SKM 0001193125-21-258453 6-K as filed: Aug 27, 2021

Number of consecutive dividends

Average dividend yield (%)

Interim dividends

Annual dividends

Past three years

Past five years

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 AUGUST 2021

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.

SEMI-ANNUAL BUSINESS REPORT

(From January 1, 2021 to June 30, 2021)

THIS IS A SUMMARY OF THE SEMI-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.

COMPANY OVERVIEW

1. Company Overview

The Company’s semi-annual business report for the six months ended June 30, 2021 includes the following consolidated subsidiaries:


Name	Date of Establishment	Principal Business	Total Assets as of Dec. 31, 2020 (millions of Won)		Material Subsidiary*
SK Telink Co., Ltd.	Apr. 9, 1998	Telecommunication services and satellite broadcasting services		176,872	Material
SK Communications Co., Ltd.	Sept. 19, 1996	Internet portal and other Internet information services		45,584
SK Broadband Co., Ltd.	Sept. 26, 1997	Fixed-line telecommunication services, multimedia and Internet protocol TV (“IPTV”) services		5,765,808	Material
PS&Marketing Co., Ltd.	Apr. 3, 2009	Sale of telecommunication devices		470,521	Material
Service Ace Co., Ltd.	Jun. 10, 2010	Customer center management services		96,258	Material
Service Top Co., Ltd.	Jun. 11, 2010	Customer center management services		69,496
SK O&S Co., Ltd. (formerly known as Network O&S Co., Ltd.)	Jun. 14, 2010	Network maintenance services		88,633	Material
SK Telecom China Holdings Co., Ltd.	Jul. 12, 2007	Investment (holding company)		48,684
SK Global Healthcare Business Group, Ltd.	Sept. 14, 2012	Investment (SPC)		2,675
YTK Investment Ltd.	Jul. 1, 2010	Investment		3,218
Atlas Investment	Jun. 24, 2011	Investment		128,039	Material
SKT Americas, Inc.	Dec. 29, 1995	Information collection and management consulting services		24,985
One Store Co., Ltd.	Mar. 1, 2016	Contents distribution		243,442	Material
SK Planet Co., Ltd.	Oct. 1, 2011	Telecommunication and platform services		536,981	Material
Eleven Street Co., Ltd.	Sept. 1, 2018	E-commerce and Internet-related services		999,225	Material
Dreamus Company (formerly known as Iriver Ltd.)	Jan. 20, 1999	Online music services		171,931	Material
ADT CAPS Co., Ltd. (formerly known as SK Infosec Co., Ltd.)	Jun. 26, 2000	Information security services		3,792,573	Material
Quantum Innovation Fund I	Dec. 3, 2018	Investment		25,354
SK telecom Japan Inc.	Mar. 1, 2018	Information collection and management consulting services		8,720
id Quantique Ltd.	Oct. 29, 2001	QRNG technology development		41,287
SK Telecom TMT Investment Corp.	Jan. 4, 2019	Investment		154,729	Material
FSK L&S Co., Ltd.	Oct. 20, 2016	Logistics consulting services		35,259
Incross Co., Ltd.	Aug. 13, 2007	Advertising agency services		177,694	Material


Name	Date of Establishment	Principal Business	Total Assets as of Dec. 31, 2020 (millions of Won)		Material Subsidiary*
Happy Hanool Co., Ltd.	Aug. 8, 2019	Services		671
SK stoa Co., Ltd.	Dec. 1, 2017	Commercial retail data broadcasting channel services		107,982	Material
Broadband Nowon Broadcasting Co., Ltd.	Jun. 15, 2001	Cable broadcasting services		23,227
T map Mobility Co., Ltd.	Dec. 29, 2020	Database and online information services		170,381	Material
ROK Media Co., Ltd.	March 19, 2003	Publishing and online retail		6,769
SK M&Service Co., Ltd.	Feb. 10, 2000	Database and online information services		129,738	Material
SK Planet Global Holdings Pte. Ltd.	Aug. 10, 2012	Investment (holding company)		361
SKP America LLC	Jan. 27, 2012	Digital contents sourcing services		43,826
K-net Culture and Contents Venture Fund	Nov. 24, 2008	Investment partnership		377,863	Material
Iriver Enterprises Ltd.	Jan. 14, 2004	Management of Chinese subsidiary		171
Iriver China Co., Ltd.	Jun. 24, 2004	Electronic device manufacturing		525
DongGuan Iriver Electronics Co., Ltd.	Jul. 6, 2006	Electronic device manufacturing		3
Life Design Company Inc.	June 25, 2008	Merchandise business in Japan		5,097
Studio Dolphin Co., Ltd.	Aug. 28, 2020	Publishing of music and other audio contents		114
SKinfosec Information Technology (wuxi) Co., Ltd.	Aug. 21, 2019	System software development and supply services		8,285
CAPSTEC Co., Ltd.	Jan. 1, 2005	Manned security services		36,845
Home & Service Co., Ltd.	Jun. 5, 2017	Information and telecommunication network maintenance		124,197	Material
Media S Co., Ltd.	Jan. 5, 2021	Movie, video and broadcasting program production		—
Panasia Semiconductor Materials LLC	May 12, 2020	Trust services and joint investment		39,015
SK Planet Japan, K. K.	Mar. 14, 2012	Digital contents sourcing services		414
id Quantique LLC	Sept. 1, 2018	Quantum information and communications services		6,096
FSK L&S (Shanghai) Co., Ltd.	Jul. 29, 2010	International cargo transportation		34,922
FSK L&S (Hungary) Co., Ltd.	Sept. 13, 2019	International cargo transportation		8,605
FSK L&S Vietnam Company Limited	May 5, 2020	International cargo transportation		1,540
FSK L&S (Jiangsu) Co., Ltd.	May 18, 2021	International cargo transportation		—
Infra Communications Co., Ltd.	Aug. 1, 2017	Service operations		2,156
Mindknock Co., Ltd.	Jan. 23, 2018	Information services		317
YLP Co., Ltd.	Feb. 4, 2016	Cargo transportation agent		12,948
SK Telecom Innovation Fund, L.P.	Jan. 15, 2016	Investment		71,846
SK Telecom China Fund I L.P.	Sept. 14, 2011	Investment		14,193

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

Changes in subsidiaries during the six months ended June 30, 2021 are set forth below.


Change	Name	Remarks
Additions	Studio Dolphin Co., Ltd.	Newly acquired by Dreamus Company
	Media S Co., Ltd.	Newly established by SK Broadband Co., Ltd.
	FSK L&S (Jiangsu) Co., Ltd.	Newly established by FSK L&S Co., Ltd.
	ROK Media Co., Ltd.	Newly acquired by One Store Co., Ltd.
	YLP Co., Ltd.	Newly acquired by T map Mobility Co., Ltd.

Exclusions	ADT CAPS Co., Ltd. (former)	Merged into ADT CAPS Co., Ltd. (formerly known as SK Infosec Co., Ltd.)

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, (3) commerce business, (4) security business and (5) other businesses including platform services and online information services. The Company’s market shares in its key business segments were approximately 48% in the wireless business (excluding mobile virtual network operator (“MVNO”) business), approximately 29% in the high speed Internet business and approximately 30% in the IPTV services during the reporting period.

The total number of the Company’s consolidated subsidiaries as of June 30, 2021 were 53, and the Company plans to spin off certain of its operations, resulting in the surviving company continuing to engage in the telecommunications and certain other businesses while the spun-off company will serve as the holding company that will hold and manage in the Company’s equity investments in semiconductor and new ICT companies as well as make new investments relating thereto. Such spin-off transaction is expected to be completed within this year.

(1)

Wireless business

The Company provides wireless telecommunications services, characterized by its 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 the first half of 2021, sales of the Company’s wireless business amounted to Won 6.226 trillion.

In order to strengthen its sales channels, the Company has been offering a variety of fixed-line and wireless telecommunication convergence products through its subsidiary, PS&Marketing Co., Ltd. (“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. 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, including its 5G network, provides customers with quality network services and provides the Company with technological know-how in network operations.

The Company plans to make efforts to evolve into a subscription product marketing company by developing competitive subscription products with various domestic and international partners leveraging the big data that it has gained through its wireless business, while providing optimally personalized product packages leveraging artificial intelligence (“AI”) capabilities.

(2)

Fixed-line business

SK Broadband Co., Ltd. (“SK Broadband”) is engaged in providing telecommunications, broadcasting and new media services and various other services that are permitted to be carried out by SK Broadband under relevant regulations, as well as business activities that are directly or indirectly related to providing those services. In 1999, SK Broadband launched its high-speed Internet service in Seoul, Busan, Incheon and Ulsan and currently provides such services nationwide. SK Broadband also commercialized its TV-Portal service in July 2006 and its IPTV service in January 2009 upon receipt of permit in September 2008. In April 2019, SK Broadband decided to launch an integrated OTT platform “wavve,” combining its OTT service “oksusu” with POOQ, an OTT service alliance of Korea’s three terrestrial broadcasters. SK Broadband is focusing on strengthening the competitiveness of the combined OTT service through an increased investment in content and thereby developing it into a key service in the 5G era. In addition, SK Broadband’s merger with Tbroad Co., Ltd. (“Tbroad”) obtained all requisite regulatory approvals in January 2020, and the merger became effective as of April 30, 2020. In the first half of 2021, sales of the Company’s fixed-line business amounted to Won 1.8011 trillion.

(3)

Security business

In the field of security business, the Company has completed its converged security business portfolio ranging from physical security to information security through the acquisitions of material subsidiaries comprising the former ADT CAPS Co., Ltd. (“Former ADT CAPS”) and SK Infosec Co., Ltd. (“SK Infosec”). Due to a growing number of single-person households and increasing awareness for crime prevention, the security industry has been growing steadily in recent years. New markets for physical security have also been developing as a result of integrating cutting-edge information and communications technology (“ICT”), such as big data, Internet of Things (“IoT”) and AI, and bio-recognition technologies. The domestic market size of the physical security industry expanded from Won 3.6 trillion in 2012 to Won 5.5 trillion in 2017 (at an average annual growth rate of 8.7%), and is expected to grow to Won 7.9 trillion (at an average annual growth rate of 7.5%) in 2022. The Company plans to expand its security business into one of its major business areas by leveraging such industry growth as well as by seeking to evolve into a converged security company following the recently completed merger of SK Infosec and Former ADT CAPS and promoting synergies with its other ICT-based businesses. In the first half of 2021, sales of the Company’s security business amounted to Won 653.3 billion.

(4)

Commerce business

The Company is a leading player in the Korean e-commerce industry through its material subsidiary Eleven Street Co., Ltd. (“Eleven Street”), which operates an e-commerce platform service that connects various sellers and purchasers through its online and mobile platforms. The Company continues to evolve into a commerce portal by providing differentiated shopping-related services covering shopping information, product search and purchases, relying on the strength of the Company’s core principles of innovation supported by its advanced technological capabilities, including AI-based commerce search technology and customized recommendations based on big data analysis. In addition, the rapidly growing SK stoa Co., Ltd. (“SK Stoa”) will solidify its top position in the T-commerce market by strengthening its customer base secured through strategic marketing and product sourcing capabilities. In the first half of 2021, sales of the Company’s commerce business amounted to Won 407.1 billion.

See “II.1. Business Overview” for more information.

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
February 20, 2019	Corporate bond	AAA (Stable)	Korea Ratings	Current rating
February 20, 2019	Corporate bond	AAA (Stable)	Korea Investors Service, Inc.	Current rating
February 20, 2019	Corporate bond	AAA (Stable)	NICE Investors Service, Co., Ltd.	Current rating
May 31, 2019	Corporate bond	AAA (Stable)	Korea Ratings	Regular rating
June 4, 2019	Corporate bond	AAA (Stable)	NICE Investors Service, Co., Ltd.	Regular rating
June 18, 2019	Corporate bond	AAA (Stable)	Korea Investors Service, Inc.	Regular rating
July 15, 2019	Corporate bond	AAA (Stable)	Korea Ratings	Current rating
July 15, 2019	Corporate bond	AAA (Stable)	Korea Investors Service, Inc.	Current rating
July 15, 2019	Corporate bond	AAA (Stable)	NICE Investors Service, Co., Ltd.	Current rating
October 4, 2019	Corporate bond	AAA (Stable)	Korea Ratings	Current rating
October 7, 2019	Corporate bond	AAA (Stable)	Korea Investors Service, Inc.	Current rating
October 8, 2019	Corporate bond	AAA (Stable)	NICE Investors Service, Co., Ltd.	Current rating
December 26, 2019	Corporate bond	AAA (Stable)	Korea Ratings	Current rating
December 27, 2019	Corporate bond	AAA (Stable)	Korea Investors Service, Inc.	Current rating
December 27, 2019	Corporate bond	AAA (Stable)	NICE Investors Service, Co., Ltd.	Current rating
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, Co., Ltd.	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, Co., Ltd.	Regular rating
June 25, 2021	Corporate bond	AAA (Stable)	Korea Ratings	Regular 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.

*	Rating definition: “AA”—The certainty of principal and interest payment is extremely high with very low investment risk, but has slightly inferior factors compared to “AAA” rating.

(2)

Commercial paper (“CP”) and short-term bonds


Credit rating date	Subject of rating	Credit rating	Credit rating entity (Credit rating range)	Rating classification
May 31, 2019	CP	A1	Korea Ratings	Current rating
May 31, 2019	Short-term bond	A1	Korea Ratings	Current rating
June 4, 2019	CP	A1	NICE Investors Service Co., Ltd.	Current rating
June 4, 2019	Short-term bond	A1	NICE Investors Service Co., Ltd.	Current rating
June 18, 2019	CP	A1	Korea Investors Service, Inc.	Current rating
June 18, 2019	Short-term bond	A1	Korea Investors Service, Inc.	Current rating
October 4, 2019	CP	A1	Korea Ratings	Regular rating
October 4, 2019	Short-term bond	A1	Korea Ratings	Regular rating
October 7, 2019	CP	A1	Korea Investors Service, Inc.	Regular rating
October 7, 2019	Short-term bond	A1	Korea Investors Service, Inc.	Regular rating
October 8, 2019	CP	A1	NICE Investors Service Co., Ltd.	Regular rating
October 8, 2019	Short-term bond	A1	NICE Investors Service Co., Ltd.	Regular rating
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, Co., Ltd.	Current rating
June 16, 2021	Short-term bond	A1	Korea Investors Service, Co., Ltd.	Current rating
June 25, 2021	CP	A1	Korea Ratings	Current rating
June 25, 2021	Short-term bond	A1	Korea Ratings	Current 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
March 6, 2019	Bonds denominated in foreign currency	A- (Negative)	S&P Global Ratings	Regular rating
May 30, 2019	Bonds denominated in foreign currency	A3 (Negative)	Moody’s Investors Service	Regular rating
October 14, 2019	Bonds denominated in foreign currency	A- (Negative)	Fitch Ratings	Regular rating
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 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

(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)

October 2011: Spin-off of SK Planet Co., Ltd. (“SK Planet”)

June 2015: Comprehensive exchange of shares of SK Broadband

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

December 2018: Comprehensive exchange of shares of 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

A.	Location of Headquarters

•

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

•

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

•

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

•

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

•

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

B.	Significant Changes in Management


Date of change	Shareholder meeting classification	Appointment		Term Termination or Dismissal
Date of change	Shareholder meeting classification	Newly appointed	Re-elected	Term Termination or Dismissal
March 24, 2017	General Meeting of Shareholders	Jung Ho Park, Dae Sik Cho, Jungho Ahn	Jae Hoon Lee, Jae Hyeon Ahn	Jae Young Jung
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	—

C.	Change in Company Name

On March 28, 2019, Iriver Ltd., one of the Company’s subsidiaries, changed its name to Dreamus Company in accordance with a resolution at its general meeting of shareholders.

On April 17, 2019, Network O&S Co., Ltd., one of the Company’s subsidiaries, 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, one of the Company’s material subsidiaries, 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.

D.	Mergers, Acquisitions and Restructuring

(1) Exchange of shares of SK Communications Co., Ltd. (“SK Communications”)

On November 24, 2016, the Board of Directors resolved to approve the payment of cash consideration in lieu of the issuance of shares of the Company in a comprehensive exchange of shares of SK Communications. The amount of cash consideration was based on a share exchange ratio of one common share of the Company to 0.0125970 common share of SK Communications. In February 2017, SK Communications became a wholly-owned subsidiary of the Company.

(2) Acquisition of shares of Iriver

The Company acquired 4,699,248 shares of Iriver at a purchase price of Won 5,320 in connection with a capital contribution. The Company’s equity interest in Iriver following the acquisition is 45.9%. See “Report on Important Business Matters (Decision on Capital Increase)” filed on July 17, 2017 by Iriver for more information.

*	Iriver changed its name to “Dreamus Company” pursuant to a resolution at its general meeting of shareholders on March 28, 2019.

(3) Acquisition of newly issued shares of SK China Company Limited (“SK China”)

On July 28, 2017, the Company acquired newly issued shares of SK China to find investment opportunities in ICT and other promising areas of growth in China. In exchange for newly issued shares of SK China, the Company contributed its full equity interest in each of SKY Property Management Limited (“SKY”) and SK Industrial Development China Co., Ltd. (“SK IDC”) as well as cash, equal to the following amounts: 1) SKY stock: USD 276,443,440.64, 2) SK IDC stock: USD 108,072,007.67 and 3) Cash: USD 100,000,000.00. As a result of the acquisition, the Company holds 10,928,921 shares and a 27.27% of equity interest in SK China. See “Report on Decision on Acquisition of SK China Shares” filed by the Company on July 28, 2017 for more information about this transaction.

(4) Exchange of shares of SK Telink

On September 28, 2017, the Company disclosed a resolution approving the payment of cash consideration in lieu of the issuance of shares of SK Telecom in an exchange of shares of SK Telink. The amount of cash consideration was based on a share exchange ratio of 1:1.0687714. The exchange was completed on December 14, 2017, upon which exchange SK Telink became a wholly-owned subsidiary of the Company.

(5) 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 had a 60% equity interest in FSK L&S Co., Ltd.

(6) 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, the Company owns a total of 58.1% of the issued and outstanding shares (44,157,506 shares), and has acquired control, of id Quantique SA.

(7) 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.

(8) 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%.

(9) Exchange of shares of SK Infosec

On October 26, 2018, the Company announced the decision of 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.

(10) 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 ICT businesses of the Company. On January 3, 2020, the Company acquired 3,631,355 shares of SK Stoa after obtaining governmental approvals.

(11) 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.

(12) Disposal of shares of SMC and Shopkick

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

(13) 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.

(14) 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.

(15) 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.

(16) 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, 2020, for more information.

[SK Broadband]

(1) Establishment of a subsidiary

On May 23, 2017, SK Broadband’s board of directors resolved to approve the establishment of a subsidiary. On June 5, 2017, SK Broadband established Home & Service Co., Ltd. (“Home & Service”), a subsidiary responsible for the management of customer service operations. Home & Service was incorporated by SK Broadband under the Korean Commercial Code. The subsidiary was capitalized at Won 46 billion and the Korea Fair Trade Commission approved the subsidiary’s incorporation as an SK affiliate on July 1, 2017.

(2) Spin-off

On August 16, 2017, SK Broadband’s board of directors resolved to approve the spin-off of its T-commerce subsidiary through a spin-off and subsequent establishment of a subsidiary pursuant to Article 530-2 and 530-12 of the Korean Commercial Code, with both companies from the simple vertical spin-off remaining as existing companies. The spin-off was effective as of December 1, 2017, and the subsidiary was capitalized at Won 15 billion, with SK Broadband holding a 100% equity interest. The Korea Fair Trade Commission approved the subsidiary’s incorporation as an SK affiliate on January 1, 2018.

(3) 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.

(4) 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.

(5) 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 will merge 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.

(6) 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.

(7) Acquisition of business

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

(8) Establishment of a subsidiary

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 by the Korea Fair Trade Commission as of March 2, 2021.

[SK Telink]

(1) Acquisition of shares of NSOK

In accordance with the resolution of its board of directors on September 22, 2016, SK Telink received a capital contribution of 408,435 shares (an 83.9% equity interest) of NSOK Co., Ltd. (“NSOK”) owned by SK Telecom. On October 25, 2016, SK Telink acquired the remaining 78,200 outstanding shares (a 16.1% equity interest) of NSOK, pursuant to which NSOK became a wholly-owned subsidiary of SK Telink.

In accordance with the resolution of its board of directors on April 12, 2017, SK Telink acquired 525,824 additional shares of NSOK pursuant to a rights offering for an aggregate amount of Won 40.0 billion (or Won 76,071 per share), resulting in SK Telink’s ownership of 1,012,459 shares (a 100% equity interest) of NSOK.

(2) Comprehensive exchange of shares

On September 28, 2017, SK Telink’s board of directors approved a comprehensive exchange of shares with SK Telecom, pursuant to which SK Telecom would acquire SK Telink’s remaining outstanding shares for cash consideration in lieu of issuance of shares of SK Telecom. The share exchange agreement was subsequently approved at the extraordinary general meeting of shareholders held on November 9, 2017.

Following the exchange, there were no changes to SK Telecom’s share ownership interest level or to management structure, and SK Telecom and SK Telink will remain as corporate entities. SK Telink became a wholly-owned subsidiary of SK Telecom and remains as an unlisted corporation, while SK Telecom remains as a listed corporation.

(3) 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.

(4) 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.

(5) 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.

(6) 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.

(7) 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 expected value of the transfer is Won 21 billion.

[Eleven Street]

(1) Establishment of Eleven Street

On July 31, 2018, the board of directors of SK Planet resolved to spin off its 11st business division (including Scinic, Gifticon and 11Pay) into a newly established company, Eleven Street, effective as of September 1, 2018. In the spin-off, newly issued shares of the spun-off company were allocated in proportion to the equity interest of the shareholders as of the date of such allocation, at a ratio of 0.14344419 newly issued share for 1 share of SK Planet (8,383,931 common shares).

(2) Capital increase of Eleven Street

Pursuant to the resolution of the board of directors on September 7, 2018, Eleven Street issued new shares through a third-party allotment in order to increase its capital, allocating all such new shares to Nile Holdings Co., Ltd. The payment date was September 28, 2018. After the capital increase, SK Telecom holds a 80.26% interest in Eleven Street. See “Report on Decision on Capital Increase of Eleven Street Co., Ltd.” filed by the Company on September 7, 2018 for more information.

(3) Acquisition of shares of Hello Nature Co., Ltd. (“Hello Nature”)

On October 10, 2018, Eleven Street acquired 281,908 shares of Hello Nature, a fresh food delivery service provider, from SK Planet for Won 29.9 billion. As a result of this acquisition, Eleven Street owns a 49.90% interest in Hello Nature.

(4) Share repurchase

Pursuant to the resolution at its general shareholders’ meeting held on March 26, 2019 approving a share repurchase and the resolution of its board of directors held on April 26, 2019 approving the terms of such repurchase, Eleven Street repurchased 158,429 units of its treasury shares from SK Planet for Won 42.5 billion and 203 units of its treasury shares from certain other shareholders (Young-hoon Jeon and four others) for Won 50 million, effective as of August 30, 2019, in order to enhance the value of its shares. As a result of this repurchase, Eleven Street owns 1.55% of its total shares issued as treasury shares.

(5) Acquisition of Barogo Co., Ltd. Shares

On February 16, 2021, pursuant to the resolution of the board of directors, Eleven Street acquired 54,080 convertible preferred shares of Barogo Co., Ltd., a short-range logistics business, for Won 25 billion. The payment date is June 17, 2021, and Eleven Street’s shareholding in Barogo Co., Ltd. following such acquisition is 6.98%.

[ADT CAPS] (formerly known as SK Infosec)

(1) Comprehensive exchange of shares

On October 25, 2018, the board of directors of SK Infosec resolved to enter into a share exchange agreement with SK Telecom pursuant to which the shareholders of record of SK Infosec would be allotted 0.00997678 treasury share of SK Telecom in exchange for one common share of SK Infosec on December 27, 2018, after which SK Infosec would become a wholly-owned subsidiary of SK Telecom. The share exchange agreement was executed on November 26, 2018 and the comprehensive share exchange was completed on December 27, 2018.

(2) Merger of Life & Security Holdings

Pursuant to the resolution of SK Infosec’s board of directors on November 27, 2020, Life & Security Holdings merged with and into SK Infosec with the purpose of enhancing operational efficiency as of December 30, 2020.

(3) Merger of Former ADT CAPS

Pursuant to the resolution of SK Infosec’s board of directors on January 13, 2021, Former ADT CAPS merged with and into SK Infosec with the purpose of enhancing operating efficiency as of March 4, 2021. SK Infosec changed its name to ADT CAPS after the date of the merger.

[FORMER ADT CAPS]

(1) Merger of NSOK

Pursuant to resolutions of the board of directors on October 8, 2018 and the general meeting of shareholders on October 23, 2018, Former ADT CAPS merged NSOK with and into itself effective as of December 1, 2018 to seek new sources of growth, taking into account the growth potential of the physical security market.

(2) Merger of ADT SECURITY

Pursuant to resolutions of the board of directors on November 14, 2019 and the general meeting of shareholders on November 29, 2019, Former ADT CAPS completed the merger of ADT SECURITY with and into itself effective as of January 1, 2020 to enhance management efficiency.

(3) Acquisition of SK hystec’s business

On July 31, 2020, Former ADT CAPS acquired SK hystec inc.’s security construction and security service businesses with the purpose of strengthening its security business expertise and competitiveness.

(4) Merger of SK Infosec

On March 4, 2021, Former ADT CAPS merged with and into SK Infosec. SK Infosec changed its name to ADT CAPS after the date of the merger.

[SK Planet]

(1) Transfer of BENEPIA business

On May 29, 2017, the board of directors of SK Planet resolved to transfer the operations and assets related to its BENEPIA business for Won 7.5 billion to SK M&Service Co., Ltd. (“SK M&Service”) as of July 1, 2017.

(2) Spin-off of advertising agency business and sale of equity interest in SM Contents & Communications

On July 17, 2017, the board of directors of SK Planet resolved to (1) spin-off SK Planet’s advertising agency business as a newly established company, SM Contents & Communications, in order to strengthen the competitiveness of the business for future growth, which spin-off was effective as of October 1, 2017 and (2) sell 100% of its shares of SM Contents & Communications to SM Culture & Contents Co., Ltd. to further concentrate business capabilities and efficiently allocate management resources. The closing date of the sale transaction was October 24, 2017.

(3) Spin-off of 11st business

On June 19, 2018, the board of directors of SK Planet resolved to spin off its 11st business (including Scinic, Gifticon and 11Pay) into a newly established company, effective as of September 1, 2018, in order to enhance the level of specialization and competitiveness of its businesses by strengthening their core competencies and obtain further growth potential of the businesses. See the “Report on Decision on Spin-off of SK Planet’s 11st Business” filed on June 19, 2018 for more information.

(4) Merger of SK TechX

On June 19, 2018, the board of directors of SK Planet resolved to merge SK TechX with and into SK Planet, effective as of September 1, 2018, with a merger ratio between SK Planet and SK TechX of 1:3.0504171, in order to enhance management efficiency and create synergies. See the “Report on Decision on Merger of SK TechX into SK Planet” filed on June 19, 2018 for more information.

(5) Capital reduction

SK Planet decided to reduce the par value of its shares from Won 500 to Won 150 to improve its financial structure through coverage of losses. The capital reduction is effective as of April 27, 2020.

[SK M&Service]

(1) Acquisition of SK Planet’s BENEPIA business

Pursuant to the resolutions of its board of directors and its extraordinary shareholders meeting held on May 29, 2017, SK M&Service decided to acquire SK Planet’s BENEPIA business (including agency service for the Flexible Benefit Plan and related tangible and intangible assets, goodwill, systems, etc.) for Won 7.5 billion on July 1, 2017.

(2) Change in location of headquarters

Pursuant to the resolution of its board of directors on August 25, 2020, SK M&Service changed the location of its headquarters to 16thFloor, 34, Supyo-ro, Jung-gu, Seoul as of September 4, 2020.

[Dreamus Company]

(1) Acquisition of shares of S.M. Life Design Company Japan Inc.

Pursuant to the resolution of its board of directors on July 17, 2017, Dreamus Company approved a contract to acquire a total of 1,000,000 shares of S.M. Life Design Company Japan Inc. (a 100% equity interest) from S.M. Entertainment Japan Co., Ltd. with the purposes of entering foreign markets and maximizing business synergy. Dreamus Company acquired control of S.M. Life Design Company Japan Inc. upon its completion of payment for the shares on September 1, 2017.

(2) Merger of S.M. Mobile Communications JAPAN Inc.

Pursuant to the resolution of its board of directors on July 17, 2017, Dreamus Company decided to merge with S.M. Mobile Communications JAPAN Inc., a contents and information distribution company, with the purpose of reinforcing its contents based device business and enhancing managerial efficiency. As of October 1, 2017, Dreamus Company merged S.M. Mobile Communications JAPAN Inc. into it with a merger ratio of 1:1.6041745, based on which Dreamus Company issued 4,170,852 new common shares.

(3) Acquisition of important assets (Supply and distribution rights for music and digital contents)

On February 28, 2018, Dreamus Company entered into an agreement with S.M. Entertainment Co., Ltd. to acquire supply and distribution rights for music and digital contents of S.M. Entertainment Co., Ltd., JYP Entertainment Corporation and Big Hit Entertainment. Through this arrangement, the Company plans to increase sales by entering the music and sound recording industries and to create synergies through strategic alliances.

(4) Merger between subsidiaries

In order to achieve management efficiency and maximize organizational operation synergies, groovers Japan Co., Ltd. and SM Mobile Communications Japan Inc., each of which was a Japanese subsidiary of Dreamus Company, completed their merger with groovers Japan Co., Ltd. as the surviving entity, effective as of July 1, 2018.

(5) Investment in groovers Inc. (“Groovers”)

On July 26, 2018, the board of directors of Dreamus Company resolved to make an equity investment of Won 11,000 million (2,200,000 common shares) in Groovers for the purposes of providing operating funds to improve its financial structure and pursue new businesses. Payment was completed on July 27, 2018, and the Company’s ownership interest after such equity investment is 100%.

(6) Transfer of Music Mate business between Groovers and SK TechX

On August 31, 2018, pursuant to the resolutions of its board of directors and the extraordinary meeting of shareholders, each of which was held on June 28, 2018, Groovers acquired all properties, assets and rights related to the Music Mate streaming service from SK TechX for Won 3,570 million.

(7) Merger of Groovers

Pursuant to the resolution of its board of directors on December 26, 2018, Dreamus Company merged Groovers, a provider of music, contents and other services, with and into itself on March 1, 2019, in order to seek synergies by integrating management resources and enhance management efficiency. The merger was completed based on a merger ratio of 1:0 with no capital increase. The merger and merger registration were completed on March 1, 2019 and March 5, 2019, respectively. Since this merger qualified as a small-scale merger, the approval of the merger by a resolution of the board of directors substituted for the approval by a general meeting of shareholders.

(8) Disposal of shares of Iriver Inc.

Pursuant to the resolution of its board of directors on July 18, 2019, Dreamus Company disposed of all of its shares in Iriver Inc., effective as of September 1, 2019, with the goal of achieving sustainable growth of its device business by improving its financial structure and profitability and maintaining its business expertise and continuity of operations.

(9) Merger between subsidiaries

In order to achieve management efficiency and maximize organizational operation synergies, Life Design Company Inc. and groovers Japan Co., Ltd., each of which is a Japanese subsidiary of Dreamus Company, completed their merger with Life Design Company Inc. as the surviving entity, effective as of December 15, 2019.

(10) Acquisition of shares of Studio Dolphin Co., Ltd.

Pursuant to the resolution of its board of directors, Dreamus Company entered into an agreement to acquire 10,000 shares (100% ownership interest) of Studio Dolphin Co., Ltd., which is engaged in audio content planning and production businesses, in order to strengthen its audio content business capacity. Payment was completed on May 14, 2021.

(11) Investment in FNC Co., Ltd. (acquisition of convertible bonds)

On May 13, 2021, pursuant to the resolution of its board of directors, Dreamus Company entered into an agreement to acquire convertible bonds amounting to Won 20 billion issued by FNC Co., Ltd., which engages in the business of acquisition, ownership, exercise and granting of copyrights and related rights, in order to invest in music content intellectual property and expand its music business. Payment was completed on May 18, 2021.

(12) Capital increase

Pursuant to the resolution of the board of directors on April 30, 2021, Dreamus Company issued new shares (13,135,673 convertible preferred shares) through a third-party allotment in order to increase its capital for music and content investment and production expansion and allocated all such new shares to Neospes Co., Ltd. The payment of Won 70 billion was completed in full on June 15, 2021.

[Incross]

(1) Spin-off of Infra Communications Co., Ltd. (“Infra Communications”)

Effective as of August 1, 2017, Incross spun off its business related to the operation agency service of the integrated mobile application marketplace “ONE Store” into a newly established company, Infra Communications, in order to strengthen the expertise and enhance management efficiency of each of its businesses, to respond effectively to the external environment by re-investing the value generated from each business into such business, and to grow and develop such business through strategic and efficient allocation of management resources.

(2) Transfer of mobile advertising network business

Effective as of April 1, 2017, Incross acquired SK Planet’s mobile advertising network business, “Syrup Ad” with the purpose of strengthening the competitiveness of its advertising network business.

(3) Transfer of media representative business

Effective as of March 17, 2020, Incross acquired SK Stoa’s advertisement media agency and advertising agency businesses with the purpose of strengthening the competitiveness of its media lab business.

[T Map Mobility]

(1) Establishment of T Map Mobility

T Map Mobility was established through a vertical spin-off of SK Telecom’s mobility business effective as of December 29, 2020. T Map Mobility was established as a wholly-owned subsidiary of SK Telecom, with a share capital of Won 5 billion and 10,000,000 total shares issued.

(2) Capital increase

Pursuant to the resolution of the board of directors on February 23, 2021, T Map Mobility undertook a capital increase by issuing new shares (838,500 common shares) and allotting all such shares to SK Telecom. The payment date was March 5, 2021, and SK Telecom’s equity interest in T Map Mobility remained at 100% following such capital increase.

Pursuant to the resolution of the board of directors on April 14, 2021, T Map Mobility issued new shares (676,330 Class A preferred shares) through third-party allotment and allotted all such shares to Uber Singapore Technology Pte. Ltd. The payment date was April 15, 2021, and following such capital increase, the equity interests of SK Telecom and Uber Singapore Technology Pte. Ltd. in T Map Mobility were 94.13% and 5.87%, respectively.

Pursuant to the resolution of the board of directors on May 25, 2021, T Map Mobility issued new shares (3,800,133 common shares) through third-party allotment and allotted 2,287,859 shares and 1,512,274 shares to Ascenta Mobility Investment Co., Ltd. and Terameter Holdings Co., Ltd., respectively. The payment date was May 26, 2021, and following such capital increase, the equity interests of SK Telecom, Ascenta Mobility Investment Co., Ltd., Terameter Holdings Co., Ltd., and Uber Singapore Technology Pte. Ltd. in T Map Mobility were 70.77%, 14.94%, 9.87% and 4.42%, respectively.

Pursuant to the resolution of the board of directors on May 25, 2021, T Map Mobility issued new shares (775,585 common shares) through third-party allotment and allotted all such shares to Terameter Holdings Co., Ltd. The payment date was May 27, 2021, and following such capital increase, the equity interests of SK Telecom, Ascenta Mobility Investment Co., Ltd., Terameter Holdings Co., Ltd., and Uber Singapore Technology Pte. Ltd. in T Map Mobility were 67.36%, 14.22%, 14.22% and 4.20%, respectively.

Pursuant to the resolution of the board of directors on May 12, 2021, T Map Mobility issued new shares (267,700 common shares) through third-party allotment as part of a comprehensive share exchange with YLP Co., Ltd. and allocated all such shares to Jae Hyung Im and three others. The date of issuance of shares following the share exchange was June 29, 2021, and following such capital increase, the equity interests of SK Telecom, Ascenta Mobility Investment Co., Ltd., Terameter Holdings Co., Ltd., Uber Singapore Technology Pte. Ltd, and others in T Map Mobility were 66.26%, 13.99%, 13.99%, 4.13% and 1.64%, respectively.

(3) Exchange of shares of YLP Co., Ltd.

On May 18, 2021, the Board of Directors resolved to approve comprehensive share exchange with YLP Co., Ltd. at a ratio of one common share of the Company to 5.3788007 common shares of YLP Co., Ltd. The exchange of shares was completed on June 29, 2021 and YLP Co., Ltd. became a wholly-owned subsidiary of the Company.

[One Store]

(1) Establishment of One Store

In March 2016, SK Planet spun off its T-store business and established One Store Co., Ltd. (“One Store”). The spin-off was in the form of a horizontal spin-off whereby SK Planet’s shareholder, SK Telecom, received shares of One Store in proportion to its equity interest as of the record date for the allotment of the newly-issued shares of One Store. SK Telecom was allotted 0.0842582 newly-issued shares of One Store (total 6,000,000 common shares) for each SK Planet share it held.

(2) Capital increase

Since its establishment, One Store undertook five rounds of capital increases pursuant to the resolutions of its board of directors. On March 8, 2016, One Store allotted 4,409,600 new shares to its shareholder, SK Telecom. On May 26, 2016, it issued 5,472,673 new shares through third-party allotment. On November 14, 2019, One Store issued new shares (consisting of 3,871,352 convertible preferred shares) through third-party allotment. In May 2020, it issued 240,450 additional shares pursuant to the exercise of stock options granted to directors and employees in April 2018. In addition, on March 8, 2021, One Store issued 800,000 new shares to KT and LG U+ through third-party allotment, and on March 31, 2021, it issued an additional 710,850 new shares following the exercise of certain stock options. On June 11, 2021 and June 18, 2021, One Store issued additional new shares (414,900 convertible preferred shares in the aggregate) to Microsoft Corporation and Deutsche Telekom Capital Partners Venture Fund II GmbH & Co.KG, respectively, through third-party allotment.

(3) Share repurchase

In order to boost employee morale, on July 9, 2020, the board of directors of One Store resolved to repurchase shares. One Store repurchased 113,354 shares held by its employees for Won 2,854 million, after which treasury shares constitute 0.52% of its total shares issued.

(4) Acquisition of shares of ROK Media Co., Ltd.

In order to strengthen the competitiveness its content offerings, One Store acquired 60,000 shares of ROK Media Co., Ltd., which operates a web novel and webtoon publication business, for Won 40,000 million. The date of transaction was April 7, 2021, and One Store’s equity interest in ROK Media Co., Ltd. after such acquisition is 100.0%.

3. Total Number of Shares

A.	Total Number of Shares


(As of June 30, 2021)			(Unit: in shares)
Classification	Share type						Remarks
Classification	Common shares		Preferred shares		Total		Remarks
I. Total number of authorized shares		220,000,000		—		220,000,000		—
II. Total number of shares issued to date		89,278,946		—		89,278,946		—
III. Total number of shares retired to date		17,218,803		—		17,218,803		—
a. reduction of capital		—		—		—		—
b. retirement with profit		17,218,803		—		17,218,803		—
c. redemption of redeemable shares		—		—		—		—
d. others		—		—		—		—
IV. Total number of shares (II-III)		72,060,143		—		72,060,143		—
V. Number of treasury shares		899,500		—		899,500		—
VI. Number of shares outstanding (IV-V)		71,160,643		—		71,160,643		—

B.	Treasury Shares


(As of June 30, 2021)															(Unit: in shares)
Acquisition methods			Type of shares	At the beginning of period		Changes									At the end of period
Acquisition methods			Type of shares	At the beginning of period		Acquired (+)			Disposed (-)			Retired (-)			At the end of period
Acquisition pursuant to the Financial Investment Services and Capital Markets Act of Korea	Direct acquisition	Direct acquisition from market	Common shares		7,609,263		—			120,990			7,488,273			—
			Preferred shares		—		—			—			—			—
		Direct over-the-counter acquisition	Common shares		—		—			—			—			—
			Preferred shares		—		—			—			—			—
		Tender offer	Common shares		—		—			—			—			—
			Preferred shares		—		—			—			—			—
		Sub-total (a)	Common shares		7,609,263		—			120,990			7,488,273			—
			Preferred shares		—		—			—			—			—
	Acquisition through trust and other agreements	Held by trustee	Common shares		1,809,295		288,000			2,097,295	⁽¹⁾		—			—
			Preferred shares		—		—			—			—			—
		Held in actual stock	Common shares		—		2,097,295	⁽¹⁾		500	⁽³⁾		1,197,295			899,500
			Preferred shares		—		—			—			—			—
		Sub-total (b)	Common shares		1,809,295		2,385,295			2,097,295			1,197,295			899,500
			Preferred shares		—		—			—			—			—
Other acquisition (c)			Common shares		—		—			—			—			—
			Preferred shares		—		—			—			—			—
Total (a+b+c)			Common shares		9,418,558		2,385,295			2,218,785			8,685,568	⁽²⁾		899,500
			Preferred shares		—		—			—			—			—

(1)	Represents the number of treasury shares returned by the trustee to the Company on April 30, 2021 in accordance with the termination of the relevant share repurchase agreement.

(2)	On May 6, 2021, the Company canceled 8,685,568 treasury shares (10.76% of the total number of issued shares).

(3)	On June 22, 2021, the Company canceled 500 treasury shares for independent director compensation purposes.

4. Status of Voting Rights


(As of June 30, 2021)			(Unit: in shares)
Classification		Number of shares	Remarks
Total shares (A)	Common share	72,060,143	—
	Preferred share	—	—
Number of shares without voting rights (B)	Common share	899,500	Treasury shares
	Preferred share	—	—
Shares without voting rights pursuant to the Company’s articles of incorporation (the “Articles of Incorporation”) (C)	Common share	—	—
	Preferred share	—	—
Shares with restricted voting rights pursuant to Korean law (D)	Common share	—	—
	Preferred share	—	—
Shares with reestablished voting rights (E)	Common share	—	—
	Preferred share	—	—
The number of shares with exercisable voting right s (F = A-B-C-D + E)	Common share	71,160,643	—
	Preferred share	—	—

5. Matters Concerning Articles of Incorporation


Date of Revision	General Meeting of Shareholders	Key Revisions	Reason for Revisions
March 26, 2019	35^th General Meeting of Shareholders	Type of shares, change in transfer agent, etc.	Changes in accordance with the mandatory electronic registration of shares

March 26, 2020	36^th 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 26, 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

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, (3) commerce business, (4) security business and (5) other businesses consisting of platform services and online information services, among others.

Set forth below is a summary business description of 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

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 video-on-demand (“VOD”)
	SK Telink Co., Ltd.	International wireless direct-dial “00700” services, voice services using Internet protocol and MVNO business
	Home & Service Co., Ltd.	System maintenance of high-speed Internet, IPTV and fixed-line services

Security	ADT CAPS Co., Ltd.*	Unmanned machine-based security and manned security services, comprehensive information protection services and integrated computer system consulting and implementation services

Commerce	Eleven Street Co., Ltd.	E-commerce and Internet-related businesses
Commerce	SK stoa Co., Ltd.	Operation of data broadcasting channel for sale of goods

Other business	SK Planet Co., Ltd.	Information telecommunications business and development and supply of software
	One Store Co., Ltd.	Operation of mobile application store
	Dreamus Company	Online music service and distribution of records and digital content
	SK M&Service Co., Ltd.	System software development, distribution and technical support services and other online information services
	K-net Culture and Contents Venture Fund	Start-up investment support
	Atlas Investment	Investments
	SK Telecom TMT Investment Corp.	Investments
	Incross Co., Ltd.	Digital advertisement media lab business and video advertisement network platform business
	T map Mobility Co., Ltd.	Database and online information services

*	In the six months ended June 30, 2021, SK Infosec completed the merger of Former ADT CAPS, a subsidiary of SK Infosec, with and into itself effective as of March 4, 2021 with the purpose of enhancing management efficiency. SK Infosec changed its name to ADT CAPS after the date of the merger.

[Wireless Business]

A.	Industry Characteristics

The telecommunications services market can be categorized into telecommunications services (such as fixed-line, wireless, leased line and value-added services) and broadcasting and telecommunications convergence 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 size of population that uses telecommunication services and telecommunications expenditures per capita. While it is possible for Korean telecommunication service providers to provide services abroad through acquisitions or otherwise, foreign telecommunication services markets have their own characteristics depending, among others, on the regulatory environment and demand for telecommunication services.

The Korean mobile communication 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.

B.	Growth Potential


				(Unit: in 1,000 persons)
		As of June 30,		As of December 31,
Classification		2021		2020		2019
Number of subscribers	SK Telecom		29,383		29,089		28,648
	Others (KT, LG U+)		31,593		31,341		31,539
	MVNO		9,724		9,111		7,750
	Total		70,701		69,541		67,937

*	Source: Wireless subscriber data from the MSIT as of June 30, 2021.

C.	Domestic and Overseas Market Conditions

The Korean mobile communication market includes the entire population of Korea with mobile communication service needs, and almost every Korean is considered a potential user. 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 to 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 June 30,

As of December 31,

2021

2020

2019

Mobile communication services

48.2

48.1

47.6

*	Source: Wireless subscriber data from the MSIT as of June 30, 2021.

D.	Business Overview and Competitive Strengths

The Company is seeking to transform into a comprehensive ICT service provider. In light of the ongoing COVID-19 pandemic, the Company has quickly adapted to the contactless environment based on its diverse ICT portfolio and is continuing to show steady growth in each of its major business divisions, including MNO, media, security and commerce.

For the six months ended June 30, 2021, the Company recorded Won 9.6 trillion in operating revenue and Won 785.4 billion in profit for the period on a consolidated basis, and it recorded Won 6 trillion in operating revenue and Won 635.7 billion in profit for the period on a separate basis.

In the MNO business, the Company secured 7.7 million 5G subscribers as of June 30, 2021 through innovations and quality enhancements in its 5G services. The Company also solidified its status as the top MNO service operator while maintaining market stability through innovations in its distribution channels in response to the contactless environment and rational market operations. The Company was also ranked as the top service provider with respect to certain key metrics such as transmission speed in several 5G service quality evaluations conducted by the MSIT to date.

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 telecommunication 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.	Industry Characteristics

The domestic telecommunication 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 telecommunication service expenditures in light of the domestic income level. Domestic telecommunication companies may expand overseas through acquisitions or direct expansion, but the overseas telecommunication service industries are subject to inherently different industry charicteristics 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 telecommunication 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.

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 communication 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.

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 infrastructure expansion.

B.	Growth Potential


				(Unit: in persons)
		As of June 30,		As of December 31,
Classification		2021		2020		2019
Fixed-line Subscribers	High-speed Internet		22,670,159		22,330,182		21,761,831
	Fixed-line telephone		12,524,076		12,859,279		13,600,362
	IPTV		18,254,931		17,489,664		16,440,059
	Cable TV		13,232,850		13,378,742		13,641,708

*	Source: MSIT website.

*	High-speed Internet and fixed-line telephone subscribers as of June 30, 2021 represent the average number of subscribers in the first half of 2021, while IPTV and cable TV subscribers as of June 30, 2021 represent the average number of subscribers in the second half of 2020.

C.	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. The telecommunications services market overall is not expected to be particularly affected by economic downturns due to the low income elasticity of demand for telecommunication services.

D.	Domestic and Overseas Market Conditions

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


			(Unit: in percentages)
Classification	As of June 30,		As of December 31,
Classification	2021		2020		2019
High-speed Internet (including resales)		28.8		29.0		25.1
Fixed-line telephone (including Voice over Internet Protocol (“VoIP”)		17.5		16.8		16.8
IPTV		30.4		30.3		30.3
Cable TV		22.5		22.5		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.

*	Market shares of High-speed Internet and Fixed-line telephone as of June 30, 2021 represent the average market shares of the first half of 2021 and market shares of IPTV and Cable TV as of June 30, 2021 represent the average market shares of the second half of 2020.

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+.

[Security Business]

A.	Industry Characteristics

The security systems service business provides security services to governments, companies and individuals with the purpose of protecting tangible and intangible assets and human resources. Depending on the risk prevention method used, the security business can be classified into machine-based security, security system integration (“SI”), information security and manned security. Machine-based security operates by receiving information that is detected and transmitted by various sensors and cameras installed at the target facilities through control facility equipment and taking prompt and appropriate action, such as dispatching an agent or contacting the police or the fire department, if an abnormality is detected. Security SI is a service that integrates installation, operation, maintenance and repair of various equipment and systems by analyzing the appropriate security system for customer facilities, such as buildings, factories and schools. Manned security services deploy security personnel to areas subject to security, who perform on-site security services such as patrols and access control of buildings and facilities. The information security industry involves the business of providing security to business customers to prevent the leakage and hacking of data, including personal information. The industry can be categorized into the information security product business, which includes the development, manufacturing and distribution of information security products, and the information security service business, such as security consulting and managed security services. Information security products aim to form a secure cyber environment by protecting computer terminals and Internet communication channels, while information security services provide security across the overall ICT industry by providing security consulting services to companies on how to protect their information security assets or through managed security services, which prevent security breaches by hackers.

The Company’s primary business in the physical security industry is its unmanned security and security SI services, and the Company’s primary business in the information security industry is its managed security and security consulting services. Its business areas consist of the following:


Classification		Product

Physical Security	Machine-based security	CAPS service (unmanned security service), access control, view guard (CCTV), attendance management, drinking water management
	Security SI and maintenance and repair	Access control (entry and parking), CCTV (recording, camera, monitor, network equipment, etc.), other security systems
	Integrated security services (machine-based security + manned security)	Machine-based security services, manned security services (security, cleaning, concierge, etc.)

Information Security	Managed security services	Information security breach detection and response services (remote managed security service and on-site managed security service)
	Security consulting	Evaluation of adequacy of information security system, suggestion of solutions to enhance security (information protection consulting, compliance consulting, etc.)
	Security solutions	Provision of hardware and software for information security (network security solution, system security solutions, etc.)

B.	Growth Potential

(1)

Size of the domestic security industry


	(Unit: in 100 millions of Won except percentages)
	2021		2020		2019
Physical security industry		40,736		39,396		37,449
Cybersecurity industry		20,952		20,185		19,186
Total domestic security industry		61,688		59,581		56,635

*	Source: 2020 Domestic and Global Security Market Forecast Report, Security News / Security World

*	Figures for 2020 and 2021 are estimates.

