Sk Telecom Co Ltd 6-K, filed Mar 10, 2025
Sk Telecom Co Ltd (SKM)
About this 6-K
Sk Telecom Co Ltd filed this 6-K on March 10, 2025.
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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 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF MARCH 2025
Commission File Number: 333-04906
SK Telecom Co., Ltd.
(Translation of registrant’s name into English)
65, Euljiro, 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 ☐
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Explanatory Note:
On March 10, 2025, SK Telecom Co., Ltd. (the “Company”) publicly disclosed its audited consolidated financial statements as of and for the year ended December 31, 2024 (the “Consolidated Audited Financial Statements”). The Consolidated Audited Financial Statements, which are set forth below in this report, shall replace and supersede the preliminary and unaudited consolidated financial statement information set forth in the Company’s current report on Form 6-K furnished on February 28, 2025 (regarding the resolution to call the annual general meeting of shareholders), as well as the related information set forth in the Company’s current reports on Form 6-K furnished on February 12, 2025 (regarding (i) changes of 15% or more in revenue or profit and (ii) preliminary results of operations).
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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/ Hee Jun Chung | |
| (Signature) | ||
| Name: | Hee Jun Chung | |
| Title: | Vice President | |
Date: March 10, 2025
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SK TELECOM CO., LTD. AND SUBSIDIARIES
Consolidated Financial Statements
For each of the years ended December 31, 2024 and 2023
(With the Independent Auditor’s Report Thereon)
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| Report on audit of Internal Control over Financial Reporting |
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| Management’s Annual Report on Internal Control over Financial Reporting |
132 | |||
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(English Translation of a Report Originally Issued in Korean)
The Shareholders and Board of Directors
SK Telecom Co., Ltd.
Opinion
We have audited the accompanying consolidated financial statements of SK Telecom Co., Ltd. and its subsidiaries (collectively referred to as the “Group”) which comprise the consolidated statements of financial position as of December 31, 2024 and 2023, and the consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the two years in the period ended December 31, 2024, and notes to the consolidated financial statements, including a summary of material accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2024 and 2023, and its consolidated financial performance and its consolidated cash flows for each of the two years in the period ended December 31, 2024 in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”).
We also have audited the Group’s internal control over financial reporting as of December 31, 2024, based on the criteria established in Conceptual Framework for Designing and Operating Internal Control over Financial Reporting in accordance with the Korean Standards on Auditing (“KSA”) issued by the Operating Committee of internal control over financial reporting, and our report dated March 10, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
We conducted our audits in accordance with KSA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
| 1. | Cut-off of revenue from wireless services. |
As described in notes 3 (21) and 4 (2) to the consolidated financial statements, the Group’s revenue from the wireless
services is recognized based on data from a complex array of information technology systems which process a significant volume of transactions with its customers. Furthermore, the transactions involve a variety of contractual terms from new
subscriptions to deactivations or churn, and changes of rate plans during the period. Therefore, we have identified timing of revenue recognition related to the Group’s wireless services as a key audit matter. Related revenue from the wireless
services amounted to W10,401,565 million in 2024.
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The primary procedures we performed to address this key audit matter included:
| • | Inspecting major contracts with subscribers to assess whether the Group’s revenue recognition policies based on the terms and conditions as set out in the contracts, are consistent with reference to the requirements of KIFRS 1115; |
| • | Testing internal controls relating to the timing of revenue recognition for the wireless services; and |
| • | Evaluating the appropriateness of the timing of revenue recognition by recalculating the prorated revenue based on the subscribed rate plan and comparing it with the billing information. |
| 2. | Impairment assessment of goodwill for the fixed-line telecommunication services cash generating unit |
As described in notes 3 (10) and 15 to the consolidated financial statements, the Group assesses impairment of goodwill
allocated to a cash generating unit (“CGU”), at least, annually or when there is an indication of possible impairment by comparing the carrying amount of the CGU to its recoverable amount based on value-in-use (“VIU”). The amount of goodwill allocated to the fixed-line telecommunication services CGU is W764,082 million as of December 31, 2024.
In carrying out the goodwill impairment assessment, the Group compared the carrying amount of the fixed-line telecommunication services CGU and its value in use (“VIU”) based on discounted cash flow forecasts. We have identified the goodwill impairment assessment for the fixed-line telecommunication services CGU as a key audit matter due to the inherent uncertainties and significant judgement involved in management’s estimates around the major assumptions such as estimates of future operating revenue, perpetual growth rate and discount rate, all of which have a significant impact on the determination of the VIU.
The primary audit procedures we have performed for this key audit matter include:
| • | Assessing the competence and objectivity of the external specialist utilized by management; |
| • | Evaluating the appropriateness of the valuation method and assumptions applied by management by involving our internal specialist; |
| • | Performing a sensitivity analysis for both the discount rate and the perpetual growth rate applied to the discounted cash flow forecasts to assess the impact of changes in these key assumptions on the conclusion reached by management in its impairment assessment; |
| • | Evaluating the reasonableness of management’s future cash flow forecasts by comparison with financial budgets approved by management; and |
| • | Performing a retroactive assessment of the prior periods’ cash flow forecasts by comparison with the actual results. |
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with KIFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
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Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with KSA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| • | Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. |
| • | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| • | Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| • | Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
| • | Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Yoo, Jung Ho.
March 10, 2025
This report is effective as of March 10, 2025, the independent auditor’s report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the date of independent auditor’s report date to the time this report is used. Such events and circumstances could significantly affect the accompanying consolidated financial statements and may result in modifications to this report.
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SK TELECOM CO., LTD. AND ITS SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
The accompanying consolidated financial statements, including all footnote disclosures, have been prepared by, and are the responsibility of, the Group.
Ryu, Young-Sang
Chief Executive Officer
SK TELECOM CO., LTD.
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SK TELECOM CO., LTD. and its Subsidiaries
Consolidated Statements of Financial Position
As of December 31, 2024 and 2023
| (In millions of won) | Note |
December 31, 2024 |
December 31, 2023 |
|||||||
| Assets |
||||||||||
| Current Assets: |
||||||||||
| Cash and cash equivalents |
5,34,35 | 1,454,978 | ||||||||
| Short-term financial instruments |
5,34,35 | 323,890 | 294,934 | |||||||
| Accounts receivable – trade, net |
6,34,35,36 | 1,989,306 | 1,978,532 | |||||||
| Short-term loans, net |
6,34,35,36 | 65,205 | 78,129 | |||||||
| Accounts receivable – other, net |
6,34,35,36,37 | 369,192 | 344,350 | |||||||
| Contract assets |
8,35 | 90,385 | 89,934 | |||||||
| Prepaid expenses |
7 | 1,945,610 | 1,953,769 | |||||||
| Prepaid income taxes |
31 | 21 | 161 | |||||||
| Derivative financial assets |
21,34,35,38 | 119,500 | 8,974 | |||||||
| Inventories, net |
9 | 209,783 | 179,809 | |||||||
| Assets held for sale |
40 | 174,839 | 10,515 | |||||||
| Advanced payments and others |
6,34,35 | 165,230 | 191,517 | |||||||
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| 7,476,682 | 6,585,602 | |||||||||
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| Non-Current Assets: |
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| Long-term financial instruments |
5,34,35 | 373 | 375 | |||||||
| Long-term investment securities |
10,34,35 | 1,877,922 | 1,679,384 | |||||||
| Investments in associates and joint ventures |
11 | 2,341,827 | 1,915,012 | |||||||
| Investment property, net |
13 | 26,611 | 34,812 | |||||||
| Property and equipment, net |
12,14,36,37 | 12,617,394 | 13,006,196 | |||||||
| Goodwill |
15 | 2,072,493 | 2,075,009 | |||||||
| Intangible assets, net |
16 | 2,194,871 | 2,861,137 | |||||||
| Long-term contract assets |
8,35 | 46,352 | 39,837 | |||||||
| Long-term loans, net |
6,34,35,36 | 34,446 | 30,455 | |||||||
| Long-term accounts receivable – other, net |
6,34,35,36,37 | 173,252 | 312,531 | |||||||
| Long-term prepaid expenses |
7 | 1,108,406 | 1,086,107 | |||||||
| Guarantee deposits, net |
6,34,35,36 | 155,875 | 156,863 | |||||||
| Long-term derivative financial assets |
21,34,35,38 | 221,608 | 139,560 | |||||||
| Deferred tax assets |
31 | — | 11,609 | |||||||
| Defined benefit assets |
20 | 154,329 | 170,737 | |||||||
| Other non-current assets |
6,34,35 | 12,814 | 14,001 | |||||||
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| 23,038,573 | 23,533,625 | |||||||||
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| Total Assets |
30,119,227 | |||||||||
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(Continued)
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SK TELECOM CO., LTD. and its Subsidiaries
Consolidated Statements of Financial Position, Continued
As of December 31, 2024 and 2023
| (In millions of won) | Note | December 31, 2024 |
December 31, 2023 |
|||||||||
| Liabilities and Shareholders’ Equity |
||||||||||||
| Current Liabilities: |
||||||||||||
| Accounts payable - trade |
34,35,36 | 139,876 | ||||||||||
| Accounts payable - other |
34,35,36,37 | 2,798,978 | 1,913,006 | |||||||||
| Withholdings |
34,35,36 | 928,679 | 802,506 | |||||||||
| Contract liabilities |
8 | 168,194 | 155,576 | |||||||||
| Accrued expenses |
25,34,35 | 1,522,750 | 1,439,786 | |||||||||
| Income tax payable |
31 | 243,564 | 142,496 | |||||||||
| Provisions |
19,39 | 50,016 | 38,255 | |||||||||
| Short-term borrowings |
17,34,35,38 | 100,000 | — | |||||||||
| Current portion of long-term debt, net |
17,34,35,38 | 2,460,109 | 1,621,844 | |||||||||
| Current portion of long-term payables – other |
18,34,35,38 | 367,765 | 367,770 | |||||||||
| Lease liabilities |
34,35,36,38 | 351,363 | 372,826 | |||||||||
| Liabilities held for sale |
40 | 106,352 | 39 | |||||||||
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| 9,224,278 | 6,993,980 | |||||||||||
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| Non-Current Liabilities: |
||||||||||||
| Debentures, excluding current portion, net |
17,34,35,38 | 6,363,646 | 7,106,299 | |||||||||
| Long-term borrowings, excluding current portion, net |
17,34,35,38 | 203,125 | 315,578 | |||||||||
| Long-term payables – other |
18,34,35,38 | 539,955 | 892,683 | |||||||||
| Long-term lease liabilities |
34,35,36,38 | 1,286,588 | 1,238,607 | |||||||||
| Long-term contract liabilities |
8 | 61,512 | 56,917 | |||||||||
| Defined benefit liabilities |
20 | 2,086 | — | |||||||||
| Long-term derivative financial liabilities |
21,34,35,38 | 3,437 | 305,088 | |||||||||
| Long-term provisions |
19 | 70,044 | 83,169 | |||||||||
| Deferred tax liabilities |
31 | 851,200 | 832,236 | |||||||||
| Other non-current liabilities |
34,35,36 | 81,750 | 66,271 | |||||||||
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| 9,463,343 | 10,896,848 | |||||||||||
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| Total Liabilities |
18,687,621 | 17,890,828 | ||||||||||
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| Shareholders’ Equity: |
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| Share capital |
1,22 | 30,493 | 30,493 | |||||||||
| Capital surplus and others |
22,23,24,25 | (11,954,936 | ) | (11,828,644 | ) | |||||||
| Retained earnings |
26 | 22,976,127 | 22,799,981 | |||||||||
| Reserves |
27 | 646,943 | 387,216 | |||||||||
| Equity attributable to owners of the Parent Company |
11,698,627 | 11,389,046 | ||||||||||
| Non-controlling interests |
129,007 | 839,353 | ||||||||||
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| Total Shareholder’s Equity |
11,827,634 | 12,228,399 | ||||||||||
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| Total Liabilities and Shareholder’s Equity |
30,119,227 | |||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
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SK TELECOM CO., LTD. and its Subsidiaries
Consolidated Statements of Income
For the years ended December 31, 2024 and 2023
| (In millions of won, except for earnings per share) | Note | 2024 | 2023 | |||||||||
| Operating revenue: |
4,36 | |||||||||||
| Revenue |
17,608,511 | |||||||||||
| Operating expenses: |
36 | |||||||||||
| Labor |
2,725,765 | 2,488,245 | ||||||||||
| Commission |
7 | 5,564,289 | 5,549,899 | |||||||||
| Depreciation and amortization |
4 | 3,560,374 | 3,614,766 | |||||||||
| Network interconnection |
692,881 | 678,459 | ||||||||||
| Leased lines |
265,518 | 275,477 | ||||||||||
| Advertising |
186,340 | 235,769 | ||||||||||
| Rent |
136,753 | 142,356 | ||||||||||
| Cost of goods sold |
9 | 1,326,159 | 1,266,357 | |||||||||
| Others |
28 | 1,659,121 | 1,603,979 | |||||||||
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| 16,117,200 | 15,855,307 | |||||||||||
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| Operating profit: |
4 | 1,823,409 | 1,753,204 | |||||||||
| Finance income |
4,30 | 355,035 | 248,376 | |||||||||
| Finance costs |
4,30 | (605,919 | ) | (527,401 | ) | |||||||
| Gain relating to investments in subsidiaries, associates and joint ventures, net |
4,11 | 321,787 | 10,928 | |||||||||
| Other non-operating income |
4,29 | 72,288 | 50,366 | |||||||||
| Other non-operating expenses |
4,29 | (204,835 | ) | (47,294 | ) | |||||||
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| Profit before income tax |
4 | 1,761,765 | 1,488,179 | |||||||||
| Income tax expense |
31 | 374,670 | 342,242 | |||||||||
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| Profit for the year |
1,145,937 | |||||||||||
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| Attributable to: |
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| Owners of the Parent Company |
1,093,611 | |||||||||||
| Non-controlling interests |
136,940 | 52,326 | ||||||||||
| Earnings per share |
32 | |||||||||||
| Basic earnings per share (in won) |
4,954 | |||||||||||
| Diluted earnings per share (in won) |
5,765 | 4,950 | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
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SK TELECOM CO., LTD. and its Subsidiaries
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2024 and 2023
| (In millions of won) | Note | 2024 | 2023 | |||||||||
| Profit for the year |
1,145,937 | |||||||||||
| Other comprehensive income (loss): |
||||||||||||
| Items that will not be reclassified subsequently to profit or loss, net of taxes: |
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| Remeasurement of defined benefit liabilities assets (liabilities) |
20 | (25,905 | ) | 1,853 | ||||||||
| Valuation gain (loss) on financial assets at fair value through other comprehensive income |
27,30 | 11,253 | (18,842 | ) | ||||||||
| Items that are or may be reclassified subsequently to profit or loss, net of taxes: |
||||||||||||
| Net change in other comprehensive income of investments in associates and joint ventures |
11,27 | 132,581 | 9,225 | |||||||||
| Net change in unrealized fair value of derivatives |
21,27,30 | (6,573 | ) | (17,460 | ) | |||||||
| Foreign currency translation differences for foreign operations |
27 | 49,420 | 1,257 | |||||||||
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| Other comprehensive income (loss) for the year, net of taxes |
160,776 | (23,967 | ) | |||||||||
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| Total comprehensive income |
1,121,970 | |||||||||||
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| Total comprehensive income attributable to: |
||||||||||||
| Owners of the Parent Company |
1,072,785 | |||||||||||
| Non-controlling interests |
138,781 | 49,185 | ||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
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SK TELECOM CO., LTD. and its Subsidiaries
Consolidated Statements of Changes in Equity
For the years ended December 31, 2024 and 2023
| (In millions of won) | ||||||||||||||||||||||||||||||||
| Attributable to owners of the Parent Company | Non- controlling interests |
Total equity |
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| Note | Share capital | Capital surplus (deficit) and others |
Retained earnings |
Reserves | Sub-total | |||||||||||||||||||||||||||
| Balance as of January 1, 2023 |
(11,567,117 | ) | 22,463,711 | 391,233 | 11,318,320 | 836,876 | 12,155,196 | |||||||||||||||||||||||||
| Total comprehensive income (loss): |
||||||||||||||||||||||||||||||||
| Profit for the year |
— | — | 1,093,611 | — | 1,093,611 | 52,326 | 1,145,937 | |||||||||||||||||||||||||
| Other comprehensive loss: |
11,20,21,27,30 | — | — | (16,809 | ) | (4,017 | ) | (20,826 | ) | (3,141 | ) | (23,967 | ) | |||||||||||||||||||
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| — | — | 1,076,802 | (4,017 | ) | 1,072,785 | 49,185 | 1,121,970 | |||||||||||||||||||||||||
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| Transactions with owners: |
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| Annual dividends |
33 | — | — | (180,967 | ) | — | (180,967 | ) | (50,557 | ) | (231,524 | ) | ||||||||||||||||||||
| Interim dividends |
33 | — | — | (542,282 | ) | — | (542,282 | ) | — | (542,282 | ) | |||||||||||||||||||||
| Share option |
25 | — | 7,157 | — | — | 7,157 | 10,463 | 17,620 | ||||||||||||||||||||||||
| Interest on hybrid bonds |
24 | — | — | (17,283 | ) | — | (17,283 | ) | — | (17,283 | ) | |||||||||||||||||||||
| Redemption of hybrid bonds |
24 | — | (400,000 | ) | — | — | (400,000 | ) | — | (400,000 | ) | |||||||||||||||||||||
| Issuance of hybrid bonds |
24 | — | 398,509 | — | — | 398,509 | — | 398,509 | ||||||||||||||||||||||||
| Transactions of treasury shares |
23 | — | (265,120 | ) | — | — | (265,120 | ) | — | (265,120 | ) | |||||||||||||||||||||
| Changes in ownership in subsidiaries, etc. |
— | (2,073 | ) | — | — | (2,073 | ) | (6,614 | ) | (8,687 | ) | |||||||||||||||||||||
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| — | (261,527 | ) | (740,532 | ) | — | (1,002,059 | ) | (46,708 | ) | (1,048,767 | ) | |||||||||||||||||||||
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| Balance as of December 31, 2023 |
(11,828,644 | ) | 22,799,981 | 387,216 | 11,389,046 | 839,353 | 12,228,399 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance as of January 1, 2024 |
(11,828,644 | ) | 22,799,981 | 387,216 | 11,389,046 | 839,353 | 12,228,399 | |||||||||||||||||||||||||
| Total comprehensive income (loss): |
||||||||||||||||||||||||||||||||
| Profit for the year |
— | — | 1,250,155 | — | 1,250,155 | 136,940 | 1,387,095 | |||||||||||||||||||||||||
| Other comprehensive income (loss): |
11,20,21,27,30 | — | — | (100,792 | ) | 259,727 | 158,935 | 1,841 | 160,776 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| — | — | 1,149,363 | 259,727 | 1,409,090 | 138,781 | 1,547,871 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Transactions with owners: |
||||||||||||||||||||||||||||||||
| Annual dividends |
33 | — | — | (223,335 | ) | — | (223,335 | ) | (50,927 | ) | (274,262 | ) | ||||||||||||||||||||
| Interim dividends |
33 | — | — | (530,082 | ) | — | (530,082 | ) | — | (530,082 | ) | |||||||||||||||||||||
| Share option |
25 | — | 5,173 | — | — | 5,173 | 402 | 5,575 | ||||||||||||||||||||||||
| Interest on hybrid bonds |
24 | — | — | (19,800 | ) | — | (19,800 | ) | — | (19,800 | ) | |||||||||||||||||||||
| Acquisition and disposal of treasury shares |
23 | — | 9,154 | — | — | 9,154 | — | 9,154 | ||||||||||||||||||||||||
| Retirement of treasury shares |
23 | — | 200,000 | (200,000 | ) | — | — | — | — | |||||||||||||||||||||||
| Changes in consolidation scope |
— | — | — | — | — | (902 | ) | (902 | ) | |||||||||||||||||||||||
| Changes in ownership in subsidiaries, etc. |
— | (340,619 | ) | — | — | (340,619 | ) | (797,700 | ) | (1,138,319 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| — | (126,292 | ) | (973,217 | ) | — | (1,099,509 | ) | (849,127 | ) | (1,948,636 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance as of December 31, 2024 |
(11,954,936 | ) | 22,976,127 | 646,943 | 11,698,627 | 129,007 | 11,827,634 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
10
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31, 2024 and 2023
| (In millions of won) | Note | 2024 | 2023 | |||||||||
| Cash flows from operating activities: |
||||||||||||
| Cash generated from operating activities: |
||||||||||||
| Profit for the year |
1,145,937 | |||||||||||
| Adjustments for income and expenses |
38 | 4,313,213 | 4,546,338 | |||||||||
| Changes in assets and liabilities related to operating activities |
38 | (108,813 | ) | (274,163 | ) | |||||||
|
|
|
|
|
|||||||||
| 5,591,495 | 5,418,112 | |||||||||||
| Interest received |
74,787 | 60,134 | ||||||||||
| Dividends received |
43,536 | 50,899 | ||||||||||
| Interest paid |
(356,081 | ) | (341,488 | ) | ||||||||
| Income tax paid |
(266,452 | ) | (240,452 | ) | ||||||||
|
|
|
|
|
|||||||||
| Net cash provided by operating activities |
5,087,285 | 4,947,205 | ||||||||||
|
|
|
|
|
|||||||||
| Cash flows from investing activities: |
||||||||||||
| Cash inflows from investing activities: |
||||||||||||
| Collection of short-term loans |
131,823 | 136,242 | ||||||||||
| Proceeds from disposals of long-term investment securities |
51,741 | 100,817 | ||||||||||
| Proceeds from disposals of investments in associates and joint ventures |
77,974 | 4,950 | ||||||||||
| Proceeds from disposals of assets held for sale |
13,031 | 1,353 | ||||||||||
| Proceeds from disposals of property and equipment |
47,078 | 12,900 | ||||||||||
| Proceeds from disposals of intangible assets |
32,685 | 4,428 | ||||||||||
| Collection of long-term loans |
1,680 | 1,547 | ||||||||||
| Decrease in deposits |
5,758 | 5,922 | ||||||||||
| Proceeds from settlement of derivatives |
492 | 1,452 | ||||||||||
| Government grants received |
— | 2,967 | ||||||||||
|
|
|
|
|
|||||||||
| 362,262 | 272,578 | |||||||||||
| Cash outflows for investing activities: |
||||||||||||
| Increase in short-term financial instruments, net |
(26,581 | ) | (51,421 | ) | ||||||||
| Increase in short-term loans |
(110,810 | ) | (130,041 | ) | ||||||||
| Increase in long-term loans |
(14,118 | ) | (11,602 | ) | ||||||||
| Acquisitions of long-term investment securities |
(222,568 | ) | (324,997 | ) | ||||||||
| Cash outflows from settlement of derivatives |
(112,903 | ) | — | |||||||||
| Acquisitions of investments in associates and joint ventures |
(8,014 | ) | (17,656 | ) | ||||||||
| Acquisitions of property and equipment |
(2,487,360 | ) | (2,973,882 | ) | ||||||||
| Acquisitions of intangible assets |
(71,856 | ) | (106,761 | ) | ||||||||
| Increase in deposits |
(15,525 | ) | (6,848 | ) | ||||||||
| Cash decrease due to changes in consolidation scope |
(4,354 | ) | (2,275 | ) | ||||||||
|
|
|
|
|
|||||||||
| (3,074,089 | ) | (3,625,483 | ) | |||||||||
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
(3,352,905 | ) | ||||||||||
|
|
|
|
|
|||||||||
(Continued)
11
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Consolidated Statements of Cash Flows, Continued
For the years ended December 31, 2024 and 2023
| (In millions of won) | Note | 2024 | 2023 | |||||||||
| Cash flows from financing activities: |
||||||||||||
| Cash inflows from financing activities: |
||||||||||||
| Proceeds from issuance of debentures |
1,236,475 | 1,785,108 | ||||||||||
| Proceeds from long-term borrowings |
200,000 | 49,950 | ||||||||||
| Proceeds from short-term borrowings, net |
100,000 | — | ||||||||||
| Proceeds from issuance of hybrid bonds |
— | 398,509 | ||||||||||
| Cash inflows from settlement of derivatives |
— | 183,090 | ||||||||||
| Transactions with non-controlling shareholders |
15,717 | 160 | ||||||||||
|
|
|
|
|
|||||||||
| 1,552,192 | 2,416,817 | |||||||||||
| Cash outflows for financing activities: |
||||||||||||
| Repayments of short-term borrowings, net |
— | (142,998 | ) | |||||||||
| Repayments of long-term payables – other |
(369,150 | ) | (400,245 | ) | ||||||||
| Repayments of debentures |
(1,235,750 | ) | (1,869,190 | ) | ||||||||
| Repayments of long-term borrowings |
(402,500 | ) | (125,000 | ) | ||||||||
| Redemption of hybrid bonds |
— | (400,000 | ) | |||||||||
| Payments of dividends |
(804,317 | ) | (773,806 | ) | ||||||||
| Payments of interest on hybrid bonds |
(19,800 | ) | (17,283 | ) | ||||||||
| Repayments of lease liabilities |
(381,347 | ) | (402,465 | ) | ||||||||
| Acquisition of treasury shares |
(15,788 | ) | (285,487 | ) | ||||||||
| Transactions with non-controlling shareholders |
(133,393 | ) | (21,333 | ) | ||||||||
|
|
|
|
|
|||||||||
| (3,362,045 | ) | (4,437,807 | ) | |||||||||
|
|
|
|
|
|||||||||
| Net cash used in financing activities |
38 | (1,809,853 | ) | (2,020,990 | ) | |||||||
|
|
|
|
|
|||||||||
| Net increase (decrease) in cash and cash equivalents |
565,605 | (426,690 | ) | |||||||||
| Cash and cash equivalents at beginning of the year |
1,454,978 | 1,882,291 | ||||||||||
| Effects of exchange rate changes on cash and cash equivalents |
26,124 | (623 | ) | |||||||||
| Cash and cash equivalents included in assets held for sale |
(22,986 | ) | — | |||||||||
|
|
|
|
|
|||||||||
| Cash and cash equivalents at end of the year |
1,454,978 | |||||||||||
|
|
|
|
|
|||||||||
The accompanying notes are an integral part of the consolidated financial statements.
12
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 1. | Reporting Entity |
| (1) | General |
SK Telecom Co., Ltd. (the “Parent Company”) was incorporated on March 29, 1984, under the laws of the Republic of Korea (“Korea”) to provide cellular telephone communication services in Korea. The head office of the Parent Company is located at 65, Eulji-ro, Jung-gu, Seoul, Korea.
The Parent Company’s common shares are listed on the Stock Market of Korea Exchange, and its depositary receipts (DRs) are listed on the New York Stock Exchange. As of December 31, 2024, the Parent Company’s total issued shares are held by the following shareholders:
| Number of shares |
Percentage of total shares issued (%) |
|||||||
| SK Inc. |
65,668,397 | 30.57 | ||||||
| National Pension Service |
18,878,265 | 8.79 | ||||||
| Institutional investors and other shareholders |
124,493,193 | 57.96 | ||||||
| Kakao Investment Co., Ltd. |
3,846,487 | 1.79 | ||||||
| Treasury shares |
1,903,711 | 0.89 | ||||||
|
|
|
|
|
|||||
| 214,790,053 | 100.00 | |||||||
|
|
|
|
|
|||||
These consolidated financial statements comprise the Parent Company and its subsidiaries (collectively referred to as the “Group”). SK Inc. is the ultimate controlling entity of the Parent Company.
