| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year endedDecember 31, 2023 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||
American Depositary Shares, each representing five-ninths | ||||
SKM | New York Stock Exchange | |||
Common Stock, par value W 100 per share | SKM | New York Stock Exchange* |
| * | Not for trading, but only in connection with the registration of the American Depositary Shares. |
Auditor Name: | Auditor Location: Seoul, Korea | Auditor Firm ID: |
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Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 108 | |||||
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES | 110 | |||||
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(ii)
CERTAIN DEFINED TERMS AND CONVENTIONS USED IN THIS ANNUAL REPORT
All references to “Korea” contained in this annual report shall mean The Republic of Korea. All references to the “Government” shall mean the government of The Republic of Korea. All references to “we,” “us,” or “our” 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. All references to “U.S.” shall mean the United States of America.
All references to “MHz” contained in this annual report shall mean megahertz, a unit of frequency denoting one million cycles per second. All references to “GHz” shall mean gigahertz, a unit of frequency denoting one billion cycles per second. All references to “Kbps” shall mean one thousand bits per second, all references to “Mbps” shall mean one million bits per second and all references to “Gbps” shall mean one billion bits per second. All references to “GB” shall mean gigabytes, which is one billion bytes. Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding.
All references to “Won,” or “￦“W” in this annual report are to the currency of Korea and all references to “Dollars,” “U.S. dollar” or “US$” are to the currency of the United States of America.
The Ministry of Science and ICT (the “MSIT”) is charged with regulating information and telecommunications, and the Korea Communications Commission (the “KCC”) is charged with regulating the public interest aspects of and fairness in broadcasting. Subscriber information for the wireless and fixed-line telecommunications industry set forth in this annual report are derived from information published by the MSIT unless expressly stated otherwise.
The consolidated financial statements included in this annual report are prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (the “IASB”). As such, we make an explicit and unreserved statement of compliance with IFRS, as issued by the IASB, with respect to our consolidated financial statements as of December 31, 20212023 and 2020,2022, and for the years ended December 31, 2021, 20202023, 2022 and 20192021, included in this annual report.
Unless expressly stated otherwise, all financial data included in this annual report are presented on a consolidated basis.
Effective as of November 1, 2021, we conducted a horizontal
As part of the
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FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements,” as defined in Section 27A of the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “considering,” “depends,” “estimate,” “expect,” “intend,” “plan,” “planning,” “planned,” “project” and similar expressions, or that certain events, actions or results “may,” “might,” “should” or “could” occur, be taken or be achieved.
Forward-looking statements in this annual report include, but are not limited to, statements about the following:
our ability to anticipate and respond to various competitive factors affecting the telecommunications industry, including new services that may be introduced, changes in consumer preferences, economic conditions and discount pricing strategies by competitors;
our continued implementation of fifth generation wireless technology, which we refer to as “5G” technology;
| • | our plans for capital expenditures in 2024 for a range of projects, including investments to further expand and improve our 5G network, investments to maintain our fourth generation long-term evolution (“LTE”) network and related services, investments to improve and expand our Wi-Fi network, investments to develop our Internet of Things (“IoT”) solutions and platform services business portfolio, including artificial intelligence (“AI”) solutions, investments in data infrastructure, investments in further research and development of 5G technology, investments in businesses that can potentially leverage our 5G network, and funding for mid- to long-term research and development projects, as well as other initiatives related to the development of new growth businesses and our ongoing businesses in the ordinary course, in each case with an emphasis on incorporating AI technology into our various existing and new business areas; |
our efforts to make significant investments to build, develop and broaden our businesses, including developing our next-generation growth businesses in cloud computing, data centers, smart factories, subscription services, metaverse, media, platform, AI solutions, enterprise AI services and other innovative products and services, as well as to actively integrate AI technology generally into, and to create synergies among, our businesses, including through the adaptation of AI technology;various businesses;
our ability to comply with governmental rules and regulations, including the regulations of the Government related to telecommunications providers, the Mobile Device Distribution Improvement Act (“MDDIA”), rules related to our status as a “market-dominating business entity” under the Korean Monopoly Regulation and Fair Trade Act (the “Fair Trade Act”) and the effectiveness of steps we have taken to comply with such regulations;
our ability to effectively manage our bandwidth and to timely and efficiently implement new bandwidth-efficient technologies and our intention to participate in, and acquire additional bandwidth pursuant to, frequency bandwidth auctions held, or other allocations of bandwidth, by the MSIT;
our expectations and estimates related to interconnection fees, rates charged by our competitors, regulatory fees, operating costs and expenditures, working capital requirements, principal repayment obligations with respect to long-term borrowings, bonds and short-term borrowings, and research and development expenditures and other financial estimates;
| • | the success of our various joint ventures, investments, strategic alliances and cooperation efforts as well as other corporate restructuring activities, including the Spin-off; |
our ability to successfully attract and retain subscribers of our telecommunications-related businesses and customers of our other businesses; and
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the growth of the telecommunications and other industries in which we operate in Korea and other markets and the effect that economic, political or social conditions have on our number of subscribers and customers and results of operations.
We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be incorrect. Risks and uncertainties associated with our business include, but are not limited to, risks related to changes in the regulatory environment, technology changes, potential litigation and governmental actions, changes in the competitive environment, political changes, foreign exchange currency risks, foreign ownership limitations, credit risks and other risks and uncertainties that are more fully described under the heading “Item 3.D. Risk Factors” and elsewhere in this annual report. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances.
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PART I
Item 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
Item 1.A. | Directors and Senior Management |
Not applicable.
Item 1.B. | Advisers |
Not applicable.
Item 1.C. | Auditors |
Not applicable.
Item 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
Not applicable.
Item 3. | KEY INFORMATION |
Item 3.A. | [Reserved] |
Item 3.B. | Capitalization and Indebtedness |
Not applicable.
Item 3.C. | Reasons for the Offer and Use of Proceeds |
Not applicable.
Item 3.D. | Risk Factors |
Risks Relating to Our Business
Competition may reduce our market share and harm our business, financial condition and results of operations.
We face substantial competition across all of our businesses, including our wireless telecommunications business. We expect competition to intensifyremain intense as a result of the development of new technologies, products and services.services are developed and introduced by us and our competitors. We expect that such trends will continue to put downward pressure on the rates we can charge our subscribers.
Historically, there has been considerable consolidation in the telecommunications industry, resulting in the current competitive landscape comprising three mobile and fixed network operators in the Korean market, us, KT Corporation (“KT”) and LG Uplus Corp. (“LG U+”). Each of our competitors has substantial financial, technical, marketing and other resources to respond to our business offerings. As of December 31, 2021,2023, the collective market share of KT and LG U+ amounted to approximately 55.7%59.3% in terms of number of wireless subscribers (including an aggregate of 11.4%16.3% attributable to mobile virtual network operators (“MVNOs”) that lease KT’s and LG U+’s respective networks). compared to 56.8% (including an aggregate of 13.8% attributable to MVNOs) as of December 31, 2022. Such increase in the collective market share of KT and LG U+ was mainly attributable to an increase in the market share of MVNOs that lease LG U+’s network.
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Our competitors for subscriber activations include MVNOs, including MVNOs that lease our networks. MVNOs generally provide rate plans that are relatively cheaper than similar rate plans of the wireless network providers from which they lease their networks, including us. In recent years, a number of new entrants have entered the MVNO business, including affiliates of leading financial institutions in Korea. Some of these new entrants have engaged in aggressive marketing campaigns and promotional discounts while leveraging the brand power of their affiliates as part of their efforts to gain subscribers. Partly as a result of such efforts, the combined market share of MVNOs has increased in recent years from 14.4% as of December 31, 2021 to 16.9% as of December 31, 2022 and 19.2% as of December 31, 2023, in terms of number of subscribers.In addition, other companies may enter the wireless network services market. While new entries into such market have historically required obtaining requisite licenses fromFor example, in January 2024, the MSIT, pursuantGovernment allocated 800 MHz of bandwidth in the 28 GHz spectrum to Stage X, a consortium led by Stage Five, an amendmentMVNO, to the Telecommunications Business Act that went into effect in June
We believe that ana continued increase in the market share of MVNOs (including through the entrance of new MVNOs, if any) and the entrance of new mobile network operators (including in connection with the allocation of 800 MHz of bandwidth in the 28 GHz spectrum in January 2024 to Stage X), if any, in the wireless telecommunications market may further increase competition in the telecommunications sector, as well as cause downward price pressure on the fees we charge for our services, which, in turn, may have a material adverse effect on our business, financial position and results of operations.
Our fixed-line telephone service competes with KT and LG U+, as well as other providers of voice over Internet protocol (“VoIP”) services. As of December 31, 2021,2023, our market share of the fixed-line telephone and VoIP service market was 15.7% (including the services provided by SK Broadband Co., Ltd. (“SK Broadband”)) in terms of number of subscribers compared to KT with 56.3%54.2% and LG U+ with 19.0%18.7%. In addition, our broadband Internet access, Internet protocol TV (“IPTV”) and cable TV services provided through SK Broadband compete with other providers of such services, including KT, LG U+ and cable companies. Furthermore, our IPTV and cable TV services are facing an increasing level of competition from global operators of online video streaming platforms, such as YouTube, Netflix, Disney Plus and Amazon Video,Apple TV, leading domestic video streaming platforms such as TVING, WatchaaWavve (which is seeking to merge with TVING pursuant to a memorandum of understanding entered into in December 2023), Coupang Play and Wavve,Watcha, and the video services offered by leading domestic online and mobile search and communications platforms including NAVER and Kakao, as such services continue to become increasingly popular to serve as a substitute to traditional television programming. As of December 31, 2021,2023, our market share of the broadband Internet market was 28.7% in terms of number of subscribers compared to KT with 41.2%40.8% and LG U+ with 20.7%21.4%. As of December 31, 2021,2023, our market share of the pay TV market (which includes IPTV, cable TV and satellite TV) was 25.0%26.1% compared to KT with 36.2%36.5% (including its IPTV, cable TV and satellite TV services) and LG U+ with 25.3%24.7% (including its IPTV and cable TV services), and the collective market share of other pay TV providers was 13.4%12.8%.
Over the past few years, the Korean fixed-line telecommunications industry has been goinggone through significant consolidation involving major pay television service providers. In April 2020, we completed the merger of Tbroad Co., Ltd., a former leading cable television and other fixed-line telecommunications services provider in Korea, and two of its subsidiaries, Tbroad Dongdaemun Broadcasting Co., Ltd. and Korea Digital Cable Media Center Co. Ltd. (collectively, “Tbroad”), with and into SK Broadband. As a result of the merger and the issuance of SK Broadband’s shares to the former shareholders of Tbroad with an aggregate fair value of Won 862.1 billion as of April 30, 2020, we owned approximately 74.3% of SK Broadband’s total outstanding shares as of December 31, 2021. In the same month, SK Telecom acquired a 55.0% equity interest in Broadband Nowon Co., Ltd. (formerly known as Tbroad Nowon Broadcasting Co., Ltd.), another subsidiary of Tbroad Co., Ltd., for a purchase price of Won 10.4 billionwhich was subsequently merged with and into SK Broadband in cash. As a result ofOctober 2022. Following such transactions (the “Tbroad Merger”), we becameowned approximately 74.4% of SK
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Broadband’s total outstanding shares as of December 31, 2023 and were the third-largestsecond-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2021.2023. In December 2019, LG U+ acquired a majority equity stake in CJ Hello Co., Ltd. and changed the acquired company’s name to LG HelloVision Co., Ltd. (“LG HelloVision”) to collectively become the second-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2021.. In August 2021, KT acquired HCN Co., Ltd. (“HCN”), a major Korean cable TV service provider, through its subsidiary KT Skylife Co., Ltd. (“KT Skylife”).
Furthermore, the Government has historically enforced regulations on cable TV and IPTV service providers that prohibited them from having a market share of more than
Continued competition from other wireless and fixed-line telecommunications service providers has also resulted in, and may continue to result in, a substantial level of deactivations among our subscribers. SubscriberA substantial level of subscriber deactivations, or churn, may significantly harm our business, financial condition and results of operations. In 2021,
As we continue to expand our business into areas beyond the traditional wireless and fixed-line telecommunications businesses, we also face competition from major players in the relevant sectors, such as television shopping
Our ability to compete successfully in all of the businesses in which we operate will depend on our ability to anticipate and respond to various competitive factors affecting the respective industries, including new services that may be introduced, changes in consumer preferences, economic conditions and discount pricing strategies by competitors.
Inability to successfully implement or adapt our network and technology to meet the continuing technological advancements affecting the wireless telecommunications industry will likely have a material adverse effect on our business, financial condition and results of operations.
The telecommunications industry has been characterized by continual improvementimprovements and advances in technology, and this trend is expected to continue. We and our competitors have continually implemented technology upgrades from our basic code division multiple access (“CDMA”) network to our wideband code division multiple access (“WCDMA”) network, and subsequently to the currently dominant LTE and 5G technologies. Our business could be harmed if we fail to implement, or adapt to, future technological advancements in the telecommunications sector in a timely manner, such as the continued implementation and enhancement of 5G technology and the eventual development and implementation of a successor technology to 5G technology. We launched wireless service plans using the 5G network in April 2019 following the commencement of sales of the first
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April 2019. The more successful operation of a 5G network or development of improved 5G technology by a competitor, including better market acceptance or network quality of a competitor’s 5G services, could materially and adversely affect our existing wireless telecommunications businesses as well as the returns on future investments we may make in our 5G network or our other businesses.
In addition to introducing new technologies and offerings, we must phase out outdated and unprofitable technologies and services. For example, as of January 2019, we discontinued our wireless broadband Internet access (“WiBro”) services in January 2019 and we also terminated our second generation CDMA wireless services in July 2020. If we are unable to do sointroduce new technologies and offerings on a cost-effective and timely basis, our business, financial condition and results of operations could be adversely affected.
Implementation of new wireless technology and enhancement of existing wireless technology have required, and may continue to require, significant capital and other expenditures, which we may not recoup.
We have made, and intend to continue to make, capital investments to develop, launch and enhance our wireless service. In 2021, 20202023, 2022 and 2019,2021, we spent Won 1,850.91,380.6 billion, Won 1,878.61,833.4 billion and 2,514.3Won 1,850.9 billion, respectively, in capital expenditures to build and enhance our wireless networks. Our continued implementation and expansion of 5G services, which use a higher frequency spectrum than our LTE services, will require additional base stations (which are also commonly referred to as “cell sites”) and other infrastructure, which may result in an increase in our capital expenditures in the future.
Our businesses are subject to various types of Government regulation, and any change in Government policy relating to the telecommunications industry could have an adverse effect on our business, financial condition and results of operations.
Our businesses are generally subject to governmental supervision and various types of regulation.
Rate Regulation.
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the expected profits to the wireless telecommunications service providers and subscribers’ costs of switching wireless telecommunications service providers. See “Item 4.B. Business Overview — Law and Regulation — Rate Regulation” and “Item 5.A. Operating Results — Overview — Rate Regulations.” Such discounts have contributed to a general decrease in the monthly revenue per subscriber of our wireless telecommunications services. See “Item 5.A. Operating Results — Overview — Decrease in Monthly Revenue per Subscriber.” In July 2022, the MSIT requested wireless telecommunications service providers, including us, to introduce additional mid-tier 5G rate plans to provide 5G subscribers with more diverse and affordable rate plans that better meet their data usage patterns. We have since introduced several types of such new plans in 2022 and 2023. In November 2023, the MSIT requested wireless telecommunications service providers, including us, to provide 5G smartphone users with the option to subscribe to LTE plans, which we implemented in the same month. In addition, in January 2024, the MSIT requested wireless telecommunications service providers, including us, to introduce low-tier 5G rate plans priced under Won 40,000 per month, which we implemented in March 2024. The Government may suggest other policy initiatives relating to rate plans of wireless telecommunications service providers in the future including more affordable subscription plans for 5G wireless services for different customer segments such as those with lower volumes of data usage, and any further changes to our rate plans we make in response to such suggestion may adversely affect our profitability and results of operations.
Technology Standards.
Frequency Allocation.
MVNOs.
Interconnection.
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Regulatory Action.
In addition, the Fair Trade Act provides for various regulations and restrictions enforced by the Korea Fair Trade Commission (the “KFTC”) to prohibit or restrict actions that impede competition and fair trade. From time to time, we have been, and may in the future be, subject to investigations by the KFTC relating to potential violations of such laws and regulations. See “Item 8.A. — Consolidated Statements and Other Financial Information — Legal Proceedings — KFTC Proceedings.” Any future determination by the KFTC that we have engaged in transactions that violate the fair trade laws and regulations may result in fines or other punitive measures and may have a material adverse effect on our business.
We are subject to additional regulations as a result of our dominant market position in the wireless telecommunications sector, which could harm our ability to compete effectively.
The Government endeavors to promote competition in the Korean telecommunications markets through measures designed to prevent a dominant service provider from exercising its market power and deterring the emergence and development of viable competitors. We have been designated by the MSIT as the “dominant network service provider” in respect of our wireless telecommunications business. As such, we are subject to additional regulations to which certain of our competitors are not subject. For example, the MSIT has fifteen days to object to any new rates and terms of service reported by us. See “Item 4.B. Business Overview — Law and Regulation — Rate Regulation.”
We also qualify as a “market-dominating business entity” under the Fair Trade Act, which subjects us to additional regulations and we are prohibited from engaging in any act of abusing our position as a market-dominating entity. See “Item 4.B. Business Overview — Law and Regulation — Competition Regulation.” The additional regulations to which we are subject hashave affected our competitiveness in the past and may materially hurt our profitability and impede our ability to compete effectively against our competitors in the future.
Occurrences of a new strain of coronavirus(“COVID-19”)andwidespread infectious diseases, including any possible recurrence of other types of widespread infectious diseasesCOVID-19, may materially and adversely affect our business, financial condition and results of operations.
“COVID-19,
We are subject to a reduction in labor productivity, as well as further decrease in revenue from roaming services or wireless device sales.
an increase in unemployment among, and/or a decrease in disposable income of, our customers, who may not be able to meet payment obligations or otherwise choose to decrease their spending levels, which in turn may decrease demand for some of our products and services or cause an increase in delinquent subscriber accounts;
a slowdown in the rate of subscriber migration to our 5G service, which generally entails higher-priced subscription plans and wireless devices;
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disruptions in operations, and/or a decrease in the demand for products and services, of our corporate customers, which in turn may decrease such customers’ demand for our services and products;
service disruptions, outages and performance problems due to capacity constraints caused by an overwhelming number of people accessing our services simultaneously;
disruptions in the supply of mobile handsets or telecommunications equipment from our vendors (or components of such mobile handsets and equipment such as semiconductors) as well as in the installation of our network infrastructure;
continued instability in global and Korean financial markets, which may adversely affect our ability to meet capital funding needs on a timely and cost-effective basis;
a decrease in the fair value of our investments in companies that may be adversely affected by the pandemic; and
depreciation of the Won against major foreign currencies, which in turn may increase the cost of imported equipment necessary for expansion and enhancement of our telecommunications infrastructure.
In the event that
We may fail to successfully complete, integrate or realize the anticipated benefits of our new acquisitions, joint ventures or other strategic alternatives or corporate reorganizations, including the
We continue to seek opportunities to develop new businesses that we believe are complementary to our existing product and service portfolio and expand our global business through selective acquisitions. We also continue to seek ways to optimize our corporate structure to maximize the value of our traditional businesses on the one hand and newly developed businesses on the other hand. Accordingly, we are often engaged in evaluating potential transactions and other strategic alternatives as well as corporate reorganizations, some of which may be significant in size.
For example, we completed the Tbroad Merger in April 2020, andfollowing which we became the third-largestsecond-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2020. In addition,2023. Moreover, in June 2019, we acquired a 34.6% interest in Incross Co., Ltd. (“Incross”), a digital advertising company, for an aggregate purchase price of Won 53.7 billion, in light of potential synergies with our media and commerce businesses. Furthermore,February 2022, in order to strengthen our security businessonline distribution capabilities and explore potential synergies with our wireless and fixed-line business portfolio,other businesses in the ICT sector, we acquiredindirectly re-acquired a 55.0% interest in Life & Security Holdings Co., Ltd. (“LSH”), which owned 100% of ADT CAPS Co., Ltd. (“Former ADT CAPS”), a leading Korean physical security service company, and two sister companies, CAPSTEC Co., Ltd. and ADT SECURITY Co., Ltd. (which subsequently merged with and into Former ADT CAPS), for Won 696.7 billion in October 2018; a 100%100.0% equity interest in SK Infosecm&service Co., Ltd. (“SK Infosec”M&Service”), Korea’s leading information security company, in a share exchange transaction pursuantwhich provides online corporate employee benefits management and training services to which we issued 1,260,668 treasury shares with an aggregate book value ofKorean businesses and public institutions, through our wholly-owned subsidiary PS&Marketing Corporation (“PS&Marketing”), for Won 281.272.9 billion in exchange for all of the outstanding common shares of SK Infosec in December 2018 from SK Inc., our largest shareholder; and additional shares of id Quantique SA (“id Quantique”), a leading provider of quantum cryptography solutions for data security based in Switzerland,
We have also pursued other strategic alternatives, such as forming a strategic alliance in October 2019 with Kakao Corp. (“Kakao”), a Korean Internet company and the operator of Korea’s most popular mobile messaging application, to collaborate in the ICT sector through the sale of 1,266,620 of our treasury shares to Kakao, representing a 1.6% interest, for approximately Won 300.0 billion and a concurrent issuance by Kakao of 2,177,401 of its shares, representing a 2.5% interest, to us for approximately Won 302.3 billion.
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In order to enhancepursue enhancement of shareholder value and acceleration of growth of the competitivenessSpin-off Businesses, we effected the Spin-off in November 2021. Following the Spin-off, we have become primarily focused on our core wireless and fixed-line telecommunications businesses, as our equity interests in the Spin-off Portfolio Companies (including our interest in, among others, SK Hynix, SK shieldus Co., Ltd. (a leading provider of our media businessphysical security, cybersecurity and to promote its future growth, we acquired a minority equity stakeconverged security services in Korea), Eleven Street (an e-commerce platform in Korea), T map Mobility Co., Ltd. (a leading provider of mobility services in Korea) and Content Wavve Co., Ltd. (formerly known(which operates Wavve, a leading online contents platform in Korea)) comprising our previous semiconductor and new ICT businesses were transferred to SK Square pursuant to the Spin-off. Our business operations relating to the Spin-off Businesses have been accounted for as Contentdiscontinued operations in our consolidated financial statements for the years ended December 31, 2023, 2022 and 2021 included elsewhere in this annual report.
In line with our strategic emphasis on AI technology, we announced our updated vision of transforming into an “AI Company” that combines AI technology with connectivity technologies of our core telecommunications business as well as the underlying technologies of our other new growth businesses in November 2022 and our “AI Pyramid” strategy in September 2023, which focuses on the three key aspects of (i) developing and expanding our AI infrastructure, (ii) applying AI technology to innovate our existing core business lines and promote the growth of our new growth businesses, and (iii) developing and expanding innovative AI services. See “Item 4.B. Business Overview — Our Business Strategy.” We have also been collaborating with leading Korean AI technology companies as well as other global telecommunications companies in order to accelerate our ongoing transformation to become an AI Company, including by forming the Global Telco AI Alliance Platform Inc.(the “GTAA”) (“Content Wavve”),in July 2023 with Deutsche Telecom of Germany, e& of the United Arab Emirates and Singtel of Singapore, which was later joined by Softbank of Japan in February 2024. The members of the GTAA have agreed to establish a joint venture established bydedicated to the three major terrestrial broadcastersdevelopment of large-language models that are specifically tailored to the needs of telecommunications companies, and also seek business opportunities in Korea that operated the mobile
For a more detailed description of our recent investments in new businesses, see “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Investments in New Growth Businesses.”
While we are hoping to benefit from a range of synergies and efficiencies from the
Due to the existing high penetration rate of wireless telecommunications services in Korea, we are unlikely to maintain our subscriber growth rate, which could adversely affect our business, financial condition and results of operations.
According to data published by the MSIT and the historical population data published by the Ministry of the Interior and Safety, the penetration rate for the Korean wireless telecommunications industry as of December 31, 20212023 was approximately 139.3%161.3%, which was relatively high compared to many industrialized countries. Therefore, we expect that the penetration rate for wireless telecommunications service in Korea will remain relatively stable. As a result of the already high penetration rate in Korea for wireless telecommunications services coupled with our leading market share, we expect our subscriber growth rate to decrease.
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increased use of our services by existing subscribers would likely have a material adverse effect on our business, financial condition and results of operations.
Our business, financial condition and results of operations may be adversely affected if we fail to acquire adequate additional frequency usage rights or use our bandwidth efficiently to accommodate subscriber growth and subscriber usage.
One of the principal limitations on a wireless network’s subscriber capacity is the amount of frequency spectrum available for use by the network. We have acquired a number of frequency usage rights to secure bandwidth capacity to provide our broad range of services, for which we typically make an initial payment as well as pay usage fees during the license period. We made frequency usage right fee payments of Won 102.5 billion in 2023, Won 103.9 billion in 2022 and Won 120.8 billion in 2021, Won 136.6 billion in 2020 and Won 133.1 billion in 2019.2021. For more information regarding the various bandwidths that we use and the usage right fees for such bandwidths, see “Item 4.B. Business Overview — Law and Regulation — Frequency Allocation,” “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Capital Expenditures” and note 17 of the notes to our consolidated financial statements.
The growth of our wireless data businesses has been a significant factor in the increased utilization of our bandwidth, since wireless data applications are generally more bandwidth-intensive than voice services. In particular, the increasingcontinued increase in popularity of smartphones and data intensive applications among smartphone users has been a major factor for the high utilization of our bandwidth in recent years. Although such trend has been offset in part by the implementation of new technologies that enable more efficient usage of our bandwidth, we expect that the current trend of increased data transmission use by our subscribers will continue to accelerate in the near future as more subscribers migrate to our 5G network and the volume and sophistication of the multimedia content we offer through our wireless data services continue to grow in the 5G environment.
In November 2020,2021, the MSIT announced plans to reallocatereallocated a total of 310 MHz of frequency bandwidths whose usage terms were due to expire in 2021 to KT, LG U+ and us, 95 MHz (in the 800 MHz, 2.1 GHz and 2.6 GHz spectrums) of which was allocated to us in 2021.
We may be required to pay a substantial amount to acquire additional bandwidth capacity in the future in order to meet increasing bandwidth demand or renew the rights to use our existing bandwidth, and we may not be successful in acquiring the necessary bandwidth to meet such demand at commercially attractive terms or at all, which may adversely affect our business, financial condition and results of operations.
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We rely on key technology professionals and senior management, and the loss of the services of any such personnel or the inability to attract and retain them may negatively affect our business.
Our success depends to a significant extent on the continued service of our research and development and engineering personnel, and our ability to continue to attract, retain and motivate qualified technology professionals including researchers and engineers. In particular, our focus on leading the market in introducing new services has meant that we must aggressively recruit technology professionals with expertise in cutting-edge technologies. Such employees are in high demand, and we devote significant resources to identifying, hiring, training, successfully integrating and retaining these employees. Competition for these individuals could cause us to offer higher compensation and other benefits to attract and retain them. We also depend on the services of experienced key senior management, and if we lose their services, it would be difficult to find and integrate replacement personnel in a timely manner, or at all.
The loss of the services of any of our key technology professionals or senior management without adequate replacement, or the inability to attract new qualified personnel, would have a material adverse effect on our results of operations.
We need to observe certain financial and other covenants under the terms of our debt instruments, the failure to comply with which would put us in default under those instruments.
Certain of our debt instruments contain financial and other covenants with which we are required to comply on an annual and semi-annual basis. The financial covenants with respect to SK Telecom’s debt instruments include, but are not limited to, a maximum net
If we breach our financial or other covenants, our financial condition will be adversely affected to the extent we are not able to cure such breaches or repay the relevant debt.
We may have to make further financing arrangements to meet our capital expenditure requirements and debt payment obligations.
We have had, and expect to continue to have, significant capital expenditure requirements as we continue to build out, maintain and upgrade our networks and invest in businesses that complement our wireless and fixed-line telecommunications businesses. We spent Won 2,915.92,973.9 billion for capital expenditures in 2021.
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In particular, we continue to make significant capital investments to expand and upgrade our wireless networks in response to growing bandwidth demand by our subscribers. Bandwidth usage by our subscribers has rapidly increased in recent years primarily due to the increasing number of data intensive mobile applications and use of such applications by smartphone users. If heavy usage of bandwidth-intensive services grows beyond our current expectations, we may need to invest more capital than is currently anticipated to expand the bandwidth capacity of our networks or our customers may have aexperience suboptimal experienceperformance when using our services. Any of these events could adversely affect our competitive position and have a material adverse effect on our business, financial condition and results of operations. For a more detailed discussion of our capital expenditure plans and a discussion of other factors that may affect our future capital expenditures, see “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Capital Expenditures.”
As of December 31, 2021,2023, we had Won 2,461.02,707.2 billion in contractual payment obligations (excluding short-term leases and leases of low-value assets) due in 2022,2024, which mostly involved repayment of debt obligations and payments related to lease liabilities and other short-term leases and leases of
We have not arranged firm financing for all of our current or future capital expenditure plans and contractual payment obligations. We have, in the past, obtained funds for our proposed capital expenditure and payment obligations from various sources, including our cash flow from operations as well as from financings, primarily debt and equity financings. Any material adverse change in our operational or financial condition could impact our ability to fund our capital expenditure plans and contractual payment obligations. Volatile financial market conditions and an increasing interest rate environment may also curtail our ability to obtain adequate funding.funding and/or increase our cost of borrowings, which would have an adverse effect on our liquidity and financial position. Inability to fund such capital expenditure requirements may have a material adverse effect on our business, financial condition and results of operations. In addition, although we currently anticipate that the capital expenditure levels estimated by us will be adequate to meet our business needs, such estimates may need to be adjusted based on developments in technology and markets. Failure to meet any such increased expenditure requirements or to obtain adequate financing for such requirements on terms acceptable to us, or at all, may have a material adverse effect on our business, financial condition and results of operations.
Termination or impairment of our relationship with a small number of key suppliers for network equipment and for leased lines could adversely affect our business, financial condition and results of operations.
We purchase wireless network equipment from a small number of suppliers. To date, we have purchased substantially all of the equipment for our networks from Samsung Electronics Co., Ltd. (“Samsung Electronics”),
We cannot assure you that we will be able to continue to obtain the necessary equipment from one or more of our suppliers. Any discontinuation or interruption in the availability of equipment from our suppliers for any reason could have an adverse effect on our business, financial condition and results of operations. In addition, inability to lease adequate lines at commercially reasonable rates may impact the quality of the services we offer and may also damage our reputation and our business.
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Our business relies on technology developed by us, and our business will suffer if we are unable to protect our proprietary rights.
We own numerous patents and trademarks worldwide, and have applications for patents pending in many countries. In addition to active research and development efforts, our success depends in part on our ability to obtain patents and other intellectual property rights covering our services.
We may be required to defend against charges of infringement of patent or other proprietary rights of third parties. Although we have not experienced any significant patent or other intellectual property disputes, we cannot
Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.
Our business involves the storage and transmission of large amounts of confidential information, and cybersecurity breaches expose us to a risk of loss of this information, which may lead to improper use or disclosure of such information, ensuing potential liability and litigation, any of which could harm our reputation and adversely affect our business.
We maintain a comprehensive process for assessing, identifying and managing material risks from cybersecurity threats as part of our overall risk management system and processes. See “Item 16K. Cybersecurity.” Our cybersecurity measures may also be breached due to employee error, malfeasance or otherwise. Instituting appropriate access controls and safeguards across all of our information technology infrastructure is challenging. Furthermore, outside parties may attempt to fraudulently induce employees to disclose sensitive information in order to gain access to our data or our customers’ data or accounts, or may otherwise obtain access to such data or accounts. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until attacks are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. While we have experienced minor isolated cybersecurity incidents in the past, we do not believe that any such incidents had a material adverse effect on our business, financial condition or results of operations. If an actual or perceived breach of our cybersecurity of a material nature occurs or the market perception of the effectiveness of our cybersecurity measures is materially harmed, we may incur significant legal and financial exposure, including legal claims and regulatory fines and penalties, damage to our reputation and a loss of confidence of our customers, which could have an adverse effect on our business, financial condition and results of operations.
In addition, our wireless and fixed-line subscribers utilize our network to access the Internet and, as a consequence, we or they may become victim to common malicious and abusive Internet activities, such as unsolicited mass advertising (
Labor disputes may disrupt our operations.
Although we have never experienced any significant labor disputes, there can be no assurance that we will not experience labor disputes in the future, including protests and strikes, which could have an adverse effect on our business, financial condition and results of operations.
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Every two years, the union and management negotiate and enter into a new collective bargaining agreement that has a
Concerns that radio frequency emissions may be linked to various health concerns could adversely affect our business and we could be subject to litigation relating to these health concerns.
In the past, allegations that serious health risks may result from the use of wireless telecommunications devices or other transmission equipment have adversely affected share prices of some wireless telecommunications companies in the United States. In May 2011, the International Agency for Research on Cancer (the “IARC”), a part of the World Health Organization, announced that it has classified radiofrequency electromagnetic fields associated with wireless phone use as possibly carcinogenic to humans, based on an increased risk for glioma, a malignant type
Our ability to deliver services may be disrupted due to a systems failure, shutdown in our networks or natural disaster.
Our services are currently carried through our wireless and fixed-line networks, which could be vulnerable to damage or interruptions in operations due to fires, floods, earthquakes, power losses, telecommunication failures, network software flaws, unauthorized access, computer viruses and similar events, which may occur from time to time. The occurrence of any of these events could impact our ability to deliver services, we may be liable for damages to our customers caused by such interruptions, our reputation may be damaged and our customers may lose confidence in us, which could have a negative effect on our business, financial condition and results of operations.
Depreciation of the value of the Won against the Dollar and other major foreign currencies may have a material adverse effect on our results of operations and the market value of our common shares and ADSs.
Substantially all of our revenues are denominated in Won. Depreciation of the Won may materially affect our results of operations because, among other things, it causes:
an increase in the amount of Won required by us to make interest and principal payments on our foreign currency-denominated debt; and
an increase, in Won terms, of the costs of equipment that we purchase from overseas sources which we pay for in Dollars or other foreign currencies.
Fluctuations in the exchange rate between the Won and the Dollar will affect the Dollar equivalent of the Won price of the our common shares on the KRX KOSPI Market. These fluctuations will also affect:
the amounts a registered holder or beneficial owner of ADSs will receive from the American Depositary Receipt (“ADR”) depositary in respect of dividends, which will be paid in Won to the ADR depositary and converted by the ADR depositary into Dollars;
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the Dollar value of the proceeds that a holder will receive upon sale in Korea of our common shares; and
the secondary market price of our ADSs.
If SK Inc. causes us to breach the foreign ownership limitations on our common shares by being deemed to be a foreign entity, we may experience a change of control.
The Telecommunications Business Act currently sets a 49.0% limit on the aggregate foreign ownership of our issued shares. Under the Telecommunications Business Act, as amended, a Korean entity, such as SK Inc., is deemed to be a foreign entity if its largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreigner and such shareholder (together with the shareholdings of its related parties) holds 15.0% or more of the issued voting stock of the Korean entity.
Notwithstanding the above, pursuant to a recentan amendment to the Telecommunications Business Act which became effective onin April 20, 2022, a Korean entity, so long as (i) such entity’s largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreign entity specifically designated by the MSIT incorporated in a country that has entered into a bilateral or multilateral free trade agreement with Korea, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the
As of December 31, 2021,2023, SK Inc. owned 65,668,397
If our aggregate foreign shareholding limit is exceeded, the MSIT may issue a corrective order to us, the breaching shareholder (including SK Inc. if the breach is caused by an increase in foreign ownership of SK Inc.) and the foreign shareholder which owns in the aggregate 15.0% or more of SK Inc. Furthermore, if SK Inc. is considered a foreign shareholder, it will be prohibited from exercising its voting rights with respect to the shares held in excess of the 49.0% ceiling, which may result in a change in control of us. In addition, the MSIT will be prohibited from granting us licenses or permits necessary for entering into new telecommunications businesses until our aggregate foreign shareholding is reduced to below 49.0%. For a description of further actions that the MSIT could take, see “Item 4.B. Business Overview — Law and Regulation — Foreign Ownership and Investment Restrictions and Requirements.”
Risks Relating to Korea
Unfavorable financial and economic developments in Korea may have an adverse effect on us.
We are incorporated in Korea, and a substantial portion of our operations and assets are located in Korea. As a result, we are subject to political, economic, legal and regulatory risks specific to Korea, and our performance and successful fulfillment of our operational strategies are dependent in large part on the overall Korean economy. The economic indicators in Korea in recent years have shown mixed signsDue to the debilitating effects of growth and uncertainty, and starting in 2020, the overallCOVID-19 pandemic on the Korean economy and the economies of Korea’s major trading partners, the economic indicators in Korea have shown mixed signs of deterioration due toand
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uncertain recovery since the debilitating effectsoutbreak of the
In recent years, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity prices, supply chain disruptions and the increasing weakness of the global economy, in particular due towhich have been affected by, among others, the
Developments that could have an adverse impact on Korea’s economy include:
| • | declines in consumer confidence and a slowdown in consumer spending, including as a result of severe health epidemics, such as COVID-19, and increases in market interest rates; |
rising inflationary pressures leading to increases in the costs of goods and services and a slowdowndecrease in consumer spending, including as a resultpurchasing power;
adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the ongoing globalWon against the U.S. dollar, Euro or Japanese Yen exchange rates or revaluation of the Chinese Yuan), interest rates, inflation rates or stock markets;
adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe and Japan, or in emerging market economies in Asia or elsewhere, including as a result of deteriorating economic and trade relations between the United
States and China and increased uncertainties |
a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail or small-small— and medium-sizedmedium—sized enterprise borrowers in Korea;
the economic impact of any pending or future free trade agreements or any changes to existing free trade agreements;
shortages of imported raw materials, natural resources, rare earth minerals or component parts, including semiconductors, due to disruptions to the global supply chain;
a deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy;
increased sovereign default risks in select countries and the resulting adverse effects on the global financial markets;
| • | a deterioration in the financial condition or performance of small- and medium-sized enterprises and other companies in Korea due to the Government’s policies to increase minimum wages and limit working hours of employees; |
| • | investigations of large Korean conglomerates and their senior management for possible misconduct; |
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social and labor unrest;
substantial changes in the market prices of Korean real estate;
| • | a substantial decrease in tax revenues and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs, in particular in light of the Government’s ongoing efforts to provide emergency relief payments to households and emergency loans to corporations in need of funding in light of the COVID-19 pandemic as well as interest rate increases, which together would likely lead to a national budget deficit as well as an increase in the Government’s debt; |
financial problems or lack of progress in the restructuring of Korean conglomerates, other large troubled companies, their suppliers or the financial sector;
loss of investor confidence arising from corporate accounting irregularities and corporate governance issues concerning certain Korean conglomerates;
increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea;
geopolitical uncertainty and the risk of further attacks by terrorist groups around the world;
political uncertainty or increasing strife among or within political parties in Korea;
hostilities, political or social tensions involving Russia (including the invasion of Ukraine by Russia and the ensuing actions that the United States and other countries have taken or may take)take in the future, such as the imposition of sanctions against Russia) and the resulting adverse effects on the global supply of oil and other natural resources and the global financial markets;
hostilities or political or social tensions involving oil producing countries in the Middle East (including a potential escalation ofthose resulting from escalating hostilities betweenin the United States and Iran)Middle East following the Israel-Hamas war) and North Africa and any material disruption in the global supply of oil or sudden increase in the price of oil;
natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; and
an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States.
Escalations in tensions with North Korea could have an adverse effect on us and the market value of our common shares and ADSs.
Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between the two Koreas has fluctuated and may increase abruptly as a result of future events. In particular, there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon, and ballistic missile and satellite programs as well as its hostile military actions against Korea. Some of the significant incidents in recent years include the following:
| • | North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and has conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs and warheads that can be mounted on ballistic missiles. Over the years, North Korea has continued to conduct a series of missile tests, including ballistic missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. North Korea has increased the frequency of such activities since the beginning of 2022, firing numerous ballistic missiles, including intercontinental ballistic missiles, and in November 2023, successfully launched its first spy satellite. In response, the Government has repeatedly condemned the provocations and flagrant violations of relevant United Nations Security Council resolutions. In February 2016, the Government also closed the inter-Korea Gaeseong Industrial Complex in response to North Korea’s fourth nuclear |
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test in January 2016. Internationally, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea. Over the years, the United States and the European Union have also expanded their sanctions applicable to North Korea. |
In March 2010, a Korean naval vessel was destroyed by an underwater explosion, killing many of the crewmen on board. The Government formally accused North Korea of causing the sinking, while North Korea denied responsibility. Moreover, in November 2010, North Korea fired more than one hundred artillery shells that hit Korea’s Yeonpyeong Island near the Northern Limit Line, which acts as the de facto maritime boundary between Korea and North Korea on the west coast of the Korean peninsula, causing casualties and significant property damage. The Government condemned North Korea for the attack and vowed stern retaliation should there be further provocation.
North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within North Korea.
Although bilateral summit meetings between Korea and North Korea were held between the two Koreas in April, May and September 2018 and between the United States and North Korea in June 2018, February 2019 and June 2019, there can be no assurance that the level of tensions affecting the Korean peninsula will not escalate in the future. Any further increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between Korea and North Korea or between the United States and North Korea break down or military hostilities occur, could have a material adverse effect on our business, financial condition and results of operations and the market value of our common shares and ADSs.
Korea’s legislation allowing class action suits related to securities transactions may expose us to additional litigation risk.
The Securities-related Class Action Act of Korea (the “Securities-related Class Action Act”), enacted in January 2004, allows class action suits to be brought by shareholders of companies (including us) listed on the KRX KOSPI Market for losses incurred in connection with purchases and sales of securities and other securities transactions arising from (1) false or inaccurate statements provided in the registration statements, prospectuses, annual reports, audit reports, and semi-annual or quarterly reports and material fact reports and omissionor omissions of material information in such documents, (2) insider trading, (3) market manipulation and (4) unfair trading. This lawThe Securities-related Class Action Act permits 50 or more shareholders who collectively hold 0.01% of the shares of a company to bring a class action suit against, among others, the issuer and its directors and officers. Because of the relatively recent enactment of the act,Securities-related Class Action Act, there is not enough judicial precedent to predict how the courts will apply the law. Litigation can be time-consuming and expensive to resolve, and can divert management time and attention from the operation of a business. We are not aware of any basis upon which such suit may be brought against us, nor are any such suits pending or threatened. Any such litigation brought against us could have a material adverse effect on our business, financial condition and results of operations.
There are special risks involved with investing in securities of Korean companies, including the possibility of restrictions being imposed by the Government in emergency circumstances.
As we are a Korean company and operate in a business and cultural environment that is different from that of other countries, there are risks associated with investing in our securities that are not typical for investments in securities of companies in other jurisdictions.
