquired 100 additional shares (total of 200 shares).
October 28, 2021 108,149,105 30.02 Changes in total number of shares due to stock-split
November 2, 2021 65,688,437 30.02 Changes in total number of shares due to the Spin-off; Poong Young Yoon, inside director of SK Square, acquired 2,733 shares.
January 24, 2022 65,695,437 30.02 Jung Ho Park, director of the Company’s affiliate, and Young Sang Ryu, representative director of the Company, acquired 3,000 and 4,000 shares, respectively.
February 25, 2022 65,703,035 30.02 Jung Ho Park, director of the Company’s affiliate, acquired 7,598 shares.
March 25, 2022 65,706,519 30.03 Jong Ryeol Kang, inside director of the Company, acquired 3,484 shares.
May 3, 2022 65,712,503 30.03 Four independent directors of the Company, Youngmin Yoon, Jung Ho Ahn, Junmo Kim, Seok-dong Kim, each acquired 1,144 shares. Yong-Hak Kim, another independent director of the Company, acquired<br>1,408 shares.
February 27, 2023 65,719,411 30.03 Young Sang Ryu, representative director of the Company, and Jong Ryeol Kang, inside director of the Company, acquired 4,634 and 2,274 shares, respectively.
March 28, 2023 65,717,964 30.03 Retirement of Jung Ho Ahn, independent director of the Company (1,447 shares)
April 21, 2023 65,724,963 30.03 Four independent directors, Youngmin Yoon, Haeyun Oh, Junmo Kim and Seok-dong Kim each acquired 1,338 shares. Yong-Hak Kim, independent director of the Company, acquired 1,647<br>shares.

2. Distribution of Shares

A. Shareholders with Ownership of 5% or Greater
(As of December 31, 2023) (Unit: in shares and percentages)
--- --- --- --- --- --- ---
Name (title) Common share
Number of shares Ownership ratio Remarks
SK Inc. 65,668,397 30.01 % —
National Pension Service 16,330,409 7.46 % —
Citibank ADR 13,722,598 6.27 % —
Shareholdings under the Employee Stock Ownership Program — — —

57

B. Minority Shareholders
(As of December 31, 2023) (Unit: in shares and percentages)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Classification Shareholders Ownership
Number ofminorityshareholders Totalnumber ofshareholders Ratio (%) Number ofshares owned byminorityshareholders Total numberof sharesissued Ratio(%)
Minority shareholders* 212,691 212,700 99.9 104,391,612 218,833,144 47.7
* Shareholders who hold less than 1% of total voting shares issued.
--- ---

3. Share Price and Trading Volume in the Last Six Months

A. Domestic Securities Market
(Unit: in Won and shares)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Types July 2023 August 2023 September2023 October 2023 November2023 December 2023
Common stock Highest 48,300 52,000 50,300 52,300 51,100
Lowest 46,150 47,700 47,700 48,400 49,250
Average 47,039 49,711 49,389 50,893 50,150
Daily transaction volume Highest 721,893 1,351,955 1,824,321 6,744,768 1,262,024
Lowest 316,415 242,582 266,126 339,393 396,233
Monthly transaction volume 10,568,918 13,011,466 11,526,288 19,303,798 12,376,553
B.  Foreign Securities Market (New York Stock Exchange)
(Unit : in US and ADRs)
Types July 2023 August 2023 September2023 October 2023 November2023 December 2023
Depositary receipt Highest 20.21 21.46 21.16 22.61 22.04
Lowest 19.35 19.90 19.71 20.43 21.07
Average 19.73 20.74 20.37 21.71 21.43
Daily transaction volume Highest 552,500 554,100 996,700 651,600 600,000
Lowest 188,100 193,900 152,300 176,000 168,000
Monthly transaction volume 7,085,000 6,146,600 7,422,500 7,196,200 6,717,100

All values are in US Dollars.

58

VIII. EMPLOYEES AND DIRECTORS

1. Officers and Employees

A. Employees
(As of December 31, 2023) (Unit: in persons and millions of Won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Business segment Gender Number of employees Averagelength ofservice(years) Aggregate wagefor the year of2023 Average wageper person
Employees without afixed term ofemployment Employees with afixed term ofemployment Total
Total Part-timeemployees Total Part-timeemployees
— Male 4,280 — 97 — 4,377 14.9 714,653 163
— Female 1,000 — 202 — 1,202 8.6 130,730 109
Total 5,280 — 299 — 5,579 13.6 845,383 152
B. Compensation of Unregistered Officers
--- ---
(As of December 31, 2023) (Unit: in persons and millions of Won)
--- --- --- --- ---
Number of Unregistered Officers Aggregate wage for the first six months of 2023 Average wage per person
91 47,182 518

2. Compensation of Directors

A. Amount Approved at the Shareholders’ Meeting
(As of December 31, 2023) (Unit: in millions of Won)
--- --- --- --- ---
Classification Number of Directors Aggregate Amount Approved
Directors 8 12,000
B. Amount Paid
--- ---

(1) Total Amount

(As of December 31, 2023) (Unit: in millions of Won)
Number of Directors Aggregate Amount Paid Average Amount Paid Per Director Remarks
8 4,114 588 —
* The number of directors includes one non-executive director who did not<br>receive any compensation.
--- ---
** The average amount paid per director excludes one non-executive<br>director who did not receive any compensation.
--- ---

(2) Amount by Classification

(As of December 31, 2023) (Unit: in millions of Won)
Classification Number of Directors Aggregate Amount Paid Average Amount Paid Per Director Remarks
Inside Directors 3 3,295 1,648 —
Independent Directors (Excluding Audit Committee Members) 1 165 165 —
Audit Committee Members 4 653 163 —
Auditor — — — —
* The number of directors includes one non-executive director who did not<br>receive any compensation.
--- ---

59

** The average amount paid per director excludes one non-executive<br>director who did not receive any compensation.

3. Individual Compensation of Directors and Officers

A. Remuneration for Individual Directors (among those Paid over Won 500 Million per Year)
(As of December 31, 2023) (Unit: in millions of Won)
--- --- --- --- ---
Name Position Total remuneration Payment not includedin total remuneration
Young Sang Ryu Representative Director 2,065 25,380 PSUs
Jong Ryeol Kang Inside Director 1,230 4,400 PSUs
* Young Sang Ryu and Jong Ryeol Kang, two of the registered directors, were granted performance stock units<br>(“PSUs”) pursuant to the Company’s equity compensation plan in consideration of their short- and long-term achievements. See “VIII. Employees and Directors — 4. Stock Options Granted and Exercised — C. Equity<br>Compensation Plans” for additional details on the basis for, process and key details of the PSUs.
--- ---
B. Composition of Total Remuneration
--- ---
Name Composition
--- ---
Young Sang Ryu Total remuneration: Won 2,065 million<br><br><br>•  Salary: Won 1,200 million<br><br><br>•  Bonus: Won 836 million<br><br><br>•  Other earned income: Won 29 million
Jong Ryeol Kang Total remuneration: Won 1,230 million<br><br><br>•  Salary: Won 700 million<br><br><br>•  Bonus: Won 525 million<br><br><br>•  Other earned income: Won 5 million
C. Remuneration for the Five Highest-Paid Officers (among those Paid over Won 500 Million per Year)
--- ---
(As of December 31, 2023) (Unit: in millions of Won)
--- --- --- --- ---
Name Position Total remuneration Payment not included intotal remuneration
Jin Woo So Vice Chairman 2,537 —
Man Seog Ryu Head of SK Academy 2,242 —
Young Sang Ryu Representative Director 2,065 25,380 PSUs
Yong-Seop Yum Head of SK Research Institute 1,713 —
HyunA Lee Vice President 1,413 1,000 PSUs
* Young Sang Ryu and HyunA Lee were granted PSUs pursuant to the Company’s equity compensation plan in<br>consideration of their short- and long-term achievements. See “VIII. Employees and Directors — 4. Stock Options Granted and Exercised — C. Equity Compensation Plans” for additional details on the basis for, process and key<br>details of the PSUs.
--- ---

60

D. Composition of Total Remuneration
Name Composition
--- ---
Jin Woo So Total remuneration: Won 2,537 million<br><br><br>•  Salary: —<br><br><br>•  Bonus: Won 2,537 million<br><br><br>•  Other earned income: —
Man Seog Ryu Total remuneration: Won 2,242 million<br><br><br>•  Salary: Won 489 million<br><br><br>•  Bonus: Won 362 million<br><br><br>•  Severance: Won 1,391 million
Young Sang Ryu Total remuneration: Won 2,065 million<br><br><br>•  Salary: Won 1,200 million<br><br><br>•  Bonus: Won 836 million<br><br><br>•  Other earned income: 29
Yong-Seop Yum Total remuneration: Won 1,713 million<br><br><br>•  Salary: Won 825 million<br><br><br>•  Bonus: Won 888 million<br><br><br>•  Other earned income: —
HyunA Lee Total remuneration: Won 1,413 million<br><br><br>•  Salary: Won 430 million<br><br><br>•  Bonus: Won 338 million<br><br><br>•  Other earned income: Won 4 million<br><br><br>•  Severance: Won 641 million

4. Stock Options Granted and Exercised

A. Stock Options Granted to Directors and Auditors
(As of December 31, 2023)
--- --- --- --- --- --- ---
Classification Number of Directors Fair Value of Stock Options<br>(Won) Remarks
Inside Directors<br><br><br>(Excluding Independent Directors and Audit Committee Members) 2 1,679,967,757 —
Independent Directors (Excluding Audit Committee Members) — — —
Audit Committee Members — — —
Executives 15 502,537,741 Includes<br>directors of<br>affiliates
Total 17 2,170,665,238 —
B. Stock Options Granted and Exercised
--- ---
(As of December 31, 2023) (Unit: in Won and shares)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Grantee Relationshipwith theCompany Date ofGrant Method ofGrant InitiallyGranted ChangesduringReportingPeriod Total Changes Unexercisedas of End ofReportingPeriod ExercisePeriod ExercisePrice
Exercised Canceled Exercised Canceled
Young Sang Ryu Inside Director February 20, 2018 Issuance of treasury stock, cash settlement 4,123 — 4,123 — 4,123 — February 21, 2020 – February 20, 2023 50,824
Young Sang Ryu Inside Director March 26, 2019 Issuance of treasury stock, cash settlement 5,265 — — — — 5,265 March 27, 2021 – March 26, 2024 50,862
Young Sang Ryu Inside Director March 26, 2020 Issuance of treasury stock, cash settlement 7,145 — — — — 7,145 March 27, 2023 – March 26, 2027 38,452

61

(As of December 31, 2023) (Unit: in Won and shares)
Grantee Relationshipwith theCompany Date ofGrant Method ofGrant InitiallyGranted ChangesduringReportingPeriod Total Changes Unexercisedas of End ofReportingPeriod ExercisePeriod ExercisePrice
Exercised Canceled Exercised Canceled
Young Sang Ryu Inside Director March 25, 2021 Issuance of treasury stock, cash settlement 18,190 — — — — 18,190 March 26, 2023 – March 25, 2026 50,276
Young Sang Ryu Inside Director March 25, 2022 Issuance of treasury stock, cash settlement 295,275 — 196,850 — 196,850 98,425 March 26, 2025 – March 25, 2029 56,860
Jong Ryeol Kang Inside Director March 26, 2020 Issuance of treasury stock, cash settlement 6,219 — — — — 6,219 March 27, 2023 – March 26, 2027 38,452
Jong Ryeol Kang Inside Director March 25, 2021 Issuance of treasury stock, cash settlement 7,136 — — — — 7,136 March 26, 2023 – March 25, 2026 50,276
Jong Ryeol Kang Inside Director March 25, 2022 Issuance of treasury stock, cash settlement 21,743 — — — — 21,743 March 26, 2024 – March 25, 2027 56,860
Jong Ryeol Kang Inside Director March 28, 2023 Issuance of treasury stock, cash settlement 22,000 — 22,000 — 22,000 — March 29, 2025 – March 28, 2028 47,280
Dong Hwan Cho Unregistered Officer March 26, 2020 Issuance of treasury stock, cash settlement 4,631 — — — — 4,631 March 27, 2023 – March 26, 2027 38,452
Dong Hwan Cho Unregistered Officer March 25, 2021 Issuance of treasury stock, cash settlement 5,375 — — — — 5,375 March 26, 2023 – March 25, 2026 50,276
Dong Hwan Cho Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 8,697 — — — — 8,697 March 26, 2024 – March 25, 2027 56,860
Dong Hwan Cho Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
HyunA Lee Unregistered Officer March 26, 2020 Issuance of treasury stock, cash settlement 4,631 — — — — 4,631 March 27, 2023 – March 26, 2027 38,452
HyunA Lee Unregistered Officer March 25, 2021 Issuance of treasury stock, cash settlement 8,746 — — — — 8,746 March 26, 2023 – March 25, 2026 50,276
HyunA Lee Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 12,884 — — — — 12,884 March 26, 2024 – March 25, 2027 56,860
HyunA Lee Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Myung Jin Han Unregistered Officer March 25, 2021 Issuance of treasury stock, cash settlement 4,403 — — — — 4,403 March 26, 2023 – March 25, 2026 50,276
Myung Jin Han Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 11,274 — — — — 11,274 March 26, 2024 – March 25, 2027 56,860
Myung Jin Han Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Bong Ho Lim Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 8,858 — — — — 8,858 March 26, 2024 – March 25, 2027 56,860

62

(As of December 31, 2023) (Unit: in Won and shares)
Grantee Relationshipwith theCompany Date ofGrant Method ofGrant InitiallyGranted ChangesduringReportingPeriod Total Changes Unexercisedas of End ofReportingPeriod ExercisePeriod ExercisePrice
Exercised Canceled Exercised Canceled
Bong Ho Lim Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Jin Won Kim Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 10,629 — — — — 10,629 March 26, 2024 – March 25, 2027 56,860
Jin Won Kim Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Yong Joo Park Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 10,334 — — — — 10,334 March 26, 2024 – March 25, 2027 56,860
Yong Joo Park Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Hee Sup Kim Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 7,086 — — — — 7,086 March 26, 2024 – March 25, 2027 56,860
Hee Sup Kim Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Jung Whan Ahn Unregistered Officer March 25, 2022 Issuance of treasury stock, cash settlement 8,858 — — — — 8,858 March 26, 2024 – March 25, 2027 56,860
Jung Whan Ahn Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Kyeong Deog Kim Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Hyuk Kim Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Min Yong Ha Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Young Log Cho Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Yong Hun Kim Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Hyun Ki Chang Unregistered Officer March 28, 2023 Issuance of treasury stock, cash settlement 12,000 — 12,000 — 12,000 — March 29, 2025 – March 28, 2028 47,280
Jung Ho Park Officer of Affiliate March 24, 2017 Issuance of treasury stock, cash settlement 67,320 — 67,320 — 67,320 — March 25, 2020 – March 24, 2023 53,298
Jung Ho Park Officer of Affiliate March 24, 2017 Issuance of treasury stock, cash settlement 67,320 — — — — 67,320 March 25, 2021 – March 24, 2024 57,562
Jung Ho Park Officer of Affiliate March 26, 2020 Issuance of treasury stock, cash settlement 337,408 — — — — 337,408 March 27, 2023 – March 26, 2027 38,452

63

(As of December 31, 2023) (Unit: in Won and shares)
Grantee Relationshipwith theCompany Date ofGrant Method ofGrant InitiallyGranted ChangesduringReportingPeriod Total Changes Unexercisedas of End ofReportingPeriod ExercisePeriod ExercisePrice
Exercised Canceled Exercised Canceled
Hyoung Il Ha Officer of Affiliate February 22, 2019 Issuance of treasury stock, cash settlement 4,749 — — — — 4,749 February 23, 2021 – February 22, 2024 53,052
Hyoung Il Ha Officer of Affiliate March 26, 2020 Issuance of treasury stock, cash settlement 5,955 — — — — 5,955 March 27, 2023 – March 26, 2027 38,452
Hyoung Il Ha Officer of Affiliate March 25, 2021 Issuance of treasury stock, cash settlement 11,418 — — — — 11,418 March 26, 2023 – March 25, 2026 50,276
Poong Young Yoon Officer of Affiliate March 26, 2020 Issuance of treasury stock, cash settlement 5,293 — — — — 5,293 March 27, 2023 – March 26, 2027 38,452
Poong Young Yoon Officer of Affiliate March 25, 2021 Issuance of treasury stock, cash settlement 10,203 — — — — 10,203 March 26, 2023 – March 25, 2026 50,276
Seong Ho Ha Officer of Affiliate February 22, 2019 Issuance of treasury stock, cash settlement 4,157 — — — — 4,157 February 23, 2021 – February 22, 2024 53,052
Seong Ho Ha Officer of Affiliate March 26, 2020 Issuance of treasury stock, cash settlement 5,028 — — — — 5,028 March 27, 2023 – March 26, 2027 38,452
Seong Ho Ha Officer of Affiliate March 25, 2021 Issuance of treasury stock, cash settlement 5,830 — — — — 5,830 March 26, 2023 – March 25, 2026 50,276
Seong Ho Ha Officer of Affiliate March 25, 2022 Issuance of treasury stock, cash settlement 9,341 — — — — 9,341 March 26, 2024 – March 25, 2027 56,860
Sang Kyu Shin Officer of Affiliate March 25, 2021 Issuance of treasury stock, cash settlement 4,646 — — — — 4,646 March 26, 2023 – March 25, 2026 50,276
Jae Seung Song Officer of Affiliate March 25, 2021 Issuance of treasury stock, cash settlement 8,047 — — — — 8,047 March 26, 2023 – March 25, 2026 50,276
Byung Hoon Ryu Officer of Affiliate March 25, 2021 Issuance of treasury stock, cash settlement 3,796 — — — — 3,796 March 26, 2023 – March 25, 2026 50,276
* The stock options granted on March 28, 2023 were cancelled and replaced with PSUs.
--- ---
** Two-thirds of the stock options granted to Young Sang Ryu on<br>March 25, 2022 were cancelled and replaced with PSUs.
--- ---
C. Equity Compensation Plans
--- ---

(1) PSUs

Since 2023, the Company has been granting PSUs to certain registered officers (including the representative director), unregistered officers and officers of subsidiaries in order to align management and shareholder interests and further align growth in the Company’s enterprise value with management compensation. Future performance targets are set when entering into the relevant stock compensation agreement, and the final number of shares to be received by each grantee will be determined based on the achievement levels of such targets, subject to approval by the Board of Directors.

64

PSUs ranging between 0% and 100% of a grantee’s annual salary is initially granted, and such units are converted into shares ranging between 0% and 200% of the grantee’s annual salary at the time of the PSU grant after a three-year vesting period based on the rates of increase in the Company’s share price and the KOSPI 200 Index. In consideration of the representative director’s role and importance, additional shares of up to 100% of the representative director’s annual salary at the time of the PSU grant may be granted in recognition of his or her outstanding achievements if the share price increases by more than 100% and such increase has outpaced the increase in the KOSPI 200 Index by more than 50%. The validity of the PSUs is dependent on the grantee meeting a minimum term of incumbency under his or her title until the end of the year in which the PSUs were granted. The number of shares granted is subject to adjustments in cases of certain events including capital increases, stock splits, reverse stock splits and distribution of stock dividends.

(As of December 31, 2023)
Number of grantees Number of PSUs granted Shares granted inthe year endedDecember 31, 2023 Cumulativeshares granted asof December 31,2023 Remaining shares to be granted
194 228,708 — — 228,708

(2) Stock Appreciation Rights (“SARs”)

In 2021 and 2022, the Company granted SARs to certain executive officers as equity compensation following approval by the Board of Directors.

SARs entitle the grantee to receive in cash the product of (a) the difference between the share price at the time of grant and the share price after a three-year vesting period and (b) the number of shares of the Company’s common stock equal to 100% of a grantee’s annual salary.

If the grantee’s employment with the Company is terminated within two years of the grant date, no such payment is made. If a grantee’s employment with the Company is terminated at a date between two and three years after the grant date, settlement is made based on the share price on the termination date. The maximum payout is capped at 100% of the grantee’s annual salary at the time of grant.

(As of December 31, 2023)
Number of grantees 2021 86
2022 72
Number of SARs granted 2021 253,081 *
2022 338,525
Shares granted in the year ended December 31, 2023 —
Cumulative shares granted as of December 31, 2023 —
Remaining shares to be granted — (to be paid out in cash)
* The number of shares granted in 2021 reflects the effect of the Stock Split.
--- ---

(3) Shareholder Participation Program

Since 2021, pursuant to Article 342 of the Korean Commercial Code, the Company has been operating the “Shareholder Participation Program” as equity compensation in order to align management and shareholder interests and strengthen commitment to enhance enterprise value.

All employees of the Company, including the representative director, are eligible to participate in the Shareholder Participation Program, under which the Company grants treasury shares equal to a portion of a participating employee’s bonus, upon individual application. The grant of treasury shares is subject to resolution by the Board of Directors.

The participating employee must be employed with the Company at the time of actual grant and there is no transfer restriction period. The number of treasury shares granted is subject to adjustments in cases of certain events including capital increases, stock splits, reverse stock splits and distribution of stock dividends.

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(As of December 31, 2023)
Number of grantees 2021 1,985
2022 2,005
2023 1,863
Number of shares granted 2021 366,309 *
2022 413,080
2023 434,088
Shares granted in the year ended December 31, 2023 434,088
Cumulative shares granted as of December 31, 2023 1,213,477
Remaining shares to be granted —
* The number of shares granted in 2021 reflects the effect of the Stock Split.
--- ---

(4) Stock Grant

Since 2021, the Company has been granting portions of independent directors’ remuneration in the form of shares in order to align the interests of the Board of Directors and shareholders. The grant of shares is subject to resolution by the Board of Directors.

The number of shares granted, which is in the form of treasury shares, is based on the independent director’s role and responsibility and the Company’s director compensation payment criteria. Transfer of such shares is restricted for three years following initial receipt. The number of treasury shares granted is subject to adjustments in cases of certain events including capital increases, stock splits, reverse stock splits and distribution of stock dividends.

(As of December 31, 2023)
Number of grantees 2021 5
2022 5
2023 5
Number of shares granted 2021 1,515 *
2022 5,984
2023 6,999
Shares granted in the year ended December 31, 2023** 6,999
Cumulative shares granted as of December 31, 2023** 1,545,708
Remaining shares to be granted** —
* The number of shares granted in 2021 reflects the effect of the Stock Split.
--- ---
** Reflects the total number of shares granted to employees and directors by the Company.
--- ---

In 2021, following resolution by the Board of Directors, the Company awarded treasury shares to all employees in order to enhance enterprise value and maximize synergies following the Spin-off.

The treasury shares were granted to all of the Company’s then-current employees and the transfer of such shares was restricted for six months. The number of treasury shares granted is subject to adjustments in cases of capital increases, stock splits, reverse stock splits and distribution of stock dividends.

(As of December 31, 2023)
Number of grantees 5,054
Number of shares granted 1,531,210 *
Shares granted in the year ended December 31, 2023** 6,999
Cumulative shares granted as of December 31, 2023** 1,545,708
Remaining shares to be granted** —
* The number of shares granted in 2021 reflects the effect of the Stock Split.
--- ---
** Reflects the total number of shares granted to employees and directors by the Company.
--- ---
IX. RELATED PARTY TRANSACTIONS
--- ---

1. Line of Credit Extended to the Largest Shareholder and Related Parties

None.

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2. Transfer of Assets to/from the Largest Shareholder and Related Parties and OtherTransactions

A. Purchase and Dispositions of Investments
(As of December 31, 2023) (Unit: in millions of Won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Name (Corporate name) Relationship Purchase and Dispositions of Investments Remarks
Type ofInvestment Transaction Details
Beginning Increase Decrease Ending
SK Telecom Americas, Inc. Subsidiary Shares 31,203 39,066 — 70,269 New acquisition
Atlas Investment Subsidiary Shares 145,518 34,030 — 179,548 New acquisition
Quantum Innovation Fund I Subsidiary Shares 11,626 240 (10,569 ) 1,297 New acquisition
SK Broadband Co., Ltd. Subsidiary Shares 2,215,427 1,438 — 2,216,865 Contribution

3. Transactions with the Largest Shareholder and Related Parties

(As of December 31, 2023) (Unit: in millions of Won)
Counterparty RelationshipwithCounterparty Type Transaction Period Transaction Details Transaction Amount
PS&Marketing Related company Purchase January 1, 2023 – December 30, 2023 Marketing fees, etc. 1,266,660

4. Related Party Transactions

See Note 37 of the notes to the Company’s audited consolidated financial statements attached hereto for more information regarding related party transactions.

5. Other Related Party Transactions (excluding Transactions with the Largest Shareholder and Related Parties listedabove)

A. Provisional Payment and Loans (including loans on marketable securities)
(As of December 31, 2023) (Unit: in millions of Won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Name (Corporate name) Relationship Account category Change details Accruedinterest Remarks
Beginning Increase Decrease Ending
Baekmajang and others Agency Long-term and short-term loans 70,946 125,072 126,397 69,621 — —
Daehan Kanggun BCN Inc. Investee Long-term loans 22,147 — — 22,147 — —
B. Other transactions
--- ---

See Note 37 of the notes to the Company’s audited consolidated financial statements attached hereto for more information regarding other related party transactions.

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X. OTHER INFORMATION RELATING TO THE PROTECTION OF INVESTORS

1. Developments in the Items Mentioned in Prior Reports on Important Business Matters

None.

2. Contingent Liabilities

A. Legal Proceedings

[SK Telecom]

As of December 31, 2023, the Company is involved in various pending legal proceedings, and the provisions recognized for these proceedings are not material. The management of the Company has determined that there are currently no present obligations in connection with proceedings for which no provision has been recognized. The management has also determined that the outcome of these proceedings will not have a significant impact on the Company’s financial position and operating performance.

[SK Broadband]

As of December 31, 2023, there were 19 pending lawsuits against SK Broadband (aggregate amount of claims of Won 8,740 million), and provisions in the amount of Won 218 million in connection with such lawsuits were recognized.

B. Other Contingent Liabilities and Guarantees for Payment

[SK Telecom]

None.

[SK Broadband]

As of December 31, 2023, SK Broadband has entered into revolving credit facilities with a limit of Won 130 billion with three financial institutions including Hana Bank in relation to its loans.

In connection with public offerings of notes, SK Broadband is subject to certain restrictions with respect to its debt ratio, third party payment guarantees and other limitations on liens.

SK Broadband has provided “geun” mortgage amounting to Won 1,228 million on certain of its buildings, including Gyeyang Guksa, in connection with leasing of such buildings.

SK Broadband has entered into a leased line contract and a resale contract for fixed-line telecommunications services with SK Telecom.

As of December 31, 2023, SK Broadband has been provided with the following material payment guarantees by other parties.

(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Seoul Guarantee Insurance Company Contract and defect performance guarantee 35,837
Korea Content Financial Cooperative Contract performance guarantee 39,763

[PS&Marketing]

As of December 31, 2023, PS&Marketing has been provided with the following material payment guarantees by other parties.

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(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Seoul Guarantee Insurance Company Performance guarantee 1,636

[SK Telink]

As of December 31, 2023, SK Telink provided the following material payment guarantees to other parties.

(Unit: in millions of Won)
Guarantor Counterparty Guaranteed Amount Guarantee Details
SK Telink Korea Coast Guard<br>and others 1,671 Contract<br>guarantee

As of December 31, 2023, SK Telink has been provided with the following material payment guarantees by other parties.

(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Seoul Guarantee Insurance Company Contract guarantee 679

[Home&Service]

As of December 31, 2023, Home&Service has been provided with the following material payment guarantees by other parties.

(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Seoul Guarantee Insurance Company Payment guarantees and<br>warranties 4,398

[SK M&Service]

As of December 31, 2023, SK M&Service has entered into the following credit facilities with financial institutions.

(Unit: billions of Won)
Financial Institution Credit Limit Details
KEB Hana Bank 10 Working capital loan
Industrial Bank of Korea 15 Working capital loan
Shinhan Bank 1 Payment guarantee

As of December 31, 2023, SK M&Service has been provided with the following material payment guarantees by other parties.

(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Korea Tourism Organization and 36 other companies Transaction performance guarantee 2,999
SK Energy Transaction performance guarantee 700

[SK O&S]

As of December 31, 2023, SK O&S has been provided with the following material payment guarantees by other parties.

69

(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Seoul Guarantee Insurance Company Contract performance guarantee 50,000

[SK Stoa]

As of December 31, 2023, SK Stoa has been provided with the following material payment guarantees by other parties.

(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Kookmin Bank Performance guarantee 1,280
Kookmin Bank Revolving credit 18,000

[SAPEON Korea]

As of December 31, 2023, SAPEON Korea has been provided with the following material payment guarantees by other parties.

(Unit: in millions of Won)
Guarantor Guarantee Details Guaranteed Amount
Seoul Guarantee Insurance Company Payment guarantees and warranties 3,108

3. Status of Sanctions, etc.

[SK Telecom]

A. Sanctions by Investigative or Juridical Agencies

None.

B. Sanctions by Administrative Agencies

(1) Sanctions by Financial Supervisory Authorities

None.

(2) Sanctions by the Korea Fair Trade Commission (the “KFTC”)

Date Authority Subject ofAction Sanction Reason and the Relevant Law Status ofImplementation Company’sMeasures
Mar. 18, 2021 KFTC SK Telecom Decision of KFTC Meeting (No. 2021-075)<br><br><br>•   Correctional order (prohibition order against future actions)<br><br><br>•   Fine of Won 3,198 million Although SK Telecom and SK Broadband believe that they allocated sales commissions for sales of IPTV-bundled plans based on reasonable standard, KFTC determined that SK Telecom unfairly supported SK Broadband by paying for part of<br>the sales commissions payable by SK Broadband (Article 23-1(7) of the Monopoly Regulation and Fair Trade Act (“MRFTA”)) Decision confirmed; implementation of correctional order Properly allocate sales commissions in accordance with court’s decision; strengthen compliance activities

70

Date Authority Subject ofAction Sanction Reason and the Relevant Law Status ofImplementation Company’sMeasures
Aug. 25, 2021 KFTC SK Telecom Decision of KFTC Meeting (No. 2021-224)<br><br><br>•   Correctional order (prohibition order against future actions) Unfair support to Loen by reducing the payment agent fee for “Melon” service for two years from 2010 to 2011 (Article 23-1(7) of the MRFTA) Decision confirmed; implementation of correctional order Strengthen compliance activities (despite low possibility of recurrence and minimal impact on the Company’s business)
Aug. 2, 2023 KFTC SK Telecom Decision of KFTC Meeting (No. 2023-107) Inappropriate advertising practice relating to promotion of transmission speed of wireless services that may mislead consumers Filed an administrative appeal seeking cancellation of administrative disposition Notwithstanding the appeal, strengthen compliance activities related to advertising practices
Jan. 29, 2023 KFTC SK Telecom Decision of KFTC Meeting (No. 2024-031)<br><br><br>•   Correctional order (prohibition order against future actions)<br><br><br>•   Fine of Won 1,428 million Collusion by four companies including SK Telecom in the bidding price or standard price during negotiations on costs for renting locations that house their base stations (Former Article<br>19-1(1) of the MRFTA) Fine to be paid Strengthen compliance activities, including collusion prevention training

(3) Sanctions by Tax Authorities

None.

(4) Sanctions by Other Administrative or Public Institutions

Date Authority Subject of Action Sanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Feb. 3, 2021 KCC SK Telecom Decision of 4th KCC Meeting of 2021<br><br><br>•   Submission of statistical data pursuant to Article 30 of the Location Information Act<br><br><br>•   Establishment and submission of recurrence prevention plan<br><br><br>•   Fine of Won 4.5 million Delay of submission of semi-annual data on personal location information request and provision to the National Assembly’s Science, ICT, Broadcasting and Communications Committee on four occasions (Article 30(2) of the Location<br>Information Act, Article 30(4) of Enforcement Decree) Decision confirmed; receipt for payment of fine issued; recurrence prevention plan submitted Specify roles and responsibilities for compiling/sending statistical data to KCC and National Assembly; establish system for submission process (within 15 days after end of second quarter); include relevant information in transition<br>documents to prevent omission in connection with personnel/organizational change
Dec. 29, 2021 KCC SK Telecom Decision of 59th KCC Meeting of 2021<br><br><br>•   Announcement of correctional order<br><br><br>•   Establishment and submission of recurrence prevention plan<br><br><br>•   Fine of Won 1,490 million Excessive financial support other than the disclosed subsidy for the sales of mobile terminal devices and discriminatory payment and payment inducement based on subscription type and rate plan (Articles 3-1, 4-5 and 15-2 of the MDDIA) Decision confirmed; payment of fine completed and implementation plan submitted Implement measures to prevent recurrence and establish a transparent incentive system for agents and distributors

71

Date Authority Subject of Action Sanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Dec. 30, 2021 MSIT SK Telecom Correctional order (resubmission of the business report for FY2020 to MSIT with mandated revisions); Fine of Won 128 million Error in the assets/profits/costs categories of the telecommunications business report for FY2020, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications<br>Business Accounting Separation Criteria (Article 49, Article 53-2, Article 92-1 of the Telecommunications Business Act) Submitted the revised business report for FY2020 (Jan. 13, 2022); paid the fine (Jan. 24, 2022) Improve business procedures to prevent errors
June 15, 2022 KCC SK Telecom Decision of 29th KCC Meeting of 2022<br><br><br>•   Announcement of correctional order<br><br><br>•   Improvement of operating procedures including fixed-line and wireless gift management<br>system<br> <br>•   Establishment and submission of recurrence prevention plan<br><br><br>•   Fine of Won 632 million Unreasonably discriminatory practice based on subscription type and rate plan in providing gifts with values that are over or below 15% of the applicable limit in the Company’s sales of Internet-bundled plans (Article 50 of the<br>Telecommunications Business Act, Article 42-1 of Enforcement Decree and Article 4 of Standards for Unfair User Discrimination in Providing Economic Benefits) Decision confirmed; implementation plan submitted and payment of fine completed Immediately ceased such activities; improved fixed-line and wireless network gift registration system and service application process
Dec. 20, 2022 MSIT SK Telecom Correctional order (resubmission of the business report for FY2021 to MSIT with mandated revisions); Fine of Won 135 million Error in the assets/profits/costs categories of the telecommunications business report for FY2021, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications<br>Business Accounting Separation Criteria (Article 49, Article 53-2, Article 92-1 of the Telecommunications Business Act) Submitted the revised business report for FY2021 (Jan. 3, 2023); paid the fine (Jan. 10, 2023) Improve business procedures to prevent errors
Dec. 28, 2023 MSIT SK Telecom Correctional order (resubmission of the business report for FY2022 to MSIT with mandated revisions); Fine of Won 134 million Error in the assets/profits/costs categories of the telecommunications business report for FY2022, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications<br>Business Accounting Separation Criteria (Article 49, Article 53-2, Article 92-1 of the Telecommunications Business Act) Submitted the revised business report for FY2022 (Jan. 11, 2024); paid the fine (Jan. 22, 2024) Improve business procedures to prevent errors

72

[SK Broadband]

A. Sanctions by Investigative or Juridical Agencies

None.

B. Sanctions by Administrative Agencies

(1) Sanctions by Financial Supervisory Authorities

None.

(2) Sanctions by the KFTC

Date Authority Subject ofAction Sanction Amount ofMonetarySanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Mar. 18, 2021 KFTC SK Broadband Correctional order and fine of Won 3.198 billion Won 3.198 billion Although SK Telecom and SK Broadband believe that they allocated sales commissions for sales of IPTV-bundled plans based on reasonable standard, KFTC determined that SK Telecom unfairly supported SK Broadband by paying for part of<br>the sales commissions payable by SK Broadband (Article 23-1(7) of the MRFTA) The Supreme Court of Korea dismissed the Company’s filing of an administrative proceeding and application for suspension of execution of the KFTC’s decision (Mar. 16, 2023) To properly allocate sales commissions in accordance with court’s decision; strengthen compliance activities

(3) Sanctions by Tax Authorities

Date Authority Subject ofAction Sanction Amount ofMonetarySanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Feb. 17, 2021 Seoul Regional Tax Office SK Broadband Fine Won 596 million Violation of tax bill collection obligation (Article 10 (1-4) and Article 18 of the Punishment of Tax Offenses Act) Paid the fine Provide measures against collusion and prevent further recurrences

(4) Sanctions by Other Administrative or Public Institutions

73

Date Authority Subject ofAction Sanction Amount ofMonetarySanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Feb. 16, 2021 Central Radio Management Service SK Broadband Sejong Broadcast Fine Won 2.8 million Violated regulations on displaying sponsorship notice on public service advertisements (SK Broadband Sejong Broadcast) (Article 16 of the Act on Regulation of Violations of Public Order) Paid the fine —
Apr. 20, 2021 Central Radio Management Service SK Broadband Fine (Won 10 million) Won 10 million Illegally modified numbers were introduced during an illegal calling number modification blocking test for public and financial institutions as part of an inspection in 2020 (Failed to meet the requirements for appropriate technical<br>measures to prevent harm to users) (Article 84-2 of the Telecommunications Business Act) Paid the reduced amount of the fine (Won 4 million) Analysis of the causes for the malfunctioning of the number theft blocking system and improvement of the system
June 8, 2021 Communication office of the KCC SK Broadband Fine (Won 3 million) Won 3 million Violated the Act on the Restriction of Transmission of Advertising Information for Commercial Purposes by requiring date of birth information from customers in order to stop receiving text message advertisements (Article 50(4) of<br>the Information and Communications Network Act and Article 61(3) of its Enforcement Decree) Paid the fine (July 6, 2021) Improved the system so that users will no longer be asked to enter date of birth in order to stop receiving text message advertisements (Feb. 2021)
Aug. 10, 2021 KCC SK Broadband Correctional order (improvement of business practice) — Failure to explain or notify users that its high-speed Internet service was initiated without measuring the speed or without meeting the minimum guaranteed speed (Article 50 of the Telecommunications Business Act) Submitted the correctional order implementation plan Compliance with the correctional order

74

Date Authority Subject ofAction Sanction Amount ofMonetarySanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Oct. 19, 2021 KCC; Communication office of the KCC SK Broadband Fine (Won 8 million) Fine (Won 8 million) Insufficient implementation of necessary measures for addressing service vulnerabilities and insufficient follow-up response to reports of spam messages, including insufficient implementation<br>of sanctions against companies that engage in mass texting of spam messages (Act on Promotion of Information and Communications Network Utilization and Information and Article 50-4(4) of the Broadcasting<br>Act) Paid the fine (November 10, 2021) Improvement of the measures for addressing service vulnerabilities
Dec. 14, 2021 Central Radio Management Service 9 affiliated system operators of SK Broadband Correctional order — Failure to execute the local channel investment plan (Article 99-1 of the Broadcasting Act) Submitted the correctional order implementation plan Compliance with the correctional order
Dec. 30, 2021 MSIT SK Broadband Correctional order (resubmi-ssion of the business report for FY2020 to MSIT with mandated revisions); Fine of Won 50 million Won 50 million Error in the assets/profits/costs categories of the telecommunications business report for FY2020, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications<br>Business Accounting Separation Criteria (Article 49 of the Telecommunications Business Act) Submitted the revised business report for FY2020 (Jan. 14, 2022); paid the fine (Jan. 24, 2022) Improve business procedures to prevent errors
Dec. 30, 2021 MSIT Tbroad Correctional order (resubmission of the business report for FY2020 to MSIT with mandated revisions); Fine of Won 5 million Won 5 million Error in the assets/profits/costs categories of the telecommunications business report for FY2020, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications<br>Business Accounting Separation Criteria (Article 49 of the Telecommunications Business Act) Submitted the revised business report for FY2020 (Jan. 14, 2022); paid the fine (Jan. 24, 2022) Improve business procedures to prevent errors
June 30, 2022 KCC SK Broadband Correctional order; Fine of Won 1.093 billion Won 1.093 billion Discriminatory practice in providing gifts to the Company’s users as part of its telecommunication bundle products (Article 50-1 of the Telecommunications Business Act and Article 42-1 of Enforcement Decree) Submitted implementation plan; paid the fine (July 19) Improve procedures; public announcement of correctional order

75

Date Authority Subject ofAction Sanction Amount ofMonetarySanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Dec. 20, 2022 MSIT SK Broadband Correctional order (resubmission of the business report for FY2021 to MSIT with mandated revisions); Fine of Won 97 million Won 97 million Error in the assets/profits/costs categories of the telecommunications business report for FY2021, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications<br>Business Accounting Separation Criteria (Article 49 of the Telecommunications Business Act) Submitted the revised business report for FY2021 (Jan. 3, 2023); paid the fine (Jan. 10, 2023) Improve business procedures to prevent errors
Jan. 20, 2023 KCC; Communication office of the KCC SK Broadband Fine of Won 3.75 million Won 3.75 million Violated the Act on the Restriction of Transmission of Advertising Information for Commercial Purposes by transmitting advertising information against the recipient’s express refusal (Article<br>50-2 and 76 of the Act on Promotion of Information and Communications Network Utilization and Information and Article 74 and Attached Table 9 of its Enforcement Decree) Paid the reduced amount of the fine (Won 3 million) Improve relevant business procedures
Apr. 21, 2023 MSIT SK Broadband Fine of Won 5 million Won 5 million Violated the Act on Internet Multimedia Broadcasting Service by providing Internet multimedia broadcasting services without reporting changes to the terms and conditions (Article 15-1 of the<br>Act on Internet Multimedia Broadcasting Service) Paid the reduced amount of the fine (Won 4 million) Improve relevant business procedures
Jul. 12, 2023 Personal Information Protection Commission SK Broadband Fine of Won 1 million Won 1 million Negligence in the delegation and subcontracting of personal information processing tasks while outsourcing tasks related to the SK Competency Test (insufficient details in delegation documentation) (Article 26-1 of the Personal Information Protection Act) Paid the reduced amount of the fine (Won 0.8 million) Improve relevant business procedures

76

Date Authority Subject ofAction Sanction Amount ofMonetarySanction Reason and the RelevantLaw Status ofImplementation Company’sMeasures
Dec. 28, 2023 MSIT SK Broadband Correctional order; Fine of Won 78 million Won 78 million Correctional order in connection with the telecommunications business report submitted pursuant to Article 49 of the Telecommunications Business Act Submitted the revised business report for FY2022 (Jan. 11, 2024); paid the fine (Jan. 22, 2024) Improve relevant business procedures to prevent errors

[SAPEON Korea]

A.Sanctions by Investigative or Juridical Agencies

Date Authority Subject ofAction Sanction Reason and the Relevant<br><br><br>Law Status ofImplementation Company’sMeasures
Mar. 29, 2023 Suwon District Court SAPEON Korea Fine of Won 30,000 Violation of the Korean Commercial Code by failing to register two directors who took office in March 2023 on a timely basis Paid the fine Improve relevant business procedures

B. Sanctions by Administrative Agencies

(1) Sanctions by Financial Supervisory Authorities

None.

(2) Sanctions by the KFTC

Date Authority Subject ofAction Sanction Reason and the Relevant<br><br><br>Law Status ofImplementation Company’sMeasures
Oct. 12, 2023 KFTC SAPEON Korea Decision of KFTC (No. 2023-2180)<br> <br>- Fine of Won<br>6.4 million Resolved on contribution to the employee welfare fund at a board of directors meeting, and reported such decision 67 days past the filing deadline and incorrectly disclosed the attendance of independent directors (Article 27 of the<br>MRFTA) Trial decision confirmed; paid the fine Improve related business procedures

(3) Sanctions by Tax Authorities

None

(4) Sanctions by Other Administrative or Public Institutions

None

4. Material EventsSubsequent to the Reporting Period

(1) On January 25, 2024, the Board of Directors approved the disposal of treasury shares, and details of such disposal are as follows:

77

Classification Content
Class and amount of shares 498,135 common shares
Price of shares disposed Won 49,600 per share
Total value of shares disposed Won 24,707 million
Date of disposal January 29, 2024
Purpose of disposal Payment of bonus with treasury shares
Method of disposal Over-the-counter disposal

(2) On July 26, 2023, the Board of Directors approved the repurchase and cancellation of treasury shares. Pursuant to the Trust Agreement, the Company repurchased 6,090,410 treasury shares between July 27, 2023 and January 26, 2024. The Company cancelled 4,043,091 treasury shares on February 5, 2024.

(3) On February 2, 2024, the Board of Directors approved the annual dividend as follows:

Classification Content
Dividend Amount Cash dividend of Won 1,050 per share<br><br><br>(Total: Won 223,335 million)
Dividend Return Rate (based on market price) 2.1%
Dividend Record Date December 31, 2023
Dividend Payment Date In accordance with Article 464-2 of the Korean Commercial Code, within one month of the General Meeting of Shareholders

(4) SK Broadband issued commercial paper on January 9, 2024, and Series 55-1 and 55-2 bearer-type unsecured bonds on January 22, 2024. The details of such issuances are as follows:

IssuingCompany Securitiestype Issuemethod Issue Date PrincipalAmount(millions ofwon) Interestrate Rating(ratingagency) MaturityDate Repaymentstatus Supervisingcompany
SK Broadband Commercial paper Private offering January 9, 2024 100,000 4.26% A1 (Korea Ratings, Korea Investors Service, Inc., NICE Investors Service, Co., Ltd.) January 23, 2024 Repaid Shinhan Bank
SK Broadband Corporate bond Public offering January 22, 2024 170,000 3.89% AA (Korea Ratings, Korea Investors Service, Inc., NICE Investors Service, Co., Ltd.) January 22, 2027 Not yet repaid SK Securities, NH Investment & Securities
SK Broadband Corporate bond Public offering January 22, 2024 60,000 3.93% AA (Korea Ratings, Korea Investors Service, Inc., NICE Investors Service, Co., Ltd.) January 22, 2029 Not yet repaid SK Securities, NH Investment & Securities
Total — — — 330,000 — — — — —

78

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SK Telecom Co., Ltd.
(Registrant)
By: /s/ Heejun Chung
(Signature)
Name: Heejun Chung
Title: Senior Vice President

Date: April 18, 2024

SK TELECOM CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(With the Independent Auditor’s Report Thereon)

Contents

Page
Independent Auditor’s Report
Consolidated Financial Statements
Consolidated Statements of Financial Position 1
Consolidated Statements of Income 3
Consolidated Statements of Comprehensive Income 4
Consolidated Statements of Changes in Equity 5
Consolidated Statements of Cash Flows 6
Notes to the Consolidated Financial Statements 8
Report on audit of Internal Control over FinancialReporting
Management’s Annual Report on Internal Control over Financial Reporting
Ernst & Young Han Young<br><br><br>Taeyoung Building, 111, Yeouigongwon-ro,<br> <br>Yeongdeungpo-gu, Seoul<br>07241 Korea<br> <br><br> <br>Tel: +82237876600<br><br><br>Fax: +8227835890<br> <br>ey.com/kr
---

Independent Auditor’s Report

(English Translation of a Report Originally Issued in Korean)

The Shareholders and Board of Directors

SK Telecom Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of SK Telecom Co., Ltd. and its subsidiaries (collectively referred to as the “Group”) which comprise the consolidated statement of financial position as of December 31, 2023 and 2022, and the consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2023, and notes to the consolidated financial statements, including a summary of material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for each of the two years in the period ended December 31, 2023 in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”).

We also have audited the Group’s internal control over financial reporting as of December 31, 2023, based on the criteria established in Conceptual Framework for Designing and Operating Internal Control over Financial Reporting in accordance with the Korean Standards on Auditing (“KSA”) issued by the Operating Committee of internal control over financial reporting, and our report dated March 6, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

We conducted our audits in accordance with KSA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

1. Cut-off of revenue from wireless services.

As described in notes 3 (21) and 4 (2) to the consolidated financial statements, the Group’s revenue from the wireless services is recognized based on data from a complex array of information technology systems which process a significant volume of transactions with its customers. Furthermore, the transactions involve a variety of contractual terms from new subscriptions to deactivations or churn, and changes of rate plans during the period. Therefore, we have identified timing of revenue recognition related to the Group’s wireless services as a key audit matter. Related revenue from the wireless services amounted to ~~W~~10,328,980 million in 2023.

LOGO

The primary procedures we performed to address this key audit matter included:

• Inspecting major contracts with subscribers to assess whether the Group’s revenue recognition policies based<br>on the terms and conditions as set out in the contracts, are consistent with reference to the requirements of KIFRS 1115;
• Testing internal controls relating to the timing of revenue recognition for the wireless services; and<br>
--- ---
• Evaluating the appropriateness of the timing of revenue recognition by recalculating the prorated revenue based<br>on the subscribed rate plan and comparing it with the billing information.
--- ---
2. Impairment assessment of goodwill for the fixed-line telecommunication services cash generating unit
--- ---

As described in notes 3 (10) and 16 to the consolidated financial statements, the Group assesses impairment of goodwill allocated to a cash generating unit (“CGU”), at least, annually or when there is an indication of possible impairment by comparing the carrying amount of the CGU to its recoverable amount based on value-in-use (”VIU”). The amount of goodwill allocated to the fixed-line telecommunication services CGU is ~~W~~764,082 million as of December 31, 2023.

In carrying out the goodwill impairment assessment, the Group compared the carrying amount of the fixed-line telecommunication services CGU and its value in use (“VIU”) based on discounted cash flow forecasts. We have identified the goodwill impairment assessment for the fixed-line telecommunication services CGU as a key audit matter due to the inherent uncertainties and significant judgement involved in management’s estimates around the major assumptions such as estimates of future operating revenue, perpetual growth rate and discount rate, all of which have a significant impact on the determination of the VIU.

The primary audit procedures we have performed for this key audit matter include:

• Assessing the competence and objectivity of the external specialist utilized by management;<br>
• Evaluating the appropriateness of the valuation method and assumptions applied by management by involving our<br>internal specialist;
--- ---
• Performing a sensitivity analysis for both the discount rate and the perpetual growth rate applied to the<br>discounted cash flow forecasts to assess the impact of changes in these key assumptions on the conclusion reached by management in its impairment assessment;
--- ---
• Evaluating the reasonableness of management’s future cash flow forecasts by comparison with financial<br>budgets approved by management; and
--- ---
• Performing a retroactive assessment of the prior periods’ cash flow forecasts by comparison with the actual<br>results.
--- ---

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with KIFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

LOGO

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with KSA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to<br>fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is<br>higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are<br>appropriate in the circumstances.
--- ---
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and<br>related disclosures made by management.
--- ---
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on<br>the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are<br>required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to<br>the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
--- ---
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the<br>disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
--- ---
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business<br>activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.<br>
--- ---

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

LOGO

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Yoo, Jung Ho.

March 6, 2024

This report is effective as of March 6, 2024, the independent auditor’s report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the date of independent auditor’s report date to the time this report is used. Such events and circumstances could significantly affect the accompanying consolidated financial statements and may result in modifications to this report.

SK TELECOM CO., LTD. AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

The accompanying consolidated financial statements, including all footnote disclosures, have been prepared by, and are the responsibility of, the Group.

Ryu, Young-Sang

Chief Executive Officer

SK TELECOM CO., LTD.