13
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 1. | Reporting Entity, Continued |
| (2) | List of consolidated subsidiaries |
The list of consolidated subsidiaries as of December 31, 2024 and 2023 is as follows:
| Ownership (%)(*1) | ||||||||||||||
| Subsidiary |
Location |
Primary business |
Dec. 31, 2024 |
Dec. 31, 2023 |
||||||||||
| Subsidiaries owned by the Parent Company |
SK Telink Co., Ltd. | Korea | International telecommunication and Mobile Virtual Network Operator Service |
100.0 | 100.0 | |||||||||
| NATE Communications Corporation (Formerly, SK Communications Co., Ltd.) |
Korea | Internet website services | 100.0 | 100.0 | ||||||||||
| SK Broadband Co., Ltd.(*2) | Korea | Fixed-line telecommunication services | 99.1 | 74.4 | ||||||||||
| PS&Marketing Corporation | Korea | Communications device retail business | 100.0 | 100.0 | ||||||||||
| SERVICE ACE Co., Ltd. | Korea | Call center management service | 100.0 | 100.0 | ||||||||||
| SERVICE TOP Co., Ltd. | Korea | Call center management service | 100.0 | 100.0 | ||||||||||
| SK O&S Co., Ltd. | Korea | Base station maintenance service | 100.0 | 100.0 | ||||||||||
| SK Telecom China Holdings Co., Ltd. |
China | Investment (Holdings company) | 100.0 | 100.0 | ||||||||||
| SK Global Healthcare |
Hong Kong | Investment | — | 100.0 | ||||||||||
| YTK Investment Ltd. | Cayman Islands | Investment | 100.0 | 100.0 | ||||||||||
| Atlas Investment | Cayman Islands | Investment | 100.0 | 100.0 | ||||||||||
| SK Telecom Americas, Inc. | USA | Information gathering and consulting | 100.0 | 100.0 | ||||||||||
| Quantum Innovation Fund I(*3) | Korea | Investment | — | 59.9 | ||||||||||
| Happy Hanool Co., Ltd. | Korea | Service | 100.0 | 100.0 | ||||||||||
| SK stoa Co., Ltd. | Korea | Other telecommunication retail business | 100.0 | 100.0 | ||||||||||
| SAPEON Inc. | USA | Investment (Holdings company) | 62.5 | 62.5 | ||||||||||
| Astra AI Infra LLC(*3) | USA | Investment | 100.0 | — | ||||||||||
| Subsidiaries owned by SK Broadband Co., Ltd. |
Home & Service Co., Ltd. | Korea | Operation of information and communication facility |
100.0 | 100.0 | |||||||||
| Media S Co., Ltd. | Korea | Production and supply services of broadcasting programs |
100.0 | 100.0 | ||||||||||
| Subsidiary owned by PS&Marketing Corporation |
SK m&service Co., Ltd. | Korea | Database and internet website service | 100.0 | 100.0 | |||||||||
| Subsidiary owned by SK Telecom Americas, Inc. |
Global AI Platform Corporation | USA | Software development and supply business | 100.0 | 100.0 | |||||||||
| Subsidiary owned by Global AI Platform Corporation |
Global AI Platform Corporation Korea |
Korea | Software development and supply business | 100.0 | 100.0 | |||||||||
| Subsidiary owned by Quantum Innovation Fund I |
PanAsia Semiconductor Materials LLC.(*3) |
Korea | Investment | — | 66.4 | |||||||||
| Subsidiary owned by SAPEON Inc. |
Rebellions Inc. (Formerly, SAPEON Korea Inc.)(*3) |
Korea | Manufacturing non-memory and other electronic integrated circuits |
— | 100.0 | |||||||||
| Others(*4) |
SK Telecom Innovation Fund, L.P. |
USA | Investment | 100.0 | 100.0 | |||||||||
| SK Telecom China Fund I L.P.(*3) | Cayman Islands | Investment | — | 100.0 | ||||||||||
14
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 1. | Reporting Entity, Continued |
| (2) | List of consolidated subsidiaries, Continued |
The list of consolidated subsidiaries as of December 31, 2024 and 2023 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) | In relation to the merger of SK Broadband Co., Ltd. during the year ended December 31, 2020, the Parent
Company has entered into a shareholders’ agreement with the shareholders of the acquirees on November 13, 2024. Pursuant to the shareholders’ agreement, the Parent Company entered into a share purchase agreement to purchase 24.76% of
the shares of SK Broadband Co., Ltd. for |
| (*3) | Details of changes in the consolidation scope for the year ended December 31, 2024 are presented in note 1-(4). |
| (*4) | Others are owned by Atlas Investment and another subsidiary of the Parent Company. |
15
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 1. | Reporting Entity, Continued |
| (3) | Condensed financial information of subsidiaries |
1) Condensed financial information of significant consolidated subsidiaries as of and for the year ended December 31, 2024 is as follows:
| (In millions of won) | ||||||||||||||||||||
| As of December 31, 2024 | 2024 | |||||||||||||||||||
| Subsidiary |
Total assets | Total liabilities |
Total equity |
Revenue | Profit | |||||||||||||||
| SK Telink Co., Ltd. |
63,558 | 147,404 | 341,838 | 14,323 | ||||||||||||||||
| SK Broadband Co., Ltd. |
6,806,280 | 3,760,426 | 3,045,854 | 4,415,270 | 263,967 | |||||||||||||||
| PS&Marketing Corporation |
448,887 | 218,885 | 230,002 | 1,382,361 | 63 | |||||||||||||||
| SERVICE ACE Co., Ltd. |
74,676 | 49,818 | 24,858 | 191,376 | 2,585 | |||||||||||||||
| SERVICE TOP Co., Ltd. |
60,073 | 42,479 | 17,594 | 166,699 | 969 | |||||||||||||||
| SK O&S Co., Ltd. |
130,618 | 94,807 | 35,811 | 351,721 | 689 | |||||||||||||||
| Home & Service Co., Ltd. |
139,664 | 107,379 | 32,285 | 495,546 | 3,947 | |||||||||||||||
| SK stoa Co., Ltd. |
116,785 | 56,192 | 60,593 | 302,332 | 4,354 | |||||||||||||||
| SK m&service Co., Ltd. |
164,772 | 100,230 | 64,542 | 246,999 | 220 | |||||||||||||||
2) Condensed financial information of significant consolidated subsidiaries as of and for the year ended December 31, 2023 is as follows:
| (In millions of won) | ||||||||||||||||||||
| As of December 31, 2023 | 2023 | |||||||||||||||||||
| Subsidiary |
Total assets | Total liabilities |
Total equity |
Revenue | Profit (loss) |
|||||||||||||||
| SK Telink Co., Ltd. |
65,049 | 148,871 | 309,091 | 17,761 | ||||||||||||||||
| SK Broadband Co., Ltd. |
6,442,611 | 3,323,156 | 3,119,455 | 4,281,932 | 213,905 | |||||||||||||||
| PS&Marketing Corporation |
451,549 | 224,042 | 227,507 | 1,353,321 | 4,681 | |||||||||||||||
| SERVICE ACE Co., Ltd. |
83,395 | 54,888 | 28,507 | 197,598 | 2,822 | |||||||||||||||
| SERVICE TOP Co., Ltd. |
71,196 | 47,641 | 23,555 | 178,423 | 1,738 | |||||||||||||||
| SK O&S Co., Ltd. |
140,942 | 98,346 | 42,596 | 345,617 | 2,614 | |||||||||||||||
| Home & Service Co., Ltd. |
165,667 | 112,025 | 53,642 | 490,094 | 1,297 | |||||||||||||||
| SK stoa Co., Ltd. |
94,041 | 37,253 | 56,788 | 301,496 | (1,427 | ) | ||||||||||||||
| SK m&service Co., Ltd. |
153,660 | 88,195 | 65,465 | 247,479 | 1,253 | |||||||||||||||
16
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 1. | Reporting Entity, Continued |
| (4) | Changes in subsidiaries |
1) Details of subsidiary that was newly included in consolidation scope for the year ended December 31, 2024 is as follows:
| Subsidiary |
Reason | |
| Astra AI Infra LLC | Established by the Parent Company |
2) Details of subsidiaries that were excluded from consolidation scope for the year ended December 31, 2024 is as follows:
| Subsidiary |
Reason | |
| SK Global Healthcare Business Group Ltd. | Liquidation | |
| Quantum Innovation Fund I | Liquidation | |
| PanAsia Semiconductor Materials LLC. | Liquidation | |
| Rebellions Inc. (Formerly, SAPEON Korea Inc.) |
Loss of control | |
| SK Telecom China Fund I L.P. | Liquidation | |
17
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 1. | Reporting Entity, Continued |
| (5) | The financial information of material non-controlling interests of the Group as of and for the years ended December 31, 2024 and 2023 are as follows: |
| 1) | 2024 |
As of December 31, 2023 the material non-controlling interest of the Group was attributed to SK Broadband Co., Ltd. The non-controlling interest of SK Broadband Co., Ltd. decreased during the year ended December 31, 2024, therefore, there are no material non-controlling interests of the Group as of December 31, 2024.
| 2) | 2023 |
| (In millions of won) | ||||
| SK Broadband Co., Ltd.(*) | ||||
| Ownership of non-controlling interests (%) |
25.4 | |||
| As of December 31, 2023 | ||||
| Current assets |
||||
| Non-current assets |
5,214,315 | |||
| Current liabilities |
(1,388,317 | ) | ||
| Non-current liabilities |
(1,988,989 | ) | ||
| Net assets |
3,225,974 | |||
| Carrying amount of non-controlling interests |
819,592 | |||
| 2023 | ||||
| Revenue |
||||
| Profit for the year |
202,890 | |||
| Total comprehensive income |
183,499 | |||
| Profit attributable to non-controlling interests |
51,448 | |||
| Net cash provided by operating activities |
||||
| Net cash used in investing activities |
(1,064,434 | ) | ||
| Net cash used in financing activities |
(60,254 | ) | ||
| Effects of exchange rate changes on cash and cash equivalents |
9 | |||
| Net decrease in cash and cash equivalents |
(13,832 | ) | ||
| Dividends paid to non-controlling interests for the year ended December 31, 2023 |
||||
| (*) | The above condensed financial information is the consolidated financial information of the subsidiary and reflects fair value adjustments as a result of the business combination. |
18
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 2. | Basis of Preparation |
These consolidated financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”), as prescribed in the Act on External Audits of Stock Companies of Korea. The accompanying consolidated financial statements have been translated into English from Korean financial statements. In the event of any differences in interpreting the financial statements or the independent auditor’s report thereon, Korean version, which is used for regulatory reporting purposes, shall prevail.
The accompanying consolidated financial statements comprise the Group and the Group’s investments in associates and joint ventures.
The consolidated financial statements were authorized for issuance by the Board of Directors on February 11, 2025, which may be subject to final amendments and approval at the shareholder’s meeting to be held on March 26, 2025.
| (1) | Basis of measurement |
The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the consolidated statement of financial position:
| • | derivative financial instruments measured at fair value; |
| • | financial instruments measured at fair value through profit or loss (“FVTPL”); |
| • | financial instruments measured at fair value through other comprehensive income (“FVOCI”); |
| • | liabilities measured at fair value for cash-settled share-based payment arrangement; and |
| • | liabilities (assets) for defined benefit plans recognized at the total present value of defined benefit obligations less the fair value of plan assets. |
| (2) | Functional and presentation currency |
Financial statements of Group entities within the Group are prepared in functional currency of each group entity, which is the currency of the primary economic environment in which each entity operates. Consolidated financial statements of the Group are presented in Korean won, which is the Parent Company’s functional and presentation currency.
| (3) | Use of estimates and judgments |
The preparation of the consolidated financial statements in conformity with KIFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period prospectively.
1) Critical judgments
Information about critical judgments in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is included in notes for the following areas: consolidation (whether the Group has de facto control over an investee), and determination of stand-alone selling prices.
19
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 2. | Basis of Preparation, Continued |
| (3) | Use of estimates and judgments, Continued |
2) Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes: loss allowance (notes 6 and 35), estimated useful lives of costs to obtain a contract (notes 8), property and equipment and intangible assets (notes 3 (7), (8), 12 and 16), impairment of goodwill (notes 3 (10) and 15), recognition of provision (notes 3 (15) and 19), measurement of defined benefit liabilities (assets) (notes 3 (14) and 20), transaction of derivative instruments (notes 3 (6) and 21) and recognition of deferred tax assets (liabilities) (notes 3 (23) and 31).
3) Fair value measurement
The Group’s accounting policies and disclosures require the measurement of fair values, for both a number of financial and non-financial assets and liabilities. The Group has an established policies and processes with respect to the measurement of fair values including Level 3 fair values, and the measurement of fair values is reviewed and is directly reported to the finance executives.
The Group regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Group assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of KIFRS, including the level in the fair value hierarchy in which such valuations should be classified.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
| • | Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; |
| • | 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 21 and note 35.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies |
The material accounting policies applied by the Group in the preparation of its consolidated financial statements in accordance with KIFRS are included below. Except for certain standards and amendments which are effective for annual periods beginning on or after January 1, 2024, the material accounting policies applied by the Group in these consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as of and for the year ended December 31, 2023. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.
The new and amended standards and interpretations that are effective for annual periods beginning on or after January 1, 2024 are as follows. These amended standards had no material impact on the Group’s consolidated financial statements.
| • | Classification of Liabilities as Current or Non-current, Non-current Liabilities with Covenants (Amendments to KIFRS 1001) |
| • | Disclosures of Information on Supplier Finance Arrangements (Amendments to KIFRS 1007 and KIFRS 1107) |
| • | Lease Liability in a Sale and Leaseback (Amendments to KIFRS 1116) |
| • | Disclosures of Virtual Assets (Amendments to KIFRS 1001) |
| (1) | Operating segments |
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Group’s operating segments have been determined to be each business unit, for which the Group generates separately identifiable financial information that is regularly reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The Group has three reportable segments as described in note 4. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (2) | Basis of consolidation |
1) Business combination
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control.
In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.
The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.
Consideration transferred is generally measured at fair value, identical to the measurement of identifiable net assets acquired at fair value. The difference between the acquired company’s fair value and the consideration transferred is accounted for goodwill. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Acquisition-related costs are expensed in the periods in which the costs are incurred and the services are received, except if related to the costs to issue debt or equity securities recognized based on KIFRS 1032 and KIFRS 1109.
Consideration transferred does not include the amount settled in relation to the pre-existing relationship. Such amounts are generally recognized through profit or loss.
Contingent consideration is measured at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. If contingent consideration is not classified as equity, the Group subsequently recognizes changes in fair value of contingent consideration through profit or loss.
2) Non-controlling interests
Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.
Changes in a Controlling Company’s ownership interest in a subsidiary that do not result in the Controlling Company losing control of the subsidiary are accounted for as equity transactions.
3) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of an investee begins from the date the Group obtains control of the investee and cease when the Group loses control of the investee.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (2) | Basis of consolidation, Continued |
4) Loss of control
If the Group loses control of a subsidiary, the Group derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position and recognizes gain or loss associated with the loss of control attributable to the former controlling interest. Any investment retained in the former subsidiary is recognized at its fair value when control is lost.
5) Interest in investees accounted for using the equity method
Interest in investees accounted for using the equity method composed of interest in associates and joint ventures.
An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and operating policies. A joint venture is a joint arrangement whereby the Group that has joint control of the arrangement has rights to the net assets of the arrangement.
The investment in an associate and a joint venture is initially recognized at cost including transaction costs and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss and changes in equity of the associate or the joint venture after the date of acquisition.
6) Intra-group transactions
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. The Group’s share of unrealized gain incurred from transactions with investees accounted for using the equity method are eliminated and unrealized loss are eliminated using the same basis if there are no evidence of asset impairments.
7) Business combinations under common control
SK Inc. is the ultimate controlling entity of the Group. The assets and liabilities acquired under business combination under common control are recognized at the carrying amounts in the ultimate controlling shareholder’s consolidated financial statements. The difference between consideration and carrying amount of net assets acquired is added to or subtracted from capital surplus and others.
| (3) | Cash and cash equivalents |
Cash and cash equivalents comprise cash balances, call deposits and investment securities with maturities of three months or less from the acquisition date that are easily convertible to cash and subject to an insignificant risk of changes in their fair value.
| (4) | Inventories |
Inventories are initially recognized at the acquisition cost and subsequently measured using the weighted average method. During the period, a perpetual inventory system is used to track inventory quantities, which is adjusted based on the physical inventory counts performed at the period end. When the net realizable value of inventories is less than cost, the carrying amount is reduced to the net realizable value, and any difference is charged to current period as operating expenses.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (5) | Non-derivative financial assets |
1) Recognition and initial measurement
Accounts receivable – trade and debt investments issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument.
A financial asset (unless an accounts receivable – trade without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. An accounts receivable – trade without a significant financing component is initially measured at the transaction price.
2) Classification and subsequent measurement
On initial recognition, a financial asset is classified as measured at:
| • | FVTPL |
| • | FVOCI – equity investment |
| • | FVOCI – debt investment |
| • | Financial assets at amortized cost |
A financial asset is classified based on the business model in which a financial asset is managed and its contractual cash flow characteristics.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:
| • | it is held within a business model whose objective is to hold assets to collect contractual cash flows; and |
| • | its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. |
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (5) | Non-derivative financial assets, Continued |
2) Classification and subsequent measurement, Continued
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
| • | it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and |
| • | its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. |
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (“OCI”). This election is made on an investment-by-investment basis.
All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
The following accounting policies are applied to the subsequent measurement of financial assets.
|
|
Financial assets at FVTPL |
These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss. | ||
| Financial assets at amortized cost |
These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. | |||
| Debt investments at FVOCI |
These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. | |||
| Equity investments at FVOCI |
These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss. | |||
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (5) | Non-derivative financial assets, Continued |
3) Impairment
The Group estimates the expected credit losses (“ECL”) for the debt instruments measured at amortized cost and FVOCI based on the Group’s historical experience and informed credit assessment that includes forward-looking information. The impairment approach is decided based on the assessment of whether the credit risk of a financial asset has increased significantly since initial recognition. However, the Group applies a practical expedient and recognizes impairment losses equal to lifetime ECLs for accounts receivable – trade and lease receivables from the initial recognition.
ECL is a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).
At each reporting date, the Group assesses whether financial assets measured at amortized cost and debt investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Loss allowance on financial assets measured at amortized cost is deducted from the carrying amount of the respective assets, while loss allowance on debt instruments at FVOCI is recognized in OCI, instead of reducing the carrying amount of the transferred assets.
4) Derecognition
Financial assets
The Group derecognizes a financial asset when:
| • | the contractual rights to the cash flows from the financial asset expire; or |
| • | it transfers the rights to receive the contractual cash flows in a transaction in which either: |
| • | substantially all of the risks and rewards of ownership of the financial asset are transferred; or |
| • | the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. |
The Group enters into transactions whereby it transfers assets recognized in its consolidated statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (5) | Non-derivative financial assets, Continued |
4) Derecognition, Continued
Interest rate benchmark reform
When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changed as a result of interest rate benchmark reform, the Group updated the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform. A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met:
| • | the change is necessary as a direct consequence of the reform; and |
| • | the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e., the basis immediately before the change. |
When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Group first updated the effective rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. After that, the Group applied the policies on accounting for modifications to the additional changes.
5) Offsetting
Financial assets and financial liabilities are offset, and the net amount is presented in the statement of financial position when the Group currently has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to settle the liability and realize the asset simultaneously.
A financial asset and a financial liability are offset only when the right to set off the amount is not contingent on future event and legally enforceable even on the event of default, insolvency or bankruptcy.
| (6) | Derivative financial instruments, including hedge accounting |
Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value at the end of each reporting period, and changes therein are accounted for as described below.
1) Hedge accounting
The Group holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Group designates derivatives as hedging instruments to hedge the variability in cash flow associated with highly probable forecasted transactions or firm commitments (a cash flow hedge).
On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (6) | Derivative financial instruments, including hedge accounting, Continued |
1) Hedge accounting, Continued
Hedges directly affected by interest rate benchmark reform
When uncertainty arises about the interest rate benchmark designated as a hedged risk and the timing or the amount of the interest rate benchmark-based cash flows of the hedged item or of the hedging instrument as a result of IBOR reform, for the purpose of evaluating whether there is an economic relationship between the hedged items and the hedging instruments, the Group assumes that the interest rate benchmark on which the hedged items and the hedging instruments are based is not altered as a result of interest rate benchmark reform.
For a cash flow hedge of a forecast transaction, the Group assumes that the benchmark interest rate will not be altered as a result of interest rate benchmark reform for the purpose of assessing whether the forecast transaction is highly probable and determining whether a previously designated forecast transaction in a discontinued cash flow hedge is still expected to occur.
The Group will cease applying the specific policy for assessing the economic relationship between the hedged item and the hedging instrument.
| • | to a hedged item or hedging instrument when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the respective item or instrument; or |
| • | when the hedging relationship is discontinued. |
When the basis for determining the contractual cash flows of the hedged item or hedging instrument changes as a result of IBOR reform and therefore there is no longer uncertainty arising about the cash flows of the hedged item or the hedging instrument, the Group amends the hedge documentation of that hedging relationship to reflect the change(s) required by IBOR reform.
The Group amends the formal hedge documentation by the end of the reporting period during which a change required by IBOR reform is made to the hedged risk, hedged item or hedging instrument. These amendments in the formal hedge documentation do not constitute the discontinuation of the hedging relationship or the designation of a new hedging relationship.
If changes are made in addition to those changes required by interest rate benchmark reform to the financial asset or financial liability designated in a hedging relationship or to the designation of the hedging relationship, the Group determines whether those additional changes result in the discontinuation of hedging accounting. If the additional changes do not result in the discontinuation of hedging accounting, the Group amend the formal designation of the hedging relationship.
When the interest rate benchmark on which the hedged future cash flows had been based is changed as required by IBOR reform, for the purpose of determining whether the hedged future cash flows are expected to occur, the Group deems that the hedging reserve recognized in OCI for that hedging relationship is based on the alternative benchmark rate on which the hedged future cash flows will be based.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (6) | Derivative financial instruments, including hedge accounting, Continued |
1) Hedge accounting, Continued
Cash flow hedge
When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.
2) Other derivative financial instruments
Other derivative financial instrument not designated as a hedging instrument are measured at fair value, and the changes in fair value of the derivative financial instrument is recognized immediately in profit or loss.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (7) | Property and equipment |
Property and equipment are initially measured at cost. The cost of property and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.
Property and equipment, subsequently, are carried at cost less accumulated depreciation and accumulated impairment losses.
Subsequent costs are recognized in the carrying amount of property and equipment at cost or, if appropriate, as a separate item if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing are recognized in profit or loss as incurred.
Property and equipment, except for land, are depreciated on a straight-line basis over estimated useful lives that appropriately reflect the pattern in which the asset’s future economic benefits are expected to be consumed. A component that is significant compared to the total cost of property and equipment is depreciated over its separate useful life.
Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized as other non-operating income or expenses.
The estimated useful lives of the Group’s property and equipment are as follows:
| Useful lives (years) | ||
| Buildings and structures | 15 ~ 40 | |
| Machinery | 3 ~ 15, 30 | |
| Other property and equipment | 3 ~ 10 |
The Group reviews estimated residual values, expected useful lives, and depreciation methods annually at the end of each reporting date and adjusts, if appropriate. The change is accounted for as a change in an accounting estimate.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (8) | Intangible assets |
Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.
Intangible assets, except for goodwill, are amortized on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, club memberships and brand are expected to be available for use as there are no foreseeable limits to the periods. These intangible assets are determined as having indefinite useful lives and, therefore, not amortized.
The estimated useful lives of the Group’s intangible assets are as follows:
| Useful lives (years) | ||||
| Frequency usage rights |
5 ~ 10 | |||
| Land usage rights |
5 | |||
| Industrial rights |
5, 10 | |||
| Development costs |
5 | |||
| Facility usage rights |
10, 20 | |||
| Customer relations |
3 ~ 15 | |||
| Other |
3 ~ 20 | |||
Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes, if appropriate, are accounted for as changes in accounting estimates.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (8) | Intangible assets, Continued |
Expenditures on research activities are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be reliably measured, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.
Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.
| (9) | Investment properties |
Investment properties are properties held to earn rent income and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are reported at cost less accumulated depreciation and accumulated impairment losses.
Subsequent expenditures are recognized in carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. The carrying amount of those parts that are replaced is derecognized. The costs associated with routine maintenance and repairs are recognized in profit or loss as incurred.
Investment property, except for land, is depreciated on a straight-line basis over estimated useful lives of 30 years. In addition, right-of-use asset classified as investment property is depreciated using the straight-line basis from the commencement date to the end of the lease term.
The depreciation method, estimated useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate. The change is accounted for as a change in an accounting estimate.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (10) | Impairment of non-financial assets |
The carrying amounts of the Group’s non-financial assets other than contract assets recognized for revenue arising from contracts with a customer, assets recognized for the costs to obtain or fulfill a contract with a customer, employee benefits, inventories, deferred tax assets, and non-current assets held for sale are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amounts to their carrying amounts.
The Group estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual recoverable amount of an asset, the Group estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or CGU.
An impairment loss is recognized in profit or loss to the extent the carrying amount of the asset exceeds its recoverable amount.
Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergy arising from the business acquired. Any impairment identified at the CGU level will first reduce the carrying amount of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
| (11) | Leases |
A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
1) Group as a lessee
At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.
The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (11) | Leases, Continued |
1) Group as a lessee, Continued
The right-of-use asset is subsequently depreciated using the straight-line basis from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
| • | fixed payments, including in-substance fixed payments; |
| • | variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; |
| • | amounts expected to be payable under a residual value guarantee; and |
| • | the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. |
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property and equipment’ in the statement of financial position.
The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Group recognizes the lease payments on short-term leases and leases of low value assets as an expense on a straight-line basis over the lease term.
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Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (11) | Leases, Continued |
2) Group as a lessor
At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.
When the Group is an intermediate lessor, is accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
If an arrangement contains lease and non-lease components, then the Group applies KIFRS 1115 to allocate the consideration in the contract.
The Group applies derecognition and impairment requirements in KIFRS 1109 to the net investment in the lease. The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in the lease.
The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other revenue’.
| (12) | Assets held for sale |
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sales rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the assets (or disposal groups) must be available for immediate sale in their present condition and their sale must be highly probable. The assets or disposal groups that are classified as assets held for sale are measured at the lower of their carrying amounts and fair value less cost to sell. The Group recognizes an impairment loss for any initial or subsequent write-down of assets (or disposal groups) to fair value less costs to sell and a gain for any subsequent increase in fair value less costs to sell up to the cumulative impairment loss previously recognized.
An asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated (or amortized).
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Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (13) | Non-derivative financial liabilities |
The Group classifies non-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement. The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liabilities.
1) Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition. Subsequent to initial recognition, these liabilities are measured at fair value. The amount of change in fair value of financial liability that is attributable to changes in the credit risk of that liability shall be presented in other comprehensive income, and the remaining amount of change in the fair value of the liability shall be presented in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the issue of the financial liability are recognized in profit or loss as incurred.
2) Other financial liabilities
Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the issue of the financial liabilities. Subsequent to initial recognition, other financial liabilities are measured at amortized cost and the interest expenses are recognized using the effective interest method.
3) Derecognition of financial liability
The Group extinguishes a financial liability only when the contractual obligation is fulfilled, canceled or expires. The Group recognizes new financial liabilities at fair value based on new contracts and eliminates existing liabilities when the contractual terms of the financial liabilities change and the cash flows change substantially.
When a financial liability is derecognized, the difference between the carrying amount and the consideration paid (including any transferred non-cash assets or liabilities assumed) is recognized in profit or loss.
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Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (14) | Employee benefits |
1) Short-term employee benefits
Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render related services. When an employee has rendered a service to the Group during an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.
2) Other long-term employee benefits
Other long-term employee benefits include employee benefits that are settled beyond 12 months after the end of the period in which the employees render related services. The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.
3) Retirement benefits: defined contribution plans
When an employee has rendered a service to the Group during a period, the Group recognizes the contribution payable to a defined contribution plan in exchange for that service as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Group recognizes that excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund.
4) Retirement benefits: defined benefit plans
At the end of reporting period, defined benefit liabilities (assets) relating to defined benefit plans are recognized at present value of defined benefit obligations net of fair value of plan assets.
The calculation is performed annually by an independent actuary using the projected unit credit method. When the fair value of plan assets exceeds the present value of the defined benefit obligation, the Group recognizes an asset, to the extent of the present value of any economic benefits available in the form of refunds from the plan or reduction in the future contributions to the plan.
Remeasurements of the net defined benefit liability (asset), which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group determines net interests on net defined benefit liability (asset) by multiplying discount rate determined at the beginning of the annual reporting period and considers changes in net defined benefit liability (asset) from contributions and benefit payments. Net interest costs and other costs relating to the defined benefit plan are recognized through profit or loss.
When the plan amendment or curtailment occurs, gains or losses on amendment or curtailment in benefits for the past service provided are recognized through profit or loss. The Group recognizes a gain or loss on a settlement when the settlement of defined benefit plan occurs.
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Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (15) | Provisions |
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. If the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.
If some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement is recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.
A provision is used only for expenditures for which the provision was originally recognized.
| (16) | Emissions Rights |
The Group accounts for greenhouse gases emission right and the relevant liability as below pursuant to the Act on Allocation and Trading of Greenhouse Gas Emission in Korea.
1) Greenhouse Gases Emission Right
Greenhouse Gases Emission Right consists of emission allowances, which are allocated from the government free of charge or purchased from the market. The cost includes any directly attributable costs incurred during the normal course of business.
The Group derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to government in which the future economic benefits are no longer expected to be probable.
2) Emissions liability
Emission liability is a present obligation of submitting emission rights to the government with regard to emission of greenhouse gas. The emission liability is measured based on the expected quantity of emission for the performing period in excess of emission allowance in possession and the unit price for such emission rights in the market at the end of the reporting period. The emissions liabilities are derecognized when they are surrendered to the government.
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Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (17) | Transactions in foreign currencies |
1) Foreign currency transactions
Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
Exchange differences arising from monetary items except for financial liabilities designated cashflow hedging instruments are recognized in profit or loss. If a gain or loss on a non-monetary item is recognized in other comprehensive income, any foreign exchange differences are also recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any foreign exchange differences are also recognized in profit or loss.
2) Foreign operations
If the presentation currency of the Group is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods:
The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation is treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and translated at the closing rate at the reporting date.