Under the Korean Foreign Exchange Transactions Act, if the Government deems that certain emergency circumstances, including a significant disruption in the international balance of payments and international financial markets or extreme difficulty in carrying out currency, exchange rate or other macroeconomic policies due to the movement of capital between Korea and other countries, are likely to occur, it may impose any
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necessary restriction such as requiring Korean or foreign investors to obtain prior approval from the Ministry of Economy and Finance (the “MOEF”) for the acquisition of Korean securities or for the repatriation of interest, dividends or sales proceeds arising from Korean securities or from disposition of such securities or other transactions involving foreign exchange. See “Item 10.D. Exchange Controls — Korean Foreign Exchange Controls and Securities Regulations.”
Risks Relating to Securities
Sales of our shares by SK Inc. and/or other large shareholders may adversely affect the market value of our common shares and ADSs.
Sales of substantial amounts of our common shares, or the perception that such sales may occur, could adversely affect the prevailing market value of our common shares or ADSs or our ability to raise capital through an offering of our common shares.
As of December 31, 2021,2023, SK Inc. owned 30.0% of our total issued common shares and has not agreed to any restrictions on its ability to dispose of our shares. See “Item 7.A. Major Shareholders.” We can make no prediction as to the timing or amount of any sales of our common shares. We cannot assure you that future sales of our common shares, or the availability of our common shares for future sale, will not adversely affect the prevailing market value of our common shares or ADSs from time to time.
If an investor surrenders his or her ADSs to withdraw the underlying shares, he or she may not be allowed to deposit the shares again to obtain ADSs.
Under the deposit agreement, holders of our common shares may deposit those shares with the ADR depositary’s custodian in Korea and obtain ADSs, and holders of ADSs may surrender ADSs to the ADR depositary and receive our common shares. However, under the terms of the deposit agreement, as amended, the depositary bank is required to obtain our prior consent to any such deposit if, after giving effect to such deposit, the total number of our common shares represented by ADSs, which was 14,653,59813,512,383 shares as of March 31, 2022,2024, exceeds a specified maximum, which was 59,712,21673,861,029 shares as of March 31, 2022,2024, subject to adjustment under certain circumstances.
An investor in our ADSs may not be able to exercise preemptive rights for additional new shares and may suffer dilution of his or her equity interest in us.
The Korean Commercial Code and our articles of incorporation require us, with some exceptions, to offer shareholders the right to subscribe for new shares in proportion to their existing ownership percentage whenever new shares are issued. If we offer a right to subscribe for additional new common shares or any other rights of similar nature, the ADR depositary, after consultation with us, may make the rights available to an ADS holder or use reasonable efforts to dispose of the rights on behalf of the ADS holder and make the net proceeds available to the ADS holder. The ADR depositary, however, is not required to make available to an ADS holder any rights to purchase any additional shares unless it deems that doing so is lawful and feasible and:
a registration statement filed by us under the Securities Act is in effect with respect to those shares; or
the offering and sale of those shares is exempt from, or is not subject to, the registration requirements of the Securities Act.
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We are under no obligation to file any registration statement with respect to any ADSs. If a registration statement is required for an ADS holder to exercise preemptive rights but is not filed by us, the ADS holder will not be able to exercise his or her preemptive rights for additional shares. As a result, ADS holders may suffer dilution of their equity interest in us.
Short selling of our ADSs by purchasers of securities convertible or exchangeable into our ADSs could materially adversely affect the market price of our ADSs.
SK Inc., through one or more special purpose vehicles, has engaged and may in the future engage in monetization transactions relating to its ownership interest in us. These transactions have included and may include
A holder of our ADSs may not be able to enforce a judgment of a foreign court against us.
We are a corporation with limited liability organized under the laws of Korea. Substantially all of our directors and officers and other persons named in this annual report reside in Korea, and all or a significant portion of the assets of our directors and officers and other persons named in this annual report and substantially all of our assets are located in Korea. As a result, it may not be possible for holders of our ADSs to effect service of process within the United States, or to enforce against us any judgments obtained from the United States courts based on the civil liability provisions of the federal securities laws of the United States. There is doubt as to the enforceability in Korea, either in original actions or in actions for enforcement of judgments of United States courts, of civil liabilities predicated on the United States federal securities laws.
We are generally subject to Korean corporate governance and disclosure standards, which may differ from those in other countries.
Companies in Korea, including us, are subject to corporate governance standards applicable to Korean public companies, which may differ in some respects from standards applicable in other countries, including the United States. As a reporting company registered with the SEC and listed on the NYSE,New York Stock Exchange (“NYSE”), we are subject to certain corporate governance standards as mandated by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). However, foreign private issuers, including us, are exempt from certain corporate governance requirements under the Sarbanes-Oxley Act or under the rules of the NYSE. There may also be less publicly available information about Korean companies, such as us, than is regularly made available by public or
Item 4. | INFORMATION ON THE COMPANY |
Item 4.A. | History and Development of the Company |
As Korea’s first wireless telecommunications service provider, we have a recognized history of leadership and innovation in the domestic telecommunications sector. Today, we remain Korea’s leading wireless telecommunications services provider and have continued to pioneer the commercial development and
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implementation of
In February 2012, we acquired an equity stake in SK Hynix, one of the world’s largest memory-chip makers by revenue, for an aggregate purchase price of Won 3.4 trillion, and became its largest shareholder. In November 2021, we transferred all of our 20.1% equity interest in SK Hynix to SK Square pursuant to the
Effective as of November 1, 2021, we conducted the
In connection with the
We are a corporation with limited liability organized under the laws of Korea.
The SEC maintains a website (http://www.sec.gov)(www.sec.gov), which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Korean Telecommunications Industry
Established in March 1984, we became the first wireless telecommunications service provider in Korea. We remained the sole provider of wireless telecommunications services until April 1996, when Shinsegi commenced cellular service. The Government began to introduce competition into the fixed-line and wireless telecommunications services markets in the early 1990’s. During this period, the Government allowed new competitors to enter the fixed-line sector, sold a controlling stake in us to the SK Group, and granted a cellular license to our first competitor, Shinsegi. In October 1997, three additional companies began providing wireless telecommunications services under Government licenses to provide wireless telecommunications services. In 2000 and 2001, the Korean wireless telecommunications market experienced significant consolidation. In January 2002, Shinsegi was merged into us. Additionally, two of the other wireless telecommunications services providers merged.
There are currently three mobile network operators in Korea: us, KT and LG U+. As of December 31, 2021,2023, the market share of the Korean wireless telecommunications market, in terms of number of subscribers, of KT
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and LG U+ was approximately 31.0%29.3% and 24.7%30.0%, respectively (compared to our market share of 44.3%40.7%), each including MVNO subscribers leasing the respective networks. As of December 31, 2021,2023, MVNOs had a combined market share of 14.4%19.2%, of which MVNOs leasing our networks represented 3.0%2.9%, MVNOs leasing KT’s networks represented 7.4%8.6% and MVNOs leasing LG U+’s networks represented 3.9%7.6%.
Telecommunications industry growth in Korea has been among the most rapid in the world, with fixed-line penetration being under five lines per 100 population in 1978 and increasing to 47.9 lines per 100 population as of December 31, 2006 before decreasing to 23.621.4 lines per 100 population as of December 31, 2021,2023, and wireless penetration increasing from 7.0 subscribers per 100 population in 1996 to 139.3161.3 subscribers per 100 population as of December 31, 2021.2023. The table below sets forth certain subscription and penetration information regarding the Korean telecommunications industry as of the dates indicated:
As of December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In thousands, except for per population amounts) | ||||||||||||
Population of Korea (1) | 51,639 | 51,829 | 51,850 | |||||||||
Wireless Subscribers (2) | 71,920 | 69,542 | 67,937 | |||||||||
Wireless Subscribers per 100 Population | 139.3 | 134.2 | 131.0 | |||||||||
Telephone Lines in Service | 12,212 | 12,859 | 13,600 | |||||||||
Telephone Lines per 100 Population | 23.6 | 24.8 | 26.2 | |||||||||
| As of December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (In thousands, except for per population amounts) | ||||||||||||
Population of Korea(1) | 51,325 | 51,439 | 51,639 | |||||||||
Wireless Subscribers(2) | 82,770 | 75,958 | 71,920 | |||||||||
Wireless Subscribers per 100 Population | 161.3 | 147.7 | 139.3 | |||||||||
Telephone Lines in Service | 10,974 | 11,621 | 12,212 | |||||||||
Telephone Lines per 100 Population | 21.4 | 22.6 | 23.6 | |||||||||
| (1) | Source: The Ministry of the Interior and Safety. |
| (2) | Includes subscribers of non-mobile phone wireless services, |
Since the introduction of short text messaging in 1998, Korea’s wireless data market has grown rapidly. This growth has been driven, in part, by the rapid development of wireless Internet service since its introduction in 1999 and the implementation of LTE and 5G technologies providing for fast data transmission speeds and large data transmission capacity. As of December 31, 2021,2023, approximately 60.755.1 million Korean wireless subscribers owned Internet-enabled handsets capable of accessing wireless Internet services, including 53.5 million subscribers that own smartphones that had direct access to the Internet using mobile Internet technology.
As of December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In thousands, except for percentage data) | ||||||||||||
Number of Wireless Internet-Enabled Handsets | 60,689 | 59,886 | 58,812 | |||||||||
Number of Smartphones | 53,465 | 52,223 | 51,132 | |||||||||
Total Number of Wireless Subscribers (1) | 71,920 | 69,542 | 67,937 | |||||||||
Penetration of Wireless Internet-Enabled Handsets | 84.4 | % | 86.1 | % | 86.6 | % | ||||||
Penetration of Smartphones | 74.3 | % | 75.1 | % | 75.3 | % | ||||||
| As of December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (In thousands, except for percentage data) | ||||||||||||
Number of Smartphones | 55,126 | 54,249 | 53,465 | |||||||||
Total Number of Wireless Subscribers(1) | 82,770 | 75,958 | 71,920 | |||||||||
Penetration of Smartphones | 66.6 | % | 71.4 | % | 74.3 | % | ||||||
| (1) | Includes subscribers of non-mobile phone wireless services, |
The decreases in the penetration rate of smartphones as of December 31, 2023 compared to December 31, 2022, and as of December 31, 2022 compared to December 31, 2021, were primarily due to a faster increase in the number of subscribers of non-mobile phone wireless services, such as tablet computers, wearable devices, IoT devices and others, as compared to the increase in the number of smartphones.
In addition to its well-developed wireless telecommunications sector, Korea has one of the largest Internet markets in the Asia Pacific region. From the end of 2010 to the end of 2021,2023, the number of broadband Internet
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access subscribers increased from approximately 17.2 million to approximately 22.924.1 million.
As of December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In thousands) | ||||||||||||
Number of Broadband Internet Access Subscribers (1) | 22,944 | 22,327 | 21,762 | |||||||||
Number of IPTV Subscribers | 20,628 | 19,364 | 18,021 | |||||||||
| As of December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (In thousands) | ||||||||||||
Number of Broadband Internet Access Subscribers(1) | 24,098 | 23,537 | 22,944 | |||||||||
Number of IPTV Subscribers | 21,583 | 21,289 | 20,628 | |||||||||
| (1) | Includes subscribers accessing Internet service using digital subscriber line, or xDSL, connections; cable modem connections; local area network, or LAN, connections; fiber-to-the-home, |
Item 4.B. | Business Overview |
Overview
We are Korea’s leading wireless telecommunications services provider and continue to pioneer the commercial development and implementation of
cellular services, which include wireless voice and data transmission services, sales of wireless devices, IoT solutions, platform services, cloud services, smart factory solutions, subscription services, advertising and curated shopping services, metaverse platform-based services, AI solutions and enterprise AI services;
fixed-line telecommunications services, which include fixed-line telephone services, broadband Internet services, advanced media platform services (including IPTV and cable TV services) and business communications services; and
| • | other businesses, which include our T-commerce business and certain other miscellaneous businesses. |
Our Business Strategy
We believe that the current trends in the Korean telecommunications industry are characterized by technological change, evolving consumer needs and increasing digital convergence. Against the backdrop of these industry trends, we aim to maintain our leading position in the Korean market for wireless telecommunications services and actively develop our next-generation growth businesses by leveraging our AI and digital infrastructure technologies. In pursuit of such objectives, we plan to further utilize AI technology and our big data analysis capabilities to createdevelop and commercialize new products and services that are tailored to our customers’ evolving needs, as well as incorporate AI capabilities directly into many of the products and services we offer, and offer a variety of subscription-based marketing services and meterverse platform services.offer. In doing so, we plan to actively collaborate with the new ICT businesses operated by the
| • | Maintain our leadership in the wireless services business by offering innovative 5G services and customer-oriented products and services. We plan to maintain our leadership in the wireless services |
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business by offering innovative 5G services that provide differentiated subscriber experiences. We also plan to promote the proliferation of 5G services by offering services and content that are specialized for the 5G environment, such as hands-on experience services, metaverse platform-based services and e-sports. In addition, we will continue to analyze the needs of our subscribers and enhance the quality and breadth of our wireless services by leveraging our AI |
| • | Develop our next-generation growth businesses. We believe that we have evolved from being a domestic telecommunications provider in Korea to possessing the fundamental capabilities that enable us to pursue a broad range of |
| • | Develop our technological capabilities and new products and services to support our 5G network. We aim to continue developing cutting-edge technologies that will be adopted as the technological standard for 5G services. In addition, we will seek to apply our 5G infrastructure and capabilities to our various other key businesses to create unique new products and services geared to serve evolving customer needs. Furthermore, we aim to collaborate with various partners to identify new business opportunities that can potentially leverage our 5G network. |
| • | Pursue sustainable management to seek mutual growth with the broader society. The SK Management System, which is the business philosophy and foundation of the corporate culture of the SK Group, includes as a key component the goal of growing together with the broader society by contributing to its economic growth, creating social value and promoting environmentally friendly technology. In line with the “double bottom line” management policy, which aims to achieve long-term shareholder value while creating social value by leveraging our business capabilities, we strive to contribute to the well-being of all stakeholders and the enhancement of our corporate value in the long-term. |
As part of our ongoing efforts to pursue such strategies, effective as of November 1, 2021, we conducted the
More recently, in February 2022, we unveiledfurtherance of our new vision entitled “SKT 2.0,” pursuant to whichstrategic emphasis on AI technology, we announced our planupdated vision of transforming into an AI Company in November 2022 and our AI Pyramid strategy in September 2023, which focuses on the three key aspects of (i) developing and expanding our AI infrastructure, (ii) applying AI technology to reorganizeinnovate our operations into five majorexisting core business groups, comprising wirelesslines and fixed-line telecommunications, media, enterprise, AIVERSE and Connected Intelligence. By
We have also been collaborating with leading Korean AI technology companies as well as other global telecommunications companies in order to accelerate our ongoing transformation to become an AI Company, including by forming the GTAA in July 2023 with Deutsche Telecom of Germany, e& of the United Arab Emirates and Singtel of Singapore, which was later joined by Softbank of Japan in February 2024. The members of the GTAA have agreed to establish a joint venture dedicated to the development of large-language models that
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are specifically tailored to the needs of telecommunications companies, and also seek business opportunities in AI-related business areas.
We are also expanding our services to not only focus on connecting people through more traditional means of telecommunications but also through “Ifland,” our AI-driven metaverse services which we launched in July 2021, and our planned mobility services (including urban air mobility and autonomous driving, both of which are currently under development). Furthermore, we are building and expanding “AIX,” a new collaborative AI technology framework, through an alliance of leading Korean AI technology companies led by us, which strategy includes pursuing opportunities for eachacquisitions and investments in companies in business group, we intendareas that would benefit from our AI and digital transformation capabilities, thereby increasing the enterprise values of such companies that in turn would ultimately increase our enterprise value. In addition, as part of our commitment to pursue sustainable management, we seek to make positive contributions to the maximization of our overall growthsociety and enterprise value.
Cellular Services
We offer wireless voice and data transmission services, sell wireless devices and provide IoT solutions and innovative platform services through our cellular services segment. Our wireless voice and data transmission services are offered through our backbone networks that collectively can be accessed by approximately 99.0% of the Korean population. We had 31.933.7 million wireless subscribers, including MVNO subscribers leasing our networks, as of December 31, 2021,2023, representing a market share of 44.3%40.7%, the largest market share among Korean wireless telecommunications service providers. We launched our wireless services using our 5G network in April 2019, and we are continually expanding our 5G network coverage and enhancing service quality. The table below sets forth the number of subscribers, including subscribers of MVNOs that lease our wireless networks, using our various digital wireless networks as of the dates indicated:
As of December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(in thousands) | ||||||||||||
Network | ||||||||||||
5G | 9,911 | 5,476 | 2,084 | |||||||||
LTE | 20,198 | 22,848 | 25,022 | |||||||||
WCDMA | 1,660 | 2,920 | 3,986 | |||||||||
CDMA (1) | 115 | 139 | 443 | |||||||||
Total | 31,884 | 31,384 | 31,535 | |||||||||
| As of December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (in thousands) | ||||||||||||
Network | ||||||||||||
5G | 15,757 | 13,466 | 9,911 | |||||||||
LTE | 16,816 | 18,084 | 20,198 | |||||||||
WCDMA | 1,089 | 1,285 | 1,660 | |||||||||
CDMA(1) | — | — | 115 | |||||||||
|
|
|
|
|
| |||||||
Total | 33,662 | 32,836 | 31,884 | |||||||||
| (1) | In July 2020, we terminated our second generation wireless services using our CDMA network. CDMA subscribers as of December 31, 2021 consist of subscribers who |
In 2021, 20202023, 2022 and 2019,2021, our cellular services segment revenue was Won 12,718.513,123.2 billion, Won 12,348.012,942.3 billion and Won 12,223.812,718.5 billion, respectively, representing 75.9%74.5%, 76.8%74.8% and 79.3%75.9%, respectively, of our consolidated revenue from continuing operations.
Wireless Services
We offer wireless voice transmission and data transmission services to our subscribers through our backbone networks. Our wireless telecommunications services are available to our subscribers receiving service under the SK Telecom brand. In addition, customers can obtain wireless telecommunications services that operate on our network from MVNOs that lease our wireless networks. We derive revenues from our wireless telecommunications service principally through monthly plan-based fees as described in “— Rate Plans” below.
We provide a
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services. Our messaging service allows our subscribers to send and receive text, graphic, audio and video messages. In addition, our subscribers can access a wide variety of digital content and services through mobile applications providing music, video, gaming, news, commerce, metaverse community and financial services as well as solutions that enable subscribers to access the Internet and
Through service agreements with various foreign wireless telecommunications service providers, we offer cellular global roaming services, branded as our
Through our subsidiary SK Telink Co., Ltd. (“SK Telink”), we also operate our MVNO business under the brand “SK 7Mobile,” which we believe offers excellent quality at reasonable rates utilizing SK Telecom’s wireless networks. SK Telink is focused on developing
In addition, we provide interconnection service to connect our networks to domestic and international fixed-line and other wireless networks. See “— Interconnection” below.
Wireless Device Sales
We offer several categories of wireless devices, including smartphones and basic phones, tablets and other Internet access devices and wearable devices that are sold through an extensive distribution network, which consists of authorized exclusive dealers and independent retailers, as well as branch offices and stores directly operated by us through our wholly-owned subsidiary, PS&Marketing Co., Ltd. (“PS&Marketing”).&Marketing. As of December 31, 2021,2023, approximately 24.524.4 million, or 76.9%72.4%, of our subscribers (including MVNO subscribers leasing our networks) owned smartphones that have direct access to the Internet compared to approximately 23.924.3 million, subscribers, or 76.3%74.1%, as of December 31, 2020.2022, which decrease was primarily due to a faster increase in the number of non-mobile phone wireless devices, such as tablet computers, wearable devices, IoT devices and others, as compared to the increase in the number of smartphones. We purchase a substantial majority of our wireless devices from Samsung Electronics and Apple.
Smartphones and Basic Phones
Tablets and Other InternetWearable Devices.
IoT Solutions
Through our IoT solutions business, we provide network access and enhanced services to support telemetry-type applications, which are characterized by massive machine-type communication (“mMTC”) wireless connections, to business customers. In order to promote the growth of our IoT solutions business, we deployed networks nationwide that are designed to support IoT devices, namely our high-speed
We provide network access and customized IoT solutions to our business customers. Our IoT services support devices that are used in a variety of market segments, including retail, utilities, security, automotive,
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agriculture and data analytics. For example, our Cloud Energy Management Solution (“Cloud EMS”) business provides a
Platform Services
Through our platform services business, we seek to provide innovative AI products and services that meet our customers’ evolving needs in an increasingly connected world. In September 2016, we launched NUGU, the first intelligent AI service launched in Korea with Korean language capabilities based on advanced voice recognition technologies. Through cloud-based deep-learning technology, NUGU is designed to evolve on its own as it collects more data about its users over time.
In May 2022, we launched a beta-test version of A., which offers the ability to verbally communicate with the user and handle a variety of smart devices basedtasks on NUGU, such as the NUGU Candle series, an AI speaker which offers NUGU-baseduser’s smartphone, including recording and summarizing calls, managing the user’s schedules, providing real-time interpretation service during calls and recommending and playing personalized music and video contents. We plan to continually strengthen the level of personalization offered, and expand the portfolio of services “NUGU nemo,” a smart speakerhandled, by A., including through collaboration with a touchscreen, “NUGU CHIPS,” a wireless charging dock compatible with certain Samsung Galaxy smartphones that automatically convertsthird parties. We officially launched the smartphone being charged into a NUGU-capable device, and “albert AI,” an educational device that teaches children how to code.
Other New Businesses
In recent periods, we have launched a variety of new businesses leveraging our capabilities in telecommunications technology and ICT, and we are continuing to invest in these and other emerging new business areas, including the following:
| • | Cloud services. We provide comprehensively managed cloud services in Korea, which entail ongoing and regular support and active administration services ranging from those relating to network, application, infrastructure and security, leveraging our advanced 5G MEC technology and platform. Customers that subscribe to our cloud services primarily include businesses that require secure and ultra-low latency communications, focusing on the game, media, logistics, healthcare, finance and manufacturing industries. We completed the construction of MEC infrastructure at four strategic locations during 2020 and we launched our first MEC-based cloud service, “5GX Edge Cloud,” in collaboration with Amazon Web Services in December 2020. In March 2022, in collaboration with Dell Technologies Inc. (“Dell”), we launched a MEC platform that combines our 5G MEC solution and Dell’s servers and began offering cloud services to global telecommunications companies. We have also entered into strategic partnerships with a number of other leading cloud service providers to pursue further collaboration in the 5GX Edge Cloud business. In February 2024, we made a minority equity investment in Lambda, a graphics processing unit (“GPU”) cloud service provider based in San Francisco, and plan to form a strategic partnership during 2024 to actively explore business opportunities in the global AI cloud market. We believe that such investment will enable us to secure a stable supply of GPUs for us to provide GPU-as-a-service to businesses as we seek to enter the global AI cloud and data center markets in furtherance of our organizational goal to transform into an AI Company. |
| • | Smart Factory Solutions. We provide tailored smart factory solutions that leverage our 5G and other wireless technology infrastructure as well as our capabilities in artificial intelligence-of-things technology and big data analysis to cater primarily to businesses in high-tech industries. Our smart factory solutions, which are typically provided on a subscription basis, cater to the various needs of our customers including those related to manufacturing process, quality control, equipment management, industrial safety and logistics. |
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| • | Subscription service. In August 2021, we launched a subscription-based membership service under our “T Universe” brand name. T Universe currently offers several types of subscription packages, and a subscriber can choose from a variety of available benefits including free shipping and discount coupons on merchandise purchases made on the Amazon Global Store (which operates on Eleven Street’s 11st e-commerce platform), access to a cloud storage service, and discounts and/or coupons from various participating food and beverage store chains and delivery service providers, online video streaming and music services including YouTube Premium. Customers can also choose to subscribe to specific products or services. In order to continue expanding our T Universe membership base, we plan to pursue additional business partnerships with popular consumer brands and service providers to increase the number and appeal of the businesses that participate in the T Universe subscription program. We also plan to continue to invest in improving our customers’ user experience and strengthen the use of AI and digital technologies in our marketing efforts to promote to grow and evolve T Universe into an “AI-based subscription commerce platform.” |
| • | Metaverse. In July 2021, we launched a metaverse community platform called “Ifland.” Ifland, which is available as a mobile application on the Google Android and the Apple iOS operating systems, allows users to create personal avatars and communicate with other users by joining one or more of Ifland’s thousands of active virtual communities. Users can also create their own communities and virtual homes. In addition, businesses and public institutions have been actively promoting their services, products and events on the Ifland platform. As of December 31, 2023, Ifland was available in 50 countries around the world and had over 60 million cumulative downloads globally. We plan to continue enhancing our customers’ user experience by increasing the media and game contents available on the platform through collaboration with third-party content creators, publishers and other strategic partners. We have also begun supporting economic transactions on the Ifland platform by introducing virtual points that may be monetized into cash, and we have further enhanced the level of economic activities on the platform through the introduction of in-app purchases and the use of non-fungible token technologies. |
| • | Advertising and curated shopping services. We offer advertising services to businesses by leveraging our wireless telecommunications services platform. Our advertising services primarily consist of display advertising on our proprietary mobile applications for smartphones, including “T Phone” (which manages our wireless customers’ voice calls) and “T Membership” (which manages our customer loyalty program under the same name). In addition, we offer a text message-based curated shopping service under our “T Deal” brand. Our customers who have consented to the T Deal service receive a daily text message on their smartphones with a link to a broad range of merchandise with significant discounts that are specially curated to maximize customer interest by utilizing AI technology and big data. |
| • | Enterprise AI services. Our business customers have been increasingly seeking digital transformation by implementing AI technology, including generative AI, into their operations and business cycle. In order to meet such needs of our business customers, we have introduced various AI technology services, which we have been developing in order to improve our and our affiliated companies’ competitiveness, which are collectively referred to as “enterprise AI” services. Our enterprise AI services combine AI technology with connectivity and infrastructure technologies of our core telecommunications business as well as the underlying technologies of our other new growth businesses, and are offered in six categories, including generative AI, AI vision, AI robot, AI contact center, AI marketing and AI data. |
Rate Plans
We offer our wireless telecommunications services on both a postpaid and prepaid basis. Substantially all of our subscribers received our wireless telecommunications services on a postpaid basis as of December 31, 2021.2023. Postpaid accounts primarily represent retail subscribers under contract with SK Telecom pursuant to which a
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subscriber is billed in advance a monthly fixed service fee in return for a monthly network service allowance and usage for outgoing voice calls and wireless data services beyond the allowance is billed in arrears, where payment of the total amount of the bill is due at the end of the month. The standard contract period for our rate plans is 24 months, although our subscribers have the option to enter into shorter term contracts or no fixed-term contract at all. We provide various subsidies and discounts, including handset subsidies, depending on the length of the contract and the subscriber’s chosen rate plan. Our prepaid service enables individuals to obtain wireless telecommunications services without a fixed-term contract by paying for all services in advance according to expected usage. We do not charge our customers for incoming calls, although we do receive interconnection charges from KT and other companies for calls from the fixed-line network terminating on our networks and interconnection revenues from other wireless network operators. See “— Interconnection” below.
We also charge our customers a 10.0% value-added tax, which is included in the price of all of our rate plans. We can offset the value-added tax we collect from our customers against value-added tax refundable to us by the Korean tax authorities. We remit taxes we collect from our customers to the Korean tax authorities. We record revenues in our financial statements net of such taxes.
Basic Rate Plans.
In addition, we provide a variety of differentiated rate plans for our customer segments such as our “0” plans for smartphone users who are 2434 years old or younger tailored for younger demographics, our “0 Teen” plans for teenagers who are 18 years old or younger, our “ZEM” plans for children who are 12 years old or younger, our “T Senior” LTE and 5G subscription plans for users who are 65 years or older, our “5G Happiness (
We also offer bundled rate discount plans combining multiple wireless devices thatas well as those combining our wireless services with our fixed-line telecommunications services. In addition, we offer we offer targetedbundled rate plans that provide discounts for smart watches that range from Won 11,000 to Won 12,100 per month.
Data
Roaming Plans.
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59,000 or 7GB24GB for Won 79,000 that can be used over a specified numberin 190 countries. Subscribers who are 34 years old or younger receive an additional data allowance of days in approximately 125 countries1GB. In addition, we offer monthly overseas travel-related benefits to subscribers of the Baro Plan, including discount coupons for Won 29,000, Won 39,000 and Won 59,000, respectively, as well as our “baro OnePass 300” and “baro OnePass 500” plans suitable for short-termoverseas travel which are fixed rate plans that provide data roaming of 300MB for Won 9,900 per day and 500MB for Won 16,500 per day, respectively, and are available in 185 countries. We also offer our “baro OnePass VIP”plan, which provides unlimited data roaming for Won 19,000 per day in 102 countries.insurance. All of our “baro”roaming plans include free high-quality data voice calls and text messages to Korea through our T phonePhone application. We also provide to all of our roaming service subscribers an automatic roaming service called “Safe Automatic T Roaming,” which provides 30 minutes of voice calls per day (including three minutes of free voice calls) for a maximum of Won 10,000 (with voice calls in excess of 30 minutes per day incurring additional charges).
Digital Wireless Network
We offer wireless voice and data transmission services throughout Korea using digital wireless networks, primarily consisting of our 5G network, LTE network, WCDMA network,
5G Network.
We believe that our 5G technology and network infrastructure enable us to provide the fastest 5G data transmission network nationwide. In December 2021,2023, the MSIT announced that our 5G network provided the fastest upload and download speeds among the three mobile network operators, KT, LG U+ and us. The nationwide average download speed of our 5G network was 930988 Mbps compared to 763949 Mbps for KT’s 5G network and 712881 Mbps for LG U+’s 5G network.
LTE Network.
We believe that our advanced LTE technology and dense network infrastructure enable us to provide the fastest LTE data transmission network nationwide. In December 2021,2023, the MSIT announced that our LTE network
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network provided the fastest upload and download speeds among the three mobile network operators, KT, LG U+ and us.
Wi-Fi
LoRa Networks
Network Infrastructure
The principal components of our wireless networks are:
| • | base stations, which are physical locations equipped with transmitters, receivers and other equipment that communicate by radio signals with wireless handsets within range of the cell (typically a 3 to 40 kilometer radius); |
| • | switching stations, which switch voice and data transmissions to their proper destinations, which may be, for instance, a mobile phone of one of our subscribers (for which transmissions would originate and terminate on our wireless networks), a mobile phone of a KT or LG U+ subscriber (for which transmissions would be routed to KT’s or LG U+’s wireless networks, as applicable), a fixed-line telephone number (for which calls would be routed to the public switched telephone network of a fixed-line network operator), an international number (for which calls would be routed to the network of a long distance service provider) or an Internet site; and |
| • | transmission lines, which link base stations to switching stations and switching stations with other switching stations. |
As of December 31, 2021,2023, our 5G, LTE and WCDMA networks had an aggregate of 58,385
To date, we have purchased substantially all of the equipment for our networks from Samsung Electronics, Ericsson–LGEricsson-LG and Nokia. Most of the transmission lines we use, including virtually all of the lines linking switching stations, as well as a portion of the lines linking base stations to switching stations, comprise optical fiber lines that we own
We use a wireless network surveillance system. This system oversees the operation of base stations and allows us to monitor our main equipment located throughout the country from one monitoring station. The automatic inspection and testing provided to the base stations lets the system immediately rebalance to the most suitable setting, and the surveillance system provides for automatic dispatch of repair teams and quick recovery in emergency situations.
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Marketing, Distribution and Customer Service
Marketing.
We have implemented certain information technology improvements in connection with our marketing strategy, including customer management systems, as well as more effective information security controls. We believe these upgrades have enhanced our ability to process and utilize marketing- and subscriber-related data, which, in turn, has helped us to develop more effective and targeted marketing strategies. We currently operate a customer information system designed to provide us with an extensive customer database. Our customer information system includes a billing system that provides us with comprehensive account information for internal purposes and enables us to efficiently respond to customer requests. Our customers can also change their rate plans, verify the charges accrued on their accounts, receive their bills online and send text messages to our other subscribers through our website at www.tworld.co.kr and through our “T world” mobile application.
We strive to improve subscriber retention through our T Membership program, which is a membership service available to our wireless subscribers. Our T Membership program provides various membership benefits to its members such as discounts with our membership partners for dining, shopping, entertainment and travel, membership points accumulation, access to our online membership shopping mall and invitations to various promotional events. Although our competitors also have similar membership programs, we believe that our T Membership program has a competitive advantage over our competitors’ membership programs due to our large subscriber base and breadth of membership benefits.
Distribution.
As part of our initiative to provide a differentiated customer service experience, we operate T Premium Stores that allow our potential and existing subscribers to receive detailed information on our subscription services and “T Factory” stores to further experience certain of our services such as our services that are available through our IoT solutions and platform services. In October 2020, we opened the first T Factory, a facility that offers a wide range of experiences with wireless devices as well as our subscription services and also includes an unmanned store that is open seven days a week and 24 hours a day.
In addition, we operate an online distribution channel, “T Direct Shop,” through which subscribers can conveniently purchase wireless devices and subscribe to our services online. We also operate a dedicated online shop on 11st, our former subsidiary Eleven Street’s
Currently, authorized dealers are entitled to an initial commission for each new subscriber registered by the dealer, as well as an average ongoing commission calculated as a percentage of that subscriber’s monthly plan-based rate for the first five years. In order to strengthen our relationships with our exclusive dealers, we offer a dealer financing plan, pursuant to which we provide to each authorized dealer a loan of up to Won 4.0 billion (Won 5.0 billion if collateral is pledged) which can be used for operational expenditures with a repayment period of up to three years.11 months. We also provide loans to our authorized dealers for financing deposits and key money in connection with securing retail space with a repayment period of up to 30 months. As of December 31, 2021,2023, we had an aggregate of Won 63.669.6 billion outstanding in loans to authorized dealers.
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Customer Service.
Fixed-line Telecommunications Services
We offer fixed-line telephone, broadband Internet and advanced media platform services (including IPTV and cable TV services) and business communications services through our fixed-line telecommunications services segment. Our fixed-line telecommunications services are provided by our subsidiary, SK Broadband. The following table sets forth historical information about our subscriber base for our fixed-line telecommunications services for the periods indicated:
As of December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(in thousands) | ||||||||||||
Fixed-Line Telephone (including VoIP) (1) | 3,634 | 3,753 | 3,913 | |||||||||
Broadband Internet (2) | 6,581 | 6,476 | 5,469 | |||||||||
IPTV (3) | 6,137 | 5,657 | 5,193 | |||||||||
Cable TV | 2,863 | 2,929 | — | |||||||||
| As of December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (in thousands) | ||||||||||||
Fixed-Line Telephone (including VoIP) (1) | 3,464 | 3,559 | 3,634 | |||||||||
Broadband Internet (2) | 6,926 | 6,704 | 6,581 | |||||||||
IPTV (3) | 6,728 | 6,504 | 6,137 | |||||||||
Cable TV | 2,821 | 2,819 | 2,863 | |||||||||
| (1) | Includes subscribers to VoIP services of SK |
| (2) | Excludes dedicated broadband Internet lines for Internet cafes. |
| (3) | Includes subscribers to SK Broadband’s B tv service and video-on-demand |
In 2021, 20202023, 2022 and 2019,2021, our fixed-line telecommunications services segment revenue was Won 3,677.73,928.0 billion, Won 3,432.23,813.0 billion and Won 2,959.33,677.7 billion, respectively, representing 22.0%22.3%, 21.3%22.0% and 19.2%22.0%, respectively, of our consolidated revenue from continuing operations.
As part of our efforts to enhance our capabilities and increase our market share in the fixed-line business, we completed the Tbroad Merger in April 2020. We currently own approximately 74.3%74.4% of SK Broadband’s total outstanding shares. See “Item 3.D. Risk Factors — Risks Relating to Our Business — We may fail to successfully complete, integrate or realize the anticipated benefits of our new acquisitions, joint ventures or other strategic alternatives or corporate reorganizations, including the
Fixed-line Telephone Services
Our fixed-line telephone services comprise local, domestic long distance, international long distance and VoIP services. VoIP is a technology that transmits voice data through an Internet Protocol network. As of December 31,
Broadband Internet Access Services
Our broadband Internet access network covered more than 86%a substantial majority of households in Korea as of December 31, 2021.2023. As of December 31, 2021,2023, we had approximately 6.56.9 million broadband Internet access
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subscribers. We offer broadband Internet access products with various throughput speeds, ranging from “Giga Premium,” which is up to 10 times faster than data transmission speeds on networks utilizing FTTH technology and allows for data transmission at a maximum speed of 1 Gbps, to “Giga Premium×10,” which provides data transmission speeds of up to 10 Gbps.
Advanced Media Platform (including IPTV and Cable TV Services)
As part of our initiative to be the leading next-generation platform provider, we provide an advanced media platform with various media content and service offerings.
We have offered
In November 2021, we launched our “Apple TV 4K” set top box in collaboration with Apple, which offers a convenient solution for customers to experience our high definition IPTV services as well as other types of Apple
Following the Tbroad Merger, we also offerhave been offering cable TV services under the “B tv Cable” brand with access to as many as 220230 channels. As of December 31, 2021,2023, we had approximately 2.92.8 million cable TV subscribers.
In January 2021, in order to strengthen our content generation capabilities, we established a new subsidiary, Media S Co., Ltd. (“Media S”), which currently operates two TV channels, “Channel S,” which primarily broadcasts entertainment contents, and “Channel S
We also offer advertising services on our advanced media platform, primarily consisting of advertisements on video-on-demand and streaming contents and our TV channels.
We continue to expand the scope of our media services and content offerings to provide our subscribers with a vast library of high-quality content that can be accessed through our wireless networks and our fixed-line network.network, which we believe will also increase the appeal of our advanced media platform to businesses as an advertising platform.
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Business Communications Services
We offer other business communications services to our business customers, including corporations and government entities. Our business communications services include leased line solutions, Internet data center solutions and network solution services.
Our leased line solutions are exclusive lines that allow
Rate Plans
For our residential customers, we offer both bundled rate plans for a combination of our fixed-line service offerings as well as individual rate plans for each separate service offering. Bundled rate plans are offered at a discount compared to subscribing to the same services through individual rate plans. Approximately 86%85% of subscribers to our broadband Internet services subscribe to two or more of our services through our bundled rate plans. Bundled rate plans for a combination of fixed-line telephone, broadband Internet access and IPTV or cable TV services, which are subject to a contract of one to three years, range from Won 30,80019,800 to Won 67,65067,100 per month, depending on the services included and the length of the contract. We also offer bundled rate plans combining our fixed-line communicationtelecommunications services with our wireless services and physical security services, respectively.
Our “5,000 minute” plan for subscribers to our fixed-line telephone service features 5,000 voice minutes for domestic
With respect to our business communications services, we offer rates that are tailored to the specific needs of our business customers. We also charge certain installation fees and equipment rental fees as well as other ancillary fees with respect to certain of our fixed-line telecommunications services.
Marketing, Distribution and Customer Service
We focus on bringing our fixed-line telephone, broadband Internet and advanced media platform services (including IPTV and cable TV services) to residential users, and various business communications services to corporate users. We market our fixed-line telecommunications products and services under the “B” brand. Our “B” brand signifies the centralityour pursuit of “Broadband”creating a “Borderless” media ecosystem with “Beloved” content offerings to transform our business andto go “Beyond” simply offering connectivity to customers. It also seeks to emphasize our commitment to providing the “Best” quality products and services tostand “Beside” our customers that go “Beyond” expectations,to “Bridge” their worlds, leading to a “Bravo” response.and “Blissful” customer experience. Our “B” brand also strengthens our shared identity with our wireless service’s “T” brand.
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We currently outsource a significant portion of our retail sales force needs. We market our servicesoperate an extensive distribution network, including regional marketing branch offices and provide after-sales service support to customers through more than 60numerous customer centers, large retail stores and a network of more than 310 authorized exclusive dealers located throughout Korea.across Korea, in order to increase subscriber growth while reducing subscriber acquisition costs. In addition, SK Telecom’s direct retail stores and authorized dealers for wireless telecommunications services also market our fixed-line telephone, broadband Internet and advanced media platform services (including IPTV and cable TV services), which we believe has
In addition, we operate an online distribution channel, “B Direct Shop,” through which subscribers can conveniently subscribe online to our pay TV, broadband Internet and residential fixed-line telephone services. In light of increasing customer preference for online service, in part due to the COVID-19 pandemic, the level of distribution of our services through the B Direct Shop has consistently increased in recent years. We intend to continue to develop our online distribution channel to leverage our offline distribution capabilities to provide convenience and additional value to our subscribers.
Sales to business subscribers are handled through our
Other Businesses
We strive to continually diversify our products and services and develop new businesses that we believe are complementary to our existing products and services, which we include in our other businesses segment. In 2021, 20202023, 2022 and 2019,2021, the revenue of our other businesses segment, which primarily consisted of our
T-Commerce
We operate a
Portal Service
We offer a portal service under our “Nate” brand name through SK Communications. Nate can be accessed through its website, www.nate.com, or through its mobile application. Nate offers a wide variety of content and
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services, including Nate Search, an Internet search engine, Nate News, which provides a library of articles about current events, sports, entertainment and culture, and Nate Pann, a user-generated content service as well as access to free
Online Employee Benefits Management and Training Services
In February 2022, we indirectly re-acquired a 100.0% equity interest in SK M&Service, which provides online corporate employee benefits management and training services to Korean businesses and public institutions, through our wholly-owned subsidiary PS&Marketing, for Won 72.9 billion from SK Planet. We believe that such acquisition will strengthen our online distribution capabilities and create opportunities for synergies with our other businesses in the ICT sector.
Interconnection
Our wireless and fixed-line networks interconnect with the public switched telephone networks operated by KT and SK Broadband and, through their networks, with the international gateways of KT and LG U+, as well as the networks of the other wireless telecommunications service providers in Korea. These connections enable our subscribers to make and receive calls from telephones outside our networks. Under Korean law, certain service providers, including us, are required to permit other service providers to interconnect to their networks. If a new service provider desires interconnection with the networks of an existing service provider but the parties are unable to reach an agreement within 90 days, the new service provider can appeal to the KCC.
Domestic Calls
Guidelines issued by the MSIT require that all interconnection charges levied by a regulated carrier take into account (i) the actual costs to that carrier of carrying a call or (ii) imputed costs. The MSIT determines
Wireless-to-Fixed-line.
Fixed-line-to-Wireless.
Wireless-to-Wireless.
Our revenues from the
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International Calls and International Roaming Arrangements
With respect to international calls, if a call is initiated by our wireless subscribers, we bill the wireless subscriber for the international charges of KT, LG U+ or SK Broadband, and we receive interconnection charges from such operators. If an international call is received by our subscriber, KT, LG U+ or SK Broadband pays interconnection charges to us based on our imputed costs.
To complement the services we provide to our subscribers in Korea, we offer international voice and data roaming services. We charge our subscribers usage fees for global roaming service and, in turn, pay foreign wireless network operators fees for the corresponding usage of their network. For a more detailed discussion of our global roaming services, see “— Wireless Services” above.