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Financial Position

As of December 31, 2023 and 2022

(In millions of won) Note December 31, 2023 December 31, 2022
Assets
Current Assets:
Cash and cash equivalents 5,35,36 ~~W~~ 1,454,978 1,882,291
Short-term financial instruments 5,35,36 294,934 237,230
Accounts receivable – trade, net 6,35,36,37 1,978,532 1,970,611
Short-term loans, net 6,35,36,37 78,129 78,590
Accounts receivable – other, net 6,35,36,37,38 344,350 479,781
Contract assets 8,36 89,934 83,058
Prepaid expenses 7 1,953,769 1,974,315
Prepaid income taxes 32 161 415
Derivative financial assets 22,35,36,39 8,974 168,527
Inventories, net 9 179,809 166,355
Non-current assets held for sale 41 10,515 6,377
Advanced payments and others 6,35,36 191,517 171,646
**** 6,585,602 **** 7,219,196
Non-Current Assets:
Long-term financial instruments 5,35,36 375 375
Long-term investment securities 10,35,36 1,679,384 1,410,736
Investments in associates and joint ventures 12 1,915,012 1,889,289
Investment property, net 14 34,812 25,137
Property and equipment, net 13,15,37,38 13,006,196 13,322,492
Goodwill 11,16 2,075,009 2,075,009
Intangible assets, net 17 2,861,137 3,324,910
Long-term contract assets 8,36 39,837 49,163
Long-term loans, net 6,35,36,37 30,455 26,973
Long-term accounts receivable – other, net 6,35,36,37,38 312,531 373,951
Long-term prepaid expenses 7 1,086,107 1,073,422
Guarantee deposits, net 6,35,36,37 156,863 167,441
Long-term derivative financial assets 22,35,36,39 139,560 152,633
Deferred tax assets 32 11,609 6,860
Defined benefit assets 21 170,737 175,748
Other non-current assets 6,35,36 14,001 14,927
**** 23,533,625 **** 24,089,066
Total Assets ~~W~~ 30,119,227 **** 31,308,262

(Continued)

1

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Financial Position, Continued

As of December 31, 2023 and 2022

(In millions of won) Note December 31, 2023 December 31, 2022
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable – trade 35,36,37 ~~W~~ 139,876 89,255
Accounts payable – other 35,36,37 1,913,006 2,427,906
Withholdings 35,36,37 802,506 803,555
Contract liabilities 8 155,576 172,348
Accrued expenses 26,35,36 1,439,786 1,505,549
Income tax payable 32 142,496 112,358
Provisions 20,40 38,255 39,683
Short-term borrowings 18,35,36,39 — 142,998
Current portion of long-term debt, net 18,35,36,39 1,621,844 1,967,586
Current portion of long-term payables – other 19,35,36,39 367,770 398,874
Lease liabilities 35,36,37,39 372,826 386,429
Liabilities held for sale 39 —
**** 6,993,980 **** **** 8,046,541 ****
Non-Current Liabilities:
Debentures, excluding current portion, net 18,35,36,39 7,106,299 6,524,095
Long-term borrowings, excluding current portion, net 18,35,36,39 315,578 668,125
Long-term payables – other 19,35,36,39 892,683 1,239,467
Long-term lease liabilities 35,36,37,39 1,238,607 1,395,628
Long-term contract liabilities 8 56,917 61,574
Defined benefit liabilities 21 — 61
Long-term derivative financial liabilities 22,35,36,39 305,088 302,593
Long-term provisions 20 83,169 79,415
Deferred tax liabilities 32 832,236 763,766
Other non-current liabilities 35,36,37 66,271 71,801
**** 10,896,848 **** **** 11,106,525 ****
Total Liabilities **** 17,890,828 **** **** 19,153,066 ****
Shareholders’ Equity:
Share capital 1,23 30,493 30,493
Capital surplus and others 11,23,24,25,26 (11,828,644 ) (11,567,117 )
Retained earnings 27 22,799,981 22,463,711
Reserves 28 387,216 391,233
Equity attributable to owners of the Parent Company 11,389,046 11,318,320
Non-controlling interests 839,353 836,876
Total Shareholder’s Equity **** 12,228,399 **** **** 12,155,196 ****
Total Liabilities and Shareholder’s Equity ~~W~~ 30,119,227 **** **** 31,308,262 ****

The accompanying notes are an integral part of the consolidated financial statements.

2

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Income

For the years ended December 31, 2023 and 2022

(In millions of won, except for earnings per share) Note 2023 2022
Operating revenue: 4,37
Revenue ~~W~~ 17,608,511 17,304,973
Operating expenses: 37
Labor 2,488,245 2,449,813
Commission 7 5,549,899 5,518,786
Depreciation and amortization 4 3,614,766 3,621,325
Network interconnection 678,459 715,285
Leased lines 275,477 268,426
Advertising 235,769 252,402
Rent 142,356 143,747
Cost of goods sold 9 1,266,357 1,268,124
Others 29 1,603,979 1,454,995
15,855,307 15,692,903
Operating profit 4 **** 1,753,204 **** **** 1,612,070 ****
Finance income 4,31 248,376 179,838
Finance costs 4,31 (527,401 ) (456,327 )
Gain (loss) relating to investments in associates and joint ventures, net 4,12 10,928 (81,707 )
Other non-operating income 4,30 50,366 55,898
Other non-operating expenses 4,30 (47,294 ) (73,620 )
Profit before income tax 4 **** 1,488,179 **** **** 1,236,152 ****
Income tax expense 32 342,242 288,321
Profit for the year ~~W~~ 1,145,937 **** **** 947,831 ****
Attributable to:
Owners of the Parent Company ~~W~~ 1,093,611 912,400
Non-controlling interests 52,326 35,431
Earnings per share 33
Basic earnings per share (in won) ~~W~~ 4,954 4,118
Diluted earnings per share (in won) 4,950 4,116

The accompanying notes are an integral part of the consolidated financial statements.

3

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2023 and 2022

(In millions of won) Note 2023 2022
Profit for the year ~~W~~ 1,145,937 **** **** 947,831 ****
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss, net of taxes:
Remeasurement of defined benefit liabilities (assets) 21 1,853 70,885
Valuation loss on financial assets at fair value through other comprehensive income 28,31 (18,842 ) (491,853 )
Items that are or may be reclassified subsequently to profit or loss, net oftaxes:
Net change in other comprehensive income of investments in associates and joint ventures 12,28 9,225 119,707
Net change in unrealized fair value of derivatives 22,28,31 (17,460 ) (21,366 )
Foreign currency translation differences for foreign operations 28 1,257 16,401
Other comprehensive loss for the year, net of taxes **** (23,967 ) **** (306,226 )
Total comprehensive income ~~W~~ 1,121,970 **** **** 641,605 ****
Total comprehensive income attributable to:
Owners of the Parent Company ~~W~~ 1,072,785 601,193
Non-controlling interests 49,185 40,412

The accompanying notes are an integral part of the consolidated financial statements.

4

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2023 and 2022

(In millions of won)
Attributable to owners of the Parent Company
Note Share capital Capital surplus<br>(deficit) andothers Retainedearnings Reserves Sub-total Non-controlling<br>interests Total equity
Balance as of January 1, 2022 ~~W~~ 30,493 **** (11,623,726 ) **** 22,437,341 **** **** 735,238 **** **** 11,579,346 **** **** 755,792 **** **** 12,335,138 ****
Total comprehensive income (loss):
Profit for the year — — 912,400 — 912,400 35,431 947,831
Other comprehensive income (loss): 12,21,22,28,31 — — 32,798 (344,005 ) (311,207 ) 4,981 (306,226 )
— — 945,198 (344,005 ) 601,193 40,412 641,605
Transactions with owners:
Annual dividends 34 — — (361,186 ) — (361,186 ) — (361,186 )
Interim dividends 34 — — (542,876 ) — (542,876 ) — (542,876 )
Share option 26 — 72,261 — — 72,261 — 72,261
Interest on hybrid bonds 25 — — (14,766 ) — (14,766 ) — (14,766 )
Transactions of treasury shares 24 — (2,683 ) — — (2,683 ) — (2,683 )
Changes in ownership in subsidiaries, etc. 11 — (12,969 ) — — (12,969 ) 40,672 27,703
— 56,609 (918,828 ) — (862,219 ) 40,672 (821,547 )
Balance as of December 31, 2022 ~~W~~ 30,493 **** (11,567,117 ) **** 22,463,711 **** **** 391,233 **** **** 11,318,320 **** **** 836,876 **** **** 12,155,196 ****
Balance as of January 1, 2023 ~~W~~ 30,493 **** (11,567,117 ) **** 22,463,711 **** **** 391,233 **** **** 11,318,320 **** **** 836,876 **** **** 12,155,196 ****
Total comprehensive income (loss):
Profit for the year — — 1,093,611 — 1,093,611 52,326 1,145,937
Other comprehensive loss: 12,21,22,28,31 — — (16,809 ) (4,017 ) (20,826 ) (3,141 ) (23,967 )
— — 1,076,802 (4,017 ) 1,072,785 49,185 1,121,970
Transactions with owners:
Annual dividends 34 — — (180,967 ) — (180,967 ) (50,557 ) (231,524 )
Interim dividends 34 — — (542,282 ) — (542,282 ) — (542,282 )
Share option 26 — 7,157 — — 7,157 10,463 17,620
Interest on hybrid bonds 25 — — (17,283 ) — (17,283 ) — (17,283 )
Repayments of hybrid bonds 25 — (400,000 ) — — (400,000 ) — (400,000 )
Issuance of hybrid bonds 25 — 398,509 — — 398,509 — 398,509
Transactions of treasury shares 24 — (265,120 ) — — (265,120 ) — (265,120 )
Changes in ownership in subsidiaries, etc. 11 — (2,073 ) — — (2,073 ) (6,614 ) (8,687 )
— (261,527 ) (740,532 ) — (1,002,059 ) (46,708 ) (1,048,767 )
Balance as of December 31, 2023 ~~W~~ 30,493 **** (11,828,644 ) **** 22,799,981 **** **** 387,216 **** **** 11,389,046 **** **** 839,353 **** **** 12,228,399 ****

The accompanying notes are an integral part of the consolidated financial statements.

5

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2023 and 2022

(In millions of won) Note 2023 2022
Cash flows from operating activities:
Cash generated from operating activities:
Profit for the year ~~W~~ 1,145,937 947,831
Adjustments for income and expenses 39 4,546,338 4,719,438
Changes in assets and liabilities related to operating activities 39 (274,163 ) 118,106
5,418,112 5,785,375
Interest received 60,134 52,163
Dividends received 50,899 16,388
Interest paid (341,488 ) (259,719 )
Income tax paid (240,452 ) (434,890 )
Net cash provided by operating activities **** 4,947,205 **** **** 5,159,317 ****
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net — 264,693
Decrease in short-term investment securities, net — 5,010
Collection of short-term loans 136,242 123,700
Decrease in long-term financial instruments — 330,032
Proceeds from disposals of long-term investment securities 100,817 104,190
Proceeds from disposals of investments in associates and joint ventures 4,950 342,645
Proceeds from disposals of assets held for sale 1,353 20,136
Proceeds from disposals of property and equipment 12,900 15,792
Proceeds from disposals of intangible assets 4,428 10,993
Collection of long-term loans 1,547 1,134
Decrease in deposits 5,922 10,056
Proceeds from settlement of derivatives 1,452 1,542
Government grants received 2,967 —
272,578 1,229,923
Cash outflows for investing activities:
Increase in short-term financial instruments, net (51,421 ) —
Increase in short-term loans (130,041 ) (127,263 )
Increase in long-term loans (11,602 ) (11,724 )
Increase in long-term financial instruments — (330,032 )
Acquisitions of long-term investment securities (324,997 ) (436,753 )
Acquisitions of investments in associates and joint ventures (17,656 ) (11,065 )
Acquisitions of property and equipment (2,973,882 ) (2,908,287 )
Acquisitions of intangible assets (106,761 ) (138,136 )
Increase in deposits (6,848 ) (12,146 )
Cash decrease due to changes in consolidation scope (2,275 ) —
Cash outflow for business combinations, net — (62,312 )
(3,625,483 ) (4,037,718 )
Net cash used in investing activities ~~W~~ (3,352,905) **** **** (2,807,795 )

(Continued)

6

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Cash Flows, Continued

For the years ended December 31, 2023 and 2022

(In millions of won) Note 2023 2022
Cash flows from financing activities: ****
Cash inflows from financing activities:
Proceeds from short-term borrowings, net ~~W~~ — 130,000
Proceeds from issuance of debentures 1,785,108 1,200,122
Proceeds from long-term borrowings 49,950 440,000
Proceeds from issuance of hybrid bonds 398,509 —
Cash inflows from settlement of derivatives 183,090 768
Transactions with non-controlling shareholders 160 31,151
2,416,817 1,802,041
Cash outflows for financing activities:
Repayments of short-term borrowings, net (142,998 ) —
Repayments of long-term payables – other (400,245 ) (400,245 )
Repayments of debentures (1,869,190 ) (1,390,000 )
Repayments of long-term borrowings (125,000 ) (41,471 )
Repayments of hybrid bonds (400,000 ) —
Payments of dividends (773,806 ) (904,020 )
Payments of interest on hybrid bonds (17,283 ) (14,766 )
Repayments of lease liabilities (402,465 ) (401,054 )
Acquisition of treasury shares (285,487 ) —
Transactions with non-controlling shareholders (21,333 ) (367 )
(4,437,807 ) (3,151,923 )
Net cash used in financing activities 39 **** (2,020,990 ) **** (1,349,882 )
Net increase (decrease) in cash and cash equivalents **** (426,690 ) **** 1,001,640 ****
Cash and cash equivalents at beginning of the year 1,882,291 872,731
Effects of exchange rate changes on cash and cash equivalents (623 ) 7,920
Cash and cash equivalents at end of the year ~~W~~ 1,454,978 **** **** 1,882,291 ****

The accompanying notes are an integral part of the consolidated financial statements.

7

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity
(1) General
--- ---

SK Telecom Co., Ltd. (the “Parent Company”) was incorporated on March 29, 1984, under the laws of the Republic of Korea (“Korea”) to provide cellular telephone communication services in Korea. The head office of the Parent Company is located at 65, Eulji-ro, Jung-gu, Seoul, Korea.

The Parent Company’s common shares are listed on the Stock Market of Korea Exchange, and its depositary receipts (DRs) are listed on the New York Stock Exchange. Meanwhile, the Board of Directors of the Parent Company resolved to cancel the listing of the Parent Company’s DRs on the London Stock Exchange on June 22, 2023, and the DRs were delisted from the London Stock Exchange as of July 31, 2023. As of December 31, 2023, the Parent Company’s total issued shares are held by the following shareholders:

Number of shares Percentage oftotal shares issued (%)
SK Inc. 65,668,397 30.01
National Pension Service 16,330,409 7.46
Institutional investors and other shareholders 126,854,437 57.97
Kakao Investment Co., Ltd. 3,846,487 1.76
Treasury shares 6,133,414 2.80
218,833,144 100.00

These consolidated financial statements comprise the Parent Company and its subsidiaries (collectively referred to as the “Group”). SK Inc. is the ultimate controlling entity of the Parent Company.

8

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity, Continued
(2) List of consolidated subsidiaries
--- ---

The list of consolidated subsidiaries as of December 31, 2023 and 2022 is as follows:

Ownership (%)(*1)
Subsidiary Location Primary business Dec. 31,<br>2023 Dec. 31,2022
Subsidiaries<br><br><br>owned by the<br><br><br>Parent Company SK Telink Co., Ltd. Korea International telecommunication and Mobile Virtual Network Operator Service 100.0 100.0
SK Communications Co., Ltd. Korea Internet website services 100.0 100.0
SK Broadband Co., Ltd. Korea Fixed-line telecommunication services 74.4 74.4
PS&Marketing Corporation Korea Communications device retail business 100.0 100.0
SERVICE ACE Co., Ltd. Korea Call center management service 100.0 100.0
SERVICE TOP Co., Ltd. Korea Call center management service 100.0 100.0
SK O&S Co., Ltd. Korea Base station maintenance service 100.0 100.0
SK Telecom China Holdings Co.,<br><br><br>Ltd. China Investment (Holdings company) 100.0 100.0
SK Global Healthcare Business Group Ltd. Hong Kong Investment 100.0 100.0
YTK Investment Ltd. Cayman Islands Investment 100.0 100.0
Atlas Investment Cayman Islands Investment 100.0 100.0
SK Telecom Americas, Inc. USA Information gathering and consulting 100.0 100.0
Quantum Innovation Fund I Korea Investment 59.9 59.9
SK Telecom Japan Inc.(*2) Japan Information gathering and consulting 33.0 100.0
Happy Hanool Co., Ltd. Korea Service 100.0 100.0
SK stoa Co., Ltd. Korea Other telecommunication retail business 100.0 100.0
SAPEON Inc. USA Manufacturing non-memory and other electronic integrated<br>circuits 62.5 62.5
Subsidiaries owned by SK Broadband Co., Ltd. Home & Service Co., Ltd. Korea Operation of information and<br><br><br>communication facility 100.0 100.0
Media S Co., Ltd. Korea Production and supply services of broadcasting programs 100.0 100.0
Subsidiary owned by PS&Marketing Corporation SK m&service Co., Ltd. Korea Database and internet website service 100.0 100.0
Subsidiary owned by SK Telecom Americas, Inc. Global AI Platform Corporation(*2) USA Software development and supply business 100.0 —
Subsidiary owned by Global AI Platform Corporation Global AI Platform Corporation<br><br><br>Korea(*2) Korea Software development and supply business 100.0 —
Subsidiary owned by Quantum Innovation Fund I PanAsia Semiconductor<br> <br>Materials LLC. Korea Investment 66.4 66.4
Subsidiary owned by SK Telecom Japan Inc. SK Planet Japan, K. K.(*2) Japan Digital contents sourcing service 79.8 79.8
Subsidiary owned by SAPEON Inc. SAPEON Korea Inc. Korea Manufacturing non-memory and other electronic integrated<br>circuits 100.0 100.0
Others(*3) SK Telecom Innovation Fund,<br><br><br>L.P. USA Investment 100.0 100.0
SK Telecom China Fund I L.P. Cayman Islands Investment 100.0 100.0

9

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity, Continued
(2) List of consolidated subsidiaries, Continued
--- ---

The list of consolidated subsidiaries as of December 31, 2023 and 2022 is as follows, Continued:

(*1) The ownership interest represents direct ownership interest in subsidiaries either by the Parent Company or<br>subsidiaries of the Parent Company.
(*2) Details of changes in the consolidation scope for year ended December 31, 2023 are presented in note 1-(4).
--- ---
(*3) Others are owned by Atlas Investment and another subsidiary of the Parent Company.
--- ---

10

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity, Continued
(3) Condensed financial information of subsidiaries
--- ---
1) Condensed financial information of significant consolidated subsidiaries as of and for the year ended<br>December 31, 2023 is as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- ---
As of December 31, 2023 2023
Subsidiary Total assets Total liabilities Total equity Revenue Profit (loss)
SK Telink Co., Ltd. W   213,920 65,049 148,871 309,091 17,761
SK Broadband Co., Ltd. 6,442,611 3,323,156 3,119,455 4,281,932 213,905
PS&Marketing Corporation 451,549 224,042 227,507 1,353,321 4,681
SERVICE ACE Co., Ltd. 83,395 54,888 28,507 197,598 2,822
SERVICE TOP Co., Ltd. 71,196 47,641 23,555 178,423 1,738
SK O&S Co., Ltd. 140,942 98,346 42,596 345,617 2,614
Home & Service Co., Ltd. 165,667 112,025 53,642 490,094 1,297
SK stoa Co., Ltd. 94,041 37,253 56,788 301,496 (1,427 )
SK m&service Co., Ltd. 153,660 88,195 65,465 247,479 1,253
2) Condensed financial information of significant consolidated subsidiaries as of and for the year ended<br>December 31, 2022 is as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- ---
As of December 31, 2022 2022
Subsidiary Total assets Total liabilities Total equity Revenue Profit (loss)
SK Telink Co., Ltd. ~~W~~   196,281 60,927 135,354 302,595 15,008
SK Broadband Co., Ltd. 6,245,484 3,134,949 3,110,535 4,162,093 212,816
PS&Marketing Corporation 403,030 177,739 225,291 1,376,400 3,856
SERVICE ACE Co., Ltd. 97,597 59,189 38,408 194,798 2,429
SERVICE TOP Co., Ltd. 81,590 53,589 28,001 179,365 1,613
SK O&S Co., Ltd. 121,755 70,280 51,475 331,715 2,059
Home & Service Co., Ltd. 158,248 102,184 56,064 413,259 (1,217 )
SK stoa Co., Ltd. 103,910 44,696 59,214 329,304 9,977
SK m&service Co., Ltd.(*) 160,704 95,263 65,441 211,081 4,157
(*) The financial information is the condensed financial information after the entity was included in the scope of<br>consolidation.
--- ---

11

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity, Continued
(4) Changes in subsidiaries
--- ---
1) The list of subsidiaries that were newly included in consolidation scope for the year ended December 31,<br>2023 is as follows:
--- ---
Subsidiary Reason
--- ---
Global AI Platform Corporation Korea Established by the SK Telecom Americas, Inc
Global AI Platform Corporation Established by the SK Telecom Americas, Inc
2) The list of subsidiaries that were excluded from consolidation scope for the year ended December 31, 2023<br>is as follows:
--- ---
Subsidiary Reason
--- ---
SK Telecom Japan Inc. Loss of control
SK Planet Japan, K. K. Loss of control

12

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity, Continued
(5) The financial information of significant non-controlling interests of<br>the Group as of and for the years ended December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- ---
SK Broadband Co., Ltd.(*)
Ownership of non-controlling interests (%) 25.4
As of December 31, 2023
Current assets ~~W~~ 1,388,965
Non-current assets 5,214,315
Current liabilities (1,388,317 )
Non-current liabilities (1,988,989 )
Net assets 3,225,974
Carrying amount of non-controlling interests 819,592
2023
Revenue ~~W~~ 4,274,747
Profit for the year 202,890
Total comprehensive income 183,499
Profit attributable to non-controlling interests 51,448
Net cash provided by operating activities ~~W~~ 1,110,847
Net cash used in investing activities (1,064,434 )
Net cash used in financing activities (60,254 )
Effects of exchange rate changes on cash and cash equivalents 9
Net decrease in cash and cash equivalents (13,832 )
Dividends paid to non-controlling interests for the year<br>ended December 31, 2023 ~~W~~ 50,557
(*) The above condensed financial information is the consolidated financial information of the subsidiary and<br>reflects fair value adjustments as a result of the business combination.
--- ---

13

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity, Continued
(5) The financial information of significant non-controlling interests of<br>the Group as of and for the years ended December 31, 2023 and 2022 are as follows, Continued:
--- ---
(In millions of won)
--- --- --- ---
SK Broadband Co., Ltd.(*)
Ownership of non-controlling interests (%) 25.3
As of December 31, 2022
Current assets ~~W~~ 1,348,305
Non-current assets 5,076,410
Current liabilities (1,707,805 )
Non-current liabilities (1,488,834 )
Net assets 3,228,076
Carrying amount of non-controlling interests 816,676
2022
Revenue ~~W~~ 4,156,326
Profit for the year 217,303
Total comprehensive income 237,860
Profit attributable to non-controlling interests 51,528
Net cash provided by operating activities ~~W~~ 1,184,794
Net cash used in investing activities (807,965 )
Net cash used in financing activities (415,908 )
Effects of exchange rate changes on cash and cash equivalents (584 )
Net decrease in cash and cash equivalents (39,663 )
Dividends paid to non-controlling interests for the year<br>ended December 31, 2022 ~~W~~ —
(*) The above condensed financial information is the consolidated financial information of the subsidiary and<br>reflects fair value adjustments as a result of the business combination.
--- ---

14

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

2. Basis of Preparation

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”), as prescribed in the Act on External Audits of Stock Companies of Korea. The accompanying consolidated financial statements have been translated into English from Korean financial statements. In the event of any differences in interpreting the financial statements or the independent auditor’s report thereon, Korean version, which is used for regulatory reporting purposes, shall prevail.

The accompanying consolidated financial statements comprise the Group and the Group’s investments in associates and joint ventures.

The consolidated financial statements were authorized for issuance by the Board of Directors on February 2, 2024, which will be submitted for final approval at the shareholder’s meeting to be held on March 26, 2024. ****

(1) Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the consolidated statement of financial position:

• derivative financial instruments measured at fair value;
• financial instruments measured at fair value through profit or loss (“FVTPL”);
--- ---
• financial instruments measured at fair value through other comprehensive income (“FVOCI”);<br>
--- ---
• liabilities measured at fair value for cash-settled share-based payment arrangement; and
--- ---
• liabilities (assets) for defined benefit plans recognized at the total present value of defined benefit<br>obligations less the fair value of plan assets.
--- ---
(2) Functional and presentation currency
--- ---

Financial statements of Group entities within the Group are prepared in functional currency of each group entity, which is the currency of the primary economic environment in which each entity operates. Consolidated financial statements of the Group are presented in Korean won, which is the Parent Company’s functional and presentation currency.

(3) Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with KIFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period prospectively.

1) Critical judgments

Information about critical judgments in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is included in notes for the following areas: consolidation (whether the Group has de facto control over an investee), and determination of stand-alone selling prices.

15

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

2. Basis of Preparation, Continued
(3) Use of estimates and judgments, Continued
--- ---
2) Assumptions and estimation uncertainties
--- ---

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes: loss allowance (notes 6 and 36), estimated useful lives of costs to obtain a contract (notes 8), property and equipment and intangible assets (notes 3 (7), (8), 13 and 17), impairment of goodwill (notes 3 (10) and 16), recognition of provision (notes 3 (15) and 20), measurement of defined benefit liabilities (assets) (notes 3 (14) and 21), transaction of derivative instruments (notes 3 (6) and 22) and recognition of deferred tax assets (liabilities) (notes 3 (23) and 32).

3) Fair value measurement

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established policies and processes with respect to the measurement of fair values including Level 3 fair values, and the measurement of fair values is reviewed and is directly reported to the finance executives.

The Group regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Group assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of KIFRS, including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;<br>
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or<br>liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
--- ---
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable<br>inputs).
--- ---

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Information about assumptions used for fair value measurements are included in note 22 and note 36.

16

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies

The material accounting policies applied by the Group in the preparation of its consolidated financial statements in accordance with KIFRS are included below. Except for certain standards and amendments which are effective for annual periods beginning on or after January 1, 2023, the material accounting policies applied by the Group in these consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as of and for the year ended December 31, 2022. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.

The new and amended standards and interpretations that are effective for annual periods beginning on or after January 1, 2023 are as follows. These amended standards had no material impact on the Group’s consolidated financial statements.

• Disclosure of Accounting Polices (Amendments to KIFRS 1001)
• Disclosures of Profit or Loss on Financial Liabilities with Conditions for Adjusting an Exercise Price<br>(Amendments to KIFRS 1001)
--- ---
• Definition of Accounting Estimates (Amendments to KIFRS 1008)
--- ---
• Deferred Tax related to Assets and Liabilities Arising from a Single Transaction (Amendments to KIFRS 1012)<br>
--- ---
• KIFRS 1117 Insurance Contracts and its amendments
--- ---
• International tax reform - Pillar Two model rules (Amendments to KIFRS 1012)
--- ---

The Pillar Two model rules is scheduled to take effect for the Group’s fiscal year beginning January 1, 2024. As the Group falls within the scope of the enacted Pillar Two model rules, it has assessed the potential exposure to Pillar Two income tax. The assessment of potential exposure to Pillar Two income tax is based on the most recent tax returns of the Group’s ultimate controlling entity group, country-by-country reporting, and financial statements. The Group expects that the exposure to Pillar Two income tax will be immaterial.

(1) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Group’s operating segments have been determined to be each business unit, for which the Group generates separately identifiable financial information that is regularly reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The Group has three reportable segments as described in note 4. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

17

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(2) Basis of consolidation
--- ---
1) Business combination
--- ---

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control.

In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

Consideration transferred is generally measured at fair value, identical to the measurement of identifiable net assets acquired at fair value. The difference between the acquired company’s fair value and the consideration transferred is accounted for goodwill. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Acquisition-related costs are expensed in the periods in which the costs are incurred and the services are received, except if related to the costs to issue debt or equity securities recognized based on KIFRS 1032 and KIFRS 1109.

Consideration transferred does not include the amount settled in relation to the pre-existing relationship. Such amounts are generally recognized through profit or loss.

Contingent consideration is measured at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. If contingent consideration is not classified as equity, the Group subsequently recognizes changes in fair value of contingent consideration through profit or loss.

2) Non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.

Changes in a Controlling Company’s ownership interest in a subsidiary that do not result in the Controlling Company losing control of the subsidiary are accounted for as equity transactions.

3) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of an investee begins from the date the Group obtains control of the investee and cease when the Group loses control of the investee.

18

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(2) Basis of consolidation, Continued
--- ---
4) Loss of control
--- ---

If the Group loses control of a subsidiary, the Group derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position and recognizes gain or loss associated with the loss of control attributable to the former controlling interest. Any investment retained in the former subsidiary is recognized at its fair value when control is lost.

5) Interest in investees accounted for using the equity method

Interest in investees accounted for using the equity method composed of interest in associates and joint ventures.

An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and operating policies. A joint venture is a joint arrangement whereby the Group that has joint control of the arrangement has rights to the net assets of the arrangement.

The investment in an associate and a joint venture is initially recognized at cost including transaction costs and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss and changes in equity of the associate or the joint venture after the date of acquisition.

6) Intra-group transactions

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. The Group’s share of unrealized gain incurred from transactions with investees accounted for using the equity method are eliminated and unrealized loss are eliminated using the same basis if there are no evidence of asset impairments.

7) Business combinations under common control

SK Inc. is the ultimate controlling entity of the Group. The assets and liabilities acquired under business combination under common control are recognized at the carrying amounts in the ultimate controlling shareholder’s consolidated financial statements. The difference between consideration and carrying amount of net assets acquired is added to or subtracted from capital surplus and others.

(3) Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits and investment securities with maturities of three months or less from the acquisition date that are easily convertible to cash and subject to an insignificant risk of changes in their fair value.

(4) Inventories

Inventories are initially recognized at the acquisition cost and subsequently measured using the weighted average method. During the period, a perpetual inventory system is used to track inventory quantities, which is adjusted based on the physical inventory counts performed at the period end. When the net realizable value of inventories is less than cost, the carrying amount is reduced to the net realizable value, and any difference is charged to current period as operating expenses.

19

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(5) Non-derivative financial assets
--- ---
1) Recognition and initial measurement
--- ---

Accounts receivable – trade and debt investments issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless an accounts receivable – trade without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. An accounts receivable – trade without a significant financing component is initially measured at the transaction price.

2) Classification and subsequent measurement

On initial recognition, a financial asset is classified as measured at:

• FVTPL
• FVOCI – equity investment
--- ---
• FVOCI – debt investment
--- ---
• Financial assets at amortized cost
--- ---

A financial asset is classified based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and<br>
• its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal<br>amount outstanding on specified dates.
--- ---

20

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(5) Non-derivative financial assets, Continued
--- ---
2) Classification and subsequent measurement, Continued
--- ---

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and<br>selling financial assets; and
• its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal<br>amount outstanding on specified dates.
--- ---

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (“OCI”). This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

The following accounting policies are applied to the subsequent measurement of financial assets.

Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
Financial assets at amortized cost These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in<br>profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are<br>recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of the cost of the investment. Other net gains and losses are recognized in<br>OCI and are never reclassified to profit or loss.

21

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(5) Non-derivative financial assets, Continued
--- ---
3) Impairment
--- ---

The Group estimates the expected credit losses (“ECL”) for the debt instruments measured at amortized cost and FVOCI based on the Group’s historical experience and informed credit assessment that includes forward-looking information. The impairment approach is decided based on the assessment of whether the credit risk of a financial asset has increased significantly since initial recognition. However, the Group applies a practical expedient and recognizes impairment losses equal to lifetime ECLs for accounts receivable – trade and lease receivables from the initial recognition.

ECL is a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

At each reporting date, the Group assesses whether financial assets measured at amortized cost and debt investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Loss allowance on financial assets measured at amortized cost is deducted from the carrying amount of the respective assets, while loss allowance on debt instruments at FVOCI is recognized in OCI, instead of reducing the carrying amount of the transferred assets.

4) Derecognition
Financial assets
--- ---

The Group derecognizes a financial asset when:

• the contractual rights to the cash flows from the financial asset expire; or
• it transfers the rights to receive the contractual cash flows in a transaction in which either:<br>
--- ---
• substantially all of the risks and rewards of ownership of the financial asset are transferred; or<br>
--- ---
• the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not<br>retain control of the financial asset.
--- ---

The Group enters into transactions whereby it transfers assets recognized in its consolidated statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

22

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(5) Non-derivative financial assets, Continued
--- ---
4) Derecognition, Continued
--- ---

Interest rate benchmark reform

When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changed as a result of interest rate benchmark reform, the Group updated the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform. A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met:

• the change is necessary as a direct consequence of the reform; and
• the new basis for determining the contractual cash flows is economically equivalent to the previous basis –<br>i.e., the basis immediately before the change.
--- ---

When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Group first updated the effective rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. After that, the Group applied the policies on accounting for modifications to the additional changes.

5) Offsetting

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position when the Group currently has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to settle the liability and realize the asset simultaneously.

A financial asset and a financial liability are offset only when the right to set off the amount is not contingent on future event and legally enforceable even on the event of default, insolvency or bankruptcy.

(6) Derivative financial instruments, including hedge accounting

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value at the end of each reporting period, and changes therein are accounted for as described below.

1) Hedge accounting

The Group holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Group designates derivatives as hedging instruments to hedge the variability in cash flow associated with highly probable forecasted transactions or firm commitments (a cash flow hedge).

On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

23

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(6) Derivative financial instruments, including hedge accounting, Continued
--- ---
1) Hedge accounting, Continued
--- ---

Hedges directly affected by interest rate benchmark reform

When uncertainty arises about the interest rate benchmark designated as a hedged risk and the timing or the amount of the interest rate benchmark-based cash flows of the hedged item or of the hedging instrument as a result of IBOR reform, for the purpose of evaluating whether there is an economic relationship between the hedged items and the hedging instruments, the Group assumes that the interest rate benchmark on which the hedged items and the hedging instruments are based is not altered as a result of interest rate benchmark reform.

For a cash flow hedge of a forecast transaction, the Group assumes that the benchmark interest rate will not be altered as a result of interest rate benchmark reform for the purpose of assessing whether the forecast transaction is highly probable and determining whether a previously designated forecast transaction in a discontinued cash flow hedge is still expected to occur.

The Group will cease applying the specific policy for assessing the economic relationship between the hedged item and the hedging instrument

• to a hedged item or hedging instrument when the uncertainty arising from interest rate benchmark reform is no<br>longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the respective item or instrument; or
• when the hedging relationship is discontinued.
--- ---

When the basis for determining the contractual cash flows of the hedged item or hedging instrument changes as a result of IBOR reform and therefore there is no longer uncertainty arising about the cash flows of the hedged item or the hedging instrument, the Group amends the hedge documentation of that hedging relationship to reflect the change(s) required by IBOR reform.

The Group amends the formal hedge documentation by the end of the reporting period during which a change required by IBOR reform is made to the hedged risk, hedged item or hedging instrument. These amendments in the formal hedge documentation do not constitute the discontinuation of the hedging relationship or the designation of a new hedging relationship.

If changes are made in addition to those changes required by interest rate benchmark reform to the financial asset or financial liability designated in a hedging relationship or to the designation of the hedging relationship, the Group determines whether those additional changes result in the discontinuation of hedging accounting. If the additional changes do not result in the discontinuation of hedging accounting, the Group amend the formal designation of the hedging relationship.

When the interest rate benchmark on which the hedged future cash flows had been based is changed as required by IBOR reform, for the purpose of determining whether the hedged future cash flows are expected to occur, the Group deems that the hedging reserve recognized in OCI for that hedging relationship is based on the alternative benchmark rate on which the hedged future cash flows will be based.

24

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(6) Derivative financial instruments, including hedge accounting, Continued
--- ---
1) Hedge accounting, Continued
--- ---

Cash flow hedge

When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.

2) Other derivative financial instruments

Other derivative financial instrument not designated as a hedging instrument are measured at fair value, and the changes in fair value of the derivative financial instrument is recognized immediately in profit or loss.

25

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(7) Property and equipment
--- ---

Property and equipment are initially measured at cost. The cost of property and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Property and equipment, subsequently, are carried at cost less accumulated depreciation and accumulated impairment losses.

Subsequent costs are recognized in the carrying amount of property and equipment at cost or, if appropriate, as a separate item if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing are recognized in profit or loss as incurred.

Property and equipment, except for land, are depreciated on a straight-line basis over estimated useful lives that appropriately reflect the pattern in which the asset’s future economic benefits are expected to be consumed. A component that is significant compared to the total cost of property and equipment is depreciated over its separate useful life.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized as other non-operating income (loss).

The estimated useful lives of the Group’s property and equipment are as follows:

Useful lives (years)
Buildings and structures 15 ~ 40
Machinery 3 ~ 15, 30
Other property and equipment 3 ~10

The Group reviews estimated residual values, expected useful lives, and depreciation methods annually at the end of each reporting date and adjusts, if appropriate. The change is accounted for as a change in an accounting estimate.

26

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(8) Intangible assets
--- ---

Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.

Intangible assets, except for goodwill, are amortized on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, club memberships and brand are expected to be available for use as there are no foreseeable limits to the periods. These intangible assets are determined as having indefinite useful lives and, therefore, not amortized.

The estimated useful lives of the Group’s intangible assets are as follows:

Useful lives (years)
Frequency usage rights 5 ~ 10
Land usage rights 5
Industrial rights 5, 10
Development costs 5
Facility usage rights 10, 20
Customer relations 3 ~ 15
Other 3 ~ 20

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes, if appropriate, are accounted for as changes in accounting estimates.

27

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(8) Intangible assets, Continued
--- ---

Expenditures on research activities are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be reliably measured, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.

(9) Investment property

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are reported at cost less accumulated depreciation and accumulated impairment losses.

Subsequent expenditures are recognized in carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. The carrying amount of those parts that are replaced is derecognized. The costs associated with routine maintenance and repairs are recognized in profit or loss as incurred.

Investment property, except for land, is depreciated on a straight-line basis over estimated useful lives of 30 years. In addition, right-of-use asset classified as investment property is depreciated using the straight-line basis from the commencement date to the end of the lease term.

The depreciation method, estimated useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate. The change is accounted for as a change in an accounting estimate.

28

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(10) Impairment of non-financial assets
--- ---

The carrying amounts of the Group’s non-financial assets other than contract assets recognized for revenue arising from contracts with a customer, assets recognized for the costs to obtain or fulfill a contract with a customer, employee benefits, inventories, deferred tax assets, and non-current assets held for sale are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amounts to their carrying amounts.

The Group estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual recoverable amount of an asset, the Group estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or CGU.

An impairment loss is recognized in profit or loss to the extent the carrying amount of the asset exceeds its recoverable amount.

Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergy arising from the business acquired. Any impairment identified at the CGU level will first reduce the carrying amount of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(11) Leases

A contract is or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

1) Group as a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

29

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(11) Leases, Continued
--- ---
1) Group as a lessee, Continued
--- ---

The right-of-use asset is subsequently depreciated using the straight-line basis from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in-substance fixed payments;<br>
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the<br>commencement date;
--- ---
• amounts expected to be payable under a residual value guarantee; and
--- ---
• the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an<br>optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.
--- ---

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension of termination option of if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in ‘property and equipment’ in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Group recognizes the lease payments on short-term leases and leases of low value assets as an expense on a straight-line basis over the lease term.

30

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(11) Leases, Continued
--- ---
2) Group as a lessor
--- ---

At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, is accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, then the Group applies KIFRS 1115 to allocate the consideration in the contract.

The Group applies derecognition and impairment requirements in KIFRS 1109 to the net investment in the lease. The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in the lease.

The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other revenue’.

(12) Non-current assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sales rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the assets (or disposal groups) must be available for immediate sale in their present condition and their sale must be highly probable. The assets or disposal groups that are classified as non-current assets held for sale are measured at the lower of their carrying amounts and fair value less cost to sell. The Group recognizes an impairment loss for any initial or subsequent write-down of assets (or disposal groups) to fair value less costs to sell and a gain for any subsequent increase in fair value less costs to sell up to the cumulative impairment loss previously recognized.

A non-current asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated (or amortized).

31

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(13) Non-derivative financial liabilities
--- ---

The Group classifies non-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement. The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liabilities.

1) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition. Subsequent to initial recognition, these liabilities are measured at fair value. The amount of change in fair value of financial liability that is attributable to changes in the credit risk of that liability shall be presented in other comprehensive income, and the remaining amount of change in the fair value of the liability shall be presented in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the issue of the financial liability are recognized in profit or loss as incurred.

2) Other financial liabilities

Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the issue of the financial liabilities. Subsequent to initial recognition, other financial liabilities are measured at amortized cost and the interest expenses are recognized using the effective interest method.

3) Derecognition of financial liability

The Group extinguishes a financial liability only when the contractual obligation is fulfilled, canceled or expires. The Group recognizes new financial liabilities at fair value based on new contracts and eliminates existing liabilities when the contractual terms of the financial liabilities change and the cash flows change substantially.

When a financial liability is derecognized, the difference between the carrying amount and the consideration paid (including any transferred non-cash assets or liabilities assumed) is recognized in profit or loss.

32

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(14) Employee benefits
--- ---
1) Short-term employee benefits
--- ---

Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render related services. When an employee has rendered a service to the Group during an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.

2) Other long-term employee benefits

Other long-term employee benefits include employee benefits that are settled beyond 12 months after the end of the period in which the employees render related services. The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.

3) Retirement benefits: defined contribution plans

When an employee has rendered a service to the Group during a period, the Group recognizes the contribution payable to a defined contribution plan in exchange for that service as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Group recognizes that excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund.

4) Retirement benefits: defined benefit plans

At the end of reporting period, defined benefit liabilities (assets) relating to defined benefit plans are recognized at present value of defined benefit obligations net of fair value of plan assets.

The calculation is performed annually by an independent actuary using the projected unit credit method. When the fair value of plan assets exceeds the present value of the defined benefit obligation, the Group recognizes an asset, to the extent of the present value of any economic benefits available in the form of refunds from the plan or reduction in the future contributions to the plan.

Remeasurements of the net defined benefit liability (asset), which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group determines net interests on net defined benefit liability (asset) by multiplying discount rate determined at the beginning of the annual reporting period and considers changes in net defined benefit liability (asset) from contributions and benefit payments. Net interest costs and other costs relating to the defined benefit plan are recognized through profit or loss.

When the plan amendment or curtailment occurs, gains or losses on amendment or curtailment in benefits for the past service provided are recognized through profit or loss. The Group recognizes a gain or loss on a settlement when the settlement of defined benefit plan occurs.

33

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(15) Provisions
--- ---

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. If the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

If some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement is recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

A provision is used only for expenditures for which the provision was originally recognized.

(16) Emissions Rights

The Group accounts for greenhouse gases emission right and the relevant liability as below pursuant to the Act on Allocation and Trading of Greenhouse Gas Emission in Korea.

1) Greenhouse Gases Emission Right

Greenhouse Gases Emission Right consists of emission allowances, which are allocated from the government free of charge or purchased from the market. The cost includes any directly attributable costs incurred during the normal course of business.

The Group derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to government in which the future economic benefits are no longer expected to be probable.

2) Emissions liability

Emission liability is a present obligation of submitting emission rights to the government with regard to emission of greenhouse gas. The emission liability is measured based on the expected quantity of emission for the performing period in excess of emission allowance in possession and the unit price for such emission rights in the market at the end of the reporting period. The emissions liabilities are derecognized when they are surrendered to the government.

34

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(17) Transactions in foreign currencies
--- ---
1) Foreign currency transactions
--- ---

Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Exchange differences arising from monetary items except for financial liabilities designated cashflow hedging instruments are recognized in profit or loss. If a gain or loss on a non-monetary item is recognized in other comprehensive income, any foreign exchange differences are also recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any foreign exchange differences are also recognized in profit or loss.

2) Foreign operations

If the presentation currency of the Group is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods:

The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation is treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and translated at the closing rate at the reporting date.

When a foreign operation is disposed, the relevant amount in the translation is transferred to profit or loss as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to profit or loss.

(18) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

When the Parent Company repurchases its own shares, the amount of the consideration paid is recognized as a deduction from equity and classified as treasury shares. The gains or losses from the purchase, disposal, reissue, or retirement of treasury shares are directly recognized in equity being as transaction with owners.

35

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(19) Hybrid bond
--- ---

The Group recognizes a financial instrument issued by the Group as an equity instrument if it does not include contractual obligation to deliver financial assets including cash to the counter party.

(20) Share-based payment

For equity-settled share-based payment transaction, if the fair value of the goods or services received cannot be reliably estimated, the Group measures the value indirectly by reference to the fair value of the equity instruments granted. The related expense with a corresponding increase in capital surplus and others is recognized over the vesting period of the awards.

The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the fair value of the liability are recognized in profit or loss.

(21) Revenue
1) Identification of performance obligations in contracts with customers
--- ---

The Group identifies the distinct services or goods as performance obligations in contracts with customers such as (1) providing wireless and fixed-line telecommunications services, (2) sale of handsets and (3) providing other goods and services. In the case of providing both wireless telecommunications service and selling a handset together to one customer, the Group allocates considerations from the customer between the separate performance obligations for handset sale and wireless telecommunications service. The handset sale revenue is recognized when handset is delivered, and the wireless telecommunications service revenue is recognized over the period of the contract term as stated in the subscription contract.

2) Allocation of the transaction price to each performance obligation

The Group allocates the transaction price of a contract to each performance obligation identified on a relative stand-alone selling price basis. The Group uses “adjusted market assessment approach” for estimating the stand-alone selling price of a good or service.

3) Incremental costs of obtaining a contract

The Group pays commissions to its retail stores and authorized dealers in connection with acquiring service contracts. The commissions paid to these parties constituted a significant portion of the Group’s operating expenses. These commissions would not have been paid if there have been no binding contracts with subscribers and, therefore, the Group capitalizes certain costs associated with commissions paid to obtain new customer contracts and amortize them over the expected contract periods.

36

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(21) Revenue, Continued
--- ---
4) Customer loyalty programs
--- ---

The Group provides customer loyalty points to customers based on the usage of the service to which the Group allocates a portion of consideration received as a performance obligation distinct from wireless telecommunications services. The amount to be allocated to the loyalty program is measured according to the relative stand-alone selling price of the customer loyalty points. The amount allocated to the loyalty program is deferred as a contract liability and is recognized as revenue when loyalty points are redeemed.

5) Consideration payable to a customer

Based on the subscription contract, a customer who uses the Group’s wireless telecommunications services may receive a discount for purchasing goods or services from a designated third party. The Group pays a portion of the price discounts that the customer receives to the third party which is viewed as consideration payable to a customer. The Group accounts for the amounts payable to the third party as a reduction of the wireless telecommunications service revenue.

(22) Finance income and finance costs

Finance income comprises interest income on funds invested (including financial assets measured at fair value), dividend income, gains on disposal of financial assets at FVTPL, changes in fair value of financial instruments at FVTPL, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest rate method. Dividend income is recognized in profit or loss when the right to receive the dividend is established.

Finance costs comprise interest expense on borrowings and debentures, changes in fair value of financial instruments at FVTPL, and losses on hedging instruments that are recognized in profit or loss. Interest expense on borrowings and debentures is recognized as it accrues in profit or loss using the effective interest rate method.

(23) Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

The Group pays income tax in accordance with the tax-consolidation system when the Parent Company and its subsidiaries are economically unified.

1) Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and includes interests and fines related to income taxes paid or payable. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

37

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(23) Income taxes, Continued
--- ---
2) Deferred tax
--- ---

Deferred tax is recognized by using the asset-liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Group recognizes a deferred tax liability for all taxable temporary differences, except for the difference associated with investments in subsidiaries and associates that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Group recognizes a deferred tax asset for all deductible temporary differences to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

A deferred tax asset is recognized for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Future taxable profit is dependent on the reversal of taxable temporary differences. If there are insufficient taxable temporary differences to recognize the deferred tax asset, the business plan of the Group and the reversal of existing temporary differences are considered in determining the future taxable profit.

The Group reviews the carrying amount of a deferred tax asset at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized, or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if the Group has a legally enforceable right to offset the amount recognized and intends to settle the current tax liabilities and assets on a net basis. Income tax expense in relation to dividend payments is recognized when liabilities relating to the dividend payments are recognized.

3) Uncertainty over income tax treatments

The Group assesses the uncertainty over income tax treatments pursuant to KIFRS 1012. If the Group concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the Group reflects the effect of uncertainty for each uncertain tax treatment by using either of the following methods, depending on which method the entity expects to better predict the resolution of the uncertainty:

• The most likely amount: the single most likely amount in a range of possible outcomes.
• The expected value: the sum of the probability-weighted amounts in a<br>range of possible outcomes.
--- ---

38

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(24) Earnings per share
--- ---

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees, if any.

(25) Discontinued operation

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

• represents a separate major line of business or geographic area of operations;
• is part of a single co-ordinated plan to dispose of a separate major line<br>of business or geographic area of operations; or
--- ---
• is a subsidiary acquired only for a purpose of resale.
--- ---

When an operation is classified as a discontinued operation, the comparative statements of income and comprehensive income are re-presented as if the operation had been discontinued from the start of the comparative year.

(26) Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective for annual period beginning after January 1, 2023 are disclosed below. The following amendments are not expected to have a significant impact on the Group’s consolidated financial statements.

• Classification of Liabilities as Current or Non-current (Amendments to<br>KIFRS 1001).
• Disclosures of Information on Supplier Finance Arrangements (Amendments to KIFRS 1007 and KIFRS 1107)<br>
--- ---
• Lease Liability in a Sale and Leaseback (Amendments to KIFRS 1116)
--- ---
• Disclosures of Crypto assets (Amendments to KIFRS 1001)
--- ---

39

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

4. Operating Segments

The Group’s operating segments have been identified to be each business unit, by which the Group provides different services and merchandise. The Group’s reportable segments include: cellular services, which include cellular voice service, wireless data service and wireless internet services; fixed-line telecommunication services, which include telephone services, internet services, and leased line services; and all other businesses, which include providing shopping channel and digital platform for selling products and other immaterial operations, each of which does not meet the quantitative threshold to be considered as a reportable segment and are presented collectively as others.

(1) Segment information for the years ended December 31, 2023 and 2022 are as follows:
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Cellularservices Fixed-linetelecommunication<br>services Others Sub-total Adjustments Total
Total revenue ~~W~~14,664,180 5,095,704 603,493 20,363,377 (2,754,866 ) 17,608,511
Inter-segment revenue 1,541,014 1,167,684 46,168 2,754,866 (2,754,866 ) —
External revenue 13,123,166 3,928,020 557,325 17,608,511 — 17,608,511
Depreciation and amortization 2,743,448 971,628 24,390 3,739,466 (124,700 ) 3,614,766
Operating profit (loss) 1,463,934 329,072 (42,771 ) 1,750,235 2,969 1,753,204
Finance income and costs, net (279,025 )
Gain relating to investments in associates and joint ventures, net 10,928
Other non-operating income and expense,<br>net 3,072
Profit before income tax 1,488,179
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Cellularservices Fixed-linetelecommunication<br>services Others Sub-total Adjustments Total
Total revenue ~~W~~14,496,866 4,895,791 592,188 19,984,845 (2,679,872 ) 17,304,973
Inter-segment revenue 1,554,550 1,082,802 42,520 2,679,872 (2,679,872 ) —
External revenue 12,942,316 3,812,989 549,668 17,304,973 — 17,304,973
Depreciation and amortization 2,738,547 981,838 22,730 3,743,115 (121,790 ) 3,621,325
Operating profit (loss) 1,334,306 311,210 (2,126 ) 1,643,390 (31,320 ) 1,612,070
Finance income and costs, net (276,489 )
Loss relating to investments in associates and joint ventures, net (81,707 )
Other non-operating income and expense,<br>net (17,722 )
Profit before income tax 1,236,152

40

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

4. Operating Segments, Continued
1) Segment information for the years ended December 31, 2023 and 2022 are as follows, Continued: <br>
--- ---

The Group principally operates its businesses in Korea and the revenue amounts earned outside of Korea are immaterial. Therefore, no entity-wide geographical information is presented.

No single customer contributed 10% or more to the Group’s total revenue for the years ended December 31, 2023 and 2022.