When a foreign operation is disposed, the relevant amount in the translation is transferred to profit or loss as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to profit or loss.
| (18) | Share capital |
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
When the Parent Company repurchases its own shares, the amount of the consideration paid is recognized as a deduction from equity and classified as treasury shares. The gains or losses from the purchase, disposal, reissue, or retirement of treasury shares are directly recognized in equity being as transaction with owners.
39
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (19) | Hybrid bond |
The Group recognizes a financial instrument issued by the Group as an equity instrument if it does not include contractual obligation to deliver financial assets including cash to the counter party.
| (20) | Share-based payment |
For equity-settled share-based payment transaction, if the fair value of the goods or services received cannot be reliably estimated, the Group measures the value indirectly by reference to the fair value of the equity instruments granted. The related expense with a corresponding increase in capital surplus and others is recognized over the vesting period of the awards.
The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.
The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the fair value of the liability are recognized in profit or loss.
| (21) | Revenue |
1) Identification of performance obligations in contracts with customers
The Group identifies the distinct services or goods as performance obligations in contracts with customers such as (1) providing wireless and fixed-line telecommunications services, (2) sale of handsets and (3) providing other goods and services. In the case of providing both wireless telecommunications service and selling a handset together to one customer, the Group allocates considerations from the customer between the separate performance obligations for handset sale and wireless telecommunications service. The handset sale revenue is recognized when handset is delivered, and the wireless telecommunications service revenue is recognized over the period of the contract term as stated in the subscription contract.
2) Allocation of the transaction price to each performance obligation
The Group allocates the transaction price of a contract to each performance obligation identified on a relative stand-alone selling price basis. The Group uses “adjusted market assessment approach” for estimating the stand-alone selling price of a good or service.
3) Incremental costs of obtaining a contract
The Group pays commissions to its retail stores and authorized dealers in connection with acquiring service contracts. The commissions paid to these parties constituted a significant portion of the Group’s operating expenses. These commissions would not have been paid if there have been no binding contracts with subscribers and, therefore, the Group capitalizes certain costs associated with commissions paid to obtain new customer contracts and amortize them over the expected contract periods.
40
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (21) | Revenue, Continued |
4) Customer loyalty programs
The Group provides customer loyalty points to customers based on the usage of the service to which the Group allocates a portion of consideration received as a performance obligation distinct from wireless telecommunications services. The amount to be allocated to the loyalty program is measured according to the relative stand-alone selling price of the customer loyalty points. The amount allocated to the loyalty program is deferred as a contract liability and is recognized as revenue when loyalty points are redeemed.
5) Consideration payable to a customer
Based on the subscription contract, a customer who uses the Group’s wireless telecommunications services may receive a discount for purchasing goods or services from a designated third party. The Group pays a portion of the price discounts that the customer receives to the third party which is viewed as consideration payable to a customer. The Group accounts for the amounts payable to the third party as a reduction of the wireless telecommunications service revenue.
| (22) | Finance income and finance costs |
Finance income comprises interest income on funds invested (including financial assets measured at fair value), dividend income, gains on disposal of financial assets at FVTPL, changes in fair value of financial instruments at FVTPL, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest rate method. Dividend income is recognized in profit or loss when the right to receive the dividend is established.
Finance costs comprise interest expense on borrowings and debentures, changes in fair value of financial instruments at FVTPL, and losses on hedging instruments that are recognized in profit or loss. Interest expense on borrowings and debentures is recognized as it accrues in profit or loss using the effective interest rate method.
| (23) | Income taxes |
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.
The Group pays income tax in accordance with the tax-consolidation system when the Parent Company and its subsidiaries are economically unified.
1) Current tax
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and includes interests and fines related to income taxes paid or payable. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.
41
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (23) | Income taxes, Continued |
2) Deferred tax
Deferred tax is recognized by using the asset-liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Group recognizes a deferred tax liability for all taxable temporary differences, except for the difference associated with investments in subsidiaries and associates that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Group recognizes a deferred tax asset for all deductible temporary differences to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.
A deferred tax asset is recognized for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Future taxable profit is dependent on the reversal of taxable temporary differences. If there are insufficient taxable temporary differences to recognize the deferred tax asset, the business plan of the Group and the reversal of existing temporary differences are considered in determining the future taxable profit.
The Group reviews the carrying amount of a deferred tax asset at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized, or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if the Group has a legally enforceable right to offset the amount recognized and intends to settle the current tax liabilities and assets on a net basis. Income tax expense in relation to dividend payments is recognized when liabilities relating to the dividend payments are recognized.
3) Uncertainty over income tax treatments
The Group assesses the uncertainty over income tax treatments pursuant to KIFRS 1012. If the Group concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the Group reflects the effect of uncertainty for each uncertain tax treatment by using either of the following methods, depending on which method the entity expects to better predict the resolution of the uncertainty:
| • | The most likely amount: the single most likely amount in a range of possible outcomes. |
| • | The expected value: the sum of the probability-weighted amounts in a range of possible outcomes. |
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Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 3. | Material Accounting Policies, Continued |
| (24) | Earnings per share |
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees, if any.
| (25) | Discontinued operation |
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:
| • | represents a separate major line of business or geographic area of operations; |
| • | is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or |
| • | is a subsidiary acquired only for a purpose of resale. |
When an operation is classified as a discontinued operation, the comparative statements of income and comprehensive income are re-presented as if the operation had been discontinued from the start of the comparative year.
| (26) | Standards issued but not yet effective |
The new and amended standards and interpretations that are issued, but not yet effective for annual period beginning after January 1, 2024 are disclosed below. The following amendments are not expected to have a material impact on the Group’s consolidated financial statements.
| • | Lack of Exchangeability (Amendments to KIFRS 1021 and KIFRS 1101) |
| • | Classification and measurement of financial instruments (Amendments to KIFRS 1109 and KIFRS 1107) |
| • | Annual Improvements to KIFRS - Volume 11 |
43
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 4. | Operating Segments |
The Group’s operating segments have been identified to be each business unit, by which the Group provides different services and merchandise. The Group’s reportable segments include: cellular services, which include cellular voice service, wireless data service and wireless internet services; fixed-line telecommunication services, which include telephone services, internet services, and leased line services; and all other businesses, which include providing shopping channel and digital platform for selling products and other immaterial operations, each of which does not meet the quantitative threshold to be considered as a reportable segment and are presented collectively as others.
| (1) | Segment information for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) |
| |||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||
| Cellular services |
Fixed-line telecommunication services |
Others | Sub-total | Adjustments | Total | |||||||||||||||||||
| Total revenue |
5,271,705 | 614,036 | 20,751,958 | (2,811,349 | ) | 17,940,609 | ||||||||||||||||||
| Inter-segment revenue |
1,548,004 | 1,196,293 | 67,052 | 2,811,349 | (2,811,349 | ) | — | |||||||||||||||||
| External revenue |
13,318,213 | 4,075,412 | 546,984 | 17,940,609 | — | 17,940,609 | ||||||||||||||||||
| Depreciation and amortization |
2,688,764 | 966,904 | 25,824 | 3,681,492 | (121,118 | ) | 3,560,374 | |||||||||||||||||
| Operating profit (loss) |
1,529,971 | 366,517 | (64,929 | ) | 1,831,559 | (8,150 | ) | 1,823,409 | ||||||||||||||||
| Finance income and costs, net |
|
(250,884 | ) | |||||||||||||||||||||
| Gain relating to investments in subsidiaries, associates and joint ventures, net |
|
321,787 | ||||||||||||||||||||||
| Other non-operating income and expense, net |
|
(132,547 | ) | |||||||||||||||||||||
| Profit before income tax |
|
1,761,765 | ||||||||||||||||||||||
| (In millions of won) |
| |||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||
| Cellular services |
Fixed-line telecommunication services |
Others | Sub-total | Adjustments | Total | |||||||||||||||||||
| Total revenue |
5,095,704 | 603,493 | 20,363,377 | (2,754,866 | ) | 17,608,511 | ||||||||||||||||||
| Inter-segment revenue |
1,541,014 | 1,167,684 | 46,168 | 2,754,866 | (2,754,866 | ) | — | |||||||||||||||||
| External revenue |
13,123,166 | 3,928,020 | 557,325 | 17,608,511 | — | 17,608,511 | ||||||||||||||||||
| Depreciation and amortization |
2,743,448 | 971,628 | 24,390 | 3,739,466 | (124,700 | ) | 3,614,766 | |||||||||||||||||
| Operating profit (loss) |
1,463,934 | 329,072 | (42,771 | ) | 1,750,235 | 2,969 | 1,753,204 | |||||||||||||||||
| Finance income and costs, net |
|
(279,025 | ) | |||||||||||||||||||||
| Gain relating to investments in associates and joint ventures, net |
|
10,928 | ||||||||||||||||||||||
| Other non-operating income and expense, net |
|
3,072 | ||||||||||||||||||||||
| Profit before income tax |
|
1,488,179 | ||||||||||||||||||||||
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Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 4. | Operating Segments, Continued |
| 1) | Segment information for the years ended December 31, 2024 and 2023 are as follows, Continued: |
The Group principally operates its businesses in Korea and the revenue amounts earned outside of Korea are immaterial. Therefore, no entity-wide geographical information is presented.
No single customer contributed 10% or more to the Group’s total revenue for the years ended December 31, 2024 and 2023.
| 2) | Disaggregation of operating revenues considering the economic factors that affect the nature, amounts, timing and uncertainty of the Group’s revenue and future cash flows is as follows: |
| (In millions of won) | ||||||||||
| 2024 | 2023 | |||||||||
| Goods and Services transferred at a point in time: |
||||||||||
| Cellular revenue |
Goods and others(*1) | 993,919 | ||||||||
| Fixed-line telecommunication revenue |
Goods and others | 68,836 | 93,174 | |||||||
| Other revenue |
Others(*2) | 468,518 | 459,905 | |||||||
|
|
|
|
|
|||||||
| 1,616,027 | 1,546,998 | |||||||||
|
|
|
|
|
|||||||
| Goods and Services transferred over time: |
||||||||||
| Cellular revenue |
Wireless service(*3) | 10,401,565 | 10,328,980 | |||||||
| Cellular interconnection |
400,516 | 432,660 | ||||||||
| Other(*4) |
1,437,459 | 1,367,607 | ||||||||
| Fixed-line telecommunication revenue |
Fixed-line service | 156,453 | 147,669 | |||||||
| Cellular interconnection |
14,014 | 15,804 | ||||||||
| Internet Protocol Television(*5) |
1,837,199 | 1,837,209 | ||||||||
| International calls |
213,745 | 190,872 | ||||||||
| Internet service and miscellaneous(*6) |
1,785,165 | 1,643,292 | ||||||||
| Other revenue |
Miscellaneous(*2) |
78,466 | 97,420 | |||||||
|
|
|
|
|
|||||||
| 16,324,582 | 16,061,513 | |||||||||
|
|
|
|
|
|||||||
| 17,608,511 | ||||||||||
|
|
|
|
|
|||||||
45
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 4. | Operating Segments, Continued |
| (2) | Disaggregation of operating revenues considering the economic factors that affect the nature, 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 data broadcasting channel use for product sales-type and sales of goods through data broadcasting. |
| (*3) | Wireless service includes revenue from wireless voice and data transmission services principally derived from usage charges to wireless subscribers. |
| (*4) | Other revenue includes revenue from billing and collection services as well as other miscellaneous services. |
| (*5) | Internet Protocol Television (“IPTV”) service revenue includes revenue from IPTV services principally derived from usage charges to IPTV subscribers. |
| (*6) | Internet service includes revenue from the high speed broadband internet service principally derived from usage charges to subscribers as well as other miscellaneous services. |
| 5. | Deposits with Restrictions on Use |
Deposits which are restricted in use as of December 31, 2024 and 2023 are summarized as follows:
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Cash and cash equivalents(*) |
58 | |||||||
| Short-term financial instruments(*) |
79,500 | 79,500 | ||||||
| Long-term financial instruments(*) |
372 | 372 | ||||||
|
|
|
|
|
|||||
| 79,930 | ||||||||
|
|
|
|
|
|||||
| (*) | Includes the charitable trust fund established by the Group, profits from which shall be donated to charitable institutions. As of December 31, 2024, such funds cannot be withdrawn before maturity. |
46
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 6. | Trade and Other Receivables |
| (1) | Details of trade and other receivables as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | December 31, 2024 | |||||||||||
| Gross amount |
Loss allowance |
Carrying amount |
||||||||||
| Current assets: |
||||||||||||
| Accounts receivable – trade |
(258,028 | ) | 1,989,306 | |||||||||
| Short-term loans |
65,767 | (562 | ) | 65,205 | ||||||||
| Accounts receivable – other(*) |
394,820 | (25,628 | ) | 369,192 | ||||||||
| Accrued income |
4,242 | — | 4,242 | |||||||||
| Guarantee deposits (Other current assets) |
119,575 | — | 119,575 | |||||||||
|
|
|
|
|
|
|
|||||||
| 2,831,738 | (284,218 | ) | 2,547,520 | |||||||||
| Non-current assets: |
||||||||||||
| Long-term loans |
75,842 | (41,396 | ) | 34,446 | ||||||||
| Long-term accounts receivable – other(*) |
173,252 | — | 173,252 | |||||||||
| Guarantee deposits |
155,875 | — | 155,875 | |||||||||
| Long-term accounts receivable – trade (Other non-current assets) |
11,078 | (2 | ) | 11,076 | ||||||||
|
|
|
|
|
|
|
|||||||
| 416,047 | (41,398 | ) | 374,649 | |||||||||
|
|
|
|
|
|
|
|||||||
| (325,616 | ) | 2,922,169 | ||||||||||
|
|
|
|
|
|
|
|||||||
| (*) | Gross and carrying amounts of accounts receivable – other as of December 31, 2024 include
|
| (In millions of won) | December 31, 2023 | |||||||||||
| Gross amount |
Loss allowance |
Carrying amount |
||||||||||
| Current assets: |
||||||||||||
| Accounts receivable – trade |
(242,734 | ) | 1,978,532 | |||||||||
| Short-term loans |
78,824 | (695 | ) | 78,129 | ||||||||
| Accounts receivable – other(*) |
375,748 | (31,398 | ) | 344,350 | ||||||||
| Accrued income |
4,295 | — | 4,295 | |||||||||
| Guarantee deposits (Other current assets) |
129,357 | — | 129,357 | |||||||||
|
|
|
|
|
|
|
|||||||
| 2,809,490 | (274,827 | ) | 2,534,663 | |||||||||
| Non-current assets: |
||||||||||||
| Long-term loans |
71,847 | (41,392 | ) | 30,455 | ||||||||
| Long-term accounts receivable – other(*) |
314,409 | (1,878 | ) | 312,531 | ||||||||
| Guarantee deposits |
157,163 | (300 | ) | 156,863 | ||||||||
| Long-term accounts receivable – trade (Other non-current assets) |
12,320 | (3 | ) | 12,317 | ||||||||
|
|
|
|
|
|
|
|||||||
| 555,739 | (43,573 | ) | 512,166 | |||||||||
|
|
|
|
|
|
|
|||||||
| (318,400 | ) | 3,046,829 | ||||||||||
|
|
|
|
|
|
|
|||||||
| (*) | Gross and carrying amounts of accounts receivable – other as of December 31, 2023 include
|
47
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 6. | Trade and Other Receivables, Continued |
| (2) | Changes in the loss allowance on accounts receivable – trade measured at amortized costs for the years ended December 31, 2024 and 2023 are as follows: |
| Beginning balance |
Impairment | Write-offs(*) | Collection of receivables previously written-off |
Ending balance |
||||||||||||||||
| 2024 |
49,865 | (42,662 | ) | 8,090 | 258,030 | |||||||||||||||
| 2023 |
37,906 | (40,236 | ) | 10,144 | 242,737 | |||||||||||||||
| (*) | 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. Details of loss allowance on accounts receivable – trade as of December 31, 2024 are as follows: |
| (In millions of won) | ||||||||||||||||||
| Less than 6 months |
6 months ~ 1 year |
1 ~ 3 years |
More than 3 years |
|||||||||||||||
| Telecommunications service revenue |
Expected credit loss rate |
1.59 | % | 72.27 | % | 89.87 | % | 99.98 | % | |||||||||
| Gross amount |
50,529 | 146,442 | 21,898 | |||||||||||||||
| Loss allowance |
23,652 | 36,516 | 131,613 | 21,893 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
| Other revenue |
Expected credit loss rate |
3.69 | % | 46.00 | % | 54.77 | % | 99.04 | % | |||||||||
| Gross amount |
4,091 | 9,272 | 18,269 | |||||||||||||||
| Loss allowance |
19,303 | 1,882 | 5,078 | 18,093 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
As the Group is a wireless and fixed-line telecommunications service provider, the Group’s financial assets measured at amortized cost primarily consist of receivables from numerous individual customers, therefore, no significant credit concentration risk arises.
Receivables related to other revenue mainly consist of receivables from corporate customers. The Group transacts only with corporate customers with credit ratings that are considered to be low at credit risk. In addition, the Group is not exposed to significant credit concentration risk as the Group regularly assesses their credit risk by monitoring their credit rating. While the contract assets are under the impairment requirements, no significant credit risk has been identified.
48
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 7. | Prepaid expenses |
The Group pays commissions to its retail stores and authorized dealers, primarily for wireless telecommunication services based on their performance of attracting new customers and renewing contracts with existing customers, and recognizes costs that would not occur in case of not signing contracts with new and existing customers as prepaid expenses among the commissions. These prepaid expenses are amortized on a straight-line basis over the periods that the Group expects to maintain its customers.
| (1) | Details of prepaid expenses as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Current assets: |
| |||||||
| Incremental costs of obtaining contracts |
1,882,296 | |||||||
| Others |
64,002 | 71,473 | ||||||
|
|
|
|
|
|||||
| 1,953,769 | ||||||||
|
|
|
|
|
|||||
| Non-current assets: |
| |||||||
| Incremental costs of obtaining contracts |
1,022,813 | |||||||
| Others |
70,236 | 63,294 | ||||||
|
|
|
|
|
|||||
| 1,086,107 | ||||||||
|
|
|
|
|
|||||
| (2) | Incremental costs of obtaining contracts |
The amortization in connection with incremental costs of obtaining contracts recognized as an asset for the years ended December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Amortization recognized |
2,505,724 | |||||||
49
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 8. | Contract Assets and Liabilities |
In case of providing both wireless telecommunication services and sales of handsets, the Group allocated the consideration based on relative stand-alone selling prices and recognized unbilled receivables from handset sales as contract assets. The Group recognized receipts in advance for prepaid telecommunications services and unearned revenue for customer loyalty programs as contract liabilities.
| (1) | Details of contract assets and liabilities as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Contract assets: |
||||||||
| Allocation of consideration between performance obligations |
129,771 | |||||||
| Contract liabilities: |
||||||||
| Wireless service contracts |
20,275 | 19,149 | ||||||
| Customer loyalty programs |
5,694 | 7,164 | ||||||
| Fixed-line service contracts |
151,427 | 146,106 | ||||||
| Others |
52,310 | 40,074 | ||||||
|
|
|
|
|
|||||
| 212,493 | ||||||||
|
|
|
|
|
|||||
| (2) | The amount of revenue recognized for the years ended December 31, 2024 and 2023 related to the contract
liabilities carried forward from the prior periods are |
| (In millions of won) | ||||||||||||||||
| Less than 1 year |
1 ~ 2 years | More than 2 years |
Total | |||||||||||||
| Wireless service contracts |
— | — | 20,275 | |||||||||||||
| Customer loyalty programs |
4,166 | 1,023 | 505 | 5,694 | ||||||||||||
| Fixed-line service contracts |
91,443 | 11,356 | 48,628 | 151,427 | ||||||||||||
| Others |
52,310 | — | — | 52,310 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 12,379 | 49,133 | 229,706 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
50
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 9. | Inventories |
| (1) | Details of inventories as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Acquisition cost |
Valuation allowance |
Carrying amount |
Acquisition cost |
Valuation allowance |
Carrying amount |
|||||||||||||||||||
| Merchandise |
(8,121 | ) | 183,202 | 174,255 | (7,641 | ) | 166,614 | |||||||||||||||||
| Supplies |
26,581 | — | 26,581 | 13,195 | — | 13,195 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (8,121 | ) | 209,783 | 187,450 | (7,641 | ) | 179,809 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (2) | Inventories recognized as operating expenses for the years ended December 31, 2024 and 2023 are
|
| 10. | Long-term Investment Securities |
| (1) | Details of long-term investment securities as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||
| Category | December 31, 2024 | December 31, 2023 | ||||||||||
| Equity instruments |
FVOCI | (*) | 1,398,734 | |||||||||
| FVTPL | — | 8 | ||||||||||
|
|
|
|
|
|||||||||
| 1,739,133 | 1,398,742 | |||||||||||
| Debt instruments |
FVTPL | 138,789 | 280,642 | |||||||||
|
|
|
|
|
|||||||||
| 138,789 | 280,642 | |||||||||||
|
|
|
|
|
|||||||||
| 1,679,384 | ||||||||||||
|
|
|
|
|
|||||||||
| (*) | The Group designated investments in equity instruments that are not held for trading as financial assets at
FVOCI, and the amounts of those equity instruments as of December 31, 2024 and 2023 are |
51
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures |
| (1) | Investments in associates and joint ventures accounted for using the equity method as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | December 31, 2024 | December 31, 2023 | ||||||||||||||||||
| Country | Ownership (%) |
Carrying amount |
Ownership (%) |
Carrying amount |
||||||||||||||||
| Investments in associates: |
||||||||||||||||||||
| SK China Company Ltd. |
China | 27.3 | 27.3 | |||||||||||||||||
| Korea IT Fund(*1) |
Korea | 63.3 | 363,138 | 63.3 | 336,404 | |||||||||||||||
| UniSK |
China | 49.0 | 26,031 | 49.0 | 22,285 | |||||||||||||||
| SK Technology Innovation Company(*2) |
Cayman Islands | 49.0 | 34,516 | 49.0 | 70,409 | |||||||||||||||
| SK MENA Investment B.V. |
Netherlands | 32.1 | 17,273 | 32.1 | 14,872 | |||||||||||||||
| SK Latin America Investment S.A.(*3) |
Spain | 32.1 | 1,357 | 32.1 | 14,607 | |||||||||||||||
| SK South East Asia Investment Pte. Ltd. |
Singapore | 20.0 | 391,572 | 20.0 | 355,282 | |||||||||||||||
| Citadel Pacific Telecom Holdings, LLC (*4) |
USA | 15.0 | 51,780 | 15.0 | 45,901 | |||||||||||||||
| SM Culture & Contents Co., Ltd.(*5) |
Korea | 22.8 | 39,567 | 22.8 | 41,578 | |||||||||||||||
| Nam Incheon Broadcasting Co., Ltd. |
Korea | 27.3 | 15,635 | 27.3 | 14,344 | |||||||||||||||
| Home Choice Corp.(*4) |
Korea | 17.8 | 3,238 | 17.8 | 3,215 | |||||||||||||||
| Konan Technology Inc. |
Korea | 20.6 | 3,575 | 20.7 | 6,349 | |||||||||||||||
| CMES Inc. (*4,6) |
Korea | 6.6 | 4,772 | 7.7 | 900 | |||||||||||||||
| SK telecom Japan Inc.(*7) |
Japan | 24.9 | 3,703 | 33.0 | 1,239 | |||||||||||||||
| Rebellions Inc. (Formerly, SAPEON Korea Inc.)(*8) |
Korea | 26.1 | 298,327 | — | — | |||||||||||||||
| Start-up Win-Win Fund and others(*4,9,10,11,12,13,14,15) |
— | — | 102,702 | — | 81,142 | |||||||||||||||
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|||||||||||||||||
| Investments in joint ventures: |
||||||||||||||||||||
| UTC Kakao-SK Telecom ESG Fund(*16) |
Korea | 48.2 | 9,198 | 48.2 | 9,495 | |||||||||||||||
|
|
|
|
|
|||||||||||||||||
| 9,198 | 9,495 | |||||||||||||||||||
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|||||||||||||||||
52
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (1) | Investments in associates and joint ventures accounted for using the equity method as of December 31, 2024 and 2023 are as follows, Continued: |
| (*1) | Investment in Korea IT Fund was classified as investment in associates as the Group does not have control over the investee under the contractual agreement with other shareholders. |
| (*2) | The Group received |
| (*3) | The Group received |
| (*4) | 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. |
| (*5) | The Group recognized an impairment loss of |
| (*6) | The Group acquired an additional |
| (*7) | The Group contributed an additional |
| (*8) | The Group lost control of SAPEON Korea Inc., which was a subsidiary of the Parent Company, for the year ended December 31, 2024, due to a decreased ownership resulting from the merger between SAPEON Korea Inc. and Rebellions Inc. As a result, the entity was reclassified as an investment in associate for the year ended December 31, 2024. The redeemable convertible preference shares with voting rights of Rebellions Inc. have been issued, and the Group’s ownership interests of voting shares and common shares held by the Group are 26.1%, and 40.5% as of December 31, 2024, respectively. |
| (*9) | The Group contributed an additional |
| (*10) | The Group disposed of a portion of shares in Start-up Win-Win Fund for |
| (*11) | The Group contributed an additional |
53
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (1) | Investments in associates and joint ventures accounted for using the equity method as of December 31, 2024 and 2023 are as follows, Continued: |
| (*12) | The Group reclassified the entire shares of F&U Credit information Co., Ltd. as assets held for sale. (See note 40). |
| (*13) | The Group received |
| (*14) | The Group newly acquired a portion of shares of |
| (*15) | The Group granted Performance Share Units (“PSU”) for executives of associates for the year ended
December 31, 2024, resulting in a cumulative contribution amount to |
| (*16) | This investment was classified as investment in joint venture as the Group has a joint control pursuant to the agreement with the other shareholders. |
| (2) | The market value of investments in listed associates as of December 31, 2024 and 2023 are as follows: |
