Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF June 2024

COMMISSION FILE NUMBER: 333-04906

 

 

SK Telecom Co., Ltd.

(Translation of registrant’s name into English)

 

 

65, Eulji-ro, Jung-gu

Seoul 04539, Korea

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒     Form 40-F ☐

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

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

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

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

 

 

 

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QUARTERLY BUSINESS REPORT

(From January 1, 2024 to March 31, 2024)

THIS IS A SUMMARY OF THE QUARTERLY BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN WHICH IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED FOR THE CONVENIENCE OF READERS.

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

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

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I.	COMPANY OVERVIEW

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

 

II.

BUSINESS

1. Business Overview

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

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

 

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

[Wireless Business]

 

A.

Overview

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

 

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

The Company has been maintaining solid profitability based on the stable sales generated from its 5G subscribers, together with efficient investments in, and operation of, its wireless networks and stabilization of market competition. The Company’s 5G wireless services, which recorded 15.93 million subscribers as of March 31, 2024, accounted for 70% of the Company’s total number of subscribers. The Company continually seeks growth in the number of its 5G wireless subscribers while actively implementing artificial intelligence (“AI”) technology into its fixed-line and wireless businesses, thereby continuing efforts to optimize efficiencies in operational and capital expenditures.

In addition, the Company has been promoting growth in its enterprise business by developing various AI-related business items, including AI contact centers, vision AI and big data, while continuing efforts to increase demand for the Company’s Internet of Things (“IoT”) lines. For the three months ended March 31, 2024, the Company’s enterprise business recorded an increase in revenue of approximately 10% compared to the three months ended March 31, 2023. In particular, based mainly on recurring revenue, the Company’s cloud business recorded an increase in revenue of approximately 40% for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, thereby driving the revenue growth of the Company’s overall enterprise business.

“A. (Adot),” the Company’s Korean language GPT-3 based service, has resonated with the market by introducing call recording and summarization features, and it continues to innovate customers’ communication experience, including by introducing real-time interpretation service during calls. In April 2024, the Company expanded A.’s call recording and summarization features as well as real-time interpretation service during calls, which have been highly popular among iPhone users, to devices run on the Google Android operating system.

 

B.	Industry Characteristics

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

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

 

C.	Growth Potential

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

 

(Unit: in 1,000 persons)
Classification				As of March 31, 2024				As of December 31,
								2023				2022
Number of subscribers		SK Telecom			31,662				31,276				30,452
		Others (KT, LG U+)			36,080				35,643				32,676
		MVNO			16,569				15,851				12,829
		Total			84,311				82,770				75,957

 

*	Source: Wireless telecommunications service data from the MSIT as of March 31, 2024.

 

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D.	Domestic and Overseas Market Conditions

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

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

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

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

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

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

 

						(Unit: in percentages)
Classification		As of March 31, 2024				As of December 31,
						2023				2022
Mobile communication services			46.7				46.7				48.2

 

*	Source: Wireless telecommunications service data from the MSIT as of March 31, 2024.

 

E.	Competitive Strengths

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

For the three months ended March 31, 2024, the Company recorded Won 4.47 trillion in operating revenue and Won 0.50 trillion in operating profit on a consolidated basis. The increased competitiveness of telecommunications services and the rapid progress in new growth businesses such as B2B have enabled the Company to continue to improve its operating results.

 

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

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

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

[Fixed-line Business]

 

A.

Overview

For the three months ended March 31, 2024, SK Broadband recorded Won 1.09 trillion in revenue on a consolidated basis, which represented a 2.7% increase from Won 1.06 trillion for the three months ended March 31, 2023. Such increase was primarily attributable to the growth of SK Broadband’s media business resulting from an increase in the number of subscribers and the growth of its B2B business primarily focused on new data centers.

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

For the three months ended March 31, 2024, the media business segment recorded Won 0.48 trillion in revenue, which represented a 0.9% increase compared to the three months ended March 31, 2023. For the three months ended March 31, 2024, the fixed-line business segment recorded Won 0.61 trillion in revenue, which represented a 4.3% increase compared to the three months ended March 31, 2023.

 

B.	Industry Characteristics

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

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

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

 

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

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

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

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

 

C.	Growth Potential

 

								(Unit: in persons)
Classification				As of March 31,				As of December 31,
				2024				2023				2022
Fixed-line Subscribers		High-speed Internet			24,192,115				24,098,164				23,537,333
		Fixed-line telephone			10,858,211				10,973,838				11,621,413
		IPTV			20,814,402				20,814,402				20,203,451
		Cable TV			12,631,281				12,631,281				12,824,704

 

*	Source: MSIT website.

**	High-speed Internet and fixed-line telephone subscribers represent the number of subscribers as of February 29, 2024, while IPTV and cable TV subscribers represent the average number of subscribers in the first half of 2023.

 

D.	Cyclical Nature and Seasonality

High-speed Internet and fixed-line telephone services operate in mature markets that are comparatively less sensitive to cyclical economic changes as the services provided by different operators have become less differentiated. TV services have become necessities that provide broadcasting, and the market, which is subject to a subscriber-based business model, has little sensitivity to cyclical economic changes.

 

E.	Domestic and Overseas Market Conditions

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

 

						(Unit: in percentages)
Classification		As of March 31,				As of December 31,
		2024				2023				2022
High-speed Internet (including resales)			28.8				28.7				28.5
Fixed-line telephone (including Voice over Internet Protocol (“VoIP”)			18.1				18.0				17.8
IPTV			31.6				31.6				30.9
Cable TV			22.3				22.3				22.2

 

*	Source: MSIT website.

**	With respect to Internet telephone, the market share was calculated based on market shares among the Company, KT and LG U+ and is based on the number of IP phone subscribers.

***	Market shares of High-speed Internet and Fixed-line telephone represent the market shares as of February 29, 2024 and market shares of IPTV and Cable TV represent the average market shares in the first half of 2023.

 

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

[Other Businesses]

 

A.	Other businesses

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

Sapeon, an AI semiconductor company, launched “X330,” its next-generation inference AI chip, and plans to further utilize its AI semiconductor capabilities and operational know-how in its efforts to lead the global market in next-generation AI data centers.

2. Key Financial Data by Business Line

 

A.

Assets

 

						(Unit: in millions of Won and percentages)
		As of March 31,								As of December 31,
		2024								2023								2022
Classification		Amount				Ratio				Amount				Ratio				Amount				Ratio
Wireless			25,776,657				76	%			25,608,563				77	%			27,078,021				79	%
Fixed-line			6,959,937				21	%			6,825,342				20	%			6,588,076				19	%
Other			988,015				3	%			910,020				3	%			762,028				2	%
Subtotal			33,724,609				100	%			33,343,925				100	%			34,428,124				100	%
Consolidation Adjustment			(3,428,097	)			—				(3,224,698	)			—				(3,119,862	)			—
Total			30,296,511				—				30,119,227				—				31,308,262				—

 

B.

Revenue

 

						(Unit: in millions of Won and percentages)
Classification		For the three months ended March 31, 2024								For the year ended December 31,
										2023								2022
		Amount				Ratio				Amount				Ratio				Amount				Ratio
Wireless			3,338,838				75	%			13,123,166				75	%			12,942,316				75	%
Fixed-line			1,003,694				22	%			3,928,020				22	%			3,812,989				22	%
Other			132,079				3	%			557,325				3	%			549,668				3	%
Total			4,474,611				100	%			17,608,511				100	%			17,304,973				100	%

 

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C.	Operating Profit

 

						(Unit: in millions of Won and percentages)
Classification		For the three months ended March 31, 2024								For the year ended December 31,
										2023								2022
		Amount				Ratio				Amount				Ratio				Amount				Ratio
Wireless			438,854				86	%			1,463,934				84	%			1,334,306				81	%
Fixed-line			84,825				17	%			329,072				19	%			311,083				19	%
Other			(15,365	)			(3	)%			(42,771	)			(2	)%			(2,102	)			0	%
Subtotal			508,314				100	%			1,750,235				100	%			1,643,287				100	%
Consolidation Adjustment			(9,825	)			—				2,969				—				(31,216	)			—
Total			498,489				—				1,753,204				—				1,612,070				—

3. Updates on Major Products and Services

 

								(Unit: in millions of Won and percentages)
Business		Major Companies		Items		Major Trademarks		For the three months ended March 31, 2024								For the year ended December 31,
																2023								2022
								Consolidated Sales Amount				Ratio				Consolidated Sales Amount				Ratio				Consolidated Sales Amount				Ratio
Wireless		SK Telecom Co., Ltd., PS&Marketing Co., Ltd., Service Ace Co., Ltd. SK O&S Co., Ltd., etc.		Mobile communications service, wireless data service, ICT service		T, 5GX, T Plan and others			3,338,838				75	%			13,123,166				75	%			12,942,316				75	%
Fixed-line		SK Broadband Co., Ltd., SK Telink Co., Ltd. Home & Service Co., Ltd., etc.		Fixed-line phone, high-speed Internet, data and network lease service		B tv, 00700 international call, 7mobile and others			1,003,694				22	%			3,928,020				22	%			3,812,989				22	%
Other		SK stoa Co., Ltd., etc.		Commercial retail data broadcasting channel services and others		Stoa ON			132,079				3	%			557,325				3	%			549,668				3	%
Total									4,474,611				100	%			17,608,511				100	%			17,304,973				100	%

4. Price Trends for Major Products

[Wireless Business]

As of March 31, 2024, based on the Company’s standard monthly subscription plan, the basic service fee was Won 12,100 (including value-added tax) and the usage fee was Won 1.98 per second. Among the 4G-based plans, the “T-Plan Safe 4G” provides 4 GB of data and unlimited voice calls at Won 50,000 per month (including value-added tax). Among the 5G-based plans, the “Basic” plan provides 11 GB of data and unlimited voice calls at Won 49,000 per month (including value-added tax). On June 1, 2023, the Company launched the “5G 0 Youth” plan, which actively reflects the data usage patterns and lifestyle trends of the younger demographics. The Company plans to continue to introduce new services that reach out to different customer segments. The Company provides a variety of other subscription plans catering to subscriber demand, which may be reviewed on the Company’s website at www.tworld.co.kr.

 

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[Fixed-line Business]

On March 2, 2024, SK Broadband launched the “2030 Direct” plan, which is aimed at cost-conscious customers in their 20s and 30s who feel uncomfortable with entering into long-term subscription plans. Such plan offers Internet services under a one-year subscription plan at a rate comparable to that of a three-year contract. Customers between the age of 18 and 39 who sign up for this plan through SK Broadband’s website, B Direct Shop, or call center, 106 Customer Center, are eligible for a one-year Internet service contract including Wi-Fi at a rate that provides a discount of up to 55% compared to the rate for a non-term contract internet service.

In addition, on March 11, 2024, SK Broadband launched the “Budget-friendly Combination” plan, which offers a discount when bundling SK Broadband’s fixed-line services (Internet and IPTV) and the wireless services of certain MVNOs that lease SK Telecom’s network (including Liiv M Mobile, Eyagi Mobile, Mobing, Toss Mobile and Eyes mobile). This plan provides benefits equivalent to that of the “Modern Family Combination” plan, which bundles SK Broadband’s fixed-line services and SK Telecom’s wireless services. Based on a three-year contract, the plan offers discounts up to Won 14,300, including a Won 13,200 discount on high-speed Internet service fees and a Won 1,100 discount on IPTV fees (when bundled with IPTV services). However, no discounts are offered on the MVNO service fees. SK Broadband plans to further expand the list of MVNOs that can be bundled with the Budget-friendly Combination plan. SK Broadband also provides a variety of other subscription plans based on consumer demand, which may be reviewed on the Company’s website at www.bworld.co.kr.

5. Investment Status

[Wireless Business]

 

A.	Investment in Progress

 

(Unit: in billions of Won)

Purpose of investment

Subject of investment

Investment period

Expected investment amount

Amount already invested

Investment effect

Upgrade/ New installation

Network, systems and others

Year ended December 31, 2024

To be determined

236

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

 

B.	Future Investment Plan

 

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

[Fixed-line Business]

 

A.	Investment in Progress and Future Investment Plan

 

								(Unit: in billions of Won)
Purpose of investment		Subject of investment		Investment period		Amount already invested		Future investment		Investment effect
Coverage expansion, upgrade of media platform		Network, systems, Internet data center and others		Three months ended March 31, 2024		82		To be determined		Securing subscriber network and equipment; quality and system improvement

 

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6. Revenues

 

				(Unit: in millions of Won)
Business		Sales type		Item				For the three months ended March 31, 2024				For the year ended December 31, 2023				For the year ended December 31, 2022
Wireless		Services		Mobile communication, wireless data, information communication		Export			49,737				169,885				140,642
						Domestic			3,289,101				12,953,281				12,801,674
						Subtotal			3,338,838				13,123,166				12,942,316
Fixed-line		Services		Fixed-line, high-speed Internet, data, lease line service		Export			45,628				178,824				183,812
						Domestic			958,066				3,749,196				3,629,177
						Subtotal			1,003,694				3,928,020				3,812,989
Other		Services		Commercial retail data broadcasting channel services		Export			—				—				—
						Domestic			132,079				557,325				549,668
						Subtotal			132,079				557,325				549,668
Total						Export			95,365				348,709				324,454
						Domestic			4,379,246				17,259,802				16,980,519
						Total			4,474,611				17,608,511				17,304,973

 

		(Unit: in millions of Won)
For the three months ended March 31, 2024		Wireless				Fixed-line				Other				Sub total				Consolidation adjustment				After consolidation
Total sales			3,707,285				1,304,133				145,312				5,156,730				(682,119	)			4,474,611
Internal sales			368,447				300,439				13,233				682,119				(682,119	)			—
External sales			3,338,838				1,003,694				132,079				4,474,611				—				4,474,611
Depreciation and amortization			678,139				243,230				6,491				927,860				(30,710	)			897,150
Operating profit (loss)			438,854				84,825				(15,365	)			508,314				(9,825	)			498,489
Finance profit (loss)																							(61,082	)
Gain from investments in associates and joint ventures																							4,906
Other non-operating profit (loss)																							(1,568	)
Profit before income tax																							440,745

7. Derivative Transactions

 

A.	Current Swap Contract Applying Cash Flow Risk Hedge Accounting

Currency and interest rate swap contracts under cash flow hedge accounting as of March 31, 2024 are as follows:

[SK Telecom]

 

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

 

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[SK Broadband]

 

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

8. Major Contracts

None.

9. R&D Investments

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

 

				(Unit: in millions of Won except percentages)
Category				For the three months ended March 31, 2024				For the year ended December 31, 2023				For the year ended December 31, 2022				Remarks
Raw material					11				48				23				—
Labor					30,091				140,790				113,297				—
Depreciation					33,185				137,264				135,604				—
Commissioned service					8,311				51,749				46,447				—
Others					18,499				61,992				78,989				—
Total R&D costs					90,097				391,843				374,360				—
Government Subsidies					—				—				—				—
Accounting  Sales and administrative expenses					88,928				369,507				340,864				—
Development expenses (intangible assets)					1,169				22,334				33,495				—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)					2.01	%			2.23	%			2.16	%			—

10. Other information relating to investment decisions

 

A.	Brand Management Policies

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

 

B.	Business-related Intellectual Property

[SK Telecom]

As of March 31, 2024, the registered patents and trademarks held by the Company included 3,277 Korean-registered patents, 1,769 foreign-registered patents and 725 Korean-registered trademarks. The number of registered patents and trademarks is subject to constant change due to the acquisition of new rights, expiration of terms, abandonments and dispositions.

[SK Broadband]

As of March 31, 2024, SK Broadband held 262 Korean-registered patents and 70 foreign-registered patents (including those held jointly with other companies). It also holds 302 Korean-registered trademarks. SK Broadband owns intellectual property rights to its proprietary graphic design of the alphabet “B” representing its brand. The designed alphabet “B” is registered in all business categories for trademarks (total of 45). The number of registered patents and trademarks is subject to continual change due to the acquisition of new rights, expiration of terms, abandonments and dispositions.

 

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C.	Business-related Pollutants and Environmental Protection

[SK Telecom]

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

[SK Broadband]

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

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

 

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III.	FINANCIAL INFORMATION

1. Summary Financial Information (Consolidated and Separate)

 

A.	Summary Financial Information (Consolidated)

Below is the summary consolidated financial information of the Company as of March 31, 2024, December 31, 2023 and December 31, 2022 and for the three months ended March 31, 2024 and for the years ended December 31, 2023 and 2022. The Company’s consolidated financial statements as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and 2023, which are prepared in accordance with K-IFRS, are attached hereto.

 

(Unit: in millions of Won except number of companies)
		As of March 31, 2024				As of December 31, 2023				As of December 31, 2022
Assets
Current Assets			7,109,603				6,585,602				7,219,196
•  Cash and Cash Equivalents			1,718,989				1,454,978				1,882,291
•  Accounts Receivable – Trade, net			2,043,694				1,978,532				1,970,611
•  Accounts Receivable – Other, net			421,931				344,350				479,781
•  Others			2,924,989				2,807,742				2,886,513
Non-Current Assets			23,186,908				23,533,625				24,089,066
•  Long-Term Investment Securities			1,803,587				1,679,384				1,410,736
•  Investments in Associates and Joint Ventures			1,971,334				1,915,012				1,889,289
•  Property and Equipment, net			12,621,363				13,006,196				13,322,492
•  Goodwill			2,075,009				2,075,009				2,075,009
•  Intangible Assets, net			2,710,382				2,861,137				3,324,910
•  Others			2,005,233				1,996,887				2,066,630
Total Assets			30,296,511				30,119,227				31,308,262
Liabilities
Current Liabilities			7,258,331				6,993,980				8,046,541
Non-Current Liabilities			10,585,198				10,896,848				11,106,525
Total Liabilities			17,843,529				17,890,828				19,153,066
Equity
Equity Attributable to Owners of the Parent Company			11,658,150				11,389,046				11,318,320
Share Capital			30,493				30,493				30,493
Capital Surplus (Deficit) and Other Capital Adjustments			(11,618,241	)			(11,828,644	)			(11,567,117	)
Retained Earnings			22,727,912				22,799,981				22,463,711
Reserves			517,986				387,216				391,233
Non-controlling Interests			794,832				839,353				836,876
Total Equity			12,452,982				12,228,399				12,155,196
Total Liabilities and Equity			30,296,511				30,119,227				31,308,262

 

(Unit: in millions of Won except per share data and number of consolidated subsidiaries)
		For the three months ended March 31, 2024				For the year ended December 31, 2023				For the year ended December 31, 2022
Operating Revenue			4,474,611				17,608,511				17,304,973
Operating Profit			498,489				1,753,204				1,612,070
Profit Before Income Tax			440,745				1,488,179				1,236,152
Profit from Continued Operations			361,940				1,145,937				947,831
Profit from Discontinued Operations			—				—				—
Profit for the Period			361,940				1,145,937				947,831
Profit for the Period Attributable to Owners of the Parent Company			352,986				1,093,611				912,400
Profit for the Period Attributable to Non-controlling Interests			8,954				52,326				35,431
Basic Earnings Per Share (Won)			1,636				4,954				4,118
Diluted Earnings Per Share (Won)			1,634				4,950				4,116
Total Number of Consolidated Subsidiaries			25				25				25

 

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B.	Summary Financial Information (Separate)

Below is the summary separate financial information of the Company as of March 31, 2024, December 31, 2023 and December 31, 2022 and for the three months ended March 31, 2024 and for the years ended December 31, 2023 and 2022. The Company’s separate financial statements as of March 31, 2024 and December 31, 2023 and for the three months ended March 31, 2024 and 2023, which are prepared in accordance with K-IFRS, are attached hereto.

 

			(Unit: in millions of Won)
		As of March 31, 2024				As of December 31, 2023				As of December 31, 2022
Assets
Current Assets			5,160,532				4,703,844				5,498,460
•  Cash and Cash Equivalents			885,809				631,066				1,217,504
•  Accounts Receivable – Trade, net			1,521,505				1,495,617				1,425,695
•  Accounts Receivable – Other, net			583,016				343,036				435,096
•  Others			2,170,202				2,234,125				2,420,165
Non-Current Assets			20,036,688				20,292,088				20,933,661
•  Long-Term Investment Securities			1,520,339				1,426,290				1,155,188
•  Investments in Subsidiaries and Associates			4,707,513				4,670,568				4,621,807
•  Property and Equipment, net			8,800,913				9,076,459				9,519,663
•  Goodwill			1,306,236				1,306,236				1,306,236
•  Intangible Assets, net			2,112,636				2,250,829				2,693,400
•  Others			1,589,051				1,561,706				1,637,367
Total Assets			25,197,220				24,995,932				26,432,121
Liabilities
Current Liabilities			5,731,093				5,505,470				6,236,135
Non-Current Liabilities			8,684,936				9,054,369				9,812,604
Total Liabilities			14,416,029				14,559,839				16,048,739
Equity
Share Capital			30,493				30,493				30,493
Capital Surplus and Other Capital Adjustments			(4,557,234	)			(4,766,147	)			(4,506,693	)
Retained Earnings			209,156				15,032,473				14,691,461
Reserves			209,156				139,274				168,121
Total Equity			25,197,220				10,436,093				10,383,382
Total Liabilities and Equity			25,197,220				24,995,932				26,432,121

 

(Unit: in millions of Won)
		For the three months ended March 31, 2024				For the year ended December 31, 2023				For the year ended December 31, 2022
Operating Revenue			3,188,680				12,589,220				12,414,588
Operating Profit			436,427				1,455,870				1,321,131
Profit Before Income Tax			566,591				1,354,939				1,146,250
Profit for the Period			492,106				1,059,750				869,490
Basic Earnings Per Share (Won)			2,290				4,798				3,921
Diluted Earnings Per Share (Won)			2,287				4,794				3,919

 

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2. Dividends and Others

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

3. Use of Direct Financing

 

A.	Use of Proceeds from Public Offerings

[SK Telecom]

 

(As of March 31, 2024)

(Unit: in millions of Won)

Category

Bond Series

Payment Date

Planned Use of Proceeds

Actual Use of Proceeds

Reasons for Difference

Use

Amount

Use

Amount

Corporate bond

Series 82-1,2,3

April 12, 2022

Repayment of debt

350,000

Repayment of debt

350,000

—

Corporate bond

Series 83-1

August 10, 2022

Repayment of debt

300,000

Repayment of debt

300,000

—

Corporate bond (ESG bond)

Series 83-2

August 10, 2022

Other (fund investment, etc.)

95,000

Other (investment in funds, etc.)

95,000

—

Corporate bond

Series 84-1,2,3,4

December 14, 2022

Repayment of debt

310,000

Repayment of debt

310,000

—

Corporate bond

Series 85-1,2

February 17, 2023

Repayment of debt

300,000

Repayment of debt

300,000

—

Corporate bond

Series 86-1,2,3

April 12, 2023

Repayment of debt

350,000

Repayment of debt

350,000

—

Hybrid securities

Series 3

June 5, 2023

Repayment of debt

400,000

Repayment of debt

400,000

—

Corporate bond

Series 87-1,2,3,4

October 18, 2023

Repayment of debt

295,000

Repayment of debt

295,000

—

Corporate bond

Series 88-1,2,3,4

February 22, 2024

Repayment of debt

400,000

Repayment of debt

400,000

—

 

*

Series 83-2 issued as of August 10, 2022 is an ESG bond. Series 83-2 was issued in furtherance of the Company’s ESG goal to achieve Net Zero by 2050, and covers solar energy generation equipment in the environment sector, mutual growth funds in the social sector and the SK Telecom-Kakao ESG Fund. The proceeds from the bond offering were intended to refinance prior investments and new investments, and were used for the intended purpose.

[SK Broadband]

 

(As of March 31, 2024)

(Unit: in millions of Won)

Category

Bond Series

Payment Date

Planned Use of Proceeds

Actual Use of Proceeds

Reasons for Difference

Use

Amount

Use

Amount

Corporate bond

Series 52-1

January 25, 2022

Repayment of debt

100,000

Repayment of debt

100,000

—

Corporate bond (green bond)

Series 52-2

January 25, 2022

Repayment of debt

50,000

Repayment of debt

50,000

—

Corporate bond

Series 53-1

March 2, 2023

Operation fund

5,000

Operation fund

5,000

—

Corporate bond

Series 53-1

March 2, 2023

Repayment of debt

45,000

Repayment of debt

45,000

—

Corporate bond

Series 53-2

March 2, 2023

Operation fund

55,000

Operation fund

55,000

—

Corporate bond

Series 53-2

March 2, 2023

Repayment of debt

45,000

Repayment of debt

45,000

—

Corporate bond

Series 53-3

March 2, 2023

Operation fund

46,900

Operation fund

46,900

—

Corporate bond

Series 53-3

March 2, 2023

Repayment of debt

43,100

Repayment of debt

43,100

—

Corporate bond

Series 54-1

October 30, 2023

Facility fund

100,000

Facility fund

100,000

—

Corporate bond

Series 54-2

October 30, 2023

Facility fund

60,000

Facility fund

60,000

—

Corporate bond

Series 55-1

January 22, 2024

Repayment of debt

170,000

Repayment of debt

170,000

—

Corporate bond

Series 55-1

January 22, 2024

Repayment of debt

60,000

Repayment of debt

60,000

—

 

*

Series 52-2 issued as of January 25, 2022 is an ESG bond (green bond). Series 52-2 was issued in furtherance of the Company’s ESG goal for the purpose of repayment of funds raised to be invested in the conversion of hybrid fiber-coaxial network to fiber-to-the-home network, which has a positive impact on the environment, including the reduction of greenhouse gas emissions. The proceeds from the bond offering were used for the intended purpose.

 

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4. Other Matters Related to Financial Information

 

A.	Restatement of the Financial Statements

Not applicable.