2) Disaggregation of operating revenues considering the economic factors that affect the nature, amounts, timing<br>and uncertainty of the Group’s revenue and future cash flows is as follows:
(In millions of won)
--- --- --- --- --- ---
2023 2022
Goods and Services transferred at a point in time:
Cellular revenue Goods and others(*1) ~~W~~ 993,919 969,025
Fixed-line telecommunication revenue Goods and others 93,174 66,477
Other revenue Others(*2) 459,905 464,805
1,546,998 1,500,307
Goods and Services transferred over time:
Cellular revenue Wireless service(*3) 10,328,980 10,253,217
Cellular interconnection 432,660 471,163
Other(*4) 1,367,607 1,248,911
Fixed-line telecommunication revenue Fixed-line service 147,669 156,662
Cellular interconnection 15,804 21,209
Internet Protocol Television(*5) 1,837,209 1,816,130
International calls 190,872 180,689
Internet service and miscellaneous(*6) 1,643,292 1,571,822
Other revenue Miscellaneous(*2) 97,420 84,863
16,061,513 15,804,666
~~W~~ 17,608,511 17,304,973

41

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

4. Operating Segments, Continued
(2) Disaggregation of operating revenues considering the economic factors that affect the nature, amounts, timing<br>and uncertainty of the Group’s revenue and future cash flows is as follows, Continued:
--- ---
(*1) Cellular revenue includes revenue from sales of handsets and other electronic accessories.<br>
--- ---
(*2) Miscellaneous other revenue includes revenue from considerations received for the data broadcasting channel use<br>for product sales-type and sales of goods through data broadcasting.
--- ---
(*3) Wireless service includes revenue from wireless voice and data transmission services principally derived from<br>wireless subscribers.
--- ---
(*4) Other revenue includes revenue from billing and collection services as well as other miscellaneous services.<br>
--- ---
(*5) Internet Protocol Television (“IPTV”) service revenue includes revenue from IPTV services principally<br>derived from usage charges to IPTV subscribers.
--- ---
(*6) Internet service includes revenue from the high speed broadband internet service principally derived from usage<br>charges to subscribers as well as other miscellaneous services.
--- ---
5. Deposits with Restrictions on Use
--- ---

Deposits which are restricted in use as of December 31, 2023 and 2022 are summarized as follows:

(In millions of won)
December 31, 2023 December 31, 2022
Cash and cash equivalents(*) ~~W~~ 58 43
Short-term financial instruments(*) 79,500 79,514
Long-term financial instruments(*) 372 375
~~W~~ 79,930 79,932
(*) Includes the followings: i) deposits restricted in use due to the court’s order for seizure and collection<br>of bonds; and ii) charitable trust fund established by the Group, profits from which shall be donated to charitable institutions. As of December 31, 2023, such deposits and funds cannot be withdrawn before maturity. **** <br>
--- ---

42

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

6. Trade and Other Receivables
(1) Details of trade and other receivables as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won) December 31, 2023
--- --- --- --- --- --- --- ---
Gross<br>amount Loss allowance Carrying<br>amount
Current assets:
Accounts receivable – trade ~~W~~ 2,221,266 (242,734 ) 1,978,532
Short-term loans 78,824 (695 ) 78,129
Accounts receivable – other(*) 375,748 (31,398 ) 344,350
Accrued income 4,295 — 4,295
Guarantee deposits (Other current assets) 129,357 — 129,357
2,809,490 (274,827 ) 2,534,663
Non-current assets:
Long-term loans 71,847 (41,392 ) 30,455
Long-term accounts receivable – other(*) 314,409 (1,878 ) 312,531
Guarantee deposits 157,163 (300 ) 156,863
Long-term accounts receivable – trade (Other<br>non-current assets) 12,320 (3 ) 12,317
555,739 (43,573 ) 512,166
~~W~~ 3,365,229 (318,400 ) 3,046,829
(*) Gross and carrying amounts of accounts receivable – other as of December 31, 2023 include<br>~~W~~ 273,945 million of financial instruments classified as fair value through profit or loss (“FVTPL”).
--- ---
(In millions of won) December 31, 2022
--- --- --- --- --- --- --- ---
Gross<br>amount Loss allowance Carrying<br>amount
Current assets:
Accounts receivable – trade ~~W~~ 2,205,530 (234,919 ) 1,970,611
Short-term loans 79,298 (708 ) 78,590
Accounts receivable – other(*) 522,091 (42,310 ) 479,781
Accrued income 1,732 — 1,732
Guarantee deposits (Other current assets) 113,204 — 113,204
2,921,855 (277,937 ) 2,643,918
Non-current assets:
Long-term loans 71,857 (44,884 ) 26,973
Long-term accounts receivable – other(*) 375,829 (1,878 ) 373,951
Guarantee deposits 167,741 (300 ) 167,441
Long-term accounts receivable – trade (Other<br>non-current assets) 14,165 (4 ) 14,161
629,592 (47,066 ) 582,526
~~W~~ 3,551,447 (325,003 ) 3,226,444
(*) Gross and carrying amounts of accounts receivable – other as of December 31, 2022 include<br>~~W~~ 332,669 million of financial instruments classified as fair value through profit or loss (“FVTPL”).
--- ---

43

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

6. Trade and Other Receivables, Continued
(2) Changes in the loss allowance on accounts receivable – trade measured at amortized costs for the years<br>ended December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning<br>balance Impair ment Write-offs (*) Collection of<br>receivables<br>previously<br>written-off Business<br>combination Ending<br>balance
2023 ~~W~~ 234,923 37,906 (40,236 ) 10,144 — 242,737
2022 ~~W~~ 238,881 27,053 (42,296 ) 11,282 3 234,923
(*) The Group writes off the trade and other receivables that are determined to be uncollectable due to reasons<br>such as termination of operations or bankruptcy.
--- ---
(3) The Group applies the practical expedient that allows the Group to estimate the loss allowance for accounts<br>receivable – trade at an amount equal to the lifetime expected credit losses. The expected credit losses include the forward-looking information. To make the assessment, the Group uses its historical credit loss experience over the past three<br>years and classifies the accounts receivable - trade by their credit risk characteristics and days overdue. Details of loss allowance on accounts receivable – trade as of December 31, 2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Less than 6<br>months 6 months ~<br>1 year 1 ~ 3<br>years More than<br>3 years
Telecommunications service revenue Expected credit loss rate 1.51 % 69.24 % 88.55 % 99.99 %
Gross amount ~~W~~ 1,467,781 48,329 139,925 21,545
Loss allowance 22,130 33,461 123,906 21,542
Other revenue Expected credit loss rate 2.30 % 28.27 % 53.39 % 93.51 %
Gross amount ~~W~~ 516,401 4,100 11,378 24,127
Loss allowance 11,903 1,159 6,075 22,561

As the Group is a wireless and fixed-line telecommunications service provider, the Group’s financial assets measured at amortized cost primarily consist of receivables from numerous individual customers, therefore, no significant credit concentration risk arises.

Receivables related to other revenue mainly consist of receivables from corporate customers. The Group transacts only with corporate customers with credit ratings that are considered to be low at credit risk. In addition, the Group is not exposed to significant credit concentration risk as the Group regularly assesses their credit risk by monitoring their credit rating. While the contract assets are under the impairment requirements, no significant credit risk has been identified.

44

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

7. Prepaid expenses

The Group pays commissions to its retail stores and authorized dealers, primarily for wireless telecommunication services based on their performance of attracting new customers and renewing contracts with existing customers, and recognizes costs that would not occur in case of not signing contracts with new and existing customers as prepaid expenses among the commissions. These prepaid expenses are amortized on a straight-line basis over the periods that the Group expects to maintain its customers.

(1) Details of prepaid expenses as of December 31, 2023 and 2022 are as follows:
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Current assets:
Incremental costs of obtaining contracts ~~W~~ 1,882,296 1,888,182
Others 71,473 86,133
~~W~~ 1,953,769 1,974,315
Non-current assets:
Incremental costs of obtaining contracts ~~W~~ 1,022,813 996,180
Others 63,294 77,242
~~W~~ 1,086,107 1,073,422
(2) Incremental costs of obtaining contracts
--- ---

The amortization in connection with incremental costs of obtaining contracts recognized for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 2022
Amortization recognized ~~W~~ 2,505,724 2,485,593

45

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

8. Contract Assets and Liabilities

In case of providing both wireless telecommunication services and sales of handsets, the Group allocated the consideration based on relative stand-alone selling prices and recognized unbilled receivables from handset sales as contract assets. The Group recognized receipts in advance for prepaid telecommunications services and unearned revenue for customer loyalty programs as contract liabilities.

(1) Details of contract assets and liabilities as of December 31, 2023 and 2022 are as follows:<br>
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Contract assets:
Allocation of consideration between performance obligations ~~W~~ 129,771 132,221
Contract liabilities:
Wireless service contracts 19,149 18,544
Customer loyalty programs 7,164 7,706
Fixed-line service contracts 146,106 136,880
Others 40,074 70,792
~~W~~ 212,493 233,922
(2) The amount of revenue recognized for the years ended December 31, 2023 and 2022 related to the contract<br>liabilities carried forward from the prior periods are ~~W~~141,460 million and ~~W~~109,867 million, respectively. Details of revenue expected to be recognized from contract liabilities as of December 31,<br>2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- ---
Less than1 year 1 ~ 2 years More than<br>2 years Total
Wireless service contracts ~~W~~ 19,149 — — 19,149
Customer loyalty programs 5,717 969 478 7,164
Fixed-line service contracts 93,587 9,502 43,017 146,106
Others 37,124 2,950 — 40,074
~~W~~ 155,577 13,421 43,495 212,493

46

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

9. Inventories
(1) Details of inventories as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Acquisition<br>cost Valuation<br>allowance Carrying<br>amount Acquisition<br>cost Valuation<br>allowance Carrying<br>amount
Merchandise ~~W~~ 174,255 (7,641 ) 166,614 156,919 (5,616 ) 151,303
Supplies 13,195 — 13,195 15,052 — 15,052
~~W~~ 187,450 (7,641 ) 179,809 171,971 (5,616 ) 166,355
(2) Inventories recognized as operating expenses for the years ended December 31, 2023 and 2022 are<br>~~W~~1,264,302 million and ~~W~~1,266,217 million, respectively, which are included in the cost of goods sold. In addition, valuation losses on inventories which are included in the cost of goods sold and other<br>operating expenses amount to ~~W~~2,025 million and ~~W~~1,541 million for the years ended December 31, 2023 and 2022, respectively. Write-downs included in other operating expenses for the year ended<br>December 31, 2023 are ~~W~~19 million.
--- ---
10. Long-term Investment Securities
--- ---
(1) Details of long-term investment securities as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- ---
Category December 31, 2023 December 31, 2022
Equity instruments FVOCI(*) ~~W~~ 1,398,734 1,189,597
FVTPL 8 44,440
1,398,742 1,234,037
Debt instruments FVTPL 280,642 176,699
280,642 176,699
~~W~~ 1,679,384 1,410,736
(*) The Group designated investments in equity instruments that are not held for trading as financial assets at<br>FVOCI, and the amounts of those equity instruments as of December 31, 2023 and 2022 are ~~W~~1,398,734 million and ~~W~~1,189,597 million, respectively.
--- ---

47

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

11. Business Combinations
(1) 2023
--- ---
There were no changes in the Group due to the business combinations for the year ended December 31, 2023.<br>
--- ---
(2) 2022
--- ---
1) Acquisition of SK m&service Co., Ltd. by PS&Marketing Corporation:
--- ---

PS&Marketing Corporation obtained control over SK m&service Co., Ltd. by acquiring its 3,099,112 shares (100%) for the year ended December 31, 2022. As this transaction is a business combination under common control, the assets acquired and liabilities assumed were recognized at the carrying amounts in the ultimate controlling entity’s consolidated financial statements, and the difference between the consideration transferred and the carrying amounts of net assets was recognized as capital surplus and others. Subsequent to the acquisition of control, SK m&service Co., Ltd. recognized ~~W~~211,081 million of revenue and ~~W~~4,157 million of net profit for the year ended December 31, 2022. In addition, assuming that the business combination occurred as of January 1, 2022, the Group would have been recognized ~~W~~250,108 million of revenue and ~~W~~4,695 million of net profit for the year ended December 31, 2022.

(i) Summary of the acquiree

Information of acquiree
Corporate name SK m&service Co., Ltd.
Location 16^th^ floor, 34, Supyo-ro, Jung-gu, Seoul, Korea
CEO Park, Jeong-Min
Industry Database and internet website service

48

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

11. Business Combinations, Continued
(ii) Considerations transferred and identifiable assets acquired and liabilities assumed as of the acquisition date<br>are as follows:
--- ---
(In millions of won)
--- --- --- ---
Amounts
I. Consideration transferred:
Cash and cash equivalents ~~W~~ 72,859
II. Fair value of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents 10,547
Accounts receivable – trade and other, net 76,035
Inventories, net 3,349
Property and equipment, net 27,138
Intangible assets, net 12,462
Goodwill 2,516
Other assets 10,394
Accounts payable – trade and other (53,894 )
Income tax payable (399 )
Lease liabilities (6,503 )
Provisions (991 )
Defined benefit liabilities (2,739 )
Other liabilities (18,337 )
59,578
III. Capital surplus and others(I-II) ~~W~~ 13,281

49

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures
(1) Investments in associates and joint ventures accounted for using the equity method as of December 31, 2023<br>and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Country Ownership<br>(%) Carryingamount Ownership(%) Carryingamount
Investments in associates:
SK China Company Ltd. China 27.3 ~~W~~ 896,990 27.3 ~~W~~ 879,527
Korea IT Fund(*1) Korea 63.3 336,404 63.3 324,860
UniSK China 49.0 22,285 49.0 20,839
SK Technology Innovation Company Cayman Islands 49.0 70,409 49.0 69,375
SK MENA Investment B.V. Netherlands 32.1 14,872 32.1 14,296
SK Latin America Investment S.A. Spain 32.1 14,607 32.1 11,961
SK South East Asia Investment Pte. Ltd. Singapore 20.0 355,282 20.0 357,537
Citadel Pacific Telecom Holdings, LLC (*2) USA 15.0 45,901 15.0 48,542
SM. Culture & Contents Co., Ltd.(*3) Korea 22.8 41,578 23.1 59,611
Invites Genomics Co., Ltd.(*4) (Formerly, Invites Healthcare Co., Ltd.) Korea 31.1 — 31.1 —
Nam Incheon Broadcasting Co., Ltd. Korea 27.3 14,344 27.3 13,575
Home Choice Corp.(*2) Korea 17.8 3,215 17.8 4,456
Konan Technology Inc. Korea 20.7 6,349 20.8 8,366
CMES Inc. (*2) Korea 7.7 900 7.7 900
SK telecom Japan Inc.(*5) Japan 33.0 1,239 — —
12CM JAPAN and others(*2,6,7) — — 81,142 — 69,734
~~W~~ 1,905,517 ~~W~~ 1,883,579
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund(*8) Korea 48.2 9,495 48.2 5,710
9,495 5,710
~~W~~ 1,915,012 ~~W~~ 1,889,289

50

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(1) Investments in associates and joint ventures accounted for using the equity method as of December 31, 2023<br>and 2022 are as follows, Continued:
--- ---
(*1) Investment in Korea IT Fund was classified as investment in associates as the Group does not have control over<br>the investee under the contractual agreement with other shareholders.
--- ---
(*2) These investments were classified as investments in associates as the Group can exercise significant influence<br>through its right to appoint the members of the Board of Directors even though the Group has less than 20% of equity interests.
--- ---
(*3) The Group recognized an impairment loss of ~~W~~18,755 million as the recoverable amount was<br>assessed to be less than the carrying amount for the year ended December 31, 2023.
--- ---
(*4) The Group recognized the carrying amount of investments in Invites Genomics Co., Ltd. (Formerly, Invites<br>Healthcare Co., Ltd.) in its entirety as an impairment loss for the year ended December 31, 2022.
--- ---
(*5) The Group disposed of a portion of shares in SK telecom Japan Inc., which was a subsidiary of the Parent<br>Company, to SK hynix Inc. and SK Square Co., Ltd. for ~~W~~4,900 million in cash, from which it recognized ~~W~~998 million of loss relating to investments in subsidiaries for the year ended December 31,<br>2023, and the remaining ownership interest is reclassified as investments in associates as of December 31, 2023.
--- ---
(*6) The Group additionally contributed ~~W~~6,000 million of investment in KB ESG Fund of the<br>three telecommunications companies, ~~W~~28 million in F&U Credit information Co., Ltd., ~~W~~215 million of investment in KDX Korea Data Exchange, ~~W~~132 million of investment in<br>SK Venture Capital, LLC, and ~~W~~261 million of investment in Walden SKT Venture Fund for the year ended December 31, 2023. Also, the Group obtained significant influence by contributing<br>~~W~~6,500 million to Telecom Daean Evaluation Jun B Corporation Co., Ltd., and ~~W~~520 million to Covet Co., Ltd., for the year ended December 31, 2023.
--- ---
(*7) The Group disposed of a portion of shares in Start-up Win-Win Fund for ~~W~~550 million and a portion of SK-KNET Youth Startup Investment Cooperative for ~~W~~4,400 million in cash for the year<br>ended December 31, 2023.
--- ---
(*8) The Group additionally contributed ~~W~~4,000 million in cash to the investee for the year<br>ended December 31, 2023, but there is no change in the ownership interest. The Group has joint control over the investee pursuant to the agreement with the other shareholders, thus the investment in the investee was classified as investments in<br>joint ventures.
--- ---

51

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(2) The market value of investments in listed associates as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won, except for share data)
--- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Market price<br>per share<br>(in won) Number of<br>shares Market<br>value Market price<br>per share<br>(in won) Number of<br>shares Market<br>value
SM.Culture & Contents Co.,Ltd. ~~W~~ 1,887 22,033,898 41,578 2,960 22,033,898 65,220
Konan Technology Inc. 32,600 2,359,160 76,909 28,250 1,179,580 33,323
(3) The condensed financial information of material associates as of and for the years ended December 31, 2023<br>and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- ---
Korea ITFund SK China<br>Company Ltd. SK South East Asia<br>Investment Pte. Ltd.
As of December 31, 2023
Current assets ~~W~~ 128,344 1,350,607 213,522
Non-current assets 402,819 1,987,252 3,034,553
Current liabilities — 99,083 502,728
Non-current liabilities — 252,100 13,586
2023
Revenue ~~W~~ 33,017 70,126 76,686
Profit (loss) for the year 16,330 87,462 (66,169 )
Other comprehensive income (loss) 5,316 (56,660 ) 2,779
Total comprehensive income (loss) 21,646 30,802 (63,390 )
(In millions of won)
--- --- --- --- --- --- --- --- --- ---
Korea ITFund SK China<br>Company Ltd. SK South East Asia<br>Investment Pte. Ltd.
As of December 31, 2022
Current assets ~~W~~ 98,132 1,223,426 146,589
Non-current assets 414,804 2,050,001 3,034,335
Current liabilities — 76,654 488,132
Non-current liabilities — 276,525 —
2022
Revenue ~~W~~ 19,916 62,334 72,658
Profit (loss) for the year 7,505 (11,681 ) (17,504 )
Other comprehensive income (loss) (11,779 ) 58,034 (34,220 )
Total comprehensive income (loss) (4,274 ) 46,353 (51,724 )

52

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(4) Reconciliations of financial information of material associates to carrying amounts of investments in<br>associates in the consolidated financial statements as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023
Net assets Ownership<br>interests (%) Net assets<br>attributable to<br>the ownership<br>interests Cost-book value<br>differentials Carrying amount
Korea IT Fund ~~W~~ 531,163 63.3 336,404 — 336,404
SK China Company Ltd. 2,986,676 27.3 814,503 82,487 896,990
SK South East Asia Investment Pte. Ltd.(*) 1,776,411 20.0 355,282 — 355,282
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2022
Net assets Ownership<br>interests (%) Net assets<br>attributable to<br>the ownership<br>interests Cost-book value<br>differentials Carrying amount
Korea IT Fund ~~W~~ 512,936 63.3 324,860 — 324,860
SK China Company Ltd. 2,920,248 27.3 796,387 83,140 879,527
SK South East Asia Investment Pte. Ltd.(*) 1,787,685 20.0 357,537 — 357,537
(*) Net assets of these entities represent net assets excluding those attributable to their non-controlling interests.
--- ---

53

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(5) Details of the changes in investments in associates and joint ventures accounted for using the equity method<br>for the years ended December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Beginning<br>balance Acquisition<br>and disposal Share of profit<br>(loss) Other<br>comprehensive<br>income (loss) Other increase<br>(decrease) Ending<br>balance
Investments in associates:
SK China Company Ltd. ~~W~~ 879,527 — 24,054 (6,591 ) — 896,990
Korea IT Fund(*1) 324,860 — 10,343 3,366 (2,165 ) 336,404
UniSK(*1) 20,839 — 2,079 102 (735 ) 22,285
SK Technology<br><br><br>Innovation Company 69,375 — (178 ) 1,212 — 70,409
SK MENA Investment B.V. 14,296 — 335 241 — 14,872
SK Latin America Investment S.A. 11,961 — 1,974 672 — 14,607
SK South East Asia Investment Pte. Ltd. 357,537 — (12,881 ) 10,626 — 355,282
Citadel Pacific Telecom Holdings, LLC (*1) 48,542 — 2,628 637 (5,906 ) 45,901
SM. Culture & Contents Co., Ltd.(*2) 59,611 (679 ) 593 808 (18,755 ) 41,578
Nam Incheon Broadcasting Co., Ltd.(*1) 13,575 — 905 — (136 ) 14,344
Home Choice Corp. 4,456 — (1,241 ) — — 3,215
Konan Technology Inc. 8,366 (44 ) (2,100 ) 127 — 6,349
CMES Inc. 900 — — — — 900
SK telecom Japan Inc.(*3) — — — — 1,239 1,239
12CM JAPAN and others(*1,4) 69,734 8,706 5,108 (2,264 ) (142 ) 81,142
1,883,579 7,983 31,619 8,936 (26,600 ) 1,905,517
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund 5,710 4,000 (215 ) — — 9,495
5,710 4,000 (215 ) — — 9,495
~~W~~ 1,889,289 11,983 31,404 8,936 (26,600 ) 1,915,012

54

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(5) Details of the changes in investments in associates and joint ventures accounted for using the equity method<br>for the years ended December 31, 2023 and 2022 are as follows, Continued:
--- ---
(*1) Dividends received from the associates are deducted from the carrying amount for the year ended<br>December 31, 2023.
--- ---
(*2) The Group recognized ~~W~~18,755 million of impairment loss for the year ended<br>December 31, 2023.
--- ---
(*3) The Group disposed of a portion of shares in SK telecom Japan Inc., which was a subsidiary of the Parent<br>Company, resulting in the reclassification of the remaining shares as an investment in associates for the year ended December 2023.
--- ---
(*4) The acquisition for the year ended December 31, 2023 includes ~~W~~6,500 million of<br>investment in Telecom Daean Evaluation Jun B Corporation Co., Ltd., ~~W~~6,000 million of investment in KB ESG Fund of the three telecommunications companies, ~~W~~215 million of investment in KDX Korea Data<br>Exchange, ~~W~~132 million of investment in SK Venture Capital, LLC, ~~W~~261 million of investment in Walden SKT Venture Fund, ~~W~~520 million of investment in Covet<br>Co., Ltd., and ~~W~~28 million of investment in F&U Credit information Co., Ltd. The disposal for the year ended December 31, 2023 includes a portion of shares in Start-up Win-Win Fund for ~~W~~550 million and a portion of SK-KNET Youth Startup Investment Cooperative for ~~W~~4,400 million for the year ended<br>December 31, 2023.
--- ---

55

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(5) Details of the changes in investments in associates and joint ventures accounted for using the equity method<br>for the years ended December 31, 2023 and 2022 are as follows, Continued:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Beginning<br>balance Acquisition<br>and disposal Share of<br>profit<br>(loss) Other<br>comprehensive<br>income<br>(loss) Other<br>increase<br>(decrease) Ending<br>balance
Investments in associates:
SK China Company Ltd. ~~W~~ 793,754 — (19,395 ) 105,168 — 879,527
Korea IT Fund (*1) 339,976 — 4,753 (7,459 ) (12,410 ) 324,860
HanaCard Co., Ltd. 349,866 (368,389 ) 17,749 774 — —
UniSK 19,156 — 2,424 (741 ) — 20,839
SK Technology Innovation Company 86,301 — (22,923 ) 5,997 — 69,375
SK MENA Investment B.V. 15,343 — (2,059 ) 1,012 — 14,296
SK Latin America Investment S.A. 14,004 — (2,083 ) 40 — 11,961
SK South East Asia Investment Pte. Ltd. 348,782 — (6,975 ) 15,730 — 357,537
Pacific Telecom Inc. 43,789 — 2,890 1,863 — 48,542
SM. Culture & Contents Co., Ltd. 60,261 37 (756 ) 69 — 59,611
Digital Games International Pte. Ltd. 2,208 (1,757 ) (562 ) 111 — —
Invites Genomics Co., Ltd.(*2) (Formerly, Invites Healthcare Co., Ltd.) 26,474 — (11,759 ) (74 ) (14,641 ) —
Nam Incheon Broadcasting Co., Ltd.(*1) 12,525 — 1,186 — (136 ) 13,575
Home Choice Corp. 3,052 — 1,403 1 — 4,456
Konan Technology Inc. 3,639 5,451 (710 ) (14 ) — 8,366
CMES Inc.(*3) — — — — 900 900
12CM JAPAN and others(*4) 68,966 1,873 1,245 — (2,350 ) 69,734
2,188,096 (362,785 ) (35,572 ) 122,477 (28,637 ) 1,883,579
Investments in joint ventures:
Finnq Co., Ltd. 7,255 (3,840 ) (3,617 ) 202 — —
UTC Kakao-SK Telecom ESG Fund 2,000 4,000 (290 ) — — 5,710
9,255 160 (3,907 ) 202 — 5,710
~~W~~ 2,197,351 (362,625 ) (39,479 ) 122,679 (28,637 ) 1,889,289

56

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(5) Details of the changes in investments in associates and joint ventures accounted for using the equity method<br>for the years ended December 31, 2023 and 2022 are as follows, Continued:
--- ---
(*1) Dividends received from the associates are deducted from the carrying amount for the year ended<br>December 31, 2022.
--- ---
(*2) The Group recognized ~~W~~14,641 million of impairment loss for the year ended<br>December 31, 2022.
--- ---
(*3) As the Group obtained significant influence over the investee, ~~W~~900 million of financial<br>assets at FVOCI are reclassified to investments in associates for the year ended December 31, 2022.
--- ---
(*4) The acquisition for the year ended December 31, 2022 includes ~~W~~2,000 million of cash<br>investment in Smart SKT Infinitum Game Fund, ~~W~~4,000 million of cash investment in KB ESG Fund of three telecommunications companies and ~~W~~12 million of cash investment in SK Venture Capital, LLC. The<br>disposal for the year ended December 31, 2022 includes ~~W~~4,850 million relating to disposal of the part of shares of Start-up Win-Win Fund and<br>~~W~~1,080 million relating to disposal of the part of shares of Daekyo Wipoongdangdang Contents Korea Fund. In addition, dividends amounting to ~~W~~1,290 million received from<br>Start-up Win-Win Fund deducted from the carrying amount for the year ended December 31, 2022.
--- ---

57

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

12. Investments in Associates and Joint Ventures, Continued
(6) The Group discontinued the application of equity method to the following investees due to their carrying<br>amounts being reduced to zero. The details of cumulative unrecognized equity method losses as of December 31, 2023 are as follows:
--- ---
((In millions of won) Unrecognized loss Unrecognized change in equity
--- --- --- --- --- --- --- --- --- ---
2023 Cumulativeloss 2023 Cumulativeloss
Invites Genomics Co., Ltd. (Formerly, Invites Healthcare Co., Ltd.) ~~W~~ 7,844 7,844 1,179 1,179
Daehan Kanggun BcN Co., Ltd. and others — 5,780 — (124 )
~~W~~ 7,844 13,624 1,179 1,055
13. Property and Equipment
--- ---
(1) Property and equipment as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023
Acquisition cost Accumulated<br>depreciation Accumulated<br>impairment loss Carrying amount
Land ~~W~~ 1,248,200 — — 1,248,200
Buildings 1,775,563 (1,001,721 ) (450 ) 773,392
Structures 941,868 (705,388 ) (1,601 ) 234,879
Machinery 37,688,793 (29,796,000 ) (2,139 ) 7,890,654
Other 1,757,617 (1,271,597 ) (863 ) 485,157
Right-of-use<br>assets 2,549,003 (933,567 ) (3,485 ) 1,611,951
Construction in progress 761,963 — — 761,963
~~W~~ 46,723,007 (33,708,273 ) (8,538 ) 13,006,196
(In millions of won)
December 31, 2022
Acquisition cost Accumulated<br>depreciation Accumulated<br>impairment loss Carrying amount
Land ~~W~~ 1,005,857 — — 1,005,857
Buildings 1,736,257 (950,582 ) (450 ) 785,225
Structures 935,276 (668,019 ) (1,601 ) 265,656
Machinery 37,100,715 (29,185,881 ) (1,934 ) 7,912,900
Other 1,771,890 (1,273,655 ) (841 ) 497,394
Right-of-use<br>assets 2,555,685 (766,350 ) (3,206 ) 1,786,129
Construction in progress 1,069,331 — — 1,069,331
~~W~~ 46,175,011 (32,844,487 ) (8,032 ) 13,322,492

58

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

13. Property and Equipment, Continued
(2) Changes in property and equipment for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Beginning<br>balance Acquisition Disposal Transfer Deprecia-tion Impairment Ending<br>balance
Land ~~W~~ 1,005,857 12 (388 ) 242,719 — — 1,248,200
Buildings 785,225 1,083 (294 ) 41,516 (54,138 ) — 773,392
Structures 265,656 1,632 (198 ) 6,446 (38,657 ) — 234,879
Machinery 7,912,900 553,541 (7,267 ) 1,734,474 (2,302,789 ) (205 ) 7,890,654
Other 497,394 554,595 (1,205 ) (476,097 ) (89,506 ) (24 ) 485,157
Right-of-use<br>assets 1,786,129 345,761 (86,069 ) (23,436 ) (410,032 ) (402 ) 1,611,951
Construction in progress 1,069,331 1,554,922 (26 ) (1,862,264 ) — — 761,963
~~W~~ 13,322,492 3,011,546 (95,447 ) (336,642 ) (2,895,122 ) (631 ) 13,006,196
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Beginning<br>balance Acquisition Disposal Transfer Deprecia-tion Impairment Business<br>combination<br>(*) Ending<br>balance
Land ~~W~~ 972,800 79 (175 ) 30,364 — — 2,789 1,005,857
Buildings 794,453 1,071 (638 ) 36,219 (54,463 ) — 8,583 785,225
Structures 291,279 2,288 (32 ) 10,422 (38,301 ) — — 265,656
Machinery 7,997,927 560,889 (49,586 ) 1,696,447 (2,292,358 ) (419 ) — 7,912,900
Other 487,716 780,382 (938 ) (672,199 ) (105,730 ) (391 ) 8,554 497,394
Right-of-use<br>assets 1,559,333 720,932 (65,961 ) (27,579 ) (403,794 ) (3,133 ) 6,331 1,786,129
Construction in progress 767,751 1,564,345 (1,709 ) (1,261,937 ) — — 881 1,069,331
~~W~~ 12,871,259 3,629,986 (119,039 ) (188,263 ) (2,894,646 ) (3,943 ) 27,138 13,322,492
(*) Includes assets acquired from SK m&service Co., Ltd. by PS&Marketing Corporation, a subsidiary of the<br>Parent Company for the year ended December 31, 2022.
--- ---

59

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

14. Investment Property
(1) Investment property as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Acquisitioncost Accumulated<br>depreciation Carrying<br>amount Acquisition<br>cost Accumulated<br>depreciation Carrying<br>amount
Land ~~W~~ 14,199 — 14,199 6,115 — 6,115
Buildings 27,462 (17,220 ) 10,242 21,490 (14,606 ) 6,884
Right-of-use<br>assets 16,975 (6,604 ) 10,371 17,057 (4,919 ) 12,138
~~W~~ 58,636 (23,824 ) 34,812 44,662 (19,525 ) 25,137
(2) Changes in investment property for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- ---
2023
Beginning balance Transfer Depreciation Ending balance
Land ~~W~~ 6,115 8,084 — 14,199
Buildings 6,884 5,343 (1,985 ) 10,242
Right-of-use<br>assets 12,138 473 (2,240 ) 10,371
~~W~~ 25,137 13,900 (4,225 ) 34,812
(In millions of won)
--- --- --- --- --- --- --- --- --- ---
2022
Beginning balance Transfer Depreciation Ending balance
Land ~~W~~ 6,071 44 — 6,115
Buildings 7,353 564 (1,033 ) 6,884
Right-of-use<br>assets 9,610 4,124 (1,596 ) 12,138
~~W~~ 23,034 4,732 (2,629 ) 25,137
(3) The Group recognized lease income of ~~W~~6,202 million and<br>~~W~~5,222 million from investment property for the years ended December 31, 2023 and 2022, respectively.
--- ---
(4) The fair value of investment property is ~~W~~70,138 million and<br>~~W~~73,934 million as of December 31, 2023 and 2022, respectively.
--- ---
15. Leases
--- ---
(1) Group as a lessee
--- ---
1) Details of the right-of-use<br>assets as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Right-of-use<br>assets:
Land, buildings and structures ~~W~~ 1,376,721 1,546,918
Others 235,230 239,211
~~W~~ 1,611,951 1,786,129

60

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

15. Leases, Continued
(1) Group as a lessee, Continued
--- ---
2) Details of amounts recognized in the consolidated statements of income for the years ended December 31,<br>2023 and 2022 as a lessee are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Depreciation of<br>right-of-use assets:
Land, buildings and structures ~~W~~ 346,931 346,499
Others(*) 63,101 57,295
~~W~~ 410,032 403,794
Interest expense on lease liabilities ~~W~~ 46,595 29,996
(*) Others include the amount reclassified as research and development expenses related to the lease contract for<br>research and development facilities.
--- ---

Expenses related to short-term leases and leases of low-value assets that the Group recognized are immaterial.

3) The total cash outflows due to lease payments for the years ended December 31, 2023 and 2022 amounted to<br>~~W~~474,410 million and ~~W~~449,196 million, respectively.
(2) Group as a lessor
--- ---
1) Finance lease
--- ---

The Group recognized interest income of ~~W~~800 million and ~~W~~910 million on lease receivables for the years ended December 31, 2023 and 2022, respectively.

The following table sets out a maturity analysis for lease receivables, presenting the undiscounted lease payments to be received subsequent to December 31, 2023.

(In millions of won)
Amount
Less than 1 year ~~W~~ 11,499
1 ~ 2 years 3,306
2 ~ 3 years 1,517
3 ~ 4 years 693
4 ~ 5 years 271
Undiscounted lease payments ~~W~~ 17,286
Unrealized finance income ~~W~~ 360
Net investment in the lease 16,926

61

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

15. Leases, Continued
(2) Group as a lessor, Continued
--- ---
2) Operating lease
--- ---

The Group recognized lease income of ~~W~~235,988 million and ~~W~~246,279 million for the years ended December 31, 2023 and 2022, respectively, of which variable lease payments received are ~~W~~2,694 million and ~~W~~8,622 million, respectively.

The following table sets out a maturity analysis of lease payments, presenting the undiscounted fixed payments to be received subsequent to December 31, 2023.

(In millions of won)
Amount
Less than 1 year ~~W~~ 148,980
1 ~ 2 years 91,033
2 ~ 3 years 48,701
~~W~~ 288,714
16. Goodwill
--- ---
(1) Goodwill as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Goodwill related to merger of Shinsegi Telecom, Inc. ~~W~~ 1,306,236 1,306,236
Goodwill related to acquisition of SK Broadband Co., Ltd. 764,082 764,082
Other goodwill 4,691 4,691
~~W~~ 2,075,009 2,075,009

62

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

16. Goodwill, Continued
(2) Details of the impairment testing of Goodwill as of December 31, 2023 is as follows:<br>
--- ---

Goodwill is allocated to the following CGUs for the purpose of impairment testing.

• goodwill related to Shinsegi Telecom, Inc.(*1): Cellular services;
• goodwill related to SK Broadband Co., Ltd.(*2): Fixed-line telecommunication services; and
--- ---
• other goodwill: Others.
--- ---
(*1) Goodwill related to merger of Shinsegi Telecom, Inc.
--- ---

The recoverable amount of the CGU is based on its value in use calculated by applying the post-tax annual discount rate of 5.4% (2022: 6.7%) (pre-tax annual discount rate for 2023 and 2022: 8.4% and 9.0%) to the estimated future post-tax cash flows based on financial budgets for the next five years. An annual growth rate of 0.0% (2022: 0.0%) was applied for the cash flows expected to be incurred after five years and is not expected to exceed the long-term wireless telecommunication industry growth rate.

(*2) Goodwill related to acquisition of SK Broadband Co., Ltd.

The recoverable amount of the CGU is based on its value in use calculated by applying the post-tax annual discount rate of 6.2% (2022: 6.7%) (pre-tax annual discount rate for 2023 and 2022: 7.9% and 8.5%) to the estimated future post-tax cash flows based on financial budgets for the next five years. An annual growth rate of 1.0% (2022: 1.0%) was applied for the cash flows expected to be incurred after five years and is not expected to exceed the long-term fixed-line telecommunication industry growth rate.

(3) Details of the changes in goodwill for the years ended December 31, 2023 and 2022 are as follows:<br>
(In millions of won)
--- --- --- --- ---
2023 2022
Beginning balance ~~W~~ 2,075,009 2,072,493
Acquisition(*) — 2,516
Ending balance ~~W~~ 2,075,009 2,075,009
(*) It consists of goodwill recognized as PS&Marketing Corporation’s acquisition of SK m&service Co.,<br>Ltd for the years ended December 31, 2022 (See Note 11).
--- ---

As of December 31, 2023 and 2022, accumulated impairment losses are ~~W~~33,441 million, respectively.

63

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

17. Intangible Assets
(1) Intangible assets as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won) December 31, 2023
--- --- --- --- --- --- --- --- --- --- ---
Acquisition<br>cost Accumulated<br>amortization Accumulated<br>impairmentloss Carrying<br>amount
Frequency usage rights(*1) ~~W~~ 3,564,907 (1,958,301 ) — 1,606,606
Land usage rights 57,106 (56,519 ) — 587
Industrial rights 97,993 (34,141 ) (17,698 ) 46,154
Development costs 14,815 (14,766 ) — 49
Facility usage rights 159,891 (145,578 ) — 14,313
Customer relations 505,063 (231,913 ) — 273,150
Club memberships(*2) 121,895 — (24,709 ) 97,186
Other(*3) 4,851,168 (4,020,886 ) (7,190 ) 823,092
~~W~~ 9,372,838 (6,462,104 ) (49,597 ) 2,861,137
(In millions of won) December 31, 2022
Acquisition<br>cost Accumulated<br>amortization Accumulated<br>impairment<br>loss Carrying<br>amount
Frequency usage rights(*1) ~~W~~ 3,767,590 (1,499,158 ) (186,000 ) 2,082,432
Land usage rights 59,389 (58,165 ) — 1,224
Industrial rights 94,238 (30,068 ) (12,378 ) 51,792
Development costs 14,497 (14,213 ) — 284
Facility usage rights 157,651 (142,654 ) — 14,997
Customer relations 505,063 (204,882 ) — 300,181
Club memberships(*2) 116,401 — (24,430 ) 91,971
Other(*3) 4,627,565 (3,839,030 ) (6,506 ) 782,029
~~W~~ 9,342,394 (5,788,170 ) (229,314 ) 3,324,910
(*1) The Parent Company was reassigned 800 MHz, 1.8 GHz and 2.1 GHz band of frequency licenses from the Ministry of<br>Science and Information and Communication Technology (“ICT”) in exchange for ~~W~~227,200 million, ~~W~~547,800 million and ~~W~~411,700 million, respectively, for the year ended<br>December 31, 2021. The band of frequency was assigned to the Parent Company at the date of initial lump sum payment for the year ended December 31, 2021 and the annual payments in installment for the remaining balances are made in the next<br>five years starting from the date of initial lump sum payment.
--- ---
(*2) Club memberships are classified as intangible assets with indefinite useful lives and are not amortized.<br>
--- ---
(*3) Other intangible assets primarily consist of computer software and others.
--- ---

64

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

17. Intangible Assets, Continued
(2) Changes in intangible assets for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Beginning<br>balance Acquisition Disposal Transfer Amortization Impairment<br>(*1) Ending<br>balance
Frequency usage rights ~~W~~ 2,082,432 — — — (475,826 ) — 1,606,606
Land usage rights 1,224 155 (15 ) 40 (817 ) — 587
Industrial rights 51,792 4,563 (350 ) — (4,530 ) (5,321 ) 46,154
Development costs 284 — — — (234 ) (1 ) 49
Facility usage rights 14,997 1,884 (16 ) 981 (3,533 ) — 14,313
Customer relations 300,181 — — — (27,031 ) — 273,150
Club memberships 91,971 7,619 (2,174 ) 65 — (295 ) 97,186
Other 782,029 91,848 (1,752 ) 294,567 (339,478 ) (4,122 ) 823,092
~~W~~ 3,324,910 106,069 (4,307 ) 295,653 (851,449 ) (9,739 ) 2,861,137
(*1) The Group recognized the difference between recoverable amount and the carrying amount of intangible assets<br>amounting to ~~W~~9,739 million as impairment loss for the year ended December 31, 2023.
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Beginning<br>balance Acquisition Disposal Transfer Amortization Impairment<br>(*1) Business<br>Combination(*2) Ending<br>balance
Frequency usage rights ~~W~~ 2,559,689 — — — (477,257 ) — — 2,082,432
Land usage rights 2,732 — — — (1,508 ) — — 1,224
Industrial rights 55,954 13,428 (823 ) (103 ) (4,324 ) (12,343 ) 3 51,792
Development costs 200 — — — (573 ) — 657 284
Facility usage rights 17,874 1,396 (2 ) 252 (4,523 ) — — 14,997
Customer relations 327,257 — — — (27,076 ) — — 300,181
Club memberships 88,494 9,926 (7,113 ) — — (725 ) 1,389 91,971
Other 817,569 108,144 (380 ) 189,075 (342,776 ) (16 ) 10,413 782,029
~~W~~ 3,869,769 132,894 (8,318 ) 189,224 (858,037 ) (13,084 ) 12,462 3,324,910
(*1) The Group recognized the difference between recoverable amount and the carrying amount of intangible assets<br>amounting to ~~W~~13,084 million as impairment loss for the year ended December 31, 2022.
--- ---
(*2) Includes assets acquired from the acquisition of SK m&service Co., Ltd. by PS&Marketing Corporation, a<br>subsidiary of the Parent Company.
--- ---

65

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

17. Intangible Assets, Continued
(3) Research and development expenditures recognized as expense for the years ended December 31, 2023 and 2022<br>are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Research and development costs expensed as incurred ~~W~~ 369,507 340,864
(4) Details of frequency usage rights as of December 31, 2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- ---
Amount Description Commencement of<br><br><br>amortization Completion of<br><br><br>amortization
800MHz license ~~W~~ 109,789 LTE service Jul. 2021 Jun. 2026
1.8GHz license 308,534 LTE service Dec. 2021 Dec. 2026
2.6GHz license 364,250 LTE service Sep. 2016 Dec. 2026
2.1GHz license 231,879 W-CDMA and LTE service Dec. 2021 Dec. 2026
3.5GHz license 592,154 5G service Apr. 2019 Nov. 2028
~~W~~ 1,606,606
18. Borrowings and Debentures
--- ---
(1) Short-term borrowings as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- ---
Lender Annual<br>interest rate (%) Maturity December 31,<br>2023 December 31,<br>2022
BNK Securities. Co., Ltd. — — ~~W~~ — 100,000
KEB Hana Bank — — — 30,000
Hana Financial Investment Co., Ltd. — — — 4,642
DB Financial Investment Co., Ltd. — — — 2,785
Shinhan Financial Investment Co., Ltd. — — — 5,571
~~W~~ — 142,998

66

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

18. Borrowings and Debentures, Continued
(2) Long-term borrowings as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- ---
Lender Annual interest<br><br><br>rate (%) Maturity December 31,<br>2023 December 31,<br>2022
Korea Development Bank(*1) 1.87 Feb. 10, 2026 ~~W~~ 28,125 40,625
Credit Agricole CIB(*2) 3M CD + 0.82 Dec. 14, 2023 — 12,500
Mizuho bank, Ltd. 1.35 May. 20, 2024 100,000 100,000
DBS bank Ltd. 1.30 May. 28, 2024 200,000 200,000
DBS bank Ltd. 2.65 Mar. 10, 2025 200,000 200,000
Credit Agricole CIB 3.30 Apr. 29, 2024 50,000 50,000
Mizuho Bank, Ltd. 3.29 Nov. 27, 2023 — 100,000
Nonghyup Bank(*3) MOR + 1.36 Nov. 17, 2024 40,000 40,000
Credit Agricole CIB 4.89 Nov. 28, 2025 50,000 50,000
Mizuho Bank, Ltd.(*2) 3M CD + 1.05 Jul. 25, 2025 50,000 —
718,125 793,125
Less: present value discount (47 ) (13 )
718,078 793,112
Less: current portions (402,500 ) (124,987 )
~~W~~ 315,578 668,125
(*1) The long-term borrowings are to be repaid by installments on an annual basis from 2022 to 2026.<br>
--- ---
(*2) 3M CD rates are 3.83% and 3.98% as of December 31, 2023 and 2022, respectively.
--- ---
(*3) 6M MOR rates are 3.85% and 4.35% as of December 31, 2023 and 2022, respectively.
--- ---

67

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

18. Borrowings and Debentures, Continued
(3) Debentures as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- --- --- --- ---
Purpose Maturity Annual<br>interest rate<br>(%) December 31,<br>2023 December 31,<br>2022
Unsecured corporate bonds Operating and refinancing fund 2032 3.45 ~~W~~ 90,000 90,000
Unsecured corporate bonds Operating fund 2023 3.03 — 230,000
Unsecured corporate bonds 2033 3.22 130,000 130,000
Unsecured corporate bonds 2024 3.64 150,000 150,000
Unsecured corporate bonds Refinancing fund 2024 2.82 190,000 190,000
Unsecured corporate bonds Operating and 2025 2.49 150,000 150,000
Unsecured corporate bonds refinancing fund 2030 2.61 50,000 50,000
Unsecured corporate bonds Operating fund 2025 2.66 70,000 70,000
Unsecured corporate bonds 2030 2.82 90,000 90,000
Unsecured corporate bonds Operating and 2025 2.55 100,000 100,000
Unsecured corporate bonds refinancing fund 2035 2.75 70,000 70,000
Unsecured corporate bonds Operating fund 2026 2.08 90,000 90,000
Unsecured corporate bonds 2036 2.24 80,000 80,000
Unsecured corporate bonds 2026 1.97 120,000 120,000
Unsecured corporate bonds 2031 2.17 50,000 50,000
Unsecured corporate bonds Refinancing fund 2027 2.55 100,000 100,000
Unsecured corporate bonds Operating and refinancing fund 2032 2.65 90,000 90,000
Unsecured corporate bonds Refinancing fund 2027 2.84 100,000 100,000
Unsecured corporate bonds 2023 2.81 — 100,000
Unsecured corporate bonds 2028 3.00 200,000 200,000
Unsecured corporate bonds 2038 3.02 90,000 90,000
Unsecured corporate bonds Operating and refinancing fund 2023 2.33 — 150,000
Unsecured corporate bonds 2038 2.44 50,000 50,000
Unsecured corporate bonds Operating fund 2024 2.09 120,000 120,000
Unsecured corporate bonds 2029 2.19 50,000 50,000
Unsecured corporate bonds 2039 2.23 50,000 50,000
Unsecured corporate bonds Operating and refinancing fund 2024 1.49 60,000 60,000
Unsecured corporate bonds 2029 1.50 120,000 120,000
Unsecured corporate bonds 2039 1.52 50,000 50,000
Unsecured corporate bonds 2049 1.56 50,000 50,000
Unsecured corporate bonds Operating fund 2024 1.76 70,000 70,000
Unsecured corporate bonds 2029 1.79 40,000 40,000
Unsecured corporate bonds 2039 1.81 60,000 60,000
Unsecured corporate bonds Operating and refinancing fund 2023 1.64 — 170,000

68

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

18. Borrowings and Debentures, Continued
(3) Debentures as of December 31, 2023 and 2022 are as follows, Continued:
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- --- --- --- ---
Purpose Maturity Annual<br>interest rate<br>(%) December 31,<br>2023 December 31,<br>2022
Unsecured corporate bonds Operating fund 2025 1.75 130,000 130,000
Unsecured corporate bonds 2030 1.83 50,000 50,000
Unsecured corporate bonds 2040 1.87 70,000 70,000
Unsecured corporate bonds Refinancing fund 2025 1.40 140,000 140,000
Unsecured corporate bonds 2030 1.59 40,000 40,000
Unsecured corporate bonds 2040 1.76 110,000 110,000
Unsecured corporate bonds 2024 1.17 80,000 80,000
Unsecured corporate bonds 2026 1.39 80,000 80,000
Unsecured corporate bonds 2031 1.80 50,000 50,000
Unsecured corporate bonds 2041 1.89 100,000 100,000
Unsecured corporate bonds 2024 2.47 90,000 90,000
Unsecured corporate bonds 2026 2.69 70,000 70,000
Unsecured corporate bonds 2041 2.68 40,000 40,000
Unsecured corporate bonds 2025 3.80 240,000 240,000
Unsecured corporate bonds 2027 3.84 70,000 70,000
Unsecured corporate bonds 2042 3.78 40,000 40,000
Unsecured corporate bonds 2025 4.00 300,000 300,000
Unsecured corporate bonds 2027 4.00 95,000 95,000
Unsecured corporate bonds 2024 4.79 100,000 100,000
Unsecured corporate bonds 2025 4.73 110,000 110,000
Unsecured corporate bonds 2027 4.74 60,000 60,000
Unsecured corporate bonds 2032 4.69 40,000 40,000
Unsecured corporate bonds 2026 3.65 110,000 —
Unsecured corporate bonds 2028 3.83 190,000 —
Unsecured corporate bonds 2026 3.72 80,000 —
Unsecured corporate bonds 2028 3.80 200,000 —
Unsecured corporate bonds 2030 3.96 70,000 —
Unsecured corporate bonds 2026 4.54 115,000 —
Unsecured corporate bonds 2028 4.68 100,000 —
Unsecured corporate bonds 2030 4.72 50,000 —
Unsecured corporate bonds 2033 4.72 30,000 —
Unsecured corporate bonds(*1) Operating fund 2023 2.93 — 80,000
Unsecured corporate bonds(*1) Refinancing fund 2024 2.09 160,000 160,000
Unsecured corporate bonds(*1) Operating and refinancing fund 2024 1.71 100,000 100,000
Unsecured corporate bonds(*1) 2026 1.86 50,000 50,000
Unsecured corporate bonds(*1) Refinancing fund 2023 1.48 — 100,000
Unsecured corporate bonds(*1) Operating and refinancing fund 2025 1.64 100,000 100,000

69

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

18. Borrowings and Debentures, Continued
(3) Debentures as of December 31, 2023 and 2022 are as follows, Continued:
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- --- --- --- --- --- --- --- ---
Purpose Maturity Annual<br>interest rate<br>(%) December 31,<br>2023 December 31,<br>2022
Unsecured corporate bonds(*1) Refinancing fund 2025 1.41 160,000 160,000
Unsecured corporate bonds(*1) 2024 1.69 100,000 100,000
Unsecured corporate bonds(*1) 2025 2.58 100,000 100,000
Unsecured corporate bonds(*1) 2032 2.92 50,000 50,000
Unsecured corporate bonds(*1) Operating and refinancing fund 2025 4.21 50,000 —
Unsecured corporate bonds(*1) 2026 4.28 100,000 —
Unsecured corporate bonds(*1) 2028 4.37 90,000 —
Unsecured corporate bonds(*1) Facility fund 2026 4.87 100,000 —
Unsecured corporate bonds(*1) 2028 5.00 60,000 —
Unsecured global bonds Operating fund 2027 6.63 515,760<br> <br>(USD 400,000 ) 506,920<br> <br>(USD 400,000 )
Unsecured global bonds 2023 3.75 — 633,650<br> <br>(USD 500,000 )
Unsecured global bonds(*1) Refinancing fund 2023 3.88 — 380,190<br> <br>(USD 300,000 )
Unsecured global bonds(*1) 2028 4.88 386,820<br> <br>(USD 300,000 ) —
Floating rate notes(*2) Operating fund 2025 SOFR rate<br>+ 1.17 386,820<br> <br>(USD 300,000 ) 380,190<br> <br>(USD 300,000 )
Convertible bonds(*3) Operating fund 2028 — 3,868<br> <br>(USD 3,000 ) —
Convertible bonds(*3) 2028 — 3,868<br> <br>(USD 3,000 ) —
Convertible bonds(*3) 2028 — 2,579<br> <br>(USD 2,000 ) —
Convertible bonds(*3) 2028 — 10,444<br> <br>(USD 8,100 ) —
Convertible bonds(*3) 2028 — 20,824<br> <br>(USD 16,150 ) —
Convertible bonds(*3) 2028 — 9,993<br> <br>(USD 7,750 ) —
Convertible bonds(*3) 2028 — 10,315<br> <br>(USD 8,000 ) —
8,351,291 8,385,950
Less: discounts on bond (25,648 ) (19,256 )
8,325,643 8,366,694
Less: current portions of bonds (1,219,344 ) (1,842,599 )
~~W~~ 7,106,299 6,524,095

70

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

18. Borrowings and Debentures, Continued
(3) Debentures as of December 31, 2023 and 2022 are as follows, Continued:
--- ---
(*1) Unsecured corporate bonds were issued by SK Broadband Co., Ltd., a subsidiary of the Parent Company.<br>
--- ---
(*2) Interest rates applied are SOFR rate 5.38% as of December 31, 2023 and LIBOR rate (3 month) 4.75% + 0.91%<br>as of December 31, 2022.
--- ---
(*3) Convertible bonds were issued by SAPEON Inc., a subsidiary of the Parent Company, and the conditions for<br>issuing convertible bonds and changes are as follows:
--- ---
1) As of December 31, 2023, the conditions for issuing convertible bonds are as follows:<br>
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Series
1 3 4 5
Total amount of convertible bonds authorized 3,868 ( 3,000) 3,868<br> <br>(USD 3,000 ) 2,579<br> <br>(USD 2,000 ) 10,444 ( 8,100 20,824<br> <br>(USD 16,150 )
Coupon rate 0% (However, if not converted, 4% from January 1, 2025, to three yearsfrom the issue date, and 8% thereafter until the maturity of theconvertible bonds)
Repayment of interest and principal Lump-sum repayment at maturity with accrued interest added to theissued amount
Convertible period Until the maturity date or the mandatory conversion date
Type of shares to be issued upon conversion Registered common stock or securities identical to subsequentinvestments
Conversion ratio 100%
Conversion price (In U.S. dollars) 410.22 per share
Early redemption right Exercisable from January 1, 2025, in case of non-fulfillment of certainconditions
(In millions of won and thousands of U.S. dollars)
Series
6 7
Total amount of convertible bonds authorized 9,993 ( 7,750) 10,315 ( 8,000)
Coupon rate 0%(However, if not converted, 4% from January 1, 2025, to three yearsfrom the issue date, and 8% thereafter until the maturity of theconvertible bonds)
Repayment of interest and principal Lump-sum repayment at maturity with accrued interest added to theissued amount
Convertible period Until the maturity date or the mandatory conversion date
Type of shares to be issued upon conversion Registered common stock or securities identical to subsequentinvestments
Conversion ratio 100%
Conversion price (In U.S. dollars) 410.22 per share
Early redemption right Exercisable from January 1, 2025, in case of non-fulfillment of certainconditions

All values are in US Dollars.