| (In millions of won, except for share data) | ||||||||||||||||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Market price per share (in won) |
Number of shares |
Market value |
Market price per share (in won) |
Number of shares |
Market value |
|||||||||||||||||||
| SM Culture & Contents Co., Ltd. |
22,033,898 | 30,847 | 1,887 | 22,033,898 | 41,578 | |||||||||||||||||||
| Konan Technology Inc. |
19,470 | 2,359,160 | 45,933 | 32,600 | 2,359,160 | 76,909 | ||||||||||||||||||
| CMES Inc. |
24,000 | 763,968 | 18,335 | — | — | — | ||||||||||||||||||
54
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (3) | The condensed financial information of material associates as of and for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||
| Korea IT Fund |
SK China Company Ltd. |
SK South East Asia Investment Pte. Ltd. |
||||||||||
| As of December 31, 2024 | ||||||||||||
| Current assets |
1,755,237 | 1,724,220 | ||||||||||
| Non-current assets |
409,248 | 1,898,657 | 1,328,952 | |||||||||
| Current liabilities |
— | 48,662 | 342,671 | |||||||||
| Non-current liabilities |
— | 328,485 | 18,430 | |||||||||
| 2024 | ||||||||||||
| Revenue |
71,870 | 119,019 | ||||||||||
| Profit (loss) for the year |
37,187 | 55,448 | (54,649 | ) | ||||||||
| Other comprehensive income (loss)13,006 |
(156,828 | ) | (3,972 | ) | ||||||||
| Total comprehensive income (loss)50,193 |
(101,380 | ) | (58,621 | ) | ||||||||
| (In millions of won) | ||||||||||||
| Korea IT Fund |
SK China Company Ltd. |
SK South East Asia Investment Pte. Ltd. |
||||||||||
| As of December 31, 2023 | ||||||||||||
| Current assets |
1,350,607 | 213,522 | ||||||||||
| Non-current assets |
402,819 | 1,987,252 | 3,034,553 | |||||||||
| Current liabilities |
— | 99,083 | 502,728 | |||||||||
| Non-current liabilities |
— | 252,100 | 13,586 | |||||||||
| 2023 | ||||||||||||
| Revenue |
70,126 | 76,686 | ||||||||||
| Profit (loss) for the year |
16,330 | 87,462 | (66,169 | ) | ||||||||
| Other comprehensive income (loss)5,316 |
5,316 | (56,660 | ) | 2,779 | ||||||||
| Total comprehensive income (loss)21,646 |
21,646 | 30,802 | (63,390 | ) | ||||||||
55
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (4) | Reconciliations of financial information of material associates to carrying amounts of investments in associates in the consolidated financial statements as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Net assets | Ownership interests (%) |
Net assets attributable to the ownership interests |
Cost-book value differentials |
Carrying amount |
||||||||||||||||
| Korea IT Fund |
63.3 | 363,138 | — | 363,138 | ||||||||||||||||
| SK China Company Ltd. |
3,276,747 | 27.3 | 893,609 | 81,834 | 975,443 | |||||||||||||||
| SK South East Asia Investment Pte. Ltd.(*) |
1,957,860 | 20.0 | 391,572 | — | 391,572 | |||||||||||||||
| (In millions of won) | ||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Net assets | Ownership interests (%) |
Net assets attributable to the ownership interests |
Cost-book value differentials |
Carrying amount |
||||||||||||||||
| Korea IT Fund |
63.3 | 336,404 | — | 336,404 | ||||||||||||||||
| SK China Company Ltd. |
2,986,676 | 27.3 | 814,503 | 82,487 | 896,990 | |||||||||||||||
| SK South East Asia Investment Pte. Ltd.(*) |
1,776,411 | 20.0 | 355,282 | — | 355,282 | |||||||||||||||
| (*) | Net assets of these entities represent net assets excluding those attributable to their non-controlling interest. |
56
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (5) | Details of the changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | 2024 | |||||||||||||||||||||||
| Beginning balance |
Acquisition and disposal |
Share of profit (loss) |
Other comprehensive income (loss) |
Other increase (decrease) |
Ending balance |
|||||||||||||||||||
| Investments in associates: |
||||||||||||||||||||||||
| SK China Company Ltd. |
— | 8,913 | 69,540 | — | 975,443 | |||||||||||||||||||
| Korea IT Fund(*1) |
336,404 | — | 23,552 | 8,237 | (5,055 | ) | 363,138 | |||||||||||||||||
| UniSK(*1) |
22,285 | — | 1,430 | 2,815 | (499 | ) | 26,031 | |||||||||||||||||
| SK Technology Innovation Company |
70,409 | — | 4,269 | 8,078 | (48,240 | ) | 34,516 | |||||||||||||||||
| SK MENA Investment B.V. |
14,872 | — | 329 | 2,072 | — | 17,273 | ||||||||||||||||||
| SK Latin America Investment S.A. |
14,607 | — | (65 | ) | 1,268 | (14,453 | ) | 1,357 | ||||||||||||||||
| SK South East Asia Investment Pte. Ltd. |
355,282 | — | (9,403 | ) | 45,693 | — | 391,572 | |||||||||||||||||
| Citadel Pacific Telecom Holdings, LLC (*1) |
45,901 | — | 619 | 6,699 | (1,439 | ) | 51,780 | |||||||||||||||||
| SM Culture & Contents Co., Ltd. |
41,578 | (3 | ) | (1,880 | ) | (128 | ) | — | 39,567 | |||||||||||||||
| Nam Incheon Broadcasting Co., Ltd.(*1) |
14,344 | — | 1,427 | — | (136 | ) | 15,635 | |||||||||||||||||
| Home Choice Corp. |
3,215 | — | 23 | — | — | 3,238 | ||||||||||||||||||
| Konan Technology Inc. |
6,349 | (16 | ) | (2,861 | ) | 103 | — | 3,575 | ||||||||||||||||
| CMES Inc. |
900 | (4,396 | ) | (767 | ) | 51 | 8,984 | 4,772 | ||||||||||||||||
| SK telecom Japan Inc. |
1,239 | 1,560 | (983 | ) | 1,887 | — | 3,703 | |||||||||||||||||
| Rebellions Inc. (Formerly, SAPEON Korea Inc.)(*2) |
— | — | — | — | 298,327 | 298,327 | ||||||||||||||||||
| Start-up Win-Win Fund and others(*1,3,4) |
81,142 | (2,953 | ) | (1,686 | ) | 2,793 | 23,406 | 102,702 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 1,905,517 | (5,808 | ) | 22,917 | 149,108 | 260,895 | 2,332,629 | ||||||||||||||||||
| Investments in joint ventures: |
||||||||||||||||||||||||
| UTC Kakao-SK Telecom ESG Fund |
9,495 | — | (297 | ) | — | — | 9,198 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 9,495 | — | (297 | ) | — | — | 9,198 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (5,808 | ) | 22,620 | 149,108 | 260,895 | 2,341,827 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
57
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (5) | Details of the changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2024 and 2023 are as follows, Continued: |
| (*1) | Dividends received from the associates are deducted from the carrying amount for the year ended December 31, 2024. |
| (*2) | The Group lost control of SAPEON Korea Inc., which was a subsidiary of the Parent Company, for the year ended December 31, 2024, due to a decreased ownership resulting from the merger between SAPEON Korea Inc. and Rebellions Inc. As a result, the entity was reclassified as an investment in associate for the year ended December 31, 2024. |
| (*3) | The acquisition for the year ended December 31, 2024 includes |
| (*4) | The Group reclassified the entire shares of F&U Credit information Co., Ltd. as assets held for sale. (See note 40). |
58
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (5) | Details of the changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2024 and 2023 are as follows, Continued: |
| (In millions of won) | 2023 | |||||||||||||||||||||||
| Beginning balance |
Acquisition and disposal |
Share of profit (loss) |
Other comprehensive income (loss) |
Other increase (decrease) |
Ending balance |
|||||||||||||||||||
| Investments in associates: |
||||||||||||||||||||||||
| SK China Company Ltd. |
— | 24,054 | (6,591 | ) | — | 896,990 | ||||||||||||||||||
| Korea IT Fund(*1) |
324,860 | — | 10,343 | 3,366 | (2,165 | ) | 336,404 | |||||||||||||||||
| UniSK(*1) |
20,839 | — | 2,079 | 102 | (735 | ) | 22,285 | |||||||||||||||||
| SK Technology Innovation Company |
69,375 | — | (178 | ) | 1,212 | — | 70,409 | |||||||||||||||||
| SK MENA Investment B.V. |
14,296 | — | 335 | 241 | — | 14,872 | ||||||||||||||||||
| SK Latin America Investment S.A. |
11,961 | — | 1,974 | 672 | — | 14,607 | ||||||||||||||||||
| SK South East Asia Investment Pte. Ltd. |
357,537 | — | (12,881 | ) | 10,626 | — | 355,282 | |||||||||||||||||
| Citadel Pacific Telecom Holdings, LLC (*1) |
48,542 | — | 2,628 | 637 | (5,906 | ) | 45,901 | |||||||||||||||||
| SM Culture & Contents Co., Ltd.(*2) |
59,611 | (679 | ) | 593 | 808 | (18,755 | ) | 41,578 | ||||||||||||||||
| Nam Incheon Broadcasting Co., Ltd.(*1) |
13,575 | — | 905 | — | (136 | ) | 14,344 | |||||||||||||||||
| Home Choice Corp. |
4,456 | — | (1,241 | ) | — | — | 3,215 | |||||||||||||||||
| Konan Technology Inc. |
8,366 | (44 | ) | (2,100 | ) | 127 | — | 6,349 | ||||||||||||||||
| CMES Inc. |
900 | — | — | — | — | 900 | ||||||||||||||||||
| SK telecom Japan Inc.(*3) |
— | — | — | — | 1,239 | 1,239 | ||||||||||||||||||
| 12CM JAPAN and others(*1,4) |
69,734 | 8,706 | 5,108 | (2,264 | ) | (142 | ) | 81,142 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 1,883,579 | 7,983 | 31,619 | 8,936 | (26,600 | ) | 1,905,517 | ||||||||||||||||||
| Investments in joint ventures: |
||||||||||||||||||||||||
| UTC Kakao-SK Telecom ESG Fund |
5,710 | 4,000 | (215 | ) | — | — | 9,495 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 5,710 | 4,000 | (215 | ) | — | — | 9,495 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 11,983 | 31,404 | 8,936 | (26,600 | ) | 1,915,012 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||||||
59
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (5) | Details of the changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2024 and 2023 are as follows, Continued: |
| (*1) | Dividends received from the associates are deducted from the carrying amount for the year ended December 31, 2023. |
| (*2) | The Group recognized |
| (*3) | The Group disposed of a portion of shares in SK telecom Japan Inc., which was a subsidiary of the Parent Company, resulting in the reclassification of the remaining shares as an investment in associates for the year ended December 2023. |
| (*4) | The acquisition for the year ended December 31, 2023 includes |
60
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 11. | Investments in Associates and Joint Ventures, Continued |
| (6) | 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 December 31, 2024 are as follows: |
| ((In millions of won) | Unrecognizedloss | Unrecognized change in equity | ||||||||||||||
| 2024 | Cumulative loss |
2024 | Cumulative loss |
|||||||||||||
| Invites Genomics Co., Ltd. (Formerly, Invites Healthcare Co., Ltd.) |
22,178 | 107 | 1,286 | |||||||||||||
| Daehan Kanggun BcN Co., Ltd. and others |
— | 5,187 | — | (124 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 27,365 | 107 | 1,162 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 12. | Property and Equipment |
| (1) | Property and equipment as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | December 31, 2024 | |||||||||||||||
| Acquisition cost | Accumulated depreciation |
Accumulated impairment loss |
Carrying amount |
|||||||||||||
| Land |
— | — | 1,260,712 | |||||||||||||
| Buildings |
1,822,695 | (1,056,427 | ) | (450 | ) | 765,818 | ||||||||||
| Structures |
955,360 | (742,772 | ) | (1,601 | ) | 210,987 | ||||||||||
| Machinery |
38,191,687 | (30,457,696 | ) | (11,425 | ) | 7,722,566 | ||||||||||
| Other |
1,631,503 | (1,262,496 | ) | — | 369,007 | |||||||||||
| Right-of-use assets |
2,645,207 | (1,036,988 | ) | — | 1,608,219 | |||||||||||
| Construction in progress |
681,010 | — | (925 | ) | 680,085 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (34,556,379 | ) | (14,401 | ) | 12,617,394 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (In millions of won) | December 31, 2023 | |||||||||||||||
| Acquisition cost | Accumulated depreciation |
Accumulated impairment loss |
Carrying amount |
|||||||||||||
| Land |
— | — | 1,248,200 | |||||||||||||
| Buildings |
1,775,563 | (1,001,721 | ) | (450 | ) | 773,392 | ||||||||||
| Structures |
941,868 | (705,388 | ) | (1,601 | ) | 234,879 | ||||||||||
| Machinery |
37,688,793 | (29,796,000 | ) | (2,139 | ) | 7,890,654 | ||||||||||
| Other |
1,757,617 | (1,271,597 | ) | (863 | ) | 485,157 | ||||||||||
| Right-of-use assets |
2,549,003 | (933,567 | ) | (3,485 | ) | 1,611,951 | ||||||||||
| Construction in progress |
761,963 | — | — | 761,963 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (33,708,273 | ) | (8,538 | ) | 13,006,196 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
61
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 12. | Property and Equipment, Continued |
| (2) | Changes in property and equipment for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||
| Beginning balance |
Acquisition | Disposal | Transfer(*) | Deprecia- tion |
Impairment | Changes in consolidation scope |
Ending balance |
|||||||||||||||||||||||||
| Land |
101 | (2,213 | ) | 14,624 | — | — | — | 1,260,712 | ||||||||||||||||||||||||
| Buildings |
773,392 | 3,785 | (1,279 | ) | 46,479 | (56,559 | ) | — | — | 765,818 | ||||||||||||||||||||||
| Structures |
234,879 | 1,574 | (78 | ) | 13,408 | (37,997 | ) | — | (799 | ) | 210,987 | |||||||||||||||||||||
| Machinery |
7,890,654 | 517,884 | (23,253 | ) | 1,616,265 | (2,267,720 | ) | (11,025 | ) | (239 | ) | 7,722,566 | ||||||||||||||||||||
| Other |
485,157 | 390,130 | (12,131 | ) | (408,675 | ) | (84,179 | ) | (10 | ) | (1,285 | ) | 369,007 | |||||||||||||||||||
| Right-of-use assets |
1,611,951 | 523,494 | (90,734 | ) | (26,271 | ) | (407,338 | ) | (33 | ) | (2,850 | ) | 1,608,219 | |||||||||||||||||||
| Construction in progress |
761,963 | 1,441,907 | (5,030 | ) | (1,517,830 | ) | — | (925 | ) | — | 680,085 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 2,878,875 | (134,718 | ) | (262,000 | ) | (2,853,793 | ) | (11,993 | ) | (5,173 | ) | 12,617,394 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (In millions of won) | ||||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||
| Beginning balance |
Acquisition | Disposal | Transfer | Deprecia- tion |
Impairment | Ending balance |
||||||||||||||||||||||
| Land |
12 | (388 | ) | 242,719 | — | — | 1,248,200 | |||||||||||||||||||||
| Buildings |
785,225 | 1,083 | (294 | ) | 41,516 | (54,138 | ) | — | 773,392 | |||||||||||||||||||
| Structures |
265,656 | 1,632 | (198 | ) | 6,446 | (38,657 | ) | — | 234,879 | |||||||||||||||||||
| Machinery |
7,912,900 | 553,541 | (7,267 | ) | 1,734,474 | (2,302,789 | ) | (205 | ) | 7,890,654 | ||||||||||||||||||
| Other |
497,394 | 554,595 | (1,205 | ) | (476,097 | ) | (89,506 | ) | (24 | ) | 485,157 | |||||||||||||||||
| Right-of-use assets |
1,786,129 | 345,761 | (86,069 | ) | (23,436 | ) | (410,032 | ) | (402 | ) | 1,611,951 | |||||||||||||||||
| Construction in progress |
1,069,331 | 1,554,922 | (26 | ) | (1,862,264 | ) | — | — | 761,963 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 3,011,546 | (95,447 | ) | (336,642 | ) | (2,895,122 | ) | (631 | ) | 13,006,196 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*) | The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co.,
Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the property and equipment amounting to |
62
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
As of December 31, 2024 and 2023
| 13. | Investment Property |
| (1) | Investment property as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Acquisition cost |
Accumulated depreciation |
Carrying amount |
Acquisition cost |
Accumulated depreciation |
Carrying amount |
|||||||||||||||||||
| Land |
— | 9,787 | 14,199 | — | 14,199 | |||||||||||||||||||
| Buildings |
23,010 | (14,981 | ) | 8,029 | 27,462 | (17,220 | ) | 10,242 | ||||||||||||||||
| Right-of-use assets |
16,518 | (7,723 | ) | 8,795 | 16,975 | (6,604 | ) | 10,371 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (22,704) | 26,611 | 58,636 | (23,824) | 34,812 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (2) | Changes in investment property for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||
| 2024 | ||||||||||||||||
| Beginning balance |
Transfer(*) | Depreciation | Ending balance |
|||||||||||||
| Land |
(4,412 | ) | — | 9,787 | ||||||||||||
| Buildings |
10,242 | (1,143 | ) | (1,070 | ) | 8,029 | ||||||||||
| Right-of-use assets |
10,371 | 73 | (1,649 | ) | 8,795 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (5,482 | ) | (2,719 | ) | 26,611 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (In millions of won) | ||||||||||||||||
| 2023 | ||||||||||||||||
| Beginning balance |
Transfer | Depreciation | Ending balance |
|||||||||||||
| Land |
8,084 | — | 14,199 | |||||||||||||
| Buildings |
6,884 | 5,343 | (1,985 | ) | 10,242 | |||||||||||
| Right-of-use assets |
12,138 | 473 | (2,240 | ) | 10,371 | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 13,900 | (4,225 | ) | 34,812 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (*) | The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co.,
Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the investment property amounting to |
| (3) | The Group recognized lease income of |
| (4) | The fair value of investment property is |
63
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
As of December 31, 2024 and 2023
| 14. | Leases |
| (1) | Group as a lessee |
| 1) | Details of the right-of-use assets as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Right-of-use assets: |
||||||||
| Land, buildings and structures |
1,376,721 | |||||||
| Others |
228,797 | 235,230 | ||||||
|
|
|
|
|
|||||
| 1,611,951 | ||||||||
|
|
|
|
|
|||||
| 2) | Details of amounts recognized in the consolidated statements of income for the years ended December 31, 2024 and 2023 as a lessee are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Depreciation of right-of-use assets: |
||||||||
| Land, buildings and structures |
346,931 | |||||||
| Others(*) |
64,177 | 63,101 | ||||||
|
|
|
|
|
|||||
| 410,032 | ||||||||
|
|
|
|
|
|||||
| Interest expense on lease liabilities |
46,595 | |||||||
| (*) | Others include the amount reclassified as research and development expenses related to the lease contract for research and development facilities. |
Expenses related to short-term leases and leases of low-value assets that the Group recognized are immaterial.
3) The total cash outflows due to lease
payments for the years ended December 31, 2024 and 2023 amounted to WW
64
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 14. | Leases, Continued |
| (2) | Group as a lessor |
1) Finance lease
The Group
recognized interest income of WW
The following table sets out a maturity analysis for lease receivables, presenting the undiscounted lease payments to be received subsequent to December 31, 2024.
| (In millions of won) | ||||
| Amount | ||||
| Less than 1 year |
||||
| 1 ~ 2 years |
4,012 | |||
| 2 ~ 3 years |
2,544 | |||
| 3 ~ 4 years |
1,411 | |||
| 4 ~ 5 years |
391 | |||
|
|
|
|||
| Undiscounted lease payments |
||||
|
|
|
|||
| Unrealized finance income |
||||
| Net investment in the lease |
20,589 | |||
2) Operating lease
The Group recognized lease income of WWWW
The following table sets out a maturity analysis of lease payments, presenting the undiscounted fixed payments to be received subsequent to December 31, 2024.
| (In millions of won) | ||||
| Amount | ||||
| Less than 1 year |
||||
| 1 ~ 2 years |
72,437 | |||
| 2 ~ 3 years |
39,704 | |||
| 3 ~ 4 years |
118 | |||
| 4 ~ 5 years |
113 | |||
| More than 5 years |
2,250 | |||
|
|
|
|||
|
|
|
|||
65
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 15. | Goodwill |
| (1) | Goodwill as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 |
December 31, 2023 |
|||||||
| Goodwill related to merger of Shinsegi Telecom, Inc. |
1,306,236 | |||||||
| Goodwill related to acquisition of SK Broadband Co., Ltd. |
764,082 | 764,082 | ||||||
| Other goodwill |
2,175 | 4,691 | ||||||
|
|
|
|
|
|||||
| 2,075,009 | ||||||||
|
|
|
|
|
|||||
| (2) | Details of the impairment testing of Goodwill as of December 31, 2024 is as follows: |
Goodwill is allocated to the following CGUs for the purpose of impairment testing.
| • | goodwill related to Shinsegi Telecom, Inc.(*1): Cellular services; |
| • | goodwill related to SK Broadband Co., Ltd.(*2): Fixed-line telecommunication services; and |
| • | other goodwill: Others. |
| (*1) | Goodwill related to merger of Shinsegi Telecom, Inc. |
The recoverable amount of the CGU is based on its value in use calculated by applying the post-tax annual discount rate of 5.2% (2023: 5.4%) (pre-tax annual discount rate for 2024 and 2023: 7.0% and 8.4%) to the estimated future post-tax cash flows based on financial budgets for the next five years. An annual growth rate of 0.0% (2023: 0.0%) was applied for the cash flows expected to be incurred after five years and is not expected to exceed the long-term wireless telecommunication industry growth rate.
| (*2) | Goodwill related to acquisition of SK Broadband Co., Ltd. |
The recoverable amount of the CGU is based on its value in use calculated by applying the post-tax annual discount rate of 6.0% (2023: 6.2%) (pre-tax annual discount rate for 2024 and 2023: 7.6% and 7.9%) to the estimated future post-tax cash flows based on financial budgets for the next five years. An annual growth rate of 1.0% (2023: 1.0%) was applied for the cash flows expected to be incurred after five years and is not expected to exceed the long-term fixed-line telecommunication industry growth rate.
| (3) | Details of the changes in goodwill for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Beginning balance |
2,075,009 | |||||||
| Reclassified as assets held for sale(*) |
(2,516 | ) | — | |||||
|
|
|
|
|
|||||
| Ending balance |
2,075,009 | |||||||
|
|
|
|
|
|||||
| (*) | The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co.,
Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the goodwill amounting to |
As of December 31, 2024 and 2023, accumulated impairment losses are WW
66
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
As of December 31, 2024 and 2023
| 16. | Intangible Assets |
| (1) | Intangible assets as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | December 31, 2024 | |||||||||||||||
| Acquisition cost |
Accumulated amortization |
Accumulated impairment loss |
Carrying amount |
|||||||||||||
| Frequency usage rights(*1) |
(2,429,361 | ) | — | 1,135,546 | ||||||||||||
| Land usage rights |
54,341 | (54,032 | ) | — | 309 | |||||||||||
| Industrial rights |
98,265 | (33,092 | ) | (45,000 | ) | 20,173 | ||||||||||
| Development costs |
2,960 | (2,933 | ) | — | 27 | |||||||||||
| Facility usage rights |
161,561 | (148,247 | ) | — | 13,314 | |||||||||||
| Customer relations |
505,062 | (258,943 | ) | — | 246,119 | |||||||||||
| Club memberships(*2) |
93,266 | — | (14,648 | ) | 78,618 | |||||||||||
| Other(*3) |
5,029,153 | (4,284,644 | ) | (43,744 | ) | 700,765 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (7,211,252 | ) | (103,392 | ) | 2,194,871 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (In millions of won) | December 31, 2023 | |||||||||||||||
| Acquisition cost |
Accumulated amortization |
Accumulated impairment loss |
Carrying amount |
|||||||||||||
| Frequency usage rights(*1) |
(1,958,301 | ) | — | 1,606,606 | ||||||||||||
| Land usage rights |
57,106 | (56,519 | ) | — | 587 | |||||||||||
| Industrial rights |
97,993 | (34,141 | ) | (17,698 | ) | 46,154 | ||||||||||
| Development costs |
14,815 | (14,766 | ) | — | 49 | |||||||||||
| Facility usage rights |
159,891 | (145,578 | ) | — | 14,313 | |||||||||||
| Customer relations |
505,063 | (231,913 | ) | — | 273,150 | |||||||||||
| Club memberships(*2) |
121,895 | — | (24,709 | ) | 97,186 | |||||||||||
| Other(*3) |
4,851,168 | (4,020,886 | ) | (7,190 | ) | 823,092 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (6,462,104 | ) | (49,597 | ) | 2,861,137 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (*1) | The Parent Company was reassigned 800 MHz, 1.8 GHz and 2.1 GHz band of frequency licenses from the Ministry of
Science and Information and Communication Technology (“ICT”) in exchange for |
| (*2) | Club memberships are classified as intangible assets with indefinite useful lives and are not amortized. |
| (*3) | Other intangible assets primarily consist of computer software and others. |
67
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 16. | Intangible Assets, Continued |
| (2) | Changes in intangible assets for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) |
| |||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||
| Beginning balance |
Acquisition | Disposal | Transfer (*2) |
Amortization | Impairment (*1) |
Changes in consolidation scope |
Ending balance |
|||||||||||||||||||||||||
| Frequency usage rights |
— | — | — | (471,060 | ) | — | — | 1,135,546 | ||||||||||||||||||||||||
| Land usage rights |
587 | 69 | (5 | ) | — | (342 | ) | — | — | 309 | ||||||||||||||||||||||
| Industrial rights |
46,154 | 6,578 | (241 | ) | (1 | ) | (4,962 | ) | (27,340 | ) | (15 | ) | 20,173 | |||||||||||||||||||
| Development costs |
49 | — | — | — | (22 | ) | — | — | 27 | |||||||||||||||||||||||
| Facility usage rights |
14,313 | 1,477 | (3 | ) | 618 | (3,091 | ) | — | — | 13,314 | ||||||||||||||||||||||
| Customer relations |
273,150 | — | — | — | (27,031 | ) | — | — | 246,119 | |||||||||||||||||||||||
| Club memberships |
97,186 | 3,700 | (20,065 | ) | (1,727 | ) | — | (476 | ) | — | 78,618 | |||||||||||||||||||||
| Other |
823,092 | 61,598 | (1,596 | ) | 209,702 | (336,870 | ) | (54,927 | ) | (234 | ) | 700,765 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 73,422 | (21,910 | ) | 208,592 | (843,378 | ) | (82,743 | ) | (249 | ) | 2,194,871 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (*1) | The Group recognized the difference between recoverable amount and the carrying amount of intangible assets
amounting to |
| (*2) | The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co.,
Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the intangible assets amounting to |
| (In millions of won) |
| |||||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||||||
| Beginning balance |
Acquisition | Disposal | Transfer | Amortization | Impairment (*1) |
Ending balance |
||||||||||||||||||||||
| Frequency usage rights |
— | — | — | (475,826 | ) | — | 1,606,606 | |||||||||||||||||||||
| Land usage rights |
1,224 | 155 | (15 | ) | 40 | (817 | ) | — | 587 | |||||||||||||||||||
| Industrial rights |
51,792 | 4,563 | (350 | ) | — | (4,530 | ) | (5,321 | ) | 46,154 | ||||||||||||||||||
| Development costs |
284 | — | — | — | (234 | ) | (1 | ) | 49 | |||||||||||||||||||
| Facility usage rights |
14,997 | 1,884 | (16 | ) | 981 | (3,533 | ) | — | 14,313 | |||||||||||||||||||
| Customer relations |
300,181 | — | — | — | (27,031 | ) | — | 273,150 | ||||||||||||||||||||
| Club memberships |
91,971 | 7,619 | (2,174 | ) | 65 | — | (295 | ) | 97,186 | |||||||||||||||||||
| Other |
782,029 | 91,848 | (1,752 | ) | 294,567 | (339,478 | ) | (4,122 | ) | 823,092 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 106,069 | (4,307 | ) | 295,653 | (851,449 | ) | (9,739 | ) | 2,861,137 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*1) | The Group recognized the difference between recoverable amount and the carrying amount of intangible assets
amounting to |
68
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 16. | Intangible Assets, Continued |
| (3) | Research and development expenditures recognized as expense for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) |
||||||||
| 2024 | 2023 | |||||||
| Research and development costs expensed as incurred |
369,507 | |||||||
| (4) | Details of frequency usage rights as of December 31, 2024 are as follows: |
| (In millions of won) | ||||||||||
| Amount | Description |
Commencement of amortization |
Completion of amortization | |||||||
| 800MHz license |
LTE service | Jul. 2021 | Jun. 2026 | |||||||
| 1.8GHz license |
202,751 | LTE service | Dec. 2021 | Dec. 2026 | ||||||
| 2.6GHz license |
242,830 | LTE service | Sep. 2016 | Dec. 2026 | ||||||
| 2.1GHz license |
152,378 | W-CDMA and LTE service | Dec. 2021 | Dec. 2026 | ||||||
| 3.5GHz license |
471,714 | 5G service | Apr. 2019 | Nov. 2028 | ||||||
|
|
|
|||||||||
|
|
|
|||||||||
| 17. | Borrowings and Debentures |
| (1) | Short-term borrowings as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||
| Lender |
Annual interest rate (%) |
Maturity | December 31, 2024 |
December 31, 2023 |
||||||||||||
| SK Securities Co., Ltd. |
3.62 | Oct. 2, 2025 | — | |||||||||||||
| Shinhan Securities Co., Ltd. |
3.62 | Oct. 2, 2025 | 50,000 | — | ||||||||||||
|
|
|
|
|
|||||||||||||
| — | ||||||||||||||||
|
|
|
|
|
|||||||||||||
69
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 17. | Borrowings and Debentures, Continued |
| (2) | Long-term borrowings as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||
| Lender |
Annual interest rate (%) |
Maturity |
December 31, 2024 |
December 31, 2023 |
||||||||||
| Korea Development Bank(*1) |
1.87 | Feb. 10, 2026 | 28,125 | |||||||||||
| Mizuho bank, Ltd. |
1.35 | May. 20, 2024 | — | 100,000 | ||||||||||
| DBS bank Ltd. |
1.32 | May. 28, 2024 | — | 200,000 | ||||||||||
| DBS bank Ltd. |