 

B.	Loss Allowance

 

(1)

Loss Allowance of Trade and Other Receivables

 

			(Unit: in millions of Won, except percentages)
		For the three months ended March 31, 2024
		Gross amount				Loss Allowance				Percentage
Accounts receivable – trade			2,312,107				256,020				11.1	%
Loans			154,107				42,109				27.3	%
Accounts receivable – other			773,736				34,740				4.5	%
Accrued income			3,760				—				—
Guarantee deposits			283,196				300				0.1	%
Total			3,526,906				333,169				9.4	%
			(Unit: in millions of Won, except percentages)
		For the year ended December 31, 2023
		Gross amount				Loss Allowance				Percentage
Accounts receivable – trade			2,233,586				242,737				10.9	%
Loans			150,671				42,087				27.9	%
Accounts receivable – other			690,157				33,276				4.8	%
Accrued income			4,295				—				—
Guarantee deposits			286,520				300				0.1	%
Total			3,365,229				318,400				9.5	%
			(Unit: in millions of Won, except percentages)
		For the year ended December 31, 2022
		Gross amount				Loss Allowance				Percentage
Accounts receivable – trade			2,219,695				234,923				10.6	%
Loans			151,155				45,592				30.2	%
Accounts receivable – other			897,920				44,188				4.9	%
Accrued income			1,732				—				—
Guarantee deposits			280,945				300				0.1	%
Total			3,551,447				325,003				9.2	%

 

(2)

Movements in Loss Allowance of Trade and Other Receivables

 

											(Unit: in millions of Won)
		For the three months ended March 31, 2024				For the year ended December 31, 2023				For the year ended December 31, 2022
Beginning balance			318,400				325,003				330,891
Effect of change in accounting policy			—				—				—
Increase of loss allowance			14,949				43,162				30,064
Reversal of loss allowance			—				—				—
Write-offs			(180	)			(49,764	)			(35,955	)
Other			—				—				3
Ending balance			333,169				318,400				325,003

 

(3)

Policies for Loss Allowance

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

 

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(4)

Aging of Accounts Receivable

 

											(Unit: in millions of Won, except percentages)
		As of March 31, 2024
		Six months or less				From six months to one year				From one year to three years				More than three years				Total
Accounts receivable – general			2,049,489				62,418				152,681				47,518				2,312,107
Percentage			88.6	%			2.7	%			6.6	%			2.1	%			100.0	%

 

C.	Inventories

 

(1)

Detailed Categories of Inventories

 

			(Unit: in millions of Won, except percentages)
Account Category		For the three months ended March 31, 2024				For the year ended December 31, 2023				For the year ended December 31, 2022
Merchandise			190,109				166,614				151,303
Goods in transit			—				—				—
Other inventories			20,222				13,195				15,052
Total			210,331				179,809				166,355
Percentage of inventories to total assets [Inventories / Total assets]			0.69	%			0.60	%			0.53	%
Inventory turnover [Cost of sales / { ( Beginning balance of inventories + Ending balance of inventories ) / 2}]			6.77				7.32				6.84

 

(2)

Reporting of Inventories

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

 

D.	Fair Value Measurement

See Note 29 of the notes to the Company’s interim consolidated financial statements attached hereto for more information.

 

E.	Key Terms of Debt Securities

[SK Telecom]

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

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 62-3		Aug. 28, 2012		Aug. 28, 2032		90,000		Aug. 22, 2012		Meritz Securities Co., Ltd.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 100% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed Won 2 trillion
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

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Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 63-2		Apr. 23, 2013		Apr. 23, 2033		130,000		Apr. 17, 2013		Korea Securities Finance Corp.
Unsecured Bond – Series 64-2		May 14, 2014		May 14, 2024		150,000		Apr. 29, 2014		Korea Securities Finance Corp.
Unsecured Bond – Series 65-3		Oct. 28, 2014		Oct. 28, 2024		190,000		Oct. 16, 2014		Korea Securities Finance Corp.
Unsecured Bond – Series 66-2		Feb. 26, 2015		Feb. 26, 2025		150,000		Feb. 11, 2015		Korea Securities Finance Corp.
Unsecured Bond – Series 66-3		Feb. 26, 2015		Feb. 26, 2030		50,000		Feb. 11, 2015		Korea Securities Finance Corp.
Unsecured Bond – Series 67-2		July 17, 2015		July 17, 2025		70,000		July 9, 2015		Korea Securities Finance Corp.
Unsecured Bond – Series 67-3		July 17, 2015		July 17, 2030		90,000		July 9, 2015		Korea Securities Finance Corp.
Unsecured Bond – Series 68-2		Nov. 30, 2015		Nov. 30, 2025		100,000		Nov. 18, 2015		Korea Securities Finance Corp.
Unsecured Bond – Series 68-3		Nov. 30, 2015		Nov. 30, 2035		70,000		Nov. 18, 2015		Korea Securities Finance Corp.
Unsecured Bond – Series 69-3		Mar. 4, 2016		Mar. 4, 2026		90,000		Feb. 22, 2016		Korea Securities Finance Corp.
Unsecured Bond – Series 69-4		Mar. 4, 2016		Mar. 4, 2036		80,000		Feb. 22, 2016		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 100% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed Won 2 trillion
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 70-3		June 3, 2016		June 3, 2026		120,000		May 24, 2016		Korea Securities Finance Corp.
Unsecured Bond – Series 70-4		June 3, 2016		June 3, 2031		50,000		May 24, 2016		Korea Securities Finance Corp.
Unsecured Bond – Series 71-3		Apr. 25, 2017		Apr. 25, 2027		100,000		Apr. 13, 2017		Korea Securities Finance Corp.
Unsecured Bond – Series 71-4		Apr. 25, 2017		Apr. 25, 2032		90,000		Apr. 13, 2017		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed Won 5 trillion
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

18

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Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 72-3		Nov. 10, 2017		Nov. 10, 2027		100,000		Oct. 31, 2017		Korea Securities Finance Corp.
Unsecured Bond – Series 73-2		Feb. 20, 2018		Feb. 20, 2023		100,000		Feb. 6. 2018		Korea Securities Finance Corp.
Unsecured Bond – Series 73-3		Feb. 20, 2018		Feb. 20, 2028		200,000		Feb. 6. 2018		Korea Securities Finance Corp.
Unsecured Bond – Series 73-4		Feb. 20, 2018		Feb. 20, 2038		90,000		Feb. 6. 2018		Korea Securities Finance Corp.
Unsecured Bond – Series 74-2		Sept. 17, 2018		Sept. 17, 2023		150,000		Sept. 5, 2018		Korea Securities Finance Corp.
Unsecured Bond – Series 74-3		Sept. 17, 2018		Sept. 17, 2038		50,000		Sept. 5, 2018		Korea Securities Finance Corp.
Unsecured Bond – Series 75-2		Mar. 6, 2019		Mar. 6, 2024		120,000		Feb. 21, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 75-3		Mar. 6, 2019		Mar. 6, 2029		50,000		Feb. 21, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 75-4		Mar. 6, 2019		Mar. 6, 2039		50,000		Feb. 21, 2019		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 76-2		July 29, 2019		July 29, 2024		60,000		July 17, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 76-3		July 29, 2019		July 29, 2029		120,000		July 17, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 76-4		July 29, 2019		July 29, 2039		50,000		July 17, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 76-5		July 29, 2019		July 29, 2049		50,000		July 17, 2019		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

19

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Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 77-2		Oct. 22, 2019		Oct. 22, 2024		70,000		Oct. 10, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 77-3		Oct. 22, 2019		Oct. 22, 2029		40,000		Oct. 10, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 77-4		Oct. 22, 2019		Oct. 22, 2039		60,000		Oct. 10, 2019		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 78-2		Jan. 14, 2020		Jan. 14, 2025		130,000		Dec. 31, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 78-3		Jan. 14, 2020		Jan. 14, 2030		50,000		Dec. 31, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 78-4		Jan. 14, 2020		Jan. 14, 2040		70,000		Dec. 31, 2019		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 79-1		Oct. 19, 2020		Oct. 19, 2025		140,000		Oct. 6, 2020		Korea Securities Finance Corp.
Unsecured Bond – Series 79-2		Oct. 19, 2020		Oct. 19, 2030		40,000		Oct. 6, 2020		Korea Securities Finance Corp.
Unsecured Bond – Series 79-3		Oct. 19, 2020		Oct. 19, 2040		110,000		Oct. 6, 2020		Korea Securities Finance Corp.

 

20

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Table of Contents

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 80-1		Jan. 15, 2021		Jan. 14, 2024		80,000		Jan. 5, 2021		Korea Securities Finance Corp.
Unsecured Bond – Series 80-2		Jan. 15, 2021		Jan. 15, 2026		80,000		Jan. 5, 2021		Korea Securities Finance Corp.
Unsecured Bond – Series 80-3		Jan. 15, 2021		Jan. 15, 2031		50,000		Jan. 5, 2021		Korea Securities Finance Corp.
Unsecured Bond – Series 80-4		Jan. 15, 2021		Jan. 15, 2041		100,000		Jan. 5, 2021		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 81-1		Oct. 28, 2021		Oct. 28, 2024		90,000		Oct. 18, 2021		Korea Securities Finance Corp.
Unsecured Bond – Series 81-2		Oct. 28, 2021		Oct. 28, 2026		70,000		Oct. 18, 2021		Korea Securities Finance Corp.
Unsecured Bond – Series 81-3		Oct. 28, 2021		Oct. 28, 2041		40,000		Oct. 18, 2021		Korea Securities Finance Corp.
Unsecured Bond – Series 82-1		April 12, 2022		April 12, 2025		240,000		March 31, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 82-2		April 12, 2022		April 12, 2027		70,000		March 31, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 82-3		April 12, 2022		April 12, 2042		40,000		March 31, 2022		Korea Securities Finance Corp.

 

21

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Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 83-1		August 10, 2022		August 8, 2025		300,000		July 29, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 83-2		August10, 2022		August 10, 2027		95,000		July 29, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 84-1		December 14, 2022		December 13, 2024		100,000		December 2, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 84-2		December 14, 2022		December 12, 2025		110,000		December 2, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 84-3		December 14, 2022		December 14, 2027		60,000		December 2, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 84-4		December 14, 2022		December 14, 2032		40,000		December 2, 2022		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 85-1		February 17, 2023		February 17, 2026		110,000		February 7, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 85-2		February 17, 2023		February 17, 2028		190,000		February 7, 2023		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

22

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Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 86-1		April 12, 2023		April 10, 2026		80,000		March 31, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 86-2		April 12, 2023		April 12, 2028		200,000		March 31, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 86-3		April 12, 2023		April 12, 2030		70,000		March 31, 2023		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Hybrid Securities Series 3		June 5, 2023		June 5, 2083		400,000		May 23, 2023		Eugene Investment & Securities Co., Ltd.

 

Maintenance of Financial Ratio		Key Term		Not Applicable
		Compliance Status		Compliant
Restriction on Liens		Key Term		Not Applicable
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Not Applicable
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Not Applicable
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 87-1		October 18, 2023		October 16, 2026		115,000		October 5, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 87-2		October 18, 2023		October 18, 2028		100,000		October 5, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 87-3		October 18, 2023		October 18, 2030		50,000		October 5, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 87-4		October 18, 2023		October 18, 2033		30,000		October 5, 2023		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on April 11, 2024

 

23

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Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 88-1		February 22, 2024		February 22, 2027		180,000		February 8, 2024		Korea Securities Finance Corp.
Unsecured Bond – Series 88-2		February 22, 2024		February 22, 2029		110,000		February 8, 2024		Korea Securities Finance Corp.
Unsecured Bond – Series 88-3		February 22, 2024		February 22, 2034		110,000		February 8, 2024		Korea Securities Finance Corp.

 

Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 300%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 150% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 50% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction of cross-shareholding Exclusion from corporate group
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		To be submitted following the filing of the next semi-annual business report

[SK Broadband]

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

 

Name		Issue Date		Maturity Date		Principal Amount (millions of Won)		Date of Fiscal Agency Agreement		Fiscal Agent
Unsecured Bond – Series 48-2		Sept. 24, 2019		Sept. 24, 2024		100,000		Sept. 10, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 48-3		Sept. 24, 2019		Sept. 23, 2026		50,000		Sept. 10, 2019		Korea Securities Finance Corp.
Unsecured Bond – Series 49-2		June 11, 2020		June 11, 2025		100,000		June 1, 2020		Korea Securities Finance Corp.
Unsecured Bond – Series 50		Sept. 25, 2020		Sept. 25, 2025		160,000		Sept. 15, 2020		Korea Securities Finance Corp.
Unsecured Bond – Series 51		July 13, 2021		July 12, 2024		100,000		July 1, 2021		Korea Securities Finance Corp.
Unsecured Bond – Series 52-1		Jan. 25, 2022		Jan. 24, 2025		100,000		Jan. 13, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 52-2		Jan. 25, 2022		Jan. 25, 2032		50,000		Jan. 13, 2022		Korea Securities Finance Corp.
Unsecured Bond – Series 53-1		Mar. 2, 2023		Feb. 28, 2025		50,000		Feb. 17, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 53-2		Mar. 2, 2023		Feb. 27, 2026		100,000		Feb. 17, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 53-3		Mar. 2, 2023		Mar. 2, 2028		90,000		Feb. 17, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 54-1		Oct. 30, 2023		Oct. 30, 2026		100,000		Oct. 18, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 54-2		Oct. 30, 2023		Oct. 30, 2028		60,000		Oct. 18, 2023		Korea Securities Finance Corp.
Unsecured Bond – Series 55-1		January 22, 2024		January 22, 2027		170,000		January 10, 2024		Korea Securities Finance Corp.
Unsecured Bond – Series 55-2		January 22, 2024		January 22, 2029		60,000		January 10, 2024		Korea Securities Finance Corp.

 

24

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Maintenance of Financial Ratio		Key Term		Debt ratio no greater than 400%
		Compliance Status		Compliant
Restriction on Liens		Key Term		The total amount of secured debt not to exceed 200% of share capital as of the end of the previous fiscal year
		Compliance Status		Compliant
Restriction on Disposition of Assets		Key Term		Disposal of assets per fiscal year not to exceed 70% of total assets
		Compliance Status		Compliant
Restriction on Changes of Ownership Structure		Key Term		Restriction on changes of ownership structure
		Compliance Status		Compliant
Submission of Compliance Certificate		Compliance Status		Submitted on September 11, 2023

 

25

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IV.	MANAGEMENT’S DISCUSSION AND ANALYSIS

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

 

26

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V.	AUDITOR’S OPINION

1. Independent Auditors and Audit Opinions

 

A.	Independent Auditor and Audit Opinion (Separate and Consolidated)

 

Period		Independent auditor		Audit opinion		Emphasis of Matter		Critical Audit Matters
Three months ended March 31, 2024		Ernst & Young Han Young		—		—		—
Year ended December 31, 2023		Ernst & Young Han Young		Unqualified		—		Timing of revenue recognition related to the Company’s cellular services; impairment assessment of goodwill for the fixed-line telecommunications services cash generating unit
Year ended December 31, 2022		Ernst & Young Han Young		Unqualified		—		Timing of revenue recognition related to the Company’s cellular services; impairment assessment of goodwill for the fixed-line telecommunications services cash generating unit

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

**	The audit opinion is on the consolidated and separate financial statements.

 

B.	Audit Services Contracts with Independent Auditors

 

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

Period

Auditors

Contents

Audit Contract

Actual Performance

Fee

Total number of hours

Fee

Total number of hours

Three months ended March 31, 2024

Ernst & Young Han Young

Quarterly and semi-annual review

2,880

25,000

233

2,021

Separate financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Internal accounting system audit

Year ended December 31, 2023

Ernst & Young Han Young

Quarterly and semi-annual review

2,780

24,800

2,780

24,800

Separate financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Internal accounting system audit

Year ended December 31, 2022

Ernst & Young Han Young

Quarterly and semi-annual review

2,700

24,100

2,700

24,100

Separate financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Internal accounting system audit

 

27

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C.	Non-Audit Services Contracts with Independent Auditors

 

(Unit: in millions of Won)
Period		Contract date		Service provided		Service duration		Fee
Three months ended March 31, 2024		—		—		—		—
Year ended December 31, 2023		—		—		—		—
Year ended December 31, 2022		—		—		—		—

 

D.	Discussions between Audit Committee and Independent Auditors

 

Date		Attendance		Method		Key Matters Discussed
February 20, 2024		Company’s Audit Committee: 4 Auditor: 2		In-person		Report on 2023 results of audit of financial statements; report on results of 2023 internal accounting management system audit
April 22, 2024		Company’s Audit Committee: 3 Auditor: 1		In-person		Report on 2023 Public Company Accounting Oversight Board audit results

 

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VI.	CORPORATE ORGANIZATION INCLUDING BOARD OF DIRECTORS

1. Board of Directors

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

2. Audit System

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

3. Shareholders’ Exercise of Voting Rights

 

A.	Voting System

 

(As of March 31, 2024)
Classification of Voting System		Cumulative voting system		Written voting system		Electronic voting system
Adoption status		Selected		Not adopted		Adopted
Implementation status		—		—		Conducted during the 40th General Meeting of Shareholders

The Company implemented a proxy solicitation procedure for the 40th General Meeting of Shareholders, pursuant to which shareholders were permitted to provide written proxy to exercise their voting rights.

 

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VII.	SHAREHOLDERS

1. Shareholdings of the Largest Shareholder and Related Persons

 

A.	Shareholdings of the Largest Shareholder and Related Persons

 

(As of March 31, 2024)										(Unit: in shares and percentages)
Name		Relationship		Type of share		Number of shares owned and ownership ratio
						Beginning of Period								End of Period
						Number of shares				Ownership ratio				Number of shares				Ownership ratio
SK Inc.		Largest Shareholder		Common share			65,668,397				30.01				65,668,397				30.57
Tae Won Chey		Related Person		Common share			303				0.00				303				0.00
Dong Hyun Jang		Related Person		Common share			762				0.00				762				0.00
Jung Ho Park		Related Person		Common share			21,530				0.01				21,530				0.01
Young Sang Ryu		Related Person		Common share			11,974				0.01				20,309				0.01
Yong-Hak Kim		Related Person		Common share			3,358				0.00				3,358				0.00
Seok-Dong Kim		Related Person		Common share			2,785				0.00				2,785				0.00
Junmo Kim		Related Person		Common share			2,785				0.00				2,785				0.00
Haeyun Oh		Related Person		Common share			1,338				0.00				1,338				0.00
Mi Kyung Noh		Related Person		Common share			0				0.00				0				0.00
Sung Hyung Lee		Related Person		Common share			0				0.00				0				0.00
Poong Young Yoon		Related Person		Common share			2,733				0.00				2,733				0.00
Jong Ryeol Kang		Related Person		Common share			5,758				0.00				8,823				0.00
Yang Seob Kim		Related Person		Common share			0				0.00				0				0.00
Total				Common share			65,724,963				30.03				65,733,123				30.60

 

*	The change in ownership ratio reflects the cancellation of treasury shares (1.8% of total shares issued) in February 2024.

**	The number of shares owned and ownership ratio as of the beginning of the period account for the 3,240 shares owned by Kyu-nam Choi (former non-executive director) and Youngmin Yoon (former independent director) whose respective terms expired in March 2024.

***	The number of shares owned and ownership ratio as of the beginning of the period do not account for the shares owned by Yang Seob Kim (executive director), Sung Hyung Lee (non-executive director) and Mi Kyung Noh (independent director), who were newly appointed in March 2024.

 

B.	Overview of the Largest Shareholder

As of March 31, 2024, the Company’s largest shareholder was SK Inc. SK Inc. was established on April 13, 1991 and was made public on the securities market on November 11, 2009 under the identification code “034730.” SK Inc. is located at 26, Jong-ro, Jongno-gu, Seoul, Korea. SK Inc.’s telephone number is [phone] and its website is https://www.sk-inc.com/.

 

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

Changes in shareholdings of the largest shareholder are as follows:

 

(As of March 31, 2024)								(Unit: in shares and percentages)
Largest Shareholder		Date of the change		Shares Held*		Holding Ratio		Remarks
SK Inc.		January 24, 2022		65,695,437		30.02		Jung Ho Park, director of the Company’s affiliate, and Young Sang Ryu, representative director of the Company, acquired 3,000 and 4,000 shares, respectively.
		February 25, 2022		65,703,035		30.02		Jung Ho Park, director of the Company’s affiliate, acquired 7,598 shares.
		March 25, 2022		65,706,519		30.03		Jong Ryeol Kang, executive director of the Company, acquired 3,484 shares.
		May 3, 2022		65,712,503		30.03		Four independent directors of the Company, Youngmin Yoon, Jung Ho Ahn, Junmo Kim, Seok-dong Kim, each acquired 1,144 shares. Yong-Hak Kim, another independent director of the Company, acquired 1,408 shares.
		February 27, 2023		65,719,411		30.03		Young Sang Ryu, representative director of the Company, and Jong Ryeol Kang, executive director of the Company, acquired 4,634 and 2,274 shares, respectively.
		March 28, 2023		65,717,964		30.03		Retirement of Jung Ho Ahn, independent director of the Company (1,447 shares)
		April 21, 2023		65,724,963		30.03		Four independent directors, Youngmin Yoon, Haeyun Oh, Junmo Kim and Seok-dong Kim each acquired 1,338 shares. Yong-Hak Kim, independent director of the Company, acquired 1,647 shares.
		January 29, 2024		65,733,123		30.60		Young Sang Ryu, representative director of the Company, and Jong Ryeol Kang, executive director of the Company, acquired 8,335 and 3,065 shares, respectively.

 

*	The figures for shares held and holding ratio are based on the shareholding of the largest shareholder and its related persons.

**	The change in ownership ratio reflects the cancellation of treasury shares (1.8% of total shares issued) in February 2024.

 

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VIII.

EMPLOYEES AND DIRECTORS

1. Officers and Employees

 

A.	Registered Directors

 

(As of March 31, 2024)

Name

Gender

Date of Birth

Position

Professional Background

Duration of Term

End of Current Term

Young Sang Ryu

Male

May 1970

Chief Executive Officer; Representative Director

Former Head, SK Telecom MNO business

6 years and 1 month

—

Jong Ryeol Kang

Male

Oct. 1964

CSPO and Head of ICT Infrastructure Center

Former Head, Corporate Culture Division

2 years and 1 month

—

Yang Seob Kim

Male

Feb. 1966

Head of Corporate Planning and Chief Financial Officer

Former Head of Finance Division and Chief Financial Officer, SK Innovation

1 month

—

Sung Hyung Lee

Male

Dec. 1965

Non-executive Director

President, Chief Financial Officer and Head of Finance Division, SK Inc.; Former President, Chief Financial Officer and Head of PM Division, SK Inc.

1 month

—

Yong-Hak Kim

Male

Jan. 1953

Independent Director

Former President (Professor Emeritus), Yonsei University

4 years and 1 month

—

Seok-Dong Kim

Male

May 1953

Independent Director

Former Chairman, Financial Services Commission

5 years and 1 month

—

Junmo Kim

Male

Sep. 1976

Independent Director

Professor, Department of Electrical Engineering at Korea Advanced Institute of Science and Technology

4 years and 1 month

—

Haeyun Oh

Female

Nov. 1974

Independent Director

Former Director of MARS Artificial Intelligence Integrated Research Center, Korea Advanced Institute of Science and Technology; Professor, Department of Computer Science at Korea Advanced Institute of Science and Technology

1 year and 1 month

—

Mi Kyung Noh

Female

Aug. 1965

Independent Director

Regional Head of Credit Risk Review and Asia Pacific Risk, HSBC Hong Kong

1 month

—

*

At the 40th General Meeting of Shareholders held on March 26, 2024, Young Sang Ryu was re-elected as a representative director, Yang Seob Kim was newly elected as an executive director, Sung Hyung Lee was newly appointed as a non-executive director, and Mi Kyung Noh was newly appointed as an independent director and a member of the audit committee.

 

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2. Compensation of Directors and Officers

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

 

IX.	RELATED PARTY TRANSACTIONS

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

None.

 

2.

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

 

A.	Purchase and Dispositions of Investments

 

(As of March 31, 2024)

(Unit: in millions of Won)

Name (Corporate name)

Purchase and Dispositions of Investments

Transaction Details

Relationship

Type of Investment

Beginning

Increase

Decrease

Ending

Remarks

SK Americas, Inc.

Subsidiary

Shares

5,498

5,878

—

11,376

Additional acquisition

Atlas Investment

Subsidiary

Shares

193,661

26,679

—

220,340

Additional acquisition

3. Transactions with the Largest Shareholder and Related Parties

 

(As of March 31, 2024)

(Unit: in millions of Won)

Counterparty

Relationship with Counterparty

Type

Transaction Period

Transaction Details

Transaction Amount

PS&Marketing

Related company

Purchase

January 1, 2024 – March 30, 2024

Marketing fees, etc.

315,530

4. Related Party Transactions

See Note 30 of the notes to the Company’s interim consolidated financial statements attached hereto for more information regarding related party transactions.

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

 

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

 

(As of March 31, 2024)														(Unit: in millions of Won)
Name (Corporate name)		Relationship		Account category		Change details																Accrued interest				Remarks
						Beginning				Increase				Decrease				Ending
Baekmajang and others		Agency		Long-term and short- term loans			69,621				33,360				31,213				71,768				—				—
Daehan Kanggun BCN Inc.		Investee		Long-term loans			22,147				—				—				22,147				—				—

 

B.	Other transactions

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

 

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X.	OTHER INFORMATION RELATING TO THE PROTECTION OF INVESTORS

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

None.

2. Contingent Liabilities

 

A.	Legal Proceedings

[SK Telecom]

As of March 31, 2024, the Company is involved in various pending legal proceedings, and the provisions recognized for these proceedings are not material. The management of the Company has determined that there are currently no present obligations in connection with proceedings for which no provision has been recognized. The management has also determined that the outcome of these proceedings will not have a significant impact on the Company’s financial position and operating performance.

[SK Broadband]

As of March 31, 2024, there were 19 pending lawsuits against SK Broadband (aggregate amount of claims of Won 8,653 million).

 

B.	Other Contingent Liabilities and Guarantees for Payment

[SK Telecom]

None.

[SK Broadband]

As of March 31, 2024, SK Broadband has entered into revolving credit facilities with a limit of Won 170 billion with three financial institutions including Hana Bank in relation to its loans.

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

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

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

As of March 31, 2024, SK Broadband has been provided with the following material payment guarantees by other parties.

 

(Unit: in millions of Won)
Guarantor		Guarantee Details		Guaranteed Amount
Seoul Guarantee Insurance Company		Contract and defect performance guarantee			30,680
Korea Content Financial Cooperative		Contract performance guarantee			42,649

 

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[PS&Marketing]

As of March 31, 2024, PS&Marketing has been provided with the following material payment guarantees by other parties.

 

(Unit: in millions of Won)
Guarantor		Guarantee Details		Guaranteed Amount
Seoul Guarantee Insurance Company		Performance guarantee			1,543

[SK Telink]

As of March 31, 2024, SK Telink provided the following material payment guarantees to other parties.

 

(Unit: in millions of Won)
Guarantor		Counterparty		Guaranteed Amount				Guarantee Details
SK Telink		Korea Coast Guard and others			158			Contract guarantee

As of March 31, 2024, SK Telink has been provided with the following material payment guarantees by other parties.

 

(Unit: in millions of Won)
Guarantor		Guarantee Details		Guaranteed Amount
Seoul Guarantee Insurance Company		Contract guarantee			589

[Home&Service]

As of March 31, 2024, Home&Service has been provided with the following material payment guarantees by other parties.

 

(Unit: in millions of Won)
Guarantor		Guarantee Details		Guaranteed Amount
Seoul Guarantee Insurance Company		Payment guarantees and warranties			2,156

[SK M&Service]

As of March 31, 2024, SK M&Service has entered into the following credit facilities with financial institutions.

 

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

As of March 31, 2024, SK M&Service has been provided with the following material payment guarantees by other parties.

 

(Unit: in millions of Won)
Guarantor		Guarantee Details		Guaranteed Amount
Korea Tourism Organization and 36 other companies		Transaction performance guarantee			2,284
SK Energy		Transaction performance guarantee			700

[SK O&S]

As of March 31, 2024, SK O&S has been provided with the following material payment guarantees by other parties.