71

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

18. Borrowings and Debentures, Continued
(3) Debentures as of December 31, 2023 and 2022 are as follows, Continued:
--- ---
(*3) Convertible bonds were issued by SAPEON Inc., a subsidiary of the Parent Company, and the conditions for<br>issuing convertible bonds and changes are as follows, Continued
--- ---

The conversion rights of the aforementioned convertible bonds are classified as equity

2) The carrying amount of changes in the liability component (present value of<br>non-convertible bonds) of the convertible bonds for the year ended December 31, 2023 are as follows
(In millions of won and thousands of U.S. dollars)
--- --- ---
2023
Beginning balance —
Issuance of convertible bonds 54,284 ( 41,932)
Amortization based on effective interest rate 4,951 ( 4,007)
Ending balance 59,235 ( 45,939

All values are in US Dollars.

The liability component of convertible bonds (present value of non-convertible bonds) is measured at amortized cost using the effective interest rate.

19. Long-term Payables – other
(1) As of December 31, 2023 and 2022, details of long-term payables – other which consist of payables<br>related to the acquisition of frequency usage rights are as follows (See note 17):
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Long-term payables – other ~~W~~ 1,290,225 1,690,470
Present value discount on long-term payables – other (29,772 ) (52,129 )
Current portion of long-term payables – other (367,770 ) (398,874 )
Carrying amount as of December 31 ~~W~~ 892,683 1,239,467
(2) The sum of portions repaid among the principal of long-term payables – other for the years ended<br>December 31, 2023 and 2022 amounts to ~~W~~400,245 million and ~~W~~400,245 million, respectively. The repayment schedule of the principal amount of long-term payables – other as of December 31,<br>2023 is as follows:
--- ---
(In millions of won)
--- --- ---
Amount
Less than 1 year ~~W~~ 369,150
1 ~ 3 years 738,300
3 ~ 5 years 182,775
~~W~~ 1,290,225

72

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

20. Provisions

Changes in provisions for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 As of December 31,<br>2023
Beginning<br>balance Increase Utilization Reversal Other Ending<br>balance Current Non-<br>current
Provision for restoration ~~W~~ 115,089 8,041 (2,397 ) (714 ) 5 120,024 37,073 82,951
Emission allowance 2,186 2,404 (635 ) (2,773 ) — 1,182 1,182 —
Other provisions 1,823 — (1,005 ) (108 ) (492 ) 218 — 218
~~W~~ 119,098 10,445 (4,037 ) (3,595 ) (487 ) 121,424 38,255 83,169
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022 As of December 31,<br>2022
Beginningbalance Increase Utilization Reversal Other Business<br>combination Endingbalance Current Non-<br>current
Provision for restoration ~~W~~ 114,731 6,823 (5,679 ) (1,767 ) (10 ) 991 115,089 36,998 78,091
Emission allowance 1,885 2,719 — (2,418 ) — — 2,186 2,186 —
Other provisions 10,379 4,071 (9,509 ) (3,080 ) (38 ) — 1,823 499 1,324
~~W~~ 126,995 13,613 (15,188 ) (7,265 ) (48 ) 991 119,098 39,683 79,415
21. Defined Benefit Liabilities (Assets)
--- ---
(1) Details of defined benefit liabilities (assets) as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Present value of defined benefit obligations ~~W~~ 1,121,679 1,038,320
Fair value of plan assets (1,292,416 ) (1,214,007 )
Defined benefit assets(*) (170,737 ) (175,748 )
Defined benefit liabilities — 61
(*) Since the Group entities neither have legally enforceable right nor intention to settle the defined benefit<br>obligations of Group entities with defined benefit assets of other Group entities, defined benefit assets of Group entities have been separately presented from defined benefit liabilities.
--- ---
(2) Principal actuarial assumptions as of December 31, 2023 and 2022 are as follows:
--- ---
December 31, 2023 December 31, 2022
--- --- ---
Discount rate for defined benefit obligations 3.71% ~ 4.79% 5.09% ~ 5.71%
Expected rate of salary increase 2.00% ~ 5.27% 2.00% ~ 8.37%

Discount rate for defined benefit obligation is determined based on market yields of high-quality corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of salary increase is determined based on the Group’s historical promotion index, inflation rate and salary increase ratio.

73

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

21. Defined Benefit Liabilities (Assets), Continued
(3) Changes in present value of defined benefit obligations for the years ended December 31, 2023 and 2022 are<br>as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Beginning balance ~~W~~ 1,038,320 1,035,016
Current service cost 132,465 134,847
Interest cost 54,032 32,572
Remeasurement<br><br><br>- Demographic assumption 810 (28,222 )
- Financial assumption (24,953 ) (84,532 )
- Adjustment based on experience 18,814 2,369
Business combinations(*1) — 29,357
Benefit paid (99,396 ) (79,117 )
Others(*2) 1,587 (3,970 )
Ending balance ~~W~~ 1,121,679 1,038,320
(*1) Includes liabilities acquired from the acquisition of SK m&service Co., Ltd. by PS&Marketing<br>Corporation, a subsidiary of the Parent Company for the year ended December 31, 2022.
--- ---
(*2) Others include changes in liabilities due to employee’s transfers among affiliates for the years ended<br>December 31, 2023 and 2022.
--- ---

74

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

21. Defined Benefit Liabilities (Assets), Continued
(4) Changes in fair value of plan assets for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Beginning balance ~~W~~ 1,214,007 1,040,286
Interest income 62,058 32,910
Remeasurement (2,140 ) (18,622 )
Contributions 108,224 215,254
Benefit paid (90,452 ) (83,123 )
Business combinations(*1) — 26,618
Others(*2) 719 684
Ending balance ~~W~~ 1,292,416 1,214,007
(*1) Includes liabilities acquired from the acquisition of SK m&service Co., Ltd. by PS&Marketing<br>Corporation, a subsidiary of the Parent Company for the years ended December 31, 2022.
--- ---
(*2) Others include changes in assets due to the employee’s transfers among affiliates for the years ended<br>December 31, 2023 and 2022.
--- ---

The Group’s expected contributions to the defined benefit plan for the year ended December 31, 2024, amounts to ~~W~~150,608 million.

(5) Total cost of defined benefit plan, which is recognized in profit or loss for the years ended December 31,<br>2023 and 2022 are as follows:
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Current service cost ~~W~~ 132,465 134,847
Net interest income (8,026 ) (338 )
~~W~~ 124,439 134,509

Costs related to the defined benefit plan except for the amounts transferred to construction in progress are included in labor expenses and research and development expenses.

(6) Details of plan assets as of December 31, 2023 and 2022 are as follows:
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Equity instruments ~~W~~ 72,619 17,716
Debt instruments 162,374 174,385
Short-term financial instruments, etc. 1,057,423 1,021,906
~~W~~ 1,292,416 1,214,007

75

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

21. Defined Benefit Liabilities (Assets), Continued
(7) Sensitivity analysis
--- ---

As of December 31, 2023, effects on defined benefit obligations if each of significant actuarial assumptions changes within expectable and reasonable range are as follows:

(In millions of won)
0.5% Increase 0.5% Decrease
Discount rate ~~W~~ (37,694) 40,345
Expected salary increase rate 40,624 (38,319 )

The sensitivity analysis does not consider dispersion of all cash flows that are expected from the plan but provides approximate values of sensitivity for the assumptions used.

A weighted average duration of defined benefit obligations as of December 31, 2023 and 2022 are 7.27 years and 7.53 years, respectively.

(8) Defined contribution plan

The amount recognized as an expense for defined contribution plans are ~~W~~20,404 million and ~~W~~15,529 million for the years ended December 31, 2023 and 2022, respectively.

22. Derivative Instruments
(1) Currency and interest rate swap contracts under cash flow hedge accounting as of December 31, 2023 are as<br>follows:
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- ---
Borrowing<br><br><br>date Hedging Instrument (Hedged item) Hedged risk Financial institution Duration of contract
Jul. 20, 2007 Fixed-to-fixed<br>cross currency swap (U.S. dollar denominated bonds face value of USD 400,000) Foreign currency risk Morgan Stanley and four other banks Jul. 20, 2007 ~Jul. 20, 2027
Mar. 4, 2020 Floating-to-fixed<br>cross-currency interest rate swap (U.S. dollar-denominated bonds face value of USD 300,000) Foreign currency risk and Interest rate risk Citibank Mar. 4, 2020 ~ Jun. 4, 2025
Jun. 28, 2023 Fixed-to-fixed<br>cross currency swap (U.S. dollar denominated bonds face value of USD 300,000) Foreign currency risk Citi bank,<br><br><br>Shinhan Bank, Korea Development Bank and J.P. Morgan Jun. 28, 2023 ~ Jun. 28, 2028

As of December 31, 2023, the changes in fair value of derivatives designated as hedging instrument, which are all effective in hedging, were recognized in full in other comprehensive income.

76

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

22. Derivative Instruments, Continued
(2) SK Broadband Co., Ltd., a subsidiary of the Parent Company, entered into Total Return Swap(TRS) contract<br>amounting to ~~W~~270,000 million and ~~W~~64,000 million with beneficiary certificates as underlying asset with IGIS Professional Investment Type Private Real Estate Investment Trust No. 156 and Hana<br>Professional Alternative Investment Type Private Real Estate Investment Trust No. 62, respectively. The contracts consist of the settlement of the difference resulting from the change in the value of the real estate on the maturity date of the<br>contract and the settlement of the difference between the dividend and the standard dividend during the contract period. SK Broadband Co., Ltd. has an obligation to guarantee fixed rate of returns to the other party to each contract. SK Broadband<br>Co., Ltd. recognized long-term derivative financial assets of ~~W~~21,027 million and ~~W~~20,631 million for TRS as of December 31, 2023 and 2022, respectively. Long-term derivative financial assets were<br>measured using the discounted present value methods for estimated future cash flows.
--- ---
(3) In relation to the business acquisition by SK Broadband Co., Ltd. for the year ended December 31, 2020 the<br>Parent Company has entered into a shareholders’ agreement with the shareholders of the acquirees. Pursuant to the agreement, when certain conditions are met within a period of time subsequent to the merger, the shareholders of the acquirees can<br>exercise their drag-along rights and require the Parent Company to sell its shares in SK Broadband Co., Ltd. Should the shareholders exercise their drag-along rights, the Parent Company also can exercise its call options over the shares held by<br>those shareholders. The Group recognized a long-term derivative financial liability of ~~W~~295,876 million (~~W~~302,593 million as of December 31, 2022) for the rights prescribed in the shareholders’<br>agreement as of December 31, 2023.
--- ---

The fair value of SK Broadband Co., Ltd.’s common stock was estimated using 5-year projected cash flows discounted at 6.2% per annum. The fair value of the derivative financial liability was determined by using the Binomial Model based on various assumptions including the price of common stock and its price fluctuations. The significant unobservable inputs used in the fair value measurement and inter-relationship between significant unobservable inputs and fair value measurement are as follows:

Significant unobservable inputs Correlations between inputs<br><br><br>and fair value measurements
Fair value of SK Broadband Co., Ltd.’s common stock The estimated fair value of derivative financial liabilities would decrease (increase) if the fair<br>value of common stock would increase (decrease)
Volatility of stock price The estimated fair value of derivative financial liabilities would decrease (increase) if the<br>volatility of stock price increase (decrease)

77

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

22. Derivative Instruments, Continued
(4) The Parent Company has entered into the agreement with Newberry Global Limited, whereby the Group has been<br>granted subscription right and contingent subscription right to acquire Newberry series-C redeemable convertible preferred stock for the year ended December 31, 2020. The Parent Company recognized<br>derivative financial assets of ~~W~~13,136 million and ~~W~~8,083 million as of December 31, 2022, respectively, for subscription right and contingent subscription right. There is no balance for derivative<br>financial assets as of December 31, 2023, as the exercise period expired without the exercise of subscription rights and contingent subscription rights for the year ended December 31, 2023.
--- ---
(5) The Parent Company has entered into the agreement with HAEGIN Co., Ltd., whereby the Parent Company has been<br>granted contingent subscription right to acquire HAEGIN Co., Ltd.’s common stock for the year ended December 31, 2022. The Parent Company is able to exercise the right in accordance with the agreement when certain conditions are met and<br>recognized long-term derivative financial assets of ~~W~~2,323 million for the contingent subscription right as of December 31, 2023. The fair value of HAEGIN Co., Ltd.’s common stock was estimated using 5-year projected cash flows discounted at 13.0% per annum. Meanwhile, if the fair value of HAEGIN Co., Ltd.’s common stock, significant unobservable input used in the fair value measurement, increases<br>(decreases), the estimated fair value of derivative financial asset would increase (decrease). If the volatility of stock price, significant unobservable input used in the fair value measurement, increases (decreases), the estimated fair value of<br>derivative financial asset would increase (decrease).
--- ---

78

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

22. Derivative Instruments, Continued
(6) The fair value of derivative financial instruments to which the Group applies cash flow hedging is recorded in<br>the consolidated financial statements as long-term derivative financial assets and long-term derivative financial liabilities. As of December 31, 2023, details of fair values of the derivative assets and liabilities are as follows:<br>
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- --- ---
Hedging instrument (Hedged item) Fair value
Non-current assets:
Fixed-to-fixed<br>cross currency swap (U.S. dollar denominated bonds face value of 400,000) 80,426 80,426
Floating-to-fixed<br>cross currency interest rate swap (U.S. dollar denominated bonds face value of 300,000) 35,784 35,784
116,210 116,210
Non-current liabilities:
Fixed-to-fixed<br>cross currency swap (U.S dollar denominated bonds face value of 300,000) (9,212 ) (9,212 )
(9,212 ) (9,212 )

All values are in US Dollars.

As of December 31, 2023, the changes in fair value of derivatives designated as hedging instrument, which are all effective in hedging, were recognized in full in other comprehensive income.

(7) The fair value of derivatives held for trading is recorded in the consolidated financial statements as<br>derivative financial assets, long-term derivative financial assets and long-term derivative financial liabilities. As of December 31, 2023, details of fair values of the derivative assets and liabilities are as follows:
(In millions of won)
--- --- --- --- --- --- ---
Held for trading Fair value
Current assets:
Contract for difference settlement ~~W~~ 8,974 8,974
Non-current assets:
Contingent subscription right 2,323 2,323
Contract for difference settlement 21,027 21,027
~~W~~ 32,324 32,324
Non-current liabilities:
Drag-along and call option rights ~~W~~ (295,876 ) (295,876 )
~~W~~ (295,876 ) (295,876 )

79

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

23. Share Capital and Capital Surplus and Others
(1) Details of share capital as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won, except for share data)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Number of authorized shares 670,000,000 670,000,000
Par value (in won) ~~W~~ 100 100
Number of issued shares 218,833,144 218,833,144
Share capital:
Common share(*1) ~~W~~ 30,493 30,493
(*1) In 2002 and 2003, The Parent Company retired treasury shares with reduction of its retained earnings before<br>appropriation. As a result, the Group’s issued shares have decreased without change in share capital.
--- ---
(2) There were no changes in share capital of the Parent Company for the years ended December 31, 2023 and<br>2022.
--- ---
(3) Details of shares outstanding as of December 31, 2023 and 2022 are as follows:
--- ---
(In shares) December 31, 2023 December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Issued<br>shares Treasuryshares Outstandingshares Issued<br>shares Treasuryshares Outstandingshares
Shares outstanding 218,833,144 6,133,414 212,699,730 218,833,144 801,091 218,032,053
(4) Details of capital surplus and others as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Paid-in surplus ~~W~~ 1,771,000 1,771,000
Treasury shares (Note 24) (301,981 ) (36,702 )
Hybrid bonds (Note 25) 398,509 398,759
Share option (Note 26) 9,818 2,061
Others(*) (13,705,990 ) (13,702,235 )
~~W~~ (11,828,644 ) (11,567,117 )
(*) Others primarily consist of the excess of the consideration paid by the Group over the carrying amount of net<br>assets acquired from entities under common control.
--- ---

80

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

24. Treasury Shares
(1) Treasury shares as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won, except for the number of shares)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Number of shares 6,133,414 801,091
Acquisition cost ~~W~~ 301,981 36,702
(2) Changes in treasury shares for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In shares)
--- --- --- --- --- --- ---
2023 2022
Treasury shares as of January 1 801,091 1,250,992
Acquisition(*1) 5,773,410 —
Disposal(*2) (441,087 ) (449,901 )
Treasury shares as of December 31 6,133,414 801,091
(*1) The Parent Company acquired 5,773,410 of its treasury shares for ~~W~~285,487 million in an<br>effort to increase shareholder value by stabilizing its stock price for the years ended December 31, 2023.
--- ---
(*2) The Parent Company distributed 441,087 treasury shares (acquisition cost: ~~W~~20,208 million) as<br>bonus payment to the employees, resulting in gain on disposal of treasury shares of ~~W~~212 million for the year ended December 31, 2023. Also, the Parent Company distributed 449,901 treasury shares (acquisition cost:<br>~~W~~20,612 million) as bonus payment to the employees, resulting in gain on disposal of treasury shares of ~~W~~4,813 million for the year ended December 31, 2022.
--- ---

81

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

25. Hybrid Bonds

Hybrid bonds classified as equity as of December 31, 2023 and 2022 are as follows:

(In millions of won)
Type Issuance date Maturity(*1) Annualinterestrate(%)(*2) December 31,2023 December 31,2022
Series 3 hybrid bonds Unsecured subordinated bearer bond June 5, 2023 June 5, 2083 4.95 ~~W~~ 400,000 —
Series 2-1 hybrid bonds Unsecured subordinated bearer bond June 7, 2018 June 7, 2078 3.70 — 300,000
Series 2-2 hybrid bonds Unsecured subordinated bearer bond June 7, 2018 June 7, 2078 3.65 — 100,000
Issuance costs (1,491 ) (1,241 )
~~W~~ 398,509 398,759

The Parent Company redeemed previously issued hybrid bonds and issued new ones for the year ended December 31, 2023. As there is no contractual obligation to deliver financial assets to the holders of hybrid bonds, the Parent Company classified the hybrid bonds as equity.

These are subordinated bonds that rank before common shares in the event of a liquidation or reorganization of the Parent Company.

(*1) The Parent Company has a right to extend the maturity without any notice or announcement.<br>
(*2) Annual interest rate is determined as yield rate of 5-year national<br>bond plus premium. According to the step-up clause, additional premium of 0.25% and 0.75%, respectively, after 10 years and 25 years from the issuance date are applied.
--- ---

82

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

26. Share based payment Arrangement
26.1 Share-based payment arrangement of the Parent Company
--- ---
(1) The terms and conditions related to the grants of the share-based payment arrangement are as follows:<br>
--- ---
1) Share-based payment arrangement with cash alternatives
--- ---
Series
--- --- --- --- --- --- --- --- --- --- ---
1-3 3 4 5 6
Grant date March 24, 2017 February 22, 2019 March 26, 2019 March 26, 2020 March 25, 2021
Types of shares to be issued Registered common shares of the Parent Company
Grant method Reissue of treasury shares, Cash settlement
Number of shares (in share) 67,320 8,907 5,266 376,313 87,794
Exercise price (in won) 57,562 53,052 50,862 38,452 50,276
Exercise period Mar. 25, 2021<br>~<br> <br>Mar. 24, 2024 Feb. 23, 2021<br> <br>~<br><br><br>Feb. 22, 2024 Mar. 27, 2021<br> <br>~<br><br><br>Mar. 26, 2024 Mar. 27, 2023<br> <br>~<br><br><br>Mar. 26, 2027 Mar. 26, 2023<br> <br>~<br><br><br>Mar. 25, 2026
Vesting conditions 4 years’<br> <br>service from<br>the grant date 2 years’<br> <br>service from the<br>grant date 2 years’<br> <br>service from<br>the grant date 3 years’<br> <br>service from<br><br><br>the grant date 2 years’<br> <br>service from<br><br><br>the grant date
Series
--- --- --- ---
7-1 7-2
Grant date March 25, 2022
Types of shares to be issued Registered common shares of the Parent Company
Grant method Reissue of treasury shares,<br> <br>Cash settlement
Number of shares (in share) 295,275 109,704
Exercise price (in won) 56,860 56,860
Exercise period Mar. 26, 2025<br> <br>~<br><br><br>Mar. 25, 2029 Mar. 26, 2024<br> <br>~<br><br><br>Mar. 25, 2027
Vesting<br><br><br>conditions 2 years’<br> <br>service from<br><br><br>the grant date 2 years’<br> <br>service from<br><br><br>the grant date
(*) The remaining parts of 1-2st and 2nd share options were fully<br>forfeited, and the 8th share option was canceled for the year ended December 31, 2023.
--- ---

83

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

26. Share based payment Arrangement, Continued
26.1 Share-based payment arrangement of the Parent Company, Continued:
--- ---
(1) The terms and conditions related to the grants of the share-based payment arrangement are as follows,<br>Continued:
--- ---
2) Cash-settled share-based payment arrangement
--- ---
Granted in 2021 Granted in 2022
--- --- --- --- --- --- ---
Share appreciation rights of<br>SK Telecom Co., Ltd.(*) Share appreciation rights of<br>SK Square Co., Ltd.(*) Share appreciation rights of<br>SK Telecom Co., Ltd.
Grant date January 1, 2021 January 1, 2022
Grant method Cash settlement
Number of shares (in share) 183,246 118,456 338,525
Exercise price (in won) 50,276 56,860
Exercise period Jan. 1, 2023 ~ Mar. 28, 2024 Jan. 1, 2024 ~ Mar. 25, 2025
Vesting conditions 2 years’ service from the grant date 2 years’ service from the grant date
(*) Parts of the grant that have not met the vesting conditions have been forfeited for the year ended<br>December 31, 2022.
--- ---
3) Equity-settled share-based payment arrangement
--- ---

The Parent Company newly established Performance Share Units (“PSU”) for executives of the Parent Company and major subsidiaries as part of the compensation based on the growth of corporate value for the year ended December 31, 2023, and the details are as follows:

PSU of SK Telecom Co., Ltd.
Grant date March 28, 2023
Types of shares to be issued Registered common shares of the Parent Company
Grant method Reissue of treasury shares
Number of shares(*) Fluctuates according to the share price on the expiration date and the cumulative increase rate of KOSPI200
Reference share price (in won) 47,280
Reference index (KOSPI200) 315
Maturity (exercise date) The day in which the annual general meeting of shareholders is held after 3 years from the grant date
Vesting conditions Full service in the year in which the grant date is included
(*) The initial amount granted is a total of ~~W~~10,813 million, and the amount calculated<br>according to the adjustment rate based on the share price on the expiration date and the cumulative increase rate of KOSPI200 will be paid in shares.
--- ---

84

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

26. Share based payment Arrangement, Continued
26.1 Share-based payment arrangement of the Parent Company, Continued:
--- ---
(2) Share compensation expense for share-based payment arrangements with cash alternatives recognized for the year<br>ended December 31, 2023 and the remaining share compensation expense to be recognized in subsequent periods are as follows:
--- ---
(In millions of won)
--- --- ---
Share compensation expense
As of December 31, 2022 ~~W~~ 155,579
For the year ended December 31, 2023 2,171
In subsequent periods 504
~~W~~ 158,254

The liabilities recognized by the Parent Company in relation to the share-based payment arrangement with cash alternatives are ~~W~~5,530 million and ~~W~~4,221 million, respectively, which are included in accrued expenses as of December 31, 2023 and 2022.

As of December 31, 2023 and 2022, the carrying amount of liabilities recognized by the Parent Company in relation to the cash-settled share-based payment arrangement are ~~W~~1,133 million and ~~W~~906 million, respectively.

Share compensation expenses recognized for equity-settled share-based payment arrangements are ~~W~~6,267 million for the year ended December 31, 2023.

85

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

26. Share based payment Arrangement, Continued
26.1 Share-based payment arrangement of the Parent Company, Continued:
--- ---
(3) The Parent Company used binomial option pricing model in the measurement of the fair value of the share options<br>at the remeasurement date and the inputs used in the model are as follows:
--- ---
1) Share-based payment arrangement with cash alternatives
--- ---
(i) SK Telecom Co., Ltd.
--- ---
(In won) Series
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
1-3 3 4 5 6 7-1 7-2
Risk-free interest rate 3.52 % 3.49 % 3.52 % 3.14 % 3.18 % 3.15 % 3.14 %
Estimated option’s life 7 years 5 years 5 years 7 years 5 years 7 years 5 years
Share price on the remeasurement date 50,100 50,100 50,100 50,100 50,100 50,100 50,100
Expected volatility 16.80 % 16.80 % 16.80 % 16.80 % 16.80 % 16.80 % 16.80 %
Expected dividends yield 6.60 % 6.60 % 6.60 % 6.60 % 6.60 % 6.60 % 6.60 %
Exercise price 57,562 53,052 50,862 38,452 50,276 56,860 56,860
Per-share fair value of the option 63 310 1,157 11,648 3,400 2,466 1,974
(ii) SK Square Co., Ltd.
--- ---
(In won) Series
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
1-3 3 4 5 6
Risk-free interest rate 2.07 % 1.91 % 1.78 % 1.52 % 1.55 %
Estimated option’s life 7 years 5 years 5 years 7 years 5 years
Share price (Closing price on the preceding day) 52,500 51,800 50,600 34,900 49,800
Expected volatility 13.38 % 8.30 % 7.70 % 8.10 % 25.70 %
Expected dividends yield 3.80 % 3.80 % 3.90 % 5.70 % 4.00 %
Exercise price 57,562 53,052 50,862 38,452 50,276
Per-share fair value of the option 3,096 1,720 1,622 192 8,142

86

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

26. Share based payment Arrangement, Continued
26.1 Share-based payment arrangement of the Parent Company, Continued:
--- ---
(3) The Parent Company used binomial option pricing model in the measurement of the fair value of the share options<br>at the remeasurement date and the inputs used in the model are as follows, Continued:
--- ---
2) Cash-settled share-based payment arrangement
--- ---
(In won) Granted in 2021 Granted in 2022
--- --- --- --- --- --- --- --- --- ---
Share appreciation rights of<br>SK Telecom Co., Ltd. Share appreciation rights of<br>SK Square Co., Ltd. Share appreciation rights of<br>SK Telecom Co., Ltd.
Risk-free interest rate 3.52 % 3.52 % 3.37 %
Estimated option’s life 3.25 years 3.25 years 3.25 years
Share price on the remeasurement date 50,100 52,600 50,100
Expected volatility 16.80 % 30.90 % 16.80 %
Expected dividends yield 6.60 % 0.00 % 6.60 %
Exercise price 50,276 50,276 56,860
Per-share fair value of the option 1,387 4,706 949
3) Equity-settled share-based payment arrangement
--- ---
(In won)
--- --- --- ---
PSU of SK Telecom Co., Ltd.
Risk-free interest rate 3.26 %
Estimated option’s life 3 years
Share price on the expected grant date 48,500
Expected volatility 18.67 %
Expected dividends yield 4.90 %
Per-share fair value of the option 27,525

87

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

26. Share based payment Arrangement, Continued
26.2 Share-based payment arrangement by SAPEON Inc., a subsidiary of the Parent Company
--- ---
(1) The terms and conditions related to the grants of the share-based payment arrangement are as follows:<br>
--- ---
Series
--- --- --- --- --- --- ---
1-1 1-2 2
Grant date February 28, 2023 November 13, 2023
Types of shares to be issued Registered common shares of SAPEON Inc.
Grant method Issuance of shares
Number of shares (in share) 14,500 35,100 6,450
Exercise price (in U.S. dollars) 100.0
Exercise period(*) Jan. 4, 2024<br> <br>~<br><br><br>Jan. 4, 2032 Apr. 1, 2024<br> <br>~<br><br><br>Apr. 1, 2032 Feb. 1, 2025<br> <br>~<br><br><br>Feb. 1, 2033
Vesting conditions 2 years’ service from the commencement date, 50%<br><br><br>3 years’ service from the commencement date, 25%<br><br><br>4 years’ service from the commencement date, 25%
(*) The exercise periods vary as vesting periods for each share-based payment arrangement are different. The<br>exercise period was disclosed based on the vesting period with the highest number of grants.
--- ---
(2) Share compensation expense for share-based payment arrangements for the year ended December 31, 2023 and<br>the remaining share compensation expense to be recognized in subsequent periods are as follows:
--- ---
(In millions of won)
--- --- ---
Share compensation expense
As of December 31, 2022 ~~W~~ —
For the year ended December 31, 2023 2,555
In subsequent periods 1,312
~~W~~ 3,867
(3) SAPEON Inc., a subsidiary of the Parent Company, used binomial option pricing model in the measurement of the<br>fair value of the share options at grant date and the inputs used in the model are as follows:
--- ---
(In U.S. dollars)
--- --- --- --- --- --- --- --- --- ---
1-1 1-2 2
Risk-free interest rate 4.18 % 4.16 % 4.67 %
Estimated option’s life 5.18 years 5.42 years 5.55 years
Underlying share price 107.8 107.8 118.1
Expected volatility 43.50 % 43.00 % 43.00 %
Expected dividends yield 0.00 % 0.00 % 0.00 %
Exercise price 100.0 100.0 100.0
Per-share fair value of the option 50.7 51.4 61.4

88

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

27. Retained Earnings
(1) Retained earnings as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Appropriated:
Legal reserve ~~W~~ 22,320 22,320
Reserve for business expansion 9,831,138 9,631,138
Reserve for technology development 4,565,300 4,365,300
14,396,438 13,996,438
Unappropriated 8,381,223 8,444,953
~~W~~ 22,799,981 22,463,711
(2) Legal reserve
--- ---

The Korean Commercial Act requires the Parent Company to appropriate as a legal reserve at least 10% of cash dividends paid for each accounting period until the reserve equals 50% of outstanding share capital. The legal reserve may not be utilized for cash dividends, but may only be used to offset a future deficit, if any, or may be transferred to share capital.

28. Reserves
(1) Details of reserves, net of taxes, as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- ---
December 31, 2023 December 31, 2022
Valuation gain on FVOCI ~~W~~ 176,208 173,281
Other comprehensive income of investments in associates and joint ventures 182,702 173,477
Valuation gain (loss) on derivatives (1,488 ) 14,463
Foreign currency translation differences for foreign operations 29,794 30,012
~~W~~ 387,216 391,233

89

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

28. Reserves, Continued
(2) Changes in reserves for the years ended December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Valuation gain<br>on financial<br>assets at FVOCI Other<br>comprehensive<br>income ofinvestments inassociates and<br>joint ventures Valuation gain<br>(loss) on<br>derivatives Foreign currency<br>translation<br>differences for<br>foreign operations Total
Balance as of January 1, 2022 ~~W~~ 633,240 53,770 33,918 14,310 735,238
Changes, net of taxes (459,959 ) 119,707 (19,455 ) 15,702 (344,005 )
Balance as of December 31, 2022 ~~W~~ 173,281 173,477 14,463 30,012 391,233
Changes, net of taxes 2,927 9,225 (15,951 ) (218 ) (4,017 )
Balance as of December 31, 2023 ~~W~~ 176,208 182,702 (1,488 ) 29,794 387,216
(3) Changes in valuation gain on financial assets at FVOCI for the years ended December 31, 2023 and 2022 are<br>as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Balance as of January 1 ~~W~~ 173,281 633,240
Amount recognized as other comprehensive income for the year, net of taxes (18,883 ) (490,959 )
Amount reclassified to retained earnings, net of taxes 21,810 31,000
Balance as of December 31 ~~W~~ 176,208 173,281
(4) Changes in valuation gain (loss) on derivatives for the years ended December 31, 2023 and 2022 are as<br>follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Balance as of January 1 ~~W~~ 14,463 33,918
Amount recognized as other comprehensive income for the year, net of taxes (18,725 ) (25,630 )
Amount reclassified to profit, net of taxes 2,774 6,175
Balance as of December 31 ~~W~~ (1,488 ) 14,463

90

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

29. Other Operating Expenses

Details of other operating expenses for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 2022
Communication ~~W~~ 32,238 31,881
Utilities 511,240 401,025
Taxes and dues 29,009 49,445
Repair 431,964 435,572
Research and development 369,507 340,864
Training 39,286 39,632
Bad debt for accounts receivable - trade 37,906 27,053
Travel 22,499 15,684
Supplies and other 130,330 113,839
~~W~~ 1,603,979 1,454,995
30. Other Non-Operating Income and Expenses
--- ---

Details of other non-operating income and expenses for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 2022
Other non-operating income:
Gain on disposal of property and equipment and intangible assets ~~W~~ 21,898 15,985
Others 28,468 39,913
~~W~~ 50,366 55,898
Other non-operating expenses:
Loss on impairment of property and equipment and intangible assets ~~W~~ 10,369 17,027
Loss on disposal of property and equipment and intangible assets 9,369 20,465
Donations 14,766 13,125
Bad debt for accounts receivable – other 5,256 3,011
Others 7,534 19,992
~~W~~ 47,294 73,620

91

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

31. Finance Income and Costs
(1) Details of finance income and costs for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Finance income:
Interest income ~~W~~ 70,055 58,472
Gain on sale of accounts receivable – other — 1,043
Dividends 43,014 2,552
Gain on foreign currency transactions 19,065 21,283
Gain on foreign currency translations 1,199 2,095
Gain relating to financial instruments at FVTPL 115,043 94,393
~~W~~ 248,376 179,838
(In millions of won)
--- --- --- --- ---
2023 2022
Finance costs:
Interest expense ~~W~~ 389,813 328,307
Loss on sale of accounts receivable – other 65,027 61,841
Loss on foreign currency transactions 21,693 19,485
Loss on foreign currency translations 1,227 3,814
Loss relating to financial instruments at FVTPL 49,641 41,597
Loss on disposal of investment assets — 1,283
~~W~~ 527,401 456,327
(2) Details of interest income included in finance income for the years ended December 31, 2023 and 2022 are<br>as follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Interest income on cash equivalents and financial instruments ~~W~~ 44,921 27,991
Interest income on loans and others 25,134 30,481
~~W~~ 70,055 58,472
(3) Details of interest expenses included in finance costs for the years ended December 31, 2023 and 2022 are<br>as follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Interest expense on borrowings ~~W~~ 29,917 25,736
Interest expense on debentures 247,105 217,475
Others 112,791 85,096
~~W~~ 389,813 328,307

92

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

31. Finance Income and Costs, Continued
(4) Finance income and costs by category of financial instruments for the years ended December 31, 2023 and<br>2022 are as follows. Bad debt expense (reversal of loss allowance) for accounts receivable – trade, loans and receivables are presented and explained separately in notes 6 and 36.
--- ---
1) Finance income and costs
--- ---
(In millions of won)
--- --- --- --- ---
2023
Finance income Finance costs
Financial assets:
Financial assets at FVTPL ~~W~~ 127,001 114,668
Financial assets at FVOCI 39,681 —
Financial assets at amortized cost 69,373 22,795
Derivatives designated as hedging instrument 2,480 —
238,535 137,463
Financial liabilities:
Financial liabilities at FVTPL 6,717 —
Financial liabilities at amortized cost 3,124 389,938
9,841 389,938
~~W~~ 248,376 527,401
(In millions of won)
--- --- --- --- ---
2022
Finance income Finance costs
Financial assets:
Financial assets at FVTPL ~~W~~ 104,068 103,292
Financial assets at FVOCI 1,495 1,283
Financial assets at amortized cost 45,008 23,094
Derivatives designated as hedging instrument — 146
150,571 127,815
Financial liabilities:
Financial liabilities at FVTPL 18,432 —
Financial liabilities at amortized cost 10,835 328,512
29,267 328,512
~~W~~ 179,838 456,327

93

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

31. Finance Income and Costs, Continued
(4) Finance income and costs by category of financial instruments for the years ended December 31, 2023 and<br>2022 are as follows. Bad debt expense (reversal of loss allowance) for accounts receivable – trade, loans and receivables are presented and explained separately in notes 6 and 36, Continued.
--- ---
2) Other comprehensive income (loss), net of tax
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Financial assets:
Financial assets at FVOCI ~~W~~ (18,842 ) (491,853 )
Derivatives designated as hedging instrument (11,520 ) (21,548 )
(30,362 ) (513,401 )
Financial liabilities:
Derivatives designated as hedging instrument (5,940 ) 182
~~W~~ (36,302 ) (513,219 )
(5) Details of impairment losses for financial assets for the years ended December 31, 2023 and 2022 are as<br>follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Accounts receivable – trade ~~W~~ 37,906 27,053
Other receivables 5,256 3,011
~~W~~ 43,162 30,064

94

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

32. Income Tax Expense
(1) Income tax expenses for the years ended December 31, 2023 and 2022 consist of the following:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Current tax expense:
Current year ~~W~~ 273,936 274,902
Current tax of prior years (11,590 ) 73,477
262,346 348,379
Deferred tax expense:
Changes in net deferred tax assets 79,896 (60,058 )
Income tax expense: ~~W~~ 342,242 288,321
(2) The difference between income taxes computed using the statutory corporate income tax rates and the recorded<br>income taxes for the years ended December 31, 2023 and 2022 is attributable to the following:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Profit before income tax ~~W~~ 1,488,179 1,236,152
Income taxes at statutory income tax rate 382,517 329,580
Non-taxable income (3,091 ) (14,969 )
Non-deductible expenses 15,725 24,679
Tax credit and tax reduction (64,829 ) (10,300 )
Changes in unrecognized deferred taxes 14,354 21,057
Changes in tax rate 3,444 (42,307 )
Income tax refund and others (5,878 ) (19,419 )
Income tax expense ~~W~~ 342,242 288,321

95

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

32. Income Tax Expense, Continued
(3) Deferred taxes directly charged to (credited from) equity for the years ended December 31, 2023 and 2022<br>are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Valuation gain on financial assets measured at fair value ~~W~~ 12,977 167,249
Share of other comprehensive gain (loss) of investment in associates and joint ventures 292 (2,972 )
Valuation gain on derivatives 5,631 7,649
Remeasurement of defined benefit liabilities (assets) (2,672 ) (20,867 )
Loss on disposal of treasury shares and others (53 ) (28,108 )
~~W~~ 16,175 122,951
(4) Details of the changes in deferred tax assets (liabilities) for the years ended December 31, 2023 and 2022<br>are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Beginning Deferred taxexpense(income) Directly charged to(credited from) equity Ending
Deferred tax assets (liabilities) related to temporary differences: ****
Loss allowance ~~W~~ 75,042 73 — 75,115
Accrued interest income (7,903 ) 1,064 — (6,839 )
Financial assets measured at fair value (10,171 ) (5,332 ) 12,977 (2,526 )
Investments in subsidiaries, associates and joint ventures 16,846 5,792 292 22,930
Property and equipment and intangible assets (352,605 ) (66,808 ) — (419,413 )
Provisions 1,629 (310 ) — 1,319
Retirement benefit obligation 30,619 (15,517 ) (2,672 ) 12,430
Valuation gain on derivatives 12,768 1,271 5,631 19,670
Gain (loss) on foreign currency translation 20,633 34 — 20,667
Incremental costs to acquire a contract (722,900 ) 4,689 — (718,211 )
Contract assets and liabilities 4,279 13,286 — 17,565
Right-of-use<br>assets (431,397 ) 41,534 — (389,863 )
Lease liabilities 428,648 (40,557 ) — 388,091
Others 85,716 (81,397 ) (53 ) 4,266
(848,796 ) (142,178 ) 16,175 (974,799 )
Deferred tax assets related to unused tax loss carryforwards and tax creditcarryforwards: ****
Tax loss carryforwards 2,007 5,143 — 7,150
Tax credit 89,883 57,139 — 147,022
91,890 62,282 — 154,172
~~W~~ (756,906 ) (79,896 ) 16,175 (820,627 )

96

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

32. Income Tax Expense, Continued
(4) Details of the changes in deferred tax assets (liabilities) for the years ended December 31, 2023 and 2022<br>are as follows, Continued:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Beginning Deferred taxexpense(income) Directly charged to(credited from) equity Businesscombinations Ending
Deferred tax assets (liabilities) related to temporary differences: ****
Loss allowance ~~W~~ 77,357 (2,315 ) — — 75,042
Accrued interest income (166 ) (5,057 ) — (2,680 ) (7,903 )
Financial assets measured at fair value (157,828 ) (19,592 ) 167,249 — (10,171 )
Investments in subsidiaries, associates and joint ventures (31,817 ) 51,635 (2,972 ) — 16,846
Property and equipment and intangible assets (305,967 ) (46,895 ) — 257 (352,605 )
Provisions 4,198 (2,569 ) — — 1,629
Retirement benefit obligation 52,332 (875 ) (20,867 ) 29 30,619
Valuation gain on derivatives 6,336 (1,217 ) 7,649 — 12,768
Gain (loss) on foreign currency translation 21,378 (745 ) — — 20,633
Incremental costs to acquire a contract (749,871 ) 26,971 — — (722,900 )
Contract assets and liabilities (2,201 ) 6,480 — — 4,279
Right-of-use<br>assets (389,502 ) (41,895 ) — — (431,397 )
Lease liabilities 381,537 47,111 — — 428,648
Others 68,481 41,691 (28,108 ) 3,652 85,716
(1,025,733 ) 52,728 122,951 1,258 (848,796 )
Deferred tax assets related to unused tax loss carryforwards and tax creditcarryforwards: ****
Tax loss carryforwards — 2,007 — — 2,007
Tax credit 84,560 5,323 — — 89,883
84,560 7,330 — — 91,890
~~W~~ (941,173 ) 60,058 122,951 1,258 (756,906 )

97

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

32. Income Tax Expense, Continued
(5) Details of temporary differences, unused tax loss carryforwards and unused tax credits carryforwards which are<br>not recognized as deferred tax assets (liabilities), in the consolidated statements of financial position as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Loss allowance ~~W~~ 77,837 85,969
Investments in subsidiaries, associates and joint ventures (480,667 ) (434,253 )
Other temporary differences 64,004 61,817
Unused tax loss carryforwards 174,589 229,410

The amount of unused tax loss carryforwards which are not recognized as deferred tax assets as of December 31, 2023 are expiring within the following periods:

(In millions of won)
Unused tax loss carryforwards
Less than 1 year ~~W~~ 19,087
1 ~ 2 years 14,345
2 ~ 3 years 12,956
More than 3 years 128,201
~~W~~ 174,589
33. Earnings per Share
--- ---

Earnings per share is calculated to profit of the Parent Company per common share and dilutive potential common share, and details are as follows:

(1) Basic earnings per share
1) Basic earnings per share for the years ended December 31, 2023 and 2022 are calculated as follows:<br>
--- ---
(In millions of won, except for share data and basic earnings per share)
--- --- --- --- --- --- ---
2023 2022
Basic earnings per share attributable to owners of the Parent Company: ****
Profit attributable to owners of the Parent Company ~~W~~ 1,093,611 912,400
Interest on hybrid bonds (17,283 ) (14,766 )
Profit attributable to owners of the Parent Company<br><br><br>on common shares 1,076,328 897,634
Weighted average number of common shares outstanding 217,264,615 217,994,490
Basic earnings per share (in won) ~~W~~ 4,954 4,118

98

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

33. Earnings per Share, Continued
(1) Basic earnings per share, Continued
--- ---
2) The weighted average number of common shares outstanding for the years ended December 31, 2023 and 2022<br>are calculated as follows:
--- ---
(In shares)
--- --- --- --- --- --- ---
2023
Number of common shares Weighted average number ofcommon shares
Issued shares as of January 1, 2023 218,833,144 218,833,144
Treasury shares as of January 1, 2023 (801,091 ) (801,091 )
Acquisition of treasury shares (5,773,410 ) (1,154,633 )
Disposal of treasury shares 441,087 387,195
212,699,730 217,264,615
(In shares)
--- --- --- --- --- --- ---
2022
Number of common shares Weighted average number ofcommon shares
Issued shares as of January 1, 2022 218,833,144 218,833,144
Treasury shares as of January 1, 2022 (1,250,992 ) (1,250,992 )
Disposal of treasury shares 449,901 412,338
218,032,053 217,994,490
(2) Diluted earnings per share
--- ---
1) Diluted earnings per share for the years ended December 31, 2023 and 2022 are calculated as follows:<br>
--- ---
(In millions of won, except for share data and diluted earnings per share)
--- --- --- --- ---
2023 2022
Profit attributable to owners of the Parent Company on common shares ~~W~~ 1,076,328 897,634
Adjusted weighted average number of common shares outstanding 217,452,721 218,108,742
Diluted earnings per share (in won) ~~W~~ 4,950 4,116
2) The adjusted weighted average number of common shares outstanding for the years ended December 31, 2023<br>and 2022 are calculated as follows:
--- ---
(In shares)
--- --- --- --- --- ---
2023 2022
Outstanding shares as of January 1 218,032,053 217,582,152
Effect of treasury shares (767,438 ) 412,338
Effect of share option 188,106 114,252
Adjusted weighted average number of common shares outstanding 217,452,721 218,108,742

99

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

34. Dividends
(1) Details of dividends declared
--- ---

Details of dividend declared in Parent company for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won, except for face value and share data)
Year Dividend type Number of sharesoutstanding Face value(in won) Dividend ratio Dividends
2023 Cash dividends (Interim) 218,466,141 100 830 % ~~W~~ 181,327
Cash dividends (Interim) 218,473,140 100 830 % 181,333
Cash dividends (Interim) 216,412,898 100 830 % 179,623
Cash dividends (Year-end) 212,699,730 100 1,050 % 223,335
~~W~~ 765,618
2022 Cash dividends (Interim) 218,002,830 100 830 % ~~W~~ 180,942
Cash dividends (Interim) 218,032,053 100 830 % 180,967
Cash dividends (Interim) 218,032,053 100 830 % 180,967
Cash dividends (Year-end) 218,032,053 100 830 % 180,967
~~W~~ 723,843
(2) Dividends yield ratio
--- ---

Dividends yield ratios for the years ended December 31, 2023 and 2022 are as follows:

(In won)
Year Dividend type Dividend per share Closing priceat year-end Dividend yieldratio
2023 Cash dividends 3,540 50,100 7.07 %
2022 Cash dividends 3,320 47,400 7.00 %

100

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

35. Categories of Financial Instruments
(1) Financial assets by category as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023
Financialassets at<br>FVTPL Equityinstruments atFVOCI Financialassets atamortized cost Derivativeshedginginstrument Total
Cash and cash equivalents ~~W~~ 313,340 — 1,141,638 — 1,454,978
Financial instruments 62,364 — 232,945 — 295,309
Long-term investment securities(*) 280,650 1,398,734 — — 1,679,384
Accounts receivable – trade — — 1,990,849 — 1,990,849
Loans and other receivables 273,945 — 781,157 — 1,055,102
Derivative financial assets 32,324 — — 116,210 148,534
~~W~~ 962,623 1,398,734 4,146,589 116,210 6,624,156
(*) The Group designated ~~W~~1,398,734 million of equity instruments that are not held for<br>trading as financial assets at FVOCI.
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2022
Financialassets at<br>FVTPL Equityinstrumentsat FVOCI Financialassets atamortized cost Derivativeshedginginstrument Total
Cash and cash equivalents ~~W~~ 245,982 — 1,636,309 — 1,882,291
Financial instruments 148,365 — 89,240 — 237,605
Long-term investment securities(*) 221,139 1,189,597 — — 1,410,736
Accounts receivable – trade — — 1,984,772 — 1,984,772
Loans and other receivables 332,669 — 909,003 — 1,241,672
Derivative financial assets 54,009 — — 267,151 321,160
~~W~~ 1,002,164 1,189,597 4,619,324 267,151 7,078,236
(*) The Group designated ~~W~~1,189,597 million of equity instruments that are<br>not held for trading as financial assets at FVOCI.
--- ---

101

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

35. Categories of Financial Instruments, Continued
(2) Financial liabilities by category as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- ---
December 31, 2023
Financial liabilitiesat FVTPL Financial liabilitiesat amortized cost Derivativeshedginginstrument Total
Accounts payable – trade ~~W~~ — 139,876 — 139,876
Derivative financial liabilities 295,876 — 9,212 305,088
Borrowings — 718,078 — 718,078
Debentures — 8,325,643 — 8,325,643
Lease liabilities(*) — 1,611,433 — 1,611,433
Accounts payable - other and others — 4,539,838 — 4,539,838
~~W~~ 295,876 15,334,868 9,212 15,639,956
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2022
Financial liabilitiesat FVTPL Financial liabilities<br>at amortized cost Total
Accounts payable – trade ~~W~~ — 89,255 89,255
Derivative financial liabilities 302,593 — 302,593
Borrowings — 936,110 936,110
Debentures — 8,366,694 8,366,694
Lease liabilities(*) — 1,782,057 1,782,057
Accounts payable - other and others — 5,505,465 5,505,465
~~W~~ 302,593 16,679,581 16,982,174
(*) Lease liabilities are not applicable on category of financial liabilities, but are classified as financial<br>liabilities measured at amortized cost, considering the nature of measuring liabilities.
--- ---

102

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management
(1) Financial risk management
--- ---

The Group is exposed to market risk, credit risk and liquidity risk. Market risk is the risk related to the changes in market prices, such as foreign exchange rates, interest rates and price fluctuations. The Group implements a risk management system to monitor and manage these specific risks.