Competition
We operate in highly saturated and competitive markets, and we believe that our subscriber growth is affected by many factors, including the expansion and technical enhancement of our networks, the development and deployment of new technologies, the effectiveness of our marketing and distribution strategy, the quality of our customer service, the introduction of new products and services, competitive pricing of our rate plans, new market entrants and regulatory changes.
Historically, there has been considerable consolidation in the telecommunications industry, resulting in the current competitive landscape comprising three mobile and fixed network operators in the Korean market, KT, LG U+ and us. Each of our competitors has substantial financial, technical, marketing and other resources to respond to our business offerings.
The following table shows the market share information, based on number of subscribers, as of December 31, 2021,2023, for the following markets.
Market Share (%) | ||||||||||||||||
SK Telecom | KT | LG U+ | Others | |||||||||||||
Wireless Service (1) | 44.3 | % | 31.0 | % | 24.7 | % | — | % | ||||||||
LTE Service (1) | 42.1 | 30.4 | 27.6 | — | ||||||||||||
5G Service (1) | 50.7 | 25.6 | 23.7 | — | ||||||||||||
Fixed-Line Telephone (including VoIP) | 15.7 | 56.3 | 19.0 | 9.1 | ||||||||||||
Broadband Internet | 28.7 | 41.2 | 20.7 | 9.4 | ||||||||||||
Pay TV (2) | 25.0 | (3) | 36.2 | (4) | 25.3 | (5) | 13.4 | |||||||||
| Market Share (%) | ||||||||||||||||
| SK Telecom | KT | LG U+ | Others | |||||||||||||
Wireless Service (1) | 40.7 | % | 29.3 | % | 30.0 | % | — | % | ||||||||
Fixed-Line Telephone (including VoIP) | 15.7 | 54.2 | 18.7 | 11.5 | ||||||||||||
Broadband Internet | 28.7 | 40.8 | 21.4 | 9.1 | ||||||||||||
Pay TV (2) | 26.1 | (3) | 36.5 | (4) | 24.7 | (5) | 12.8 | |||||||||
| (1) | Includes MVNO subscribers that lease the wireless networks of the respective mobile network operator. |
| (2) | Includes video-on-demand |
| (3) | Consists of |
| (4) | Consists of |
| (5) | Consists of 14.9% from LG U+’s IPTV service and |
Cellular Services
As of December 31, 2021,2023, we had 31.933.7 million subscribers, representing a market share of approximately 44.3%40.7%, including MVNO subscribers leasing our networks. As of December 31, 2021,2023, KT and LG U+ had 22.324.3 million and 17.724.8 million subscribers, respectively, representing approximately 31.0%29.3% and 24.7%30.0%, respectively, of the total number of wireless subscribers in Korea on such date, each including MVNO subscribers leasing its networks. As of December 31, 2021,
In 2023, we had 9.9 million 5G subscribers and KT and LG U+ had 5.0 million and 4.6 million 5G subscribers, respectively, each including MVNO subscribers leasing its networks. As of December 31, 2021, we had 20.2 million LTE subscribers and KT and LG U+ had 14.7 million and 13.3 million LTE subscribers, respectively, each including MVNO subscribers leasing its networks.
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2022. In 2020,2023, we gained 40.5%48.4% of the total number of new wireless subscribers and subscribers that migrated to a different wireless telecommunications service provider, compared to KT with 27.1%28.5% and LG U+ with 32.4%.
Our competitors for subscriber activations include MVNOs, including MVNOs that lease our networks. MVNOs generally provide rate plans that are relatively cheaper than similar rate plans of the wireless network providers from which they lease their networks, including us. Currently, 1314 MVNOs provide wireless telecommunications services using the networks leased from us. As of December 31, 2021,2023, MVNOs had a combined market share of 14.4%19.2%, of which MVNOs leasing our networks represented 3.0%2.9%, MVNOs leasing KT’s networks represented 7.4%8.6% and MVNOs leasing LG U+’s networks represented 3.9%7.6%.
In recent years, a number of new entrants have entered the MVNO business, including affiliates of leading financial institutions in Korea. Some of these new entrants have engaged in aggressive marketing campaigns and promotional discounts while leveraging the brand power of their affiliates as part of their efforts to gain subscribers. Partly as a result of such efforts, the combined market share of MVNOs has increased in recent years from 14.4% as of December 31, 2021 to 16.9% as of December 31, 2022 and 19.2% as of December 31, 2023, in terms of number of subscribers.
In addition, other companies may enter the wireless network services market. New entriesmarket, including in such market have historicallyconnection with the allocation of 800 MHz of bandwidth in the 28 GHz spectrum in January 2024 to Stage X, which is required, obtaining requisite licenses fromamong other things, to install 6,000 base stations across Korea that use the MSIT. However, pursuant28 GHz spectrum by 2027. See “— Law and Regulation — Frequency Allocation” and “Item 3.D. Risk Factors — Risks Relating to an amendmentOur Business — Our businesses are subject to various types of Government regulation, and any change in Government policy relating to the Telecommunications Business Act that went intotelecommunications industry could have an adverse effect in June 2019, companies meeting certain regulatory criteria may become a network service provider by registering with the MSIT without a separate license requirement, which may have the effecton our business, financial condition and results of encouraging new entries into the Korean wireless network services market in the future.operations.” For a description of the risks associated with the competitive environment in which we operate, see “Item 3.D. Risk Factors — Risks Relating to Our Business — Competition may reduce our market share and harm our business, financial condition and results of operations.”
Historically, competition in the wireless telecommunications business had caused us to significantly increase our marketing and advertising expenses from time to time depending on the prevailing competitive landscape, with
We face competition from KT and LG U+ as well as other platform service providers in our other cellular service businesses. For example, our Smart Home service competes with KT’s Giga IoT Home service and LG U+’s IoT@Home service.
Fixed-Line Telecommunications Services
Our fixed-line telephone service competes with KT and LG U+ as well as providers of other VoIP services. As of December 31, 2021,2023, our market share of the fixed-line telephone and VoIP service market was 15.7% (including the services provided by SK Broadband) in terms of number of subscribers compared to KT with 56.3%54.2% and LG U+ with 19.0%18.7%.
We are the second largestsecond-largest provider of broadband Internet access services in Korea in terms of both revenue and subscribers, and our network covered more than 86%a substantial majority of households in Korea as of December 31, 2020.
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2023. As of December 31, 2021,2023, our market share of the broadband Internet market was 28.7% in terms of number of subscribers compared to KT with 41.2%40.8% and LG U+ with 20.7%21.4%.
Our IPTV and cable TV services compete with other providers of pay TV services, including KT, LG U+ and cable companies. As of December 31, 2021,2023, our market share of the pay TV market (which includes IPTV, cable TV and satellite TV) in terms of number of subscribers was 25.0%26.1% compared to KT with 36.2%36.5% (including its IPTV, cable TV and satellite TV services) and LG U+ with 25.3%24.7% (including its IPTV and cable TV services), and the collective market share of other pay TV providers was 13.4%12.8%. Furthermore, our IPTV and cable TV services are facing an increasing level of competition from global operators of online video streaming platforms, such as YouTube, Netflix, Disney Plus and Amazon Video,Apple TV, leading domestic video streaming platforms such as TVING, WatchaaWavve (which is seeking to merge with TVING pursuant to a memorandum of understanding entered into in December 2023), Coupang Play and Wavve,Watcha, and the video services offered by leading domestic online and mobile search and communications platforms including NAVER and Kakao, as such services continue to become increasingly popular to serve as a substitute to traditional television programming.
Over the past few years, the Korean fixed-line telecommunications industry has been goinggone through significant consolidation involving major pay television service providers. We completed the Tbroad Merger in April 2020, as a result offollowing which we have become the third-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2020. In December 2019, LG U+ acquired a majority equity stake in LG HelloVision to becomebecame the second-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2021. 2023. In December 2019, LG U+ acquired a majority equity stake in LG HelloVision.In August 2021, KT acquired HCN, a major Korean cable TV service provider, through its subsidiary KT Skylife. Such transactions, as well as further consolidation in the fixed-line telecommunications industry, may result in increased competition, as the entities emerging from such consolidation and other remaining players in the industry may actively pursue expanding or protecting their respective market shares.
Furthermore, the Government has historically enforced regulations on cable TV and IPTV service providers that prohibited them from having a market share of more than
Other Investments and Relationships
We have investments in severala number of other businesses and companies and have entered into various business arrangements with other companies. For example, we formed a strategic alliance in October 2019 with Kakao, a Korean Internet company and the operator of Korea’s most popular mobile messaging application, to collaborate in the ICT sector through the sale of 1,266,620 of our treasury shares to Kakao, representing a 1.6% interest, for Won 300.0 billion and a concurrent issuance by Kakao of 2,177,401 of its shares, representing a 2.5% interest, to us for Won 302.3 billion.In addition, in July 2022, we entered into a strategic alliance with Hana Financial Group, a leading financial holding company in Korea with subsidiaries having significant presences in commercial banking, credit card business, securities brokerage and insurance, among others, to seek synergies through convergence between finance and ICT technology. As part of December 31, 2021, our principal investments includedsuch strategic alliance, we transferred the entirety of our 15.0% equity interest in KEB HanaCard Co., Ltd. (“KEB HanaCard”),for Won 330.0 billion in July 2022 and acquired 8,630,949 shares of Hana Financial Group (representing a leading credit card company in Korea. KEB2.9% interest) for Won 330.0 billion between July and November 2022, and HanaCard offers certain credit card products that provideacquired 1,307,471 common shares of us (representing a 0.6% interest) for discounts on some of our wireless network servicesWon 68.4 billion between July and integrate T Membership benefits, among other features.
Law and Regulation
Overview
Korea’s telecommunications industry is subject to comprehensive regulation by the MSIT, which is responsible for information and telecommunications policies. The MSIT regulates and supervises a broad range of communications issues, including:
entry into the telecommunications industry;
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scope of services provided by telecommunications service providers;
allocation of radio spectrum;
setting of technical standards and promotion of technical standardization;
rates, terms and practices of telecommunications service providers;
interconnection and revenue-sharing between telecommunications service providers;
research and development of policy formulation for information and telecommunications; and
competition among telecommunications service providers.
The MSIT is charged with regulating information and telecommunications and the KCC is charged with regulating the public interest aspects of and fairness in broadcasting.
Telecommunications service providers are currently classified into two categories: network service providers and value-added service providers. We are classified as a network service provider because we provide telecommunications services with our own telecommunications networks and related facilities. As a network service provider, we were previously required to obtain a license from the MSIT for the services we provide. However, an amendment to the Telecommunications Business Act, pursuant to which companies meeting certain regulatory criteria may become a network service provider without a separate license requirement, went into effect in June 2019. Our licenses permit us to provide cellular services, third generation wireless telecommunications services using WCDMA and WiBro technologies, fourth generation wireless telecommunications services using LTE technology and fifth generation wireless telecommunications services using 5G technology.
The MSIT may revoke our licenses or suspend any of our businesses if we fail to comply with its rules, regulations and corrective orders, including the rules restricting beneficial ownership and control and corrective orders issued in connection with any violation of rules restricting beneficial ownership and control or any violation of the conditions of our licenses. Alternatively, in lieu of suspension of our business, the MSIT or, depending on the subject matter of the violation, the KCC may levy a monetary penalty of up to 3.0% of the average of our annual revenue for the preceding three fiscal years. A network service provider that wants to cease its business or dissolve must notify its users 60 days prior to the scheduled date of cessation or dissolution and obtain MSIT approval.
In the past, the Government has stated that its policy was to promote competition in the Korean telecommunications market through measures designed to prevent the dominant service provider in any such market from exercising its market power in such a way as to prevent the emergence and development of viable competitors. While all network service providers are subject to MSIT regulation, we are subject to increased regulation because of our position as the dominant wireless telecommunications services provider in Korea.
Competition Regulation
The KCC is charged with ensuring that network service providers engage in fair competition and has broad powers to carry out this goal. If a network service provider is found to be in violation of the fair competition requirement, the KCC may take corrective measures it deems necessary, including, but not limited to, prohibiting further violations, requiring amendments to the articles of incorporation or to service contracts with customers, requiring the execution or performance of, or amendments to, interconnection agreements with other network service providers and prohibiting advertisements to solicit new subscribers. The KCC is required to notify the Minister of the MSIT upon ordering certain corrective measures.
In addition, we qualify as a “market-dominating business entity” under the Fair Trade Act. Accordingly, we are prohibited from engaging in any act of abusing our position as a market-dominating entity, such as
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unreasonably determining, maintaining or altering service rates, unreasonably controlling the rendering of services, unreasonably interfering with business activities of other business entities, hindering unfairly the entry of newcomers or substantially restricting competition to the detriment of the interests of consumers.
Because we are a member company of the SK Group, which is a large business group as designated by the FTC,KFTC, we are subject to the following restrictions under the Fair Trade Act:
| • | Restriction on debt guarantee among affiliates. Any affiliate within the SK Group may not guarantee the debts of another domestic affiliate, except for certain guarantees prescribed in the Fair Trade Act, such as those relating to the debts of a company acquired for purposes of industrial rationalization, bid deposits for overseas construction work or technology development funds. |
| • | Restriction on cross-investment. A member company of the SK Group may not acquire or hold shares in an affiliate belonging to the SK Group that owns shares in the member company. |
| • | Restrictions on circular investments. A member company of the SK Group may not acquire or hold shares which would constitute “circular investments” in an affiliate company which also forms part of the SK Group where “circular investments” refer to a cross-affiliate shareholding relationship under which three or more affiliate companies become connected through cross affiliate shareholdings by owning shares in other affiliates or by becoming an entity whose shares are owned by other affiliates. |
| • | Public notice of board resolution on large-scale transactions with specially related persons. If a member company of the SK Group engages in a transaction with a specially related person in an amount exceeding the lesser of (1) Won 10 billion and (2) 5.0% of the larger of the total capital or capital stock of the member company (provided, however, in cases where the total capital or capital stock of the member company is less than Won 500 million, the threshold set forth in (1) above is set at Won 500 million), the transaction must be approved by a resolution of the member company’s board of directors and the member company must publicly disclose the transaction. |
| • | Restrictions on investments by subsidiaries and sub-subsidiaries of holding companies. The Fair Trade Act prohibits subsidiaries of holding companies from investing in, or holding shares of common stock of, domestic affiliates that belong to the same large business group, unless such domestic affiliates are their own subsidiaries. Furthermore, any subsidiaries of a holding company’s subsidiaries (“sub-subsidiaries”) are prohibited from investing in, or holding shares of common stock of, domestic affiliates that belong to the same large business group, unless all shares issued by the affiliates are held by the sub-subsidiary. Therefore, we and other subsidiaries of SK Inc. may not invest in any domestic affiliate that is also a member company of the SK Group, except in the case where we invest in our own subsidiary or where another subsidiary of SK Inc. invests in its own subsidiary. |
| • | Public notice of the current status of a business group. Under the Fair Trade Act and the Enforcement Decree thereof, a member company of the SK Group must publicly disclose the general status of the SK Group, including the name, business scope and financial status of affiliates, information on the officers of affiliates, information on shareholding and cross-investments between member companies of the SK Group, information on transactions with certain related persons and, if a member company engages in a transaction with an affiliated company in the amount of 5.0% or more of the member company’s quarterly sales or Won 5.0 billion or more, information on transactions with such affiliated company on a quarterly basis. |
Rate Regulation
Network service providers whose sales proceeds exceed the amount prescribed by law must report to the MSIT the rates and contractual terms for each type of service they provide. Prior to December 2020, as the dominant network service provider for specific services (based on having the largest market share in terms of number of subscribers and meeting certain revenue thresholds), we had to obtain prior approval of the MSIT on our rates and terms of service; provided, however, that such
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Furthermore, in 2007, the Government announced a “road map” highlighting revisions in regulations to promote deregulation of the telecommunications industry. In accordance with the road map and pursuant to the Combined Sales Regulation, promulgated in May 2007, telecommunications service providers in Korea are now permitted to bundle their services, such as wireless data transmission service, wireless voice transmission service, broadband Internet access service, fixed-line telephone service and IPTV service, at a discounted rate; provided, however, that we and KT, as market-dominating business entities under the Telecommunications Business Act, allow other competitors to employ the services provided by us and KT, respectively, so that such competitors can provide similar discounted package services. In September 2007, the regulations and provisions under the Telecommunications Business Act were amended to permit licensed transmission service providers to offer local, domestic long-distance and international telephone services, as well as broadband Internet access and Internet phone services, without additional business licenses.
Moreover, an MVNO system under which the MSIT may designate and obligate certain wireless telecommunications services providers to allow an MVNO, at such MVNO’s request, to use their telecommunications network facilities at a rate mutually agreed upon that complies with the standards set by the MSIT became effective on March 14, 2017 under the amended Telecommunications Business Act. We were designated as the only wireless telecommunications services provider obligated to allow the other wireless telecommunications services provider to use our telecommunications network facilities. The expiration of such system has beenwas extended to September 22, 2022 pursuant to an amendment to the Telecommunications Business Act. While such regulatory requirement expired in September 2022, we have continued to comply with such requirement pending future regulatory development, and in December 2023, a bill indefinitely extending such requirement was passed by the National Assembly. Currently, 1314 MVNOs provide wireless telecommunications services using the networks leased from us.
On October 1, 2014, the MDDIA, enacted for the purpose of establishing a transparent and fair mobile distribution practice, became effective. The MDDIA limits the amount of subsidies a wireless telecommunications service provider can provide to subscribers in order to prevent excessive competition among wireless telecommunications service providers. Pursuant to the MDDIA, wireless telecommunications service providers are prohibited from (i) unfairly providing discriminatory subsidies based on criteria such as type of subscription, subscription plan and characteristics of the subscriber and (ii) entering into a separate agreement with subscribers imposing obligations to use a specific subscription plan as a condition for providing subsidies. While the Government indicated in January 2024 that it will seek to abolish the MDDIA in order to encourage wireless service providers to offer more differentiated customer benefits to consumers, the timing of such abolishment, if at all, remains uncertain. In connection with such policy objectives, the Government amended the Enforcement Decree of the MDDIA in March 2024, pursuant to which wireless telecommunications service providers may provide more liberal subsidies to subscribers that are switching their wireless telecommunications providers based on certain criteria specified by the KCC, including the expected profits to the wireless telecommunications service providers and subscribers’ costs of switching wireless telecommunications service providers. See “Item 5.A. Operating Results — Overview — Rate Regulations.”
In addition, under the MDDIA, wireless telecommunications service providers are obliged to provide certain benefits, such as discounted rates, to subscribers who subscribe to their service without receiving subsidies. In June 2017, the State Affairs Planning Advisory Committee of Korea announced that it would encourage wireless telecommunications service providers, including us, to increase the applicable discount rate offered to subscribers from 20% to 25%, which we adopted in September 2017, and to offer additional discounts to low income customers, including those on government welfare programs and senior citizen recipients of the basic pension, which we implemented in December 2017 and July 2018, respectively. Although the Government has recently indicated that it will seek to abolish the MDDIA as described above, it has also suggested that such discounted rates may be retained through a related amendment to the Telecommunications Business Act. We cannot provide assurance that we will not provide other rate discounts or lower-priced subscription plans in the future to comply with the Government’s public policy guidelines or suggestions.
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Interconnection
Dominant network service providers such as ourselves that own essential infrastructure facilities or possess a certain market share are required to provide interconnection of their telecommunications network facilities to other service providers upon request. The MSIT sets and announces the standards for determining the scope, procedures, compensation and other terms and conditions of such provision, interconnection or
Frequency Allocation
The MSIT has the discretion to allocate and adjust the frequency bandwidths for each type of service and may auction off the rights to certain frequency bandwidths. Upon allocation of new frequency bandwidths or adjustment of frequency bandwidths, the MSIT is required to give a public notice. The MSIT also regulates the frequency to be used by each radio station, including the transmission frequency used by equipment in our base stations. All of our frequency allocations are for a definite term. We pay fees to the MSIT for our frequency usage that are determined based upon our number of subscribers, frequency usage by our networks and other factors. For 2021, 20202023, 2022 and 2019,2021, the fee amounted to Won 120.8102.5 billion, Won 136.6103.9 billion and Won 133.1120.8 billion, respectively.
We currently use 10 MHz of bandwidth in the 2.1 GHz spectrum for our WCDMA services, 30 MHz of bandwidth in the 2.1 GHz spectrum, 20 MHz of bandwidth in the 800 MHz spectrum, 35 MHz of bandwidth in the 1.8 GHz spectrum and 60 MHz of bandwidth in the 2.6 GHz spectrum for our LTE services, as well as 100 MHz of bandwidth in the 3.5 GHz spectrum for our 5G services. In December 2022, citing the lack of progress made to date with respect to the implementation of 5G infrastructure for our use of the 28 GHz spectrum (800 MHz of bandwidth which was allocated to us in December 2018 for a period of five years until November 2023), the MSIT reduced the duration of our license for the use of such bandwidth by six months and asked us to install 15,000 base stations that use the 28 GHz spectrum by the end of May 2023, which we were not able to do within the Government’s requested timetable. Furthermore, in December 2022, the Government cancelled the allocations of bandwidth in the 28 GHz spectrum that had been provided to KT and LG U+, also citing the lack of progress made by these companies. In January 2024, the Government allocated 800 MHz of bandwidth in the 28 GHz spectrum for our 5Gto Stage X to provide nationwide wireless network services. In 2020, we recognized an impairment loss of Won 186.0 billion in connection with the frequency usage rights for the 800 MHz of bandwidth inStage X is required, among other things, to install 6,000 base stations across Korea that use the 28 GHz spectrum as the carrying amount exceeded the recoverable amount.by 2027. For more information regarding the license fees for the various bandwidths that we use, see “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Capital Expenditures” and note 17 of the notes to our consolidated financial statements.
In November 2020,2021, the MSIT announced plans to reallocatereallocated a total of 310 MHz of frequency bandwidths whose usage terms were due to expire in 2021 to KT, LG U+ and us, 95 MHz (in the 800 MHz, 2.1 GHz and 2.6 GHz spectrums) of which was allocated to us in 2021. us.See “Item 5.B. Liquidity and Capital Resources — Capital Requirements.”
For risks relating to the maintenance of adequate bandwidth capacity, see “Item 3.D. Risk Factors — Risks Relating to Our Business — Our business, financial condition and results of operations may be adversely affected if we fail to acquire adequate additional frequency usage rights or use our bandwidth efficiently to accommodate subscriber growth and subscriber usage.”
Mandatory Contributions and Obligations
All telecommunications service providers other than (i) value-added service providers and regional paging service providers or (ii) any telecommunications service providers whose net annual revenue is less than an amount determined by the MSIT (currently set at Won 30.0 billion) are required to provide “universal”
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telecommunications services including local telephone services, local public telephone services, telecommunications services for remote islands and wireless communication services for ships and telephone services for handicapped and
In addition to such universal services for handicapped and
Foreign Ownership and Investment Restrictions and Requirements
Because we are a network service provider, and the exception for the foreign shareholding limit under the amended Telecommunications Business Act which became effective on August 13, 2013, does not apply to us, foreign governments, individuals, and entities (including Korean entities that are deemed foreigners, as discussed below) are prohibited from owning more than 49.0% of our voting stock. Korean entities whose largest shareholder is a foreign government or a foreigner (together with any of its related parties) that owns 15.0% or more of the outstanding voting stock of such Korean entities are also deemed foreigners. If this 49.0% ownership limitation is violated, certain of our foreign shareholders will not be permitted to exercise voting rights in excess of the limitation, and the MSIT may require other corrective action.
Notwithstanding the above, pursuant to a recentan amendment to the Telecommunications Business Act which became effective onin April 20, 2022, a Korean entity, so long as (i) such entity’s largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreign entity specifically designated by the MSIT incorporated in a country that has entered into a bilateral or multilateral free trade agreement with Korea, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the issued voting stock of such entity, may own more than 49.0% of our issued shares but may not exercise its voting rights with respect to the shares held in excess of the 49.0% ceiling until the end of the MSIT’s Public Interest Review.
As of December 31, 2021,2023, SK Inc. owned 65,668,397shares of our common stock, or 30.0%, of our issued shares. As of December 31, 2021,2023, the two largest foreign shareholders of SK Inc. each held a 3.3% stake therein. If such foreign shareholders increase their shareholdings in SK Inc. to 15% or more and any such foreign shareholder constitutes the largest shareholder of SK Inc., SK Inc. will be considered a foreign shareholder, and its shareholding in us would be included in the calculation of our aggregate foreign shareholding. If SK Inc.’s shareholding in us is included in the calculation of our aggregate foreign shareholding, then our aggregate foreign shareholding, assuming the foreign ownership level as of December 31, 20212023 (which we believe was 43.6%41.0%), would reach 73.6%, exceedingexceed the 49.0% ceiling on foreign shareholding.
If our aggregate foreign shareholding limit is exceeded, the MSIT may issue a corrective order to us, the breaching shareholder (including SK Inc. if the breach is caused by an increase in foreign ownership of SK Inc.) and the foreign shareholder which owns in the aggregate 15.0% or more of SK Inc. Furthermore, SK Inc. will be prohibited from exercising its voting rights with respect to the shares held in excess of the 49.0% ceiling, which
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may result in a change in control of us. In addition, the MSIT will be prohibited from granting us licenses or permits necessary for entering into new telecommunications businesses until our aggregate foreign shareholding is reduced to below 49.0%. If a corrective order is issued to us by the MSIT arising from the violation of the foregoing foreign ownership limit, and we do not comply within the prescribed period under such corrective order, the MSIT may:
revoke our business license;
suspend all or part of our business; or
| • | if the suspension of business is deemed to result in significant inconvenience to our customers or to be detrimental to the public interest, impose a one-time administrative penalty of up to 3.0% of the average of our annual revenue for the preceding three fiscal years. |
Additionally, the Telecommunications Business Act also authorizes the MSIT to assess monetary penalties of up to 0.3% of the purchase price of the shares for each day the corrective order is not complied with, as well as a prison term of up to three years or a penalty of Won 150 million. See “Item 3.D. Risk Factors — Risks Relating to Our Business — If SK Inc. causes us to breach the foreign ownership limitations on our common shares, we may experience a change of control.”
We are required under the Foreign Exchange Transaction Act to file a report with a designated foreign exchange bank or with the MOEF, in connection with any issue of foreign currency denominated securities by us in
The Telecommunications Business Act provides for the creation of a Public Interest Review Committee under the MSIT to review investments in or changes in the control of network service providers. The following events would be subject to review by the Public Interest Review Committee:
the acquisition by an entity (and its related parties) of 15.0% or more of the equity of a network service provider;
a change in the largest shareholder of a network service provider;
agreements by a network service provider or its shareholders with foreign governments or parties regarding important business matters of such network service provider, such as the appointment of officers and directors and transfer of businesses;
a deemed foreigner (as discussed above) from a country whose government has entered into a bilateral or multilateral free trade agreement designated by the MSIT with the Government owning in excess of 49.0% of the outstanding voting stock of a network service provider (which became effective on April 20, 2022);provider; and
a change in the shareholder that actually controlscontrol over a network service provider.provider specified in the Enforcement Decree of the Telecommunications Business Act (including, but not limited to, the change of control over the holding company of such network service provider).
If the Public Interest Review Committee determines that any of the foregoing transactions or events would be detrimental to the public interest, then the MSIT may issue orders to stop the transaction, amend any agreements, suspend voting rights, or divest the shares of the relevant network service provider. Additionally, if a dominant network service provider (which would currently include us and KT), together with its specially related persons (as defined under the FSCMA), holds more than 5.0% of the equity of another dominant network service provider, the voting rights on the shares held in excess of the 5.0% limit may not be exercised.
Patents and Licensed Technology
Access to the latest relevant technology is critical to our ability to offer the most advanced wireless telecommunications services and to design and manufacture competitive products. In addition to active internal
48
and external research and development efforts as described in “Item 5.C. Research and Development, Patents and Licenses, etc.,” our success depends in part on our ability to obtain patents, licenses and other intellectual property rights covering our products. We own numerous patents and trademarks worldwide, and have applications for patents pending in many countries. Our patents are mainly related to LTE,wireless (LTE, 5G and
We are not currently involved in any material litigation regarding patent infringement. For a description of the risks associated with our reliance on intellectual property, see “Item 3.D. Risk Factors — Risks Relating to Our Business — Our business relies on technology developed by us, and our business will suffer if we are unable to protect our proprietary rights.”
Seasonality of the Business
Our business is not affected by seasonality.
Item 4.C. | Organizational Structure |
Organizational Structure
We are a member of the SK Group, based on the definition of “group” under the Fair Trade Act. As of December 31, 2021,2023, SK Group members owned in aggregate 30.0% of the shares of our issued common stock.
Significant Subsidiaries
For information regarding our subsidiaries, see note 1(2) of the notes to our consolidated financial statements.
Item 4.D. | Property, Plants and Equipment |
The following table sets forth certain information concerning our principal properties as of December 31, 2021:
Location | Primary Use | Approximate Area | ||||
Seoul Metropolitan Area | Corporate Headquarters | 921,727 | (1) | |||
Regional Headquarters | 608,670 | |||||
Customer Service Centers | 107,277 | |||||
Training Centers | 279,372 | |||||
Central Research and Development Center | 319,789 | |||||
| Others(2) | ||||||
Gyeongsang Provinces | ||||||
Regional Headquarters | 384,399 | |||||
| Others(2) | 1,155,739 | |||||
Jeolla and Jeju Provinces | Regional Headquarters | 265,614 | ||||
| Others(2) | ||||||
Chungcheong Province | ||||||
Regional Headquarters | 566,386 | |||||
| Others(2) | 695,960 |
| (1) | Represents our 93.25% ownership of SK T-Tower. |
| (2) | Includes base stations. |
49
Our registered office and corporate headquarters are located at SK
We maintain a range of insurance policies to cover our assets and employees, including our directors and officers. We are insured against business interruption, fire, lightning, flooding, theft, vandalism, public liability and certain other risks that may affect our assets and employees. We believe that the types and amounts of our insurance coverage are in accordance with general business practices in Korea.
Item 4A. | UNRESOLVED STAFF COMMENTS |
We do not have any unresolved comments from the SEC staff regarding our periodic reports under the Exchange Act.
Item 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
You should read the following discussion together with our consolidated financial statements and the related notes thereto which appear elsewhere in this annual report. We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. In addition, you should read carefully notes 2(4) and 3 of the notes to our consolidated financial statements which provide summaries of certain critical accounting estimates that require our management to make difficult, complex or subjective judgments relating to matters which are highly uncertain and that may have a material impact on our financial conditions and results of operations.
Item 5.A. | Operating Results |
Unless otherwise indicated, the amounts set forth below in this Item 5.A. exclude the results of operations of our former businesses comprising the
Overview
Our operations are reported in three segments: (1) cellular services, which include wireless voice and data transmission services, sales of wireless devices, IoT solutions and platform services as well as certain other new growth businesses and other miscellaneous cellular services,
In our cellular services segment, we earn revenue principally from our wireless voice and data transmission services through monthly
50
In our
In our others segment, we principally earn revenue from the
Pursuant to the
Our cellular service revenue and
Among other factors, management uses operating profit of each reportable segment presented in accordance with
A number of recent developments have had or are expected to have a material impact on our results of operations, financial condition and capital expenditures. These developments include:
Rate Regulations
51
Telecommunications Business Act. In connection with such policy objectives, the Government amended the Enforcement Decree of the MDDIA in March 2024, pursuant to which wireless telecommunications service providers may provide more liberal subsidies to subscribers that are switching their wireless telecommunications providers based on certain criteria specified by the KCC, including the expected profits to the wireless telecommunications service providers and subscribers’ costs of switching wireless telecommunications service providers.
These Government measures have adversely affected our revenues and results of operations as more subscribers elected to receive the 25% rate discount in recent years. On the other hand, this has also led to a reduction of, or partially offset increases in, our marketing expenses as the number of subscribers who have elected to receive handset subsidies has generally declined in recent years, and has contributed to maintaining a stable churn rate.
Failure to comply with the MDDIA may lead to suspension of our business or imposition of monetary penalties. For more information about the MDDIA and the penalties imposed for violating Government regulations, see “Item 4.B. Business Overview — Law and Regulation — Rate Regulation” and “Item 8.A. Consolidated Statements and Other Financial Information — Legal Proceedings — KCC Proceedings.Regulation.”
Decrease in Interconnection Fees
Changes in Monthly Revenue per Subscriber
Our ARPU increaseddecreased by 0.7%2.2% to Won 30,51729,874 in 20212023 from Won 30,31430,546 in 2020, which represented a decrease of 1.0% from Won 30,630 in 2019. Our ARPU including MVNO increased by 2.1% to Won 28,485 in 2021 from Won 27,895 in 2020,2022, which represented an increase of 1.8%0.1% from Won 27,41230,517 in 2019.2021. Our ARPU including MVNO decreased by 2.4% to Won 27,885 in 2023 from Won 28,582 in 2022, which represented an increase of 0.3% from Won 28,485 in 2021. The decrease in ARPU in 20202023 was primarily due to an increase in subscriptions for IoT solutions by corporate customers,and other non-mobile phone devices, from which we derive lower revenue per subscriber. Such decreases weresubscriber, which effect was offset in part by an increase in the number of subscribers that subscribe to our 5G subscription plans, which are relatively higher-priced unlimited data usage plans and 5Gcompared to other
52
types of wireless subscription plans. The increasedecrease in ARPU including MVNO in 20202023 was primarily attributabledue to the decreasean increase in the proportionnumber of MVNO subscribers from whom we derive lower revenue per subscriber.ARPU. The increases in our ARPU and our ARPU including MVNO in 20212022 were primarily due to an increase in the number of subscribers who subscribe to our higher-priced 5G subscription plans.
Effects of
Explanatory Note Regarding Presentation of Certain Financial Information under
In addition to preparing consolidated financial statements in accordance with IFRS as issued by the IASB included in this annual report, we also prepare financial statements in accordance with
K-IFRS
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For the Year Ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In billions of Won) | ||||||||||||
Operating profit pursuant to IFRS as issued by the IASB | ￦ | 1,432.4 | ￦ | 1,035.0 | ￦ | 987.1 | ||||||
Differences: | ||||||||||||
Other income pursuant to IFRS that are classified as other non-operating income pursuant toK-IFRS: | ||||||||||||
Gain on disposal of property and equipment and intangible assets | (39.1 | ) | (34.6 | ) | (7.8 | ) | ||||||
Others | (76.6 | ) | (61.1 | ) | (87.8 | ) | ||||||
| (115.8 | ) | (95.8 | ) | (95.6 | ) | |||||||
Other operating expenses pursuant to IFRS that are classified as other non-operating expenses pursuant toK-IFRS: | ||||||||||||
Loss on impairment of property and equipment and intangible assets | 3.1 | 200.7 | 42.8 | |||||||||
Loss on disposal of property and equipment and intangible assets | 28.2 | 25.6 | 23.8 | |||||||||
Donations | 12.8 | 16.1 | 16.8 | |||||||||
Bad debt for accounts receivable ( other | 4.0 | 6.6 | 3.6 | |||||||||
Others | 22.5 | 60.3 | 60.2 | |||||||||
| 70.6 | 309.3 | 147.2 | ||||||||||
Operating profit pursuant to K-IFRS | ￦ | 1,387.2 | ￦ | 1,248.6 | ￦ | 1,038.7 | ||||||
| For the Year Ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (In billions of Won) | ||||||||||||
Operating profit pursuant to IFRS as issued by the IASB | W | 1,756.3 | W | 1,594.3 | W | 1,432.4 | ||||||
Differences: | ||||||||||||
Other income pursuant to IFRS that are classified as other non-operating income pursuant to K-IFRS: | ||||||||||||
Gain on disposal of property and equipment and intangible assets | (21.9 | ) | (16.0 | ) | (39.1 | ) | ||||||
Others | (28.5 | ) | (40.3 | ) | (76.6 | ) | ||||||
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| (50.4 | ) | (56.3 | ) | (115.8 | ) | |||||||
Other operating expenses pursuant to IFRS that are classified as other non-operating expenses pursuant to K-IFRS: | ||||||||||||
Impairment loss on property and equipment and intangible assets | 10.4 | 17.0 | 3.1 | |||||||||
Loss on disposal of property and equipment and intangible assets | 9.4 | 20.5 | 28.2 | |||||||||
Donations | 14.8 | 13.1 | 12.8 | |||||||||
Bad debt for accounts receivable – other | 5.3 | 3.0 | 4.0 | |||||||||
Others | 7.5 | 20.4 | 22.5 | |||||||||
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| 47.3 | 74.0 | 70.6 | ||||||||||
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Operating profit pursuant to K-IFRS | W | 1,753.2 | W | 1,612.1 | W | 1,387.2 | ||||||
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See note 4(2) of the notes to our consolidated financial statements. However, there is no impact on profit for the year or earnings per share for each of the three years ended December 31, 2021, 20202023, 2022 and 2019.
