UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF APRIL 2023

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  ☐

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

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

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

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

 

 

 

ANNUAL BUSINESS REPORT

(From January 1, 2022 to December 31, 2022)

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 of the Reporting Period				Additions				Subtractions				End of the Reporting Period				Number of Material Subsidiaries*
Listed Companies			0				0				0				0				0
Unlisted Companies			23				3				1				25				10
Total			23				3				1				25				10

 

*	“Material Subsidiary” means a subsidiary with total assets of Won 75 billion or more as of the end of the previous fiscal year.

For a list of the Company’s subsidiaries as of December 31, 2022, see Note 1(2) of the notes to the Company’s audited consolidated financial statements attached hereto.

Changes in subsidiaries during the year ended December 31, 2022 are set forth below.

 

Change		Name		Remarks
Additions		SAPEON Korea Inc.		Newly established by parent company
		SAPEON Inc.		Newly established by parent company
		SK M&Service Co., Ltd.		Newly acquired by PS&Marketing Co., Ltd.
Exclusions		Nowon Broadcasting Co., Ltd.		Acquired by SK Broadband Co., Ltd. during the reporting period
		—		—

 

A.	Corporate Legal Business Name: SK Telecom Co., Ltd.

 

B.	Date of Incorporation: March 29, 1984

 

C.	Location of Headquarters

 

(1)

Address: 65 Euljiro, Jung-gu, Seoul, Korea

 

(2)

Phone: +82-2-6100-2114

 

(3)

Website: http://www.sktelecom.com

 

D.	Major Businesses

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.    

The Company’s wireless business, fixed-line business and other businesses account for 74.8%, 22.0% and 3.2%, respectively, of the Company’s revenue. The Company’s market shares in its key business segments were approximately 48% in the wireless business, excluding the mobile virtual network operator (“MVNO”) business, and approximately 29% in the high speed Internet business.

 

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.		74.8%
		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.		22.0%
		SK Telink Co., Ltd.
		Home & Service Co., Ltd.
Other businesses		SK stoa Co., Ltd.		Operation of commercial retail data broadcasting channel services		3.2%
Total						100.0%

The total number of the Company’s consolidated subsidiaries as of December 31, 2022 was 25, including SK Broadband Co., Ltd. (“SK Broadband”) and PS&Marketing Co., Ltd. (“PS&Marketing”).

 

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
June 16, 2020		Corporate bond		AAA (Stable)		Korea Ratings		Regular rating
June 18, 2020		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Regular rating
June 22, 2020		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Regular rating
September 28, 2020		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
September 29, 2020		Corporate bond		AAA (Stable)		Korea Ratings		Current rating
September 29, 2020		Corporate bond		AAA (Stable)		Korea Investors Service, Inc.		Current rating
December 30, 2020		Corporate bond		AAA (Stable)		NICE Investors Service, Co., Ltd.		Current rating
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

 

*	Rating definition: “AAA” – The certainty of principal and interest payment is at the highest level with extremely low investment risk and is stable such that it will not be influenced by reasonably foreseeable changes in external factors.

 

3

(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 16, 2020		CP		A1		Korea Ratings		Current rating
June 16, 2020		Short-term bond		A1		Korea Ratings		Current rating
June 18, 2020		CP		A1		Korea Investors Service, Inc.		Current rating
June 18, 2020		Short-term bond		A1		Korea Investors Service, Inc.		Current rating
June 22, 2020		CP		A1		NICE Investors Service Co., Ltd.		Current rating
June 22, 2020		Short-term bond		A1		NICE Investors Service Co., Ltd.		Current rating
September 28, 2020		CP		A1		NICE Investors Service Co., Ltd.		Regular rating
September 28, 2020		Short-term bond		A1		NICE Investors Service Co., Ltd.		Regular rating
September 29, 2020		CP		A1		Korea Ratings		Regular rating
September 29, 2020		Short-term bond		A1		Korea Ratings		Regular rating
September 29, 2020		CP		A1		Korea Investors Service, Inc.		Regular rating
September 29, 2020		Short-term bond		A1		Korea Investors Service, Inc.		Regular rating
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

 

*	Rating definition: “A1” - Timely repayment capability is at the highest level with extremely low investment risk and is stable such that it will not be influenced by reasonably foreseeable changes in external factors.