The Group’s financial assets consist of cash and cash equivalents, financial instruments, long-term investment securities, accounts receivable – trade and other, etc. Financial liabilities consist of accounts payable – trade and other, borrowings, debentures, lease liabilities and others.

1) Market risk
(i) Currency risk
--- ---

The Group has currency risk due to revenue and expenses from its global operations. Major foreign currencies where the currency risk occur are USD, EUR and others. The Group determines the currency risk management policy after considering the nature of business and the presence of methods that mitigate the currency risk for each Group entities. The Group manages currency risk arising from business transactions by using currency forwards, etc. Currency risk occurs on forecasted transactions and recognized assets and liabilities which are denominated in a currency other than the functional currency of each group entity.

Monetary assets and liabilities denominated in foreign currencies as of December 31, 2023 are as follows:

(In millions of won, thousands of foreign currencies)
Liabilities
Won<br>equivalent Foreign<br>currencies Won<br>equivalent
74,608 ~~W~~ 96,200 1,025,369 ~~W~~ 1,322,111
5,391 7,691 132 188
Others 336 —
~~W~~ 104,227 ~~W~~ 1,322,299

All values are in US Dollars.

In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign currency debentures. (See note 22)

As of December 31, 2023, a hypothetical change in exchange rates by 10% would have increased (decreased) the Group’s profit before income tax and equity as follows:

(In millions of won)
Equity
If decreased by 10% If increased by 10% If decreased by 10%
5,521 (5,521 ) ~~W~~ 5,521 (5,521 )
750 (750 ) 750 (750 )
Others 34 (34 ) 34 (34 )
6,305 (6,305 ) ~~W~~ 6,305 (6,305 )

All values are in Euros.

103

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
1) Market risk, Continued
--- ---
(ii) Interest rate risk
--- ---

The interest rate risk of the Group arises from borrowings, debentures and long-term payables – other. Since the Group’s interest-bearing assets are mostly fixed interest bearing assets, the Group’s revenue and operating cash flows from the interest-bearing assets are not influenced by the changes in market interest rates.

The Group performs various analysis to reduce interest rate risk and to optimize its financing. To minimize risks arising from changes in interest rates, the Group takes various measures such as refinancing, renewal, alternative financing and hedging.

As of December 31, 2023, floating-rate borrowings and debentures amount to ~~W~~90,000 million and ~~W~~386,820 million, respectively, and the Group has entered into interest rate swaps to hedge interest rate risk related to the floating-rate debentures. Therefore, profit before income tax for the year ended December 31, 2023 would not have been affected by the changes in interest rates of floating-rate debentures.

If the interest rate increases (decreases) 1%p with all other variables held constant, profit before income tax and equity for the year ended December 31, 2023 would change by ~~W~~900 million in relation to the floating-rate borrowings which have not entered into interest rate swaps.

As of December 31, 2023, the floating-rate long-term payables – other are ~~W~~1,290,225 million. If the interest rate increases (decreases) 1%p with all other variables held constant, profit before income tax and equity for the year ended December 31, 2023 would change by ~~W~~12,902 million in relation to the floating-rate long-term payables – other that are exposed to interest rate risk.

Interest rate benchmark reform andassociated risks

In case of Korean CD rate, the alternative interest rate benchmark has selected as Korea Overnight Financing Repo Rate(“KOFR”) and as part of interest rate benchmark reform, the interest rate has been disclosed through Korea Securities Depository since November 26, 2021. KOFR is calculated using the overnight RP rate as collateral for government bonds and monetary stabilization bonds. However, unlike LIBOR, calculation of CD rate will not be suspended, thereby making it unclear when and how the transition to KOFR will take place.

104

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
1) Market risk, Continued
--- ---

Non-derivative financial liabilities

The Parent Company’s non-derivative financial liabilities subject to interest rate benchmark reform as of December 31, 2022 were floating-rate bonds indexed to USD LIBOR. The Group completed discussion with the counterparty about including the fallback clauses as of December 31, 2023.

Derivatives

Most of the Group’s derivative instruments designated as cash flow hedge are governed by contracts based on the International Swaps and Derivatives Association(“ISDA”)’s master agreements. As part of interest rate benchmark reform, ISDA has included a new fallback clause regarding which alternative benchmark interest rate to be applied when the calculation of major IBOR is suspended in the master agreement. The master agreement is applied to derivative contracts executed after January 25, 2021, and the transaction parties are required to adhere to ISDA protocol to include the same fallback clause into derivative contracts executed before January 25, 2021. The Group has adhered to ISDA protocol for transition to the alternative benchmark interest rate and the fallback clause will be included when counterparties adhere to the protocol to include. The Group’s counterparties have adhered to ISDA protocol and agreed to include the fallback clause.

(iii) Price fluctuations risk

As of December 31, 2023, the Group holds equity instruments in an active trading market, exposing it to price fluctuation risk. Assuming all other variables remain constant, the impact on the Group’s profit before income tax and equity resulting from a 10% fluctuation in the per-share stock price of the equity securities for the year ended December 31, 2023 is as follows.

(In millions of won)
Profit before income tax Equity
If increased by 10% If decreased by 10% If increased by 10% If decreased by 10%
~~W~~ — — ~~W~~ 85,006 (85,006 )

105

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
2) Credit risk
--- ---

The maximum credit exposure as of December 31, 2023 and 2022 are as follows:

(In millions of won)
December 31, 2023 December 31, 2022
Cash and cash equivalents ~~W~~ 1,454,773 1,882,093
Financial instruments 295,309 237,605
Investment securities — 900
Accounts receivable – trade 1,990,849 1,984,772
Contract assets 129,771 132,221
Loans and other receivables 1,055,102 1,241,672
Derivative financial assets 148,534 321,160
~~W~~ 5,074,338 5,800,423

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. To manage credit risk, the Group evaluates the credit worthiness of each customer or counterparty by considering the party’s financial information, its own trading records and other factors. Based on such information, the Group establishes credit limits for each customer or counterparty.

(i) Accounts receivable – trade and contract assets

The Group establishes a loss allowance in respect of accounts receivable – trade and contract assets. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that are expected to occur. The collective loss allowance is determined based on historical data of collection statistics for similar financial assets. Details of changes in loss allowance for the year ended December 31, 2023 are included in note 6.

(ii) Debt investments

The credit risk arises from debt investments included in ~~W~~295,309 million of financial instruments, and ~~W~~1,055,102 million of loans and other receivables. To limit the exposure to this risk, the Group transacts only with financial institutions with credit ratings that are considered to be low credit risk.

Most of the Group’s debt investments are considered to have a low risk of default and the borrower has a strong capacity to meet its contractual cash flow obligations in the near term. Thus, the Group measured the loss allowance for the debt investments at an amount equal to 12-month expected credit losses.

Meanwhile, the Group monitors changes in credit risk at each reporting date. The Group recognized the loss allowance at an amount equal to lifetime expected credit losses when the credit risk on the debt investments is assumed to have increased significantly if it is more than 30 days past due.

106

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
2) Credit risk, Continued
--- ---
(ii) Debt investments, Continued
--- ---

The Group’s maximum exposure to credit risk is equal to each financial asset’s carrying amount. The gross carrying amounts of each financial asset except for the accounts receivable – trade and derivative financial assets as of December 31, 2023 are as follows.

(In millions of won)
Financial assetsat FVTPL Financial assets at amortized cost
12-month ECL Lifetime ECL –<br>not credit impaired Lifetime ECL –credit impaired
Gross amount ~~W~~ 336,309 1,009,175 8,914 71,677
Loss allowance — (3,314 ) (3,095 ) (69,255 )
Carrying amount ~~W~~ 336,309 1,005,861 5,819 2,422

Changes in the loss allowance for the debt investments for the year ended December 31, 2023 are as follows:

(In millions of won)
12-month ECL Lifetime ECL –<br>not credit impaired Lifetime ECL –credit impaired Total
December 31, 2022 ~~W~~ 3,081 3,314 83,685 90,080
Remeasurement of loss allowance, net 1,105 3,049 1,102 5,256
Transfer to lifetime ECL – not credit impaired (868 ) 868 — —
Transfer to lifetime ECL – credit impaired — (4,136 ) 4,136 —
Amounts written off (4 ) — (26,583 ) (26,587 )
Recovery of amounts written off — — 6,915 6,915
December 31, 2023 ~~W~~ 3,314 3,095 69,255 75,664
(iii) Cash and cash equivalents
--- ---

The Group deposits ~~W~~1,454,773 million of cash and cash equivalents as of December 31, 2023 (~~W~~1,882,093 million as of December 31, 2022) at banks and financial institutions with credit ratings above the certain level. Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the short maturities of the exposures. The Group considered that its cash and cash equivalents have low credit risk based on the credit ratings of the counterparties assigned by external credit rating agencies.

107

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
3) Liquidity risk
--- ---

The Group’s approach to managing liquidity is to ensure that it will always maintain sufficient cash and cash equivalents balances and have enough liquidity through various committed credit lines. The Group maintains enough liquidity within credit lines through active operating activities.

Contractual maturities of financial liabilities as of December 31, 2023 are as follows:

(In millions of won)
Carryingamount Contractualcash flows Less than1 year 1 - 5 years More than 5years
Accounts payable - trade ~~W~~ 139,876 139,876 139,876 — —
Borrowings(*) 718,078 739,791 417,056 322,735 —
Debentures(*) 8,325,643 9,532,468 1,493,063 5,800,210 2,239,195
Lease liabilities 1,611,433 1,899,929 386,202 1,026,475 487,252
Accounts payable – other and others(*) 4,539,838 4,614,608 3,642,356 972,202 50
~~W~~ 15,334,868 16,926,672 6,078,553 8,121,622 2,726,497
(*) The contractual cash flow is amount that includes interest payables.
--- ---

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or in significantly different amounts.

As of December 31, 2023, periods in which cash flows from cash flow hedge derivatives are expected to occur are as follows:

(In millions of won)
Carryingamount Contractualcash flows Less than 1year 1 - 5 years
Assets ~~W~~ 116,210 123,260 30,928 92,332
Liabilities (9,212 ) (10,610 ) 2,970 (13,580 )
106,998 112,650 33,898 78,752

108

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(2) Capital management
--- ---

The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of its debt and equity structure. The overall strategy of the Group is the same as that of the Group as of and for the year ended December 31, 2022.

The Group monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total liabilities divided by total equity from the consolidated financial statements.

Debt-equity ratio as of December 31, 2023 and 2022 are as follows:

(In millions of won)
December 31, 2023 December 31, 2022
Total liabilities ~~W~~ 17,890,828 19,153,066
Total equity 12,228,399 12,155,196
Debt-equity ratios 146.31 % 157.57 %
(3) Fair value
--- ---
1) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of<br>December 31, 2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023
Carryingamount Level 1 Level 2 Level 3 Total
Financial assets that are measured at fair value:
FVTPL ~~W~~ 962,623 — 649,649 312,974 962,623
Derivative hedging instruments 116,210 — 116,210 — 116,210
FVOCI 1,398,734 1,135,832 — 262,902 1,398,734
~~W~~ 2,477,567 1,135,832 765,859 575,876 2,477,567
Financial liabilities that are measured at fair value:
FVTPL 295,876 — — 295,876 295,876
Derivative hedging instruments 9,212 — 9,212 — 9,212
~~W~~ 305,088 — 9,212 295,876 305,088
Financial liabilities that are not measured at fair value:
Borrowings ~~W~~ 718,078 — 695,320 — 695,320
Debentures 8,325,643 — 8,052,193 — 8,052,193
Long-term payables – other 1,260,453 — 1,294,977 — 1,294,977
~~W~~ 10,304,174 — 10,042,490 — 10,042,490

109

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(3) Fair value, Continued
--- ---
2) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of<br>December 31, 2022 are as follows:
--- ---
(In millions of won) December 31, 2022
--- --- --- --- --- --- --- --- --- --- ---
Carryingamount Level 1 Level 2 Level 3 Total
Financial assets that are measured at fair value:
FVTPL ~~W~~ 1,002,164 44,431 727,014 230,719 1,002,164
Derivative hedging instruments 267,151 — 267,151 — 267,151
FVOCI 1,189,597 993,765 — 195,832 1,189,597
~~W~~ 2,458,912 1,038,196 994,165 426,551 2,458,912
Financial liabilities that are measured at fair value:
FVTPL ~~W~~ 302,593 — — 302,593 302,593
Financial liabilities that are not measured at fair value:
Borrowings ~~W~~ 936,110 — 911,597 — 911,597
Debentures 8,366,694 — 7,813,420 — 7,813,420
Long-term payables – other 1,638,341 — 1,614,934 — 1,614,934
~~W~~ 10,941,145 — 10,339,951 — 10,339,951

The above information does not include fair values of financial assets and liabilities of which fair values have not been measured as carrying amounts are reasonable approximation of fair values.

Fair value of the financial instruments that are traded in an active market (financial assets at FVOCI and financial assets at FVTPL) is measured based on the bid price at the end of the reporting date.

The Group uses various valuation methods for determination of fair value of financial instruments that are not traded in an active market. Derivative financial contracts and long-term liabilities are measured using the discounted present value methods. Other financial assets are determined using the methods such as discounted cash flow and market approach. Inputs used in such valuation methods include swap rate, interest rate, and risk premium, and the Group performs valuation using the inputs which are consistent with natures of assets and liabilities measured.

Interest rates used by the Group for the fair value measurement as of December 31, 2023 are as follows:

Interest rate
Derivative instruments 2.18% ~ 6.25%
Borrowings and debentures 3.84% ~ 18.12%
Long-term payables – other 3.72% ~ 3.85%

110

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

36. Financial Risk Management, Continued
(3) Fair value, Continued
--- ---
3) There have been no transfers between Level 1 and Level 2 for the year ended December 31, 2023.<br>The changes of financial instruments classified as Level 3 for the year ended December 31, 2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance as ofJanuary 1,<br>2023 Gain (loss)for the year OCI Acquisition Disposal Balance as of<br>December 31,2023
Financial assets ****
FVTPL ~~W~~ 230,719 (41,556 ) 1,602 157,356 (35,147 ) 312,974
FVOCI 195,832 — 14,448 52,622 — 262,902
~~W~~ 426,551 (41,556 ) 16,050 209,978 (35,147 ) 575,876
Financial liabilities ****
FVTPL ~~W~~ (302,593 ) 6,717 — — — (295,876 )
(4) Enforceable master netting agreement or similar agreement
--- ---

Carrying amounts of financial instruments recognized to which offset agreements are applicable as of December 31, 2023 and 2022 are as follows:

(In millions of won)
December 31, 2023
Gross financialinstrumentsrecognized Amountoffset Net financial<br>instruments<br>presented on the<br>consolidated statements of<br>financialposition
Financial assets:
Accounts receivable – trade and others ~~W~~ 194,374 (183,520 ) 10,854
Financial liabilities:
Accounts payable – other and others ~~W~~ 190,630 (183,520 ) 7,110
(In millions of won)
--- --- --- --- --- --- --- ---
December 31, 2022
Gross financialinstrumentsrecognized Amountoffset Net financial<br>instrumentspresented on theconsolidated statements offinancial position
Financial assets:
Accounts receivable – trade and others ~~W~~ 245,835 (236,921 ) 8,914
Financial liabilities:
Accounts payable – other and others ~~W~~ 244,509 (236,921 ) 7,588

111

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

37. Transactions with Related Parties
(1) List of related parties
--- ---
Relationship Company
--- ---
Ultimate controlling entity SK Inc.
Joint venture UTC Kakao-SK Telecom ESG Fund
Associates SK China Company Ltd. and 44 others
Others The Ultimate controlling entity’s subsidiaries and associates and others

As of December 31, 2023, the Group belongs to SK Group, a conglomerate as defined in the MonopolyRegulation and Fair Trade Act of the Republic of Korea. All of the other entities included in SK Group are considered related parties of the Group.

(2) Compensation for the key management

The Parent Company considers registered directors who have substantial role and responsibility in planning, operations, and relevant controls of the business as key management. The compensation given to such key management for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 2022
Salaries ~~W~~ 4,139 3,487
Defined benefits plan expenses 1,005 761
Share option 2,542 1,598
~~W~~ 7,686 5,846

Compensation for the key management includes salaries, non-monetary salaries, and defined benefits made in relation to the pension plan and compensation expenses related to share options granted.

112

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

37. Transactions with Related Parties, Continued
(3) Transactions with related parties for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- ---
2023
Scope Company Operating revenueand others Operatingexpense andothers (*1) Acquisition ofproperty andequipmentand others
Ultimate Controlling Entity SK Inc.(*2) ~~W~~ 21,438 633,265 120,926
Associates F&U Credit information Co., Ltd. 3,876 49,398 552
SK USA, Inc. — 5,384 —
Daehan Kanggun BcN Co., Ltd. 12,972 — —
Others(*3) 8,806 15,962 865
25,654 70,744 1,417
Others SK Innovation Co., Ltd. 33,571 18,977 —
SK Energy Co., Ltd. 4,113 540 —
SK Geo Centric Co., Ltd. 835 2 —
SK Networks Co., Ltd.(*4) 5,876 970,662 1
SK Networks Service Co., Ltd. 5,471 72,274 8,393
SK Ecoplant Co., Ltd. 2,547 — —
SK hynix Inc. 58,725 178 —
SK Shieldus Co., Ltd. 59,974 147,333 26,021
Content Wavve Corp. 14,524 87,263 176
Eleven Street Co., Ltd. 72,683 34,053 —
SK Planet Co., Ltd. 18,308 88,250 16,338
SK RENT A CAR Co., Ltd. 14,023 20,231 —
SK Magic Co., Ltd. 1,632 1,142 —
Tmap Mobility Co., Ltd. 24,862 10,003 —
Onestore Co., Ltd. 16,265 166 —
Dreamus Company 6,202 77,452 284
UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.) 172 50,263 52,733
Happy Narae Co., Ltd. 1,472 35,461 92,375
Others 52,039 21,884 13,292
393,294 1,636,134 209,613
~~W~~ 440,386 2,340,143 331,956
(*1) Operating expenses and others include lease payments by the Group.
--- ---
(*2) Operating expenses and others include ~~W~~218,019 million of dividends paid<br>by the Parent Company.
--- ---
(*3) Operating revenue and others include ~~W~~8,806 million of dividends<br>received which was deducted from the investment in associates.
--- ---
(*4) Operating expenses and others include costs for handset purchases amounting to<br>~~W~~915,339 million.
--- ---

113

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

37. Transactions with Related Parties, Continued
(3) Transactions with related parties for the years ended December 31, 2023 and 2022 are as follows,<br>Continued:
--- ---
(In millions of won) 2022
--- --- --- --- --- --- --- ---
Scope Company Operating revenueand others Operatingexpense andothers (*1) Acquisition ofproperty andequipmentand others
Ultimate Controlling Entity SK Inc.(*2) ~~W~~ 22,162 662,247 114,895
Associates F&U Credit information Co., Ltd. 3,490 49,227 265
HanaCard Co., Ltd. (*3) 8,932 1,820 22
Daehan Kanggun BcN Co., Ltd. 20,290 — —
Others(*4) 13,795 5,608 80
46,507 56,655 367
Others SK Innovation Co., Ltd. 27,524 19,598 —
SK Energy Co., Ltd. 4,585 710 —
SK Geo Centric Co., Ltd. 925 1 —
SK Networks Co., Ltd.(*5) 4,312 904,320 288
SK Networks Service Co., Ltd. 6,110 71,432 7,891
SK Ecoplant Co., Ltd. 3,330 112 —
SK hynix Inc. 60,933 75 —
SK Shieldus Co., Ltd. 39,455 147,731 35,854
Content Wavve Corp. 6,797 108,760 229
Eleven Street Co., Ltd. 71,972 31,589 —
SK Planet Co., Ltd. 19,753 95,261 17,481
SK RENT A CAR Co., Ltd. 14,992 15,891 —
SK Magic Co., Ltd. 2,204 1,071 —
Tmap Mobility Co., Ltd. 22,011 4,973 892
Onestore Co., Ltd. 17,181 24 —
Dreamus Company 7,235 85,193 649
UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.) 283 46,222 53,897
Happy Narae Co., Ltd. 1,637 24,727 143,188
Others 40,058 29,610 20,555
351,297 1,587,300 280,924
~~W~~ 419,966 2,306,202 396,186
(*1) Operating expenses and others include lease payments by the Group.
--- ---
(*2) Operating expenses and others include ~~W~~272,524 million of dividends paid<br>by the Parent Company.
--- ---
(*3) HanaCard Co., Ltd. was excluded from the related parties due to the disposal of the Group’s shares in the<br>entity for the year ended December 31, 2022, and the transactions above occurred before the disposal.
--- ---
(*4) Operating revenue and others include ~~W~~13,700 million of dividends<br>deducted from the investment in associates as a result of receipt by the Group.
--- ---
(*5) Operating expenses and others include costs for handset purchases amounting to<br>~~W~~844,157 million.
--- ---

114

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

37. Transactions with Related Parties, Continued
(4) Account balances with related parties as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- ---
December 31, 2023
Receivables Payables
Scope Company Loans Accounts receivable –trade, etc. Accounts payable– other, etc.
Ultimate Controlling Entity SK Inc. ~~W~~ — 1,535 106,546
Associates F&U Credit information Co., Ltd. — 325 4,417
Daehan Kanggun BcN Co., Ltd.(*1) 22,147 4,701 —
Others — 3,910 3,476
22,147 8,936 7,893
Others SK Innovation Co., Ltd. — 8,697 28,646
SK Networks Co., Ltd. — 120 156,316
Mintit Co., Ltd. — 17,036 —
SK hynix Inc. — 8,022 2,251
Happy Narae Co., Ltd. — 101 5,686
SK Shieldus Co., Ltd. — 12,723 14,784
Content Wavve Corp. — 1,476 2
Incross Co., Ltd. — 2,239 943
Eleven Street Co., Ltd. — 6,138 6,103
SK Planet Co., Ltd. — 9,981 18,833
SK RENT A CAR Co., Ltd. — 866 33,365
UNA Engineering Inc.<br> <br>(Formerly, UbiNS<br>Co., Ltd.) — 1 10,764
Others(*2) — 15,082 30,184
— 82,482 307,877
~~W~~ 22,147 92,953 422,316
(*1) As of December 31, 2023, the Parent Company recognized loss allowance for the entire balance of loans to<br>Daehan Kanggun BcN Co., Ltd.
--- ---
(*2) During the year ended December 31, 2022, SK Telecom Innovation Fund, L.P., a subsidiary of the Parent<br>Company, entered into a convertible loan agreement for USD 13,000,000 with id Quantique SA, classified as an other related party. SK Telecom Innovation Fund, L.P. acquired shares of id Quantique SA amounting to USD 26,731,250, including common<br>shares converted from the entire balance of loan for the year ended December 31, 2023
--- ---

115

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

37. Transactions with Related Parties, Continued
(4) Account balances with related parties as of December 31, 2023 and 2022 are as follows, Continued:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- ---
December 31, 2022
Receivables Payables
Scope Company Loans Accounts receivable– trade, etc. Accounts payable– other, etc.
Ultimate Controlling Entity SK Inc. ~~W~~ — 2,383 103,141
Associates F&U Credit information Co., Ltd. — 64 5,682
SK USA, Inc. — — 1,519
Wave City Development Co., Ltd.(*1) — 901 —
Daehan Kanggun BcN Co., Ltd.(*2) 22,147 3,199 —
Others — — 65
22,147 4,164 7,266
Others SK Innovation Co., Ltd. — 9,726 33,091
SK Networks Co., Ltd. — 488 113,943
Mintit Co., Ltd. — 35,058 3
SK hynix Inc. — 15,494 311
Happy Narae Co., Ltd. — 31 31,979
SK Shieldus Co., Ltd. — 14,035 17,447
Content Wavve Corp. — 349 19,244
Incross Co., Ltd. — 3,774 16,152
Eleven Street Co., Ltd. — 6,797 13,026
SK Planet Co., Ltd. — 8,190 43,238
SK RENT A CAR Co., Ltd. — 1,291 22,895
UNA Engineering Inc.<br><br><br>(Formerly, UbiNS Co., Ltd.) — — 21,179
Others(*3) 16,475 13,996 41,890
16,475 109,229 374,398
~~W~~ 38,622 115,776 484,805
(*1) As of December 31, 2022, the Parent Company recognized loss allowance amounting to<br>~~W~~379 million for accounts receivable – trade.
--- ---
(*2) As of December 31, 2022, the Parent Company recognized loss allowance for the entire balance of loans to<br>Daehan Kanggun BcN Co., Ltd.
--- ---
(*3) During the year ended December 31, 2022, SK Telecom Innovation Fund, L.P., a subsidiary of the Parent<br>Company, entered into a convertible loan agreement for USD 13,000,000 with id Quantique SA, classified as other related party.
--- ---
(5) The Group has granted SK REIT Co., Ltd. The right of first offer regarding the disposal of real estate owned by<br>the Group. Whereby, the negotiation period is within 3 to 5 years from June 30, 2021, date of agreement, and the Group has been granted the right by SK REIT Co., Ltd. to lease the real estate in preference to a third party if SK REIT Co., Ltd.<br>purchases the real estate from the Group.
--- ---
(6) The details of additional investments and disposal of associates and joint ventures for the year ended<br>December 31, 2023 are as presented in note 12.
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116

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

38. Commitments and Contingencies
(1) Collateral assets and commitments
--- ---

SK Broadband Co., Ltd., a subsidiary of the Parent Company, has pledged its properties as collateral for leases on buildings in the amount of ~~W~~1,228 million as of December 31, 2023.

(2) Legal claims and litigations

As of December 31, 2023, the Group is involved in various legal claims and litigation. Provision recognized in relation to these claims and litigation is immaterial. In connection with those legal claims and litigation for which no provision was recognized, management does not believe the Group has a present obligation, nor is it expected any of these claims or litigation will have a material impact on the Group’s financial position or operating results in the event an outflow of resources is ultimately necessary.

(3) Accounts receivable from sale of handsets

The sales agents of the Parent Company sell handsets to the Parent Company’s subscribers on an installment basis. The Parent Company entered into comprehensive agreements to purchase accounts receivable from handset sales with retail stores and authorized dealers and to transfer the accounts receivable from handset sales to special purpose companies which were established with the purpose of liquidating receivables, respectively.

The accounts receivable from sale of handsets amounting to ~~W~~291,747 million and ~~W~~357,467 million as of December 31, 2023 and 2022, respectively, which the Parent Company purchased according to the relevant comprehensive agreement are recognized as accounts receivable – other and long-term accounts receivable – other.

(4) Obligation relating to spin-off

The Parent Company carried out the spin-off of its business of managing investments in semiconductor, New Information and Communication Technologies(“ICT”) and other businesses and making new investments on November 1, 2021. The Parent Company has obligation to jointly and severally reimburse the Parent Company’s liabilities incurred prior to the spin-off with SK Square Co., Ltd., the spin-off company, in accordance with Article 530-9 (1) of Korean Commercial Act.

117

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

38. Commitments and Contingencies, Continued
(5) Commitment of the acquisition and disposal of shares
--- ---

The Board of Directors of the Parent Company resolved the acquisition and disposal of certain shares in order to strengthen the strategic alliance with Hana Financial Group Inc.(“HFG”) at the Board of Directors’ meeting held on July 22, 2022. In accordance with the resolution, as of July 27, 2022, the Parent Company disposed of its entire common shares of HanaCard Co., Ltd. (39,902,323 shares) and entire common shares of Finnq Co., Ltd. (6,370,000 shares) to HFG for ~~W~~330,032 million and ~~W~~5,733 million, respectively. Through the agreement with HFG, the Parent Company is obligated to acquire HFG’s common shares from July 27, 2022 to January 31, 2024, after depositing ~~W~~330,032 million in a specific money trust, and the Parent Company completed the acquisition of the shares for the year ended December 31, 2022. As a part of the aforementioned transaction, as of July 27, 2022, the Parent Company disposed of its entire common shares of SK Square Co., Ltd. (767,011 shares) to HanaCard Co., Ltd. for ~~W~~31,563 million, and HanaCard Co., Ltd. is obligated to acquire the Parent Company’s common shares from July 27, 2022 to January 31, 2024, after depositing ~~W~~68,437 million in a specific money trust, and completed the acquisition of the shares for the year ended December 31, 2022. The Parent Company, HFG, and HanaCard Co., Ltd. may not dispose of shares they have acquired under the aforementioned transaction until March 31, 2025.

(6) The acquisition cost of property and equipment and intangible assets to be incurred in subsequent periods under<br>arrangements is ~~W~~44,202 million as of December 31, 2023.
(7) According to the covenant for bond issuance and borrowings, the Group is required to maintain specific<br>financial ratios, such as the debt ratio, at certain levels. The funds obtained must be used for specified purposes only, and regular reporting to lenders is mandated. Additionally, the contracts include clauses that restrict both provision of<br>additional collateral of assets held by the Group and disposal of certain assets.
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118

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

39. Statements of Cash Flows
(1) Adjustments for income and expenses from operating activities for the years ended December 31, 2023 and<br>2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Interest income ~~W~~ (70,055 ) (58,472 )
Dividends (43,014 ) (2,552 )
Gain on foreign currency translations (1,199 ) (2,095 )
Gain on sale of accounts receivable – other — (1,043 )
Gain (loss) relating to investments in associates and joint ventures, net (10,928 ) 81,707
Gain on disposal of property and equipment and intangible assets (21,898 ) (15,985 )
Gain relating to financial instruments at FVTPL (115,043 ) (94,393 )
Interest expense 389,813 328,307
Loss on foreign currency translations 1,227 3,814
Loss on sale of accounts receivable – other 65,027 61,841
Income tax expense 342,242 288,321
Expense related to defined benefit plan 124,439 134,509
Share option 18,889 84,463
Bonus paid by treasury shares 20,420 25,425
Depreciation and amortization 3,750,796 3,755,312
Bad debt for accounts receivables – trade 37,906 27,053
Impairment loss on property and equipment and intangible assets 10,369 17,027
Loss on disposal of property and equipment and intangible assets 9,369 20,465
Bad debt for accounts receivable – other 5,256 3,011
Loss relating to financial instruments at FVTPL 49,641 41,597
Loss on disposal of investment assets — 1,283
Other income (expenses) (16,919 ) 19,843
~~W~~ 4,546,338 4,719,438

119

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

39. Statements of Cash Flows, Continued
(2) Changes in assets and liabilities from operating activities for the years ended December 31, 2023 and 2022<br>are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Accounts receivable – trade ~~W~~ (46,531 ) (60,546 )
Accounts receivable – other 79,223 54,988
Advanced payments 3,986 (25,377 )
Prepaid expenses (2,262 ) 11,989
Inventories (17,549 ) 39,633
Long-term accounts receivable – other 66,036 (74,729 )
Contract assets 3,877 (13,400 )
Guarantee deposits (2,117 ) 6,245
Accounts payable – trade 50,442 (101,465 )
Accounts payable – other (188,318 ) 369,693
Withholdings (3,714 ) 4,964
Contract liabilities (19,620 ) 18,910
Deposits received (1,744 ) 99
Accrued expenses (73,734 ) 116,039
Provisions (566 ) (20 )
Long-term provisions (1,061 ) (13,792 )
Plan assets (17,772 ) (132,131 )
Retirement benefits payment (99,396 ) (79,117 )
Others (3,343 ) (3,877 )
~~W~~ (274,163 ) 118,106
(3) Significant non-cash transactions for the years ended December 31,<br>2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Decrease in accounts payable – other relating to the acquisition of property and equipment<br>and intangible assets ~~W~~ (305,823 ) (39,977 )
Increase of<br>right-of-use assets 345,761 720,932
Transfer from property and equipment to investment property 13,900 4,732

120

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

39. Statements of Cash Flows, Continued
(4) Reconciliation of liabilities arising from financing activities for the years ended December 31, 2023 and<br>2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Non-cash transactions
January 1,2023 Cash flows Exchange ratechanges(*) Fair valuechanges Otherchanges December 31,2023
Total liabilities from financing activities:
Short-term borrowings ~~W~~ 142,998 (142,998 ) — — — —
Long-term borrowings 793,113 (75,050 ) — — 15 718,078
Debentures 8,366,693 (84,082 ) 36,701 — 6,331 8,325,643
Lease liabilities 1,782,057 (402,465 ) — — 231,841 1,611,433
Long-term payables – other 1,638,341 (400,245 ) — — 22,357 1,260,453
Derivative financial liabilities — — — (9,212 ) — (9,212 )
Derivative financial assets (267,151 ) 183,090 — (32,149 ) — (116,210 )
~~W~~ 12,456,051 (921,750 ) 36,701 (41,361 ) 260,544 11,790,185
Other cash flows from financing activities:
Payments of cash dividends ~~W~~ (773,806 )
Payments of interest on hybrid bonds (17,283 )
Acquisition of treasury shares (285,487 )
Proceeds of hybrid bonds 398,509
Repayments of hybrid bonds (400,000 )
Cash inflow from transactions with the non-controlling<br>shareholders 160
Cash outflow from transactions with the non-controlling<br>shareholders (21,333 )
(1,099,240 )
~~W~~ (2,020,990)
(*) The effect of changes in foreign exchange rates for financial liabilities at amortized cost.<br>
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121

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

39. Statements of Cash Flows, Continued
(4) Reconciliation of liabilities arising from financing activities for the years ended December 31, 2023 and<br>2022 are as follows, Continued:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Non-cash transactions
January 1,2022 Cash flows Exchange ratechanges(*) Fair valuechanges Business<br>combinations Otherchanges December 31,2022
Total liabilities from financing activities:
Short-term borrowings ~~W~~ 12,998 130,000 — — — — 142,998
Long-term borrowings 394,187 398,529 — — — 397 793,113
Debentures 8,426,683 (189,878 ) 122,350 — — 7,538 8,366,693
Lease liabilities 1,534,281 (401,054 ) — — 6,503 642,327 1,782,057
Long-term payables – other 2,009,833 (400,245 ) — — — 28,753 1,638,341
Derivative financial liabilities 111 — — (111 ) — — —
Derivative financial assets (182,661 ) 768 — (85,258 ) — — (267,151 )
~~W~~ 12,195,432 (461,880 ) 122,350 (85,369 ) 6,503 679,015 12,456,051
Other cash flows from financing activities:
Payments of cash dividends ~~W~~ (904,020 )
Payments of interest on hybrid bonds (14,766 )
Cash inflow from transactions with the non-controlling<br>shareholders 31,151
Cash outflow from transactions with the non-controlling<br>shareholders (367 )
(888,002 )
~~W~~ (1,349,882 )
(*) The effect of changes in foreign exchange rates for financial liabilities at amortized cost.<br>
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122

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

40. Emissions Liabilities
(1) The quantity of emissions rights allocated free of charge for each implementation year as of December 31,<br>2023 are as follows:
--- ---
(In tCO2-eQ)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Quantities<br>allocated<br>in 2021 Quantities<br>allocated<br>in 2022 Quantitiesallocated<br>in 2023 Quantitiesallocated<br>in 2024 Quantitiesallocated<br>in 2025 Total
Emissions rights allocated free of charge(*) 1,385,433 1,602,751 1,443,977 1,300,465 1,300,465 7,033,091
(*) The changes in quantity due to additional allocation, cancellation of allocation and others are considered.<br>
--- ---
(2) Changes in emissions rights quantities the Group held are as follows:
--- ---
(In tCO2-eQ)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Quantitiesallocated in 2021 Quantitiesallocated in 2022 Quantitiesallocated in 2023 Total
Beginning — — 306,575 306,575
Allocation at no cost 1,385,433 1,602,751 1,443,977 4,432,161
Purchase — 213,609 — 213,609
Surrender or shall be surrendered (1,421,570 ) (1,515,595 ) (1,657,664 ) (4,594,829 )
Borrowed 36,137 5,810 — 41,947
Ending — 306,575 92,888 399,463
(3) As of December 31, 2023, the estimated annual greenhouse gas emissions quantities of the Group are<br>1,657,664 tCO2-eQ.
--- ---

123

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

41. Non-current Assets Held for Sale

Non-current assets held for sale as of December 31, 2023 and 2022 are as follows:

(In millions of won)
December 31,2023 December 31,2022
Investments in associates Daekyo Wipoongdangdang Contents Korea Fund ~~W~~ 746 1,062
Long-term Digital Content Korea Fund 3,395 3,645
Investment securities InterVest Fund — 107
Central Fusion Content Fund 884 1,563
P&I Cultural Innovation Fund 1,892 —
Inventories — 505 —
Prepaid Expenses — 1,489 —
Property and Equipment — 1,604 —
~~W~~ 10,515 6,377

124

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

42. Subsequent Events
(1) On January 25, 2024, the Board of Directors of the Parent Company approved the disposal of treasury shares and<br>details of the transaction are as follows:
--- ---
Information of disposal
--- ---
Number of treasury shares 498,135 Common shares
Price of the treasury shares (in won) Per share ~~W~~49,600
Aggregate disposal value ~~W~~24,707 million
Disposal date January 29, 2024
Purpose of disposal Allotment of shares as bonus payment
Method of disposal Over-the-counter
(2) The Board of Directors of the Parent Company approved the acquisition and retirement of treasury shares of the<br>Parent Company at the Board of Directors’ meeting held on July 26, 2023. The Parent Company acquired a total of 6,090,410 shares during the period from July 27, 2023 to January 26, 2024 through a trust agreement and 4,043,091<br>shares were retired on February 5, 2024.
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125

Audit opinion on internal control over financial reporting

The accompanying independent auditor’s report on internal control over financial reporting is attached as a result of auditing the internal control over financial reporting of SK Telecom Co., Ltd. and its subsidiaries (the “Group”) and the consolidated financial statements of the Group for the year ended December 31, 2023 in accordance with the Article 8 of the Act on ExternalAudit of Stock Companies.

Attachments:

1. Independent auditor’s report on Internal Control over Financial Reporting
2. Management’s Annual Report on Internal Control over Financial Reporting
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Ernst & Young Han Young<br> <br>Taeyoung Building,<br>111,Yeouigongwon-ro,<br> <br>Yeongdeungpo-gu, Seoul 07241 Korea<br> <br><br><br><br>Tel: +82 2 3787 6600<br> <br>Fax: +82 2 783 5890<br><br><br>ey.com/kr

Independent auditor’s report on Internal Control over Financial Reporting

(Based on a report originally issued in Korean)

SK Telecom Co., Ltd.:

The Shareholders and Board of Directors

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting (“ICFR”) of SK Telecom Co., Ltd. and its subsidiaries (the “Group”) based on the Conceptual Framework for Designing and Operating ICFR (“ICFR Design and Operation Framework”) established by the Operating Committee of ICFR in Korea (the “ICFR Committee”) as of December 31, 2023.

In our opinion, the Group’s ICFR has been effectively designed and operated, in all material respects, as of December 31, 2023, in accordance with the ICFR Design and Operation Framework.

We also have audited, in accordance with Korean Standards on Auditing (“KSA”), the consolidated statement of financial position as of December 31, 2023, the consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of material accounting policies, of the Group, and our report dated March 6, 2024 expressed an unqualified opinion thereon.

Basis forOpinion on ICFR

We conducted our audit in accordance with KSA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of ICFR section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of ICFR in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for ICFR

Management is responsible for designing, operating, and maintaining effective ICFR, and for its assessing the effectiveness of ICFR, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Those charged with governance are responsible for overseeing the Group’s ICFR.

Auditor’s Responsibilities for the Audit of ICFR

Our responsibility is to express an opinion of the Group’s ICFR based on our audit. We conducted our audit in accordance with KSA. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective ICFR was maintained in all material respects.

An audit of the ICFR involves performing procedures to obtain audit evidence as to whether a material weakness exists. The procedures selected depend on the auditor’s judgment, including the assessment of the risks that a material weakness exists. An audit also includes testing and evaluating the design and operation of ICFR based on obtaining an understanding of ICFR and the assessed risk.

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ICFR definition and Inherent Limitations

A company’s ICFR is implemented by those charged with governance, management, and other employees and is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”). A company’s ICFR includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with KIFRS, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, ICFR may not prevent or detect misstatements of the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that ICFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The engagement partner on the audit resulting in this independent auditor’s report is Yoo, Jung Ho.

March 6, 2024

This report is effective as of March 6,<br>2024, the independent auditor’s report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the auditor’s report date to the time this report is used. Such events and circumstances<br>could significantly affect the Group’s ICFR and may result in modifications to this report.

Management’s Annual Report on Internal Control overFinancial Reporting

English translation of a Report Originally Issued in Korean

To Shareholders, the Board of Directors and Audit Committee of

SK Telecom Co., Ltd.

We, as the Chief Executive Officer (“CEO”) and Internal Control over Financial Reporting (“ICFR”) Officer of SK Telecom Co., Ltd. and its subsidiaries (the “Group”), assessed the status of the design and operation of the Group’s ICFR for the year ending December 31, 2023.

The Group’s management including the CEO and ICFR Officer is responsible for designing and operating ICFR. We, as the CEO and ICFR Officer (collectively, “We”, “Our” or “Us”), evaluated whether the ICFR has been appropriately designed and is effectively operating to prevent and detect error or fraud which may cause material misstatement of the financial statements to ensure preparation and disclosure of reliable financial information.

We used the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’ established by the Operating Committee of Internal Control over Financial Reporting in Korea (the “ICFR Committee”)’ as the criteria for design and operation of the Group’s ICFR. We also conducted an evaluation of ICFR based on the ‘Management Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting’ established by the ICFR Committee.

Based on our assessment of ICFR operation, we concluded that the Group’s ICFR has been appropriately designed and is operating effectively in all material respects as of December 31, 2023, in accordance with the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’.

We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statements which might cause material misunderstandings of the readers, and we have reviewed and verified this report with sufficient care.

February 20, 2024

/s/ Kim, Yang Seob
Internal Control over Financial Reporting Officer
/s/ Ryu, Young Sang
Chief Executive Officer

SK TELECOM CO., LTD.

Separate Financial Statements

For the years ended December 31, 2023 and 2022

(With the Independent Auditor’s Report Thereon)

Contents

Page
Independent Auditor’s Report
Separate Financial Statements
Separate Statements of Financial Position 1
Separate Statements of Income 3
Separate Statements of Comprehensive Income 4
Separate Statements of Changes in Equity 5
Separate Statements of Cash Flows 6
Notes to the Separate Financial Statements 8
Report on audit of Internal Control over Financial<br>Reporting 111
Management’s Annual Report on Internal Control over Financial Reporting 114

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Ernst & Young Han Young<br> <br>Taeyoung Building,<br>111,Yeouigongwon-ro,<br> <br>Yeongdeungpo-gu, Seoul 07241 Korea Tel: +82 2 3787 6600<br> <br>Fax: +82 2 783 5890<br><br><br>ey.com/kr

Independent Auditor’s Report

(English Translation of a Report Originally Issued in Korean)

The Shareholders and Board of Directors

SK TelecomCo., Ltd.

Opinion

We have audited the accompanying separate financial statements of SK Telecom Co., Ltd. (the “Company”) which comprise the separate statements of financial position as of December 31, 2023 and 2022, and the separate statements of income, comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2023, and notes to the separate financial statements, including a summary of material accounting policies.

In our opinion, the accompanying separate financial statements present fairly, in all material respects, the separate financial position of the Company as of December 31, 2023 and 2022, and its separate financial performance and its separate cash flows for each for each of the two years in the period ended December 31, 2023 in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on the criteria established in Conceptual Framework for Designing and Operating Internal Control over Financial Reporting in accordance with the Korean Standards on Auditing (“KSA”) issued by the Operating Committee of internal control over financial reporting, and our report dated March 6, 2024 expressed an unqualified opinion thereon.

Basis forOpinion

We conducted our audits in accordance with KSA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Separate Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the separate financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate financial statements of the current period. These matters were addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

Cut-off of revenues from the wireless services

As described in notes 3 (21) and 27 to the separate financial statements, the Company’s revenue from the wireless services is recognized based on data from a complex array of information technology systems which process a significant volume of transactions with its customers. Furthermore, the transactions involve a variety of contractual terms from new subscriptions to deactivations or churn, and changes of rate plans during the period. Therefore, we have identified timing of revenue recognition related to the Company’s wireless services as a key audit matter. Related revenue from the wireless services amounted to ~~W~~10,554,390 million in 2023.

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The primary procedures we performed to address this key audit matter included:

• Inspecting major contracts with subscribers to assess whether the Company’s revenue recognition policies<br>based on the terms and conditions as set out in the contracts, are consistent with reference to the requirements of KIFRS 1115;
• Testing internal controls relating to the timing of revenue recognition for the wireless services; and<br>
--- ---
• Evaluating the appropriateness of the timing of revenue recognition by recalculating the prorated revenue based<br>on the subscribed rate plan and comparing it with the billing information.
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Responsibilities of Management and Those Charged withGovernance for the Separate Financial Statements

Management is responsible for the preparation and fair presentation of the separate financial statements in accordance with KIFRS, and for such internal control as management determines is necessary to enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate financial statements.

As part of an audit in accordance with KSA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud<br>or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is<br>higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are<br>appropriate in the circumstances.
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• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and<br>related disclosures made by management.
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LOGO

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on<br>the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we<br>are required to draw attention in our auditor’s report to the related disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to<br>the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the separate financial statements, including the<br>disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
--- ---

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine this matter that was of most significant in the audit of the separate financial statements of the current period and is therefore the key audit matter. We describe this matter in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Yoo, Jung Ho.

March 6, 2024

This report is effective as of March 6, 2024, the independent auditor’s report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the date of independent auditor’s report date to the time this report is used. Such events and circumstances could significantly affect the accompanying separate financial statements and may result in modifications to this report.

SK TELECOM CO., LTD.

SEPARATE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

The accompanying separate financial statements, including all footnote disclosures, have been prepared by, and are the responsibility of, the Company.

Ryu, Young-Sang

Chief Executive Officer

SK TELECOM CO., LTD.

SK TELECOM CO., LTD.

Separate Statements of Financial Position

As of December 31, 2023 and 2022

(In millions of won)
Note December 31, 2023 December 31, 2022
Assets
Current Assets:
Cash and cash equivalents 34,35 ~~W~~ 631,066 1,217,504
Short-term financial instruments 4,34,35 186,364 169,829
Accounts receivable – trade, net 5,34,35,36 1,495,617 1,425,695
Short-term loans, net 5,34,35,36 68,806 70,043
Accounts receivable – other, net 5,34,35,36,37 343,036 435,096
Contract assets 7,35 9,228 12,100
Prepaid expenses 6 1,828,646 1,908,987
Guarantee deposits 5,34,35,36 72,479 63,516
Derivative financial assets 19,34,35,38 — 123,999
Inventories, net 28,096 23,355
Advanced payments and others 5,34,35 40,506 48,336
**** 4,703,844 **** 5,498,460
Non-Current Assets:
Long-term financial instruments 4,34,35 354 354
Long-term investment securities 8,34,35 1,426,290 1,155,188
Investments in subsidiaries, associates and joint ventures 9 4,670,568 4,621,807
Property and equipment, net 10,12,36 9,076,459 9,519,663
Investment property, net 11 46,080 52,023
Goodwill 13 1,306,236 1,306,236
Intangible assets, net 14 2,250,829 2,693,400
Long-term loans, net 5,34,35,36 119 194
Long-term accounts receivable – other 5,34,35,37 308,868 377,858
Long-term contract assets 7,35 12,385 20,998
Long-term prepaid expenses 6 898,754 935,710
Guarantee deposits, net 5,34,35,36 91,220 92,019
Long-term derivative financial assets 19,34,35,38 118,533 126,737
Defined benefit assets 18 85,144 31,225
Other non-current assets 249 249
**** 20,292,088 **** 20,933,661
Total Assets ~~W~~ 24,995,932 **** 26,432,121

(Continued)

1

SK TELECOM CO., LTD.

Separate Statements of Financial Position, Continued

As of December 31, 2023 and 2022

(In millions of won)
Note December 31, 2023 December 31, 2022
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable – other 34,35,36 ~~W~~ 1,794,997 2,334,484
Contract liabilities 7 59,814 80,654
Withholdings 34,35 608,352 604,681
Accrued expenses 34,35 911,460 871,095
Income tax payable 31 133,543 82,554
Provisions 17,39 31,313 31,651
Short-term borrowings 15,34,35,38 — 100,000
Current portion of long-term debt, net 15,34,35,38 1,249,516 1,383,097
Lease liabilities 34,35,36,38 341,075 337,320
Current portion of long-term payables – other 16,34,35,38 367,770 398,874
Other current liabilities 34,35 7,630 11,725
**** 5,505,470 **** **** 6,236,135 ****
Non-Current Liabilities:
Debentures, excluding current portion, net 15,34,35,38 5,807,423 5,705,873
Long-term borrowings, excluding current portion, net 15,34,35,38 250,000 640,000
Long-term payables – other 16,34,35,38 892,683 1,239,467
Long-term contract liabilities 7 4,398 12,745
Long-term derivative financial liabilities 19,34,35,38 295,876 302,593
Long-term lease liabilities 34,35,36,38 885,470 1,041,991
Long-term provisions 17 69,791 65,754
Deferred tax liabilities 31 801,995 754,321
Other non-current liabilities 34,35 46,733 49,860
**** 9,054,369 **** **** 9,812,604 ****
Total Liabilities **** 14,559,839 **** **** 16,048,739 ****
Shareholders’ Equity:
Share capital 1,20 30,493 30,493
Capital surplus and others 20,21,22,23 (4,766,147 ) (4,506,693 )
Retained earnings 24,25 15,032,473 14,691,461
Reserves 26 139,274 168,121
Total Shareholder’s Equity **** 10,436,093 **** **** 10,383,382 ****
Total Liabilities and Shareholder’s Equity ~~W~~ 24,995,932 **** **** 26,432,121 ****

The accompanying notes are an integral part of the separate financial statements.

2

SK TELECOM CO., LTD.

Separate Statements of Income

For the years ended December 31, 2023 and 2022

(In millions of won, except for earnings per share)
Note 2023 2022
Operating revenue: 27,36
Revenue ~~W~~ 12,589,220 12,414,588
Operating expenses: 36
Labor 943,924 992,964
Commissions 6 4,831,879 4,792,121
Depreciation and amortization 2,698,436 2,693,630
Network interconnection 490,114 532,621
Leased lines 189,059 191,212
Advertising 174,403 161,294
Rent 127,182 121,067
Cost of goods sold 548,155 544,286
Others 28 1,130,198 1,064,262
11,133,350 11,093,457
Operating profit **** 1,455,870 **** **** 1,321,131 ****
Finance income 30 342,646 134,965
Finance costs 30 (441,390 ) (387,606 )
Other non-operating income 29 40,844 45,162
Other non-operating expenses 29 (24,019 ) (29,005 )
Gain (loss) relating to investments in subsidiaries, associates and joint ventures, net 9 (19,012 ) 61,603
Profit before income tax **** 1,354,939 **** **** 1,146,250 ****
Income tax expense 31 295,189 276,760
Profit for the year ~~W~~ 1,059,750 **** **** 869,490 ****
Earnings per share: **** 32
Basic earnings per share (in won) ~~W~~ 4,798 3,921
Diluted earnings per share (in won) 4,794 3,919

The accompanying notes are an integral part of the separate financial statements.

3

SK TELECOM CO., LTD.

Separate Statements of Comprehensive Income

For the years ended December 31, 2023 and 2022

(In millions of won)
Note 2023 2022
Profit for the year ~~W~~ 1,059,750 **** **** 869,490 ****
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss, net of taxes:
Remeasurement of defined benefit assets 18 43,656 (4,899 )
Valuation loss on financial assets at fair value through other comprehensive income 26,30 (39,221 ) (481,023 )
Items that are or may be reclassified subsequently to profit or loss, net oftaxes:
Net change in unrealized fair value of derivatives 19,26,30 (11,488 ) (13,792 )
Other comprehensive loss for the year, net of taxes **** (7,053 ) **** (499,714 )
Total comprehensive income ~~W~~ 1,052,697 **** **** 369,776 ****

The accompanying notes are an integral part of the separate financial statements.