 

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

 

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[SK Stoa]

As of March 31, 2024, SK Stoa has been provided with the following material payment guarantees by other parties.

 

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

[SAPEON Korea]

As of March 31, 2024, SAPEON Korea has been provided with the following material payment guarantees by other parties.

 

(Unit: in millions of Won)
Guarantor		Guarantee Details		Guaranteed Amount
Seoul Guarantee Insurance Company		Payment guarantees, warranties and contract guarantees			599

3. Status of Sanctions, etc.

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

4. Material Events Subsequent to the Reporting Period

Omitted in quarterly reports in accordance with applicable Korean disclosure rules. For more information, please refer to the Company’s annual business report for the year ended December 31, 2023.

 

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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/ Heejun Chung
(Signature)
Name:		Heejun Chung
Title:		Senior Vice President

Date: June 12, 2024

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SK TELECOM CO., LTD. AND ITS SUBSIDIARIES

Interim Consolidated Financial Statements

For each of the three-month periods ended March 31, 2024 and 2023

(with the independent auditor’s review report)

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Contents

 

		Page
Report on review of interim consolidated financial statements
Interim Consolidated Financial Statements
Interim Consolidated Statements of Financial Position			1
Interim Consolidated Statements of Income			3
Interim Consolidated Statements of Comprehensive Income			4
Interim Consolidated Statements of Changes in Equity			5
Interim Consolidated Statements of Cash Flows			6
Notes to the Interim Consolidated Financial Statements			8

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Report on review of interim consolidated financial statements

(English translation of a report originally issued in Korean)

The Shareholders and Board of Directors

SK Telecom Co., Ltd.

We have reviewed the accompanying interim consolidated financial statements of SK Telecom Co., Ltd. and its subsidiaries (collectively referred to as the “Group”), which comprise the interim consolidated statement of financial position as of March 31, 2024, and the related interim consolidated statements of income, interim consolidated statements of comprehensive income, interim consolidated statements of changes in equity and interim consolidated statements of cash flows for each of the three-month periods ended March 31, 2024 and 2023, and a summary of material accounting policy information and other explanatory information.

Management’s responsibility for the interim consolidated financial statements

Management is responsible for the preparation and fair presentation of these interim consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of interim consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on these interim consolidated financial statements based on our review.

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial statements are not prepared fairly, in all material respects, in accordance with KIFRS 1034 Interim Financial Reporting.

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Other matters

We have audited the consolidated statement of financial position as of December 31, 2023, and the related consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended (not presented herein) in accordance with KSA, and our report dated March 6, 2024 expressed an unqualified opinion thereon. The accompanying consolidated statement of financial position as of December 31, 2023 presented for comparative purposes is not different, in all material respects, from the above audited consolidated statement of financial position.

May 13, 2024

 

This report is effective as of May 13, 2024, the independent auditor’s review report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the date of the independent auditor’s review report to the time this review report is used. Such events and circumstances could significantly affect the accompanying interim consolidated financial statements and may result in modification to this review report.

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SK TELECOM CO., LTD. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023 AND

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2024 AND 2023

The accompanying interim 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

Interim Consolidated Statements of Financial Position

As of March 31, 2024 and December 31, 2023

 

(In millions of won)		Note				March 31, 2024 (Unaudited)				December 31, 2023
Assets
Current Assets:
Cash and cash equivalents			28,29			W	1,718,989				1,454,978
Short-term financial instruments			28,29				354,624				294,934
Accounts receivable – trade, net			5,28,29,30				2,043,694				1,978,532
Short-term loans, net			5,28,29				80,178				78,129
Accounts receivable – other, net			5,28,29,30,31				421,931				344,350
Contract assets			7,29				86,930				89,934
Prepaid expenses			6				1,987,891				1,953,769
Prepaid income taxes			26				141				161
Derivative financial assets			28,29				25,880				8,974
Inventories, net			8				210,331				179,809
Non-current assets held for sale			34				9,469				10,515
Advanced payments and others			5,28,29,30				169,545				191,517
							7,109,603				6,585,602
Non-Current Assets:
Long-term financial instruments			28,29				375				375
Long-term investment securities			9,28,29				1,803,587				1,679,384
Investments in associates and joint ventures			10				1,971,334				1,915,012
Investment property, net			12				33,848				34,812
Property and equipment, net			11,13,30,31				12,621,363				13,006,196
Goodwill							2,075,009				2,075,009
Intangible assets, net			14				2,710,382				2,861,137
Long-term contract assets			7,29				38,978				39,837
Long-term loans, net			5,28,29,30				31,820				30,455
Long-term accounts receivable – other, net			5,28,29,30,31				317,065				312,531
Long-term prepaid expenses			6				1,096,437				1,086,107
Guarantee deposits, net			5,28,29,30				166,233				156,863
Long-term derivative financial assets			28,29				168,601				139,560
Deferred tax assets			26				10,552				11,609
Defined benefit assets			18				127,235				170,737
Other non-current assets			5,28,29				14,089				14,001
							23,186,908				23,533,625
Total Assets						W	30,296,511				30,119,227

 

(Continued)

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SK TELECOM CO., LTD. and its Subsidiaries

Interim Consolidated Statements of Financial Position, Continued

As of March 31, 2024 and December 31, 2023

 

 

(In millions of won)		Note				March 31, 2024 (Unaudited)				December 31, 2023
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable – trade			28,29,30			W	144,972				139,876
Accounts payable – other			28,29,30				1,765,608				1,913,006
Withholdings			28,29,30				1,046,404				802,506
Contract liabilities			7				166,773				155,576
Accrued expenses			28,29				1,206,611				1,439,786
Income tax payable			26				205,972				142,496
Provisions			17,33				39,237				38,255
Current portion of long-term debt, net			15,28,29				1,946,148				1,621,844
Current portion of long-term payables – other			16,28,29				363,002				367,770
Lease liabilities			28,29,30				373,566				372,826
Liabilities held for sale							38				39
							7,258,331				6,993,980
Non-Current Liabilities:
Debentures, excluding current portion, net			15,28,29				7,303,518				7,106,299
Long-term borrowings, excluding current portion, net			15,28,29				112,460				315,578
Long-term payables – other			16,28,29				533,407				892,683
Long-term lease liabilities			28,29,30				1,215,839				1,238,607
Long-term contract liabilities			7				60,875				56,917
Defined benefit liabilities			18				5,855				—
Long-term derivative financial liabilities			28,29				295,876				305,088
Long-term provisions			17				83,573				83,169
Deferred tax liabilities			26				900,222				832,236
Other non-current liabilities			28,29,30				73,573				66,271
							10,585,198				10,896,848
Total Liabilities							17,843,529				17,890,828
Shareholders’ Equity:
Share capital			1,19				30,493				30,493
Capital surplus and others			19,20				(11,618,241	)			(11,828,644	)
Retained earnings			21				22,727,912				22,799,981
Reserves			22				517,986				387,216
Equity attributable to owners of the Parent Company							11,658,150				11,389,046
Non-controlling interests							794,832				839,353
Total Shareholders’ Equity							12,452,982				12,228,399
Total Liabilities and Shareholders’ Equity						W	30,296,511				30,119,227

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Interim Consolidated Statements of Income

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won, except for earnings per share)		Note				2024 (Unaudited)				2023 (Unaudited)
Operating revenue:			4,30
Revenue						W	4,474,611				4,372,227
Operating expenses:			30
Labor							660,617				617,570
Commission			6				1,379,580				1,356,230
Depreciation and amortization			4				897,150				900,180
Network interconnection							176,886				172,477
Leased lines							64,320				72,008
Advertising							34,742				43,590
Rent							31,314				38,471
Cost of goods sold			8				330,305				314,191
Others			23				401,208				362,732
							3,976,122				3,877,449
Operating profit:			4				498,489				494,778
Finance income			4,25				60,082				52,208
Finance costs			4,25				(121,164	)			(125,138	)
Gain relating to investments in associates and joint ventures, net			4,10				4,906				771
Other non-operating income			4,24				8,793				9,334
Other non-operating expenses			4,24				(10,361	)			(11,055	)
Profit before income tax			4				440,745				420,898
Income tax expense			26				78,805				118,397
Profit for the period						W	361,940				302,501
Attributable to:
Owners of the Parent Company						W	352,986				290,506
Non-controlling interests							8,954				11,995
Earnings per share			27
Basic earnings per share (in won)						W	1,636				1,314
Diluted earnings per share (in won)							1,634				1,314

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Interim Consolidated Statements of Comprehensive Income

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won)		Note				2024 (Unaudited)				2023 (Unaudited)
Profit for the period						W	361,940				302,501
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss, net of taxes:
Remeasurement of defined benefit liabilities (assets)			18				(4,630	)			(20,466	)
Valuation gain on financial assets at fair value through other comprehensive income			22				78,509				54,694
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			10,22				46,577				32,054
Net change in unrealized fair value of derivatives			22				380				(401	)
Foreign currency translation differences for foreign operations			22				11,543				10,820
Other comprehensive income for the period, net of taxes							132,379				76,701
Total comprehensive income						W	494,319				379,202
Total comprehensive income attributable to:
Owners of the Parent Company						W	486,986				367,899
Non-controlling interests							7,333				11,303

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Interim Consolidated Statements of Changes in Equity

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won)						Attributable to owners of the Parent Company																				Non- controlling interests				Total equity
		Note				Share capital				Capital surplus and others				Retained earnings				Reserves				Sub-total
Balance as of January 1, 2023						W	30,493				(11,567,117	)			22,463,711				391,233				11,318,320				836,876				12,155,196
Total comprehensive income:
Profit for the period							—				—				290,506				—				290,506				11,995				302,501
Other comprehensive income (loss)			10,18,22				—				—				(19,808	)			97,201				77,393				(692	)			76,701
							—				—				270,698				97,201				367,899				11,303				379,202
Transactions with owners:
Annual dividends							—				—				(180,967	)			—				(180,967	)			(50,557	)			(231,524	)
Share option			20				—				(13	)			—				—				(13	)			—				(13	)
Interest on hybrid bonds							—				—				(3,692	)			—				(3,692	)			—				(3,692	)
Transactions of treasury shares			19				—				20,031				—				—				20,031				—				20,031
Changes in ownership in subsidiaries, etc.							—				1,490				—				—				1,490				(3,955	)			(2,465	)
							—				21,508				(184,659	)			—				(163,151	)			(54,512	)			(217,663	)
Balance as of March 31, 2023 (Unaudited)						W	30,493				(11,545,609	)			22,549,750				488,434				11,523,068				793,667				12,316,735
Balance as of January 1, 2024						W	30,493				(11,828,644	)			22,799,981				387,216				11,389,046				839,353				12,228,399
Total comprehensive income:
Profit for the period							—				—				352,986				—				352,986				8,954				361,940
Other comprehensive income (loss)			10,18,22				—				—				3,230				130,770				134,000				(1,621	)			132,379
							—				—				356,216				130,770				486,986				7,333				494,319
Transactions with owners:
Annual dividends							—				—				(223,335	)			—				(223,335	)			(50,927	)			(274,262	)
Share option			20				—				37				—				—				37				311				348
Interest on hybrid bonds							—				—				(4,950	)			—				(4,950	)			—				(4,950	)
Acquisition and disposal of treasury shares			19,20				—				8,876				—				—				8,876				—				8,876
Retirement of treasury shares			19				—				200,000				(200,000	)			—				—				—				—
Changes in ownership in subsidiaries, etc.							—				1,490				—				—				1,490				(1,238	)			252
							—				210,403				(428,285	)			—				(217,882	)			(51,854	)			(269,736	)
Balance as of March 31, 2024 (Unaudited)						W	30,493				(11,618,241	)			22,727,912				517,986				11,658,150				794,832				12,452,982

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Interim Consolidated Statements of Cash Flows

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won)		Note				2024 (Unaudited)				2023 (Unaudited)
Cash flows from operating activities:
Cash generated from operating activities:
Profit for the period						W	361,940				302,501
Adjustments for income and expenses			32				1,142,924				1,190,410
Changes in assets and liabilities related to operating activities			32				(303,304	)			(371,424	)
							1,201,560				1,121,487
Interest received							16,586				11,753
Dividends received							2,340				—
Interest paid							(118,823	)			(108,149	)
Income tax refund (paid)							17,066				(283	)
Net cash provided by operating activities							1,118,729				1,024,808
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net							—				8,710
Collection of short-term loans							33,837				33,119
Proceeds from disposals of long-term investment securities							22,867				56,046
Proceeds from disposals of investments in associates and joint ventures							15,072				—
Proceeds from disposals of property and equipment							2,790				2,927
Proceeds from disposals of intangible assets							1,349				8
Proceeds from disposals of non-current assets held for sale							1,074				930
Collection of long-term loans							204				642
Decrease in deposits							2,027				1,294
Proceeds from settlement of derivatives							230				543
							79,450				104,219
Cash outflows for investing activities:
Increase in short-term financial instruments, net							(58,975	)			—
Increase in short-term loans							(34,137	)			(39,976	)
Increase in long-term loans							(3,556	)			(3,060	)
Acquisitions of long-term investment securities							(27,594	)			(48,248	)
Acquisitions of investments in associates and joint ventures							(5,984	)			(8,526	)
Acquisitions of property and equipment							(576,578	)			(776,655	)
Acquisitions of intangible assets							(13,945	)			(7,335	)
Increase in deposits							(2,331	)			(3,467	)
							(723,100	)			(887,267	)
Net cash used in investing activities						W	(643,650	)			(783,048	)

 

(Continued)

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SK TELECOM CO., LTD. and its Subsidiaries

Interim Consolidated Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won)		Note				2024 (Unaudited)				2023 (Unaudited)
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from issuance of debentures						W	627,405				545,320
Transactions with non-controlling shareholders							—				186
Cash outflows for financing activities:							627,405				545,506
Repayments of short-term borrowings, net							—				(130,000	)
Repayments of long-term payables – other							(369,150	)			(400,245	)
Repayments of debentures							(360,000	)			(350,000	)
Repayments of long-term borrowings							(13,125	)			(6,250	)
Payments of interest on hybrid bonds							(4,950	)			(3,692	)
Repayments of lease liabilities							(81,503	)			(85,913	)
Acquisition of treasury shares							(15,788	)			—
							(844,516	)			(976,100	)
Net cash used in financing activities							(217,111	)			(430,594	)
Net increase (decrease) in cash and cash equivalents							257,968				(188,834	)
Cash and cash equivalents at beginning of the period							1,454,978				1,882,291
Effects of exchange rate changes on cash and cash equivalents							6,043				2,480
Cash and cash equivalents at end of the period						W	1,718,989				1,695,937

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

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 March 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			16,374,544				7.62
Institutional investors and other shareholders			126,991,437				59.13
Kakao Investment Co., Ltd.			3,846,487				1.79
Treasury shares			1,909,188				0.89
			214,790,053				100.00

These interim 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.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

1.	Reporting Entity, Continued

 

(2)

List of consolidated subsidiaries

The list of consolidated subsidiaries as of March 31, 2024 and December 31, 2023 is as follows:

 

Ownership (%)(*1)

Subsidiary

Location

Primary business

Mar. 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

SK Communications Co., Ltd.

Korea

Internet website services

100.0

100.0

SK Broadband Co., Ltd.

Korea

Fixed-line telecommunication services

74.4

74.4

PS&Marketing Corporation

Korea

Communications device retail business

100.0

100.0

SERVICE ACE Co., Ltd.

Korea

Call center management service

100.0

100.0

SERVICE TOP Co., Ltd.

Korea

Call center management service

100.0

100.0

SK O&S Co., Ltd.

Korea

Base station maintenance service

100.0

100.0

SK Telecom China Holdings Co., Ltd.

China

Investment (Holdings company)

100.0

100.0

SK Global Healthcare Business Group Ltd.

Hong Kong

Investment

100.0

100.0

YTK Investment Ltd.

Cayman Islands

Investment

100.0

100.0

Atlas Investment

Cayman Islands

Investment

100.0

100.0

SK Telecom Americas, Inc.

USA

Information gathering and consulting

100.0

100.0

Quantum Innovation Fund I

Korea

Investment

59.9

59.9

Happy Hanool Co., Ltd.

Korea

Service

100.0

100.0

SK stoa Co., Ltd.

Korea

Other telecommunication retail business

100.0

100.0

SAPEON Inc.

USA

Manufacturing non-memory and other electronic integrated circuits

62.5

62.5

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.

Korea

Investment

66.4

66.4

Subsidiary owned by SAPEON Inc.

SAPEON Korea Inc.

Korea

Manufacturing non-memory and other electronic integrated circuits

100.0

100.0

Others(*2)

SK Telecom Innovation Fund, L.P.

USA

Investment

100.0

100.0

SK Telecom China Fund I L.P.

Cayman Islands

Investment

100.0

100.0

 

(*1)

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

(*2)

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

1.	Reporting Entity, Continued

 

(3)

Condensed financial information of subsidiaries

 

1)

Condensed financial information of significant consolidated subsidiaries as of and for the three-month period ended March 31, 2024 is as follows:

 

(In millions of won)
		As of March 31, 2024												For the three-month period ended March 31, 2024
Subsidiary		Total assets				Total liabilities				Total equity				Revenue				Profit (loss)
SK Telink Co., Ltd.		W	216,706				77,383				139,323				81,472				5,497
SK Broadband Co., Ltd.			6,570,125				3,598,792				2,971,333				1,092,647				54,605
PS&Marketing Corporation			451,015				222,369				228,646				358,174				1,107
SERVICE ACE Co., Ltd.			74,783				48,478				26,305				49,599				1,290
SERVICE TOP Co., Ltd.			64,732				45,676				19,056				44,066				733
SK O&S Co., Ltd.			98,632				57,254				41,378				66,766				(1,025	)
Home & Service Co., Ltd.			157,668				104,063				53,605				126,607				893
SK stoa Co., Ltd.			99,559				41,497				58,062				74,078				1,305
SK m&service Co., Ltd.			172,822				107,263				65,559				57,489				61

 

2)

Condensed financial information of significant consolidated subsidiaries as of December 31, 2023 and for the three-month period ended March 31, 2023 is as follows:

 

(In millions of won)
		As of December 31, 2023												For the three-month period ended March 31, 2023
Subsidiary		Total assets				Total liabilities				Total equity				Revenue				Profit
SK Telink Co., Ltd.		W	213,920				65,049				148,871				76,842				7,146
SK Broadband Co., Ltd.			6,442,611				3,323,156				3,119,455				1,062,604				50,210
PS&Marketing Corporation			451,549				224,042				227,507				337,649				3,278
SERVICE ACE Co., Ltd.			83,395				54,888				28,507				51,819				1,772
SERVICE TOP Co., Ltd.			71,196				47,641				23,555				47,496				1,011
SK O&S Co., Ltd.			140,942				98,346				42,596				66,799				719
Home & Service Co., Ltd.			165,667				112,025				53,642				122,965				1,555
SK stoa Co., Ltd.			94,041				37,253				56,788				76,682				246
SK m&service Co., Ltd.			153,660				88,195				65,465				65,027				1,385

 

(4)

Changes in subsidiaries

There was no subsidiary newly included or excluded in the interim consolidated financial statements for the three-month period ended March 31, 2024.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

1.	Reporting Entity, Continued

 

(5)

The financial information of material non-controlling interests of the Group as of March 31, 2024 and December 31, 2023 and for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		SK Broadband Co., Ltd.(*)
Ownership of non-controlling interests (%)			25.5
		As of March 31, 2024
Current assets		W	1,591,241
Non-current assets			5,128,875
Current liabilities			(1,493,321	)
Non-current liabilities			(2,174,220	)
Net assets			3,052,575
Carrying amount of non-controlling interests			779,820
		For the three-month period ended March 31, 2024
Revenue		W	1,089,993
Profit for the period			51,981
Total comprehensive income			48,815
Profit attributable to non-controlling interests			13,887
Net cash provided by operating activities		W	257,026
Net cash used in investing activities			(260,417	)
Net cash provided by financing activities			32,402
Effects of exchange rate changes on cash and cash equivalents			368
Net increase in cash and cash equivalents			29,379
Dividends paid to non-controlling interests for the three-month period ended March 31, 2024		W	—

 

(*)

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.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

1.	Reporting Entity, Continued

 

(5)

The financial information of material non-controlling interests of the Group as of March 31, 2024 and December 31, 2023 and for the three-month periods ended March 31, 2024 and 2023 are as follows, Continued:

 

(In millions of won)
		SK Broadband Co., Ltd.(*)
Ownership of non-controlling interests (%)			25.4
		As of December 31, 2023
Current assets		W	1,388,965
Non-current assets			5,214,315
Current liabilities			(1,388,317	)
Non-current liabilities			(1,988,989	)
Net assets			3,225,974
Carrying amount of non-controlling interests			819,592
		For the three-month period ended March 31, 2023
Revenue		W	1,061,451
Profit for the period			50,560
Total comprehensive income			43,365
Profit attributable to non-controlling interests			12,345
Net cash provided by operating activities		W	317,168
Net cash used in investing activities			(122,113	)
Net cash provided by financing activities			89,025
Effects of exchange rate changes on cash and cash equivalents			(198	)
Net increase in cash and cash equivalents			283,882
Dividends paid to non-controlling interests for the three-month period ended March 31, 2023		W	—

 

(*)

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.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

2.	Basis of Preparation

 

(1)

Statement of compliance

These interim condensed consolidated financial statements were prepared in accordance with International Financial Reporting Standard as adopted by the Republic of Korea (“KIFRS”) 1034 Interim Financial Reporting as part of the period covered by the Group’s KIFRS annual financial statements. These interim consolidated financial statements do not include all of the disclosures required for full annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since December 31, 2023. The accompanying interim consolidated financial statements have been translated into English from the Korean language financial statements. In the event of any differences in interpreting the financial statements or the independent auditor’s review report thereon, the Korean version, which is used for regulatory reporting purposes, shall prevail.

 

(2)

Use of estimates and judgments

 

1)

Critical judgments, assumptions and estimation uncertainties

The preparation of the interim 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.

In preparing these interim consolidated financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2023.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

2.	Basis of Preparation, Continued

 

(2)

Use of estimates and judgments, Continued

 

2)

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 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 29.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

3.	Material Accounting Policies

The material accounting policies applied by the Group in these interim 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, except for the adoption of new and revised KIFRS applied from January 1, 2024, which are summarized below. The Group has not early applied the new and revised KIFRS and interpretations that have been issued but are not yet effective.

The following new and amended KIFRS and interpretations are effective from January 1, 2024, initially, but these amended standards are not expected to have a material impact on the Group’s interim 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)

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

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 three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		For the three-month period ended March 31, 2024
		Cellular services				Fixed-line telecommunication services				Others				Sub-total				Adjustments				Total
Total revenue		W	3,707,285				1,304,133				145,312				5,156,730				(682,119	)			4,474,611
Inter-segment revenue			368,447				300,439				13,233				682,119				(682,119	)			—
External revenue			3,338,838				1,003,694				132,079				4,474,611				—				4,474,611
Depreciation and amortization			678,139				243,230				6,491				927,860				(30,710	)			897,150
Operating profit (loss)			438,854				84,825				(15,365	)			508,314				(9,825	)			498,489
Finance income and costs, net																							(61,082	)
Gain relating to investments in associates and joint ventures, net																							4,906
Other non-operating income and expense, net																							(1,568	)
Profit before income tax																							440,745

 

(In millions of won)
		For the three-month period ended March 31, 2023
		Cellular services				Fixed-line telecommunication services				Others				Sub-total				Adjustments				Total
Total revenue		W	3,621,018				1,265,360				154,288				5,040,666				(668,439	)			4,372,227
Inter-segment revenue			371,100				287,103				10,236				668,439				(668,439	)			—
External revenue			3,249,918				978,257				144,052				4,372,227				—				4,372,227
Depreciation and amortization			682,310				242,746				6,147				931,203				(31,023	)			900,180
Operating profit (loss)			422,814				81,977				(8,285	)			496,506				(1,728	)			494,778
Finance income and costs, net																							(72,930	)
Gain relating to investments in associates and joint ventures, net																							771
Other non-operating income and expense, net																							(1,721	)
Profit before income tax																							420,898

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

4.	Operating Segments, Continued

 

(1)

Segment information for the three-month periods ended March 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 three-month period ended March 31, 2024 and for the year ended December 31, 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)				For the three-month period ended
				March 31, 2024				March 31, 2023
Goods and Services transferred at a point in time:
Cellular revenue		Goods and others(*1)		W	277,843				241,906
Fixed-line telecommunication revenue		Goods and others			17,964				23,394
Other revenue		Others(*2)			111,039				118,120
					406,846				383,420
Goods and Services transferred over time:
Cellular revenue		Wireless service(*3)			2,599,167				2,571,077
		Cellular interconnection			109,391				112,562
		Other(*4)			352,437				324,373
Fixed-line telecommunication revenue		Fixed-line service			35,776				33,419
		Cellular interconnection			5,125				4,702
		Internet Protocol Television(*5)			457,417				455,087
		International calls			50,635				47,922
		Internet service and miscellaneous(*6)			436,777				413,732
Other revenue		Miscellaneous(*2)			21,040				25,933
					4,067,765				3,988,807
				W	4,474,611				4,372,227

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

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.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

5.	Trade and Other Receivables

 

(1)

Details of trade and other receivables as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Gross amount				Loss allowance				Carrying amount
Current assets:
Accounts receivable – trade		W	2,299,711				(256,017	)			2,043,694
Short-term loans			80,895				(717	)			80,178
Accounts receivable – other(*)			454,793				(32,862	)			421,931
Accrued income			3,760				—				3,760
Guarantee deposits (Other current assets)			116,663				—				116,663
			2,955,822				(289,596	)			2,666,226
Non-current assets:
Long-term loans			73,212				(41,392	)			31,820
Long-term accounts receivable – other(*)			318,943				(1,878	)			317,065
Guarantee deposits			166,533				(300	)			166,233
Long-term accounts receivable – trade (Other non-current assets)			12,396				(3	)			12,393
			571,084				(43,573	)			527,511
		W	3,526,906				(333,169	)			3,193,737

 

(*)

Gross and carrying amounts of accounts receivable – other as of March 31, 2024 include W287,313 million of financial instruments classified as fair value through profit or loss (“FVTPL”).

 

(In millions of won)		December 31, 2023
		Gross amount				Loss allowance				Carrying amount
Current assets:
Accounts receivable – trade		W	2,221,266				(242,734	)			1,978,532
Short-term loans			78,824				(695	)			78,129
Accounts receivable – other(*)			375,748				(31,398	)			344,350
Accrued income			4,295				—				4,295
Guarantee deposits (Other current assets)			129,357				—				129,357
			2,809,490				(274,827	)			2,534,663
Non-current assets:
Long-term loans			71,847				(41,392	)			30,455
Long-term accounts receivable – other(*)			314,409				(1,878	)			312,531
Guarantee deposits			157,163				(300	)			156,863
Long-term accounts receivable – trade (Other non-current assets)			12,320				(3	)			12,317
			555,739				(43,573	)			512,166
		W	3,365,229				(318,400	)			3,046,829

 

(*)

Gross and carrying amounts of accounts receivable – other as of December 31, 2023 include W273,945 million of financial instruments classified as fair value through profit or loss (“FVTPL”).