(2)

Size of the domestic physical security industry

*	Source: 2020 Domestic and Global Security Market Forecast Report, Security News / Security World


(Unit: in 100 millions of Won except percentages)
	2021					2020					2019					2018
	Amount		Percentage			Amount		Percentage			Amount		Percentage			Amount		Percentage
CCTV monitoring		14,275		35.04	%		13,938		35.38	%		13,095		34.97	%		12,871		35.16	%
Alarm monitoring		2,695		6.62	%		2,601		6.60	%		2,574		6.87	%		2,526		6.90	%
Comprehensive security services		15,757		39.00	%		15,452		39.22	%		14,903		39.80	%		14,610		39.91	%
Access Control		4,432		10.88	%		4,184		10.62	%		4,069		10.87	%		3,983		10.88	%
Biometric Recognition		3,577		8.78	%		3,221		8.18	%		2,808		7,50	%		2,617		7.15	%

Total		40,736		100.00	%		39,396		100.00	%		37,449		100.00	%		36,607		100.00	%

*	Figures for 2020 and 2021 are estimates.

(3)

Forecast of the domestic physical security industry


(Unit: in millions of Won)
		2025		2023		2021		2020
Physical Security Services	Dispatch security services		1,945,651		1,835,418		1,731,430		1,729,700
	Video security services		493,319		468,669		445,251		430,195
	Other security services		876,166		758,080		655,909		593,046

Total			3,315,136		3,062,167		2,832,590		2,752,941

*	Source: “Study on Policy Plans for the Support of the Physical Security Industry of Gyeonggi-do,” published by the Gyeonggi-do Assembly

*	This report was published in the second half of 2020. All figures are estimates.

C.	Cyclical Nature and Seasonality

The security business seeks to satisfy the basic need for safety and is less sensitive to economic fluctuations compared to other industries. Although the slowdown in the Korean economy and competition based on lower-cost alternatives has had a negative impact on industry growth, sustained growth is nevertheless expected due to the recent expansion of the industry into converged security markets with the integration of ICT.

D.	Domestic and Overseas Market Conditions

The security industry is experiencing a rapid increase in demand for CCTV, access control and other security systems due to threats including crime, natural disasters and calamities and terrorism. With increased consumer interest in safety, demand for security system services is expected to continue to grow. To date, the Korean security market is characterized by an oligopoly dominated by three leading companies due to the high barriers to entry as a result of high initial investment costs of building large-scale network systems and the effects of brand loyalty. The traditional security industry, characterized by price competition aimed at increasing market share, is expanding into a converged security market with the integration of ICT. In addition, the global converged security market integrating ICT has recently been experiencing rapid growth and increased competition due to the entry of global information technology companies.

Furthermore, the importance of the information security industry is steadily increasing due to the diversified and increasingly advanced and intelligent attacks by hackers, and the demand for information security is expected to increase exponentially due to the digital transformation arising from advances in new technologies, such as AI, IoT, cloud and smart factories, as part of the fourth industrial revolution. Although global information security companies are demonstrating strength in the domestic information security market for products, the top three domestic companies have traditionally dominated the market for services.

The security industry, which received attention for pioneering a new market for day-to-day disease prevention measures in response to the COVID-19 pandemic, demonstrated growth despite various obstacles. In the post-COVID-19 era, which is expected to begin in 2022 after the wide administration of vaccines, the growth of the security industry is expected to accelerate further due to the convergence of physical security and cybersecurity as well as the advancement of integrated control centers for the stable operation and development of smart cities.

As a result, although the size of the domestic security market in 2020 failed to reach Won 6 trillion in light of the effects of COVID-19, it is expected to grow annually by 3.9% to Won 6.4 trillion in 2021 and by 5.2% to Won 6.3 trillion in 2022.

E.	Business Overview and Competitive Strengths

For the six months ended June 30, 2021, ADT CAPS recorded Won 684.9 billion in operating revenue and Won 67.8 billion in operating profit, and it secured approximately 710,000 subscribers as of June 30, 2021, including subscribers to information security services.

Due to the saturation of the unmanned security market, there was no significant change in the number of ADT CAPS’ unmanned security contracts in 2020 compared to the previous year. However, ADT CAPS was able to maintain consistent growth in the number of new subscribers acquired through the SK distribution network and a continued increase in revenue from the CAPS Home and parking services. In addition, despite the economic downturn due to COVID-19, ADT CAPS was able to pave new markets for contactless access control and fever detection services using facial recognition and thermal imaging cameras.

Revenue from the information security business of ADT CAPS exceeded Won 300 billion, making ADT CAPS the first company to do so in the industry. ADT CAPS is widening the gap with the second-largest player in the information security market and has maintained its top position in the market for the past five years.

Although the unmanned security market is expected to remain saturated in 2021, ADT CAPS will pursue efforts to improve the results of operations and service quality of its core unmanned security business through the development of products and market approaches that are tailored to the needs of various customers, while also improving its new security businesses, including the information security business, by enhancing its technologies and diversifying its product portfolio through further development efforts and the increased use of AI.

Former ADT CAPS merged with SK Infosec, a cybersecurity service provider, and the combined ADT CAPS is considering business synergies from various perspectives to provide a more diverse range of high-quality services to customers, including converged security products, in the future.

Unmanned security services range from crime prevention based on cutting-edge sensors and prompt dispatch of security personnel to follow-up services. With increased efforts to reduce false alarms, ADT CAPS continues to reduce dispatch and control costs, thereby improving service quality and ultimately generating new sources of revenue to establish a positive cycle for continuous growth.

Video security services provide objective security through full identification of subjects with the use of high-definition video, made convenient and safe through a diverse lineup of products and remote control services. Access security services provide outsider access control, employee attendance checks and even drinking water management, which are made user-friendly and convenient due to the integration of cutting edge AI-based technology such as fingerprint, facial and mobile recognition. ADT CAPS plans to continue advancing such technology-based services and deliver more convenient and safer security services to customers through innovative technologies.

The SI business provides comprehensive security solutions suitable for the management of large buildings, such as access control and energy, fire safety and parking management services. ADT CAPS is striving to provide customers with the best comprehensive security solution, including more economical and optimized products through the development of innovative technologies.

In the case of information security services, in addition to continuing to provide information protection consulting, security solutions, security system establishment and managed security services based on its know-how accumulated over the years, ADT CAPS is committed to securing new technologies, such as AI security and 5G security, in order to preemptively respond to increasingly intelligent and diversified cyberattacks and respond quickly to changes in the new ICT environment.

ADT CAPS established the first converged security management platform in Korea in response to the emergence of the converged security industry, which is becoming increasingly important as trends of hyper-connectivity, integration and digital transformation are affecting people’s lives and industries on a national level. ADT CAPS strives to become a global total security company by exploring new markets, discovering new business models and expanding advanced technologies through the convergence of physical security and information security, as well as other areas of technology.

[Commerce Business]

A.	Industry Characteristics

Electronic commerce, or e-commerce, refers to transactions of goods and services that are processed electronically by information processing systems, such as personal computers, and can be classified into “online order” and “online order brokerage” businesses. The mail order brokerage business refers to the act of intermediating a transaction between a seller and a buyer by an online shopping mall, and the online order business refers to direct sales of goods and services by an online shopping mall. Online shopping malls can be categorized, based on the range of products that they handle, into special malls that handle products limited to specific categories and general malls that handle products across multiple categories. The Korean e-commerce market started to grow in the early 2000s with the spread of the Internet, and it is now going through a second period of growth in the form of mobile commerce as a result of the removal of time and space constraints on shopping following the proliferation of smartphones beginning in 2010, the simplification and improved convenience of payment services, the expansion of fast delivery services following intense competition in such services beginning in 2018, the combination of offline and online shopping experiences (omni-channel and O2O services) and advancements in personalization and recommendation services based on AI. Eleven Street, which operates an online order brokerage business, is known as an “open market business” operator within the e-commerce market. As a result of leading the trend of mobile commerce and pursuing innovative customer experience since the early stages of its business, Eleven Street has grown into a major player in the e-commerce market.

B.	Growth Potential

As of December 31, 2020, the size of the Korean e-commerce market was Won 161.1 trillion, accounting for approximately 34% of the total online and offline distribution market and demonstrating rapid growth at an annual average growth rate of over 19% for the past three years. In addition, mobile transactions accounted for 67.5% of the total e-commerce transaction value in 2020, after surpassing 50% for the first time in 2016. Considering the current acceleration in the shift of products traditionally sold offline, such as food products, food delivery services, apparels and household products, to the mobile e-commerce platform and with the expansion of contactless consumption of goods in light of COVID-19, mobile e-commerce is expected to continue its growth in the future.


Year	2020			2019			2018			2017			2016
E-commerce transaction value (trillion Won)		161.1			135.3			113.3			94.2			65.6
Annual growth rate		19.1	%		19.3	%		20.3	%		43.6	%		21.5	%

*	Source: Statistics Korea, “Online Shopping Trends.”

C.	Cyclical Nature and Seasonality

While the commerce industry is inherently affected by fluctuations in the economy to a certain extent, their effect on the e-commerce market has been limited due to its ongoing rapid growth.

D.	Domestic and Overseas Market Conditions

The mobile-centered online commerce market is expected to grow steadily due to the further growth potential of the Internet shopping population, the development of online business models by offline commerce operators and the growth of mobile commerce. New business models are expected to emerge and proliferate into new markets as diverse lifestyle services that go beyond commodities are incorporated into the area of commerce.

E.	Business Overview and Competitive Strengths

Focusing on the 11st Marketplace, Eleven Street plans to continue expanding its commerce ecosystem and ultimately enhance its corporate value by providing diverse and innovative shopping experiences based on technology and strengthening customer benefits using synergies with other ICT businesses of the Company. In particular, Eleven Street recorded an operating profit in 2019, thereby successfully establishing a foundation for sustainable growth, and a positive growth in revenue in 2020 due to a meaningful increase in the transaction value through efficient execution of marketing expenses. Eleven Street has become a leader in the Korean e-commerce market through steady growth since the launch of 11st in 2008 by building customer trust and through effective marketing, despite its late entry into the online commerce market that was previously dominated by two players, Gmarket and Auction. Eleven Street has also firmly established itself as a market leader and top player in the Korean mobile commerce market by rapidly responding to the shift of the e-commerce market towards mobile platforms. In addition, Eleven Street has made efforts to gain the market’s confidence and improve customer satisfaction since the launch of 11st, resulting in recognition by certifications from KS-SQI (Service Quality Index) for thirteen consecutive years, KCSI (Consumer Satisfaction Index) for twelve consecutive years and CCM (Consumer Centered Management). Leveraging the large user base of 11st, Eleven Street plans to become a “leading commerce portal most trusted by users” by expanding the product offerings of 11st through expanded strategic partnerships with domestic and foreign players and upgrading services in order to evolve into a future-oriented commerce company, thereby continuing to strengthen the unique value of 11st as a commerce portal through improvements in customer’s convenience and continuous innovation.

[Other Businesses]

OK Cashbag, operated by SK Planet, is a point-based loyalty marketing program which has grown to become a global top-tier loyalty marketing program since its inception in 1999. Customers have access to increased benefits through accumulation of loyalty reward points and partner companies use OK Cashbag as a marketing resource. As Korea’s largest loyalty mileage program, OK Cashbag maintains a leading position in the industry. The Company is continuing to develop its service in light of market conditions and customers’ needs to enhance its customers’ perception of point value and is reviewing and pursuing various plans to develop OK Cashbag into a service that goes beyond a mileage program that leverages the key competitiveness of OK Cashbag such as its platform and partnership network.

Syrup is a service that provides information about coupons and events based on time, place and occasion, thereby maximizing economic benefits for consumers, as well as a marketing tool based on consumption behavior data that enables its business partners to achieve smart, low-cost and high-efficiency marketing. Based on big data accumulated over the years, Syrup expanded its service to the area of mobile finance, which allows users to check their financial assets and provides an integrated process including recommendation for and subscription to customized financial products. The Company plans to continue developing Syrup to provide more practical benefits to its customers in their daily lives.

Incross, a material subsidiary of the Company, primarily focuses on the digital advertising media representative business, which involves establishing media strategies and executing advertising on behalf of advertisers and advertising agencies, its “Dawin” business, which is Korea’s first video advertising network platform, and “T deal,” which is an advertising service that combines SK Telecom’s text messaging, AI and commerce services. T deal is an advertising product that sends text messages with personalized product recommendations and links to online pages where the products can be purchased. In addition, Infra Communications, a subsidiary of Incross, provides operational services for the integrated mobile application market “ONE Store.”

FLO, launched in December 2018 by Dreamus Company, a material subsidiary of the Company, became the first music platform to discontinue its real-time music chart and introduced the “FLO Chart,” which applies AI and machine learning technologies to a music chart based on data collected over the past 24 hours, thus increasing reliability. In addition, FLO is expanding the scope of its audio content service by offering podcasts and audio books from January 2021. Following the commencement of its collaboration with Willa, the top audio book service business in Korea, in January 2021, FLO has been expanding the scope of such collaboration through the production of audio book curation podcasts. In April 2021, FLO entered into a contract with Spoon Radio, the top live audio platform in Korea, and is producing original audio contents with new formats that target generation Z. FLO plans to continue to strengthen its differentiated, original audio content offerings with new formats and subjects. As of June 30, 2021, the average number of unique visitors to FLO increased to 2.45 million, an increase of 0.14 million compared to the end of 2020, according to internal estimates. In addition to online music services, Dreamus Company operates a musical record and digital content distribution business, artist merchandise business and (MD) and a device business primarily under the Astell & Kern brand.

The Company’s mobility business was vertically spun off into a new company, T Map Mobility, in December 2020, and it is expected to enhance the its capabilities in the future through partnerships with global mobility business operators. The “T map” service provides maps, information on local areas, real-time traffic information and navigation services, and it has achieved a leading position in the domestic location-based service platform market. In addition, the Company is expanding its mobile platform base that connects daily lives by expanding into online-to-offline service areas such as “T map Public Transportation” services. The Company also continues to secure new subscribers by differentiating itself through services such as an AI-based driver assistant software named “T map x NUGU,” and it is continuing to further build a location-based platform by providing built-in solutions for automobile “infotainment” systems to car manufacturers while also providing services to link local information and advertising.

ONE Store, which was established through a horizontal spin-off from SK Planet in March 2016, launched its proprietary ONE Store App Market in June 2016 by integrating the mobile application marketplaces of the three leading domestic MNO companies and NAVER. ONE Store, which is pre-installed on Android-based mobile devices distributed by the three leading domestic MNO companies, offers over 20,000 mobile game titles, 200,000 mobile applications as well as various contents, including web novels and webtoons, and platform services including an e-commerce business. In its four years of operation, ONE Store has continually increased its market presence with an annual transaction value of over Won 800 billion, a cumulative membership-based user base of over 50 million and a monthly average user access of approximately 20 million.

2. Updates on Major Products and Services

(Unit: in millions of Won and percentages)

Business

Major Companies

Item

Major Trademarks

Consolidated
Sales Amount

Ratio

Wireless

SK Telecom Co., Ltd.,
PS&Marketing Co., Ltd.,

Service Ace Co., Ltd.
SK O&S Co., Ltd.

Mobile communication service,
wireless data service,
ICT service

T, 5GX, T Plan and others

6,225,972

64.9

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

1,801,144

18.8

Security

ADT CAPS Co., Ltd.

Manned and unmanned security, information security and others

CAPS, T&CAPS, B&CAPS and others

653,282

6.8

Commerce

Eleven Street Co., Ltd.

SK stoa Co., Ltd.

E-commerce

11st, 11Pay, Gifticon and others

407,112

4.2

Other

SK Planet Co., Ltd.,

One Store Co., Ltd., Dreamus Company,

SK M&Service Co., Ltd.,

Incross Co., Ltd.

Information telecommunication, electronic finance, advertising, Internet platform service

OK Cashbag, ONE Store, FLO and others

511,223

5.3

Total

9,598,733

100

3. Price Trends for Major Products

[Wireless Business]

As of December 31, 2020, based on the Company’s standard monthly subscription plan, the basic service fee was Won 12,100 and the usage fee was Won 1.98 per second. Among the 4G-based “T-Plans”, the “Safe 4G” provides 4 GB of data and unlimited voice calls at Won 50,000 per month (including value-added tax). Among the “5GX Plans”, the “Slim Plan” provides 10 GB of data and unlimited voice calls at Won 55,000 per month (including value-added tax). The Company provides a variety of other subscription plans catered to subscriber demand.

[Fixed-line Business]

The fees charged by the Company for its services are changing as it launches a variety of subscription plans that satisfy customer needs. In February 2021, the Company launched the “The Slim Rate Plan” to reflect the preference of certain subscribers to receive rate discounts over promotional gifts when subscribing to new services, with discounted service fees ranging from Won 2,750 to Won 11,000 per month (based on a three-year subscription period), depending on the transmission speed and whether the subscription includes IPTV services. The Company also provides a variety of other subscription plans.

[Commerce Business]

Eleven Street acts as an intermediary in e-commerce transactions between sellers and buyers on 11st, and charges sellers sales commissions in accordance with the terms of use as consideration for execution of transactions, payment settlement and security measures. Although the amount of sales commissions vary by product category, it is generally set at market standard rates ranging from 10% to 12% of the transaction value. Such sales commission rate structure has largely remained unchanged since the launch of 11st, although Eleven Street occasionally offers temporary promotional reductions for certain periods in order to encourage transactions.

4. 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, 2021

Network, systems and others

Capacity increase and quality improvement; systems improvement

To be determined

848

—

Total

To be determined

848

—

B.	Future Investment Plan

(Unit: in billions of Won)

Business

Expected investment amount

Expected investment for each year

Investment effect

Asset type

Amount

2021

2022

2023

Network/Common

Network, systems and others

To be
determined

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

Total

To be
determined

*	The Company indicated during the earnings conference call held on February 3, 2021 that the level of capital expenditures for 2021 is expected to be similar to that of 2020.

[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	Six months ended June 30, 2021	221.5	To be determined	Secure subscriber networks and equipment; quality and system improvements

5. Revenues


			(Unit: in millions of Won)
Business	Sales type		Item		For the six months ended June 30, 2021		For the year ended December 31, 2020		For the year ended December 31, 2019
Wireless		Services	Mobile communication	Export		39,293		152,518		141,496
Wireless		Services		Domestic		6,186,679		12,143,166		12,030,919
				Subtotal		6,225,972		12,295,684		12,172,415
Fixed-line		Services	Fixed-line, B2B data, high-speed Internet, IPTV	Export		69,084		127,618		96,962
				Domestic		1,732,060		3,278,058		3,445,469
				Subtotal		1,801,144		3,405,676		3,542,431
Security		Services	Personnel and system security, information security and others	Export		9,456		16,696		—
				Domestic		643,826		1,229,821		913,301
				Subtotal		653,282		1,246,517		913,301
Commerce		Services	E-commerce	Export		795		1,299		3,829
				Domestic		406,317		791,552		526,660
				Subtotal		407,112		792,851		530,489
Other		Services	Display and search ad., contents	Export		35,494		50,129		81,844
				Domestic		475,729		833,794		503,222
				Subtotal		511,223		883,923		585,066
Total				Export		154,122		348,260		324,131
				Domestic		9,444,611		18,276,391		17,419,571

				Total		9,598,733		18,624,651		17,743,702


			(Unit: in millions of Won)
For the six months ended June 30, 2021	Wireless		Fixed		Security		Commerce			Other			Sub total		Internal transaction			After consolidation
Total sales		6,990,516		2,342,955		720,255		414,758			662,144			11,130,628		(1,531,895	)		9,598,733
Internal sales		764,544		541,811		66,973		7,646			150,921			1,531,895		(1,531,895	)		—
External sales		6,225,972		1,801,144		653,282		407,112			511,223			9,598,733		—			9,598,733
Depreciation and amortization		1,404,539		467,882		129,791		17,095			34,015			2,053,322		(59,021	)		1,994,301
Operating profit (loss)		641,364		153,912		56,386		(6,384	)		(26,304	)		818,974		(33,596	)		785,378
Finance profit (loss)																			(186,535	)
Gain from subsidiaries, investments in associates and joint ventures																			980,091
Other non-operating profit (loss)																			115,116
Profit before income tax																			1,694,050

6. 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 June 30, 2021 are as follows:

(Unit: in millions of Won and thousands of USD)


Borrowing date	Hedged item	Hedged risk	Contract type	Financial institution	Duration of contract
Jul. 20, 2007	Fixed rate foreign currency denominated bonds (face value of USD 400,000)	Foreign currency risk	Cross currency swap	Morgan Stanley and four other banks	Jul. 20, 2007 –Jul. 20, 2027
Dec. 16, 2013	Fixed rate foreign currency denominated loan (face value of USD 11,451)	Foreign currency risk	Cross currency swap	Deutsche Bank	Dec. 16, 2013 – Apr. 29, 2022
Apr. 16, 2018	Fixed rate foreign currency denominated bonds (face value of USD 500,000)	Foreign currency risk	Cross currency swap	The Export-Import Bank of Korea and three other banks	Apr. 16, 2018 – Apr. 16, 2023
Mar. 4, 2020	Floating rate foreign currency denominated bonds (face value of USD 300,000)	Foreign currency and interest rate risks	Cross currency interest rate swap	Citibank	Mar. 4, 2020 – Jun. 4, 2025
Aug. 13, 2018	Fixed rate foreign currency denominated bonds (face value of USD 300,000)	Foreign currency risk	Cross currency swap	Citibank	Aug. 13, 2018 – Aug. 13, 2023
Dec. 20, 2016	Floating rate Korean Won denominated loan (face value of KRW 6,125)	Interest rate risk	Interest rate swap	Korea Development Bank	Dec. 20, 2016 – Dec. 20, 2021
Dec. 21, 2017	Floating rate Korean Won denominated loan (face value of KRW 18,750)	Interest rate risk	Interest rate swap	Korea Development Bank	Dec. 21, 2017 – Dec. 21, 2022
Dec. 19, 2018	Floating rate Korean Won denominated loan (face value of KRW 31,250)	Interest rate risk	Interest rate swap	Credit Agricole CIB	Mar. 19, 2019 – Dec. 14, 2023

7. Major Contracts

None.

8. R&D Investments

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


(Unit: in millions of Won except percentages)
Category		For the six months ended June 30, 2021			For the year ended December 31, 2020			For the year ended December 31, 2019			Remarks
Raw material			395			627			633			—
Labor			82,335			163,426			125,248			—
Depreciation			74,177			176,381			161,655			—
Commissioned service			22,591			46,046			65,794			—
Others			26,878			41,751			52,167			—
Total R&D costs			206,376			428,230			405,497			—
Accounting	Sales and administrative expenses		201,815			416,445			391,327			—
	Development expenses (Intangible assets)		4,561			11,785			14,170			—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)			1.08	%		2.30	%		2.29	%		—

9. Other information relating to investment decisions

A.	Trademark 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 June 30, 2021, the Company held 3,169 Korean-registered patents and 1,233 foreign-registered patents. The Company holds 742 Korean-registered trademarks and owns intellectual property rights to its proprietary graphic design of the alphabet “T” representing its brand. The designed alphabet “T” is registered in all business categories for trademarks (total of 45). 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 June 30, 2021, SK Broadband held 292 Korean-registered patents and 142 foreign-registered patents (including those held jointly with other companies). It also holds 304 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.

[SK Planet]

SK Planet holds 1,655 registered patents, 85 design marks, 940 registered trademarks and 4 copyrights (in each case including those held jointly with other companies) in Korea. It also holds various other intellectual property rights in other countries, including 243 U.S.-registered patents, 124 Chinese-registered patents, 65 Japanese-registered patents, 65 E.U.-registered patents (in each case including those held jointly with other companies) and 152 foreign registered trademarks.

[Eleven Street]

Eleven Street holds 128 registered patents, 14 registered design marks, 617 registered trademarks and 5 copyrights (in each case including those held jointly with other companies) in Korea. It also holds various other intellectual property rights in other countries, including 41 U.S.-registered patents (including those held jointly with other companies).

[T Map Mobility]

T Map Mobility holds 188 registered patents, 11 registered trademarks and 5 copyrights in Korea. It also holds 23 foreign-registered patents (including those held jointly with other companies). 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 is committed to fulfilling its social obligations with a sense of responsibility for its impact on the society and the environment on a company-wide basis. Under the vision of “realizing a sustainable future based on ICT,” 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, in December 2020, the Company was one of the first companies in Korea to join the RE100 (Renewable Energy 100%) initiative, which aims to source 100% of its energy needs from renewable energy sources by 2050. 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 addition, SK Broadband continues to invest in environment-friendly facilities for its data centers and improve the stability and efficiency of its services.

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 June 30, 2021, December 31, 2020 and December 31, 2019 and for the six months ended June 30, 2021 and 2020 and the years ended December 31, 2020 and 2019. The Company’s unaudited consolidated financial statements as of June 30, 2021 and December 31, 2020 and for the six months ended June 30, 2021 and 2020, which are prepared in accordance with K-IFRS, are attached hereto.


(Unit: in millions of Won except number of companies)

	As of June 30, 2021		As of December 31, 2020		As of December 31, 2019
Assets
Current Assets		9,140,912		8,775,086		8,088,507
• Cash and Cash Equivalents		1,539,295		1,369,653		1,270,824
• Accounts Receivable – Trade, net		2,301,615		2,188,893		2,230,979
• Accounts Receivable – Other, net		955,323		979,044		903,509
• Others		4,344,679		4,237,496		3,683,195
Non-Current Assets		40,916,689		39,131,871		37,113,861
• Long-Term Investment Securities		2,730,618		1,648,837		857,215
• Investments in Associates and Joint Ventures		15,508,918		14,354,113		13,385,264
• Property and Equipment, net		13,243,760		13,377,077		12,933,460
• Intangible Assets, net		4,042,483		4,436,194		4,866,092
• Goodwill		3,463,037		3,357,524		2,949,530
• Others		1,927,873		1,958,126		2,122,300

Total Assets		50,057,601		47,906,957		45,202,368

Liabilities
Current Liabilities		7,821,778		8,177,967		7,851,673
Non-Current Liabilities		15,829,024		15,332,747		14,533,761

Total Liabilities		23,650,802		23,510,714		22,385,434

Equity
Equity Attributable to Owners of the Parent Company		25,503,449		23,743,894		22,950,227
Share Capital		44,639		44,639		44,639
Capital Surplus (Deficit) and Other Capital Adjustments		2,826,475		677,203		1,006,481
Retained Earnings		21,679,418		22,981,913		22,228,683
Reserves		952,917		40,139		(329,576	)
Non-controlling Interests		903,350		652,349		(133,293	)

Total Equity		26,406,799		24,396,243		22,816,934

Total Liabilities and Equity		50,057,601		47,906,957		45,202,368

Number of Companies Consolidated		53		49		48


(Unit: in millions of Won except per share data)

	For the six months ended June 30, 2021		For the six months ended June 30, 2020		For the year ended December 31, 2020			For the year ended December 31, 2019
Operating Revenue		9,598,733		9,053,928		18,624,651			17,740,716
Operating Profit		785,378		659,082		1,349,324			1,108,177
Profit Before Income Tax		1,694,050		917,278		1,877,040			1,161,001
Profit for the Period		1,367,673		738,291		1,500,538			860,733
Profit for the Period Attributable to Owners of the Parent Company		1,324,050		735,940		1,504,352			888,698
Profit for the Period Attributable to Non-controlling Interests		43,623		2,351		(3,814	)		(27,965	)
Basic Earnings Per Share (Won)		18,502		9,962		20,463			12,127
Diluted Earnings Per Share (Won)		18,490		9,962		20,459			12,127

B.	Summary Financial Information (Separate)

Below is the summary separate financial information of the Company as of June 30, 2021, December 31, 2020 and December 31, 2019 and for the six months ended June 30, 2021 and 2020 and the years ended December 31, 2020 and 2019. The Company’s unaudited separate financial statements as of June 30, 2021 and December 31, 2020 and for the six months ended March 31, 2021 and 2020 and for the years ended December 31, 2020 and 2019, which are prepared in accordance with K-IFRS, are attached hereto.


	(Unit: in millions of Won)

	As of June 30, 2021		As of December 31, 2020		As of December 31, 2019
Assets
Current Assets		4,835,661		5,047,115		4,998,465
• Cash and Cash Equivalents		285,377		329,208		497,282
• Accounts Receivable – Trade, net		1,584,872		1,503,552		1,479,971
• Accounts Receivable – Other, net		400,452		434,713		506,642
• Others		2,564,960		2,779,642		2,514,570
Non-Current Assets		27,874,974		26,939,336		26,619,167
• Long-Term Investment Securities		1,970,708		983,688		510,633
• Investments in Subsidiaries and Associates		11,685,264		11,357,504		10,578,158
• Property and Equipment, net		9,159,603		9,157,548		9,052,709
• Intangible Assets, net		2,305,759		2,665,083		3,461,152
• Goodwill		1,306,236		1,306,236		1,306,236
• Others		1,447,404		1,469,277		1,710,279

Total Assets		32,710,635		31,986,451		31,617,632

Liabilities
Current Liabilities		4,740,294		5,076,404		5,165,744
Non-Current Liabilities		9,965,384		9,560,189		9,067,989

Total Liabilities		14,705,678		14,636,593		14,233,733

Equity
Share Capital		44,639		44,639		44,639
Capital Surplus and Other Capital Adjustments		2,212,133		289,134		715,619
Retained Earnings		14,707,654		16,684,640		16,672,947
Reserves		1,040,531		331,445		(49,306	)

Total Equity		18,004,957		17,349,858		17,383,899

Total Liabilities and Equity		32,710,635		31,986,451		31,617,632


(Unit: in millions of Won except per share data)

	For the six months ended June 30, 2021		For the six months ended June 30, 2020		For the year ended December 31, 2020		For the year ended December 31, 2019
Operating Revenue		6,002,323		5,866,052		11,746,630		11,421,342
Operating Profit		635,662		528,206		1,023,067		951,803
Profit Before Income Tax		801,504		706,355		941,455		1,184,878
Profit for the Period		650,024		573,109		758,792		979,891
Basic Earnings Per Share (Won)		9,031		7,735		10,221		13,393
Diluted Earnings Per Share (Won)		9,025		7,735		10,219		13,393

2. Dividends and Others

A.	Dividend Policy

Our fundamental shareholder distribution policy seeks to enhance long-term shareholder returns through stable cash dividends based on the Company’s performance and through the enhancement of corporate value based on sustained growth. To this end, the Company strives to enhance its corporate value under its capital management principle of balancing investment for growth and shareholder returns.

In addition, the Company determines 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.

The Company distributes annual dividends to shareholders or pledgees registered on its shareholder’s register as of the end of each fiscal year, and the Company distributed an interim dividend once a year as of June 30 pursuant to the resolution of its board of directors. In order to further enhance the Company’s policy to provide continual shareholder return and 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 on March 25, 2021. On July 22, 2021, the board of directors resolved to approve the first quarterly dividends.

Furthermore, the Company repurchases its own shares from time to time to enhance its corporate value in consideration of the market price of the Company’s shares and its financial resources. In 2020 and 2021 to date, the Company purchased approximately Won 500 billion of treasury shares through a trustee. In May 2021, the Company canceled 8,685,568 units of previously acquired treasury shares, which represented 10.76% of the total number of shares issued at the time, to enhance shareholder value.

(1)

Distribution of cash dividends was approved during the 35th General Meeting of Shareholders held on March 26, 2019.

•

Distribution of cash dividends per share of Won 9,000 (exclusive of an interim dividend of Won 1,000) was approved.

(2)

Distribution of interim dividends of Won 1,000 was approved during the 426th Board of Directors’ Meeting on July 25, 2019.

(3)

Distribution of cash dividends was approved during the 36th General Meeting of Shareholders held on March 26, 2020.

•

Distribution of cash dividends per share of Won 9,000 (exclusive of an interim dividend of Won 1,000) was approved.

(4)

Distribution of interim dividends of Won 1,000 was approved during the 438thBoard of Directors’ Meeting on July 21, 2020.

(5)

Distribution of cash dividends was approved during the 37th General Meeting of Shareholders held on March 25, 2021.

•

Distribution of cash dividends per share of Won 9,000 (exclusive of an interim dividend of Won 1,000) was approved.

(6)

Distribution of quarterly dividends of Won 2,500 was approved during the 453thBoard of Directors’ Meeting on July 22, 2021.

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 six months ended June 30, 2021		As of and for the year ended December 31, 2020		As of and for the year ended December 31, 2019
Par value per share (Won)			500		500		500
(Consolidated) Net income			1,324,050		1,504,352		888,698
(Separate) Net income			650,024		758,792		979,891
Net income per share (Won)			18,502		20,463		12,127
Total cash dividend			177,901		715,080		730,098
Total stock dividends			—		—		—
(Consolidated) Percentage of cash dividend to available income (%)			27.4		47.5		82.0
Cash dividend yield ratio (%)	Common shares		0.8		4.1		4.1
Cash dividend yield ratio (%)	Preferred shares		—		—		—
Stock dividend yield ratio (%)	Common shares		—		—		—
Stock dividend yield ratio (%)	Preferred shares		—		—		—
Cash dividend per share (Won)	Common shares		2,500		10,000		10,000
Cash dividend per share (Won)	Preferred shares		—		—		—
Stock dividend per share (share)	Common shares		—		—		—
Stock dividend per share (share)	Preferred shares		—		—		—

The total amount of cash dividends was calculated by adding the total amount of cash dividends resolved at the general meeting of shareholders for the relevant fiscal year and any quarterly cash dividends paid during such fiscal year (including interim dividends) in accordance with applicable disclosure requirements.

*	Consolidated net income is based on equity attributable to owners of the parent company.

*	Cash dividend for the years ended December 31, 2020 and 2019 above include an interim dividend of Won 1,000 per share. Cash dividend for the six months ended June 30, 2021 includes a quarterly dividend of Won 2,500 per share, effective as of the end of the second quarter of the financial year.

C.	Past Distributions of Dividends

3. Use of Direct Financing

A.	Use of Proceeds from Public Offerings

[SK Telecom]

(Unit: in millions of Won)

Category

Bond
Series

Payment Date

Planned Use of Proceeds

Actual Use of Proceeds

Reasons for
Difference

Use

Amount

Use

Amount

Corporate bond

80th

January 15, 2021

Repayment of
debt

310,000

Repayment of
debt

310,000

—

Corporate bond

79th

October 19, 2020

Repayment of
debt

290,000

Repayment of
debt

290,000

—

Corporate bond

78th

January 14, 2020

Working
capital

360,000

Working
capital

360,000

—

Corporate bond

78th

January 14, 2020

Repayment of
debt

60,000

Repayment of
debt

60,000

—

Corporate bond

77th

October 22, 2019

Working
capital

400,000

Working
capital

400,000

—

Corporate bond

76th

July 29, 2019

Working
capital

70,000

Working
capital

70,000

—

Corporate bond

76th

July 29, 2019

Repayment of
debt

330,000

Repayment of
debt

330,000

—

Corporate bond

75th

March 6, 2019

Frequency
usage right
payments

400,000

Frequency
usage right
payments

400,000

—

[SK Broadband]

(Unit: in millions of Won)

Category

Bond
Series

Payment Date

Planned Use of Proceeds

Actual Use of Proceeds

Reasons for
Difference

Use

Amount

Use

Amount

Corporate bond

Series
47-1

March 26, 2019

Repayment of
debt

50,000

Repayment of
debt

210,000

—

Corporate bond

Series
47-2

March 26, 2019

160,000

—

Corporate bond

Series
48-1

September 24, 2019

-Repayment of
debt

-Working
capital

80,000

-Repayment of
debt

-Working
Capital

230,000

—

Corporate bond

Series
48-2

September 24, 2019

100,000

Corporate bond

Series
48-3

September 24, 2019

50,000

Corporate bond

Series
49-1

June 11, 2020

-Repayment of
debt

-Working
Capital

100,000

-Repayment of
debt

-Working
Capital

200,000

—

Corporate bond

Series
49-2

June 11, 2020

100,000

Corporate bond

Series
50

September 25, 2020

Repayment of
debt

160,000

Repayment of
debt

160,000

—

*	Commercial papers and foreign bonds that do not require securities reports in Korea have been omitted.

B.	Use of Proceeds from Private Offerings

[Dreamus Company]

(As of June 30, 2021)

(Unit: in millions of Won)

Classification

Payment Date

Planned Use of Proceeds

Actual Use of Proceeds

Reasons for
Difference

Use

Amount

Use

Amount

Capital increase through third-party allotment (No. 4)

August 10, 2018

Strengthening of
contents business
and establishment of
infrastructure related
to music industry

70,000

Operating
expenses for
music business
and investment
in contents

70,000

—

Capital increase through third-party allotment (No. 27)

June 15, 2021

-Working capital (40,000)

-Funds for equity

investments

(30,000)

70,000

-Working capital (1,572)

-Fund for equity investments

(21,776)

23,348

The Company
did not reach the
investment period
for certain of the
operating funds
and funds for
equity
investment. It
plans to use the
remaining
proceeds in the
future and is
keeping tsuch
amounts in bank
deposits.

C.	Operation of Unused Proceeds


	(Unit: in millions of Won)

Classification	Financial Item	Amount	Contract Period	Investment Period
Deposit/ Installment Savings	Term Deposit	46,652	July 2021	1 month as of the end of this reporting period (3 months maturity)
Total		46,652	—

4. Other Matters Related to Financial Information

A.	Restatement of the Financial Statements

The accounting policies applied to the annual consolidated financial statements as of and for the fiscal year ended December 31, 2020 are applied to the interim consolidated financial statements as of and for the six months ended June 30, 2021.

In 2020, the Company changed its accounting policy related to the determination of lease terms based on the agenda decision “Lease Term and Useful Life of Leasehold Improvements” published by the International Financial Reporting Interpretations Committee (“IFRIC”) on December 16, 2019. The comparative financial information for the six months ended June 30, 2020 has been restated.

B.	Loss Allowance

(1)

Loss Allowance of Trade and Other Receivables


	(Unit: in millions of Won)
	For the six months ended June 30, 2021
	Gross amount		Loss Allowance		Percentage
Accounts receivable – trade		2,584,338		257,903		10	%
Loans		146,407		43,056		29	%
Accounts receivable – other		1,290,938		53,938		4	%
Accrued income		4,849		0		0	%
Guarantee deposits		277,512		300		0	%

Total		4,304,044		355,197		8	%


	(Unit: in millions of Won)
	For the year ended December 31, 2020
	Gross amount		Loss Allowance		Percentage
Accounts receivable – trade		2,478,851		264,498		11	%
Loans		182,721		45,024		25	%
Accounts receivable – other		1,366,922		55,075		4	%
Accrued income		3,418		166		5	%
Guarantee deposits		285,507		300		0	%

Total		4,317,419		365,063		8	%


	(Unit: in millions of Won)
	For the year ended December 31, 2019
	Gross amount		Loss Allowance		Percentage
Accounts receivable – trade		2,497,396		249,501		10	%
Loans		147,937		48,054		32	%
Accounts receivable – other		1,298,477		48,379		4	%
Accrued income		3,977		166		4	%
Guarantee deposits		310,074		299		0	%

Total		4,257,861		346,399		8	%

(2)

Movements in Loss Allowance of Trade and Other Receivables


	(Unit: in millions of Won)
	For the six months ended June 30, 2021			For the year ended December 31, 2020			For the year ended December 31, 2019
Beginning balance		365,063			346,399			376,045
Effect of change in accounting policy		0			—			—
Increase of loss allowance		15,072			59,184			28,841
Reversal of loss allowance		0			—			—
Write-offs		(34,502	)		(57,575	)		(46,616	)
Other		9,564			17,054			17,650

Ending balance		355,197			365,062			346,399

(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)
	As of June 30, 2021
	Six months or less			From six months to one year			From one year to three years			More than three years			Total
Accounts receivable – general		2,338,574			49,753			131,604			64,407			2,584,338
Percentage		90	%		2	%		5	%		2	%		100	%

C.	Inventories

(1)

Detailed Categories of Inventories


	(Unit: in millions of Won)
Account Category	For the six months ended June 30, 2021			For the year ended December 31, 2020			For the year ended December 31, 2019
Merchandise		199,247			162,196			147,928
Goods in transit		—			—			—
Other inventories		12,533			9,247			14,954

Total		211,780			171,443			162,882

Percentage of inventories to total assets [ Inventories / Total assets ]		0.42	%		0.36	%		0.36	%
Inventory turnover [ Cost of sales / { ( Beginning balance of inventories + Ending balance of inventories ) / 2} ]		6.89			7.60			7.79

(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 its auditors at the end of each year.

D.	Fair Value Measurement

See notes 2 and 30 of the notes to the Company’s unaudited consolidated financial statements as of June 30, 2021 and December 31, 2020 and for the six months ended June 30, 2021 and 2020 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 Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 61-2

Dec. 27, 2011

Dec. 27, 2021

190,000

Dec. 19, 2011

Hana Financial
Investment Co.,
Ltd.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 300%
Maintenance of Financial Ratio	Compliance Status	Compliant
Restriction on Liens	Key Term	The total amount of secured debt not to exceed 50% of share capital as of the end of the previous fiscal year
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed Won 2 trillion
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Not applicable
Restriction on Changes of Ownership Structure	Compliance Status	Not applicable
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 62-2

Aug. 28, 2012

Aug. 28, 2022

140,000

Aug. 22, 2012

Meritz Securities
Co., Ltd.

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%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed Won 2 trillion
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Not applicable
Restriction on Changes of Ownership Structure	Compliance Status	Not applicable
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 63-1

April 23, 2013

April 23, 2023

230,000

April 17, 2013

Korea Securities
Finance Corp.

Unsecured Bond – Series 63-2

April 23, 2013

April 23, 2033

130,000

April 17, 2013

Korea Securities
Finance Corp.

Unsecured Bond – Series 64-2

May 14, 2014

May 14, 2024

150,000

April 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 66-1

Feb. 26, 2015

Feb. 26, 2022

100,000

Feb. 11, 2015

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

March 4, 2016

March 4, 2026

90,000

Feb. 22, 2016

Korea Securities
Finance Corp.

Unsecured Bond – Series 69-4

March 4, 2016

March 4, 2036

80,000

Feb. 22, 2016

Korea Securities
Finance Corp.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 300%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed Won 2 trillion
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Not applicable
Restriction on Changes of Ownership Structure	Compliance Status	Not applicable
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 70-2

June 3, 2016

June 3, 2021

50,000

May 24, 2016

Korea Securities
Finance Corp.

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 71-2

April 25, 2017

April 25, 2022

120,000

April 13, 2017

Korea Securities
Finance Corp.

Unsecured Bond – Series 71-3

April 25, 2017

April 25, 2027

100,000

April 13, 2017

Korea Securities
Finance Corp.

Unsecured Bond – Series 71-4

April 25, 2017

April 25, 2032

90,000

April 13, 2017

Korea Securities
Finance Corp.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 300%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed Won 5 trillion
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	—
Restriction on Changes of Ownership Structure	Compliance Status	—
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 72-2

Nov. 10, 2017

Nov. 10, 2022

80,000

Oct. 31, 2017

Korea Securities
Finance Corp.

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 74-1

Sept. 17, 2018

Sept. 17, 2021

100,000

Sept. 5, 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 75-1

March 6, 2019

March 6, 2022

180,000

Feb. 21, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 75-2

March 6, 2019

March 6, 2024

120,000

Feb. 21, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 75-3

March 6, 2019

March 6, 2029

50,000

Feb. 21, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 75-4

March 6, 2019

March 6, 2039

50,000

Feb. 21, 2019

Korea Securities
Finance Corp.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 300%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 50% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Restriction of cross-shareholding Exclusion from corporate group
Restriction on Changes of Ownership Structure	Compliance Status	Compliant
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 76-1

July 29, 2019

July 29, 2022

120,000

July 17, 2019

Korea Securities
Finance Corp.

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%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 50% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Restriction of cross-shareholding Exclusion from corporate group
Restriction on Changes of Ownership Structure	Compliance Status	Compliant
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 77-1

Oct. 22, 2019

Oct. 21, 2022

90,000

Oct. 10, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 77-2

Oct. 22, 2019

Oct. 22, 2024

50,000

Oct. 10, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 77-3

Oct. 22, 2019

Oct. 22, 2029

30,000

Oct. 10, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 77-4

Oct. 22, 2019

Oct. 22, 2039

30,000

Oct. 10, 2019

Korea Securities
Finance Corp.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 300%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 50% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Restriction of cross-shareholding Exclusion from corporate group
Restriction on Changes of Ownership Structure	Compliance Status	Compliant
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 78-1

Jan. 14, 2020

Jan. 13, 2023

170,000

Dec. 31, 2019

Korea Securities
Finance Corp.

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%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 50% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Restriction of cross-shareholding Exclusion from corporate group
Restriction on Changes of Ownership Structure	Compliance Status	Compliant
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
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%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 50% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Restriction of cross-shareholding Exclusion from corporate group
Restriction on Changes of Ownership Structure	Compliance Status	Compliant
Submission of Compliance Certificate	Compliance Status	Submitted on April 14, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
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.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 300%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 50% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Restriction of cross-shareholding Exclusion from corporate group
Restriction on Changes of Ownership Structure	Compliance Status	Compliant
Submission of Compliance Certificate	Compliance Status	Expected to be submitted in August 2021

[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
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 43-2

Oct. 5, 2016

Oct. 5, 2021

120,000

Sept. 22, 2016

Korea Securities
Finance Corp.

Unsecured Bond – Series 44

Feb. 3, 2017

Feb. 3, 2022

150,000

Jan. 20, 2017

Korea Securities
Finance Corp.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 400%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed Won 2 trillion
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	—
Restriction on Changes of Ownership Structure	Compliance Status	—
Submission of Compliance Certificate	Compliance Status	Submitted on April 27, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 45-2

Oct. 11, 2017

Oct. 11, 2022

140,000

Sept. 20, 2017

Korea Securities
Finance Corp.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 400%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 70% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	—
Restriction on Changes of Ownership Structure	Compliance Status	—
Submission of Compliance Certificate	Compliance Status	Submitted on April 27, 2021

Name

Issue Date

Maturity Date

Principal Amount
(millions of Won)

Date of Fiscal
Agency
Agreement

Fiscal Agent

Unsecured Bond – Series 46-2

Feb. 1, 2018

Feb. 1, 2023

80,000

Jan. 19, 2018

Korea Securities
Finance Corp.

Unsecured Bond – Series 47-1

March 26, 2019

March 26, 2022

50,000

March 14, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 47-2

March 26, 2019

March 26, 2024

160,000

March 14, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 48-1

Sept. 24, 2019

Sept. 23, 2022

80,000

Sept. 10, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 48-2

Sept. 24, 2019

Sept. 24, 2024

100,000

Sept. 10, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 48-3

Sept. 24, 2019

Sept. 23, 2026

50,000

Sept. 10, 2019

Korea Securities
Finance Corp.

Unsecured Bond – Series 49-1

June 11, 2020

June 9, 2023

100,000

June 1, 2020

Korea Securities
Finance Corp.

Unsecured Bond – 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

160,000

Sept. 15, 2025

Korea Securities
Finance Corp.


Maintenance of Financial Ratio	Key Term	Debt ratio no greater than 400%
Maintenance of Financial Ratio	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
Restriction on Liens	Compliance Status	Compliant
Restriction on Disposition of Assets	Key Term	Disposal of assets per fiscal year not to exceed 70% of total assets
Restriction on Disposition of Assets	Compliance Status	Compliant
Restriction on Changes of Ownership Structure	Key Term	Restriction on changes of ownership structure
Restriction on Changes of Ownership Structure	Compliance Status	Compliant
Submission of Compliance Certificate	Compliance Status	Submitted on April 27, 2021

*	Beginning with Series 47, the maintenance of financial ratio requirement has changed to a consolidated basis.

IV.

MANAGEMENT’S DISCUSSION AND ANALYSIS

Omitted in quarterly and semi-annual reports in accordance with applicable Korean disclosure rules.

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
Six months ended June 30, 2021	KPMG Samjong Accounting Corp.	—	—	—
Year ended December 31, 2020	KPMG Samjong Accounting Corp.	Unqualified	Retroactive application of change in accounting policy related to change to determination of lease period	Revenue recognition; assessment of impairment of cash-generating unit of security services, assessment of fair value of customer relationship
Year ended December 31, 2019	KPMG Samjong Accounting Corp.	Unqualified	N/A	Revenue recognition; assessment of impairment of cash-generating unit of security services

Note: All consolidated subsidiaries of the Company that are subject to audits and whose audits have been completed received unqualified audit opinions.

B.	Audit Services Contracts with Independent Auditors

(Unit: in millions of Won except number of hours)

Period

Auditors

Contents

Audit Contract

Actual Performance

Fee

Total number
of hours

Fee

Total number
of hours

Six months ended June 30, 2021

KPMG Samjong Accounting Corp.

Quarterly review

2,460

24,600

680

5,145

Separate financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Internal accounting system audit

Year ended December 31, 2020

KPMG Samjong Accounting Corp.

Quarterly review

2,360

23,600

2,360

23,600

Separate financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Internal accounting system audit

Year ended December 31, 2019

KPMG Samjong Accounting Corp.

Quarterly review

1,860

23,040

1,860

23,040

Separate financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

C.	Non-Audit Services Contracts with Independent Auditors


(Unit: in millions of Won)
Period	Contract date	Service provided	Service duration	Fee
Six months ended June 30, 2021	May 6, 2021	Audit and review of financial statements of the newly established company and its subsidiaries involved in the contemplated spin-off	May 26, 2021 – July 28, 2021	1,143
Six months ended June 30, 2021	May 17, 2021	Confirmation of financial information in connection with frequency reallocation application	May 17, 2021 – May 24, 2021	2
Year ended December 31, 2020	July 23, 2020	Confirmation of financial information	July 23, 2020 – July 30, 2020	3
	December 8, 2020	Confirmation of financial information	December 8, 2020 – December 10, 2020	3
	December 30, 2020	Consulting services for new business group model research project	December 31, 2020 – February 12, 2021	90
Year ended December 31, 2019	February 8, 2019	Consulting for publication of 2018 integrated annual report	February 8, 2019 – June 30, 2019	120
Year ended December 31, 2019	April 26, 2019	Confirmation of financial information	April 26, 2019 – April 29, 2019	3

D.	Discussions between Audit Committee and Independent Auditors


Date	Attendance	Method	Key Matters Discussed
February 24, 2021	Audit Committee: 4 Independent Auditor: 2	In-person	Report on 2020 critical audit matters and results of audit of financials statements; report on results of 2020 internal accounting management system audit
April 28, 2021	Audit Committee: 4 Independent Auditor: 2	In-person	Report on 2020 Public Company Accounting Oversight Board audit results; report on 2021 audit plan and selection of critical audit matters
June 23, 2021	Audit Committee: 3 Independent Auditor: 1	In-person	Report on 2021 audit plan and selection of critical audit matters
July 14, 2021	Audit Committee: 4 Independent Auditor: 2	Remote	Report on results of 2020 evaluation of external auditors
July 15, 2021	Audit Committee: 4 Independent Auditor: 1	In-writing	Report on results of audit of past financial statements of newly established corporations from the spin-off
July 21, 2021	Audit Committee: 4 Independent Auditor: 1	Remote	Report on results of external auditors’ 2021 semi-annual review

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: five independent directors, two inside directors and one non-executive director. In order to enhance its professional expertise and fulfill its roles and responsibilities efficiently, the Board of Directors operates the following five committees: Independent Director Nomination Committee, Audit Committee, Future Strategy Committee, Compensation Committee and ESG Committee.