2.63 | Mar. 10, 2025 | 200,000 | 200,000 | ||||||||||
| Credit Agricole CIB |
3.30 | Apr. 29, 2024 | — | 50,000 | ||||||||||
| Credit Agricole CIB |
4.89 | Nov. 28, 2025 | 50,000 | 50,000 | ||||||||||
| Mizuho Bank, Ltd.(*2) |
3M CD + 1.05 | Jul. 25, 2025 | 50,000 | 50,000 | ||||||||||
| Nonghyup Bank(*3) |
MOR + 1.36 | Nov. 17, 2024 | — | 40,000 | ||||||||||
| DBS bank Ltd.(*2) |
3M CD + 0.075 | Oct. 8, 2026 | 200,000 | — | ||||||||||
|
|
|
|
|
|||||||||||
| 515,625 | 718,125 | |||||||||||||
| Less: present value discount |
(25 | ) | (47 | ) | ||||||||||
|
|
|
|
|
|||||||||||
| 515,600 | 718,078 | |||||||||||||
| Less: current portions |
(312,475 | ) | (402,500 | ) | ||||||||||
|
|
|
|
|
|||||||||||
| 315,578 | ||||||||||||||
|
|
|
|
|
|||||||||||
| (*1) | The long-term borrowings are to be repaid by installments on an annual basis from 2022 to 2026. |
| (*2) | 3M CD rates are 3.41% and 3.83% as of December 31, 2024 and 2023, respectively. |
| (*3) | 6M MOR rates are 3.33% and 3.85% as of December 31, 2024 and 2023, respectively. |
70
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 17. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2024 and 2023 are as follows: |
| (In millions of won and thousands of U.S. dollars) | ||||||||||||||
| Purpose |
Maturity |
Annual interest rate |
December 31, 2024 |
December 31, 2023 |
||||||||||
| Unsecured corporate bonds |
Operating fund | 2032 | 3.45 | 90,000 | ||||||||||
| Unsecured corporate bonds |
2033 | 3.22 | 130,000 | 130,000 | ||||||||||
| Unsecured corporate bonds |
2024 | 3.64 | — | 150,000 | ||||||||||
| Unsecured corporate bonds |
Refinancing fund | 2024 | 2.82 | — | 190,000 | |||||||||
| Unsecured corporate bonds |
Operating and refinancing fund |
2025 | 2.49 | 150,000 | 150,000 | |||||||||
| Unsecured corporate bonds |
||||||||||||||
| Unsecured corporate bonds |
Operating fund | 2030 | 2.61 | 50,000 | 50,000 | |||||||||
| Unsecured corporate bonds |
2025 | 2.66 | 70,000 | 70,000 | ||||||||||
| Unsecured corporate bonds |
2030 | 2.82 | 90,000 | 90,000 | ||||||||||
| Unsecured corporate bonds |
Refinancing fund | 2025 | 2.55 | 100,000 | 100,000 | |||||||||
| Unsecured corporate bonds |
2035 | 2.75 | 70,000 | 70,000 | ||||||||||
| Unsecured corporate bonds |
Operating fund | 2026 | 2.08 | 90,000 | 90,000 | |||||||||
| Unsecured corporate bonds |
2036 | 2.24 | 80,000 | 80,000 | ||||||||||
| Unsecured corporate bonds |
2026 | 1.97 | 120,000 | 120,000 | ||||||||||
| Unsecured corporate bonds |
2031 | 2.17 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
Refinancing fund | 2027 | 2.55 | 100,000 | 100,000 | |||||||||
| Unsecured corporate bonds |
Operating and refinancing fund |
2032 | 2.65 | 90,000 | 90,000 | |||||||||
| Unsecured corporate bonds |
Refinancing fund | 2027 | 2.84 | 100,000 | 100,000 | |||||||||
| Unsecured corporate bonds |
Operating fund | 2028 | 3.00 | 200,000 | 200,000 | |||||||||
| Unsecured corporate bonds |
2038 | 3.02 | 90,000 | 90,000 | ||||||||||
| Unsecured corporate bonds |
2038 | 2.44 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
2024 | 2.09 | — | 120,000 | ||||||||||
| Unsecured corporate bonds |
2029 | 2.19 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
2039 | 2.23 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
Refinancing fund | 2024 | 1.49 | — | 60,000 | |||||||||
| Unsecured corporate bonds |
Operating and refinancing fund |
2029 | 1.50 | 120,000 | 120,000 | |||||||||
| Unsecured corporate bonds |
||||||||||||||
| Unsecured corporate bonds |
Refinancing fund | 2039 | 1.52 | 50,000 | 50,000 | |||||||||
| Unsecured corporate bonds |
2049 | 1.56 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
Operating fund | 2024 | 1.76 | — | 70,000 | |||||||||
| Unsecured corporate bonds |
2029 | 1.79 | 40,000 | 40,000 | ||||||||||
| Unsecured corporate bonds |
2039 | 1.81 | 60,000 | 60,000 | ||||||||||
| Unsecured corporate bonds |
2025 | 1.75 | 130,000 | 130,000 | ||||||||||
| Unsecured corporate bonds |
2030 | 1.83 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
2040 | 1.87 | 70,000 | 70,000 | ||||||||||
71
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 17. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2024 and 2023 are as follows, Continued: |
| (In millions of won and thousands of U.S. dollars) | ||||||||||||||
| Purpose |
Maturity |
Annual interest rate |
December 31, 2024 |
December 31, 2023 |
||||||||||
| Unsecured corporate bonds |
Refinancing fund | 2025 | 1.40 | 140,000 | 140,000 | |||||||||
| Unsecured corporate bonds |
2030 | 1.59 | 40,000 | 40,000 | ||||||||||
| Unsecured corporate bonds |
2040 | 1.76 | 110,000 | 110,000 | ||||||||||
| Unsecured corporate bonds |
2024 | 1.17 | — | 80,000 | ||||||||||
| Unsecured corporate bonds |
2026 | 1.39 | 80,000 | 80,000 | ||||||||||
| Unsecured corporate bonds |
2031 | 1.80 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
2041 | 1.89 | 100,000 | 100,000 | ||||||||||
| Unsecured corporate bonds |
2024 | 2.47 | — | 90,000 | ||||||||||
| Unsecured corporate bonds |
2026 | 2.69 | 70,000 | 70,000 | ||||||||||
| Unsecured corporate bonds |
2041 | 2.68 | 40,000 | 40,000 | ||||||||||
| Unsecured corporate bonds |
2025 | 3.80 | 240,000 | 240,000 | ||||||||||
| Unsecured corporate bonds |
2027 | 3.84 | 70,000 | 70,000 | ||||||||||
| Unsecured corporate bonds |
2042 | 3.78 | 40,000 | 40,000 | ||||||||||
| Unsecured corporate bonds |
2025 | 4.00 | 300,000 | 300,000 | ||||||||||
| Unsecured corporate bonds |
2027 | 4.00 | 95,000 | 95,000 | ||||||||||
| Unsecured corporate bonds |
2024 | 4.79 | — | 100,000 | ||||||||||
| Unsecured corporate bonds |
2025 | 4.73 | 110,000 | 110,000 | ||||||||||
| Unsecured corporate bonds |
2027 | 4.74 | 60,000 | 60,000 | ||||||||||
| Unsecured corporate bonds |
2032 | 4.69 | 40,000 | 40,000 | ||||||||||
| Unsecured corporate bonds |
2026 | 3.65 | 110,000 | 110,000 | ||||||||||
| Unsecured corporate bonds |
2028 | 3.83 | 190,000 | 190,000 | ||||||||||
| Unsecured corporate bonds |
2026 | 3.72 | 80,000 | 80,000 | ||||||||||
| Unsecured corporate bonds |
2028 | 3.80 | 200,000 | 200,000 | ||||||||||
| Unsecured corporate bonds |
2030 | 3.96 | 70,000 | 70,000 | ||||||||||
| Unsecured corporate bonds |
2026 | 4.54 | 115,000 | 115,000 | ||||||||||
| Unsecured corporate bonds |
2028 | 4.68 | 100,000 | 100,000 | ||||||||||
| Unsecured corporate bonds |
2030 | 4.72 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds |
2033 | 4.72 | 30,000 | 30,000 | ||||||||||
| Unsecured corporate bonds |
2027 | 3.72 | 180,000 | — | ||||||||||
| Unsecured corporate bonds |
2029 | 3.73 | 110,000 | — | ||||||||||
| Unsecured corporate bonds |
2034 | 3.92 | 110,000 | — | ||||||||||
| Unsecured corporate bonds |
2027 | 2.91 | 170,000 | — | ||||||||||
| Unsecured corporate bonds |
2029 | 2.92 | 90,000 | — | ||||||||||
| Unsecured corporate bonds |
2034 | 2.96 | 40,000 | — | ||||||||||
| Unsecured corporate bonds(*1) |
2024 | 2.09 | — | 160,000 | ||||||||||
| Unsecured corporate bonds(*1) |
Operating and refinancing fund |
2024 | 1.71 | — | 100,000 | |||||||||
| Unsecured corporate bonds(*1) |
2026 | 1.86 | 50,000 | 50,000 | ||||||||||
| Unsecured corporate bonds(*1) |
2025 | 1.64 | 100,000 | 100,000 | ||||||||||
| Unsecured corporate bonds(*1) |
Refinancing fund | 2025 | 1.41 | 160,000 | 160,000 | |||||||||
| Unsecured corporate bonds(*1) |
2024 | 1.69 | — | 100,000 | ||||||||||
| Unsecured corporate bonds(*1) |
2025 | 2.58 | 100,000 | 100,000 | ||||||||||
| Unsecured corporate bonds(*1) |
2032 | 2.92 | 50,000 | 50,000 | ||||||||||
72
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 17. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2024 and 2023 are as follows, Continued: |
| (In millions of won and thousands of U.S. dollars) | ||||||||||||||
| Purpose |
Maturity |
Annual interest rate |
December 31, 2024 |
December 31, 2023 |
||||||||||
| Unsecured corporate bonds(*1) |
Operating and refinancing fund |
2025 | 4.21 | 50,000 | 50,000 | |||||||||
| Unsecured corporate bonds(*1) |
2026 | 4.28 | 100,000 | 100,000 | ||||||||||
| Unsecured corporate bonds(*1) |
2028 | 4.37 | 90,000 | 90,000 | ||||||||||
| Unsecured corporate bonds(*1) |
Facility fund | 2026 | 4.87 | 100,000 | 100,000 | |||||||||
| Unsecured corporate bonds(*1) |
2028 | 5.00 | 60,000 | 60,000 | ||||||||||
| Unsecured corporate bonds(*1) |
Refinancing fund | 2027 | 3.89 | 170,000 | — | |||||||||
| Unsecured corporate bonds(*1) |
2029 | 3.93 | 60,000 | — | ||||||||||
| Unsecured corporate bonds(*1) |
Facility and Refinancing fund |
2027 | 3.06 | 130,000 | — | |||||||||
| Unsecured corporate bonds(*1) |
2029 | 3.06 | 115,000 | — | ||||||||||
| Unsecured corporate bonds(*1) |
2031 | 3.11 | 50,000 | — | ||||||||||
| Unsecured global bonds |
Operating fund | 2027 | 6.63 | |
588,000 (USD 400,000) |
|
|
515,760 (USD 400,000) |
| |||||
| Unsecured global bonds(*1) |
Refinancing fund | 2028 | 4.88 | |
441,000 (USD 300,000) |
|
|
386,820 (USD 300,000) |
| |||||
| Floating rate notes(*2) |
Operating fund | 2025 | SOFR rate + 1.17 |
|
441,000 (USD 300,000) |
|
|
386,820 (USD 300,000) |
| |||||
| Convertible bonds(*3) |
2028 | — | |
4,410 (USD 3,000) |
|
|
3,868 (USD 3,000) |
| ||||||
| Convertible bonds(*3) |
2028 | — | — | |
3,868 (USD 3,000) |
| ||||||||
| Convertible bonds(*3) |
2028 | — | — | |
2,579 (USD 2,000) |
| ||||||||
| Convertible bonds(*3) |
2028 | — | — | |
10,444 (USD 8,100) |
| ||||||||
| Convertible bonds(*3) |
2028 | — | |
23,741 (USD 16,150) |
|
|
20,824 (USD 16,150) |
| ||||||
| Convertible bonds(*3) |
2028 | — | |
11,392 (USD 7,750) |
|
|
9,993 (USD 7,750) |
| ||||||
| Convertible bonds(*3) |
2028 | — | |
11,760 (USD 8,000) |
|
|
10,315 (USD 8,000) |
| ||||||
|
|
|
|
|
|||||||||||
| 8,526,303 | 8,351,291 | |||||||||||||
| Less: discounts on bond |
(15,023) | (25,648) | ||||||||||||
|
|
|
|
|
|||||||||||
| 8,511,280 | 8,325,643 | |||||||||||||
| Less: current portions of bonds |
(2,147,634) | (1,219,344) | ||||||||||||
|
|
|
|
|
|||||||||||
| 7,106,299 | ||||||||||||||
|
|
|
|
|
|||||||||||
73
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 17. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2024 and 2023 are as follows, Continued: |
(*1) Unsecured corporate bonds were issued by SK Broadband Co., Ltd., a subsidiary of the Parent Company.
(*2) Applied interest rates are SOFR rate of 4.49% and 5.38% as of December 31, 2024 and 2023, respectively.
(*3) Convertible bonds were issued by SAPEON Inc., a subsidiary of the Parent Company, and the conditions for issuing convertible bonds and changes are as follows:
| 1) | As of December 31, 2024, the conditions for issuing convertible bonds are as follows: |
| (In millions of won and thousands of U.S. dollars) | ||||||||||||||||
| Series | ||||||||||||||||
| 1 | 5 | 6 | 7 | |||||||||||||
| Total amount of convertible bonds authorized |
|
4,410 (USD 3,000) |
|
|
23,741 (USD 16,150) |
|
|
11,392 (USD 7,750) |
|
|
11,760 (USD 8,000) |
| ||||
| Coupon rate |
|
0% (However, if not converted, 4% from January 1, 2025, to three years from the issue date, and 8% thereafter until the maturity of the convertible bonds) |
| |||||||||||||
| Repayment of interest and principal |
|
Lump-sum repayment at maturity with accrued interest added to the issued amount |
| |||||||||||||
| Convertible period |
Until the maturity date or the mandatory conversion date | |||||||||||||||
| Type of shares to be issued upon conversion |
|
Registered common stock or securities identical to subsequent investments |
| |||||||||||||
| Conversion ratio |
100% | |||||||||||||||
| Conversion price (In U.S. dollars) |
USD 410.22 per share | |||||||||||||||
| Early redemption right |
|
Exercisable from January 1, 2025, in case of non-fulfillment of certain conditions |
| |||||||||||||
The conversion rights of the aforementioned convertible bonds are classified as equity.
| 2) | The carrying amount of changes in the liability component (present value of non-convertible bonds) of the convertible bonds for the year ended December 31, 2024 are as follows |
| (In millions of won and thousands of U.S. dollars) | ||||
| 2024 | ||||
| Beginning balance |
|
59,235 (USD 45,939) |
| |
| Repayment |
|
18,778 (USD 14,230) |
| |
| Amortization based on effective interest rate |
|
17,279 (USD 7,567) |
| |
|
|
|
|||
| Ending balance |
|
57,736 (USD 39,276) |
| |
|
|
|
|||
The liability component of convertible bonds (present value of non-convertible bonds) is measured at amortized cost using the effective interest rate.
74
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 18. | Long-term Payables – other |
| (1) | As of December 31, 2024 and 2023, details of long-term payables – other which consist of payables related to the acquisition of frequency usage rights are as follows (See note 16): |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Long-term payables – other |
1,290,225 | |||||||
| Present value discount on long-term payables – other |
(13,355 | ) | (29,772 | ) | ||||
| Current portion of long-term payables – other |
(367,765 | ) | (367,770 | ) | ||||
|
|
|
|
|
|||||
| Carrying amount as of December 31 |
892,683 | |||||||
|
|
|
|
|
|||||
| (2) | The sum of portions repaid among the principal of long-term payables – other for the years ended
December 31, 2024 and 2023 amounts to |
| (In millions of won) | ||||
| Amount | ||||
| Less than 1 year |
||||
| 1 ~ 3 years |
460,538 | |||
| 3 ~ 5 years |
91,387 | |||
|
|
|
|||
|
|
|
|||
75
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 19. | Provisions |
Changes in provisions for the years ended December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||||||||||||||||||||||||||||||
| 2024 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||
| Beginning balance |
Increase | Utilization | Reversal | Changes in consolidation scope |
Other(*) | Ending balance |
Current | Non-current | ||||||||||||||||||||||||||||
| Provision for restoration |
6,475 | (3,555 | ) | (1,053 | ) | (351 | ) | (1,917 | ) | 119,623 | 49,579 | 70,044 | ||||||||||||||||||||||||
| Emission allowance |
1,182 | 1,410 | (130 | ) | (2,025 | ) | — | — | 437 | 437 | — | |||||||||||||||||||||||||
| Other provisions |
218 | — | — | (218 | ) | — | — | — | — | — | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| 7,885 | (3,685 | ) | (3,296 | ) | (351 | ) | (1,917 | ) | 120,060 | 50,016 | 70,044 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| (*) | Other includes amounts reclassified as liabilities held for sale for the year ended December 31, 2024. |
| (In millions of won) | ||||||||||||||||||||||||||||||||
| 2023 | As of December 31, 2023 | |||||||||||||||||||||||||||||||
| Beginning balance |
Increase | Utilization | Reversal | Other | Ending balance |
Current | Non-current | |||||||||||||||||||||||||
| Provision for restoration |
8,041 | (2,397 | ) | (714 | ) | 5 | 120,024 | 37,073 | 82,951 | |||||||||||||||||||||||
| Emission allowance |
2,186 | 2,404 | (635 | ) | (2,773 | ) | — | 1,182 | 1,182 | — | ||||||||||||||||||||||
| Other provisions |
1,823 | — | (1,005 | ) | (108 | ) | (492 | ) | 218 | — | 218 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| 10,445 | (4,037 | ) | (3,595 | ) | (487 | ) | 121,424 | 38,255 | 83,169 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
76
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 20. | Defined Benefit Liabilities (Assets) |
| (1) | Details of defined benefit liabilities (assets) as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Present value of defined benefit obligations |
1,121,679 | |||||||
| Fair value of plan assets |
(1,294,567 | ) | (1,292,416 | ) | ||||
|
|
|
|
|
|||||
| Defined benefit assets(*) |
(154,329 | ) | (170,737 | ) | ||||
|
|
|
|
|
|||||
| Defined benefit liabilities |
2,086 | — | ||||||
|
|
|
|
|
|||||
| (*) | Since the 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) | Principal actuarial assumptions as of December 31, 2024 and 2023 are as follows: |
| December 31, 2024 | December 31, 2023 | |||
| Discount rate for defined benefit obligations | 3.35% ~ 4.24% | 3.71% ~ 4.79% | ||
| Expected rate of salary increase | 2.00% ~ 5.42% | 2.00% ~ 5.27% |
Discount rate for defined benefit obligation is determined based on market yields of high-quality corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of salary increase is determined based on the Group’s historical promotion index, inflation rate and salary increase ratio.
| (3) | Changes in present value of defined benefit obligations for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Beginning balance |
1,038,320 | |||||||
| Current service cost |
130,538 | 132,465 | ||||||
| Interest cost |
47,463 | 54,032 | ||||||
| Remeasurement |
||||||||
| - Demographic assumption |
(761 | ) | 810 | |||||
| - Financial assumption |
49,788 | (24,953 | ) | |||||
| - Adjustment based on experience |
(15,085 | ) | 18,814 | |||||
| Benefit paid |
(157,801 | ) | (99,396 | ) | ||||
| Past service cost |
6,795 | — | ||||||
| Changes in consolidation scope |
(2,458 | ) | — | |||||
| Others(*) |
(37,834 | ) | 1,587 | |||||
|
|
|
|
|
|||||
| Ending balance |
1,121,679 | |||||||
|
|
|
|
|
|||||
| (*) | Others include changes in liabilities due to employees’ transfers among affiliates and reclassification as liabilities held for sale for the years ended December 31, 2024 and 2023. |
77
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 20. | Defined Benefit Liabilities (Assets), Continued |
| (4) | Changes in fair value of plan assets for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Beginning balance |
1,214,007 | |||||||
| Interest income |
54,215 | 62,058 | ||||||
| Remeasurement |
729 | (2,140 | ) | |||||
| Contributions |
124,921 | 108,224 | ||||||
| Benefit paid |
(131,031 | ) | (90,452 | ) | ||||
| Changes in consolidation scope |
(2,151 | ) | — | |||||
| Others(*) |
(44,532 | ) | 719 | |||||
|
|
|
|
|
|||||
| Ending balance |
1,292,416 | |||||||
|
|
|
|
|
|||||
| (*) | Others include changes in assets due to employees’ transfers among affiliates and reclassification as assets held for sale for the years ended December 31, 2024 and 2023. |
The Group’s expected contributions to
the defined benefit plan for the year ended December 31, 2025, amounts to W
| (5) | Total cost of defined benefit plan, which is recognized in profit or loss for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Current service cost |
132,465 | |||||||
| Net interest income |
(6,752 | ) | (8,026 | ) | ||||
| Past service cost |
6,795 | — | ||||||
|
|
|
|
|
|||||
| 124,439 | ||||||||
|
|
|
|
|
|||||
Costs related to the defined benefit plan except for the amounts transferred to construction in progress are included in labor expenses and research and development expenses.
| (6) | Details of plan assets as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Equity instruments |
72,619 | |||||||
| Debt instruments |
394,138 | 162,374 | ||||||
| Short-term financial instruments, etc. |
833,245 | 1,057,423 | ||||||
|
|
|
|
|
|||||
| 1,292,416 | ||||||||
|
|
|
|
|
|||||
78
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 20. | Defined Benefit Liabilities (Assets), Continued |
| (7) | Sensitivity analysis |
As of December 31, 2024, effects on defined benefit obligations if each of significant actuarial assumptions changes within expectable and reasonable range are as follows:
| (In millions of won) | ||||||||
| 0.5% Increase | 0.5% Decrease | |||||||
| Discount rate |
42,443 | |||||||
| Expected salary increase rate |
42,433 | (40,047 | ) | |||||
The sensitivity analysis does not consider dispersion of all cash flows that are expected from the plan but provides approximate values of sensitivity for the assumptions used.
A weighted average duration of defined benefit obligations as of December 31, 2024 and 2023 are 7.46 years and 7.27 years, respectively.
| (8) | Defined contribution plan |
The amount recognized as an expense for defined contribution plans are WW
| 21. | Derivative Instruments |
| (1) | Currency and interest rate swap contracts under cash flow hedge accounting as of December 31, 2024 are as follows: |
| (In millions of won, thousands of foreign currencies) | ||||||||
| Borrowing |
Hedging Instrument (Hedged item) |
Hedged risk |
Financial institution |
Duration of | ||||
| Jul. 20, 2007 | Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000) |
Foreign currency risk | Morgan Stanley and four other banks | Jul. 20, 2007 ~ Jul. 20, 2027 | ||||
| Mar. 4, 2020 | Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000) |
Foreign currency risk and interest rate risk | Citibank | Mar. 4, 2020 ~ Jun. 4, 2025 | ||||
| Jun. 28, 2023 | Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 300,000) |
Foreign currency risk | Citi bank, Shinhan Bank, Korea Development Bank and J.P. Morgan |
Jun. 28, 2023 ~ Jun. 28, 2028 | ||||
| Oct. 7, 2024 | Floating-to-fixed interest rate swap (Korean won borrowing amounting to KRW 200,000) |
Interest rate risk | DBS Bank Ltd | Oct. 10, 2024 ~ Oct. 8, 2026 | ||||
As of December 31, 2024, the changes in fair value of derivatives designated as hedging instrument, which are all effective in hedging, were recognized in full in other comprehensive income.
79
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 21. | Derivative Instruments, Continued |
| (2) | SK Broadband Co., Ltd., a subsidiary of the Parent Company, entered into Total Return Swap(TRS) contract
amounting to |
| (3) | In relation to the business acquisition by SK Broadband Co., Ltd. during the year ended December 31, 2020,
the Parent Company has entered into a shareholders’ agreement with the shareholders of the acquirees on November 13, 2024. Pursuant to the shareholders’ agreement, the Parent Company entered into a share purchase agreement to purchase
24.76% of the shares of SK Broadband Co., Ltd. for |
| (4) | The Parent Company has entered into the agreement with HAEGIN Co., Ltd., whereby the Parent Company has been granted contingent subscription right to acquire HAEGIN Co., Ltd.’s common stock for the year ended December 31, 2022. The Parent Company is able to exercise the right in accordance with the agreement when certain conditions are met. There is no balance for derivative financial assets as of December 31, 2024. |
| (5) | SAPEON Inc., a subsidiary of the Parent Company, disposed of a portion of shares of Rebellions Inc. (formerly,
SAPEON Korea Inc.) for the year ended December 31, 2024, and entered into a Price Return Swap (PRS) in which the buyer receives the difference between the amount of sale and the settlement amount when selling the shares. The Parent Company
recognized a long-term derivative financial liability of |
80
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 21. | Derivative Instruments, Continued |
| (6) | The fair value of derivative financial instruments to which the Group applies cash flow hedging is recorded in the consolidated financial statements as derivative financial assets, long-term derivative financial assets, and long-term derivative financial liabilities. As of December 31, 2024, details of fair values of the derivative assets and liabilities are as follows: |
| (In millions of won, thousands of foreign currencies) | ||||||||
| Hedging instrument (Hedged item) |
Cash flow hedge |
Fair value |
||||||
| Non-current assets: |
||||||||
| Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000) |
148,172 | |||||||
| Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 300,000) |
41,975 | 41,975 | ||||||
| Current assets: |
||||||||
| Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000) |
80,650 | |||||||
|
|
|
|
|
|||||
| 270,797 | ||||||||
|
|
|
|
|
|||||
| Non-current liabilities: |
||||||||
| Floating-to-fixed interest rate swap (Korean won borrowing amounting to KRW 200,000) |
(748 | ) | ||||||
|
|
|
|
|
|||||
| (748 | ) | |||||||
|
|
|
|
|
|||||
As of December 31, 2024, the changes in fair value of derivatives designated as hedging instrument, which are all effective in hedging, were recognized in full in other comprehensive income.
| (7) | The fair value of derivatives held for trading is recorded in the consolidated financial statements as derivative financial assets, long-term financial assets, and long-term derivative financial liabilities. As of December 31, 2024, details of fair values of the derivative assets and liabilities are as follows: |
| (In millions of won) | ||||||||
| Held for trading |
Fair value | |||||||
| Current assets: |
||||||||
| Contract for difference settlement |
38,850 | |||||||
| Non-current assets: |
||||||||
| Contract for difference settlement |
31,461 | 31,461 | ||||||
|
|
|
|
|
|||||
| 70,311 | ||||||||
|
|
|
|
|
|||||
| Non-current liabilities: |
||||||||
| Price Return Swap (PRS) |
(2,689 | ) | ||||||
|
|
|
|
|
|||||
| (2,689 | ) | |||||||
|
|
|
|
|
|||||
81
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 22. | Share Capital and Capital Surplus and Others |
| (1) | Details of share capital as of December 31, 2024 and 2023 are as follows: |
| (In millions of won, except for share data) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Number of authorized shares |
670,000,000 | 670,000,000 | ||||||
| Par value (in won) |
100 | |||||||
| Number of issued shares |
214,790,053 | 218,833,144 | ||||||
| Share capital: |
||||||||
| Common share(*) |
30,493 | |||||||
| (*) | In 2002, 2003 and 2024, the Parent Company retired treasury shares with reduction of its retained earnings before appropriation. As a result, the Group’s issued shares have decreased without change in share capital. |
| (2) | Changes in issued shares for the years ended December 31, 2024 and 2023 are as follows: |
| (In shares) | ||||||||
| 2024 | 2023 | |||||||
| Issued shares as of January 1 |
218,833,144 | 218,833,144 | ||||||
| Retirement of treasury shares(*) |
(4,043,091 | ) | — | |||||
|
|
|
|
|
|||||
| Issued shares as of December 31 |
214,790,053 | 218,833,144 | ||||||
|
|
|
|
|
|||||
| (*) | The Parent Company retired 4,043,091 treasury shares with reduction of its retained earnings before appropriation for the year ended December 31, 2024. |
| (3) | Details of shares outstanding as of December 31, 2024 and 2023 are as follows: |
| (In shares) | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||
| Issued shares |
Treasury shares |
Outstanding shares |
Issued shares |
Treasury shares |
Outstanding shares |
|||||||||||||||||||
| Shares outstanding |
214,790,053 | 1,903,711 | 212,886,342 | 218,833,144 | 6,133,414 | 212,699,730 | ||||||||||||||||||
| (4) | Details of capital surplus and others as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Paid-in surplus |
1,771,000 | |||||||
| Treasury shares (Note 23) |
(92,962 | ) | (301,981 | ) | ||||
| Hybrid bonds (Note 24) |
398,509 | 398,509 | ||||||
| Share option (Note 25) |
14,498 | 9,818 | ||||||
| Others(*) |
(14,045,981 | ) | (13,705,990 | ) | ||||
|
|
|
|
|
|||||
| (11,828,644 | ) | |||||||
|
|
|
|
|
|||||
| (*) | 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. |
82
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 23. | Treasury Shares |
| (1) | Treasury shares as of December 31, 2024 and 2023 are as follows: |
| (In millions of won, except for the number of shares) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Number of shares |
1,903,711 | 6,133,414 | ||||||
| Acquisition cost |
301,981 | |||||||
| (2) | Changes in treasury shares for the years ended December 31, 2024 and 2023 are as follows: |
| (In shares) | ||||||||
| 2024 | 2023 | |||||||
| Treasury shares as of January 1 |
6,133,414 | 801,091 | ||||||
| Acquisition(*1) |
317,000 | 5,773,410 | ||||||
| Disposal(*2) |
(503,612 | ) | (441,087 | ) | ||||
| Retirement of treasury shares(*3) |
(4,043,091 | ) | — | |||||
|
|
|
|
|
|||||
| Treasury shares as of December 31 |
1,903,711 | 6,133,414 | ||||||
|
|
|
|
|
|||||
| (*1) | The Parent Company acquired 317,000 of its treasury shares for
|
| (*2) | The Parent Company distributed 503,612 treasury shares (acquisition cost:
|
| (*3) | The Parent Company retired 4,043,091 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 year ended December 31, 2024. |
83
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 24. | Hybrid Bonds |
Hybrid bonds classified as equity as of December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||||||||||||||||||
| Type | Issuance date | Maturity(*1) | Annual interest rate(%)(*2) |
December 31, 2024 |
December 31, 2023 |
|||||||||||||||||||
| Series 3 hybrid bonds |
|
Unsecured subordinated bearer bond |
|
June 5, 2023 | June 5, 2083 | 4.95 | 400,000 | |||||||||||||||||
| Issuance costs |
(1,491 | ) | (1,491 | ) | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| 398,509 | ||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
The Parent Company redeemed previously issued hybrid bonds and issued new ones for the year ended December 31, 2023. As there is no contractual obligation to deliver financial assets to the holders of hybrid bonds, the Parent Company classified the hybrid bonds as equity.