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

5.	Trade and Other Receivables, Continued

 

(2)

Changes in the loss allowance on trade and other receivables measured at amortized cost for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		January 1, 2024				Impairment				Write-offs(*)				Collection of receivables previously written-off				March 31, 2024
Accounts receivable – trade		W	242,737				13,571				(2,655	)			2,367				256,020
Accounts receivable – other, etc.			75,663				1,378				(186	)			294				77,149
		W	318,400				14,949				(2,841	)			2,661				333,169

 

(In millions of won)
		January 1, 2023				Impairment				Write-offs(*)				Collection of receivables previously written-off				March 31, 2023
Accounts receivable – trade		W	234,923				9,417				(1,913	)			2,654				245,081
Accounts receivable – other, etc.			90,079				1,837				(77	)			453				92,292
		W	325,002				11,254				(1,990	)			3,107				337,373

 

(*)

The Group writes off trade and other receivables that are determined to be uncollectable due to reasons such as termination of operations or bankruptcy.

 

(3)

The Group applies the practical expedient that allows the Group to estimate the loss allowance for accounts receivable – trade at an amount equal to the lifetime expected credit losses. The expected credit losses include the forward-looking information. To make the assessment, the Group uses its historical credit loss experience over the past three years and classifies the accounts receivable – trade by their credit risk characteristics and days overdue.

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

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

6.	Prepaid Expenses

The Group pays commissions to its retail stores and authorized dealers, primarily for wireless and fixed-line 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 March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Current assets:
Incremental costs of obtaining contracts		W	1,889,292				1,882,296
Others			98,599				71,473
		W	1,987,891				1,953,769
Non-current assets:
Incremental costs of obtaining contracts		W	1,029,088				1,022,813
Others			67,349				63,294
		W	1,096,437				1,086,107

 

(2)

Incremental costs of obtaining contracts

The amortization and impairment losses in connection with incremental costs of obtaining contracts recognized as an asset for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Amortization and impairment losses recognized		W	619,397				626,247

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

7.	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 March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Contract assets:
Allocation of consideration between performance obligations		W	125,908				129,771
Contract liabilities:
Wireless service contracts			20,182				19,149
Customer loyalty programs			5,920				7,164
Fixed-line service contracts			153,984				146,106
Others			47,562				40,074
		W	227,648				212,493

 

(2)

The amount of revenue recognized for the three-month periods ended March 31, 2024 and 2023 related to the contract liabilities carried forward from the prior periods are W31,905 million and W36,625 million, respectively.

 

8.	Inventories

 

(1)

Details of inventories as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024												December 31, 2023
		Acquisition cost				Valuation allowance				Carrying amount				Acquisition cost				Valuation allowance				Carrying amount
Merchandise		W	198,193				(8,084	)			190,109				174,255				(7,641	)			166,614
Supplies			19,524				—				19,524				13,195				—				13,195
Raw Materials			1,186				(488	)			698				—				—				—
		W	218,903				(8,572	)			210,331				187,450				(7,641	)			179,809

 

(2)

Inventories recognized as operating expenses for the three-month periods ended March 31, 2024 and 2023 are W329,728 million and W314,191 million, respectively, which are included in cost of goods sold. In addition, valuation losses on inventories which are included in the cost of goods sold and other operating expenses amount to W443 million and W2,605 million for the three-month periods ended March 31, 2024 and 2023, respectively. Write-down included in other operating expenses for the three-month period ended March 31, 2024 is W34 million.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

9.	Long-Term Investment Securities

Details of long-term investment securities as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		Category				March 31, 2024				December 31, 2023
Equity instruments			FVOCI	(*)		W	1,661,048				1,398,734
			FVTPL				8				8
							1,661,056				1,398,742
Debt instruments			FVTPL				142,531				280,642
							142,531				280,642
						W	1,803,587				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 March 31, 2024 and December 31, 2023 are W1,661,048 million and W1,398,734 million, respectively.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	Investments in Associates and Joint Ventures

 

(1)

Investments in associates and joint ventures accounted for using the equity method as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)						March 31, 2024								December 31, 2023
		Country				Ownership (%)				Carrying amount				Ownership (%)				Carrying amount
Investments in associates:
SK China Company Ltd.			China				27.3			W	926,909				27.3			W	896,990
Korea IT Fund(*1)			Korea				63.3				336,484				63.3				336,404
UniSK			China				49.0				23,214				49.0				22,285
SK Technology Innovation Company			Cayman Islands				49.0				72,217				49.0				70,409
SK MENA Investment B.V.			Netherlands				32.1				15,059				32.1				14,872
SK Latin America Investment S.A.			Spain				32.1				13,854				32.1				14,607
SK South East Asia Investment Pte. Ltd.			Singapore				20.0				368,457				20.0				355,282
Citadel Pacific Telecom Holdings, LLC(*2)			USA				15.0				49,518				15.0				45,901
SM Culture & Contents Co., Ltd.(*3)			Korea				22.8				39,158				22.8				41,578
Nam Incheon Broadcasting Co., Ltd.			Korea				27.3				14,733				27.3				14,344
Home Choice Corp.(*2)			Korea				17.8				3,221				17.8				3,215
Konan Technology Inc.			Korea				20.7				5,161				20.7				6,349
CMES Inc.(*2,4)			Korea				8.4				5,488				7.7				900
SK telecom Japan Inc.			Japan				33.0				1,239				33.0				1,239
12CM JAPAN and others(*2,5,6,7)			—				—				87,178				—				81,142
										W	1,961,890							W	1,905,517
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund(*8)			Korea				48.2				9,444				48.2				9,495
											9,444								9,495
										W	1,971,334							W	1,915,012

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	Investments in Associates and Joint Ventures, Continued

 

(1)

Investments in associates and joint ventures accounted for using the equity method as of March 31, 2024 and December 31, 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)

These investments were classified as investments in associates as the Group can exercise significant influence through its right to appoint the members of the Board of Directors even though the Group has less than 20% of equity interests.

 

(*3)

The Group recognized an impairment loss of W18,755 million as the recoverable amount was assessed to be less than the carrying amount for the year ended December 31, 2023.

 

(*4)

The Group additionally acquired W8,984 million of shares by exercising the conversion right of the redeemable convertible preference shares, and disposed of a portion of shares for W14,872 million in cash, from which it recognized W10,476 million of gain on disposal of such investments in associates for the three-month period ended March 31, 2024. The ownership interest of the Group increased from 7.7% to 8.4% due to the acquisition and disposal of shares.

 

(*5)

The Group additionally contributed W5,878 million to SK AMERICAS Inc. (formerly, SK USA, Inc.) for the three-month period ended March 31, 2024, and the ownership interest of the Group has decreased from 49.0% to 20.0% due to the paid-in capital increase through disproportionate allotment of shares.

 

(*6)

The Group disposed of a portion of shares in Start-up Win-Win Fund for W200 million in cash for the three-month period ended March 31, 2024.

 

(*7)

The Group additionally contributed W106 million of investments in SK VENTURE CAPITAL, LLC in cash for the three-month period ended March 31, 2024, but there is no change in the ownership interest.

 

(*8)

These investments were classified as investments in joint ventures 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 March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)
		March 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.		W	1,784				22,033,898				39,308				1,887				22,033,898				41,578
Konan Technology Inc.			27,700				2,359,160				65,349				32,600				2,359,160				76,909

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	Investments in Associates and Joint Ventures, Continued

 

(3)

The condensed financial information of material associates as of March 31, 2024 and December 31, 2023 and for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		As of March 31, 2024
		Korea IT Fund				SK China Company Ltd.				SK South East Asia Investment Pte. Ltd.
Current assets		W	129,452				1,371,437				368,229
Non-current assets			401,839				2,036,158				3,016,795
Current liabilities			—				47,413				534,345
Non-current liabilities			—				263,196				13,867

 

		For the three-month period ended March 31, 2024
Revenue		W	—				14,711				57
Profit (loss) for the period			127				13,909				(9,956	)
Other comprehensive income (loss)			—				(6,037	)			(2,809	)
Total comprehensive income (loss)			127				7,872				(12,765	)

 

(In millions of won)
		As of December 31, 2023
		Korea IT Fund				SK China Company Ltd.				SK South East Asia Investment Pte. Ltd.
Current assets		W	128,344				1,350,607				213,522
Non-current assets			402,819				1,987,252				3,034,553
Current liabilities			—				99,083				502,728
Non-current liabilities			—				252,100				13,586

 

		For the three-month period ended March 31, 2023
Revenue		W	—				17,334				68
Profit (loss) for the period			160				6,850				(8,292	)
Other comprehensive income (loss)			—				(17,807	)			529
Total comprehensive income (loss)			160				(10,957	)			(7,763	)

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	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 March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024
		Net assets				Ownership interests (%)				Net assets attributable to the ownership interests				Cost-book value differentials				Carrying amount
Korea IT Fund		W	531,291				63.3				336,484				—				336,484
SK China Company Ltd.			3,096,986				27.3				844,586				82,323				926,909
SK South East Asia Investment Pte. Ltd.(*)			1,842,286				20.0				368,457				—				368,457

 

(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		W	531,163				63.3				336,404				—				336,404
SK China Company Ltd.			2,986,676				27.3				814,503				82,487				896,990
SK South East Asia Investment Pte. Ltd.(*)			1,776,411				20.0				355,282				—				355,282

 

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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	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 three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended March 31, 2024
		Beginning balance				Acquisition and disposal				Share of profit (loss)				Other compre- hensive income				Other changes				Ending balance
Investments in associates:
SK China Company Ltd.		W	896,990				—				(1,701	)			31,620				—				926,909
Korea IT Fund			336,404				—				80				—				—				336,484
UniSK			22,285				—				104				825				—				23,214
SK Technology Innovation Company			70,409				—				(1,307	)			3,115				—				72,217
SK MENA Investment B.V.			14,872				—				(457	)			644				—				15,059
SK Latin America Investment S.A.			14,607				—				(1,010	)			257				—				13,854
SK South East Asia Investment Pte. Ltd.			355,282				—				(1,928	)			15,103				—				368,457
Citadel Pacific Telecom Holdings, LLC			45,901				—				178				3,439				—				49,518
SM Culture & Contents Co., Ltd.			41,578				—				(2,262	)			(158	)			—				39,158
Nam Incheon Broadcasting Co., Ltd.(*1)			14,344				—				525				—				(136	)			14,733
Home Choice Corp.			3,215				—				6				—				—				3,221
Konan Technology Inc.			6,349				—				(1,188	)			—				—				5,161
CMES Inc.			900				(4,396	)			—				—				8,984				5,488
SK telecom Japan Inc.			1,239				—				—				—				—				1,239
12CM JAPAN and others(*1,2)			81,142				5,617				336				483				(400	)			87,178
			1,905,517				1,221				(8,624	)			55,328				8,448				1,961,890
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund			9,495				—				(51	)			—				—				9,444
			9,495				—				(51	)			—				—				9,444
		W	1,915,012				1,221				(8,675	)			55,328				8,448				1,971,334

 

(*1)	Dividends received from the associates are deducted from the carrying amount for the three-month period ended March 31, 2024.

(*2)

The acquisition for the three-month period ended March 31, 2024 includes W5,878 million of investments in SK AMERICAS Inc. (formerly, SK USA, Inc.) and W106 million of investment in SK VENTURE CAPITAL, LLC. The disposal for the three-month period ended March 31, 2024 includes a portion of shares in SK AMERICAS Inc. (formerly, SK USA, Inc.) for W167 million and a portion of Start-up Win-Win Fund for W200 million.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	Investments in Associates and Joint Ventures, Continued

 

(5)

Changes in investments in associates and joint ventures accounted for using the equity method for the three-month periods ended March 31, 2024 and 2023 are as follows, Continued:

 

(In millions of won)		For the three-month period ended March 31, 2023
		Beginning balance				Acquisition and disposal				Share of profit (loss)				Other compre- hensive income				Ending balance
Investments in associates:
SK China Company Ltd.		W	879,527				—				4,851				20,343				904,721
Korea IT Fund			324,860				—				(2,064	)			—				322,796
UniSK			20,839				—				(35	)			882				21,686
SK Technology Innovation Company			69,375				—				(2,038	)			1,953				69,290
SK MENA Investment B.V.			14,296				—				(400	)			395				14,291
SK Latin America Investment S.A.			11,961				—				993				646				13,600
SK South East Asia Investment Pte. Ltd.			357,537				—				302				9,655				367,494
Citadel Pacific Telecom Holdings, LLC (Formerly, Pacific Telecom Inc.)			48,542				—				814				1,006				50,362
SM Culture & Contents Co., Ltd.			59,611				—				605				91				60,307
Nam Incheon Broadcasting Co., Ltd.			13,575				—				213				—				13,788
Home Choice Corp.			4,456				—				(1,291	)			—				3,165
Konan Technology Inc.			8,366				—				(685	)			—				7,681
CMES Inc.			900				—				—				—				900
Telecom Daean Evaluation Jun B Corporation Co., Ltd. (Formerly, Telecom Daean Evaluation Co., Ltd. (tentative))			—				6,500				—				—				6,500
12CM JAPAN and others			69,734				26				(441	)			483				69,802
			1,883,579				6,526				824				35,454				1,926,383
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund			5,710				2,000				(53	)			—				7,657
			5,710				2,000				(53	)			—				7,657
		W	1,889,289				8,526				771				35,454				1,934,040

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	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 March 31, 2024 are as follows:

 

(In millions of won)		Unrecognized loss								Unrecognized change in equity
		For the three-month period ended March 31, 2024				Cumulative loss				For the three-month period ended March 31, 2024				Cumulative loss
Invites Genomics Co., Ltd.		W	7,695				15,540				(151	)			1,028
Daehan Kanggun BcN Co., Ltd. and others			—				5,187				—				(124	)
		W	7,695				20,727				(151	)			904

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

11.	Property and Equipment

Changes in property and equipment for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		For the three-month period ended March 31, 2024
		Beginning balance				Acquisition				Disposal				Transfer				Depreciation				Ending balance
Land		W	1,248,200				7				(192	)			3,844				—				1,251,859
Buildings			773,392				36				(213	)			21,685				(14,116	)			780,784
Structures			234,879				249				(74	)			4,073				(9,742	)			229,385
Machinery			7,890,654				57,115				(695	)			346,561				(573,618	)			7,720,017
Others			485,157				112,463				(996	)			(73,392	)			(21,800	)			501,432
Right-of-use assets			1,611,951				97,198				(27,193	)			(9,333	)			(99,580	)			1,573,043
Construction in progress			761,963				154,652				—				(351,772	)			—				564,843
		W	13,006,196				421,720				(29,363	)			(58,334	)			(718,856	)			12,621,363

 

(In millions of won)
		For the three-month period ended March 31, 2023
		Beginning balance				Acquisition				Disposal				Transfer				Depreciation				Ending balance
Land		W	1,005,857				3				(287	)			54,161				—				1,059,734
Buildings			785,225				7				(5	)			(2,501	)			(13,439	)			769,287
Structures			265,656				—				(2	)			2,267				(9,648	)			258,273
Machinery			7,912,900				53,798				(1,034	)			469,504				(574,022	)			7,861,146
Others			497,394				69,869				(147	)			(121,299	)			(22,386	)			423,431
Right-of-use assets			1,786,129				111,050				(26,272	)			(9,521	)			(101,204	)			1,760,182
Construction in progress			1,069,331				73,936				—				(453,863	)			—				689,404
		W	13,322,492				308,663				(27,747	)			(61,252	)			(720,699	)			12,821,457

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

12.	Investment Property

 

(1)

Changes in investment property for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		For the three-month period ended March 31, 2024
		Beginning balance				Transfer				Depreciation				Ending balance
Land		W	14,199				(589	)			—				13,610
Buildings			10,242				30				(143	)			10,129
Right-of-use assets			10,371				214				(476	)			10,109
		W	34,812				(345	)			(619	)			33,848

 

(In millions of won)
		For the three-month period ended March 31, 2023
		Beginning balance				Transfer				Depreciation				Ending balance
Land		W	6,115				10,673				—				16,788
Buildings			6,884				6,323				(350	)			12,857
Right-of-use assets			12,138				499				(524	)			12,113
		W	25,137				17,495				(874	)			41,758

 

(2)

The Group recognized lease income of W1,700 million and W2,111 million from investment property for the three-month periods ended March 31, 2024 and 2023, respectively.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

13.

Leases

 

(1)

Details of the right-of-use assets as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Right-of-use assets:
Land, buildings and structures		W	1,327,784				1,376,721
Others			245,259				235,230
		W	1,573,043				1,611,951

 

(2)

Details of amounts recognized in the interim consolidated statements of income for the three-month periods ended March 31, 2024 and 2023 as a lessee are as follows:

 

(In millions of won)
		For the three-month period ended
		March 31, 2024				March 31, 2023
Depreciation of right-of-use assets:
Land, buildings and structures		W	83,343				86,428
Others(*)			16,237				14,776
		W	99,580				101,204
Interest expense on lease liabilities		W	11,634				11,550

 

(*)	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 three-month periods ended March 31, 2024 and 2023 amounted to W100,591 million and W102,853 million, respectively.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

14.	Intangible Assets

 

(1)

Changes in intangible assets for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		For the three-month period ended March 31, 2024
		Beginning balance				Acquisition				Disposal				Transfer				Amortization				Ending balance
Frequency usage rights		W	1,606,606				—				—				—				(117,765	)			1,488,841
Land usage rights			587				60				(5	)			—				(126	)			516
Industrial rights			46,154				1,751				(172	)			—				(1,201	)			46,532
Development costs			49				—				—				—				(7	)			42
Facility usage rights			14,313				377				—				355				(779	)			14,266
Customer relations			273,150				—				—				—				(6,759	)			266,391
Club memberships(*1)			97,186				986				(816	)			—				—				97,356
Other(*2)			823,092				9,826				—				48,931				(85,411	)			796,438
		W	2,861,137				13,000				(993	)			49,286				(212,048	)			2,710,382

 

(In millions of won)
		For the three-month period ended March 31, 2023
		Beginning balance				Acquisition				Disposal				Transfer				Amortization				Impairment				Ending balance
Frequency usage rights		W	2,082,432				—				—				—				(120,625	)			—				1,961,807
Land usage rights			1,224				—				—				—				(280	)			—				944
Industrial rights			51,792				624				—				—				(1,062	)			—				51,354
Development costs			284				—				—				—				(121	)			—				163
Facility usage rights			14,997				691				—				52				(941	)			—				14,799
Customer relations			300,181				—				—				—				(6,758	)			—				293,423
Club memberships(*1)			91,971				1,389				(9	)			65				—				—				93,416
Other(*2)			782,029				5,102				(8	)			42,479				(83,019	)			(64	)			746,519
		W	3,324,910				7,806				(17	)			42,596				(212,806	)			(64	)			3,162,425

 

(*1)	Club memberships are classified as intangible assets with indefinite useful lives and are not amortized.

(*2)	Other intangible assets primarily consist of computer software and others.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

14.	Intangible Assets, Continued

 

(2)

Details of frequency usage rights as of March 31, 2024 are as follows:

 

(In millions of won)

Amount

Description

Commencement of amortization

Completion of amortization

800 MHz license

W

98,810

LTE service

Jul. 2021

Jun. 2026

1.8 GHz license

282,088

LTE service

Dec. 2021

Dec. 2026

2.6 GHz license

333,895

LTE service

Sept. 2016

Dec. 2026

2.1 GHz license

212,004

W-CDMA and LTE service

Dec. 2021

Dec. 2026

3.5 GHz license

562,044

5G service

Apr. 2019

Nov. 2028

W

1,488,841

 

15.	Borrowings and Debentures

 

(1)

Changes in long-term borrowings for the three-month period ended March 31, 2024 are as follows:

 

(In millions of won)
		Lender				Annual interest rate (%)				Maturity				Book value
Current														W	402,500
Non-current															315,578
As of January 1, 2024															718,078
Repayments of long-term borrowings:
			Nonghyup Bank(*1)				MOR + 1.36				Feb. 19, 2024				(10,000	)
			Korea Development Bank(*2)				1.87				Feb. 10, 2026				(3,125	)
															(13,125	)
Other changes(*3)															7
Current(*4)															592,500
Non-current(*4)															112,460
As of March 31, 2024														W	704,960

 

(*1)	6M MOR rates are 3.64% and 3.85% as of March 31, 2024 and December 31, 2023, respectively.

(*2)	The long-term borrowings are to be repaid by installments on an annual basis from 2022 to 2026.

(*3)	Other changes include the effects on changes in present value discount for the three-month period ended March 31, 2024.

(*4)	W203,125 million were reclassified from non-current to current for the three-month period ended March 31, 2024.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

15.	Borrowings and Debentures, Continued

 

(2)

Changes in debentures for the three-month period ended March 31, 2024 are as follows:

 

(In millions of won)
		Purpose		Annual interest rate (%)				Maturity				Face value				Book value
Current												W	1,220,000				1,219,344
Non-current													7,131,291				7,106,299
As of January 1, 2024													8,351,291				8,325,643
Debentures newly issued:
Unsecured corporate bonds		Refinancing fund			3.72				Feb. 22, 2027				180,000				179,233
Unsecured corporate bonds		Refinancing fund			3.73				Feb. 22, 2029				110,000				109,536
Unsecured corporate bonds		Refinancing fund			3.92				Feb. 22, 2034				110,000				109,535
Unsecured corporate bonds(*1)		Refinancing fund			3.89				Jan. 22, 2027				170,000				169,341
Unsecured corporate bonds(*1)		Refinancing fund			3.93				Jan. 22, 2029				60,000				59,760
													630,000				627,405
Debentures repaid:
Unsecured corporate bonds		Operating fund			2.09				Mar. 6, 2024				(120,000	)			(120,000	)
Unsecured corporate bonds		Refinancing fund			1.17				Jan. 15, 2024				(80,000	)			(80,000	)
Unsecured corporate bonds(*1)		Refinancing fund			2.09				Mar. 26, 2024				(160,000	)			(160,000	)
													(360,000	)			(360,000	)
Other changes(*2)													60,155				64,118
Current(*3)													1,354,646				1,353,648
Non-current(*3)													7,326,800				7,303,518
As of March 31, 2024												W	8,681,446				8,657,166

 

(*1)	Unsecured corporate bonds were issued by SK Broadband Co., Ltd., a subsidiary of the Parent Company.

(*2)	Other changes include the effects on foreign currency translation of debentures and changes in discount on issuance of debentures for the three-month period ended March 31, 2024.

(*3)	W494,053 million were reclassified from non-current to current for the three-month period ended March 31, 2024.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

16.	Long-Term Payables – Other

 

(1)

As of March 31, 2024 and December 31, 2023, details of long-term payables – other which consist of payables related to the acquisition of frequency usage rights are as follows (See note 14):

 

(In millions of won)
		March 31, 2024				December 31, 2023
Long-term payables - other		W	921,075				1,290,225
Present value discount on long-term payables – other			(24,666	)			(29,772	)
Current installments of long-term payables – other			(363,002	)			(367,770	)
Carrying amount at period end		W	533,407				892,683

 

(2)

The sum of portions repaid among the principal of long-term payables – other for the three-month periods ended March 31, 2024 and 2023 amounts to W369,150 million and W400,245 million, respectively. The repayment schedule of the principal amount of long-term payables – other as of March 31, 2024 is as follows:

 

(In millions of won)
		Amount
Less than 1 year		W	369,150
1~3 years			460,538
3~5 years			91,387
		W	921,075

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

17.	Provisions

Changes in provisions for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		For the three-month period ended March 31, 2024																								As of March 31, 2024
		Beginning balance				Increase				Utilization				Reversal				Other				Ending balance				Current				Non-current
Provision for restoration		W	120,024				2,103				(699	)			(225	)			1				121,204				37,631				83,573
Emission allowance			1,182				461				—				(37	)			—				1,606				1,606				—
Other provisions			218				—				—				(218	)			—				—				—				—
		W	121,424				2,564				(699	)			(480	)			1				122,810				39,237				83,573

 

(In millions of won)
		For the three-month period ended March 31, 2023																								As of March 31, 2023
		Beginning balance				Increase				Utilization				Reversal				Other				Ending balance				Current				Non-current
Provision for restoration		W	115,089				4,063				(397	)			(139	)			22				118,638				36,309				82,329
Emission allowance			2,186				638				—				—				—				2,824				2,824				—
Other provisions			1,823				—				(172	)			(7	)			14				1,658				507				1,151
		W	119,098				4,701				(569	)			(146	)			36				123,120				39,640				83,480

 

18.	Defined Benefit Liabilities (Assets)

 

(1)

Details of defined benefit liabilities (assets) as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Present value of defined benefit obligations		W	1,148,646				1,121,679
Fair value of plan assets			(1,270,026	)			(1,292,416	)
Defined benefit assets(*)			(127,235	)			(170,737	)
Defined benefit liabilities			5,855				—

 

(*)

Since the Group entities neither have legally enforceable right nor intention to settle the defined benefit obligations of the Group entities with defined benefit assets of other Group entities, defined benefit assets of the Group entities have been separately presented from defined benefit liabilities.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

18.	Defined Benefit Liabilities (Assets), Continued

 

(2)

Changes in present value of defined benefit obligations for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Beginning balance		W	1,121,679				1,038,320
Current service cost			33,305				33,061
Interest cost			11,686				12,511
Remeasurement - Demographic assumption			—				—
- Financial assumption			(553	)			1,559
- Adjustment based on experience			7,092				23,702
Benefit paid			(32,453	)			(28,441	)
Others			7,890				3,883
Ending balance		W	1,148,646				1,084,595

 

(3)

Changes in fair value of plan assets for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Beginning balance		W	1,292,416				1,214,007
Interest income			13,579				15,091
Remeasurement			379				(966	)
Contributions			10,000				10,000
Benefit paid			(47,681	)			(37,042	)
Others			1,333				(1,593	)
Ending balance		W	1,270,026				1,199,497

 

(4)

Total cost of defined benefit plan, which is recognized in profit or loss for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Current service cost		W	33,305				33,061
Net interest income			(1,893	)			(2,580	)
		W	31,412				30,481

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

19.	Share Capital and Capital Surplus and Others

 

(1)

The Parent Company’s outstanding share capital consists of shares with a par value of W100. The number of authorized, issued and outstanding common shares and the details of share capital and capital surplus and others as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)
		March 31, 2024				December 31, 2023
Number of authorized shares			670,000,000				670,000,000
Number of issued shares			214,790,053				218,833,144
Share capital:
Common shares(*1)		W	30,493				30,493
Capital surplus and others:
Paid-in surplus			1,771,000				1,771,000
Treasury shares(*1)			(93,229	)			(301,981	)
Hybrid bonds(*2)			398,509				398,509
Share option(Note 20)			10,067				9,818
Others(*3)			(13,704,588	)			(13,705,990	)
		W	(11,618,241	)			(11,828,644	)

 

(*1)

The Parent Company retired 4,043,091 treasury shares with reduction of its unappropriated retained earnings, and accordingly, the Parent Company’s shares issued have decreased without a change in share capital for the three-month period ended March 31, 2024. Also, in 2002 and 2003, the Parent Company retired treasury shares with reduction of its retained earnings before appropriation, and as a result, the Parent Company’s issued shares have decreased without a change in share capital.