4

SK TELECOM CO., LTD.

Separate Statements of Changes in Equity

For the years ended December 31, 2023 and 2022

(In millions of won) Capital surplus and others
Note Sharecapital Paid-in<br>surplus Treasury<br>shares Hybridbonds Shareoption Other Sub-total Retained<br>earnings Reserves Totalequity
Balance as of January 1, 2022 ~~W~~ 30,493 **** 1,771,000 **** (57,314 ) **** 398,759 **** **** 47,166 **** **** (6,735,882 ) **** (4,576,271 ) **** 14,770,618 **** **** 638,016 **** **** 10,862,856 ****
Total comprehensive income (loss):
Profit for the year — — — — — — — 869,490 — 869,490
Other comprehensive loss 18,19,26,30 — — — — — — — (29,819 ) (469,895 ) (499,714 )
— — — — — — — 839,671 (469,895 ) 369,776
Transactions with owners:
Annual dividends 33 — — — — — — — (361,186 ) — (361,186 )
Interim dividends 33 — — — — — — — (542,876 ) — (542,876 )
Share option 23 — — — — 47,129 25,132 72,261 — — 72,261
Interest on hybrid bonds 22 — — — — — — — (14,766 ) — (14,766 )
Transactions of treasury shares 21 — — 20,612 — (92,234 ) 68,939 (2,683 ) — — (2,683 )
— — 20,612 — (45,105 ) 94,071 69,578 (918,828 ) — (849,250 )
Balance as of December 31, 2022 ~~W~~ 30,493 **** 1,771,000 **** (36,702 ) **** 398,759 **** **** 2,061 **** **** (6,641,811 ) **** (4,506,693 ) **** 14,691,461 **** **** 168,121 **** **** 10,383,382 ****
Balance as of January 1, 2023 ~~W~~ 30,493 **** 1,771,000 **** (36,702 ) **** 398,759 **** **** 2,061 **** **** (6,641,811 ) **** (4,506,693 ) **** 14,691,461 **** **** 168,121 **** **** 10,383,382 ****
Total comprehensive income (loss):
Profit for the year — — — — — — — 1,059,750 — 1,059,750
Other comprehensive income (loss) 18,19,26,30 — — — — — — — 21,794 (28,847 ) (7,053 )
— — — — — — — 1,081,544 (28,847 ) 1,052,697
Transactions with owners:
Annual dividends 33 — — — — — — — (180,967 ) — (180,967 )
Interim dividends 33 — — — — — — — (542,282 ) — (542,282 )
Share option 23 — — — — 7,757 (600 ) 7,157 — — 7,157
Interest on hybrid bonds 22 — — — — — — — (17,283 ) — (17,283 )
Repayments of hybrid bonds 22 — — — (398,759 ) — (1,241 ) (400,000 ) — — (400,000 )
Issuance of hybrid bonds 22 — — — 398,509 — — 398,509 — — 398,509
Transactions of treasury shares 21 — — (265,279 ) — — 159 (265,120 ) — — (265,120 )
— — (265,279 ) (250 ) 7,757 (1,682 ) (259,454 ) (740,532 ) — (999,986 )
Balance as of December 31, 2023 ~~W~~ 30,493 **** 1,771,000 **** (301,981 ) **** 398,509 **** **** 9,818 **** **** (6,643,493 ) **** (4,766,147 ) **** 15,032,473 **** **** 139,274 **** **** 10,436,093 ****

The accompanying notes are an integral part of the separate financial statements.

5

SK TELECOM CO., LTD.

Separate Statements of Cash Flows

For the years ended December 31, 2023 and 2022

(In millions of won) Note 2023 2022
Cash flows from operating activities:
Cash generated from operating activities:
Profit for the year ~~W~~ 1,059,750 869,490
Adjustments for income and expenses 38 3,334,194 3,470,169
Changes in assets and liabilities related to operating activities 38 (148,374 ) 214,858
4,245,570 4,554,517
Interest received 32,673 31,516
Dividends received 208,026 50,927
Interest paid (283,654 ) (220,723 )
Income tax paid (194,275 ) (343,956 )
Net cash provided by operating activities **** 4,008,340 **** **** 4,072,281 ****
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net — 201,376
Collection of short-term loans 126,398 115,121
Decrease in long-term financial instruments — 330,032
Proceeds from disposals of long-term investment<br><br><br>securities 17,939 55,114
Proceeds from disposals of investments<br><br><br>in subsidiaries, associates and joint ventures 26,819 382,114
Proceeds from disposals of non-current<br><br><br>assets held for sale — 20,136
Proceeds from disposals of property and equipment 9,731 12,795
Proceeds from disposals of intangible assets 4,423 3,680
185,310 1,120,368
Cash outflows for investing activities:
Increase in short-term financial instruments, net (11,115 ) —
Increase in short-term loans (125,072 ) (122,506 )
Increase in long-term financial instruments — (330,032 )
Acquisitions of long-term investment securities (284,509 ) (372,672 )
Acquisitions of investments in subsidiaries, associates and joint ventures (90,355 ) (93,215 )
Acquisitions of property and equipment (1,977,806 ) (2,074,860 )
Acquisitions of intangible assets (67,459 ) (91,914 )
(2,556,316 ) (3,085,199 )
Net cash used in investing activities ~~W~~ (2,371,006 ) **** (1,964,831 )

(Continued)

6

SK TELECOM CO., LTD.

Separate Statements of Cash Flows, Continued

For the years ended December 31, 2023 and 2022

(In millions of won) Note 2023 2022
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings ~~W~~ — 100,000
Proceeds from long-term borrowings — 440,000
Proceeds from issuance of debentures 941,185 1,050,820
Cash inflows from settlement of derivatives 126,000 768
Proceeds from issuance of hybrid bonds 398,509 —
1,465,694 1,591,588
Cash outflows for financing activities:
Repayments of short-term borrowings (100,000 ) —
Repayments of long-term borrowings (100,000 ) (7,096 )
Repayments of long-term payables – other (400,245 ) (400,245 )
Repayments of debentures (1,309,000 ) (970,000 )
Payments of dividends (723,215 ) (904,020 )
Repayments of hybrid bonds (400,000 ) —
Payments of interest on hybrid bonds (17,283 ) (14,766 )
Repayments of lease liabilities (354,235 ) (344,199 )
Acquisition of treasury shares (285,487 ) —
(3,689,465 ) (2,640,326 )
Net cash used in financing activities **** (2,223,771 ) **** (1,048,738 )
Net increase (decrease) in cash and cash equivalents **** (586,437 ) **** 1,058,712 ****
Cash and cash equivalents at beginning of the year 1,217,504 158,823
Effects of exchange rate changes on cash and cash equivalents (1 ) (31 )
Cash and cash equivalents at end of the year ~~W~~ 631,066 1,217,504

The accompanying notes are an integral part of the separate financial statements.

7

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

1. Reporting Entity

SK Telecom Co., Ltd. (“the Company”) was incorporated on March 29, 1984, under the laws of the Republic of Korea (“Korea”) to provide cellular telephone communication services in Korea. The head office of the Company is located at 65, Eulji-ro, Jung-gu, Seoul, Korea.

The Company’s common shares are listed on the Stock Market of Korea Exchange, and its depositary receipts (DRs) are listed on the New York Stock Exchange. Meanwhile, the Board of Directors of the Company resolved to cancel the listing of the Company’s DRs on the London Stock Exchange on June 22, 2023, and the DRs were delisted from the London Stock Exchange as of July 31, 2023. As of December 31, 2023, the Company’s total issued shares are held by the following shareholders:

Number of shares Percentage oftotal shares issued (%)
SK Inc. 65,668,397 30.01
National Pension Service 16,330,409 7.46
Institutional investors and other shareholders 126,854,437 57.97
Kakao Investment Co., Ltd. 3,846,487 1.76
Treasury shares 6,133,414 2.80
218,833,144 100.00
2. Basis of Preparation
--- ---

These separate financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”), as prescribed in the Act on External Audits of Stock Companies of Korea. The accompanying separate financial statements have been translated into English from Korean financial statements. In the event of any differences in interpreting the financial statements or the independent auditor’s report thereon, Korean version, which is used for regulatory reporting purposes, shall prevail.

These financial statements are separate financial statements prepared in accordance with KIFRS 1027, Separate Financial Statements, presented by a parent and an investor with joint control of or significant influence over an investee, in which the investments are accounted for at cost less impairment, if any.

The separate financial statements were authorized for issuance by the Board of Directors on February 2, 2024, which will be submitted for final approval at the shareholders’ meeting to be held on March 26, 2024.

(1) Basis of measurement

The separate financial statements have been prepared on the historical cost basis, except for the following material items in the separate statement of financial position:

• derivative financial instruments measured at fair value;
• financial instruments measured at fair value through profit or loss (“FVTPL”);
--- ---
• financial instruments measured at fair value through other comprehensive income (“FVOCI”);<br>
--- ---
• liabilities measured at fair value for cash-settled share-based payment arrangement; and
--- ---
• liabilities (assets) for defined benefit plans recognized at the total present value of defined benefit<br>obligations less the fair value of plan assets.
--- ---

8

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

2. Basis of Preparation, Continued
(2) Functional and presentation currency
--- ---

These separate financial statements are presented in Korean won, which is the currency of the primary economic environment in which the Company operates.

(3) Use of estimates and judgments

The preparation of the separate financial statements in conformity with KIFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period prospectively.

1) Critical judgments

Information about critical judgments in applying accounting policies that have the most significant effects on the amounts recognized in the separate financial statements is included in notes for the following areas: financial risk management.

2) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is included in the following notes: loss allowance (notes 5 and 35), estimated useful lives of costs to obtain a contract (notes 3 (21), and 6), property and equipment and intangible assets (notes 3 (7), (8), 10 and 14), impairment of goodwill (notes 3 (10) and 13), recognition of provision (notes 3 (15) and 17), measurement of defined benefit liabilities (notes 3 (14) and 18), transaction of derivative instruments (notes 3 (6) and 19) and recognition of deferred tax assets (liabilities) (notes 3 (23) and 31).

3) Fair value measurement

A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has established policies and processes with respect to the measurement of fair values including Level 3 fair values, and the measurement of fair values is reviewed and is directly reported to the finance executives.

The Company regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of KIFRS, including the level in the fair value hierarchy in which such valuations should be classified.

9

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

2. Basis of Preparation, Continued
(3) Use of estimates and judgments, Continued
--- ---
3) Fair value measurement, Continued
--- ---

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;<br>
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or<br>liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
--- ---
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable<br>inputs).
--- ---

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Information about assumptions used for fair value measurements is included in note 19 and note 35.

10

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies

The material accounting policies applied by the Company in the preparation of its separate financial statements in accordance with KIFRS are included below. Except for certain standards and amendments which are effective for annual periods beginning on or after January 1, 2023, the material accounting policies applied by the Company in these separate financial statements are the same as those applied by the Company in its separate financial statements as of and for the year ended December 31, 2022. The Company has not early adopted any standards, and interpretations or amendments that have been issued but are not yet effective.

The new and amended standards and interpretations that are effective for annual periods beginning on or after January 1, 2023 are as follows. These amended standards had no material impact on the Company’s separate financial statements.

• Disclosure of Accounting Polices (Amendments to KIFRS 1001)
• Disclosures of Profit or Loss on Financial Liabilities with Conditions for Adjusting an Exercise Price<br>(Amendments to KIFRS 1001)
--- ---
• Definition of Accounting Estimates (Amendments to KIFRS 1008)
--- ---
• Deferred Tax related to Assets and Liabilities Arising from a Single Transaction (Amendments to KIFRS 1012)<br>
--- ---
• KIFRS 1117 Insurance Contracts and its amendments
--- ---
• International tax reform – Pillar Two model rules (Amendments to KIFRS 1012)
--- ---

The Pillar Two model rules is scheduled to take effect for the Company’s fiscal year beginning January 1, 2024. As the Company falls within the scope of the enacted Pillar Two model rules, it has assessed the potential exposure to Pillar Two income tax. The assessment of potential exposure to Pillar Two income tax is based on the most recent tax returns of the Company’s ultimate controlling entity group, country-by-country reporting, and financial statements. The Company expects that the exposure to Pillar Two income tax will be immaterial.

(1) Operating segments

The Company presents disclosures relating to operating segments on its consolidated financial statements in accordance with KIFRS 1108, Operating Segments, and such disclosures are not separately disclosed on these separate financial statements.

(2) Investments in subsidiaries, associates, and joint ventures

These separate financial statements are prepared and presented in accordance with KIFRS 1027, Separate Financial Statements. The Company applies the cost method to investments in subsidiaries, associates and joint ventures in accordance with KIFRS 1027. Dividends from subsidiaries, associates, and joint ventures are recognized in profit or loss when the right to receive the dividends is established.

The assets and liabilities acquired under business combination under common control are recognized at the carrying amounts in the ultimate controlling shareholder’s consolidated financial statements. The difference between consideration and carrying amount of net assets acquired is added to or subtracted from capital surplus and others.

11

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(3) Cash and cash equivalents
--- ---

Cash and cash equivalents comprise cash balances, call deposits, and investment securities with maturities of three months or less from the acquisition date that are easily convertible to cash and subject to an insignificant risk of changes in their fair value.

(4) Inventories

Inventories are initially recognized at the acquisition cost and subsequently measured using the average method. During the period, a perpetual inventory system is used to track inventory quantities, which is adjusted based on the physical inventory counts performed at the period end. When the net realizable value of inventories is less than cost, the carrying amount is reduced to the net realizable value, and any difference is charged to current period as operating expenses.

(5) Non-derivative financial assets
1) Recognition and initial measurement
--- ---

Accounts receivable – trade and debt investments issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument.

A financial asset (unless an accounts receivable – trade without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. An accounts receivable – trade without a significant financing component is initially measured at the transaction price.

12

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(5) Non-derivative financial assets, Continued
--- ---
2) Classification and subsequent measurement
--- ---

On initial recognition, a financial asset is classified as measured at:

• FVTPL
• FVOCI – equity investment
--- ---
• FVOCI – debt investment
--- ---
• Financial assets at amortized cost
--- ---

A financial asset is classified based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and<br>
• its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal<br>amount outstanding on specified dates.
--- ---

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

• it is held within a business model whose objective is achieved by both collecting contractual cash flows and<br>selling financial assets; and
• its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal<br>amount outstanding on specified dates.
--- ---

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (“OCI”). This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

13

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(5) Non-derivative financial assets, Continued
--- ---
2) Classification and subsequent measurement, Continued
--- ---

The following accounting policies are applied to the subsequent measurement of financial assets.

Financial assets at FVTPL These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
Financial assets at amortized<br> <br>cost These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in<br>profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses<br>are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of the cost of the investment. Other net gains and losses are recognized<br>in OCI and are never reclassified to profit or loss.
3) Impairment
--- ---

The Company estimates the expected credit losses (“ECL”) for the debt instruments measured at amortized cost and FVOCI based on the Company’s historical experience and informed credit assessment that includes forward-looking information. The impairment approach is decided based on the assessment of whether the credit risk of a financial asset has increased significantly since initial recognition. However, the Company applies a practical expedient and recognizes impairment losses equal to lifetime ECLs for accounts receivable – trade and lease receivables from the initial recognition.

ECL is a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Company expects to receive).

At each reporting date, the Company assesses whether financial assets measured at amortized cost and debt investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Loss allowance on financial assets measured at amortized cost is deducted from the carrying amount of the respective assets, while loss allowance on debt instruments at FVOCI is recognized in OCI, instead of reducing the carrying amount of the assets.

14

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(5) Non-derivative financial assets, Continued
--- ---
4) Derecognition
--- ---

Financial assets

The Company derecognizes a financial asset when:

• the contractual rights to the cash flows from the financial asset expire; or
• it transfers the rights to receive the contractual cash flows in a transaction in which either:<br>
--- ---
• substantially all of the risks and rewards of ownership of the financial asset are transferred; or<br>
--- ---
• the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not<br>retain control of the financial asset.
--- ---

The Company enters into transactions whereby it transfers assets recognized in its statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

Interest rate benchmark reform

When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changed as a result of interest rate benchmark reform, the Company updated the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform. A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met:

• the change is necessary as a direct consequence of the reform; and
• the new basis for determining the contractual cash flows is economically equivalent to the previous basis –<br>i.e., the basis immediately before the change.
--- ---

When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Company first updated the effective interest rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. After that, the Company applied the policies on accounting for modifications to the additional changes.

5) Offsetting

Financial assets and financial liabilities are offset and the net amount is presented in the statement of financial position when the Company currently has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to settle the liability and realize the asset simultaneously.

A financial asset and a financial liability are offset only when the right to set off the amount is not contingent on future event and legally enforceable even on the event of default, insolvency or bankruptcy.

15

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(6) Derivative financial instruments, including hedge accounting
--- ---

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value at the end of each reporting period, and changes therein are accounted for as described below.

1) Hedge accounting

The Company holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Company designates derivatives as hedging instruments to hedge the variability in cash flow associated with highly probable forecasted transactions or firm commitments (a cash flow hedge).

On initial designation of the hedge, the Company formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

Hedges directly affected by interest rate benchmark reform

When uncertainty arises about the interest rate benchmark designated as a hedged risk and the timing or the amount of the interest rate benchmark-based cash flows of the hedged item or of the hedging instrument as a result of IBOR reform, for the purpose of evaluating whether there is an economic relationship between the hedged items and the hedging instruments, the Company assumes that the interest rate benchmark on which the hedged items and the hedging instruments are based is not altered as a result of interest rate benchmark reform.

For a cash flow hedge of a forecast transaction, the Company assumes that the benchmark interest rate will not be altered as a result of interest rate benchmark reform for the purpose of assessing whether the forecast transaction is highly probable and determining whether a previously designated forecast transaction in a discontinued cash flow hedge is still expected to occur.

The Company will cease applying the specific policy for assessing the economic relationship between the hedged item and the hedging instrument

• to a hedged item or hedging instrument when the uncertainty arising from interest rate benchmark reform is no<br>longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the respective item or instrument; or
• when the hedging relationship is discontinued.
--- ---

When the basis for determining the contractual cash flows of the hedged item or hedging instrument changes as a result of IBOR reform and therefore there is no longer uncertainty arising about the cash flows of the hedged item or the hedging instrument, the Company amends the hedge documentation of that hedging relationship to reflect the change(s) required by IBOR reform.

The Company amends the formal hedge documentation by the end of the reporting period during which a change required by IBOR reform is made to the hedged risk, hedged item or hedging instrument. These amendments in the formal hedge documentation do not constitute the discontinuation of the hedging relationship or the designation of a new hedging relationship.

16

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(6) Derivative financial instruments, including hedge accounting, Continued
--- ---
1) Hedge accounting, Continued
--- ---

Hedges directly affected by interest rate benchmark reform, Continued

If changes are made in addition to those changes required by interest rate benchmark reform to the financial asset or financial liability designated in a hedging relationship or to the designation of the hedging relationship, the Company determines whether those additional changes result in the discontinuation of hedging accounting. If the additional changes do not result in the discontinuation of hedging accounting, the Company amend the formal designation of the hedging relationship.

When the interest rate benchmark on which the hedged future cash flows had been based is changed as required by IBOR reform, for the purpose of determining whether the hedged future cash flows are expected to occur, the Company deems that the hedging reserve recognized in OCI for that hedging relationship is based on the alternative benchmark rate on which the hedged future cash flows will be based.

Cash flow hedge

When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.

2) Other derivative financial instruments

Other derivative financial instrument not designated as a hedging instrument are measured at fair value, and the changes in fair value of the derivative financial instrument is recognized immediately in profit or loss.

17

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(7) Property and equipment
--- ---

Property and equipment are initially measured at cost. The cost of property and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Property and equipment, subsequently, are carried at cost less accumulated depreciation and accumulated impairment losses.

Subsequent costs are recognized in the carrying amount of property and equipment at cost or, if appropriate, as a separate item if it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be reliably measured. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing are recognized in profit or loss as incurred.

Property and equipment, except for land, are depreciated on a straight-line basis over estimated useful lives that appropriately reflect the pattern in which the asset’s future economic benefits are expected to be consumed. A component that is significant compared to the total cost of property and equipment is depreciated over its separate useful life.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized as other non-operating income (loss).

18

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(7) Property and equipment, Continued
--- ---

The estimated useful lives of the Company’s property and equipment are as follows:

Useful lives (years)
Buildings and structures 15, 30
Machinery 3 ~ 8, 10, 30
Other property and equipment 4 ~10

The Company reviews estimated residual values, expected useful lives, and depreciation methods annually at the end of each reporting date and adjusts, if appropriate. The change is accounted for as a change in an accounting estimate.

(8) Intangible assets

Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.

Intangible assets, except for goodwill, are amortized on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, club memberships are expected to be available for use as there are no foreseeable limits to the periods. These intangible assets are determined as having indefinite useful lives and, therefore, not amortized.

The estimated useful lives of the Company’s intangible assets are as follows:

Useful lives (years)
Frequency usage rights 5 ~ 10
Land usage rights 5
Industrial rights 5, 10
Facility usage rights 10, 20
Other 3 ~ 20

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes, if appropriate, are accounted for as changes in accounting estimates.

Expenditures on research activities are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be reliably measured, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.

19

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(9) Investment property
--- ---

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are reported at cost less accumulated depreciation and accumulated impairment losses.

Subsequent expenditures are recognized in carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Company and the cost of an asset can be measured reliably. The carrying amount of those parts that are replaced is derecognized. The costs associated with routine maintenance and repairs are recognized in profit or loss as incurred.

Investment property, except for land, is depreciated on a straight-line basis over estimated useful lives of 30 years. In addition, right-of-use asset classified as investment property is depreciated using the straight-line basis from the commencement date to the end of the lease term.

The depreciation method, estimated useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate. The change is accounted for as a change in an accounting estimate.

20

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(10) Impairment of non-financial assets
--- ---

The carrying amounts of the Company’s non-financial assets other than contract assets recognized for revenue arising from contracts with a customer, assets recognized for the costs to obtain or fulfill a contract with a customer, employee benefits, inventories, deferred tax assets, and non-current assets held for sale are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amounts to their carrying amounts.

The Company estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual recoverable amount of an asset, the Company estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU, for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or CGU.

An impairment loss is recognized in profit or loss to the extent the carrying amount of the asset exceeds its recoverable amount.

Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergy arising from the business acquired. Any impairment identified at the CGU level will first reduce the carrying amount of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

21

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(11) Leases
--- ---

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

1) Company as a lessee

At commencement or on modification of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, the Company has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line basis from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

The Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in-substance fixed payments;<br>
• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the<br>commencement date;
--- ---
• amounts expected to be payable under a residual value guarantee; and
--- ---
• the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in<br>an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.
--- ---

22

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(11) Leases, Continued
--- ---
1) Company as a lessee, Continued
--- ---

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Company presents right-of-use assets that do not meet the definition of investment property in ‘property and equipment’ in the statement of financial position.

The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company recognizes the lease payments on short-term leases and leases of low value assets as an expense on a straight-line basis over the lease term.

2) Company as a lessor

At inception or on modification of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

When the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Company makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Company applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, then the Company applies KIFRS 1115 to allocate the consideration in the contract.

The Company applies derecognition and impairment requirements in KIFRS 1109 to the net investment in the lease. The Company further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in the lease.

The Company recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other revenue’.

23

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(12) Non-current assets held for sale
--- ---

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sales rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the assets (or disposal groups) must be available for immediate sale in their present condition and their sale must be highly probable. The assets or disposal groups that are classified as non-current assets held for sale are measured at the lower of their carrying amounts and fair value less cost to sell. The Company recognizes an impairment loss for any initial or subsequent write-down of assets (or disposal groups) to fair value less costs to sell and a gain for any subsequent increase in fair value less costs to sell up to the cumulative impairment loss previously recognized.

A non-current asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated (or amortized).

(13) Non-derivative financial liabilities

The Company classifies non-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement. The Company recognizes financial liabilities in the separate statement of financial position when the Company becomes a party to the contractual provisions of the financial liabilities.

1) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition. Subsequent to initial recognition, these liabilities are measured at fair value. The amount of change in fair value of financial liability that is attributable to changes in the credit risk of that liability shall be presented in other comprehensive income, and the remaining amount of change in the fair value of the liability shall be presented in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the issue of the financial liability are recognized in profit or loss as incurred.

2) Other financial liabilities

Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the issue of the financial liabilities. Subsequent to initial recognition, other financial liabilities are measured at amortized cost and the interest expenses are recognized using the effective interest method.

3) Derecognition of financial liability

The Company extinguishes a financial liability only when the contractual obligation is fulfilled, canceled or expires. The Company recognizes new financial liabilities at fair value based on new contracts and eliminates existing liabilities when the contractual terms of the financial liabilities change and the cash flows change substantially.

When a financial liability is derecognized, the difference between the carrying amount and the consideration paid (including any transferred non-cash assets or liabilities assumed) is recognized in profit or loss.

24

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(14) Employee benefits
--- ---
1) Short-term employee benefits
--- ---

Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render related services. When an employee has rendered a service to the Company during an accounting period, the Company recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.

2) Other long-term employee benefits

Other long-term employee benefits include employee benefits that are settled beyond 12 months after the end of the period in which the employees render related services. The Company’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.

3) Retirement benefits: defined contribution plans

When an employee has rendered a service to the Company during a period, the Company recognizes the contribution payable to a defined contribution plan in exchange for that service as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Company recognizes that excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund.

4) Retirement benefits: defined benefit plans

At the end of reporting period, defined benefit liabilities (assets) relating to defined benefit plans are recognized at present value of defined benefit obligations net of fair value of plan assets.

The calculation is performed annually by an independent actuary using the projected unit credit method. When the fair value of plan assets exceeds the present value of the defined benefit obligation, the Company recognizes an asset, to the extent of the present value of any economic benefits available in the form of refunds from the plan or reduction in the future contributions to the plan.

Remeasurements of the net defined benefit liability (asset), which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Company determines net interests on net defined benefit liability (asset) by multiplying discount rate determined at the beginning of the annual reporting period and considers changes in net defined benefit liability (asset) from contributions and benefit payments. Net interest costs and other costs relating to the defined benefit plan are recognized through profit or loss.

When the plan amendment or curtailment occurs, gains or losses on amendment or curtailment in benefits for the past service provided are recognized through profit or loss. The Company recognizes a gain or loss on a settlement when the settlement of defined benefit plan occurs.

25

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(15) Provisions
--- ---

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. If the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

If some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement is recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

A provision is used only for expenditures for which the provision was originally recognized.

26

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(16) Emissions Rights
--- ---

The Company accounts for greenhouse gases emission right and the relevant liability as below pursuant to the Act on Allocation and Trading of Greenhouse Gas Emission in Korea.

1) Greenhouse Gases Emission Right

Greenhouse Gases Emission Right consists of emission allowances, which are allocated from the government free of charge or purchased from the market. The cost includes any directly attributable costs incurred during the normal course of business.

The Company derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to government in which the future economic benefits are no longer expected to be probable.

2) Emissions liability

Emission liability is a present obligation of submitting emission rights to the government with regard to emission of greenhouse gas. The emission liability is measured based on the expected quantity of emission for the performing period in excess of emission allowance in possession and the unit price for such emission rights in the market at the end of the reporting period. The emissions liabilities are derecognized when they are surrendered to the government.

27

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(17) Transactions in foreign currencies
--- ---

Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Exchange differences arising from monetary items except for financial liabilities designated cashflow hedging instruments are recognized in profit or loss. If a gain or loss on a non-monetary item is recognized in other comprehensive income, any foreign exchange differences are also recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any foreign exchange differences are also recognized in profit or loss.

(18) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

When the Company repurchases its own shares, the amount of the consideration paid is recognized as a deduction from equity and classified as treasury shares. The gains or losses from the purchase, disposal, reissue, or retirement of treasury shares are directly recognized in equity being as transaction with owners.

(19) Hybrid bond

The Company recognizes a financial instrument issued by the Company as an equity instrument if it does not include contractual obligation to deliver financial assets including cash to the counter party.

(20)   Share-based payment

For equity-settled share-based payment transaction, if the fair value of the goods or services received cannot be reliably estimated, the Company measures the value indirectly by reference to the fair value of the equity instruments granted. The related expense with a corresponding increase in capital surplus and others is recognized over the vesting period of the awards.

The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the fair value of the liability are recognized in profit or loss.

28

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(21) Revenue
--- ---
1) Identification of performance obligations in contracts with customers
--- ---

The Company identifies the distinct services or goods as performance obligations in contracts with customers such as (1) providing wireless telecommunications services and (2) sale other goods and services. In the case of providing both wireless telecommunications service and selling a handset together to one customer, the Company allocates considerations from the customer between the separate performance obligations for handset sale and wireless telecommunications service. The handset sale revenue is recognized when handset is delivered, and the wireless telecommunications service revenue is recognized over the period of the contract term as stated in the subscription contract.

2) Allocation of the transaction price to each performance obligation

The Company allocates the transaction price of a contract to each performance obligation identified on a relative stand-alone selling price basis. The Company uses “adjusted market assessment approach” for estimating the stand-alone selling price of a good or service.

3) Incremental costs of obtaining a contract

The Company pays commissions to its retail stores and authorized dealers in connection with acquiring service contracts. The commissions paid to these parties constituted a significant portion of the Company’s operating expenses. These commissions would not have been paid if there have been no binding contracts with subscribers and, therefore, the Company capitalizes certain costs associated with commissions paid to obtain new customer contracts and amortize them over the expected contract periods.

4) Customer loyalty programs

The Company provides customer loyalty points to customers based on the usage of the service to which the Company allocates a portion of consideration received as a performance obligation distinct from wireless telecommunications services. The amount to be allocated to the loyalty program is measured according to the relative stand-alone selling price of the customer loyalty points. The amount allocated to the loyalty program is deferred as a contract liability and is recognized as revenue when loyalty points are redeemed.

5) Consideration payable to a customer

Based on the subscription contract, a customer who uses the Company’s wireless telecommunications services may receive a discount for purchasing goods or services from a designated third party. The Company pays a portion of the price discounts that the customer receives to the third party which is viewed as consideration payable to a customer. The Company accounts for the amounts payable to the third party as a reduction of the wireless telecommunications service revenue.

29

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(22) Finance income and finance costs
--- ---

Finance income comprises interest income on funds invested (including financial assets measured at fair value), dividend income, gains on disposal of financial assets at FVTPL, changes in fair value of financial instruments at FVTPL, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest rate method. Dividend income is recognized in profit or loss when the right to receive the dividend is established.

Finance costs comprise interest expense on borrowings and debentures, changes in fair value of financial instruments at FVTPL, and losses on hedging instruments that are recognized in profit or loss. Interest expense on borrowings and debentures is recognized as it accrues in profit or loss using the effective interest rate method.

30

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(23) Income taxes
--- ---

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

The Company pays income tax in accordance with the tax-consolidation system when the Company and its subsidiaries are economically unified.

1) Current tax

In accordance with the tax-consolidation system, the Company calculates current taxes on the consolidated taxable income for the Company and its subsidiaries that meet the criteria for the consolidated income tax returns and recognizes the income tax payable as current tax liabilities of the Company.

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and includes interests and fines related to income taxes paid or payable. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

2) Deferred tax

Deferred tax is recognized by using the asset-liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Company recognizes a deferred tax liability for all taxable temporary differences, except for the difference associated with investments in subsidiaries and associates that the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Company recognizes a deferred tax asset for all deductible temporary differences, to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

A deferred tax asset is recognized for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Future taxable profit is dependent on the reversal of taxable temporary differences. If there are insufficient taxable temporary differences to recognize the deferred tax asset, the business plan of the Company and the reversal of existing temporary differences are considered in determining the future taxable profit.

The Company reviews the carrying amount of a deferred tax asset at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.

31

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

3. Material Accounting Policies, Continued
(23) Income taxes, Continued
--- ---
2) Deferred tax, Continued
--- ---

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if the Company has a legally enforceable right to offset the amount recognized and intends to settle the current tax liabilities and assets on a net basis. Income tax expense in relation to dividend payments is recognized when liabilities relating to the dividend payments are recognized.

3) Uncertainty over income tax treatments

The Company assesses the uncertainty over income tax treatments pursuant to KIFRS 1012. If the Company concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the Company reflects the effect of uncertainty for each uncertain tax treatment by using either of the following methods, depending on which method the entity expects to better predict the resolution of the uncertainty:

• The most likely amount – the single most likely amount in a range of possible outcomes.<br>
• The expected value – the sum of the probability-weighted amounts in a range of possible outcomes.<br>
--- ---
(24) Earnings per share
--- ---

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees, if any.

(25) Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective for annual period beginning after January 1, 2023 are disclosed below. The following amendments are not expected to have a material impact on the Company’s separate financial statements.

• Classification of Liabilities as Current or Non-current (Amendments to<br>KIFRS 1001).
• Disclosures of Information on Supplier Finance Arrangements (Amendments to KIFRS 1007 and KIFRS 1107)<br>
--- ---
• Lease Liability in a Sale and Leaseback (Amendments to KIFRS 1116)
--- ---
• Disclosures of Crypto assets (Amendments to KIFRS 1001)
--- ---

32

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

4. Deposits with Restrictions on Use

Deposits which are restricted in use as of December 31, 2023 and 2022 are summarized as follows:

(In millions of won)
December 31, 2023 December 31, 2022
Short-term financial Charitable trust fund(*1) ~~W~~ 79,000 79,000
instruments Litigations-related seizure(*2) — 14
Long-term financial Collateral deposits for time deposit(*3) 130 130
instruments Guarantee deposit 12 12
Collateral deposit(*4) 212 212
~~W~~ 79,354 79,368
(*1) The charitable trust fund is for shared growth established by SK Group and profits from the charitable trust<br>fund are only used for the purpose of financial support for small and medium-sized enterprises that cooperate with SK Group. As of December 31, 2023, the funds cannot be withdrawn before maturity<br>(~~W~~63,000 million on July 5, 2024 and ~~W~~16,000 million on July 10, 2024).
--- ---
(*2) The deposit is restricted in use due to the court’s order for seizure and collection of bonds.<br>
--- ---
(*3) The deposit is for registration of electrical construction business and specialized energy construction<br>business in accordance with Enforcement Decree of the Electrical Constriction Business Act and Enforcement Decree of the Framework Act on the Construction Industry, respectively. Accordingly, the deposit is restricted in use while the<br>Company operates the businesses.
--- ---
(*4) The deposit is for registration of mechanical facility construction business and general construction business<br>in accordance with Enforcement Decree of the Framework Act on the Construction Industry. Accordingly, the deposit is restricted in use while the Company operates the businesses.
--- ---

33

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

5. Trade and Other Receivables
(1) Details of trade and other receivables as of December 31, 2023 and 2022 are as follows:<br>
--- ---

(In millions of won)

December 31, 2023
Gross amount Lossallowance Carryingamount
Current assets:
Accounts receivable – trade ~~W~~ 1,589,862 (94,245 ) 1,495,617
Short-term loans 69,501 (695 ) 68,806
Accounts receivable – other(*) 370,860 (27,824 ) 343,036
Guarantee deposits 72,479 — 72,479
Accrued income 2,643 — 2,643
2,105,345 (122,764 ) 1,982,581
Non-current assets:
Long-term loans 41,155 (41,036 ) 119
Long-term accounts receivable – other(*) 308,868 — 308,868
Guarantee deposits 91,220 — 91,220
441,243 (41,036 ) 400,207
~~W~~ 2,546,588 (163,800 ) 2,382,788
(*) Gross and carrying amounts of accounts receivable – other as of December 31, 2023 include<br>~~W~~273,945 million of financial instruments classified as fair value through profit or loss (“FVTPL”).
--- ---
(In millions of won) December 31, 2022
--- --- --- --- --- --- --- ---
Gross amount Lossallowance Carryingamount
Current assets:
Accounts receivable – trade ~~W~~ 1,511,926 (86,231 ) 1,425,695
Short-term loans 70,751 (708 ) 70,043
Accounts receivable – other(*) 467,800 (32,704 ) 435,096
Guarantee deposits 63,516 — 63,516
Accrued income 1,168 — 1,168
2,115,161 (119,643 ) 1,995,518
Non-current assets:
Long-term loans 41,231 (41,037 ) 194
Long-term accounts receivable – other(*) 377,858 — 377,858
Guarantee deposits 92,019 — 92,019
511,108 (41,037 ) 470,071
~~W~~ 2,626,269 (160,680 ) 2,465,589
(*) Gross and carrying amounts of accounts receivable – other as of December 31, 2022 include<br>~~W~~332,669 million of financial instruments classified as fair value through profit or loss (“FVTPL”).
--- ---

34

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

5. Trade and Other Receivables, Continued
(2) Changes in the loss allowance on accounts receivable – trade measured at amortized cost for the years<br>ended December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- ---
Beginning balance Impairment Write-offs(*) Collection ofreceivablespreviouslywritten-off Ending<br>balance
2023 ~~W~~ 86,231 28,765 (28,442 ) 7,691 94,245
2022 ~~W~~ 92,762 16,053 (31,500 ) 8,916 86,231
(*) The Company writes off the trade and other receivables that are determined to be uncollectable due to reasons<br>such as termination of operations or bankruptcy.
--- ---
(3) The Company applies the practical expedient that allows the Company to estimate the loss allowance for accounts<br>receivable – trade at an amount equal to the lifetime expected credit losses. The expected credit losses include the forward-looking information. To make the assessment, the Company uses its historical credit loss experience over the past three<br>years and classifies the accounts receivable – trade by their credit risk characteristics and days overdue. Details of loss allowance on accounts receivable – trade as of December 31, 2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Less than 6months 6 months ~<br>1 year 1 ~ 3<br>years More than 3years
Telecommunications service revenue Expected credit loss rate 0.46 % 48.91 % 73.36 % 99.98 %
Gross amount ~~W~~ 1,144,931 18,062 47,666 17,412
Loss allowance 5,288 8,835 34,970 17,409
Other revenue Expected credit loss rate 2.20 % 50.30 % 56.58 % 97.32 %
Gross amount ~~W~~ 336,220 2,199 8,583 14,789
Loss allowance 7,389 1,106 4,856 14,392

As the Company is a wireless telecommunications service provider, the Company’s financial assets measured at amortized cost primarily consist of receivables from numerous individual customers, and, therefore, no significant credit concentration risk arises.

Receivables related to other revenue mainly consist of receivables from corporate customers. The Company transacts only with corporate customers with credit ratings that are considered to be low at credit risk. In addition, the Company is not exposed to significant credit concentration risk as the Company regularly assesses their credit risk by monitoring their credit rating. While the contract assets are under the impairment requirements, no significant credit risk has been identified.

35

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

6. Prepaid Expenses

The Company pays commissions to its retail stores and authorized dealers for wireless telecommunications services based on their performance of attracting new customers and renewing contracts with existing customers, and recognizes costs that would not occur in case of not signing contracts with new and existing customers as prepaid expenses among the commissions. These prepaid expenses are amortized on a straight-line basis over the periods that the Company expects to maintain its customers.

(1) Details of prepaid expenses as of December 31, 2023 and 2022 are as follows:
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Current assets:
Incremental costs of obtaining contracts ~~W~~ 1,795,410 1,877,900
Others 33,236 31,087
~~W~~ 1,828,646 1,908,987
Non-current assets:
Incremental costs of obtaining contracts ~~W~~ 863,650 904,746
Others 35,104 30,964
~~W~~ 898,754 935,710
(2) Incremental costs of obtaining contracts
--- ---

The amortization in connection with incremental costs of obtaining contracts recognized for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won) 2023 2022
Amortization recognized ~~W~~ 2,390,984 2,407,314

36

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

7. Contract Assets and Liabilities

In case of providing both wireless telecommunication services and sales of handsets, the Company allocated the consideration based on relative stand-alone selling prices and recognized unbilled receivables from handset sales as contract assets. The Company recognized receipts in advance for prepaid telecommunications services and unearned revenue for customer loyalty programs as contract liabilities.

(1) Details of contract assets and liabilities as of December 31, 2023 and 2022 are as follows:<br>
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Contract assets:
Allocation of consideration between performance obligations ~~W~~ 21,613 33,098
Contract liabilities:
Wireless service contracts 19,149 18,544
Customer loyalty programs 7,164 7,706
Others 37,899 67,149
~~W~~ 64,212 93,399
(2) The amount of revenue recognized for the years ended December 31, 2023 and 2022 related to the contract<br>liabilities carried forward from the prior periods are ~~W~~75,521 million and ~~W~~54,981million, respectively. Details of revenue expected to be recognized from contract liabilities as of December 31, 2023 are<br>as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- ---
Less than<br>1 year 1 ~ 2years More than<br>2 years Total
Wireless service contracts ~~W~~ 19,149 — — 19,149
Customer loyalty programs 5,716 970 478 7,164
Others 34,949 2,950 — 37,899
~~W~~ 59,814 3,920 478 64,212

37

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

8. Long-term Investment Securities

Details of long-term investment securities as of December 31, 2023 and 2022 are as follows:

(In millions of won)
Category December 31, 2023 December 31, 2022
Equity instruments FVOCI (*) ~~W~~ 1,207,605 1,066,785
Debt instruments FVTPL 218,685 88,403
~~W~~ 1,426,290 1,155,188
(*) The Company designated investments in equity instruments that are not held for trading as financial assets at<br>FVOCI, and the amounts of those equity instruments as of December 31, 2023 and 2022 are ~~W~~1,207,605 million and ~~W~~1,066,785 million, respectively.
--- ---

38

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

9. Investments in Subsidiaries, Associates and Joint Ventures
(1) Investments in subsidiaries, associates and joint ventures as of December 31, 2023 and 2022 are as<br>follows:
--- ---
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Investments in subsidiaries ~~W~~ 3,259,021 3,200,863
Investments in associates and joint ventures 1,411,547 1,420,944
~~W~~ 4,670,568 4,621,807
(2) Details of investments in subsidiaries as of December 31, 2023 and 2022 are as follows:<br>
--- ---

(In millions of won, except for share data)

December 31, 2023 December 31, 2022
Number ofshares Ownership<br>(%) Carrying<br>amount Carrying<br>amount
SK Telink Co., Ltd.(*1) 1,432,627 100.0 ~~W~~ 244,015 243,988
SK Broadband Co., Ltd.(*1) 299,052,435 74.4 2,216,865 2,215,427
SK Communications Co., Ltd. 43,427,530 100.0 24,927 24,927
PS&Marketing Corporation(*1) 66,000,000 100.0 313,989 313,934
SERVICE ACE Co., Ltd. (*1) 4,385,400 100.0 21,946 21,927
SK Telecom China Holdings Co., Ltd. — 100.0 48,096 48,096
SK Telecom Americas, Inc. (*2) 122 100.0 70,269 31,203
Atlas Investment(*3) — 100.0 193,661 159,631
SK stoa Co., Ltd. (*1) 3,631,355 100.0 40,057 40,029
Quantum Innovation Fund I(*4,5) — 59.9 1,297 11,626
SAPEON Inc. 400,000 62.5 48,456 48,456
SK O&S Co., Ltd. and others(*1,6) — — 35,443 41,619
~~W~~ 3,259,021 3,200,863

39

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

9. Investments in Subsidiaries, Associates and Joint Ventures, Continued
(2) Details of investments in subsidiaries as of December 31, 2023 and 2022 are as follows, Continued:<br>
--- ---
(*1) The Company granted Performance Share Units (“PSU”) stock options to executives of its subsidiaries,<br>resulting in a cumulative total contribution of ~~W~~1,614 million. There is no change in the ownership interest. (See note 23)
--- ---
(*2) The Company additionally contributed ~~W~~39,066 million in cash for the year ended<br>December 31, 2023, but there is no change in the ownership interest.
--- ---
(*3) The Company additionally contributed ~~W~~34,030 million in cash for the year ended<br>December 31, 2023, but there is no change in the ownership interest.
--- ---
(*4) The Company additionally contributed ~~W~~240 million in cash for the year ended<br>December 31, 2023, but there is no change in the ownership interest.
--- ---
(*5) The Company disposed of a portion of shares in Quantum Innovation Fund I at<br>~~W~~16,974 million from which it recognized ~~W~~6,405 million of gain relating to investments in subsidiaries for the year ended December 31, 2023, but there is no change in the ownership interest.<br>
--- ---
(*6) The Company disposed of a portion of shares in SK telecom Japan Inc., which was a subsidiary of the Company, to<br>SK hynix Inc. and SK Square Co., Ltd., from which it recognized ~~W~~1,654 million of loss relating to investments in subsidiaries for the year ended December 31, 2023, and the remaining ownership interest is reclassified as<br>investments in associates as of December 31, 2023.
--- ---

40

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

9. Investments in Subsidiaries, Associates and Joint Ventures, Continued
(3) Details of investments in associates and joint ventures as of December 31, 2023 and 2022 are as follows:<br>
--- ---

(In millions of won, except for share data)

December 31, 2023 December 31, 2022
Number ofshares Ownership<br>(%) Carrying<br>amount Carrying<br>amount
Investments in associates:
SK China Company Ltd. 10,928,921 27.3 ~~W~~ 601,192 601,192
Korea IT Fund(*1) 190 63.3 220,957 220,957
SK Technology Innovation Company 14,700 49.0 45,864 45,864
SM Culture & Contents Co., Ltd.(*2) 22,033,898 22.8 41,578 65,341
SK South East Asia Investment Pte. Ltd. 300,000,000 20.0 344,240 344,240
Citadel Pacific Telecom Holdings, LLC (*3) 1,734,109 15.0 36,487 36,487
Invites Genomics Co., Ltd.(*4) (Formerly, Invites Healthcare Co., Ltd.) 489,999 31.1 — —
CMES Inc.(*3) 42,520 7.7 900 900
Konan Technology Inc. 2,359,160 20.7 22,413 22,413
12CM JAPAN and others(*3,5,6,7) — — 87,916 77,550
1,401,547 1,414,944
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund(*8) — 48.2 10,000 6,000
~~W~~ 1,411,547 1,420,944
(*1) Investments in Korea IT Fund was classified as investment in associates as the Company does not have control<br>over the investee under the contractual agreement with other shareholders.
--- ---
(*2) The Company recognized an impairment loss of ~~W~~23,763 million as the recoverable amount<br>was assessed to be less than the carrying amount for the year ended December 31, 2023.
--- ---
(*3) These investments were classified as investments in associates as the Company can exercise significant<br>influence through its right to appoint the members of the Board of Directors even though the Company has less than 20% of equity interests.
--- ---
(*4) The Company recognized the carrying amount of investments in Invites Genomics Co., Ltd. (Formerly, Invites<br>Healthcare Co., Ltd.) in entirety as an impairment loss for the year ended December 31, 2022.
--- ---
(*5) The Company disposed of a portion of shares in SK telecom Japan Inc., which was a subsidiary of the Company,<br>resulting in the reclassification of the remaining shares as an investment in associates for the year ended December 2023.
--- ---

41

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

9. Investments in Subsidiaries, Associates and Joint Ventures, Continued
(3) Details of investments in associates and joint ventures as of December 31, 2023 and 2022 are as follows,<br>Continued:
--- ---
(*6) The Company additionally contributed ~~W~~6,000 million of investment in KB ESG Fund of the<br>three telecommunications companies, ~~W~~28 million in F&U Credit information Co., Ltd. and ~~W~~215 million of investment in KDX Korea Data Exchange for the year ended December 31, 2023. Also, the<br>Company obtained significant influence by contributing ~~W~~6,500 million to Telecom Daean Evaluation Jun B Corporation Co., Ltd., and ~~W~~520 million to Covet Co., Ltd., for the year ended December 31,<br>2023.
--- ---
(*7) The Company disposed of a portion of shares in Start-up Win-Win Fund for ~~W~~550 million and a portion of SK-KNET Youth Startup Investment Cooperative for ~~W~~4,400 million in cash for the year<br>ended December 31, 2023.
--- ---
(*8) The Company additionally contributed ~~W~~4,000 million in cash to the investee for the year<br>ended December 31, 2023, but there is no change in the ownership interest. The Company has joint control over the investee pursuant to the agreement with the other shareholders, thus the investment in the investee was classified as investments<br>in joint ventures.
--- ---
(4) The market value of investments in listed associates as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won, except for share data)
--- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Market price<br>per share(in won) Number ofshares Marketvalue Market price<br>per share(in won) Number ofshares Marketvalue
SM Culture & Contents Co., Ltd. ~~W~~ 1,887 22,033,898 41,578 2,960 22,033,898 65,220
Konan Technology Inc. 32,600 2,359,160 76,909 28,250 1,179,580 33,323

42

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

10. Property and Equipment
(1) Property and equipment as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023
Acquisition cost Accumulateddepreciation Accumulated<br>Impairment loss Carrying<br>amount
Land ~~W~~ 723,069 — — 723,069
Buildings 1,313,507 (744,787 ) (450 ) 568,270
Structures 939,983 (704,932 ) (1,601 ) 233,450
Machinery 27,625,424 (22,394,558 ) — 5,230,866
Right-of-use<br>assets 1,983,163 (756,288 ) — 1,226,875
Other 1,493,783 (1,056,929 ) — 436,854
Construction in progress 657,075 — — 657,075
~~W~~ 34,736,004 (25,657,494 ) (2,051 ) 9,076,459
(In millions of won)
December 31, 2022
Acquisition cost Accumulateddepreciation Accumulated<br>Impairment loss Carrying<br>amount
Land ~~W~~ 646,286 — — 646,286
Buildings 1,264,103 (700,677 ) (450 ) 562,976
Structures 933,702 (667,774 ) (1,601 ) 264,327
Machinery 27,420,063 (22,145,451 ) — 5,274,612
Right-of-use<br>assets 2,033,034 (660,568 ) — 1,372,466
Other 1,505,800 (1,061,476 ) — 444,324
Construction in progress 954,672 — — 954,672
~~W~~ 34,757,660 (25,235,946 ) (2,051 ) 9,519,663

43

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

10. Property and Equipment, Continued
(2) Changes in property and equipment for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Beginningbalance Acquisition Disposal Transfer Depreciation Ending<br>balance
Land ~~W~~ 646,286 8 (388 ) 77,163 — 723,069
Buildings 562,976 372 (152 ) 47,161 (42,087 ) 568,270
Structures 264,327 1,279 (200 ) 6,477 (38,433 ) 233,450
Machinery 5,274,612 98,114 (493 ) 1,470,364 (1,611,731 ) 5,230,866
Right-of-use<br>assets 1,372,466 253,838 (36,160 ) (4,768 ) (358,501 ) 1,226,875
Other 444,324 536,726 (874 ) (476,653 ) (66,669 ) 436,854
Construction in progress 954,672 1,026,496 (26 ) (1,324,067 ) — 657,075
~~W~~ 9,519,663 1,916,833 (38,293 ) (204,323 ) (2,117,421 ) 9,076,459
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Beginningbalance Acquisition Disposal Transfer Depreciation Ending<br>balance
Land ~~W~~ 621,614 — (89 ) 24,761 — 646,286
Buildings 564,976 353 (182 ) 39,082 (41,253 ) 562,976
Structures 290,813 1,293 (32 ) 10,428 (38,175 ) 264,327
Machinery 5,331,485 108,792 (43,577 ) 1,464,892 (1,586,980 ) 5,274,612
Right-of-use<br>assets 1,370,897 410,640 (37,386 ) (18,651 ) (353,034 ) 1,372,466
Other 439,982 759,010 (728 ) (671,632 ) (82,308 ) 444,324
Construction in progress 698,641 1,211,667 (1,709 ) (953,927 ) — 954,672
~~W~~ 9,318,408 2,491,755 (83,703 ) (105,047 ) (2,101,750 ) 9,519,663

44

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

11. Investment Property
(1) Investment property as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Acquisition<br>cost Accumulateddepreciation Carrying<br>amount Acquisition<br>cost Accumulateddepreciation Carrying<br>amount
Land ~~W~~ 16,288 — 16,288 16,485 — 16,485
Buildings 55,629 (37,345 ) 18,284 58,248 (39,182 ) 19,066
Right-of-use<br>assets 21,313 (9,805 ) 11,508 23,505 (7,033 ) 16,472
~~W~~ 93,230 (47,150 ) 46,080 98,238 (46,215 ) 52,023
(2) Changes in investment property for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
2023
Beginningbalance Transfer Depreciation Endingbalance
Land ~~W~~ 16,485 (197 ) — 16,288
Buildings 19,066 1,059 (1,841 ) 18,284
Right-of-use<br>assets 16,472 5,402 (10,366 ) 11,508
~~W~~ 52,023 6,264 (12,207 ) 46,080
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
2022
Beginningbalance Transfer Depreciation Endingbalance
Land ~~W~~ 17,084 (599 ) — 16,485
Buildings 21,768 (743 ) (1,959 ) 19,066
Right-of-use<br>assets 6,248 18,015 (7,791 ) 16,472
~~W~~ 45,100 16,673 (9,750 ) 52,023
(3) The Company recognized lease income of ~~W~~22,773 million and<br>~~W~~22,745 million from investment property for the years ended December 31, 2023 and 2022, respectively.
--- ---
(4) The fair value of investment property is ~~W~~157,071 million and<br>~~W~~182,142 million as of December 31, 2023 and 2022, respectively.
--- ---

45

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

12. Leases
(1) Company as a lessee
--- ---
1) Details of the right-of-use<br>assets as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Right-of-use<br>assets:
Land, buildings and structures ~~W~~ 971,929 1,113,958
Others 254,946 258,508
~~W~~ 1,226,875 1,372,466
2) Details of amounts recognized in the separate statements of income for the years ended December 31, 2023<br>and 2022 as a lessee are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Depreciation of<br>right-of-use assets:
Land, buildings and structures ~~W~~ 281,187 278,406
Others(*) 77,314 74,628
~~W~~ 358,501 353,034
Interest expense on lease liabilities ~~W~~ 31,824 25,377
(*) Others include the amount reclassified as research and development expenses related to the lease contract for<br>research and development facilities.
--- ---

Expenses related to short-term leases and leases of low-value assets that the Company recognized are immaterial.