These are subordinated bonds that rank before common shares in the event of a liquidation or reorganization of the Parent Company.
| (*1) | The Parent Company has a right to extend the maturity without any notice or announcement. |
| (*2) | Annual interest rate is determined as yield rate of 5-year national bond plus premium. According to the step-up clause, additional premium of 0.25% and 0.75%, respectively, after 10 years and 25 years from the issuance date are applied. |
84
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 25. | Share based payment Arrangement |
| 25.1 | Share-based payment arrangement of the Parent Company |
| (1) | The terms and conditions related to the grants of the share-based payment arrangement are as follows: |
| 1) | Share-based payment arrangement with cash alternatives |
| Series | ||||||||||||||||
| 5 | 6 | 7-1(*) | 7-2(*) | |||||||||||||
| Grant date |
March 26, 2020 | |
March 25, 2021 |
|
|
March 25, 2022 |
| |||||||||
| Types of shares to be issued |
Registered common shares | |||||||||||||||
| Grant method |
Reissue of treasury shares, Cash settlement | |||||||||||||||
| Number of shares (in share) |
370,355 | 71,726 | 98,425 | 96,820 | ||||||||||||
| Exercise price (in won) |
38,452 | 50,276 | 56,860 | 56,860 | ||||||||||||
| Exercise period |
|
Mar. 27, 2023 ~ Mar. 26, 2027 |
|
|
Mar. 26, 2023 ~ Mar. 25, 2026 |
|
|
Mar. 26, 2025 ~ Mar. 25, 2029 |
|
|
Mar. 26, 2024 ~ Mar. 25, 2027 |
| ||||
| Vesting conditions |
|
3 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 |
| ||||
| (*) | For the year ended December 31, 2024, 196,850 shares of stock options granted in the 7 th -1 series and 12,884 shares of stock options granted in the 7 th -2 series were canceled. |
For the year ended December 31, 2024, the entire amount of remaining stock options granted in the 4 th series and some portions of stock options granted in the 3 rd, 5th, and 6 th series were exercised, and the entire amount of remaining stock options granted in the 1 st -3 and 3 rd series was fully forfeited.
| 2) | Cash-settled share-based payment arrangement |
| Granted in 2022 | ||
| Share appreciation rights of SK Telecom Co., Ltd. | ||
| Grant date |
January 1, 2022 | |
| Grant method |
Cash settlement | |
| Number of shares (in share) |
338,525 | |
| Exercise price (in won) |
56,860 | |
| Exercise period |
Jan. 1, 2024 ~ Mar. 25, 2025 | |
| Vesting conditions |
2 years’ service from the grant date |
The entire amount of remaining share appreciation rights for shares of SK Telecom Co., Ltd. and SK Square Co., Ltd. granted in 2021 was fully exercised for the year ended December 31, 2024.
85
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 25. | Share based payment Arrangement, Continued |
| 25.1 | Share-based payment arrangement of the Parent Company, Continued: |
| (1) | The terms and conditions related to the grants of the share-based payment arrangement are as follows, Continued: |
| 3) | Equity-settled share-based payment arrangement |
The Parent Company newly established Performance Share Units (“PSU”) for executives of the Parent Company and major subsidiaries as part of the compensation based on the growth of corporate value for the year ended December 31, 2024, and the details are as follows:
|
PSU of SK Telecom Co., Ltd. | ||||
| Grant date |
March 28, 2023 | March 26, 2024 | ||
| Types of shares to be issued |
Registered common shares of the Parent Company | |||
| Grant method |
Reissue of treasury shares | |||
| Number of shares(*) |
Fluctuates according to the share price on the expiration date and the cumulative increase rate of KOSPI200 | |||
| Reference share price (in won) |
47,280 | 52,720 | ||
| Reference index (KOSPI200) |
315 | 362 | ||
| Maturity (exercise date) |
The day in which the annual general meeting of shareholders is held after 3 years from the grant date | |||
| Vesting conditions |
Full service in the year in which the grant date is included | |||
| (*) | The initial amount granted is a total of |
86
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 25. | Share based payment Arrangement, Continued |
| 25.1 | Share-based payment arrangement of the Parent Company, Continued: |
| (2) | Share compensation expense for share-based payment arrangements with cash alternatives recognized for the year ended December 31, 2024 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, 2023 |
||||
| For the year ended December 31, 2024 |
846 | |||
| In subsequent periods |
— | |||
|
|
|
|||
|
|
|
|||
The liabilities recognized by the Parent Company in relation to the share-based payment arrangement with cash
alternatives are WW
As of December 31, 2024 and 2023, the carrying amount of liabilities recognized by the Parent Company in relation to the cash-settled
share-based payment arrangement are WW
Share compensation expenses recognized for equity-settled share-based payment arrangements are
WW
87
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 25. | Share based payment Arrangement, Continued |
| 25. 1 | Share-based payment arrangement of the Parent Company, Continued: |
| (3) | The Parent Company used option-pricing models, including the binomial model, on the measurement of the fair value of the share options at the remeasurement date and the inputs used in the model are as follows: |
| 1) | Share-based payment arrangement with cash alternatives |
(i) SK Telecom Co., Ltd.
| (In won) | Series | |||||||||||||||
| 5 | 6 | 7-1 | 7-2 | |||||||||||||
| Risk-free interest rate |
2.74 | % | 2.73 | % | 2.81 | % | 2.74 | % | ||||||||
| Estimated option’s life |
7 years | 5 years | 7 years | 5 years | ||||||||||||
| Share price on the remeasurement date |
55,200 | 55,200 | 55,200 | 55,200 | ||||||||||||
| Expected volatility |
16.50 | % | 16.50 | % | 16.50 | % | 16.50 | % | ||||||||
| Expected dividends yield |
6.41 | % | 6.41 | % | 6.41 | % | 6.41 | % | ||||||||
| Exercise price |
38,452 | 50,276 | 56,860 | 56,860 | ||||||||||||
| Per-share fair value of the option |
16,748 | 5,668 | 3,820 | 3,080 | ||||||||||||
(ii) SK Square Co., Ltd.
| (In won) | Series | |||||||
| 5 | 6 | |||||||
| Risk-free interest rate |
1.52 | % | 1.55 | % | ||||
| Estimated option’s life |
7 years | 5 years | ||||||
| Share price (Closing price on the preceding day) |
34,900 | 49,800 | ||||||
| Expected volatility |
8.10 | % | 25.70 | % | ||||
| Expected dividends yield |
5.70 | % | 4.00 | % | ||||
| Exercise price |
38,452 | 50,276 | ||||||
| Per-share fair value of the option |
192 | 8,142 | ||||||
88
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 25. | Share based payment Arrangement, Continued |
| 25. 1 | Share-based payment arrangement of the Parent Company, Continued: |
| (3) | The Parent Company used option-pricing models, including the binomial model, on the measurement of the fair value of the share options at the remeasurement date and the inputs used in the model are as follows, Continued: |
| 2) | Cash-settled share-based payment arrangement |
| (In won) | Granted in 2022 | |||
| Share appreciation rights of SK Telecom Co., Ltd. |
||||
| Risk-free interest rate |
2.87 | % | ||
| Estimated option’s life |
3.25 years | |||
| Share price on the remeasurement date |
55,200 | |||
| Expected volatility |
16.50 | % | ||
| Expected dividends yield |
6.41 | % | ||
| Exercise price |
56,860 | |||
| Per-share fair value of the option |
902 | |||
| 3) | Equity-settled share-based payment arrangement |
| (In won) | Granted in 2023 PSU of SK Telecom Co., Ltd. |
Granted in 2024 PSU of SK Telecom Co., Ltd. |
||||||
| Risk-free interest rate |
3.26 | % | 3.30 | % | ||||
| Estimated option’s life |
3 years | 3 years | ||||||
| Share price on the grant date |
48,500 | 54,100 | ||||||
| Expected volatility |
18.67 | % | 15.90 | % | ||||
| Expected dividends yield |
4.90 | % | 5.40 | % | ||||
| Per-share fair value of the option |
27,525 | 25,920 | ||||||
89
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 25. | Share based payment Arrangement, Continued |
| 25.2 | Share-based payment arrangement by SAPEON Inc., a subsidiary of the Parent Company |
| (1) | The terms and conditions related to the grants of the share-based payment arrangement are as follows: |
| Series | ||||||||
| 1-1 | 1-2 | 2 | ||||||
| Grant date |
February 28, 2023 | November 13, 2023 | ||||||
| Types of shares to be issued |
Registered common shares of SAPEON Inc. | |||||||
| Grant method |
Issuance of shares | |||||||
| Number of shares (in share) |
800 | 21,050 | 600 | |||||
| Exercise price (in U.S. dollars) |
100.0 | |||||||
| Exercise period(*) |
Jan. 4, 2024 ~ Jan. 4, 2032 |
Apr. 1, 2024 ~ Apr. 1, 2032 |
|
Feb. 1, 2025 ~ Feb. 1, 2033 |
| |||
| Vesting conditions |
2 years’ service from the commencement date, 50% 3 years’ service from the commencement date, 25% 4 years’ service from the commencement date, 25% |
| ||||||
| (*) | The exercise periods vary as vesting periods for each share-based payment arrangement are different. The exercise period was disclosed based on the vesting period with the highest number of grants. |
| (2) | Share compensation expense for share-based payment arrangements for the year ended December 31, 2024 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, 2023 |
||||
| For the year ended December 31, 2024 |
402 | |||
| In subsequent periods |
— | |||
|
|
|
|||
|
|
|
|||
| (3) | SAPEON Inc., a subsidiary of the Parent Company, used binomial option pricing model 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 U.S. dollars) | ||||||||||||
| 1-1 | 1-2 | 2 | ||||||||||
| Risk-free interest rate |
4.18 | % | 4.16 | % | 4.67 | % | ||||||
| Estimated option’s life |
5.18 years | 5.42 years | 5.55 years | |||||||||
| Underlying share price |
107.8 | 107.8 | 118.1 | |||||||||
| Expected volatility |
43.50 | % | 43.00 | % | 43.00 | % | ||||||
| Expected dividends yield |
0.00 | % | 0.00 | % | 0.00 | % | ||||||
| Exercise price |
100.0 | 100.0 | 100.0 | |||||||||
| Per-share fair value of the option |
50.7 | 51.4 | 61.4 | |||||||||
90
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 26. | Retained Earnings |
| (1) | Retained earnings as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Appropriated: |
||||||||
| Legal reserve |
22,320 | |||||||
| Reserve for business expansion |
9,981,138 | 9,831,138 | ||||||
| Reserve for technology development |
4,715,300 | 4,565,300 | ||||||
|
|
|
|
|
|||||
| 14,696,438 | 14,396,438 | |||||||
| Unappropriated |
8,257,369 | 8,381,223 | ||||||
|
|
|
|
|
|||||
| 22,799,981 | ||||||||
|
|
|
|
|
|||||
| (2) | Legal reserve |
The Korean Commercial Act requires the Parent Company to appropriate as a legal reserve at least 10% of cash dividends paid for each accounting period until the reserve equals 50% of outstanding share capital. The legal reserve may not be utilized for cash dividends, but may only be used to offset a future deficit, if any, or may be transferred to share capital.
| 27. | Reserves |
| (1) | Details of reserves, net of taxes, as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Valuation gain on FVOCI |
176,208 | |||||||
| Other comprehensive income of investments in associates and joint ventures |
315,283 | 182,702 | ||||||
| Valuation loss on derivatives |
(8,044 | ) | (1,488 | ) | ||||
| Foreign currency translation differences for foreign operations |
77,047 | 29,794 | ||||||
|
|
|
|
|
|||||
| 387,216 | ||||||||
|
|
|
|
|
|||||
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 27. | Reserves, Continued |
| (2) | Changes in reserves for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||
| Valuation gain on financial assets at FVOCI |
Other comprehensive income of investments in associates and joint ventures |
Valuation gain (loss) on derivatives |
Foreign currency translation differences for foreign operations |
Total | ||||||||||||||||
| Balance as of January 1, 2023 |
173,477 | 14,463 | 30,012 | 391,233 | ||||||||||||||||
| Changes, net of taxes |
2,927 | 9,225 | (15,951 | ) | (218 | ) | (4,017 | ) | ||||||||||||
| Balance as of December 31, 2023 |
182,702 | (1,488 | ) | 29,794 | 387,216 | |||||||||||||||
| Balance as of January 1, 2024 |
182,702 | (1,488 | ) | 29,794 | 387,216 | |||||||||||||||
| Changes, net of taxes |
86,449 | 132,581 | (6,556 | ) | 47,253 | 259,727 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Balance as of December 31, 2024 |
315,283 | (8,044 | ) | 77,047 | 646,943 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (3) | Changes in valuation gain (loss) on financial assets at FVOCI for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Balance as of January 1 |
173,281 | |||||||
| Amount recognized as other comprehensive income (loss) for the year, net of taxes |
11,262 | (18,883 | ) | |||||
| Amount reclassified to retained earnings, net of taxes |
75,187 | 21,810 | ||||||
|
|
|
|
|
|||||
| Balance as of December 31 |
176,208 | |||||||
|
|
|
|
|
|||||
| (4) | Changes in valuation gain (loss) on derivatives for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Balance as of January 1 |
14,463 | |||||||
| Amount recognized as other comprehensive income (loss) for the year, net of taxes |
(12,636 | ) | (18,725 | ) | ||||
| Amount reclassified to profit, net of taxes |
6,080 | 2,774 | ||||||
|
|
|
|
|
|||||
| Balance as of December 31 |
(1,488 | ) | ||||||
|
|
|
|
|
|||||
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 28. | Other Operating Expenses |
Details of other operating expenses for the years ended December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Communication |
32,238 | |||||||
| Utilities |
547,204 | 511,240 | ||||||
| Taxes and dues |
44,888 | 29,009 | ||||||
| Repair |
438,089 | 431,964 | ||||||
| Research and development |
378,079 | 369,507 | ||||||
| Training |
30,949 | 39,286 | ||||||
| Bad debt for accounts receivable - trade |
49,865 | 37,906 | ||||||
| Travel |
19,090 | 22,499 | ||||||
| Supplies and other |
116,920 | 130,330 | ||||||
|
|
|
|
|
|||||
| 1,603,979 | ||||||||
|
|
|
|
|
|||||
| 29. | Other Non-Operating Income and Expenses |
Details of other non-operating income and expenses for the years ended December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Other non-operating income: |
||||||||
| Gain on disposal of property and equipment and intangible assets |
21,898 | |||||||
| Others |
34,972 | 28,468 | ||||||
|
|
|
|
|
|||||
| 50,366 | ||||||||
|
|
|
|
|
|||||
| Other non-operating expenses: |
||||||||
| Loss on impairment of property and equipment and intangible assets |
10,369 | |||||||
| Loss on disposal of property and equipment and intangible assets |
17,427 | 9,369 | ||||||
| Donations |
15,712 | 14,766 | ||||||
| Bad debt for accounts receivable – other |
4,838 | 5,256 | ||||||
| Others |
72,122 | 7,534 | ||||||
|
|
|
|
|
|||||
| 47,294 | ||||||||
|
|
|
|
|
|||||
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 30. | Finance Income and Costs |
| (1) | Details of finance income and costs for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Finance income: |
||||||||
| Interest income |
70,055 | |||||||
| Dividends |
35,818 | 43,014 | ||||||
| Gain on foreign currency transactions |
32,260 | 19,065 | ||||||
| Gain on foreign currency translations |
9,344 | 1,199 | ||||||
| Gain relating to financial instruments at FVTPL |
190,368 | 115,043 | ||||||
|
|
|
|
|
|||||
| 248,376 | ||||||||
|
|
|
|
|
|||||
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Finance costs: |
||||||||
| Interest expense |
389,813 | |||||||
| Loss on sale of accounts receivable – other |
35,317 | 65,027 | ||||||
| Loss on foreign currency transactions |
30,892 | 21,693 | ||||||
| Loss on foreign currency translations |
3,575 | 1,227 | ||||||
| Loss relating to financial instruments at FVTPL |
133,006 | 49,641 | ||||||
|
|
|
|
|
|||||
| 527,401 | ||||||||
|
|
|
|
|
|||||
| (2) | Details of interest income included in finance income for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Interest income on cash equivalents and financial instruments |
44,921 | |||||||
| Interest income on loans and others |
29,514 | 25,134 | ||||||
|
|
|
|
|
|||||
| 70,055 | ||||||||
|
|
|
|
|
|||||
| (3) | Details of interest expenses included in finance costs for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Interest expense on borrowings |
29,917 | |||||||
| Interest expense on debentures |
272,846 | 247,105 | ||||||
| Others |
98,565 | 112,791 | ||||||
|
|
|
|
|
|||||
| 389,813 | ||||||||
|
|
|
|
|
|||||
94
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 30. | Finance Income and Costs, Continued |
| (4) | Finance income and costs by category of financial instruments for the years ended December 31, 2024 and 2023 are as follows. Bad debt expense (reversal of loss allowance) for accounts receivable – trade, loans and receivables are presented and explained separately in notes 6 and 35. |
| 1) | Finance income and costs |
| (In millions of won) | ||||||||
| 2024 | ||||||||
| Finance income |
Finance costs |
|||||||
| Financial assets: |
||||||||
| Financial assets at FVTPL |
52,731 | |||||||
| Financial assets at FVOCI |
30,993 | — | ||||||
| Financial assets at amortized cost |
106,514 | 13,281 | ||||||
|
|
|
|
|
|||||
| 233,215 | 66,012 | |||||||
|
|
|
|
|
|||||
| Financial liabilities: |
||||||||
| Financial liabilities at FVTPL |
121,061 | 115,592 | ||||||
| Financial liabilities at amortized cost |
759 | 424,315 | ||||||
|
|
|
|
|
|||||
| 121,820 | 539,907 | |||||||
|
|
|
|
|
|||||
| 605,919 | ||||||||
|
|
|
|
|
|||||
| (In millions of won) | ||||||||
| 2023 | ||||||||
| Finance income |
Finance costs |
|||||||
| Financial assets: |
||||||||
| Financial assets at FVTPL |
114,668 | |||||||
| Financial assets at FVOCI |
39,681 | — | ||||||
| Financial assets at amortized cost |
69,373 | 22,795 | ||||||
| Derivatives designated as hedging instrument |
2,480 | — | ||||||
|
|
|
|
|
|||||
| 238,535 | 137,463 | |||||||
|
|
|
|
|
|||||
| Financial liabilities: |
||||||||
| Financial liabilities at FVTPL |
6,717 | — | ||||||
| Financial liabilities at amortized cost |
3,124 | 389,938 | ||||||
|
|
|
|
|
|||||
| 9,841 | 389,938 | |||||||
|
|
|
|
|
|||||
| 527,401 | ||||||||
|
|
|
|
|
|||||
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SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 30. | Finance Income and Costs, Continued |
| (4) | Finance income and costs by category of financial instruments for the years ended December 31, 2024 and 2023 are as follows. Bad debt expense (reversal of loss allowance) for accounts receivable – trade, loans and receivables are presented and explained separately in notes 6 and 35, Continued: |
| 2) | Other comprehensive income (loss), net of tax |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Financial assets: |
||||||||
| Financial assets at FVOCI |
(18,842 | ) | ||||||
| Derivatives designated as hedging instrument |
(12,398 | ) | (11,520 | ) | ||||
|
|
|
|
|
|||||
| (1,145 | ) | (30,362 | ) | |||||
|
|
|
|
|
|||||
| Financial liabilities: |
||||||||
| Derivatives designated as hedging instrument |
5,825 | (5,940 | ) | |||||
|
|
|
|
|
|||||
| (36,302 | ) | |||||||
|
|
|
|
|
|||||
| (5) | Details of impairment losses for financial assets for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Accounts receivable – trade |
37,906 | |||||||
| Other receivables |
4,838 | 5,256 | ||||||
|
|
|
|
|
|||||
| 43,162 | ||||||||
|
|
|
|
|
|||||
96
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 31. | Income Tax Expense |
| (1) | Income tax expenses for the years ended December 31, 2024 and 2023 consist of the following: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Current tax expense: |
||||||||
| Current year |
273,936 | |||||||
| Current tax of prior years |
(22,271 | ) | (11,590 | ) | ||||
|
|
|
|
|
|||||
| 369,921 | 262,346 | |||||||
|
|
|
|
|
|||||
| Deferred tax expense: |
||||||||
| Changes in net deferred tax assets |
4,749 | 79,896 | ||||||
|
|
|
|
|
|||||
| Income tax expense: |
342,242 | |||||||
|
|
|
|
|
|||||
| (2) | The difference between income taxes computed using the statutory corporate income tax rates and the recorded income taxes for the years ended December 31, 2024 and 2023 is attributable to the following: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Profit before income tax |
1,488,179 | |||||||
| Income taxes at statutory income tax rate |
450,819 | 382,517 | ||||||
| Non-taxable income |
(9,843 | ) | (3,091 | ) | ||||
| Non-deductible expenses |
15,216 | 15,725 | ||||||
| Tax credit and tax reduction |
(26,204 | ) | (64,829 | ) | ||||
| Changes in unrecognized deferred taxes |
(37,958 | ) | 14,354 | |||||
| Income tax refund and others |
(18,340 | ) | (5,878 | ) | ||||
| Changes in tax rate |
980 | 3,444 | ||||||
|
|
|
|
|
|||||
| Income tax expense |
342,242 | |||||||
|
|
|
|
|
|||||
97
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 31. | Income Tax Expense, Continued |
| (3) | Deferred taxes directly charged to (credited from) equity for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Valuation gain (loss) on financial assets measured at fair value |
12,977 | |||||||
| Share of other comprehensive gain (loss) of investment in associates and joint ventures |
(15,628 | ) | 292 | |||||
| Valuation gain on derivatives |
1,902 | 5,631 | ||||||
| Remeasurement of defined benefit liabilities (assets) |
7,266 | (2,672 | ) | |||||
| Loss on disposal of treasury shares and others |
(46 | ) | (53 | ) | ||||
|
|
|
|
|
|||||
| 16,175 | ||||||||
|
|
|
|
|
|||||
98
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 31. | Income Tax Expense, Continued |
| (4) | Details of the changes in deferred tax assets (liabilities) for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||
| Beginning | Deferred tax expense (income) |
Directly charged to (credited from) equity |
Reclassified as liabilities held for sale |
Changes in consolidation scope |
Ending | |||||||||||||||||||
| Deferred tax assets (liabilities) related to temporary differences: |
||||||||||||||||||||||||
| Loss allowance |
1,475 | — | — | — | 76,590 | |||||||||||||||||||
| Accrued interest income |
(6,839 | ) | (1,395 | ) | — | 7,266 | — | (968 | ) | |||||||||||||||
| Financial assets measured at fair value |
(2,526 | ) | (32,508 | ) | (4,499 | ) | — | — | (39,533 | ) | ||||||||||||||
| Investments in subsidiaries, associates and joint ventures |
22,930 | 62,447 | (15,628 | ) | — | — | 69,749 | |||||||||||||||||
| Property and equipment and intangible assets |
(419,413 | ) | (3,861 | ) | — | (318 | ) | — | (423,592 | ) | ||||||||||||||
| Provisions |
1,319 | 12 | — | — | — | 1,331 | ||||||||||||||||||
| Retirement benefit obligation |
12,430 | 18,338 | 7,266 | — | — | 38,034 | ||||||||||||||||||
| Valuation gain (loss) on derivatives |
19,670 | (7,094 | ) | 1,902 | — | — | 14,478 | |||||||||||||||||
| Gain (loss) on foreign currency translation |
20,667 | (297 | ) | — | — | — | 20,370 | |||||||||||||||||
| Incremental costs to acquire a contract |
(718,211 | ) | (4,741 | ) | — | — | — | (722,952 | ) | |||||||||||||||
| Contract assets and liabilities |
17,565 | 2,394 | — | — | — | 19,959 | ||||||||||||||||||
| Right-of-use assets |
(389,863 | ) | 19,092 | — | — | — | (370,771 | ) | ||||||||||||||||
| Lease liabilities |
388,091 | 6,115 | — | — | — | 394,206 | ||||||||||||||||||
| Others |
4,266 | (47,646 | ) | (46 | ) | (7,486 | ) | 278 | (50,634 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (974,799 | ) | 12,331 | (11,005 | ) | (538 | ) | 278 | (973,733 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred tax assets related to unused tax loss carryforwards and tax credit carryforwards: |
||||||||||||||||||||||||
| Tax loss carryforwards |
7,150 | 2,812 | — | 689 | (10,651 | ) | — | |||||||||||||||||
| Tax credit |
147,022 | (19,892 | ) | — | — | (4,597 | ) | 122,533 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 154,172 | (17,080 | ) | — | 689 | (15,248 | ) | 122,533 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (4,749 | ) | (11,005 | ) | 151 | (14,970 | ) | (851,200 | ) | ||||||||||||||||
|
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|
|
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|
|||||||||||||
99
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 31. | Income Tax Expense, Continued |
| (1) | Details of the changes in deferred tax assets (liabilities) for the years ended December 31, 2024 and 2023 are as follows, Continued: |
| (In millions of won) | ||||||||||||||||
| 2023 | ||||||||||||||||
| Beginning | Deferred tax expense (income) |
Directly charged to (credited from) equity |
Ending | |||||||||||||
| Deferred tax assets (liabilities) related to temporary differences: |
||||||||||||||||
| Loss allowance |
73 | — | 75,115 | |||||||||||||
| Accrued interest income |
(7,903 | ) | 1,064 | — | (6,839 | ) | ||||||||||
| Financial assets measured at fair value |
(10,171 | ) | (5,332 | ) | 12,977 | (2,526 | ) | |||||||||
| Investments in subsidiaries, associates and joint ventures |
16,846 | 5,792 | 292 | 22,930 | ||||||||||||
| Property and equipment and intangible assets |
(352,605 | ) | (66,808 | ) | — | (419,413 | ) | |||||||||
| Provisions |
1,629 | (310 | ) | — | 1,319 | |||||||||||
| Retirement benefit obligation |
30,619 | (15,517 | ) | (2,672 | ) | 12,430 | ||||||||||
| Valuation gain on derivatives |
12,768 | 1,271 | 5,631 | 19,670 | ||||||||||||
| Gain (loss) on foreign currency translation |
20,633 | 34 | — | 20,667 | ||||||||||||
| Incremental costs to acquire a contract |
(722,900 | ) | 4,689 | — | (718,211 | ) | ||||||||||
| Contract assets and liabilities |
4,279 | 13,286 | — | 17,565 | ||||||||||||
| Right-of-use assets |
(431,397 | ) | 41,534 | — | (389,863 | ) | ||||||||||
| Lease liabilities |
428,648 | (40,557 | ) | — | 388,091 | |||||||||||
| Others |
85,716 | (81,397 | ) | (53 | ) | 4,266 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (848,796 | ) | (142,178 | ) | 16,175 | (974,799 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Deferred tax assets related to unused tax loss carryforwards and tax credit carryforwards: |
||||||||||||||||
| Tax loss carryforwards |
2,007 | 5,143 | — | 7,150 | ||||||||||||
| Tax credit |
89,883 | 57,139 | — | 147,022 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 91,890 | 62,282 | — | 154,172 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (79,896 | ) | 16,175 | (820,627 | ) | ||||||||||||
|
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|
|
|
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|
|
|||||||||
100
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 31. | Income Tax Expense, Continued |
| (5) | Details of temporary differences, unused tax loss carryforwards and unused tax credits carryforwards which are not recognized as deferred tax assets (liabilities), in the consolidated statements of financial position as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| Loss allowance |
77,837 | |||||||
| Investments in subsidiaries, associates and joint ventures |
(993,399 | ) | (480,667 | ) | ||||
| Other temporary differences |
103,405 | 64,004 | ||||||
| Unused tax loss carryforwards |
126,553 | 174,589 | ||||||
The amount of unused tax loss carryforwards which are not recognized as deferred tax assets as of December 31, 2024 are expiring within the following periods:
| (In millions of won) | ||||
| Unused tax loss carryforwards | ||||
| Less than 1 year |
||||
| 1 ~ 2 years |
— | |||
| 2 ~ 3 years |
— | |||
| More than 3 years |
126,553 | |||
|
|
|
|||
|
|
|
|||
| (6) | In accordance with the global minimum tax law (Pillar Two) which was applied from 2024, the Group is required to pay additional taxes on the difference between the effective tax rate of each company in the Group in their respective jurisdictions and the minimum tax rate of 15%. The Group has determined that no additional taxes will be incurred under the global minimum tax law (Pillar Two), and therefore, there is no amount recognized as income tax expense for the year ended December 31, 2024. |
101
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 32. | Earnings per Share |
Earnings per share is calculated to profit of the Parent Company per common share and dilutive potential common share, and details are as follows:
| (1) | Basic earnings per share |
1) Basic earnings per share for the years ended December 31, 2024 and 2023 are calculated as follows:
| (In millions of won, except for share data and basic earnings per share) | ||||||||
| 2024 | 2023 | |||||||
| Basic earnings per share attributable to owners of the Parent Company: |
||||||||
| Profit attributable to owners of the Parent Company |
1,093,611 | |||||||
| Interest on hybrid bonds |