(*2)	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. When in liquidation or bankruptcy, these hybrid bonds are senior only to common shares.

(*3)	Others primarily consist of the excess of the consideration paid by the Group over the carrying amount of net assets acquired from entities under common control.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

19.	Share Capital and Capital Surplus and Others, Continued

 

(2)

There were no changes in share capital for the three-month periods ended March 31, 2024 and 2023, and details of shares outstanding as of March 31, 2024 and 2023 are as follows:

 

(In shares)

March 31, 2024

March 31, 2023

Issued shares

Treasury shares

Outstanding shares

Issued shares

Treasury shares

Outstanding shares

Shares outstanding

214,790,053

1,909,188

212,880,865

218,833,144

367,003

218,466,141

 

(3)

Details of treasury shares as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)
		March 31, 2024				December 31, 2023
Number of shares(*)			1,909,188				6,133,414
Acquisition cost		W	93,229				301,981

 

(*)

The Parent Company distributed 498,135 treasury shares (W24,540 million for acquisition costs) as bonus payment to its employees, resulting in a gain on disposal of treasury shares of W168 million for the three-month period ended March 31, 2024. Also, the Parent Company acquired 317,000 of its treasury shares for W15,788 for the purpose of increasing shareholders’ value through the stabilization of its stock price for the three-month period ended March 31, 2024.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

20.	Share-based payment arrangement

20.1 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 of the Parent Company
Grant method		Reissue of treasury shares, Cash settlement
Number of shares (in share)		376,313		83,148		295,275		109,704
Exercise price (in won)		38,452		50,276		56,860		56,860
Exercise period		Mar. 27, 2023		Mar. 26, 2023		Mar. 26, 2025		Mar. 26, 2024
		~		~		~		~
		Mar. 26, 2027		Mar. 25, 2026		Mar. 25, 2029		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 three-month period ended March 31, 2024, the entire amount of remaining unvested cash settlement options granted in the 4^th and some portions of cash settlement options granted in the 3^rd and 6^th were exercised, and the entire amount of remaining unvested cash settlement options granted in the 1-3^rd and 3^rd were 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 were fully exercised for the three-month period ended March 31, 2024.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

20.	Share-based payment arrangement, Continued

 

20.1

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, 2023, and the details are as follows:

 

		PSU of SK Telecom Co., Ltd.
Grant date		March 28, 2023
Types of shares to be issued		Registered common shares of the Parent Company
Grant method		Reissue of treasury shares
Number of shares(*)		Fluctuates according to the share price on the expiration date and the cumulative increase rate of KOSPI200
Reference share price (in won)		47,280
Reference index (KOSPI200)		315
Maturity (exercise date)		The day in which the annual general meeting of shareholders is held after 3 years from the grant date
Vesting conditions		Full service in the year in which the grant date is included

 

(*)

The initial amount granted is a total of W10,813 million, and the amount calculated according to the adjustment rate based on the share price on the expiration date and the cumulative increase rate of KOSPI200 will be paid in shares.

 

(2)

Share compensation expense for share-based payment arrangements with cash alternatives recognized for the three-month period ended March 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		W	157,750
For the three-month period ended March 31, 2024			1,274
In subsequent periods			—
		W	159,024

The liabilities recognized by the Parent Company in relation to the share-based payment arrangement with cash alternatives are W6,734 million and W5,530 million, respectively, which are included in accrued expenses as of March 31, 2024 and December 31, 2023.

As of March 31, 2024 and December 31, 2023, the carrying amounts of liabilities recognized by the Parent Company in relation to the cash-settled share-based payment arrangement are W367 million and W1,133 million, respectively.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

20.	Share-based payment arrangement, Continued

 

20.1

Share-based payment arrangement of the Parent Company, Continued:

 

(3)

The Parent Company used binomial option pricing model in the measurement of the fair value of the share options at 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			3.33	%			3.33	%			3.33	%			3.33	%
Estimated option’s life			7 years				5 years				7 years				5 years
Share price on the remeasurement date			52,500				52,500				52,500				52,500
Expected volatility			15.20	%			15.20	%			15.20	%			15.20	%
Expected dividends yield			6.30	%			6.30	%			6.30	%			6.30	%
Exercise price			38,452				50,276				56,860				56,860
Per-share fair value of the option			14,048				4,206				2,807				2,276

 

(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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

20.	Share-based payment arrangement, Continued

 

20.1

Share-based payment arrangement of the Parent Company, Continued:

 

(3)

The Parent Company used binomial option pricing model in the measurement of the fair value of the share options at remeasurement date, and the inputs used in the model are as follows:

 

2)

Cash-settled share-based payment arrangement

 

(In won)		Granted in 2022
		Share appreciation rights of SK Telecom Co., Ltd.
Risk-free interest rate			3.37	%
Estimated option’s life			3.25 years
Share price on the remeasurement date			52,500
Expected volatility			15.20	%
Expected dividends yield			6.30	%
Exercise price			56,860
Per-share fair value of the option			1,084

 

3)

Equity-settled share-based payment arrangement

 

(In won)
		PSU of SK Telecom Co., Ltd.
Risk-free interest rate			3.26	%
Estimated option’s life			3 years
Share price on the expected grant date			48,500
Expected volatility			18.67	%
Expected dividends yield			4.90	%
Per-share fair value of the option			27,525

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

20.	Share-based payment arrangement, Continued

 

20.2

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)		14,400		35,100		6,150
Exercise price (in U.S. dollars)				100.0
Exercise period(*)		Jan. 4, 2024		Apr. 1, 2024		Feb. 1, 2025
		~		~		~
		Jan. 4, 2032		Apr. 1, 2032		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 three-month period ended March 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		W	2,555
For the three-month period ended March 31, 2024			311
In subsequent periods			970
		W	3,836

 

(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)		Series
		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

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

21.	Retained Earnings

Retained earnings as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Appropriated:
Legal reserve		W	22,320				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			8,009,154				8,381,223
		W	22,727,912				22,799,981

 

22.

Reserves

 

(1)

Details of reserves, net of taxes, as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Valuation gain on FVOCI		W	248,234				176,208
Other comprehensive income of investments in associates and joint ventures			229,279				182,702
Valuation loss on derivatives			(1,685	)			(1,488	)
Foreign currency translation differences for foreign operations			42,158				29,794
		W	517,986				387,216

 

(2)

Changes in reserves for the three-month periods ended March 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		W	173,281				173,477				14,463				30,012				391,233
Changes, net of taxes			55,141				32,054				80				9,926				97,201
Balance as of March 31, 2023		W	228,422				205,531				14,543				39,938				488,434
Balance as of January 1, 2024		W	176,208				182,702				(1,488	)			29,794				387,216
Changes, net of taxes			72,026				46,577				(197	)			12,364				130,770
Balance as of March 31, 2024		W	248,234				229,279				(1,685	)			42,158				517,986

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

23.	Other Operating Expenses

Details of other operating expenses for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Communication		W	8,272				7,950
Utilities			134,789				117,829
Taxes and dues			9,630				7,351
Repair			104,103				99,183
Research and development			88,928				73,580
Training			7,350				8,941
Bad debt for accounts receivable – trade			13,571				9,417
Travel			5,711				5,846
Supplies and others			28,854				32,635
		W	401,208				362,732

 

24.	Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Other Non-operating Income:
Gain on disposal of property and equipment and intangible assets		W	4,108				5,929
Others			4,685				3,405
		W	8,793				9,334
Other Non-operating Expenses:
Loss on impairment of property and equipment and intangible assets		W	—				64
Loss on disposal of property and equipment and intangible assets			1,899				1,245
Donations			4,629				4,775
Bad debt for accounts receivable – other			1,378				1,837
Others			2,455				3,134
		W	10,361				11,055

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

25.	Finance Income and Costs

 

(1)

Details of finance income and costs for the three-month periods ended December 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Finance Income:
Interest income		W	18,819				12,998
Dividends			17,261				23,646
Gain on foreign currency transactions			4,044				5,574
Gain on foreign currency translations			2,573				1,759
Gain relating to financial instruments at FVTPL			17,385				8,231
		W	60,082				52,208
Finance Costs:
Interest expenses		W	105,032				93,070
Loss on sale of accounts receivable – other			11,676				24,078
Loss on foreign currency transactions			2,467				4,804
Loss on foreign currency translations			1,860				1,244
Loss relating to financial instruments at FVTPL			129				1,942
		W	121,164				125,138

 

(2)

Details of interest income included in finance income for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Interest income on cash equivalents and financial instruments		W	11,669				5,302
Interest income on loans and others			7,150				7,696
		W	18,819				12,998

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

25.	Finance Income and Costs, Continued

 

(3)

Details of interest expenses included in finance costs for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Interest expense on borrowings		W	9,207				7,977
Interest expense on debentures			69,405				58,031
Others			26,420				27,062
		W	105,032				93,070

 

(4)

Details of impairment losses for financial assets for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Accounts receivable – trade		W	13,571				9,417
Other receivables			1,378				1,837
		W	14,949				11,254

 

26.	Income Tax Expense

The income tax expense was calculated by considering current tax expense, adjusted for changes in estimates related to prior periods, and deferred tax expense due to origination and reversal of temporary differences and income tax expense that relates to items recognized outside profit or loss.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

27.	Earnings per Share

Earnings per share is calculated to profit attributable to owners 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 three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In millions of won, except for share data and basic earnings per share)		For the three-month period ended
		March 31, 2024				March 31, 2023
Basic earnings per share attributable to owners of the Parent Company:
Profit attributable to owners of the Parent Company		W	352,986				290,506
Interest on hybrid bonds			(4,950	)			(3,692	)
Profit attributable to owners of the Parent Company on common shares			348,036				286,814
Weighted average number of common shares outstanding			212,734,373				218,256,135
Basic earnings per share (in won)		W	1,636				1,314

 

2)

The weighted average number of common shares outstanding for the three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In shares)		For the three-month period ended March 31, 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	)			(310,220	)
Disposal of treasury shares			498,135				344,863
			212,880,865				212,734,373

 

(In shares)		For the three-month period ended March 31, 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	)
Disposal of treasury shares			434,088				224,082
			218,466,141				218,256,135

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

27.	Earnings per Share, Continued

 

(2)

Diluted earnings per share

 

1)

Diluted earnings per share for the three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In millions of won, except for share data and diluted earnings per share)		For the three-month period ended
		March 31, 2024				March 31, 2023
Profit attributable to owners of the Parent Company on common shares		W	348,036				286,814
Adjusted weighted average number of common shares outstanding			213,008,960				218,323,020
Diluted earnings per share (in won)		W	1,634				1,314

 

2)

The adjusted weighted average number of common shares outstanding for the three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In shares)		For the three-month period ended
		March 31, 2024				March 31, 2023
Outstanding shares as of January 1			212,699,730				218,032,053
Effect of treasury shares			34,643				224,082
Effect of share option			274,587				66,885
Adjusted weighted average number of common shares outstanding			213,008,960				218,323,020

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Categories of Financial Instruments

 

(1)

Financial assets by category as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Financial assets at FVTPL				Equity instruments at FVOCI				Financial assets at amortized cost				Derivatives hedging instrument				Total
Cash and cash equivalents		W	354,162				—				1,364,827				—				1,718,989
Financial instruments			37,020				—				317,979				—				354,999
Long-term investment securities(*)			142,539				1,661,048				—				—				1,803,587
Accounts receivable – trade			—				—				2,056,087				—				2,056,087
Loans and other receivables			287,313				—				849,366				—				1,136,679
Derivative financial assets			32,093				—				—				162,388				194,481
		W	853,127				1,661,048				4,588,259				162,388				7,264,822

 

(*)	The Group designated W1,661,048 million of equity instruments that are not held for trading as financial assets at FVOCI.

 

(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		W	313,340				—				1,141,638				—				1,454,978
Financial instruments			62,364				—				232,945				—				295,309
Long-term investment securities(*)			280,650				1,398,734				—				—				1,679,384
Accounts receivable – trade			—				—				1,990,849				—				1,990,849
Loans and other receivables			273,945				—				781,157				—				1,055,102
Derivative financial assets			32,324				—				—				116,210				148,534
		W	962,623				1,398,734				4,146,589				116,210				6,624,156

 

(*)	The Group designated W1,398,734 million of equity instruments that are not held for trading as financial assets at FVOCI.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Categories of Financial Instruments, Continued

 

(2)

Financial liabilities by category as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Financial liabilities at FVTPL				Financial liabilities at amortized cost				Total
Accounts payable – trade		W	—				144,972				144,972
Derivative financial liabilities			295,876				—				295,876
Borrowings			—				704,960				704,960
Debentures			—				8,657,166				8,657,166
Lease liabilities(*)			—				1,589,405				1,589,405
Accounts payable - other and others			—				4,022,896				4,022,896
		W	295,876				15,119,399				15,415,275

 

(In millions of won)		December 31, 2023
		Financial liabilities at FVTPL				Financial liabilities at amortized cost				Derivatives hedging instrument				Total
Accounts payable – trade		W	—				139,876				—				139,876
Derivative financial liabilities			295,876				—				9,212				305,088
Borrowings			—				718,078				—				718,078
Debentures			—				8,325,643				—				8,325,643
Lease liabilities(*)			—				1,611,433				—				1,611,433
Accounts payable - other and others			—				4,539,838				—				4,539,838
		W	295,876				15,334,868				9,212				15,639,956

 

(*)	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.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	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 exchange position 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 March 31, 2024 are as follows:

 

(In millions of won, thousands of foreign currencies)		Assets								Liabilities
		Foreign currencies				Won equivalent				Foreign currencies				Won equivalent
USD			85,508			W	115,163				1,033,837			W	1,392,371
EUR			16,078				23,361				45				65
Others			—				347				—				67
						W	138,871							W	1,392,503

In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign debentures.

As of March 31, 2024, a hypothetical change in exchange rates by 10% would have increased (decreased) the Group’s profit before income tax 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		W	6,151				(6,151	)		W	6,151				(6,151	)
EUR			2,330				(2,330	)			2,330				(2,330	)
Others			28				(28	)			28				(28	)
		W	8,509				(8,509	)		W	8,509				(8,509	)

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	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 March 31, 2024, floating-rate borrowings and debentures amount to W80,000 million and W404,040 million, respectively, and the Group has entered into interest rate swaps to hedge interest rate risk related to the floating-rate debentures. Therefore, profit before income tax for the three-month period ended March 31, 2024 would not have been affected by the changes in interest rates of floating-rate debentures.

If the interest rate increases (decreases) 1%p with all other variables held constant, profit before income taxes and equity for the three-month period ended March 31, 2024, would change by W200 million in relation to the floating-rate borrowings which have not entered into interest rate swaps.

As of March 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 three-month period ended March 31, 2024, would change by W2,303 million in relation to the floating-rate long-term payables – other that are exposed to interest rate risk.

(iii) Price fluctuations risk

As of March 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 for the three-month period ended March 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%

W

—

—

W

91,031

(91,031

)

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Financial Risk Management, Continued

 

(1)

Financial risk management, Continued

 

2)

Credit risk

The maximum credit exposure as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Cash and cash equivalents		W	1,718,775				1,454,773
Financial instruments			354,999				295,309
Accounts receivable – trade			2,056,087				1,990,849
Contract assets			125,908				129,771
Loans and other receivables			1,136,679				1,055,102
Derivative financial assets			194,481				148,534
		W	5,586,929				5,074,338

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.

The Group establishes a loss allowance in respect of accounts receivable – trade. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that are expected to occur. The collective loss allowance is determined based on historical data of collection statistics for similar financial assets. Also, the Group’s credit risk can arise from transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivatives. To minimize such risk, the Group has a policy to deal only with financial institutions with high credit ratings. The amount of maximum exposure to credit risk of the Group is the carrying amount of financial assets as of March 31, 2024.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	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 March 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		W	144,972				144,972				144,972				—				—
Borrowings(*)			704,960				721,440				605,788				115,652				—
Debentures(*)			8,657,166				9,914,426				1,655,877				5,950,190				2,308,359
Lease liabilities			1,589,405				1,875,996				392,354				1,011,569				472,073
Accounts payable – other and others(*)			4,022,896				4,091,991				3,512,503				579,438				50
		W	15,119,399				16,748,825				6,311,494				7,656,849				2,780,482

 

(*)	The contractual cash flow is amount that includes interest payables.

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

As of March 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

W

162,388

172,922

36,433

136,489

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	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 March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Total liabilities		W	17,843,529				17,890,828
Total equity			12,452,982				12,228,399
Debt-equity ratios			143.29	%			146.31	%

 

(3)

Fair value

 

1)

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of March 31, 2024 are as follows:

 

(In millions of won)		March 31, 2024
		Carrying amount				Level 1				Level 2				Level 3				Total
Financial assets that are measured at fair value:
FVTPL		W	853,127				—				678,495				174,632				853,127
Derivative hedging instruments			162,388				—				162,388				—				162,388
FVOCI			1,661,048				1,217,782				—				443,266				1,661,048
		W	2,676,563				1,217,782				840,883				617,898				2,676,563
Financial liabilities that are measured at fair value:
FVTPL		W	295,876				—				—				295,876				295,876
Financial liabilities that are not measured at fair value:
Borrowings		W	704,960				—				700,746				—				700,746
Debentures			8,657,166				—				8,539,486				—				8,539,486
Long-term payables – other			896,409				—				907,711				—				907,711
		W	10,258,535				—				10,147,943				—				10,147,943

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	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		W	962,623				—				649,649				312,974				962,623
Derivative hedging instruments			116,210				—				116,210				—				116,210
FVOCI			1,398,734				1,135,832				—				262,902				1,398,734
		W	2,477,567				1,135,832				765,859				575,876				2,477,567
Financial liabilities that are measured at fair value:
FVTPL			295,876				—				—				295,876				295,876
Derivative hedging instruments			9,212				—				9,212				—				9,212
		W	305,088				—				9,212				295,876				305,088
Financial liabilities that are not measured at fair value:
Borrowings		W	718,078				—				695,320				—				695,320
Debentures			8,325,643				—				8,052,193				—				8,052,193
Long-term payables – other			1,260,453				—				1,294,977				—				1,294,977
		W	10,304,174				—				10,042,490				—				10,042,490

The above information does not include fair values of financial assets and liabilities of which fair values have not been measured as carrying amounts are reasonable approximation of fair values.

Fair value of the financial instruments that are traded in an active market (financial assets at FVOCI and financial assets at FVTPL) is measured based on the bid price at the end of the reporting date.

The Group uses various valuation methods for determination of fair value of financial instruments that are not traded in an active market. Derivative financial contracts and long-term liabilities are measured using the discounted present value methods. Other financial assets are determined using the methods, such as discounted cash flow and market approach. Inputs used to such valuation methods include swap rate, interest rate, and risk premium, and the Group performs valuation using the inputs which are consistent with natures of assets and liabilities measured.

Interest rates used by the Group for the fair value measurement as of March 31, 2024 are as follows:

 

		Interest rate
Derivative instruments		2.56% ~ 6.25%
Borrowings and debentures		3.64% ~ 18.12%
Long-term payables – other		3.64% ~ 3.81%

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Financial Risk Management, Continued

 

(3)

Fair value, Continued

 

3)

There have been no transfers between Level 1 and Level 2 for the three-month period ended March 31, 2024. The changes in financial assets and liabilities classified as Level 3 for the three-month period ended March 31, 2024 are as follows:

 

(In millions of won)		Balance as of January 1, 2024				Gain				OCI				Acquisition				Disposal				Transfer				Balance as of March 31, 2024
Financial assets
FVTPL		W	312,974				16,541				2,189				713				(257	)			(157,528	)			174,632
FVOCI			262,902				—				6,698				26,774				(1,652	)			148,544				443,266
		W	575,876				16,541				8,887				27,487				(1,909	)			(8,984	)			617,898
Financial liabilities
FVTPL		W	(295,876	)			—				—				—				—				—				(295,876	)

 

(4)

Enforceable master netting agreement or similar agreement

Carrying amounts of financial instruments recognized of which offset agreements are applicable as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Gross financial instruments recognized				Amount offset				Net financial instruments presented on the interim consolidated statement of financial position
Financial assets:
Accounts receivable – trade and others		W	149,323				(137,636	)			11,687
Financial liabilities:
Accounts payable – other and others		W	142,541				(137,636	)			4,905
(In millions of won)		December 31, 2023
		Gross financial instruments recognized				Amount offset				Net financial instruments presented on the consolidated statement of financial position
Financial assets:
Accounts receivable – trade and others		W	194,374				(183,520	)			10,854
Financial liabilities:
Accounts payable – other and others		W	190,630				(183,520	)			7,110

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

30.	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 43 others
Others		The Ultimate controlling entity’s subsidiaries and associates and others

For the periods presented, 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 compensations given to such key management for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Salaries		W	3,076				1,989
Defined benefit plan expenses			752				530
Share option			664				539
		W	4,492				3,058

Compensations for the key management include salaries, non-monetary salaries, and defined benefits made in relation to the pension plan and compensation expenses related to share options granted.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

30.	Transactions with Related Parties, Continued

 

(3)

Transactions with the related parties for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)				For the three-month period ended March 31, 2024
Scope		Company		Operating revenue and others				Operating expenses and others(*1)				Acquisition of property and equipment and others
Ultimate controlling entity		SK Inc.(*2)		W	4,615				169,545				10,129
Associates		F&U Credit information Co., Ltd.			494				12,643				—
		SK AMERICAS Inc. (Formerly, SK USA, Inc.)			53				1,208				—
		Daehan Kanggun BcN Co., Ltd.			2,884				—				—
		Others(*3)			1,034				2,981				—
					4,465				16,832				—
Others		SK Innovation Co., Ltd.			3,741				4,632				—
		SK Energy Co., Ltd.			789				76				—
		SK Geo Centric Co., Ltd.			143				1				—
		SK Networks Co., Ltd.(*4)			1,264				277,822				—
		SK Networks Service Co., Ltd.			1,272				15,072				16
		SK Ecoplant Co., Ltd.			412				—				—
		SK hynix Inc.			10,913				124				—
		SK Shieldus Co., Ltd.			15,114				37,504				1,512
		Content Wavve Corp.			1,431				20,383				—
		Eleven Street Co., Ltd.			24,974				8,561				—
		SK Planet Co., Ltd.			3,966				19,271				1,886
		SK RENT A CAR Co., Ltd.			2,772				5,376				—
		SK Magic Co., Ltd.			345				180				—
		Tmap Mobility Co., Ltd.			6,659				1,636				—
		One Store Co., Ltd.			4,061				312				—
		Dreamus Company			991				16,753				—
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			1				12,161				3,290
		Happy Narae Co., Ltd.			147				2,641				6,378
		Others			10,946				4,730				14,784
					89,941				427,235				27,866
				W	99,021				613,612				37,995

 

(*1)	Operating expenses and others include lease payments by the Group.

(*2)	Operating expenses and others include W68,952 million of dividends declared to be paid by the Parent Company.

(*3)	Operating revenue and others include W536 million of dividends deducted from the investment in associates as a result of receipt by the Group.

(*4)	Operating expenses and others include costs for handset purchases amounting to W263,894 million.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

30.	Transactions with Related Parties, Continued

 

(3)

Transactions with the related parties for the three-month periods ended March 31, 2024 and 2023 are as follows, Continued:

 

(In millions of won)				For the three-month period ended March 31, 2023
Scope		Company		Operating revenue and others				Operating expenses and others(*1)				Acquisition of property and equipment and others
Ultimate controlling entity		SK Inc.(*2)		W	5,639				156,174				2,824
Associates		F&U Credit information Co., Ltd.			741				11,634				—
		SK AMERICAS Inc. (Formerly, SK USA, Inc.)			—				612				—
		Daehan Kanggun BcN Co., Ltd.			5,206				—				—
		Others			—				7				—
					5,947				12,253				—
Others		SK Innovation Co., Ltd.			7,288				4,865				—
		SK Energy Co., Ltd.			868				5				—
		SK Geo Centric Co., Ltd.			162				—				—
		SK Networks Co., Ltd.(*3)			1,040				260,800				—
		SK Networks Service Co., Ltd.			1,382				17,031				6
		SK Ecoplant Co., Ltd.			671				—				—
		SK hynix Inc.			14,257				35				—
		SK Shieldus Co., Ltd.			14,054				40,394				834
		Content Wavve Corp.			3,428				21,067				146
		Eleven Street Co., Ltd.			18,164				7,008				—
		SK Planet Co., Ltd.			5,020				22,651				260
		SK RENT A CAR Co., Ltd.			3,765				4,826				—
		SK Magic Co., Ltd.			346				288				—
		Tmap Mobility Co., Ltd.			6,061				353				—
		One Store Co., Ltd.			4,402				6				—
		Dreamus Company			1,545				20,580				—
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			58				10,327				803
		Happy Narae Co., Ltd.			254				2,708				4,365
		Others			11,008				4,061				9
					93,773				417,005				6,423
				W	105,359				585,432				9,247

 

(*1)	Operating expenses and others include lease payments by the Group.

(*2)	Operating expenses and others include W54,505 million of dividends declared to be paid by the Parent Company.

(*3)	Operating expenses and others include costs for handset purchases amounting to W244,239 million.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

30.	Transactions with Related Parties, Continued

 

(4)

Account balances with the related parties as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)				March 31, 2024
				Receivables								Payables
Scope		Company		Loans				Accounts receivable – trade, etc.				Accounts payable – other, etc.
Ultimate controlling entity		SK Inc.		W	—				1,687				123,923
Associates		F&U Credit information Co., Ltd.			—				7				4,904
		Daehan Kanggun BcN Co., Ltd.(*1)			22,147				2,857				—
		Others			—				4,287				1,749
					22,147				7,151				6,653
Others		SK Innovation Co., Ltd.			—				6,600				25,871
		SK Networks Co., Ltd.			—				856				160,530
		Mintit Co., Ltd.			—				13,565				1
		SK hynix Inc.			—				11,054				1,292
		Happy Narae Co., Ltd.			—				43				349
		SK Shieldus Co., Ltd.			—				10,980				21,303
		Content Wavve Corp.			—				409				4
		Incross Co., Ltd.			—				2,045				1,753
		Eleven Street Co., Ltd.			—				7,166				8,834
		SK Planet Co., Ltd.			—				1,257				15,583
		SK RENT A CAR Co., Ltd.			—				987				35,312
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			—				—				8,038
		Others			—				11,477				35,362
					—				66,439				314,232
				W	22,147				75,277				444,808

 

(*1)	As of March 31, 2024, the Parent Company recognized loss allowance for the entire balance of loans to Daehan Kanggun BcN Co., Ltd.