 

(3)

International credit ratings

 

Date of credit rating		Subject of rating		Credit rating of securities		Credit rating agency		Rating type
June 11, 2020		Bonds denominated in foreign currency		A3 (Negative)		Moody’s Investors Service		Regular rating
October 6, 2020		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
June 21, 2021		Bonds denominated in foreign currency		A- (Stable)		Fitch Ratings		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

 

4

(4)

Listing (registration or designation) of Company’s shares and special listing status

 

Listing (registration or designation) of stock		Date of listing (registration or designation)		Special listing		Special listing and applicable regulations
KOSPI Market of Korea Exchange		November 7, 1989		Not applicable		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)

 

•

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

 

•

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

 

•

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

 

•

65 Euljiro, Jung-gu, Seoul (December 13, 2004)

 

B.	Significant Changes in Management

 

Date of change		Shareholder meeting classification		Appointment				Term Termination or Dismissal
				Newly appointed		Re-elected
March 21, 2018		General Meeting of Shareholders		Young Sang Ryu, Youngmin Yoon		—		—
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		—

*	On August 25, 2021, Dae Sik Cho resigned from his position as a non-executive director.

 

5

*	On November 1, 2021, Jung Ho Park resigned from his position as the representative director following the Spin-off, and inside director Young Sang Ryu was appointed as representative director.

*	The appointments of outside director candidates are expected to be decided at the 39th General Meeting of Shareholders, which is scheduled to be held after the date of business report submission.

 

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. 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 FSK L&S Co., Ltd.

On February 6, 2016, the Company acquired 2,415,750 shares of FSK L&S Co., Ltd. at a purchase price of Won 17.8 billion from SK Inc. (formerly known as SK Holdings Co., Ltd.) to utilize its logistics sharing infrastructure with its counterparties and pursue new business opportunities. As a result of the acquisition, the Company owned a 60% equity interest in FSK L&S Co., Ltd.

(2) Acquisition of shares of id Quantique SA

In order to increase the value of the Company by enhancing its position as the top mobile network operator (“MNO”) through utilizing quantum cryptography and by generating returns from its global business, the Company acquired an additional 41,157,506 shares of id Quantique SA on April 30, 2018, as a result of which the Company owned a total of 58.1% of the issued and outstanding shares (44,157,506 shares), and acquired control, of id Quantique SA.

(3) Acquisition of shares of Siren Holdings Korea Co., Ltd.

The Company acquired shares of Siren Holdings Korea Co., Ltd. (“SHK”), which wholly owned Former ADT CAPS, in order to strengthen its security business and expand its residential customer base. See “Report on Decision on Acquisition of Shares of Siren Holdings Korea Co., Ltd.” filed on May 8, 2018 for more information.

 

*	Siren Investments Korea Co., Ltd. merged with and into SHK, with SHK as the surviving entity, following which CAPSTEC Co., Ltd. (“CAPSTEC”) and ADT SECURITY Co., Ltd. (“ADT SECURITY”), which were subsidiaries of Former ADT CAPS, became subsidiaries of SHK.

 

*	SHK changed its name to Life & Security Holdings Co., Ltd. (“Life & Security Holdings”) in accordance with a resolution at its extraordinary meeting of shareholders on October 23, 2018, and Life & Security Holdings merged with SK Infosec on December 30, 2020.

(4) Capital increase of Iriver

On July 26, 2018, the board of directors of Iriver, a subsidiary of the Company, resolved to approve a capital increase of Won 70,000 million through third-party allotment and subsequently issued 7,990,867 common shares. The Company participated in the capital increase and paid Won 65,000 million to subscribe 7,420,091 common shares of Iriver on August 10, 2018, resulting in an increase of the Company’s ownership interest from 45.9% to 53.7%.

 

6

(5) Exchange of shares of SK Infosec

On October 26, 2018, the Company announced the decision of the Company’s board of directors (the “Board of Directors”) to approve the comprehensive exchange of shares of SK Infosec for shares of the Company. The share exchange ratio was one common share of the Company to 0.0997678 common share of SK Infosec. The share exchange was completed on December 27, 2018, upon which SK Infosec became a wholly-owned subsidiary of the Company.

(6) Acquisition of shares of SK Stoa

On April 25, 2019, 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.

(7) 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 28, 2020 for more information.

(8) Disposal of shares of SMC and 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.

(9) 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.

(10) 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.

(11) 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.

(12) 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.

 

7

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

(13) 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 on June 10, 2021, for more information.

(14) Transfer of 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 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 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.