On May 27, 2021, the Board of Directors voted to reorganize its committees from the previous five committees (comprising Independent Director Nomination Committee, Audit Committee, Compensation Review Committee, CapEx Review Committee and Corporate Citizenship Committee) to the following five committees: Independent Director Nomination Committee, Audit Committee, Future Strategy Committee, Compensation Committee and ESG Committee.

At the 37th General Meeting of Shareholders held on March 25, 2021, Young Sang Ryu was re-elected as an inside director and Youngmin Yoon was re-elected as an independent director and a member of the audit committee.

Yong-Hak Kim, as a highly respected sociologist with knowledge and virtue that can contribute to the Company’s proactive pursuit of social value, has been elected as the chairman of the Board of Directors by the directors pursuant to Article 4(2) of the regulations of the Board of Directors.

B.	Significant Activities of the Board of Directors


Meeting	Date	Agenda	Approval
444th (the 1st meeting of 2021)	February 2, 2021	- Financial statements as of and for the year ended December 31, 2020 - Annual business report for the year ended December 31, 2020 - Delegation of authority to obtain funding through long-term borrowings - Disposal of treasury stock - Donations for ESG management (creation of social value) - Revisions to Audit Committee regulations - Report of internal accounting management - Report for the period after the fourth quarter of 2020	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed — —

445th (the 2nd meeting of 2021)	February 25, 2021	- Calling of 37^th General Meeting of Shareholders - Capital contribution to T Map Mobility and transfer of mobility assets - Transactions with SK Pinx in 2021 - Transfer of certain assets including SK Futures Park - Results of evaluation of internal accounting management system	Approved as proposed Approved as proposed Approved as proposed Approved as proposed —

446th (the 3rd meeting of 2021)	March 25, 2021	- Election of the chairman of the Board of Directors - Re-election of compliance officer - Transactions with SK Inc. in the second quarter of 2021 - Investment in Content Wavve Co., Ltd. to increase its competitiveness - Occupational safety and health plan for 2021 - Additional transactions with SK Pinx in 2021	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed

447th (the 4th meeting of 2021)	April 29, 2021	- Termination of Share Repurchase Agreement - Investment in SK Telecom TMT Investment Corp. - Payment of operating expenses of SUPEX Council for 2021 - Transactions with SK Hynix in 2021 - Report for the period after the first quarter of 2021	Approved as proposed Approved as proposed Approved as proposed Approved as proposed —


Meeting	Date	Agenda	Approval
448th (the 5th meeting of 2021)	May 4, 2021	• Cancelation of treasury shares	Approved as proposed

449th (the 6th meeting of 2021)	May 27, 2021	• Revision and establishment of regulations for the Board of Directors and its committees • Appointment of committee members • Revision of corporate governance charter • Determination of key performance metrics for 2021	Approved as proposed Approved as proposed Approved as proposed Approved as revised

450th (the 7th meeting of 2021)	June 10, 2021	• Cancelation of treasury shares • Amendment of the articles of incorporation on stock split • Approval of spin-off plan	Approved as proposed Approved as proposed Approved as proposed

451th (the 8th meeting of 2021)	June 24, 2021	• Transactions with SK Inc. in third and fourth quarters of 2021	Approved as proposed

452th (the 9th meeting of 2021)	June 28, 2021	• Revision of spin-off plan	Approved as proposed

453h (the 10th meeting of 2021)	July 22, 2021	• Dividends for the second quarter • Report for the first half of 2021 • Report for the period after the second quarter of 2021	Approved as proposed — —

*	The line items that do not show approval are for reporting purposes only.

C.	Committees within Board of Directors

(1)

Committee structure (as of June 30, 2021)

(a)

Independent Director Nomination Committee


Total number of persons	Members		Task
Total number of persons	Inside Directors	Independent Directors	Task
3	Jung Ho Park	Yong-Hak Kim, Jung Ho Ahn	Nomination of independent directors

*	Under the Korean Commercial Code, a majority of the members of the Independent Director Nomination Committee must be independent directors.

(b)

Compensation Committee (as of June 30, 2021)


Total number of persons	Members		Task
Total number of persons	Non-executive Director	Independent Directors	Task
4	Dae Sik Cho	Yong-Hak Kim, Seok-Dong Kim, Junmo Kim	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.

(c)

Future Strategy Committee (as of June 30, 2021)


Total number of persons	Members		Task
Total number of persons	Inside Directors	Independent Directors	Task
6	Young Sang Ryu	Yong-Hak Kim, Seok-Dong Kim, Jung Ho Ahn, Youngmin Yoon, Junmo Kim	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.

(d)

ESG Committee (as of June 30, 2021)


Total number of persons	Members		Task
Total number of persons	Inside Directors	Independent Directors	Task
3	—	Jung Ho Ahn, Youngmin Yoon, Junmo Kim	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.

(e)

Audit Committee (as of June 30, 2021)


Total number of persons	Members		Task
Total number of persons	Inside Directors	Independent Directors	Task
4	—	Seok-Dong Kim, Yong-Hak Kim, Youngmin Yoon, Jung Ho Ahn	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 the Korean Commercial Code.

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, Youngmin Yoon and Jung Ho Ahn.

Major activities of the Audit Committee as of June 30, 2021 are set forth below.


Meeting	Date	Agenda	Approval
The 1^st meeting of 2021	February 1, 2021	• Evaluation of internal accounting management system operation • Review of business and audit results for 2020 and business and audit plans for 2021 • Auditor’s opinion on internal monitoring controls • Approval of services by independent auditor in 2021	— — Approved as proposed Approved as proposed
The 2^nd meeting of 2021	February 24, 2021	• Audit results for fiscal year 2020 • Audit results for internal accounting management system for fiscal year 2020 • Evaluation of internal accounting management system • Finalization of agenda and document review for the 37th General Meeting of Shareholders • Audit report for fiscal year 2020 • Real estate transaction with SK Broadband • Contract for customer appreciation gifts to fixed-line telephone customers for 2021	— — Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
The 3^rd meeting of 2021	March 24, 2021	• Contributions to company employee welfare fund for 2021 • Contract for maintenance services of optical cables in 2021 • Contract for maintenance services of transmission equipment in 2021	Approved as proposed Approved as proposed Approved as proposed
The 4^th meeting of 2021	April 28, 2021	• Audit plan for fiscal year 2021	—
The 5^th meeting of 2021	June 23, 2021	• Audit plan for fiscal year 2021 • Evaluation of results of the 2020 external audit service	— —
The 6^th meeting of 2021	July 21, 2021	• Appointment of committee chairman • Audit results for the first half of 2021	Approved as proposed —

*	The line items that do not show approval are for reporting purposes only.

3. Shareholders’ Exercise of Voting Rights

A. Voting System and Exercise of Minority Shareholders’ Rights

(As of June 30, 2021)


Classification of Voting System	Cumulative voting system	Written voting system	Electronic voting system
Adoption status	Selected	Not adopted	Adopted
Implementation status	—	—	Conducted during the 38th general meeting of shareholders

The Company implemented a proxy solicitation procedure for the 38th general meeting of shareholders, pursuant to which shareholders were permitted to provide written proxy to exercise their voting rights.

VII. SHAREHOLDERS

1. Shareholdings of the Largest Shareholder and Related Persons

A. Shareholdings of the Largest Shareholder and Related Persons


(As of June 30, 2021)					(Unit: in shares and percentages)
Name	Relationship	Type of share	Number of shares owned and ownership ratio
			Beginning of Period				End of Period
			Number of shares		Ownership ratio		Number of shares		Ownership ratio
SK Inc.	Largest Shareholder	Common share		21,624,120		26.78		21,624,120		30.01
Tae Won Chey	Officer of affiliated company	Common share		100		0.00		100		0.00
Dong Hyun Jang	Officer of affiliated company	Common share		251		0.00		251		0.00
Jung Ho Park	Officer of the Company	Common share		2,500		0.00		3,500		0.00
Young Sang Ryu	Officer of the Company	Common share		500		0.00		1,000		0.00
Yong-Hak Kim	Officer of the Company	Common share		—		—		100		0.00
Seok-Dong Kim	Officer of the Company	Common share		—		—		100		0.00
Jung Ho Ahn	Officer of the Company	Common share		—		—		100		0.00
Youngmin Yoon	Officer of the Company	Common share		—		—		100		0.00
Junmo Kim	Officer of the Company	Common share		—		—		100		0.00

Total		Common share		21,627,471		26.78		21,629,471		30.02

B.	Overview of the Largest Shareholder

As of June 30, 2021, 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

Changes in shareholdings of the largest shareholder are as follows:

(As of June 30, 2021)

(Unit: in shares and percentages)

Largest Shareholder

Date of the change in the
largest shareholder/
Date of change in
shareholding

Shares
Held*

Holding
Ratio

Remarks

SK Inc.

December 27, 2018

21,625,471

26.78

SK Inc.’s interest in SK Infosec was transferred to the Company in exchange for the Company’s issuance of treasury shares to SK Inc.

February 17, 2020

21,627,471

26.78

Jung Ho Park, CEO of the Company, purchased 1,500 additional shares; Young Sang Ryu, inside director of the Company, purchased 500 shares.

February 4, 2021

21,628,971

26.79

Jung Ho Park, CEO of the Company, purchased 1,000 additional shares; Young Sang Ryu, inside director of the Company, purchased 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 purchased 100 shares (total of 500 shares)

2. Distribution of Shares

A.	Shareholders with Ownership of 5% or Greater


(As of June 30, 2021)			(Unit: in shares and percentages)
Name (title)	Common share
Name (title)	Number of shares		Ownership ratio			Remarks
SK Inc.		21,624,120		30.0	%		—
National Pension Service		7,205,438		10.0	%		—
Citibank ADR		6,627,636		9.2	%		—
Shareholdings under the Employee Stock Ownership Program		—		—			—

B.	Minority Shareholders

(As of June 30, 2021)

(Unit: in shares and percentages)

Classification

Shareholders

Ownership

Number of
minority
shareholders

Total number
of
shareholders

Ratio (%)

Number of
shares owned by
minority
shareholders

Total number
of shares issued

Ratio (%)

Minority shareholders*

141,059

141,067

99.9

30,639,460

72,060,143

42.5

*	Shareholders who hold less than 1% of total shares issued.

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

A.	Domestic Securities Market


(Unit: in Won and shares)
Types		June 2021		May 2021		April 2021		March 2021		February 2021		January 2021
Common stock	Highest		334,000		320,000		318,000		275,000		258,500		270,000
	Lowest		320,000		304,000		276,500		244,000		243,500		237,000
	Average		326,705		312,658		296,614		255,409		248,944		252,450
Daily transaction volume	Highest		503,399		522,424		640,853		1,101,946		744,401		1,358,231
	Lowest		140,044		156,331		193,168		178,239		270,191		371,161
Monthly transaction volume			5,329,642		6,060,793		6,630,877		7,052,935		7,193,340		12,026,412

B.	Foreign Securities Market (New York Stock Exchange)


(Unit : in US$ and ADRs)
Types		June 2021		May 2021		April 2021		March 2021		February 2021		January 2021
Depositary receipt	Highest		33.24		32.04		31.54		27.23		25.58		27.00
	Lowest		31.41		30.14		27.51		24.06		24.16		24.16
	Average		32.34		30.78		29.48		25.15		24.88		25.38
Daily transaction volume	Highest		1,237,231		618,261		725,768		744,807		461,482		1,043,660
	Lowest		186,620		115,941		164,462		178,673		127,291		151,029
Monthly transaction volume			9,584,111		5,956,736		6,614,621		8,563,650		5,375,349		8,201,873

VIII. EMPLOYEES AND DIRECTORS

1. Officers and Employees

A.	Employees


(As of June 30, 2021)												(Unit: in persons and millions of Won)
Business segment	Gender	Number of employees								Total		Average length of service (years)		Aggregate wage for the year of 2021		Average wage per person
		Employees without a fixed term of employment				Employees with a fixed term of employment
		Total		Part-time employees		Total		Part-time employees
—	Male		4,241		—		82		—		4,323		14.0		374,639		87
—	Female		883		—		198		—		1,081		8.6		62,634		59
Total			5,124		—		280		—		5,404		12.9		437,273		81

B.	Compensation of Unregistered Officers


(As of June 30, 2021)		(Unit: in persons and millions of Won)
Number of Unregistered Officers	Aggregate wage for the year of 2021	Average wage per person
105	38,725	369

2. Compensation of Directors

A.	Amount Approved at the Shareholders’ Meeting


(As of June 30, 2021)		(Unit: in millions of Won)
Classification	Number of Directors	Aggregate Amount Approved
Directors	8	12,000

B.	Amount Paid

B-1. Total Amount


(As of June 30, 2021)			(Unit: in millions of Won)
Number of Directors	Aggregate Amount Paid		Average Amount Paid Per Director		Remarks
8		4,431		554		—

B-2. Amount by Classification


(As of June 30, 2021)					(Unit: in millions of Won)
Classification	Number of Directors		Aggregate Amount Paid		Average Amount Paid Per Director		Remarks
Inside Directors		3		4,050		1,350		—
Independent Directors (Excluding Audit Committee Members)		1		76		76		—
Audit Committee Members		4		305		76		—
Auditor		—		—		—		—

3. Individual Compensation of Directors and Officers

A.	Remuneration for Individual Directors


(As of June 30, 2021)		(Unit: in millions of Won)
Name	Position	Total remuneration		Payment not included in total remuneration*
Jung Ho Park	Representative Director		3,145	Stock options
Young Sang Ryu	Head of MNO Business/ Inside Director		905	Stock options

*	See “VIII.4. Stock Options Granted and Exercised” below for details on the number of applicable stock options, exercise price and exercise period.

Composition of Total Remuneration


Name		Composition
Jung Ho Park		Total remuneration: Won 3,145 million • Salary: Won 975 million • Bonus: Won 2,170 million
Young Sang Ryu		Total remuneration: Won 905 million • Salary: Won 375 million • Bonus: Won 530 million • Other earned income: Won 0.1 million

B.	Remuneration for the Five Highest-Paid Officers (among those Paid over W500 Million per Year)

(Unit: in millions of Won)


Name	Position	Total remuneration		Payment not included in total remuneration
Jung Ho Park	Representative Director		3,145		Stock options
Jin Woo So	Chairman of Human Resources Development Committee		2,339		—
Yoon Kim	Head of T3K		1,016		Stock options
Young Sang Ryu	Head of MNO Business/ Inside Director		905		Stock options
Yong-Seop Yum	Head of Institute of Management and Economy/mySUNI CIO		803		—

*	See “VIII.4. Stock Options Granted and Exercised” below for details on the number of applicable stock options, exercise price and exercise period.

Composition of Total Remuneration


Name		Composition
Jung Ho Park		See “VIII.3.A. Remuneration for Individual Directors” above.

Jin Woo So		Total remuneration: Won 2,339 million • Salary: Won 640 million • Bonus: Won 1,699 million

Yoon Kim		Total remuneration: Won 1,016 million • Salary: Won 220 million • Bonus: Won 795 million • Other earned income: Won 0.45 million

Young Sang Ryu		See “VIII.3.A. Remuneration for Individual Directors” above.

Yong-Seop Yum		Total remuneration: Won 803 million • Salary: Won 375 million • Bonus: Won 425 million • Other earned income: Won 3 million

4. Stock Options Granted and Exercised

A.	Stock Options Granted to Directors and Auditors


(As of June 30, 2021)
Classification	Number of Directors		Fair Value of Stock Options (millions of Won)		Remarks
Inside Directors		3		72		—
Independent Directors (Excluding Audit Committee Members)		1		—		—
Audit Committee Members		4		—		—
Total		8		72		—

B.	Stock Options Granted and Exercised


(As of June 30, 2021)								(Unit: in Won and shares)
Grantee	Relationship with the Company	Date of Grant	Method of Grant	Initially Granted		Changes during Reporting Period				Total Changes				Unexercised as of End of Reporting Period		Exercise Period	Exercise Price
Grantee	Relationship with the Company	Date of Grant	Method of Grant	Initially Granted		Exercised		Canceled		Exercised		Canceled		Unexercised as of End of Reporting Period		Exercise Period	Exercise Price
Jung Ho Park	Inside Director	March 24, 2017	Issuance of treasury stock, cash settlement		22,168		—		—		—		—		22,168	March 25, 2019 – March 24, 2022		246,750
Jung Ho Park	Inside Director	March 24, 2017	Issuance of treasury stock, cash settlement		22,168		—		—		—		—		22,168	March 25, 2020 – March 24, 2023		266,490
Jung Ho Park	Inside Director	March 24, 2017	Issuance of treasury stock, cash settlement		22,168		—		—		—		—		22,168	Mach 25, 2021 – March 24, 2024		287,810
Jung Ho Park	Inside Director	March 26, 2020	Issuance of treasury stock, cash settlement		111,106		—		—		—		—		111,106	March 27, 2023 – March 26, 2027		192,260
Young Sang Ryu	Inside Director	February 20, 2018	Issuance of treasury stock, cash settlement		1,358		—		—		—		—		1,358	February 21, 2020 – February 20, 2023		254,120
Young Sang Ryu	Inside Director	March 26, 2019	Issuance of treasury stock, cash settlement		1,734		—		—		—		—		1,734	March 27, 2021 – March 26, 2024		254,310
Young Sang Ryu	Inside Director	March 26, 2020	Issuance of treasury stock, cash settlement		2,353		—		—		—		—		2,353	March 27, 2023 – March 26, 2027		192,260
Young Sang Ryu	Inside Director	March 25, 2021	Issuance of treasury stock, cash settlement		5,990		—		—		—		—		5,990	March 26, 2023 – March 25, 2026		251,380
Jong Ryeol Kang	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement		2,048		—		—		—		—		2,048	March 27, 2023 – March 26, 2027		192,260
Jong Ryeol Kang	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement		2,350		—		—		—		—		2,350	March 26, 2023 – March 25, 2026		251,380
Hyoung Il Ha	Unregistered Officer	February 22, 2019	Issuance of treasury stock, cash settlement		1,564		—		—		—		—		1,564	February 23, 2021 – February 22, 2024		265,260
Hyoung Il Ha	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement		1,961		—		—		—		—		1,961	March 27, 2023 – March 26, 2027		192,260
Hyoung Il Ha	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement		3,760		—		—		—		—		3,760	March 26, 2023 – March 25, 2026		251,380
Yoon Kim	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement		1,874		—		—		—		—		1,874	March 27, 2023 – March 26, 2027		192,260


Yoon Kim	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	2,110	—	—	—	—	2,110	March 26, 2023 – March 25, 2026	251,380
Seok Joon Huh	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement	1,852	—	—	—	—	1,852	March 27, 2023 – March 26, 2027	192,260
Seok Joon Huh	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	2,260	—	—	—	—	2,260	March 26, 2023 – March 25, 2026	251,380
Poong Young Yoon	Unregistered Officer	February 22, 2019	Issuance of treasury stock, cash settlement	1,244	—	—	—	—	1,244	February 23, 2021 – February 22, 2024	265,260
Poong Young Yoon	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement	1,743	—	—	—	—	1,743	March 27, 2023 – March 26, 2027	192,260
Poong Young Yoon	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	3,360	—	—	—	—	3,360	March 26, 2023 – March 25, 2026	251,380
Seong Ho Ha	Unregistered Officer	February 22, 2019	Issuance of treasury stock, cash settlement	1,369	—	—	—	—	1,369	February 23, 2021 – February 22, 2024	265,260
Seong Ho Ha	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement	1,656	—	—	—	—	1,656	March 27, 2023 – March 26, 2027	192,260
Seong Ho Ha	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	1,920	—	—	—	—	1,920	March 26, 2023 – March 25, 2026	251,380
Dong Hwan Cho	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement	1,525	—	—	—	—	1,525	March 27, 2023 – March 26, 2027	192,260
Dong Hwan Cho	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	1,770	—	—	—	—	1,770	March 26, 2023 – March 25, 2026	251,380
HyunA Lee	Unregistered Officer	March 26, 2020	Issuance of treasury stock, cash settlement	1,525	—	—	—	—	1,525	March 27, 2023 – March 26, 2027	192,260
HyunA Lee	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	2,880	—	—	—	—	2,880	March 26, 2023 – March 25, 2026	251,380
Sang Kyu Shin	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	1,530	—	—	—	—	1,530	March 26, 2023 – March 25, 2026	251,380


Jae Seung Song	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	2,650	—	—	—	—	2,650	March 26, 2023 – March 25, 2026	251,380
Myung Jin Han	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	1,450	—	—	—	—	1,450	March 26, 2023 – March 25, 2026	251,380
Byung Hoon Ryu	Unregistered Officer	March 25, 2021	Issuance of treasury stock, cash settlement	1,250	—	—	—	—	1,250	March 26, 2023 – March 25, 2026	251,380

IX.

RELATED PARTY TRANSACTIONS

Line of Credit Extended to the Largest Shareholder and Related Parties

None.

Transfer of Assets to/from the Largest Shareholder and Related Parties and Other Transactions

Purchase and Dispositions of Investments


(As of June 30, 2021)					(Unit: in millions of Won)
Name (Corporate name)	Relationship	Purchase and Dispositions of Investments									Remarks
		Type of Investment	Transaction Details
		Type of Investment	Beginning		Increase		Decrease		Ending
Invites Healthcare Co., Ltd.	Affiliate	Shares		28,000		7,000		—		35,000	Capital increase
Invites Healthcare Co., Ltd.	Affiliate	Treasury Shares		—		10,000		—		10,000	Capital increase
Grab Geo Holdings PTE. LTD.	Overseas Affiliate	Shares		30,517		—		30,517		—	Disposal
Carrot General Insurance Co., Ltd.	Affiliate	Shares		20,000		—		20,000		—	Disposal
Broadband Nowon Broadcasting Co., Ltd.	Affiliate	Shares		10,463		9,512		—		19,975	Capital increase
T Map Mobility	Affiliate	Shares		155,408		73,304		—		228,711	Capital increase
Atlas	Overseas Affiliate	Shares		143,097		5,061		—		148,158	Capital increase
Quantum Innovation Fund I	Affiliate	Shares		15,969		373		—		16,342	Capital increase
Berkeley Lights	Overseas Affiliate	Shares		—		31,590		—		31,590	New acquisition
Walden Riverwood Ventures LP	Overseas Affiliate	Shares		23,392		—		3,162		20,230	Capital increase
DCM V, L.P.	Overseas Affiliate	Shares		3,576		—		2		3,574	Capital increase
SK Telecom T1	Affiliate	Shares		60,305		4,887		—		65,192	Capital increase
Makeus	Affiliate	Shares		770				770			Disposal
Smart SKT Infinitum Game Fund	Affiliate	Shares		—		1,500		—		1,500	New acquisition
Contents Wave	Affiliate	Shares		90,858		100,000		—		190,858	Capital increase
Id Quantique SA	Overseas Affiliate	Shares		100,527		5,978		—		106,505	Capital increase
SK Telecom TMT Investment Corp.	Overseas Affiliate	Shares		94,136		167,865		—		262,001	Capital increase
Vive Studios	Affiliate	Shares		—		2,999		—		2,999	New acquisition
Smart Spark Lab Cloud Fund 1	Affiliate	Shares		300		400		—		700	Capital increase
Translink Capital L.L.C.	Overseas Affiliate	Shares		2,767		—		45		2,722	Disposal
Hermed Capital Health Care Fund L.P	Overseas Affiliate	Shares		21,219		—		954		20,265	Disposal

Purchase and Disposition of Securities

In order to maximize the efficiency of each business entity, SK Telecom sold its shares of Grab Geo Holdings PTE. LTD. and Carrot General Insurance Co., Ltd., which were investment assets highly related to the mobility business, to T Map Mobility. The date of the resolution by the Board of Directors was February 25, 2021.

Transactions with the Largest Shareholder and Related Parties

(Unit: in millions of Won)

Counterparty

Relationship
with
Counterparty

Type

Transaction
Period

Transaction Details

Transaction Amount

PS&Marketing

Affiliate

Purchase

January 1, 2021

June 30, 2021

–

Marketing fees, etc.

644,014

Related Party Transactions

See note 31 of the notes to the Company’s unaudited consolidated financial statements attached hereto for more information regarding related party transactions.

Other Related Party Transactions (excluding Transactions with the Largest Shareholder and Related Parties listed above)

A.	Provisional Payment and Loans (including loans on marketable securities)

(As of June 30, 2021)

(Unit: in millions of Won)

Name
(Corporate
name)

Relationship

Account category

Change details

Accrued
interest

Remarks

Beginning

Increase

Decrease

Ending

Baekmajang and others

Agency

Long-term and
short-term loans

96,766

44,652

77,046

64,372

—

Daehan Kanggun BCN Inc.

Investee

Long-term loans

22,147

—

X.	OTHER INFORMATION RELATING TO THE PROTECTION OF INVESTORS

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


Date	Title	Content	Progress Status
June 10, 2021	Spin-off Plan (Report of Material Event)	Establishment of SKT Investment Co., Ltd. (tentative) by spinning off the Company’s business of managing the equity interests in certain investees engaged in, among other things, semiconductor and new information and communication technologies	Preparing for an extraordinary meeting of shareholders on October 12, 2021; the expected effective date of the spin-off is November 1, 2021.

Contingent Liabilities

A.	Legal Proceedings

[SK Telecom]

As of June 30, 2021, 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 June 30, 2021, there were 24 pending lawsuits against SK Broadband (aggregate amount of claims of Won 16,384 million), and provisions in the amount of Won 12,255 million in connection with such lawsuits were recognized.

[SK Planet]

As of June 30, 2021, there were two pending lawsuits against SK Planet (aggregate amount of claims of Won 250 million). The management cannot reasonably predict the outcome of these cases, and no amount in connection with these proceedings was recognized on the Company’s financial statements.

[Eleven Street]

As of June 30, 2021, there were six pending lawsuits against Eleven Street (aggregate amount of claims of Won 1,073 million). The management cannot reasonably predict the outcome of these cases, and no amount in connection with these proceedings was recognized on the Company’s financial statements.

[ADT CAPS]

As of June 30, 2021, there were 22 pending lawsuits against ADT CAPS (aggregate amount of claims of Won 1,910 million), and provisions in the amount of Won 1,536 million in connection with such lawsuits were recognized.

[Incross]

As of June 30, 2021, there were no pending lawsuits against Incross. However, during the reporting period, one lawsuit on appeal in which Incross was the defendant was ruled against Incross. As of June 30, 2021, Incross completed all payments in relation to the provisions previously recognized in connection with such lawsuit.

[SK Telink]

As of June 30, 2021, there was one pending lawsuits against SK Telink (aggregate amount of claims of Won 199 million). The management cannot reasonably predict the outcome of these cases, and no amount in connection with these proceedings was recognized on the Company’s financial statements.

B.	Other Contingent Liabilities

[SK Telecom]

None.

[SK Broadband]

As of June 30, 2021, SK Broadband has entered into revolving credit facilities with a limit of Won 207.7 billion with four 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 1,568 million on certain of its buildings, including Guri Guksa, in connection with leasing of such buildings.

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

As of June 30, 2021, Seoul Guarantee Insurance Company has provided a performance guarantee of Won 40,972 million to SK Broadband in connection with the performance of certain contracts and the repair of any defects, and Korea Content Financial Cooperative has provided a performance guarantee of Won 43,742 million in connection with the performance of certain contracts.

[SK Planet]

As of June 30, 2021, SK Planet has entered into revolving credit facilities of up to Won 17 billion with Shinhan Bank and KEB Hana Bank.

As of June 30, 2021, Seoul Guarantee Insurance Company has provided guarantees of Won 3,723 million in total to SK Planet in connection with the performance of certain contracts and curing of defects.

[ADT CAPS]

As of June 30, 2021, ADT CAPS has entered into the following agreements with financial institutions, including loan agreements:


(Unit: in millions of Won)
Financial Institution	Type of Loan	Line of Credit	Amount Borrowed
Shinhan Bank and others	Acquisition financing	2,050,000	1,950,000
KEB Hana Bank	General	5,000	5,000
KEB Hana Bank	General	27,000	27,000
Shinhan Bank	Revolving credit	15,000	15,000

As of June 30, 2021, ADT CAPS has been provided with the following material payment guarantees by other parties:

As of June 30, 2021, ADT CAPS has entered into an accounts receivable-backed loan agreement with a credit limit of Won 58,000 million (of which ADT CAPS has borrowed Won 34,314 million) and a letter of credit of Won 2,000 million with KEB Hana Bank in order to make purchase payments

As of June 30, 2021, ADT CAPS has entered into an accounts receivable-backed loan agreement with a credit limit of Won 25,000 million (of which ADT CAPS has borrowed Won 5,692 million) with Kookmin Bank in order to make purchase payments.

In connection with ADT CAPS’ long-term loan in aggregate amount of Won 2,050 billion, it has provided its shares of CAPSTEC and an early repayment management account with Shinhan Bank (account number: 100-033-127083) as collateral.

[Dreamus Company]

As of June 30, 2021, there is one pending lawsuit against Dreamus Company (claim of Won 30 million). The management cannot reasonably predict the outcome of this case or its impact on the Company’s financial statements due to the uncertainty of the amount to be paid by the Company.

As of June 30, 2021, Seoul Guarantee Insurance Company has provided a guarantee of Won 184 million in connection with the performance and curing of defects under certain contracts for the benefit of the relevant customer of Dreamus Company.

Dreamus Company has entered into agreements with certain domestic and foreign companies for the implementation of designs and technologies in connection with product manufacturing, pursuant to which it is paying certain fees for the revenues generated from applicable products and the use of patents. The aggregate amount of such fees paid in the first half of 2021 and the second half of 2020 were Won 789 million and Won 881 million, respectively, which were included in its cost of sales and selling and administrative expenses.

[One Store]

As of June 30, 2021, details of the major payment guarantees received by One Store from third parties are as follows:

[Incross]

As of June 30, 2021, Incross has pledged the following assets:


(Unit: in millions of Won)
Pledged Assets	Agreement Details	Amount	Pledgee
Short-term financial instruments	Guarantee of contract performance3	13,100	NAVER Corporation
		5,124	Kakao Corp.
		250	Smart Media Representative Co., Ltd.
		1,500	SK Broadband
		100	Paradise Hotel
		1,046	KT
		748	Kakao Games Corp.
		739	LG U+
Total		22,607

As of June 30, 2021, Incross has entered into the following loan or transaction limit agreements on a consolidated basis:


(Unit: in millions of Won)
Counterparty	Agreement Details	Line of Credit
KEB Hana Bank	Loan for general funds	2,000
Woori Bank	Loan for general funds	2,000
Industrial Bank of Korea	Loan for general funds	4,100
Total		8,100

As of June 30, 2021, Incross provides KT Skylife Co., Ltd. with performance guarantees related to the payment of media advertisement fees in connection with advertisement agent services. No actual amount under such guarantee has been provided as of June 30, 2021.

As of June 30, 2021, Seoul Guarantee Insurance Company has provided a guarantee of Won 109 million (Won 127 million as of December 31, 2020) in connection with the guarantee of contract performance related to Incross’ operations.

Pursuant to Article 530-3(1) of the Korean Commercial Code, Incross’ SP business was spun off into a newly established company pursuant to a special resolution of its general shareholders’ meeting on March 28, 2014, and pursuant to Article 530-9(1) of the Korean Commercial Code, Incross and the new spun-off company are jointly liable for the repayment of debt incurred prior to the spin-off.

[SK M&Service]

As of June 30, 2021, SK M&Service has entered into the following agreements with financial institutions, including loan agreements:

(Unit: in millions of Won)

Financial Institution

Type of Loan

Line of Credit

Amount Borrowed

KEB Hana Bank

KRW

4,700

—

Korea Development Bank

KRW

10,000

—

KEB Hana Bank

KRW

268

231

As of June 30, 2021, Seoul Guarantee Insurance Company has provided SK M&Service with a performance guarantee in the amount of Won 1,616 million and Shinhan Bank has provided SK M&Service with a Won payment guarantee in the amount of Won 100 million.

[SK Stoa]

As of June 30, 2021, Kookmin Bank has provided a payment guarantee of Won 1.2 billion in connection with e-commerce transaction debt.

As of June 30, 2021, SK Stoa has entered into revolving credit facility of Won 10.0 billion with KEB Hana Bank.

3. Status of Sanctions, etc.

[SK Telecom]

Date

Authority

Subject of
Action

Sanction

Reason and the Relevant
Law

Status of Implementation

Company’s Measures

Mar. 20, 2019

KCC

SK Telecom

Decision of 14th KCC Meeting of 2019

– Correctional order

– Fine of Won 975 million

Payment of subsidies exceeding 115% limit by dealers; payment of discriminatory subsidies by dealers; inducement of such payments in connection with operation of online business channels (Articles 4-5, 3-1(1) and 9-3 of the MDDIA)

Decision confirmed; fine paid; correctional order implemented

Immediately ceased such activities; implemented compliance monitoring of online sales guidelines; revised online request system

June 26, 2019

KCC

SK Telecom

Decision of 31st KCC Meeting of 2019

– Correctional order

– Fine of Won 231 million

Refusal or delay of termination of user contract without just cause (Article 50-1(5) of the Telecommunications Business Act; Article 42-1(5) of the Enforcement Decree)

Decision confirmed; payment of fine and implementation of correctional order completed

Addressed issues discovered during investigation, such as outbound contact with customers regarding termination without customer consent

July 9, 2019

KCC

SK Telecom

Decision of 33rd KCC Meeting of 2019

– Correctional order

– Fine of Won 1.5 million

Failure to maintain subsidies without change for a minimum period of seven days (Article 4-3 of the MDDIA)

Decision confirmed; report on implementation of correctional order and payment of fine completed

Implemented improvements to work procedures (announce subsidies separately from public announcements on official website in case of notice of subsidies during pre-order period)

June 4, 2020

KCC

SK Telecom

Decision of 33rd KCC Meeting of 2020

– Correctional order

– Fine of Won 4 million

Obtaining consent from users for collection of personal location information through new contracts for mobile phones with material omissions instead of applicable terms of use for location information business (Article 18-1 of the Location Information Act and Article 22 of Enforcement Decree)

Decision confirmed; payment of fine and implementation of correctional order completed

Provided training to persons responsible for location information management, including representatives, and personnel handling location information

July 8, 2020

KCC

SK Telecom

Decision of 40th KCC Meeting of 2020

– Correctional order and submission of report

– Fine of Won 22.3 billion

Payment of subsidies exceeding 115% limit by dealers; payment of unreasonably discriminatory subsidies based on subscription type and rate plan; selection of certain dealers and instruction to and inducement of such subsidies by such dealers (Articles 3-1, 4-5 and 9-3 of the MDDIA)

Decision confirmed; payment of fine completed; implementation plan and report on implementation of correctional order submitted

Immediately ceased such activities; promoted measures to prevent recurrence, such as operation of voluntary consultative body regarding illegal online postings, standardization of incentive instructions/forms, establishment of record management system, development of monitoring activities of online retailers and expansion of the electronic subscription system

Date

Authority

Subject of
Action

Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s Measures

Sept. 9, 2020

KCC

SK Telecom

Decision of 49th KCC Meeting of 2020

– Correctional order and submission of report

– Fine of Won 76 million

False, exaggerated or deceptive advertising through offline and online channels that could potentially mislead users regarding key information about bundled products, such as component products and discount details, to induce subscription (Article 50(1)-5 of the Telecommunications Business Act and Article 42(1) of Enforcement Decree)

Decision confirmed; payment of completed and implementation plan submitted

Immediately ceased such activities; implemented improvements to work procedures such as designation of manager for false or exaggerated advertising of bundled products, regular self-monitoring, strengthening of evaluation and employee training of dealers/agents

Feb. 3, 2021

KCC

SK Telecom

Decision of 4th KCC Meeting of 2021

– Submission of statistical data pursuant to Article 30 of the Location Information Act

– Establishment and submission of recurrence prevention plan

– 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 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 documents to prevent omission in connection with personnel/organizational change

Mar. 18, 2021

Fair Trade Commission (“FTC”)

SK Telecom

Decision of FTC Meeting (No. 2021-75)

– Correctional order (prohibition order against future actions)

– 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, FTC determined that SK Telecom unfairly supported SK Broadband by paying for part of the sales commissions payable by SK Broadband (Article 23-1(7) of the Monopoly Regulation and Fair Trade Act)

On April 28, 2021, SK Telecom filed an administrative proceeding and applied for suspension of execution of the FTC decision (service of process delivered on March 30, 2021)

To properly allocate sales commissions in accordance with court’s decision; strengthen compliance activities

[SK Broadband]

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s
Measures

Jun. 13, 2019

FTC

T-broad/

T-broad Dongdaemun Broadcast/T-broad Nowon Broadcast

Prosecution

—

Provision of unfair benefits to related parties of Taekwang Group affiliates (Article 23-2 of the Monopoly Regulation and Fair Trade Act)

Criminal investigation pending

Expected to end without further action due to lack of prosecution rights due to merger

Jul. 29, 2019

FTC

SK Broadband

Correctional order (for unjustly restricting competition while participating in a bid for a public sector-only circuit project of public agencies) and fine of Won 32.7 million (SK Broadband was ultimately exempted from both the correctional order and the fine)

—

Substantially restricting competition in a bidding process for a public sector-only network project by agreeing on the winning bidder, bidding participants and the bidding price in advance (SK Broadband was the first to voluntarily report the act of collusion and was granted exemption from applicable sanctions) (Article 19-1(3), Article 19-1(8) and Article 22-2(1)(2) of the Monopoly Regulation and Fair Trade Act, and Article 33 and Article 35-1 of its Enforcement Decree)

Not applicable due to exemption

Conduct legal education regarding collusive bidding (Jul. 1, 2019 to Jul. 19, 2019) and establish measures to prevent recurrence, including an internal reporting channel related to collusion and a fast-track system for legal advice on related matters

Aug. 28, 2019

FTC

T-broad/

T-broad Dongdaemun Broadcast/T-broad Nowon Broadcast/Korea Digital Cable Media Center (“KDMC”)

Correctional order and fine

Tbroad: Won 177 million/ Tbroad Dongdaemun/Won 4 million/Tbroad Nowon: Won 1 million/ KDMC: Won 2 million

Provision of unfair benefits to related parties of Taekwang Group affiliates (Article 23-2 of the Monopoly Regulation and Fair Trade Act)

Paid the fine

Administrative proceedings pending

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s Measures

Nov. 29, 2019

FTC

SK Broadband

Correctional order (for unjustly restricting competition while participating in a bid to be selected as a mobile messaging service provider for the Public Procurement Service) and fine of Won 188 million

Won 188 million

Substantially restricting competition in an auction for selection of a mobile messaging service provider by agreeing on the winning bidder in advance, and either intentionally participating or restraining from participating in the bid so that such agreed-upon bidder can win the bid (SK Broadband was the second to voluntarily report the act of collusion and was granted a reduction in fine from Won 301 million to Won 188 million) (Article 19-1(8), Article 21, Article 22, Article 22-2(1)(2), Article 55-3 of the Monopoly Regulation and Fair Trade Act and Article 9, Article 33, Article 35-1, Article 61 and Appendix 2 of its Enforcement Decree)

Paid the fine

Dec. 9, 2019

FTC

Korea Digital Cable Media Center

Fine of Won 8 million

Won 8 million

Violation of disclosure rules regarding corporate group status of five Taekwang group companies (Articles 11-4 and 69-2(1) of the Monopoly Regulation and Fair Trade Act)

Paid the fine

—

Jan. 13, 2020

FTC

SK Broadband

Correctional order (prohibiting acts of restricting competition, such as unilaterally raising prices, reducing the number of channels and inducing switch to high-priced products, based on post-merger

—

Correctional order to prevent the post-merger entity from engaging in activities that may restrict competition in the pay TV market (Articles 7-1 and 16-1 of the Monopoly Regulation and Fair Trade Act)

Submitted implementation plans (approved by Korea Fair Trade Commission)

Implement implementation plans

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s
Measures

Oct. 22, 2020

FTC

SK Broadband/Broadband Nowon Broadcast

Correctional order (injunction and notice) and fine of Won 351 million

Won 351 million

1. Unilateral change of fee payment criteria (provision of disadvantage)

2. Coercion of purchase of thrift phones (coercion of purchase)

3. Coercion of change of ownership of product (extortion of economic benefit)

(Article 23(1)-4 of the Monopoly Regulation and Fair Trade Act

Articles 7(1) and 9(1) of the Fair Agency Transactions Act)

Administrative proceeding

Improve work procedures to prevent errors in the future

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

Mar. 29, 2021

FTC

SK Broadband

Correctional order and fine of Won 3.198 billion

Won 3.198 billion

On Apr. 28, 2021, SK Telecom filed an administrative proceeding and applied for suspension of execution of the FTC decision (service of process delivered on Mar. 30, 2021)

To properly allocate sales commissions in accordance with court’s decision; strengthen compliance activities

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s
Measures

Jan. 23, 2019

Ministry of Science and ICT

3 affiliated system operators of T-broad

Correctional Order

—

Did not fulfill conditions for reauthorization including carrying out network investment plans for 2017 (Article 99-1(8) of the Broadcasting Act)

Submitted plans for corrective actions and implementation measures

Compliance with corrective order

Feb. 25, 2019

Ministry of Science and ICT

SK Broadband

Correctional Order (Correctional order and fine of Won 2.8 million for the violation of the Telecommunications business act related to false statistical reports)

Won 2.8 million

Erroneous reporting of high-speed internet subscriber line data (Article 88-1, Article 92-1, Article 104-5 (17) of the Telecommunications Business Act)

Submitted implementation plans such as improving business processes

Paid the fine and complied with corrective order

Mar. 15, 2019

Communication office of the Korea Communications Commission

SK Broadband

Fine for violating laws related to providing information transfer services (Won 4.8 million)

Won 4.8 million

Failed to establish processes for service denial to spammers and deny such services to spammers (Article 76 and Article 50-4 of Act on Promotion of Information and Communications Network Utilization and Information Protection, etc., Article 74 of same act’s enforcement decree)

Implementation of plans to improve procedures on transfer of advertising information, fine payment (Apr. 2019)

Improvement of work process on denial of services to spammers

Jun. 26, 2019

Korea Communications Commission

SK Broadband

Correctional order (corrective action for infringing on user interests relating to the limit on cancelling subscription to high-speed Internet and bundle products)

—

Delaying/rejecting/restricting cancellation of services without a justifiable reason (Article 50-1 (5) of the Telecommunications Business Act, Article 42 (1) Table 45 (b) 4 of the same act’s enforcement decree)

Public disclosure of corrective order, improvement of work process and fine payment (Won 165 million)

Fine payment and corrective order compliance (work process improvement)

Sept. 30, 2019

Public Procurement Service

SK Broadband

3-month restriction from bidding in the public sector

—

Found to be colluding in public sector dedicated line project bidding from 2015 to 2017 by relevant organizations (Article 76-1 of the Act on Contracts to which the State is a Party)

Administrative litigation (main case) has been withdrawn, with a 3-month restriction period from Apr. 17, 2020-Jul. 16, 2020

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s
Measures

Dec. 9, 2019

Ministry of Science and ICT

2 affiliated system operators of T-broad

Corrective Order

—

Did not fulfill reauthorization conditions such as carrying out network investment plans for 2018 (Article 99-1 of the Broadcasting Act)

Submitted plans for corrective actions and implementation measures

Compliance with corrective order

Jan. 15, 2020

Ministry of Science and ICT

SK Broadband

Corrective Order (Rewrite the operations report for the 2018 tax year with mandated revisions and submit to the Ministry of Science and ICT), fine of Won 79 million

Won 79 million

Error in the assets/profits/costs categories for the telecommunications business report for the 2018 tax year, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications Business Accounting Separation Criteria. (Article 49 of the Telecommunications Business Act)

Submitted revised business report for 2018 tax year (Feb 3, 2020) and paid fine (Feb. 7, 2020)

Improve business processes to prevent errors

Jan. 16, 2020

Ministry of Science and ICT

T-broad

Corrective Order (Rewrite the operations report for the 2018 tax year with mandated revisions and submit to the Ministry of Science and ICT), fine of 13 million won

Won 13 million

Submitted revised business report for 2018 tax year (Jan. 3, 2020) and paid the fine (Feb. 10, 2020)

Improve business processes to prevent errors

May 1, 2020

Central Radio Management Service

3 affiliated system operators of T-broad

Fine of Won 6 million

Won 6 million won (Won 2 million each for Namdong Broadcast, Saerom Broadcast, and Seohai Broadcast)

—Fine for violating broadcasting laws by failing to submit monthly broadcasting results (Article 83 of the Broadcasting Act, Article 16 of the Act on Regulation of Violations of Public Order)

Paid the fine

—

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s
Measures

Sept. 9, 2020

Korea Communications Commission

SK Broadband

Corrective order (improvement of relevant work), fine of Won 251 million

Won 251 million

False, exaggerated, or deceptive ads on content of bundle products or discount rates, penalties, or discount scales, and other such main features of bundle products in order to induce subscription.(Article 50-1(5) of the Telecommunications Business Act, and Article 42-1-Table 4-5-f of the enforcement decree for the same act, Article 3-1-d of Bundling Sales Prohibition Standards

Plan to comply to corrective order

Fine payment and improvement of business processes

Dec. 11, 2020

Central Radio Management Service

13 affiliated system operators of SK Broadband

Corrective Order

—

Notification of administrative measures due to violation of the Broadcasting Act (failing to distribute PP program fees, which was a condition for reauthorization) (Article 99-1 of the Broadcasting Act)

—

Compliance to corrective order

Dec. 21, 2020

Ministry of Science and ICT

SK Broadband

Corrective Order (resubmission of the operations report for the 2019 tax year with mandated revisions and submit to the Ministry of Science and ICT), fine of Won 101 million

Won 101 million

Error in the assets/profits/costs categories for the telecommunications business report for the 2019 tax year, the submission of which is mandated by the Telecommunication Account Settlement and Reporting Regulations and Telecommunications Business Accounting Separation Criteria. (Article 49 of the Telecommunications Business Act)

Submitted revised business report for 2019 tax year (Jan. 15, 2021) and paid fine (Jan. 25, 2021)

Improve business processes to prevent errors

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s
Measures

Dec. 21, 2020

Ministry of Science and ICT

T-broad

Corrective Order (resubmission of the operations report for the 2019 tax year with mandated revisions and submit to the Ministry of Science and ICT), fine of Won 11 million

Won 11 million

Submitted revised business report for 2019 tax year (Jan. 15, 2021) and paid fine (Jan. 25, 2021)

Improve business processes to prevent errors

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 4 million

Illegally modified numbers were introduced during an illegal calling number modification blocking test for public and financial institutions as part of a calling number modification inspection in 2020 (Failed to meet requirements for appropriate technical measures to prevent modifications to prevent loss to users) (Article 84-2 of the Telecommunications Business Act)

Paid the reduced amount of fine (Won 4 million)

Analysis on the causes for malfunctioning of number theft blocking system, and improvement of system)

Date

Authority

Subject of
Action

Sanction

Amount of
Monetary
Sanction

Reason and the Relevant
Law

Status of
Implementation

Company’s
Measures

Jun. 8, 2021

Communication office of the Korea Communications Commission

SK Broadband

Fine (Won 3 million won)

Won 3 million

The Korea Communications Office determined that a violation of laws regarding the advertising information transfer restrictions occurred in connection with the practice of requiring date of birth information from customers in order to stop receiving text message advertisements (Article 50(4) of the Information and Communications Network Act and Article 61(3) of the Enforcement Decree of the same Act)

Paid the fine (Jul. 6)

Improved system so that users will no longer be asked to enter date of birth in order to stop receiving text message advertisements (Feb. 2021)

[ADT Caps]

During the past three years, ADT Caps received various fines in the aggregate amount of Won 120 million for violations of the Road Traffic Act, such as parking and speeding violations by its service vehicles dispatched for guards and technical personnel from its approximately 100 nationwide branches. While the safety management team is conducting training to comply with the Road Traffic Act, there are cases in which such violations may be unavoidable, such as in connection with an emergency dispatch to inspect a customer’s security system.

Date

Authority

Sanction

Monetary
Amount

Reason and the Relevant
Law

Status of
Implementation

Company’s Measures

Oct. 12, 2018

FTC

Fine, Correctional order

Won 56 million

Collusion in GS E&C’s Parnas Tower telecommunication construction (Articles 19-1(8) of the Fair Trade Act)

Paid the fine

Strengthen compliance management system

Jan. 17, 2019

Ministry of Employment and Labor

Fine

Won 2.2 million

Insufficient posting of the Occupational Safety and Health Act; Failure to appoint a managing supervisor (Articles 11-1 and 14-1 of the Occupational Safety and Health Act)

Paid the fine

Print and post the relevant laws; appoint managing supervisor and conduct training

Aug. 1, 2019

Seoul Gangnam Police Chief

Business suspension, Fine

Won 0.4 million

Placement of guards who meet disqualification criteria (Article 31-2(6) of the Security Business Act)

Paid the fine

Strengthen the employment process of new guards

Date

Authority

Sanction

Monetary
Amount

Reason and the Relevant
Law

Status of
Implementation

Company’s Measures

Sept. 19, 2019

Ministry of Employment and Labor, Seoul Regional Employment and Labor Office

Correctional order, Fine

Won 32.8 million

(Correctional order) Discriminatory treatment of dispatched workers, Minimum wage posting/notification;

(Fine) Failure to state mandatory items in labor contracts

(Article 21 of the Act on the Protection, Etc. of Temporary Agency Workers, Article 21 of the Minimum Wage Act, Article 17 of the Act on the Protection, Etc. of Fixed-term and Part-time Workers)

Distribution of additional holiday gifts (one driver); Submission of pictures of the minimum wage postings at the headquarters and local offices; Submission of revised labor contracts for all applicable workers

Equal treatment of permanent and dispatched workers; Revision of labor contracts on the Company’s bulletin; Revision of the format of the labor contracts (with revised minimum wage provisions)

Sept. 30, 2019

Governor of Gyeonggi-do Province

Fine

Won 0.5 million

Delay in notification of information change (CEO name, location) (Article 78 of the Information and Communications Construction Business)

Paid the fine

Strengthen management system

May 11, 2020

Seoul Gangnam Police Chief

Fine

Won 0.2 million

Delay in reporting permit changes (change of registered officers) (Article 4-3(3) of the Security Business Act)

Paid the fine

Strengthen management system

Jan. 14, 2021

Ministry of Employment and Labor, Seongnam Regional Employment and Labor Office

Fine

Won 0.2 million

Violation of reporting on correction of reasons for loss of the insured (Article 15 of the Employment Insurance Act)

Paid the fine

Strengthen management system

[Dreamus Company]

Date

Authority

Sanction

Reason and the Relevant Law

Status of Implementation

Company’s Measures

Jun. 17, 2021

National Radio Research Institute

Notice of administrative measures

-Cancellation of existing adequacy evaluation for two units of equipment and materials, Re-validation of selected testing institutions

-Improvement of business procedures

Adequacy evaluation was conducted using a test report issued by an unauthorized testing center (Article 58 of the Radio Wave Act)

-Completion of adequacy verification through retesting

-Collection of unsold equipment materials

-Plan to notify the buyers that there is no health concern regarding electromagnetic effects or disturbances

-Plan to submit an implementation plan for improvement of notices and business procedures

-Verification that the test is conducted at a center with MRA (Mutual Recognition Agreement)

-Preparation of a checklist for each step of the adequacy evaluation

-Appointment of adequacy testing personnel for follow-up

[One Store]

•

Date: December 18, 2020 (notice date)

•

Sanction: One Store received a fine of Won 6.4 million.