 

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Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

30.	Transactions with Related Parties, Continued

 

(4)

Account balances with the related parties as of March 31, 2024 and December 31, 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.		W	—				1,535				106,546
Associates		F&U Credit information Co., Ltd.			—				325				4,417
		Daehan Kanggun BcN Co., Ltd.(*1)			22,147				4,701				—
		Others			—				3,910				3,476
					22,147				8,936				7,893
Others		SK Innovation Co., Ltd.			—				8,697				28,646
		SK Networks Co., Ltd.			—				120				156,316
		Mintit Co., Ltd.			—				17,036				—
		SK hynix Inc.			—				8,022				2,251
		Happy Narae Co., Ltd.			—				101				5,686
		SK Shieldus Co., Ltd.			—				12,723				14,784
		Content Wavve Corp.			—				1,476				2
		Incross Co., Ltd.			—				2,239				943
		Eleven Street Co., Ltd.			—				6,138				6,103
		SK Planet Co., Ltd.			—				9,981				18,833
		SK RENT A CAR Co., Ltd.			—				866				33,365
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			—				1				10,764
		Others(*2)			—				15,082				30,184
					—				82,482				307,877
				W	22,147				92,953				422,316

 

(*1)	As of December 31, 2023, the Parent Company recognized loss allowance for the entire balance of loans to 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 real estate owned by the Group. Whereby, the negotiation period is within 3 to 5 years from June 30, 2021, date of agreement, and the Group has been granted the right by SK REIT Co., Ltd. to lease the real estate in preference to a third party if SK REIT Co., Ltd. purchases the real estate from the Group.

 

(6)

The details of additional investments and disposal of associates and joint ventures for the three-month period ended March 31, 2024 are as presented in note 10.

 

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March 31, 2024 and 2023 (Unaudited)

 

31.	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 W1,228 million as of March 31, 2024.

 

(2)

Legal claims and litigations

As of March 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 W303,804 million and W291,747 million as of March 31, 2024 and December 31, 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.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

31.	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)

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.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

32.	Statements of Cash Flows

 

(1)

Adjustments for income and expenses from operating activities for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Interest income		W	(18,819	)			(12,998	)
Dividends			(17,261	)			(23,646	)
Gain on foreign currency translations			(2,573	)			(1,759	)
Gain relating to investments in associates and joint ventures, net			(4,906	)			(771	)
Gain on disposal of property and equipment and intangible assets			(4,108	)			(5,929	)
Gain relating to financial instruments at FVTPL			(17,385	)			(8,231	)
Interest expenses			105,032				93,070
Loss on foreign currency translations			1,860				1,244
Loss on sale of accounts receivable – other			11,676				24,078
Income tax expense			78,805				118,397
Expense related to defined benefit plan			31,412				30,481
Share option			3,080				803
Bonus paid by treasury shares			24,707				20,080
Depreciation and amortization			931,523				934,379
Bad debt for accounts receivable – trade			13,571				9,417
Loss on impairment of property and equipment and intangible assets			—				64
Loss on disposal of property and equipment and intangible assets			1,899				1,245
Bad debt for accounts receivable – other			1,378				1,837
Loss relating to financial instruments at FVTPL			129				1,942
Other expenses			2,904				6,707
		W	1,142,924				1,190,410

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

32.	Statements of Cash Flows, Continued

 

 

(2)

Changes in assets and liabilities from operating activities for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Accounts receivable – trade		W	(51,791	)			76,590
Accounts receivable – other			(76,850	)			6,988
Advanced payments			5,305				14,904
Prepaid expenses			(44,538	)			(22,879	)
Inventories			(31,751	)			(37,518	)
Long-term accounts receivable – other			(3,376	)			18,984
Contract assets			3,022				(4,907	)
Guarantee deposits			4,062				(7,330	)
Accounts payable – trade			4,479				49,530
Accounts payable – other			(154,092	)			(431,943	)
Withholdings			250,668				171,309
Contract liabilities			14,860				(11,010	)
Deposits received			104				(111	)
Accrued expenses			(218,926	)			(190,179	)
Provisions			980				(7	)
Long-term provisions			(9,050	)			(179	)
Plan assets			37,681				27,042
Retirement benefits payment			(32,453	)			(28,441	)
Others			(1,638	)			(2,267	)
		W	(303,304	)			(371,424	)

 

(3)

Material non-cash transactions for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Decrease in accounts payable – other relating to the acquisition of property and equipment and intangible assets		W	(253,001	)			(578,571	)
Increase of right-of-use assets			97,198				111,050
Transfer from property and equipment to investment property			(345	)			17,495

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

33.	Emissions Liabilities

 

(1)

The quantity of emissions rights allocated free of charge for each implementation year as of March 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				1,440,634				1,464,836				1,504,944				7,398,598

 

(*)

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 the three-month period ended March 31, 2024				Total
Beginning			—				306,575				110,878				417,453
Allocation at no cost			1,602,751				1,440,634				1,464,836				4,508,221
Purchase			213,609				14,524				131,521				359,654
Surrender or shall be surrendered			(1,515,595	)			(1,650,855	)			(1,707,235	)			(4,873,685	)
Borrowed			5,810				—				—				5,810
Ending			306,575				110,878				—				417,453

 

(*)	Changes for the year ended December 31, 2023 are estimated quantities, and additionally allocated and surrendered or shall be surrendered quantities will be fixed in May 2024.

 

(3)

As of March 31, 2024, the estimated annual greenhouse gas emissions quantities of the Group are 1,707,235 tCO2-eQ.

 

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SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Interim Consolidated Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

34.	Non-current Assets Held for Sale

Non-current assets held for sale as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)				March 31, 2024				December 31, 2023
Investments in associates		Daekyo Wipoongdangdang Contents Korea Fund		W	746				746
Long-term investment securities		Digital Content Korea Fund			3,395				3,395
		Central Fusion Content Fund			884				884
		P&I Cultural Innovation Fund			818				1,892
Inventories		—			353				505
Prepaid expenses		—			1,575				1,489
Property and equipment		—			1,698				1,604
				W	9,469				10,515

 

35.	Subsequent Events

The Board of Directors of the Parent Company resolved to pay interim dividends at the Board of Directors’ meeting held on April 25, 2024, and the details are as follows:

 

Classification		Description
Interim dividend amount		W830 per share (Total amount: W176,691 million)
Dividend rate		1.55%
Record date		March 31, 2024
Date of distribution		Pursuant to Article 165-12 (3) of Capital Market and Financial Investment Business Act, the Parent Company shall distribute dividends no later than May 14, 2024.

 

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SK TELECOM CO., LTD.

Interim Separate Financial Statements

For each of the three-month periods ended March 31, 2024 and 2023

(with the independent auditor’s review report)

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Contents

 

		Page
Report on review of interim separate financial statements
Interim Separate Financial Statements
Interim Separate Statements of Financial Position			1
Interim Separate Statements of Income			3
Interim Separate Statements of Comprehensive Income			4
Interim Separate Statements of Changes in Equity			5
Interim Separate Statements of Cash Flows			6
Notes to the Interim Separate Financial Statements			8

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Report on review of interim separate financial statements

(English translation of a report originally issued in Korean)

The Shareholders and Board of Directors

SK Telecom Co., Ltd.

We have reviewed the accompanying interim separate financial statements of SK Telecom Co., Ltd. (collectively referred to as the “Company”), which comprise the interim separate statement of financial position as of March 31, 2024, and the related interim separate statements of income, interim separate statements of comprehensive income, interim separate statements of changes in equity and interim separate statements of cash flows for each of the three-month periods ended March 31, 2024 and 2023, and a summary of material accounting policy information and other explanatory information.

Management’s responsibility for the interim separate financial statements

Management is responsible for the preparation and fair presentation of these interim separate financial statements in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”) 1034 Interim Financial Reporting, and for such internal control as management determines is necessary to enable the preparation of interim separate financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on these interim separate financial statements based on our review.

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim separate financial statements are not prepared fairly, in all material respects, in accordance with KIFRS 1034 Interim Financial Reporting.

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Other matters

We have audited the separate statement of financial position as of December 31, 2023, and the related separate statement of income, separate statement of comprehensive income, separate statement of changes in equity and separate statement of cash flows for the year then ended (not presented herein) in accordance with KSA, and our report dated March 6, 2024 expressed an unqualified opinion thereon. The accompanying separate statement of financial position as of December 31, 2023 presented for comparative purposes is not different, in all material respects, from the above audited separate statement of financial position.

May 13, 2024

 

This report is effective as of May 13, 2024, the independent auditor’s review report date. Accordingly, certain material subsequent events or circumstances may have occurred during the period from the date of the independent auditor’s review report to the time this review report is used. Such events and circumstances could significantly affect the accompanying interim separate financial statements and may result in modification to this review report.

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SK TELECOM CO., LTD. (the “Company”)

INTERIM SEPARATE FINANCIAL STATEMENTS

AS OF MARCH 31, 2024 AND DECEMBER 31, 2023 AND

FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2024 AND 2023

The accompanying interim separate financial statements, including all footnote disclosures, have been prepared by, and are the responsibility of, the Company.

Ryu, Young-Sang

Chief Executive Officer

SK TELECOM CO., LTD.

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SK TELECOM CO., LTD.

Interim Separate Statements of Financial Position

As of March 31, 2024 and December 31, 2023

 

(In millions of won)		Note				March 31, 2024 (Unaudited)				December 31, 2023
Assets
Current Assets:
Cash and cash equivalents			27,28			W	885,809				631,066
Short-term financial instruments			27,28				116,020				186,364
Accounts receivable – trade, net			4,27,28,29				1,521,505				1,495,617
Short-term loans, net			4,27,28				70,932				68,806
Accounts receivable – other, net			4,27,28,29,30				583,016				343,036
Contract assets			6,28				7,556				9,228
Prepaid expenses			5				1,845,593				1,828,646
Guarantee deposits			4,27,28,29				64,214				72,479
Derivative financial assets			27,28				2,323				—
Inventories, net							32,324				28,096
Advanced payments and others			4,27,28				31,240				40,506
						5,160,532				4,703,844
Non-Current Assets:
Long-term financial instruments			27,28				354				354
Long-term investment securities			7,27,28				1,520,339				1,426,290
Investments in subsidiaries, associates and joint ventures			8				4,707,513				4,670,568
Property and equipment, net			9,11,29				8,800,913				9,076,459
Investment property, net			10				42,103				46,080
Goodwill							1,306,236				1,306,236
Intangible assets, net			12				2,112,636				2,250,829
Long-term loans, net			4,27,28,29				119				119
Long-term accounts receivable – other			4,27,28,30				309,481				308,868
Long-term contract assets			6,28				11,548				12,385
Long-term prepaid expenses			5				905,622				898,754
Guarantee deposits, net			4,27,28,29				97,055				91,220
Long-term derivative financial assets			27,28				151,693				118,533
Defined benefit assets			16				70,827				85,144
Other non-current assets							249				249
						20,036,688				20,292,088
Total Assets						W	25,197,220				24,995,932

(Continued)

 

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SK TELECOM CO., LTD.

Interim Separate Statements of Financial Position, Continued

As of March 31, 2024 and December 31, 2023

 

 

(In millions of won)		Note				March 31, 2024 (Unaudited)				December 31, 2023
Liabilities and Equity
Current Liabilities:
Accounts payable – other			27,28,29			W	1,662,029				1,794,997
Contract liabilities			6				68,506				59,814
Withholdings			27,28				793,024				608,352
Accrued expenses			27,28				742,618				911,460
Income tax payable			25				194,565				133,543
Provisions			15,32				31,863				31,313
Current portion of long-term debt, net			13,27,28				1,519,532				1,249,516
Lease liabilities			27,28,29				341,546				341,075
Current portion of long-term payables – other			14,27,28				363,002				367,770
Other current liabilities			27,28				14,408				7,630
						5,731,093				5,505,470
Non-Current Liabilities:
Debentures, excluding current portion, net			13,27,28				5,966,984				5,807,423
Long-term borrowings, excluding current portion, net			13,27,28				50,000				250,000
Long-term payables – other			14,27,28				533,407				892,683
Long-term contract liabilities			6				1,852				4,398
Long-term derivative financial liabilities			27,28				295,876				295,876
Long-term lease liabilities			27,28,29				859,543				885,470
Long-term provisions			15				70,160				69,791
Deferred tax liabilities			25				865,949				801,995
Other non-current liabilities			27,28				41,165				46,733
						8,684,936				9,054,369
Total Liabilities							14,416,029				14,559,839
Shareholders’ Equity:
Share capital			1,17				30,493				30,493
Capital surplus and others			17,18				(4,557,234	)			(4,766,147	)
Retained earnings			19				15,098,776				15,032,473
Reserves			20				209,156				139,274
Total Shareholders’ Equity							10,781,191				10,436,093
Total Liabilities and Shareholders’ Equity						W	25,197,220				24,995,932

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

 

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SK TELECOM CO., LTD.

Interim Separate Statements of Income

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won, except for earnings per share)		Note				2024 (Unaudited)				2023 (Unaudited)
Operating revenue:			21,29
Revenue						W	3,188,680				3,117,255
Operating expenses:			29
Labor							265,432				233,079
Commission			5				1,181,512				1,179,373
Depreciation and amortization							667,127				671,001
Network interconnection							124,592				124,824
Leased lines							47,989				51,040
Advertising							21,029				26,979
Rent							27,417				33,662
Cost of goods sold							142,019				131,583
Others			22				275,136				250,053
							2,752,253				2,701,594
Operating profit							436,427				415,661
Finance income			24				218,654				195,849
Finance costs			24				(96,879	)			(109,294	)
Other non-operating income			23				6,773				7,008
Other non-operating expenses			23				(8,860	)			(7,619	)
Gain relating to investments in subsidiaries, associates and joint ventures, net			8				10,476				—
Profit before income tax							566,591				501,605
Income tax expense			25				74,485				79,452
Profit for the period						W	492,106				422,153
Earnings per share:			26
Basic earnings per share (in won)						W	2,290				1,917
Diluted earnings per share (in won)							2,287				1,917

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

 

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SK TELECOM CO., LTD.

Interim Separate Statements of Comprehensive Income

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won)		Note				2024 (Unaudited)				2023 (Unaudited)
Profit for the period						W	492,106				422,153
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss, net of taxes:
Remeasurement of defined benefit assets			16				837				(7,686	)
Valuation gain on financial assets at fair value through other comprehensive income			20				73,406				54,354
Items that are or may be reclassified subsequently to profit or loss, net of taxes:
Net change in unrealized fair value of derivatives			20				(1,879	)			1,526
Other comprehensive income for the period, net of taxes							72,364				48,194
Total comprehensive income						W	564,470				470,347

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

 

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SK TELECOM CO., LTD.

Interim Separate Statements of Changes in Equity

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won)										Capital surplus and others
		Note				Share capital				Paid-in surplus				Treasury shares				Hybrid bonds				Share option				Other				Sub-total				Retained earnings				Reserves				Total equity
Balance as of January 1, 2023						W	30,493				1,771,000				(36,702	)			398,759				2,061				(6,641,811	)			(4,506,693	)			14,691,461				168,121				10,383,382
Total comprehensive income:
Profit for the period							—				—				—				—				—				—				—				422,153				—				422,153
Other comprehensive income (loss)			16,20				—				—				—				—				—				—				—				(7,686	)			55,880				48,194
							—				—				—				—				—				—				—				414,467				55,880				470,347
Transactions with owners:
Annual dividends							—				—				—				—				—				—				—				(180,967	)			—				(180,967	)
Share option			18				—				—				—				—				187				(200	)			(13	)			—				—				(13	)
Interest on hybrid bonds							—				—				—				—				—				—				—				(3,692	)			—				(3,692	)
Transactions of treasury shares			17,18				—				—				19,887				—				—				144				20,031				—				—				20,031
							—				—				19,887				—				187				(56	)			20,018				(184,659	)			—				(164,641	)
Balance as of March 31, 2023  (Unaudited)						W	30,493				1,771,000				(16,815	)			398,759				2,248				(6,641,867	)			(4,486,675	)			14,921,269				224,001				10,689,088
Balance as of January 1, 2024						W	30,493				1,771,000				(301,981	)			398,509				9,818				(6,643,493	)			(4,766,147	)			15,032,473				139,274				10,436,093
Total comprehensive income:
Profit for the period							—				—				—				—				—				—				—				492,106				—				492,106
Other comprehensive income			16,20				—				—				—				—				—				—				—				2,482				69,882				72,364
							—				—				—				—				—				—				—				494,588				69,882				564,470
Transactions with owners:
Annual dividends							—				—				—				—				—				—				—				(223,335	)			—				(223,335	)
Share option			18				—				—				—				—				249				(212	)			37				—				—				37
Interest on hybrid bonds							—				—				—				—				—				—				—				(4,950	)			—				(4,950	)
Acquisition and disposal of treasury shares			17,18				—				—				8,752				—				—				124				8,876				—				—				8,876
Retirement of treasury shares			17,18				—				—				200,000				—				—				—				200,000				(200,000	)			—				—
							—				—				208,752				—				249				(88	)			208,913				(428,285	)			—				(219,372	)
Balance as of March 31, 2024  (Unaudited)						W	30,493				1,771,000				(93,229	)			398,509				10,067				(6,643,581	)			(4,557,234	)			15,098,776				209,156				10,781,191

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

 

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SK TELECOM CO., LTD.

Interim Separate Statements of Cash Flows

For the three-month periods ended March 31, 2024 and 2023

 

(In millions of won)		Note				2024 (Unaudited)				2023 (Unaudited)
Cash flows from operating activities:
Cash generated from operating activities:
Profit for the period						W	492,106				422,153
Adjustments for income and expenses			31				691,050				739,559
Changes in assets and liabilities related to operating activities			31				(205,711	)			(371,938	)
							977,445				789,774
Interest received							8,590				5,821
Dividends received							2,190				—
Interest paid							(105,926	)			(94,571	)
Income tax refund							17,933				405
Net cash provided by operating activities							900,232				701,429
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net							70,892				323
Collection of short-term loans							31,213				30,161
Proceeds from disposals of long-term investment securities							11,789				215
Proceeds from disposals of investments in subsidiaries, associates and joint ventures							15,072				—
Proceeds from disposals of property and equipment							1,948				1,822
Proceeds from disposals of intangible assets							249				—
							131,163				32,521
Cash outflows for investing activities:
Increase in short-term loans							(33,360	)			(38,274	)
Acquisitions of long-term investment securities							(107	)			—
Acquisitions of investments in subsidiaries, associates and joint ventures							(32,557	)			(15,324	)
Acquisitions of property and equipment							(434,172	)			(645,898	)
Acquisitions of intangible assets							(3,202	)			(3,046	)
							(503,398	)			(702,542	)
Net cash used in investing activities						W	(372,235	)			(670,021	)

(Continued)

 

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SK TELECOM CO., LTD.

Interim Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2024 and 2023

 

 

(In millions of won)		Note				2024 (Unaudited)				2023 (Unaudited)
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from issuance of debentures						W	398,306				298,730
							398,306				298,730
Cash outflows for financing activities:
Repayments of short-term borrowings							—				(100,000	)
Repayments of long-term borrowings							(10,000	)			—
Repayments of long-term payables – other							(369,150	)			(400,245	)
Repayments of debentures							(200,000	)			(270,000	)
Acquisition of treasury shares							(15,788	)			—
Payments of interest on hybrid bonds							(4,950	)			(3,692	)
Repayments of lease liabilities							(71,904	)			(74,166	)
							(671,792	)			(848,103	)
Net cash used in financing activities							(273,486	)			(549,373	)
Net increase (decrease) in cash and cash equivalents							254,511				(517,965	)
Cash and cash equivalents at beginning of the period							631,066				1,217,504
Effects of exchange rate changes on cash and cash equivalents							232				4
Cash and cash equivalents at end of the period						W	885,809				699,543

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

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

1.	Reporting Entity

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

The Company’s common shares are listed on the Stock Market of Korea Exchange, and its depositary receipts (DRs) are listed on the New York Stock Exchange. As of March 31, 2024, the 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			16,374,544				7.62
Institutional investors and other shareholders			126,991,437				59.13
Kakao Investment Co., Ltd.			3,846,487				1.79
Treasury shares			1,909,188				0.89
			214,790,053				100.00

 

2.	Basis of Preparation

 

(1)

Statement of compliance

These interim condensed separate financial statements were prepared in accordance with International Financial Reporting Standard as adopted by the Republic of Korea (“KIFRS”) 1034 Interim Financial Reporting as part of the period covered by the Company’s KIFRS annual financial statements. These interim separate financial statements do not include all of the disclosures required for full annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since December 31, 2023. The accompanying interim separate financial statements have been translated into English from the Korean language financial statements. In the event of any differences in interpreting the financial statements or the independent auditor’s review report thereon, the Korean version, which is used for regulatory reporting purposes, shall prevail.

These interim financial statements are interim separate financial statements prepared in accordance with KIFRS 1027, Separate Financial Statements, presented by a parent, an investor with joint control of or significant influence over an investee, in which the investments are accounted for at cost less impairment, if any.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

2.	Basis of Preparation, Continued

 

(2)

Use of estimates and judgments

1) Critical judgments, assumptions and estimation uncertainties

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

In preparing these interim separate financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the separate financial statements as of and for the year ended December 31, 2023.

2) Fair value measurement

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

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

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

 

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

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

Information about assumptions used for fair value measurements are included in note 28.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

3.	Material Accounting Policies

The material accounting policies applied by the Company in these interim separate financial statements are the same as those applied by the Company in its separate financial statements as of and for the year ended December 31, 2023, except for the adoption of new and revised KIFRS applied from January 1, 2024, which are summarized below. The Company has not early applied the new and revised KIFRS and interpretations that have been issued but are not yet effective.

The following new and amended KIFRS and interpretations are effective from January 1, 2024, initially, but these amended standards are not expected to have a material impact on the Company’s interim separate 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)

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

4.	Trade and Other Receivables

 

(1)

Details of trade and other receivables as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Gross amount				Loss allowance				Carrying amount
Current assets:
Accounts receivable – trade		W	1,624,282				(102,777	)			1,521,505
Short-term loans			71,648				(716	)			70,932
Accounts receivable – other(*)			612,276				(29,260	)			583,016
Guarantee deposits			64,214				—				64,214
Accrued income			743				—				743
			2,373,163				(132,753	)			2,240,410
Non-current assets:
Long-term loans			41,155				(41,036	)			119
Long-term accounts receivable – other(*)			309,481				—				309,481
Guarantee deposits			97,055				—				97,055
			447,691				(41,036	)			406,655
		W	2,820,854				(173,789	)			2,647,065

 

(*)	Gross and carrying amounts of accounts receivable – other as of March 31, 2024 include W287,313 million of financial instruments classified as fair value through profit or loss (“FVTPL”).

 

(In millions of won)		December 31, 2023
		Gross amount				Loss allowance				Carrying amount
Current assets:
Accounts receivable – trade		W	1,589,862				(94,245	)			1,495,617
Short-term loans			69,501				(695	)			68,806
Accounts receivable – other(*)			370,860				(27,824	)			343,036
Guarantee deposits			72,479				—				72,479
Accrued income			2,643				—				2,643
			2,105,345				(122,764	)			1,982,581
Non-current assets:
Long-term loans			41,155				(41,036	)			119
Long-term accounts receivable – other(*)			308,868				—				308,868
Guarantee deposits			91,220				—				91,220
			441,243				(41,036	)			400,207
		W	2,546,588				(163,800	)			2,382,788

 

(*)	Gross and carrying amounts of accounts receivable – other as of December 31, 2023 include W273,945 million of financial instruments classified as fair value through profit or loss (“FVTPL”).

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

4.	Trade and Other Receivables, Continued

 

(2)

Changes in the loss allowance on trade and other receivables measured at amortized cost for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		January 1, 2024				Impairment				Write-offs(*)				Collection of receivables previously written-off				March 31, 2024
Accounts receivable – trade		W	94,245				7,027				(439	)			1,944				102,777
Accounts receivable – other, etc.			69,555				1,319				(141	)			279				71,012
		W	163,800				8,346				(580	)			2,223				173,789

 

(In millions of won)
		January 1, 2023				Impairment				Write-offs(*)				Collection of receivables previously written-off				March 31, 2023
Accounts receivable – trade		W	86,231				6,920				(318	)			2,113				94,946
Accounts receivable – other, etc.			74,449				1,337				(89	)			348				76,045
		W	160,680				8,257				(407	)			2,461				170,991

 

(*)	The Company writes off trade and other receivables that are determined to be uncollectable due to reasons such as termination of operations or bankruptcy.

 

(3)

The Company applies the practical expedient that allows the Company to estimate the loss allowance for accounts receivable – trade at an amount equal to the lifetime expected credit losses. The expected credit losses include the forward-looking information. To make the assessment, the Company uses its historical credit loss experience over the past three years and classifies the accounts receivable – trade by their credit risk characteristics and days overdue.

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

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

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

5.	Prepaid Expenses

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

 

(1)

Details of prepaid expenses as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Current assets:
Incremental costs of obtaining contracts		W	1,794,266				1,795,410
Others			51,327				33,236
		W	1,845,593				1,828,646
Non-current assets:
Incremental costs of obtaining contracts		W	866,480				863,650
Others			39,142				35,104
		W	905,622				898,754

 

(2)

Incremental costs of obtaining contracts

The amortization in connection with incremental costs of obtaining contracts recognized as an asset for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Amortization recognized		W	587,486				607,362

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

6.	Contract Assets and Liabilities

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

 

(1)

Details of contract assets and liabilities as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Contract assets:
Allocation of consideration between performance obligations		W	19,104				21,613
Contract liabilities:
Wireless service contracts			20,182				19,149
Customer loyalty programs			5,920				7,164
Others			44,256				37,899
		W	70,358				64,212

 

(2)

The amount of revenue recognized for the three-month periods ended March 31, 2024 and 2023 related to the contract liabilities carried forward from the prior periods are W13,230 million and W18,533 million, respectively.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

7.	Long-term Investment Securities

Details of long-term investment securities as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)

Category

March 31, 2024

December 31, 2023

Equity instruments

FVOCI

(*)

W

1,442,898

1,207,605

Debt instruments

FVTPL

77,441

218,685

W

1,520,339

1,426,290

 

(*)	The Company 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 March 31, 2024 and December 31, 2023 are W1,442,898 million and W1,207,605 million, respectively.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

8.	Investments in Subsidiaries, Associates and Joint Ventures

 

(1)

Investments in subsidiaries, associates and joint ventures as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Investments in subsidiaries		W	3,285,700				3,259,021
Investments in associates and joint ventures			1,421,813				1,411,547
		W	4,707,513				4,670,568

 

(2)

Details of investments in subsidiaries as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)
		March 31, 2024												December 31, 2023
		Number of shares				Ownership (%)				Carrying amount				Carrying amount
SK Telink Co., Ltd.			1,432,627				100.0			W	244,015				244,015
SK Broadband Co., Ltd.			299,052,435				74.4				2,216,865				2,216,865
SK Communications Co., Ltd.			43,427,530				100.0				24,927				24,927
PS&Marketing Corporation			66,000,000				100.0				313,989				313,989
SERVICE ACE Co., Ltd.			4,385,400				100.0				21,946				21,946
SK Telecom China Holdings Co., Ltd.			—				100.0				48,096				48,096
SK Telecom Americas, Inc.			122				100.0				70,269				70,269
Atlas Investment(*1)			—				100.0				220,340				193,661
SK stoa Co., Ltd.			3,631,355				100.0				40,057				40,057
Quantum Innovation Fund I			—				59.9				1,297				1,297
SAPEON Inc.			400,000				62.5				48,456				48,456
SK O&S Co., Ltd. and others			—				—				35,443				35,443
										W	3,285,700				3,259,021

 

(*1)	The Company additionally contributed W26,679 million in cash for the three-month period ended March 31, 2024, but there is no change in the ownership interest.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

8.	Investments in Subsidiaries, Associates and Joint Ventures, Continued

 

(3)

Details of investments in associates and joint ventures as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)
		March 31, 2024												December 31, 2023
		Number of shares				Ownership (%)				Carrying amount				Carrying amount
Investments in associates:
SK China Company Ltd.			10,928,921				27.3			W	601,192				601,192
Korea IT Fund(*1)			190				63.3				220,957				220,957
SK Technology Innovation Company			14,700				49.0				45,864				45,864
SM Culture & Contents Co., Ltd.			22,033,898				22.8				41,578				41,578
SK South East Asia Investment Pte. Ltd.			300,000,000				20.0				344,240				344,240
Citadel Pacific Telecom Holdings, LLC (*2)			1,734,109				15.0				36,487				36,487
CMES Inc.(*2,3)			763,968				8.4				5,488				900
Konan Technology Inc.			2,359,160				20.7				22,413				22,413
12CM JAPAN and others(*2,4,5)			—				—				93,594				87,916
											1,411,813				1,401,547
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund(*6)			—				48.2				10,000				10,000
											10,000				10,000
										W	1,421,813				1,411,547

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

8.	Investments in Subsidiaries, Associates and Joint Ventures, Continued

 

(3)

Details of investments in associates and joint ventures as of March 31, 2024 and December 31, 2023 are as follows, Continued:

 

(*1)	Investments in Korea IT Fund was classified as investment in associates as the Company does not have control over the investee under the contractual agreement with other shareholders.