Operating Results
The following table sets forth summary consolidated income statement information, including that expressed as a percentage of operating revenue and other income, for the periods indicated:
For the year ended December 31, | ||||||||||||||||||||||||
2021 (1) | 2020 (1) | 2019 (1) | ||||||||||||||||||||||
(In billions of Won, except percentages) | ||||||||||||||||||||||||
From continuing operations: | ||||||||||||||||||||||||
Operating revenue and other income | ￦ | 16,864.3 | 100.0 | % | ￦ | 16,183.5 | 100.0 | % | ￦ | 15,512.0 | 100.0 | % | ||||||||||||
Revenue | 16,748.6 | 99.3 | 16,087.7 | 99.4 | 15,416.4 | 99.4 | ||||||||||||||||||
Other income | 115.8 | 0.7 | 95.8 | 0.6 | 95.6 | 0.6 | ||||||||||||||||||
Operating expenses | 15,432.0 | 91.5 | 15,148.5 | 93.6 | 14,525.0 | 93.6 | ||||||||||||||||||
Operating profit | 1,432.4 | 8.5 | 1,035.0 | 6.4 | 987.1 | 6.4 | ||||||||||||||||||
Profit before income tax | 1,718.2 | 10.2 | 905.2 | 5.6 | 807.0 | 5.2 | ||||||||||||||||||
Income tax expense | 446.8 | 2.6 | 221.3 | 1.4 | 262.9 | 1.7 | ||||||||||||||||||
Profit from continuing operations | 1,271.4 | 7.5 | 684.0 | 4.2 | 544.1 | 3.5 | ||||||||||||||||||
Profit from discontinued operations | 1,147.6 | 6.8 | 816.6 | 5.0 | 316.6 | 2.0 | ||||||||||||||||||
Profit for the year | 2,419.0 | 14.3 | 1,500.5 | 9.3 | 860.7 | 5.5 | ||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||
Owners of the Parent Company | 2,407.5 | 14.3 | 1,504.4 | 9.3 | 888.7 | 5.7 | ||||||||||||||||||
Non-controlling interests | 11.5 | 0.1 | (3.8 | ) | (0.0 | ) | (28.0 | ) | (0.2 | ) | ||||||||||||||
| For the year ended December 31, | ||||||||||||||||||||||||
| 2023 | 2022 | 2021 | ||||||||||||||||||||||
| (In billions of Won, except percentages) | ||||||||||||||||||||||||
From continuing operations: | ||||||||||||||||||||||||
Operating revenue and other income | W | 17,658.9 | 100.0 | % | W | 17,361.2 | 100.0 | % | W | 16,864.3 | 100.0 | % | ||||||||||||
Revenue | 17,608.5 | 99.7 | 17,305.0 | 99.7 | 16,748.6 | 99.3 | ||||||||||||||||||
Other income | 50.4 | 0.3 | 56.3 | 0.3 | 115.8 | 0.7 | ||||||||||||||||||
Operating expenses | 15,902.6 | 90.1 | 15,766.9 | 90.8 | 15,432.0 | 91.5 | ||||||||||||||||||
Operating profit | 1,756.3 | 9.9 | 1,594.3 | 9.2 | 1,432.4 | 8.5 | ||||||||||||||||||
Profit before income tax | 1,488.2 | 8.4 | 1,236.2 | 7.1 | 1,718.2 | 10.2 | ||||||||||||||||||
Income tax expense | 342.2 | 1.9 | 288.3 | 1.7 | 446.8 | 2.6 | ||||||||||||||||||
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Profit from continuing operations | 1,145.9 | 6.5 | 947.8 | 5.5 | 1,271.4 | 7.5 | ||||||||||||||||||
Profit from discontinued operations(1) | — | — | — | — | 1,147.6 | 6.8 | ||||||||||||||||||
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Profit for the year | 1,145.9 | 6.5 | 947.8 | 5.5 | 2,419.0 | 14.3 | ||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||
Owners of the Parent Company | 1,093.6 | 6.2 | 912.4 | 5.3 | 2,407.5 | 14.3 | ||||||||||||||||||
Non-controlling interests | 52.3 | 0.3 | 35.4 | 0.2 | 11.5 | 0.1 | ||||||||||||||||||
| (1) | Pursuant to the Spin-off, the Spin-off Businesses were transferred to SK Square, and such businesses have been accounted for as discontinued operations in our consolidated |
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The following table sets forth additional information about our operations with respect to our reportable segments during the periods indicated:
| For the year ended December 31, | ||||||||||||||||||||||||
| 2023 | 2022 | 2021 | ||||||||||||||||||||||
| Amount | Percentage of Total Revenue | Amount | Percentage of Total Revenue | Amount | Percentage of Total Revenue | |||||||||||||||||||
| (In billions of Won, except percentages) | ||||||||||||||||||||||||
Cellular Services Revenue | ||||||||||||||||||||||||
Wireless Service(1) | W | 10,329.0 | 58.7 | % | W | 10,253.2 | 59.2 | % | W | 10,100.4 | 60.3 | % | ||||||||||||
Cellular Interconnection | 432.7 | 2.5 | 471.2 | 2.7 | 493.8 | 2.9 | ||||||||||||||||||
Wireless Device Sales | 993.9 | 5.6 | 969.0 | 5.6 | 959.9 | 5.7 | ||||||||||||||||||
Miscellaneous(2) | 1,367.6 | 7.8 | 1,248.9 | 7.2 | 1,164.4 | 7.0 | ||||||||||||||||||
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Total Cellular Services Revenue | 13,123.2 | 74.5 | 12,942.3 | 74.8 | 12,718.5 | 75.9 | ||||||||||||||||||
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Fixed-line Telecommunication Services Revenue | ||||||||||||||||||||||||
Fixed-line Telephone Service | 147.7 | 0.8 | 156.7 | 0.9 | 217.0 | 1.3 | ||||||||||||||||||
Fixed-line Interconnection | 15.8 | 0.1 | 21.2 | 0.1 | 69.8 | 0.4 | ||||||||||||||||||
Broadband Internet Service and Advanced Media Platform Service(3) | 2,494.0 | 14.2 | 2,452.5 | 14.2 | 2,443.9 | 14.6 | ||||||||||||||||||
International Calling Service | 190.9 | 1.1 | 180.7 | 1.0 | 162.4 | 1.0 | ||||||||||||||||||
Miscellaneous(4) | 1,079.6 | 6.1 | 1,001.9 | 5.8 | 784.6 | 4.7 | ||||||||||||||||||
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Total Fixed-line Telecommunication Services Revenue | 3,928.0 | 22.3 | 3,813.0 | 22.0 | 3,677.7 | 22.0 | ||||||||||||||||||
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Others Revenue | ||||||||||||||||||||||||
T-commerce(5) | 301.3 | 1.7 | 329.2 | 1.9 | 316.2 | 1.9 | ||||||||||||||||||
Portal Service(6) | 23.2 | 0.1 | 24.7 | 0.1 | 27.0 | 0.2 | ||||||||||||||||||
Miscellaneous(7) | 232.8 | 1.3 | 195.7 | 1.1 | 9.2 | 0.1 | ||||||||||||||||||
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Total Other Revenue | 557.3 | 3.2 | 549.7 | 3.2 | 352.4 | 2.1 | ||||||||||||||||||
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| |||||||||||||
Total Revenue | 17,608.5 | 100.0 | 17,305.0 | 100.0 | 16,748.6 | 100.0 | ||||||||||||||||||
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Segment Operating Expenses(8) | ||||||||||||||||||||||||
Cellular Services | 11,673.1 | 66.3 | 11,646.2 | 67.3 | 11,643.4 | 69.5 | ||||||||||||||||||
Fixed-line Telecommunication Services | 3,582.1 | 20.3 | 3,494.2 | 20.2 | 3,380.2 | 20.2 | ||||||||||||||||||
Others | 600.1 | 3.4 | 552.5 | 3.2 | 337.8 | 2.0 | ||||||||||||||||||
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Total Segment Operating Expenses | 15,855.3 | 90.0 | 15,692.9 | 90.7 | 15,361.4 | 91.7 | ||||||||||||||||||
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Segment Operating Profit (Loss) (9) | ||||||||||||||||||||||||
Cellular Services | 1,450.1 | 8.2 | 1,296.1 | 7.5 | 1,075.1 | 6.4 | ||||||||||||||||||
Fixed-line Telecommunication Services | 345.9 | 2.0 | 318.8 | 1.8 | 297.5 | 1.8 | ||||||||||||||||||
Others | (42.8 | ) | (0.2 | ) | (2.8 | ) | (0.0 | ) | 14.6 | 0.1 | ||||||||||||||
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|
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Total Segment Operating Profit | W | 1,753.2 | 10.0 | % | W | 1,612.1 | 9.3 | % | W | 1,387.2 | 8.3 | % | ||||||||||||
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For the year ended December 31, | ||||||||||||||||||||||||
2021 | 2020 | 2019 | ||||||||||||||||||||||
Amount | Percentage of Total Revenue | Amount | Percentage of Total Revenue | Amount | Percentage of Total Revenue | |||||||||||||||||||
(In billions of Won, except percentages) | ||||||||||||||||||||||||
Cellular Services Revenue | ||||||||||||||||||||||||
Wireless Service (1) | ￦ | 10,100.4 | 60.3 | % | ￦ | 9,806.7 | 61.0 | % | ￦ | 9,538.2 | 61.9 | % | ||||||||||||
Cellular Interconnection | 493.8 | 2.9 | 472.2 | 2.9 | 494.3 | 3.2 | ||||||||||||||||||
Wireless Device Sales | 959.9 | 5.7 | 983.4 | 6.1 | 1,151.2 | 7.5 | ||||||||||||||||||
Miscellaneous (2) | 1,164.4 | 7.0 | 1,085.7 | 6.7 | 1,040.1 | 6.7 | ||||||||||||||||||
Total Cellular Services Revenue | 12,718.5 | 75.9 | 12,348.0 | 76.8 | 12,223.8 | 79.3 | ||||||||||||||||||
Fixed-line Telecommunication Services Revenue | ||||||||||||||||||||||||
Fixed-line Telephone Service | 217.0 | 1.3 | 230.4 | 1.4 | 225.6 | 1.5 | ||||||||||||||||||
Fixed-line Interconnection | 69.8 | 0.4 | 83.8 | 0.5 | 92.4 | 0.6 | ||||||||||||||||||
Broadband Internet Service and Advanced Media Platform Service (3) | 2,443.9 | 14.6 | 2,210.7 | 13.7 | 1,822.4 | 11.8 | ||||||||||||||||||
International Calling Service | 162.4 | 1.0 | 160.3 | 1.0 | 137.9 | 0.9 | ||||||||||||||||||
Miscellaneous (4) | 784.6 | 4.7 | 747.0 | 4.6 | 681.0 | 4.4 | ||||||||||||||||||
Total Fixed-line Telecommunication Services Revenue | 3,677.7 | 22.0 | 3,432.2 | 21.3 | 2,959.3 | 19.2 | ||||||||||||||||||
Others Revenue | ||||||||||||||||||||||||
T-commerce (5) | 316.2 | 1.9 | 268.5 | 1.7 | 191.5 | 1.2 | ||||||||||||||||||
Portal Service (6) | 27.0 | 0.2 | 30.7 | 0.2 | 36.1 | 0.2 | ||||||||||||||||||
Miscellaneous | 9.2 | 0.1 | 8.3 | 0.1 | 5.7 | 0.0 | ||||||||||||||||||
Total Other Revenue | 352.4 | 2.1 | 307.6 | 1.9 | 233.3 | 1.5 | ||||||||||||||||||
Total Revenue | 16,748.6 | 100.0 | 16,087.7 | 100.0 | 15,416.4 | 100.0 | ||||||||||||||||||
Segment Operating Expenses (7) | ||||||||||||||||||||||||
Cellular Services | 11,643.4 | 69.5 | 11,341.2 | 70.5 | 11,327.7 | 73.5 | ||||||||||||||||||
Fixed-line Telecommunication Services | 3,380.2 | 20.2 | 3,189.3 | 19.8 | 2,802.0 | 18.2 | ||||||||||||||||||
Others | 337.8 | 2.0 | 308.6 | 1.9 | 248.0 | 1.6 | ||||||||||||||||||
Total Segment Operating Expenses | 15,361.4 | 91.7 | 14,839.1 | 92.2 | 14,377.7 | 93.3 | ||||||||||||||||||
Segment Operating Profit (Loss) (8) | ||||||||||||||||||||||||
Cellular Services | 1,075.1 | 6.4 | 1,006.8 | 6.3 | 896.1 | 5.8 | ||||||||||||||||||
Fixed-line Telecommunication Services | 297.5 | 1.8 | 242.9 | 1.5 | 157.3 | 1.0 | ||||||||||||||||||
Others | 14.6 | 0.1 | (1.1 | ) | (0.0 | ) | (14.7 | ) | (0.1 | ) | ||||||||||||||
Total Segment Operating Profit | ￦ | 1,387.2 | 8.3 | % | ￦ | 1,248.6 | 7.8 | % | ￦ | 1,038.7 | 6.7 | % | ||||||||||||
| (1) | Wireless service revenue includes revenue from wireless voice and data transmission services principally derived through monthly plan-based fees, usage charges for outgoing voice calls, usage charges for wireless data services andvalue-added service fees such as fees for our cloud services and T Universe subscription program paid by wireless subscribers. |
| (2) | Miscellaneous cellular services revenue includes revenue from our IoT and other solutions as well as other miscellaneous cellular services. |
| (3) | Broadband internet service and advanced media platform service revenue includes revenues from our broadband Internet services as well as IPTV and cable TV services. |
| (4) | Miscellaneous fixed-line telecommunication services revenue includes revenues from business communications services (other thanfixed-line telephone service) provided by SK Broadband. |
| (5) | T-commerce |
| (6) | Portal service revenue includes revenues from Nate, our online portal service operated by SK Communications. |
| (7) | Miscellaneous revenue includes revenues from SK M&Service and other minor miscellaneous revenue items. |
| (8) | “Segment operating expenses” mean operating expenses for each reportable segment presented in accordance with K-IFRS and therefore does not include certain expenses that are classified as othernon-operating expenses underK-IFRS. For more information on the differences between our consolidated operating expenses pursuant toK-IFRS and pursuant to IFRS as issued by the IASB, see “— Explanatory Note Regarding Presentation of Certain Financial Information underK-IFRS.” |
Segment operating profit (loss) for each of the segments above is presented net of consolidation adjustments. Accordingly, they do not reconcile with the segment operating profit (loss) for each of such segments set forth in |
2023 Compared to 2020
Operating Revenue and Other Income.
Our consolidated operating revenue increased by 4.1%1.8% to Won 16,748.617,608.5 billion in 20212023 from Won 16,087.717,305.0 billion in 2020, primarily2022, due to increases in cellular services revenue, and fixed-line telecommunications services revenue and, to a smallermuch lesser extent, an increase in others revenue.
Our consolidated other income increaseddecreased by 20.9%10.5% to Won 115.850.4 billion in 20212023 from Won 95.856.3 billion in 2020,2022, primarily due to the difference inas a result of the previously estimated and actual amounts of certain regulatory fines.
The following sets forth additional information about our operating revenues with respect to each of our reportable segments.
Cellular services: The revenue of our cellular services segment, which is composed of revenues from wireless service, cellular interconnection, wireless device sales and miscellaneous cellular services, increased by 3.0%1.4% to Won 12,718.513,123.2 billion in 20212023 from Won 12,348.012,942.3 billion in 2020.2022. The increase in our cellular services revenue was due to increases in wireless service revenue, miscellaneous cellular services revenue, wireless service revenue and cellular interconnectionwireless device sales revenue, partially offset by a decrease in wireless device salescellular interconnection revenue.
| - | Miscellaneous cellular services revenue increased by 9.5% to Won 1,367.6 billion in 2023 from Won 1,248.9 billion in 2022, primarily due to increases in revenue from our cloud services, IoT solutions and other new businesses, as we continued to build up the scale of such businesses to complement our core wireless service business. |
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| - | Wireless service revenue increased by 0.7% to Won 10,329.0 billion in 2023 from Won 10,253.2 billion in 2022, primarily attributable to the continued increase in the number of subscribers who subscribe to our 5G subscription plans and an increase in the usage of our roaming services in light of a further increase in international travel by our subscribers as the negative effects of the COVID-19 pandemic continued to taper. |
| - | Wireless device sales revenue increased by 2.6% to Won 993.9 billion in 2023 from Won 969.0 billion in 2022, primarily due to an increase in the average prices of the handsets we sold during the year, which primarily reflected the higher prices charged by device manufacturers in part due to higher manufacturing costs, partially offset by a decrease in the sales of handsets due to demand for new flagship devices of the leading device manufacturers falling short of expectations in 2023. |
| - | Cellular interconnection revenue decreased by 8.2% to Won 432.7 billion in 2023 from Won 471.2 billion in 2022, primarily attributable to a decrease in interconnection rates. |
| • | Fixed-line telecommunications services: The revenue of our fixed-line telecommunication services segment, which is composed of revenues from broadband Internet service and advanced media platform service (including IPTV and cable TV services), fixed-line telephone service, international calling service, fixed-line interconnection and miscellaneous fixed-line telecommunication services, increased by 3.0% to Won 3,928.0 billion in 2023 from Won 3,813.0 billion in 2022, primarily due to increases in miscellaneous fixed-line telecommunication services revenue, broadband Internet service and advanced media platform service revenue and international calling service revenue, slightly offset by decreases in fixed-line telephone service revenue and fixed-line interconnection revenue. |
| - | Miscellaneous fixed-line telecommunication services revenue increased by 7.8% to Won 1,079.6 billion in 2023 from Won 1,001.9 billion in 2022, primarily due to an increase in revenue from our business communications services, including our data center services. |
| - | Revenue from our broadband Internet service and advanced media platform service (including our IPTV and cable TV services) increased by 1.7% to Won 2,494.0 billion in 2023 from Won 2,452.5 billion in 2022, primarily due to increases in the number of IPTV subscribers to 6.7 million subscribers as of December 31, 2023 from 6.5 million subscribers as of December 31, 2022 and the number of subscribers who subscribe to our higher-priced subscription plans. |
| - | International calling service revenue increased by 5.6% to Won 190.9 billion in 2023 from Won 180.7 billion in 2022, primarily due to an increase in international calling volume. |
| - | Fixed-line telephone service revenue decreased by 5.7% to Won 147.7 billion in 2023 from Won 156.7 billion in 2022, primarily due to decreases in residential calling volume as a result of a continued shift in consumer preference toward wireless communication and the number of fixed-line telephone subscribers to 3.46 million as of December 31, 2023 from 3.56 million as of December 31, 2022. |
| - | Fixed-line interconnection revenue decreased by 25.5% to Won 15.8 billion in 2023 from Won 21.2 billion in 2022, primarily due to a continued decrease in interconnection rates, as well as decreases in residential calling volume and the number of fixed-line telephone subscribers as described above. |
| • | Others: The revenue of our others segment slightly increased by 1.4% to Won 557.3 billion in 2023 from Won 549.7 billion in 2022, primarily due to a 19.0% increase in our miscellaneous others revenue, which mainly reflected the effect of our recognition of revenue attributable to SK M&Service, which we acquired in February 2022, for the whole year, partially offset by an 8.4% decrease in the revenue of SK Stoa’s T-commerce business to Won 301.5 billion in 2023 from Won 329.3 billion in 2022, which mainly reflected a decrease in the volume of merchandise sold in light of the general downturn in the T-commerce services industry. |
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Operating Expenses. Our consolidated operating expenses increased by 3.0%0.9% to Won 10,100.415,902.6 billion in 20212023 from Won 9,806.715,766.9 billion in 2020,2022, primarily attributabledue to the continuedan 8.0% increase in the number of subscribers who subscribeother operating expenses to our higher-priced 5G plans.
The increase in the cumulative percentage of wireless service subscribers who elected to receive discounted rates in lieu of receiving handset subsidies pursuant to the MDDIA as well as a continued decrease in the usage of our roaming services, mainly reflecting the continued negative impact of the ongoing
The increase was primarily attributable to an increase in the volume of mobile to mobile calls, partially offset by a decrease in interconnection rates.
The increase in commissions was primarily due to increasesan increase in the sales of our 5G wireless service and IPTV service subscriptions through our authorized dealers and independent retailers.
The decrease in other operatingnetwork interconnection expenses was primarily due to decreases in wireless-to-fixed-line and fixed-line-to-wireless interconnection rates, as well as a significant decrease in impairment loss on property and equipment and intangible assets to Won 3.1 billion in 2021 from Won 200.7 billion in 2020, which mainly reflected impairment losses we recognized on frequency usage rights in 2020.
The following sets forth additional information about our segment operating expenses with respect to each of our reportable segments, which do not include certain expenses that are classified as other
| • | Cellular services: The segment operating expenses for our cellular services segment slightly increased by 0.2% to Won 11,673.1 billion in 2023 from Won 11,646.2 billion in 2022, as the increase in utilities cost as described above was substantially offset by a decrease in labor costs relating to SK Telecom’s employees, which mainly reflected the effect of a one-time bonus payment relating to the Spin-off made in 2022. |
| • | Fixed-line telecommunication services: The segment operating expenses for our fixed-line telecommunication services segment increased by 2.5% to Won 3,582.1 billion in 2023 from Won 3,494.2 billion in 2022, primarily due to an increase in SK Broadband’s marketing expenses and commissions, primarily reflecting an increase in the sale of IPTV service subscriptions, as well as an increase in utilities cost. |
Others: The segment operating expenses for our others segment increased by 9.5%8.6% to Won 337.8600.1 billion in 20212023 from Won 308.6552.5 billion in 2020,2022, primarily due to an increasethe effect of our recognition of operating expenses attributable to SK M&Service, which we acquired in February 2022, for the cost of goods sold of SK Stoa, which mainly reflected a corresponding increase in the revenue generated by SK Stoa’s
Operating Profit.
The following sets forth additional information about our segment operating profit (loss) with respect to each of our reportable segments. Our segment operating profit (loss) with respect to each of our reportable segments is based onK-IFRS and the sum of segment operating profit for all three reportable segments differs from our consolidated operating profit presented in accordance with IFRS as issued by the IASB. For a reconciliation of operating profit presented in accordance with IFRS as issued by the IASB and operating profit
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presented in accordance with K-IFRS, see “— Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS” and note 4(2) of the notes to our consolidated financial statements.
Cellular services: The segment operating profit of our cellular services segment increased by 11.9% to Won 1,450.1 billion in 2023 from Won 1,296.1 billion in 2022, due to the greater increase in segment operating revenue as compared to the increase in segment operating expenses, for the various reasons described above. The segment operating margin (which, with respect to each reportable segment, is segment operating profit (loss) divided by revenue from such segment, expressed as a percentage) of our cellular services segment increased to 11.0% in 2023 from 10.0% in 2022.
| • | Fixed-line telecommunication services: The segment operating profit of our fixed-line telecommunication services segment increased by 8.5% to Won 345.9 billion in 2023 from Won 318.8 billion in 2022, due to the greater increase in segment operating revenue as compared to the increase in segment operating expenses, for the reasons described above. The segment operating margin of our fixed-line telecommunication services segment remained relatively constant at 8.8% in 2023 compared to 8.4% in 2022. |
Others: The segment operating loss of our others segment significantly increased to Won 42.8 billion in 2023 from Won 2.8 billion in 2022, due to the greater increase in segment operating expenses as compared to the increase in segment operating revenue as described above. As a result, the segment operating margin of our others segment worsened to (7.7)% in 2023 from (0.5)% in 2022.
Finance Income and Finance Costs. Our finance income increased by 38.2% to Won 248.4 billion in 2023 from Won 179.8 billion in 2022, primarily due to a significant increase in dividends received to Won 43.0 billion in 2023 (mainly attributable to dividends we received from Hana Financial Group) from Won 2.6 billion in 2022, as well as a 21.8% increase in gain relating to financial instruments at fair value through profit or loss to Won 115.0 billion in 2023 from Won 94.4 billion in 2022, primarily relating to our equity investment in Joby Aviation Inc.
Our finance costs increased by 15.6% to Won 527.4 billion in 2023 from Won 456.3 billion in 2022, primarily due to an 18.7% increase in in interest expense to Won 389.8 billion in 2023 from Won 328.3 billion in 2022, which primarily reflected higher market interest rates.
Gains (Losses) Related to Investments in Associates and Joint Ventures. We recorded net gains related to investments in associates and joint ventures of Won 10.9 billion in 2023, primarily due to our share of profits from SK China Company Ltd. of Won 24.0 billion, compared to net losses related to investments in associates and joint ventures of Won 81.7 billion in 2022, primarily due to loss of Won 48.6 billion from disposal of our equity interest in HanaCard in 2022.
Income Tax. Income tax expense increased by 18.7% to Won 342.2 billion in 2023 from Won 288.3 billion in 2022 primarily due to a 20.4% increase in profit before income tax to Won 1,488.2 billion in 2023 from Won 1,236.2 billion in 2022. Our effective tax rate in 2023 decreased to 23.0% from 23.3% in 2022. Our effective tax rates in 2023 and 2022 were lower than the maximum statutory tax rate of 26.4% for 2023 and 27.5% for 2022, primarily due to, in the case of 2023, tax credits and tax reductions, and a decrease in the corporate income tax rate in Korea beginning in 2023, and in the case of 2022, a decrease in net deferred tax liability due to an expected decrease in the corporate income tax rate in Korea beginning in 2023, as well as changes in unrecognized deferred taxes and tax credits and tax reductions.
Profit for the Year. Principally as a result of the factors discussed above, our profit for the year increased by 20.9% to Won 1,145.9 billion in 2023 from Won 947.8 billion in 2022. Profit for the year as a percentage of operating revenue and other income was 6.5% in 2023 compared to 5.5% in 2022.
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2022 Compared to 2021
Operating Revenue and Other Income. Our consolidated operating revenue and other income increased by 2.9% to Won 17,361.2 billion in 2022 from Won 16,864.3 billion in 2021 due to an increase in operating revenue, as discussed below.
Our consolidated operating revenue increased by 3.3% to Won 17,305.0 billion in 2022 from Won 16,748.6 billion in 2021, primarily due to increases in cellular services revenue, others revenue and fixed-line telecommunications services revenue.
Our consolidated other income decreased by 51.4% to Won 56.3 billion in 2022 from Won 115.8 billion in 2021, primarily due to the effect of the difference in the previously estimated and actual amounts of certain regulatory fees recognized in 2021.
The following sets forth additional information about our operating revenues with respect to each of our reportable segments.
Cellular services: The revenue of our cellular services segment increased by 1.8% to Won 12,942.3 billion in 2022 from Won 12,718.5 billion in 2021. The increase in our cellular services revenue was due to increases in wireless service revenue, miscellaneous cellular services revenue and wireless device sales revenue, partially offset by a decrease in cellular interconnection revenue.
| - | Wireless service revenue increased by 1.5% to Won 10,253.2 billion in 2022 from Won 10,100.4 billion in 2021, primarily attributable to the continued increase in the number of subscribers who subscribe to our 5G subscription plans and an increase in the usage of our roaming services in light of the substantial lifting of travel restrictions imposed by governments in response to the COVID-19 pandemic. |
| - | Miscellaneous cellular services revenue increased by 7.3% to Won 1,248.9 billion in 2022 from Won 1,164.4 billion in 2021, primarily due to increases in revenue from our cloud services, IoT solutions and other new businesses. |
| - | Wireless device sales revenue slightly increased by 0.9% to Won 969.0 billion in 2022 from Won 959.9 billion in 2021, primarily due to an increase in the sale of 5G-compatible devices that generally command higher prices. |
| - | Cellular interconnection revenue decreased by 4.6% to Won 471.2 billion in 2022 from Won 493.8 billion in 2021. The decrease was primarily attributable to a decrease in interconnection rates, partially offset by an increase in the volume of mobile to mobile calls. |
| • | Fixed-line telecommunications services: The revenue of our fixed-line telecommunication services segment increased by 3.7% to Won 3,813.0 billion in 2022 from Won 3,677.7 billion in 2021, primarily due to an increase in miscellaneous fixed-line telecommunication services revenue, partially offset by decreases in fixed-line telephone service revenue and fixed-line interconnection revenue. |
| - | Miscellaneous fixed-line telecommunication services revenue increased by 27.7% to Won 1,001.9 billion in 2022 from Won 784.6 billion in 2021, primarily due to an increase in revenue from our business communications services, including our data center services. |
| - | Fixed-line telephone service revenue decreased by 27.8% to Won 156.7 billion in 2022 from Won 217.0 billion in 2021, primarily due to decreases in residential calling volume as a result of a continued shift in consumer preference toward wireless communication and the number of fixed-line telephone subscribers to 3.56 million as of December 31, 2022 from 3.63 million as of December 31, 2021. |
| - | Fixed-line interconnection revenue decreased by 69.6% to Won 21.2 billion in 2022 from Won 69.8 billion in 2021, primarily due to a decrease in interconnection rates, as well as decreases in residential calling volume and the number of fixed-line telephone subscribers as described above. |
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| • | Others: The revenue of our others segment increased by 56.0% to Won 549.7 billion in 2022 from Won 352.4 billion in 2021, primarily due to our acquisition of SK M&Service in February 2022 as well as a 4.1% increase in revenue of SK Stoa’s T-commerce business to Won 329.3 billion in 2022 from Won 316.2 billion in 2021, which mainly reflected an increase in the volume of merchandise sold. |
Operating Expenses. Our consolidated operating expenses increased by 2.2% to Won 15,766.9 billion in 2022 from Won 15,432.0 billion in 2021, primarily due to a 6.5% increase in labor costs to Won 2,449.8 billion in 2022 from Won 2,300.8 billion in 2021, a 8.6% increase in cost of goods sold to Won 1,268.1 billion in 2022 from Won 1,167.4 billion in 2021, a 6.8% increase in other operating expenses to Won 1,529.0 billion in 2022 from Won 1,431.6 billion in 2021 and a 1.7% increase in commissions to Won 5,518.8 billion in 2022 from Won 5,426.1 billion in 2021.
The increase in labor costs was primarily due to a general increase in the base salary of our employees.
The increase in cost of goods sold was primarily due to an increase in sales of miscellaneous telecommunications equipment to our corporate customers.
The increase in other operating expenses was primarily due to an increase in utilities, mainly reflecting increases in the number of base stations and electricity prices.
The increase in commissions was primarily due to increases in fees paid to third party service and contents providers relating to our new businesses and the sales of IPTV service subscriptions through our authorized dealers and independent retailers.
The following sets forth additional information about our segment operating expenses with respect to each of our reportable segments, which do not include certain expenses that are classified as other non-operating expenses under K-IFRS. For more information on the difference between our consolidated operating expenses pursuant to K-IFRS and pursuant to IFRS as issued by the IASB, see “ — Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS” and note 4(2) of the notes to our consolidated financial statements.
Cellular services: The segment operating expenses for our cellular services segment remained relatively constant at Won 11,646.2 billion in 2022 compared to Won 11,643.4 billion in 2021, as increases in SK Telecom’s labor costs as described above as well as fees paid to third party service and contents providers and advertising fees relating to SK Telecom’s new businesses were substantially offset by decreases in commissions paid to SK Telecom’s authorized dealers and independent retailers, as the market for new 5G subscribers began to stabilize, and depreciation and amortization expenses, primarily reflecting the expiration of the applicable amortization period for certain of our software assets and a decrease in the amortization expenses for our frequency usage rights.
| • | Fixed-line telecommunication services: The segment operating expenses for our fixed-line telecommunication services segment increased by 3.4% to Won 3,494.2 billion in 2022 from Won 3,380.2 billion in 2021, primarily due to an increase in SK Broadband’s marketing expenses and commissions, primarily reflecting an increase in the sale of IPTV service subscriptions. |
| • | Others: The segment operating expenses for our others segment increased by 63.6% to Won 552.5 billion in 2022 from Won 337.8 billion in 2021, primarily due to our acquisition of SK M&Service in February 2022 and an increase in the operating expenses of SK Stoa, which mainly reflected a corresponding increase in the revenue generated by SK Stoa’s T-commerce business. |
Operating Profit. Our consolidated operating profit increased by 11.3% to Won 1,594.3 billion in 2022 from Won 1,432.4 billion in 2021, as the increase in operating revenue outpaced the increase in operating expenses in 2022.
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The following sets forth additional information about our segment operating profit (loss) with respect to each of our reportable segments. Our segment operating profit (loss) with respect to each of our reportable segments is based on K-IFRSand the sum of segment operating profit for all three reportable segments differs from our consolidated operating profit presented in accordance with IFRS as issued by the IASB. For a reconciliation of operating profit presented in accordance with IFRS as issued by the IASB and operating profit presented in accordance with
Cellular services: The segment operating profit of our cellular services segment increased by 6.8%20.6% to Won 1,296.1 billion in 2022 from Won 1,075.1 billion in 2021, from Won 1,006.8 billion in 2020, due to the greater increase in segment operating revenue as compared to the increase in segment operating expenses, for the various reasons described above.
| • | Fixed-line telecommunication services: The segment operating profit of our fixed-line telecommunication services segment increased by 7.2% to Won 318.8 billion in 2022 from |
Others: Our others segment recorded operating loss of Won 2.8 billion in 2022 compared to operating profit of Won 14.6 billion in 2021, due to the greater increase in segment operating expenses as compared to the increase in segment operating revenue as described above. As a result, the segment operating margin of our others segment improveddeclined to (0.5)% in 2022 from 4.1% in 2021 from (0.4)% in 2020.2021.
Finance Income and Finance Costs.
Our finance costs increased by 44.6% to Won 456.3 billion in 2022 from Won 315.6 billion in 2021, primarily due to a loss on sale of accounts receivable – other related to our sale of accounts receivable for handset installment payments of Won 61.8 billion in 2022 compared to nil in 2021, as well as a 17.4% increase in in interest expense to Won 328.3 billion in 2022 from Won 279.7 billion in 2021, which primarily reflected higher market interest rates.
Gains (Losses) Related to Investments in Associates and Joint Ventures.
Income Tax.
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rates in 20212022 and 20202021 were lower than the maximum statutory tax rate of 27.5% for both years, primarily due to, in the case of 2022, a decrease in net deferred tax liability due to an expected decrease in the corporate income tax rate in Korea beginning in 2023, as well as changes in unrecognized deferred taxes and tax credits and tax reductions, and in both years.
Profit from Continuing Operations.
Profit from Discontinued Operations.
Profit for the Year.
Item 5.B. | Liquidity and Capital Resources |
Liquidity
We had a working capital deficit (current liabilities in excess of current assets) of Won 408.4 billion as of December 31, 2023, Won 827.3 billion as of December 31, 2022 and Won 607.8 billion as of December 31, 2021 and a working capital surplus (current assets in excess of current liabilities) of Won 597.1 billion as of December 31, 2020.2021. The decrease in our working capital deficit as of December 31, 20212023 compared to December 31, 20202022 was mainly due to the
We had cash and cash equivalents
For the presentation of the statement of cash flows for the year ended December 31, 2021 in our consolidated financial statements, we elected to combine cash flows from discontinued operations with cash flows from continuing operations within each cash flow statement category. The absence of cash flows from discontinued operations is not expected to affect our future liquidity and capital resources.
Cash flows from operating activities and debt financing have been our principal sources of liquidity. We had cash and cash equivalents of Won 1,455.0 billion as of December 31, 2023, Won 1,882.3 billion as of December 31, 2022 and Won 872.7 billion as of December 31, 2021 and Won 1,369.7 billion as of December 31, 2020.2021. We believe that we have a variety of alternatives available to us to satisfy our financial requirements to the extent that they are not met by funds generated by operations, including the issuance of debt securities and bank borrowings.
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Year ended December 31, | Change | |||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2020 to 2021 | 2019 to 2020 | ||||||||||||||||||||||||
(In billions of Won, except percentages) | ||||||||||||||||||||||||||||
Net cash provided by operating activities | ￦ | 5,031.3 | ￦ | 5,821.9 | ￦ | 4,035.0 | ￦ | (790.6 | ) | (13.6 | )% | ￦ | 1,786.9 | 44.3 | % | |||||||||||||
Net cash used in investing activities | (3,486.2 | ) | (4,250.4 | ) | (3,581.6 | ) | 764.2 | (18.0 | ) | (668.8 | ) | 18.7 | ||||||||||||||||
Net cash used in financing activities | (2,053.6 | ) | (1,457.6 | ) | (686.7 | ) | (596.0 | ) | 40.9 | (770.9 | ) | 112.3 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (508.5 | ) | 113.9 | (233.3 | ) | (622.4 | ) | N.A. | 347.2 | N.A. | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies | 11.6 | (15.1 | ) | (2.6 | ) | 26.7 | (176.8 | ) | (12.5 | ) | 480.8 | |||||||||||||||||
Cash and cash equivalents at beginning of period | 1,369.7 | 1,270.8 | 1,506.7 | 98.9 | 7.8 | (235.9 | ) | (15.7 | ) | |||||||||||||||||||
Cash and cash equivalents at end of period | 872.7 | 1,369.7 | 1,270.8 | (497.0 | ) | (36.3 | ) | 98.8 | 7.8 | |||||||||||||||||||
| Year ended December 31, | Change | |||||||||||||||||||||||||||
| 2023 | 2022 | 2021 | 2022 to 2023 | 2021 to 2022 | ||||||||||||||||||||||||
| (In billions of Won, except percentages) | ||||||||||||||||||||||||||||
Net cash provided by operating activities | W | 4,947.2 | W | 5,159.3 | W | 5,031.3 | W | (212.1 | ) | (4.1 | )% | W | 128.0 | 2.5 | % | |||||||||||||
Net cash used in investing activities | (3,352.9 | ) | (2,807.8 | ) | (3,486.2 | ) | (545.1 | ) | 19.4 | 678.4 | (19.5 | ) | ||||||||||||||||
Net cash used in financing activities | (2,021.0 | ) | (1,349.9 | ) | (2,053.6 | ) | (671.1 | ) | 49.7 | 703.7 | (34.3 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (426.7 | ) | 1,001.6 | (508.5 | ) | (1,428.3 | ) | N.A. | 1,510.1 | N.A. | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents held in foreign currencies | (0.6 | ) | 7.9 | 11.6 | (8.5 | ) | N.A. | (3.7 | ) | 31.9 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 1,882.3 | 872.7 | 1,369.7 | 1,009.6 | 115.7 | (497.0 | ) | (36.3 | ) | |||||||||||||||||||
Cash and cash equivalents at end of period | 1,455.0 | 1,882.3 | 872.7 | (427.3 | ) | (22.7 | ) | 1,009.6 | 115.7 | |||||||||||||||||||
N.A. = Not available
Cash Flows from Operating Activities.
Cash Flows from Investing Activities.
Cash outflows for investing activities were Won 3,625.5 billion in 2023, Won 4,037.7 billion in 2022 and Won 4,086.4 billion in 2021, Won 4,679.4 billion in 2020 and Won 4,336.7 billion in 2019.2021. Cash outflows in 2021, 20202023, 2022 and 20192021 were primarily attributable to expenditures related to the acquisition of property and equipment of Won 2,915.92,973.9 billion, Won 3,557.82,908.3 billion and Won 3,375.92,915.9 billion, respectively, primarily in connection with the acquisition of 5G and LTE equipment, the expansion of our 5G network and the maintenance of our LTE network.
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Cash Flows from Financing Activities.
Cash outflows for financing activities were Won 4,437.8 billion in 2023, Won 3,151.9 billion in 2022 and Won 3,850.4 billion in 2021, Won 4,957.2 billion in 2020 and Won 2,733.9 billion in 2019.2021. Cash outflows for financing activities included repayments of debentures, repayments of long-term borrowings, payments of dividends, and repayments of other long-term payables, repayments of lease liabilities and redemption of hybrid bonds, among other items. Repayments of debentures were Won 1,869.2 billion in 2023, Won 1,390.0 billion in 2022 and Won 890.0 billion in 2021, Won 975.5 billion in 2020 and Won 940.0 billion in 2019.2021. Repayments of long-term borrowings were Won 125.0 billion in 2023, Won 41.5 billion in 2022 and Won 286.9 billion in 2021, Won 1,950.9 billion in 2020 and Won 89.9 billion in 2019.2021. Payments of dividends were Won 773.8 billion in 2023, Won 904.0 billion in 2022 and Won 1,028.5 billion in 2021,2021. Repayments of other long-term payables were Won 742.1400.2 billion in 2020 and2023, Won 718.7400.2 billion in 2019. Repayments of other
As of December 31, 2021,2023, we had total long termlong-term debt (excluding current portion) outstanding of Won 7,390.57,421.9 billion, which included debentures in the amount of Won 7,037.47,106.3 billion and bank and institutional borrowings in the amount of Won 353.1315.6 billion. As of December 31, 2020,2022, we had total
As of December 31, 2021,2023, we had (i) Won 6,670.07,000.0 billion aggregate principal amount of Korean
As of December 31, 2021,2023, substantially all of our foreign
Capital Requirements
Historically, capital expenditures, repayment of outstanding debt, frequency usage payments and lease payments have represented our most significant use of funds. In recent years, we have also increasingly dedicated
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capital resources to develop and invest in new ICT businesses (some of which were transferred to SK Square as of November 1, 2021 pursuant to the
To fund our scheduled debt repayment and planned capital expenditures over the next several years, we intend to rely primarily on cash flows from operating activities, as well as bank and institutional borrowings, and offerings of debt or equity in the domestic or international markets. We believe that these sources will be sufficient to fund our planned capital expenditures for 2022.
Capital Expenditures.
Year ended December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
(In billions of Won) | ||||||||||||
Wireless Networks (1) | ￦ | 1,850.9 | ￦ | 1,878.6 | ￦ | 2,514.3 | ||||||
Fixed-line Network(2) | 822.8 | 818.3 | 815.8 | |||||||||
Others (3) | 242.2 | 860.9 | 45.8 | |||||||||
Total | ￦ | 2,915.9 | ￦ | 3,557.8 | ￦ | 3,375.9 | ||||||
| Year ended December 31, | ||||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| (In billions of Won) | ||||||||||||
Wireless Networks(1) | W | 1,380.6 | W | 1,833.4 | W | 1,850.9 | ||||||
Fixed-line Network(2) | 999.5 | 820.2 | 822.8 | |||||||||
Others(3) | 593.8 | 254.7 | 242.2 | |||||||||
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Total | W | 2,973.9 | W | 2,908.3 | W | 2,915.9 | ||||||
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| (1) | Includes investments in wireless networks, primarily our 5G, LTE and Wi-Fi networks, as well as other capital expenditures related to our networks. |
| (2) | Includes all capital expenditures made by SK Broadband. |
| (3) | Includes non-network related investments such as capital expenditures for product development, upgrades of our information technology systems and equipment and investments in data infrastructure, including certain investments made in connection with our discontinued operations. |
We set our capital expenditure budget for each upcoming year on an annual basis. Our actual capital expenditures in 2021, 20202023, 2022 and 20192021 were Won 2,915.92,973.9 billion, Won 3,557.82,908.3 billion and Won 3,375.92,915.9 billion, respectively. Of such amounts, we spent approximately 46.4%, 63.2% and 63.5%, 52.8% and 74.5% in 2021, 2020 and 2019, respectively, on capital expenditures related to building and enhancing our wireless networks. Our capital expenditures related to building and enhancing our wireless networks, including in connection with our 5G network which we launched in 2019, have generally decreased in recent years. See “Item 4.B. Business Overview — Cellular Services — Digital Wireless Network — 5G Network.” Our other
In particular, we have been making capital expenditures to buildfurther expand and expandimprove our 5G network. We commenced commercial 5G services in April 2019. We have also been making capital expenditures to maintain our LTE network.
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The following table sets forth our payment obligations relating to our acquisitions of frequency usage rights.
Spectrum | Technology (width) | Date of Acquisition (including renewals) | Initial Payment Amount (in billions of Won) | Initial Payment Year | Annual Payment Amount (in billions of Won) | Annual Payment Term | ||||||||||||||||
800 MHz | LTE (20 MHz) | Jul. 2021 | ￦ | 56.8 | 2021 | ￦ | 34.1 | 2022-2026 | ||||||||||||||
1.8 GHz | LTE (20 MHz + 15 MHz) | Dec. 2021 | 136.9 | 2021 | 82.2 | 2022-2026 | ||||||||||||||||
2.1 GHz | LTE (30 MHz) | Dec. 2021 | 102.9 | 2021 | 61.8 | 2022-2026 | ||||||||||||||||
| WCDMA (10 MHz) | ||||||||||||||||||||||
2.6 GHz | LTE (40 MHz + 20 MHz) | Aug. 2016 | 332.5 | 2016 | 99.8 | 2017-2026 | ||||||||||||||||
3.5 GHz | 5G (100 MHz) | Dec. 2018 | 304.6 | 2018 | 91.4 | 2019-2028 | ||||||||||||||||
28 GHz | 5G (800 MHz) | Dec. 2018 | 51.8 | 2018 | 31.1 | 2019-2023 | ||||||||||||||||
Spectrum | Technology (width) | Date of Acquisition (including renewals) | Initial Payment Amount (in billions of Won) | Initial Payment Year | Annual Payment Amount (in billions of Won) | Annual Payment Term | ||||||||||||||
800 MHz | LTE (20 MHz) | Jul. 2021 | W | 56.8 | 2021 | W | 34.1 | 2022-2026 | ||||||||||||
1.8 GHz | LTE (20 MHz + 15 MHz) | Dec. 2021 | 136.9 | 2021 | 82.2 | 2022-2026 | ||||||||||||||
2.1 GHz | LTE (30 MHz) WCDMA (10 MHz) | Dec. 2021 | 102.9 | 2021 | 61.8 | 2022-2026 | ||||||||||||||
2.6 GHz | LTE (40 MHz + 20 MHz) | Aug. 2016 | 332.5 | 2016 | 99.8 | 2017-2026 | ||||||||||||||
3.5 GHz | 5G (100 MHz) | Dec. 2018 | 304.6 | 2018 | 91.4 | 2019-2028 | ||||||||||||||
We currently expect to spend a similar amount for capital expenditures in 20222024 compared to 20212023 for a range of projects, including investments to further expand and improve our newly implemented 5G network, investments to maintain our LTE network and
Repayment of Outstanding Debt.
Year Ending December 31, | Total | |||
(In billions of Won) | ||||
2022 | ￦ | 1,444.1 | ||
2023 | 1,803.4 | |||
2024 | 1,432.5 | |||
2025 and thereafter | 4,175.5 | |||
Year Ending December 31, | Total | |||
| (In billions of Won) | ||||
2024 | W | 1,622.5 | ||
2025 | 2,419.1 | |||
2026 | 918.1 | |||
2027 and thereafter | 4,117.6 | |||
Lease Payments.
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our business. As of December 31, 2021,2023, our principal payment obligations with respect to our lease liabilities were as follows for the periods indicated:
Year Ending December 31, | Total | |||
(In billions of Won) | ||||
2022 | ￦ | 351.2 | ||
2023 | 318.2 | |||
2024 | 232.3 | |||
2025 and thereafter | 652.1 | |||
Year Ending December 31, | Total | |||
| (In billions of Won) | ||||
2024 | W | 386.2 | ||
2025 | 390.0 | |||
2026 | 281.8 | |||
2027 and thereafter | 841.9 | |||
Investments in New Growth Businesses.
In June 2019,February 2022, we acquired a 34.6%100.0% interest in Incross, a digital advertising company,SK M&Service for an aggregate purchase price of Won 53.772.9 billion in lightorder to strengthen the competitiveness of potentialour online distribution capabilities and explore synergies with our mediaother businesses in the ICT sector.
In June 2022, we acquired a minority equity interest in HAEGIN Co., Ltd., a metaverse game developer, for Won 25.1 billion in order to improve the user experience of our AI service customers and commerce businesses.
In June 2023, we acquired a minority equity interest in Joby Aviation Inc., a transportation company based in Santa Cruz developing electric vertical take-off and landing aircrafts, for US$100 million as part of our ongoing efforts to develop emissions-free aerial ridesharing services to cities and communities across Korea.
In August 2023, we acquired a minority equity interest in Anthropic, a generative AI technology company based in San Francisco, for US$100 million in order to jointly develop a multilanguage large-language model customized for telecommunications companies.
From time to time, we may make other investments in telecommunications or other businesses in Korea or abroad, where we perceive attractive opportunities for investment. From time to time, we may also dispose of existing investments when we believe that doing so would be in our best interest. Effective as of November 1, 2021, we conducted the
Severance Payments.
Also see “Item 6.D. Employees — Employee Benefits” and note 21 of the notes to our consolidated financial statements.
Dividends.
In April 2022,2024, we distributed annual dividends at Won 1,6601,050 per share (exclusive of aggregate interim dividends of Won 5,0002,490 per share)share distributed during the course of 2023) to our shareholders for an aggregate payout amount of Won 361.2223.3 billion.