3) The total cash outflows due to lease payments for the years ended December 31, 2023 and 2022 amounted to<br>~~W~~386,268 million and ~~W~~369,746 million, respectively.

46

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

12. Lease, Continued
(2) Company as a lessor
--- ---
1) Finance lease
--- ---

The Company recognized interest income of ~~W~~146 million and ~~W~~227 million for lease receivables for the years ended December 31, 2023 and 2022, respectively.

The following table sets out a maturity analysis of lease receivables, presenting the undiscounted lease payments to be received subsequent to December 31, 2023.

(In millions of won)
Amount
Less than 1 year ~~W~~ 8,349
1 ~ 2 years 2,478
Undiscounted lease payments ~~W~~ 10,827
Unrealized finance income 64
Net investment in the lease 10,763
2) Operating lease
--- ---

The Company recognized lease income of ~~W~~112,162 million and ~~W~~113,468 million for the years ended December 31, 2023 and 2022, respectively, of which variable lease payments received are ~~W~~6,389 million and ~~W~~8,622 million, respectively.

The following table sets out a maturity analysis of lease payments, presenting the undiscounted fixed payments to be received subsequent to December 31, 2023.

(In millions of won)
Amount
Less than 1 year ~~W~~ 58,283
1 ~ 2 years 10,439
2 ~ 3 years 1,727
3 ~ 4 years 105
4 ~ 5 years 98
More than 5 years 434
~~W~~ 71,086

47

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

13. Goodwill

Goodwill as of December 31, 2023 and 2022 are as follows:

(In millions of won)
December 31, 2023 December 31, 2022
Goodwill related to merger of Shinsegi Telecom, Inc. ~~W~~ 1,306,236 1,306,236

The recoverable amount of the CGU is based on its value in use calculated by applying the post-tax annual discount rate of 5.4% (2022: 6.7%) (pre-tax annual discount rate for 2023 and 2022 are 8.4% and 9.0%, respectively) to the estimated future post-tax cash flows based on financial budgets for the next five years. An annual growth rate of 0.0% (2022: 0.0%) was applied for the cash flows expected to be incurred after five years and is not expected to exceed the Company’s long-term wireless telecommunication industry growth rate.

14. Intangible Assets
(1) Intangible assets as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023
Acquisition cost Accumulatedamortization Accumulatedimpairment loss Carryingamount
Frequency usage rights(*1) ~~W~~ 3,564,907 (1,958,301 ) — 1,606,606
Land usage rights 35,144 (34,602 ) — 542
Industrial rights 51,959 (33,169 ) — 18,790
Facility usage rights 61,553 (48,118 ) — 13,435
Club memberships(*2) 80,963 — (21,962 ) 59,001
Other(*3) 3,792,089 (3,239,634 ) — 552,455
~~W~~ 7,586,615 (5,313,824 ) (21,962 ) 2,250,829
(In millions of won)
December 31, 2022
Acquisition cost Accumulatedamortization Accumulatedimpairment loss Carryingamount
Frequency usage rights(*1) ~~W~~ 3,767,590 (1,499,158 ) (186,000 ) 2,082,432
Land usage rights 36,819 (35,692 ) — 1,127
Industrial rights 48,216 (29,104 ) — 19,112
Facility usage rights 59,222 (45,977 ) — 13,245
Club memberships(*2) 78,859 — (21,962 ) 56,897
Other(*3) 3,671,908 (3,151,321 ) — 520,587
~~W~~ 7,662,614 (4,761,252 ) (207,962 ) 2,693,400

48

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

14. Intangible Assets, Continued
(1) Intangible assets as of December 31, 2023 and 2022 are as follows, Continued:
--- ---
(*1) The Company was reassigned 800 MHz, 1.8 GHz and 2.1 GHz band of frequency licenses from the Ministry of Science<br>and Information and Communication Technology (“ICT”) in exchange for ~~W~~227,200 million, ~~W~~547,800 million and ~~W~~411,700 million, respectively, for the year ended<br>December 31, 2021. The band of frequency was assigned to the Company at the date of initial lump sum payment for the year ended December 31, 2021 and the annual payments in installment for the remaining balances are made in the next five<br>years starting from the date of initial lump sum payment.
--- ---
(*2) Club memberships are classified as intangible assets with indefinite useful lives and are not amortized.<br>
--- ---
(*3) Other intangible assets primarily consist of computer software and others.
--- ---
(2) Changes in intangible assets for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Beginningbalance Acquisition Disposal Transfer Amortization Endingbalance
Frequency usage rights ~~W~~ 2,082,432 — — — (475,826 ) 1,606,606
Land usage rights 1,127 125 (15 ) 40 (735 ) 542
Industrial rights 19,112 4,549 (350 ) — (4,521 ) 18,790
Facility usage rights 13,245 1,884 (16 ) 1,072 (2,750 ) 13,435
Club memberships 56,897 3,595 (1,491 ) — — 59,001
Other 520,587 57,306 (1,501 ) 195,930 (219,867 ) 552,455
~~W~~ 2,693,400 67,459 (3,373 ) 197,042 (703,699 ) 2,250,829
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Beginningbalance Acquisition Disposal Transfer Amortization Endingbalance
Frequency usage rights ~~W~~ 2,559,689 — — — (477,257 ) 2,082,432
Land usage rights 2,449 — — — (1,322 ) 1,127
Industrial rights 10,934 13,428 (824 ) (111 ) (4,315 ) 19,112
Facility usage rights 14,355 1,396 (2 ) 260 (2,764 ) 13,245
Club memberships 51,356 6,113 (572 ) — — 56,897
Other 564,547 70,977 (382 ) 115,904 (230,459 ) 520,587
~~W~~ 3,203,330 91,914 (1,780 ) 116,053 (716,117 ) 2,693,400

49

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

14. Intangible Assets, Continued
(3) Research and development expenditures recognized as expense for the years ended December 31, 2023 and 2022<br>are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Research and development costs expensed as incurred ~~W~~ 336,377 338,389
(4) Details of frequency usage rights as of December 31, 2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- ---
Amount Description Commencement ofamortization Completion ofamortization
800 MHz license ~~W~~ 109,789 LTE service Jul. 2021 Jun. 2026
1.8 GHz license 308,534 LTE service Dec. 2021 Dec. 2026
2.6 GHz license 364,250 LTE service Sept. 2016 Dec. 2026
2.1 GHz license 231,879 W-CDMA and LTE service Dec. 2021 Dec. 2026
3.5 GHz license 592,154 5G service Apr. 2019 Nov. 2028
~~W~~ 1,606,606

50

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

15. Borrowings and Debentures
(1) Short-term borrowings as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- ---
Lender Annual<br>interest rate (%) Maturity December 31, 2023 December 31, 2022
BNK Securities. Co., Ltd. — — ~~W~~ — 100,000
(2) Long-term borrowings as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- ---
Lender Annual interestrate (%) Maturity December 31, 2023 December 31, 2022
Mizuho Bank, Ltd. 1.35 May. 20, 2024 ~~W~~ 100,000 100,000
DBS Bank Ltd. 1.30 May. 28, 2024 200,000 200,000
DBS Bank Ltd. 2.65 Mar. 10, 2025 200,000 200,000
Credit Agricole CIB 3.30 Apr. 29, 2024 50,000 50,000
Mizuho Bank, Ltd. 3.29 Nov. 27, 2023 — 100,000
Nonghyup Bank(*) MOR + 1.36 Nov. 17, 2024 40,000 40,000
Credit Agricole CIB 4.89 Nov. 28, 2025 50,000 50,000
640,000 740,000
Less current portions (390,000 ) (100,000 )
~~W~~ 250,000 640,000
(*) 6M MOR rates are 3.85% and 4.35% as of December 31, 2023 and 2022, respectively.
--- ---

51

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

15. Borrowings and Debentures, Continued
(3) Debentures as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- --- --- --- --- --- ---
Purpose Maturity Annual<br>interest rate (%) December 31,<br>2023 December 31,2022
Unsecured corporate bonds Operating and<br><br><br>Refinancing fund 2032 3.45 ~~W~~ 90,000 90,000
Unsecured corporate bonds Operating fund 2023 3.03 — 230,000
Unsecured corporate bonds 2033 3.22 130,000 130,000
Unsecured corporate bonds 2024 3.64 150,000 150,000
Unsecured corporate bonds Refinancing fund 2024 2.82 190,000 190,000
Unsecured corporate bonds Operating and 2025 2.49 150,000 150,000
Unsecured corporate bonds Refinancing fund 2030 2.61 50,000 50,000
Unsecured corporate bonds Operating fund 2025 2.66 70,000 70,000
Unsecured corporate bonds 2030 2.82 90,000 90,000
Unsecured corporate bonds Operating and 2025 2.55 100,000 100,000
Unsecured corporate bonds Refinancing fund 2035 2.75 70,000 70,000
Unsecured corporate bonds Operating fund 2026 2.08 90,000 90,000
Unsecured corporate bonds 2036 2.24 80,000 80,000
Unsecured corporate bonds 2026 1.97 120,000 120,000
Unsecured corporate bonds 2031 2.17 50,000 50,000
Unsecured corporate bonds Refinancing fund 2027 2.55 100,000 100,000
Unsecured corporate bonds Operating and<br><br><br>Refinancing fund 2032 2.65 90,000 90,000
Unsecured corporate bonds Refinancing fund 2027 2.84 100,000 100,000
Unsecured corporate bonds 2023 2.81 — 100,000
Unsecured corporate bonds 2028 3.00 200,000 200,000
Unsecured corporate bonds 2038 3.02 90,000 90,000
Unsecured corporate bonds Operating and 2023 2.33 — 150,000
Unsecured corporate bonds Refinancing fund 2038 2.44 50,000 50,000
Unsecured corporate bonds Operating fund 2024 2.09 120,000 120,000
Unsecured corporate bonds 2029 2.19 50,000 50,000
Unsecured corporate bonds 2039 2.23 50,000 50,000
Unsecured corporate bonds Operating and 2024 1.49 60,000 60,000
Unsecured corporate bonds Refinancing fund 2029 1.50 120,000 120,000
Unsecured corporate bonds 2039 1.52 50,000 50,000
Unsecured corporate bonds 2049 1.56 50,000 50,000
Unsecured corporate bonds Operating fund 2024 1.76 70,000 70,000
Unsecured corporate bonds 2029 1.79 40,000 40,000
Unsecured corporate bonds 2039 1.81 60,000 60,000
Unsecured corporate bonds Operating and<br><br><br>Refinancing fund 2023 1.64 — 170,000
Unsecured corporate bonds Operating fund 2025 1.75 130,000 130,000
Unsecured corporate bonds 2030 1.83 50,000 50,000
Unsecured corporate bonds 2040 1.87 70,000 70,000

52

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

15. Borrowings and Debentures, Continued
(3) Debentures as of December 31, 2023 and 2022 are as follows, Continued:
--- ---
(In millions of won and thousands of U.S. dollars)
--- --- --- --- --- --- --- --- --- ---
Purpose Maturity Annualinterest rate (%) December 31,<br>2023 December 31,2022
Unsecured corporate bonds Refinancing fund 2025 1.40 140,000 140,000
Unsecured corporate bonds 2030 1.59 40,000 40,000
Unsecured corporate bonds 2040 1.76 110,000 110,000
Unsecured corporate bonds 2024 1.17 80,000 80,000
Unsecured corporate bonds 2026 1.39 80,000 80,000
Unsecured corporate bonds 2031 1.80 50,000 50,000
Unsecured corporate bonds 2041 1.89 100,000 100,000
Unsecured corporate bonds 2024 2.47 90,000 90,000
Unsecured corporate bonds 2026 2.69 70,000 70,000
Unsecured corporate bonds 2041 2.68 40,000 40,000
Unsecured corporate bonds 2025 3.80 240,000 240,000
Unsecured corporate bonds 2027 3.84 70,000 70,000
Unsecured corporate bonds 2042 3.78 40,000 40,000
Unsecured corporate bonds 2025 4.00 300,000 300,000
Unsecured corporate bonds 2027 4.00 95,000 95,000
Unsecured corporate bonds 2024 4.79 100,000 100,000
Unsecured corporate bonds 2025 4.73 110,000 110,000
Unsecured corporate bonds 2027 4.74 60,000 60,000
Unsecured corporate bonds 2032 4.69 40,000 40,000
Unsecured corporate bonds 2026 3.65 110,000 —
Unsecured corporate bonds 2028 3.83 190,000 —
Unsecured corporate bonds 2026 3.72 80,000 —
Unsecured corporate bonds 2028 3.80 200,000 —
Unsecured corporate bonds 2030 3.96 70,000 —
Unsecured corporate bonds 2026 4.54 115,000 —
Unsecured corporate bonds 2028 4.68 100,000 —
Unsecured corporate bonds 2030 4.72 50,000 —
Unsecured corporate bonds 2033 4.72 30,000 —
Unsecured global bonds Operating fund 2027 6.63 515,760 ( 400,000) 506,920 ( 400,000)
2023 3.75 — 633,650 ( 500,000
Floating rate notes(*) Operating fund 2025 SOFR rate<br> <br>+1.17 386,820 ( 300,000 380,190 ( 300,000
6,682,580 7,005,760
Less discounts on bonds (15,641 (16,790
6,666,939 6,988,970
Less current portions of bonds (859,516 (1,283,097
~~W~~ 5,807,423 5,705,873

All values are in US Dollars.

(*) Interest rates applied are SOFR rate 5.38% as of December 31, 2023 and LIBOR rate (3 month) 4.75% + 0.91%<br>as of December 31, 2022.

53

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

16. Long-Term Payables – Other
(1) As of December 31, 2023 and 2022, details of long-term payables – other related to the acquisition of<br>frequency usage rights are as follows (See note 14):
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Long-term payables – other ~~W~~ 1,290,225 1,690,470
Present value discount on long-term payables – other (29,772 ) (52,129 )
Current portion of long-term payables – other (367,770 ) (398,874 )
Carrying amount at year end ~~W~~ 892,683 1,239,467
(2) The sum of portions repaid among the principal of long-term payables – other for the years ended<br>December 31, 2023 and 2022 amounts to ~~W~~400,245 million and ~~W~~400,245 million, respectively. The repayment schedule of the principal amount of long-term payables – other as of December 31,<br>2023 is as follows:
--- ---
(In millions of won)
--- --- ---
Amount
Less than 1 year ~~W~~ 369,150
1 ~ 3 years 738,300
3 ~ 5 years 182,775
~~W~~ 1,290,225
17. Provisions
--- ---

Changes in provisions for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won) 2023 As of December 31, 2023
Beginningbalance Increase Utilization Reversal Endingbalance Current Non-current
Provision for restoration ~~W~~ 95,569 6,500 (1,787 ) — 100,282 30,491 69,791
Emission allowance 1,836 2,279 (520 ) (2,773 ) 822 822 —
~~W~~ 97,405 8,779 (2,307 ) (2,773 ) 101,104 31,313 69,791
(In millions of won) 2022 As of December 31, 2022
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Beginningbalance Increase Utilization Reversal Endingbalance Current Non-current
Provision for restoration ~~W~~ 94,684 5,595 (4,046 ) (664 ) 95,569 29,815 65,754
Emission allowance 1,885 2,369 — (2,418 ) 1,836 1,836 —
~~W~~ 96,569 7,964 (4,046 ) (3,082 ) 97,405 31,651 65,754

54

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

18. Defined Benefit Assets
(1) Details of defined benefit assets as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Present value of defined benefit obligations ~~W~~ 493,541 508,622
Fair value of plan assets (578,685 ) (539,847 )
~~W~~ (85,144 ) (31,225 )
(2) Principal actuarial assumptions as of December 31, 2023 and 2022 are as follows:
--- ---
December 31, 2023 December 31, 2022
--- --- --- --- --- --- ---
Discount rate for defined benefit obligations 4.36 % 5.31 %
Expected rate of salary increase 5.21 % 8.37 %

Discount rate for defined benefit obligation is determined based on market yields of high-quality corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of salary increase is determined based on the Company’s historical promotion index, inflation rate and salary increase ratio.

(3) Changes in present value of defined benefit obligations for the years ended December 31, 2023 and 2022 are<br>as follows:
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Binning balance ~~W~~ 508,622 483,001
Current service cost 56,564 50,997
Interest cost 26,487 15,094
Remeasurement
- Demographic assumption (740 ) (26,132 )
- Financial assumption (70,134 ) 25,392
- Adjustment based on experience 12,836 (6,059 )
Benefit paid (38,347 ) (28,932 )
Others(*) (1,747 ) (4,739 )
Ending balance ~~W~~ 493,541 508,622
(*) Others include changes in liabilities due to employee’s transfers among affiliates for the years ended<br>December 31, 2023 and 2022.
--- ---

55

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

18. Defined Benefit Assets, Continued
(4) Changes in fair value of plan assets for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Beginning balance ~~W~~ 539,847 476,099
Interest income 27,753 15,296
Remeasurement 94 (10,898 )
Contribution 50,000 92,000
Benefit paid (36,124 ) (32,335 )
Others(*) (2,885 ) (315 )
Ending balance ~~W~~ 578,685 539,847
(*) Others include changes in assets due to the employee’s transfers among affiliates for the years ended<br>December 31, 2023 and 2022.
--- ---

The Company’s expected contributions to the defined benefit plan for the year ended December 31, 2024, amounts to ~~W~~83,836 million.

(5) Total cost of defined benefit plan, which is recognized in profit or loss for the years ended December 31,<br>2023 and 2022 are as follows:
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Current service cost ~~W~~ 56,564 50,997
Net interest income (1,266 ) (202 )
~~W~~ 55,298 50,795

Costs related to the defined benefit plan except for the amounts transferred to construction in progress are included in labor expenses and research and development expenses.

(6) Details of plan assets as of December 31, 2023 and 2022 are as follows:
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Equity instruments ~~W~~ 65 7,504
Debt instruments 101,638 96,134
Short-term financial instruments, etc. 476,982 436,209
~~W~~ 578,685 539,847

56

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

18. Defined Benefit Assets, Continued
(7) Sensitivity analysis
--- ---

As of December 31, 2023, effects on defined benefit obligations if each of significant actuarial assumptions changes within expectable and reasonable range are as follows:

(In millions of won)
0.5% Increase 0.5% Decrease
Discount rate ~~W~~ (13,387 ) 14,131
Expected salary increase rate 14,277 (13,645 )

The sensitivity analysis does not consider dispersion of all cash flows that are expected from the plan but provides approximate values of sensitivity for the assumptions used.

A weighted average duration of defined benefit obligations as of December 31, 2023 and 2022 are 6.20 years and 7.07 years, respectively.

(8) Defined contribution plan

The amount recognized as an expense for defined contribution plans are ~~W~~8,698 million and ~~W~~7,107 million for the years ended December 31, 2023 and 2022, respectively.

57

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

19. Derivative Instruments
(1) Currency and interest rate swap contracts under cash flow hedge accounting as of December 31, 2023 are as<br>follows:
--- ---
(In thousands of foreign currencies)
--- --- --- --- ---
Borrowing<br><br><br>date Hedging Instrument (Hedged item) Hedged risk Financial institution Duration of<br><br><br>contract
Jul. 20, 2007 Fixed-to-fixed cross currency swap (U.S. dollar denominated<br>bonds<br> <br>face value of USD 400,000) Foreign currency risk Morgan Stanley and four other banks Jul. 20, 2007 ~ Jul. 20, 2027
Mar. 4, 2020 Floating-to-fixed cross currency interest rate swap<br><br><br>(U.S. dollar denominated bonds face value of USD 300,000) Foreign currency risk and interest rate risk Citibank Mar. 4, 2020 ~ Jun. 4, 2025
(2) In relation to the merger of SK Broadband Co., Ltd. for the year ended December 31, 2020, the Company has<br>entered into a shareholders’ agreement with the shareholders of the acquirees. Pursuant to the agreement, when certain conditions are met within a period of time subsequent to the merger, the shareholders of the acquirees can exercise their<br>drag-along rights and require the Company to sell its shares in SK Broadband Co., Ltd. should the shareholders exercise their drag-along rights, the Company also can exercise its call options over the shares held by those shareholders. The Company<br>recognized a long-term derivative financial liability of ~~W~~295,876 million and ~~W~~302,593 million for the rights prescribed in the shareholders’ agreement as of December 31, 2023 and 2022,<br>respectively.
--- ---

The fair value of SK Broadband Co., Ltd.’s common stock was estimated using 5-year projected cash flows discounted at 6.2% per annum. The fair value of the derivative financial liability was determined by using the Binomial Model based on various assumptions including the price of common stock and its price fluctuations. The significant unobservable inputs used in the fair value measurement and inter-relationship between significant unobservable inputs and fair value measurement are as follows:

Significant unobservable inputs Correlations between inputs<br><br><br>and fair value measurements
Fair value of SK Broadband Co., Ltd.’s common stock The estimated fair value of derivative liabilities would decrease (increase) if the fair value of common stock would increase (decrease)
Volatility of stock price The estimated fair value of derivative liabilities would decrease (increase) if the volatility of stock price increase (decrease)

58

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

19. Derivative Instruments, Continued
(3) The Company has entered into the agreement with Newberry Global Limited, whereby the Company has been granted<br>subscription right and contingent subscription right to acquire Newberry series-C redeemable convertible preferred stock for the year ended December 31, 2020. The Company recognized derivative financial<br>assets of ~~W~~13,136 million and ~~W~~8,083 million as of December 31, 2022 for subscription right and contingent subscription right, respectively. There is no balance for derivative financial assets as of<br>December 31, 2023, as the exercise period expired without the exercise of subscription rights and contingent subscription rights for the year ended December 31, 2023.
--- ---
(4) The Company has entered into the agreement with HAEGIN Co., Ltd., whereby the Company has been granted<br>contingent subscription right to acquire HAEGIN Co., Ltd.’s common stock for the year ended December 31, 2022. The Company is able to exercise the right in accordance with the agreement when certain conditions are met and recognized long-term derivative financial assets of ~~W~~2,323 million for the contingent subscription right as of December 31, 2023. The fair value of HAEGIN Co., Ltd.’s common stock was estimated<br>using 5-year projected cash flows discounted at 13.0% per annum. Meanwhile, if the fair value of HAEGIN Co., Ltd.’s common stock, significant unobservable input used in the fair value measurement,<br>increases (decreases), the estimated fair value of derivative asset would increase (decrease). If the volatility of stock price, significant unobservable input used in the fair value measurement, increases (decreases), the estimated fair value of<br>derivative asset would increase (decrease).
--- ---
(5) The fair value of derivative financial instruments to which the Company applies cash flow hedging is recorded<br>in the separate financial statements as long-term derivative financial assets. As of December 31, 2023, details of fair values of the derivatives assets are as follows:
--- ---
(In millions of won, thousands of foreign currencies)
--- --- --- ---
Hedging instrument (Hedged item) Fair value
Non-current assets:
Fixed-to-fixed<br>cross currency swap(U.S. dollar denominated bonds face value of 400,000) 80,426 80,426
Floating-to-fixed<br>cross currency interest rate swap(U.S. dollar denominated bonds face value of 300,000) 35,784 35,784
116,210 116,210

All values are in US Dollars.

As of December 31, 2023, the changes in fair value of derivatives designated as hedging instrument, which are all effective in hedging, were recognized in full in other comprehensive income.

(6) The fair value of derivatives held for trading is recorded in the financial statements as long-term derivative<br>financial assets and long-term derivative financial liabilities. As of December 31, 2023, details of fair values of the derivative assets and liabilities are as follows:
(In millions of won)
--- --- --- --- --- --- ---
Held for trading Fair value
Non-current assets:
Contingent subscription right ~~W~~ 2,323 2,323
~~W~~ 2,323 2,323
Non-current liabilities:
Drag-along and call option rights ~~W~~ (295,876 ) (295,876 )
~~W~~ (295,876 ) (295,876 )

59

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

20. Share Capital and Capital Surplus and Others
(1) Details of share capital as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won, except for share data)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Number of authorized shares 670,000,000 670,000,000
Par value (in won) ~~W~~ 100 100
Number of issued shares 218,833,144 218,833,144
Share capital:
Common share(*) ~~W~~ 30,493 30,493
(*) In 2002 and 2003, the Company retired treasury shares with reduction of its retained earnings before<br>appropriation. As a result, the Company’s issued shares have decreased without change in share capital.
--- ---
(2) There were no changes in share capital for the years ended December 31, 2023 and 2022.<br>
--- ---
(3) Details of shares outstanding as of December 31, 2023 and 2022 are as follows:
--- ---
(In shares)
--- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Issued shares Treasuryshares Outstandingshares Issued shares Treasuryshares Outstandingshares
Shares outstanding 218,833,144 6,133,414 212,699,730 218,833,144 801,091 218,032,053
(4) Details of capital surplus and others as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023 December 31, 2022
Paid-in surplus ~~W~~ 1,771,000 1,771,000
Treasury shares(Note 21) (301,981 ) (36,702 )
Hybrid bonds(Note 22) 398,509 398,759
Share option(Note 23) 9,818 2,061
Others(*) (6,643,493 ) (6,641,811 )
~~W~~ (4,766,147) (4,506,693 )
(*) The amount includes a change in equity amounting to ~~W~~5,767,210 million due to the spin-off that was accounted for as a transaction under common control.
--- ---

60

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

21. Treasury Shares
(1) Treasury shares as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won, except for the number of shares)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Number of shares 6,133,414 801,091
Acquisition cost ~~W~~ 301,981 36,702
(2) Changes in treasury shares for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In shares)
--- --- --- --- --- --- ---
2023 2022
Treasury shares as of January 1 801,091 1,250,992
Acquisition(*1) 5,773,410 —
Disposal(*2) (441,087 ) (449,901 )
Treasury shares as of December 31 6,133,414 801,091
(*1) The Company acquired 5,773,410 of its treasury shares for ~~W~~285,487 million in an effort<br>to increase shareholder value by stabilizing its stock price for the years ended December 31, 2023.
--- ---
(*2) The Company distributed 441,087 treasury shares (acquisition cost: ~~W~~20,208 million) as bonus<br>payment to the employees, resulting in gain on disposal of treasury shares of ~~W~~212 million for the year ended December 31, 2023. Also, the Company distributed 449,901 treasury shares (acquisition cost:<br>~~W~~20,612 million) as bonus payment to the employees, resulting in gain on disposal of treasury shares of ~~W~~4,813 million for the year ended December 31, 2022
--- ---

61

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

22. Hybrid Bonds

Hybrid bonds classified as equity as of December 31, 2023 and 2022 are as follows:

(In millions of won)
Type Issuance date Maturity(*1) Annual interestrate(%)(*2) December 31,2023 December 31,2022
Series 3 hybrid bonds Unsecured<br>subordinated<br> <br>bearer bond June 5, 2023 June 5, 2083 4.95 ~~W~~ 400,000 —
Series 2-1 hybrid bonds Unsecured<br>subordinated<br> <br>bearer bond June 7, 2018 June 7, 2078 3.70 — 300,000
Series 2-2 hybrid bonds Unsecured<br>subordinated<br> <br>bearer bond June 7, 2018 June 7, 2078 3.65 — 100,000
Issuance costs (1,491 ) (1,241 )
~~W~~ 398,509 398,759

The Company redeemed previously issued hybrid bonds and issued new hybrids bonds for the year ended December 31, 2023. As there is no contractual obligation to deliver financial assets to the holders of hybrid bonds, the Company classified the hybrid bonds as equity.

These are subordinated bonds that rank before common shares in the event of a liquidation or reorganization of the Company.

(*1) The Company has a right to extend the maturity without any notice or announcement.
(*2) Annual interest rate is determined as yield rate of 5-year national<br>bond plus premium. According to the step-up clause, additional premium of 0.25% and 0.75%, respectively, after 10 years and 25 years from the issuance date are applied.
--- ---

62

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

23. Share-Based Payment Arrangement
(1) The terms and conditions related to the grants of the share-based payment arrangement are as follows:<br>
--- ---
1) Share-based payment arrangement with cash alternatives
--- ---
Series
--- --- --- --- --- --- ---
1-3 3 4 5 6
Grant date March 24, 2017 February 22, 2019 March 26, 2019 March 26, 2020 March 25, 2021
Types of shares to be issued Registered common shares
Grant method Reissue of treasury shares, Cash settlement
Number of shares (in share) 67,320 8,907 5,266 376,313 87,794
Exercise price (in won) 57,562 53,052 50,862 38,452 50,276
Exercise period Mar. 25, 2021<br> ~<br>Mar. 24, 2024 Feb. 23, 2021<br> <br>~<br><br><br>Feb. 22, 2024 Mar. 27, 2021<br> ~<br>Mar. 26, 2024 Mar. 27, 2023<br> ~<br>Mar. 26, 2027 Mar. 26, 2023<br>~<br>Mar. 25, 2026
Vesting conditions 4 years’ service<br>from the grant<br>date 2 years’ service<br>from the grant<br>date 2 years’ service<br>from the grant<br>date 3 years’ service<br>from the grant<br>date 2 years’ service<br>from the grant<br>date
Series
--- --- ---
7-1 7-2
Grant date March 25, 2022
Types of shares to be issued Registered common shares
Grant method Reissue of treasury shares,<br> <br>Cash settlement
Number of shares (in share) 295,275 109,704
Exercise price (in won) 56,860 56,860
Exercise period Mar. 26, 2025<br>~<br>Mar. 25, 2029 Mar. 26, 2024<br>~<br>Mar. 25, 2027
Vesting conditions 2 years’ service<br>from the grant<br>date 2 years’ service<br>from the grant<br>date
(*) The remaining parts of 1-2st and 2nd share options were fully<br>forfeited, and the 8th share option was canceled for the year ended December 31, 2023.
--- ---

63

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

23. Share-Based Payment Arrangement, Continued
(1) The terms and conditions related to the grants of the share-based payment arrangement are as follows,<br>Continued:
--- ---
2) Cash-settled share-based payment arrangement
--- ---
Granted in 2021 Granted in 2022
--- --- --- ---
Share appreciation rights ofSK Telecom Co., Ltd.(*) Share appreciation rights ofSK Square Co., Ltd.(*) Share appreciation rights of<br>SK Telecom Co., Ltd.
Grant date January 1, 2021 January 1, 2022
Grant method Cash settlement
Number of shares 183,246 118,456 338,525
(in share)
Exercise price (in won) 50,276 56,860
Exercise period Jan. 1, 2023 ~ Mar. 28, 2024 Jan. 1, 2024 ~ Mar. 25, 2025
Vesting conditions 2 years’ service from the grant date 2 years’ service from the grant date
(*) Parts of the grant that have not met the vesting conditions have been forfeited for the year ended<br>December 31, 2022.
--- ---
3) Equity-settled share-based payment arrangement
--- ---

The Company newly established Performance Share Units (“PSU”) for executives of the Company and major subsidiaries as part of the compensation based on the growth of corporate value for the year ended December 31, 2023, and the details are as follows:

PSU of SK Telecom Co., Ltd.
Grant date March 28, 2023
Types of shares to be issued Registered common shares
Grant method Reissue of treasury shares
Number of shares(*) Fluctuates according to the share price on the expiration date and the cumulative increase rate of KOSPI200
Reference share price (in won) 47,280
Reference index (KOSPI200) 315
Maturity (exercise date) The day in which the annual general meeting of shareholders is held after 3 years from the grant date
Vesting conditions Full service in the year in which the grant date is included
(*) The initial grant amount is a total of ~~W~~10,813 million, and the amount calculated<br>according to the adjustment rate based on the share price on the expiration date and the cumulative increase rate of KOSPI200 will be paid in shares.
--- ---

64

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

23. Share-Based Payment Arrangement, Continued
(2) Share compensation expense for share-based payment arrangements with cash alternatives recognized for the year<br>ended December 31, 2023 and the remaining share compensation expense to be recognized in subsequent periods are as follows:
--- ---
(In millions of won) Sharecompensation expense
--- --- ---
As of December 31, 2022 ~~W~~ 155,579
For the year ended December 31, 2023 2,171
In subsequent periods 504
~~W~~ 158,254

The liabilities recognized by the Company in relation to the share-based payment arrangement with cash alternatives are ~~W~~5,530 million and ~~W~~4,221 million, respectively, which are included in accrued expenses as of December 31, 2023 and 2022.

As of December 31, 2023 and 2022, the carrying amount of liabilities recognized by the Company in relation to the cash-settled share-based payment arrangement are ~~W~~1,133 million and ~~W~~906 million, respectively.

Share compensation expenses recognized for equity-settled share-based payment arrangement are ~~W~~4,653 million for the year ended December 31, 2023.

65

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

23. Share-Based Payment Arrangement, Continued
(3) The Company used binomial option-pricing model in the measurement of the fair value of share options at the<br>remeasurement date and the inputs used in the model are as follows:
--- ---
1) Share-based payment arrangement with cash alternatives
--- ---
(i) SK Telecom Co., Ltd.
--- ---
(In won) Series
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
1-3 3 4 5 6
Risk-free interest rate 3.52 % 3.49 % 3.52 % 3.14 % 3.18 %
Estimated option’s life 7 years 5 years 5 years 7 years 5 years
Share price on the remeasurement date 50,100 50,100 50,100 50,100 50,100
Expected volatility 16.80 % 16.80 % 16.80 % 16.80 % 16.80 %
Expected dividends yield 6.60 % 6.60 % 6.60 % 6.60 % 6.60 %
Exercise price 57,562 53,052 50,862 38,452 50,276
Per-share fair value of the option 63 310 1,157 11,648 3,400
(In won) Series
--- --- --- --- --- --- ---
7-1 7-2
Risk-free interest rate 3.15 % 3.14 %
Estimated option’s life 7 years 5 years
Share price on the remeasurement date 50,100 50,100
Expected volatility 16.80 % 16.80 %
Expected dividends yield 6.60 % 6.60 %
Exercise price 56,860 56,860
Per-share fair value of the option 2,466 1,974
(ii) SK Square Co., Ltd.
--- ---
(In won) Series
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
1-3 3 4 5 6
Risk-free interest rate 2.07 % 1.91 % 1.78 % 1.52 % 1.55 %
Estimated option’s life 7 years 5 years 5 years 7 years 5 years
Share price (Closing price on the preceding day) 52,500 51,800 50,600 34,900 49,800
Expected volatility 13.38 % 8.30 % 7.70 % 8.10 % 25.70 %
Expected dividends yield 3.80 % 3.80 % 3.90 % 5.70 % 4.00 %
Exercise price 57,562 53,052 50,862 38,452 50,276
Per-share fair value of the option 3,096 1,720 1,622 192 8,142

66

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

23. Share-Based Payment Arrangement, Continued
(3) The Company used binomial option-pricing model in the measurement of the fair value of share options at the<br>remeasurement date and the inputs used in the model are as follows, Continued:
--- ---
2) Cash-settled share-based payment arrangement
--- ---
(In won) Granted in 2021 Granted in 2022
--- --- --- --- --- --- --- --- --- ---
Share appreciation rights of<br>SK Telecom Co., Ltd. Share appreciation rights of<br>SK Square Co., Ltd. Share appreciation rights of<br>SK Telecom Co., Ltd.
Risk-free interest rate 3.52 % 3.52 % 3.37 %
Estimated option’s life 3.25 years 3.25 years 3.25 years
Share price on the remeasurement date 50,100 52,600 50,100
Expected volatility 16.80 % 30.90 % 16.80 %
Expected dividends yield 6.60 % 0.00 % 6.60 %
Exercise price 50,276 50,276 56,860
Per-share fair value of the option 1,387 4,706 949
3) Equity-settled share-based payment arrangement
--- ---
(In won)
--- --- --- ---
PSU of SK Telecom Co., Ltd.
Risk-free interest rate 3.26 %
Estimated option’s life 3 years
Share price on the expected grant date 48,500
Expected volatility 18.67 %
Expected dividends yield 4.90 %
Per-share fair value of the option 27,525

67

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

24. Retained Earnings
(1) Retained earnings as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Appropriated:
Legal reserve ~~W~~ 22,320 22,320
Reserve for business expansion 9,831,138 9,631,138
Reserve for technology development 4,565,300 4,365,300
14,396,438 13,996,438
Unappropriated 613,715 672,703
~~W~~ 15,032,473 14,691,461
(2) Legal reserve
--- ---

The Korean Commercial Act requires the Company to appropriate as a legal reserve at least 10% of cash dividends paid for each accounting period until the reserve equals 50% of outstanding share capital. The legal reserve may not be utilized for cash dividends, but may only be used to offset a future deficit, if any, or may be transferred to share capital.

68

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

25. Statements of Appropriation of Retained Earnings

Details of statements of appropriation of retained earnings for the years ended December 31, 2023 and 2022 are as follows:

Date of appropriation for 2023: March 26, 2024

Date of appropriation for 2022: March 28, 2023

(In millions of won)
2023 2022
Unappropriated retained earnings:
Unappropriated retained earnings ~~W~~ 91,736 390,674
Remeasurement of defined benefit assets 43,656 (4,899 )
Reclassification of valuation loss on FVOCI (21,862 ) (24,920 )
Interim dividends:<br><br><br>2023: ~~W~~2,490 per share,<br><br><br>2,490% on par value<br><br><br>2022: ~~W~~2,490 per share,<br><br><br>2,490% on par value (542,282 ) (542,876 )
Interest on hybrid bonds (17,283 ) (14,766 )
Profit for the year 1,059,750 869,490
613,715 672,703
Reversal of appropriation of retained earnings:
Reserve for business expansion (150,000 ) (200,000 )
Reserve for technology development (150,000 ) (200,000 )
Appropriation of retained earnings:
Cash dividends:<br><br><br>2023: ~~W~~ 1,050 per share,<br><br><br>1,050% on par value<br><br><br>2022: ~~W~~830 per share,<br><br><br>830% on par value 223,335 180,967
(523,335 ) (580,967 )
Unappropriated retained earnings to be carried over to subsequent year ~~W~~ 90,380 91,736

69

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

26. Reserves
(1) Details of reserves, net of taxes, as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- ---
December 31, 2023 December 31, 2022
Valuation gain on FVOCI ~~W~~ 139,548 156,907
Valuation gain (loss) on derivatives (274 ) 11,214
~~W~~ 139,274 168,121
(2) Changes in reserves for the years ended December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- ---
Valuation gain<br>on financial assets<br>at FVOCI Valuation gain(loss) on derivatives Total
Balance as of January 1, 2022 ~~W~~ 613,010 25,006 638,016
Changes, net of taxes (456,103 ) (13,792 ) (469,895 )
Balance as of December 31, 2022 156,907 11,214 168,121
Balance as of January 1, 2023 156,907 11,214 168,121
Changes, net of taxes (17,359 ) (11,488 ) (28,847 )
Balance as of December 31, 2023 ~~W~~ 139,548 (274 ) 139,274
(3) Changes in valuation gain on financial assets at FVOCI for the years ended December 31, 2023 and 2022 are<br>as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Balance as of January 1 ~~W~~ 156,907 613,010
Amount recognized as other comprehensive loss for the year, net of taxes (39,221 ) (481,023 )
Amount reclassified to retained earnings, net of taxes 21,862 24,920
Balance as of December 31 ~~W~~ 139,548 156,907
(4) Changes in valuation gain (loss) on derivatives for the years ended December 31, 2023 and 2022 are as<br>follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Balance as of January 1 ~~W~~ 11,214 25,006
Amount recognized as other comprehensive loss for the year, net of taxes (14,262 ) (19,967 )
Amount reclassified to profit, net of taxes 2,774 6,175
Balance as of December 31 ~~W~~ (274 ) 11,214

70

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

27. Operating Revenue

Disaggregation of operating revenues considering the economic factors that affect the nature, amounts, timing and uncertainty of the Company’s revenue and future cash flows is as follows:

(In millions of won)
2023 2022
Products transferred at a point in time:
Product sales ~~W~~ 115,062 108,233
Services transferred over time:
Wireless service revenue(*1) 10,554,390 10,463,131
Cellular interconnection revenue 445,244 485,496
Other(*2) 1,474,524 1,357,728
12,474,158 12,306,355
~~W~~ 12,589,220 12,414,588
(*1) Wireless service revenue includes revenue from wireless voice and data transmission services, which is<br>collected from the wireless subscribers.
--- ---
(*2) Other revenue includes revenue from billing and collection services as well as other miscellaneous services.<br>
--- ---

The Company has a right to receive consideration from a customer in an amount that corresponds directly with the value of telecommunications service provided; thus, the Company applies practical expedient method and recognizes revenue in the amount to which the Company has a right to invoice.

Most of the Company’s transactions are occurring in Korea as it principally operates its businesses in Korea.

28. Other Operating Expenses

Details of other operating expenses for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 2022
Communication ~~W~~ 26,827 27,041
Utilities 377,028 301,284
Taxes and dues 23,229 37,538
Repair 257,829 267,067
Research and development 336,377 338,389
Training 28,771 28,778
Bad debt for accounts receivable – trade 28,765 16,053
Supplies and others 51,372 48,112
~~W~~ 1,130,198 1,064,262

71

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

29. Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 2022
Other non-operating income:
Gain on disposal of property and equipment and intangible assets ~~W~~ 20,825 14,073
Others 20,019 31,089
~~W~~ 40,844 45,162
Other non-operating expenses:
Loss on disposal of property and equipment and intangible assets ~~W~~ 3,929 5,722
Donations 12,966 11,442
Bad debt for accounts receivable – other 4,349 2,071
Others 2,775 9,770
~~W~~ 24,019 29,005

72

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

30. Finance Income and Costs
(1) Details of finance income and costs for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won) 2023 2022
--- --- --- --- ---
Finance income:
Interest income ~~W~~ 36,937 34,124
Gain on sale of accounts receivable – other — 1,043
Dividends 209,195 50,927
Gain on foreign currency transactions 9,015 7,945
Gain on foreign currency translations 300 345
Gain relating to financial instruments at FVTPL 87,199 40,581
~~W~~ 342,646 134,965
(In millions of won) 2023 2022
--- --- --- --- ---
Finance costs:
Interest expense ~~W~~ 325,769 287,865
Loss on sale of accounts receivable – other 65,027 61,841
Loss on foreign currency transactions 8,115 9,304
Loss on foreign currency translations 660 961
Loss relating to financial instruments at FVTPL 41,819 27,635
~~W~~ 441,390 387,606
(2) Details of interest income included in finance income for the years ended December 31, 2023 and 2022 are<br>as follows:
--- ---
(In millions of won) 2023 2022
--- --- --- --- ---
Interest income on cash equivalents and short-term financial instruments ~~W~~ 18,484 11,268
Interest income on loans and others 18,453 22,856
~~W~~ 36,937 34,124

73

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

30. Finance Income and Costs, Continued
(3) Details of interest expenses included in finance costs for the years ended December 31, 2023 and 2022 are<br>as follows:
--- ---
(In millions of won) 2023 2022
--- --- --- --- ---
Interest expense on borrowings ~~W~~ 27,151 23,413
Interest expense on debentures 200,571 184,049
Others 98,047 80,403
~~W~~ 325,769 287,865
(4) Finance income and costs by category of financial instruments for the years ended December 31, 2023 and<br>2022 are as follows. Bad debt expense for accounts receivable – trade, loans and receivables are presented and explained separately in notes 5 and 35.
--- ---
1) Finance income and costs
--- ---
(In millions of won) 2023
--- --- --- --- ---
Finance income(*) Finance costs
Financial assets:
Financial assets at FVTPL ~~W~~ 87,758 106,846
Financial assets at FVOCI 39,681 —
Financial assets at amortized cost 36,299 8,726
Derivatives designated as hedging instrument 2,343 —
166,081 115,572
Financial liabilities:
Financial liabilities at FVTPL 6,717 —
Financial liabilities at amortized cost 1,503 325,818
8,220 325,818
~~W~~ 174,301 441,390
(*) Finance income does not include ~~W~~168,345 million of dividends received from subsidiaries<br>and associates for the year ended December 31, 2023.
--- ---

74

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

30. Finance Income and Costs, Continued
(4) Finance income and costs by category of financial instruments for the years ended December 31, 2023 and<br>2022 are as follows. Bad debt expense (reversal of loss allowance) for accounts receivable – trade, loans and receivables are presented and explained separately in notes 5 and 35, Continued:
--- ---
1) Finance income and costs, Continued
--- ---
(In millions of won)
--- --- --- --- ---
2022
Finance income(*) Finance costs
Financial assets:
Financial assets at FVTPL ~~W~~ 34,466 89,329
Financial assets at FVOCI 1,495 —
Financial assets at amortized cost 26,987 10,245
Derivatives designated as hedging instrument — 146
62,948 99,720
Financial liabilities:
Financial liabilities at amortized cost 18,432 —
Derivatives designated as hedging instrument 4,152 287,886
22,584 287,886
~~W~~ 85,532 387,606
(*) Finance income does not include ~~W~~49,433 million of dividends received from subsidiaries<br>and associates for the year ended December 31, 2022.
--- ---
2) Other comprehensive income (loss)
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Financial assets:
Financial assets at FVOCI ~~W~~ (39,221) (481,023 )
Derivatives designated as hedging instrument (11,488 ) (13,792 )
(50,709 ) (494,815 )
(5) Details of impairment losses for financial assets for the years ended December 31, 2023 and 2022 are as<br>follows:
--- ---
(In millions of won)
--- --- --- --- ---
2023 2022
Accounts receivable – trade ~~W~~ 28,765 16,053
Other receivables 4,349 2,071
~~W~~ 33,114 18,124

75

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

31. Income Tax Expense
(1) Income tax expenses for the years ended December 31, 2023 and 2022 consist of the following:<br>
--- ---
(In millions of won)
--- --- --- --- --- ---
2023 2022
Current tax expense:
Current year ~~W~~ 249,527 197,216
Current tax of prior years (4,247 ) 66,055
245,280 263,271
Deferred tax expense:
Changes in net deferred tax assets 49,909 13,489
Income tax expense ~~W~~ 295,189 276,760
(2) The difference between income taxes computed using the statutory corporate income tax rates and the recorded<br>income taxes for the years ended December 31, 2023 and 2022 is attributable to the following:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Profit before income tax ~~W~~ 1,354,939 1,146,250
Income taxes at statutory income tax rate 347,342 304,857
Non-taxable income (37,230 ) (8,814 )
Non-deductible expenses 13,071 9,870
Tax credit and tax reduction (51,843 ) (5,332 )
Changes in unrecognized deferred taxes 25,671 (4,572 )
Income tax paid (refund) (4,247 ) 48,775
Changes in tax rate and other 2,425 (68,024 )
Income tax expense ~~W~~ 295,189 276,760
(3) Deferred taxes directly charged to (credited from) equity for the years ended December 31, 2023 and 2022<br>are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Valuation gain on financial assets measured at fair value ~~W~~ 12,922 166,188
Valuation gain on derivatives 3,843 5,199
Remeasurement of defined benefit assets (14,477 ) (800 )
Loss on disposal of treasury shares (53 ) (28,108 )
~~W~~ 2,235 142,479

76

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

31. Income Tax Expense, Continued
(4) Changes in deferred tax assets (liabilities) for the years ended December 31, 2023 and 2022 are as<br>follows:
--- ---
(In millions of won) 2023
--- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning Deferred tax<br>expense<br>(income) Directly<br>charged to(credited from)equity Ending
Deferred tax assets (liabilities) related to temporary differences:
Loss allowance ~~W~~ 43,512 64 — 43,576
Accrued interest income (293 ) 38 — (255 )
Financial assets measured at fair value (12,930 ) (5,313 ) 12,922 (5,321 )
Investments in subsidiaries, associates and joint ventures 5,034 (20,764 ) — (15,730 )
Property and equipment (345,754 ) (53,025 ) — (398,779 )
Retirement benefit obligation 2,919 (293 ) (14,477 ) (11,851 )
Valuation gain on derivatives 18,112 2,144 3,843 24,099
Gain (loss) on foreign currency **** translation 20,624 34 — 20,658
Incremental costs to acquire a contract (707,002 ) 33,422 — (673,580 )
Right-of-use<br>assets (344,023 ) 35,307 — (308,716 )
Lease liabilities 345,739 (37,106 ) — 308,633
Others 129,858 (56,259 ) (53 ) 73,546
~~W~~ (844,204) (101,751 ) 2,235 (943,720 )
Tax credit 89,883 51,842 — 141,725
~~W~~ (754,321) (49,909 ) 2,235 (801,995 )

77

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

31. Income Tax Expense, Continued
(4) Changes in deferred tax assets (liabilities) for the years ended December 31, 2023 and 2022 are as<br>follows, Continued:
--- ---
(In millions of won) 2022
--- --- --- --- --- --- --- --- --- --- --- --- ---
Beginning Deferred tax<br>expense<br>(income) Directly<br>charged to(credited from)equity Ending
Deferred tax assets (liabilities) related to temporary differences:
Loss allowance ~~W~~ 45,734 (2,222 ) — 43,512
Accrued interest income (87 ) (206 ) — (293 )
Financial assets measured at fair value (158,404 ) (20,714 ) 166,188 (12,930 )
Investments in subsidiaries, associates and joint ventures 59 4,975 — 5,034
Property and equipment (271,151 ) (74,603 ) — (345,754 )
Retirement benefit obligation 6,947 (3,228 ) (800 ) 2,919
Valuation gain on derivatives 11,846 1,067 5,199 18,112
Gain (loss) on foreign currency **** translation 21,368 (744 ) — 20,624
Incremental costs to acquire a contract (744,267 ) 37,265 — (707,002 )
Right-of-use<br>assets (359,798 ) 15,775 — (344,023 )
Lease liabilities 357,488 (11,749 ) — 345,739
Others 122,394 35,572 (28,108 ) 129,858
~~W~~ (967,871) (18,812 ) 142,479 (844,204 )
Tax credit 84,560 5,323 — 89,883
~~W~~ (883,311) (13,489 ) 142,479 (754,321 )
(5) Details of temporary differences not recognized as deferred tax assets (liabilities) in the statements of<br>financial position as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- ---
December 31, 2023 December 31, 2022
Loss allowance ~~W~~ 77,405 77,405
Investments in subsidiaries, associates and joint ventures 585,877 483,857
Other temporary differences 372,134 372,134

78

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

32. Earnings per Share

Earnings per share is calculated to profit of the Company per common share and dilutive potential common share, and details are as follows:

(1) Basic earnings per share
1) Basic earnings per share for the years ended December 31, 2023 and 2022 are calculated as follows:<br>
--- ---
(In millions of won, except for share data and basic earnings per share)
--- --- --- --- --- --- ---
2023 2022
Profit for the year ~~W~~ 1,059,750 869,490
Interest on hybrid bonds (17,283 ) (14,766 )
Profit for the year on common shares 1,042,467 854,724
Weighted average number of<br><br><br>common shares outstanding 217,264,615 217,994,490
Basic earnings per share (in won) ~~W~~ 4,798 3,921
2) The weighted average number of common shares outstanding for the years ended December 31, 2023 and 2022<br>are calculated as follows:
--- ---
(In shares) 2023
--- --- --- --- --- --- ---
Number of common shares Weighted average number ofcommon shares
Issued shares as of January 1, 2023 218,833,144 218,833,144
Treasury shares as of January 1, 2023 (801,091 ) (801,091 )
Acquisition of treasury shares (5,773,410 ) (1,154,633 )
Disposal of treasury shares 441,087 387,195
212,699,730 217,264,615
(In shares) 2022
--- --- --- --- --- --- ---
Number of common shares Weighted average number ofcommon shares
Issued shares as of January 1, 2022 218,833,144 218,833,144
Treasury shares as of January 1, 2022 (1,250,992 ) (1,250,992 )
Disposal of treasury shares 449,901 412,338
218,032,053 217,994,490

79

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

32. Earnings per Share, Continued
(2) Diluted earnings per share
--- ---
1) Diluted earnings per share for the years ended December 31, 2023 and 2022 are calculated as follows:<br>
--- ---
(In millions of won, except for share data and diluted earnings per share)
--- --- --- --- ---
2023 2022
Profit for the year on common shares ~~W~~ 1,042,467 854,724
Adjusted weighted average number of common shares outstanding 217,452,721 218,108,742
Diluted earnings per share (in won) ~~W~~ 4,794 3,919
2) The adjusted weighted average number of common shares outstanding for the years ended December 31, 2023<br>and 2022 are calculated as follows:
--- ---
(In shares)
--- --- --- --- --- ---
2023 2022
Outstanding shares as of January 1 218,032,053 217,582,152
Effect of treasury shares (767,438 ) 412,338
Effect of share option 188,106 114,252
Adjusted weighted average number of common shares outstanding 217,452,721 218,108,742

80

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

33. Dividends
(1) Details of dividends declared
--- ---

Details of dividend declared for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won, except for face value and share data)
Year Dividend type Number of sharesoutstanding Face value(in won) Dividend ratio Dividends
2023 Cash dividends (Interim) 218,466,141 100 830 % ~~W~~ 181,327
Cash dividends (Interim) 218,473,140 100 830 % 181,333
Cash dividends (Interim) 216,412,898 100 830 % 179,623
Cash dividends (Year-end) 212,699,730 100 1,050 % 223,335
~~W~~ 765,618
2022 Cash dividends (Interim) 218,002,830 100 830 % ~~W~~ 180,942
Cash dividends (Interim) 218,032,053 100 830 % 180,967
Cash dividends (Interim) 218,032,053 100 830 % 180,967
Cash dividends (Year-end) 218,032,053 100 830 % 180,967
~~W~~723,843
(2) Dividends yield ratio
--- ---

Dividends yield ratios for the years ended December 31, 2023 and 2022 are as follows:

(In won)
Year Dividend type Dividend per share Closing priceat year-end Dividend yieldratio
2023 Cash dividends 3,540 50,100 7.07 %
2022 Cash dividends 3,320 47,400 7.00 %

81

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

34. Categories of Financial Instruments
(1) Financial assets by category as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2023
Financialassets atFVTPL Equityinstruments atFVOCI Financial assets atamortized cost Derivativeshedginginstrument Total
Cash and cash equivalents ~~W~~ 4,774 — 626,292 — 631,066
Financial instruments 47,364 — 139,354 — 186,718
Long-term investment securities(*) 218,685 1,207,605 — — 1,426,290
Accounts receivable – trade — — 1,495,617 — 1,495,617
Loans and other receivables 273,945 — 612,432 — 886,377
Derivative financial assets 2,323 — — 116,210 118,533
~~W~~ 547,091 1,207,605 2,873,695 116,210 4,744,601
(*) The Company designated ~~W~~1,207,605 million of equity instruments that are not held for<br>trading as financial assets at FVOCI.
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- ---
December 31, 2022
Financialassets atFVTPL Equityinstruments atFVOCI Financial assets atamortized cost Derivativeshedginginstrument Total
Cash and cash equivalents ~~W~~ 1,390 — 1,216,114 — 1,217,504
Financial instruments 90,815 — 79,368 — 170,183
Long-term investment securities(*) 88,403 1,066,785 — — 1,155,188
Accounts receivable – trade — — 1,425,695 — 1,425,695
Loans and other receivables 332,669 — 707,225 — 1,039,894
Derivative financial assets 28,114 — — 222,622 250,736
~~W~~ 541,391 1,066,785 3,428,402 222,622 5,259,200
(*) The Company designated ~~W~~1,066,785 million of equity instruments that are not held for<br>trading as financial assets at FVOCI.
--- ---

82

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

34. Categories of Financial Instruments, Continued
(2) Financial liabilities by category as of December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2023
Financial liabilities<br>at FVTPL Financial liabilitiesat amortized cost Total
Derivative financial liabilities ~~W~~ 295,876 — 295,876
Borrowings — 640,000 640,000
Debentures — 6,666,939 6,666,939
Lease liabilities(*) — 1,226,545 1,226,545
Accounts payable – other and others — 4,146,076 4,146,076
~~W~~ 295,876 12,679,560 12,975,436
(In millions of won)
--- --- --- --- --- --- ---
December 31, 2022
Financial liabilities<br>at FVTPL Financial liabilitiesat amortized cost Total
Derivative financial liabilities ~~W~~ 302,593 — 302,593
Borrowings — 840,000 840,000
Debentures — 6,988,970 6,988,970
Lease liabilities(*) — 1,379,311 1,379,311
Accounts payable – other and others — 5,009,512 5,009,512
~~W~~ 302,593 14,217,793 14,520,386
(*) The categorization of financial liabilities is not applicable to lease liabilities, but they are classified as<br>financial liabilities measured at amortized cost, considering the nature of measuring liabilities.
--- ---

83

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management
(1) Financial risk management
--- ---

The Company is exposed to market risk, credit risk and liquidity risk. Market risk is the risk related to the changes in market prices, such as foreign exchange rates, interest rates and price fluctuations. The Company implements a risk management system to monitor and manage these specific risks.