•

Reason and the Relevant Law: Violated Article 11-3 and Article 69-2 of the Monopoly Regulation and Fair Trade Act and regulations on disclosure of important matters by unlisted companies, etc. by reporting a 12.8% decrease in share ownership by the largest shareholder as of November 14, 2019 on April 9, 2020, after the due date of November 21, 2019.

•

Status of Implementation: Paid the fine (January 29, 2021).

•

Company’s Measures: Close review and monitoring of disclosure obligations to prevent recurrence of violation.

4. Material Events Subsequent to the Reporting Period

(1) Pursuant to the resolution of the board of directors on June 10, 2021, the Company plans to conduct a spin-off (the “Spin-off”) effective as of November 1, 2021. The details related to the Spin-off are as follows:


Classification	Company Name	Business Area
Existing company	SK Telecom Co., Ltd.	Fixed-line and wireless telecommunication services

Newly established company	SKT Investment Co., Ltd. (tentative and subject to change)	Business of managing the equity interests in certain investees engaged in, among other things, semiconductor and New ICT businesses and making new investments


Classification		Date
Meeting of shareholders for approval of spin-off plan		October 12, 2021

Date of the Spin-off		November 1, 2021

Registration of the Spin-off (tentative)		November 2, 2021

(2) On June 10, 2021, the board of directors of the Company resolved to engage in a stock split of its common stock for the purpose of increasing the number of outstanding shares. The total number of shares of the Company’s issued common stock will be changed from 72,060,143 shares (par value per share: KRW 500) to 360,300,715 shares (par value per share: KRW 100), subject to final shareholder approval at the general meeting of shareholders on October 12, 2021.

(3) On July 22, 2021, the board of directors of the Company declared an interim dividend as follows:.


Classification		Content
Interim dividend amount		Cash dividend of Won 2,500 per share (Total: Won 177,902 million)

Dividend return rate (based on market price)		0.77%

Dividend record date		June 30, 2021

Dividend payment date		On or before August 11, 2021, in accordance with Article 165-12(3) of the Financial Investments Services and Capital Markets Act

(4) Pursuant to the resolution of its board of directors on June 23, 2021, Eleven Street issued a capital increase of Won 48,081 million by third-party allotment for the purpose of granting stock options. This resolution is subject to final approval at the general meeting of shareholders.

(5) On June 4, 2021, the board of directors of One Store resolved to acquire 10,424,735 redeemable convertible preferred shares (representing a 2.92% equity interest) of Kuaikan World (Cayman) Limited in order to increase sales of story content business and strengthen the competitiveness of its global business. The acquisition price is Won 40,030 million, and the acquisition date is July 16, 2021.

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/ Joongsuk Oh
	(Signature)

	Name:	Joongsuk Oh
	Title:	Senior Vice President

Date: August 27, 2021

SK TELECOM CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

June 30, 2021 and 2020

(With Independent Auditors’ Review Report Thereon)

Contents


	Page
Independent Auditors’ Review Report		1

Condensed Consolidated Interim Statements of Financial Position		4

Condensed Consolidated Interim Statements of Income		6

Condensed Consolidated Interim Statements of Comprehensive Income		7

Condensed Consolidated Interim Statements of Changes in Equity		8

Condensed Consolidated Interim Statements of Cash Flows		9

Notes to the Condensed Consolidated Interim Financial Statements		11

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

SK Telecom Co., Ltd.:

Reviewed financial statements

We have reviewed the accompanying condensed consolidated interim financial statements of SK Telecom Co., Ltd. and its subsidiaries (the “Group”), which comprise the condensed consolidated statement of financial position as of June 30, 2021, the condensed consolidated statements of income and comprehensive income for the three and six-month periods ended June 30, 2021 and 2020, the condensed consolidated statements of changes in equity and cash flows for the six-month periods ended June 30, 2021 and 2020, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034, Interim Financial Reporting, and for such internal controls as management determines is necessary to enable the preparation of condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility

Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our reviews.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial information consists principally of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Korean Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not prepared fairly, in all material respects, in accordance with K-IFRS No.1034, Interim Financial Reporting.

Other matters

The consolidated statement of financial position of the Group as of December 31, 2020, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 11, 2021, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2020, presented for comparative purposes, is consistent, in all material respects, with the audited consolidated financial statements from which it has been derived.

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.

KPMG Samjong Accounting Corp.

Seoul, Korea

August 13, 2021

This report is effective as of August 13, 2021, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SK TELECOM CO., LTD. (the “Parent Company”) AND SUBSIDIARIES

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2021, AND DECEMBER 31, 2020, AND

FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2021 AND 2020

The accompanying condensed consolidated interim financial statements, including all footnote disclosures, were prepared by, and are the responsibility of, the Parent Company.

Park, Jung-Ho

Chief Executive Officer

SK TELECOM CO., LTD.

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position

As of June 30, 2021 and December 31, 2020


(In millions of won)	*Note*		June 30, 2021		December 31, 2020
Assets
Current Assets:
Cash and cash equivalents		29,30	W	1,539,295		1,369,653
Short-term financial instruments		29,30,32		1,518,759		1,426,952
Short-term investment securities		9,29,30		63,146		150,392
Accounts receivable – trade, net		5,29,30,31		2,301,615		2,188,893
Short-term loans, net		5,29,30,31		73,738		97,464
Accounts receivable – other, net		3,5,29,30,31,32		955,323		979,044
Contract assets		7,30		109,617		100,606
Prepaid expenses		3,6		2,092,870		2,128,349
Prepaid income taxes		27		753		1,984
Derivative financial assets		29,30		23,063		8,704
Inventories, net		8		211,780		171,443
Non-current assets held for sale		34		35,280		—
Advanced payments and others		3,5,29,30,31		215,673		151,602

				9,140,912		8,775,086

Non-Current Assets:
Long-term financial instruments		29,30		1,064		893
Long-term investment securities		9,29,30		2,730,618		1,648,837
Investments in associates and joint ventures		11		15,508,918		14,354,113
Property and equipment, net		3,12,13,31,32,34		13,243,760		13,377,077
Goodwill		10		3,463,037		3,357,524
Intangible assets, net		14		4,042,483		4,436,194
Long-term contract assets		7,30		47,609		47,675
Long-term loans, net		5,29,30,31		29,613		40,233
Long-term accounts receivable – other		3,5,29,30,31,32		281,677		332,803
Long-term prepaid expenses		3,6		1,080,346		1,063,711
Guarantee deposits		3,5,29,30,31		162,004		172,474
Long-term derivative financial assets		29,30		196,072		155,991
Deferred tax assets		27		98,160		105,088
Defined benefit assets		18		—		3,557
Other non-current assets		5,29,30		31,328		35,701

				40,916,689		39,131,871

Total Assets			W	50,057,601		47,906,957

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Interim Statements of Financial Position, Continued

As of June 30, 2021 and December 31, 2020


(In millions of won)	*Note*		June 30, 2021		December 31, 2020
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable – trade		29,30,31	W	304,311		372,909
Accounts payable – other		29,30,31		2,172,075		2,484,466
Withholdings		29,30,31		1,416,421		1,410,239
Contract liabilities		7		240,449		229,892
Accrued expenses		3,29,30		1,451,104		1,554,889
Income tax payable		27		205,765		219,766
Derivative financial liabilities		29,30		22		77
Provisions		3,17,32		62,855		69,363
Short-term borrowings		15,29,30		62,326		109,998
Current installments of long-term debt, net		15,29,30		1,206,667		939,237
Current installments of long-term payables – other		16,29,30		220,010		424,600
Current installments of financial liabilities at FVTPL		1,29,30		88,600		—
Lease liabilities		3,29,30,31		390,887		359,936
Other current liabilities				286		2,595

				7,821,778		8,177,967

Non-Current Liabilities:
Debentures, excluding current installments, net		15,29,30		7,471,442		7,690,169
Long-term borrowings, excluding current installments, net		15,29,30,32		2,309,009		1,979,261
Long-term payables – other		16,29,30		942,987		1,142,354
Financial liabilities at FVTPL		1,29,30		59,123		—
Long-term lease liabilities		3,29,30,31		1,112,579		1,076,841
Long-term contract liabilities		7		29,967		30,704
Defined benefit liabilities		18		241,202		154,944
Long-term derivative financial liabilities		19,29,30		443,083		375,083
Long-term provisions		3,17		72,518		81,514
Deferred tax liabilities		3,27		3,061,408		2,709,075
Other non-current liabilities		3,29,30,31		85,706		92,802

				15,829,024		15,332,747

Total Liabilities				23,650,802		23,510,714

Shareholders’ Equity:
Share capital		1,20		44,639		44,639
Capital surplus and others		20,21		2,826,475		677,203
Retained earnings		3,22		21,679,418		22,981,913
Reserves		23		952,917		40,139

Equity attributable to owners of the Parent Company				25,503,449		23,743,894
Non-controlling interests				903,350		652,349

Total Shareholders’ Equity				26,406,799		24,396,243

Total Liabilities and Shareholders’ Equity			W	50,057,601		47,906,957

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Interim Statements of Income

For the three and six-month periods ended June 30, 2021 and 2020


(In millions of won)			2021						2020
	*Note*		Three-month period ended June 30			Six-month period ended June 30			Three-month period ended June 30			Six-month period ended June 30
Operating revenue:		3,4,31
Revenue			W	4,818,272			9,598,733			4,603,338			9,053,928

Operating expenses:		3,31
Labor				791,313			1,607,722			735,707			1,478,476
Commission		6		1,448,118			2,839,532			1,333,896			2,631,865
Depreciation and amortization		3,4		997,819			1,994,301			996,959			1,981,774
Network interconnection				183,209			377,146			207,327			402,297
Leased lines		3		73,021			147,649			65,801			132,054
Advertising				97,794			173,011			93,300			167,254
Rent		3		40,972			86,989			43,790			88,322
Cost of goods sold		8		365,340			753,988			362,824			711,795
Others		24		424,089			833,017			405,950			801,009

				4,421,675			8,813,355			4,245,554			8,394,846

Operating profit		3,4		396,597			785,378			357,784			659,082

Finance income		3,4,26		46,054			110,933			32,919			68,443
Finance costs		3,4,26		(198,746	)		(297,468	)		(103,138	)		(212,036	)
Gain relating to investments in associates and joint ventures, net		4,11		657,636			980,091			267,004			407,899
Other non-operating income		3,4,25		134,148			149,110			28,741			45,360
Other non-operating expenses		3,4,25		(25,476	)		(33,994	)		(34,352	)		(51,470	)

Profit before income tax		4		1,010,213			1,694,050			548,958			917,278

Income tax expense		3,27		214,515			326,377			116,619			178,987

Profit for the period			W	795,698			1,367,673			432,339			738,291

Attributable to:
Owners of the Parent Company			W	765,785			1,324,050			427,395			735,940
Non-controlling interests				29,913			43,623			4,944			2,351

Earnings per share:		3,28
Basic earnings per share (in won)			W	10,709			18,502			5,794			9,962
Diluted earnings per share (in won)				10,700			18,490			5,794			9,962

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Interim Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2021 and 2020


(In millions of won)			2021						2020
	*Note*		Three-month period ended June 30			Six-month period ended June 30			Three-month period ended June 30			Six-month period ended June 30,
	*Note*		Three-month period ended June 30			Six-month period ended June 30			Three-month period ended June 30			Six-month period ended June 30,
Profit for the period			W	795,698			1,367,673			432,339			738,291

Other comprehensive income (loss):
Items that will never be reclassified to profit or loss, net of taxes:
Remeasurement of defined benefit liabilities		18		7,830			(10,952	)		1,469			(21,581	)
Net change in other comprehensive loss of investments in associates and joint ventures		11,23		(1,476	)		(2,979	)		(971	)		(1,962	)
Valuation gain on financial assets at fair value through other comprehensive income		23		529,608			699,287			202,636			182,367
Items that are or may be reclassified subsequently to profit or loss, net of taxes:
Net change in other comprehensive income (loss) of investments in associates and joint ventures		11,23		74,301			188,920			(47,018	)		63,760
Net change in unrealized fair value of derivatives		23		13,428			10,325			13,857			18,438
Foreign currency translation differences for foreign operations		23		1,968			18,099			(1,980	)		16,682

Other comprehensive income for the period, net of taxes				625,659			902,700			167,993			257,704

Total comprehensive income			W	1,421,357			2,270,373			600,332			995,995

Total comprehensive income attributable to:
Owners of the Parent Company			W	1,389,658			2,225,562			594,377			992,691
Non-controlling interests				31,699			44,811			5,955			3,304

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2021 and 2020


(In millions of won)
			Attributable to owners														Non-controlling interests			Total equity
	*Note*		Share capital		Capital surplus (deficit) and others			Retained earnings			Reserves			Sub-total			Non-controlling interests			Total equity
Balance, January 1, 2020			W	44,639		1,006,481			22,228,683			(329,576	)		22,950,227			(133,293	)		22,816,934
Total comprehensive income:
Profit for the period				—		—			735,940			—			735,940			2,351			738,291
Other comprehensive income (loss)		11,18,23		—		—			(21,679	)		278,430			256,751			953			257,704

				—		—			714,261			278,430			992,691			3,304			995,995

Transactions with owners:
Annual dividends				—		—			(658,228	)		—			(658,228	)		(5,765	)		(663,993	)
Share option		21		—		103			—			—			103			754			857
Interest on hybrid bonds				—		—			(7,383	)		—			(7,383	)		—			(7,383	)
Changes in ownership in subsidiaries				—		211,940			—			—			211,940			655,061			867,001

				—		212,043			(665,611	)		—			(453,568	)		650,050			196,482

Balance, June 30, 2020			W	44,639		1,218,524			22,277,333			(51,146	)		23,489,350			520,061			24,009,411

Balance, January 1, 2021			W	44,639		677,203			22,981,913			40,139			23,743,894			652,349			24,396,243
Total comprehensive income:
Profit for the period				—		—			1,324,050			—			1,324,050			43,623			1,367,673
Other comprehensive income (loss)		11,18,23		—		—			(11,266	)		912,778			901,512			1,188			902,700

				—		—			1,312,784			912,778			2,225,562			44,811			2,270,373

Transactions with owners:
Annual dividends				—		—			(641,944	)		—			(641,944	)		(25,771	)		(667,715	)
Share option		21		—		226			—			—			226			592			818
Interest on hybrid bonds				—		—			(7,383	)		—			(7,383	)		—			(7,383	)
Acquisition of treasury shares		20		—		(72,982	)		—			—			(72,982	)		—			(72,982	)
Disposal of treasury shares		20		—		29,803			—			—			29,803			—			29,803
Retirement of treasury shares		20		—		1,965,952			(1,965,952	)		—			—			—			—
Changes in ownership in subsidiaries				—		226,273			—			—			226,273			231,369			457,642

				—		2,149,272			(2,615,279	)		—			(466,007	)		206,190			(259,817	)

Balance, June 30, 2021			W	44,639		2,826,475			21,679,418			952,917			25,503,449			903,350			26,406,799

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows

For the six-month periods ended June 30, 2021 and 2020


(In millions of won)	*Note*		June 30, 2021			June 30, 2020
(In millions of won)	*Note*		June 30, 2021			June 30, 2020
Cash flows from operating activities:
Cash generated from operating activities:
Profit for the period			W	1,367,673			738,291
Adjustments for income and expenses		33		1,673,364			2,152,447
Changes in assets and liabilities related to operating activities		33		(580,097	)		(31,772	)

				2,460,940			2,858,966
Interest received				20,152			19,387
Dividends received				183,736			165,645
Interest paid				(158,140	)		(180,881	)
Income tax refund (paid)				(229,334	)		25,650

Net cash provided by operating activities				2,277,354			2,888,767

Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term investment securities, net				77,632			86,468
Collection of short-term loans				80,224			58,047
Decrease in long-term financial instruments				343			99
Proceeds from disposals of long-term investment securities				19,927			7,721
Proceeds from disposals of investments in associates and joint ventures				100,334			2,715
Proceeds from disposals of property and equipment				9,172			4,860
Proceeds from disposals of intangible assets				6,305			4,165
Collection of long-term loans				2,460			1,550
Decrease in deposits				—			10,618
Proceeds from settlement of derivatives				726			359
Cash inflow from business combinations, net				—			115,834

				297,123			292,436
Cash outflows for investing activities:
Increase in short-term financial instruments, net				(80,647	)		(69,981	)
Increase in short-term loans				(46,664	)		(68,936	)
Increase in long-term loans				(6,475	)		(3,483	)
Increase in long-term financial instruments				(18	)		(90,959	)
Acquisitions of long-term investment securities				(90,710	)		(5,461	)
Acquisitions of investments in associates and joint ventures				(180,169	)		(151,357	)
Acquisitions of property and equipment				(1,309,616	)		(1,696,509	)
Acquisitions of intangible assets				(27,712	)		(69,604	)
Increase in deposits				(7,698	)		(6,145	)
Cash outflow from business combinations, net				(90,462	)		—

				(1,840,171	)		(2,162,435	)

Net cash used in investing activities			W	(1,543,048	)		(1,869,999	)

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2021 and 2020


(In millions of won)	*Note*	June 30, 2021			June 30, 2020
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings, net		W	—			84,375
Proceeds from issuance of debentures			308,757			972,863
Proceeds from long-term borrowings			350,000			1,250
Cash inflows from settlement of derivatives			10			41,182
Increase in financial liabilities at FVTPL			129,123			—
Transactions with non-controlling shareholders			444,064			1,349

			1,231,954			1,101,019
Cash outflows for financing activities:
Repayments of short-term borrowings, net			(50,005	)		—
Repayments of long-term payable – other			(425,611	)		(426,950	)
Repayments of debentures			(330,000	)		(584,590	)
Repayments of long-term borrowings			(25,104	)		(25,295	)
Payments of dividends			(672,715	)		(658,228	)
Payments of interest on hybrid bonds			(7,383	)		(7,383	)
Repayments of lease liabilities			(203,781	)		(189,727	)
Acquisition of treasury shares			(72,982	)		—
Transactions with non-controlling shareholders			(13,489	)		(9,418	)

			(1,801,070	)		(1,901,591	)

Net cash used in financing activities			(569,116	)		(800,572	)

Net increase in cash and cash equivalents			165,190			218,196
Cash and cash equivalents at beginning of the period			1,369,653			1,270,824
Effects of exchange rate changes on cash and cash equivalents			4,452			7,883

Cash and cash equivalents at end of the period		W	1,539,295			1,496,903

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity

(1)

General

SK Telecom Co., Ltd. (“the Parent Company”) was incorporated in March 1984 under the laws of the Republic of Korea (“Korea”) to provide cellular telephone communication services in Korea. The Parent Company mainly provides wireless telecommunications 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 and depositary receipts (“DRs”) are listed on the Stock Market of Korea Exchange, the New York Stock Exchange and the London Stock Exchange. As of June 30, 2021, the Parent Company’s total issued shares are held by the following shareholders:


	Number of shares		Percentage of total shares issued (%)
SK Inc.		21,624,120		30.00
National Pension Service		7,205,438		10.00
Institutional investors and other shareholders		41,064,465		56.99
Kakao Co., Ltd.		1,266,620		1.76
Treasury shares		899,500		1.25

		72,060,143		100.00

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

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(2)

List of subsidiaries

The list of subsidiaries as of June 30, 2021 and December 31, 2020 is as follows:

Ownership (%)(*1)

Subsidiary

Location

Primary business

Jun. 30,
2021

Dec. 31,
2020

Subsidiaries owned by the Parent Company

SK Telink Co., Ltd.

Korea

Telecommunications and Mobile Virtual Network Operator service

100.0

SK Communications Co., Ltd.

Korea

Internet website services

100.0

SK Broadband Co., Ltd.

Korea

Telecommunications services

74.3

PS&Marketing Corporation

Korea

Communications device retail business

100.0

SERVICE ACE Co., Ltd.

Korea

Call center management service

100.0

SERVICE TOP Co., Ltd.

Korea

Call center management service

100.0

SK O&S Co., Ltd.

Korea

Base station maintenance service

100.0

SK Telecom China Holdings Co., Ltd.

China

Investment (Holdings company)

100.0

SK Global Healthcare Business Group, Ltd.

Hong Kong

Investment

100.0

YTK Investment Ltd.

Cayman
Islands

Investment association

100.0

Atlas Investment

Cayman
Islands

Investment association

100.0

SKT Americas, Inc.

USA

Information gathering and consulting

100.0

One Store Co., Ltd.(*2)

Korea

Telecommunications services

47.5

52.1

SK Planet Co., Ltd.

Korea

Telecommunications services, system software development and supply services

98.7

Eleven Street Co., Ltd.(*3)

Korea

E-commerce

80.3

DREAMUS COMPANY(*4)

Korea

Manufacturing digital audio players and other portable media devices

41.8

51.4

ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)(*5)

Korea

Information security service and unmanned security

62.6

Quantum Innovation Fund I

Korea

Investment

59.9

SK Telecom Japan Inc.

Japan

Information gathering and consulting

100.0

id Quantique SA(*6)

Switzerland

Quantum information and communications service

69.3

68.1

SK Telecom TMT Investment Corp.

USA

Investment

100.0

FSK L&S Co., Ltd.

Korea

Freight and logistics consulting business

60.0

Incross Co., Ltd.(*7)

Korea

Media representative business

34.6

Happy Hanool Co., Ltd.

Korea

Service

100.0

SK stoa Co., Ltd.

Korea

Other telecommunications retail business

100.0

Broadband Nowon Co., Ltd.(*8)

Korea

Cable broadcasting services

100.0

55.0

T map Mobility Co., Ltd.(*9)

Korea

Mobility business

66.3

100.0

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(2)

List of subsidiaries, Continued

The list of subsidiaries as of June 30, 2021 and December 31, 2020 is as follows, Continued:

Ownership (%)(*1)

Subsidiary

Location

Primary business

Jun. 30,
2021

Dec. 31,
2020

Subsidiary owned by One Store Co., Ltd.

Rokmedia Co., Ltd.(*10)

Korea

Publishing and telecommunications retail business

100.0

—

Subsidiaries owned by SK Planet Co., Ltd.

SK m&service Co., Ltd.

Korea

Database and Internet website service

100.0

SK Planet Global Holdings Pte. Ltd.

Singapore

Investment (Holdings company)

100.0

SKP America LLC.

USA

Digital contents sourcing service

100.0

K-net Culture and Contents Venture Fund

Korea

Capital investing in start-ups

59.0

Subsidiaries owned by DREAMUS COMPANY

iriver Enterprise Ltd.

Hong
Kong

Management of Chinese subsidiaries

100.0

iriver China Co., Ltd.

China

Sales and manufacturing of MP3 and 4

100.0

Dongguan iriver Electronics Co., Ltd.

China

Sales and manufacturing of e-book devices

100.0

LIFE DESIGN COMPANY Inc.

Japan

Sale of goods in Japan

100.0

Studio Dolphin Co., Ltd.(*10)

Korea

Music and sound recordings publishing

100.0

—

Subsidiaries owned by ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)

SKinfosec Information Technology(Wuxi) Co., Ltd.

China

System software development and supply services

100.0

ADT CAPS Co., Ltd.(*10)

Korea

Unmanned security

—

100.0

CAPSTEC Co., Ltd.

Korea

Manned security

100.0

Subsidiaries owned by SK Broadband Co., Ltd.

Home & Service Co., Ltd.

Korea

Operation of information and communications facility

100.0

Media S Co., Ltd.(*10)

Korea

Production and supply services of broadcasting programs

100.0

—

Subsidiary owned by Quantum Innovation Fund I

Panasia Semiconductor Materials LLC.

Korea

Investment

66.4

Subsidiary owned by SK Telecom Japan Inc.

SK Planet Japan, K. K.

Japan

Digital contents sourcing service

79.8

Subsidiary owned by id Quantique SA

Id Quantique LLC

Korea

Quantum information and communications

service

100.0

Subsidiaries owned by FSK L&S Co., Ltd.

FSK L&S(Shanghai) Co., Ltd.

China

Logistics business

66.0

FSK L&S(Hungary) Co., Ltd.

Hungary

Logistics business

100.0

FSK L&S VIETNAM COMPANY LIMITED

Vietnam

Logistics business

100.0

FSK L&S(Jiangsu) Co., Ltd.(*10)

China

Logistics business

100.0

—

Subsidiaries owned by Incross Co., Ltd.

Infra Communications Co., Ltd.

Korea

Service operation

100.0

Mindknock Co., Ltd.

Korea

Software development

100.0

Subsidiary owned by T map Mobility Co., Ltd.

YLP Inc.(*10)

Korea

Freight forwarders and cargo agents

100.0

—

Others(*11)

SK Telecom Innovation Fund, L.P.

USA

Investment

100.0

SK Telecom China Fund I L.P.

Cayman
Islands

Investment

100.0

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(2)

List of subsidiaries, Continued

The list of subsidiaries as of June 30, 2021 and December 31, 2020 is as follows, Continued:

(^*1)

The ownership interest represents direct ownership interest in subsidiaries either by the Parent Company or subsidiaries of the Parent Company.

(^*2)

The ownership interest has changed due to unequal paid-in capital increase and third-party share option which was exercised for the six-month period ended June 30, 2021. Although the Parent Company owns less than 50% ownership of the investee, the management has determined that the Parent Company controls One Store Co., Ltd. as it has a right to appoint the majority of the members of the board of directors by virtue of an agreement with the investee’s other shareholders.

(^*3)

80.3% of the shares issued by Eleven Street Co., Ltd. are owned by the Parent Company and 18.2% of redeemable convertible preferred shares with voting rights are owned by non-controlling shareholder. The Parent Company is obliged to guarantee dividend of at least 1% per annum of the preferred share’s issue price to the investor by the date on which Eleven Street Co., Ltd. is publicly listed or at the end of qualifying listing period, whichever occurs first. The present value of obligatory dividends amounting to W9,496 million are recognized as financial liabilities as of June 30, 2021.

(^*4)

The Group’s ownership interest of DREAMUS COMPANY has changed from 51.4% to 41.8% due to unequal paid-in capital increase for the six-month period ended June 30, 2021. Although the Parent Company owns less than 50% ownership of the investee, the management has determined that the Parent Company controls DREAMUS COMPANY as it has a right to appoint the majority of the members of the board of directors by virtue of an agreement with the investee’s other shareholders. Meanwhile, 18.8% of convertible preferred shares with voting rights are owned by non-controlling shareholders and shares of redeemable convertible preferred were classified as financial liabilities at fair value through profit or loss (“FVTPL”) in accordance with K-IFRS No. 1032.

(^*5)

On March 4, 2021, SK Infosec Co., Ltd. merged with ADT CAPS Co., Ltd., a subsidiary of SK Infosec Co., Ltd., to improve management efficiency and changed its name to ADT CAPS Co., Ltd.

(^*6)

The Parent Company additionally acquired 4,166,667 shares of id Quantique SA at W5,978 million in cash through unequal paid-in capital increase for the six-month period ended June 30, 2021.

(^*7)

Although the Parent Company owns less than 50% ownership of the investee, the management has determined that the Parent Company controls Incross Co., Ltd. considering the level of dispersion of remaining voting rights and voting patterns at previous shareholders’ meetings, and the fact that the Parent Company has a right to appoint the majority of the members of the board of directors by virtue of an agreement with the investee’s other shareholders.

(^*8)

The Parent Company acquired 513,000 shares (45%) of Broadband Nowon Co., Ltd. at W9,512 million in cash for the six-month period ended June 30, 2021.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(2)

List of subsidiaries, Continued

The list of subsidiaries as of June 30, 2021 and December 31, 2020 is as follows, Continued:

(^*9)

The Parent Company additionally contributed W73,555 million in cash and the Group’s ownership interest of T map Mobility Co., Ltd. has changed from 100% to 66.3% due to unequal paid-in capital increase for the six-month period ended June 30, 2021. In addition, the Parent Company has entered into a shareholders’ agreement with the acquirer of newly issued shares in relation to the paid-in capital increase of T map Mobility Co., Ltd. for the six-month period ended June 30, 2021, and W88,613 million of derivative financial liabilities are recognized for drag-along right of the acquirer of shares and call option of the Parent Company as of June 30, 2021. Meanwhile, 29.6% of common shares and 4.1% of convertible preferred shares with voting rights are owned by non-controlling shareholders and convertible preferred shares were classified as financial liabilities at FVTPL in accordance with K-IFRS No. 1032.

(^*10)

Details of changes in the consolidation scope for the six-month period ended June 30, 2021 are presented in note 1-(4).

(^*11)

Others are owned by Atlas Investment and another subsidiary of the Parent Company.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(3)

Condensed financial information of subsidiaries

Condensed financial information of the significant subsidiaries as of and for the six-month period ended June 30, 2021 is as follows:


(In millions of won)	As of June 30, 2021						For the six-month period ended June 30, 2021
Subsidiary	Total assets		Total liabilities		Total equity		Revenue		Profit (loss)
SK Telink Co., Ltd.	W	170,993		50,519		120,474		163,472		7,255
Eleven Street Co., Ltd.		942,930		530,158		412,772		264,242		(18,918	)
SK m&service Co., Ltd.		128,326		70,858		57,468		104,447		3,315
SK Broadband Co., Ltd.		5,671,890		2,913,156		2,758,734		1,969,874		113,490
K-net Culture and Contents Venture Fund		377,680		65,897		311,783		—		(3	)
PS&Marketing Corporation		416,103		202,617		213,486		671,051		864
SERVICE ACE Co., Ltd.		89,662		63,946		25,716		98,561		936
SERVICE TOP Co., Ltd.		66,435		44,700		21,735		94,936		2,536
SK O&S Co., Ltd.		91,894		58,223		33,671		123,646		202
SK Planet Co., Ltd.		500,182		179,281		320,901		124,612		(1,233	)
DREAMUS COMPANY(*1)		258,676		177,548		81,128		117,973		(14,902	)
ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)(*2)		3,106,729		2,773,760		332,969		720,255		8,390
One Store Co., Ltd.(*3)		323,170		133,361		189,809		100,702		(494	)
Home & Service Co., Ltd.		132,510		92,639		39,871		204,510		2,842
SK stoa Co., Ltd.		109,667		72,158		37,509		150,516		9,013
FSK L&S Co., Ltd.(*4)		79,717		42,950		36,767		141,356		5,049
Incross Co., Ltd.(*5)		183,434		104,558		78,876		22,929		7,489
T map Mobility Co., Ltd.(*6)		789,142		104,868		684,274		17,241		37,590

(*1)	The condensed financial information of DREAMUS COMPANY is consolidated financial information including iriver Enterprise Ltd. and four other subsidiaries of DREAMUS COMPANY.

(*2)

The condensed financial information of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.) is consolidated financial information including SKinfosec Information Technology (Wuxi) Co., Ltd and another subsidiary of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.) and including profit and loss which ADT CAPS Co., Ltd. recognized prior to the merger.

(*3)	The condensed financial information of One Store Co., Ltd. is consolidated financial information including Rokmedia Co., Ltd., a subsidiary of One Store Co., Ltd.

(*4)	The condensed financial information of FSK L&S Co., Ltd. is consolidated financial information including FSK L&S (Shanghai) Co., Ltd. and three other subsidiaries of FSK L&S Co., Ltd.

(*5)	The condensed financial information of Incross Co., Ltd. is consolidated financial information including Infra Communications Co., Ltd. and another subsidiary of Incross Co., Ltd.

(*6)	The condensed financial information of T map Mobility Co., Ltd. is consolidated financial information including YLP Inc., a subsidiary of T map Mobility Co., Ltd.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(3)

Condensed financial information of subsidiaries, Continued

Condensed financial information of the significant subsidiaries as of and for the year ended December 31, 2020 is as follows:


(In millions of won)	As of December 31, 2020						2020
Subsidiary	Total assets		Total liabilities		Total equity		Revenue		Profit (loss)
SK Telink Co., Ltd.	W	176,872		60,702		116,170		351,334		18,010
Eleven Street Co., Ltd.		999,225		542,534		456,691		545,556		(29,623	)
SK m&service Co., Ltd.		129,738		74,962		54,776		214,949		2,759
SK Broadband Co., Ltd.		5,765,808		3,119,489		2,646,319		3,713,021		150,694
K-net Culture and Contents Venture Fund		377,683		65,896		311,787		—		(44,737	)
PS&Marketing Corporation		470,521		257,809		212,712		1,427,218		(847	)
SERVICE ACE Co., Ltd.		96,258		71,890		24,368		206,612		2,905
SERVICE TOP Co., Ltd.		69,496		51,584		17,912		195,479		2,592
SK O&S Co., Ltd.		88,663		54,012		34,651		278,948		778
SK Planet Co., Ltd.		536,981		214,846		322,135		276,462		1,305
DREAMUS COMPANY(*1)		172,443		76,642		95,801		226,329		(23,068	)
SK Infosec Co., Ltd.(*2)		2,927,396		2,550,936		376,460		1,327,150		14,227
One Store Co., Ltd.		243,442		99,943		143,499		155,218		1,952
Home & Service Co., Ltd.		124,197		88,740		35,457		397,754		(20	)
SK stoa Co., Ltd.		107,982		79,339		28,643		268,693		17,154
FSK L&S Co., Ltd.(*3)		66,117		35,192		30,925		205,623		3,022
Incross Co., Ltd.(*4)		179,308		104,778		74,530		39,440		12,307
T map Mobility Co., Ltd.		170,381		17,179		153,202		—		(1,857	)

(*1)	The condensed financial information of DREAMUS COMPANY is consolidated financial information including iriver Enterprise Ltd. and three other subsidiaries of DREAMUS COMPANY.

(*2)

The condensed financial information of SK Infosec Co., Ltd. is consolidated financial information including SKinfosec Information Technology (Wuxi) Co., Ltd. and two other subsidiaries of SK Infosec Co., Ltd. and including profit and loss which Life Security & Holdings Co., Ltd. recognized prior to the merger.

(*3)	The condensed financial information of FSK L&S Co., Ltd. is consolidated financial information including FSK L&S (Shanghai) Co., Ltd. and two other subsidiaries of FSK L&S Co., Ltd.

(*4)	The condensed financial information of Incross Co., Ltd. is consolidated financial information including Infra Communications Co., Ltd. and another subsidiary of Incross Co., Ltd.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(4)

Changes in subsidiaries

The list of subsidiaries that were newly included in consolidation for the six-month period ended June 30, 2021 is as follows:


Subsidiary		Reason
Studio Dolphin Co., Ltd.		Acquired by DREAMUS COMPANY
Media S Co., Ltd.		Established by SK Broadband Co., Ltd.
FSK L&S(Jiangsu) Co., Ltd.		Established by FSK L&S Co., Ltd.
Rokmedia Co., Ltd.		Acquired by One Store Co., Ltd.
YLP Inc.		Acquired by T map Mobility Co., Ltd.

The list of subsidiary that was excluded from consolidation for the six-month period ended June 30, 2021 is as follows:


Subsidiary		Reason
ADT CAPS Co., Ltd.		Merged into ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(5)

The financial information of significant non-controlling interests of the Group as of and for the six-month period ended June 30, 2021 and as of and for the year ended December 31, 2020 are as follows:



(In millions of won)	DREAMUS *COMPANY(1)**			One Store Co., Ltd.			Eleven Street Co., Ltd.			ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)			Incross Co., Ltd.			SK Broadband Co., Ltd.			T map Mobility Co., Ltd.(*2)
Ownership of non-controlling interests (%)		39.4			52.0			18.2			37.4			54.8			24.9			29.6

	As of June 30, 2021
Current assets	W	213,660			253,348			819,827			294,602			170,645			1,220,233			540,243
Non-current assets		45,016			69,822			123,103			2,812,127			12,789			4,451,657			248,899
Current liabilities		(173,992	)		(126,731	)		(495,982	)		(403,744	)		(101,192	)		(1,225,231	)		(31,532	)
Non-current liabilities		(3,556	)		(6,630	)		(34,176	)		(2,370,016	)		(3,366	)		(1,687,925	)		(73,336	)
Net assets		81,128			189,809			412,772			332,969			78,876			2,758,734			684,274
Fair value adjustment and others		—			—			(9,496	)		(1,188,040	)		—			(23,000	)		—
Net assets on the consolidated financial statements		81,128			189,809			403,276			(855,071	)		78,876			2,735,734			684,274
Carrying amount of non-controlling interests		40,140			99,294			74,755			(319,797	)		48,494			687,490			211,372

	For the six-month period ended June 30, 2021
Revenue	W	117,973			100,702			264,242			720,255			22,929			1,969,874			17,241
Profit (loss) for the period		(14,902	)		(494	)		(18,918	)		8,390			7,489			113,490			37,590
Depreciation of the fair value adjustment and others		—			—			(199	)		1,141			—			—			—
Profit(loss) for the period on the consolidated financial statements		(14,902	)		(494	)		(19,117	)		9,531			7,489			113,490			37,590
Total comprehensive income (loss)		(14,866	)		(504	)		(19,118	)		11,334			7,489			113,403			37,590
Profit (loss) attributable to non-controlling interests		(7,495	)		(294	)		(3,533	)		3,566			4,635			28,520			17,239

Net cash provided by (used in) operating activities	W	13,554			13,648			(33,276	)		131,900			(289	)		470,809			(28,152	)
Net cash provided by (used in) investing activities		(23,052	)		92,934			51,847			(126,554	)		(2,879	)		(339,167	)		(562,287	)
Net cash provided by (used in) financing activities		69,008			45,939			(31,890	)		(30,798	)		(3,733	)		(141,995	)		528,821
Effects of exchange rate changes on cash and cash equivalents		928			3			353			74			—			92			1
Net increase (decrease) in cash and cash equivalents		60,438			152,524			(12,966	)		(25,378	)		(6,901	)		(10,261	)		(61,617	)

Dividends declared to non-controlling interests	W	—			—			25,000			11,515			—			—			—

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(5)

(*1)	18.8% of convertible preferred shares with voting rights are owned by non-controlling shareholders and convertible preferred shares were classified as financial liabilities at FVTPL in accordance with K-IFRS No. 1032.

(*2)	4.1% of convertible preferred shares with voting rights are owned by non-controlling shareholders and convertible preferred shares were classified as financial liabilities at FVTPL in accordance with K-IFRS No. 1032.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity, Continued

(5)


(In millions of won)
	DREAMUS COMPANY			One Store Co., Ltd.			Eleven Street Co., Ltd.			ADT CAPS Co., Ltd. (Formerly, SK *Infosec Co., Ltd.)()**			Incross Co., Ltd.			SK Broadband Co., Ltd.
Ownership of non-controlling interests (%)		48.6			47.4			18.2			37.4			55.2			24.9

	As of December 31, 2020
Current assets	W	146,278			215,672			896,828			306,520			165,668			1,179,743
Non-current assets		26,165			27,770			102,397			2,620,876			13,640			4,586,065
Current liabilities		(72,762	)		(96,139	)		(508,427	)		(417,194	)		(101,065	)		(1,279,132	)
Non-current liabilities		(3,880	)		(3,804	)		(34,107	)		(2,133,742	)		(3,713	)		(1,840,357	)
Net assets		95,801			143,499			456,691			376,460			74,530			2,646,319
Fair value adjustment and others		—			—			(14,297	)		(1,227,442	)		—			—
Net assets on the consolidated financial statements		95,801			143,499			442,394			(850,982	)		74,530			2,646,319
Carrying amount of non-controlling interests		47,452			68,573			81,754			(318,267	)		46,010			665,020

	2020
Revenue	W	226,329			155,218			545,556			1,327,150			39,440			3,713,021
Profit (loss) for the year		(23,068	)		1,952			(29,623	)		14,227			12,307			150,694
Depreciation of the fair value adjustment and others		—			—			(492	)		(19,229	)		—			—
Profit (loss) for the year on the consolidated financial statements		(23,068	)		1,952			(30,115	)		(5,002	)		12,307			150,694
Total comprehensive income (loss)		(22,740	)		2,278			(15,793	)		(3,758	)		12,145			151,417
Profit (loss) attributable to non-controlling interests		(10,770	)		930			(5,565	)		(12,432	)		7,568			27,240

Net cash provided by operating activities	W	15,223			38,006			65,499			248,524			24,629			1,035,474
Net cash used in investing activities		(2,471	)		(62,816	)		(71,644	)		(229,130	)		(2,284	)		(844,454	)
Net cash provided by (used in) financing activities		(2,329	)		(2,499	)		(18,059	)		11,134			(4,278	)		(93,259	)
Effects of exchange rate changes on cash and cash equivalents		(2,053	)		—			(385	)		(554	)		—			—
Net increase (decrease) in cash and cash equivalents		8,370			(27,309	)		(24,589	)		29,974			18,067			97,761

Dividends paid to non-controlling interests during the year ended December 31, 2020	W	—			—			5,000			17,273			—			—

(*)	The condensed financial information of SK Infosec Co., Ltd. includes profit and loss, cash flows which Life Security & Holdings Co., Ltd. recognized prior to the merger.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

2.	Basis of Preparation

(1)

Statement of compliance

These condensed consolidated interim financial statements were prepared in accordance with Korean International Financial Reporting Standard (“K-IFRS”) No. 1034, Interim Financial Reporting, as part of the period covered by the Group’s K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since December 31, 2020. These condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.

(2)

Use of estimates and judgments

Critical judgments, assumptions and estimation uncertainties

The preparation of the condensed consolidated interim financial statements in conformity with K-IFRS 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.

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2020.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

2.	Basis of Preparation, Continued

(2)

Use of estimates and judgments, Continued

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 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 K-IFRS, 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;

•

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or 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 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 30.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

3.	Significant Accounting Policies

(1)

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended December 31, 2020. The change in accounting policy will also be reflected in the Group’s consolidated financial statements as at and for the year ending December 31, 2021.

The Group has initially adopted Interest Rate Benchmark Reform Phase 2 – Amendments to K-IFRS No. 1109, Financial Instruments, K-IFRS No. 1039, Financial Instrument: Recognition and Measurement, K-IFRS No. 1107, Financial Instruments: Disclosures and K-IFRS No. 1116, Leases from January 1, 2021.

Interest Rate Benchmark Reform Phase 2 – Amendments provide exceptions as follows:

•

when a change required by interest rate benchmark reform occurs to a financial asset or financial liability measured at amortized cost, the Group updates the effective interest rate of the financial asset or financial liability rather than the carry amount and,

•

when a change required by interest rate benchmark reform occurs to a hedged item and/or hedging instrument, the exception permits the hedge relationship to be continued without interruption.

These amended standards are not expected to have a significant impact on the Group’s consolidated financial statements.

(2)

During the annual period ended December 31, 2020, the Group changed its accounting policy by applying agenda decision, Lease Term and Useful Life of Leasehold Improvements (IFRS 16 Leases and IAS 16 Property, Plant and Equipment)—November 2019, published by International Financial Reporting Interpretations Committee (“IFRIC”) on December 16, 2019. Due to the changes in accounting policies in connection with the IFRIC agenda, the Group restated its comparative financial statements for the six-month period ended June 30, 2020.

The following table summarizes the impacts of the change in accounting policy on the Group’s condensed consolidated interim financial statements.

Consolidated statement of financial position


(In millions of won)	As of June 30, 2020
	As reported		Adjustments			Restated
Assets
Accounts receivable – other, net	W	1,089,743		7,135			1,096,878
Prepaid expenses and others		3,552,784		(11,564	)		3,541,220
Property and equipment, net		12,544,240		713,934			13,258,174

	W	17,186,767		709,505			17,896,272

Liabilities
Accrued expenses and others	W	1,441,650		(252	)		1,441,398
Provisions		140,648		21,993			162,641
Lease liabilities		666,571		697,787			1,364,358
Deferred tax liabilities		2,634,816		(2,711	)		2,632,105

	W	4,883,685		716,817			5,600,502

Shareholders’ Equity
Retained earnings	W	22,284,645		(7,312	)		22,277,333

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

3.	Significant Accounting Policies, Continued

Consolidated statement of income


(In millions of won)
	For the six-month period ended June 30, 2020
	As reported		Adjustments			Restated
Operating revenue	W	9,053,209		719			9,053,928
Operating expenses:
Depreciation and amortization		1,960,672		21,102			1,981,774
Rent		102,427		(14,105	)		88,322
Leased lines		135,902		(3,848	)		132,054
Others		6,192,696		—			6,192,696

		8,391,697		3,149			8,394,846

Operating profit		661,512		(2,430	)		659,082
Finance income		68,408		35			68,443
Finance costs		206,901		5,135			212,036
Other non-operating income		45,406		(46	)		45,360
Other non-operating expenses		58,058		(6,588	)		51,470
Gain relating to investments in associates and joint ventures, net		407,899		—			407,899

Profit before income tax		918,266		(988	)		917,278
Income tax expense		179,265		(278	)		178,987

Profit for the period	W	739,001		(710	)		738,291

Earnings per share:
Basic and diluted earnings per share (in won)	W	9,971		(9	)		9,962

Consolidated statement changes in equity and consolidated statement of cash flows

The consolidated statement of changes in equity and consolidated statement of cash flows for the six-month period ended June 30, 2020 have been restated as a result of restated consolidated statement of financial position and statement of income.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

4.	Operating Segments

The Group’s operating segments have been identified to be each business unit, by which the Group provides independent services and merchandise. The Group’s reportable segments are cellular services, which include cellular voice service, wireless data service and wireless internet services; fixed-line telecommunications services, which include telephone services, internet services and leased line services; security services, which include unmanned security services, manned security services and system software development; commerce services, the open marketplace platform; and all other businesses, which include the Group’s internet portal services 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 six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	For the six-month period ended June 30, 2021
	Cellular services		Fixed-line telecommu- nications services		Security services		Commerce services			Others			Sub-total		Adjustments			Total
Total revenue	W	6,990,516		2,342,955		720,255		414,758			662,144			11,130,628		(1,531,895	)		9,598,733
Inter-segment revenue		764,544		541,811		66,973		7,646			150,921			1,531,895		(1,531,895	)		—
External revenue		6,225,972		1,801,144		653,282		407,112			511,223			9,598,733		—			9,598,733
Depreciation and amortization		1,404,539		467,882		129,791		17,095			34,015			2,053,322		(59,021	)		1,994,301
Operating profit (loss)		641,364		153,912		56,386		(6,384	)		(26,304	)		818,974		(33,596	)		785,378
Finance income and costs, net																			(186,535	)
Gain relating to investments in associates and joint ventures, net																			980,091
Other non-operating income and expenses, net																			115,116

Profit before income tax																			1,694,050


(In millions of won)
	For the six-month period ended June 30, 2020
	Cellular services		Fixed-line telecomm- unications services		Security services		Commerce services		Others			Sub-total		Adjustments			Total
Total revenue	W	6,844,418		2,115,384		611,115		382,890		551,769			10,505,576		(1,451,648	)		9,053,928
Inter-segment revenue		776,064		508,686		35,607		6,978		124,313			1,451,648		(1,451,648	)		—
External revenue		6,068,354		1,606,698		575,508		375,912		427,456			9,053,928		—			9,053,928
Depreciation and amortization		1,460,708		419,419		100,154		17,724		30,723			2,028,728		(46,954	)		1,981,774
Operating profit (loss)		528,098		111,958		66,686		1,686		(20,777	)		687,651		(28,569	)		659,082
Finance income and costs, net																		(143,593	)
Gain relating to investments in associates and joint ventures, net																		407,899
Other non-operating income and expenses, net																		(6,110	)

Profit before income tax																		917,278

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

4.	Operating Segments, Continued

(1)

Segment information for the six-month periods ended June 30, 2021 and 2020 are as follows, Continued:

Since there are no intersegment sales of inventory or depreciable assets, there is no unrealized intersegment profit to be eliminated on consolidation. 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 six-month periods ended June 30, 2021 and 2020.

(2)

Disaggregation of operating revenues considering the economic factors that affect the amounts, timing and uncertainty of the Group’s revenue and future cash flows is as follows:


(In millions of won)		For the six-month period ended
		June 30, 2021		June 30, 2020
Goods and Services transferred at a point in time:
Cellular revenue	Goods(*1)	W	434,177		423,503
Fixed-line telecommunication revenue	Goods		44,466		49,937
Commerce services revenue	Goods		46,100		32,093
	Commerce		114,109		104,556
Security services revenue	Goods		33,909		27,424
Other revenue	Goods		32,912		27,576
	Products		15,171		15,412
	Others(*2)		278,174		250,785

			999,018		931,286

Goods and Services transferred over time:
Cellular revenue	Wireless service(*3)		4,996,517		4,873,830
	Cellular interconnection		242,563		253,256
	Other(*4)		552,715		517,765
Fixed-line telecommunication revenue	Fixed-line service		88,510		100,402
	Cellular interconnection		40,779		42,475
	Internet Protocol Television(*5)		894,499		730,694
	International calls		83,302		77,639
	Internet service and miscellaneous(*6)		649,588		605,551
Commerce services revenue	Commerce service		246,903		239,263
Security services revenue	Service(*7)		619,373		548,084
Other revenue	Miscellaneous(*2)		184,966		133,683

			8,599,715		8,122,642

		W	9,598,733		9,053,928

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

4.	Operating Segments, Continued

(2)

Disaggregation of operating revenues considering the economic factors that affect the amounts, timing 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.

(*2)	Miscellaneous other revenue includes revenue from considerations received for the development and maintenance of system software and digital contents platform services.