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Contractual Obligations and Commitments
The following summarizes our contractual cash obligations (excluding short-term leases and leases of low-value assets) at December 31, 2021,2023, and the effect such obligations are expected to have on liquidity and cash flow in future periods:
Payments Due by Period (1) | ||||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 4-5 Years | More Than 5 Years | ||||||||||||||||
(In billions of Won) | ||||||||||||||||||||
Bonds | ||||||||||||||||||||
Principal | ￦ | 8,448.3 | ￦ | 1,390.0 | ￦ | 2,898.4 | ￦ | 1,615.7 | ￦ | 2,544.2 | ||||||||||
Interest | 1,031.8 | 213.8 | 286.0 | 187.9 | 344.1 | |||||||||||||||
Long-term borrowings | ||||||||||||||||||||
Principal | 394.2 | 41.1 | 337.5 | 15.6 | — | |||||||||||||||
Interest | 13.2 | 5.7 | 7.3 | 0.2 | — | |||||||||||||||
Lease liabilities | ||||||||||||||||||||
Principal | 1,553.6 | 351.2 | 550.5 | 374.2 | 277.9 | |||||||||||||||
Interest | 99.6 | 8.1 | 31.1 | 33.8 | 26.6 | |||||||||||||||
Short-term leases and leases of low-value assets | 29.2 | 29.2 | — | — | — | |||||||||||||||
Facility deposits | 5.8 | 1.2 | — | — | 4.6 | |||||||||||||||
Derivatives | 0.1 | 0.1 | 0.1 | — | — | |||||||||||||||
Other long-term payables(2) | ||||||||||||||||||||
Principal | 2,090.7 | 400.2 | 769.4 | 738.3 | 182.8 | |||||||||||||||
Interest | 30.4 | 7.4 | 14.5 | 7.2 | 1.3 | |||||||||||||||
Short-term borrowings | 13.0 | 13.0 | — | — | — | |||||||||||||||
Total contractual cash obligations | ￦ | 13,710.1 | ￦ | 2,461.0 | ￦ | 4,894.8 | ￦ | 2,972.9 | ￦ | 3,381.5 | ||||||||||
| Payments Due by Period(1) | ||||||||||||||||||||
Total | Less Than 1 Year | 1-3 Years | 4-5 Years | More Than 5 Years | ||||||||||||||||
| (In billions of Won) | ||||||||||||||||||||
Bonds | ||||||||||||||||||||
Principal | W | 8,359.2 | W | 1,220.0 | W | 3,021.6 | W | 2,167.6 | W | 1,950.0 | ||||||||||
Interest | 1,173.3 | 273.1 | 389.8 | 221.2 | 289.2 | |||||||||||||||
Long-term borrowings | ||||||||||||||||||||
Principal | 718.1 | 402.5 | 315.6 | — | — | |||||||||||||||
Interest | 21.7 | 14.6 | 7.1 | — | — | |||||||||||||||
Lease liabilities | 1,899.9 | 386.2 | 671.8 | 354.7 | 487.2 | |||||||||||||||
Facility deposits | 12.8 | 7.5 | — | — | 5.3 | |||||||||||||||
Other long-term payables(2) | ||||||||||||||||||||
Principal | 1,290.2 | 369.2 | 738.2 | 182.8 | — | |||||||||||||||
Interest | 80.3 | 34.1 | 38.9 | 7.3 | — | |||||||||||||||
Short-term borrowings | — | — | — | — | — | |||||||||||||||
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Total contractual cash obligations | W | 13,555.5 | W | 2,707.2 | W | 5,183.0 | W | 2,933.6 | W | 2,731.7 | ||||||||||
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| (1) | We are contractually obligated to make severance payments to eligible employees we have employed for more than one year, upon termination of their employment, regardless of whether such termination is voluntary or involuntary. Accruals for severance indemnities are recorded based on the amount we would be required to pay in the event the employment of all our employees were to terminate at the balance date. However, we have not yet estimated cash flows for future periods. Accordingly, payments due in connection with severance indemnities have been excluded from this table. |
| (2) | Related to acquisition of frequency licenses. See note 19 of the notes to our consolidated financial statements. |
See note 37 of the notes to our consolidated financial statements for details related to our other commitments and contingencies.
Item 5.C. | Research and Development, Patents and Licenses, etc. |
We maintain a high level of spending on our research and development activity. We also donate funds to several Korean research institutes and educational organizations that focus on research and development activity. We believe that we must maintain a substantial
The main focus of our research and development activity is the development of new wireless technologies and services and value-added technologies and services for our 5G network and LTE network, such as wireless data communications, as well as the development of new technologies that reflect the growing convergence between telecommunications and other industries, such as AI, big data analytics, media, securitymetaverse and urban air mobility. SK Telecom’s research and development activity is centered atprimarily conducted through our T3KGlobal Solution Technology Center, located atwhich is subdivided into Future R&D Group, Cloud R&D Group, Vision R&D Group, Open AIX R&D Group, Media R&D Group and Global Solution Synergy Group. The Infrastructure Technology Group under our SK
Each business unit also has its own research team that can concentrate on specific short-term research needs, and some of our consolidated subsidiaries also have their own research and development organizations to focus
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on activities related to their respective business areas. Such research teams permit our research center to concentrate on long-term, technology-intensive research projects. We aim to establish strategic alliances with selected domestic and foreign companies with a view to exchanging or jointly developing technologies, products and services.
Item 5.D. | Trend Information |
These matters are discussed under “Item 5.A. Operating Results” and “Item 5.B. Liquidity and Capital Resources” above where relevant.
Item 5.E. | Critical Accounting Estimates |
Our financial statements are prepared in accordance with IFRS as issued by the IASB. See notes 2(4) and 3 of the notes to our consolidated financial statements which provide summaries of certain critical accounting estimates that require our management to make difficult, complex or subjective judgments relating to matters which are highly uncertain and that may have a material impact on our financial conditions and results of operations.
Item 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
Item 6.A. | Directors and Senior Management |
Directors and Senior Management
Our board of directors has ultimate responsibility for the management of our affairs. Under our articles of incorporation, our board is to consist of at least three but no more than twelve directors, more than half of whom must be independent
As required under relevant Korean laws and our articles of incorporation, we have a committee for recommendation of independent
The term of offices for directors is until the close of the third annual general shareholders meeting convened after he or she commences his or her term. Our directors may serve consecutive terms. The total term of office of
Representative directors are directors elected by the board of directors with the statutory power to represent our company.
The following are the names and positions of our standingexecutive and
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Executive directors are our directors who also serve as our executive officers, and they also comprise the senior management, or the key personnel who manage us. Their names, dates of birth and positions at our company, other positions and business experience are set forth below:
Name | Month and Year of Birth | Director Since | Expiration of Term | Position | Other Positions | Business Experience | ||||||||||||
Young Sang Ryu | May 1970 | 2018 | 2024 | Executive Director, President and Chief Executive Officer | — | President of Mobile Network Operations Division, SK Telecom; Executive Vice President of Business Development Group, SK Inc.; Head of Corporate Center, SK Telecom | ||||||||||||
Jong Ryeol Kang | Oct. 1964 | 2022 | 2025 | Head of ICT Infrastructure | — | Head of Corporate Culture Center, SK Telecom | ||||||||||||
Name | Month and Year of Birth | Director Since | Expiration of Term | Position | Other Positions | Business Experience | ||||||||||||
Young Sang Ryu | May 1970 | 2018 | 2027 | Executive Director, President and Chief Executive Officer | President and Chief Executive Officer of SK Broadband | President of Mobile Network Operations Division, SK Telecom; Executive Vice President of Business Development Group, SK Inc.; Head of Corporate Center, SK Telecom | ||||||||||||
Jong Ryeol Kang | Oct. 1964 | 2022 | 2025 | Executive Director, Head of ICT Infra | — | Head of Corporate Culture Center, SK Telecom | ||||||||||||
Yang Seob Kim | Feb. 1966 | 2024 | 2027 | Head of Corporate Planning and Chief Financial Officer | — | Head of Finance Division and Chief Financial Officer, SK Innovation; | ||||||||||||
Our current
Name | Month and Year of Birth | Director Since | Expiration of Term | Position | Other Positions | Business Experience | ||||||||||||
Sung Hyung Lee | Dec. 1965 | 2024 | 2027 | Non-executive Director | President, Chief Financial Officer and Head of Finance Division, SK Inc. | President, Chief Financial Officer and Head of PM Division, SK Inc.; Head of Finance Division, SK Inc.; Head of Financial Management, SK Telecom; Head of Finance Department 1, SK Inc. | ||||||||||||
Mi Kyung Noh | Aug. 1965 | 2024 | 2027 | Independent Non-executive Director | Regional Head of Credit Risk Review, Asia Pacific Risk, HSBC Hong Kong | Executive Vice President and Chief Risk Officer, HSBC Seoul; Executive Vice President and Deputy Chief Risk Officer, HSBC Seoul | ||||||||||||
Seok-Dong Kim | May 1953 | 2019 | 2025 | Independent Non-executive Director | Chairman, JIPYONG Institute of Humanities and Society | Chairman, Financial Services Commission; Vice Minister, Ministry of Finance and Economy; Vice Chairman, Financial Supervisory Commission | ||||||||||||
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Name | Month and Year of Birth | Director Since | Expiration of Term | Position | Other Positions | Business Experience | ||||||||||||
Kyu Nam Choi | Apr. 1964 | 2021 | 2024 | Non-executive Director | Head of Global Business Development, SK SUPEX Council | Representative Director and President, Jeju Air | ||||||||||||
Jung Ho Ahn | Feb. 1978 | 2017 | 2023 | Independent Non-executive Director | Professor, Graduate School of Convergence Science and Technology, Seoul National University | Visiting Scholar, Google Inc.; Senior Research Scientist, Exascale Computing Lab, HP Labs | ||||||||||||
Youngmin Yoon | Dec. 1963 | 2018 | 2024 | Independent Non-executive Director | Dean of School of Media and Communications and Graduate School of Journalism and Mass Communication, Korea University | Professor, School of Media & Communication, Korea University; Vice-chair, Korean Academic Society for Public Relations; Advisor, Ministry of Land, Infrastructure and Transport Public Relations Division; Advisor, Korea Media Rating Board | ||||||||||||
Seok-Dong Kim | May 1953 | 2019 | 2025 | Independent Non-executive Director | Chairman, JIPYONG Institute of Humanities and Society | Chairman, Financial Services Commission; Vice Minister, Ministry of Finance and Economy; Vice Chairman, Financial Supervisory Commission | ||||||||||||
Name | Month and Year of Birth | Director Since | Expiration of Term | Position | Other Positions | Business Experience | ||||||||||||
Yong-Hak Kim | Jan. 1953 | 2020 | 2023 | Independent Non-executive Director | Professor Emeritus, Yonsei University | President, Yonsei University; BK Planning Committee, Ministry of Education; Member, Presidential Advisory Council of Policy Planning; Professor of Sociology, Yonsei University | ||||||||||||
Junmo Kim | Sept. 1976 | 2020 | 2023 | Independent Non-executive Director | Associate Professor of Electrical Engineering, KAIST | Assistant Professor of Electrical Engineering, KAIST; Senior Researcher, Samsung Advanced Institute of Technology | ||||||||||||
Name | Month and Year of Birth | Director Since | Expiration of Term | Position | Other Positions | Business Experience | ||||||||||||
Yong-Hak Kim | Jan. 1953 | 2020 | 2026 | Independent Non-executive Director | Professor Emeritus, Yonsei University | President, Yonsei University; BK Planning Committee, Ministry of Education; Member, Presidential Advisory Council of Policy Planning; Professor of Sociology, Yonsei University | ||||||||||||
Junmo Kim | Sept. 1976 | 2020 | 2026 | Independent Non-executive Director | Associate Professor of Electrical Engineering, KAIST | Assistant Professor of Electrical Engineering, KAIST; Senior Researcher, Samsung Advanced Institute of Technology | ||||||||||||
Haeyun Oh | Nov. 1974 | 2023 | 2026 | Independent Non-executive Director | President, KAIST Artificial Intelligence Research Institute | Director, KAIST Center for MARS Artificial Intelligence Research | ||||||||||||
Other Executive Officers
In addition to our standingexecutive directors, we currently have the following executive officers:
Name | Month and Year of Birth | Position | Business Experience | |||
| Head of | ||||||
| Mar. 1971 | Head of | |||||
| Hai Sung Kwon | Jul. 1975 | Head of MNO AI Platform | Acting Head of AI/DT | |||
| Kyeong Deog Kim | Apr. 1966 | Head of Enterprise Business Division | Chief Executive Officer, Dell Technologies Korea | |||
| Dae Sung Kim | Dec. 1971 | Head of Corporate | Head of MNO Support | |||
| Do Youn Kim | Feb. 1973 | Head of Ethics Management | Vice President, SK China | |||
| Dong Hyun Kim | May 1977 | Head of Brand Communications | Acting Head of Brand Communications | |||
| Myoung Gook Kim | Jul. 1972 | Head of Cloud CO | Acting Head of Cloud Business | |||
| Byong Jun Kim | Feb. 1970 | Officer of SK Research Institute | Leader of mySUNI Innovation Design College | |||
| Sang Bum Kim | Jul. 1970 | Head of Distribution | Acting Head of Distribution | |||
| Seong Joon Kim | Jul. 1970 | Head of | Representative of Service Top | |||
| Head of AI | ||||||
| Officer of | ||||||
| Jung Hoon Kim | Nov. 1963 | Head of | Head of Platform Infrastructure Group | |||
| Jiwon Kim | Jun. 1985 | Head of | Professional Researcher, Samsung Advanced Institute of Technology |
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Name | Month and Year of Birth | Position | Business Experience | |||
| Ji Eun Kim | Dec. 1973 | Officer of SV Promotion Team, SUPEX Council Project | Head of Marketing Department, Mintit | |||
| Jee Hyun Kim | Oct. 1972 | Officer of SK Research Institute | Research Officer of Deep Change, SK Research Institute | |||
| Ji Hyung Kim | Oct. 1971 | Head of Integrated Marketing Strategy | Head of Untact CP | |||
| Ji Hoon Kim | Sept. 1978 | Leader | ||||
| Hyuk Kim | Sept. 1967 | Head of Media Business Support Group | ||||
| Sept. 1969 | Head of Legal | Acting Head of Legal | ||||
| Hee Sup Kim | Oct. 1968 | Head of | Head of Public Relations Office | |||
| Nov. 1966 | Director of Statistical Policy, Statistics Korea | |||||
| Jae Sang Noh | Mar. 1973 | Head of Malaysia Office | Country Office Project Leader, SK E&S Indonesia | |||
| Hoon Do | Sept. 1973 | Officer of PR Team, SUPEX Council Project | Head of PR, SK ecoplant | |||
| Jung Hwan Ryu | Jun. 1970 | Head of | Head of Infrastructure Support Group | |||
| May 1969 | Head of | Head of | ||||
| Kyu Hyun Park | May 1972 | Head of Digital Communication | Acting Head of Digital Communication | |||
| Myung Soon Park | Feb. 1969 | Head of | Head of AI Business Unit |
Year of Birth | ||||||||
| Yong Joo Park | May 1965 | Head of ESG | Seoul Central District Prosecutor’s Office | |||||
| Ji | Jun. 1976 | Officer of Talent Development, | Project Leader of HR Support Team, SUPEX Council Project | |||||
| Byeong Chan Bai | Jun. 1972 | Head of Mobile CO | Representative, SK USA | |||||
| Jae Jun Bae | Jan. 1972 | Head of Enterprise Business Strategy | Head of Corporate Planning, SK Broadband | |||||
| Jae Won Bok | Aug. 1973 | Head of Infra Red | Acting Head of IP Infrastructure | |||||
| Jin Woo So | Dec. 1961 | Chairman of | Representative, SK Planet | |||||
| Ji Hwan Suk | Sept. 1976 | Head of Data | Acting Head of Cloud Data | |||||
| Suk Ham Sung | Apr. 1970 | Head of Policy Cooperation | Evaluation Manager of Performance Evaluation Office, MSIT | |||||
| Jin Soo Seong | May 1968 | Head of | Head of Daegu Infrastructure | |||||
| Oct. 1978 | Head of GS AIX Development | Head of PMO | ||||||
| Sang Wook Shin | Jun. 1979 | Head of Ad Business | Head of A. Service Unit | |||||
| Yong Sik Shin | Aug. 1971 | Head of | Head of Energy Business Team | |||||
| Head of Corporate | Head of HR Support Division, SK shieldus | |||||||
| Nov. 1969 | Officer of | Officer of Corporate Relations Team, SUPEX Council Project | ||||||
| Maeng Seog Yang | Mar. 1969 | Head of Metaverse | Head of 5GX MNO Business Group |
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Name | Month and Year of Birth | Position | Business Experience | |||||
| Seung Hyun Yang | Apr. 1969 | Head of | Vice President, Konan Technology | |||||
| Jong Hwan Um | Jul. 1974 | Head of ESG Innovation | Project Leader of Business Support Team, SK Inc. | |||||
| Sung Jin Yeum | Oct. 1972 | Officer of Corporate Culture | Head of CR Support | |||||
| Yong-Seop Yum | Oct. 1962 | Head of SK Research Institute | Head of Future Research Office | |||||
| Hui | Oct. 1970 | Head of Brand Strategy | Head of Brand 2 Office, Hyundai Card | |||||
| Kyung | Mar. 1966 | Head of Sports Marketing | Leader of Sports Communications Team | |||||
| Jul. 1963 | Head of | Head of | ||||||
| Dec. 1981 | Head of Strategy & Development | Director of the Investment Center, SK Inc | ||||||
| Jae Ho Yoo | Dec. 1973 | Head of Portfolio Management | Growth Business Group, Eleven Street | |||||
| Chul Jun Yu | Sept. 1971 | Head of Smart Device Center | Head of Service Ace | |||||
| Sung Eun Yoon | Jan. 1973 | Officer of | Head of Corporate Relations Strategy Office Policy System Team | |||||
| Yong Chul Yoon | May 1965 | Officer of | Head of Department, MBC Newsroom | |||||
| Nov. 1972 | Head of MNO AI Service | Head of 5GX Cluster Marketing | ||||||
| Hyeong Sig Yoon | Apr. 1968 | Head of Infra Customer CT | Head of Infrastructure DT Team | |||||
| Gahp Jae Lee | Feb. 1973 | Head of | Head of Central Marketing Office | |||||
| Jun. 1973 | Head of | Head of Data Development Operations Group | ||||||
| Gyu Sik Lee | Jan. 1970 | Head of | Leader of Change 1 Cell | |||||
| Aug. 1976 | Officer of Strategy Support Team, SUPEX Council Project | Project Leader of Strategy Support Team, SUPEX Council Project | ||||||
| Ki Yoon Lee | Dec. 1969 | Head of | ||||||
| Dong Kee Lee | Jan. 1982 | Head of Cloud R&D | Head of 5GX MEC Product | |||||
| Sang Gu Lee | Jul. 1970 | Head of Messaging CO | Head of MNO Data Business Team | |||||
| Head of | Head of | |||||||
| Young Tak Lee | Jul. 1972 | Head of Growth Support | Acting Head of CR Support | |||||
| Yong | Nov. 1961 | Research Officer at SK Research Institute | Head of ESG Group, SK Research Institute | |||||
| Acting Head of Global AI Business Development | ||||||||
| Jae Joon Lee | Head of SKTA | Acting Head of P-TF | ||||||
| Dec. 1975 | Head of Data Platform | Acting PO, Data Engineering | ||||||
| Jong Min Lee | Jul. 1978 | Head of | Head, Media Technology Institute |
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Name | Month and Year of Birth | Position | Business Experience | |||
| Jong Hoon Lee | Nov. 1975 | Head of | Acting Head of Infrastructure Solutions | |||
| Joo Young Lee | May 1975 | Officer of SK Research Institute | RF Researcher, Deep Change | |||
| Joon | Head of | Acting Head of | ||||
Year of Birth | ||||||
| Head of | Acting Head of Global Business Development | |||||
| Hye Yeon Lee | May. 1983 | Head of | Acting Head of Change Management | |||
| Kyoo Nan Im | Apr. 1970 | Director of SK Academy | Head of HR Support Division, SK | |||
| Bong Ho Lim | Dec. 1966 | Head of | Head of Metropolitan Area Marketing | |||
| Head of | ||||||
| Hyun Ki Chang | Jan. 1971 | Head of | ||||
| Hong Sung Chang | Mar. 1969 | Head of | Head of Data Technology | |||
| Dae Dug Jeong | Sept. 1967 | Head of Finance | Head of Tax Team | |||
| Dae In Jeong | Jul. 1971 | Head of SKTA GDG | Project Leader, SKTA | |||
| Doh Hee Jung | Sept. 1974 | Head of AI | Head of Data | |||
| Min Young Jeong | Dec. 1986 | Head of AI Platform | Tech Leader, Naver Clova | |||
| Suk Geun Chung | Dec. 1976 | Head of Global/AI Tech Business Division | Head of CIC, Naver Clova | |||
| Jai Hun Jung | Jun. 1968 | Head of Governance & External Affairs | Director of the Investment Support Center, SK Square | |||
| Jae Hyun Chung | Dec. 1959 | Officer of ICT Advisory Division | Officer of Corporate Growth, SK Square | |||
| Chang | Jul. 1970 | Head of | Head of Infrastructure Engineering Group | |||
| Hui Yong Jeong | Mar. 1973 | Head of GS Business Development | Head of Strategic Planning Office, SK Inc. | |||
| Dong Hwan Cho | Nov. 1970 | Head of Data CoE | ||||
| Sang Hyuk Cho | Jun. 1972 | Head of AI Strategic Partnership | Acting Head of Strategic Alliances | |||
| Young Log Cho | Jun. 1971 | Assistant to Head of External Cooperation Office | ||||
| Oct. 1977 | Head of Metaverse Development | Head of 5GX Service Development | ||||
| Hyun Deuk Cho | Feb. 1975 | Head of AI Communication | Acting Head of AI Phone | |||
| Young Hun Chae | Sept. 1969 | Head of Daegu | Acting Head of Daegu | |||
| Jong Keun Chae | Jul. 1968 | Head of | Head of Compliance Team | |||
| Nag Hun Choi | Nov. 1972 | Head of | Head of IoT Business Support Group | |||
| Dong Hee Choi | Feb. 1978 | Head of Corporate Strategy | Head of Digital Invest Center, SK Inc. | |||
| Yong Jin Choi | Feb. 1977 | Head of | Head of MNO DT Labs | |||
| Head of | Acting Head of |
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Name | Month and Year of Birth | Position | Business Experience | |||
| Chang Won Chey | Aug. 1964 | Vice President of SK Research Institute | Chief Executive Officer, SK Chemical | |||
| Tae Won Chey | Dec. 1960 | Chairman | Representative Director of SK Inc., SK Innovation and SK Hynix | |||
| Hwan Seok Choi | Aug. 1971 | Head of Corporate Strategy | Head of IPO Promotion | |||
| Myung Bok Ha | Mar. 1971 | Head of Central Regional CP | Head of Service Ace | |||
| Min Yong Ha | Sept. 1970 | Head of | Head of Global Alliance Group | |||
| Head of | Acting Head of | |||||
| Head of Metropolitan | Head of | |||||
| Seung Tae Hong | Jul. 1971 | Head of | Leader of Portfolio Innovation Team | |||
| Head of | Acting Head of HR | |||||
| Davis Eric Hartman | Oct. 1980 | Head of GLM | Head of Global AI Development Group | |||
| Item 6.B. | ||||||
Year of Birth | ||||||
Compensation |
The aggregate of the remuneration paid and
The compensation of our directors who received total annual compensation exceeding Won 500 million in 20212023 was as follows:
Name | Position | Composition of Total Compensation | Total Compensation | |||||||||||||||||||
Salary | Bonus | Other Earned Income | Severance | |||||||||||||||||||
(in millions of Won) | ||||||||||||||||||||||
Jung Ho Park (1) | Executive Director | ￦ | 1,625 | ￦ | 2,170 | ￦ | 32 | — | ￦ | 3,827 | ||||||||||||
Young Sang Ryu | Executive Director | 792 | 730 | 31 | — | 1,553 | ||||||||||||||||
Name | Position | Composition of Total Compensation | Total Compensation | |||||||||||||||||||||
| Salary | Bonus | Other Earned Income | Severance | |||||||||||||||||||||
| (in millions of Won) | ||||||||||||||||||||||||
Young Sang Ryu | Executive Director | W | 1,200 | W | 836 | W | 29 | — | W | 2,065 | (1) | |||||||||||||
Jong Ryeol Kang | Executive Director | 700 | 525 | 5 | — | 1,230 | (2) | |||||||||||||||||
| (1) | Does not include 25,380 performance stock units granted in consideration of |
| (2) | Does not include 4,400 PSUs. See “— Other Equity-based Compensation — PSU Program” below. |
Remuneration for our directors is determined by shareholder resolution. Severance allowances for our directors are determined by the board of directors in accordance with our regulation on severance allowances for officers, which was adopted by shareholder resolution. The regulation provides for monthly salary, performance bonus, severance payment and fringe benefits. The amount of performance bonuses is independently decided by a resolution of the board of directors.
The aggregate of the remuneration paid and
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The compensation of the five individuals who received the highest compensation among those who received total annual compensation exceeding Won 500 million in 20212023 was as follows:
Name | Position | Composition of Total Compensation | Total Compensation | |||||||||||||||||||
Salary | Bonus | Other Earned Income | Severance | |||||||||||||||||||
(in millions of Won) | ||||||||||||||||||||||
Jung Ho Park | Executive Director | ￦ | 1,630 | ￦ | 2,170 | ￦ | 32 | ￦ | — | ￦ | 3,832 | |||||||||||
Jin Woo So | Chairman of Talent Development Committee | 1,286 | 1,699 | 1 | — | 2,986 | ||||||||||||||||
Yoon Kim | Head of T3K | 440 | 795 | 114 | 471 | 1,820 | ||||||||||||||||
Hyeong Chan Kim | PD of SK Research Institute for SUPEX Management | 361 | 315 | 39 | 899 | 1,614 | ||||||||||||||||
Dae Hwan Ko | Director of SK Academy | 369 | 303 | 4 | 895 | 1,571 | ||||||||||||||||
Name | Position | Composition of Total Compensation | Total Compensation | |||||||||||||||||||
| Salary | Bonus | Other Earned Income | Severance | |||||||||||||||||||
| (in millions of Won) | ||||||||||||||||||||||
Jin Woo So | Vice Chairman | W | — | W | 2,537 | W | — | W | — | W | 2,537 | |||||||||||
Man Seog Ryu | Head of SK Academy | 489 | 362 | — | 1,391 | 2,242 | ||||||||||||||||
Young Sang Ryu | Representative Director | 1,200 | 836 | 29 | — | 2,065 | (1) | |||||||||||||||
Yong-Seop Yum | Head of SK Research Institute | 825 | 888 | — | — | 1,713 | ||||||||||||||||
HyunA Lee | Vice President | 430 | 338 | 4 | 641 | 1,413 | (2) | |||||||||||||||
| (1) | Does not include 25,380 PSUs. See “— Other Equity-based Compensation — PSU Program” below. |
| (2) | Does not include 1,000 PSUs. See “— Other Equity-based Compensation — PSU Program” below. |
Stock Options
On February 25, 2021, our board of directors resolved to grant options to purchase shares of our common stock to certain directors and executive officers, which was approved by shareholder resolution on March 25, 2021. On February 24, 2022, our board of directors resolved to grant options to purchase shares of our common stock to certain directors and executive officers, which was approved by shareholder resolution on March 25, 2022. On February 24, 2023, our board of directors resolved to grant options to purchase shares of our common stock to certain directors and executive officers, which was approved by shareholder resolution on March 28, 2023. The following table summarizes the exercisable stock options granted to our current and former directors and executive officers as of March 31, 2022:2024:
Recipient | Position | Grant date(1) | Exercise period | Exercise price (per share) | Number of shares issuable | |||||||||||||||||
| From | To | |||||||||||||||||||||
Jung Ho Park | Former Executive Director, President and Chief Executive Officer | March 26, 2020 | March 27, 2023 | March 26, 2027 | W | 38,452 | 337,408 | |||||||||||||||
Young Sang Ryu | Executive Director, President and Chief Executive Officer | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 7,145 | ||||||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 18,190 | ||||||||||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 98,425 | (2) | |||||||||||||||||
Jong Ryeol Kang | Executive Director, Head of ICT Infra | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 6,219 | ||||||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 7,136 | ||||||||||||||||||
| March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 21,743 | ||||||||||||||||||
Hyoung Il Ha | Former Head of Corporate Development | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,955 | ||||||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 11,418 | ||||||||||||||||||
Poong Young Yoon | Former Head of Corporate Center 1 | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,293 | ||||||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 10,203 | ||||||||||||||||||
Seong Ho Ha | Former Head of Corporate Relations Center | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,028 | ||||||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 5,830 | ||||||||||||||||||
| March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 9,341 | ||||||||||||||||||
Dong Hwan Cho | Chief Information Officer | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 4,631 | ||||||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 5,375 | ||||||||||||||||||
| March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 8,697 | ||||||||||||||||||
HyunA Lee | Head of Comm Service | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 4,631 | ||||||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 8,746 | ||||||||||||||||||
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Recipient | Position | Grant date | Exercise period | Exercise price (per share) | Number of shares issuable | |||||||||||
From | To | |||||||||||||||
Jung Ho Park | Former Executive Director, President and Chief Executive Officer | March 24, 2017 | March 25, 2019 | March 24, 2022 | ￦ | 49,350 | 67,320 | |||||||||
| March 25, 2020 | March 24, 2023 | 53,298 | 67,320 | |||||||||||||
| March 25, 2021 | March 24, 2024 | 57,562 | 67,320 | |||||||||||||
| March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 337,408 | ||||||||||||
Young Sang Ryu | Executive Director, President and Chief Executive Officer | February 20, 2018 | February 21, 2020 | February 20, 2023 | 50,824 | 4,123 | ||||||||||
| March 26, 2019 | March 27, 2021 | March 26, 2024 | 50,862 | 5,265 | ||||||||||||
| March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 7,145 | ||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 18,190 | ||||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 295,275 | ||||||||||||
Seong Ho Ha | Head of Corporate Relations Center | February 22, 2019 | February 23, 2021 | February 22, 2024 | 53,052 | 4,157 | ||||||||||
| March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,028 | ||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 5,830 | ||||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 9,341 | ||||||||||||
Hyoung Il Ha | Head of Corporate Development | February 22, 2019 | February 23, 2021 | February 22, 2024 | 53,052 | 4,749 | ||||||||||
| March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,955 | ||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 11,418 | ||||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 10,737 | ||||||||||||
Poong Young Yoon | Head of Corporate Center 1 | February 22, 2019 | February 23, 2021 | February 22, 2024 | 53,052 | 3,777 | ||||||||||
| March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,293 | ||||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 10,203 | ||||||||||||
Jong Ryeol Kang | Head of ICT Infrastructure Center | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 6,219 | ||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 7,136 | ||||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 21,743 | ||||||||||||
Recipient | Position | Grant date | Exercise period | Exercise price (per share) | Number of shares issuable | |||||||||||
From | To | |||||||||||||||
Yoon Kim | Head of T3K | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,690 | ||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 6,407 | ||||||||||||
Seok Joon Huh | Head of Private Placement Group | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 5,624 | ||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 6,863 | ||||||||||||
Dong Hwan Cho | Head of Cloud Transformation Center | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 4,631 | ||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 5,375 | ||||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 8,697 | ||||||||||||
HyunA Lee | Head of AI&CO | March 26, 2020 | March 27, 2023 | March 26, 2027 | 38,452 | 4,631 | ||||||||||
| March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 8,746 | ||||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 12,884 | ||||||||||||
Sang Kyu Shin | Head of Corporate Culture Center | March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 4,646 | ||||||||||
Jae Seung Song | Head of Corporate Development Croup | March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 8,047 | ||||||||||
Myung Jin Han | Head of Subscription Service CO | March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 4,403 | ||||||||||
| March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 11,274 | ||||||||||||
Byung Hoon Ryu | Head of Corporate Strategy Group | March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 3,796 | ||||||||||
Bong Ho Lim | Head of Mobile CO | March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 12,884 | ||||||||||
Jinwon Kim | Head of Corporate Planning Group | March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 10,629 | ||||||||||
Yong Joo Park | Head of ESG | March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 10,334 | ||||||||||
Heesup Kim | Head of Communications | March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 7,086 | ||||||||||
Jungwhan Ahn | Head of Corporate Culture | March 25, 2022 | March 26, 2025 | March 25, 2029 | 56,860 | 8,858 | ||||||||||
Recipient | Position | Grant date(1) | Exercise period | Exercise price (per share) | Number of shares issuable | |||||||||||
| From | To | |||||||||||||||
Jae Seung Song | Former Head of Corporate Development Croup | March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 8,047 | ||||||||||
Myung Jin Han | Former Head of Corporate Strategy | March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 4,403 | ||||||||||
| March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 11,274 | ||||||||||||
Byung Hoon Ryu | Former Head of Corporate Strategy Group | March 25, 2021 | March 26, 2023 | March 25, 2026 | 50,276 | 3,796 | ||||||||||
Bong Ho Lim | Head of Customer Business | March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 8,858 | ||||||||||
Jin Won Kim | Former Head of Corporate Planning | March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 10,629 | ||||||||||
Yong Joo Park | Head of ESG | March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 10,334 | ||||||||||
Hee Sup Kim | Head of Communication | March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 7,086 | ||||||||||
Jung Whan Ahn | Head of Corporate Culture | March 25, 2022 | March 26, 2024 | March 25, 2027 | 56,860 | 8,858 | ||||||||||
| (1) | The stock options granted on March 28, 2023 were cancelled and replaced with PSUs. |
| (2) | Two-thirds of the stock options granted to Young Sang Ryu on March 25, 2022 were cancelled and replaced with PSUs. |
Other Equity-based Compensation
PSU Program
Since 2023, we have been granting PSUs to certain of our and our subsidiaries’ directors (including the representative director) and executive officers in order to align management and shareholder interests and further align growth in our enterprise value with management compensation. Future performance targets are set when entering into the relevant stock compensation agreement, and the final number of shares to be received by each grantee, which will be settled out of our treasury shares, will be determined based on the achievement levels of such targets subject to approval by the board of directors. In consideration of the representative director’s role and importance, additional shares of up to 100% of the representative director’s annual salary at the time of the PSU grant may be granted in recognition of his or her outstanding achievements upon satisfaction of certain conditions. The validity of the PSUs, which is subject to a three-year vesting period, is dependent on the grantee meeting a minimum term of incumbency under his or her title until the end of the year in which the PSUs were issued. In 2023, we granted a total of 228,708 PSUs to 194 directors and executive officers.
Stock Appreciation Rights (“SARs”) Program
In 2021 and 2022, we granted SARs to certain of our executive officers as equity compensation. SARs entitle the grantee to receive in cash the product of (a) the difference between the base share price at the time of grant (calculated based on the arithmetic mean of the weighted average of recent share prices) and the base share price after a three-year vesting period (calculated based on the arithmetic mean of the weighted average of recent share prices), and (b) the number of shares of our common stock equal to 100% of a grantee’s annual salary. If the grantee’s employment with us is terminated within two years of the grant date, no such payment is made. If a grantee’s employment with us is terminated at a date between two and three years after the grant date, settlement is made based on the share price on the termination date. The maximum payout is capped at 100% of the grantee’s annual salary at the time of grant. In 2021, we granted a total of 253,081 SARs to 86 executive officers. In 2022, we granted a total of 338,525 SARs to 72 executive officers. In 2023, we did not grant any SARs.
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Shareholder Participation Program
Since 2021, pursuant to the Korean Commercial Code, we have been operating the “Shareholder Participation Program” as equity compensation in order to align management and shareholder interests and strengthen commitment to enhance our enterprise value. All of our employees, including the representative director, are eligible to participate in the Shareholder Participation Program, under which we grant treasury shares equal to a portion of a participating employee’s bonus. The participating employee must be employed with us at the time of actual grant and there is no transfer restriction period. In 2021, we granted a total of 366,309 treasury shares (reflecting the effects of the Stock Split) to 1,985 employees. In 2022, we granted a total of 413,080 treasury shares to 2,005 employees. In 2023, we granted a total of 434,088 treasury shares to 1,863 employees.
Stock Grant Program
Since 2021, we have been granting portions of our independent non-executive directors’ remuneration in the form of shares in order to align the interests of our board of directors and shareholders. The number of shares granted, which is in the form of treasury shares, is based on the independent non-executive director’s role and responsibility and our director compensation payment criteria. Transfer of such shares is restricted for three years following initial receipt. In 2021, we granted a total of 1,515 treasury shares (reflecting the effects of the Stock Split) to five independent non-executive directors. In 2022, we granted a total of 5,984 treasury shares to five independent non-executive directors. In 2023, we granted a total of 6,999 treasury shares to five independent non-executive directors.
In addition, in 2021, we awarded a total of 1,531,210 treasury shares to 5,054 employees of SK Telecom in order to enhance our enterprise value and maximize synergies following the Spin-off. The treasury shares were granted to our then-current employees and the transfer of such shares was restricted for six months.
| Item 6.C. | Board Practices |
For information regarding the expiration of each director’s term of appointment, as well as the period from which each director has served in such capacity, see the table set out under “Item 6.A. Directors and Senior Management” above.
Termination of Directors’ Services
Directors are given a retirement and severance payment upon termination of employment in accordance with our internal regulations on severance payments. Upon retirement, directors who have made significant contributions to our company during their term may be appointed to serve either as an advisor to us or as an officer of an affiliate company.
Audit Committee
Under relevant Korean laws and our articles of incorporation, we are required to have an audit committee under the board of directors. The committee is composed of at least three members,
examine the agenda for the general meeting of shareholders;
examine financial statements and other reports to be submitted by the board of directors to the general meeting of shareholders;
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review the administration by the board of directors of our affairs; and
examine the operations and asset status of us and our subsidiaries.
In addition, the audit committee must appoint independent auditors to examine our financial statements. An audit and review of our financial statements by independent auditors is required for the purposes of a securities report. Listed companies must provide such report on an annual, semi-annual and quarterly basis to the FSC and the KRX KOSPI Market.
Our audit committee is composed of four independent
Independent Director Nomination Committee
This committee is devoted to recommending independent
Strategy Committee
This committee is responsible for reviewing our annual business plan (including the budget). It also examines major capital expenditure revisions,as well as establishing our key performance indicators (“KPIs”) and routinely monitors capital expenditure decisions that have already been executed.measuring our performance against such KPIs. The committee is comprised of onethree executive director,directors, Young Sang Ryu, Jong Ryeol Kang and Yang Seob Kim, one
Compensation Review Committee
This committee oversees our overall compensation scheme for
ESG Committee
This committee is responsible for establishing and reviewing the direction of our environmental, social and governance policy as well as public filings and communications with related parties. This committee was established to help us achieve world-class sustainable growth and to help us fulfill our corporate social responsibilities. It is comprised of one executive director, Jong Ryeol Kang, and three independent directors, Jung Ho Ahn, Youngmin YoonJunmo Kim, Haeyun Oh and Junmo Kim. Jung Ho AhnMi Kyung Noh. Haeyun Oh is the chairmanchairwoman of the committee.
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Item 6.D. | Employees |
The following table sets forth the numbers of our regular employees, temporary employees and total employees as of the dates indicated:
Regular Employees | Temporary Employees | Total | ||||||||||
December 31, 2019 (1) | 34,548 | 5,995 | 40,543 | |||||||||
December 31, 2020 (1) | 34,847 | 6,250 | 41,097 | |||||||||
December 31, 2021 | 23,457 | 668 | 24,125 | |||||||||
| Regular Employees | Temporary Employees | Total | ||||||||||
December 31, 2021 | 23,457 | 668 | 24,125 | |||||||||
December 31, 2022 | 25,099 | 954 | 26,053 | |||||||||
December 31, 2023 | 25,103 | 1,092 | 26,195 | |||||||||
Labor Relations
As of December 31, 2021,2023, SK Telecom had a company union consisting of 2,4532,624 regular employees out of 23,4575,131 total regular employees. We have never experienced a work stoppage of a serious nature. Every two years,
Employee Benefits
Since April 1999, we have been required to contribute an amount equal to 4.5% of employee wages toward a national pension plan. Employees are eligible to participate in an employee stock ownership association. We are not required to, and we do not, make any contributions to the employee stock ownership association, although we subsidize the employee stock ownership association through the Employee Welfare Fund by providing low interest rate loans to employees who desire to purchase our stock through the plan in the event of a capitalization by the association.
We are required to pay a severance amount to eligible employees who voluntarily or involuntarily cease employment with us, including through retirement. This severance amount is based upon the employee’s length of service with us and the employee’s salary level at the time of severance. AsThe present value of December 31, 2021, theour defined benefit obligation,obligations, which is the present value of total accrued and unpaid retirement and severance benefits for our employees, as of December 31, 2023, was Won 1,121.7 billion, which was more than offset by the fair value of our defined benefit plan assets of Won 1,035.01,292.4 billion for allas of our employees is reflected in our consolidated financial statements as a liability, of which a totalsuch date. Accordingly, we recognized net defined benefit assets of Won 1,040.3170.7 billion was funded.as of December 31, 2023. Under Korean laws and regulations, we are prevented from involuntarily terminating a full-time employee except under certain limited circumstances. In September 2000, we entered into an employment stabilization agreement with the union. Among other things, in the event that we reorganize a department into a separate entity or we outsource an employee to a separate entity where the wage is lower, this agreement provides for a guarantee of the same wage level for the year that such an event occurs.
Under the Basic Labor Welfare Act, we may also contribute up to 5.0% of our annual earnings before tax for employee welfare. Contribution amounts are determined annually following negotiation with the union. The contribution amount for 2023 was set at 4.58% of SK Telecom’s profit before income tax on a separate basis, or Won 62.0 billion. The contribution amount for 2022 was set at 5.32% of SK Telecom’s profit before income tax on a separate basis, or Won 61.0 billion. The contribution amount for 2021 was set at 4.09% of SK Telecom’s profit before income tax on a separate basis, or Won 56.0 billion. The contribution amount for 2020 was set at 5.00% of SK Telecom’s profit before income tax on a separate basis, or Won 50.0 billion. The contribution amount for 2019 was set at 3.63% of SK Telecom’s profit before income tax on a separate basis, or Won 43.0 billion.
In addition, we provide our employees with miscellaneous other fringe benefits including medical cost subsidies, family camp programs and sabbatical programs for long-term employees.