The Company’s financial assets consist of cash and cash equivalents, financial instruments, long-term investment securities, accounts receivable – trade and others, etc. Financial liabilities consist of accounts payable – other and others, borrowings, debentures, lease liabilities and others.

1) Market risk
(i) Currency risk
--- ---

The Company’s currency risk is mainly related to changes in recognized assets and liabilities due to exchange rate fluctuations. If the Company determines that it is necessary to hedge currency risk for business purposes, the Company manages currency risk by using currency swaps, etc. Currency risk occurs on forecasted transactions and recognized assets and liabilities which are denominated in a currency other than the functional currency of the Company.

Monetary assets and liabilities denominated in foreign currencies as of December 31, 2023 are as follows:

(In millions of won, thousands of foreign currencies)
Liabilities
Wonequivalent Foreigncurrencies Wonequivalent
24,551 ~~W~~ 31,656 706,572 ~~W~~ 911,054
654 933 3 4
Others — 336 — —
~~W~~ 32,925 ~~W~~ 911,058

All values are in US Dollars.

In addition, the Company has entered into cross currency swaps to hedge against currency risk related to foreign currency debentures. (See Note 19)

As of December 31, 2023, a hypothetical change in exchange rates by 10% would have increased (decreased) the Company’s profit before income tax and equity as follows:

(In millions of won)
Equity
If decreased by 10% If increased by 10% If decreased by 10%
1,982 (1,982 ) ~~W~~ 1,982 (1,982 )
93 (93 ) 93 (93 )
Others 34 (34 ) 34 (34 )
2,109 **** (2,109 ) ~~W~~ 2,109 **** (2,109 )

All values are in Euros.

84

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
1) Market risk, Continued
--- ---
(ii) Interest rate risk
--- ---

The interest rate risk of the Company arises from borrowings, debentures and long-term payables – other. Since the Company’s interest-bearing assets are mostly fixed-interest bearing assets, the Company’s revenue and operating cash flows from the interest-bearing assets are not influenced by the changes in market interest rates.

The Company performs various analysis to reduce interest rate risk and to optimize its financing. To minimize risks arising from changes in interest rates, the Company takes various measures, such as refinancing, renewal, alternative financing and hedging.

As of December 31, 2023, floating-rate borrowings and debentures amount to ~~W~~40,000 million and ~~W~~386,820 million, respectively, and the Company has entered into interest rate swaps to hedge interest rate risk related to the floating-rate debentures. Therefore, profit before income tax for the year ended December 31, 2023 would not have been affected by the changes in interest rates of floating-rate debentures. If the interest rate increases (decreases) by 1%p with all other variables held constant, profit before income tax and equity for the year ended December 31, 2023 would change by ~~W~~400 million in relation to the floating-rate borrowings which have not entered into interest rate swaps.

As of December 31, 2023, the floating-rate long-term payables – other are ~~W~~1,290,225 million. If the interest rate increases (decreases) by 1%p with all other variables held constant, profit before income tax and equity for the year ended December 31, 2023, would change by ~~W~~12,902 million in relation to the floating-rate long-term payables – other that are exposed to interest rate risk.

85

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
1) Market risk, Continued
--- ---
(ii) Interest rate risk, Continued
--- ---

Non-derivative financial liabilities

The Company’s non-derivative financial liabilities subject to interest rate benchmark reform as of December 31, 2022 were floating-rate bonds indexed to USD LIBOR. The Company completed discussion with the counterparty about including the fallback clauses as of December 31, 2023.

Derivatives

The Company’s derivative instruments designated as cash flow hedge are governed by contracts based on the International Swaps and Derivatives Association (“ISDA”) master agreements. As part of interest rate benchmark reform, ISDA has included a new fallback clause regarding which alterative benchmark interest rate to be applied when the calculation of major IBOR is suspended in the master agreement. The master agreement is applied to derivative contracts after January 25, 2021 and the transaction parties are required to adhere to ISDA protocol to include the same fallback clause into derivative contracts executed before January 25, 2021. The Company has adhered to ISDA protocol for transition to the alternative benchmark interest rate and the fallback clause will be included when counterparties adhere to the protocol to include. The Company’s counterparties have adhered to ISDA protocol and agreed to include the fallback clause.

(iii) Price fluctuations risk

As of December 31, 2023, the Company holds equity instruments in an active trading market, exposing it to price fluctuation risk. Assuming all other variables remain constant, the impact on the Company’s profit before income tax and equity resulting from a 10% fluctuation in the per-share stock price of the equity securities for the year ended December 31, 2023 is as follows.

(In millions of won)
Profit before income tax Equity
If increased by 10% If decreased by 10% If increased by 10% If decreased by 10%
~~W~~ — — ~~W~~ 84,647 (84,647 )

86

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
2) Credit risk
--- ---

The maximum credit exposure as of December 31, 2023 and 2022 are as follows:

(In millions of won)
December 31, 2023 December 31, 2022
Cash and cash equivalents ~~W~~ 631,021 1,217,467
Financial instruments 186,718 170,183
Investment securities — 900
Accounts receivable – trade 1,495,617 1,425,695
Contract assets 21,613 33,098
Loans and other receivables 886,377 1,039,894
Derivative financial assets 118,533 250,736
~~W~~ 3,339,879 4,137,973

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. To manage credit risk, the Company evaluates the credit worthiness of each customer or counterparty by considering the party’s financial information, its own trading records and other factors. Based on such information, the Company establishes credit limits for each customer or counterparty.

87

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
2) Credit risk, Continued
--- ---
(i) Accounts receivable – trade and contract assets
--- ---

The Company establishes a loss allowance in respect of accounts receivable – trade and contract assets. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that are expected to occur. The collective loss allowance is determined based on historical data of collection statistics for similar financial assets. Details of changes in loss allowance for the year ended December 31, 2023 are included in note 5.

(ii) Debt investments

The credit risk arises from debt investments included in ~~W~~186,718 million of financial instruments, and ~~W~~886,377 million of loans and other receivables. To limit the exposure to this risk, the Company transacts only with financial institutions with credit ratings that are considered to be low credit risk.

Most of the Company’s debt investments are considered to have a low risk of default and the borrower has a strong capacity to meet its contractual cash flow obligations in the near term. Thus the Company measured the loss allowance for the debt investments at an amount equal to 12-month expected credit losses.

Meanwhile, the Company monitors changes in credit risk at each reporting date. The Company recognized the loss allowance at an amount equal to lifetime expected credit losses when the credit risk on the debt investments is assumed to have increased significantly if it is more than 30 days past due.

The Company’s maximum exposure to credit risk is equal to each financial asset’s carrying amount. The gross carrying amounts of each financial asset except for the accounts receivable – trade and derivative financial assets as of December 31, 2023 are as follows:

(In millions of won)
Financial assetsat FVTPL Financial assets at amortized cost
12-month ECL Lifetime ECL –notcredit impaired Lifetime ECL –credit impaired
Gross carrying amount ~~W~~ 321,309 747,476 7,570 66,295
Loss allowance — (2,590 ) (3,089 ) (63,876 )
Carrying amount ~~W~~ 321,309 744,886 4,481 2,419

88

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
2) Credit risk, Continued
--- ---
(ii) Debt investments, Continued
--- ---

Changes in the loss allowance for the debt investments for the year ended December 31, 2023 are as follows:

(In millions of won)
12-month ECL Lifetime ECL –<br>not credit impaired Lifetime ECL –credit impaired Total
December 31, 2022 ~~W~~ 2,803 3,314 68,332 74,449
Remeasurement of loss allowance, net 655 3,043 651 4,349
Transfer to lifetime ECL – not credit impaired (868 ) 868 — —
Transfer to lifetime ECL – credit impaired — (4,136 ) 4,136 —
Amounts written off — — (16,156 ) (16,156 )
Recovery of amounts written off — — 6,913 6,913
December 31, 2023 ~~W~~ 2,590 3,089 63,876 69,555
(iii) Cash and cash equivalents
--- ---

The Company deposits ~~W~~631,021 million of cash and cash equivalents as of December 31, 2023 (~~W~~1,217,467 million as of December 31, 2022) at banks and financial institutions with credit ratings above the certain level. The impairment on cash and cash equivalents was measured using a 12-month expected credit loss, taking into account the short-term exposure. The Company assessed the risk of cash and cash equivalents based on the counterparty’s external credit rating, determining it to be low.

89

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(1) Financial risk management, Continued
--- ---
3) Liquidity risk
--- ---

The Company’s approach to managing liquidity is to ensure that it will always maintain sufficient cash and cash equivalents balances and have enough liquidity through various committed credit lines. The Company maintains enough liquidity within credit lines through active operating activities.

Contractual maturities of financial liabilities as of December 31, 2023 are as follows:

(In millions of won)
Carryingamount Contractualcash flows Less than<br>1 year 1 – 5<br>years More than<br>5 years
Borrowings(*) ~~W~~ 640,000 656,806 401,710 255,096 —
Debentures(*) 6,666,939 7,684,857 1,083,773 4,416,636 2,184,448
Lease liabilities 1,226,545 1,346,200 345,144 839,668 161,388
Accounts payable – other and others(*) 4,146,076 4,256,188 3,266,135 990,053 —
~~W~~ 12,679,560 13,944,051 5,096,762 6,501,453 2,345,836
(*) The contractual cash flow is amount that includes interest payables.
--- ---

The Company does not expect that the cash flows included in the maturity analysis could occur significantly earlier or in significantly different amounts.

As of December 31, 2023, periods in which cash flows from cash flow hedge derivatives are expected to occur are as follows:

(In millions of won)
Carryingamount Contractualcash flows Less than<br>1 year 1 – 5<br>years
Assets ~~W~~ 116,210 123,260 30,928 92,332

90

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(2) Capital management
--- ---

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of its debt and equity structure. The overall strategy of the Company is the same as that for the year ended December 31, 2022.

The Company monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total liabilities divided by total equity from the separate financial statements.

Debt-equity ratio as of December 31, 2023 and 2022 are as follows:

(In millions of won)
December 31, 2023 December 31, 2022
Total liabilities ~~W~~ 14,559,839 16,048,739
Total equity 10,436,093 10,383,382
Debt-equity ratios 139.51 % 154.56 %

91

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(3) Fair value
--- ---
1) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of<br>December 31, 2023 and 2022 are as follows:
--- ---
(In millions of won) December 31, 2023
--- --- --- --- --- --- --- --- --- --- ---
Carryingamount Level 1 Level 2 Level 3 Total
Financial assets that are measured at fair value:
FVTPL ~~W~~ 547,091 — 326,083 221,008 547,091
Derivative hedging instruments 116,210 — 116,210 — 116,210
FVOCI 1,207,605 1,131,033 — 76,572 1,207,605
~~W~~ 1,870,906 1,131,033 442,293 297,580 1,870,906
Financial liabilities that are measured at fair value:
Derivative financial liabilities ~~W~~ 295,876 — — 295,876 295,876
Financial liabilities that are not measured at fair value:
Borrowings ~~W~~ 640,000 — 638,536 — 638,536
Debentures 6,666,939 — 6,503,016 — 6,503,016
Long-term payables – other 1,260,453 — 1,294,977 — 1,294,977
~~W~~ 8,567,392 — 8,436,529 — 8,436,529
(In millions of won) December 31, 2022
--- --- --- --- --- --- --- --- --- --- ---
Carryingamount Level 1 Level 2 Level 3 Total
Financial assets that are measured at fair value:
FVTPL ~~W~~ 541,391 — 424,876 116,515 541,391
Derivative hedging instruments 222,622 — 222,622 — 222,622
FVOCI 1,066,785 987,065 — 79,720 1,066,785
~~W~~ 1,830,798 987,065 647,498 196,235 1,830,798
Financial liabilities that are measured at fair value:
Derivative financial liabilities ~~W~~ 302,593 — — 302,593 302,593
Financial liabilities that are not measured at fair value:
Borrowings ~~W~~ 840,000 — 817,771 — 817,771
Debentures 6,988,970 — 6,488,453 — 6,488,453
Long-term payables – other 1,638,341 — 1,614,934 — 1,614,934
~~W~~ 9,467,311 — 8,921,158 — 8,921,158

92

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(3) Fair value, Continued
--- ---
1) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of<br>December 31, 2023 and 2022 are as follows, Continued:
--- ---

The above information does not include fair values of financial assets and liabilities of which fair values have not been measured as carrying amounts are reasonable approximation of fair values.

Fair value of the financial instruments that are traded in an active market (financial assets at FVOCI) is measured based on the bid price at the end of the reporting date.

The Company uses various valuation methods for determination of fair value of financial instruments that are not traded in an active market. Derivative financial contracts and long-term liabilities are measured using the discounted present value methods. Other financial assets are determined using the methods such as discounted cash flow and market approach. Inputs used in such valuation methods include swap rate, interest rate and risk premium, and the Company performs valuation using the inputs which are consistent with natures of assets and liabilities measured.

Interest rates used by the Company for the fair value measurement as of December 31, 2023 are as follows:

Interest rate
Derivative instruments 3.80% ~ 4.43%
Borrowings and debentures 3.84% ~ 3.84%
Long-term payables – other 3.72% ~ 3.85%
2) There have been no transfers between Level 1 and Level 2 for the year ended December 31, 2023.<br>The changes of financial assets and liabilities classified as Level 3 for the year ended December 31, 2023 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance as of<br>January 1,2023 Gain (loss)<br>for the year OCI Acquisition Disposal Balance as of<br>December 31,2023
Financial assets: ****
FVTPL ~~W~~ 116,515 (39,896 ) — 152,110 (7,721 ) 221,008
FVOCI 79,720 — (3,148 ) — — 76,572
~~W~~ 196,235 (39,896) (3,148) 152,110 (7,721) 297,580
Financial liabilities: ****
FVTPL ~~W~~ (302,593 ) 6,717 — — — (295,876 )

93

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

35. Financial Risk Management, Continued
(4) Enforceable master netting agreement or similar agreement
--- ---

Carrying amount of financial instruments recognized to which offset agreements are applicable as of December 31, 2023 and 2022 are as follows:

(In millions of won) December 31, 2023
Gross financialinstrumentsrecognized Amountoffset Net financialinstrumentspresented on theseparatestatement offinancial position
Financial assets:
Accounts receivable – trade and others ~~W~~ 72,597 (72,597 ) —
Financial liabilities:
Accounts payable – other and others ~~W~~ 74,388 (72,597 ) 1,791
(In millions of won) December 31, 2022
--- --- --- --- --- --- --- ---
Gross financialinstrumentsrecognized Amountoffset Net financialinstrumentspresented on theseparatestatement offinancial position
Financial assets:
Accounts receivable – trade and others ~~W~~ 82,987 (82,987 ) —
Financial liabilities:
Accounts payable – other and others ~~W~~ 85,955 (82,987 ) 2,968

94

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties
(1) List of related parties
--- ---
Relationship Company
--- ---
Ultimate controlling entity SK Inc.
Subsidiaries SK Broadband Co., Ltd. and 24 others(*)
Joint venture UTC Kakao-SK Telecom ESG Fund
Associates SK China Company Ltd. and 44 others
Others The Ultimate controlling entity’s subsidiaries and associates and others.
(*) As of December 31, 2023, subsidiaries of the Company are as follows:
--- ---
Subsidiary Ownershippercentage<br>(%)(*1) Primary business
--- --- --- --- ---
Subsidiaries owned by the Company SK Telink Co., Ltd. 100.0 International telecommunication and<br><br><br>Mobile Virtual Network Operator service
SK Communications Co., Ltd. 100.0 Internet website services
SK Broadband Co., Ltd. 74.4 Fixed-line telecommunication services
PS&Marketing Corporation 100.0 Communications device retail business
SERVICE ACE Co., Ltd. 100.0 Call center management service
SERVICE TOP Co., Ltd. 100.0 Call center management service
SK O&S Co., Ltd. 100.0 Base station maintenance service
SK Telecom China Holdings Co., Ltd. 100.0 Investment (Holdings company)
SK Global Healthcare Business Group., Ltd. 100.0 Investment
YTK Investment Ltd. 100.0 Investment
Atlas Investment 100.0 Investment
SK Telecom Americas, Inc 100.0 Information gathering and consulting
Quantum Innovation Fund I 59.9 Investment
Happy Hanool Co., Ltd. 100.0 Service
SK stoa Co., Ltd. 100.0 Other telecommunication retail business
SAPEON Inc. 62.5 Manufacturing non-memory and other electronic<br><br><br>integrated circuits
Subsidiaries owned by SK Broadband Co., Ltd. Home & Service Co., Ltd. 100.0 Operation of information and communication facility
Media S Co., Ltd. 100.0 Production and supply services of broadcasting programs
Subsidiary owned by PS&Marketing Corporation SK m&service Co., Ltd. 100.0 Database and internet website service
Subsidiary owned by Quantum Innovation Fund I PanAsia Semiconductor Materials LLC. 66.4 Investment
Subsidiary owned by SAPEON Inc. SAPEON Korea Inc. 100.0 Manufacturing non-memory and other electronic integrated circuits
Subsidiaries owned by SK Telecom Americas, Inc.(*2) Global AI Platform Corporation Korea 100.0 Software development and supply services
Global AI Platform Corporation 100.0 Software development and supply services
Others(*3) SK Telecom Innovation Fund, L.P. 100.0 Investment
SK Telecom China Fund I L.P. 100.0 Investment

95

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(1) List of related parties, Continued:
--- ---
(*1) The ownership interest represents direct ownership interest in subsidiaries either by the Company or<br>subsidiaries of the Company.
--- ---
(*2) SK Telecom Americas, Inc., a subsidiary of the Company, newly established Global AI Platform Corporation Korea<br>Co., Ltd. and Global AI Platform Corporation for the year ended December 31, 2023.
--- ---
(*3) Others are owned by Atlas Investment and another subsidiary of the Company.
--- ---

As of December 31, 2023, the Company belongs to SK Group, a conglomerate as defined in the Monopoly Regulation and Fair Trade Act. All of the other entities included in SK Group are considered related parties of the Company.

(2) Compensation for the key management

The Company considers registered directors who have substantial role and responsibility in planning, operations and relevant controls of the business as key management. The compensation given to such key management for the years ended December 31, 2023 and 2022 are as follows:

(In millions of won)
2023 2022
Salaries ~~W~~ 4,139 3,487
Defined benefit plan expenses 1,005 761
Share option 2,542 1,598
~~W~~ 7,686 5,846

Compensation for the key management includes salaries, non-monetary salaries and defined benefits made in relation to the pension plan and compensation expenses related to share options granted.

96

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(3) Transactions with related parties for the years ended December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won) 2023
--- --- --- --- --- --- --- ---
Scope Company Operatingrevenue<br>and others Operatingexpense<br>and others(*1) Acquisitionof propertyandequipmentand others
Ultimate Controlling Entity SK Inc.(*2) ~~W~~ 12,897 542,435 79,080
Subsidiaries SK Broadband Co., Ltd. (*3) 312,739 598,966 1,259
PS&Marketing Corporation(*4) 7,226 1,257,951 1,483
SK O&S Co., Ltd. 3,309 252,121 73,450
SK Telink Co., Ltd.(*5) 108,567 12,838 —
SERVICE ACE Co., Ltd.(*6) 15,058 125,219 —
SERVICE TOP Co., Ltd.(*7) 10,933 127,703 —
SK Communications Co., Ltd. 1,440 3,309 1,936
Others 9,529 26,665 1,008
468,801 2,404,772 79,136
Associates F&U Credit information Co., Ltd. 2,151 45,122 552
SK USA, Inc — 5,384 —
Daehan Kanggun BcN Co., Ltd. 12,972 — —
Others(*8) 8,806 15,717 827
23,929 66,223 1,379
Others SK Innovation Co., Ltd. 19,164 13,709 —
SK Networks Co., Ltd. 1,256 12,303 —
SK Networks Service Co., Ltd. 538 45,101 2,758
SK Energy Co., Ltd. 1,837 363 —
Content Wavve Corp. 14,478 87,238 —
Happy Narae Co., Ltd. 148 30,242 79,776
SK Shieldus Co., Ltd. 50,997 93,776 14,595
Eleven Street Co., Ltd. 7,325 32,693 —
SK Planet Co., Ltd. 5,793 79,926 7,642
SK hynix Inc. 47,486 178 —
Tmap Mobility Co., Ltd. 15,397 8,907 —
Dreamus Company 4,815 76,755 284
One Store Co., Ltd. 15,696 160 —
UNA Engineering Inc.<br> <br>(Formerly, UbiNS<br>Co., Ltd.) — 5,842 18,177
Others 33,481 27,223 13,142
218,411 514,416 136,374
~~W~~ 724,038 3,527,846 295,969

97

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(3) Transactions with related parties for the years ended December 31, 2023 and 2022 are as follows,<br>Continued:
--- ---
(*1) Operating expense and others include lease payments by the Company.
--- ---
(*2) Operating expense and others include ~~W~~218,019 million of dividends paid by the Company.<br>
--- ---
(*3) Operating revenue and others include ~~W~~149,526 million of dividend income received.<br>
--- ---
(*4) Operating expense and others include ~~W~~685,233 million paid to PS&Marketing<br>Corporation relating to purchase of accounts receivable resulting from sale of handsets.
--- ---
(*5) Operating revenue and others include ~~W~~3,009 million of dividend income received.<br>
--- ---
(*6) Operating revenue and others include ~~W~~4,004 million of dividend income received.<br>
--- ---
(*7) Operating revenue and others include ~~W~~3,000 million of dividend income received.<br>
--- ---
(*8) Operating revenue and others include ~~W~~2,165 million of dividends received from Korea IT<br>Fund, ~~W~~5,906 million of dividends received from Citadel Pacific Telecom Holdings, LLC and ~~W~~735 million of dividends received from UNISK(Beijing) Information Technology Co., Ltd.
--- ---

98

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(3) Transactions with related parties for the years ended December 31, 2023 and 2022 are as follows,<br>Continued:
--- ---
(In millions of won) 2022
--- --- --- --- --- --- --- ---
Scope Company Operating revenue andothers Operating expense<br>and others (*1) Acquisition of propertyand equipment andothers
Ultimate Controlling Entity SK Inc.(*2) ~~W~~ 13,225 575,336 74,929
Subsidiaries SK Broadband Co., Ltd. 144,568 577,970 4,666
PS&Marketing Corporation(*3) 9,414 1,298,018 1,224
SK O&S Co., Ltd. (*4) 6,093 238,871 84,966
SK Telink Co., Ltd.(*5) 105,052 16,135 —
SERVICE ACE Co., Ltd.(*6) 19,080 123,773 —
SERVICE TOP Co., Ltd.(*7) 16,359 128,163 —
SK Communications Co., Ltd. 1,334 3,466 2,331
Broadband Nowon Co., Ltd.(*8) 13,725 — —
Others 4,252 28,198 799
319,877 2,414,594 93,986
Associates F&U Credit information Co., Ltd. 1,229 42,877 265
SK USA, Inc — 5,043 —
HanaCard Co., Ltd.(*9) 2,629 1,133 22
Daehan Kanggun BcN Co., Ltd. 20,290 — —
Others(*10) 13,700 421 80
37,848 49,474 367
Others SK Innovation Co., Ltd. 14,463 13,890 —
SK Networks Co., Ltd. 1,396 15,020 288
SK Networks Service Co., Ltd. 778 43,065 3,030
SK Energy Co., Ltd. 2,239 302 —
Content Wavve Corp. 6,781 108,745 175
Happy Narae Co., Ltd. 143 15,199 129,375
SK Shieldus Co., Ltd. 32,036 96,085 19,379
Eleven Street Co., Ltd. 8,529 29,248 —
SK Planet Co., Ltd. 7,965 84,257 9,850
SK hynix Inc. 47,145 75 —
Tmap Mobility Co., Ltd. 13,810 4,925 892
Dreamus Company 6,101 84,919 649
One Store Co., Ltd. 16,610 1 —
UNA Engineering Inc.<br> <br>(Formerly, UbiNS<br>Co., Ltd.) — 4,001 22,799
Others 31,027 29,150 20,554
189,023 528,882 206,991
~~W~~ 559,973 3,568,286 376,273

99

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(3) Transactions with related parties for the years ended December 31, 2023 and 2022 are as follows,<br>Continued:
--- ---
(*1) Operating expense and others include lease payments by the Company.
--- ---
(*2) Operating expense and others include ~~W~~272,524 million of dividends paid by the Company.<br>
--- ---
(*3) Operating expense and others include ~~W~~690,052 million paid to PS&Marketing<br>Corporation relating to purchase of accounts receivable resulting from sale of handsets.
--- ---
(*4) Operating revenue and others include ~~W~~3,000 million of dividend income received.<br>
--- ---
(*5) Operating revenue and others include ~~W~~3,009 million of dividend income received.<br>
--- ---
(*6) Operating revenue and others include ~~W~~8,003 million of dividend income received.<br>
--- ---
(*7) Operating revenue and others include ~~W~~8,000 million of dividend income received.<br>
--- ---
(*8) Operating revenue and others include ~~W~~13,721 million of dividend income received before<br>the related party relationship terminated.
--- ---
(*9) HanaCard Co., Ltd. was excluded from the related parties due to the disposal of the Company’s shares in<br>the entity for the year ended December 31, 2022, and the transactions above occurred before the disposal.
--- ---
(*10) Operating revenue and others include ~~W~~13,700 million of dividend income received from<br>Korea IT Fund.
--- ---

100

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(4) Account balances with related parties as of December 31, 2023 and 2022 are as follows:<br>
--- ---
(In millions of won) December 31, 2023
--- --- --- --- --- --- --- ---
Receivables Payables
Scope Company Loans Accounts receivable –trade, etc. Accounts payable<br>– other, etc.
Ultimate Controlling Entity SK Inc. ~~W~~ — 1,411 85,758
Subsidiaries SK Broadband Co., Ltd. — 60,464 234,710
PS&Marketing Corporation — 1,230 57,560
SK O&S Co., Ltd. — 7 68,671
SK Telink Co., Ltd. — 22,632 18,154
SERVICE ACE Co., Ltd. — 460 26,828
SERVICE TOP Co., Ltd. — — 24,208
SK Communications Co., Ltd. — 2 7,033
Others — 3,230 15,775
— 88,025 452,939
Associates F&U Credit information Co., Ltd. — 3 4,060
Daehan Kanggun BcN Co., Ltd.(*1) 22,147 4,702 —
SK USA, Inc — — 972
Konan Technology Inc. — — 224
Others — — 2,239
22,147 4,705 7,495
Others SK hynix Inc. — 6,806 2,251
SK Planet Co., Ltd. — 9,313 5,579
Eleven Street Co., Ltd. — 1,957 2,842
One Store Co., Ltd. — 509 14,691
SK Shieldus Co., Ltd. — 10,972 10,157
SK Innovation Co., Ltd. — 3,308 27,806
SK Networks Co., Ltd. — 41 32,003
SK Networks Services Co., Ltd. — — 8,314
SK RENT A CAR Co., Ltd. — 70 14,101
Incross Co., Ltd. — 1,607 659
UNA Engineering Inc.<br> <br>(Formerly, UbiNS<br>Co., Ltd.) — — 2,558
Mintit Co., Ltd. — 17,025 —
Happy Narae Co., Ltd. — 8 5,193
Content Wavve Co., Ltd. — 1,476 —
Dreamus Company — 504 2,315
Others — 7,776 2,976
— 61,372 131,445
~~W~~ 22,147 155,513 677,637
(*1) As of December 31, 2023, the Company recognized loss allowance for the entire balance of loans to Daehan<br>Kanggun BcN Co., Ltd.
--- ---

101

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(4) Account balances with related parties as of December 31, 2023 and 2022 are as follows, Continued:<br>
--- ---
(In millions of won) December 31, 2022
--- --- --- --- --- --- --- ---
Receivables Payables
Scope Company Loans Accounts receivable –trade, etc. Accounts payable –other, etc.
Ultimate Controlling Entity SK Inc. ~~W~~ — 2,247 78,030
Subsidiaries SK Broadband Co., Ltd. — 37,790 204,562
PS&Marketing Corporation — 1,393 64,880
SK O&S Co., Ltd. — 3 50,213
SK Telink Co., Ltd. — 17,921 18,684
SERVICE ACE Co., Ltd. — 379 26,720
SERVICE TOP Co., Ltd. — 2 26,536
SK Communications Co., Ltd. — 5 7,671
Others — 1,085 20,529
— 58,578 419,795
Associates F&U Credit information Co., Ltd. — 5 4,775
Wave City Development Co., Ltd.(*1) — 901 —
Daehan Kanggun BcN Co., Ltd.(*2) 22,147 3,199 —
SK USA, Inc — — 1,519
22,147 4,105 6,294
Others SK hynix Inc. — 13,705 311
SK Planet Co., Ltd. — 6,648 28,097
Eleven Street Co., Ltd. — 454 8,018
One Store Co., Ltd. — 1,648 13,823
SK Shieldus Co., Ltd. — 13,324 12,473
SK Innovation Co., Ltd. — 5,592 32,305
SK Networks Co., Ltd. — 426 36,903
SK Networks Services Co., Ltd. — — 9,241
SK RENT A CAR Co., Ltd. — 89 9,920
Incross Co., Ltd. — 2,335 15,527
UNA Engineering Inc.<br> <br>(Formerly, UbiNS<br>Co., Ltd.) — — 12,008
Mintit Co., Ltd. — 34,853 —
Happy Narae Co., Ltd. — — 30,467
Content Wavve Co., Ltd. — 349 19,239
Dreamus Company — 146 3,659
Others — 8,184 11,683
— 87,753 243,674
~~W~~ 22,147 152,683 747,793
(*1) As of December 31, 2022, the Company recognized loss allowance amounting to<br>~~W~~379 million on the accounts receivable – trade.
--- ---
(*2) As of December 31, 2022, the Company recognized loss allowance for the entire balance of loans to Daehan<br>Kanggun BcN Co., Ltd.
--- ---

102

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

36. Transactions with Related Parties, Continued
(5) The Company has granted SK REIT Co., Ltd. the right of first offer regarding the disposal of real estate owned<br>by the Company. Whereby, the negotiation period is within 3 to 5 years from June 30, 2021, date of agreement, and the Company has been granted the right by SK REIT Co., Ltd. to lease the real estate in preference to a third party if SK<br>REIT Co., Ltd. purchases the real estate from the Company.
--- ---
(6) There were additional investments and disposal transactions in subsidiaries, associates and joint ventures for<br>the year ended December 31, 2023 as presented in note 9.
--- ---
37. Commitments and Contingencies
--- ---
(1) Accounts receivable from sale of handsets
--- ---

The sales agents of the Company sell handsets to the Company’s subscribers on an installment basis. The Company entered into comprehensive agreements to purchase accounts receivable from handset sales with retail stores and authorized dealers and to transfer the accounts receivable from handset sales to special-purpose companies which were established with the purpose of liquidating receivables, respectively.

The accounts receivable from sale of handsets amounting to ~~W~~291,747 million and ~~W~~357,467 million as of December 31, 2023 and 2022, respectively, which the Company purchased according to the relevant comprehensive agreement, are recognized as accounts receivable – other and long-term accounts receivable – other.

(2) Legal claims and litigations

As of December 31, 2023, the Company is involved in various legal claims and litigations. Provision recognized in relation to these claims and litigations is immaterial. In connection with those legal claims and litigations for which no provision was recognized, management does not believe the Company has a present obligation, nor is it expected that any of these claims or litigations will have a material impact on the Company’s financial position or operating results in the event an outflow of resources is ultimately necessary.

(3) Obligation relating to spin-off

The Company carried out the spin-off of its business of managing investments in semiconductor, New Information and Communication Technologies(“ICT”) and other businesses and making new investments on November 1, 2021. The Company has obligation to jointly and severally reimburse the Company’s liabilities incurred prior to the spin-off with SK Square Co., Ltd., the spin-off company, in accordance with Article 530-9 (1) of Korean Commercial Act.

103

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

37. Commitments and Contingencies, Continued
(4) Commitment of acquisition and disposal of shares
--- ---

The Board of Directors of the Company resolved the acquisition and disposal of certain shares in order to strengthen the strategic alliance with Hana Financial Group Inc.(“HFG”) at the Board of Directors’ meeting held on July 22, 2022. In accordance with the resolution, as of July 27, 2022, the Company disposed of its entire common shares of HanaCard Co., Ltd. (39,902,323 shares) and entire common shares of Finnq Co., Ltd. (6,370,000 shares) to HFG for ~~W~~330,032 million and ~~W~~5,733 million, respectively. Through the agreement with HFG, the Company is obligated to acquire HFG’s common shares from July 27, 2022 to January 31, 2024, after depositing ~~W~~330,032 million in a specific money trust, and the Company completed the acquisition of the shares for the year ended December 31, 2022. As a part of the aforementioned transaction, as of July 27, 2022, the Company disposed of its entire common shares of SK Square Co., Ltd. (767,011 shares) to HanaCard Co., Ltd. for ~~W~~31,563 million, and HanaCard Co., Ltd. is obligated to acquire the Company’s common shares from July 27, 2022 to January 31, 2024, after depositing ~~W~~68,437 million in a specific money trust, and completed the acquisition of the shares for the year ended December 31, 2022., The Company, HFG, and HanaCard Co., Ltd. may not dispose of shares they have acquired under the aforementioned transaction until March 31, 2025.

(5) The acquisition cost of property and equipment and intangible assets to be incurred in subsequent periods under<br>arrangements is ~~W~~39,459 million as of December 31, 2023.
(6) According to the covenant for bond issuance and borrowings, the Company is required to maintain specific<br>financial ratios, such as the debt ratio, at certain levels. The funds obtained must be used for specified purposes only, and regular reporting to lenders is mandated. Additionally, the contracts include clauses that restrict both provision of<br>additional collateral of assets held by the Company and disposal of certain assets.
--- ---

104

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

38. Statements of Cash Flows
(1) Adjustments for income and expenses from operating activities for the years ended December 31, 2023 and<br>2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Gain on foreign currency translations ~~W~~   (300) (345 )
Interest income (36,937 ) (34,124 )
Dividends (209,195 ) (50,927 )
Gain relating to financial instruments at FVTPL (87,199 ) (40,581 )
Gain on disposal of property and equipment and intangible assets (20,825 ) (14,073 )
Gain on sale of accounts receivable – other — (1,043 )
Loss on foreign currency translations 660 961
Bad debt for accounts receivable – trade 28,765 16,053
Bad debt for accounts receivable – other 4,349 2,071
Loss relating to financial instruments at FVTPL 41,819 27,635
Gain (loss) relating to investments in subsidiaries, associates and joint ventures 19,012 (61,603 )
Depreciation and amortization 2,833,327 2,827,617
Loss on disposal of property and equipment and intangible assets 3,929 5,722
Loss on sale of accounts receivable – other 65,027 61,841
Interest expense 325,769 287,865
Expense related to defined benefit plan 55,298 50,795
Bonus paid by treasury shares 20,420 25,425
Share option 7,051 76,314
Income tax expense 295,189 276,760
Other income (expenses) (11,965 ) 13,806
~~W~~ 3,334,194 3,470,169

105

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

38. Statements of Cash Flows, Continued
(2) Changes in assets and liabilities from operating activities for the years ended December 31, 2023 and 2022<br>are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Accounts receivable – trade ~~W~~ (99,070 ) 71,720
Accounts receivable – other 78,157 30,679
Advanced payments 9,089 (31,394 )
Prepaid expenses 66,413 4,432
Inventories (4,741 ) (14,392 )
Long-term accounts receivable – other 60,799 (95,028 )
Long-term prepaid expenses — 12,990
Guarantee deposits (3,781 ) 5,983
Contract assets 11,486 (3,622 )
Accounts payable – other (225,677 ) 290,890
Withholdings 4,802 (3,388 )
Deposits received 4,806 (4,149 )
Accrued expenses 33,086 37,239
Plan assets (13,876 ) (59,665 )
Retirement benefits payment (38,347 ) (28,932 )
Contract liabilities (29,187 ) 4,340
Others (2,333 ) (2,845 )
~~W~~ (148,374 ) 214,858
(3) Significant non-cash transactions for the years ended December 31,<br>2023 and 2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- ---
2023 2022
Decrease in accounts payable – other relating to the acquisition of property and equipment<br>and intangible assets ~~W~~ (314,811 ) (29,247 )
Increase of<br>right-of-use assets 253,838 410,640
Transfer from property and equipment to investment property 6,264 16,673

106

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

38. Statements of Cash Flows, Continued
(4) Reconciliation of liabilities arising from financing activities for the years ended December 31, 2023 and<br>2022 are as follows:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2023
Non-cash transactions
January 1,<br>2023 Cash flows Exchange ratechanges(*) Fair valuechanges Otherchanges December 31,2023
Total liabilities from financing activities:
Short-term borrowings ~~W~~ 100,000 (100,000 ) — — — —
Long-term borrowings 740,000 (100,000 ) — — — 640,000
Debentures 6,988,970 (367,815 ) 15,412 — 30,372 6,666,939
Lease liabilities 1,379,311 (354,235 ) — — 201,469 1,226,545
Long-term payables – other 1,638,341 (400,245 ) — — 22,357 1,260,453
Derivative financial assets (222,622 ) 126,000 — (19,588 ) — (116,210 )
~~W~~ 10,624,000 (1,196,295 ) 15,412 (19,588 ) 254,198 9,677,727
Other cash flows from financing activities:
Payments of cash dividends ~~W~~ (723,215 )
Payments of interest on hybrid bonds (17,283 )
Acquisition of treasury shares (285,487 )
Proceeds of hybrid bonds 398,509
Repayments of hybrid bonds (400,000 )
(1,027,476 )
~~W~~ (2,223,771 )
(*) The effect of changes in foreign exchange rates for financial liabilities at amortized cost.<br>
--- ---

107

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

38. Statements of Cash Flows, Continued
(4) Reconciliation of liabilities arising from financing activities for the years ended December 31, 2023 and<br>2022 are as follows, Continued:
--- ---
(In millions of won)
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
2022
Non-cash transactions
January 1, 2022 Cash flows Exchange ratechanges(*) Fair valuechanges Otherchanges December 31,2022
Total liabilities from financing activities:
Short-term borrowings ~~W~~ — 100,000 — — — 100,000
Long-term borrowings 306,728 432,904 — — 368 740,000
Debentures 6,804,867 80,820 97,850 — 5,433 6,988,970
Lease liabilities 1,362,095 (344,199 ) — — 361,415 1,379,311
Long-term payables – other 2,009,833 (400,245 ) — — 28,753 1,638,341
Derivative financial assets (152,512 ) 768 — (70,878 ) — (222,622 )
~~W~~ 10,331,011 (129,952 ) 97,850 (70,878 ) 395,969 10,624,000
Other cash flows from financing activities:
Payments of cash dividends ~~W~~ (904,020 )
Payments of interest on hybrid bonds (14,766 )
(918,786 )
~~W~~ (1,048,738 )
(*) The effect of changes in foreign exchange rates for financial liabilities at amortized cost.<br>
--- ---

108

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

39. Emissions Liabilities
(1) The quantity of emissions rights allocated free of charge for each implementation year as of December 31,<br>2023 are as follows:
--- ---
(In tCO2-eQ)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Quantities<br>allocated<br>in 2021 Quantities<br>allocated<br>in 2022 Quantitiesallocated<br>in 2023 Quantitiesallocated<br>in 2024 Quantitiesallocated<br>in 2025 Total
Emissions rights allocated free of charge(*) 1,031,526 1,223,008 1,031,526 1,021,864 1,021,864 5,329,788
(*) The changes in quantity due to additional allocation, cancellation of allocation and others are considered.<br>
--- ---
(2) Changes in emissions rights quantities the Company held are as follows:
--- ---
(In tCO2-eQ)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Quantities<br>allocated in2021 Quantitiesallocated in2022 Quantitiesallocated in2023 Total
Beginning — — 306,575 306,575
Allocation at no cost 1,031,526 1,223,008 1,031,526 3,286,060
Purchase — 204,761 — 204,761
Surrendered or shall be surrendered (1,051,380 ) (1,121,194 ) (1,227,222 ) (3,399,796 )
Borrowed 19,854 — — 19,854
Ending — 306,575 110,879 417,454
(3) As of December 31, 2023, the estimated annual greenhouse gas emissions quantities of the Company are<br>1,227,222 tCO2-eQ.
--- ---

109

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2023 and 2022

40. Subsequent Events
(1) On January 25, 2024, the Board of Directors of the Company approved the disposal of treasury shares and the<br>details of the transaction are as follows:
--- ---
Information of disposal
--- ---
Number of treasury shares 498,135 Common shares
Price of the treasury shares (in won) Per share ~~W~~49,600
Aggregate disposal value ~~W~~24,707 million
Disposal date January 29, 2024
Purpose of disposal Allotment of shares as bonus payment
Method of disposal Over-the-counter
(2) The Board of Directors of the Company approved the acquisition and retirement of treasury shares of the Company<br>at the Board of Directors’ meeting held on July 26, 2023. The Company acquired a total of 6,090,410 shares during the period from July 27, 2023 to January 26, 2024 through a trust agreement and 4,043,091 shares were retired on<br>February 5, 2024.
--- ---

110

Audit opinion on internal control over financial reporting

The accompanying independent auditor’s report on internal control over financial reporting is attached as a result of auditing the internal control over financial reporting of SK Telecom Co., Ltd. (the “Company”) and the separate financial statements of the Company for the year ended December 31, 2023 in accordance with the Article 8 of the Act on External Audit ofStock Companies.

Attachments:

1. Independent auditor’s report on Internal Control over Financial Reporting
2. Management’s Annual Report on Internal Control over Financial Reporting
--- ---

111

LOGO

Ernst & Young Han Young<br> <br>Taeyoung Building,<br>111, Yeouigongwon-ro,<br> <br>Yeongdeungpo-gu, Seoul 07241 Korea<br> <br><br><br><br>Tel: +82 2 3787 6600<br> <br>Fax: +82 2 783 5890<br><br><br>ey.com/kr

Independent auditor’s report on Internal Control over Financial Reporting

(Based on a report originally issued in Korean)

SK Telecom Co., Ltd.:

The Shareholders and Board of Directors

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting (“ICFR”) of SK Telecom Co., Ltd.’s (the “Company”) based on the Conceptual Framework for Designing and Operating ICFR (“ICFR Design and Operation Framework”) established by the Operating Committee of ICFR in Korea (the “ICFR Committee”) as of December 31, 2023.

In our opinion, the Company’s ICFR has been effectively designed and operated, in all material respects, as of December 31, 2023, in accordance with the ICFR Design and Operation Framework.

We also have audited, in accordance with Korean Standards on Auditing (“KSA”), the separate statement of financial position as of December 31, 2023, the separate statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, and notes to the separate financial statements, including a summary of material accounting policies, of the Company, and our report dated March 6, 2024 expressed an unqualified opinion thereon.

Basis for Opinion on ICFR

We conducted our audit in accordance with KSA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of ICFR section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of ICFR in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for ICFR

Management is responsible for designing, operating, and maintaining effective ICFR, and for its assessing the effectiveness of ICFR, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Those charged with governance are responsible for overseeing the Company’s ICFR process.

Auditor’s Responsibilities for the Audit of ICFR

Our responsibility is to express an opinion on the Company’s ICFR based on our audit. We conducted our audit in accordance with KSA. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective ICFR was maintained in all material respects.

An audit of ICFR involves performing procedures to obtain audit evidence as to whether a material weakness exists. The procedures selected depend on the auditor’s judgment, including the assessment of the risks that a material weakness exists An audit also includes testing and evaluating the design and operation of ICFR based on obtaining an understanding of ICFR and the assessed risk.

112

LOGO

ICFR definition and Inherent Limitations

A company’s ICFR is implemented by those charged with governance, management, and other employees and is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”). A company’s ICFR includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with KIFRS, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, ICFR may not prevent, or detect misstatements of the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that ICFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The engagement partner on the audit resulting in this independent auditor’s report is Yoo, Jung Ho.

March 6, 2024

This report is effective as of March 6,<br>2024, the independent auditor’s report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the auditor’s report date to the time this report is used. Such events and circumstances<br>could significantly affect the Company’s ICFR and may result in modifications to this report.

113

Management’s Annual Report on Internal Control overFinancial Reporting

English translation of a Report Originally Issued in Korean

To Shareholders, the Board of Directors and Audit Committee of

SK Telecom Co., Ltd.

We, as the Chief Executive Officer (“CEO”) and Internal Control over Financial Reporting (“ICFR”) Officer of SK Telecom Co., Ltd. (“the Company”), assessed the status of the design and operation of the Company’s ICFR for the year ending December 31, 2023.

The Company’s management including the CEO and ICFR Officer is responsible for designing and operating ICFR. We, as the CEO and ICFR Officer (collectively, “We”, “Our” or “Us”), evaluated whether the ICFR has been appropriately designed and is effectively operating to prevent and detect error or fraud which may cause material misstatement of the financial statements to ensure preparation and disclosure of reliable financial information.

We used the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’ established by the Operating Committee of Internal Control over Financial Reporting in Korea (the “ICFR Committee”)’ as the criteria for design and operation of the Company’s ICFR. We also conducted an evaluation of ICFR based on the ‘Management Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting’ established by the ICFR Committee.

Based on our assessment of ICFR operation, we concluded that the Company’s ICFR has been appropriately designed and is operating effectively in all material respects as of December 31, 2023, in accordance with the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’.

We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statements which might cause material misunderstandings of the readers, and we have reviewed and verified this report with sufficient care.

February 20, 2024

/s/ Kim, Yang Seob
Internal Control over Financial Reporting Officer
/s/ Ryu, Young Sang
Chief Executive Officer

114

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