(*2)	These investments were classified as investments in associates as the Company can exercise significant influence through its right to appoint the members of the Board of Directors even though the Company has less than 20% of equity interests.

(*3)

The Company additionally acquired W8,984 million of shares by exercising the conversion right of the redeemable convertible preference shares, and disposed of a portion of shares for W14,872 million in cash, from which it recognized W10,476 million of gain on disposal of such investments in associates for the three-month period ended March 31, 2024. The ownership interest of the Company increased from 7.7% to 8.4% due to the acquisition and disposal of shares.

(*4)

The Company additionally contributed W5,878 million to SK AMERICAS Inc. (formerly, SK USA, Inc.) for the three-month period ended March 31, 2024, and the ownership interest of the Company has decreased from 49.0% to 20.0% due to the paid-in capital increase through disproportionate allotment of shares.

(*5)	The Company disposed of a portion of shares in Start-up Win-Win Fund for W200 million in cash for the three-month period ended March 31, 2024.

(*6)	As the Company has a joint control over the investee pursuant to the agreement with the other shareholders, the investment in the investee was classified as investments in joint ventures.

 

(4)

The market value of investments in listed associates as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)
		March 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.		W	1,784				22,033,898				39,308				1,887				22,033,898				41,578
Konan Technology Inc.			27,700				2,359,160				65,349				32,600				2,359,160				76,909

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

9.	Property and Equipment

Changes in property and equipment for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		For the three-month period ended March 31, 2024
		Beginning balance				Acquisition				Disposal				Transfer				Depreciation				Ending balance
Land		W	723,069				7				(190	)			3,841				—				726,727
Buildings			568,270				3				(213	)			20,845				(10,713	)			578,192
Structures			233,450				—				(74	)			4,062				(9,675	)			227,763
Machinery			5,230,866				6,988				(35	)			335,233				(399,767	)			5,173,285
Right-of-use assets			1,226,875				62,993				(13,551	)			3,338				(87,938	)			1,191,717
Others			436,854				110,762				(905	)			(74,061	)			(16,344	)			456,306
Construction in progress			657,075				114,038				—				(324,190	)			—				446,923
		W	9,076,459				294,791				(14,968	)			(30,932	)			(524,437	)			8,800,913

 

(In millions of won)
		For the three-month period ended March 31, 2023
		Beginning balance				Acquisition				Disposal				Transfer				Depreciation				Ending balance
Land		W	646,286				3				(287	)			64,298				—				710,300
Buildings			562,976				7				(5	)			3,501				(10,347	)			556,132
Structures			264,327				—				(2	)			2,267				(9,595	)			256,997
Machinery			5,274,612				3,852				(39	)			438,917				(400,664	)			5,316,678
Right-of-use assets			1,372,466				62,155				(13,332	)			(4,057	)			(88,695	)			1,328,537
Others			444,324				65,343				(106	)			(121,493	)			(16,530	)			371,538
Construction in progress			954,672				41,997				—				(405,406	)			—				591,263
		W	9,519,663				173,357				(13,771	)			(21,973	)			(525,831	)			9,131,445

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

10.	Investment Property

 

(1)

Changes in investment property for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)
		For the three-month period ended March 31, 2024
		Beginning balance				Transfer				Depreciation				Ending balance
Land		W	16,288				(588	)			—				15,700
Buildings			18,284				807				(466	)			18,625
Right-of-use assets			11,508				(2,651	)			(1,079	)			7,778
		W	46,080				(2,432	)			(1,545	)			42,103

 

(In millions of won)
		For the three-month period ended March 31, 2023
		Beginning balance				Transfer				Depreciation				Ending balance
Land		W	16,485				536				—				17,021
Buildings			19,066				355				(497	)			18,924
Right-of-use assets			16,472				5,426				(2,422	)			19,476
		W	52,023				6,317				(2,919	)			55,421

 

(2)

The Company recognized lease income of W5,709 million and W5,988 million from investment property for the three-month periods ended March 31, 2024 and 2023, respectively.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

11.

Leases

 

(1)

Details of the right-of-use assets as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Right-of-use assets:
Land, buildings and structures		W	927,275				971,929
Others			264,442				254,946
		W	1,191,717				1,226,875

 

(2)

Details of amounts recognized in the interim separate statements of income for the three-month periods ended March 31, 2024 and 2023 as a lessee are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Depreciation of right-of-use assets:
Land, buildings and structures		W	69,052				69,744
Others(*)			18,886				18,951
		W	87,938				88,695
Interest expense on lease liabilities		W	7,966				7,520

 

(*)	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 Company recognized are immaterial.

 

(3)

The total cash outflows due to lease payments for the three-month periods ended March 31, 2024 and 2023 amounted to W79,916 million and W81,786 million, respectively.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

12.	Intangible Assets

 

(1)

Changes in intangible assets for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended March 31, 2024
		Beginning balance				Acquisition				Disposal				Transfer				Amortization				Ending balance
Frequency usage rights		W	1,606,606				—				—				—				(117,765	)			1,488,841
Land usage rights			542				60				(5	)			—				(123	)			474
Industrial rights			18,790				1,751				(172	)			—				(1,198	)			19,171
Facility usage rights			13,435				377				—				355				(672	)			13,495
Club memberships(*1)			59,001				—				(252	)			—				—				58,749
Other(*2)			552,455				1,014				—				32,788				(54,351	)			531,906
		W	2,250,829				3,202				(429	)			33,143				(174,109	)			2,112,636
(In millions of won)		For the three-month period ended March 31, 2023
		Beginning balance				Acquisition				Disposal				Transfer				Amortization				Ending balance
Frequency usage rights		W	2,082,432				—				—				—				(120,625	)			1,961,807
Land usage rights			1,127				—				—				—				(243	)			884
Industrial rights			19,112				624				—				—				(1,060	)			18,676
Facility usage rights			13,245				691				—				50				(677	)			13,309
Club memberships(*1)			56,897				1,231				—				—				—				58,128
Other(*2)			520,587				500				—				24,313				(53,661	)			491,739
		W	2,693,400				3,046				—				24,363				(176,266	)			2,544,543

 

(*1)	Club memberships are classified as intangible assets with indefinite useful lives and are not amortized.

(*2)	Other intangible assets primarily consist of computer software and others.

 

(2)

Details of frequency usage rights as of March 31, 2024 are as follows:

 

(In millions of won)

Amount

Description

Commencement of amortization

Completion of amortization

800 MHz license

W

98,810

LTE service

Jul. 2021

Jun. 2026

1.8 GHz license

282,088

LTE service

Dec. 2021

Dec. 2026

2.6 GHz license

333,895

LTE service

Sept. 2016

Dec. 2026

2.1 GHz license

212,004

W-CDMA and LTE service

Dec. 2021

Dec. 2026

3.5 GHz license

562,044

5G service

Apr. 2019

Nov. 2028

W

1,488,841

 

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Table of Contents

SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

13.	Borrowings and Debentures

 

(1)

Changes in long-term borrowings for the three-month period ended March 31, 2024 are as follows:

 

(In millions of won)

Lender

Annual interest rate (%)

Maturity

Book value

Current

W

390,000

Non-current

250,000

As of January 1, 2024

640,000

Repayments of long-term borrowing:

Nonghyup Bank(*1)

MOR + 1.36

Feb. 19, 2024

(10,000

)

Current(*2)

580,000

Non-current(*2)

50,000

As of March 31, 2024

W

630,000

 

(*1)	6M MOR rates are 3.64% and 3.85% as of March 31, 2024 and December 31, 2023, respectively.

(*2)	W200,000 million were reclassified from non-current to current for the three-month period ended March 31, 2024.

 

(2)

Changes in debentures for the three-month period ended March 31, 2024 are as follows:

 

(In millions of won)
		Purpose				Annual interest rate (%)				Maturity				Face value				Book value
Current														W	860,000				859,516
Non-current															5,822,580				5,807,423
As of January 1, 2024															6,682,580				6,666,939
Debentures newly issued:
Unsecured corporate bonds			Refinancing fund				3.72				Feb. 22, 2027				180,000				179,233
			Refinancing fund				3.73				Feb. 22, 2029				110,000				109,537
			Refinancing fund				3.92				Feb. 22, 2034				110,000				109,536
															400,000				398,306
Debentures repaid:
Unsecured corporate bonds			Operating fund				2.09				Mar. 6, 2024				(120,000	)			(120,000	)
			Refinancing fund				1.17				Jan. 15, 2024				(80,000	)			(80,000	)
															(200,000	)			(200,000	)
Other changes(*1)															40,180				41,271
Current(*2)															940,000				939,532
Non-current(*2)															5,982,760				5,966,984
As of March 31, 2024														W	6,922,760				6,906,516

 

(*1)	Other changes include the effects on foreign currency translation of debentures and changes in discount on issuance of debentures for the three-month period ended March 31, 2024.

(*2)	W279,856 million were reclassified from non-current to current for the three-month period ended March 31, 2024.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

14.	Long-Term Payables – Other

 

(1)

As of March 31, 2024 and December 31, 2023, details of long-term payables – other related to the acquisition of frequency usage rights are as follows (See note 12):

 

(In millions of won)		March 31, 2024				December 31, 2023
Long-term payables – other		W	921,075				1,290,225
Present value discount on long-term payables – other			(24,666	)			(29,772	)
Current installments of long-term payables – other			(363,002	)			(367,770	)
Carrying amount at period end		W	533,407				892,683

 

(2)

The sum of portions repaid among the principal of long-term payables – other for the three-month periods ended March 31, 2024 and 2023 amounts to W369,150 million and W400,245 million, respectively. The repayment schedule of the principal amount of long-term payables – other as of March 31, 2024 is as follows:

 

(In millions of won)		Amount
Less than 1 year		W	369,150
1 ~ 3 years			460,538
3 ~ 5 years			91,387
		W	921,075

 

15.	Provisions

Changes in provisions for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended March 31, 2024																				As of March 31, 2024
		Beginning balance				Increase				Utilization				Reversal				Ending balance				Current				Non-current
Provision for restoration		W	100,282				1,367				(649	)			(223	)			100,777				30,617				70,160
Emission allowance			822				461				—				(37	)			1,246				1,246				—
		W	101,104				1,828				(649	)			(260	)			102,023				31,863				70,160
(In millions of won)		For the three-month period ended March 31, 2023																				As of March 31, 2023
		Beginning balance				Increase				Utilization				Reversal				Ending balance				Current				Non-current
Provision for restoration		W	95,569				3,333				(392	)			—				98,510				28,939				69,571
Emission allowance			1,836				638				—				—				2,474				2,474				—
		W	97,405				3,971				(392	)			—				100,984				31,413				69,571

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

16.	Defined Benefit Assets

 

(1)

Details of defined benefit assets as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Present value of defined benefit obligations		W	505,605				493,541
Fair value of plan assets			(576,432	)			(578,685	)
		W	(70,827	)			(85,144	)

 

(2)

Changes in present value of defined benefit obligations for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Beginning balance		W	493,541				508,622
Current service cost			12,554				13,822
Interest cost			4,975				6,398
Remeasurement
- Adjustment based on experience			(259	)			11,676
Benefit paid			(11,108	)			(11,625	)
Others			5,902				1,757
Ending balance		W	505,605				530,650

 

(3)

Changes in fair value of plan assets for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Beginning balance		W	578,685				539,847
Interest income			5,934				6,745
Remeasurement			752				1,202
Contribution			10,000				10,000
Benefit paid			(19,070	)			(18,027	)
Others			131				(3,569	)
Ending balance		W	576,432				536,198

 

(4)

Total cost of defined benefit plan, which is recognized in profit or loss for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Current service cost		W	12,554				13,822
Net interest income			(959	)			(347	)
		W	11,595				13,475

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

17.	Share Capital and Capital Surplus and Others

 

(1)

The Company’s outstanding share capital consists entirely of common shares with a par value of W100. The number of authorized, issued and outstanding common shares and the details of share capital and capital surplus and others as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)		March 31, 2024				December 31, 2023
Number of authorized shares			670,000,000				670,000,000
Number of issued shares			214,790,053				218,833,144
Share capital:
Common shares(*1)		W	30,493				30,493
Capital surplus and others:
Paid-in surplus			1,771,000				1,771,000
Treasury shares			(93,229	)			(301,981	)
Hybrid bonds(*2)			398,509				398,509
Share option(Note 18)			10,067				9,818
Others			(6,643,581	)			(6,643,493	)
		W	(4,557,234	)			(4,766,147	)

 

(*1)

The Company retired 4,043,091 treasury shares with reduction of its unappropriated retained earnings, and accordingly, the Company’s shares issued have decreased without a change in share capital for the three-month period ended March 31, 2024. Also, in 2002 and 2003, the Company retired treasury shares with reduction of its retained earnings before appropriation, and as a result, the Company’s issued shares have decreased without a change in share capital.

(*2)	As there is no contractual obligation to deliver financial assets to the holders of hybrid bonds, the Company classified the hybrid bonds as equity. When in liquidation or bankruptcy, these hybrid bonds are senior only to common shares.

 

(2)

There were no changes in share capital for the three-month periods ended March 31, 2024 and 2023, and details of shares outstanding as of March 31, 2024 and 2023 are as follows:

 

(In shares)

March 31, 2024

March 31, 2023

Issued shares

Treasury shares

Outstanding shares

Issued shares

Treasury shares

Outstanding shares

Shares outstanding

214,790,053

1,909,188

212,880,865

218,833,144

367,003

218,466,141

 

(3)

Details of treasury shares as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won, except for share data)		March 31, 2024				December 31, 2023
Number of shares(*)			1,909,188				6,133,414
Acquisition cost		W	93,229				301,981

 

(*)

The Company distributed 498,135 treasury shares (W24,540 million for acquisition costs) as bonus payment to its employees, resulting in a gain on disposal of treasury shares of W168 million for the three-month period ended March 31, 2024. Also, the Company acquired 317,000 of its treasury shares for W 15,788 for the purpose of increasing shareholders’ value through the stabilization of its stock price for the three-month period ended March 31, 2024.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

18.	Share-Based Payment Arrangement

 

(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)		376,313		83,148		295,275		109,704
Exercise price (in won)		38,452		50,276		56,860		56,860
Exercise period		Mar. 27, 2023		Mar. 26, 2023		Mar. 26, 2025		Mar. 26, 2024
		~		~		~		~
		Mar. 26, 2027		Mar. 25, 2026		Mar. 25, 2029		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 three-month period ended March 31, 2024, the entire amount of remaining unvested cash settlement options granted in the 4 ^th and some portions of cash settlement options granted in the 3 ^rd and 6 ^th were exercised, and the entire amount of remaining unvested cash settlement options granted in the 1-3 ^rd and 3 ^rd were 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 were fully exercised for the three-month period ended March 31, 2024.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

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

 

		PSU of SK Telecom Co., Ltd.
Grant date		March 28, 2023
Types of shares to be issued		Registered common shares
Grant method		Reissue of treasury shares
Number of shares(*)		Fluctuates according to the share price on the expiration date and the cumulative increase rate of KOSPI200
Reference share price (in won)		47,280
Reference index (KOSPI200)		315
Maturity (exercise date)		The day in which the annual general meeting of shareholders is held after 3 years from the grant date
Vesting conditions		Full service in the year in which the grant date is included

 

(*)	The initial amount granted is a total of W10,813 million, and the amount calculated according to the adjustment rate based on the share price on the expiration date and the cumulative increase rate of KOSPI200 will be paid in shares.

 

(2)

Share compensation expense for share-based payment arrangements with cash alternatives recognized for the three-month period ended March 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		W	157,750
For the three-month period ended March 31, 2024			1,274
In subsequent periods			—
		W	159,024

The liabilities recognized by the Company in relation to the share-based payment arrangement with cash alternatives are W6,734 million and W5,530 million, respectively, which are included in accrued expenses as of March 31, 2024 and December 31, 2023.

As of March 31, 2024 and December 31, 2023, the carrying amounts of liabilities recognized by the Company in relation to the cash-settled share-based payment arrangement are W367 million and W1,133 million, respectively.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

18.	Share-Based Payment Arrangement, Continued

 

(3)

The Company used binomial option-pricing model in 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			3.33	%			3.33	%			3.33	%			3.33	%
Estimated option’s life			7 years				5 years				7 years				5 years
Share price on the remeasurement date			52,500				52,500				52,500				52,500
Expected volatility			15.20	%			15.20	%			15.20	%			15.20	%
Expected dividends yield			6.30	%			6.30	%			6.30	%			6.30	%
Exercise price			38,452				50,276				56,860				56,860
Per-share fair value of the option			14,048				4,206				2,807				2,276

 

(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

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

18.	Share-Based Payment Arrangement, Continued

 

(3)

The Company used binomial option-pricing model in 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			3.37	%
Estimated option’s life			3.25 years
Share price on the remeasurement date			52,500
Expected volatility			15.20	%
Expected dividends yield			6.30	%
Exercise price			56,860
Per-share fair value of the option			1,084

 

3)

Equity-settled share-based payment arrangement

 

(In won)
		PSU of SK Telecom Co., Ltd.
Risk-free interest rate			3.26	%
Estimated option’s life			3 years
Share price on the expected grant date			48,500
Expected volatility			18.67	%
Expected dividends yield			4.90	%
Per-share fair value of the option			27,525

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

19.	Retained Earnings

Retained earnings as of as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Appropriated:
Legal reserve		W	22,320				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			380,018				613,715
		W	15,098,776				15,032,473

 

20.

Reserves

 

(1)

Details of reserves, net of taxes, as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)
		March 31, 2024				December 31, 2023
Valuation gain on FVOCI		W	211,309				139,548
Valuation loss on derivatives			(2,153	)			(274	)
		W	209,156				139,274

 

(2)

Changes in reserves for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		Valuation gain on financial assets at FVOCI				Valuation gain (loss) on derivatives				Total
Balance at January 1, 2023		W	156,907				11,214				168,121
Changes, net of taxes			54,354				1,526				55,880
Balance at March 31, 2023			211,261				12,740				224,001
Balance at January 1, 2024			139,548				(274	)			139,274
Changes, net of taxes			71,761				(1,879	)			69,882
Balance at March 31, 2024		W	211,309				(2,153	)			209,156

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

21.	Operating Revenue

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

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Products transferred at a point in time:
Product sales		W	35,089				22,914
Services transferred over time:
Wireless service revenue(*1)			2,664,561				2,626,979
Cellular interconnection revenue			112,879				115,364
Others(*2)			376,151				351,998
			3,153,591				3,094,341
		W	3,188,680				3,117,255

 

(*1)	Wireless service revenue includes revenue from wireless voice and data transmission services, which is collected from the wireless subscribers.

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

The Company has a right to receive consideration from a customer in an amount that corresponds directly with the value of telecommunications service provided; thus, the Company applies practical expedient method and recognizes revenue in the amount to which the Company has a right to invoice.

Most of the Company’s transactions are occurring in Korea as it principally operates its businesses in Korea.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

22.	Other Operating Expenses

Details of other operating expenses for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Communication		W	6,753				6,639
Utilities			97,702				86,355
Taxes and dues			3,377				3,374
Repair			60,799				56,977
Research and development			79,924				69,497
Training			5,609				6,500
Bad debt for accounts receivable – trade			7,027				6,920
Supplies and others			13,945				13,791
		W	275,136				250,053

 

23.	Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Other Non-operating Income:
Gain on disposal of property and equipment and intangible assets		W	3,281				5,343
Others			3,492				1,665
		W	6,773				7,008
Other Non-operating Expenses:
Loss on disposal of property and equipment and intangible assets		W	1,423				512
Donations			4,610				4,710
Bad debt for accounts receivable – other			1,319				1,337
Others			1,508				1,060
		W	8,860				7,619

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

24.	Finance Income and Costs

 

(1)

Details of finance income and costs for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Finance Income:
Interest income		W	7,955				5,703
Dividends			191,147				183,184
Gain on foreign currency transactions			1,807				2,551
Gain on foreign currency translations			756				526
Gain relating to financial instruments at FVTPL			16,989				3,885
		W	218,654				195,849
Finance Costs:
Interest expenses		W	83,572				80,662
Loss on sale of accounts receivable – other			11,676				24,078
Loss on foreign currency transactions			1,210				2,342
Loss on foreign currency translations			292				270
Loss relating to financial instruments at FVTPL			129				1,942
		W	96,879				109,294

 

(2)

Details of interest income included in finance income for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Interest income on cash equivalents and short-term financial instruments		W	3,685				779
Interest income on loans and others			4,270				4,924
		W	7,955				5,703

 

(3)

Details of interest expenses included in finance costs income for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Interest expense on borrowings		W	5,770				7,429
Interest expense on debentures			54,754				50,297
Others			23,048				22,936
		W	83,572				80,662

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

24.	Finance Income and Costs, Continued

 

 

(4)

Details of impairment losses for financial assets for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Accounts receivable – trade		W	7,027				6,920
Other receivables			1,319				1,337
		W	8,346				8,257

 

25.	Income Tax Expense

The income tax expense was calculated by considering current tax expense, adjusted for changes in estimates related to prior periods, and deferred tax expense due to origination and reversal of temporary differences and income tax expense that relates to items recognized outside profit or loss.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

26.	Earnings per Share

 

Earnings

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

 

(1)

Basic earnings per share

 

1)

Basic earnings per share for the three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In millions of won, except for share data and basic earnings per share)
		For the three-month period ended
		March 31, 2024				March 31, 2023
Profit for the period		W	492,106				422,153
Interest on hybrid bonds			(4,950	)			(3,692	)
Profit for the period on common shares			487,156				418,461
Weighted average number of common shares outstanding			212,734,373				218,256,135
Basic earnings per share (in won)		W	2,290				1,917

 

2)

The weighted average number of common shares outstanding for the three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In shares)		For the three-month period ended March 31, 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	)			(310,220	)
Disposal of treasury shares			498,135				344,863
			212,880,865				212,734,373

 

(In shares)		For the three-month period ended March 31, 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	)
Disposal of treasury shares			434,088				224,082
			218,466,141				218,256,135

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

26.	Earnings per Share, Continued

 

 

(2)

Diluted earnings per share

 

1)

Diluted earnings per share for the three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In millions of won, except for share data and diluted earnings per share)
		For the three-month period ended
		March 31, 2024				March 31, 2023
Profit for the period on common shares		W	487,156				418,461
Adjusted weighted average number of common shares outstanding			213,008,960				218,323,020
Diluted earnings per share (in won)		W	2,287				1,917

 

2)

The adjusted weighted average number of common shares outstanding for the three-month periods ended March 31, 2024 and 2023 are calculated as follows:

 

(In shares)		For the three-month period ended
		March 31, 2024				March 31, 2023
Outstanding shares as of January 1			212,699,730				218,032,053
Effect of treasury shares			34,643				224,082
Effect of share option			274,587				66,885
Adjusted weighted average number of common shares outstanding			213,008,960				218,323,020

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

27.	Categories of Financial Instruments

 

(1)

Financial assets by category as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Financial assets at FVTPL				Equity instruments at FVOCI				Financial assets at amortized cost				Derivatives hedging instrument				Total
Cash and cash equivalents		W	1,153				—				884,656				—				885,809
Financial instruments			37,020				—				79,354				—				116,374
Long-term investment securities(*)			77,441				1,442,898				—				—				1,520,339
Accounts receivable – trade			—				—				1,521,505				—				1,521,505
Loans and other receivables			287,313				—				837,538				—				1,124,851
Derivative financial assets			2,323				—				—				151,693				154,016
		W	405,250				1,442,898				3,323,053				151,693				5,322,894

 

(*)

The Company designated W1,442,898 million of equity instruments that are not held for trading as financial assets at FVOCI.

 

(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		W	4,774				—				626,292				—				631,066
Financial instruments			47,364				—				139,354				—				186,718
Long-term investment securities(*)			218,685				1,207,605				—				—				1,426,290
Accounts receivable – trade			—				—				1,495,617				—				1,495,617
Loans and other receivables			273,945				—				612,432				—				886,377
Derivative financial assets			2,323				—				—				116,210				118,533
		W	547,091				1,207,605				2,873,695				116,210				4,744,601

 

(*)

The Company designated W1,207,605 million of equity instruments that are not held for trading as financial assets at FVOCI.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

27.	Categories of Financial Instruments, Continued

 

 

(2)

Financial liabilities by category as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Financial liabilities at FVTPL				Financial liabilities at amortized cost				Total
Derivative financial liabilities		W	295,876				—				295,876
Borrowings			—				630,000				630,000
Debentures			—				6,906,516				6,906,516
Lease liabilities(*)			—				1,201,089				1,201,089
Accounts payable – other and others			—				3,613,972				3,613,972
		W	295,876				12,351,577				12,647,453

 

(In millions of won)		December 31, 2023
		Financial liabilities at FVTPL				Financial liabilities at amortized cost				Total
Derivative financial liabilities		W	295,876				—				295,876
Borrowings			—				640,000				640,000
Debentures			—				6,666,939				6,666,939
Lease liabilities(*)			—				1,226,545				1,226,545
Accounts payable – other and others			—				4,146,076				4,146,076
		W	295,876				12,679,560				12,975,436

 

(*)

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.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Financial Risk Management

 

(1)

Financial risk management

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

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

 

1)

Market risk

 

(i)

Currency risk

The Company’s currency risk is mainly related to changes in recognized assets and liabilities due to exchange rate fluctuations. If the Company determines that it is necessary to hedge currency risk for business purposes, the Company manages currency risk by using currency swaps, etc. Currency risk occurs on forecasted transactions and recognized assets and liabilities which are denominated in a currency other than the functional currency of the Company.