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Item 6.E. | Share Ownership |
The following table sets forth the share ownership by our directors and executive officers as of March 31, 2022:2024:
Name | Position | Number of Shares Owned | Percentage of Total Shares Outstanding | Special Voting Rights | Options | |||||||||||||
Directors: | ||||||||||||||||||
Young Sang Ryu | Executive Director, President and Chief Executive Officer | 20,309 | * | None | 123,760 | (1) | ||||||||||||
Jong Ryeol Kang | Executive Director, Head of ICT Infra | 8,823 | * | None | 39,498 | (2) | ||||||||||||
Yong-Hak Kim | Independent Non-executive Director | 3,358 | * | None | — | |||||||||||||
Seok-Dong Kim | Independent Non-executive Director | 2,785 | * | None | — | |||||||||||||
Junmo Kim | Independent Non-executive Director | 2,785 | * | None | — | |||||||||||||
Haeyun Oh | Independent Non-executive Director | 1,338 | * | None | — | |||||||||||||
Executive Officers: | ||||||||||||||||||
Hyuncheol Ku | Head of Sales | 3,354 | * | None | — | |||||||||||||
Young Sang Kwon | Head of Strategy | 3,354 | * | None | — | |||||||||||||
Hai Sung Kwon | Head of MNO AI Platform | 2,199 | * | None | — | |||||||||||||
Kyeong Deog Kim | Head of Enterprise Business Division | 2,113 | * | None | 12,000 | |||||||||||||
Dae Sung Kim | Head of Corporate Planning | 3,352 | * | None | — | |||||||||||||
Do Youn Kim | Head of Ethics Management | 549 | * | None | — | |||||||||||||
Dong Hyun Kim | Head of Brand Comm | 5,469 | * | None | — | |||||||||||||
Myoung Gook Kim | Head of Cloud CO | 1,474 | * | None | — | |||||||||||||
Sang Bum Kim | Head of Distribution | 2,677 | * | None | — | |||||||||||||
Seong Joon Kim | Head of MNO AI Marketing | 5,699 | * | None | — | |||||||||||||
Yong Hun Kim | Head of AI Service Business Division | 3,334 | * | None | 12,000 | |||||||||||||
Jung Hoon Kim | Head of IT Infra | 4,149 | * | None | — | |||||||||||||
Jiwon Kim | Head of AI Model | 3,935 | * | None | — | |||||||||||||
Jee Hyun Kim | Officer of SK Research Institute | 1,576 | * | None | — | |||||||||||||
Ji Hyung Kim | Head of Integrated Marketing Strategy | 1,957 | * | None | — | |||||||||||||
Ji Hoon Kim | Head of AI Assistant | 2,299 | * | None | — | |||||||||||||
Hyuk Kim | Head of Media Business & Alliance | 4,010 | * | None | 12,000 | |||||||||||||
Hogeun Kim | Head of Legal | 1,982 | * | None | 12,000 | |||||||||||||
Hee Sup Kim | Head of Communication | 5,714 | * | None | 19,086 | |||||||||||||
Jung Hwan Ryu | Head of Infra Strategy & Tech CT | 5,102 | * | None | — | |||||||||||||
Kap In Moon | Head of Metropolitan Area CP | 6,772 | * | None | — | |||||||||||||
Kyu Hyun Park | Head of Digital Communication | 4,368 | * | None | — | |||||||||||||
Myung Soon Park | Head of Infra AI/DT | 1,294 | * | None | — | |||||||||||||
Yong Joo Park | Head of ESG | 9,238 | * | None | 22,334 | |||||||||||||
Jae Won Bok | Head of Infra Red | 1,297 | * | None | — | |||||||||||||
Ji Hwan Suk | Head of Data | 2,256 | * | None | — | |||||||||||||
Suk Ham Sung | Head of Policy Cooperation | 5,322 | * | None | — | |||||||||||||
Jin Soo Seong | Head of Infra Service CT | 8,090 | * | None | — | |||||||||||||
In Hyuk Sohn | Head of GS AIX Development | 4,352 | * | None | — | |||||||||||||
Sang Wook Shin | Head of Ad Business | 2,427 | * | None | — | |||||||||||||
Yong Sik Shin | Head of Enterprise AI CO | 5,313 | * | None | — | |||||||||||||
Jung Whan Ahn | Head of Corporate Culture | 3,503 | * | None | 20,858 | |||||||||||||
Maeng Seog Yang | Head of Metaverse CO | 3,550 | * | None | — | |||||||||||||
Seung Hyun Yang | Head of Global Solution Tech | 2,667 | * | None | — | |||||||||||||
Jong Hwan Um | Head of ESG Innovation | 597 | * | None | — | |||||||||||||
82
Name | Position | Number of Shares Owned | Percentage of Total Shares Outstanding | Special Voting Rights | Options | |||||||||||||
Sung Jin Yeum | Officer of Corporate Culture Department | 3,450 | * | None | — | |||||||||||||
Hui Kang Yea | Head of Brand Strategy | 5,269 | * | None | — | |||||||||||||
Kyung Sig Oh | Head of Sports Marketing | 3,101 | * | None | — | |||||||||||||
Se Hyeon Oh | Head of Web3 CO | 2,215 | * | None | — | |||||||||||||
Jae Ho Yoo | Head of Portfolio Management | 4,157 | * | None | — | |||||||||||||
Chul Jun Yu | Head of Smart Device Center | 928 | * | None | — | |||||||||||||
Sung Eun Yoon | Officer of Communication Team, SUPEX Council Project | 1,911 | * | None | — | |||||||||||||
Yong Chul Yoon | Officer of SK Research Institute | 303 | * | None | — | |||||||||||||
Jae Woong Yoon | Head of MNO AI Service | 2,163 | * | None | — | |||||||||||||
Hyeong Sig Yoon | Head of Infra Customer CT | 4,675 | * | None | — | |||||||||||||
Gahp Jae Lee | Head of Region CP | 5,716 | * | None | — | |||||||||||||
Kwan Woo Lee | Head of Subscription Development | 4,584 | * | None | — | |||||||||||||
Gyu Sik Lee | Head of AI Contact Business | 5,801 | * | None | — | |||||||||||||
Ki Yoon Lee | Head of CR | 6,171 | * | None | — | |||||||||||||
Dong Kee Lee | Head of Cloud R&D | 2,758 | * | None | — | |||||||||||||
Sang Gu Lee | Head of Messaging CO | 5,799 | * | None | — | |||||||||||||
Seung Yeoll Lee | Head of PR | 3,612 | * | None | — | |||||||||||||
Young Tak Lee | Head of Growth Support | 2,890 | * | None | — | |||||||||||||
Jae Shin Lee | Head of AI Growth Strategy | 2,563 | * | None | — | |||||||||||||
Jae Joon Lee | Head of SKTA | 200 | * | None | — | |||||||||||||
Jung Ryong Lee | Head of Data Platform | 2,675 | * | None | — | |||||||||||||
Jong Min Lee | Head of Future R&D | 2,987 | * | None | — | |||||||||||||
Jong Hoon Lee | Head of Infra Engineering | 1,622 | * | None | — | |||||||||||||
Joon Hyoung Lee | Head of Platform Development | 2,369 | * | None | — | |||||||||||||
Hyunwoo Lee | Head of GS AIDC Development | 624 | * | None | — | |||||||||||||
Hye Yeon Lee | Head of Change Management | 2,021 | * | None | — | |||||||||||||
Bong Ho Lim | Head of Customer Business Division | 7,021 | * | None | 20,858 | |||||||||||||
Jeong Yeon Lim | Head of Media R&D | 2,693 | * | None | — | |||||||||||||
Hyun Ki Chang | Head of MNO AIX CT | 508 | * | None | 12,000 | |||||||||||||
Hong Sung Chang | Head of AdTech CO | 4,331 | * | None | — | |||||||||||||
Dae Dug Jeong | Head of Finance | 3,855 | * | None | — | |||||||||||||
Doh Hee Jung | Head of AI Data | 2,530 | * | None | — | |||||||||||||
Jai Hun Jung | Head of Governance & External Affairs | 1,518 | * | None | — | |||||||||||||
Jae Hyun Chung | Officer of ICT Advisory Division | 303 | * | None | — | |||||||||||||
Chang Kawn Jung | Head of Serious Accident Prevention | 3,722 | * | None | — | |||||||||||||
Hui Yong Jeong | Head of GS Business Development | 3,014 | * | None | — | |||||||||||||
Dong Hwan Cho | Chief Information Officer | 4,221 | * | None | 30,703 | |||||||||||||
Sang Hyuk Cho | Head of AI Strategic Partnership | 3,416 | * | None | — | |||||||||||||
Young Log Cho | Officer of SK Research Institute | 5,135 | * | None | 12,000 | |||||||||||||
Ik Hwan Cho | Head of Metaverse Development | 3,824 | * | None | — | |||||||||||||
Hyun Deuk Cho | Head of AI Communication | 1,727 | * | None | — | |||||||||||||
Young Hun Chae | Head of Daegu | 2,637 | * | None | — | |||||||||||||
Jong Keun Chai | Head of Compliance | 7,278 | * | None | — | |||||||||||||
Nag Hun Choi | Head of Connectivity CO | 4,004 | * | None | — | |||||||||||||
Yong Jin Choi | Head of Open AIX R&D | 3,650 | * | None | — | |||||||||||||
Jai Won Choi | Head of Western Regional CP | 2,168 | * | None | — | |||||||||||||
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Name | Position | Number of Shares Owned | Percentage of Total Shares Outstanding | Special Voting Rights | Options | |||||||||||||
Directors: | ||||||||||||||||||
Young Sang Ryu | Executive Director, President and Chief Executive Officer | 7,340 | * | None | 329,998 | |||||||||||||
Jong Ryeol Kang | Head of ICT Infrastructure | 3,484 | * | None | 35,098 | |||||||||||||
Executive Officers: | ||||||||||||||||||
Seong Joon Kim | Head of Untact CP | 2,514 | * | None | — | |||||||||||||
Yeong Joon Kim | Head of AI Technology Unit | 1,411 | * | None | — | |||||||||||||
Jung Hoon Kim | Head of Cloud Infrastructure | 1,759 | * | None | — | |||||||||||||
Jiwon Kim | Head of T3K Innovation Meta AI | 1,714 | * | None | — | |||||||||||||
Jinwoo Kim | Head of Global Business Office | 1,759 | * | None | — | |||||||||||||
Jinwon Kim | Head of Corporate Planning Group | 3,429 | * | None | 10,629 | |||||||||||||
Name | Position | Number of Shares Owned | Percentage of Total Shares Outstanding | Special Voting Rights | Options | |||||||||||||
Hyuk Kim | Global Media Support, Media/Contents CO | 1,714 | * | None | — | |||||||||||||
Heesup Kim | Head of Communications | 2,411 | * | None | 7,086 | |||||||||||||
Jung Hwan Ryu | Head of Infrastructure Strategy | 2,420 | * | None | — | |||||||||||||
Gap In Moon | Head of Smart Device | 2,911 | * | None | — | |||||||||||||
Myung Soon Park | Head of Infrastructure Value Innovation | 1,459 | * | None | — | |||||||||||||
Yong Joo Park | Head of ESG | 5,527 | * | None | 10,334 | |||||||||||||
Jong Kwan Park | Head of Infrastructure Technology | 1,911 | * | None | — | |||||||||||||
Suk Ham Sung | Head of Policy Cooperation Office | 2,822 | * | None | — | |||||||||||||
Jin Soo Seong | Head of Infrastructure Engineering | 5,449 | * | None | — | |||||||||||||
Yongsik Shin | Head of Connect Infrastructure CO | 2,642 | * | None | — | |||||||||||||
Sang Soo Sim | Head of Western Infrastructure | 2,714 | * | None | — | |||||||||||||
Jeong Yeol Ahn | Head of Supply Chain Management | 2,182 | * | None | — | |||||||||||||
Maeng Seog Yang | Head of Metaverse Business, Metaverse CO | 1,911 | * | None | — | |||||||||||||
Ji Young Yeo | ESG Alliance, ESG Promotion | 1,763 | * | None | — | |||||||||||||
Sung Jin Yeum | Officer of Corporate Culture Center | 4,340 | * | None | — | |||||||||||||
Hui Gang Ye | Head of Brand Strategy | 2,411 | * | None | — | |||||||||||||
Kyung Sik Oh | Head of Sports Marketing | 1,866 | * | None | — | |||||||||||||
Sehyeon Oh | Head of Digital Asset CO | 1,107 | * | None | — | |||||||||||||
Sung Eun Yoon | Officer of Communications, SUPEX Council Project | 1,911 | * | None | — | |||||||||||||
Gab Jae Lee | Head of Regional CP | 2,214 | * | None | — | |||||||||||||
Kiyoon Lee | Head of Change Management 2 | 3,126 | * | None | — | |||||||||||||
Sang Gu Lee | Head of Messaging CO | 2,366 | * | None | — | |||||||||||||
Sang Heon Lee | Head of Policy Development | 2,148 | * | None | — | |||||||||||||
Jongmin Lee | Head of T3K Innovation | 1,911 | * | None | — | |||||||||||||
Joon Ho Lee | Head of ESG Promotion | 2,014 | * | None | — | |||||||||||||
Joong Ho Lee | Head of Metropolitan Area CP | 1,511 | * | None | — | |||||||||||||
HyunA Lee | Head of AI&CO | 1,107 | * | None | 26,261 | |||||||||||||
Bong Ho Lim | Head of Mobile CO | 1,759 | * | None | 8,858 | |||||||||||||
Hyoung Do Lim | Head of Change Management 1 | 1,638 | * | None | — | |||||||||||||
Hong Sung Chang | Head of Advertising/Data CO | 2,562 | * | None | — | |||||||||||||
Dae Dug Jeong | Head of Finance | 1,866 | * | None | — | |||||||||||||
Doh Hee Jung | Head of AI Transformation Intelligence Service | 1,607 | * | None | — | |||||||||||||
Chang Gweon Chung | Head of Infrastructure Business | 2,370 | * | None | — | |||||||||||||
Dong Hwan Cho | Head of Cloud Technology | 2,929 | * | None | 14,072 | |||||||||||||
Young Log Cho | Head of CR Innovation | 4,429 | * | None | — | |||||||||||||
Zonggeun Chai | Head of Ethics Management | 4,036 | * | None | — | |||||||||||||
Nag Hun Choi | Head of Smart Factory CO | 2,625 | * | None | — | |||||||||||||
Il Gyu Choi | Head of Digital Infrastructure CO | 1,509 | * | None | — | |||||||||||||
Jeong Hwan Choi | Strategic Investment, Business Development | 2,018 | * | None | — | |||||||||||||
Min Yong Ha | Head of Corporate Development | 2,714 | * | None | — | |||||||||||||
Seong Ho Ha | Head of Corporate Relations | 5,340 | * | None | 19,328 | |||||||||||||
Hyoung Il Ha | Head of Corporate Development | 7,340 | * | None | 26,904 | |||||||||||||
Geunman Heo | Head of Metropolitan Infrastructure | 2,514 | * | None | — | |||||||||||||
Myung Jin Han | Head of Corporate Strategy | 5,340 | * | None | 15,677 | |||||||||||||
Seung Tae Hong | Head of Client Value Innovation | 1,759 | * | None | — | |||||||||||||
Gyu Sik Lee | Head of ICT Support Office | 2,411 | * | None | — | |||||||||||||
Gwan Woo Lee | Head of Cloud Application Group | 2,062 | * | None | — | |||||||||||||
Yeong Sang Kwon | Head of Corporate Relations Strategy | 2,062 | * | None | — | |||||||||||||
Yong Jin Choi | Head of Apollo TF | 1,411 | * | None | — | |||||||||||||
Name | Position | Number of Shares Owned | Percentage of Total Shares Outstanding | Special Voting Rights | Options | |||||||||||||
Yong Chul Yoon | Officer of Communication Team, SUPEX Council Project | 303 | * | None | — | |||||||||||||
Eric Hartman Davis | Head of Apollo TF | 803 | * | None | — | |||||||||||||
Woo Seong Chey | Representative, SK Telecom Japan | 303 | * | None | — | |||||||||||||
Jihoon Kim | Officer of Future Business Team, SUPEX Council Project | 203 | * | None | — | |||||||||||||
Jungwhan Ahn | Head of Corporate Culture | — | * | None | 8,858 | |||||||||||||
Jaeho Yoo | Head of Portfolio Mgmt | 2,168 | * | None | — | |||||||||||||
Hyuncheol Ku | Head of Policy, Mobile CO | 1,107 | * | None | — | |||||||||||||
Dae Sung Kim | Head of Customer Planning, Business Planning | 1,107 | * | None | — | |||||||||||||
Ji Hyung Kim | Head of Bundled Marketing Strategy | 955 | * | None | — | |||||||||||||
Sang Wook Shin | Head of AI Service, AI&CO | 1,607 | * | None | — | |||||||||||||
Jae Woong Yoon | Head of Subscription Marketing, Marketing CO | 1,107 | * | None | — | |||||||||||||
Hyeongsig Yoon | Head of Infrastructure Operation | 1,501 | * | None | — | |||||||||||||
Dong Kee Lee | Head of Cloud MEC Technology, Digital Infrastructure CO | 1,107 | * | None | — | |||||||||||||
Seoungyeoll Lee | Head of PR1 | 803 | * | None | — | |||||||||||||
Jeongyeon Lim | Head of Media Technology | 825 | * | None | — | |||||||||||||
Hyuk Joon Chang | Head of Business Planning | 500 | * | None | — | |||||||||||||
Jae Hyun Chung | Officer of ICT Advisory Group | 303 | * | None | — | |||||||||||||
Ikhwan Cho | Head of Metaverse Development, Metaverse CO | 1,046 | * | None | — | |||||||||||||
Hwasik Choi | Head of Safety and Health | 1,107 | * | None | — | |||||||||||||
Hwan Seok Choi | Head of Business Strategy | 1,000 | * | None | — | |||||||||||||
Jin Hur | PD of SK Research Institute for SUPEX Management | 197 | * | None | — | |||||||||||||
Tae-won Chey | Chairman | 303 | * | None | — | |||||||||||||
Jung Ho Park | Vice-chairman | 21,530 | * | None | 539,368 | |||||||||||||
Total | 191,464 | * | 1,052,471 | |||||||||||||||
Name | Position | Number of Shares Owned | Percentage of Total Shares Outstanding | Special Voting Rights | Options | |||||||||||||
Tae Won Chey | Chairman | 303 | * | None | — | |||||||||||||
Hwan Seok Choi | Head of Corporate Strategy | 3,540 | * | None | — | |||||||||||||
Myung Bok Ha | Head of Central Regional CP | 4,641 | * | None | — | |||||||||||||
Min Yong Ha | Head of Global Solution Office | 9,099 | * | None | 12,000 | |||||||||||||
Sang Dong Han | Head of CR Support | 1,520 | * | None | — | |||||||||||||
Sun Kee Hong | Head of Metropolitan Infra | 3,984 | * | None | — | |||||||||||||
Seung Tae Hong | Head of Customer Value Innovation | 3,590 | * | None | — | |||||||||||||
Jae Man Hwang | Head of HR | 891 | * | None | — | |||||||||||||
Davis Eric Hartman | Head of GLM | 1,772 | * | None | — | |||||||||||||
Total | 342,201 | * | 361,097 | |||||||||||||||
| * | Less than 1%. |
| (1) | Does not include 25,380 PSUs. See “— Other Equity-based Compensation — PSU Program” above. |
| (2) | Does not include 4,400 PSUs. See “— Other Equity-based Compensation — PSU Program” above. |
See “Item 6.B. Compensation” for information regarding the exercisable stock options granted to our directors and executive officers.
Item 6.F. | Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
Not applicable.
| Item 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
Item 7.A. | Major Shareholders |
As of the close of our shareholders’ registry on December 31, 2021,2023, approximately 56.4%60.0% of our issued shares were held in Korea by approximately 18,648,100211,331 shareholders. According to Citibank, N.A. (“Citibank”), depositary for our ADRs,We estimate that, as of December 31, 2021,2023, there were at least 35,23222,051 record holders of our ADRs evidencing ADSs resident in the United States, to the best of Citibank’s knowledge, and 14,653,5983,161,929 shares of our common stock were held in the form of ADSs.
The following table sets forth certain information as of December 31, 20212023 with respect to any person known to us to be the beneficial owner of more than 5.0% of our common shares:
Shareholder | Number of Shares | Percentage of Total Shares Issued (1) | Percentage of Total Shares Outstanding (2) | |||||||||
SK Inc. | 65,668,397 | 30.0 | % | 30.2 | % | |||||||
National Pension Service | 21,076,493 | 9.6 | 9.7 | |||||||||
Shareholder | Number of Shares | Percentage of Total Shares Issued(1) | Percentage of Total Shares Outstanding(2) | |||||||||
SK Inc. | 65,668,397 | 30.0 | % | 30.9 | % | |||||||
National Pension Service | 16,330,409 | 7.5 | 7.7 | |||||||||
| (1) | Calculated based on 218,833,144 total issued shares, which include |
| (2) | Calculated based on |
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The following table sets forth significant changes in the percentage ownership held by our major shareholders during the past three years:
As of December 31, | ||||||||||||
Shareholder | 2021 | 2020 | 2019 | |||||||||
(As a percentage of total issued shares) (1) | ||||||||||||
SK Group (2) | 30.0 | % | 26.8 | % | 26.8 | % | ||||||
SK Inc. | 30.0 | 26.8 | 26.8 | |||||||||
National Pension Service | 9.6 | 11.0 | 11.1 | |||||||||
| As of December 31, | ||||||||||||
Shareholder | 2023 | 2022 | 2021 | |||||||||
| (As a percentage of total issued shares)(1) | ||||||||||||
SK Group(2) | 30.0 | % | 30.0 | % | 30.0 | % | ||||||
SK Inc. | 30.0 | 30.0 | 30.0 | |||||||||
National Pension Service | 7.5 | 7.7 | 9.6 | |||||||||
| (1) | Includes |
| (2) | SK Group’s ownership interest as of December 31, |
Except as described above, other than companies in the SK Group, no other persons or entities known by us to be acting in concert, directly or indirectly, jointly or severally, own in excess of 5.0% of our total shares outstanding or exercise control or could exercise control over our business.
As of March 31, 2022,2024, SK Inc. held 30.0%30.57% of our total issued shares of common stock.For a description of our foreign ownership limitation, see “Item 3.D. Risk Factors — Risks Relating to Our Business — If SK Inc. causes us to breach the foreign ownership limitations on our common shares, we may experience a change of control.” and “Item 4.B. Business Overview — Law and Regulation — Foreign Ownership and Investment Restrictions and Requirements.” In the event that SK Inc. announces plans of a sale of our shares, we expect to be able to discuss the details of such sale with them in advance and will endeavor to minimize any adverse effects on our share prices as a result of such sale.
As of March 31, 2022,2024, the total number of our common shares outstanding was 218,002,830.
Other than as disclosed herein, there are no other arrangements, to the best of our knowledge, which would result in a material change in the control of us. Our major shareholders do not have different voting rights.
Item 7.B. | Related Party Transactions |
We are part of the SK Group of affiliated companies. See “Item 7.A. Major Shareholders.” As disclosed in note 36 of the notes to our consolidated financial statements, we had related party transactions with a number of affiliated companies of the SK Group during the year ended December 31, 2021
SK Networks
As of December 31, 2021,2023, we had Won 0.20.1 billion of accounts receivable from SK Networks. As of the same date, we had Won 198.6156.3 billion of accounts payable to SK Networks, mainly relating to payments for wireless devices provided by PS&Marketing. The operating expenses we incurred with respect to SK Networks, including aggregate fees we paid to SK Networks for dealer commissions, amounted to Won 970.7 billion in 2023, Won 904.3 billion in 2022 and Won 1,055.5 billion in 2021, Won 1,023.0 billion in 2020 and Won 1,088.4 billion in 2019.2021.
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SK Inc.
We enter into agreements with SK Inc. from time to time for specific information technology-related projects, and we also pay SK Inc. for use of the SK brand. The operating expenses we incurred with respect to SK Inc., including aggregate fees we paid to SK Inc. for such information technology services and the use of the SK brand, amounted to Won 415.2 billion in 2023, Won 389.7 billion in 2022 and Won 385.2 billion in 2021, Won 380.3 billion in 2020 and Won 396.0 billion in 2019.2021. We also purchase various information technology-related equipment from SK Inc. from time to time. The total amount of such purchases was Won 120.9 billion in 2023, Won 114.9 billion in 2022 and Won 82.2 billion in 2021, Won 76.5 billion in 2020 and Won 95.4 billion in 2019.2021. We are a party to several service agreements with SK Inc. relating to the development and maintenance of our information technologies systems.
Item 7.C. | Interests of Experts and Counsel |
Not applicable.
Item 8. | FINANCIAL INFORMATION |
Item 8.A. | Consolidated Statements and Other Financial Information |
See “Item 18. Financial Statements” and pages
Legal Proceedings
KFTC Proceedings
In March 2021, the FTCKFTC imposed a fine of Won 3.2 billion on each of SK Telecom and SK Broadband (which SK Telecom and SK Broadband have paid in full) and issued a correctional order in connection with the payment by SK Telecom of a portion of sales commissions for SK Broadband’s IPTV services in the course of bundling and selling services that combine SK Telecom’s wireless and high-speed wireless Internet services with SK Broadband’s IPTV services in violation of the Fair Trade Act.
In April 2021,August 2023, the KFTC imposed a fine of Won 16.8 billion, Won 13.9 billion and Won 2.8 billion on SK Telecom (which SK Telecom has paid in full), KT and LG U+, respectively, and issued a correctional order for violating the Act on Fair Labeling and Advertising by engaging in inappropriate and potentially misleading advertising regarding the transmission speeds of their respective 5G wireless services. In August 2023, we initiated an administrative proceeding which is currently pending, requestingwith the Seoul High Court to request the revocation of the fine and the correctional order.
In January 2024, the KCCKFTC imposed a fine of Won 975 million8.6 billion, Won 5.8 billion, Won 1.4 billion and Won 4.1 billion on usKT, LG U+, SK Telecom and SK O&S Co., Ltd., a wholly-owned subsidiary of SK Telecom which engages in the base station maintenance service business, respectively, and issued a correctional order for providing discriminatory subsidies in violationviolating the Fair Trade Act by colluding from 2013 to 2019 to reduce costs for renting locations that house their base stations.
In April 2024, the KFTC notified SK Telecom and the two other major telecommunications providers that it is reviewing potential violations of the MDDIA. On June 26, 2019, the KCC imposed a fine of Won 231 million on us and issued a correctional order relating to restrictions on subscription cancelations. On July 9, 2019, the KCC imposed a fine of Won 1.5 million on us and issued a correctional order for failing to maintain the amount of subsidies for the minimum period in violation of the MDDIA.
Except as described above, neither we nor any of our subsidiaries are involved in any litigation, arbitration or administrative proceedings relating to claims which may have, or have had during the twelve months preceding the date hereof, a significant effect on our financial position or the financial position of our subsidiaries taken as a whole, and, so far as we are aware, no such litigation, arbitration or administrative proceedings are pending or threatened.
86
Dividends
Annual dividends, if any, on our outstanding shares must be approved at the annual general meeting of shareholders. This meeting is generally held in March of the following year, and the annual dividend is generally paid shortly after the meeting. Since our shareholders have discretion to declare annual dividends, we cannot give any assurance as to the amount of dividends per share or that any dividends will be declared at all. Interim dividends, if any, could be approved by a resolution of our board of directors. We replaced the interim dividend system with a quarterly dividend system pursuant to an amendment to our articles of incorporation at our annual general meeting of shareholders held on March 25, 2021. Once declared, dividends must be claimed within five years, after which the right to receive the dividends is extinguished and reverted to us.
We pay cash dividends to the ADR depositary in Won. Under the terms of the deposit agreement, cash dividends received by the ADR depositary generally are to be converted by the ADR depositary into Dollars and distributed to the holders of the ADSs, less withholding tax, other governmental charges and the ADR depositary’s fees and expenses. The ADR depositary’s designated bank in Korea must approve this conversion and remittance of cash dividends. See “Item 10.D. Exchange Controls — Korean Foreign Exchange Controls and Securities Regulations.”
Year Ended December 31, | Dividend per Share | Total Amount of Dividends | Number of Shares Entitled to Dividend | |||||||||
(In Won) | (In billions of Won) | |||||||||||
2019 | ￦ | 10,000 | ￦ | 730.1 | 73,136,448 | (1) | ||||||
2020 | 10,000 | 715.1 | 71,327,153 | (2) | ||||||||
The following table sets forth the interim and annual dividend per share and the aggregate total amount of dividends declared, as well as the number of outstanding shares entitled to dividends, with respect to the yearyears ended December 31, 2021.2021, 2022 and 2023. The annual dividend was paid in the immediately following year, and the interim dividends were paid in the same year.
Dividend Type | Dividend per Share | Total Amount of Dividends | Number of Shares Entitled to Dividend | |||||||||
(In Won) | (In billions of Won) | |||||||||||
Interim dividend (for the period ended June 30, 2021) | ￦ | 2,500 | ￦ | 177.9 | 71,160,643 | |||||||
Interim dividend (for the period ended September 30, 2021) | 2,500 | 177.9 | 71,160,643 | |||||||||
Annual dividend (for the year ended December 31, 2021) | 1,660 | 361.2 | 217,582,152 | (1) | ||||||||
Dividend Type | Dividend per Share | Total Amount of Dividends | Number of Shares Entitled to Dividend | |||||||||
| (In Won) | (In billions of Won) | |||||||||||
Interim dividend (for the period ended June 30, 2021) | W | 2,500 | W | 177.9 | 71,160,643 | |||||||
Interim dividend (for the period ended September 30, 2021) | 2,500 | 177.9 | 71,160,643 | |||||||||
Annual dividend (for the year ended December 31, 2021) | 1,660 | 361.2 | 217,582,152 | (1) | ||||||||
Interim dividend (for the period ended March 31, 2022) | 830 | 180.9 | 218,002,830 | (1) | ||||||||
Interim dividend (for the period ended June 30, 2022) | 830 | 181.0 | 218,032,053 | (1) | ||||||||
Interim dividend (for the period ended September 30, 2022) | 830 | 181.0 | 218,032,053 | (1) | ||||||||
Annual dividend (for the year ended December 31, 2022) | 830 | 181.0 | 218,032,053 | (1) | ||||||||
Interim dividend (for the period ended March 31, 2023) | 830 | 181.3 | 218,466,141 | (1) | ||||||||
Interim dividend (for the period ended June 30, 2023) | 830 | 181.3 | 218,473,140 | (1) | ||||||||
Interim dividend (for the period ended September 30, 2023) | 830 | 179.6 | 216,412,898 | (1) | ||||||||
Annual dividend (for the year ended December 31, 2023) | 1,050 | 223.3 | 212,699,730 | (1) | ||||||||
| (1) | Reflects the Stock Split, which became effective as of October 28, 2021. |
We distribute dividends to our shareholders in proportion to the number of shares owned by each shareholder. Our common shares represented by the ADSs have the same dividend rights as other outstanding common shares.
Holders of
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We declare dividends annually at the annual general meeting of shareholders which is generally held within three months after the end of the fiscal year. We pay the annual dividend shortly after the annual general meeting to the shareholders of record or registered pledges as of the end of the preceding fiscal year. We may distribute the annual dividend in cash or in shares. However, a dividend of shares must be distributed at par value. Dividends in shares may not exceed
Under the Korean Commercial Code, we may pay an annual dividend only out of the excess of our net assets, on a
In addition, the FSCMA and our articles of incorporation provide that, in addition to annual dividends, we may pay quarterly dividends. Unlike annual dividends, the decision to pay quarterly dividends can be made by a resolution of the board of directors and is not subject to shareholder approval. Any quarterly dividends must be paid in cash to the shareholders of record as of March 31, June 30 or September 30 of the relevant fiscal year.
Under the FSCMA, the total amount of quarterly dividends payable in a fiscal year shall not be more than the net assets on the balance sheet of the immediately preceding fiscal year, after deducting (1) a company’s capital in the immediately preceding fiscal year, (2) the aggregate amount of its capital reserves and legal reserves accumulated up to the immediately preceding fiscal year, (3) the amount of earnings for dividend payments confirmed at the general shareholders’ meeting with respect to the immediately preceding fiscal year and (4) the amount of legal reserve that should be set aside for the current fiscal year following the quarterly dividend payment. Furthermore, the rate of quarterly dividends for
Our obligation to pay quarterly dividends expires if no claims to such dividends are made for a period of five years from the payment date.
Item 8.B. | Significant Changes |
None.
Item 9. | THE OFFER AND LISTING |
Item 9.A. | Offering and Listing Details |
These matters are described under “Item 9.C. Markets” below where relevant.
| Item 9.B. | Plan of Distribution |
Not applicable.
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Item | Markets |
The principal trading market for our common shares is the KRX KOSPI Market. Our common shares are traded on the KRX KOSPI Market under the identification code 017670. As of March 31, 2022, 218,002,8302024, 212,880,865 shares of our common stock were outstanding.
The ADSs are traded on the NYSE and the London Stock Exchange.NYSE. The ADSs have been issued by the ADR depositary and are traded on the NYSE under the ticker symbol “SKM.” Each ADS represents five-ninths of one share of our common stock. As of March 31, 2022,2024, ADSs representing 14,653,59813,512,383 shares of our common stock were outstanding.
Item 9.D. | Selling Shareholders |
Not applicable.
Item 9.E. | Dilution |
Not applicable.
Item 9.F. | Expenses of the Issue |
Not applicable.
Item 10. | ADDITIONAL INFORMATION |
Item 10.A. | Share Capital |
Not applicable.
Item 10.B. | Memorandum and Articles of Association |
Description of Capital Stock
This section provides information relating to our capital stock, including brief summaries of material provisions of our articles of incorporation, the FSCMA, the Korean Commercial Code, the Telecommunications Business Act and related laws of Korea, all as currently in effect. The following summaries are subject to, and are qualified in their entirety by reference to, our articles of incorporation and the applicable provisions of the FSCMA, the Korean Commercial Code and the Telecommunications Business Act. We have filed a copy of our articles of incorporation as an exhibit to our annual reports on
General
The name of our company is SK Telecom Co., Ltd. We are registered under the laws of Korea under the commercial registry number of 110111-0371346. As specified in Article 2 (Objectives) of our articles of incorporation, as amended, our objectives are the rational management of the telecommunications business, development of telecommunications technology, and contribution to public welfare and convenience. In order to achieve these objectives, we are engaged in the following:
information and communication business;
sale and lease of subscriber handsets;
new media business;
advertising business;
mail order sales business;
real estate business (development, management and leasing, etc.) and chattel leasing business;
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research and technology development relating to the first four items above;
overseas and import/export business relating to the first four items above;
manufacture and distribution business relating to the first four items above;
travel business;
electronic financial services business;
film business (production, import, distribution and screening);
lifetime education and management of lifetime educational facilities;
electric engineering business;
information- and communication-related engineering business;
ubiquitous city construction and related service business;
any related business through investment, management and operation of our Korean or offshore subsidiaries and investment companies;
construction business, including the machine and equipment business;
export/import business and export/import intermediation/agency business;
electrical business such as intelligent electrical grid business;
data production, trading and utilization business, including MyData business;
manufacture, import, maintenance, sale and lease of medical equipment and veterinary medical equipment business; and
any business or undertaking incidental or conducive to the attainment of the objectives stated above.
Currently, our authorized share capital is 670,000,000 shares, which consists of shares of common stock, par value Won 100 per share, and shares of
Board of Directors
Meetings of the board of directors are convened by the representative director as he or she deems necessary or upon the request of three or more directors. The board of directors determines all important matters relating to our business. In addition, the prior approval of the majority of the independent
investment by us or any of our subsidiaries in a foreign company in equity or acquisition of such foreign company’s other overseas assets in an amount equal to 5.0% or more of our equity under our most recent balance sheet; and
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contribution of capital, loans or guarantees, acquisition of our subsidiaries’ assets or similar transactions with our affiliated companies in excess of Won 10.0 billion through one or a series of transactions.
Resolutions of the board are adopted in the presence of a majority of the directors in office and by the affirmative vote of a majority of the directors present. No director who has an interest in a matter for resolution may exercise his or her vote upon such matter.
There are no specific shareholding requirements for director’s qualification. Directors are elected at a general meeting of shareholders if the approval of the holders of the majority of the voting shares present at such meeting is obtained and if such majority also represents at least
The term of office for directors is until the close of the third annual general shareholders meeting convened after he or she commences his or her term. Our directors may serve consecutive terms and our shareholders may remove them from office at any time by a special resolution adopted at a general meeting of shareholders. The total term of office of independent directors may not exceed six years, and when combined with the term of office at our affiliates, may not exceed nine years.
Dividends
We distribute dividends to our shareholders in proportion to the number of shares owned by each shareholder. Our common shares represented by the ADSs have the same dividend rights as other outstanding common shares. For a detailed discussion of our dividend policy, see “Item 8.A. Consolidated Statements and Other Financial Information — Dividends.”
Distribution of Free Shares
In addition to paying dividends in shares out of our retained or current earnings, we may also distribute to our shareholders an amount transferred from our capital surplus or legal reserve to our stated capital in the form of free shares. We must distribute such free shares to all of our shareholders in proportion to their existing shareholdings.
Preemptive Rights and Issuance of Additional Shares
We may at times issue authorized but unissued shares, unless otherwise provided in the Korean Commercial Code, on terms determined by our board of directors. All of our shareholders are generally entitled to subscribe to any newly-issued shares in proportion to their existing shareholdings. We must offer new shares on uniform terms to all shareholders who have preemptive rights and are listed on our shareholders’ registry as of the relevant record date. We must give public notice of the preemptive rights regarding new shares and their transferability at least two weeks before the relevant record date. Our board of directors may determine how to distribute shares for which preemptive rights have not been exercised or where fractions of shares occur.
Under the Korean Commercial Code and our articles of incorporation, we may issue new shares pursuant to a board resolution to persons other than existing shareholders only if (1) the new shares are issued for the purpose of issuing depositary receipts in accordance with the relevant regulations or through an offering to public investors and (2) the purpose of such issuance is deemed necessary by us to achieve a business purpose, including, but not limited to, the introduction of new technology or the improvement of our financial condition. If we make an allotment of new shares to persons other than our existing shareholders, we are required by the Korean Commercial Code to notify our existing shareholders of (a) the class and number of new shares, (b) the
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issuance price of new shares and the date set for the payment thereof, (c) in cases of no par value shares, the amount to be included in the
In addition, under our articles of incorporation, we may issue convertible bonds or bonds with warrants, each up to an aggregate principal amount of Won 400.0 billion, to persons other than existing shareholders, where such issuance is deemed necessary by us to achieve a business purpose, including, but not limited to, the introduction of new technology or the improvement of our financial condition.
Members of our employee stock ownership association, whether or not they are our shareholders, generally have a preemptive right to subscribe for up to 20.0% of the shares publicly offered pursuant to the FSCMA. This
General Meeting of Shareholders
We generally hold the annual general meeting of shareholders within three months after the end of each fiscal year. Subject to a board resolution or court approval, we may hold an extraordinary general meeting of shareholders:
as necessary;
at the request of holders of an aggregate of 3.0% or more of our outstanding common shares;
at the request of shareholders holding an aggregate of 1.5% or more of our outstanding shares and preferred shares for at least six months; or
at the request of our audit committee.
Holders of
We must give shareholders written notice setting out the date, place and agenda of the meeting at least two weeks before the date of the general meeting of shareholders. However, for holders of less than 1.0% of the total number of issued and outstanding voting shares, we may give notice by placing at least two public notices in at least two daily newspapers at least two weeks in advance of the meeting. Currently, we use The Korea Economic Daily News and Maeil Business Newspaper, both published in Seoul, for this purpose, but we may give notice in the future through electronic means. Shareholders who are not on the shareholders’ registry as of the record date are not entitled to receive notice of the general meeting of shareholders or attend or vote at the meeting. Holders of
Our general meetings of shareholders have historically been held in or near Seoul.
Voting Rights
Holders of our common shares are entitled to one vote for each common share, except that voting rights of common shares held by us (including treasury shares and shares held by bank trust funds controlled by us), or by a corporate shareholder in which we own more than 10.0% equity interest, either directly or indirectly, may not be exercised. The Korean Commercial Code, unless otherwise stated in the articles of incorporation, permits cumulative voting, which would allow each shareholder to have multiple voting rights corresponding to the
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number of directors to be appointed in the voting and to exercise all voting rights cumulatively to elect one director. Our articles of incorporation do not permit cumulative voting for the election of directors.
Our shareholders may adopt resolutions at a general meeting by an affirmative majority vote of the voting shares present or represented at the meeting if such affirmative votes also represent at least
amending our articles of incorporation;
removing a director;
effecting any dissolution, merger or consolidation of us;
transferring the whole or any significant part of our business;
effecting our acquisition of all of the business of any other company or a part of the business of any other company having a material effect on our business;
reducing our capital; or
issuing any new shares at a price lower than their par value.
In general, holders of
However, in case of amendments to our articles of incorporation, or any merger or consolidation of us, or in some other cases which affect the rights or interests of the
Shareholders may exercise their voting rights by proxy. A shareholder may give proxies only to another shareholder, except that a corporate shareholder may give proxies to its officers or employees.
Holders of ADRs exercise their voting rights through the ADR depositary, an agent of which is the record holder of the underlying common shares. Subject to the provisions of the deposit agreement, ADR holders are entitled to instruct the ADR depositary how to vote our common shares underlying their ADSs.
Limitation on Shareholdings
The Telecommunications Business Act prohibits foreign governments, individuals, and entities (including Korean entities that are deemed foreigners, as discussed below) from owning more than 49.0% of our voting stock, subject to certain exceptions. See “Item 4.B4.B. Business Overview — Foreign Ownership and Investment Restrictions and Requirements.” Korean entities whose largest shareholder is a foreign government or a foreigner (together with any of its related parties) that owns 15.0% or more of such Korean entities’ outstanding voting stock are deemed foreigners. A foreigner who has acquired shares of our voting stock in excess of such limitation may not exercise the voting rights with respect to the shares exceeding such limitation and may be subject to the MSIT’s corrective orders.
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Rights of Dissenting Shareholders
Under Financial Investment Services and Capital Market Act, in some limited circumstances, including the transfer of all or a significant part of our business or our merger or consolidation with another company (with certain exceptions), dissenting shareholders have the right to require us to purchase their shares. To exercise this right, shareholders, including holders of
Registry of Shareholders and Record Dates
Our transfer agent, Kookmin Bank, maintains the register of our shareholders at its office in Seoul, Korea. It records and registers transfers of shares on the register of shareholders.
For the purpose of determining the shareholders who are entitled to some other rights pertaining to the shares,stock dividends, we may set a record date with at least two weeks’ prior public notice by a resolution of our board of directors.
Annual Report
When sending a written notice for the general meeting of shareholders, we must attach our annual report prepared under the FSCMA and audit report prepared under the Act on External Audit of Stock Companies. Alternatively, we may inform the shareholders of the annual report and audit report by email or uploading them to our website one week before the general meeting of shareholders. Furthermore, at least one week before the annual general meeting of shareholders, we must make our business reports and audited
Under the FSCMA, we must file with the FSC and the Korea Exchange (1) an annual report within 90 days after the end of our fiscal year, (2) a
Transfer of Shares
Under the Korean Commercial Code and the Act on Electronic Registration of Stocks, Bonds, etc., the transfer of shares is effected by registration on the electronic registration ledger. However, to assert shareholders’ rights against us, the transferee must have his or her name, seal and address registered on our registry of shareholders, maintained by our transfer agent. A
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Under current Korean regulations, the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license and internationally recognized custodians may act as agents and provide related services for foreign shareholders. Certain foreign exchange controls and securities regulations apply to the transfer of shares by
Our transfer agent is Kookmin Bank, located at 24,
Restrictions Applicable to Shares
Pursuant to the Telecommunications Business Act, the maximum aggregate foreign shareholding in us is limited to 49.0%. See “Item 4.B. Business Overview — Law and Regulation — Foreign Ownership and Investment Restrictions and Requirements.” In addition, certain foreign exchange controls and securities regulations apply to the acquisition of securities by
Acquisition of Shares by Us
We may acquire our own shares pursuant to an approval at the general meeting of shareholders, through purchases on the Korea Exchange or a tender offer, or by acquiring the interests in a trust account holding our own shares through agreements with trust companies and asset management companies. The aggregate purchase price
Under the Korean Commercial Code, we may resell or transfer any shares acquired by us to a third party pursuant to an approval by the Board of Directors. In general, corporate entities in which we own a 50.0% or more equity interest may not acquire our common stock. Under the FSCMA, we are subject to certain selling restrictions with respect to the shares acquired by us.