(19,800 | ) | (17,283 | ) | ||||
|
|
|
|
|
|||||
| Profit attributable to owners of the Parent Company on common shares |
1,230,355 | 1,076,328 | ||||||
| Weighted average number of common shares outstanding |
212,848,138 | 217,264,615 | ||||||
|
|
|
|
|
|||||
| Basic earnings per share (in won) |
4,954 | |||||||
|
|
|
|
|
|||||
102
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 32. | Earnings per Share, Continued |
| (1) | Basic earnings per share, Continued |
| 2) | The weighted average number of common shares outstanding for the years ended December 31, 2024 and 2023 are calculated as follows: |
| (In shares) | 2024 | |||||||
| Number of common shares | Weighted average number of common shares |
|||||||
| Issued shares as of January 1, 2024 |
218,833,144 | 218,833,144 | ||||||
| Treasury shares as of January 1, 2024 |
(6,133,414 | ) | (6,133,414 | ) | ||||
| Acquisition of treasury shares |
(317,000 | ) | (315,314 | ) | ||||
| Disposal of treasury shares |
503,612 | 463,722 | ||||||
|
|
|
|
|
|||||
| 212,886,342 | 212,848,138 | |||||||
|
|
|
|
|
|||||
| (In shares) | 2023 | |||||||
| Number of common shares | Weighted average number of common shares |
|||||||
| Issued shares as of January 1, 2023 |
218,833,144 | 218,833,144 | ||||||
| Treasury shares as of January 1, 2023 |
(801,091 | ) | (801,091 | ) | ||||
| Acquisition of treasury shares |
(5,773,410 | ) | (1,154,633 | ) | ||||
| Disposal of treasury shares |
441,087 | 387,195 | ||||||
|
|
|
|
|
|||||
| 212,699,730 | 217,264,615 | |||||||
|
|
|
|
|
|||||
| (2) | Diluted earnings per share |
| 1) | Diluted earnings per share for the years ended December 31, 2024 and 2023 are calculated as follows: |
| (In millions of won, except for share data and diluted earnings per share) | 2024 | 2023 | ||||||
| Profit attributable to owners of the Parent Company on common shares |
1,076,328 | |||||||
| Adjusted weighted average number of common shares outstanding |
213,428,916 | 217,452,721 | ||||||
|
|
|
|
|
|||||
| Diluted earnings per share (in won) |
4,950 | |||||||
|
|
|
|
|
|||||
| 2) | The adjusted weighted average number of common shares outstanding for the years ended December 31, 2024 and 2023 are calculated as follows: |
| (In shares) | 2024 | 2023 | ||||||
| Outstanding shares as of January 1 |
212,699,730 | 218,032,053 | ||||||
| Effect of treasury shares |
148,408 | (767,438 | ) | |||||
| Effect of share option |
580,778 | 188,106 | ||||||
|
|
|
|
|
|||||
| Adjusted weighted average number of common shares outstanding |
213,428,916 | 217,452,721 | ||||||
|
|
|
|
|
|||||
103
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 33. | Dividends |
| (1) | Details of dividends declared |
Details of dividend declared in Parent Company for the years ended December 31, 2024 and 2023 are as follows:
| (In millions of won, except for face value and share data) | ||||||||||||||||||
| Year |
Dividend type |
Number of shares outstanding |
Face value (in won) |
Dividend ratio |
Dividends | |||||||||||||
| 2024 | Cash dividends (Interim) | 212,880,865 | 100 | 830 | % | |||||||||||||
| Cash dividends (Interim) | 212,886,342 | 100 | 830 | % | 176,696 | |||||||||||||
| Cash dividends (Interim) | 212,886,342 | 100 | 830 | % | 176,696 | |||||||||||||
| Cash dividends (Year-end) | 212,886,342 | 100 | 1,050 | % | 223,531 | |||||||||||||
|
|
|
|||||||||||||||||
|
|
|
|||||||||||||||||
| 2023 | Cash dividends (Interim) | 218,466,141 | 100 | 830 | % | |||||||||||||
| Cash dividends (Interim) | 218,473,140 | 100 | 830 | % | 181,333 | |||||||||||||
| Cash dividends (Interim) | 216,412,898 | 100 | 830 | % | 179,623 | |||||||||||||
| Cash dividends (Year-end) | 212,699,730 | 100 | 1,050 | % | 223,335 | |||||||||||||
|
|
|
|||||||||||||||||
|
|
|
|||||||||||||||||
| (2) | Dividends yield ratio |
Dividends yield ratios for the years ended December 31, 2024 and 2023 are as follows:
(In won)
| Year |
Dividend type |
Dividend per share |
Closing price at year-end |
Dividend yield ratio |
||||||||||
| 2024 | Cash dividends | 3,540 | 55,200 | 6.41 | % | |||||||||
| 2023 | Cash dividends | 3,540 | 50,100 | 7.07 | % | |||||||||
104
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 34. | Categories of Financial Instruments |
| (1) | Financial assets by category as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Financial assets at FVTPL |
Equity instruments at FVOCI |
Financial assets at amortized cost |
Derivatives hedging instrument |
Total | ||||||||||||||||
| Cash and cash equivalents(*1) |
— | 1,713,000 | — | 2,023,721 | ||||||||||||||||
| Financial instruments(*1) |
5,000 | — | 319,263 | — | 324,263 | |||||||||||||||
| Long-term investment securities(*2) |
138,789 | 1,739,133 | — | — | 1,877,922 | |||||||||||||||
| Accounts receivable – trade(*1) |
— | — | 2,000,382 | — | 2,000,382 | |||||||||||||||
| Loans and other receivables(*1) |
223,761 | — | 697,216 | — | 920,977 | |||||||||||||||
| Derivative financial assets |
70,311 | — | — | 270,797 | 341,108 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 1,739,133 | 4,729,861 | 270,797 | 7,488,373 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | Financial assets reclassified as assets held for sale as of December 31, 2024 are not included. |
| (*2) | The Group designated |
| (In millions of won) | ||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Financial assets at FVTPL |
Equity instruments at FVOCI |
Financial assets at amortized cost |
Derivatives hedging instrument |
Total | ||||||||||||||||
| Cash and cash equivalents |
— | 1,141,638 | — | 1,454,978 | ||||||||||||||||
| Financial instruments |
62,364 | — | 232,945 | — | 295,309 | |||||||||||||||
| Long-term investment securities(*) |
280,650 | 1,398,734 | — | — | 1,679,384 | |||||||||||||||
| Accounts receivable – trade |
— | — | 1,990,849 | — | 1,990,849 | |||||||||||||||
| Loans and other receivables |
273,945 | — | 781,157 | — | 1,055,102 | |||||||||||||||
| Derivative financial assets |
32,324 | — | — | 116,210 | 148,534 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 1,398,734 | 4,146,589 | 116,210 | 6,624,156 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (*) | The Group designated |
105
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 34. | Categories of Financial Instruments, Continued |
| (2) | Financial liabilities by category as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | December 31, 2024 | |||||||||||||||
| Financial liabilities at FVTPL |
Financial liabilities at amortized cost |
Derivatives hedging instrument |
Total | |||||||||||||
| Accounts payable – trade |
126,508 | — | 126,508 | |||||||||||||
| Derivative financial liabilities |
2,689 | — | 748 | 3,437 | ||||||||||||
| Borrowings |
— | 615,600 | — | 615,600 | ||||||||||||
| Debentures |
— | 8,511,280 | — | 8,511,280 | ||||||||||||
| Lease liabilities(*1,2) |
— | 1,637,951 | — | 1,637,951 | ||||||||||||
| Accounts payable - other and others(*2) |
— | 5,018,850 | — | 5,018,850 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
2,689 |
15,910,189 | 748 | 15,913,626 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (In millions of won) | December 31, 2023 | |||||||||||||||
| Financial liabilities at FVTPL |
Financial liabilities at amortized cost |
Derivatives hedging instrument |
Total | |||||||||||||
| Accounts payable – trade |
139,876 | — | 139,876 | |||||||||||||
| Derivative financial liabilities |
295,876 | — | 9,212 | 305,088 | ||||||||||||
| Borrowings |
— | 718,078 | — | 718,078 | ||||||||||||
| Debentures |
— | 8,325,643 | — | 8,325,643 | ||||||||||||
| Lease liabilities(*1) |
— | 1,611,433 | — | 1,611,433 | ||||||||||||
| Accounts payable - other and others |
— | 4,539,838 | — | 4,539,838 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 15,334,868 | 9,212 | 15,639,956 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (*1) | The categorization of financial liabilities is not applicable to lease liabilities, but they are classified as financial liabilities measured at amortized cost, considering the nature of measuring liabilities. |
| (*2) | Financial liabilities reclassified as liabilities held for sale as of December 31, 2024 are not included |
106
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management |
| (1) | Financial risk management |
The Group is exposed to market risk, credit risk and liquidity risk. Market risk is the risk related to the changes in market prices, such as foreign exchange rates, interest rates and price fluctuations. The Group implements a risk management system to monitor and manage these specific risks.
The Group’s financial assets consist of cash and cash equivalents, financial instruments, long-term investment securities, accounts receivable – trade and other, etc. Financial liabilities consist of accounts payable – trade and other, borrowings, debentures, lease liabilities and others.
1) Market risk
(i) Currency risk
The Group incurs foreign exchange positions due to revenues and expenses from its global operations. Major foreign currencies where currency risk exists are USD, EUR and others. The Group determines its currency risk management policy after considering the nature of business and the presence of methods that mitigate the currency risk on each Group entity basis. The Group regularly evaluates, manages and reports foreign exchange exposure risk through the management systems to receivables and payables denominated in foreign currencies. Currency risk occurs on forecasted transactions and recognized assets and liabilities which are denominated in a currency other than the functional currency of each group entity.
Monetary assets and liabilities denominated in foreign currencies as of December 31, 2024 are as follows:
| (In millions of won, thousands of foreign currencies) | ||||||||||||||||
| Assets | Liabilities | |||||||||||||||
| Foreign currencies |
Won equivalent |
Foreign currencies |
Won equivalent |
|||||||||||||
| USD |
116,234 | 1,022,374 | ||||||||||||||
| EUR |
10,335 | 15,799 | — | — | ||||||||||||
| Others |
508 | 23 | ||||||||||||||
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|||||||||||||
In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign currency debentures. (See note 21)
As of December 31, 2024, a hypothetical change in exchange rates by 10% would have increased (decreased) the Group’s profit before income tax and equity as follows:
| (In millions of won) | ||||||||||||||||
| Profit before income tax | Equity | |||||||||||||||
| If increased by 10% | If decreased by 10% | If increased by 10% | If decreased by 10% | |||||||||||||
| USD |
(13,103 | ) | 13,103 | (13,103 | ) | |||||||||||
| EUR |
1,580 | (1,580 | ) | 1,580 | (1,580 | ) | ||||||||||
| Others |
49 | (49 | ) | 49 | (49 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (14,732 | ) | 14,732 | (14,732 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
107
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management, Continued |
| (1) | Financial Risk Management, Continued |
| 1) | Market risk, Continued |
(ii) Interest rate risk
The interest rate risk of the Group arises from borrowings, debentures and long-term payables – other. Since the Group’s interest-bearing assets are mostly fixed interest bearing assets, the Group’s revenue and operating cash flows from the interest-bearing assets are not influenced by the changes in market interest rates.
The Group performs various analysis to reduce interest rate risk and to optimize its financing. To minimize risks arising from changes in interest rates, the Group takes various measures such as refinancing, renewal, alternative financing and hedging.
As of December 31,
2024, floating-rate borrowings and debentures amount to W250,000 million and W441,000 million, respectively, and the Group has entered into interest rate swaps to hedge interest rate risk related to some
of floating-rate borrowings and floating-rate debentures. Therefore, profit before income tax for the year ended December 31, 2024 would not have been affected by the changes in interest rates of some of floating-rate borrowings and
floating-rate debentures.
If the interest rate increases (decreases) 1%p with all other variables held constant, profit before income tax
and equity for the year ended December 31, 2024 would change by W500 million in relation to the floating-rate borrowings which have not entered into interest rate swaps.
As of December 31, 2024, the floating-rate long-term payables – other are W921,075 million. If the interest
rate increases (decreases) 1%p with all other variables held constant, profit before income tax and equity for the year ended December 31, 2024 would change by W9,211 million in relation to the floating-rate long-term
payables – other that are exposed to interest rate risk.
(iii) Price fluctuations risk
As of December 31, 2024, the Group holds equity instruments in an active trading market and is exposed to price fluctuation risk accordingly. Assuming all other variables remain constant, the impact of changes in per-share stock price of the equity securities on profit before income tax and equity securities for the year ended December 31, 2024 is as follows.
| (In millions of won) | ||||||||||||||
| Profit before income tax | Equity | |||||||||||||
| If increased by 10% | If decreased by 10% | If increased by 10% | If decreased by 10% | |||||||||||
| — | (81,371 | ) | ||||||||||||
108
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management, Continued |
| (1) | Financial risk management, Continued |
| 2) | Credit risk |
The maximum credit exposure as of December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||
| December 31, 2024 |
December 31, 2023 |
|||||||
| Cash and cash equivalents(*) |
1,454,773 | |||||||
| Financial instruments(*) |
324,263 | 295,309 | ||||||
| Accounts receivable – trade(*) |
2,000,382 | 1,990,849 | ||||||
| Contract assets |
136,737 | 129,771 | ||||||
| Loans and other receivables(*) |
920,977 | 1,055,102 | ||||||
| Derivative financial assets |
341,108 | 148,534 | ||||||
|
|
|
|
|
|||||
| 5,074,338 | ||||||||
|
|
|
|
|
|||||
| (*) | Amounts reclassified as assets held for sale as of December 31, 2024 are not included. |
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. To manage credit risk, the Group evaluates the credit worthiness of each customer or counterparty by considering the party’s financial information, its own trading records and other factors. Based on such information, the Group establishes credit limits for each customer or counterparty.
| (i) | Accounts receivable – trade and contract assets |
The Group establishes a loss allowance in respect of accounts receivable – trade and contract assets. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that are expected to occur. The collective loss allowance is determined based on historical data of collection statistics for similar financial assets. Details of changes in loss allowance for the year ended December 31, 2024 are included in note 6.
| (ii) | Debt investments |
The credit risk arises from debt investments included in W324,263 million of financial instruments, and
W920,977 million of loans and other receivables. To limit the exposure to this risk, the Group transacts only with financial institutions with credit ratings that are considered to be low credit risk.
Most of the Group’s debt investments are considered to have a low risk of default and the borrower has a strong capacity to meet its contractual cash flow obligations in the near term. Thus, the Group measured the loss allowance for the debt investments at an amount equal to 12-month expected credit losses.
Meanwhile, the Group monitors changes in credit risk at each reporting date. The Group recognized the loss allowance at an amount equal to lifetime expected credit losses when the credit risk on the debt investments is assumed to have increased significantly if it is more than 30 days past due.
109
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management, Continued |
| (1) | Financial risk management, Continued |
2) Credit risk, Continued
(ii) Debt investments, Continued
The Group’s maximum exposure to credit risk is equal to each financial asset’s carrying amount. The gross carrying amounts of each financial asset except for the accounts receivable – trade and derivative financial assets as of December 31, 2024 are as follows.
| (In millions of won) | ||||||||||||||||
| Financial assets at FVTPL | Financial assets at amortized cost | |||||||||||||||
|
|
12-month ECL |
Lifetime ECL – not credit impaired |
Lifetime ECL – credit impaired |
|||||||||||||
| Gross amount |
1,012,300 | 9,291 | 62,472 | |||||||||||||
| Loss allowance |
— | (3,343 | ) | (4,004 | ) | (60,238 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Carrying amount |
1,008,957 | 5,287 | 2,234 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Changes in the loss allowance for the debt investments for the year ended December 31, 2024 are as follows:
| (In millions of won) | ||||||||||||||||
| 12-month ECL | Lifetime ECL – not credit impaired |
Lifetime ECL – credit impaired |
Total | |||||||||||||
| December 31, 2023 |
3,095 | 69,255 | 75,664 | |||||||||||||
| Remeasurement of loss allowance, net |
799 | 3,947 | 92 | 4,838 | ||||||||||||
| Transfer to lifetime ECL – not credit impaired |
(701 | ) | 701 | — | — | |||||||||||
| Transfer to lifetime ECL – credit impaired |
— | (3,739 | ) | 3,739 | — | |||||||||||
| Amounts written off |
(6 | ) | — | (11,439 | ) | (11,445 | ) | |||||||||
| Recovery of amounts written off |
— | — | 1,461 | 1,461 | ||||||||||||
| Reclassified as assets held for sale |
(63 | ) | — | (2,870 | ) | (2,933 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| December 31, 2024 |
4,004 | 60,238 | 67,585 | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(iii) Cash and cash equivalents
The Group deposits W2,023,543 million of cash and cash equivalents as of December 31, 2024
(W1,454,773 million as of December 31, 2023) at banks and financial institutions with credit ratings above the certain level. Impairment on cash and cash equivalents has been measured on a
12-month expected loss basis and reflects the short maturities of the exposures. The Group considered that its cash and cash equivalents have low credit risk based on the credit ratings of the counterparties
assigned by external credit rating agencies.
110
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management, Continued |
| (1) | Financial risk management, Continued |
3) Liquidity risk
The Group’s approach to managing liquidity is to ensure that it will always maintain sufficient cash and cash equivalents balances and have enough liquidity through various committed credit lines. The Group maintains enough liquidity within credit lines through active operating activities.
Contractual maturities of financial liabilities as of December 31, 2024 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 |
126,508 | 126,508 | — | — | ||||||||||||||||
| Borrowings(*1) |
615,600 | 635,141 | 425,815 | 209,326 | — | |||||||||||||||
| Debentures(*1) |
8,511,280 | 9,633,481 | 2,419,328 | 5,005,966 | 2,208,187 | |||||||||||||||
| Lease liabilities |
1,637,951 | 1,905,971 | 378,533 | 1,070,473 | 456,965 | |||||||||||||||
| Accounts payable – other and others(*1,2) |
5,018,850 | 5,074,355 | 4,496,367 | 572,831 | 5,157 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 17,375,456 | 7,846,551 | 6,858,596 | 2,670,309 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | The contractual cash flow is amount that includes interest payables. |
| (*2) | The Group’s accounts payable – other and others includes amounts for payments made using electronic
payments through the supplier finance arrangements. The Group pays the amount within the normal operating cycle, and no collateral is incurred in connection with the agreement and there is no substantial change in the payment conditions, therefore,
the amount is classified as accounts payable – other and presented as operating cash flows in the statements of cash flows. Accounts payable – other and others relating to the supplier finance arrangements amounts to
|
The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or in significantly different amounts.
As of December 31, 2024, 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 |
|||||||||||||
| Assets |
282,892 | 105,005 | 177,887 | |||||||||||||
| Liabilities |
(748 | ) | (750 | ) | — | (750 | ) | |||||||||
111
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management, Continued |
| (2) | Capital management |
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of its debt and equity structure. The overall strategy of the Group is the same as that of the Group as of and for the year ended December 31, 2023.
The Group monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total liabilities divided by total equity from the consolidated financial statements.
Debt-equity ratio as of December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||
| December 31, 2024 |
December 31, 2023 |
|||||||
| Total liabilities |
17,890,828 | |||||||
| Total equity |
11,827,634 | 12,228,399 | ||||||
|
|
|
|
|
|||||
| Debt-equity ratios |
158.00 | % | 146.31 | % | ||||
|
|
|
|
|
|||||
| (3) | Fair value |
| 1) | Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of December 31, 2024 are as follows: |
| (In millions of won) | December 31, 2024 | |||||||||||||||||||
| Carrying amount |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| Financial assets that are measured at fair value: |
||||||||||||||||||||
| FVTPL |
— | 539,481 | 209,101 | 748,582 | ||||||||||||||||
| Derivative hedging instruments |
270,797 | — | 270,797 | — | 270,797 | |||||||||||||||
| FVOCI |
1,739,133 | 1,088,578 | 171,967 | 478,588 | 1,739,133 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 1,088,578 | 982,245 | 687,689 | 2,758,512 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Financial liabilities that are measured at fair value: |
||||||||||||||||||||
| FVTPL |
2,689 | — | — | 2,689 | 2,689 | |||||||||||||||
| Derivative hedging instruments |
748 | — | 748 | — | 748 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| — | 748 | 2,689 | 3,437 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Financial liabilities that are not measured at fair value: |
||||||||||||||||||||
| Borrowings |
— | 619,325 | — | 619,325 | ||||||||||||||||
| Debentures |
8,511,280 | — | 8,582,255 | — | 8,582,255 | |||||||||||||||
| Long-term payables – other |
907,720 | — | 930,604 | — | 930,604 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| — | 10,132,184 | — | 10,132,184 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
112
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management, Continued |
| (3) | Fair value, Continued |
| 2) | Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of December 31, 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Carrying amount |
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
| Financial assets that are measured at fair value: |
||||||||||||||||||||
| FVTPL |
— | 649,649 | 312,974 | 962,623 | ||||||||||||||||
| Derivative hedging instruments |
116,210 | — | 116,210 | — | 116,210 | |||||||||||||||
| FVOCI |
1,398,734 | 1,135,832 | — | 262,902 | 1,398,734 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 1,135,832 | 765,859 | 575,876 | 2,477,567 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Financial liabilities that are measured at fair value: |
||||||||||||||||||||
| FVTPL |
295,876 | — | — | 295,876 | 295,876 | |||||||||||||||
| Derivative hedging instruments |
9,212 | — | 9,212 | — | 9,212 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| — | 9,212 | 295,876 | 305,088 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Financial liabilities that are not measured at fair value: |
||||||||||||||||||||
| Borrowings |
— | 695,320 | — | 695,320 | ||||||||||||||||
| Debentures |
8,325,643 | — | 8,052,193 | — | 8,052,193 | |||||||||||||||
| Long-term payables – other |
1,260,453 | — | 1,294,977 | — | 1,294,977 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| — | 10,042,490 | — | 10,042,490 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
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 Group uses various valuation methods for determination of fair value of financial instruments that are not traded in an active market. Derivative financial contracts and long-term liabilities are measured using the discounted present value methods. Other financial assets are determined using the methods such as discounted cash flow and market approach. Inputs used in such valuation methods include swap rate, interest rate, and risk premium and the volatility of stock price, and the Group performs valuation using the inputs which are consistent with natures of assets and liabilities measured.
Interest rates used by the Group for the fair value measurement as of December 31, 2024 are as follows:
| Interest rate | ||||
| Derivative instruments |
2.17% ~ 6.80% | |||
| Borrowings and debentures |
3.16% ~ 18.12% | |||
| Long-term payables – other |
3.17% ~ 3.23% | |||
113
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 35. | Financial Risk Management, Continued |
| (3) | Fair value, Continued |
| 3) | There have been no transfers between Level 1 and Level 2 for the year ended December 31, 2024. The changes of financial instruments classified as Level 3 for the year ended December 31, 2024 are as follows: |
| (In millions of won) | ||||||||||||||||||||||||||||
| Balance as of January 1, 2024 |
Gain | OCI | Acquisition | Disposal | Transfer | Balance as of December 31, 2024 |
||||||||||||||||||||||
| Financial assets |
| |||||||||||||||||||||||||||
| FVTPL |
48,758 | 6,900 | 4,199 | (6,194 | ) | (157,536 | ) | 209,101 | ||||||||||||||||||||
| FVOCI |
262,902 | — | 57,334 | 46,222 | (3,812 | ) | 115,942 | 478,588 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 48,758 | 64,234 | 50,421 | (10,006 | ) | (41,594 | ) | 687,689 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Financial liabilities |
| |||||||||||||||||||||||||||
| FVTPL |
118,372 | — | — | — | 174,815 | (2,689 | ) | |||||||||||||||||||||
| (4) | Enforceable master netting agreement or similar agreement |
Carrying amounts of financial instruments recognized to which offset agreements are applicable as of December 31, 2024 and 2023 are as follows:
| (In millions of won) | December 31, 2024 | |||||||||||
| Gross financial instruments recognized |
Amount offset | Net financial instruments presented on the consolidated statements of financial position |
||||||||||
| Financial assets: |
||||||||||||
| Accounts receivable – trade and others |
(174,372 | ) | 11,912 | |||||||||
| Financial liabilities: |
||||||||||||
| Accounts payable – other and others |
(174,372 | ) | 5,951 | |||||||||
| (In millions of won) | December 31, 2023 | |||||||||||
| Gross financial instruments recognized |
Amount offset | Net financial instruments presented on the consolidated statements of financial position |
||||||||||
| Financial assets: |
||||||||||||
| Accounts receivable – trade and others |
(183,520 | ) | 10,854 | |||||||||
| Financial liabilities: |
||||||||||||
| Accounts payable – other and others |
(183,520 | ) | 7,110 | |||||||||
114
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 36. | Transactions with Related Parties |
| (1) | List of related parties |
| Relationship |
Company | |
| Ultimate controlling entity |
SK Inc. | |
| Joint venture |
UTC Kakao-SK Telecom ESG Fund | |
| Associates |
SK China Company Ltd. and 44 others | |
| Others |
The Ultimate controlling entity’s subsidiaries and associates and others |
As of December 31, 2024, the Group belongs to SK Group, a conglomerate as defined in the Monopoly Regulation and Fair Trade Act of the Republic of Korea. All of the other entities included in SK Group are considered related parties of the Group.
| (2) | Compensation for the key management |
The Parent Company considers registered directors who have substantial role and responsibility in planning, operations, and relevant controls of the business as key management. The compensation given to such key management for the years ended December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Salaries |
4,139 | |||||||
| Defined benefits plan expenses |
1,362 | 1,005 | ||||||
| Share option |
977 | 2,542 | ||||||
|
|
|
|
|
|||||
| 7,686 | ||||||||
|
|
|
|
|
|||||
Compensation for the key management includes salaries, non-monetary salaries, and defined benefits made in relation to the pension plan and compensation expenses related to share options granted.