 

8

(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.

[SK Telink]

(1) Disposal of NSOK shares

Pursuant to the resolution of its board of directors on October 8, 2018, SK Telink entered into an agreement to sell 1,012,459 shares of NSOK (representing a 100.00% equity interest) to Life & Security Holdings. The date of sale was October 10, 2018, and the sale consideration amount was Won 100 billion. See “Report on Disposal of Shares of Related Party” filed on October 8, 2018 by SK Telink for more information about this transaction.

(2) 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.

(3) 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.

(4) 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.

(5) 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.

 

9

[PS&Marketing]

(1) Acquisition of shares of SK M&Service Co., Ltd.

PS&Marketing acquired 3,099,112 shares of SK M&Service Co., Ltd. (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.

 

10

3. Total Number of Shares

 

A.	Total Number of Shares

 

(As of December 31, 2022)		(Unit: in shares)
Classification		Share type												Remarks
		Common shares				Preferred shares				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			801,091				—				801,091				—
VI. Number of outstanding shares (IV-V)			218,032,053				—				218,032,053				—

 

*

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).

*

Number of treasury shares includes 54,032 treasury shares acquired relating to fractional shares from the Spin-off.

 

B.	Treasury Shares

 

(As of December 31, 2022)						(Unit: in shares)
Acquisition methods						Type of shares				At the beginning of period				Changes												At the end of period
														Acquired (+)				Disposed (-)				Retired (-)
Acquisition pursuant to the Financial Investment Services and Capital Markets Act of Korea		Direct acquisition		Direct acquisition from market			Common shares				—				—				—				—				—
							Preferred shares				—				—				—				—				—
				Direct over-the-counter acquisition			Common shares				—				—				—				—				—
							Preferred shares				—				—				—				—				—
				Tender offer			Common shares				—				—				—				—				—
							Preferred shares				—				—				—				—				—
				Sub-total (a)			Common shares				—				—				—				—				—
							Preferred shares				—				—				—				—				—
		Acquisition through trust and other agreements		Held by trustee			Common shares				—				—				—				—				—
							Preferred shares				—				—				—				—				—
				Held in actual stock			Common shares				1,196,960								395,869				—				801,091
							Preferred shares				—				—				—				—				—
				Sub-total (b)			Common shares				1,196,960				—				395,869				—				801,091
							Preferred shares				—				—				—				—				—
Other acquisition (c)							Common shares				54,032				—				54,032				—				—
							Preferred shares				—				—				—				—				—
Total (a+b+c)							Common shares				1,250,992				—				449,901				—				801,091
							Preferred shares				—				—				—				—				—

 

*	On January 24, 2022, the Company disposed 413,080 treasury shares for bonus payment purposes.

*	On February 25, 2022, the Company disposed 7,598 treasury shares for bonus payment purposes.

*	On May 2, 2022, the Company disposed 5,984 treasury shares for bonus payment purposes.

*	On May 13, 2022, the Company disposed 23,239 treasury shares for bonus payment purposes.

 

11

4. Status of Direct Acquisitions and Disposal of Treasury Shares

 

(As of December 31, 2022)

(Unit: in shares and percentages)

Classification

Expected Acquisition (Disposal) Period

Expected Number of Shares (A)

Executed Number of Shares (B)

Execution Ratio (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

 

*	The expected number of shares and executed number of shares reflect the effect of the Stock Split.

5. Status of Trust Agreement on Repurchase of Treasury Shares

 

(As of December 31, 2022)

(Unit: in Won, percentages and number of instances)

Agreement Period

Maximum Value of Treasury Shares to be Acquired under Agreement (A)

Actual Value of Treasury Shares Acquired under Agreement (B)

Execution Ratio (B/A)

Change of Sales Direction

Reporting Date

Classification

Start Date

End Date

Number of Instances

Date

Trust Agreement Termination

Aug. 28, 2020

Apr. 30, 2021

W

500,000,000,000

W

499,646,025,000

99.93

%

0

—

Apr. 30, 2021

6. Matters Concerning Articles of Incorporation

 

Date of Revision		General Meeting of Shareholders		Key Revisions		Reason for Revisions
March 26, 2020		36th General Meeting of Shareholders		Specialized safety and health planning, etc.		Changes in accordance with amendments to the Industrial Safety and Health Act of Korea and to reflect the relevant revisions to SK Group-wide management policies under SK Management System
March 25, 2021		37th 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		1st 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		38th 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

 

12

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
		SK M&Service Co., Ltd.		Database and online information services
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 digital contents   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

[Wireless Business]

 

A.