(*3)	Wireless service revenue includes revenue from wireless voice and data transmission services principally derived from usage charges to wireless subscribers.

(*4)	Other revenue includes revenue from billing and collection services as well as other miscellaneous services.

(*5)	IPTV service revenue includes revenue from IPTV services principally derived from usage charges to IPTV subscribers.

(*6)	Internet service revenue includes revenue from the high-speed broadband internet service principally derived from usage charges to subscribers as well as other miscellaneous services.

(*7)	Service revenue includes revenue from rendering security services.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

5.	Trade and Other Receivables

(1)

Details of trade and other receivables as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)	June 30, 2021
	Gross amount		Loss allowance			Carrying amount
Current assets:
Accounts receivable – trade	W	2,559,293		(257,678	)		2,301,615
Short-term loans		74,679		(941	)		73,738
Accounts receivable – other(*)		1,009,261		(53,938	)		955,323
Accrued income		4,849		—			4,849
Guarantee deposits (Other current assets)		115,208		—			115,208

		3,763,290		(312,557	)		3,450,733
Non-current assets:
Long-term loans		71,728		(42,115	)		29,613
Long-term accounts receivable – other(*)		281,677		—			281,677
Guarantee deposits		162,304		(300	)		162,004
Long-term accounts receivable – trade (Other non-current assets)		25,045		(225	)		24,820

		540,754		(42,640	)		498,114

	W	4,304,044		(355,197	)		3,948,847

(*)	Gross and carrying amounts of accounts receivable – other as of June 30, 2021 include W439,441 million of financial instruments classified as FVTPL.


(In millions of won)	December 31, 2020
	Gross amount		Loss allowance			Carrying amount
Current assets:
Accounts receivable – trade	W	2,453,149		(264,256	)		2,188,893
Short-term loans		98,366		(902	)		97,464
Accounts receivable – other(*)		1,034,119		(55,075	)		979,044
Accrued income		3,418		(166	)		3,252
Guarantee deposits (Other current assets)		112,733		—			112,733

		3,701,785		(320,399	)		3,381,386
Non-current assets:
Long-term loans		84,355		(44,122	)		40,233
Long-term accounts receivable – other(*)		332,803		—			332,803
Guarantee deposits		172,774		(300	)		172,474
Long-term accounts receivable – trade (Other non-current assets)		25,702		(242	)		25,460

		615,634		(44,664	)		570,970

	W	4,317,419		(365,063	)		3,952,356

(*)	Gross and carrying amounts of accounts receivable – other as of December 31, 2020 include W517,175 million of financial instruments classified as FVTPL.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

5.	Trade and Other Receivables, Continued

(2)

Changes in the loss allowance on trade and other receivables measured at amortized cost for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	January 1, 2021		Impairment		*Write-offs()**			Collection of receivables previously written- off		Business combination		June 30, 2021
Accounts receivable – trade	W	264,498		14,863		(29,536	)		7,255		823		257,903
Accounts receivable – other, etc.		100,565		209		(9,887	)		6,049		358		97,294

	W	365,063		15,072		(39,423	)		13,304		1,181		355,197


(In millions of won)
	January 1, 2020		Impairment		*Write-offs()**			Collection of receivables previously written- off		Business combination		June 30, 2020
Accounts receivable – trade	W	249,501		30,230		(17,330	)		5,258		1,879		269,538
Accounts receivable – other, etc.		96,898		2,176		(4,440	)		1,028		—		95,662

	W	346,399		32,406		(21,770	)		6,286		1,879		365,200

(*)	The Group writes off the trade and other receivables that are determined to be uncollectable due to reasons 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 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 years and classifies the accounts receivable – trade by their credit risk characteristics and days overdue.

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, and, 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.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

6.	Prepaid Expenses

The Group pays commissions to its retail stores and authorized dealers for wireless and fixed-line telecommunications services. The Group capitalized certain costs associated with commissions paid to retail stores and authorized dealers to obtain new and retained customer contracts as prepaid expenses. 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 June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Current assets:
Incremental costs of obtaining contracts	W	1,957,980		2,016,570
Others		134,890		111,779

		2,092,870		2,128,349

Non-current assets:
Incremental costs of obtaining contracts		996,457		982,952
Others		83,889		80,759

	W	1,080,346		1,063,711

(2)

Incremental costs of obtaining contracts

The amortization and impairment losses in connection with incremental costs of obtaining contracts recognized for the six-month periods ended June 30, 2021 and 2020 are as follows:

(In millions of won)

2021

2020

Three-month
period ended
June 30

Six-month
period ended
June 30

Three-month
period ended
June 30

Six-month
period ended
June 30

Amortization and impairment losses recognized

661,923

1,316,164

599,193

1,202,204

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

7.	Contract Assets and Liabilities

In case of providing both wireless telecommunications 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 June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Contract assets:
Allocation of consideration between performance obligations	W	157,226		148,281
Contract liabilities:
Wireless service contracts		19,485		22,026
Customer loyalty programs		14,180		16,709
Fixed-line service contracts		118,898		106,916
Security services		33,574		30,597
Others		84,279		84,348

	W	270,416		260,596

(2)

The amount of revenue recognized for the six-month periods ended June 30, 2021 and 2020 related to the contract liabilities carried forward from the prior period are W94,357 million and W84,780 million, respectively.

8.	Inventories

(1)

Details of inventories as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021							December 31, 2020
	Acquisition cost		Write-down			Carrying amount		Acquisition cost		Write-down			Carrying amount
Merchandise	W	210,880		(10,968	)		199,912		172,762		(10,566	)		162,196
Finished goods		4,854		(2,056	)		2,798		3,730		(1,879	)		1,851
Work in process		2,915		(930	)		1,985		2,579		(818	)		1,761
Raw materials		12,452		(7,397	)		5,055		11,921		(6,905	)		5,016
Supplies		2,030		—			2,030		619		—			619

	W	233,131		(21,351	)		211,780		191,611		(20,168	)		171,443

(2)

Inventories recognized as operating expenses for the six-month periods ended June 30, 2021 and 2020 are W660,212 million and W515,186 million, respectively, and valuation losses on inventories recognized for six-month periods ended June 30, 2021 and 2020 are W1,367 million and W202 million, respectively, which are included in the cost of goods sold. In addition, write-down recognized for six-month periods ended June 30, 2021 and 2020 are W358 million and W4 million, respectively, which are included in other operating expenses.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

9.	Investment Securities

(1)

Details of short-term investment securities as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	Category	June 30, 2021		December 31, 2020
Beneficiary certificates	FVTPL	W	63,146		150,392

(2)

Details of long-term investment securities as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	Category	June 30, 2021		December 31, 2020
Equity instruments	FVOCI(*)	W	2,442,085		1,454,361
	FVTPL		69,605		67,833

			2,511,690		1,522,194
Debt instruments	FVOCI		1,122		1,080
	FVTPL		217,806		125,563

			218,928		126,643

		W	2,730,618		1,648,837

(*)

The Group designated investment in equity instruments that are not held for trading as financial assets at FVOCI, the amounts to those FVOCI as of June 30, 2021 and December 31, 2020 are W2,442,085 million and W1,454,361 million, respectively.

10.

Business Combinations

(1)

2021

Merger of ADT CAPS Co., Ltd. by SK Infosec Co., Ltd.:

On March 4, 2021, SK Infosec Co., Ltd., a subsidiary of the Parent Company, merged with ADT CAPS Co., Ltd., a subsidiary of SK Infosec Co., Ltd., to improve management efficiency. As this transaction is a business combination under common control, the acquired assets and liabilities were recognized at the carrying amounts in the ultimate controlling entity’s consolidated financial statements and there is no effect on the assets and liabilities of consolidated financial statements. In addition, SK Infosec Co., Ltd. changed its name to ADT CAPS Co., Ltd. since the merger date.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(1)

2021, Continued

Acquisition of Studio Dolphin Co., Ltd. by DREAMUS COMPANY:

DREAMUS COMPANY, a subsidiary of the Parent Company, obtained control by acquiring 10,000 shares(100%) of Studio Dolphin Co., Ltd. during the six-month period ended June 30, 2021. The consideration transferred was W1,500 million in cash and the difference between the fair value of net assets acquired and the consideration transferred amounting to W1,465 million was recognized as goodwill. Subsequent to the acquisition of control, Studio Dolphin Co., Ltd. recognized revenue of W57 million and net loss of W41 million.

(i)

Summary of the acquiree


		Information of Acquiree
Corporate name		Studio Dolphin Co., Ltd.
Location		3^rd floor, 10, Jandari-ro 7an-gil, Mapo-gu, Seoul, Korea
CEO		Kim, Dong-Hee
Industry		Music and sound recording business

(ii)

Considerations transferred, identifiable assets acquired and liabilities assumed at the acquisition date are as follows:


(In millions of won)
	Amounts
I. Consideration transferred:
Cash and cash equivalents	W	1,500
II. Fair value of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		20
Accounts receivable – trade and other		31
Other assets		7
Accounts payable – trade and other		(4	)
Short-term borrowings		(2	)
Other liabilities		(17	)

		35

III. Goodwill(I - II)	W	1,465

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(1)

2021, Continued

Acquisition of YLP Inc. by T map Mobility Co., Ltd.:

T map Mobility Co., Ltd., a subsidiary of the Parent Company, obtained control by acquiring 168,012 shares(100%) of YLP Inc. during the six-month period ended June 30, 2021. The consideration transferred was W79,000 million, among which W55,598 million was paid in cash to acquire 118,242 shares(70.4%). In addition, 267,700 shares which would have a value of W23,402 million were newly issued as consideration and in exchange for the transfer of 49,770 shares(29.6%) owned by shareholders of YPL Inc. The difference between the fair value of net assets acquired and the consideration transferred amounting to W68,386 million was recognized as goodwill. Subsequent to the acquisition of control, YLP Inc. recognized revenue of W3,511 million and net loss of W214 million.

(i)

Summary of the acquiree


		Information of Acquiree
Corporate name		YLP Inc.
Location		1740, Cheongwon-ro, Pyeongtaek-si, Gyeonggi-do, Korea
CEO		Lee, Hyeok-Ju
Industry		Freight forwarders and cargo agents

(ii)

Considerations transferred, identifiable assets acquired and liabilities assumed at the acquisition date are as follows:


(In millions of won)
	Amounts
I. Consideration transferred:
Cash and cash equivalents	W	55,598
Fair value of shares of T map Mobility Co., Ltd.		23,402

II. Fair value of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		5,897
Accounts receivable – trade and other, net		4,480
Property and equipment, net		431
Intangible assets, net		2,110
Other assets		325
Deferred tax assets		2,288
Borrowings		(1,000	)
Accounts payable – trade and other		(3,542	)
Other liabilities		(48	)
Lease liabilities		(327	)

		10,614

III. Goodwill(I - II)	W	68,386

The fair value of certain identifiable assets and liabilities was determined at provisional amounts because valuation by external valuation firm has not been completed.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(1)

2021, Continued

Acquisition of Rokmedia Co., Ltd. by One Store Co., Ltd.:

One Store Co., Ltd., a subsidiary of the Parent Company, obtained control by acquiring 60,000 shares(100%) of Rokmedia Co., Ltd. during the six-month period ended June 30, 2021. The consideration transferred was W40,000 million in cash and the difference between the fair value of net assets acquired and the consideration transferred amounting to W35,723 million was recognized as goodwill. Subsequent to the acquisition of control, Rokmedia Co., Ltd. recognized revenue of W4,427 million and net profit of W413 million.

(i)

Summary of the acquiree


		Information of Acquiree
Corporate name		Rokmedia Co., Ltd.
Location		3^rd floor, 330, Seongam-ro, Mapo-gu, Seoul, Korea
CEO		Kang, Jun-Gyu / Kim, Jeong-Su
Industry		Publishing and telecommunications retail business

(ii)

Considerations transferred, identifiable assets acquired and liabilities assumed at the acquisition date are as follows:


(In millions of won)
	Amounts
I. Consideration transferred:
Cash and cash equivalents	W	40,000

II. Fair value of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		719
Financial instruments		2,170
Accounts receivable – trade and other, net		1,374
Inventories		933
Other assets		3,212
Short-term loans, net		30
Property and equipment, net		792
Intangible assets, net		7
Deferred tax assets		453
Accounts payable – trade and other		(1,885	)
Contract liabilities		(1,401	)
Borrowings		(1,485	)
Provisions		(385	)
Lease liabilities		(56	)
Other liabilities		(111	)
Income tax payable		(90	)

		4,277

III. Goodwill(I - II)	W	35,723

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(1)

2021, Continued

Acquisition of Rokmedia Co., Ltd. by One Store Co., Ltd., Continued:

The fair value of certain identifiable assets and liabilities was determined at provisional amounts because valuation by external valuation firm has not been completed.

(2)

2020

Merger of Tbroad Co., Ltd. and two other companies by SK Broadband Co., Ltd.:

On April 30, 2020, SK Broadband Co., Ltd., a subsidiary of the Parent Company, merged with Tbroad Co., Ltd., Tbroad Dongdaemun Broadcasting Co., Ltd. and Korea Digital Cable Media Center Co., Ltd. in order to strengthen the competitiveness and enhance the synergy as a comprehensive media company. The considerations transferred included shares of SK Broadband Co., Ltd transferred based on the merger ratio and the obligations and rights pursuant to the shareholders’ agreement between the Parent Company and the acquiree’s shareholders, both measured at fair value as of April 30, 2020. The Group recognized the difference between the fair value of net assets acquired and the consideration transferred amounting to W405,639 million as goodwill.

The Group’s consolidated revenue and profit for the year would have been W18,831,147 million and W1,516,857 million, respectively, if the acquisition has occurred on January 1, 2020. The Group cannot reasonably identify the acquiree’s revenue and profit for the year included in the consolidated statement of income, as the business of Tbroad Co., Ltd. and the other two companies were merged with the Group’s subsidiary, SK Broadband Co., Ltd, and no separate financial information post acquisition is available.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(2)

2020, Continued

Merger of Tbroad Co., Ltd. and two other companies by SK Broadband Co., Ltd., Continued:

Considerations transferred, identifiable assets acquired and liabilities assumed at the acquisition date are as follows:


(In millions of won)
	Amounts
I. Consideration transferred:
Fair value of shares of SK Broadband Co., Ltd.	W	862,147
Fair value of derivative liability(*1)		320,984

II. Fair value of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		110,644
Short-term financial instruments		6
Accounts receivable – trade and other		66,241
Prepaid expenses		36,324
Contract assets		14,033
Long-term investment securities		6,239
Investments in associates and joint ventures		13,637
Property and equipment, net		245,654
Intangible assets, net(*2)		423,515
Other assets		3,261
Deferred tax assets		1,296
Accounts payable – trade and other		(105,179	)
Contract liabilities		(1,674	)
Income tax payable		(18,065	)
Provisions		(2,755	)
Defined benefit liabilities		(30	)
Other liabilities		(15,655	)

		777,492

III. Goodwill(I - II)	W	405,639

(*1)	The Parent Company has recognized fair value of obligations and rights in connection with the shareholders’ agreement with the acquiree’s shareholders as consideration for the business combination.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(2)

2020, Continued

Merger of Tbroad Co., Ltd. and two other companies by SK Broadband Co., Ltd., Continued:

(*2)

Identifiable intangible asset recognized by the Group in the business combination included customer relationships related to Tbroad Co., Ltd. and Tbroad Dongdaemun Broadcasting Co., Ltd. measured at fair value on the date of merger amounting to W374,019 million. Fair value of the customer relationships was estimated based on the multi-period excess earnings method (“MPEEM”). MPEEM is a valuation technique under income approach which estimates fair value by discounting the expected future excess earnings attributable to an intangible asset using risk adjusted discount rate. The following table shows the details of valuation technique used in measuring fair values as well as the significant unobservable inputs used.

Type

Valuation technique

Siginificant

unobservable inputs

Interrelationship between key unobservable

inputs and

fair value measurement

Customer relationships

MPEEM

• Estimated revenue per user

• Future churn rates

• Weighted average cost of capital (“WACC”) (7.7% for Tbroad Co., Ltd. and 8.3% for Tbroad Dongdaemun Broadcasting Co., Ltd.)

• The fair value of customer relationship will increase if expected revenue per subscriber increases and customer churn rate in the future and WACC decrease.

• The fair value of customer relationship will decrease if expected revenue per subscriber decreases and customer churn rate in the future and WACC increase.

Acquisition of Broadband Nowon Co.,Ltd. by the Parent Company:

The Parent Company has obtained control by acquiring 627,000 shares(55%) of Tbroad Nowon Broadcasting Co., Ltd. and Tbroad Nowon Broadcasting Co., Ltd. changed its name to Broadband Nowon Co., Ltd. during the year ended December 31, 2020. The consideration transferred was W10,421 million in cash and the difference between the fair value of net assets acquired and the consideration transferred amounting to W733 million was recognized as other non-operating income. Subsequent to the acquisition of control, Broadband Nowon Co., Ltd. recognized revenue of W5,756 million and net profit of W426 million.

(i)

Summary of the acquiree


		Information of Acquiree
Corporate name		Broadband Nowon Co., Ltd.
Location		21, 81gil, Dobong-ro, Gangbuk-gu, Seoul, Korea
CEO		Yoo, Chang-Wan
Industry		Cable broadcasting services

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(2)

2020, Continued

Acquisition of Broadband Nowon Co., Ltd. by the Parent Company, Continued:

(ii)

Considerations transferred, identifiable assets acquired and liabilities assumed at the acquisition date are as follows:


(In millions of won)
	Amounts
I. Consideration transferred:
Cash and cash equivalents	W	10,421

II. Fair value of identifiable assets acquired and liabilities assumed:
Cash and cash equivalents		18,106
Accounts receivable – trade and other		1,122
Property and equipment, net		1,784
Intangible assets, net		360
Other assets		595
Accounts payable – trade and other		(1,351	)
Other liabilities		(336	)

		20,280

III. Non-controlling interests:		9,126

IV. Gain on bargain purchase(I – II+III)	W	(733	)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Business Combinations, Continued

(2)

2020, Continued

Acquisition of security equipment construction and security services business of SK hystec inc. by ADT CAPS Co., Ltd.

ADT CAPS Co., Ltd., a subsidiary of the Parent Company, acquired the security equipment construction and security services business from SK hystec inc., a related party of the Group, in order to strengthen the expertise and the competitiveness of security business during the year ended December 31, 2020. The consideration transferred was W8,047 million, among which W2,958 million was paid in cash during the year ended December 31, 2020 and the remaining balance will be paid at W3,000 million annually in July 2021 and July 2022. The Group recognized the difference between the fair value of net assets acquired and the consideration transferred amounting to W2,892 million as goodwill.

Considerations transferred, identifiable assets acquired and liabilities assumed at the acquisition date are as follows:


(In millions of won)
	Amounts
I. Consideration transferred:
Cash and cash equivalents	W	8,047

II. Fair value of identifiable assets acquired and liabilities assumed:
Accounts receivable – trade and other		6,787
Property and equipment, net		363
Intangible assets, net		6,460
Other assets		4
Accounts payable – trade and other		(5,306	)
Defined benefit liabilities		(1,227	)
Deferred tax liabilities		(1,554	)
Other liabilities		(372	)

		5,155

III. Goodwill (I – II)	W	2,892

Merger of Life & Security Holdings Co., Ltd. by SK Infosec Co., Ltd.

SK Infosec Co., Ltd. merged with Life & Security Holdings Co., Ltd., a subsidiary of the Parent Company, to improve business management efficiency on December 30, 2020. As this transaction is a business combination under common control, the acquired assets and liabilities were recognized at the carrying amounts in the ultimate controlling entity’s consolidated financial statements and there is no effect on the assets and liabilities of consolidated financial statements. As a result of the merger, the Parent Company’s ownership interest of SK Infosec Co., Ltd. has changed from 100% to 62.6%.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures

(1)

Investments in associates and joint ventures accounted for using the equity method as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)			June 30, 2021				December 31, 2020
	Country		Ownership (%)		Carrying amount		Ownership (%)		Carrying amount
	Country		Ownership (%)		Carrying amount		Ownership (%)		Carrying amount
Investments in associates:
SK China Company Ltd.		China		27.3	W	846,292		27.3	W	555,133
Korea IT Fund(*1)		Korea		63.3		322,267		63.3		323,294
KEB HanaCard Co., Ltd.(*2)		Korea		15.0		334,793		15.0		314,930
SK Telecom CS T1 Co., Ltd.(*1,3)		Korea		54.9		51,616		54.9		53,010
NanoEnTek, Inc.		Korea		28.4		44,444		28.4		43,190
UniSK		China		49.0		17,064		49.0		15,700
SK Technology Innovation Company		Cayman Islands		49.0		63,157		49.0		41,579
SK MENA Investment B.V.		Netherlands		32.1		14,554		32.1		14,043
SK hynix Inc.		Korea		20.1		12,813,868		20.1		12,251,861
SK Latin America Investment S.A.		Spain		32.1		13,936		32.1		13,930
Grab Geo Holdings PTE. LTD.		Singapore		30.0		30,063		30.0		30,063
SK South East Asia Investment Pte. Ltd.		Singapore		20.0		345,034		20.0		311,990
Pacific Telecom Inc.(*2)		USA		15.0		41,063		15.0		39,723
S.M. Culture & Contents Co., Ltd.		Korea		23.3		60,400		23.3		62,248
Content Wavve Co., Ltd.(*4)		Korea		36.4		162,782		30.0		75,803
Hello Nature Co., Ltd.(*5)		Korea		49.9		14,071		49.9		11,969
Digital Games International Pte. Ltd.		Singapore		33.3		4,096		33.3		6,449
Invites Healthcare Co., Ltd.(*6)		Korea		27.1		28,896		43.5		25,536
Nam Incheon Broadcasting Co., Ltd.		Korea		27.3		11,798		27.3		10,902
NANO-X IMAGING LTD.(*2,7)		Israel		5.5		27,490		5.6		28,484
Home Choice Corp.(*2)		Korea		17.8		3,362		17.8		3,585
Carrot General Insurance Co., Ltd.(*2,8)		Korea		16.0		17,813		21.4		13,469
Bertis Inc.(*2,9)		Korea		11.2		15,000		—		—
UT LLC(*10)		Korea		49.0		83,010		—		—
12CM JAPAN and others(*2,11)		—		—		73,064		—		65,750

						15,439,933				14,312,641

Investments in joint ventures:
Dogus Planet, Inc.(*12)		Turkey		50.0		10,742		50.0		15,071
Finnq Co., Ltd.(*12)		Korea		49.0		10,356		49.0		13,342
NEXTGEN BROADCAST SERVICES CO., LLC(*12,13)		USA		50.0		10,451		50.0		5,850
NEXTGEN ORCHESTRATION, LLC(*12)		USA		50.0		1,662		50.0		1,600
Techmaker GmbH(*12)		Germany		50.0		5,610		50.0		5,609
Korea Content Platform, Inc.(*12,14)		USA		20.0		30,164		—		—

						68,985				41,472

					W	15,508,918			W	14,354,113

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures accounted for using the equity method as of June 30, 2021 and December 31, 2020 are as follows, Continued:

(*1)	Investments in Korea IT Fund and SK Telecom CS T1 Co., Ltd. were classified as investment in associates as the Group does not have control over 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 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 additionally contributed W4,888 million in cash during the six-month period ended June 30, 2021, but there is no change in the ownership interest.

(*4)	The Group additionally acquired 435,431 shares at W100,000 million in cash through unequal paid-in capital increase for the six-month period ended June 30, 2021, and the ownership interest has increased from 30.0% to 36.4%.

(*5)	The Group additionally contributed W9,980 million in cash during the six-month period ended June 30, 2021, but there is no change in the ownership interest.

(*6)

The Group disposed the entire shares of SK Telecom Smart City Management Co., Ltd. to Invites Healthcare Co., Ltd. during the year ended December 31, 2020 and additionally contributed W7,000 million of accounts receivable – other relating to disposal of the shares for the six-month period ended June 30, 2021. The ownership interest with voting right has changed from 43.5% to 27.1% as convertible preferred stock of Invites Healthcare Co., Ltd. have been converted to common stock.

(*7)	The ownership interest has decreased from 5.6% to 5.5% due to stock warrant and third-party share option, granted by NANO-X IMANGING LTD, which were exercised for the six-month period ended June 30, 2021.

(*8)	The Group acquired 2,000,000 shares by contributing W10,000 million in cash, due to unequal paid-in capital increase for the six-month period ended June 30, 2021, and ownership interest has decreased from 21.4% to 16.0%.

(*9)	The Group newly invested W15,000 million in cash during the six-month period ended June 30, 2021.

(*10)

T map Mobility Co., Ltd., a subsidiary of the Parent Company, additionally contributed W4,070 million in kind as investments for the six-month period ended June 30, 2021. In addition, UT LLC offered a third-party allotment for the six-month period ended June 30, 2021. As the ownership interest has decreased from 100% to 49% and the Group lost control over UT LLC due to a third-party allotment, it was reclassified into an associate from a subsidiary and recognized W82,248 million as gain on business transfer. In relation to a third-party allotment for the six-month period ended June 30, 2021, the Group has entered into a shareholder’s agreement regarding shares of UT LLC owned by the Group with the acquirer of newly issued shares. Pursuant to the agreement, when certain conditions are met within a period of time subsequent to the transaction date, T map Mobility Co., Ltd., a subsidiary of the Parent Company, can exercise a put option. The exercise price of the put option is determined at fair value and when the put option is exercised, the consideration to be paid to the Group either in cash or in shares of Uber Technologies, Inc.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures accounted for using the equity method as of June 30, 2021 and December 31, 2020 are as follows, Continued:

(*11)

The Group disposed the entire shares of SK Wyverns Co., Ltd. and recognized W100,000 million as gain relating to investments in associates for the six-month period ended June 30, 2021.

(*12)

These investments were classified as investments in joint ventures as the Group has a joint control pursuant to the agreement with the other shareholders.

(*13)

The Group additionally contributed W5,589 million in cash during the six-month period ended June 30, 2021, but there is no change in the ownership interest.

(*14)

The Group newly acquired at W29,837 million in cash during the six-month period ended June 30, 2021.

(2)

The market value of investments in listed associates as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021						December 31, 2020
	Market price per share (in won)		Number of shares		Market value		Market price per share (in won)		Number of shares		Market value
NanoEnTek, Inc.	W	8,810		7,600,649		66,962		8,620		7,600,649		65,518
SK hynix Inc.		127,500		146,100,000		18,627,750		118,500		146,100,000		17,312,850
S.M. Culture & Contents Co., Ltd.		3,300		22,033,898		72,712		1,630		22,033,898		35,915
NANO-X IMAGING LTD.		36,217		2,607,466		94,435		49,678		2,607,466		129,534

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(3)

The condensed financial information of significant associates as of and for the six-month period ended June 30, 2021 and as of and for the year ended December 31, 2020 are as follows:


(In millions of won)
	SK hynix Inc.			KEB HanaCard Co., Ltd.			Korea IT Fund			SK China Company Ltd.		SK South East Asia Investment Pte. Ltd.

	As of June 30, 2021
Current assets	W	20,099,557			8,819,955			109,908			1,617,965		301,549
Non-current assets		57,505,784			288,748			398,936			1,479,098		2,285,988
Current liabilities		9,186,925			1,222,592			—			49,034		406
Non-current liabilities		13,620,320			5,965,943			—			252,940		—

	For the six-month period ended June 30, 2021
Revenue	W	18,815,859			633,889			28,785			45,454		83
Profit (loss) for the period		2,895,553			142,048			19,961			947,618		(1,667	)
Other comprehensive income (loss)		402,440			507			(4,662	)		69,951		118,481
Total comprehensive income		3,297,993			142,555			15,299			1,017,569		116,814

(In millions of won)
	SK hynix Inc.			KEB HanaCard Co., Ltd.			Korea IT Fund			SK China Company Ltd.		SK South East Asia Investment Pte. Ltd.

	As of December 31, 2020
Current assets	W	16,570,953			7,910,517			107,652			380,413		797,045
Non-current assets		54,602,900			298,438			402,812			1,706,634		1,672,412
Current liabilities		9,072,360			897,594			—			51,025		67
Non-current liabilities		10,192,396			5,531,968			—			308,606		—

	For the year ended December 31, 2020
Revenue	W	31,900,418			1,231,815			52,330			107,791		—
Profit (loss) for the year		4,758,914			154,521			36,615			20,369		(158,680	)
Other comprehensive income (loss)		(107,378	)		(4,283	)		9,647			42,921		(390,851	)
Total comprehensive income (loss)		4,651,536			150,238			46,262			63,290		(549,531	)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(4)

The condensed financial information of significant joint ventures as of and for the six-month period ended June 30, 2021 and as of and for the year ended December 31, 2020 are as follows:


(In millions of won)
	Dogus Planet, Inc.			Finnq Co., Ltd.

	As of June 30, 2021
Current assets	W	38,923			23,766
Cash and cash equivalents		3,333			18,934
Non-current assets		31,538			6,449
Current liabilities		42,523			8,649
Accounts payable, other payables and provision		28,555			6,166
Non-current liabilities		6,454			595

	For the six-month period ended June 30, 2021
Revenue		62,864			2,971
Depreciation and amortization		(2,123	)		(2,294	)
Interest income		598			17
Interest expense		(224	)		(18	)
Loss for the period		(7,782	)		(5,920	)
Total comprehensive loss		(11,572	)		(5,920	)

(In millions of won)
	Dogus Planet, Inc.			Finnq Co., Ltd.

	As of December 31, 2020
Current assets	W	55,951			26,781
Cash and cash equivalents		9,083			23,936
Non-current assets		30,408			8,530
Current liabilities		46,186			7,367
Accounts payable, other payables and provisions		28,145			5,094
Non-current liabilities		10,031			879

	For the year ended December 31, 2020
Revenue	W	177,084			3,937
Depreciation and amortization		(4,642	)		(4,417	)
Interest income		1,878			29
Interest expense		(555	)		(51	)
Profit (loss) for the year		7,030			(19,426	)
Total comprehensive loss		(1,659	)		(19,426	)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(5)

Reconciliations of financial information of significant associates to carrying amounts of investments in associates in the consolidated financial statements as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021
	Net assets		Ownership interests (%)		Net assets attributable to the ownership interests		Cost-book value differentials		Carrying amount
SK hynix Inc.(*1,2)	W	54,764,175		20.1		11,635,843		1,178,025		12,813,868
KEB HanaCard Co., Ltd.		1,920,169		15.0		288,025		46,768		334,793
Korea IT Fund		508,843		63.3		322,267		—		322,267
SK China Company Ltd.(*1)		2,794,788		27.3		762,173		84,119		846,292
SK South East Asia Investment Pte. Ltd.(*1)		1,725,172		20.0		345,034		—		345,034

(In millions of won)
	December 31, 2020
	Net assets		Ownership interests (%)		Net assets attributable to the ownership interests		Cost-book value differentials		Carrying amount
SK hynix Inc.(*1,2)	W	51,883,236		20.1		11,082,048		1,169,813		12,251,861
KEB HanaCard Co., Ltd.		1,779,393		15.0		266,909		48,021		314,930
Korea IT Fund		510,464		63.3		323,294		—		323,294
SK China Company Ltd.(*1)		1,725,949		27.3		470,687		84,446		555,133
SK South East Asia Investment Pte. Ltd.(*1)		1,559,951		20.0		311,990		—		311,990

(*1)	Net assets of these entities represent net assets excluding those attributable to their non-controlling interests.

(*2)

The ownership interest is based on the number of shares owned by the Parent Company divided by the total shares issued by the investee company. The Group applied the equity method using the effective ownership interest which is based on the number of shares owned by the Parent Company and the investee’s total shares outstanding. The effective ownership interest applied for the equity method is 21.25% and 21.36% as of June 30, 2021 and December 31, 2020, respectively.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(6)

Details of the changes in investments in associates and joint ventures accounted for using the equity method for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended June 30, 2021
	Beginning balance		Acquisition and Disposal			Share of profits (losses)			Other compre- hensive income (loss)			Other increase (decrease)			Ending balance


Investments in associates:
SK China Company Ltd.	W	555,133		—			263,057			28,102			—			846,292
Korea IT Fund(*1)		323,294		—			12,642			(2,953	)		(10,716	)		322,267
KEB HanaCard Co., Ltd.		314,930		—			20,044			(181	)		—			334,793
SK Telecom CS T1 Co., Ltd.		53,010		4,888			(6,260	)		(22	)		—			51,616
NanoEnTek, Inc.		43,190		—			1,289			(35	)		—			44,444
UniSK		15,700		—			664			700			—			17,064
SK Technology Innovation Company		41,579		—			19,855			1,723			—			63,157
SK MENA Investment B.V.		14,043		—			(2	)		513			—			14,554
SK hynix Inc.(*1)		12,251,861		—			609,537			123,408			(170,938	)		12,813,868
SK Latin America Investment S.A.		13,930		—			(49	)		55			—			13,936
Grab Geo Holdings PTE. LTD.		30,063		—			—			—			—			30,063
SK South East Asia Investment Pte. Ltd.		311,990		—			6,430			26,614			—			345,034
Pacific Telecom Inc.		39,723		—			388			952			—			41,063
S.M. Culture & Contents Co., Ltd.		62,248		—			(2,304	)		456			—			60,400
Content Wavve Co., Ltd.		75,803		100,000			(13,021	)		—			—			162,782
Hello Nature Co., Ltd.(*2)		11,969		9,980			(6,147	)		(1	)		(1,730	)		14,071
Digital Games International Pte. Ltd.		6,449		—			(2,475	)		122			—			4,096
Invites Healthcare Co., Ltd.		25,536		7,000			(3,614	)		(26	)		—			28,896
Nam Incheon Broadcasting Co., Ltd.		10,902		—			896			—			—			11,798
NANO-X IMAGING LTD.		28,484		(46	)		(2,025	)		—			1,077			27,490
Home Choice Corp.		3,585		—			(223	)		—			—			3,362
Carrot General Insurance Co., Ltd.		13,469		10,000			(5,531	)		(125	)		—			17,813
Bertis Inc.		—		15,000			—			—			—			15,000
UT LLC		—		86,319			(3,309	)		—			—			83,010
12CM JAPAN and others(*3)		65,750		4,660			(4,383	)		8,583			(1,546	)		73,064

		14,312,641		237,801			885,459			187,885			(183,853	)		15,439,933
Investments in joint ventures:
Dogus Planet, Inc.		15,071		—			(2,434	)		(1,895	)		—			10,742
Finnq Co., Ltd.		13,342		—			(2,868	)		(118	)		—			10,356
NEXTGEN BROADCAST SERVICES CO., LLC		5,850		5,589			(1,261	)		—			273			10,451
NEXTGEN ORCHESTRATION, LLC		1,600		—			—			—			62			1,662
Techmaker GmbH		5,609		—			(20	)		21			—			5,610
Korea Content Platform, Inc.		—		29,837			—			—			327			30,164

		41,472		35,426			(6,583	)		(1,992	)		662			68,985

	W	14,354,113		273,227			878,876			185,893			(183,191	)		15,508,918

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(6)

Details of the changes in investments in associates and joint ventures accounted for using the equity method for the six-month periods ended June 30, 2021 and 2020 are as follows, Continued:

(*1)	Dividends received from the associates are deducted from the carrying amount during the six-month period ended June 30, 2021.

(*2)	The Group recognized W1,730 million of impairment loss for the investments in Hello Nature Co., Ltd. for the six-month period ended June 30, 2021.

(*3)

The acquisition for the six-month period ended June 30, 2021 includes W1,000 million of cash investment in Studio Yesone Co., Ltd. and W1,000 million of cash investment in SONNORI Corp. and W334 million relating to contribution of WALDEN SKT VENTURE FUND and W1,500 million of new cash investment in Smart SKT Infinitum Game Fund and W800 million of cash investment in Laguna Dynamic Game&Contents Fund. The disposal for the six-month period ended June 30, 2021 includes W334 million relating to disposal of the part of shares of KDX Korea Data Exchange.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(6)

Details of the changes in investments in associates and joint ventures accounted for using the equity method for the six-month periods ended June 30, 2021 and 2020 are as follows, Continued:


(In millions of won)	For the six-month period ended June 30, 2020
	Beginning balance		Acquisition and Disposal			Share of profits (losses)			Other compre- hensive income (loss)			Other increase (decrease)			Business Combina- tion		Ending balance


Investments in associates:

SK China Company Ltd.	W	568,459		—			(1,719	)		16,315			—			—		583,055

Korea IT Fund(*1)		311,552		—			11,752			(4,759	)		(17,557	)		—		300,988

KEB HanaCard Co., Ltd.		294,756		—			8,540			(1,128	)		—			—		302,168

SK Telecom CS T1 Co., Ltd.		60,305		—			(3,415	)		20			—			—		56,910

NanoEnTek, Inc.		42,127		112			616			(28	)		—			—		42,827

UniSK		14,342		—			479			433			—			—		15,254

SK Technology Innovation Company		43,997		—			53			1,788			—			—		45,838

SK MENA Investment B.V.		14,904		—			2			595			—			—		15,501

SK hynix Inc.(*1)		11,425,325		—			401,260			48,406			(146,100	)		—		11,728,891

SK Latin America Investment S.A.		13,698		—			(28	)		396			—			—		14,066

Grab Geo Holdings PTE. LTD.		31,269		—			(271	)		74			—			—		31,072

SK South East Asia Investment Pte. Ltd.		250,034		119,770			(10,909	)		2,162			—			—		361,057

Pacific Telecom Inc.(*1)		40,016		—			1,209			1,047			(979	)		—		41,293

S.M. Culture & Contents Co., Ltd.		63,469		—			(164	)		(119	)		—			—		63,186

Content Wavve Co., Ltd.		83,640		—			(3,811	)		—			—			—		79,829

Hello Nature Co., Ltd.(*2)		13,620		9,980			(6,510	)		(61	)		(434	)		—		16,595

Digital Games International Pte. Ltd.		—		8,810			—			—			—			—		8,810

Invites Healthcare Co., Ltd.		—		28,000			—			—			—			—		28,000

Nam Incheon Broadcasting Co.,Ltd.		—		—			237			—			—			10,226		10,463

NANO-XIMAGING LTD.(*3)		—		12,071			—			—			3,538			—		15,609

Home Choice Corp.		—		—			(15	)		—			—			3,411		3,396

12CM JAPAN and others(*4)		65,343		(3,102	)		159			(1,463	)		433			—		61,370

		13,336,856		175,641			397,465			63,678			(161,099	)		13,637		13,826,178

Investments in joint ventures:
Dogus Planet, Inc.		15,921		—			6,227			(1,955	)		—			—		20,193

Finnq Co., Ltd.		22,880		—			(4,861	)		—			—			—		18,019
NEXTGEN BROADCAST SERVICES CO., LLC		7,961		—			—			—			295			—		8,256
NEXTGEN ORCHESTRATION, LLC		1,646		—			—			—			61			—		1,707
		48,408		—			1,366			(1,955	)		356			—		48,175

	W	13,385,264		175,641			398,831			61,723			(160,743	)		13,637		13,874,353

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Investments in Associates and Joint Ventures, Continued

(6)

Details of the changes in investments in associates and joint ventures accounted for using the equity method for the six-month periods ended June 30, 2021 and 2020 are as follows, Continued:

(*1)	Dividends received from the associates are deducted from the carrying amount during the six-month period ended June 30, 2020.

(*2)	The Group recognized W434 million of impairment loss for the investments in Hello Nature Co., Ltd. for the six-month period ended June 30, 2020.

(*3)	As the Group obtained significant influence, W3,621 million of financial assets at FVOCI are reclassified for the six-month period ended June 30, 2020.

(*4)	The disposal for the six-month period ended June 30, 2020 includes W1,142 million relating to transfer of the shares of Health Connect Co., Ltd. and W2,056 million related to liquidation of 2010 KIF-Stonebridge IT Fund.

(7)

The Group discontinued the application of equity method to the following investees due to their carrying amounts being reduced to zero. The details of cumulative unrecognized equity method losses as of June 30, 2021 are as follows:


(In millions of won)	Unrecognized loss					Unrecognized change in equity
	For the six-month period ended June 30, 2021			Cumulative loss		For the six-month period ended June 30, 2021		Cumulative loss
Wave City Development Co., Ltd.	W	(213	)		2,187		—		—
Daehan Kanggun BcN Co., Ltd. and others		(4,598	)		6,349		—		(124	)

	W	(4,811	)		8,536		—		(124	)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

12.

Property and Equipment

Changes in property and equipment for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	For the six-month period ended June 30, 2021
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Reclassified as held for sale			Business combina- tion		Ending balance
Land	W	1,039,323		192		(63	)		20,118			—			(20,507	)		—		1,039,063

Buildings		858,606		948		(280	)		34,410			(27,843	)		(8,669	)		639		857,811

Structures		317,403		757		(10	)		10,985			(19,084	)		(6,104	)		—		303,947
Machinery		8,376,212		174,686		(18,455	)		765,527			(1,207,663	)		—			—		8,090,307

Other		653,616		367,704		(657	)		(278,676	)		(98,747	)		—			190		643,430

Right-of-use assets		1,472,035		527,274		(274,509	)		—			(215,932	)		—			394		1,509,262

Construction in progress		659,882		703,933		(115	)		(563,760	)		—			—			—		799,940


	W	13,377,077		1,775,494		(294,089	)		(11,396	)		(1,569,269	)		(35,280	)		1,223		13,243,760


(In millions of won)
	For the six-month period ended June 30, 2020
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Business combina- tion		Ending balance
Land	W	981,389		435		(37	)		19,296			—			40,292		1,041,375

Buildings		867,408		1,158		(179	)		16,405			(27,399	)		17,030		874,423

Structures		347,069		504		(27	)		2,856			(18,435	)		37		332,004

Machinery		7,924,392		177,694		(7,941	)		995,391			(1,201,023	)		171,959		8,060,472

Other		731,066		545,106		(1,942	)		(441,836	)		(102,190	)		4,682		734,886

Right-of-use assets		1,326,628		641,676		(387,404	)		—			(217,563	)		8,385		1,371,722

Construction in progress		755,508		806,361		(11,933	)		(711,697	)		—			5,053		843,292

	W	12,933,460		2,172,934		(409,463	)		(119,585	)		(1,566,610	)		247,438		13,258,174

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

13.

Lease

(1)

Details of the right-of-use assets as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Land, buildings and structures	W	1,308,952		1,269,753

Others		200,310		202,282

	W	1,509,262		1,472,035

(2)

Details of amounts recognized in the condensed consolidated interim statements of income for the six-month periods ended June 30, 2021 and 2020 as a lessee are as follows:


(In millions of won)
	For the six-month period ended
	June 30, 2021		June 30, 2020
Depreciation of right-of-use assets:

Land, buildings and structures	W	160,018		175,448

Others		55,914		42,115

		215,932		217,563

Interest expense on lease liabilities	W	11,608		10,823

Expenses related to short-term leases		12,775		10,985

Expenses related to leases of low-value assets except for short-term leases		1,951		1,641

(3)

The total cash outflows due to lease payments for the six-month periods ended June 30, 2021 and 2020 amounted to W230,115 million and W213,176 million, respectively.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

14.

Intangible Assets

(1)

Changes in intangible assets for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	For the six-month period ended June 30, 2021
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Business combination		Ending balance
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Business combination		Ending balance
Frequency usage rights	W	1,932,765		—		—			—		(255,873	)		—		1,676,892
Land usage rights		4,720		35		(3	)		—		(1,121	)		—		3,631
Industrial rights		71,442		2,295		(1	)		63		(2,985	)		—		70,814
Development costs		9,364		536		—			—		(1,905	)		—		7,995
Facility usage rights		21,880		513		(3	)		66		(3,053	)		—		19,403
Customer relations		919,863		302		(185	)		—		(28,441	)		—		891,539
Club memberships(*1)		106,865		2,578		(4,407	)		—		—			—		105,036
Brands(*1)		374,096		—		—			—		—			—		374,096
Other(*2)		995,199		21,065		(4,154	)		85,936		(207,086	)		2,117		893,077

	W	4,436,194		27,324		(8,753	)		86,065		(500,464	)		2,117		4,042,483


(In millions of won)
	For the six-month period ended June 30, 2020
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Impairment			Business Combina- tion		Ending balance
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Impairment			Business Combina- tion		Ending balance
Frequency usage rights(*3)	W	2,647,501		—		—			—		(260,990	)		(12,388	)		—		2,374,123
Land usage rights		7,349		100		(2	)		—		(1,746	)		—			—		5,701
Industrial rights		66,824		593		(80	)		8,230		(2,456	)		—			—		73,111
Development costs		11,146		430		(18	)		1,856		(2,290	)		—			—		11,124
Facility usage rights		25,832		818		—			274		(3,100	)		—			—		23,824
Customer relations		591,371		1,385		(137	)		25		(21,051	)		—			374,771		946,364
Club memberships(*1)		80,410		4,125		(2,351	)		—		—			(30	)		49,845		131,999
Brands(*1)		374,096		—		—			—		—			—			—		374,096
Other(*2)		1,061,563		61,509		(2,645	)		121,488		(213,439	)		(282	)		11		1,028,205

	W	4,866,092		68,960		(5,233	)		131,873		(505,072	)		(12,700	)		424,627		4,968,547

(*1)	Club memberships and Brands are classified as intangible assets with indefinite useful lives and are not amortized.

(*2)	Other intangible assets primarily consist of computer software and others.

(*3)	As Ministry of Science and Information and Communication Technology (“ICT”) approved the termination of 2G service, the Parent Company recognized an impairment loss for the portion of 800MHz frequency usage rights used for 2G service during the six-month period ended June 30, 2020.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

14.

Intangible Assets, Continued

(2)

Details of frequency usage rights as of June 30, 2021 are as follows:

(In millions of won)

Amount

Description

Commencement of
amortization

Completion of
amortization

1.8 GHz license

52,870

LTE service

Sept. 2013

Nov. 2021

2.6 GHz license

667,800

LTE service

Sept. 2016

Dec. 2026

2.1 GHz license

46,284

W-CDMA and LTE service

Dec. 2016

Nov. 2021

3.5 GHz license

893,255

5G service

Apr. 2019

Nov. 2028

28 GHz license

16,683

5G service

—

Nov. 2023

1,676,892

15.

Borrowings and Debentures

(1)

Short-term borrowings as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	Lender	Annual interest rate (%)	June 30, 2021		December 31, 2020
Short-term borrowings	Citibank	2.45	W	—		50,000
	KEB Hana Bank(*1)	FTP 1M +1.01		27,000		27,000
	KEB Hana Bank(*2)	6M financial I(bank) + 1.59		5,000		5,000
	Shinhan Bank(*2)	6M financial I(bank) + 1.35		15,000		15,000
	Hana Financial Investment Co., Ltd.	4.20		4,642		4,642
	DB Financial Investment Co., Ltd.	4.00		2,785		2,785
	Shinhan Financial Investment Co., Ltd.	4.20		5,571		5,571
	Shinhan Bank	3.59		510		—
	Shinhan Bank(*2)	6M financial I(bank) + 1.48		780		—
	Shinhan Bank(*2)	6M financial I(bank) + 1.66		38		—
	Industrial Bank of Korea	1.50		200		—
	Industrial Bank of Korea	2.93		500		—
	Industrial Bank of Korea	2.98		300		—

			W	62,326		109,998

(^*1)

1M FTP rate are 1.15% and 1.14% as of June 30, 2021 and December 31, 2020, respectively.

(^*2)

6M financial I(bank) rate are 0.90% and 0.92% as of June 30, 2021 and December 31, 2020, respectively.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

15.

Borrowings and Debentures, Continued

(2)

Changes in the long-term borrowings for the six-month period ended June 30, 2021 are as follows:


(In millions of won, thousands of other currencies)
	Lender	Annual interest rate (%)	Maturity	Book value
Current				W	49,663
Non-current					1,979,261

As of January 1, 2021					2,028,924

New long-term borrowings:
	Korea Development Bank	1.87	Feb. 10, 2026		50,000
	Mizuho bank, Ltd.	1.35	May 20, 2024		100,000
	DBS bank Ltd	1.32	May 28, 2024		200,000

					350,000
Repayments of long-term borrowings:
	Korea Development Bank(*1)	3M CD + 0.61	Dec. 20, 2021		(6,125	)
	Korea Development Bank(*1)	3M CD + 0.71	Dec. 21, 2022		(6,250	)
	Credit Agricole CIB(*1)	3M CD + 0.82	Dec. 14, 2023		(6,250	)
	FAE	0.00	May 7, 2025		(62 (CHF 50	) )
	Export Kreditnamnden	1.70	Apr. 29, 2022		(6,417	)

					(25,104	)

Other changes(*2)					2,449

Current(*3)					47,260
Non-current(*3)					2,309,009

As of June 30, 2021				W	2,356,269

(^*1)

As of June 30, 2021, 3M CD rate is 0.68%.

(^*2)

Other changes include the effects on foreign currency translation of long-term borrowings and changes in present value discount and borrowings which are acquired due to acquisition of Rokmedia Co., Ltd. by One Store Co., Ltd., a subsidiary of the Parent Company, for the six-month period ended June 30, 2021. (See note 10)

(^*3)

W22,058 million were reclassified from non-current to current for the six-month period ended June 30, 2021.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

15.

Borrowings and Debentures, Continued

(3)

Changes in debentures for the six-month period ended June 30, 2021 are as follows:


(In millions of won)
	Purpose	Annual interest rate (%)		Maturity	Face value			Book value
Current					W	890,000			889,574
Non-current						7,716,782			7,690,169

As of January 1, 2021						8,606,782			8,579,743

Debentures newly issued:
Unsecured corporate bonds	Refinancing fund		1.17	Jan. 15, 2024		80,000			79,642
			1.39	Jan. 15, 2026		80,000			79,678
			1.80	Jan. 15, 2031		50,000			49,811
			1.89	Jan. 15, 2041		100,000			99,626
Private placement corporate bonds(*1)	Operating fund		0.00	Oct. 1, 2023		6,040			5,777

						316,040			314,534

Debentures repaid:
Unsecured corporate bonds	Operating fund		1.80	Mar. 4, 2021		(100,000	)		(100,000	)
			1.71	Jun. 3, 2021		(50,000	)		(50,000	)
Unsecured corporate bonds	Refinancing fund		2.57	Feb. 20, 2021		(110,000	)		(110,000	)
Unsecured corporate bonds(*2)	Operating and refinancing fund		2.59	Feb. 1, 2021		(70,000	)		(70,000	)

						(330,000	)		(330,000	)

Other changes(*3)						63,001			66,572
Current(*4)						1,160,000			1,159,407
Non-current(*4)						7,495,823			7,471,442

As of June 30, 2021					W	8,655,823			8,630,849

(^*1)

Private placement corporate bonds were issued by ADT CAPS Co., Ltd., a subsidiary of the Parent Company.