Liquidation Rights
In the event of our liquidation, remaining assets after payment of all debts, liquidation expenses and taxes will be distributed among shareholders in proportion to their shareholdings. Holders of
Item 10.C. | Material Contracts |
We have not entered into any material contracts during the two years immediately preceding the date of this annual report, other than in the ordinary course of our business. For information regarding our agreements and transactions with entities affiliated with the SK Group, see “Item 7.B. Related Party Transactions” and note 36 of the notes to our consolidated financial statements. For a description of certain agreements entered into during the past three years related to our capital commitments and obligations, see “Item 5.B. Liquidity and Capital Resources.”
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Item 10.D. | Exchange Controls |
Korean Foreign Exchange Controls and Securities Regulations
General
The Foreign Exchange Transaction Act and the Presidential Decree and regulations under that Act and Decree, collectively referred to as the Foreign Exchange Transaction Laws, regulate investment in Korean securities by
Subject to certain limitations, the MOEF has authority to take the following actions under the Foreign Exchange Transaction Laws:
| • | if the Government deems it necessary on account of war, armed conflict, natural disaster or grave and sudden and significant changes in domestic or foreign economic circumstances or similar events or circumstances, the MOEF may temporarily suspend performance under any or all foreign exchange transactions, in whole or in part, to which the Foreign Exchange Transaction Laws apply (including suspension of payment and receipt of foreign exchange), impose an obligation to deposit, safe-keep or sell any means of payment to The Bank of Korea, a foreign exchange stabilization fund, certain other governmental agencies or financial companies or impose an obligation on a resident that holds a claim against a non-resident to collect such claim to enable the recovery of the relevant debt back to Korea; and |
if the Government concludes that the international balance of payments and international financial markets are experiencing or are likely to experience significant disruption or that the movement of capital between Korea and other countries are likely to adversely affect the Won, exchange rate or other macroeconomic policies, the MOEF may take action to require any person who intends to effect or effects a capital transaction to deposit all or a portion of the means of payment acquired in such transactions with The Bank of Korea, a foreign exchange stabilization fund, certain other governmental agencies or financial companies.
Under the regulations of the FSC amended on February 4, 2009, (1) if a company listed on the KRX KOSPI Market or a company listed on the KRX KOSDAQ Market has submitted a public disclosure of material matters to
Government Review of Issuances of ADSs
In order for us to issue ADSs in excess of US$3050 million, we are required to submit a report to the MOEF with respect to the issuance of the ADSs prior to and after such issuance; provided that such US$3050 million threshold amount would be reduced by the aggregate principal amount of any foreign currency loans borrowed, and any securities offered and issued, outside Korea during the
Under current Korean laws and regulations, the depositary is required to obtain our prior consent for any proposed deposit of common shares if the number of shares to be deposited in such proposed deposit exceeds the number of common shares initially deposited by us for the issuance of ADSs (including deposits in connection with the initial and all subsequent issuances of ADSs by us or with our consent and stock dividends or other distributions related to the ADSs).
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deposit exceeds the number of common shares initially deposited by us for the issuance of ADSs (including deposits in connection with the initial and all subsequent issuances of ADSs by us or with our consent and stock dividends or other distributions related to the ADSs). |
In addition to such restrictions under Korean laws and regulations, there are also restrictions on the deposits of our common shares for issuance of ADSs. Therefore, a holder of ADRs who surrenders ADRs and withdraws shares may not be permitted subsequently to deposit those shares and obtain ADRs.
We submitted a report to and obtained acceptance thereof by the MOEF for the issuance of ADSs up to an amount corresponding to 24,321,893 common shares. No additional Korean governmental approval is necessary for the issuance of ADSs except that if the total number of our common shares on deposit for conversion into ADSs exceeds 24,321,893 common shares, we may be required to file a report to and obtain acceptance thereof by the MOEF with respect to the increase of such limit and the issuance of additional ADSs.
Reporting Requirements for Holders of Substantial Interests
Under the FSCMA, any person whose direct or beneficial ownership of shares with voting rights, certificates representing the rights to subscribe for shares and equity-related debt securities including convertible bonds and bonds with warrants (collectively referred to as “equity securities”), together with the equity securities beneficially owned by certain related persons or by any person acting in concert with the person, accounts for 5.0% or more of the total outstanding equity securities is required to report the status and purpose (in terms of whether the purpose of shareholding is to affect control over management of the issuer) of the holdings to the FSC and the Korea Exchange within five business days after reaching the 5.0% ownership interest threshold and promptly deliver a copy of such report to the issuer. In addition, any change (1) in the ownership interest subsequent to the report which equals or exceeds 1.0% of the total outstanding equity securities, or (2) in the shareholding purpose is required to be reported to the FSC and the Korea Exchange within five business days from the date of the change. However, the reporting deadline of such reporting requirement is extended for (1) certain professional investors, as specified under the FSCMA, or (2) persons who hold shares for purposes other than management control by up to the tenth day of the month immediately following the last month of the quarter in which the share acquisition or change in their shareholding occurred. Those who reported the purpose of shareholding is to affect control over management of the issuer are prohibited from exercising their voting rights and acquiring additional shares for five days subsequent to the report under the FSCMA.
Violation of these reporting requirements may subject a person to criminal sanctions such as fines or imprisonment and may result in a loss of voting rights with respect to the ownership of unreported equity securities exceeding 5.0%. Furthermore, the FSC may issue an order to dispose of such
In addition to the reporting requirements described above, any person whose direct or beneficial ownership of our common shares accounts for 10.0% or more of the total issued and outstanding shares with voting rights (a “major shareholder”) must report the status of his or her shareholding to the Securities and Futures Commission and the Korea Exchange within five business days after he or she becomes a major shareholder. In addition, any change in the ownership interest subsequent to the report must be reported to the Securities and Futures Commission and the Korea Exchange by the fifth business day of any changes in his or her shareholding. Violations of these reporting requirements may subject a person to criminal sanctions, such as fines or imprisonment.
Furthermore, a major shareholder must report his or her trading plan to the Securities and Futures Commission and the Korea Exchange at least between 30 to 90 days prior to the trading, with the specific timeframe to be determined by the Enforcement Decree of the FSCMA, which is yet to be formally promulgated. According to the related legislative notice, this timeframe is set to be 30 days. The enforcement of such reporting obligations is scheduled to take effect on July 24, 2024.
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Restrictions Applicable to ADSs
No Korean governmental approval is necessary for the sale and purchase of ADSs in the secondary market outside Korea or for the withdrawal of shares underlying ADSs and the delivery of shares in Korea in connection with the withdrawal, provided that a foreigner who intends to acquire the shares must obtain an investment registration card from the Financial Supervisory Service of Korea (the “FSS”), as described below. The acquisition of the shares by a foreigner must be reported by the foreigner or his or her standing proxy in Korea immediately to the Governor of the FSS (the “Governor”).
Persons who have acquired shares as a result of the withdrawal of shares underlying the ADSs may exercise their preemptive rights for new shares, participate in free distributions and receive dividends on shares without any further governmental approval.
In addition, we are required to file a securities registration statement with the FSC and such securities registration statement has to become effective pursuant to the FSCMA in order for us to issue shares represented by ADSs, except in certain limited circumstances.
Restrictions Applicable to Shares
As a result of amendments to the Foreign Exchange Transaction Laws and the regulations of the FSC, together referred to as the Investment“Investment Rules,” adopted in connection with the stock market opening from January 1992 and after that date, foreigners may invest, with limited exceptions and subject to procedural requirements, in all shares of Korean companies, whether listed on the KRX KOSPI Market or the KRX KOSDAQ Market, unless prohibited by specific laws. Foreign investors may trade shares listed on the KRX KOSPI Market or the KRX KOSDAQ Market only through the KRX KOSPI Market or the KRX KOSDAQ Market, except in limited circumstances, including, among others:
| • | odd-lot trading of shares; |
acquisition of shares by a foreign company as a result of a merger;
acquisition or disposal of shares in connection with a tender offer;
acquisition of shares by exercise of warrant, conversion right under convertible bonds, exchange right under exchangeable bonds or withdrawal right under depositary receipts issued outside of Korea by a Korean company (“converted shares”);
acquisition of shares through exercise of rights under securities issued outside of Korea;
acquisition of shares as a result of inheritance, donation, bequest or exercise of shareholders’ rights, including preemptive rights or rights to participate in free distributions and receive dividends;
| • | over-the-counter transactions between foreigners of a class of shares for which the ceiling on aggregate acquisition by foreigners, as explained below, has been reached or exceeded; |
| • | acquisition of shares by direct investment (including de facto direct investment) under the Foreign Investment Promotion Law; |
acquisition and disposal of shares on an overseas stock exchange market, if such shares are simultaneously listed on the KRX KOSPI Market or KRX KOSDAQ Market and such overseas stock exchange;
arm’s length transactions between foreigners in the event all such foreigners belong to an investment group managed by the same person; and
transactions between foreigners outside the securities market and disposal of shares through alternative trading systems.systems which do not result in a change in the substantive ownership of the securities.
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For
The Investment Rules requirepreviously required a foreign investor who wisheswished to invest in shares for the first time on the KRX KOSPI Market or the KRX KOSDAQ Market (including converted shares) and shares being publicly offered for initial listing on the KRX KOSPI Market or the KRX KOSDAQ Market to register its identity with the FSS prior to making any such investment; however, the registration requirement does not apply to foreign investors who acquire converted shares with the intention of selling such converted shares within three months from the date of acquisition of the converted shares or who acquire the shares in an
However, the IRC requirement was abolished on June 13, 2023. Recent amendments to the Investment Rules now permit a foreign corporation or depositary issuing depositary receipts may obtain one or more investment registration cards in its name in certain circumstances as described in the relevant regulations.
If a foreign investor acquires or sells shares outside the KRX KOSPI Market and the KRX KOSDAQ Market, such acquisition or sale of shares must be reported by the foreign investor or such foreign investor’s standing proxy to the Governor at the time of each such acquisition or sale; provided, however, that a foreign investor must ensure that any acquisition or sale of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market in the case of trades in connection with a tender offer,
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Shares of Korean companies must be electronically registered with an eligible custodian in Korea.Korea, except in cases where physical security is necessary for the exercise of securities rights or for physical inspections. The Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment
Under the Investment Rules, with certain exceptions, foreign investors may acquire shares of a Korean company without being subject to any foreign investment ceiling. As onetwo such exception,exceptions, designated public corporations are subject to (i) a 40.0% ceiling on the acquisition of shares by foreigners in the aggregate. Designated public corporations mayaggregate and (ii) unless the corporations’ articles of incorporation set a lower threshold, a 3.0% ceiling on the acquisition of shares by a single person within 3.0% of the total number of shares in their articles of incorporation.foreign individual or entity. Currently, Korea Electric Power Corporation is the only designated public corporation, whichbut it has not set such a ceiling.lower threshold for ownership by a single foreign individual or entity. Furthermore, an investment by a foreign investor of not less than 10.0% of the outstanding shares with voting rights of a Korean company is defined as a direct foreign investment under the Foreign Investment Promotion Law, which is, in general, subject to the report to, and acceptance by, the Ministry of Trade, Industry and Energy of Korea, which delegates its authority to foreign exchange banks or the Korea Trade-Investment Promotion Agency under the relevant regulations. The acquisition of our shares by a foreign investor is also subject to the restrictions prescribed in the Telecommunications Business Act. The Telecommunications Business Act generally limits the maximum aggregate foreign shareholdings in us to 49.0% of the outstanding shares. A foreigner who has acquired shares in excess of such restriction described above may not exercise the voting rights with respect to the shares exceeding such limitations and may be subject to corrective orders.
Under the Foreign Exchange Transaction Laws, a foreign investor who intends to make a portfolio investment in shares of a Korean company listed on the KRX KOSPI Market or the KRX KOSDAQ Market must designate a foreign exchange bank at which he, she or it must open a foreign currency account and a Won account exclusively for stock investments. No approval is required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened at a securities company. Funds in the foreign currency account may be remitted abroad without any governmental approval.
Dividends on shares are paid in Won. No governmental approval is required for foreign investors to receive dividends on, or the Won proceeds of the sale of, any such shares to be paid, received and retained in Korea. Dividends paid on, and the Won proceeds of the sale of, any such shares held by a
Financial investment companies with a securities dealing, brokerage or collective investment license are allowed to open foreign currency accounts with foreign exchange banks exclusively for accommodating foreign investors’ stock investments in Korea. Through these accounts, these financial investment companies may enter into foreign exchange transactions on a limited basis, such as conversion of foreign currency funds and Won funds, either as a counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.
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Item 10.E. | Taxation |
United States Taxation
This summary describes certain U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning, and disposing of common shares or ADSs. This summary applies to you only if you hold our common shares or ADSs as capital assets for tax purposes. This summary does not apply to you if you are a member of a class of holders subject to special rules, such as:
a dealer in securities or currencies;
| • | a trader in securities that elects to use a mark-to-market method of accounting for securities holdings; |
a bank or other financial institution;
a life insurance company;
| • | a tax-exempt organization; |
a person that holds common shares or ADSs that are a hedge or that are hedged against interest rate or currency risks;
a person that holds common shares or ADSs as part of a straddle or conversion transaction for tax purposes;
a person whose functional currency for tax purposes is not the U.S. dollar;
a person that owns or is deemed to own 10.0% or more of any class of our stock (by vote or value); or
an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes (or partners therein).
This summary is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations promulgated thereunder, and published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.
Please consult your own tax advisers concerning the U.S. federal, state, local, and other tax consequences of purchasing, owning, and disposing of common shares or ADSs in your particular circumstances.
For purposes of this summary, you are a “U.S. holder” if you are the beneficial owner of a common share or an ADS and are:
a citizen or resident of the United States;
a U.S. domestic corporation; or
otherwise subject to U.S. federal income tax on a net income basis with respect to income from the common share or ADS.
In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the common shares represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the common share represented by that ADS.
Dividends
The gross amount of cash dividends that you receive (prior to deduction of Korean taxes) generally will be subject to U.S. federal income taxation as foreign source “passive income” dividend income and will not be eligible for the dividends received deduction. Dividends paid in Won will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of your receipt of the dividend, in the case of common shares, or the depositary’s receipt, in the case of ADSs, regardless of whether
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the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.
Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by an individual with respect to the ADSs will be subject to taxation at a preferential rate if the dividends are “qualified dividends.” Dividends paid on the ADSs will be treated as qualified dividends if (1) the ADSs are readily tradable on an established securities market in the United States and (2) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company as defined for U.S. federal income tax purposes (“PFIC”),PFIC, as discussed below under “
Distributions of additional shares in respect of common shares or ADSs that are made as part of a
Sale or Other Disposition
Subject to the discussion below under “Passive Foreign Investment Company Rules,” for U.S. federal income tax purposes, gain or loss you realize on a sale or other disposition of common shares or ADSs generally will be treated as U.S. source capital gain or loss, and will be long-term capital gain or loss if the common shares or ADSs were held for more than one year. Your ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder generally is subject to taxation at reduced rates.
Passive Foreign Investment Company Rules
Special U.S. tax rules apply to companies that are considered to be PFICs. We will be classified as a PFIC in a particular taxable year if either (i) 75 percent or more of our gross income for the taxable year is passive income; or (ii) 50%50 percent or more of the value of our assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. Investments in companies in which we own less than 25 percent of the stock (by value) are considered to be assets that produce passive income.
The determination whether we are a PFIC is made annually based on the particular facts and circumstances, such as the composition of our income and the valuation of our assets. Due to fluctuations in our stock price and changes in the value and composition of our assets, including our substantial investment in the stock of SK Hynix prior to the
You should consult your own tax advisors regarding our classification as a PFIC for 20212022, 2023 or in the current or future years.
If we are classified as a PFIC, and you do not make a
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distributions that you have received in the preceding three taxable years, or your holding period, if shorter), including gain that you recognize on the sale of your common shares or ADSs. The amount of income tax on any excess distributions will be increased by an interest charge to compensate for tax deferral, calculated as if the excess distributions were earned ratably over the period you hold your common shares or ADSs. Classification as a PFIC may also have other adverse tax consequences, including, in the case of individuals, the denial of a
Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year during which a U.S. holder holds our common shares or ADSs, such U.S. holder will generally be subject to the unfavorable rules described above for that year and for each subsequent year in which such U.S. holder holds the common shares or ADSs (even if we do not qualify as a PFIC in such subsequent years). However, if we cease to be a PFIC, a U.S. holder can avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if such U.S. holder’s common shares or ADSs had been sold on the last day of the last taxable year during which we were a PFIC. U.S. holders should consult their own tax advisor about the advisability of making this election.
A U.S. holder may be able to avoid the unfavorable rules described above by electing to mark its ADSs to market, provided the ADSs are treated as “marketable stock.” The ADSs generally will be treated as marketable stock if the ADSs are “regularly traded” on a “qualified exchange or other market” (which includes the NYSE). Further, it should also be noted that only the ADSs and not the common shares are listed on the NYSE. Consequently, a U.S. holder that holds common shares that are not represented by ADSs may not be eligible to make a
Although a U.S. holder can also avoid the unfavorable PFIC rules described above by electing to treat its common shares or ADSs as interests in a qualified electing fund (“QEF”), we do not intend to provide the information that would allow a U.S. holder to make such an election. Accordingly, in the event that we are treated as a PFIC, a U.S. holder will not be able to make a “QEF election.”
A U.S. holder that owns an equity interest in a PFIC must annually file IRS Form 8621, and may be required to file other IRS forms. A failure to file one or more of these forms as required may toll the running of the statute of limitations in respect of each of the U.S. holder’s taxable years for which such form is required to be filed. As
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a result, the taxable years with respect to which the U.S. holder fails to file the form may remain open to assessment by the IRS indefinitely, until the form is filed.
The U.S. federal income tax rules relating to PFICs are complex. U.S. holders are strongly urged to consult their own tax advisors regarding our potential classification as a PFIC and regarding the U.S. federal income tax consequences of acquiring, holding and disposing of our common shares or ADSs if we are so classified, including the advisability of making a
Foreign Tax Credit Considerations
You should consult your own tax advisers to determine whether you are subject to any special rules that limit your ability to make effective use of foreign tax credits, including the possible adverse impact of failing to take advantage of benefits under the income tax treaty between the United States and Korea. If no such rules apply, youKorea (the “Treaty”).
Subject to generally applicable limitations and conditions, Korean withholding tax imposed on dividends paid at the appropriate rate applicable to a U.S. holder may claimbe eligible for a credit against yoursuch U.S. holder’s U.S. federal income tax liability. These generally applicable limitations and conditions include requirements adopted by the IRS in regulations promulgated in December 2021 and any Korean tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S. holder that consistently elects to apply a modified version of these rules under recently issued temporary guidance, and complies with specific requirements set forth in such guidance, the Korean tax on dividends will be treated as meeting the new requirements and therefore as a creditable tax. In the case of all other U.S. holders, the application of these requirements to the Korean tax on dividends is uncertain and we have not determined whether these requirements are met. If the Korean tax is not a creditable tax for a U.S. holder or the U.S. holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. holder may be able to deduct the Korean tax in computing such U.S. holder’s taxable income for U.S. federal income tax purposes. Dividends will constitute income from sources without the United States and, if such withholding tax is a creditable tax for a U.S. holder that elects to claim foreign tax credits, generally will constitute “passive category income” for foreign tax credit purposes.
Gain, if any, realized by a U.S. holder on the sale or other disposition of the common shares or ADSs generally will be treated as U.S. source income for U.S. foreign tax credit purposes. A U.S. holder that is eligible for, and properly elects, the benefits of the Treaty, will generally not be subject to Korean withholding tax on capital gains. If a U.S. holder is not eligible for benefits under the Treaty and is therefore subject to Korean withholding tax on capital gains, the U.S. holder generally will not be entitled to credit any Korean tax imposed on the sale or other disposition of the shares against such U.S. holder’s U.S. federal income tax liability, for Korean taxes withheld from dividends onexcept in the common shares or ADSs, so longcase of a U.S. holder that consistently elects to apply a modified version of the U.S. foreign tax credit rules that is permitted under recently issued temporary guidance and complies with the specific requirements set forth in such guidance. Consequently, even if the withholding tax qualifies as you have owned our common shares or ADSs (anda creditable tax, a U.S. holder may not entered into specified kinds of hedging transactions) for at least a
Any Korean securities transaction tax or agricultural and fishery special surtax that you pay will not be creditable for foreign tax credit purposes.
The rules with respect of certain short-term or hedged positions in securities and may not be allowed in respect of arrangements in which a U.S. holder’s expected economic profit is insubstantial.
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Specified Foreign Financial Assets
Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 on the last day of the taxable year or U.S.$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a
U.S. Information Reporting and Backup Withholding Rules
Payments of dividends and sales proceeds that are made within the United States or through certain
Korean Taxation
The following is a summary of the principal Korean tax consequences to owners of the common shares or ADSs, as the case may be, who are
Tax on Dividends
Dividends on the common shares or ADSs paid (whether in cash or in shares) to a
The tax is withheld by the payer of the dividend. While it is the payer that is required to withhold the tax, Korean law generally entitles the person who was subject to the withholding of Korean tax to recover from the Government any part of the Korean tax withheld upon providing evidence that it was entitled to have tax withheld at a lower rate if certain conditions are met.
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Tax on Capital Gains
As a general rule, capital gains earned by
However, a
It should be noted that capital gains earned by you (regardless of whether you have a permanent establishment in Korea) from a transfer of ADSs outside Korea will generally be exempt from Korean income taxation, provided that the ADSs are deemed to have been issued overseas. If and when an owner of the underlying common shares transfers the ADSs following the conversion of the underlying shares for ADSs, such person will not be exempt from Korean income taxation.
Inheritance Tax and Gift Tax
Korean inheritance tax is imposed upon (1) all assets (wherever located) of the deceased if at the time of his death he was a tax resident of Korea and (2) all property located in Korea which passes on death (irrespective of the domicile of the deceased). Gift tax is imposed in similar circumstances to the above. The taxes are imposed if the value of the relevant property is above a certain limit and vary depending on the value of the property and the identity of the parties involved.
Under Korean inheritance and gift tax laws, securities issued by a Korean corporation are deemed to be located in Korea irrespective of where they are physically located or by whom they are owned.
Securities Transaction Tax
Securities transaction tax is imposed on the transfer of shares issued by a Korean corporation or the right to subscribe for such shares generally at the rate of 0.43%0.35% of the sales price. In the case of the transfer of shares listed on the KRX KOSPI Market (such as our common shares), the securities transaction tax is imposed generally at the rate of (1) 0.23%0.18% of the sales price of such shares (including agricultural and fishery special surtax thereon) if traded on the KRX KOSPI Market or (2) subject to certain exceptions, 0.43%0.35% of the sales price of such shares if traded outside the KRX KOSPI Market.
Securities transaction tax or the agricultural and fishery special surtax is not applicable if (1) the shares or rights to subscribe for shares are listed on a designated foreign stock exchange and (2) the sale of the shares takes place on such exchange.
Securities transaction tax, if applicable, must be paid by the transferor of the shares or rights, in principle. When the transfer is effected through a securities settlement company, such settlement company is generally required to withhold and pay (to the tax authority) the tax, and when such transfer is made through a financial investment company with a brokerage license only, such company is required to withhold and pay the tax. Where the transfer is effected by a
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Tax Treaties
Currently, Korea has income tax treaties with a number of countries, inter alia, Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Luxembourg, Ireland, the Netherlands, New Zealand, Norway, Singapore, Sweden, Switzerland, the United Kingdom and the United States under which the rate of withholding tax on dividend and interest is reduced, generally to between 5.0% and 16.5% (including local income tax), and the tax on capital gains derived by a
Each
Furthermore, in order for a
For a
At present, Korea has not entered into any tax treaty relating to inheritance or gift tax.
Item 10.F. | Dividends and Paying Agents |
Not applicable.
Item 10.G. | Statements by Experts |
Not applicable.
Item 10.H. | Documents on Display |
We file reports, including annual reports on
Documents filed with annual reports and documents filed or submitted to the SEC are also available for inspection at our principal business office during normal business hours. Our principal business office is located at SK
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Item 10.I. | Subsidiary Information |
Not applicable.
Item 10.J. | Annual Report to Security Holders |
Not applicable.
| Item 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are exposed to foreign exchange rate and interest rate risk primarily associated with underlying liabilities and to equity price risk as a result of our investment in equity instruments.
We have entered into a
The following discussion and tables, which constitute “forward looking statements” that involve risks and uncertainties, summarize our market-sensitive financial instruments including fair value, maturity and contract terms. These tables address market risk only and do not present other risks which we face in the normal course of business, including country risk, credit risk and legal risk.
Exchange Rate Risk
Korea is our main market and, therefore, substantially all of our cash flow is denominated in Won. We are exposed to foreign exchange risk related to foreign currency denominated liabilities. These liabilities relate primarily to foreign currency denominated debt, primarily in Dollars. A 10.0% increase in the exchange rate between the Won and all foreign currencies would result in an increase in profit before income tax of Won 2.86.3 billion, with a decrease of 10.0% in the exchange rate having the opposite effect, as of December 31, 2021.2023. For a further discussion of our exchange rate risk exposures, see note 35(1) of the notes to our consolidated financial statements.
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Interest Rate Risk
We are also subject to market risk exposure arising from changing interest rates. The following table summarizes the carrying amounts and fair values, maturity and contract terms of our exchange rate and interest sensitive short-term and long-term liabilities as of December 31, 2021:
Maturities | ||||||||||||||||||||||||||||||||
2022 | 2023 | 2024 | 2025 | 2026 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||
(In billions of Won, except for percentage data) | ||||||||||||||||||||||||||||||||
Local currency: | ||||||||||||||||||||||||||||||||
Fixed-rate | ￦ | 1,402.3 | ￦ | 829.0 | ￦ | 1,417.6 | ￦ | 848.0 | ￦ | 458.9 | ￦ | 2,063.9 | ￦ | 7,019.7 | ￦ | 7,008.5 | ||||||||||||||||
Average weighted rate (1) | 2.21 | % | 2.96 | % | 2.03 | % | 1.92 | % | 1.86 | % | 2.38 | % | ||||||||||||||||||||
Variable rate | 12.5 | 25.0 | — | — | — | — | 37.5 | 37.5 | ||||||||||||||||||||||||
Average weighted rate (1) | 2.78 | % | 2.67 | % | — | — | — | — | ||||||||||||||||||||||||
Sub-total | 1,414.8 | 854.0 | 1,417.6 | 848.0 | 458.9 | 2,063.9 | 7,057.2 | 7,046.0 | ||||||||||||||||||||||||
Foreign currency: | ||||||||||||||||||||||||||||||||
Fixed-rate | 6.7 | 945.2 | — | — | — | 470.6 | 1,422.5 | 1,671.5 | ||||||||||||||||||||||||
Average weighted rate (1) | 1.70 | % | 3.88 | % | — | — | — | 6.63 | % | |||||||||||||||||||||||
Variable rate | — | — | — | 354.2 | — | — | 354.2 | 354.2 | ||||||||||||||||||||||||
Average weighted rate (1) | — | — | — | 1.12 | % | — | — | |||||||||||||||||||||||||
Sub-total | 6.7 | 945.2 | — | 354.2 | — | 470.6 | 1,776.7 | 2,025.7 | ||||||||||||||||||||||||
Total | ￦ | 1,421.5 | ￦ | 1,799.2 | ￦ | 1,417.6 | ￦ | 1,202.2 | ￦ | 458.9 | ￦ | 2,534.5 | ￦ | 8,833.9 | ￦ | 9,071.7 | ||||||||||||||||
| Maturities | ||||||||||||||||||||||||||||||||
| 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | Fair Value | |||||||||||||||||||||||||
| (In billions of Won, except for percentage data) | ||||||||||||||||||||||||||||||||
Local currency: | ||||||||||||||||||||||||||||||||
Fixed-rate | W | 1,569.3 | W | 1,897.4 | W | 940.8 | W | 424.0 | W | 837.4 | W | 1,944.5 | W | 7,613.4 | W | 7,241.3 | ||||||||||||||||
Average weighted rate(1) | 2.28 | % | 2.90 | % | 3.18 | % | 3.46 | % | 3.87 | % | 2.55 | % | ||||||||||||||||||||
Variable rate | 40.0 | 49.9 | — | — | — | — | 89.9 | 89.9 | ||||||||||||||||||||||||
Average weighted rate(1) | 5.21 | % | 4.88 | % | — | — | — | — | ||||||||||||||||||||||||
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Sub-total | 1,609.3 | 1,947.3 | 940.8 | 424.0 | 837.4 | 1,944.5 | 7,703.3 | 7,331.2 | ||||||||||||||||||||||||
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Foreign currency: | ||||||||||||||||||||||||||||||||
Fixed-rate | — | 59.2 | — | 513.1 | 381.9 | — | 954.2 | 1,030.1 | ||||||||||||||||||||||||
Average weighted rate(1) | — | — | — | 6.63 | % | 4.88 | % | — | ||||||||||||||||||||||||
Variable rate | — | 386.2 | — | — | — | — | 386.2 | 386.2 | ||||||||||||||||||||||||
Average weighted rate(1) | — | 6.55 | % | — | — | — | — | |||||||||||||||||||||||||
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Sub-total | — | 445.4 | — | 513.1 | 381.9 | — | 1,340.4 | 1,416.3 | ||||||||||||||||||||||||
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Total | W | 1,609.3 | W | 2,392.7 | W | 940.8 | W | 937.1 | W | 1,219.3 | W | 1,944.5 | W | 9,043.7 | W | 8,747.5 | ||||||||||||||||
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| (1) | Weighted average rates of the portfolio at the period end. |
A 1.0% point increase in interest rates would result in a decrease in profit before income tax of Won 20.913.8 billion (consisting of Won 0.9 billion in relation to the floating-rate borrowings for which we have not entered into interest rate swaps and Won 12.9 billion in relation to the floating-rate long-term payables – other that are exposed to interest rate risk) with a 1.0% point decrease in interest rates having the opposite effect, as of December 31, 2021.2023. For a further discussion of our interest rate risk exposures, see note 35(1) of the notes to our consolidated financial statements.
Equity Price Risk
We are also subject to market risk exposure arising from changes in the equity securities market, which affect the fair value of our equity portfolio. As of December 31, 2021, 20202023, 2022 and 2019,2021, a 10.0% increase in the equity indices where our equity investments at fair value through other comprehensive income are listed, with all other variables held constant, would have increased our total equity by Won 140.085.0 billion, Won 94.677.8 billion and Won 40.8103.2 billion, respectively, with a 10.0% decrease in the equity index having the opposite effect.
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Item 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
Item 12.A. | Debt Securities |
Not applicable.
Item 12.B. | Warrants and Rights |
Not applicable.
Item 12.C. | Other Securities |
Not applicable.
Item 12.D. | American Depositary Shares |
Fees and Charges under Deposit Agreement
The ADR depositary will charge the party receiving ADSs up to US$5.00 per 100 ADSs (or fraction thereof), provided that the ADR depositary has agreed to waive such fee as would have been payable by us in the case of (1) an offering of ADSs by us or (2) any distribution of shares of common stock or any rights to subscribe for additional shares of common stock. The ADR depositary will not charge the party to whom ADSs are delivered against deposits. The ADR depositary will charge the party surrendering ADSs for delivery of deposited securities up to US$5.00 per 100 ADSs (or fraction thereof) surrendered. The ADR depositary will also charge the party to whom any cash distribution, or for whom the sale or exercise of rights or other corporate action involving distributions to shareholders, is made with respect to ADSs up to US$0.02 per ADS held plus the expenses of the ADR depositary on a
Holders of ADRs must pay (1) taxes and other governmental charges, (2) share transfer registration fees on deposits of shares of common stock, (3) such cable, telex, facsimile transmission and delivery expenses as are expressly provided in the deposit agreement to be at the expense of persons depositing shares of common stock or holders of ADRs and (4) such reasonable expenses as are incurred by the ADR depositary in the conversion of foreign currency into United States dollars.
Notwithstanding any other provision of the deposit agreement, in the event that the ADR depositary determines that any distribution in property (including shares or rights to subscribe therefor or other securities) is subject to any tax or governmental charges which the ADR depositary is obligated to withhold, the ADR depositary may dispose of all or a portion of such property (including shares and rights to subscribe therefor) in such amounts and in such manner as the ADR depositary deems necessary and practicable to pay such taxes or governmental charges, including by public or private sale, and the ADR depositary will distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes or governmental charges to the holders of ADSs entitled thereto in proportion to the number of ADSs held by them respectively.
All such charges may be changed by agreement between the ADR depositary and us at any time and from time to time, subject to the deposit agreement. The right of the ADR depositary to receive payment of fees, charges and expenses shall survive the termination of this deposit agreement and, as to any depositary, the resignation or removal of such depositary pursuant to the deposit agreement.
Payments made by ADR Depositary
The ADR depositary reimburses us for certain expenses we incur in connection with our ADR program, subject to certain ceilings. These reimbursable expenses currently include expenses relating to the preparation of SEC filings and submissions, listing fees, education and training fees, corporate action expenses and other miscellaneous fees. In the fiscal year 2021,2023, we received US$1,791,012.52,201,641.87, net of taxes, from the ADR depositary in connection with such reimbursements.
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PART II
Item 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
None.
Item 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
None.
Item 15. | CONTROLS AND PROCEDURES |
Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as such term is defined in
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Report of the Independent Registered Public Accounting Firm on the Effectiveness of Our Internal Control Over Financial Reporting
The report of our independent registered public accounting firm, KPMG Samjong Accounting Corp. (“KPMG Samjong”),Ernst & Young Han Young, or E&Y, on the effectiveness of our internal control over financial reporting as of December 31, 20212023 is included in Item 18 of this
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during 20212023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Item 16. | RESERVED |
Item 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
Seok-Dong Kim is the chairman of our audit committee and determined to be an “audit committee financial expert” within the meaning of this Item 16A by the board of directors. The board of directors have further determined that Seok-Dong Kim is independent within the meaning of applicable SEC rules and the listing standards of the NYSE.
Item 16B. | CODE OF ETHICS |
Code of Ethics for Chief Executive Officer, Chief Financial Officer and Controller
We have a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, senior accounting officers and employees. We also have internal control and disclosure policy designed to promote full, fair, accurate, timely and understandable disclosure in all of our reports and publicly filed documents. A copy of our code of ethics is available on our website at www.sktelecom.com. If we amend the provisions of our code of ethics that apply to our Chief Executive Officer, Chief Financial Officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website.
Item 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
The table sets forth the fees we paid to our independent registered public accounting firm KPMG SamjongE&Y and its affiliates for the years ended December 31, 20212023 and 2020:
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
(In millions of Won) | ||||||||
Audit Fees | ￦ | 5,969 | ￦ | 5,157 | ||||
Audit-Related Fees | 62 | 16 | ||||||
Tax Fees | 262 | 372 | ||||||
All Other Fees | — | 93 | ||||||
Total | ￦ | 6,293 | ￦ | 5,638 | ||||
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| (In millions of Won) | ||||||||
Audit Fees | W | 4,829 | W | 4,654 | ||||
Audit-Related Fees | 190 | — | ||||||
Tax Fees | — | 26 | ||||||
All Other Fees | — | 200 | ||||||
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Total | W | 5,019 | W | 4,880 | ||||
“Audit Fees”
“Audit-Related Fees”
“Tax Fees”
“All Other Fees”
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Pre-Approval
Our audit committee
Our audit committee did not
Item 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
Not applicable.
Item 16E. | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
The following table sets forth information regarding purchases by us of our common shares during the fiscal year ended December 31, 2021.
Period | Total Number of Shares Purchased | Average Price Paid per Share (1) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
(In billions of Won) | ||||||||||||||||
January 1, 2021 – April 30, 2021 (2)(3) | 1,440,000 | ￦ | 47,647 | 1,440,000 | ￦ | — | ||||||||||
November 29, 2021 (4) | 54,032 | 57,900 | 54,032 | — | ||||||||||||
Total | 1,494,032 | ￦ | 48,018 | 1,494,032 | ￦ | — | ||||||||||
Period | Total Number of Shares Purchased(1) | Average Price Paid per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Value of Shares that May Still Be Purchased Under the Plans or Programs(3) | ||||||||||||
| (In billions of Won) | ||||||||||||||||
July 27, 2023 –December 31, 2023 | 5,773,410 | W | 49,449 | 5,773,410 | W | 15.8 | ||||||||||
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Total | 5,773,410 | W | 49,449 | 5,773,410 | W | 15.8 | ||||||||||
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| (1) | Repurchases made in the open market pursuant to the 2023 Share Repurchase Agreement, pursuant to which we were authorized to repurchase up to Won 300 billion of our common shares from July 27, 2023 to January 26, 2024. |
| (2) | Average price paid per share is a weighted average calculation using the aggregate price, excluding commissions and fees. |
| (3) | Remaining under the |
Item 16F. | CHANGE IN REGISTRANT ’ S CERTIFYING ACCOUNTANT |
Not applicable.
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Item 16G. | CORPORATE GOVERNANCE |
The following is a summary of the significant differences between the NYSE’s corporate governance standards and those that we follow under Korean law.
NYSE Corporate Governance Standards | Our Corporate Governance Practice | |
Director Independence | ||
| Listed companies must have a majority of independent directors. | Of the | |
Executive Session | ||
| Non-managementdirectors must meet in regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year. | Our audit committee, which is comprised solely of four independent directors, holds meetings whenever there are matters related to management directors, and such meetings are generally held once every month. | |
Nomination/Corporate Governance Committee | ||
| Listed companies must have a nomination/corporate governance committee composed entirely of independent directors. The committee must have a charter that addresses the purpose, responsibilities (including development of corporate governance guidelines) and annual performance evaluation of the committee. | Although we do not have a separate nomination/corporate governance committee, we maintain an independent director nomination committee composed of | |
Compensation Committee | ||
| Listed companies must have a compensation committee composed entirely of independent directors. The committee must have a charter that addresses the purpose, responsibilities and annual performance evaluation of the committee. The charter must be made available on the company’s website. In addition, in accordance with the SEC rules adopted pursuant to Section 952 of the Dodd-Frank Act, the NYSE listing standards were amended to expand the factors relevant in determining whether a committee member has a relationship with the company. | We maintain a compensation non-independent director and three independent directors. | |
Audit Committee | |||
| Listed companies must have an audit committee that satisfies the independence and other requirements of Rule 10A-3 under the Exchange Act. All members must be independent. The committee must have a charter addressing the committee’s purpose, an annual performance evaluation of the committee, and the duties and responsibilities of the committee. The charter must be made available on the company’s website. | We maintain an audit committee comprised solely of four independent directors. | ||
Audit Committee Additional Requirements | |||
| Listed companies must have an audit committee that is composed of at least three directors. | Our audit committee has four independent directors. | ||
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NYSE Corporate Governance Standards | Our Corporate Governance Practice | |
Shareholder Approval of Equity Compensation Plan | ||
| Listed companies must allow its shareholders to exercise their voting rights with respect to any material revision to the company’s equity compensation plan. | We currently have | |
Shareholder Approval of Equity Offerings | ||
| Listed companies must allow its shareholders to exercise their voting rights with respect to equity offerings that do not qualify as public offerings for cash, and offerings of equity of related parties. | Pursuant to the Korean Commercial Code and the FSCMA, our shareholders are generally entitled to preemptive rights with respect to the issuance of new shares. Exceptions include public offerings as prescribed in the FSCMA and allotments to third parties in cases necessary for the achievement of a business purpose, such as the introduction of new technology and the improvement of our financial condition. | |
Corporate Governance Guidelines | ||
| Listed companies must adopt and disclose corporate governance guidelines. | We have adopted a Corporate Governance Charter, which is available (in Korean) on our website at www.sktelecom.com. We are also in compliance with the Korean Commercial Code in connection with such matters, including the governance of the board of directors. | |
Code of Business Conduct and Ethics | ||
| Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose any waivers of the code for directors or executive officers. | We have adopted a Code of Business Conduct and Ethics for all of our directors, officers and employees, and such code is also available on our website at www.sktelecom.com . | |
Item 16H. | MINE SAFETY DISCLOSURE |
Not applicable.
Item 16I. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
Not applicable.
| Item 16J. | INSIDER TRADING POLICIES |
Not applicable.
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| Item 16K. | CYBERSECURITY |
Risk Management and Strategy
We maintain a comprehensive process for assessing, identifying and managing material risks from cybersecurity threats as part of our overall risk management system and processes.
We understand the importance of preserving trust and protecting personal and other confidential and sensitive information. Cybersecurity is a critical component of our overall risk management system and we have established an information security and cybersecurity framework to help safeguard the confidentiality, integrity and access of our information assets, and to ensure regulatory, contractual and operational compliance. We utilize policies, software, training programs and hardware solutions to protect and monitor our environment, including multifactor authentication, firewalls, intrusion detection and prevention systems, vulnerability and penetration testing, and identity management systems.
Our information security and cybersecurity framework and infrastructure comply with and incorporate the Information Security Management System (“ISMS”) and Personal Information and Information Security Management System (“ISMS-P”) standards, which significantly overlap with International Organization for Standardizations (“ISO”) standards. Our certifications under such standards are valid for three years, and we are subject to an annual audit to maintain such certifications.
Our Chief Information Security Officer (“CISO”), under the supervision of our board of directors and the ESG Committee, oversees our approach to managing cybersecurity and digital risk and regularly engages with cross-functional teams including legal, human resources, facilities and corporate risk. We also carry insurance that provides protection against potential losses arising from cybersecurity incidents and annually review our policy and levels of coverage based on current risks.
We conduct annual information security awareness training for all directors, officers and employees and enhanced training for specialized personnel, such as personal information handlers, location information handlers and information security managers, and publish periodic cybersecurity newsletters to highlight any emerging or urgent security threats. We also conduct cyber awareness training and run tabletop exercises to simulate responses to cybersecurity incidents, and use the findings to improve our practices, procedures and technologies.
We also engage with a range of external experts, including cybersecurity assessors and consultants, to assess and report on the effectiveness of our cybersecurity and data privacy controls, and our internal incident response preparedness, as well as to help identify areas for continued focus and improvement. In addition, we engage outside legal counsel regarding cybersecurity issues such as regulatory compliance, materiality determinations, disclosure obligations and best practices for oversight, as needed. Since 2006, we have been a member of CONCERT, a Government-sponsored organization which allows members to share best practices, fight cybercrime, enhance privacy, discuss new technologies and better understand the evolving regulatory environment and advance capabilities in these areas.