Overview

For the year ended December 31, 2022, the Company recorded Won 17.31 trillion in revenue and Won 1.61 trillion in operating profit, in each case on a consolidated basis. The increase in the number of 5G subscribers and rapid progress in new growth businesses such as its B2B business led to a steady growth in revenue, while the stabilizing market environment drove enhanced profitability. As of the year ended December 31, 2022, the number of the Company’s 5G subscribers reached 13.39 million. The Company’s performance continues to improve based on the competitiveness of its 5G services.

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 in Seoul and provides telemarketing services. Additionally, SK O&S Co., Ltd. (“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.

 

13

The Company plans to maintain stable growth in the sales of its wireless business based on a solid increase in the number of 5G subscribers, while continuously enhancing profitability by pursuing efficient investments in, and operation of, its wireless networks and leveraging the stabilization of market competition.

The Company has been providing its customers with various subscription packages through “T Universe,” the Company’s subscription business, in partnership with domestic and international businesses. In addition, the Company is continually updating key functions and technologies of “A. (Adot),” the world’s first commercialized Korean language GPT-3-based service, in preparation of A.’s official service launch, while further strengthening the social and community functions of “ifland” with a goal to transform it into a globally leading metaverse service.

 

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,
				2022				2021				2020
Number of subscribers		SK Telecom			30,452				29,696				29,089
		Others (KT, LG U+)			32,676				31,869				31,341
		MVNO			12,829				10,355				9,111
		Total			75,957				71,920				69,541

 

*	Source: Wireless telecommunications service data from the MSIT as of December 31, 2022.

 

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.

 

14

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,
		2022				2021				2020
Mobile communications services			48.2				48.2				48.1

 

*	Source: Wireless telecommunications service data from the MSIT as of December 31, 2022.

 

E.	Competitive Strengths

The Company successfully completed the Spin-off in 2021 to maximize shareholder value and launched “SKT 2.0.” Concurrently, the Company reorganized its business to center around five major business areas and is seeking maximization of overall corporate value by establishing and executing strategies optimized for each business segment and pursuing growth in each segment. For the year ended December 31, 2022, the Company recorded Won 17.31 trillion in operating revenue and Won 1.61 trillion in operating profit on a consolidated basis. The increase in the number of 5G subscribers and rapid progress in new growth businesses such as B2B led to a steady growth in sales, while stabilization of the market further bolstered an improvement in profits. The Company is continuing to enhance its profitability by leveraging its competitiveness in the 5G market and secured 13.39 million 5G subscribers as of December 31, 2022.

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.

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, 2022, SK Broadband recorded Won 4.16 trillion in revenue on a consolidated basis, which represented a 2.6% increase from Won 4.05 trillion for the year ended December 31, 2021. 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 resulting from, among other things, the operation of new data centers.

 

15

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, 2022, SK Broadband’s media business segment recorded Won 1.88 trillion in revenue, which represented a 2.6% increase compared to the year ended December 31, 2021. For the year ended December 31, 2022, the fixed-line business segment recorded Won 2.27 trillion in revenue, which represented an 2.7% increase compared to the year ended December 31, 2021.

 

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. SK Broadband 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.

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 faster and more reliable premium Giga Internet services is increasing due to the growth in usage of home mobile networks using Wi-Fi and an increased consumption of high-definition large media content.

With the mergers and acquisitions among IPTV service providers and multiple service operators, the paid broadcasting market has reorganized around IPTV operators, and companies are moving away from competition based on subscriber base expansion to competition based on media platform services. The transition to a contactless service society due to COVID-19 has led to increased consumption of paid content by viewers, accelerating competition through the ability to source unique contents. The Company expects 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.

 

16

In the corporate business market, the Company is continuing its efforts to generate stable returns by securing growth drivers in new service areas such as cloud computing, while also strengthening its competitiveness in the traditional fixed line-based business through expansion of core infrastructure including data centers, which have seen an increase in market demand recently.

C. Growth Potential

 

				(Unit: in persons)
Classification				As of December 31,
				2022				2021				2020
Fixed-line Subscribers		High-speed Internet			23,537,333				22,944,268				22,327,182
		Fixed-line telephone			11,621,413				12,211,954				12,859,279
		IPTV			20,203,451				19,346,812				17,872,297
		Cable TV			12,824,704				12,986,039				13,305,796

 

*	Source: MSIT website.