(^*2)

Unsecured corporate bonds were issued by SK Broadband Co., Ltd., a subsidiary of the Parent Company.

(^*3)

Other changes include the effects on foreign currency translation of debentures and changes in present value discount on debentures for the six-month period ended June 30, 2021.

(^*4)

W599,833 million were reclassified from non-current to current for the six-month period ended June 30, 2021.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

16.

Long-Term Payables – Other

(1)

Long-term payables – other as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Payables related to acquisition of frequency usage rights	W	929,813		1,141,723
Other		13,174		631

	W	942,987		1,142,354

(2)

As of June 30, 2021 and December 31, 2020, details of long-term payables – other which consist of payables related to the acquisition of frequency usage rights are as follows (See note 14):


(In millions of won)
	June 30, 2021			December 31, 2020
Long-term payables – other	W	1,200,691			1,626,040
Present value discount on long-term payables – other		(50,868	)		(59,717	)
Current installments of long-term payables – other		(220,010	)		(424,600	)

Carrying amount at period end	W	929,813			1,141,723

(3)

The principal amount of the long-term payables – other repaid for the six-month periods ended June 30, 2021 and 2020 are W425,349 million, respectively. The repayment schedule of the principal amount of long-term payables – other as of June 30, 2021 is as follows:


(In millions of won)
	Amount
Less than 1 year	W	222,240
1~3 years		413,385
3~5 years		382,290
More than 5 years		182,776

	W	1,200,691

17.

Provisions

Changes in provisions for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	For the six-month period ended June 30, 2021																As of June 30, 2021
	Beginning balance		Increase		Utilization			Reversal			Other		Business combination		Ending balance		Current		Non-current
Provision for restoration	W	113,653		6,919		(3,516	)		(342	)		55		—		116,769		56,506		60,263
Emission allowance		7,424		487		(1,091	)		(5,678	)		—		—		1,142		1,142		—
Other provisions(*)		29,800		2,154		(14,540	)		(337	)		—		385		17,462		5,207		12,255

	W	150,877		9,560		(19,147	)		(6,357	)		55		385		135,373		62,855		72,518

(^*)	W4,041 million of current provisions are included in the other provisions relating to SK Planet Co., Ltd.’s onerous contracts. (See note 32)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

17.

Provisions, Continued

Changes in provisions for the six-month periods ended June 30, 2021 and 2020 are as follows, Continued:


(In millions of won)
	For the six-month period ended June 30, 2020																As of June 30, 2020
	Beginning balance		Increase		Utilization			Reversal			Other		Business combination		Ending balance		Current		Non- current
Provision for restoration	W	102,519		5,023		(1,952	)		(1,062	)		7		626		105,161		51,519		53,642
Emission allowance		5,257		4,572		—			—			—		—		9,829		9,829		—
Other provisions(*)		57,385		4,908		(16,772	)		—			1		2,129		47,651		30,830		16,821

	W	165,161		14,503		(18,724	)		(1,062	)		8		2,755		162,641		92,178		70,463

(*)	W29,610 million of current provisions and W3,828 million of non-current provisions are included in the other provisions relating to SK Planet Co., Ltd.’s onerous contracts.

18.

Defined Benefit Liabilities (Assets)

(1)

Details of defined benefit liabilities (assets) as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021			December 31, 2020
Present value of defined benefit obligations	W	1,344,546			1,278,550
Fair value of plan assets		(1,103,344	)		(1,127,163	)

Defined benefit assets(*)		—			(3,557	)

Defined benefit liabilities		241,202			154,944

(*)	Since Group entities neither have legally enforceable right nor intention to settle the defined benefit 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)

Changes in defined benefit obligations for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Beginning balance	W	1,278,550			1,136,787
Business combination		—			515
Current service cost		97,530			96,841
Past service cost		—			815
Interest cost		14,543			11,675
Remeasurement - Adjustment based on experience		13,047			24,622
Benefit paid		(59,746	)		(40,164	)
Others		622			944

Ending balance	W	1,344,546			1,232,035

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

18.

Defined Benefit Liabilities (Assets), Continued

(3)

Changes in plan assets for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Beginning balance	W	1,127,163			965,654
Business combination		—			485
Interest income		12,547			10,451
Remeasurement		(1,873	)		(921	)
Contributions		29,909			32,772
Benefit paid		(63,833	)		(46,415	)
Others		(569	)		1,456

Ending balance	W	1,103,344			963,482

(4)

Total cost of benefit plan, which is recognized in profit and loss (included in labor in the condensed consolidated interim statements of income) and capitalized into construction-in-progress, for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021		June 30, 2020
Current service cost	W	97,530		96,841
Past service cost		—		815
Net interest cost		1,996		1,224

	W	99,526		98,880

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

19.

Derivative Instruments

In relation to the paid-in capital increase of T Map Mobility Co., Ltd., a subsidiary of the Parent Company, for the six-month period ended June 30, 2021, the Parent Company has entered into a shareholder’s agreement with the acquirer of newly issued shares. Pursuant to the agreement, when certain conditions are met within a period of time subsequent to the paid-in capital increase, the acquirer of newly issued shares can exercise their drag-along rights and require the Parent Company to sell its shares of T Map Mobility Co., Ltd. should the subscriber of newly issued shares exercise their drag-along rights, the Parent Company also can exercise its call options over the shares held by those shareholders. The Group recognized a derivative financial liability of W88,613 million for the rights included in the shareholders’ agreement as of June 30, 2021.

The underlying asset is the total equity value of T Map Mobility Co., Ltd. calculated by multiplying the unit price per share (W87,418) as of the date of shareholder’s agreement which is the base of calculation by the total number of shares issued (16,090,548 shares). 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 the possibility of exercising the right. There is no significant difference in fair values between the date of shareholders’ agreement and June 30, 2021, and the significant unobservable inputs used in the fair value measurement and inter-relationship between significant unobservable inputs and fair value measurement are as below:


Significant unobservable inputs		Correlations between inputs and fair value measurements
Fair value of T Map Mobility Co., Ltd.’s common stock after the paid-in capital increase		The estimated fair value of derivative liabilities would decrease (increase) if the fair value of common stock would increase (decrease)
Volatility		The estimated fair value of derivative liabilities would decrease (increase) if the volatility of stock price increase (decrease)

20.

Share Capital and Capital Surplus and Others

(1)

The Parent Company’s outstanding share capital consists entirely of common shares with a par value of W500. The number of authorized, issued and outstanding common shares and the details of capital surplus and others as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021			December 31, 2020
Number of authorized shares		220,000,000			220,000,000
Number of issued shares(*1)		72,060,143			80,745,711
Share capital:
Common share	W	44,639			44,639
Capital surplus and others:
Paid-in surplus		2,915,887			2,915,887
Treasury shares		(203,595	)		(2,123,661	)
Hybrid bonds(*2)		398,759			398,759
Share option(Note 21)		1,707			1,481
Others(*3)		(286,283	)		(515,263	)

	W	2,826,475			677,203

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

20.

Share Capital and Capital Surplus and Others, Continued

(1)

(*1)

The Parent Company retired 8,685,568 treasury shares with reduction of its retained earnings before appropriation, as a result, the Parent Company’s issued shares have decreased without change in share capital for the six-month period ended June 30, 2021. In addition, in 2002 and 2003, the Parent Company retired treasury shares with reduction of its retained earnings before appropriation. As a result, the Parent Company’s issued shares have decreased without change in share capital.

(*2)	As there is no contractual obligation to deliver financial assets to the holders of hybrid bonds, the Group classified the hybrid bonds as equity. When in liquidation or bankruptcy, these hybrid bonds are senior only to common stocks.

(*3)	Others primarily consist of the excess of the consideration paid by the Group over the carrying amount of net assets acquired from entities under common control.

(2)

There were no changes in share capital for the six-month periods ended June 30, 2021 and 2020 and details of shares outstanding as of June 30, 2021 and 2020 are as follows:

(In shares)

June 30, 2021

June 30, 2020

Issued
shares

Treasury
shares

Outstanding
shares

Issued
shares

Treasury
shares

Outstanding
shares

Shares outstanding

72,060,143

899,500

71,160,643

80,745,711

7,609,263

73,136,448

(3)

Details of treasury shares as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021		December 31, 2020
Number of shares(*)		899,500		9,418,558
Acquisition cost	W	203,595		2,123,661

(*)

The Parent Company acquired 288,000 of its treasury shares for W72,982 million in an effort to increase shareholder value by stabilizing its stock price for the six-month period ended June 30, 2021. In addition, the Parent Company distributed 120,990 treasury shares (acquisition cost: W26,983 million) as bonus payment to the employees, resulting in gain on disposal of treasury shares of W2,659 million and distributed 500 treasury shares (acquisition cost: W113 million) as a part of the compensation to non-executive directors, resulting in gain on disposal of treasury shares of W48 million for the six-month period ended June 30, 2021.

Meanwhile, the Parent Company retired 8,685,568 treasury shares with reduction of its retained earnings before appropriation, as a result, the Parent Company’s issued shares have decreased without change in share capital for the six-month ended June 30, 2021.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option

(1)

The terms and conditions related to the grants of the share options under the share option program are as follows:

Parent Company

1-1

1-2

1-3

Grant date

March 24, 2017

February 20,
2018

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 shares)

22,168

1,358

4,177

1,734

127,643

33,280

Exercise price (in won)

246,750

266,490

287,810

254,120

265,260

254,310

192,260

251,380

Exercise period

Mar. 25, 2019

Mar. 24, 2022

Mar. 25, 2020

Mar. 24, 2023

Mar. 25, 2021

Mar. 24, 2024

Feb. 21, 2020

Feb. 20, 2023

Feb. 23, 2021

Feb. 22, 2024

Mar. 27, 2021

Mar. 26, 2024

Mar. 27, 2023

Mar. 26, 2027

Mar. 26, 2023

Mar. 25, 2026

Vesting conditions

2 years’
service from
the grant date

3 years’
service from
the grant

date

4 years’
service from
the grant

date

2 years’
service from
the grant

date

2 years’

service from
the grant date

2 years’

service from

the grant
date

3 years’

service from

the grant
date

2 years’

service from

the grant
date


	DREAMUS COMPANY
	1-1	1-2	1-3
Grant date	March 28, 2019	March 28, 2019	March 28, 2019
Types of shares to be issued	Common shares of DREAMUS COMPANY
Grant method	Issuance of new shares, reissue of treasury shares, cash settlement
Number of shares (in shares)(*)	333,344	333,337	333,319
Exercise price (in won)	9,160	9,160	9,160
Exercise period	Mar. 29, 2021~ Mar. 28, 2024	Mar. 29, 2022~ Mar. 28, 2025	Mar. 29, 2023~ Mar. 28, 2026
Vesting conditions	(a) 2 years’ service from the grant date	(a) 3 years’ service from the grant date	(a) 4 years’ service from the grant date
	(b) Average stock price for the exercise period is more than 150% of the exercise price	(b) Average stock price for the exercise period is more than 150% of the exercise price	(b) Average stock price for the exercise period is more than 150% of the exercise price

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(1)

The terms and conditions related to the grants of the share options under the share option program are as follows, Continued:

Incross Co., Ltd.

Grant date

March 7, 2017

March 7, 2019

October 15, 2019

March 10, 2020

October 20, 2020

March 5, 2021

Types of shares to be issued

Common shares of Incross Co., Ltd.

Grant method

Issuance of new shares, reissue of treasury shares, cash settlement

Number of shares
(in shares)(*)

8,025

6,600

59,225

19,800

3,300

19,775

Exercise price (in won)

17,485

16,895

22,073

26,291

45,280

51,940

Exercise period

Mar. 7, 2020~

Mar. 7, 2022~

Oct. 15, 2022~

Mar. 10, 2023~

Oct. 20, 2023~

Mar. 5, 2024~

Mar. 6, 2023

Mar. 6, 2025

Oct. 14, 2025

Mar. 9, 2026

Oct. 19, 2026

Mar. 4, 2027

Vesting conditions

3 years’

service from

the grant date

3 years’

service from

the grant date

3 years’

service from

the grant date

3 years’

service from

the grant date

3 years’

service from

the grant date

3 years’

service from

the grant date

ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

1-1

1-2

1-3

1-4

Grant date

August 22, 2019

Types of shares to be issued

Registered common shares of ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)

Grant method

Cash settlement

Number of shares (in shares)

161,541

87,562

230,581

203,223

Exercise price (in won)

20,579

22,225

24,003

Exercise period

1^st exercise: Applied to 50% of the granted shares and exercisable 6 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

2^nd exercise: Applied to 25% of the granted shares and exercisable 12 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

3^rd exercise: Applied to 25% of the granted shares and exercisable 18 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

Vesting conditions

Service provided until
December 31, 2019

Service provided until
December 31, 2020

Service provided until
December 31, 2021

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(1)

The terms and conditions related to the grants of the share options under the share option program are as follows, Continued:

ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

2-1

2-2

2-3

2-4

Grant date

December 30, 2020

Types of shares to be issued

Registered common shares of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

Grant method

Cash settlement

Number of shares
(in shares)(*)

23,097

9,648

25,527

15,878

Exercise price (in won)

20,807

22,472

24,270

Exercise period

1^st exercise: Applied to 50% of the granted shares and exercisable 6 months after the listing (June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

2^nd exercise: Applied to 25% of the granted shares and exercisable 12 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

3^rd exercise: Applied to 25% of the granted shares and exercisable 18 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)

Vesting conditions

Service provided until
December 31, 2020

Service provided until
December 31, 2021

Service provided until
December 31, 2022

ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)

3-1

3-2

3-3

Grant date

January 26, 2021

Types of shares to be issued

Registered common shares of ADT CAPS Co., Ltd.
(Formerly, SK Infosec Co., Ltd.)

Grant method

Cash settlement

Number of shares (in shares)

126,637

126,638

Exercise price (in won)

20,807

22,472

24,270

Exercise period

1^st exercise: Applied to 50% of the granted shares and exercisable 12 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)

2^nd exercise: Applied to 25% of the granted shares and exercisable 18 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)

3^rd exercise: Applied to 25% of the granted shares and exercisable 24 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)

Vesting conditions

Service provided until
December 31, 2021

Service provided until
December 31, 2022

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(1)

The terms and conditions related to the grants of the share options under the share option program are as follows, Continued:


	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	4-1	4-2	4-3	FSK L&S Co., Ltd.

Grant date	April 27, 2021			May 31, 2019
Types of shares to be issued	Registered common shares of ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)			Common shares of FSK L&S Co., Ltd.
Grant method	Cash settlement			Issuance of new shares
Number of shares (in shares)(*)	60,478	60,476	65,918	43,995
	12,496	12,496	12,496
	18,694	18,692	18,691
Exercise price (in won)	20,579	22,225	24,003	10,000
	20,807	22,472	24,270
	26,787	28,929	31,243
Exercise period	1^st exercise: Applied to 50% of the granted shares and exercisable 6 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)			June 1, 2022 ~ May 31, 2025
	2^nd exercise: Applied to 25% of the granted shares and exercisable 12 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	3^rd exercise: Applied to 25% of the granted shares and exercisable 18 months after the listing(June 30, 2022) of ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
Vesting conditions	Service provided until December 31, 2021 Service provided until December 31, 2021	Service provided until December 31, 2021 Service provided until December 31, 2021	Service provided until December 31, 2021 Service provided until December 31, 2022	(a) 2 years’ service from the grant date (b) The share options cannot be exercised if the business performance of the prior year is less than 70% of the management goal.
	Service provided until December 31, 2021	Service provided until December 31, 2022	Service provided until December 31, 2023


	One Store Co., Ltd.
	2-1	2-2	2-3

Grant date	April 1, 2021
Types of shares to be issued	Common shares of One Store Co., Ltd.
Grant method	Issuance of new shares
Number of shares (in shares)	173,230	173,230	173,230
Exercise price (in won)	32,500	32,500	32,500
Exercise period	1^st exercise: Applied to 30% of the granted shares and Mar. 31, 2023 ~ Mar. 30, 2024
	2^nd exercise: Applied to 60% of the granted shares and Mar. 31, 2024 ~ Mar. 30, 2025
	3^rd exercise: Applied to 100% of the granted shares and Mar. 31, 2025 ~ Mar. 30, 2026
Vesting conditions	2 years’ service from the grant date	2 years’ service from the grant date	2 years’ service from the grant date

(*)

Some of stock options granted by One Store Co., Ltd., DREAMUS COMPANY, FSK L&S Co., Ltd. and ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.) that have not met the vesting conditions have been forfeited for the six-month period ended June 30, 2021. Some of the stock options granted by Incross Co., Ltd. have been exercised and 1^st stock options granted by One Store Co., Ltd. and remaining 5^th stock options granted by Incross Co., Ltd. have been fully exercised for the six-month period ended June 30, 2021.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(2)

Share compensation expense recognized for the six-month period ended June 30, 2021 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, 2020	W	7,589
For the six-month period ended June 30, 2021		2,882
In subsequent periods		6,653

	W	17,124

(3)

The Group used the binomial option-pricing model or Monte-Carlo simulation in the measurement of the fair value of the share options at grant date and the inputs used in the model are as follows:


(In won)	Parent Company
	1-1			1-2			1-3			2			3			4			5			6
Risk-free interest rate		1.86	%		1.95	%		2.07	%		2.63	%		1.91	%		1.78	%		1.52	%		1.55	%
Estimated option’s life		5 years			6 years			7 years			5 years			5 years			5 years			7 years			5 years
Share price (Closing price on the preceding day)		262,500			262,500			262,500			243,500			259,000			253,000			174,500			249,000
Expected volatility		13.38	%		13.38	%		13.38	%		16.45	%		8.30	%		7.70	%		8.10	%		25.70	%
Expected dividends		3.80	%		3.80	%		3.80	%		3.70	%		3.80	%		3.90	%		5.70	%		4.00	%
Exercise price		246,750			266,490			287,810			254,120			265,260			254,310			192,260			251,380
Per-share fair value of the option		27,015			20,240			15,480			23,988			8,600			8,111			962			40,711


(In won)	DREAMUS COMPANY
	1-1			1-2			1-3
Risk-free interest rate		1.73	%		1.77	%		1.82	%
Estimated option’s life		—			—			—
Share price (Closing price on the preceding day)		8,950			8,950			8,950
Expected volatility		32.34	%		32.34	%		32.34	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		9,160			9,160			9,160
Per-share fair value of the option		1,976			2,189			2,356


(In won)	Incross Co., Ltd.
	4			6			7			8			9			10
Risk-free interest rate		1.35	%		1.76	%		1.41	%		1.16	%		1.23	%		1.56	%
Estimated option’s life		6 years			6 years			6 years			6 years			6 years			6 years
Share price (Closing price on the preceding day)		43,843			17,000			22,050			21,800			40,300			49,250
Expected volatility		18.67	%		25.58	%		42.37	%		41.69	%		51.16	%		43.02	%
Expected dividends		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%
Exercise price		17,485			16,895			22,073			26,291			45,280			51,940
Per-share fair value of the option		9,423			4,887			9,209			7,813			18,491			20,398

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(3)

The Group used the binomial option-pricing model or Monte-Carlo simulation in the measurement of the fair value of the share options at grant date and the inputs used in the model are as follows, Continued:


(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	1-1, 1-2
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		26,630			28,027			28,150
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		20,579			20,579			20,579
Per-share fair value of the option		6,051			7,448			7,571

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	1-3
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		27,746			28,756			28,945
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		22,225			22,225			22,225
Per-share fair value of the option		5,521			6,531			6,720

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	1-4
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		28,951			29,666			29,912
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		24,003			24,003			24,003
Per-share fair value of the option		4,948			5,663			5,909

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	2-1, 2-2
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		26,784			28,128			28,261
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		20,807			20,807			20,807
Per-share fair value of the option		5,977			7,321			7,454

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(3)


(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	2-3
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		27,913			28,865			29,064
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		22,472			22,472			22,472
Per-share fair value of the option		5,441			6,393			6,592

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	2-4
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		29,132			29,817			30,070
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		24,270			24,270			24,270
Per-share fair value of the option		4,862			5,547			5,800

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	3-1
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		26,784			28,128			28,261
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		20,807			20,807			20,807
Per-share fair value of the option		5,977			7,321			7,454

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	3-2
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		27,913			28,865			29,064
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		22,472			22,472			22,472
Per-share fair value of the option		5,441			6,393			6,592

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(3)


(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	3-3
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		29,132			29,817			30,070
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		24,270			24,270			24,270
Per-share fair value of the option		4,862			5,547			5,800

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	4-1
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		26,630			28,027			28,150
		26,784			28,128			28,261
		26,784			28,128			28,261
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		20,579			20,579			20,579
		20,807			20,807			20,807
		26,787			26,787			26,787
Per-share fair value of the option		6,051			7,448			7,571
		5,977			7,321			7,454
		5,977			7,321			7,454

(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	4-2
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		27,746			28,756			28,945
		27,913			28,865			29,064
		27,913			28,865			29,064
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		22,225			22,225			22,225
		22,472			22,472			22,472
		28,929			28,929			28,929
Per-share fair value of the option		5,521			6,531			6,720
		5,441			6,393			6,592
		5,441			6,393			6,592

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Share Option, Continued

(3)


(In won)	ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.)
	4-3
	1^st exercise			2^nd exercise			3^rd exercise
Risk-free interest rate		0.89	%		0.97	%		0.97	%
Estimated option’s life		2 years			2.5 years			3 years
Share price		28,951			29,666			29,912
		29,132			29,817			30,070
		29,132			29,817			30,070
Expected volatility		27.87	%		27.87	%		27.87	%
Expected dividends		0.00	%		0.00	%		0.00	%
Exercise price		24,003			24,003			24,003
		24,270			24,270			24,270
		31,243			31,243			31,243
Per-share fair value of the option		4,948			5,663			5,909
		4,862			5,547			5,800
		4,862			5,547			5,800


(In won)	One Store Co., Ltd.
	2-1			2-2			2-3			FSK L&S Co., Ltd.
Risk-free interest rate		0.91	%		1.14	%		1.42	%		1.64	%
Estimated option’s life		2 years			3 years			4 years			—
Share price		32,705			32,705			32,705			10,455
Expected volatility		41.30	%		41.30	%		41.30	%		16.20	%
Expected dividends		0.00	%		0.00	%		0.00	%		0.00	%
Exercise price		32,500			32,500			32,500			10,000
Per-share fair value of the option		7,796			9,596			11,169			1,420

As FSK L&S Co., Ltd., ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.), and One Store Co., Ltd., the subsidiaries of the Parent Company, are unlisted, the share price is calculated using the discounted cash flow model.

22.

Retained Earnings

Retained earnings as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Appropriated:
Legal reserve	W	22,320		22,320

Reserve for business expansion		11,631,138		11,631,138
Reserve for technology development		4,365,300		4,365,300

		15,996,438		15,996,438
Unappropriated		5,660,660		6,963,155

	W	21,679,418		22,981,913

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

23.

Reserves

(1)

Details of reserves, net of taxes, as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021			December 31, 2020
Valuation gain on FVOCI	W	1,137,640			438,979
Other comprehensive loss of investments in associates and joint ventures		(206,392	)		(392,333	)
Valuation gain on derivatives		27,748			17,615
Foreign currency translation differences for foreign operations		(6,079	)		(24,122	)

	W	952,917			40,139

(2)

Changes in reserves for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	Valuation gain (loss) on financial assets at FVOCI			Other comprehensive income (loss) of investments in associates and joint ventures			Valuation gain (loss) on derivatives			Foreign currency translation differences for foreign operations			Total
	Valuation gain (loss) on financial assets at FVOCI						Valuation gain (loss) on derivatives						Total
Balance at January 1, 2020	W	(47,086	)		(278,142	)		(920	)		(3,428	)		(329,576	)
Changes, net of taxes		183,051			61,808			17,890			15,681			278,430
Balance at June 30, 2020	W	135,965			(216,334	)		16,970			12,253			(51,146	)
Balance at January 1, 2021	W	438,979			(392,333	)		17,615			(24,122	)		40,139
Changes, net of taxes		698,661			185,941			10,133			18,043			912,778

Balance at June 30, 2021	W	1,137,640			(206,392	)		27,748			(6,079	)		952,917

24.

Other Operating Expenses

Details of other operating expenses for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Communication	W	9,788		19,871		11,279		21,871
Utilities		77,655		165,463		75,152		161,545
Taxes and dues		21,528		29,444		18,078		26,449
Repair		93,955		183,986		97,792		178,322
Research and development		101,126		201,815		104,890		215,205
Training		8,190		14,839		6,413		14,645
Bad debt for accounts receivable – trade		7,388		14,863		12,912		30,230
Travel		3,827		7,046		2,681		7,862
Supplies and others		100,632		195,690		76,753		144,880

	W	424,089		833,017		405,950		801,009

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

25.

Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Other non-operating Income:
Gain on disposal of property and equipment and intangible assets	W	4,440		7,178		2,804		4,353
Gain on business transfer		82,248		82,248		—		12,451
Others		47,460		59,684		25,937		28,556

	W	134,148		149,110		28,741		45,360

Other non-operating Expenses:
Loss on impairment of property and equipment and intangible assets	W	—		—		12,700		12,700
Loss on disposal of property and equipment and intangible assets		10,931		16,960		11,914		18,999
Donations		6,340		9,944		4,156		10,608
Bad debt for accounts receivable – other		264		209		1,385		2,176
Loss on impairment of investment assets		5,302		281		—		—
Others		2,639		6,600		4,197		6,987

	W	25,476		33,994		34,352		51,470

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

26.

Finance Income and Costs

(1)

Details of finance income and costs for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Finance Income:
Interest income	W	12,734		24,984		11,529		24,478
Gain on sale of accounts receivable – other		6,345		14,266		2,834		7,513
Dividends		1,044		2,083		276		1,008
Gain on foreign currency transactions		1,553		3,126		3,227		5,319
Gain on foreign currency translations		—		7,239		—		7,093
Gain relating to financial instruments at FVTPL		24,378		59,235		15,053		23,032

	W	46,054		110,933		32,919		68,443


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Finance Costs:
Interest expenses	W	87,304		173,799		97,060		197,571
Loss on foreign currency transactions		3,256		5,128		3,124		5,374
Loss on foreign currency translations		706		5,749		2,491		6,018
Loss on disposal of long-term investment securities		—		—		101		101
Loss relating to financial instruments at FVTPL		107,480		112,792		362		2,972

	W	198,746		297,468		103,138		212,036

(2)

Details of interest income included in finance income for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Interest income on cash equivalents and short-term financial instruments	W	5,521		10,731		6,261		12,638
Interest income on loans and others		7,213		14,253		5,268		11,840

	W	12,734		24,984		11,529		24,478

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

26.

Finance Income and Costs, Continued

(3)

Details of interest expenses included in finance costs for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Interest expenses on borrowings	W	19,509		37,925		27,212		53,017
Interest expenses on debentures		55,716		111,772		56,401		113,298
Others		12,079		24,102		13,447		31,256

	W	87,304		173,799		97,060		197,571

(4)

Details of impairment losses for financial assets for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Accounts receivable – trade	W	7,388		14,863		12,912		30,230
Other receivables		264		209		1,385		2,176

	W	7,652		15,072		14,297		32,406

27.

Income Tax Expense

Income tax expense was calculated by considering current tax expense, adjusted to changes in estimates related to prior periods, and deferred tax expense due to origination and reversal of temporary differences.

28.

Earnings per Share

(1)

Basic earnings per share

Basic earnings per share for the six-month periods ended June 30, 2021 and 2020 are calculated as follows:


(In millions of won, except for share data)	2021						2020
	Three-month period ended June 30			Six-month period ended June 30			Three-month period ended June 30			Six-month period ended June 30
Profit attributable to owners of the Parent Company	W	765,785			1,324,050			427,395			735,940
Interest on hybrid bonds		(3,691	)		(7,383	)		(3,691	)		(7,383	)
Profit attributable to owners of the Parent Company on common shares		762,094			1,316,667			423,704			728,557
Weighted average number of common shares outstanding		71,160,198			71,162,974			73,136,448			73,136,448

Basic earnings per share (in won)	W	10,709			18,502			5,794			9,962

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Earnings per Share, Continued

(1)

Basic earnings per share, Continued

The weighted average number of common shares outstanding for the six-month periods ended June 30, 2021 and 2020 are calculated as follows:


(In shares)	Number of common shares			Weighted average number of common shares
	Number of common shares			Three-month period ended June 30			Six-month period ended June 30
Issued shares at January 1, 2021		80,745,711			80,745,711			80,745,711
Treasury shares at January 1, 2021		(9,418,558	)		(9,418,558	)		(9,418,558	)
Acquisition of treasury shares		(288,000	)		(288,000	)		(263,138	)
Disposal of treasury shares		121,490			121,045			98,959

Weighted average number of common shares outstanding at June 30, 2021		71,160,643			71,160,198			71,162,974

(In shares)	Number of common shares			Weighted average number of common shares
	Number of common shares			Three-month period ended June 30			Six-month period ended June 30
Issued shares at January 1, 2020		80,745,711			80,745,711			80,745,711
Treasury shares at January 1, 2020		(7,609,263	)		(7,609,263	)		(7,609,263	)

Weighted average number of common shares outstanding at June 30, 2020		73,136,448			73,136,448			73,136,448

(2)

Diluted earnings per share

Diluted earnings per share for the six-month period ended June 30, 2021 are calculated as follows:


(In millions of won, except for share data)	2021
	Three-month period ended June 30		Six-month period ended June 30
Profit attributable to owners of the Parent Company on common shares	W	762,094		1,316,667
Adjusted weighted average number of common shares outstanding		71,222,636		71,208,334

Diluted earnings per share (in won)	W	10,700		18,490

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Earnings per Share, Continued

(2)

Diluted earnings per share, Continued

The adjusted weighted average number of common shares outstanding for the six-month period ended June 30, 2021 are calculated as follows:


(In shares)	2021
	Three-month period ended June 30			Six-month period ended June 30
Outstanding shares at January 1, 2021	W	71,327,153			71,327,153
Effect of treasury shares		(166,955	)		(164,179	)
Effect of share option		62,438			45,360

Adjusted weighted average number of common shares outstanding	W	71,222,636			71,208,334

For the six-month period ended June 30, 2020, diluted earnings per share are the same as basic earnings per share as there are no dilutive potential common shares.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Categories of Financial Instruments

(1)

Financial assets by category as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)	June 30, 2021
	Financial assets at FVTPL		Equity instruments at FVOCI		Debt instruments at FVOCI		Financial assets at amortized cost		Derivatives hedging instrument		Total
Cash and cash equivalents	W	—		—		—		1,539,295		—		1,539,295
Financial instruments		—		—		—		1,519,823		—		1,519,823
Short-term investment securities		63,146		—		—		—		—		63,146
Long-term investment securities(*)		287,411		2,442,085		1,122		—		—		2,730,618
Accounts receivable – trade		—		—		—		2,326,435		—		2,326,435
Loans and other receivables		439,441		—		—		1,182,971		—		1,622,412
Derivative financial assets		101,834		—		—		—		117,301		219,135

	W	891,832		2,442,085		1,122		6,568,524		117,301		10,020,864

(*)	The Group designated W2,442,085 million of equity instruments that are not held for trading as financial assets at FVOCI.


(In millions of won)	December 31, 2020
	Financial assets at FVTPL		Equity instruments at FVOCI		Debt instruments at FVOCI		Financial assets at amortized cost		Derivatives hedging instrument		Total
Cash and cash equivalents	W	—		—		—		1,369,653		—		1,369,653
Financial instruments		—		—		—		1,427,845		—		1,427,845
Short-term investment securities		150,392		—		—		—		—		150,392
Long-term investment securities(*)		193,396		1,454,361		1,080		—		—		1,648,837
Accounts receivable – trade		—		—		—		2,214,353		—		2,214,353
Loans and other receivables		517,175		—		—		1,220,828		—		1,738,003
Derivative financial assets		99,559		—		—		—		65,136		164,695

	W	960,522		1,454,361		1,080		6,232,679		65,136		8,713,778

(*)	The Group designated W1,454,361 million of equity instruments that are not held for trading as financial assets measured at FVOCI.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Categories of Financial Instruments, Continued

(2)

Financial liabilities by category as of June 30, 2021, and December 31, 2020, are as follows:


(In millions of won)	June 30, 2021
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives hedging instrument		Total
Accounts payable – trade	W	—		304,311		—		304,311
Derivative financial liabilities		421,712		—		21,394		443,106
Borrowings		—		2,418,595		—		2,418,595
Debentures		—		8,630,849		—		8,630,849
Lease liabilities(*)		—		1,503,466		—		1,503,466
Accounts payable – other and others		—		5,490,282		—		5,490,282
Financial liabilities at FVTPL		147,723		—		—		147,723

	W	569,435		18,347,503		21,394		18,938,332


(In millions of won)	December 31, 2020
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives hedging instrument		Total
Accounts payable – trade	W	—		372,909		—		372,909
Derivative financial liabilities		333,099		—		42,061		375,160
Borrowings		—		2,138,922		—		2,138,922
Debentures		—		8,579,743		—		8,579,743
Lease liabilities(*)		—		1,436,777		—		1,436,777
Accounts payable – other and others		—		6,051,550		—		6,051,550

	W	333,099		18,579,901		42,061		18,955,061

(*)	Lease liabilities are not applicable on category of financial liabilities, but are classified as financial liabilities measured at amortized cost on consideration of nature for measurement of liabilities.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Financial Risk Management

(1)

Financial risk management

The Group is exposed to credit risk, liquidity risk and market risk. Market risk is the risk related to the changes in market prices, such as foreign exchange rates and interest rates. 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, investment securities and accounts receivable – trade and others, etc. Financial liabilities consist of accounts payable – trade and other, borrowings, debentures, lease liabilities and others.

Market risk

(i)

Currency risk

The Group incurs exchange position due to revenue and expenses from its global operations. Major foreign currencies where the currency risk occurs are USD, EUR and JPY. 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. 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. The Group manages currency risk arising from business transactions by using currency forwards, etc.

Monetary assets and liabilities denominated in foreign currencies as of June 30, 2021 are as follows:


(In millions of won, thousands of foreign currencies)
	Assets				Liabilities
	Foreign currencies		Won equivalent		Foreign currencies		Won equivalent
USD		91,569	W	103,473		1,550,350	W	1,751,895
EUR		11,934		16,044		9,558		12,851
JPY		372,256		3,805		646		7
Others		—		2,309		—		65

			W	125,631			W	1,764,818

In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures.

As of June 30, 2021, a hypothetical change in exchange rates by 10% would have increased (decreased) the Group’s income before income tax as follows:


(In millions of won)
	If increased by 10%		If decreased by 10%
USD	W	5,013		(5,013	)
EUR		320		(320	)
JPY		380		(380	)
Others		224		(224	)

	W	5,937		(5,937	)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

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 June 30, 2021, the floating-rate borrowings and debentures of the Group are W104,043 million and W339,000 million, respectively, and the Group has entered into interest rate swap agreements for most of floating rate borrowings and debentures to hedge interest rate risk. If the interest rate increases (decreases) 1%p with all other variables held constant, income before income taxes for the six-month period ended June 31, 2021 would change by W240 million in relation to the floating-rate borrowings that are exposed to interest rate risk.

As of June 30, 2021, the floating-rate long-term payables – other are W1,200,691 million. If the interest rate increases (decreases) 1%p with all other variables held constant, income before income taxes for the six-month ended June 30, 2021 would change by W6,003 million in relation to the floating-rate long-term payables – other that are exposed to interest rate risk.

Credit risk

The maximum credit exposure as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Cash and cash equivalents	W	1,539,040		1,369,423
Financial instruments		1,519,823		1,427,845
Investment securities		2,022		4,154
Accounts receivable – trade		2,326,435		2,214,353
Contract assets		157,226		148,281
Loans and other receivables		1,622,412		1,738,003
Derivative financial assets		219,135		164,695

	W	7,386,093		7,066,754

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

Credit risk, Continued

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 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.

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. Also, the Group’s credit risk can arise from transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivatives. To minimize such risk, the Group has a policy to deal only with financial institutions with high credit ratings. The amount of maximum exposure to credit risk of the Group is the carrying amount of financial assets as of June 30, 2021.

Liquidity risk

The Group’s approach to managing liquidity is to ensure that it will always maintain sufficient cash and cash equivalent 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 June 30, 2021 are as follows:


(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Accounts payable – trade	W	304,311		304,311		304,311		—		—
Borrowings(*)		2,418,595		2,759,025		179,490		2,579,346		189
Debentures(*)		8,630,849		9,751,404		1,380,909		5,456,414		2,914,081
Lease liabilities		1,503,466		1,615,503		399,024		975,910		240,569
Accounts payable – other and others(*)		5,490,282		5,557,879		4,536,017		837,936		183,926
Financial liabilities at FVTPL		59,123		59,123		—		—		59,123

	W	18,406,626		20,047,245		6,799,751		9,849,606		3,397,888

(*)	Includes interest payables.

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

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

Liquidity risk, Continued

As of June 30, 2021, periods in which cash flows from cash flow hedge derivatives are expected to occur are as follows:


(In millions of won)
	Carrying amount			Contractual cash flows			Less than 1 year			1-5 years			More than 5 years
Assets	W	117,301			119,577			17,369			94,931			7,277
Liabilities		(21,394	)		(22,227	)		(1,227	)		(21,000	)		—

	W	95,907			97,350			16,142			73,931			7,277

(2)

Capital management

The Group manages its capital to ensure that it will be able to continue as a business 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 for the year ended December 31, 2020.

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

Debt-equity ratio as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021			December 31, 2020
Total liabilities	W	23,650,802			23,510,714
Total equity		26,406,799			24,396,243
Debt-equity ratios		89.56	%		96.37	%

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Financial Risk Management, Continued

(3)

Fair value

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)	June 30, 2021
	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets that are measured at fair value:
FVTPL	W	891,832		59,638		511,879		320,315		891,832
Derivatives hedging instruments		117,301		—		117,301		—		117,301
FVOCI		2,443,207		1,866,341		—		576,866		2,443,207

	W	3,452,340		1,925,979		629,180		897,181		3,452,340

Financial liabilities that are measured at fair value:
FVTPL	W	569,435		—		—		569,435		569,435
Derivatives hedging instruments		21,394		—		21,394		—		21,394

	W	590,829		—		21,394		569,435		590,829

Financial liabilities that are not measured at fair value:
Borrowings	W	2,418,595		—		2,483,512		—		2,483,512
Debentures		8,630,849		—		9,117,476		—		9,117,476
Long-term payables – other		1,162,997		—		1,166,084		—		1,166,084

	W	12,212,441		—		12,767,072		—		12,767,072


(In millions of won)	December 31, 2020
	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets that are measured at fair value:
FVTPL	W	960,522		60,473		629,732		270,317		960,522
Derivatives hedging instruments		65,136		—		65,136		—		65,136
FVOCI		1,455,441		885,452		—		569,989		1,455,441

	W	2,481,099		945,925		694,868		840,306		2,481,099

Financial liabilities that are measured at fair value:
FVTPL	W	333,099		—		—		333,099		333,099
Derivatives hedging instruments		42,061		—		42,061		—		42,061

	W	375,160		—		42,061		333,099		375,160

Financial liabilities that are not measured at fair value:
Borrowings	W	2,138,923		—		2,282,316		—		2,282,316
Debentures		8,579,743		—		9,085,324		—		9,085,324
Long-term payables – other		1,566,954		—		1,582,805		—		1,582,805

	W	12,285,620		—		12,950,445		—		12,950,445

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Financial Risk Management, Continued

(3)

Fair value, Continued

Fair value and carrying amount of financial assets and liabilities based on fair value hierarchy as of June 30, 2021 and December 31, 2020, 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 and 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 for 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 June 30, 2021 are as follows:


		Interest rate
Derivative instruments		0.14% ~ 3.90%
Borrowings and debentures		1.15% ~ 3.48%
Long-term payables – other		1.37% ~ 2.06%

2) There have been no transfers between Level 2 and Level 1 for the six-month period ended June 30, 2021. The changes of financial assets and liabilities classified as Level 3 for the six-month period ended June 30, 2021 are as follows:


(In millions of won)
	Balance at January 1, 2021			Gain (loss) for the period			OCI		Acquisition			Disposal			Transfer			Balance at June 30, 2021
Financial assets:
FVTPL	W	270,317			54,815			4,002		63,943			(78,944	)		6,182			320,315
FVOCI		569,989			—			3,590		4,411			—			(1,124	)		576,866

	W	840,306			54,815			7,592		68,354			(78,944	)		5,058			897,181

Financial liabilities:
FVTPL	W	(333,099	)		(107,213	)		—		(129,123	)		—			—			(569,435	)

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Financial Risk Management, Continued

(4)

Enforceable master netting agreement or similar agreement

Carrying amount of financial instruments recognized of which offset agreements are applicable as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)	June 30, 2021
	Gross financial instruments recognized		Amount offset			Net financial instruments presented on the condensed consolidated interim statement of financial position
Financial assets:
Accounts receivable – trade and others	W	367,090		(236,851	)		130,239
Financial liabilities:
Accounts payable – other and others	W	329,830		(236,851	)		92,979


(In millions of won)	December 31, 2020
	Gross financial instruments recognized		Amount offset			Net financial instruments presented on the statements of financial position		Relevant financial instruments not offset			Net amount
Financial assets:
Derivative instruments(*)	W	8,015		—			8,015		(453	)		7,562
Accounts receivable – trade and others		317,332		(203,403	)		113,929		—			113,929

	W	325,347		(203,403	)		121,944		(453	)		121,491

Financial liabilities:
Derivative instruments(*)	W	453		—			453		(453	)		—
Accounts payable – other and others		301,996		(203,403	)		98,593		—			98,593

	W	302,449		(203,403	)		99,046		(453	)		98,593

(*)	The balance represents the net amount under the standard terms and conditions of International Swaps and Derivatives Association.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Transactions with Related Parties

(1)

List of related parties


Relationship		Company
Ultimate Controlling Entity		SK Inc.
Joint ventures		Dogus Planet, Inc. and 5 others
Associates		SK hynix Inc. and 59 others
Others		The Ultimate Controlling Entity’s subsidiaries and associates, etc.

As of June 30, 2021, the Group is included 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 Group.

(2)

Compensation for the key management

The Parent Company considers registered directors (3 executive and 5 non-executive 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 six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Salaries	W	952		4,432		672		5,521
Defined benefits plan expenses		209		2,024		175		3,108
Share option		40		72		61		93

	W	1,201		6,528		908		8,722

Compensation for the key management includes salaries, non-monetary salaries and retirement benefits made in relation to the pension plan and compensation expenses related to share options granted.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
		For the period ended June 30, 2021
		Operating revenue and others				Operating expense *and others(1)**				Acquisition of property and equipment and others
Scope	Company	Three- month		Six- month		Three- month		Six- month		Three- month		Six- month
Ultimate Controlling Entity	SK Inc.(*2)	W	9,048		18,140		96,905		382,271		24,741		26,909
Associates	F&U Credit information Co., Ltd.		759		1,545		12,489		25,204		—		—
	SK hynix Inc.(*3)		29,598		229,981		39		173		—		—
	KEB HanaCard Co., Ltd.		1,663		1,683		669		1,511		—		—
	SK Wyverns Co., Ltd.(*4)		—		202		—		8,203		—		—
	Content Wavve Co., Ltd.		65		84		32,974		33,669		—		—
	Others(*5)		15,874		29,146		3,946		4,378		—		—

			47,959		262,641		50,117		73,138		—		—

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		3,517		6,278		—		—		—		—
	SK Innovation Co., Ltd.		18,828		30,929		4,291		8,922		—		—
	SK Networks Co., Ltd.(*6)		4,286		7,271		200,041		501,512		—		24
	SK Networks Service Co., Ltd.		1,841		3,587		19,947		37,172		475		487
	SK Telesys Co., Ltd.		77		147		2,719		4,085		9,142		10,704
	SK TNS Co., Ltd.(*4)		16		75		2,531		6,868		35,525		57,903
	SK Energy Co., Ltd.		7,332		9,742		311		719		—		—
	SK hynix Semiconductor (China) Ltd.		10,448		26,371		—		—		—		—
	SK Battery Hungary Kft.		10,599		19,903		—		—		—		—
	SK Global Chemical Co., Ltd.		9,989		12,768		—		8		—		—
	SK Global Chemical International Trading (Shanghai) Co., Ltd.		4,263		7,769		—		—		—		—
	Happy Narae Co., Ltd.		2,461		4,542		6,376		10,980		38,619		43,560
	Others		25,496		57,195		38,725		76,549		22,125		27,718

			99,153		186,577		274,941		646,815		105,886		140,396

		W	156,160		467,358		421,963		1,102,224		130,627		167,305

(*1)	Operating expense and others include lease payments by the Group.

(*2)	Operating expense and others include W194,617 million of dividends paid by the Parent Company.

(*3)	Operating revenue and others include W170,937 million of dividends received from SK hynix Inc. which was deducted from the investment in associates.

(*4)	Transactions occurred before disposal.

(*5)	Operating revenue and others include W10,716 million of dividends received from Korea IT Fund which was deducted from the investment in associates.

(*6)	Operating expenses and others include costs for handset purchases amounting to W478,924 million.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the six-month periods ended June 30, 2021 and 2020 are as follows, Continued:


(In millions of won)
		For the period ended June 30, 2020
		Operating revenue and others				Operating expense *and others(1)**				Acquisition of property and equipment and others
Scope	Company	Three- month		Six- month		Three- month		Six- month		Three- month		Six- month
Ultimate Controlling Entity	SK Inc.(*2)	W	9,754		18,805		82,052		373,666		16,332		18,476
Associates	F&U Credit information Co., Ltd.		595		1,072		13,496		25,908		—		—
	SK hynix Inc.(*3)		19,283		178,862		100		161		—		—
	KEB HanaCard Co., Ltd.		257		408		768		1,555		—		—
	SK Wyverns Co., Ltd.		321		637		2,634		12,063		—		—
	Content Wavve Co., Ltd.		18		161		15,308		25,144		—		—
	Others(*4)		30,699		43,185		2,836		4,855		—		—

			51,173		224,325		35,142		69,686		—		—

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		3,477		8,072		100		101		—		—
	SK Innovation Co., Ltd.		10,177		21,225		3,308		7,448		—		—
	SK Networks Co., Ltd.(*5)		3,250		6,925		222,689		492,001		6		12
	SK Networks Service Co., Ltd.		2,070		3,307		17,345		34,864		455		558
	SK Telesys Co., Ltd.		99		197		2,575		5,141		9,591		10,249
	SK TNS Co., Ltd.		577		633		2,960		11,219		173,951		194,591
	SK Energy Co., Ltd.		4,550		6,654		157		231		—		—
	SK hynix Semiconductor (China) Ltd.		13,887		25,921		—		—		—		—
	SK Battery Hungary Kft.		7,647		12,402		—		—		—		—
	SK Global Chemical Co., Ltd.		6,809		12,146		8		8		—		—
	SK Global Chemical International Trading (Shanghai) Co., Ltd.		5,060		7,756		—		8		—		—
	Happy Narae Co., Ltd.		2,219		4,382		13,643		17,759		44,724		55,481
	Others		21,730		40,960		29,720		58,239		17,475		23,723

			81,552		150,580		292,505		627,019		246,202		284,614

		W	142,479		393,710		409,699		1,070,371		262,534		303,090

(*1)	Operating expense and others include lease payments by the Group.

(*2)	Operating expense and others include W194,617 million of dividends paid by the Parent Company.

(*3)	Operating revenue and others include W146,100 million of dividends received from SK hynix Inc. which was deducted from the investment in associates.

(*4)	Operating revenue and others include W18,537 million of dividends received from Korea IT Fund and Pacific Telecom Inc. which was deducted from the investment in associates.

(*5)	Operating expenses and others include costs for handset purchases amounting to W461,979 million.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Transactions with Related Parties, Continued

(4)

Account balances with related parties as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)		June 30, 2021
		Receivables				Payables
Scope	Company	Loans		Accounts receivable – trade, etc.		Accounts payable – other, etc.
Ultimate Controlling Entity	SK Inc.	W	—		4,823		58,847

Associates	F&U Credit information Co., Ltd.		—		19		5,203
	SK hynix Inc.		—		27,560		155
	Wave City Development Co., Ltd.(*1)		—		7,182		—
	Daehan Kanggun BcN Co., Ltd.(*2)		22,147		2,483		—
	KEB HanaCard Co., Ltd.		—		671		64,605
	Content Wavve Co., Ltd.		—		175		1,985
	Others		—		6,316		2,309

			22,147		44,406		74,257

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		—		1,427		8
	SK Innovation Co., Ltd.		—		12,935		38,667
	SK Networks Co., Ltd.		—		2,678		115,874
	SK Networks Services Co., Ltd.		—		685		7,079
	SK Telesys Co., Ltd.		—		20		7,257
	SK Energy Co., Ltd.		—		4,560		1,927
	SK hystec Co., Ltd.		—		492		6,767
	SK hynix Semiconductor (China) Ltd.		—		5,392		—
	SK Battery Hungary Kft.		—		3,162		—
	SK Global Chemical Co., Ltd.		—		3,045		5
	SK Global Chemical International Trading (Shanghai) Co., Ltd.		—		1,599		—
	Happy Narae Co., Ltd.		—		701		15,061
	Others		—		25,221		46,265

			—		61,917		238,910

		W	22,147		111,146		372,014

(*1)	As of June 30, 2021, the Parent Company recognized loss allowance amounting to W3,016 million on the accounts receivable – trade.

(*2)	As of June 30, 2021, the Parent Company recognized full loss allowance for the balance of loans to Daehan Kanggun BcN Co., Ltd.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Transactions with Related Parties, Continued

(4)

Account balances with related parties as of June 30, 2021 and December 31, 2020 are as follows, Continued:


(In millions of won)		December 31, 2020
		Receivables				Payables
Scope	Company	Loans		Accounts receivable – trade, etc.		Accounts payable – other, etc.
Ultimate Controlling Entity	SK Inc.	W	—		6,449		64,373

Associates	F&U Credit information Co., Ltd.		—		10		4,699
	SK hynix Inc.		—		33,773		128
	Wave City Development Co., Ltd.(*1)		—		25,782		—
	Daehan Kanggun BcN Co., Ltd.(*2)		22,147		2,779		—
	KEB HanaCard Co., Ltd.		—		352		145,328
	Content Wavve Co., Ltd.		—		283		2,491
	Others		—		9,098		1,686

			22,147		72,077		154,332

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		—		1,521		152
	SK Innovation Co., Ltd.		—		11,737		44,105
	SK Networks Co., Ltd.		—		2,245		108,233
	SK Networks Services Co., Ltd.		—		579		7,103
	SK Telesys Co., Ltd.		—		37		9,253
	SK TNS Co., Ltd.		—		263		89,915
	SK Energy Co., Ltd.		—		3,502		1,837
	SK hystec Co., Ltd.		—		494		6,085
	SK hynix Semiconductor (China) Ltd.		—		5,896		—
	SK Battery Hungary Kft.		—		2,075		—
	SK Global Chemical Co., Ltd.		—		1,142		5
	SK Global Chemical International Trading (Shanghai) Co., Ltd.		—		795		21
	Happy Narae Co., Ltd.		—		720		16,534
	Others		—		15,564		120,575

			—		46,570		403,818

		W	22,147		125,096		622,523

(*1)	As of December 31, 2020, the Parent Company recognized loss allowance amounting to W10,880 million on the accounts receivable – trade.

