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Investor PresentationAugust 2006
This material has been prepared by SK Telecom for the information of investors of the company.This is not intended as an offer or solicitation for the purchase or sale of any financial instrument or securities. While reasonable care has been taken to ensure that the information contained herein isnot untrue or misleading at the time of preparation, the company makes no representation as to itsaccuracy or completeness. Any projections or estimates may be different from actual results
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Disclaimer
This presentation has been prepared by SK Telecom Co., Ltd. (“the Company”). This presentation is being presented solely for your information and is subject to change without notice. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented. The Company, its affiliates, advisers or representatives accept no liability whatsoever for any losses arising from any information contained in the presentation.
This presentation does not constitute an offer or invitation to purchase or subscribe for any shares of the Company, and no part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment.The contents of this presentation may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose.
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Industry Overview
2006 2Q Operating Results and Outlook
Growth Strategy
Commitment to Shareholders
Table of ContentsTable of ContentsTable of Contents
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Industry Overview
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Korean Mobile Market Trend
Further growth potential exists in the Korean wireless marketFurther growth potential exists in the Korean wireless market
Mobile Penetration
29,04732,342 33,592
36,586 38,342 39,382
81.4%79.4%75.9%
61.2%70.1%67.9%
2001 2002 2003 2004 2005 Jun-06Subscribers(000’s) Penetration
Source: MIC, NSO Source: The Mobile World, as of 31 Mar 2006
30%
72% 73%81%
93% 98%
110% 113% 115%
Chin
a
US
Japa
n
Kore
a
Taiw
anSi
ngap
ore
UK
Swed
enHo
ng K
ong
Korean Mobile MarketKorean Mobile MarketKorean Mobile Market
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Market Share Revenue
Undisputed leader in the Korean wireless marketUndisputed leader in the Korean wireless market
Net Income Churn Rate
SKT:50.7%
KTF:32.7%
LGT:16.7%
19,98412,634
6,765
(‘000, %) (KRW bn)
SKT KTF LGT
(%)
Source: MIC, Company data
2006 2Q Competitive Landscape2006 2Q Competitive Landscape2006 2Q Competitive Landscape
373
SKT
81
KTF
-195
LGT
(KRW bn)
2,638
1,314
743
SKT KTF LGT
1.8%
2.6%3.1%
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2006 2Q Operating Results and Outlook
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Note:(1) Before revision: 17.5%(2) Before revision: 4,400
(Unit: KRW bn)
Revenue 2,638 10,500
Net Income 373 N/A
EBITDA 997 4,000
Marketing Expense
to Revenue 22.7% 20.5%
Capital Expenditure 348 1,600
2Q 2006 2006E2Q ‘06
4%2,527 2,540 4%
-20%467 337 11%
-10%1,103 1,029 -3%
5.2%p17.5% 17.3% 5.4%p
25%278 84 315%
YoY2Q ‘05 1Q ‘06 QoQ 2006E
2006 2Q Operating Results2006 2Q Operating Results2006 2Q Operating Results
(1)
(2)
5,179
710
2,026
20.1%
431
2Q 20061H ‘06
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Continued effort to maintain market leadership while stabilizingContinued effort to maintain market leadership while stabilizing the marketthe market
2Q Market Status
'04 '05
19.2%
17.2%
22.7%
2Q '06
Introduction ofhandset subsidy
Intense competition initiated by competitors’aggressive marketing program
Increase in retention cost & decrease in acquisition cost (April)
Increase in acquisition cost (May & June)
Marketing Expense Trend
2006 Market Environment2006 Market Environment2006 Market Environment
Rational behind Guidance Revision
MNPIntroduction
Increased retention & acquisition cost caused by introduction of handset subsidy and heated competition in 2Q
Need to secure the subscriber base for mid-to-long term corporate value
Committed to increase in corporate value and shareholders oriented management
1Q ‘06
17.3%
Handset SubsidyIntroduction
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Growth Strategy
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Total Investment US$1 billionUS$360 million US$220 million
Development
• US$1.0bn in China Unicom’s CB
• SKT to be exclusive and sole partner in relation to China Unicom’s CDMA business- Cooperation in 6 areas
• 740,000 subscribers & 4.3% M/S as of July ’06
• Nationwide coverage by 2006
• 2010 projected mobilepenetration: 44.5%
• Joint venture with EarthLink
• Differentiated service aimed at younger generation, tech savvy customers and Korean- American
InvestmentPrinciple
Transplant Resource & Capability of SKTLocal partnership to minimize risk and maximize successCulturally similar and geographically close to Korea
Global Business Global Business Global Business Stepping stone to emerge as a global leader in technology & servStepping stone to emerge as a global leader in technology & service innovationice innovation
Penetration Population
30.0%1,312 million
11.8%84 million
72.0%298 million
(1)
Source: (1) The Mobile World, as of 31 March 2006
VietnamVietnam U.SU.S ChinaChina
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HSDPA
Video telephony & related value-added service- Expand to phone-to-phone as well as web-to-phone &
fixed-to-phone- Value added svc. such as image coloring / lettering,
image message call
Video telephony & related value-added service- Expand to phone-to-phone as well as web-to-phone &
fixed-to-phone- Value added svc. such as image coloring / lettering,
image message call
Video Telephony
Roaming Service Marketing- 80% of world’s wireless operators use GSM or WCDMA
Roaming Service Marketing- 80% of world’s wireless operators use GSM or WCDMA
Global Roaming
QVGA Contents- High-resolution video contentsJUNE Channel- Night-time auto-download service
QVGA Contents- High-resolution video contentsJUNE Channel- Night-time auto-download service
Premium Multimedia Svc.
Convergence & Ubiquitous Service
Music portal site where MP3 files are downloaded through internet and mobile handsets5.7 mn subscribers as of June 06Korea’s # 1 paid music site in terms of revenue & subscriber base
Mobile version of immensely popular web-based community portal1.5 mn users as of June ’06(18mn Cyworld users as of June ’06)
3D game portal site launched In April 2005Expanding contents via cooperation with major game developersExpect increased use with introduction of HSDPA
Core and new domestic business to continue to enhance overall grCore and new domestic business to continue to enhance overall growth owth
Domestic BusinessDomestic BusinessDomestic Business
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Commitment to Shareholders
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Commitment to enhancing shareholder valueCommitment to enhancing shareholder value
①① Special dividends of approx. KRW 300 Special dividends of approx. KRW 300 bnbn in 2004in 2004
②② Total treasury buyback of KRW 200 Total treasury buyback of KRW 200 bnbn scheduled for 2Hscheduled for 2H-- Stage 1 : Stock buyback for cancellation of 491,000 shares(apprStage 1 : Stock buyback for cancellation of 491,000 shares(approx. KRW 93 ox. KRW 93 bnbn) from 1 Aug to 14 Aug) from 1 Aug to 14 Aug-- Stage 2 : Second buyback process will be undertaken after the sStage 2 : Second buyback process will be undertaken after the stage 1 buyback is completedtage 1 buyback is completed
③③ 2007: 2007: Similar level of shareholder return as 2006 Similar level of shareholder return as 2006
5%
2001
10%
2002
21%
2003
25%
2004
35%
2005
40%
2006 2007E
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22Trend of Dividend Payout Ratio / Share Buyback
Shareholder ReturnShareholder ReturnShareholder Return
33