*	High-speed Internet and fixed-line telephone subscribers represent the number of subscribers as of December 31, 2022, while IPTV and cable TV subscribers represent the average number of subscribers in the first half of 2022.

 

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,
		2022				2021				2020
High-speed Internet (including resales)			28.5				28.7				29.0
Fixed-line telephone (including Voice over Internet Protocol (“VoIP”)			17.8				17.5				16.8
IPTV			30.9				30.6				30.4
Cable TV			22.2				22.2				22.5

 

*	Source: MSIT website.

*	With respect to Internet telephone, the market share was calculated based on market shares among the 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.

*	Market shares of High-speed Internet and Fixed-line telephone represent the market shares as of December 31, 2022 and market shares of IPTV and Cable TV represent the average market shares in the first half of 2022.

SK Broadband 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, SK Broadband principally 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 SK Broadband, KT and LG U+.

 

17

[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 was the first in the industry to launch a cloud-based television application service, “Stoa ON,” which provides personalized digital television shopping services. 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.

2. Key Financial Data by Business Line

 

A.

Assets

 

		(Unit: in millions of Won and percentages)
Classification		As of December 31,
		2022								2021								2020*
		Amount				Ratio				Amount				Ratio				Amount				Ratio
Wireless			27,078,021				79	%			27,126,972				80	%			32,707,344				73	%
Fixed-line			6,588,076				19	%			6,319,019				19	%			6,091,992				14	%
Other			762,028				2	%			462,021				1	%			6,244,788				14	%
Subtotal			34,428,124				100	%			33,908,011				100	%			45,044,125				100	%
Consolidation Adjustment			(3,119,862	)			—				(2,996,734	)			—				2,862,832				—
Total			31,308,262				—				30,911,277				—				47,906,957				—

 

*	Includes assets that were spun-off to SK Square as part of the Spin-off.

 

B.

Revenue

 

		(Unit: in millions of Won and percentages)
Classification		For the year ended December 31,
		2022								2021								2020*
		Amount				Ratio				Amount				Ratio				Amount				Ratio
Wireless			12,942,316				75	%			12,718,473				76	%			12,295,684				66	%
Fixed-line			3,812,989				22	%			3,677,706				22	%			3,405,677				18	%
Other			549,668				3	%			352,406				2	%			2,923,290				16	%
Total			17,304,973				100	%			16,748,585				100	%			18,624,651				100	%

 

*	Based on revenue prior to the Spin-off.

 

18

C.	Operating Profit

 

		(Unit: in millions of Won and percentages)
Classification		For the year ended December 31,
		2022								2021								2020*
		Amount				Ratio				Amount				Ratio				Amount				Ratio
Wireless			1,334,306				81	%			1,123,147				78	%			1,031,887				80	%
Fixed-line			311,083				19	%			294,070				21	%			258,973				20	%
Other			(2,102	)			0	%			14,550				1	%			645				0	%
Subtotal			1,643,287				100	%			1,431,767				100	%			1,291,505				100	%
Consolidation Adjustment			(31,216	)			—				(44,605	)			—				(42,927	)			—
Total			1,612,070				—				1,387,162				—				1,248,578				—

* Based on operating profit reflecting the Spin-off.

3. Updates on Major Products and Services

 

		(Unit: in millions of Won and percentages)
Business								For the year ended December 31,
								2022								2021								2020
		Major Companies		Items		Major Trademarks		Consolidated Sales Amount				Ratio				Consolidated Sales Amount				Ratio				Consolidated Sales Amount				Ratio
Wireless		SK Telecom Co., Ltd., PS&Marketing Co., Ltd., Service Ace Co., Ltd. SK O&S Co., Ltd. SK M&Service Co., Ltd.		Mobile communications service, wireless data service, ICT service		T, 5GX, T Plan and others			12,942,316				75	%			12,718,473				76	%			12,295,684				66	%
Fixed-line		SK Broadband Co., Ltd., SK Telink Co., Ltd. Home & Service Co., Ltd.		Fixed-line phone, high- speed Internet, data and network lease service		B tv, 00700 international call, 7mobile and others			3,812,989				22	%			3,677,706				22	%			3,405,677				18	%
Other		SK stoa Co., Ltd.		Commercial retail data broadcasting channel services and others		Stoa ON			549,668				3	%			352,406				2	%			2,923,290				16	%
Total									17,304,973				100	%			16,748,585				100	%			18,624,651				100	%

4. Price Trends for Major Products

[Wireless Business]

As of December 31, 2022, 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). The Company provides a variety of other subscription plans catered to subscriber demand, which may be reviewed on the Company’s website at www.tworld.co.kr.