115
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 36. | Transactions with Related Parties, Continued |
| (3) | Transactions with related parties for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | 2024 | |||||||||||||
| Scope |
Company |
Operating revenue and others |
Operating expense and others (*1) |
Acquisition of property and equipment and others |
||||||||||
| Ultimate Controlling Entity |
SK Inc.(*2) | 660,578 | 125,691 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Associates |
F&U Credit information Co., Ltd. | 3,227 | 48,035 | 266 | ||||||||||
| SK AMERICAS Inc. (Formerly, SK USA Inc.) |
649 | 5,462 | — | |||||||||||
| Daehan Kanggun BcN Co., Ltd. | 9,551 | — | — | |||||||||||
| Others(*3) | 10,154 | 13,051 | 296 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| 23,581 | 66,548 | 562 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| Others |
SK Innovation Co., Ltd. |
14,630 | 16,757 | — | ||||||||||
| SK Energy Co., Ltd. |
3,822 | 264 | — | |||||||||||
| SK Geo Centric Co., Ltd. |
847 | 187 | — | |||||||||||
| SK Networks Co., Ltd.(*4) |
5,096 | 1,011,217 | — | |||||||||||
| SK Networks Service Co., Ltd. |
5,300 | 67,713 | 4,352 | |||||||||||
| SK Ecoplant Co., Ltd. |
2,993 | — | — | |||||||||||
| SK hynix Inc. |
50,127 | 256 | — | |||||||||||
| SK Shieldus Co., Ltd. |
61,040 | 147,587 | 18,863 | |||||||||||
| Content Wavve Corp. |
13,432 | 83,164 | — | |||||||||||
| Eleven Street Co., Ltd. |
69,448 | 31,277 | — | |||||||||||
| SK Planet Co., Ltd. |
15,580 | 84,536 | 14,656 | |||||||||||
| SK RENT A CAR Co., Ltd.(*5) |
8,336 | 14,462 | 169 | |||||||||||
| SK Magic Co., Ltd. |
1,522 | 796 | — | |||||||||||
| Tmap Mobility Co., Ltd. |
24,291 | 6,452 | — | |||||||||||
| Onestore Co., Ltd. |
14,588 | 1,604 | — | |||||||||||
| Dreamus Company |
5,526 | 66,242 | 265 | |||||||||||
| UNA Engineering Inc. |
88 | 55,902 | 50,497 | |||||||||||
| Happy Narae Co., Ltd. |
1,317 | 15,760 | 108,074 | |||||||||||
| Others |
47,355 | 75,040 | 25,236 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| 345,338 | 1,679,216 | 222,112 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| 2,406,342 | 348,365 | |||||||||||||
|
|
|
|
|
|
|
|||||||||
| (*1) | Operating expenses and others include lease payments by the Group. |
| (*2) | Operating expenses and others include |
| (*3) | Operating revenue and others include |
| (*4) | Operating expenses and others include costs for handset purchases amounting to
|
| (*5) | SK RENT A CAR Co., Ltd. was excluded from the related parties for the year ended December 31, 2024, and the transactions above occurred before the related party relationship terminated. |
116
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 36. | Transactions with Related Parties, Continued |
| (3) | Transactions with related parties for the years ended December 31, 2024 and 2023 are as follows, Continued: |
| (In millions of won) | 2023 | |||||||||||||
| Scope |
Company |
Operating revenue and others |
Operating expense and others (*1) |
Acquisition of property and equipment and others |
||||||||||
| Ultimate Controlling Entity |
SK Inc.(*2) | 633,265 | 120,926 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| Associates |
F&U Credit information Co., Ltd. | 3,876 | 49,398 | 552 | ||||||||||
| SK AMERICAS Inc. (Formerly, SK USA Inc.) |
— | 5,384 | — | |||||||||||
| Daehan Kanggun BcN Co., Ltd. | 12,972 | — | — | |||||||||||
| Others(*3) | 8,806 | 15,962 | 865 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| 25,654 | 70,744 | 1,417 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| Others |
SK Innovation Co., Ltd. |
33,571 | 18,977 | — | ||||||||||
| SK Energy Co., Ltd. |
4,113 | 540 | — | |||||||||||
| SK Geo Centric Co., Ltd. |
835 | 2 | — | |||||||||||
| SK Networks Co., Ltd.(*4) |
5,876 | 970,662 | 1 | |||||||||||
| SK Networks Service Co., Ltd. |
5,471 | 72,274 | 8,393 | |||||||||||
| SK Ecoplant Co., Ltd. |
2,547 | — | — | |||||||||||
| SK hynix Inc. |
58,725 | 178 | — | |||||||||||
| SK Shieldus Co., Ltd. |
59,974 | 147,333 | 26,021 | |||||||||||
| Content Wavve Corp. |
14,524 | 87,263 | 176 | |||||||||||
| Eleven Street Co., Ltd. |
72,683 | 34,053 | — | |||||||||||
| SK Planet Co., Ltd. | 18,308 | 88,250 | 16,338 | |||||||||||
| SK RENT A CAR Co., Ltd. | 14,023 | 20,231 | — | |||||||||||
| SK Magic Co., Ltd. | 1,632 | 1,142 | — | |||||||||||
| Tmap Mobility Co., Ltd. | 24,862 | 10,003 | — | |||||||||||
| Onestore Co., Ltd. | 16,265 | 166 | — | |||||||||||
| Dreamus Company | 6,202 | 77,452 | 284 | |||||||||||
| UNA Engineering Inc. | 172 | 50,263 | 52,733 | |||||||||||
| Happy Narae Co., Ltd. | 1,472 | 35,461 | 92,375 | |||||||||||
| Others | 52,039 | 21,884 | 13,292 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| 393,294 | 1,636,134 | 209,613 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| 2,340,143 | 331,956 | |||||||||||||
|
|
|
|
|
|
|
|||||||||
| (*1) | Operating expenses and others include lease payments by the Group. |
| (*2) | Operating expenses and others include |
| (*3) | Operating revenue and others include |
| (*4) | Operating expenses and others include costs for handset purchases amounting to
|
117
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 36. | Transactions with Related Parties, Continued |
| (4) | Account balances with related parties as of December 31, 2024 and 2023 are as follows: |
| (In millions of won) | December 31, 2024 | |||||||||||||
| Receivables | Payables | |||||||||||||
| Scope |
Company |
Loans | Accounts receivable – trade, etc. |
Accounts payable – other, etc. |
||||||||||
| Ultimate Controlling Entity |
SK Inc. | 1,668 | 76,471 | |||||||||||
| Associates |
F&U Credit information Co., Ltd. | — | 54 | 4,610 | ||||||||||
| Daehan Kanggun BcN Co., Ltd.(*) | 22,147 | — | — | |||||||||||
| Others | — | 5,158 | 7,001 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| 22,147 | 5,212 | 11,611 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| Others |
SK Innovation Co., Ltd. | — | 6,531 | 28,326 | ||||||||||
| SK Networks Co., Ltd. | — | 372 | 140,120 | |||||||||||
| Mintit Co., Ltd. | — | 4 | — | |||||||||||
| SK hynix Inc. | — | 12,680 | 206 | |||||||||||
| Happy Narae Co., Ltd. | — | 52 | 17,833 | |||||||||||
| SK Shieldus Co., Ltd. | — | 12,582 | 20,515 | |||||||||||
| Content Wavve Corp. | — | 1,564 | 7 | |||||||||||
| Incross Co., Ltd. | — | 1,946 | 20,353 | |||||||||||
| Eleven Street Co., Ltd. | — | 16,637 | 4,750 | |||||||||||
| SK Planet Co., Ltd. | — | 980 | 15,491 | |||||||||||
| UNA Engineering Inc. | — | — | 25,498 | |||||||||||
| Others | — | 12,703 | 27,981 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| — | 66,051 | 301,080 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| 72,931 | 389,162 | |||||||||||||
|
|
|
|
|
|
|
|||||||||
| (*) | As of December 31, 2024, the Parent Company recognized loss allowance for the entire balance of loans to Daehan Kanggun BcN Co., Ltd. |
118
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 36. | Transactions with Related Parties, Continued |
| (4) | Account balances with related parties as of December 31, 2024 and 2023 are as follows, Continued: |
| (In millions of won) | December 31, 2023 | |||||||||||||
| Receivables | Payables | |||||||||||||
| Scope |
Company |
Loans | Accounts receivable – trade, etc. |
Accounts payable – other, etc. |
||||||||||
| Ultimate Controlling Entity |
SK Inc. | 1,535 | 106,546 | |||||||||||
| Associates |
F&U Credit information Co., Ltd. | — | 325 | 4,417 | ||||||||||
| Daehan Kanggun BcN Co., Ltd.(*1) | 22,147 | 4,701 | — | |||||||||||
| Others | — | 3,910 | 3,476 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| 22,147 | 8,936 | 7,893 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| Others |
SK Innovation Co., Ltd. | — | 8,697 | 28,646 | ||||||||||
| SK Networks Co., Ltd. | — | 120 | 156,316 | |||||||||||
| Mintit Co., Ltd. | — | 17,036 | — | |||||||||||
| SK hynix Inc. | — | 8,022 | 2,251 | |||||||||||
| Happy Narae Co., Ltd. | — | 101 | 5,686 | |||||||||||
| SK Shieldus Co., Ltd. | — | 12,723 | 14,784 | |||||||||||
| Content Wavve Corp. | — | 1,476 | 2 | |||||||||||
| Incross Co., Ltd. | — | 2,239 | 943 | |||||||||||
| Eleven Street Co., Ltd. | — | 6,138 | 6,103 | |||||||||||
| SK Planet Co., Ltd. | — | 9,981 | 18,833 | |||||||||||
| SK RENT A CAR Co., Ltd. | — | 866 | 33,365 | |||||||||||
| UNA Engineering Inc. | — | 1 | 10,764 | |||||||||||
| Others(*2) | — | 15,082 | 30,184 | |||||||||||
|
|
|
|
|
|
|
|||||||||
| — | 82,482 | 307,877 | ||||||||||||
|
|
|
|
|
|
|
|||||||||
| 92,953 | 422,316 | |||||||||||||
|
|
|
|
|
|
|
|||||||||
(*1) As of December 31, 2023, the Parent Company recognized loss allowance for the entire balance of loans to Daehan Kanggun BcN Co., Ltd.
(*2) During the year ended December 31, 2022, SK Telecom Innovation Fund, L.P., a subsidiary of the Parent Company, entered into a convertible loan agreement for USD 13,000,000 with id Quantique SA, classified as an other related party. SK Telecom Innovation Fund, L.P. acquired shares of id Quantique SA amounting to USD 26,731,250, including common shares converted from the entire balance of loan for the year ended December 31, 2023.
| (5) | The Group has granted SK REIT Co., Ltd. the right of first offer regarding the disposal of specified real estates owned by the Group. Whereby, the negotiation period is within three to five years from June 30, 2021 when the agreement was signed, and the negotiation period of real estates on maturity was extended for three years as of June 30, 2024. In addition, the Group has been granted the right by SK REIT Co., Ltd. to lease the real estate in preference to a third party if SK REIT Co., Ltd. purchases the real estate from the Group. |
| (6) | Details of additional investments and disposal of subsidiaries, associates and joint ventures for the year ended December 31, 2024 are as presented in Note 11. |
119
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 37. | 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
W1,098 million as of December 31, 2024.
(2) Legal claims and litigations
As of December 31, 2024, 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 any of these claims or litigations will have a material impact on the Group’s financial position or operating results in the event an outflow of resources is ultimately necessary.
(3) Accounts receivable from sale of handsets
The sales agents of the Parent Company sell handsets to the Parent Company’s subscribers on an installment basis. The Parent Company entered into comprehensive agreements to purchase accounts receivable from handset sales with retail stores and authorized dealers and to transfer the accounts receivable from handset sales to special purpose companies which were established with the purpose of liquidating receivables, respectively.
The accounts receivable from sale of handsets amounting to
W241,962 million and W291,747 million as of December 31, 2024 and 2023, respectively, which the Parent Company purchased according to the relevant comprehensive agreement, are recognized as accounts
receivable – other and long-term accounts receivable – other.
(4) Obligation relating to spin-off
The Parent Company carried out the spin-off of its business of managing investments in semiconductor, New Information and Communication Technologies(“ICT”) and other businesses and making new investments on November 1, 2021. The Parent Company has obligation to jointly and severally reimburse the Parent Company’s liabilities incurred prior to the spin-off with SK Square Co., Ltd., the spin-off company, in accordance with Article 530-9 (1) of Korean Commercial Act.
120
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 37. | Commitments and Contingencies, Continued |
(5) Commitment of the acquisition and disposal of shares
The Board of Directors of the Parent Company resolved the acquisition and disposal of certain shares in order to strengthen the strategic
alliance with Hana Financial Group Inc.(“HFG”) at the Board of Directors’ meeting held on July 22, 2022. In accordance with the resolution, as of July 27, 2022, the Parent Company disposed of its entire common shares of
HanaCard Co., Ltd. (39,902,323 shares) and entire common shares of Finnq Co., Ltd. (6,370,000 shares) to HFG for W330,032 million and W5,733 million, respectively. Through the agreement with HFG, the
Parent Company is obligated to acquire HFG’s common shares from July 27, 2022 to January 31, 2024, after depositing W330,032 million in a specific money trust, and the Parent Company completed the acquisition of
the shares for the year ended December 31, 2022. As a part of the aforementioned transaction, as of July 27, 2022, the Parent Company disposed of its entire common shares of SK Square Co., Ltd. (767,011 shares) to HanaCard Co., Ltd. for
W31,563 million, and HanaCard Co., Ltd. is obligated to acquire the Parent Company’s common shares from July 27, 2022 to January 31, 2024, after depositing W68,437 million in a specific
money trust, and completed the acquisition of the shares for the year ended December 31, 2022. The Parent Company, HFG, and HanaCard Co., Ltd. may not dispose of shares they have acquired under the aforementioned transaction until
March 31, 2025.
(6) The acquisition cost of property and equipment and intangible assets to be incurred in subsequent periods under
arrangements is W28,346 million as of December 31, 2024.
(7) According to the covenant for bond issuance and borrowings, the Group is required to maintain specific financial ratios, such as the debt ratio, at certain levels. The funds obtained must be used for specified purposes only, and regular reporting to lenders is mandated. Additionally, the contracts include clauses that restrict both provision of additional collateral of assets held by the Group and disposal of certain assets.
121
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 38. | Statements of Cash Flows |
| (1) | Adjustments for income and expenses from operating activities for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Interest income |
(70,055 | ) | ||||||
| Dividends |
(35,818 | ) | (43,014 | ) | ||||
| Gain on foreign currency translations |
(9,344 | ) | (1,199 | ) | ||||
| Gain relating to investments in subsidiaries, associates and joint ventures, net |
(321,787 | ) | (10,928 | ) | ||||
| Gain on disposal of property and equipment and intangible assets |
(37,316 | ) | (21,898 | ) | ||||
| Gain relating to financial instruments at FVTPL |
(190,368 | ) | (115,043 | ) | ||||
| Interest expense |
403,129 | 389,813 | ||||||
| Loss on foreign currency translations |
3,575 | 1,227 | ||||||
| Loss on sale of accounts receivable – other |
35,317 | 65,027 | ||||||
| Income tax expense |
374,670 | 342,242 | ||||||
| Expense related to defined benefit plan |
130,581 | 124,439 | ||||||
| Share option |
6,696 | 18,889 | ||||||
| Bonus paid by treasury shares |
24,988 | 20,420 | ||||||
| Depreciation and amortization |
3,699,890 | 3,750,796 | ||||||
| Bad debt for accounts receivables – trade |
49,865 | 37,906 | ||||||
| Impairment loss on property and equipment and intangible assets |
94,736 | 10,369 | ||||||
| Loss on disposal of property and equipment and intangible assets |
17,427 | 9,369 | ||||||
| Bad debt for accounts receivable – other |
4,838 | 5,256 | ||||||
| Loss relating to financial instruments at FVTPL |
133,006 | 49,641 | ||||||
| Other income (expenses) |
16,373 | (16,919 | ) | |||||
|
|
|
|
|
|||||
| 4,546,338 | ||||||||
|
|
|
|
|
|||||
122
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 38. | Statements of Cash Flows, Continued |
| (2) | Changes in assets and liabilities from operating activities for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Accounts receivable – trade |
(46,531 | ) | ||||||
| Accounts receivable – other |
(51,028 | ) | 79,223 | |||||
| Advanced payments |
4,503 | 3,986 | ||||||
| Prepaid expenses |
(11,233 | ) | (2,262 | ) | ||||
| Inventories |
(35,661 | ) | (17,549 | ) | ||||
| Long-term accounts receivable – other |
135,823 | 66,036 | ||||||
| Contract assets |
(6,966 | ) | 3,877 | |||||
| Guarantee deposits |
15,552 | (2,117 | ) | |||||
| Accounts payable – trade |
(10,039 | ) | 50,442 | |||||
| Accounts payable – other |
(161,778) | (188,318 | ) | |||||
| Withholdings |
138,672 | (3,714 | ) | |||||
| Contract liabilities |
17,213 | (19,620 | ) | |||||
| Deposits received |
(1,835 | ) | (1,744 | ) | ||||
| Accrued expenses |
81,025 | (73,734 | ) | |||||
| Provisions |
(160 | ) | (566 | ) | ||||
| Long-term provisions |
(357 | ) | (1,061 | ) | ||||
| Plan assets |
6,110 | (17,772) | ||||||
| Retirement benefits payment |
(157,801 | ) | (99,396 | ) | ||||
| Others |
(1,810 | ) | (3,343 | ) | ||||
|
|
|
|
|
|||||
| (274,163 | ) | |||||||
|
|
|
|
|
|||||
| (3) | Material non-cash transactions for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||
| 2024 | 2023 | |||||||
| Decrease in accounts payable – other relating to the acquisition of property and equipment and intangible assets |
(305,823) | |||||||
| Increase of right-of-use assets |
523,494 | 345,761 | ||||||
| Transfer from property and equipment to investment property |
(5,482 | ) | 13,900 | |||||
| Increase in accounts payable – other relating to the acquisition of shares |
1,195,642 | — | ||||||
123
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 38. | Statements of Cash Flows, Continued |
| (4) | Reconciliation of liabilities arising from financing activities for the years ended December 31, 2024 and 2023 are as follows: |
| (In millions of won) | ||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||
| January 1, 2024 | Cash flows | Non-cash transactions | ||||||||||||||||||||||
| Exchange rate changes(*) |
Fair value changes |
Other changes |
December 31, 2024 |
|||||||||||||||||||||
| Total liabilities from financing activities: |
| |||||||||||||||||||||||
| Short-term borrowings |
100,000 | — | — | — | 100,000 | |||||||||||||||||||
| Long-term borrowings |
718,078 | (202,500 | ) | — | — | 22 | 515,600 | |||||||||||||||||
| Debentures |
8,325,643 | 725 | 179,773 | — | 5,139 | 8,511,280 | ||||||||||||||||||
| Lease liabilities |
1,611,433 | (381,347 | ) | — | — | 407,865 | 1,637,951 | |||||||||||||||||
| Long-term payables – other |
1,260,453 | (369,150 | ) | — | — | 16,417 | 907,720 | |||||||||||||||||
| Derivative financial liabilities |
(9,212 | ) | — | — | 8,464 | — | (748 | ) | ||||||||||||||||
| Derivative financial assets |
(116,210 | ) | — | — | (154,587 | ) | — | (270,797 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (852,272 | ) | 179,773 | (146,123 | ) | 429,443 | 11,401,006 | ||||||||||||||||||
| Other cash flows from financing activities: |
| |||||||||||||||||||||||
| Payments of cash dividends |
||||||||||||||||||||||||
| Payments of interest on hybrid bonds |
(19,800 | ) | ||||||||||||||||||||||
| Acquisition of treasury shares |
(15,788 | ) | ||||||||||||||||||||||
| Cash outflow from transactions with the non-controlling shareholders |
(133,393 | ) | ||||||||||||||||||||||
| Cash inflow from transactions with the non-controlling shareholders |
15,717 | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (957,581 | ) | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (*) | The effect of changes in foreign exchange rates for financial liabilities at amortized cost. |
124
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 38. | Statements of Cash Flows, Continued |
| (4) | Reconciliation of liabilities arising from financing activities for the years ended December 31, 2024 and 2023 are as follows, Continued: |
| (In millions of won) | ||||||||||||||||||||||||
| 2023 | ||||||||||||||||||||||||
| January 1, 2023 | Cash flows | Non-cash transactions | ||||||||||||||||||||||
| Exchange rate changes(*) |
Fair value changes |
Other changes |
December 31, 2023 |
|||||||||||||||||||||
| Total liabilities from financing activities: |
| |||||||||||||||||||||||
| Short-term borrowings |
(142,998 | ) | — | — | — | — | ||||||||||||||||||
| Long-term borrowings |
793,113 | (75,050 | ) | — | — | 15 | 718,078 | |||||||||||||||||
| Debentures |
8,366,693 | (84,082 | ) | 36,701 | — | 6,331 | 8,325,643 | |||||||||||||||||
| Lease liabilities |
1,782,057 | (402,465 | ) | — | — | 231,841 | 1,611,433 | |||||||||||||||||
| Long-term payables – other |
1,638,341 | (400,245 | ) | — | — | 22,357 | 1,260,453 | |||||||||||||||||
| Derivative financial liabilities |
— | — | — | (9,212 | ) | — | (9,212 | ) | ||||||||||||||||
| Derivative financial assets |
(267,151 | ) | 183,090 | — | (32,149 | ) | — | (116,210 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (921,750 | ) | 36,701 | (41,361 | ) | 260,544 | 11,790,185 | ||||||||||||||||||
| Other cash flows from financing activities: |
| |||||||||||||||||||||||
| Payments of cash dividends |
||||||||||||||||||||||||
| Payments of interest on hybrid bonds |
(17,283 | ) | ||||||||||||||||||||||
| Acquisition of treasury shares |
(285,487 | ) | ||||||||||||||||||||||
| Proceeds of hybrid bonds |
398,509 | |||||||||||||||||||||||
| Redemption of hybrid bonds |
(400,000 | ) | ||||||||||||||||||||||
| Cash inflow from transactions with the non-controlling shareholders |
160 | |||||||||||||||||||||||
| Cash outflow from transactions with the non-controlling shareholders |
(21,333 | ) | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (1,099,240 | ) | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| (*) | The effect of changes in foreign exchange rates for financial liabilities at amortized cost. |
125
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 39. | Emissions Liabilities |
| (1) | The quantity of emissions rights allocated free of charge for each implementation year as of December 31, 2024 are as follows: |
| (In tCO2-eQ) | ||||||||||||||||||||||||
| Quantities allocated in 2021 |
Quantities allocated in 2022 |
Quantities allocated in 2023 |
Quantities allocated in 2024 |
Quantities allocated in 2025 |
Total | |||||||||||||||||||
| Emissions rights allocated free of charge(*) |
1,385,433 | 1,602,751 | 1,736,918 | 1,444,523 | 1,506,276 | 7,675,901 | ||||||||||||||||||
| (*) | The changes in quantity due to additional allocation, cancellation of allocation and others are considered. |
| (2) | Changes in emissions rights quantities the Group held are as follows: |
| (In tCO2-eQ) | ||||||||||||||||
| Quantities allocated in 2022 |
Quantities allocated in 2023 |
Quantities allocated in 2024 |
Total | |||||||||||||
| Beginning |
— | 306,575 | 414,356 | 720,931 | ||||||||||||
| Allocation at no cost |
1,602,751 | 1,736,918 | 1,444,523 | 4,784,192 | ||||||||||||
| Purchase |
213,609 | (56,266 | ) | 27,288 | 184,631 | |||||||||||
| Surrender or shall be surrendered |
(1,515,595 | ) | (1,572,871 | ) | (1,687,118 | ) | (4,775,584 | ) | ||||||||
| Borrowed |
5,810 | — | — | 5,810 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Ending |
306,575 | 414,356 | 199,049 | 919,980 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| (3) | As of December 31, 2024, the estimated annual greenhouse gas emissions quantities of the Group are 1,687,118 tCO2-eQ. |
126
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 40. | Assets and Liabilities Held for Sale |
Assets and liabilities held for sale as of December 31, 2024 and 2023 are as follows:
| (In millions of won) | ||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||
| Assets: |
| |||||||||
| Disposal Groups(*) |
Cash and cash equivalents | — | ||||||||
| Accounts receivable – trade and other, net | 71,401 | — | ||||||||
| Prepaid expenses | 1,127 | — | ||||||||
| Inventories, net | 3,740 | — | ||||||||
| Property and equipment, net | 17,412 | — | ||||||||
| Investment property, net | 1,719 | — | ||||||||
| Intangible assets, net | 5,655 | — | ||||||||
| Goodwill | 2,516 | — | ||||||||
| Financial instrument | 10 | — | ||||||||
| Defined benefit assets | 7,601 | — | ||||||||
| Advanced payments and others | 17,559 | — | ||||||||
| Investments in associates |
F&U Credit information Co., Ltd. | 11,138 | — | |||||||
| Daekyo Wipoongdangdang Contents Korea Fund |
746 | 746 | ||||||||
| Long-term Investment securities |
Digital Content Korea Fund | 3,395 | 3,395 | |||||||
| Central Fusion Content Fund | 883 | 884 | ||||||||
| P&I Cultural Innovation Fund | 818 | 1,892 | ||||||||
| Inventories |
— | — | 505 | |||||||
| Prepaid Expenses |
— | — | 1,489 | |||||||
| Property and Equipment |
— | 6,133 | 1,604 | |||||||
|
|
|
|
|
|||||||
| 10,515 | ||||||||||
| Liabilities: |
| |||||||||
| Disposal Groups(*) |
Accounts payable – other | 82,206 | — | |||||||
| Withholdings | 16,161 | — | ||||||||
| Lease liabilities | 2,745 | — | ||||||||
| Contract liabilities | 1,261 | — | ||||||||
| Provisions | 1,924 | — | ||||||||
| Other current liabilities | 1,904 | — | ||||||||
| Deferred tax liabilities | 151 | — | ||||||||
| Other liabilities |
— | — | 39 | |||||||
|
|
|
|
|
|||||||
| 39 | ||||||||||
|
|
|
|
|
|||||||
| (*) | The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified assets and liabilities of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd. as assets and liabilities held for sale. |
127
Table of Contents
SK TELECOM CO., LTD. and its Subsidiaries
Notes to the Consolidated Financial Statements
For the years ended December 31, 2024 and 2023
| 41. | Subsequent Events |
The Group entered into a stock sale agreement in which the Group disposes of the entire shares of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and 70.0% shares of SK m&service Co., Ltd. and the entire shares of F&U Credit information Co., Ltd. on December 18, 2024, and completed the disposal of the shares of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd. on January 23, 2025 and February 25, 2025, respectively.
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Audit opinion on internal control over financial reporting
The accompanying independent auditor’s report on internal control over financial reporting is attached as a result of auditing the internal control over financial reporting of SK Telecom Co., Ltd. and its subsidiaries (the “Group”) and the consolidated financial statements of the Group for the year ended December 31, 2024 in accordance with the Article 8 of the Act on External Audit of Stock Companies.
Attachments:
| 1. | Independent auditor’s report on Internal Control over Financial Reporting |
| 2. | Management’s Annual Report on Internal Control over Financial Reporting |
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Independent auditor’s report on Internal Control over Financial Reporting
(Based on a report originally issued in Korean)
SK Telecom Co., Ltd.:
The Shareholders and Board of Directors
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting (“ICFR”) of SK Telecom Co., Ltd. and its subsidiaries (the “Group”) based on the Conceptual Framework for Designing and Operating ICFR (“ICFR Design and Operation Framework”) established by the Operating Committee of ICFR in Korea (the “ICFR Committee”) as of December 31, 2024.
In our opinion, the Group’s ICFR has been effectively designed and operated, in all material respects, as of December 31, 2024, in accordance with the ICFR Design and Operation Framework.
We also have audited, in accordance with Korean Standards on Auditing (“KSA”), the consolidated statement of financial position as of December 31, 2024, the consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of material accounting policies, of the Group, and our report dated March 10, 2025 expressed an unqualified opinion thereon.
Basis for Opinion on ICFR
We conducted our audit in accordance with KSA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of ICFR section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of ICFR in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of Management and Those Charged with Governance for ICFR
Management is responsible for designing, operating, and maintaining effective ICFR, and for its assessing the effectiveness of ICFR, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.
Those charged with governance are responsible for overseeing the Group’s ICFR.
Auditor’s Responsibilities for the Audit of ICFR
Our responsibility is to express an opinion of the Group’s ICFR based on our audit. We conducted our audit in accordance with KSA. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective ICFR was maintained in all material respects.
An audit of the ICFR involves performing procedures to obtain audit evidence as to whether a material weakness exists. The procedures selected depend on the auditor’s judgment, including the assessment of the risks that a material weakness exists. An audit also includes testing and evaluating the design and operation of ICFR based on obtaining an understanding of ICFR and the assessed risk.
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ICFR definition and Inherent Limitations
A company’s ICFR is implemented by those charged with governance, management, and other employees and is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”). A company’s ICFR includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with KIFRS, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, ICFR may not prevent or detect misstatements of the financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that ICFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The engagement partner on the audit resulting in this independent auditor’s report is Yoo, Jung Ho.
March 10, 2025
| This report is effective as of March 10, 2025, the independent auditor’s report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the auditor’s report date to the time this report is used. Such events and circumstances could significantly affect the Group’s ICFR and may result in modifications to this report. |
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Management’s Annual Report on Internal Control over Financial Reporting
English translation of a Report Originally Issued in Korean
To Shareholders, the Board of Directors and Audit Committee of
SK Telecom Co., Ltd.
We, as the Chief Executive Officer (“CEO”) and Internal Control over Financial Reporting (“ICFR”) Officer of SK Telecom Co., Ltd. and its subsidiaries (the “Group”), assessed the status of the design and operation of the Group’s ICFR for the year ending December 31, 2024.
The Group’s management including the CEO and ICFR Officer is responsible for designing and operating ICFR. We, as the CEO and ICFR Officer (collectively, “We”, “Our” or “Us”), evaluated whether the ICFR has been appropriately designed and is effectively operating to prevent and detect error or fraud which may cause material misstatement of the financial statements to ensure preparation and disclosure of reliable financial information.
We used the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’ established by the Operating Committee of Internal Control over Financial Reporting in Korea (the “ICFR Committee”)’ as the criteria for design and operation of the Group’s ICFR. We also conducted an evaluation of ICFR based on the ‘Management Guideline for Evaluating and Reporting Effectiveness of Internal Control over Financial Reporting’ established by the ICFR Committee.
Based on our assessment of ICFR operation, we concluded that the Group’s ICFR has been appropriately designed and is operating effectively in all material respects as of December 31, 2024, in accordance with the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’.
We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statements which might cause material misunderstandings of the readers, and we have reviewed and verified this report with sufficient care.
February 25, 2025
| /s/ Kim, Yang Seob |
| Internal Control over Financial Reporting Officer |
| /s/ Ryu, Young Sang |
| Chief Executive Officer |
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