(*2)	As of December 31, 2020, the Parent Company recognized full loss allowance for the balance of loans to Daehan Kanggun BcN Co., Ltd.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Transactions with Related Parties, Continued

(5)

The Parent Company has granted SK REIT Co., Ltd. the right of first offer regarding the disposal of real estate owned by the Parent Company. Whereby the negotiation period is within 3 to 5 years from June 30, 2021, date of agreement, and the Parent Company 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. purchases the real estate from the Parent Company.

32.

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 W1,568 million as of June 30, 2021.

In addition, ADT CAPS Co., Ltd.(Formerly, SK Infosec Co., Ltd.), a subsidiary of the Parent Company, has pledged its shares of CAPSTEC Co., Ltd. for the long-term borrowings with a face value of W1,936,060 million and Incross Co., Ltd., a subsidiary of the Parent Company, has pledged its W22,607 million of short-term financial instrument for performance guarantee as of June 30, 2021.

In addition, One Store Co., Ltd., a subsidiary of the Parent Company, has pledged its properties for the short-term borrowings of W510 million and its time deposits for the borrowing agreement with no executed balance to Shinhan Bank as of June 30, 2021.

(2)

Legal claims and litigations

As of June 30, 2021, the Group 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 Group has a present obligation, nor is it expected that any of these claims or litigations will have a significant impact on the Group’s financial position or operating results in the event an outflow of resources is ultimately necessary.

Meanwhile, the pending litigation over the validity of partnership contract that SK Planet Co., Ltd., a subsidiary of the Parent Company, was involved as the defendant (Plaintiff: Nonghyup Bank) was settled by the agreement between the parties for the year ended December 31, 2018. As a result of the settlement, the credit card business partnership between the SK Planet Co., Ltd. and Nonghyup Bank will be maintained until April 2021, and the SK Planet Co., Ltd. is obligated to pay the commission fees based on the customers’ credit card usage until September 2021, the expiration date of the credit cards. The Group determined that the contract and the subsidiary agreements meet the definition of an onerous contract according to K-IFRS No.1037, for which the Group recognized provisions with the best estimate of the expenditure required to settle the present obligation at the end of the reporting period. In this regard, W4,041 million are recognized as current provisions as of June 30, 2021.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

32.

Commitments and Contingencies, Continued

(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 receivables from handset sales with retail stores and authorized dealers and to transfer the accounts receivables from handset sales to special purpose companies which were established with the purpose of liquidating receivables, respectively.

The accounts receivables from sale of handsets amounting to W476,772 million and W571,004 million as of June 30, 2021 and December 31, 2020, respectively, which the Parent Company purchased according to the relevant comprehensive agreement are recognized as accounts receivable – other and long-term accounts receivable – other.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

33.

Statements of Cash Flows

(1)

Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Interest income	W	(24,984	)		(24,478	)
Dividends		(2,083	)		(1,008	)
Gain on foreign currency translations		(7,239	)		(7,093	)
Gain on sale of accounts receivable – other		(14,266	)		(7,513	)
Gain relating to investments in associates and joint ventures, net		(980,091	)		(407,899	)
Gain on disposal of property and equipment and intangible assets		(7,178	)		(4,353	)
Gain on business transfer		(82,248	)		(12,451	)
Gain relating to financial instruments at FVTPL		(59,235	)		(23,032	)
Other income		(6,153	)		(2,467	)
Interest expense		173,799			197,571
Loss on foreign currency translations		5,749			6,018
Loss on disposal of long-term investment securities		—			101
Income tax expense		326,377			178,987
Expense related to defined benefit plan		99,526			98,880
Share option		2,882			1,600
Bonus paid by treasury shares		29,642			—
Depreciation and amortization		2,069,733			2,071,682
Bad debt for account receivables – trade		14,863			30,230
Loss on disposal of property and equipment and intangible assets		16,960			18,999
Impairment loss on property and equipment and intangible assets		—			12,700
Bad debt for accounts receivable – other		209			2,176
Loss relating to financial instruments at FVTPL		112,792			2,972
Loss on impairment on other investment securities		281			—
Other expenses		4,028			20,825

	W	1,673,364			2,152,447

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

33.

Statements of Cash Flows, Continued

(2)

Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Accounts receivable – trade	W	(113,099	)		(42,738	)
Accounts receivable – other		35,829			85,870
Advanced payments		(90,341	)		(6,502	)
Prepaid expenses		16,739			65,480
Inventories		(39,949	)		(36,670	)
Long-term accounts receivable – other		67,389			104,115
Contract assets		(9,496	)		47,183
Guarantee deposits		11,772			11,450
Accounts payable – trade		(65,690	)		(13,166	)
Accounts payable – other		(235,354	)		(4,192	)
Withholdings		(7,599	)		(96,671	)
Contract liabilities		9,548			3,391
Deposits received		(4,073	)		(809	)
Accrued expenses		(111,088	)		(141,906	)
Provisions		(15,155	)		(12,665	)
Long-term provisions		(59	)		(2,792	)
Plan assets		33,924			13,643
Retirement benefit payment		(59,746	)		(40,164	)
Others		(3,649	)		35,371

	W	(580,097	)		(31,772	)

(3)

Significant non-cash transactions for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Decrease in accounts payable – other relating to the acquisition of property and equipment and intangible assets	W	(61,784	)		(165,895	)
Increase of right-of-use assets		527,274			641,676
Contribution in kind for investments		11,070			4,702
Retirement of treasury shares		1,965,952			—

34.

Non-current assets Held for Sale

On February 25, 2021, the Parent Company has decided to dispose of certain land, buildings, structures and equipment (carrying value: W35,280 million) to E-MART Inc. pursuant to the approval of the board of directors and reclassified the property and equipment as non-current assets held for sale.

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

35.

Subsequent Events

(1)

On June 10, 2021, the board of directors of the Parent Company made a resolution to a horizontal spin- off of the Parent Company and the effective date of spin-off is scheduled on November 1, 2021. The details of spin-off are as follows:


	Company	Business
Surviving Company	SK Telecom Co., Ltd.	Wireless and fixed-line telecommunications and other businesses
Spin-off Company	SKT Investment Co., Ltd. (tentative)	Business of managing the equity interests in certain investees engaged in, among other things, semiconductor and New ICT businesses and making new investments

The details of spin-off schedule are as follows:


		Date
Scheduled date of shareholders’ meeting for the spin-off approval		October 12, 2021
Effective date of spin-off		November 1, 2021
Scheduled date of registration of spin-off		November 2, 2021

(2)

The board of directors of the Parent Company resolved the stock split of its common stock to increase the number of its outstanding shares on June 10, 2021. Whereby the number of issued shares will be changed from 72,060,143 shares (a par value of W500) to 360,300,715 shares (a par value of W100) and the stock split will be approved at the shareholders’ meeting to be held on October 12, 2021.

(3)

The board of directors of the Parent Company resolved to pay interim dividend at the board meeting on July 22, 2021, and the details are as follows:


Interim dividend amount		W2,500 per share (total amount: W177,902 million)
Dividend rate		0.77%
Dividend date		June 30, 2021
Date of distribution		According to Article 165 of Capital Market and Financial Investment Business Act 12-3, the Parent Company planning to distribute dividends by August 11, 2021.

(4)

On June 23, 2021, the board of directors of Eleven Street Co., Ltd., a subsidiary of the Parent Company, made a resolution to grant share options of which grant method is issuance of new shares to the employees and the resolution will be approved at the shareholders’ meeting in the future.

(5)

On June 4, 2021, the board of directors of One Store Co., Ltd., a subsidiary of the Parent Company, made a resolution to acquire 10,424,735 shares(2.92%) of redeemable convertible preferred shares issued by Kuaikan World(Cayman) Limited in order to increase revenue and strengthen the competitiveness of its global business. Acquisition cost and date are W40,030 million and July 16, 2021, respectively.

SK TELECOM CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

June 30, 2021 and 2020

(With Independent Auditors’ Review Report Thereon)

Contents


	Page
Independent Auditors’ Review Report		1

Condensed Separate Interim Statements of Financial Position		4

Condensed Separate Interim Statements of Income		6

Condensed Separate Interim Statements of Comprehensive Income		7

Condensed Separate Interim Statements of Changes in Equity		8

Condensed Separate Interim Statements of Cash Flows		9

Notes to the Condensed Separate Interim Financial Statements		11

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To the Board of Directors and Shareholders

SK Telecom Co., Ltd.:

Reviewed financial statements

We have reviewed the accompanying condensed separate interim financial statements of SK Telecom Co., Ltd. (the “Company”), which comprise the condensed separate statement of financial position as of June 30, 2021, the condensed separate statements of income and comprehensive income for the three and six-month periods ended June 30, 2021 and 2020, the condensed separate statements of changes in equity and cash flows for the six-month periods ended June 30, 2021 and 2020, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility

Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No. 1034, Interim Financial Reporting, and for such internal controls as management determines is necessary to enable the preparation of condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ review responsibility

Our responsibility is to issue a report on these condensed separate interim financial statements based on our reviews.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not prepared fairly, in all material respects, in accordance with K-IFRS No. 1034, Interim Financial Reporting.

Other matters

The separate statement of financial position of the Company as of December 31, 2020, and the related separate statements of income, comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by us in accordance with Korean Standards on Auditing and our report thereon, dated March 11, 2021, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2020, presented for comparative purposes, is consistent, in all material respects, with the audited separate financial statements from which it has been derived.

The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.

KPMG Samjong Accounting Corp.

Seoul, Korea

August 13, 2021

This report is effective as of August 13, 2021, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SK TELECOM CO., LTD. (the “Company”)

CONDENSED SEPARATE INTERIM FINANCIAL STATEMENTS

AS OF JUNE 30, 2021, AND DECEMBER 31, 2020, AND

FOR THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 2021 AND 2020

The accompanying condensed separate interim financial statements, including all footnote disclosures, were prepared by, and are the responsibility of, the Company.

Park, Jung-Ho

Chief Executive Officer

SK TELECOM CO., LTD.

SK TELECOM CO., LTD.

Condensed Separate Interim Statements of Financial Position

As of June 30, 2021 and December 31, 2020


(In millions of won)
	*Note*		June 30, 2021		December 31, 2020
Assets
Current Assets:
Cash and cash equivalents		27,28	W	285,377		329,208
Short-term financial instruments		27,28		314,000		516,000
Short-term investment securities		7,27,28		31,816		31,854
Accounts receivable – trade, net		4,27,28,29		1,584,872		1,503,552
Short-term loans, net		4,27,28,29		63,414		89,280
Accounts receivable – other, net		3,4,27,28,29,30		400,452		434,713
Contract assets		6,28		9,297		8,388
Prepaid expenses		3,5		1,985,223		2,052,515
Guarantee deposits		4,27,28,29		49,792		51,069
Derivative financial assets		27,28		23,063		8,704
Inventories, net				6,598		5,181
Non-current assets held for sale		32		55,280		—
Advanced payments and others		4,27,28		26,477		16,651

				4,835,661		5,047,115

Non-Current Assets:
Long-term financial instruments		27,28		354		354
Long-term investment securities		7,27,28		1,970,708		983,688
Investments in subsidiaries, associates and joint ventures		8,32		11,685,264		11,357,504
Property and equipment, net		3,9,10,29,32		9,159,603		9,157,548
Goodwill				1,306,236		1,306,236
Intangible assets, net		11		2,305,759		2,665,083
Long-term loans, net		4,27,28,29		314		6,518
Long-term accounts receivable – other		3,4,27,28,30		295,036		348,335
Long-term contract assets		6,28		21,974		22,844
Long-term prepaid expenses		3,5		929,932		903,961
Guarantee deposits		4,27,28,29		98,253		110,555
Long-term derivative financial assets		27,28		101,292		76,461
Other non-current assets				249		249

				27,874,974		26,939,336

Total Assets			W	32,710,635		31,986,451

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Interim Statements of Financial Position, Continued

As of June 30, 2021 and December 31, 2020


(In millions of won)
	*Note*		June 30, 2021		December 31, 2020
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable – other		27,28,29	W	1,709,005		1,955,472
Contract liabilities		6		83,280		83,216
Withholdings		27,28		656,474		659,181
Accrued expenses		3,27,28		700,273		724,992
Income tax payable		25		158,722		154,144
Provisions		3,14		51,656		43,437
Current installments of long-term debt, net		12,27,28		852,462		712,105
Lease liabilities		3,27,28,29		302,708		313,422
Current installments of long-term payables – other		13,27,28		220,010		424,600
Other current liabilities		27,28		5,704		5,835

				4,740,294		5,076,404

Non-Current Liabilities:
Debentures, excluding current installments, net		12,27,28		6,137,201		6,175,576
Long-term borrowings, excluding current installments, net		12,27,28		300,000		6,167
Long-term payables – other		13,27,28		929,813		1,141,723
Long-term contract liabilities		6		6,610		8,110
Long-term derivative financial liabilities		16,27,28		430,519		362,002
Long-term lease liabilities		3,27,28,29		1,041,049		999,776
Long-term provisions		3,14		43,286		55,953
Deferred tax liabilities		3,25		995,597		756,873
Defined benefit liabilities		15		36,173		7,421
Other non-current liabilities		27,28		45,136		46,588

				9,965,384		9,560,189

Total Liabilities				14,705,678		14,636,593

Shareholders’ Equity:
Share capital		1,17		44,639		44,639
Capital surplus and others		17,18		2,212,133		289,134
Retained earnings		3,19		14,707,654		16,684,640
Reserves		20		1,040,531		331,445

Total Shareholders’ Equity				18,004,957		17,349,858

Total Liabilities and Shareholders’ Equity			W	32,710,635		31,986,451

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Interim Statements of Income

For the three and six-month periods ended June 30, 2021 and 2020


(In millions of won)
			2021						2020
	*Note*		Three-month period ended June 30			Six-month period ended June 30			Three-month period ended June 30			Six-month period ended June 30
Operating revenue:		3,21,29
Revenue			W	3,021,605			6,002,323			2,941,546			5,866,052

Operating expenses:		3,29
Labor				208,606			456,151			193,517			398,044
Commission		5		1,201,858			2,375,218			1,153,420			2,293,903
Depreciation and amortization		3		692,938			1,381,306			718,484			1,435,609
Network interconnection				137,323			278,592			149,101			293,195
Leased lines				54,724			109,720			52,879			105,986
Advertising				21,041			34,243			22,937			39,362
Rent		3		26,987			56,542			30,792			62,600
Cost of goods sold				113,126			216,023			102,756			210,092
Others		22		236,642			458,866			247,739			499,055

				2,693,245			5,366,661			2,671,625			5,337,846

Operating profit				328,360			635,662			269,921			528,206

Finance income		3,24		25,875			259,718			29,711			317,253
Finance costs		3,24		(150,101	)		(208,465	)		(66,299	)		(135,482	)
Other non-operating income		3,23		27,730			31,259			23,776			37,654
Other non-operating expenses		3,23		(10,563	)		(16,008	)		(23,014	)		(34,419	)
Gain (loss) relating to investments in subsidiaries and associates, net		8		(662	)		99,338			(14,498	)		(6,857	)

Profit before income tax				220,639			801,504			219,597			706,355

Income tax expense		3,25		36,628			151,480			51,242			133,246

Profit for the period			W	184,011			650,024			168,355			573,109

Earnings per share:		3,26
Basic earnings per share (in won)			W	2,534			9,031			2,251			7,735
Diluted earnings per share (in won)				2,532			9,025			2,251			7,735

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Interim Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2021 and 2020

(In millions of won)

2021

2020

Note

Three-month
period ended
June 30

Six-month
period ended
June 30

Three-month
period ended
June 30

Six-month
period ended
June 30

Profit for the period

184,011

650,024

168,355

573,109

Other comprehensive income (loss):

Items that will never be reclassified to profit or loss, net of taxes:

Remeasurement of defined benefit liabilities

4,998

(11,731

)

2,909

(11,224

)

Valuation gain on financial assets at fair value through other comprehensive income

528,206

699,526

184,838

171,194

Items that are or may be reclassified subsequently to profit or loss, net of taxes:

Net change in unrealized fair value of derivatives

11,190

9,560

10,728

13,999

Other comprehensive income for the period, net of taxes

544,394

697,355

198,475

173,969

Total comprehensive income

728,405

1,347,379

366,830

747,078

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Interim Statements of Changes in Equity

For the six-month periods ended June 30, 2021 and 2020


(In millions of won)			Share		Capital surplus and others															Retained			Reserves
	*Note*		capital		Paid-in surplus		Treasury shares			Hybrid bonds		Share option		Other			Sub-total			earnings			Reserves			Total equity
Balance, January 1, 2020			W	44,639		2,915,887		(1,696,997	)		398,759		1,302		(903,332	)		715,619			16,672,947			(49,306	)		17,383,899
Total comprehensive income:
Profit for the period				—		—		—			—		—		—			—			573,109			—			573,109
Other comprehensive income (loss)		15,20		—		—		—			—		—		—			—			(11,224	)		185,193			173,969

				—		—		—			—		—		—			—			561,885			185,193			747,078

Transactions with owners:
Annual dividends				—		—		—			—		—		—			—			(658,228	)		—			(658,228	)
Share option		18		—		—		—			—		103		—			103			—			—			103
Interest on hybrid bonds				—		—		—			—		—		—			—			(7,383	)		—			(7,383	)

				—		—		—			—		103		—			103			(665,611	)		—			(665,508	)

Balance, June 30, 2020			W	44,639		2,915,887		(1,696,997	)		398,759		1,405		(903,332	)		715,722			16,569,221			135,887			17,465,469

Balance, January 1, 2021			W	44,639		2,915,887		(2,123,661	)		398,759		1,481		(903,332	)		289,134			16,684,640			331,445			17,349,858
Total comprehensive income:
Profit for the period				—		—		—			—		—		—			—			650,024			—			650,024
Other comprehensive income (loss)		15,20		—		—		—			—		—		—			—			(11,731	)		709,086			697,355

				—		—		—			—		—		—			—			638,293			709,086			1,347,379

Transactions with owners:
Annual dividends				—		—		—			—		—		—			—			(641,944	)		—			(641,944	)
Share option		18		—		—		—			—		226		—			226			—			—			226
Interest on hybrid bonds				—		—		—			—		—		—			—			(7,383	)		—			(7,383	)
Acquisition of treasury shares		17		—		—		(72,982	)		—		—		—			(72,982	)		—			—			(72,982	)
Disposal of treasury shares		17		—		—		27,096			—		—		2,707			29,803			—			—			29,803
Retirement of treasury shares		17		—		—		1,965,952			—		—		—			1,965,952			(1,965,952	)		—			—

				—		—		1,920,066			—		226		2,707			1,922,999			(2,615,279	)		—			(692,280	)

Balance, June 30, 2021			W	44,639		2,915,887		(203,595	)		398,759		1,707		(900,625	)		2,212,133			14,707,654			1,040,531			18,004,957

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Interim Statements of Cash Flows

For the six-month periods ended June 30, 2021 and 2020


(In millions of won)
	*Note*		June 30, 2021			June 30, 2020
Cash flows from operating activities:
Cash generated from operating activities:
Profit for the period			W	650,024			573,109
Adjustments for income and expenses		31		1,511,444			1,547,565
Changes in assets and liabilities related to operating activities		31		(302,543	)		(38,084	)

				1,858,925			2,082,590

Interest received				11,484			9,171
Dividends received				195,315			284,666
Interest paid				(102,678	)		(115,982	)
Income tax refund (paid)				(162,058	)		44,273

Net cash provided by operating activities				1,800,988			2,304,718

Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net				202,000			—
Collection of short-term loans				77,046			54,650
Decrease in long-term financial instruments				—			28
Proceeds from disposals of long-term investment securities				8,192			200
Proceeds from disposals of investments in subsidiaries, associates and joint ventures				130,626			659
Proceeds from disposals of property and equipment				6,366			1,315
Proceeds from disposals of intangible assets				632			1,946

				424,862			58,798
Cash outflows for investing activities:

Increase in short-term financial instruments, net				—			(25,000	)
Increase in short-term loans				(44,652	)		(65,176	)
Acquisitions of long-term investment securities				(13,399	)		(327	)
Acquisitions of investments in subsidiaries, associates and joint ventures				(372,618	)		(212,105	)
Acquisitions of property and equipment				(872,523	)		(1,269,114	)
Acquisitions of intangible assets				(5,766	)		(45,851	)

				(1,308,958	)		(1,617,573	)

Net cash used in investing activities			W	(884,096	)		(1,558,775	)

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Interim Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2021 and 2020


(In millions of won)
	*Note*	June 30, 2021			June 30, 2020
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from long-term borrowings, net		W	300,000			—
Proceeds from issuance of debentures			308,757			773,727
Cash inflows from settlement of derivatives			10			41,182

			608,767			814,909
Cash outflows for financing activities:
Repayments of long-term borrowings			(6,417	)		(6,670	)
Repayments of long-term payables – other			(425,349	)		(425,349	)
Repayments of debentures			(260,000	)		(424,590	)
Payments of dividends			(641,944	)		(658,228	)
Payments of interest on hybrid bonds			(7,383	)		(7,383	)
Repayments of lease liabilities			(155,424	)		(156,570	)
Acquisition of treasury shares			(72,982	)		—

			(1,569,499	)		(1,678,790	)

Net cash used in financing activities			(960,732	)		(863,881	)

Net decrease in cash and cash equivalents			(43,840	)		(117,938	)
Cash and cash equivalents at beginning of the period			329,208			497,282
Effects of exchange rate changes on cash and cash equivalents			9			(289	)

Cash and cash equivalents at end of the period		W	285,377			379,055

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

1.	Reporting Entity

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

The Company’s common shares and depositary receipts (“DRs”) are listed on the Stock Market of Korea Exchange, the New York Stock Exchange and the London Stock Exchange. As of June 30, 2021, the Company’s total issued shares are held by the following shareholders:


	Number of shares		Percentage of total shares issued (%)
SK Inc.		21,624,120		30.00
National Pension Service		7,205,438		10.00
Institutional investors and other shareholders		41,064,465		56.99
Kakao Co., Ltd.		1,266,620		1.76
Treasury shares		899,500		1.25

		72,060,143		100.00

2.	Basis of Preparation

(1)

Statement of compliance

These condensed separate interim financial statements were prepared in accordance with Korean International Financial Reporting Standard (“K-IFRS”) No. 1034, Interim Financial Reporting, as part of the period covered by the Company’s K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since December 31, 2020. These condensed separate interim financial statements do not include all of the disclosures required for full annual financial statements.

These condensed interim financial statements are separate interim financial statements prepared in accordance with K-IFRS No. 1027, Separate Financial Statements, presented by a parent, an investor with joint control of or significant influence over an investee, in which the investments are accounted for at cost.

(2)

Use of estimates and judgments

1) Critical judgments, assumptions and estimation uncertainties

The preparation of the condensed separate interim financial statements in conformity with K-IFRS 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.

In preparing these condensed separate interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the separate financial statements as of and for the year ended December 31, 2020.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

2.	Basis of Preparation, Continued

(2)

Use of estimates and judgments, Continued

2) 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 K-IFRS, 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 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;

•

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or 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 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 are included in note 28.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

3.	Significant Accounting Policies

(1)

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Company’s separate financial statements as at and for the year ended December 31, 2020. The change in accounting policy will also be reflected in the Company’s separate financial statements as at and for the year ending December 31, 2021.

The Company has initially adopted Interest Rate Benchmark Reform Phase 2 – Amendments to K-IFRS No. 1109, Financial Instruments, K-IFRS No. 1039, Financial Instrument: Recognition and Measurement, K-IFRS No. 1107, Financial Instruments: Disclosures and K-IFRS No. 1116, Leases from January 1, 2021.

Interest Rate Benchmark Reform Phase 2 – Amendments provide exceptions as follows:

•

when a change required by interest rate benchmark reform occurs to a financial asset or financial liability measured at amortized cost, the Company updates the effective interest rate of the financial asset or financial liability rather than the carry amount and,

•

when a change required by interest rate benchmark reform occurs to a hedged item and/or hedging instrument, the exception permits the hedge relationship to be continued without interruption.

These amended standards are not expected to have a significant impact on the Company’s separate financial statements.

(2)

During the annual period ended December 31, 2020, the Company changed its accounting policy by applying agenda decision, Lease Term and Useful Life of Leasehold Improvements (IFRS 16 Leases and IAS 16 Property, Plant and Equipment)—November 2019, published by International Financial Reporting Interpretations Committee (“IFRIC”) on December 16, 2019. Due to the changes in accounting policies in connection with the IFRIC agenda, the Company restated its comparative financial statements for the six-month period ended June 30, 2020.

The following table summarizes the impacts of the change in accounting policy on the Company’s condensed separate interim financial statements.

Statement of financial position


(In millions of won)
	As of June 30, 2020
	As reported		Adjustments			Restated
Assets
Accounts receivable – other, net	W	642,102		4,852			646,954
Prepaid expenses		2,992,321		(9,769	)		2,982,552
Property and equipment, net		8,424,982		885,826			9,310,808

	W	12,059,405		880,909			12,940,314

Liabilities
Accrued expenses	W	670,976		(252	)		670,724
Provisions		72,700		21,660			94,360
Lease liabilities		447,660		869,685			1,317,345
Deferred tax liabilities		709,433		(2,711	)		706,722

	W	1,900,769		888,382			2,789,151

Shareholders’ Equity
Retained earnings	W	16,576,694		(7,473	)		16,569,221

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

3.	Significant Accounting Policies, Continued

Statement of income


(In millions of won)
	For the six-month period ended June 30, 2020
	As reported		Adjustments			Restated
Operating revenue	W	5,862,677		3,375			5,866,052
Operating expenses:
Depreciation and amortization		1,394,308		41,301			1,435,609
Rent		100,378		(37,778	)		62,600
Others		3,839,787		(150	)		3,839,637

		5,334,473		3,373			5,337,846

Operating profit		528,204		2			528,206
Finance income		317,258		(5	)		317,253
Finance costs		129,131		6,351			135,482
Other non-operating income		38,039		(385	)		37,654
Other non-operating expenses		38,968		(4,549	)		34,419
Loss relating to investments in subsidiaries and associates, net		6,857		—			6,857

Profit before income tax		708,545		(2,190	)		706,355
Income tax expense		133,803		(557	)		133,246

Profit for the period	W	574,742		(1,633	)		573,109

Earnings per share:
Basic and diluted earnings per share (in won)	W	7,758		(23	)		7,735

Statement of changes in equity and statement of cash flows

The statement of changes in equity and statement of cash flows for the six-month period ended June 30, 2020 have been restated as a result of restated statement of financial position and statement of income.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

4.	Trade and Other Receivables

(1)

Details of trade and other receivables as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)	June 30, 2021
	Gross amount		Loss allowance			Carrying amount
Current assets:
Accounts receivable – trade	W	1,679,600		(94,728	)		1,584,872
Short-term loans		64,055		(641	)		63,414
Accounts receivable – other(*)		434,065		(33,613	)		400,452
Guarantee deposits		49,792		—			49,792
Accrued income		173		—			173

		2,227,685		(128,982	)		2,098,703
Non-current assets:
Long-term loans		41,352		(41,038	)		314
Long-term accounts receivable – other(*)		295,036		—			295,036
Guarantee deposits		98,253		—			98,253

		434,641		(41,038	)		393,603

	W	2,662,326		(170,020	)		2,492,306

(*)	Gross and carrying amounts of accounts receivable – other as of June 30, 2021 include W439,441 million of financial instruments classified as FVTPL.


(In millions of won)	December 31, 2020
	Gross amount		Loss allowance			Carrying amount
Current assets:
Accounts receivable – trade	W	1,605,860		(102,308	)		1,503,552
Short-term loans		90,182		(902	)		89,280
Accounts receivable – other(*)		468,880		(34,167	)		434,713
Guarantee deposits		51,069		—			51,069
Accrued income		518		—			518

		2,216,509		(137,377	)		2,079,132
Non-current assets:
Long-term loans		47,619		(41,101	)		6,518
Long-term accounts receivable – other(*)		348,335		—			348,335
Guarantee deposits		110,555		—			110,555

		506,509		(41,101	)		465,408

	W	2,723,018		(178,478	)		2,544,540

(*)	Gross and carrying amounts of accounts receivable – other as of December 31, 2020 include W517,175 million of financial instruments classified as FVTPL.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

4.	Trade and Other Receivables, Continued

(2)

Changes in the loss allowance on trade and other receivables measured at amortized cost for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	January 1, 2021		Impairment		*Write-offs()**			Collection of receivables previously written- off		June 30, 2021
Accounts receivable – trade	W	102,308		4,101		(16,712	)		5,031		94,728
Accounts receivable – other, etc.		76,170		823		(2,634	)		933		75,292

	W	178,478		4,924		(19,346	)		5,964		170,020


(In millions of won)
	January 1, 2020		Impairment		*Write-offs()**			Collection of receivables previously written- off		June 30, 2020
	January 1, 2020		Impairment		*Write-offs()**			Collection of receivables previously written- off		June 30, 2020
Accounts receivable – trade	W	103,756		15,310		(12,833	)		4,908		111,141
Accounts receivable – other, etc.		76,458		1,822		(2,775	)		928		76,433

	W	180,214		17,132		(15,608	)		5,836		187,574

(*)	The Company writes off the trade and other receivables that are determined to be uncollectable due to reasons 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 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 years and classifies the accounts receivable – trade by their credit risk characteristics and days overdue.

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.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

5.	Prepaid Expenses

The Company pays commissions to its retail stores and authorized dealers for wireless telecommunications services and for each service contract and installation contract secured. The Company capitalized certain costs associated with commissions paid to retail stores and authorized dealers to obtain new and retained customer contracts as prepaid expenses. 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 June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Current assets:
Incremental costs of obtaining contracts	W	1,941,818		2,022,314
Others		43,405		30,201

	W	1,985,223		2,052,515

Non-current assets:
Incremental costs of obtaining contracts	W	912,134		885,951
Others		17,798		18,010

	W	929,932		903,961

(2)

Incremental costs of obtaining contracts

The amortization in connection with incremental costs of obtaining contracts recognized for the three and six-month periods ended June 30, 2021 and 2020 are as follows:

(In millions of won)

2021

2020

Three-month
period ended
June 30

Six-month
period ended
June 30

Three-month
period ended
June 30

Six-month
period ended
June 30

Amortization recognized

655,959

1,296,499

601,909

1,201,435

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

6.	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 June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Contract assets:
Allocation of consideration between performance obligations	W	31,271		31,232
Contract liabilities:
Wireless service contracts		19,485		22,026
Customer loyalty programs		14,180		16,709
Others		56,225		52,591

	W	89,890		91,326

(2)

The amount of revenue recognized for the six-month periods ended June 30, 2021 and 2020 related to the contract liabilities carried forward from the prior period are W41,902 million and W43,626 million, respectively.

7.	Investment Securities

(1)

Details of short-term investment securities as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	Category	June 30, 2021		December 31, 2020
Beneficiary certificates	FVTPL	W	31,816		31,854

(2)

Details of long-term investment securities as of June 30, 2021, and December 31, 2020, are as follows:


(In millions of won)
	Category	June 30, 2021		December 31, 2020
Equity instruments	FVOCI(*)	W	1,894,200		916,387
Debt instruments	FVTPL		76,508		67,301

		W	1,970,708		983,688

(*)	The Company designated investments in equity instruments that are not held for trading as financial assets at FVOCI, the amounts to those FVOCI as of June 30, 2021 and December 31, 2020 are W1,894,200 million and W916,387 million, respectively.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

8.	Investments in Subsidiaries, Associates and Joint Ventures

(1)

Investments in subsidiaries, associates and joint ventures as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Investments in subsidiaries	W	6,280,025		6,014,367
Investments in associates and joint ventures		5,405,239		5,343,137

	W	11,685,264		11,357,504

(2)

Details of investments in subsidiaries as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021						December 31, 2020
	Number of shares		Ownership (%)		Carrying amount		Carrying amount
SK Telink Co., Ltd.		1,432,627		100.0	W	243,988		243,988
SK Broadband Co., Ltd.		298,460,212		74.3		2,195,452		2,195,452
SK Communications Co., Ltd.		43,427,530		100.0		41,939		41,939
PS&Marketing Corporation		66,000,000		100.0		313,934		313,934
SERVICE ACE Co., Ltd.		4,385,400		100.0		21,927		21,927
SK Planet Co., Ltd.		69,593,562		98.7		404,833		404,833
Eleven Street Co., Ltd.		8,224,709		80.3		1,049,403		1,049,403
DREAMUS COMPANY(*1)		29,246,387		41.8		156,781		156,781
SK Telecom China Holdings Co., Ltd.		—		100.0		48,096		48,096
SKT Americas, Inc.		122		100.0		31,203		31,203
Atlas Investment(*2)		—		100.0		151,473		143,097
One Store Co., Ltd.(*3)		10,409,600		47.5		82,186		82,186
id Quantique SA(*4)		77,490,839		69.3		106,505		100,527
ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)(*5)		46,836,584		62.6		747,804		747,804
SK Telecom TMT Investment Corp.(*6)		80,000		100.0		262,000		94,136
FSK L&S Co., Ltd.		2,415,750		60.0		17,757		17,757
Incross Co., Ltd.(*7)		2,786,455		34.6		53,722		53,722
SK stoa Co., Ltd.		3,631,355		100.0		40,029		40,029
Broadband Nowon Co., Ltd.(*8)		1,140,000		100.0		19,975		10,463
Quantum Innovation Fund I(*9)		—		59.9		16,342		15,969
T map Mobility Co., Ltd.(*10)		10,838,500		66.3		228,963		155,408
SK O&S Co., Ltd. and others		—		—		45,713		45,713

					W	6,280,025		6,014,367

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

8.	Investments in Subsidiaries, Associates and Joint Ventures, Continued

(2)

Details of investments in subsidiaries as of June 30, 2021 and December 31, 2020 are as follows, Continued:

(*1)

The ownership interest has changed from 51.4% to 41.8% due to unequal paid-in capital increase for the six-month period ended June 30, 2021. Although the Company owns less than 50% ownership of the investee, the management has determined that the Company controls DREAMUS COMPANY as it has a right to appoint the majority of the members of the board of directors by virtue of an agreement with the investee’s other shareholders.

(*2)	The Company additionally contributed W8,376 million in cash for the six-month period ended June 30, 2021.

(*3)

The ownership interest has changed from 52.1% to 47.5% due to unequal paid-in capital increase and third-party share option which was exercised for the six-month period ended June 30, 2021. Although the Company owns less than 50% ownership of the investee, the management has determined that the Company controls One Store Co., Ltd. as it has a right to appoint the majority of the members of the board of directors by virtue of an agreement with the investee’s other shareholders.

(*4)	The Company acquired 4,166,667 shares of id Quantique SA at W5,978 million in cash through unequal paid-in capital increase for the six-month period ended June 30, 2021.

(*5)	On March 4, 2021, SK Infosec Co., Ltd. merged with ADT CAPS Co., Ltd., a subsidiary of SK Infosec Co., Ltd., to improve management efficiency and changed its name to ADT CAPS Co., Ltd.

(*6)	The Company additionally contributed W167,864 million in cash for the six-month period ended June 30, 2021, but there is no change in the ownership interest.

(*7)

Although the Company owns less than 50% ownership of the investee, the management has determined that the Company controls Incross Co., Ltd. considering the level of dispersion of remaining voting rights and voting patterns at previous shareholders’ meetings, and the fact that the Company has a right to appoint the majority of the members of the board of directors by virtue of an agreement with the investee’s other shareholders.

(*8)	The Company acquired 513,000 shares (45%) of Broadband Nowon Co., Ltd. at W9,512 million in cash for the six-month period ended June 30, 2021.

(*9)	The Company additionally contributed W373 million in cash for the six-month period ended June 30, 2021, but there is no change in the ownership interest.

(*10)

The Company additionally contributed W73,555 million in cash and the ownership interest has changed from 100% to 66.3% due to unequal paid-in capital increase for the six-month period ended June 30, 2021. In addition, the Company has entered into a shareholder’s agreement with the acquirer of newly issued shares in relation to the paid-in capital increase of T Map Mobility Co., Ltd. for the six-month period ended June 30, 2021 and W88,613 million of derivative financial liabilities are recognized for drag-along right of the acquirer of shares and call option of the Company as of June 30, 2021. (See note 16)

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

8.	Investments in Subsidiaries, Associates and Joint Ventures, Continued

(3) Details of investments in associates and joint ventures as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021						December 31, 2020
	Number of shares		Ownership (%)		Carrying amount		Carrying 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
KEB HanaCard Co., Ltd.(*2)		39,902,323		15.0		253,739		253,739
NanoEnTek, Inc.		7,600,649		28.4		51,138		51,138
SK Technology Innovation Company		14,700		49.0		45,864		45,864
SK hynix Inc.		146,100,000		20.1		3,374,725		3,374,725
S.M. Culture & Contents Co., Ltd.		22,033,898		23.3		65,341		65,341
SK South East Asia Investment Pte. Ltd.		300,000,000		20.0		344,240		344,240
Pacific Telecom Inc.(*2)		1,734,109		15.0		36,487		36,487
Grab Geo Holdings PTE. LTD.(*3)		—		—		—		30,517
Content Wavve Co., Ltd.(*4)		1,741,717		36.4		190,858		90,858
SK Telecom CS T1 Co., Ltd.(*1,5)		52,832		54.9		65,193		60,305
Digital Games International Pte. Ltd.		10,000,000		33.3		8,810		8,810
Invites Healthcare Co., Ltd.(*6)		489,999		27.1		35,000		28,000
Carrot General Insurance Co., Ltd.(*7)		—		—		—		20,000
12CM JAPAN and others(*2,8)		—		—		80,657		79,926

						5,374,201		5,312,099

Investments in joint ventures:
Finnq Co., Ltd.(*9)		6,370,000		49.0		25,429		25,429
Techmaker GmbH(*9)		12,500		50.0		5,609		5,609

						31,038		31,038

					W	5,405,239		5,343,137

(*1)	Investments in Korea IT Fund and SK Telecom CS T1 Co., Ltd. were classified as investment in associates as the Company does not have control over the investee under the contractual agreement with other shareholders.

(*2)	These investments were classified as investments in associates as the Company can exercise significant influence through its right to appoint the members of the board of directors even though the Company has less than 20% of equity interests.

(*3)	The Company disposed the entire shares of Grab Geo Holdings PTE. LTD. at W30,580 million in cash to T map Mobility Co., Ltd., a subsidiary, and recognized W63 million as gain relating to investments in associates for the six-month period ended June 30, 2021.

(*4)	The Company additionally acquired 435,431 shares of Content Wavve Co., Ltd. by contributing W100,000 million in cash due to an unequal paid-in capital increase for the six-month period ended June 30, 2021, and the ownership interest has changed from 30% to 36.4%.

(*5)	The Company additionally contributed W4,888 million in cash for the six-month period ended June 30, 2021, but there is no change in the ownership interest.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

8.	Investments in Subsidiaries, Associates and Joint Ventures, Continued

(3)

Details of investments in associates and joint ventures as of June 30, 2021 and December 31, 2020 are as follows, Continued:

(*6)

The Company disposed the entire shares of SK Telecom Smart City Management Co., Ltd. to Invites Healthcare Co., Ltd. during the year ended December 31, 2020 and additionally contributed W7,000 million of accounts receivable – other relating to disposal of the shares for the six-month period ended June 30, 2021. The ownership interest with voting right has changed from 43.5% to 27.1% as convertible preferred stock of Invites Healthcare Co., Ltd. have been converted to common stock.

(*7)

The Company has entered into an agreement whereby the entire shares of Carrot General Insurance Co., Ltd. will transfer to T map Mobility Co., Ltd. which is a subsidiary of the Company. In accordance with the agreement, the Company reclassified the entire shares of Carrot General Insurance Co., Ltd. as non-current assets held for sale. (See note 32)

(*8)

The Company disposed the entire shares of SK Wyverns Co., Ltd. and recognized W100,000 million as gain relating to investments in associates for the six-month period ended June 30, 2021. In addition, the Company disposed of the entire common shares and redeemable convertible preference shares of MakeUs Co., Ltd. at W244 million in cash to DREAMUS COMPANY which is a subsidiary of the Company and recognized W725 million of loss relating to investments in associates and W198 million of gain relating to financial instruments at FVTPL for the six-month period ended June 30, 2021.

(*9)	These investments were classified as investments in joint ventures as the Company has a joint control pursuant to the agreement with the other shareholders.

(4)

The market value of investments in listed subsidiaries as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021						December 31, 2020
	Market price per share (in won)		Number of shares		Market value		Market price per share (in won)		Number of shares		Market value
DREAMUS COMPANY	W	5,910		29,246,387		172,846		5,280		29,246,387		154,421
Incross Co., Ltd.		56,500		2,786,455		157,435		54,000		2,786,455		150,469

(5)

The market value of investments in listed associates as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021						December 31, 2020
	Market price per share (in won)		Number of shares		Market value		Market price per share (in won)		Number of shares		Market value
NanoEnTek, Inc.	W	8,810		7,600,649		66,962		8,620		7,600,649		65,518
SK hynix Inc.		127,500		146,100,000		18,627,750		118,500		146,100,000		17,312,850
S.M.Culture & Contents Co., Ltd.		3,300		22,033,898		72,712		1,630		22,033,898		35,915

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

9.	Property and Equipment

Changes

in property and equipment for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	For the six-month period ended June 30, 2021
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Reclassified as held for sale			Ending balance
Land	W	638,371		192		(63	)		20,118			—			(20,507	)		638,111
Buildings		587,958		1,587		(280	)		34,023			(21,033	)		(8,669	)		593,586
Structures		316,895		236		(10	)		10,985			(19,053	)		(6,104	)		302,949
Machinery		5,354,992		45,319		(3,921	)		644,291			(792,657	)		—			5,248,024
Right-of-use assets		1,323,111		223,726		(35,754	)		—			(182,088	)		—			1,328,995
Other		405,140		312,859		(520	)		(281,080	)		(40,975	)		—			395,424
Construction in progress		531,081		518,054		—			(396,621	)		—			—			652,514

	W	9,157,548		1,101,973		(40,548	)		31,716			(1,055,806	)		(35,280	)		9,159,603


(In millions of won)
	For the six-month period ended June 30, 2020
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance
Land	W	618,012		81		(37	)		19,295			—			637,351
Buildings		600,625		143		(9	)		16,448			(20,712	)		596,495
Structures		346,734		501		(27	)		2,856			(18,429	)		331,635
Machinery		5,074,665		43,191		(4,002	)		880,384			(823,864	)		5,170,374
Right-of-use assets		1,239,194		334,923		(33,318	)		—			(193,059	)		1,347,740
Other		500,887		482,282		(829	)		(444,558	)		(47,016	)		490,766
Construction in progress		672,592		629,101		(3,531	)		(561,715	)		—			736,447

	W	9,052,709		1,490,222		(41,753	)		(87,290	)		(1,103,080	)		9,310,808

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

10.

Lease

(1)

Details of the right-of-use assets as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Land, buildings and structures	W	1,123,076		1,095,216
Others		205,919		227,895

	W	1,328,995		1,323,111

(2)

Details of amounts recognized in the condensed separate interim statements of income for the six-month periods ended June 30, 2021 and 2020 as a lessee are as follows:


(In millions of won)
	For the six-month period ended
	June 30, 2021		June 30, 2020
Depreciation of right-of-use assets:
Land, buildings and structures	W	145,226		150,535
Others		36,862		42,524

	W	182,088		193,059

Interest expense on lease liabilities	W	9,053		9,753

Expenses related to short-term leases and low-value assets leases are immaterial.

(3)

The total cash outflows due to lease payments for the six-month periods ended June 30, 2021 and 2020 amounted to W164,517 million and W166,346 million, respectively.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

11.

Intangible Assets

(1)

Changes in intangible assets for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	For the six-month period ended June 30, 2021
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Ending balance
Frequency usage rights	W	1,932,765		—		—			—		(255,873	)		1,676,892
Land usage rights		4,103		—		(3	)		—		(909	)		3,191
Industrial rights		9,659		2,137		—			—		(1,269	)		10,527
Facility usage rights		15,061		514		(3	)		69		(1,337	)		14,304
Club memberships(*1)		50,698		33		(120	)		—		—			50,611
Other(*2)		652,797		3,082		(62	)		31,583		(137,166	)		550,234

	W	2,665,083		5,766		(188	)		31,652		(396,554	)		2,305,759


(In millions of won)
	For the six-month period ended June 30, 2020
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Impairment			Ending balance
Frequency usage rights(*3)	W	2,647,501		—		—			—		(260,990	)		(12,388	)		2,374,123
Land usage rights		5,708		99		—			—		(1,067	)		—			4,740
Industrial rights		12,054		240		(45	)		—		(1,314	)		—			10,935
Facility usage rights		15,524		766		—			280		(1,318	)		—			15,252
Club memberships(*1)		47,611		123		(1,179	)		—		—			—			46,555
Other(*2)		732,754		44,623		(2,562	)		102,575		(153,268	)		—			724,122

	W	3,461,152		45,851		(3,786	)		102,855		(417,957	)		(12,388	)		3,175,727

(*1)	Club memberships are classified as intangible assets with indefinite useful lives and are not amortized.

(*2)	Other intangible assets primarily consist of computer software and others.

(*3)	As Ministry of Science and Information and Communication Technology (“ICT”) approved the termination of 2G service, the Company recognized an impairment loss for the portion of 800MHz frequency usage rights used for 2G service for the six-month period ended June 30, 2020.

(2)

Details of frequency usage rights as of June 30, 2021 are as follows:

(In millions of won)

Amount

Description

Commencement of
amortization

Completion of
amortization

1.8 GHz license

52,870

LTE service

Sept. 2013

Nov. 2021

2.6 GHz license

667,800

LTE service

Sept. 2016

Dec. 2026

2.1 GHz license

46,284

W-CDMA and LTE service

Dec. 2016

Nov. 2021

3.5 GHz license

893,255

5G service

Apr. 2019

Nov. 2028

28 GHz license

16,683

5G service

—

Nov. 2023

1,676,892

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

12.

Borrowings and Debentures

(1)

Changes in long-term borrowings for the six-month periods ended June 30, 2021 are as follows:


(In millions of won)
	Lender	Annual interest rate (%)		Maturity	Book value
Current					W	12,441
Non-current						6,167

As of January 1, 2021						18,608

New long-term borrowings:	Mizuho Bank, Ltd.		1.35	May. 20, 2024		100,000
	DBS Bank Ltd		1.32	May. 28, 2024		200,000

						300,000

Repayments of long-term borrowings:	Export Kreditnamnden		1.70	Apr. 29, 2022		(6,417	)

Other changes(*1)						691

Current(*2)						12,882
Non-current(*2)						300,000

As of June 30, 2021					W	312,882

(*1)	Other changes include the effects on foreign currency translation of long-term borrowings and changes in present value discount on long-term borrowings for the six-month period ended June 30, 2021.

(*2)	W6,277 million were reclassified from non-current to current for the six-month period ended June 30, 2021.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

12.

Borrowings and Debentures, Continued

(2)

Changes in debentures for the six-month period ended June 30, 2021 are as follows:


(In millions of won)
	Purpose	Annual interest rate (%)		Maturity	Face value			Book value
Current					W	700,000			699,664
Non-current						6,195,600			6,175,576

As of January 1, 2021						6,895,600			6,875,240

Debentures newly issued:
Unsecured corporate bonds	Refinancing fund		1.17	Jan. 15, 2024		80,000			79,642
			1.39	Jan. 15, 2026		80,000			79,678
			1.80	Jan. 15, 2031		50,000			49,811
			1.89	Jan. 15, 2041		100,000			99,626

						310,000			308,757

Debentures repaid:
Unsecured corporate bonds	Operating fund		1.80	Mar. 4, 2021		(100,000	)		(100,000	)
	Refinancing fund		2.57	Feb. 20, 2021		(110,000	)		(110,000	)
	Operating fund		1.71	Jun. 3, 2021		(50,000	)		(50,000	)

						(260,000	)		(260,000	)

Other changes(*1)						50,400			52,784

Current(*2)						840,000			839,580
Non-current(*2)						6,156,000			6,137,201

As of June 30, 2021					W	6,996,000			6,976,781

(*1)	Other changes include the effects on foreign currency translation of debentures and changes in present value discount on debentures for the six-month period ended June 30, 2021.

(*2)	W399,916 million were reclassified from non-current to current for the six-month period ended June 30, 2021.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

13.

Long-Term Payables – Other

(1)

As of June 30, 2021 and December 31, 2020, details of long-term payables – other related to the acquisition of frequency usage rights are as follows (See note 11):


(In millions of won)
	June 30, 2021			December 31, 2020
Long-term payables – other	W	1,200,691			1,626,040
Present value discount on long-term payables – other		(50,868	)		(59,717	)
Current installments of long-term payables – other		(220,010	)		(424,600	)

Carrying amount at period end	W	929,813			1,141,723

(2)

The principal amount of long-term payables – other repaid for the six-month periods ended June 30, 2021 and 2020 are W425,349 million, respectively. The repayment schedule of the principal amount of long-term payables – other as of June 30, 2021 is as follows:


(In millions of won)
	Amount
Less than 1 year	W	222,240
1 ~ 3 years		413,385
3 ~ 5 years		382,290
More than 5 years		182,776

	W	1,200,691

14.

Provisions

Changes in provisions for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended June 30, 2021												As of June 30, 2021
	Beginning balance		Increase		Utilization			Reversal			Ending balance		Current		Non- current
Provision for restoration	W	91,966		5,244		(3,410	)		—			93,800		50,514		43,286
Emission allowance		7,424		487		(1,091	)		(5,678	)		1,142		1,142		—

	W	99,390		5,731		(4,501	)		(5,678	)		94,942		51,656		43,286


(In millions of won)	For the six-month period ended June 30, 2020												As of June 30, 2020
	Beginning balance		Increase		Utilization			Reversal			Ending balance		Current		Non- current
Provision for restoration	W	83,675		1,745		(303	)		(586	)		84,531		43,544		40,987
Emission allowance		5,256		4,573		—			—			9,829		9,829		—

	W	88,931		6,318		(303	)		(586	)		94,360		53,373		40,987

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

15.