[Fixed-line Business]

In July 2022, SK Broadband launched the “Nowadays Home Integration Plan,” which provides discounts for users subscribing to the Internet and IPTV (including telephone) services. The plan combines and simplifies the existing fixed-line integration plans (including “Home Integration Plan” and “Core Fee Plan”). The amount of discount varies by the Internet plan (at a speed of 100M/500M or higher). As for the Internet plan, the amount of discount ranges from Won 1,100 to Won 5,500, whereas the amount of discount for the IPTV plan is set as Won 2,200. A VOD coupon (Won 3,300/month) is additionally provided to customers who subscribe to premium internet plans and “B tv All” or higher IPTV plans.

In addition, in order to facilitate customers’ understanding of its service, SK Broadband modified some of the names of its Internet and IPTV products. English in the names were replaced with Korean, and the names were also changed to better reflect the characteristics of the products. For instance, “Wifi” was replaced with the Korean transcription of Wifi, and “Smart internet” was renamed to “Remote Care Internet.” As for IPTV, “B tv New Basic” was renamed to “B tv Economy,” and “B tv Choice” was renamed to “B tv Mini.”

 

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In September 2022, SK Broadband launched the “Nowadays Family Integration” plan, which provides a discount for users from the same family subscribing to the Internet, mobile and IPTV plans. The plan combines the existing fixed mobile integration plans for families (including “Whole Family Plan,” “Whole Family Free,” “TV plus,” etc.) with different terms of usage and provides additional benefits. The plan provides a discount from Won 4,400 and to Won 13,200 depending on the user’s Internet plan (at a speed of 100M/500M/or above 1G). As for mobile, the plan provides a discount from Won 3,500 to Won 24,000 depending on the number of mobile phone lines connected to the plan. If IPTV is added, the plan provides an additional discount of Won 1,100 and a free B tv data pack (worth Won 5,500) for mobile phones.

SK Broadband also provides a variety of other subscription plans based on consumer demand.

5. Investment Status

[Wireless Business]

 

A.	Investment in Progress

 

(Unit: in billions of Won)

Business

Classification

Investment period

Subject of investment

Investment effect

Expected investment amount

Amount already invested

Future investment

Network/Common

Upgrade/ New installation

Year ended December 31, 2022

Network, systems and others

Capacity increase and quality improvement; systems improvement

2,215

2,215

—

Total

2,215

2,215

—

B. Future Investment Plan

 

Business

Expected investment amount

Expected investment for each year

Investment effect

Asset type

Amount

2023

2024

2025

Network/Common

Network, systems and others

To be determined

To be determined

To be determined

To be determined

Upgrades to the existing services and expanded provision of network services including 5G

Total

To be determined

To be determined

To be determined

To be determined

[Fixed-line Business]

 

A.	Investment in Progress and Future Investment Plan

 

		(Unit: in billions of Won)
Purpose of investment		Subject of investment		Investment period		Amount already invested		Future investment		Investment effect
Coverage expansion, upgrade of media platform		Network, systems, Internet data center and others		Year ended December 31, 2022		820		To be determined		Securing subscriber network and equipment; quality and system improvement

 

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6. Revenues

 

		(Unit: in millions of Won)
Business		Sales type				Item				For the year ended December 31, 2022				For the year ended December 31, 2021				For the year ended December 31, 2020
Wireless			Services			Mobile communication, wireless data, information communication		Export			140,642				143,149				152,518
								Domestic			12,801,674				12,575,324				12,195,445
								Subtotal			12,942,316				12,718,473				12,347,963
Fixed-line			Services			Fixed-line, high-speed Internet, data, lease line service		Export			183,812				139,846				127,618
								Domestic			3,629,177				3,537,860				3,304,600
								Subtotal			3,812,989				3,677,706				3,432,218
Other			Services			Commercial retail data broadcasting channel services		Export			—				—				—
								Domestic			549,668				352,406				307,566
								Subtotal			549,668				352,406				307,566
Total								Export			324,454				251,502				280,136
								Domestic			16,980,519				16,497,083				15,807,611
								Total			17,304,973				16,748,585				16,087,747