Monetary assets and liabilities denominated in foreign currencies as of March 31, 2024 are as follows:

 

(In millions of won, thousands of foreign currencies)		Assets								Liabilities
		Foreign currencies				Won equivalent				Foreign currencies				Won equivalent
USD			24,857			W	33,478				710,265			W	956,585
EUR			11,656				16,935				45				65
Others			—				347				—				67
						W	50,760							W	956,717

In addition, the Company has entered into cross currency swaps to hedge against currency risk related to foreign currency debentures.

As of March 31, 2024, a hypothetical change in exchange rates by 10% would have increased (decreased) the Company’s profit before income tax and equity as follows:

 

(In millions of won)		Profit before income tax								Equity
		If increased by 10%				If decreased by 10%				If increased by 10%				If decreased by 10%
USD		W	1,644				(1,644	)		W	1,644				(1,644	)
EUR			1,687				(1,687	)			1,687				(1,687	)
Others			28				(28	)			28				(28	)
		W	3,359				(3,359	)		W	3,359				(3,359	)

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Financial Risk Management, Continued

 

(1)

Financial risk management, Continued

 

1)

Market risk, Continued

 

(ii)

Interest rate risk

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

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

As of March 31, 2024, floating-rate borrowings and debentures amount to W30,000 million and W404,040 million, respectively, and the Company has entered into interest rate swaps to hedge interest rate risk related to the floating-rate debentures. Therefore, profit before income tax for the three-month period ended March 31, 2024 would not have been affected by the changes in interest rates of floating-rate debentures. If the interest rate increases (decreases) 1%p with all other variables held constant, profit before income tax and equity for the three-month period ended March 31, 2024, would change by W75 million in relation to the floating-rate borrowings which have not entered into interest rate swaps.

As of March 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 three-month period ended March 31, 2024, would change by W2,303 million in relation to the floating-rate long-term payables – other that are exposed to interest rate risk.

 

(iii)

Price fluctuations risk

As of March 31, 2024, the Company 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 for the three-month period ended March 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%

W

—

—

W

91,031

(91,031

)

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Financial Risk Management, Continued

 

(1)

Financial risk management, Continued

 

2)

Credit risk

The maximum credit exposure as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Cash and cash equivalents		W	885,754				631,021
Financial instruments			116,374				186,718
Accounts receivable – trade			1,521,505				1,495,617
Contract assets			19,104				21,613
Loans and other receivables			1,124,851				886,377
Derivative financial assets			154,016				118,533
		W	3,821,604				3,339,879

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

The Company establishes a loss allowance in respect of accounts receivable – trade. The main components of this allowance are a specific loss component that relates to individually significant exposures and a collective loss component established for groups of similar assets in respect of losses that are expected to occur. The collective loss allowance is determined based on historical data of collection statistics for similar financial assets. Also, the Company’s credit risk can arise from transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivatives. To minimize such risk, the Company has a policy to deal only with financial institutions with high credit ratings.

The Company’s maximum exposure to credit risk is equal to each financial asset’s carrying amount as of March 31, 2024.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Financial Risk Management, Continued

 

(1)

Financial risk management, Continued

 

3)

Liquidity risk

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

Contractual maturities of financial liabilities as of March 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
Borrowings(*)		W	630,000				642,313				590,484				51,829				—
Debentures(*)			6,906,516				7,949,549				1,175,598				4,519,974				2,253,977
Lease liabilities			1,201,089				1,309,728				345,486				818,853				145,389
Accounts payable -other and others(*)			3,613,972				3,683,067				3,096,583				586,484				—
		W	12,351,577				13,584,657				5,208,151				5,977,140				2,399,366

(*) The contractual cash flow is amount that includes interest payables.

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

As of March 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

W

151,693

162,227

34,451

127,776

 

(2)

Capital management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to shareholders through the optimization of its debt and equity structure. The overall strategy of the Company is the same as that for the year ended December 31, 2023.

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

Debt-equity ratio as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024				December 31, 2023
Total liabilities		W	14,416,029				14,559,839
Total equity			10,781,191				10,436,093
Debt-equity ratios			133.71	%			139.51	%

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Financial Risk Management, Continued

 

(3)

Fair value

 

1)

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Carrying amount				Level 1				Level 2				Level 3				Total
Financial assets that are measured at fair value:
FVTPL		W	405,250				—				325,486				79,764				405,250
Derivative hedging instruments			151,693				—				151,693				—				151,693
FVOCI			1,442,898				1,217,782				—				225,116				1,442,898
		W	1,999,841				1,217,782				477,179				304,880				1,999,841
Financial liabilities that are measured at fair value:
Derivative financial liabilities		W	295,876				—				—				295,876				295,876
Financial liabilities that are not measured at fair value:
Borrowings		W	630,000				—				630,049				—				630,049
Debentures			6,906,516				—				6,744,131				—				6,744,131
Long-term payables – other			896,409				—				907,711				—				907,711
		W	8,432,925				—				8,281,891				—				8,281,891

 

(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		W	547,091				—				326,083				221,008				547,091
Derivative hedging instruments			116,210				—				116,210				—				116,210
FVOCI			1,207,605				1,131,033				—				76,572				1,207,605
		W	1,870,906				1,131,033				442,293				297,580				1,870,906
Financial liabilities that are measured at fair value:
Derivative financial liabilities		W	295,876				—				—				295,876				295,876
Financial liabilities that are not measured at fair value:
Borrowings		W	640,000				—				638,536				—				638,536
Debentures			6,666,939				—				6,503,016				—				6,503,016
Long-term payables – other			1,260,453				—				1,294,977				—				1,294,977
		W	8,567,392				—				8,436,529				—				8,436,529

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Financial Risk Management, Continued

 

(3)

Fair value, Continued

 

1)

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of March 31, 2024 and December 31, 2023 are as follows, Continued:

The above information does not include fair values of financial assets and liabilities of which fair values have not been measured as carrying amounts are reasonable approximation of fair values.

Fair value of the financial instruments that are traded in an active market (financial assets at FVOCI) is measured based on the bid price at the end of the reporting date.

The Company uses various valuation methods for determination of fair value of financial instruments that are not traded in an active market. Derivative financial contracts and long-term liabilities are measured using the discounted present value methods. Other financial assets are determined using the methods, such as discounted cash flow and market approach. Inputs used to such valuation methods include swap rate, interest rate and risk premium, and the Company performs valuation using the inputs which are consistent with natures of assets and liabilities measured.

Interest rates used by the Company for the fair value measurement as of March 31, 2024 are as follows:

 

		Interest rate
Derivative instruments		3.80% ~ 4.90%
Borrowings and debentures		3.64% ~ 3.84%
Long-term payables – other		3.64% ~ 3.81%

 

2)

There have been no transfers between Level 1 and Level 2 for the three-month period ended March 31, 2024. The changes in financial assets and liabilities classified as Level 3 for the three-month period ended March 31, 2024 are as follows:

 

(In millions of won)
		Balance as of January 1, 2024				Gain				Disposal				Transfer				Balance as of March 31, 2024
Financial assets:
FVTPL		W	221,008				16,312				(28	)			(157,528	)			79,764
FVOCI			76,572				—				—				148,544				225,116
		W	297,580				16,312				(28	)			(8,984	)			304,880
Financial liabilities:
FVTPL		W	(295,876	)			—				—				—				(295,876	)

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

28.	Financial Risk Management, Continued

 

(4)

Enforceable master netting agreement or similar agreement

Carrying amounts of financial instruments recognized of which offset agreements are applicable as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)		March 31, 2024
		Gross financial instruments recognized				Amount offset				Net financial instruments presented on the interim separate statement of financial position
Financial assets:
Accounts receivable – trade and others		W	71,684				(71,684	)			—
Financial liabilities:
Accounts payable – other and others		W	73,404				(71,684	)			1,720

 

(In millions of won)		December 31, 2023
		Gross financial instruments recognized				Amount offset				Net financial instruments presented on the separate statement of financial position
Financial assets:
Accounts receivable – trade and others		W	72,597				(72,597	)			—
Financial liabilities:
Accounts payable – other and others		W	74,388				(72,597	)			1,791

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties

 

(1)

List of related parties

 

Relationship		Company
Ultimate controlling entity		SK Inc.
Subsidiaries		SK Broadband Co., Ltd. and 24 others(*)
Joint venture		UTC Kakao-SK Telecom ESG Fund
Associates		SK China Company Ltd. and 43 others
Others		The Ultimate controlling entity’s subsidiaries and associates and others

(*) As of March 31, 2024, subsidiaries of the Company are as follows:

 

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

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(1)

List of related parties, Continued:

 

(*1)

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

(*2)

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

For the periods presented, the Company 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 Company.

 

(2)

Compensation for the key management

The Company considers registered directors who have substantial role and responsibility in planning, operations and relevant controls of the business as key management. The compensations given to such key management for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Salaries		W	3,076				1,989
Defined benefit plan expenses			752				530
Share option			664				539
		W	4,492				3,058

Compensations for the key management include salaries, non-monetary salaries and defined benefits made in relation to the pension plan and compensation expenses related to share options granted.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(3)

Transactions with the related parties for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)				For the three-month period ended March 31, 2024
Scope		Company		Operating revenue and others				Operating expenses and others(*1)				Acquisition of property and equipment and others
Ultimate controlling entity		SK Inc.(*2)		W	2,535				148,927				3,847
Subsidiaries		SK Broadband Co., Ltd.(*3)			188,142				149,653				—
		PS&Marketing Corporation(*4)			1,591				313,765				174
		SK O&S Co., Ltd.			774				62,729				102
		SK Telink Co., Ltd.(*5)			43,136				3,843				—
		SERVICE ACE Co., Ltd.(*6)			6,435				31,461				—
		SERVICE TOP Co., Ltd.(*7)			7,584				30,715				—
		SK Communications Co., Ltd.			364				241				76
		Others			2,209				7,814				—
					250,235				600,221				352
Associates		F&U Credit information Co., Ltd.			188				11,670				—
		SK AMERICAS Inc. (Formerly, SK USA, Inc.)			—				1,208				—
		Daehan Kanggun BcN Co., Ltd.			2,884				—				—
		Others(*8)			400				2,979				—
					3,472				15,857				—
Others		SK Innovation Co., Ltd.			1,337				3,342				—
		SK Networks Co., Ltd.			228				2,746				—
		SK Networks Service Co., Ltd.			118				8,387				16
		SK Energy Co., Ltd.			362				11				—
		Content Wavve Corp.			1,431				20,378				—
		Happy Narae Co., Ltd.			35				1,928				6,237
		SK Shieldus Co., Ltd.			11,651				22,862				408
		Eleven Street Co., Ltd.			2,022				8,316				—
		SK Planet Co., Ltd.			1,355				17,239				—
		SK hynix Inc.			8,490				125				—
		Tmap Mobility Co., Ltd.			4,636				1,450				—
		Dreamus Company			991				16,649				—
		One Store Co., Ltd.			3,983				22				—
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			—				836				2,510
		Others			7,269				6,299				14,784
					43,908				110,590				23,955
				W	300,150				875,595				28,154

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(3)

Transactions with related parties for the three-month periods ended March 31, 2024 and 2023 are as follows, Continued:

 

 

(*1)

Operating expenses and others include lease payments by the Company.

 

(*2)

Operating expenses and others include W68,952 million of dividends declared to be paid by the Company.

 

(*3)

Operating revenue and others include W149,526 million of dividend income recognized.

 

(*4)

Operating expenses and others include W173,181 million paid to PS&Marketing Corporation relating to purchase of accounts receivable resulting from sale of handsets.

 

(*5)

Operating revenue and others include W14,971 million of dividend income recognized.

 

(*6)

Operating revenue and others include W3,302 million of dividend income recognized.

 

(*7)

Operating revenue and others include W5,700 million of dividend income recognized.

 

(*8)

Operating revenue and others include W400 million of dividend received from Start-up Win-Win Fund.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(3)

Transactions with the related parties for the three-month periods ended March 31, 2024 and 2023 are as follows, Continued:

 

(In millions of won)				For the three-month period ended March 31, 2023
Scope		Company		Operating revenue and others				Operating expenses and others(*1)				Acquisition of property and equipment and others
Ultimate controlling entity		SK Inc.(*2)		W	3,460				134,275				130
Subsidiaries		SK Broadband Co., Ltd.(*3)			185,668				144,109				—
		PS&Marketing Corporation(*4)			1,884				315,372				—
		SK O&S Co., Ltd.			787				64,985				—
		SK Telink Co., Ltd.(*5)			30,281				4,050				—
		SERVICE ACE Co., Ltd.(*6)			7,146				32,731				—
		SERVICE TOP Co., Ltd.(*7)			4,958				33,808				—
		SK Communications Co., Ltd.			334				724				—
		Others			1,092				6,824				—
					232,150				602,603				—
Associates		F&U Credit information Co., Ltd.			190				10,245				—
		SK AMERICAS Inc. (Formerly, SK USA, Inc.)			—				612				—
		Daehan Kanggun BcN Co., Ltd.			5,206				—				—
					5,396				10,857				—
Others		SK Innovation Co., Ltd.			4,613				3,441				—
		SK Networks Co., Ltd.			254				3,604				—
		SK Networks Service Co., Ltd.			128				10,106				—
		SK Energy Co., Ltd.			404				11				—
		Content Wavve Corp.			3,417				21,061				—
		Happy Narae Co., Ltd.			32				1,773				4,251
		SK Shieldus Co., Ltd.			12,444				27,792				33
		Eleven Street Co., Ltd.			1,580				6,730				—
		SK Planet Co., Ltd.			1,600				20,156				—
		SK hynix Inc.			11,911				35				—
		Tmap Mobility Co., Ltd.			3,515				348				—
		Dreamus Company			1,216				20,194				—
		One Store Co., Ltd.			4,260				—				—
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			—				317				—
		Others			7,328				5,403				—
					52,702				120,971				4,284
				W	293,708				868,706				4,414

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(3)

Transactions with related parties for the three-month periods ended March 31, 2024 and 2023 are as follows, Continued:

 

 

(*1)

Operating expenses and others include lease payments by the Company.

 

(*2)

Operating expenses and others include W54,505 million of dividends declared to be paid by the Company.

 

(*3)

Operating revenue and others include W149,526 million of dividend income recognized.

 

(*4)

Operating expenses and others include W175,439 million paid to PS&Marketing Corporation relating to purchase of accounts receivable resulting from sale of handsets.

 

(*5)

Operating revenue and others include W3,009 million of dividend income recognized.

 

(*6)

Operating revenue and others include W4,004 million of dividend income recognized.

 

(*7)

Operating revenue and others include W3,000 million of dividend income recognized.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(4)

Account balances with the related parties as of March 31, 2024 and December 31, 2023 are as follows:

 

(In millions of won)				March 31, 2024
				Receivables								Payables
Scope		Company		Loans				Accounts receivable – trade, etc.				Accounts payable – other, etc.
Ultimate controlling entity		SK Inc.		W	—				1,591				120,511
Subsidiaries		SK Broadband Co., Ltd.			—				207,460				207,892
		PS&Marketing Corporation			—				1,545				55,124
		SK O&S Co., Ltd.			—				72				27,762
		SK Telink Co., Ltd.			—				38,234				18,895
		SERVICE ACE Co., Ltd.			—				3,750				19,123
		SERVICE TOP Co., Ltd.			—				5,706				16,128
		SK Communications Co., Ltd.			—				3				7,206
		Others			—				8,372				29,099
					—				265,142				381,229
Associates		F&U Credit information Co., Ltd.			—				6				4,287
		Daehan Kanggun BcN Co., Ltd.(*1)			22,147				2,858				—
		Others			—				—				1,548
					22,147				2,864				5,835
Others		SK hynix Inc.			—				10,603				1,292
		SK Planet Co., Ltd.			—				909				2,318
		Eleven Street Co., Ltd.			—				3,792				2,737
		One Store Co., Ltd.			—				483				15,054
		SK Shieldus Co., Ltd.			—				9,319				13,396
		SK Innovation Co., Ltd.			—				4,910				25,357
		SK Networks Co., Ltd.			—				71				30,510
		SK Networks Services Co., Ltd.			—				—				5,546
		SK RENT A CAR Co., Ltd.			—				611				15,535
		Incross Co., Ltd.			—				1,462				1,470
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			—				—				3,164
		Mintit Co., Ltd.			—				13,423				—
		Happy Narae Co., Ltd.			—				—				142
		Content Wavve Corp.			—				409				3
		Dreamus Company			—				340				2,488
		Others			—				5,972				10,319
					—				52,304				129,331
				W	22,147				321,901				636,906

 

(*1)

As of March 31, 2024, the Company recognized loss allowance for the entire balance of loans to Daehan Kanggun BcN Co., Ltd.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(4)

Account balances with the related parties as of March 31, 2024 and December 31, 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.		W	—				1,411				85,758
Subsidiaries		SK Broadband Co., Ltd.			—				60,464				234,710
		PS&Marketing Corporation			—				1,230				57,560
		SK O&S Co., Ltd.			—				7				68,671
		SK Telink Co., Ltd.			—				22,632				18,154
		SERVICE ACE Co., Ltd.			—				460				26,828
		SERVICE TOP Co., Ltd.			—				—				24,208
		SK Communications Co., Ltd.			—				2				7,033
		Others			—				3,230				15,775
					—				88,025				452,939
Associates		F&U Credit information Co., Ltd.			—				3				4,060
		Daehan Kanggun BcN Co., Ltd.(*1)			22,147				4,702				—
		SK AMERICAS Inc. (Formerly, SK USA, Inc.)			—				—				972
		Konan Technology Inc.			—				—				224
		Others			—				—				2,239
					22,147				4,705				7,495
Others		SK hynix Inc.			—				6,806				2,251
		SK Planet Co., Ltd.			—				9,313				5,579
		Eleven Street Co., Ltd.			—				1,957				2,842
		One Store Co., Ltd.			—				509				14,691
		SK Shieldus Co., Ltd.			—				10,972				10,157
		SK Innovation Co., Ltd.			—				3,308				27,806
		SK Networks Co., Ltd.			—				41				32,003
		SK Networks Services Co., Ltd.			—				—				8,314
		SK RENT A CAR Co., Ltd.			—				70				14,101
		Incross Co., Ltd.			—				1,607				659
		UNA Engineering Inc. (Formerly, UbiNS Co., Ltd.)			—				—				2,558
		Mintit Co., Ltd.			—				17,025				—
		Happy Narae Co., Ltd.			—				8				5,193
		Content Wavve Co., Ltd.			—				1,476				—
		Dreamus Company			—				504				2,315
		Others			—				7,776				2,976
					—				61,372				131,445
				W	22,147				155,513				677,637

 

(*1)

As of December 31, 2023, the Company recognized loss allowance for the entire balance of loans to Daehan Kanggun BcN Co., Ltd.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

29.	Transactions with Related Parties, Continued

 

(5)

The Company has granted SK REIT Co., Ltd. the right of first offer regarding the disposal of real estate owned by the Company. Whereby, the negotiation period is within 3 to 5 years from June 30, 2021 date of agreement, and the Company has been granted the right by SK REIT Co., Ltd. to lease the real estate in preference to a third party if SK REIT Co., Ltd. purchases the real estate from the Company.

 

(6)

The details of additional investments and disposal in subsidiaries, associates and joint ventures for the three-month period ended March 31, 2024 are as presented in note 8.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

30.	Commitments and Contingencies

 

(1)

Accounts receivable from sale of handsets

The sales agents of the Company sell handsets to the Company’s subscribers on an installment basis. The Company entered into comprehensive agreements to purchase accounts receivable from handset sales with retail stores and authorized dealers and to transfer the accounts receivable from handset sales to special-purpose companies which were established with the purpose of liquidating receivables, respectively.

The accounts receivable from sale of handsets amounting to W303,804 million and W291,747 million as of March 31, 2024 and December 31, 2023, respectively, which the Company purchased according to the relevant comprehensive agreement, are recognized as accounts receivable – other and long-term accounts receivable – other.

 

(2)

Legal claims and litigations

As of March 31, 2024, the Company is involved in various legal claims and litigations. Provision recognized in relation to these claims and litigations is immaterial. In connection with those legal claims and litigations for which no provision was recognized, management does not believe the Company has a present obligation, nor is it expected that any of these claims or litigations will have a material impact on the Company’s financial position or operating results in the event an outflow of resources is ultimately necessary.

 

(3)

Obligation relating to spin-off

The Company carried out the spin-off of its business of managing investments in semiconductor, New Information and Communication Technologies(“ICT”) and other businesses and making new investments on November 1, 2021. The Company has obligation to jointly and severally reimburse the Company’s liabilities incurred prior to the spin-off with SK Square Co., Ltd., the spin-off company, in accordance with Article 530-9 (1) of Korean Commercial Act.

 

(4)

Commitment of the acquisition and disposal of shares

The Board of Directors of the Company resolved the acquisition and disposal of certain shares in order to strengthen the strategic alliance with Hana Financial Group Inc.(“HFG”) at the Board of Directors’ meeting held on July 22, 2022. In accordance with the resolution, as of July 27, 2022, the Company disposed of its entire common shares of HanaCard Co., Ltd. (39,902,323 shares) and entire common shares of Finnq Co., Ltd. (6,370,000 shares) to HFG for W330,032 million and W5,733 million, respectively. Through the agreement with HFG, the Company is obligated to acquire HFG’s common shares from July 27, 2022 to January 31, 2024, after depositing W330,032 million in a specific money trust, and the Company completed the acquisition of the shares for the year ended December 31, 2022. As a part of the aforementioned transaction, as of July 27, 2022, the Company disposed of its entire common shares of SK Square Co., Ltd. (767,011 shares) to HanaCard Co., Ltd. for W31,563 million, and HanaCard Co., Ltd. is obligated to acquire the Company’s common shares from July 27, 2022 to January 31, 2024, after depositing W68,437 million in a specific money trust, and completed the acquisition of the shares for the year ended December 31, 2022. The Company, HFG, and HanaCard Co., Ltd. may not dispose of shares they have acquired under the aforementioned transaction until March 31, 2025.

 

(5)

According to the covenant for bond issuance and borrowings, the Company 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 Company and disposal of certain assets.

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

31.	Statements of Cash Flows

 

(1)

Adjustments for income and expenses from operating activities for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Gain on foreign currency translations		W	(756	)			(526	)
Interest income			(7,955	)			(5,703	)
Dividends			(191,147	)			(183,184	)
Gain relating to investments in subsidiaries, associates and joint ventures, net			(10,476	)			—
Gain relating to financial instruments at FVTPL			(16,989	)			(3,885	)
Gain on disposal of property and equipment and intangible assets			(3,281	)			(5,343	)
Other income			(653	)			(392	)
Loss on foreign currency translations			292				270
Bad debt for accounts receivable – trade			7,027				6,920
Bad debt for accounts receivable – other			1,319				1,337
Loss relating to financial instruments at FVTPL			129				1,942
Depreciation and amortization			700,091				705,016
Loss on disposal of property and equipment and intangible assets			1,423				512
Loss on sale of accounts receivable – other			11,676				24,078
Interest expense			83,572				80,662
Expense related to defined benefit plan			11,595				13,475
Bonus paid by treasury shares			24,707				20,080
Share option			3,013				803
Income tax expense			74,485				79,452
Other expenses			2,978				4,045
		W	691,050				739,559

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

31.	Statements of Cash Flows, Continued

 

(2)

Changes in assets and liabilities from operating activities for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Accounts receivable – trade		W	(32,494	)			13,307
Accounts receivable – other			(51,942	)			22,804
Advanced payments			7,366				18,129
Prepaid expenses			(24,201	)			5,887
Inventories			(4,228	)			(7,054	)
Long-term accounts receivable – other			(3,075	)			15,717
Guarantee deposits			3,596				(7,817	)
Contract assets			2,508				3,068
Accounts payable – other			(155,427	)			(422,551	)
Withholdings			184,672				145,981
Deposits received			302				4,865
Accrued expenses			(135,162	)			(146,231	)
Plan assets			9,070				8,027
Retirement benefits payment			(11,108	)			(11,625	)
Contract liabilities			6,146				(12,863	)
Others			(1,734	)			(1,582	)
		W	(205,711	)			(371,938	)

 

(3)

Material non-cash transactions for the three-month periods ended March 31, 2024 and 2023 are as follows:

 

(In millions of won)		For the three-month period ended
		March 31, 2024				March 31, 2023
Decrease in accounts payable – other relating to the acquisition of property and equipment and intangible assets		W	(202,374	)			(534,696	)
Increase of right-of-use assets			62,993				62,155
Transfer from property and equipment to investment property			(2,432	)			6,317

 

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SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

32.	Emissions Liabilities

 

(1)

The quantity of emissions rights allocated free of charge for each implementation year as of March 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(*)			1,031,526				1,223,008				1,031,526				1,021,864				1,021,864				5,329,788

 

(*)

The changes in quantity due to additional allocation, cancellation of allocation and others are considered.

 

(2)

Changes in emissions rights quantities the Company held are as follows:

 

(In tCO2-eQ)		Quantities allocated in 2022				Quantities allocated in 2023(*)				Quantities allocated in the three- month period ended March 31, 2024				Total
Beginning			—				306,575				110,879				417,454
Allocation at no cost			1,223,008				1,031,526				1,021,864				3,276,398
Purchase			204,761				—				103,467				308,228
Surrender or shall be surrendered			(1,121,194	)			(1,227,222	)			(1,236,210	)			(3,584,626	)
Ending			306,575				110,879				—				417,454

 

(*)

Changes for the year ended December 31, 2023 are estimated quantities, and additionally allocated and surrendered or shall be surrendered quantities will be fixed in May 2024.

 

(3)

As of March 31, 2024, the estimated annual greenhouse gas emissions quantities of the Company are 1,236,210 tCO2-eQ.

 

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Table of Contents

SK TELECOM CO., LTD.

Notes to the Interim Separate Financial Statements

March 31, 2024 and 2023 (Unaudited)

 

33.	Subsequent Events

The Board of Directors of the Company resolved to pay interim dividends at the Board of Directors’ meeting held on April 25, 2024, and the details are as follows:

 

Classification		Description
Interim dividend amount		W830 per share (Total amount: W176,691 million)
Dividend rate		1.55%
Record date		March 31, 2024
Date of distribution		Pursuant to Article 165-12 (3) of Capital Market and Financial Investment Business Act, the Company shall distribute dividends no later than May 14, 2024.

 

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