Defined Benefit Liabilities

(1)

Details of defined benefit liabilities as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021			December 31, 2020
Present value of defined benefit obligations	W	497,731			464,846
Fair value of plan assets		(461,558	)		(457,425	)

	W	36,173			7,421

(2)

Changes in defined benefit obligations for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Beginning balance	W	464,846			422,782
Current service cost		28,476			28,628
Past service cost		—			815
Interest cost		5,549			5,059
Remeasurement
- Adjustment based on experience		15,231			14,656
Benefit paid		(18,652	)		(12,887	)
Others		2,281			2,827

Ending balance	W	497,731			461,880

(3)

Changes in plan assets for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Beginning balance	W	457,425			397,689
Interest income		5,383			4,553
Remeasurement		32			(120	)
Contribution		21,500			15,000
Benefit paid		(24,263	)		(21,419	)
Others		1,481			2,269

Ending balance	W	461,558			397,972

(4)

Total cost of benefit plan, which is recognized in profit and loss (included in labor in the condensed separate interim statements of income) and capitalized into construction-in-progress, for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021		June 30, 2020
Current service cost	W	28,476		28,628
Past service cost		—		815
Net interest cost		166		506

	W	28,642		29,949

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

16.

Derivative Instruments

In relation to the paid-in capital increase of T Map Mobility Co., Ltd. for the six-month period ended June 30, 2021, the Company has entered into a shareholder’s agreement with the acquirer of newly issued shares. Pursuant to the agreement, when certain conditions are met within a period of time subsequent to the paid-in capital increase, the acquirer of newly issued shares can exercise their drag-along rights and require the Company to sell its shares of T Map Mobility Co., Ltd. should the acquirer of newly issued shares exercise their drag-along rights, the Company also can exercise its call options over the shares held by those shareholders. The Company recognized a derivative financial liability of W88,613 million for the rights included in the shareholders’ agreement as of June 30, 2021.

The underlying assets are the total equity value of T Map Mobility Co., Ltd. calculated by multiplying the unit price per share (W87,418) as of the date of shareholder’s agreement which is the base of calculation by the total number of shares issued (16,090,548 shares). 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 the possibility of exercising the right. There is no significant difference in fair values between the date of shareholders’ agreement and June 30, 2021 and the significant unobservable inputs used in the fair value measurement and inter-relationship between significant unobservable inputs and fair value measurement are as below:


Significant unobservable inputs		Correlations between inputs and fair value measurements
Fair value of T Map Mobility Co., Ltd.’s common stock after the paid-in capital increase		The estimated fair value of derivative liabilities would decrease (increase) if the fair value of common stock would increase (decrease)

Volatility		The estimated fair value of derivative liabilities would decrease (increase) if the volatility of stock price increase (decrease)

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

17.

Share Capital and Capital Surplus and Others

(1)

The Company’s outstanding share capital consists entirely of common shares with a par value of W500. The number of authorized, issued and outstanding common shares and the details of capital surplus and others as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021			December 31, 2020
Number of authorized shares		220,000,000			220,000,000
Number of issued shares(*1)		72,060,143			80,745,711
Share capital:
Common share	W	44,639			44,639
Capital surplus and others:
Paid-in surplus		2,915,887			2,915,887
Treasury shares		(203,595	)		(2,123,661	)
Hybrid bonds(*2)		398,759			398,759
Share option(Note 18)		1,707			1,481
Others		(900,625	)		(903,332	)

	W	2,212,133			289,134

(*1)

The Company retired 8,685,568 treasury shares with reduction of its retained earnings before appropriation, as a result, the Company’s issued shares have decreased without change in share capital for the six-month ended June 30, 2021. In addition, in 2002 and 2003, the Company retired treasury shares with reduction of its retained earnings before appropriation. As a result, the Company’s issued shares have decreased without change in share capital.

(*2)	As there is no contractual obligation to deliver financial assets to the holders of hybrid bonds, the Company classified the hybrid bonds as equity. When in liquidation or bankruptcy, these hybrid bonds are senior only to common stocks.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

17.

Share Capital and Capital Surplus and Others, Continued

(2)

There were no changes in share capital for the six-month periods ended June 30, 2021 and 2020 and details of shares outstanding as of June 30, 2021 and 2020 are as follows:

(In shares)

June 30, 2021

June 30, 2020

Issued shares

Treasury
shares

Outstanding
shares

Issued shares

Treasury
shares

Outstanding
shares

Shares outstanding

72,060,143

899,500

71,160,643

80,745,711

7,609,263

73,136,448

(3)

Details of treasury shares as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won, except for share data)
	June 30, 2021		December 31, 2020
Number of shares(*)		899,500		9,418,558
Acquisition cost	W	203,595		2,123,661

(*)

The Company acquired 288,000 of its treasury shares for W72,982 million in an effort to increase shareholder value by stabilizing its stock price for the six-month period ended June 30, 2021. In addition, the Company distributed 120,990 treasury shares (acquisition cost: W26,983 million) as bonus payment to the employees, resulting in gain on disposal of treasury shares of W2,659 million for the six-month period ended June 30, 2021. In addition, the Company distributed 500 treasury shares (acquisition cost: W113 million) as compensation to the non-executive directors, resulting in gain on disposal of treasury shares of W48 million for the six-month period ended June 30, 2021.

Meanwhile, the Company retired 8,685,568 treasury shares with reduction of its retained earnings before appropriation, as a result, the Company’s issued shares have decreased without change in share capital for the six-month ended June 30, 2021.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

18.

Share Option

(1)

The terms and conditions related to the grants of the share options under the share option program are as follows:

Series

1-1

1-2

1-3

Grant date

March 24, 2017

February 20, 2018

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)

22,168

1,358

4,177

1,734

127,643

33,280

Exercise price (in won)

246,750

266,490

287,810

254,120

265,260

254,310

192,260

251,380

Exercise period

Mar. 25, 2019 ~ Mar. 24, 2022

Mar. 25, 2020 ~ Mar. 24, 2023

Mar. 25, 2021 ~ Mar. 24, 2024

Feb. 21, 2020 ~ Feb. 20, 2023

Feb. 23, 2021 ~ Feb. 22, 2024

Mar. 27, 2021 ~ Mar. 26, 2024

Mar. 27, 2023 ~ Mar. 26, 2027

Mar. 26, 2023 ~ Mar. 25, 2026

Vesting conditions

2 years’ service from the grant date

3 years’ service from the grant date

4 years’ service from the grant date

2 years’ service from the grant date

3 years’

service from

the grant date

2 years’

service from

the grant date

(2)

Share compensation expense recognized for the six-month period ended June 30, 2021 and the remaining share compensation expense to be recognized in subsequent periods are as follows:


(In millions of won)	Share compensation expense
	Share compensation expense
As of December 31, 2020	W	1,481
For the six-month period ended June 30, 2021		226
In subsequent periods		1,244

	W	2,951

(3)

The Company used binomial option-pricing model in the measurement of the fair value of share options at the grant date and the inputs used in the model are as follows:


(In won)	Series
	1-1			1-2			1-3			2			3			4			5			6
Risk-free interest rate		1.86	%		1.95	%		2.07	%		2.63	%		1.91	%		1.78	%		1.52	%		1.55	%
Estimated option’s life		5 years			6 years			7 years			5 years			5 years			5 years			7 years			5 years
Share price (Closing price on the preceding day)		262,500			262,500			262,500			243,500			259,000			253,000			174,500			249,000

Expected volatility		13.38	%		13.38	%		13.38	%		16.45	%		8.30	%		7.70	%		8.10	%		25.70	%
Expected dividends		3.80	%		3.80	%		3.80	%		3.70	%		3.80	%		3.90	%		5.70	%		4.00	%
Exercise price		246,750			266,490			287,810			254,120			265,260			254,310			192,260			251,380
Per-share fair value of the option		27,015			20,240			15,480			23,988			8,600			8,111			962			40,711

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

19.

Retained Earnings

Retained earnings as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021			December 31, 2020
Appropriated:
Legal reserve	W	22,320			22,320

Reserve for business expansion		11,631,138			11,631,138
Reserve for technology development		4,365,300			4,365,300

		15,996,438			15,996,438
Unappropriated		(1,311,104	)		665,882

	W	14,707,654			16,684,640

20.

Reserves

(1)

Details of reserves, net of taxes, as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Valuation gain on FVOCI	W	1,022,772		323,246
Valuation gain on derivatives		17,759		8,199

	W	1,040,531		331,445

(2)

Changes in reserves for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	Valuation gain (loss) on financial assets at FVOCI			Valuation gain (loss) on derivatives			Total
Balance at January 1, 2020	W	(41,998	)		(7,308	)		(49,306	)
Changes, net of taxes		171,194			13,999			185,193

Balance at June 30, 2020		129,196			6,691			135,887

Balance at January 1, 2021		323,246			8,199			331,445
Changes, net of taxes		699,526			9,560			709,086

Balance at June 30, 2021	W	1,022,772			17,759			1,040,531

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

21.

Operating Revenue

Disaggregation of operating revenues considering the economic factors that affect the amounts, timing and uncertainty of the Company’s revenue and future cash flows is as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Products transferred at a point in time:
Product sales	W	21,881		31,795		8,848		24,005
Services transferred over time:
Wireless service revenue(*1)		2,560,679		5,092,437		2,487,070		4,970,517
Cellular interconnection revenue		125,965		253,715		136,364		267,892
Other(*2)		313,080		624,376		309,264		603,638

		2,999,724		5,970,528		2,932,698		5,842,047

	W	3,021,605		6,002,323		2,941,546		5,866,052

(*1)	Wireless service revenue includes revenue from wireless voice and data transmission services principally derived through usage charges collected from the wireless subscribers.

(*2)	Other revenue includes revenue from billing and collection services as well as other miscellaneous services.

The Company has a right to consideration from a customer in an amount that corresponds directly with the value to the subscriber of the Company’s performance completed, thus, as a practical expedient, the Company 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.

22.

Other Operating Expenses

Details of other operating expenses for the three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Communication	W	7,051		14,147		7,705		15,352
Utilities		58,741		124,257		56,471		123,530
Taxes and dues		16,724		18,951		14,037		17,251
Repair		61,250		110,029		61,719		113,998
Research and development		82,644		166,143		89,369		183,386
Training		5,270		9,581		4,257		10,374
Bad debt for accounts receivable – trade		2,013		4,101		6,081		15,310
Others		2,949		11,657		8,100		19,854

	W	236,642		458,866		247,739		499,055

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

23.

Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Other non-operating Income:
Gain on disposal of property and equipment and intangible assets	W	2,770		3,495		1,218		1,971
Gain on business transfer		—		—		—		12,451
Others		24,960		27,764		22,558		23,232

	W	27,730		31,259		23,776		37,654

Other non-operating Expenses:
Loss on disposal of property and equipment and intangible assets	W	2,569		3,687		5,267		8,015
	W	2,569		3,687		5,267		8,015
Impairment loss on property and equipment and intangible assets		—		—		12,388		12,388
		—		—		12,388		12,388
Donations		5,783		9,032		3,956		10,133
Bad debt for accounts receivable – other		714		823		719		1,822
Others		1,497		2,466		684		2,061

	W	10,563		16,008		23,014		34,419

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

24.

Finance Income and Costs

(1)

Details of finance income and costs for the three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Finance Income:
Interest income	W	6,448		13,328		5,912		12,069
Gain on sale of accounts receivable – other		6,345		14,266		2,834		7,513
Dividends		10,716		195,315		18,814		284,666
Gain on foreign currency transactions		485		1,066		2,151		2,858
Gain on foreign currency translations		—		125		—		2,767
Gain relating to financial instruments at FVTPL		1,881		35,618		—		7,380

	W	25,875		259,718		29,711		317,253

Finance Costs:
Interest expense	W	58,806		116,853		61,794		126,616
Loss on foreign currency transactions		2,222		2,547		2,641		3,526
Loss on foreign currency translations		171		119		1,508		2,945
Loss relating to financial instruments at FVTPL		88,902		88,946		356		2,395

	W	150,101		208,465		66,299		135,482

(2)

Details of interest income included in finance income for the three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Interest income on cash equivalents and short-term financial instruments	W	1,066		2,028		1,860		3,704
Interest income on loans and others		5,382		11,300		4,052		8,365

	W	6,448		13,328		5,912		12,069

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

24.

Finance Income and Costs, Continued

(3)

Details of interest expense included in finance costs for the three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Interest expense on borrowings	W	1,751		2,552		3,543		5,425
Interest expense on debentures		46,814		93,815		46,195		93,149
Others		10,241		20,486		12,056		28,042

	W	58,806		116,853		61,794		126,616

(4)

Details of impairment losses for financial assets for the three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Accounts receivable – trade	W	2,013		4,101		6,081		15,310
Other receivables		714		823		719		1,822

	W	2,727		4,924		6,800		17,132

25.

Income Tax Expense

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

26.

Earnings per Share

(1)

Basic earnings per share

Basic earnings per share for the three and six-month periods ended June 30, 2021 and 2020 are calculated as follows:


(In millions of won, except for share data)	2021						2020
	Three-month period ended June 30			Six-month period ended June 30			Three-month period ended June 30			Six-month period ended June 30
Profit for the period	W	184,011			650,024			168,355			573,109
Interest on hybrid bonds		(3,691	)		(7,383	)		(3,691	)		(7,383	)
Profit for the period on common shares		180,320			642,641			164,664			565,726
Weighted average number of common shares outstanding		71,160,198			71,162,974			73,136,448			73,136,448

Basic earnings per share (in won)	W	2,534			9,031			2,251			7,735

The weighted average number of common shares outstanding for the three and six-month periods ended June 30, 2021 and 2020 are calculated as follows:


(In shares)				Weighted average number of common shares
	Number of common shares			Three-month period ended June 30			Six-month period ended June 30
Issued shares at January 1, 2021		80,745,711			80,745,711			80,745,711
Treasury shares at January 1, 2021		(9,418,558	)		(9,418,558	)		(9,418,558	)
Acquisition of treasury shares		(288,000	)		(288,000	)		(263,138	)
Disposal of treasury shares		121,490			121,045			98,959

		71,160,643			71,160,198			71,162,974


(In shares)				Weighted average number of common shares
	Number of common shares			Three-month period ended June 30			Six-month period ended June 30
Issued shares at January 1, 2020		80,745,711			80,745,711			80,745,711
Treasury shares at January 1, 2020		(7,609,263	)		(7,609,263	)		(7,609,263	)

		73,136,448			73,136,448			73,136,448

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

26.

Earnings per Share, Continued

(2)

Diluted earnings per share

Diluted earnings per share for the three and six-month period ended June 30, 2021 is calculated as follows:


(In millions of won, except for share data)	2021
	Three-month period ended June 30		Six-month period ended June 30
Profit for the period on common shares	W	180,320		642,641
Adjusted weighted average number of common shares outstanding		71,222,636		71,208,334
		71,222,636		71,208,334

Diluted earnings per share (in won)	W	2,532		9,025

The adjusted weighted average number of common shares outstanding for the three and six-month period ended June 30, 2021 is calculated as follows:


(In shares)	2021
	Three-month period ended June 30			Six-month period ended June 30
Outstanding shares at January 1, 2021		71,327,153			71,327,153
Effect of treasury shares		(166,955	)		(164,179	)
Effect of share option		62,438			45,360

Adjusted weighted average number of common shares outstanding		71,222,636			71,208,334
		71,222,636			71,208,334

For the six-month period ended June 30, 2020, diluted earnings per share are the same as basic earnings per share as there are no dilutive potential common shares.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

27.

Categories of Financial Instruments

(1)

Financial assets by category as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021
	Financial assets at FVTPL		Equity instruments at FVOCI		Financial assets at amortized cost		Derivatives hedging instrument		Total
Cash and cash equivalents	W	—		—		285,377		—		285,377
Financial instruments		—		—		314,354		—		314,354
Short-term investment securities		31,816		—		—		—		31,816
Long-term investment securities(*)		76,508		1,894,200		—		—		1,970,708
Accounts receivable – trade		—		—		1,584,872		—		1,584,872
Loans and other receivables		439,441		—		467,993		—		907,434
Derivative financial assets		22,859		—		—		101,496		124,355

	W	570,624		1,894,200		2,652,596		101,496		5,218,916

(*)	The Company designated W1,894,200 million of equity instruments that are not held for trading as financial assets at FVOCI.


(In millions of won)
	December 31, 2020
	Financial assets at FVTPL		Equity instruments at FVOCI		Financial assets at amortized cost		Derivatives hedging instrument		Total
Cash and cash equivalents	W	—		—		329,208		—		329,208
Financial instruments		—		—		516,354		—		516,354
Short-term investment securities		31,854		—		—		—		31,854
Long-term investment securities(*)		67,301		916,387		—		—		983,688
Accounts receivable – trade		—		—		1,503,552		—		1,503,552
Loans and other receivables		517,175		—		523,813		—		1,040,988
Derivative financial assets		22,859		—		—		62,306		85,165

	W	639,189		916,387		2,872,927		62,306		4,490,809

(*)	The Company designated W916,387 million of equity instruments that are not held for trading as financial assets at FVOCI.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

27.

Categories of Financial Instruments, Continued

(2)

Financial liabilities by category as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives hedging instrument		Total
Derivative financial liabilities	W	409,597		—		20,922		430,519
Borrowings		—		312,882		—		312,882
Debentures		—		6,976,781		—		6,976,781
Lease liabilities(*)		—		1,343,757		—		1,343,757
Accounts payable – other and others		—		3,872,257		—		3,872,257

	W	409,597		12,505,677		20,922		12,936,196

(In millions of won)
	December 31, 2020
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives hedging instrument		Total
Derivative financial liabilities	W	320,984		—		41,018		362,002
Borrowings		—		18,608		—		18,608
Debentures		—		6,875,240		—		6,875,240
Lease liabilities(*)		—		1,313,198		—		1,313,198
Accounts payable – other and others		—		4,446,539		—		4,446,539

	W	320,984		12,653,585		41,018		13,015,587

(*)	Lease liabilities are not applicable on category of financial liabilities, but are classified as financial liabilities measured at amortized cost on consideration of nature for measurement of liabilities.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Financial Risk Management

(1)

Financial risk management

The Company is exposed to credit risk, liquidity risk and market risk. Market risk is the risk related to the changes in market prices, such as foreign exchange rates and interest rates. 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, investment securities, accounts receivable – trade and others, etc. Financial liabilities consist of accounts payable – other, borrowings, debentures, lease liabilities and others.

Market risk

(i)

Currency risk

The Company is exposed to currency risk mainly on exchange fluctuations 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 June 30, 2021 are as follows:


(In millions of won, thousands of foreign currencies)
	Assets				Liabilities
	Foreign currencies		Won equivalent		Foreign currencies		Won equivalent
USD		15,146	W	17,115		1,211,552	W	1,369,053
EUR		581		781		4		6
Others		—		160		—		—

			W	18,056			W	1,369,059

In addition, the Company has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures.

As of June 30, 2021, a hypothetical change in exchange rates by 10% would have increased (decreased) the Company’s income before income taxes as follows:


(In millions of won)
	If increased by 10%		If decreased by 10%
USD	W	946		(946	)
EUR		78		(78	)
Others		16		(16	)

	W	1,040		(1,040	)

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

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 analyses 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 June 30, 2021, floating-rate debentures amount to W339,000 million, and the Company has entered into interest rate swaps to hedge interest rate risk related to the floating-rate debentures. Therefore, income before income taxes for the six-month period ended June 30, 2021 would not have been affected by the changes in interest rates of floating-rate debentures.

As of June 30, 2021, the floating-rate long-term payables – other are W1,200,691 million. If the interest rate increases (decreases) 1%p with all other variables held constant, income before income taxes for the six-month period ended June 30, 2021, would change by W6,003 million in relation to the floating-rate long-term payables – other that are exposed to interest rate risk.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

2) Credit risk

The maximum credit exposure as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021		December 31, 2020
Cash and cash equivalents	W	285,339		329,176
Financial instruments		314,354		516,354
Investment securities		900		900
Accounts receivable – trade		1,584,872		1,503,552
Contract assets		31,271		31,232
Loans and other receivables		907,434		1,040,988
Derivative financial assets		124,355		85,165

	W	3,248,525		3,507,367

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 creditworthiness of each customer or counterparty 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.

The Company establishes a loss allowance in respect of accounts receivable – trade and other. 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. Also, the Company’s credit risk can arise from transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivatives. To minimize such risk, the Company has a policy to deal only with financial institutions with high credit ratings.

The amount of maximum exposure to credit risk of the Company is the carrying amount of financial assets as of June 30, 2021.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

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 equivalent 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 June 30, 2021 are as follows:


(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 – 5 years		More than 5 years
Borrowings(*)	W	312,882		325,202		17,232		307,970		—
Debentures(*)		6,976,781		8,017,864		1,030,042		4,123,972		2,863,850
Lease liabilities		1,343,757		1,430,028		304,492		913,219		212,317
Accounts payable – other and others(*)		3,872,257		3,940,547		2,924,384		832,237		183,926

	W	12,505,677		13,713,641		4,276,150		6,177,398		3,260,093

(*)	Includes interest payables.

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

As of June 30, 2021, periods in which cash flows from cash flow hedge derivatives are expected to occur are as follows:


(In millions of won)
	Carrying amount			Contractual cash flows			Less than 1 year			1 – 5 years			More than 5 years
Assets	W	101,496			103,772			17,369			79,126			7,277
Liabilities		(20,922	)		(21,756	)		(1,205	)		(20,551	)		—

	W	80,574			82,016			16,164			58,575			7,277

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Financial Risk Management, Continued

(2)

Capital management

The Company manages its capital to ensure that it will be able to continue as a business 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, 2020.

The Company monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total liabilities divided by total equity; both are from the condensed separate interim financial statements.

Debt-equity ratio as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021			December 31, 2020
Total liabilities	W	14,705,678			14,636,593
Total equity		18,004,957			17,349,858
Debt-equity ratios		81.68	%		84.36	%

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Financial Risk Management, Continued

(3)

Fair value

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)	June 30, 2021
	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets that are measured fair value:
FVTPL	W	570,624		—		471,257		99,367		570,624
Derivative hedging instruments		101,496		—		101,496		—		101,496
FVOCI		1,894,200		1,858,948		—		35,252		1,894,200

	W	2,566,320		1,858,948		572,753		134,619		2,566,320

Financial liabilities that are measured at fair value:
Derivative financial liabilities	W	409,597		—		—		409,597		409,597
Derivative hedging instruments		20,922		—		20,922		—		20,922

	W	430,519		—		20,922		409,597		430,519

Financial liabilities that are not measured at fair value:
Borrowings	W	312,882		—		310,563		—		310,563
Debentures		6,976,781		—		7,407,028		—		7,407,028
Long-term payables – other		1,149,823		—		1,152,911		—		1,152,911

	W	8,439,486		—		8,870,502		—		8,870,502


(In millions of won)	December 31, 2020
	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets that are measured at fair value:
FVTPL	W	639,189		—		549,029		90,160		639,189
Derivative hedging instruments		62,306		—		62,306		—		62,306
FVOCI		916,387		881,135		—		35,252		916,387

	W	1,617,882		881,135		611,335		125,412		1,617,882

Financial liabilities that are measured at fair value:
Derivative financial liabilities	W	320,984		—		—		320,984		320,984
Derivative hedging instruments		41,018		—		41,018		—		41,018

	W	362,002		—		41,018		320,984		362,002

Financial liabilities that are not measured at fair value:
Borrowings	W	18,608		—		19,131		—		19,131
Debentures		6,875,240		—		7,316,314		—		7,316,314
Long-term payables – other		1,566,323		—		1,582,174		—		1,582,174

	W	8,460,171		—		8,917,619		—		8,917,619

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Financial Risk Management, Continued

(3)

Fair value, Continued

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of June 30, 2021 and December 31, 2020 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 for 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 June 30, 2021 are as follows:


		Interest rate
Derivative instruments		0.14% ~ 1.65%
Borrowings and debentures		1.15% ~ 1.91%
Long-term payables – other		1.37% ~ 2.06%

There have been no transfers between Level 2 and Level 1 for the six-month period ended June 30, 2021. The changes of financial assets and liabilities classified as Level 3 for the six-month period ended June 30, 2021 are as follows:


(In millions of won)
	Balance at January 1, 2021			Valuation			Acquisition		Disposal			Balance at June 30, 2021
Financial assets:
FVTPL	W	90,160			35,590			13,399		(39,782	)		99,367
FVOCI		35,252			—			—		—			35,252

	W	125,412			35,590			13,399		(39,782	)		134,619

Financial liabilities:
FVTPL	W	(320,984	)		(88,613	)		—		—			(409,597	)

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

28.

Financial Risk Management, Continued

(4)

Enforceable master netting agreement or similar agreement

Carrying amount of financial instruments recognized of which offset agreements are applicable as of June 30, 2021 and December 31, 2020 are as follows:


(In millions of won)
	June 30, 2021
	Gross financial instruments recognized		Amount offset			Net financial instruments presented on the condensed separate interim statement of financial position
Financial assets:
Accounts receivable – trade and others	W	74,870		(74,870	)		—

Financial liabilities:
Accounts payable – other and others	W	75,510		(74,870	)		640


(In millions of won)	December 31, 2020
	Gross financial instruments recognized		Amount offset			Net financial instruments presented on the statement of financial position		Relevant financial instruments not offset			Net amount
Financial assets:
Derivative instruments(*)	W	8,015		—			8,015		(453	)		7,562
Accounts receivable – trade and others		79,127		(77,714	)		1,413		—			1,413

	W	87,142		(77,714	)		9,428		(453	)		8,975

Financial liabilities:
Derivative instruments(*)	W	453		—			453		(453	)		—
Accounts payable – other and others		77,714		(77,714	)		—		—			—

	W	78,167		(77,714	)		453		(453	)		—

(*)	The balance represents the net amount under the standard terms and conditions of International Swaps and Derivatives Association.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties

(1)

List of related parties


Relationship		Company
Ultimate Controlling Entity		SK Inc.
Subsidiaries		SK Planet Co., Ltd. and 52 others(*)
Joint ventures		Dogus Planet, Inc. and 5 others
Associates		SK hynix Inc. and 59 others
Others		The Ultimate Controlling Entity’s other subsidiaries and associates, etc.

(*)	As of June 30, 2021, subsidiaries of the Company are as follows:


Subsidiary		Ownership *percentage(%)(1)**		Primary business
Subsidiaries owned by the Company	SK Telink Co., Ltd.		100.0	Telecommunication and Mobile Virtual Network Operator service
	SK Communications Co., Ltd.		100.0	Internet website services
	SK Broadband Co., Ltd.		74.3	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 association
	Atlas Investment		100.0	Investment association
	SKT Americas, Inc.		100.0	Information gathering and consulting
	One Store Co., Ltd.(*2)		47.5	Telecommunication services
	SK Planet Co., Ltd.		98.7	Telecommunication services, system software development and supply services
	Eleven Street Co., Ltd.		80.3	E-commerce
	DREAMUS COMPANY(*3)		41.8	Manufacturing digital audio players and other portable media devices
	ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)(*4)		62.6	Information security service and unmanned security
	Quantum Innovation Fund I		59.9	Investment
	SK Telecom Japan Inc.		100.0	Information gathering and consulting
	id Quantique SA(*5)		69.3	Quantum information and communications service
	SK Telecom TMT Investment Corp.		100.0	Investment
	FSK L&S Co., Ltd.		60.0	Freight and logistics consulting business
	Incross Co., Ltd.(*6)		34.6	Media representative business
	Happy Hanool Co., Ltd.		100.0	Service
	SK stoa Co., Ltd.		100.0	Other telecommunication retail business
	Broadband Nowon Co., Ltd.(*7)		100.0	Cable broadcasting services
	T Map Mobility Co., Ltd.(*8)		66.3	Mobility business
Subsidiary owned by One Store Co., Ltd.	Rokmedia Co., Ltd.(*9)		100.0	Publishing and telecommunications retail business
Subsidiaries owned by SK Planet Co., Ltd.	SK m&service Co., Ltd.		100.0	Database and internet website service
	SK Planet Global Holdings Pte. Ltd.		100.0	Investment (Holdings company)
	SKP America LLC.		100.0	Digital contents sourcing service
	K-net Culture and Contents Venture Fund		59.0	Capital investing in start-ups

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(1)

List of related parties, Continued


Subsidiary		Ownership *percentage(%)(1)**		Primary business
Subsidiaries owned by DREAMUS COMPANY	iriver Enterprise Ltd.		100.0	Management of Chinese subsidiaries
	iriver China Co., Ltd.		100.0	Sales and manufacturing of MP3 and 4
	Dongguan iriver Electronics Co., Ltd.		100.0	Sales and manufacturing of e-book devices
	LIFE DESIGN COMPANY Inc.		100.0	Sales of goods in Japan
	Studio Dolphin Co., Ltd.(*10)		100.0	Music and sound recordings publishing
Subsidiaries owned by ADT	SKinfosec Information Technology(Wuxi) Co., Ltd.		100.0	System software development and supply services
CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)	CAPSTEC Co., Ltd.		100.0	Manned security
Subsidiaries owned by SK Broadband Co., Ltd.	Home & Service Co., Ltd.		100.0	Operation of information and communication facility
	Media S Co., Ltd.(*11)		100.0	Production and supply services of broadcasting programs
Subsidiary owned by Quantum Innovation Fund I	Panasia Semiconductor Materials LLC.		66.4	Investment
Subsidiary owned by id Quantique SA	Id Quantique LLC		100.0	Quantum information and communications service
	FSK L&S(Shanghai) Co., Ltd.		66.0	Logistics business
Subsidiaries owned by FSK L&S Co., Ltd.	FSK L&S(Hungary) Co., Ltd.		100.0	Logistics business
	FSK L&S VIETNAM COMPANY LIMITED		100.0	Logistics business
	FSK L&S (Jiangsu) Co., Ltd.(*12)		100.0	Logistics business
Subsidiaries owned by Incross Co., Ltd.	Infra Communications Co., Ltd.		100.0	Service operation
	Mindknock Co., Ltd.		100.0	Software development
Subsidiary owned by SK Telecom Japan Inc.	SK Planet Japan, K. K.		79.8	Digital Contents sourcing service
Subsidiary owned by T Map Mobility Co., Ltd.	YLP Inc.(*13)		100.0	Freight forwarders and cargo agents
Others(*14)	SK Telecom Innovation Fund, L.P.		100.0	Investment
	SK Telecom China Fund I L.P.		100.0	Investment

(^*1)

The ownership interest represents direct ownership interest in subsidiaries either by the Company or subsidiaries of the Company.

(^*2)

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(1)

List of related parties, Continued

(^*3)

(^*4)

On March 4, 2021, SK Infosec Co., Ltd. merged with ADT CAPS Co., Ltd., a subsidiary of SK Infosec Co., Ltd., to improve management efficiency and changed its name to ADT CAPS Co., Ltd.

(^*5)

The Company additionally acquired 4,166,667 shares of id Quantique SA by contributing W5,978 million in cash due to an unequal paid-in capital increase for the six-month period ended June 30, 2021.

(^*6)

Although the Company owns less than 50% of the investee, the management has determined that the Company controls Incross Co., Ltd. considering the level of dispersion of remaining voting rights and voting patterns at previous shareholders’ meetings, and the fact that the Company has a right to appoint the majority of the members of the board of directors by virtue of an agreement with the investee’s other shareholders.

(^*7)

The Company acquired 513,000 shares (45%) of Broadband Nowon Co., Ltd. at W9,512 million in cash for the six-month period ended June 30, 2021.

(^*8)

(^*9)

One Store Co., Ltd. acquired 60,000 shares (100%) of Rokmedia Co., Ltd. at W40,000 million in cash for the six-month period ended June 30, 2021.

(^*10)

DREAMUS COMPANY acquired 10,000 shares (100%) of Studio Dolphin Co., Ltd. at W1,500 million in cash for the six-month period ended June 30, 2021.

(^*11)

SK Broadband Co., Ltd. newly established Media S Co., Ltd. as its subsidiary for the six-month period ended June 30, 2021.

(^*12)

FSK L&S Co., Ltd. newly established FSK L&S (Jiangsu) Co., Ltd. as its subsidiary for the six-month period ended June 30, 2021.

(^*13)

T Map Mobility Co., Ltd. acquired 118,242 shares (70.4%) of YLP Inc. at W55,598 million in cash for the six-month period ended June 30, 2021. In addition, 49,770 shares (29.6%) of YLP Inc. were transferred to T Map Mobility Co., Ltd. and 267,700 common shares of T Map Mobility Co., Ltd. were newly issued to the shareholder of YLP Inc. in consideration of the transfer on June 29, 2021.

(^*14)

Others are owned by Atlas Investment and another subsidiary of the Company.

As of June 30, 2021, the Company is included in 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.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(2)

Compensation for the key management

The Company considers registered directors (3 executive and 5 non-executive 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 three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)
	2021				2020
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Salaries	W	952		4,432		672		5,521
Defined benefits plan expenses		209		2,024		175		3,108
Share option		40		72		61		93

	W	1,201		6,528		908		8,722

Compensation for the key management includes salaries, non-monetary salaries and retirement benefits made in relation to the pension plan and compensation expenses related to share options granted.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the three and six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)		For the period ended June 30, 2021
		Operating revenue and others				Operating expense *and others (1)**				Acquisition of property and equipment
Scope	Company	Three- month		Six- month		Three- month		Six- month		Three- month		Six- month
Ultimate Controlling Entity	SK Inc.(*2)	W	3,273		6,448		70,640		334,516		11,092		12,542

Subsidiaries	SK Broadband Co., Ltd.		24,843		48,231		135,847		270,969		770		770
	PS&Marketing Corporation(*3)		2,186		5,535		288,391		638,479		280		296
	SK O&S Co., Ltd.		925		1,770		56,751		112,447		9,959		10,764
	SK Planet Co., Ltd.		1,164		2,244		20,856		41,598		2,670		2,670
	SK Telink Co., Ltd.(*4)		16,422		36,957		9,159		19,370		—		—
	SERVICE ACE Co., Ltd.		2,478		5,416		30,812		62,690		—		—
	SERVICE TOP Co., Ltd.		2,174		4,277		32,927		68,152		—		—
	Eleven Street Co., Ltd.		915		1,824		3,578		6,851		—		—
	One Store Co., Ltd.		4,027		7,662		—		—		—		—
	ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)(*5)		4,920		18,887		21,701		38,038		2,223		2,551
	DREAMUS COMPANY		754		1,453		25,975		47,556		—		—
	Others		3,029		5,287		9,772		16,304		715		754

			63,837		139,543		635,769		1,322,454		16,617		17,805

Associates	F&U Credit information Co., Ltd.		192		382		10,570		21,327		—		—
	SK hynix Inc.(*6)		7,839		186,637		14		53		—		—
	KEB HanaCard Co., Ltd.		1,663		1,683		669		1,511		—		—
	SK Wyverns Co., Ltd.(*7)		—		199		—		8,203		—		—
	Content Wavve Co., Ltd.		33		40		32,974		33,669		—		—
	Others(*8)		18,191		25,308		3,724		3,862		—		—

			27,918		214,249		47,951		68,625		—		—

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		557		1,037		—		—		—		—
	SK Innovation Co., Ltd.		3,276		5,477		3,304		6,813		—		—
	SK Networks Co., Ltd.		451		828		2,170		4,281		—		24
	SK Networks Service Co., Ltd.		172		341		9,656		18,693		403		403
	SK Telesys Co., Ltd.		40		73		22		98		8,703		9,683
	SK TNS Co., Ltd.(*7)		13		52		2,377		5,856		18,213		38,169
	SK Energy Co., Ltd.		539		913		143		163		—		—
	SKC Infra Service Co., Ltd.		7		11		2,167		4,745		91		91
	SK ENS Co., Ltd.		513		917		—		—		—		—
	UbiNS Co., Ltd.		—		—		532		728		9,597		10,375
	Happy Narae Co., Ltd.		36		64		2,968		6,688		36,372		40,794
	Others		3,747		6,104		2,659		5,749		4,049		4,166

			9,351		15,817		25,998		53,814		77,428		103,705

		W	104,379		376,057		780,358		1,779,409		105,137		134,052

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the three and six-month periods ended June 30, 2021 and 2020 are as follows, Continued:

(*1)	Operating expense and others include lease payments by the Company.

(*2)	Operating expense and others include W194,617 million of dividends paid by the Company.

(*3)	Operating expense and others include W325,617 million paid to PS&Marketing Corporation relating to purchase of accounts receivable resulting from sale of handsets.

(*4)	Operating revenue and others include W3,009 million of dividend income received.

(*5)	Operating revenue and others include W9,637 million of dividend income received.

(*6)	Operating revenue and others include W170,937 million of dividend income received.

(*7)	Transactions occurred before disposal.

(*8)	Operating revenue and others include W10,716 million of dividend income received from Korea IT Fund.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the three and six-month periods ended June 30, 2021 and 2020 are as follows, Continued:


(In millions of won)		For the period ended June 30, 2020
		Operating revenue and others				Operating expense *and others(1)**				Acquisition of property and equipment
Scope	Company	Three- month		Six- month		Three- month		Six- month		Three- month		Six- month
Scope	Company	Three- month		Six- month		Three- month		Six- month		Three- month		Six- month
Ultimate Controlling Entity	SK Inc.(*2)	W	3,592		7,419		64,888		334,187		3,886		4,537

Subsidiaries	SK Broadband Co., Ltd.		30,065		60,108		131,244		262,056		794		794
	PS&Marketing Corporation(*3)		3,584		7,080		309,714		618,445		—		—
	SK O&S Co., Ltd.		1,084		2,087		54,759		107,454		12,790		14,248
	SK Planet Co., Ltd.		1,423		2,038		18,877		39,596		2,532		2,776
	SK Telink Co., Ltd.(*4)		13,448		115,899		8,356		14,876		—		2
	SERVICE ACE Co., Ltd.(*5)		2,659		6,545		34,666		70,415		—		—
	SERVICE TOP Co., Ltd.		2,265		4,538		36,722		74,397		—		—
	Eleven Street Co., Ltd.		791		1,914		3,622		5,971		—		—
	Life & Security Holdings Co., Ltd.(*6)		3,619		13,810		759		782		449		583
	One Store Co., Ltd.		3,505		7,308		70		132		—		—
	ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)(*7)		78		20,150		8,230		15,673		1,845		1,887
	DREAMUS COMPANY		577		968		16,659		31,168		—		—
	Others		1,481		3,636		8,319		17,085		1,420		1,719

			64,579		246,081		631,997		1,258,050		19,830		22,009

Associates	F&U Credit information Co., Ltd.		204		428		11,624		22,754		—		—
	SK hynix Inc.(*8)		10,956		165,084		77		114		—		—
	KEB HanaCard Co., Ltd.		257		408		768		1,555		—		—
	SK Wyverns Co., Ltd.		299		597		2,634		12,038		—		—
	Content Wavve Co., Ltd.		1		10		15,308		25,144		—		—
	Others(*9)		25,461		32,195		2,813		4,800		—		—

			37,178		198,722		33,224		66,405		—		—

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		1,853		4,157		100		101		—		—
	SK Innovation Co., Ltd.		3,330		6,910		2,765		6,100		—		—
	SK Networks Co., Ltd.		517		1,064		2,514		6,401		—		—
	SK Networks Service Co., Ltd.		249		386		9,761		19,627		424		427
	SK Telesys Co., Ltd.		62		123		87		307		7,541		8,049
	SK TNS Co., Ltd.		49		100		8,778		10,758		129,853		141,736
	SK Energy Co., Ltd.		856		1,769		141		148		—		—
	SKC Infra Service Co., Ltd.		7		15		1,889		3,828		—		—
	SK ENS Co., Ltd.		569		1,139		53		53		—		—
	UbiNS Co., Ltd.		—		—		301		444		5,215		6,598
	Happy Narae Co., Ltd.		29		54		2,796		5,683		41,275		51,069
	Others		3,407		6,459		2,339		3,987		3,094		3,094

			10,928		22,176		31,524		57,437		187,402		210,973

		W	116,277		474,398		761,633		1,716,079		211,118		237,519

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the three and six-month periods ended June 30, 2021 and 2020 are as follows, Continued:

(*1)	Operating expense and others include lease payments by the Company.

(*2)	Operating expense and others include W194,617 million of dividends paid by the Company.

(*3)	Operating expense and others include W357,061 million paid to PS&Marketing Corporation relating to purchase of accounts receivable resulting from sale of handsets.

(*4)	Operating revenue and others include W89,969 million of dividend income received.

(*5)	Operating revenue and others include W2,000 million of dividend income received.

(*6)	Operating revenue and others include W7,039 million of dividend income received.

(*7)	Operating revenue and others include W20,028 million of dividend income received.

(*8)	Operating revenue and others include W146,100 million of dividend income received.

(*9)	Operating revenue and others include W18,537 million of dividend income received from Korea IT Fund and Pacific Telecom Inc.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(4)

Account balances with related parties as of June 30, 2021, and December 31, 2020 are as follows:


(In millions of won)		June 30, 2021
		Receivables				Payables
Scope	Company	Loans		Accounts receivable – trade, etc.		Accounts payable – other, etc.
Ultimate Controlling Entity	SK Inc.	W	—		1,748		40,118

Subsidiaries	SK Broadband Co., Ltd.		—		9,246		208,898
	PS&Marketing Corporation		—		1,764		73,244
	SK O&S Co., Ltd.		—		145		31,924
	SK Planet Co., Ltd.		—		2,454		19,978
	SK Telink Co., Ltd.		—		12,069		44,263
	SERVICE ACE Co., Ltd.		—		280		20,795
	SERVICE TOP Co., Ltd.		—		22		17,245
	Eleven Street Co., Ltd.		—		785		17,793
	One Store Co., Ltd.		—		289		12,950
	SK m&service Co., Ltd.		—		1,967		12,782
	ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)		—		895		15,110
	SK Communications Co., Ltd.		—		52		11,861
	Others		—		3,942		18,076

			—		33,910		504,919

Associates	F&U Credit information Co., Ltd.		—		12		4,102
	SK hynix Inc.		—		6,758		155
	Wave City Development Co., Ltd.(*1)		—		7,182		—
	Daehan Kanggun BcN Co., Ltd.(*2)		22,147		2,483		—
	KEB HanaCard Co., Ltd.		—		671		64,600
	Others		—		181		4,147

			22,147		17,287		73,004

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		—		290		209
	SK Innovation Co., Ltd.		—		4,413		38,315
	SK Networks Co., Ltd.		—		623		4,777
	SK Networks Services Co., Ltd.		—		—		5,555
	SK Telesys Co., Ltd.		—		17		5,658
	SK Energy Co., Ltd.		—		253		401
	Others		—		2,752		35,689

			—		8,348		90,604

		W	22,147		61,293		708,645

(*1)	As of June 30, 2021, the Company recognized loss allowance amounting to W3,016 million on the accounts receivable – trade.

(*2)	As of June 30, 2021, the Company recognized full loss allowance for the balance of loans to Daehan Kanggun BcN Co., Ltd.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

29.

Transactions with Related Parties, Continued

(4)

Account balances with related parties as of June 30, 2021 and December 31, 2020 are as follows, Continued:


(In millions of won)		December 31, 2020
		Receivables				Payables
Scope	Company	Loans		Accounts receivable – trade, etc.		Accounts payable – other, etc.
Ultimate Controlling Entity	SK Inc.		W—		1,593		44,035

Subsidiaries	SK Broadband Co., Ltd.		—		12,035		224,714
	PS&Marketing Corporation		—		1,686		69,301
	SK O&S Co., Ltd.		—		78		38,220
	SK Planet Co., Ltd.		—		412		23,886
	SK Telink Co., Ltd.		—		11,994		26,621
	SERVICE ACE Co., Ltd.		—		210		28,111
	SERVICE TOP Co., Ltd.		—		158		28,215
	Eleven Street Co., Ltd.		—		545		8,182
	One Store Co., Ltd.		—		267		12,320
	SK m&service Co., Ltd.		—		2,688		15,046
	ADT CAPS Co., Ltd. (Formerly, SK Infosec Co., Ltd.)		—		921		13,998
	SK Communications Co., Ltd.		—		28		11,052
	Others		—		1,791		25,729

			—		32,813		525,395

Associates	F&U Credit information Co., Ltd.		—		5		4,005
	SK hynix Inc.		—		6,991		127
	Wave City Development Co., Ltd.(*1)		—		25,782		—
	Daehan Kanggun BcN Co., Ltd.(*2)		22,147		2,779		—
	KEB HanaCard Co., Ltd.		—		352		145,328
	Others		—		7,398		4,150

			22,147		43,307		153,610

Others	SK Ecoplant Co., Ltd. (Formerly, SK Engineering & Construction Co., Ltd.)		—		410		152
	SK Innovation Co., Ltd.		—		4,277		42,896
	SK Networks Co., Ltd.		—		371		4,533
	SK Networks Services Co., Ltd.		—		—		6,328
	SK Telesys Co., Ltd.		—		33		4,331
	SK TNS Co., Ltd.		—		19		89,370
	SK Energy Co., Ltd.		—		525		233
	Others		—		2,192		26,640

			—		7,827		174,483

			W22,147		85,540		897,523

(*1)	As of December 31, 2020, the Company recognized loss allowance amounting to W10,880 million on the accounts receivable – trade.

(*2)	As of December 31, 2020, the Company recognized full loss allowance for the balance of loans to Daehan Kanggun BcN Co., Ltd.

(5)

The Company has granted SK REIT Co., Ltd. the right of first offer regarding the disposal of real estate owned 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 REIT Co., Ltd. purchases the real estate from the Company.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

30.

Commitments and Contingencies

(1)

Accounts receivables 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 W476,772 million and W571,004 million as of June 30, 2021 and December 31, 2020, 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 June 30, 2021, 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 significant impact on the Company’s financial position or operating results in the event an outflow of resources is ultimately necessary.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Statements of Cash Flows

(1)

Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Gain on foreign currency translations	W	(125	)		(2,767	)
Interest income		(13,328	)		(12,069	)
Dividends		(195,315	)		(284,666	)
Gain (loss) relating to investments in subsidiaries and associates		(99,338	)		6,857
Gain relating to financial instruments at FVTPL		(35,618	)		(7,380	)
Gain on disposal of property and equipment and intangible assets		(3,495	)		(1,971	)
Gain on business transfer		—			(12,451	)
Gain on sale of accounts receivable – other		(14,266	)		(7,513	)
Other income		(5,340	)		(550	)
Loss on foreign currency translations		119			2,945
Bad debt for accounts receivable – trade		4,101			15,310
Bad debt for accounts receivable – other		823			1,822
Loss relating to financial instruments at FVTPL		88,946			2,395
Depreciation and amortization		1,452,360			1,521,037
Loss on disposal of property and equipment and intangible assets		3,687			8,015
Impairment loss on property and equipment and intangible assets		—			12,388
Interest expense		116,853			126,616
Expense related to defined benefit plan		28,642			29,949
Bonus paid by treasury shares		29,642			—
Share option		226			103
Income tax expense		151,480			133,246
Other expenses		1,390			16,249

	W	1,511,444			1,547,565

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

31.

Statements of Cash Flows, Continued

(2)

Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021			June 30, 2020
Accounts receivable – trade	W	(85,355	)		(38,338	)
Accounts receivable – other		45,770			121,991
Advanced payments		(48,401	)		(2,974	)
Prepaid expenses		67,292			(48,362	)
Inventories		(1,417	)		5,672
Long-term accounts receivable – other		55,680			92,539
Long-term prepaid expenses		(27,192	)		157,725
Guarantee deposits		8,887			9,549
Contract assets		(39	)		(2,662	)
Accounts payable – other		(252,041	)		(98,305	)
Withholdings		(2,707	)		(115,935	)
Deposits received		(2,585	)		1,916
Accrued expenses		(38,493	)		(127,943	)
Plan assets		2,763			6,419
Retirement benefit payment		(18,652	)		(12,887	)
Contract liabilities		(1,436	)		(12,543	)
Others		(4,617	)		26,054

	W	(302,543	)		(38,084	)

(3)

Significant non-cash transactions for the six-month periods ended June 30, 2021 and 2020 are as follows:


(In millions of won)	For the six-month period ended
	June 30, 2021		June 30, 2020
Increase (decrease) in accounts payable – other relating to the acquisition of property and equipment and intangible assets	W	5,724		(113,814	)
Increase of right-of-use assets		223,726		334,923
Retirement of treasury shares		1,965,952		—

32.

Non-current Assets Held for Sale

(1)

On February 25, 2021, the Company has decided to dispose of the investments in a certain associate engaged in mobility business to T map Mobility Co., Ltd. by approval of the board of directors and reclassified entire shares of the investments in associates as non-current assets held for sale.

(2)

On February 25, 2021, the Company has decided to dispose of certain land, buildings, structures and equipment (carrying value: W35,280 million) to E-MART Inc. pursuant to the approval of the board of directors and reclassified the property and equipment as non-current assets held for sale.

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2021 and 2020

33.

Subsequent Events

(1)

On June 10, 2021, the board of directors of the Company made a resolution to a horizontal spin-off of the Company and the effective date of spin-off is scheduled on November 1, 2021. The details of spin-off are as follows:


	Company	business
Surviving Company	SK Telecom Co., Ltd.	Wireless and fixed-line telecommunications and other businesses

Spin-off Company	SKT Investment Co., Ltd. (tentative)	Business of managing the equity interests in certain investees engaged in, among other things, semiconductor and New ICT businesses and making new investments


		Date
Scheduled date of shareholders’ meeting for the spin-off approval		October 12, 2021
Effective date of spin-off		November 1, 2021
Scheduled date of registration of spin-off		November 2, 2021

(2)

The board of directors of the Company resolved the stock split of its common stock to increase the number of its outstanding shares on June 10, 2021. Whereby, the number of issued shares will be changed from 72,060,143 shares (a par value of W500) to 360,300,715 shares (a par value of W100) and the stock split will be approved at the shareholders’ meeting to be held on October 12, 2021.

(3)

The board of directors of the Company resolved to pay interim dividend at the board meeting on July 22, 2021, and the details are as follows:


Interim dividend amount		W2,500 per share (Total amount: W177,902 million)
Dividend rate		0.77%
Dividend date		June 30, 2021
Date of distribution		According to Article 165 of Capital Market and Financial Investment Business Act 12-3, the Company planning to distribute dividends by August 11, 2021.