 

		(Unit: in millions of Won)
For the year ended December 31, 2022		Wireless				Fixed-line				Other				Sub total				Consolidation adjustment				After consolidation
Total sales			14,496,866				4,895,791				592,188				19,984,845				(2,679,872	)			17,304,973
Internal sales			1,554,550				1,082,802				42,520				2,679,872				(2,679,872	)			—
External sales			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 profit (loss)																							(276,489	)
Gain from investments in associates and joint ventures																							(81,707	)
Other non-operating profit (loss)																							(17,722	)
Profit before income tax																							1,236,152

7. Derivative Transactions

 

A.	Current Swap Contract Applying Cash Flow Risk Hedge Accounting

Currency and interest rate swap contracts under cash flow hedge accounting as of December 31, 2022 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
Apr. 16, 2018		Fixed rate foreign currency denominated bonds		Foreign currency risk		Cross currency swap		The Export-Import Bank of Korea and three other banks		Apr. 16, 2018 – Apr. 16, 2023
Aug. 13, 2018		Fixed rate foreign currency denominated bonds		Foreign currency risk		Cross currency swap		Citibank		Aug. 13, 2018 – Aug. 13, 2023
Dec. 19, 2018		Floating rate Korean Won denominated borrowings		Interest rate risk		Interest rate swap		Credit Agricole CIB		Mar. 19, 2019 – Dec. 14, 2023
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

 

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[SK Broadband]

 

Borrowing date		Hedged item		Hedged risk		Contract type		Financial institution		Duration of contract
Aug. 13, 2018		Non-guaranteed foreign currency denominated bonds (face value of USD 300,000,000)		Foreign currency risk		Cross currency swap		Citibank		Aug. 13, 2018 – Aug. 13, 2023

 

Borrowing date		Hedged item		Hedged risk		Contract type		Financial institution		Duration of contract
Dec. 19, 2018		Floating rate Korean Won denominated borrowings		Interest rate risk		Interest rate swap		Credit Agricole CIB		Mar. 19, 2019 – Dec. 14, 2023

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 ended December 31, 2022				For the year ended December 31, 2021				For the year ended December 31, 2020				Remarks
Raw material					23				48				54				—
Labor					113,297				122,445				122,906				—
Depreciation					135,604				147,249				169,872				—
Commissioned service					46,447				55,917				35,939				—
Others					78,989				48,048				35,209				—
Total R&D costs					374,360				373,707				363,980				—
Government Subsidies					—				—				—				—
Accounting		Sales and administrative expenses			340,864				347,711				353,198				—
		Development expenses (Intangible assets)			33,495				25,996				10,782				—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)					2.16	%			2.23	%			2.26	%			—

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.

 

B.	Business-related Intellectual Property

[SK Telecom]

As of December 31, 2022, the Company held 3,328 Korean-registered patents and 1,574 foreign-registered patents. The Company holds 713 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, 2022, SK Broadband held 287 Korean-registered patents and 80 foreign-registered patents (including those held jointly with other companies). It also holds 290 Korean-registered trademarks and 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.

 

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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 implement RE100 and is considering the installation of additional solar power generation facilities to self-produce and use renewable energy.

 

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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, 2022, 2021 and 2020 and for the years ended 2022, 2021 and 2020. The Company’s consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021, which are prepared in accordance with K-IFRS, are attached hereto.

 

		(Unit: in millions of Won except number of companies)
		As of December 31, 2022				As of December 31, 2021				As of December 31, 2020
Assets
Current Assets			7,219,196				6,352,665				8,775,086
•   Cash and Cash Equivalents			1,882,291				872,731				1,369,653
•   Accounts Receivable – Trade, net			1,970,611				1,913,511				2,188,893
•   Accounts Receivable – Other, net			479,781				548,362				979,044
•   Others			2,886,513				3,018,061				4,237,496
Non-Current Assets			24,089,066				24,558,612				39,131,871
•   Long-Term Investment Securities			1,410,736				1,715,078				1,648,837
•   Investments in Associates and Joint Ventures			1,889,289				2,197,351				14,354,113
•   Property and Equipment, net			13,322,492				12,871,259				13,377,077
•   Goodwill			2,075,009				3,869,769				4,436,194
•   Intangible Assets, net			3,324,910				2,072,493				3,357,524
•   Others			2,066,630				1,832,662				1,958,126
Total Assets			31,308,262				30,911,277				47,906,957
Liabilities
Current Liabilities			8,046,541				6,960,435				8,177,967
Non-Current Liabilities			11,106,525				11,615,704				15,332,747
Total Liabilities			19,153,066				18,576,139				23,510,714
Equity
Equity Attributable to Owners of the Parent Company			11,318,320				11,579,346				23,743,894
Share Capital			30,493				30,493				44,639
Capital Surplus (Deficit) and Other Capital Adjustments			(11,567,117	)			(11,623,726	)			677,203
Retained Earnings			22,463,711				22,437,341				22,981,913
Reserves			391,233				735,238				40,139
Non-controlling Interests			836,876				755,792				652,349
Total Equity			12,155,196				12,335,138				24,396,243
Total Liabilities and Equity			31,308,262				30,911,277				47,906,957

 

		(Unit: in millions of Won except per share data and number of consolidated subsidiaries)
		For the year ended December 31, 2022				For the year ended December 31, 2021				For the year ended December 31, 2020
Operating Revenue			17,304,973				16,748,585				16,087,747
Operating Profit			1,612,070				1,387,162				1,248,578
Profit Before Income Tax			1,236,152				1,718,191				905,218
Profit from Continued Operations			947,831				1,271,395				683,956
Profit from Discontinued Operations			—				1,147,594				816,582
Profit for the Period			947,831				2,418,989				1,500,538
Profit for the Period Attributable to Owners of the Parent Company			912,400				2,407,523				1,504,352
Profit for the Period Attributable to Non-controlling Interests			35,431				11,466				(3,814	)
Basic Earnings Per Share (Won)			4,118				7,191				4,093
Diluted Earnings Per Share (Won)			4,116				7,187				4,092
Total Number of Consolidated Subsidiaries			25				23				49

 

24

B.	Summary Financial Information (Separate)

Below is the summary separate financial information of the Company as of December 31, 2022, 2021 and 2020 and for the years ended December 31, 2022, 2021 and 2020. The Company’s audited separate financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022 and 2021, which are prepared in accordance with K-IFRS, are attached hereto.

 

		(Unit: in millions of Won)
		As of December 31, 2022				As of December 31, 2021				As of December 31, 2020
Assets
Current Assets			5,498,460				4,681,493				5,047,115
•   Cash and Cash Equivalents			1,217,504				158,823				329,208
•   Accounts Receivable – Trade, net			1,425,695				1,514,260				1,503,552
•   Accounts Receivable – Other, net			435,096				520,956				434,713
•   Others			2,420,165				2,487,454				2,779,642
Non-Current Assets			20,933,661				21,707,572				26,939,336
•   Long-Term Investment Securities			1,155,188				1,476,361				983,688
•   Investments in Subsidiaries and Associates			4,621,807				4,841,139				11,357,504
•   Property and Equipment, net			9,519,663				9,318,408				9,157,548
•   Goodwill			1,306,236				1,306,236				1,306,236
•   Intangible Assets, net			2,693,400				3,203,330				2,665,083
•   Others			1,637,367				1,562,098				1,469,277
Total Assets			26,432,121				26,389,065				31,986,451
Liabilities
Current Liabilities			6,236,135				5,426,477				5,076,404
Non-Current Liabilities			9,812,604				10,099,732				9,560,189
Total Liabilities			16,048,739				15,526,209				14,636,593
Equity
Share Capital			30,493				30,493				44,639
Capital Surplus and Other Capital Adjustments			(4,506,693	)			(4,576,271	)			289,134
Retained Earnings			14,691,461				14,770,618				16,684,640
Reserves			168,121				638,016				331,445
Total Equity			10,383,382				10,862,856				17,349,858
Total Liabilities and Equity			26,432,121				26,389,065				31,986,451

 

		(Unit: in millions of Won)
		For the year ended December 31, 2022				For the year ended December 31, 2021				For the year ended December 31, 2020
Operating Revenue			12,414,588				12,102,830				11,746,630
Operating Profit			1,321,131				1,144,323				1,023,067
Profit Before Income Tax			1,146,250				1,369,347				941,455
Profit for the Period			869,490				1,073,823				758,792
Basic Earnings Per Share (Won)			3,921				3,183				2,044
Diluted Earnings Per Share (Won)			3,919				3,181				2,044

 

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