Our cybersecurity risk management processes extend to the oversight and identification of threats associated with our use of third-party service providers. We review our vendors’ cybersecurity practices before we enter into business transactions with them, and we seek to contractually obligate vendors to operate their environments in accordance with strict cybersecurity standards. We also develop contingency plans for business continuity if our vendors are subject to a cyberattack that impacts our use of their systems. Furthermore, we assess the risks faced by our partners, including branch offices and stores in our extensive distribution network, at least once a year in order to assess risks and identify threats and vulnerabilities, and implement corrective measures. Since 2015, we have been engaging third-party assessors to conduct annual audits of our distribution network and have been conducting remote diagnoses of all personal information-processing personal computers on a weekly basis.
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Our internal audit department conducts annual audits to review and evaluate the effectiveness of our internal controls relating to information security and disclosure obligations.
Our business, financial condition and results of operations have not been materially affected by risks from cybersecurity threats, including as a result of previous cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks and any future material incidents.
Governance
Management
The cybersecurity risk management processes described above are primarily managed by our CISO, who also serves as our Chief Privacy Officer and has been acting in such role since 2019. Our CISO has more than 20 years of experience in the area of information technology and more than six years of experience in the area of information protection. Our CISO maintains the following internationally recognized certificates: ISO27001, ISO27017 and ISO27018. In order to streamline our information protection and privacy governance regime, we operate an integrated control center led by our CISO to prevent common malicious and abusive Internet activities, such as spam, hacking of personal information, distributed denial-of-service attacks and dissemination of viruses, worms and other destructive or disruptive software, and to respond in real time when a situation arises. We also hold an Information Protection Committee meeting every week under the leadership of our CISO. Furthermore, key executive officers such as our Chief Operating Officer and Chief Serious-accident Prevention Officer manage company-wide information security risks under the leadership of our Chief Executive Officer.
Board of Directors
Our board of directors is committed to mitigating data privacy and cybersecurity risks and recognizes the importance of these issues as part of our risk management framework. While the board of directors, with assistance from the ESG Committee, maintains ultimate responsibility for the oversight of our data privacy and cybersecurity program and risks due to the complexities of the risks involved or the importance of cybersecurity-related risks to stakeholders, it has delegated certain responsibilities to our CISO who heads an execution organization composed of executive officers with relevant experience. In addition, our board of directors receives annual review reports covering the status of the company’s management and protection of personal credit information from our CISO. For information security issues that have a company-wide impact, our board of directors convenes a crisis response situation room to directly engage with and advise our CISO, and the CISO reports to the board of directors the results of work performed based on such advice.
Our board of directors’ principal role is one of oversight, recognizing that management is responsible for the design, implementation and maintenance of an effective program for protecting against and mitigating data privacy and cybersecurity risks. Members of the board of directors stay apprised of the rapidly evolving cyber threat landscape and provide guidance to management as appropriate in order to address the effectiveness of our overall data privacy and cybersecurity program.
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PART III
Item 17. | FINANCIAL STATEMENTS |
Not applicable.
Item 18. | FINANCIAL STATEMENTS |
| F-1 | |||||||
| F-2 | |||||||
| F-4 | |||||||
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting | |||||||
Financial Statements of SK Hynix | |||||||
| (incorporated by reference to Item 18 of the Registrant’s Annual Report on Form 20-F filed on April 28, 2022) | |||||||
| (incorporated by reference to Item 18 of the Registrant’s Annual Report on Form 20-F filed on April 28, 2022) | |||||||
| (incorporated by reference to Item 18 of the Registrant’s Annual Report on Form 20-F filed on April 28, 2022) | |||||||
| (incorporated by reference to Item 18 of the Registrant’s Annual Report on Form 20-F filed on April 28, 2022) | |||||||
| (incorporated by reference to Item 18 of the Registrant’s Annual Report on Form 20-F filed on April 28, 2022) | |||||||
| (incorporated by reference to Item 18 of the Registrant’s Annual Report on Form 20-F filed on April 28, 2022) | |||||||
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Item 19. | EXHIBITS |
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on
SK TELECOM CO., LTD. (Registrant) | ||
/s/ Hee Jun Chung | ||
Name: | Hee Jun Chung | |
Title: | Vice President, Head of IR | |
Date: April 28, 2022
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| F-2 | |||||||
| F-4 | |||||||
| F-9 | |||||||
| F-10 | |||||||
| F-11 | |||||||
Impairment assessment of generating unit | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of the Matter | At December 31, 2023, the amount of goodwill allocated to the fixed-line telecommunication services CGU is W 764,082 million. As described in notes 3 (10) and 16 of the consolidated financial statements, the Group assesses impairment of goodwill allocated to a cash generating unit (“CGU”), at least, annually or when there is an indication of possible impairment by comparing the carrying amount of the CGU to its recoverable amountvalue-in-use
/s/ We have served as the Group’s auditor since Seoul, the Republic of Korea April F-3 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Directors SK Telecom Co., Ltd.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated statement of income, comprehensive income, changes in equity and cash flows of SK Telecom Co., Ltd. and subsidiaries (the “Group”) for the year ended December 31, 2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of the Group’s operations and its cash flows for the year ended December 31, 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Spin-off of Semiconductor and New ICT businesses As described in Note 3 and Note 41, SK Telecom Co., Ltd. completed the spin-off of certain businesses on November 1, 2021. The spin-off company, namely SK Square Co., Ltd., is engaged in managing investments in semiconductor, new Information and Communication Technologies (“ICT”) and making new investments. The spun-off businesses are presented as discontinued operations. Basis for Opinion These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange C o mmission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ KPMG Samjong Accounting Corp. We served as the Group’s auditor from 2012 to 2021. Seoul, Korea April 28, 2022 F-4 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Shareholders and Board of Directors of SK Telecom Co., Ltd.: Opinion on Internal Control Over Financial Reporting We have audited SK Telecom Co., Ltd. and We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated Basis for Opinion The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Seoul, the Republic of Korea April
SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of Financial Position As of December 31,
(Continued)
SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of
F-8
SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of For the years ended December 31,
SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of Comprehensive Income For the years ended December 31, 2023, 2022 and 2021
The accompanying notes are an integral part of the consolidated financial statements F-10 SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of Changes in Eq uityFor the years ended December 31, 2023, 2022 and 2021
(Continued) F-11 SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of Changes in Equity, Continued For the years ended December 31, 2023, 2022 and 2021
(Continued) F-12 SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of Changes in Equity, Continued For the years ended December 31, 2023, 2022 and 2021
The accompanying notes are an integral part of the consolidated financial statements F-13 SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of Cash Flows For the years ended December 31, 2023, 2022 and 2021
(Continued) F-14 SK TELECOM CO., LTD. and Subsidiaries Consolidated Statements of Cash Flows, Continued For the years ended December 31, 2023, 2022 and 2021
The accompanying notes are an integral part of the interim consolidated financial statements. F-15 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
SK Telecom Co., Ltd. Eulji-ro, Jung-gu, Seoul, Korea.The Parent Company’s common shares
These consolidated financial statements comprise the Parent Company and its subsidiaries On November 1, 2021, the date of spin-off, the Parent Company completed the .spin-off of its business of managing investments in semiconductor,
The list of consolidated subsidiaries as of December 31,
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
F-17 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-18 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
F-20 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-21 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
These consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). These consolidated financial statements were authorized for issue by the Board of Directors on February re-authorized for issue by management in connection with the filing with the U.S. Securities Exchange Commission on April SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the consolidated statement of financial position: derivative financial instruments measured at fair value; financial instruments measured at fair value through profit or loss (“FVTPL”); financial instruments measured at fair value through other comprehensive income (“FVOCI”); liabilities measured at fair value for cash-settled share-based payment arrangement; and liabilities (assets) for defined benefit plans recognized at the total present value of defined benefit obligations less the
Financial statements of Group entities within the Group are prepared in functional currency of each group entity, which is the currency of the primary economic environment in which each entity operates. Consolidated financial statements of the Group are presented in Korean won, which is the Parent Company’s functional and presentation currency.
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period
Information about critical judgments in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is included in notes for the following areas: consolidation (whether the Group has de facto control over an investee), and determination of stand-alone selling prices.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes: loss allowance (notes 6 and 35), estimated useful lives of costs to obtain a contract (notes F-23 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established policies and processes with respect to the measurement of fair values including Level 3 fair values, and the measurement of fair values is reviewed and is directly reported to the finance executives.The Group regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Group assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Information about assumptions used for fair value measurements are included in note 22 and note 35.
The The Group has Disclosure of Accounting Polices (Amendments to IAS 1) F-24 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
IFRS 17 Insurance Contracts International tax reform – Pillar Two model rules (Amendments to The Pillar Two model rules is scheduled to take effect for the Group’s fiscal year beginning January 1, 2024. As the Group falls within the scope of the enacted Pillar Two model rules, it has assessed the potential exposure to Pillar Two income tax. The assessment of potential exposure to Pillar Two income tax is based on the most recent tax returns of the Group’s a spin-off of its Non-current
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Group’s operating segments have been determined to be each business unit, for which the Group generates separately identifiable financial information that is regularly reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The Group has three reportable segments as described in note 4. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs. The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. F-25 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
Consideration transferred is generally measured at fair value, identical to the measurement of identifiable net assets acquired at fair value. The difference between the acquired company’s fair value and the consideration transferred is accounted for goodwill. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Acquisition-related costs are expensed in the periods in which the costs are incurred and the services are received, except if related to the costs to issue debt or equity securities recognized based on IAS 32 and IFRS 9. Consideration transferred does not include the amount settled in relation to the pre-existing relationship. Such amounts are generally recognized through profit or loss.Contingent consideration is measured at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. If contingent consideration is not classified as equity, the Group subsequently recognizes changes in fair value of contingent consideration through profit or loss.
Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.Changes in a Controlling Company’s ownership interest in a subsidiary that do not result in the Controlling Company losing control of the subsidiary are accounted for as equity transactions.
Subsidiaries are entities controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of an investee begins from the date the Group obtains control of the investee and cease when the Group loses control of the investee.
If the Group loses control of a subsidiary, the Group derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position and recognizes gain or loss associated with the loss of control attributable to the former controlling interest. Any investment retained in the former subsidiary is recognized at its fair value when control is lost.
Interest in investees accounted for using the equity method composed of interest in associates and joint ventures. An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and operating policies. A joint venture is a joint arrangement whereby the Group that has joint control of the arrangement has rights to the net assets of the arrangement. F-26 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The investment in an associate and a joint venture is initially recognized at cost including transaction costs and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss and changes in equity of the associate or the joint venture after the date of acquisition.
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. The Group’s share of unrealized gain incurred from transactions with investees accounted for using the equity method are eliminated and unrealized loss are eliminated using the same basis if there are no evidence of asset impairments.
SK Inc. is the ultimate controlling entity of the Group. The assets and liabilities acquired under business combination under common control are recognized at the carrying amounts in the ultimate controlling shareholder’s consolidated financial statements. The difference between consideration and carrying amount of net assets acquired is added to or subtracted from capital surplus and others.
Cash and cash equivalents comprise cash balances, call deposits and investment securities with maturities of three months or less from the acquisition date that are easily convertible to cash and subject to an insignificant risk of changes in their fair value.
Inventories are initially recognized at the acquisition cost and subsequently measured using the weighted average method. During the period, a perpetual inventory system is used to track inventory quantities, which is adjusted based on the physical inventory counts performed at the period end. When the net realizable value of inventories is less than cost, the carrying amount is reduced to the net realizable value, and any difference is charged to current period as operating expenses.
Accounts receivable A financial asset (unless an accounts receivable F-27 SK TELECOM CO., LTD. and Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
On initial recognition, a financial asset is classified as measured at: FVTPL FVOCI FVOCI Financial assets at amortized cost A financial asset is classified based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: it is held within a business model whose objective is to hold assets to collect contractual cash flows; and its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates. On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (“OCI”). This election is made on an investment-by-investment All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
The following accounting policies are applied to the subsequent measurement of financial assets.
The Group estimates the expected credit losses (“ECL”) for the debt instruments measured at amortized cost and FVOCI based on the Group’s historical experience and informed credit assessment that includes forward-looking information. The impairment approach is decided based on the assessment of whether the credit risk of a financial asset has increased significantly since initial recognition. However, the Group applies a practical expedient and recognizes impairment losses equal to lifetime ECLs for accounts receivable – trade and lease receivables from the initial recognition. ECL is a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). At each reporting date, the Group assesses whether financial assets measured at amortized cost and debt investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. F-29 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
Loss allowance on financial assets measured at amortized cost is deducted from the carrying amount of the respective assets, while loss allowance on debt instruments at FVOCI is recognized in OCI, instead of reducing the carrying amount of the transferred assets.
Financial assets The Group derecognizes a financial asset when: the contractual rights to the cash flows from the financial asset expire; or it transfers the rights to receive the contractual cash flows in a transaction in which either: substantially all of the risks and rewards of ownership of the financial asset are transferred; or the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. The Group enters into transactions whereby it transfers assets recognized in its consolidated statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized. Interest rate benchmark reform When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changed as a result of interest rate benchmark reform, the Group updated the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform. A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met: the change is necessary as a direct consequence of the reform; and the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e., the basis immediately before the change. When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Group first updated the effective rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. After that, the Group applied the policies on accounting for modifications to the additional changes.
Financial assets and financial liabilities are offset, and the net amount is presented in the statement of financial position when the Group currently has a legally enforceable right to offset the recognized amounts and F-30 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
A financial asset and a financial liability are offset only when the right to set off the amount is not contingent on future event and legally enforceable even on the event of default, insolvency or bankruptcy.
Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value at the end of each reporting period, and changes therein are accounted for as described below.
The Group holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Group designates derivatives as hedging instruments to hedge the variability in cash flow associated with highly probable forecasted transactions or firm commitments (a cash flow hedge). On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. Hedges directly affected by interest rate benchmark reform When uncertainty arises about the interest rate benchmark designated as a hedged risk and the timing or the amount of the interest rate benchmark-based cash flows of the hedged item or of the hedging instrument as a result of IBOR reform, for the purpose of evaluating whether there is an economic relationship between the hedged items and the hedging instruments, the Group assumes that the interest rate benchmark on which the hedged items and the hedging instruments are based is not altered as a result of interest rate benchmark reform.For a cash flow hedge of a forecast transaction, the Group assumes that the benchmark interest rate will not be altered as a result of interest rate benchmark reform for the purpose of assessing whether the forecast transaction is highly probable and determining whether a previously designated forecast transaction in a discontinued cash flow hedge is still expected to occur. The Group will cease applying the specific policy for assessing the economic relationship between the hedged item and the hedging instrument to a hedged item or hedging instrument when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the respective item or instrument; orwhen the hedging relationship is discontinued. F-31 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
When the basis for determining the contractual cash flows of the hedged item or hedging instrument changes as a result of IBOR reform and therefore there is no longer uncertainty arising about the cash flows of the hedged item or the hedging instrument, the Group amends the hedge documentation of that hedging relationship to reflect the change(s) required by IBOR reform. The Group amends the formal hedge documentation by the end of the reporting period during which a change required by IBOR reform is made to the hedged risk, hedged item or hedging instrument. These amendments in the formal hedge documentation do not constitute the discontinuation of the hedging relationship or the designation of a new hedging relationship. If changes are made in addition to those changes required by interest rate benchmark reform to the financial asset or financial liability designated in a hedging relationship or to the designation of the hedging relationship, the Group determines whether those additional changes result in the discontinuation of hedging accounting. If the additional changes do not result in the discontinuation of hedging accounting, the Group amend the formal designation of the hedging relationship. When the interest rate benchmark on which the hedged future cash flows had been based is changed as required by IBOR reform, for the purpose of determining whether the hedged future cash flows are expected to occur, the Group deems that the hedging reserve recognized in OCI for that hedging relationship is based on the alternative benchmark rate on which the hedged future cash flows will be based. Cash flow hedge When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.
Other derivative financial instrument not designated as a hedging instrument are measured at fair value, and the changes in fair value of the derivative financial instrument is recognized immediately in profit or loss. SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
Property and equipment are initially measured at cost. The cost of property and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. Property and equipment, subsequently, are carried at cost less accumulated depreciation and accumulated impairment losses. Subsequent costs are recognized in the carrying amount of property and equipment at cost or, if appropriate, as a separate item if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. The carrying amount of the replaced part is derecognized. The costs of the day-to-day Property and equipment, except for land, are depreciated on a straight-line basis over estimated useful lives that appropriately reflect the pattern in which the asset’s future economic benefits are expected to be consumed. A component that is significant compared to the total cost of property and equipment is depreciated over its separate useful life. Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized as other The estimated useful lives of the Group’s property and equipment are as follows:
Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses. Intangible assets, except for goodwill, are amortized on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, club memberships and brand are expected to be available for use as there are no foreseeable limits to the periods. These intangible assets are determined as having indefinite useful lives and, therefore, not amortized. F-33 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The estimated useful lives of the Group’s intangible assets are as follows:
Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes, if appropriate, are accounted for as changes in accounting estimates. Expenditures on research activities are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be reliably measured, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred. Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.
Investment properties are properties held to earn Subsequent expenditures are recognized in carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. The carrying amount of those parts that are replaced is derecognized. The costs associated with routine maintenance and repairs are recognized in profit or loss as incurred. Investment property, except for land, is depreciated on a straight-line basis over estimated useful lives of 30 years. In addition, right-of-use straight-line basis from the commencement date to the end of the lease term.The depreciation method, estimated useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate. The change is accounted for as a change in an accounting estimate. F-34 SK TELECOM CO., LTD. and Subsidiaries
The carrying amounts of the Group’s non-financial assets other than contract assets recognized for revenue arising from contracts with a customer, assets recognized for the costs to obtain or fulfill a contract with a customer, employee benefits, inventories, deferred tax assets, andnon-current assets held for sale are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amounts to their carrying amounts.The Group estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual recoverable amount of an asset, the Group estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU for which estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or CGU.An impairment loss is recognized in profit or loss to the extent the carrying amount of the asset exceeds its recoverable amount. Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergy arising from the business acquired. Any impairment identified at the CGU level will first reduce the carrying amount of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses in respect of goodwill which are never reversed, an impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, the Group has elected not to separate non-lease components and account for the lease andnon-lease components as a single lease component.The Group recognizes a right-of-use right-of-use F-35 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The right-of-use asset is subsequently depreciated using the straight-line basis from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of theright-of-use right-of-use right-of-use The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. Lease payments included in the measurement of the lease liability comprise the following: fixed payments, including in-substance fixed variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement amounts expected to be payable under a residual value the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use right-of-use The Group presents right-of-use The Group has elected not to recognize right-of-use low-value assets and short-term leases. The Group recognizes the lease payments straight-line basis over the lease term.SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset. When the Group is an intermediate lessor, is accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of asub-lease with reference to theright-of-use sub-lease as an operating lease.If an arrangement contains lease and non-lease components, then the Group applies IFRS 15 to allocate the consideration in the contract.The Group applies derecognition and impairment requirements in IFRS 9 to the net investment in the lease. The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in the lease. The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other revenue’.
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sales rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the assets (or disposal groups) must be available for immediate sale in their present condition and their sale must be highly probable. The assets or disposal groups that are classified asnon-current assets held for sale are measured at the lower of their carrying amounts and fair value less cost to sell. The Group recognizes an impairment loss for any initial or subsequent write-down of assets (or disposal groups) to fair value less costs to sell and a gain for any subsequent increase in fair value less costs to sell up to the cumulative impairment loss previously A non-current asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated (or amortized).F-37 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The Group classifies non-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement. The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liabilities.
Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition. Subsequent to initial recognition, these liabilities are measured at fair value. The amount of change in fair value of financial liability that is attributable to changes in the credit risk of that liability shall be presented in other comprehensive income, and the remaining amount of change in the fair value of the liability shall be presented in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the issue of the financial liability are recognized in profit or loss as incurred.
Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the issue of the financial liabilities. Subsequent to initial recognition, other financial liabilities are measured at amortized cost and the interest expenses are recognized using the effective interest method.
The Group extinguishes a financial liability only when the contractual obligation is fulfilled, canceled or expires. The Group recognizes new financial liabilities at fair value based on new contracts and eliminates existing liabilities when the contractual terms of the financial liabilities change and the cash flows change substantially. When a financial liability is derecognized, the difference between the carrying amount and the consideration paid (including any transferred non-cash assets or liabilities assumed) is recognized in profit or loss.
Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render related services. When an employee has rendered a service to the Group during an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service. F-38 Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
Other long-term employee benefits include employee benefits that are settled beyond 12 months after the end of the period in which the employees render related services. The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.
When an employee has rendered a service to the Group during a period, the Group recognizes the contribution payable to a defined contribution plan in exchange for that service as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Group recognizes that excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund.
At the end of reporting period, defined benefit liabilities (assets) relating to defined benefit plans are recognized at present value of defined benefit obligations net of fair value of plan assets. The calculation is performed annually by an independent actuary using the projected unit credit method. When the fair value of plan assets exceeds the present value of the defined benefit obligation, the Group recognizes an asset, to the extent of the present value of any economic benefits available in the form of refunds from the plan or reduction in the future contributions to the plan. Remeasurements of the net defined benefit liability (asset), which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group determines net interests on net defined benefit liability (asset) by multiplying discount rate determined at the beginning of the annual reporting period and considers changes in net defined benefit liability (asset) from contributions and benefit payments. Net interest costs and other costs relating to the defined benefit plan are recognized through profit or loss. When the plan amendment or curtailment occurs, gains or losses on amendment or curtailment in benefits for the past service provided are recognized through profit or loss. The Group recognizes a gain or loss on a settlement when the settlement of defined benefit plan occurs.
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. If the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows. F-39 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
If some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement is recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset. Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed. A provision is used only for expenditures for which the provision was originally recognized.
The Group accounts for greenhouse gases emission right and the relevant liability as below pursuant to the Act on Allocation and Trading of Greenhouse Gas Emission in Korea.
Greenhouse Gases Emission Right consists of emission allowances, which are allocated from the government free of charge or purchased from the market. The cost includes any directly attributable costs incurred during the normal course of business. The Group derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to government in which the future economic benefits are no longer expected to be probable.
Emission liability is a present obligation of submitting emission rights to the government with regard to emission of greenhouse gas. The emission liability is measured based on the expected quantity of emission for the performing period in excess of emission allowance in possession and the unit price for such emission rights in the market at the end of the reporting period. The emissions liabilities are derecognized when they are surrendered to the government.
Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.Exchange differences arising from monetary items except for financial liabilities designated cashflow hedging instruments are recognized in profit or loss. If a gain or loss on a non-monetary item is recognized in other comprehensive income, any foreign exchange differences are also recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any foreign exchange differences are also recognized in profit or loss. F-40 Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
If the presentation currency of the Group is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods: The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income. Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation is treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and translated at the closing rate at the reporting date. When a foreign operation is disposed, the relevant amount in the translation is transferred to profit or loss as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to profit or loss.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects. When the Parent Company repurchases its own shares, the amount of the consideration paid is recognized as a deduction from equity and classified as treasury shares. The gains or losses from the purchase, disposal, reissue, or retirement of treasury shares are directly recognized in equity being as transaction with owners.
The Group recognizes a financial instrument issued by the Group as an equity instrument if it does not include contractual obligation to deliver financial assets including cash to the counter party.
For The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service andnon-market performance conditions at the vesting date.F-41 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the fair value of the liability are recognized in profit or loss.
The Group identifies the distinct services or goods as performance obligations in contracts with customers such as (1) providing wireless and fixed-line telecommunications services, (2) sale of handsets and (3) providing other goods and services. In the case of providing both wireless telecommunications service and selling a handset together to one customer, the Group allocates considerations from the customer between the separate performance obligations for handset sale and wireless telecommunications service. The handset sale revenue is recognized when handset is delivered, and the wireless telecommunications service revenue is recognized over the period of the contract term as stated in the subscription contract.
The Group allocates the transaction price of a contract to each performance obligation identified on a relative stand-alone selling price basis. The Group uses “adjusted market assessment approach” for estimating the stand-alone selling price of a good or service.
The Group pays commissions to its retail stores and authorized dealers in connection with acquiring service contracts. The commissions paid to these parties constituted a significant portion of the Group’s operating expenses. These commissions would not have been paid if there have been no binding contracts with subscribers and, therefore, the Group capitalizes certain costs associated with commissions paid to obtain new customer contracts and amortize them over the expected contract periods.
The Group provides customer loyalty points to customers based on the usage of the service to which the Group allocates a portion of consideration received as a performance obligation distinct from wireless telecommunications services. The amount to be allocated to the loyalty program is measured according to the relative stand-alone selling price of the customer loyalty points. The amount allocated to the loyalty program is deferred as a contract liability and is recognized as revenue when loyalty points are redeemed. SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
Based on the subscription contract, a customer who uses the Group’s wireless telecommunications services may receive a discount for purchasing goods or services from a designated third party. The Group pays a portion of the price discounts that the customer receives to the third party which is viewed as consideration payable to a customer. The Group accounts for the amounts payable to the third party as a reduction of the wireless telecommunications service revenue.
Finance income comprises interest income on funds invested (including financial assets measured at fair value), dividend income, gains on disposal of financial assets at FVTPL, changes in fair value of financial instruments at FVTPL, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest rate method. Dividend income is recognized in profit or loss when the right to receive the dividend is established. Finance costs comprise interest expense on borrowings and debentures, changes in fair value of financial instruments at FVTPL, and losses on hedging instruments that are recognized in profit or loss. Interest expense on borrowings and debentures is recognized as it accrues in profit or loss using the effective interest rate method.
Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI. The Group pays income tax in accordance with the tax-consolidation system when the Parent Company and its subsidiaries are economically unified.
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and includes interests and fines related to income taxes paid or payable. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable ornon-deductible items from the accounting profit.
Deferred tax is recognized by using the asset-liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Group recognizes a deferred tax liability for all taxable temporary differences, except for the difference associated with investments in subsidiaries and associates that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the F-43 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
temporary difference will not reverse in the foreseeable future. The Group recognizes a deferred tax asset for all deductible temporary differences to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized. A deferred tax asset is recognized for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Future taxable profit is dependent on the reversal of taxable temporary differences. If there are insufficient taxable temporary differences to recognize the deferred tax asset, the business plan of the Group and the reversal of existing temporary differences are considered in determining the future taxable profit. The Group reviews the carrying amount of a deferred tax asset at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized, or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if the Group has a legally enforceable right to offset the amount recognized and intends to settle the current tax liabilities and assets on a net basis. Income tax expense in relation to dividend payments is recognized when liabilities relating to the dividend payments are recognized.
The Group assesses the uncertainty over income tax treatments pursuant to IAS 12. If the Group concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the Group reflects the effect of uncertainty for each uncertain tax treatment by using either of the following methods, depending on which method the entity expects to better predict the resolution of the uncertainty: The most likely amount: the single most likely amount in a range of possible outcomes. The expected value: the sum of the probability-weighted amounts in a range of possible outcomes.
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees, if any. F-44 Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: represents a separate major line of business or geographic area of operations; is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; oris a subsidiary acquired When an operation is classified as a discontinued operation, the comparative statements of income and comprehensive income are re-presented as if the operation had been discontinued from the start of the earliest comparative year.
Classification of Liabilities as Current or Non-current Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) Disclosures of Crypto assets (Amendments to IAS 1)
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
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-46 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-47 SK TELECOM CO., LTD. and Subsidiaries Notes to For the years ended December 31, 2023, 2022 and 2021
Domestic revenue for the years ended December 31, 4 billionW 17,602 billion,W 16,734 billion,W 19,285 billion,W 20,056 billion andnon-current assets outside of Korea amount toW 3 billion,No single customer contributed 10% or more to the Group’s total revenue for the years ended December 31, 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.
F-48 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
Deposits which are restricted in use as of December 31,
F-49 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-50 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
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, Receivables related to other revenue mainly consist of receivables from corporate customers. The Group transacts only with corporate customers with credit ratings that are considered to be low at credit risk. In addition, the Group is not exposed to significant credit concentration risk as the Group regularly assesses their credit risk by monitoring their credit rating. While the contract assets are under the impairment requirements, no significant credit risk has been identified.
The Group pays commissions to its retail stores and authorized dealers, primarily for wireless telecommunication services based on their performance of attracting new customers and
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
The amortization
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.
F-52 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
There are
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
Details of long-term investment securities as of December 31, 2023 and 2022 are as follows:
PS&Marketing Corporation obtained control over SK m&service Co., Ltd. by acquiring its 3,099,112 shares (100%) for the year ended December 31, 2022. As this transaction is a business combination under common control, the assets acquired and liabilities assumed were recognized at the carrying amounts in W 211,081 million of revenue W 4,695 million of net profit for the
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
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| 1) | ||||
technique | inputs and | |||||
Acquisition of |
11. | Business Combinations, Continued |
| ( 3 ) | 2021, Continued |
| 2) | Acquisition of Studio Dolphin Co., Ltd. by Dreamus Company, Continued: |
| (i) | Summary of the acquiree |
Information of acquiree | ||
Corporate name | ||
Location | ||
CEO | ||
Industry |
| (ii) | Considerations transferred, identifiable assets acquired and liabilities assumed |
(In millions of won) | |||||||
I. | |||||||
Cash and cash equivalents | |||||||
II. Fair value of identifiable assets acquired and liabilities assumed: | |||||||
| Cash and cash equivalents | 20 | ||||||
| Accounts receivable – trade and other | 31 | ||||||
| Other assets | 7 | ||||||
| Accounts payable – trade and other | (4 | ) | |||||
| Short-term borrowings | (2 | ) | |||||
| Other liabilities | (17 | ) | |||||
| III. Goodwill (I - II) | W | 1,465 | |||||
| 3) | ||||
| Acquisition of YLP Inc. by Tmap Mobility Co., Ltd.: |
11. | Business Combinations, Continued |
| ( 3 ) | 2021, Continued |
| 3) | Acquisition of YLP Inc. by Tmap Mobility Co., Ltd., Continued: |
| (i) | Summary of the acquiree |
Information of acquiree | ||
| Corporate name | YLP Inc. | |
| Location | 1740, Cheongwon-ro, Pyeongtaek-si, Gyeonggi-do, Korea | |
| CEO | Lee, Hyeok-Ju | |
| Industry | Freight forwarders and cargo agents |
| (ii) | Considerations transferred, identifiable assets acquired and liabilities assumed as of the acquisition date are as follows: |
(In millions of won) | ||||
Amounts | ||||
| I. Consideration transferred: | ||||
| Cash and cash equivalents | W | 55,598 | ||
| Fair value of shares of Tmap Mobility Co., Ltd. | 23,402 | |||
| II. Fair value of identifiable assets acquired and liabilities assumed: | ||||
| Cash and cash equivalents | 1,897 | |||
| Financial instruments | 4,000 | |||
| Accounts receivable – trade and other, net | 4,480 | |||
| Property and equipment, net | 431 | |||
| Intangible assets, net | 3,595 | |||
| Other assets | 325 | |||
| Borrowings | (1,000 | ) | ||
| Accounts payable – trade and other | (3,542 | ) | ||
| Lease liabilities | (327 | ) | ||
| Other liabilities | (48 | ) | ||
| Deferred tax liabilities | (327 | ) | ||
| 9,484 | ||||
| III. Goodwill (I - II) | W | 69,516 | ||
11. | Business Combinations, Continued |
| ( 3 ) | 2021, Continued |
| 4) | Acquisition of Rokmedia Co., Ltd. by Onestore Co., Ltd.: |
| (i) | Summary of the acquiree |
Information of acquiree | ||
| Corporate name | Rokmedia Co., Ltd. | |
| Location | 3 rd floor, 330, Seongam-ro, Mapo-gu, Seoul, Korea | |
| CEO | Kang, Jun-Gyu / Kim, Jeong-Su | |
| Industry | Publishing and telecommunications retail business |
11. | Business Combinations, Continued |
| ( 3 ) | 2021, Continued |
| 4) | Acquisition of Rokmedia Co., Ltd. by Onestore Co., Ltd., Continued: |
| (ii) | Considerations transferred, identifiable assets acquired and liabilities assumed as of the acquisition date are as follows: |
(In millions of won) | ||||
Amounts | ||||
| I. Consideration transferred: | ||||
| Cash and cash equivalents | W | 40,000 | ||
| II. Fair value of identifiable assets acquired and liabilities assumed: | ||||
| Cash and cash equivalents | 719 | |||
| Financial instruments | 2,170 | |||
| Accounts receivable – trade and other, net | 1,374 | |||
| Inventories | 933 | |||
| Other assets | 3,212 | |||
| Short-term loans, net | 30 | |||
| Property and equipment, net | 792 | |||
| Intangible assets, net | 2,677 | |||
| Accounts payable – trade and other | (1,885 | ) | ||
| Contract liabilities | (1,401 | ) | ||
| Borrowings | (1,485 | ) | ||
| Provisions | (385 | ) | ||
| Lease liabilities | (56 | ) | ||
| Other liabilities | (111 | ) | ||
| Deferred tax liabilities | (135 | ) | ||
| Income tax payable | (90 | ) | ||
| 6,359 | ||||
| III. Goodwill (I - II) | W | 33,641 | ||
| 5) | Acquisition of GOOD SERVICE Co., Ltd. by Tmap Mobility Co., Ltd.: |
11. | Business Combinations, Continued |
| ( 3 ) | 2021, Continued |
| 5) | Acquisition of GOOD SERVICE Co., Ltd. by Tmap Mobility Co., Ltd., Continued: |
| (i) | Summary of the acquiree |
Information of acquiree | ||
| Corporate name | GOOD SERVICE Co., Ltd. | |
| Location | 4 th floor, 54, Daeheung-ro, Mapo-gu, Seoul, Korea | |
| CEO | Kim, Seung-Wook | |
| Industry | Surrogate driving service business and related business |
| (ii) | Considerations transferred, identifiable assets acquired and liabilities assumed as of the acquisition date are as follows: |
(In millions of won) | ||||
Amounts | ||||
| I. Consideration transferred: | ||||
| Cash and cash equivalents | W | 10,000 | ||
| II. Fair value of identifiable assets acquired and liabilities assumed: | ||||
| Cash and cash equivalents | 1,328 | |||
| Financial instruments | 116 | |||
| Accounts receivable – trade and other, net | 1,881 | |||
| Property and equipment, net | 116 | |||
| Intangible assets, net | 3,492 | |||
| Accounts payable – trade and other | (883 | ) | ||
| Other liabilities | (85 | ) | ||
| Deferred tax liabilities | (696 | ) | ||
| Lease liabilities | (113 | ) | ||
| 5,156 | ||||
| III. Goodwill (I - II) | W | 4,844 | ||
12. | Investments in Associates and Joint Ventures |
| (1) | Investments in associates and joint ventures accounted for using the equity method as of December 31, 2023 and 2022 are as follows: |
December 31, 2021 | December 31, 2020 | |||||||||||||||||||
(In millions of won) | Country | Ownership (%) | Carrying amount | Ownership (%) | Carrying amount | |||||||||||||||
Investments in associates: | ||||||||||||||||||||
SK China Company Ltd. | China | 27.3 | ￦ | 793,754 | 27.3 | ￦ | 555,133 | |||||||||||||
Korea IT Fund(*1) | Korea | 63.3 | 339,976 | 63.3 | 323,294 | |||||||||||||||
KEB HanaCard Co., Ltd.(*2) | Korea | 15.0 | 349,866 | 15.0 | 314,930 | |||||||||||||||
SK Telecom CS T1 Co., Ltd.(*3) | Korea | — | — | 54.9 | 53,010 | |||||||||||||||
NanoEnTek, Inc.(*3) | Korea | — | — | 28.4 | 43,190 | |||||||||||||||
UniSK | China | 49.0 | 19,156 | 49.0 | 15,700 | |||||||||||||||
SK Technology Innovation Company | Cayman Islands | | 49.0 | 86,301 | 49.0 | 41,579 | ||||||||||||||
SK MENA Investment B.V. | Netherlands | 32.1 | 15,343 | 32.1 | 14,043 | |||||||||||||||
SK hynix Inc.(*3) | Korea | — | — | 20.1 | 12,251,861 | |||||||||||||||
SK Latin America Investment S.A. | Spain | 32.1 | 14,004 | 32.1 | 13,930 | |||||||||||||||
Grab Geo Holdings PTE. LTD.(*3) | Singapore | — | — | 30.0 | 30,063 | |||||||||||||||
SK South East Asia Investment Pte. Ltd. | Singapore | 20.0 | 348,782 | 20.0 | 311,990 | |||||||||||||||
Pacific Telecom Inc.(*2) | USA | 15.0 | 43,789 | 15.0 | 39,723 | |||||||||||||||
S.M. Culture & Contents Co., Ltd.(*4) | Korea | 23.1 | 60,261 | 23.3 | 62,248 | |||||||||||||||
Content Wavve Co., Ltd.(*3) | Korea | — | — | 30.0 | 75,803 | |||||||||||||||
Hello Nature Co., Ltd.(*3) | Korea | — | — | 49.9 | 11,969 | |||||||||||||||
Digital Games International Pte. Ltd. | Singapore | 33.3 | 2,208 | 33.3 | 6,449 | |||||||||||||||
Invites Healthcare Co., Ltd.(*5) | Korea | 27.1 | 26,474 | 43.5 | 25,536 | |||||||||||||||
Nam Incheon Broadcasting Co., Ltd. | Korea | 27.3 | 12,525 | 27.3 | 10,902 | |||||||||||||||
NANO-X IMAGING LTD.(*3) | Israel | — | — | 5.6 | 28,484 | |||||||||||||||
Home Choice Corp.(*2) | Korea | 17.8 | 3,052 | 17.8 | 3,585 | |||||||||||||||
Carrot General Insurance Co., Ltd.(*6) | Korea | — | — | 21.4 | 13,469 | |||||||||||||||
12CM JAPAN and others(*2,3,7) | — | — | 72,605 | — | 65,750 | |||||||||||||||
| 2,188,096 | 14,312,641 | |||||||||||||||||||
Investments in joint ventures: | ||||||||||||||||||||
Dogus Planet, Inc.(*3) | Turkey | — | — | 50.0 | 15,071 | |||||||||||||||
Finnq Co., Ltd.(*8) | Korea | 49.0 | 7,255 | 49.0 | 13,342 | |||||||||||||||
NEXTGEN BROADCAST SERVICES CO, LLC(*3) | USA | — | — | 50.0 | 5,850 | |||||||||||||||
NEXTGEN ORCHESTRATION, LLC(*3) | USA | — | — | 50.0 | 1,600 | |||||||||||||||
Techmaker GmbH(*3) | Germany | — | — | 50.0 | 5,609 | |||||||||||||||
UTC Kakao-SK Telecom ESG Fund(*8,9) | Korea | 48.2 | 2,000 | — | — | |||||||||||||||
| 9,255 | 41,472 | |||||||||||||||||||
￦ | 2,197,351 | ￦ | 14,354,113 | |||||||||||||||||
(In millions of won) | December 31, 2023 | December 31, 2022 | ||||||||||||||||
Country | Ownership (%) | Carrying amount | Ownership (%) | Carrying amount | ||||||||||||||
Investments in associates: | ||||||||||||||||||
| SK China Company Ltd. | China | 27.3 | 896,990 | 27.3 | W | 879,527 | ||||||||||||
| Korea IT Fund(*1) | Korea | 63.3 | 336,404 | 63.3 | 324,860 | |||||||||||||
| UniSK | China | 49.0 | 22,285 | 49.0 | 20,839 | |||||||||||||
| SK Technology Innovation Company | Cayman Islands | 49.0 | 70,409 | 49.0 | 69,375 | |||||||||||||
| SK MENA Investment B.V. | Netherlands | 32.1 | 14,872 | 32.1 | 14,296 | |||||||||||||
| SK Latin America Investment S.A. | Spain | 32.1 | 14,607 | 32.1 | 11,961 | |||||||||||||
| SK South East Asia Investment Pte. Ltd. | Singapore | 20.0 | 355,282 | 20.0 | 357,537 | |||||||||||||
| Citadel Pacific Telecom Holdings, LLC(*2) | USA | 15.0 | 45,901 | 15.0 | 48,542 | |||||||||||||
| SM. Culture & Contents Co., Ltd.(*3) | Korea | 22.8 | 41,578 | 23.1 | 59,611 | |||||||||||||
| Invites Genomics Co., Ltd.(*4) (Formerly, Invites Healthcare Co., Ltd.) | Korea | 31.1 | — | 31.1 | — | |||||||||||||
| Nam Incheon Broadcasting Co., Ltd. | Korea | 27.3 | 14,344 | 27.3 | 13,575 | |||||||||||||
| Home Choice Corp.(*2) | Korea | 17.8 | 3,215 | 17.8 | 4,456 | |||||||||||||
| Konan Technology Inc. | Korea | 20.7 | 6,349 | 20.8 | 8,366 | |||||||||||||
| CMES Inc.(*2) | Korea | 7.7 | 900 | 7.7 | 900 | |||||||||||||
| SK telecom Japan Inc.(*5) | Japan | 33.0 | 1,239 | — | — | |||||||||||||
| 12CM JAPAN and others(*2,6,7) | — | — | 81,142 | — | 69,734 | |||||||||||||
| 1,905,517 | 1,883,579 | |||||||||||||||||
Investments in joint ventures: | ||||||||||||||||||
| UTC Kakao-SK Telecom ESG Fund(*8) | Korea | 48.2 | 9,495 | 48.2 | 5,710 | |||||||||||||
| 9,495 | 5,710 | |||||||||||||||||
| 1,915,012 | W | 1,889,289 | ||||||||||||||||
| (*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) |
12. | Investments in Associates and Joint Ventures, Continued |
| (1) | Investments in associates and joint ventures accounted for using the equity method as of December 31, 2023 and 2022 are as follows, Continued: |
| (*4) | The |
| (*5) | The Group disposed of a portion of shares in SK telecom Japan Inc., which was a subsidiary of the W 4,900 million in cash, from which it recognizedW 998 million of loss relating to |
| (*6) | The Group additionally contributed W 28 million in F&U Credit information Co., Ltd.,W 215 million of investment in KDX Korea Data Exchange,W 132 million of investment in SK Venture Capital, LLC, andW 261 million of investment in Walden SKT Venture Fund for the year ended December 31, W 6,500 million to W 520 million to |
| (* | The Group W 550 million and a portion of SK-KNET Youth Startup Investment Cooperative for |
(In millions of won, except for share data) | December 31, 2021 | December 31, 2020 | ||||||||||||||||||||||
Market price per share (in won) | Number of shares | Market value | Market price per share (in won) | Number of shares | Market value | |||||||||||||||||||
NanoEnTek, Inc.(*) | ￦ | — | — | — | 8,620 | 7,600,649 | 65,518 | |||||||||||||||||
SK hynix Inc.(*) | — | — | — | 118,500 | 146,100,000 | 17,312,850 | ||||||||||||||||||
S.M. | 4,485 | 22,033,898 | 98,822 | 1,630 | 22,033,898 | 35,915 | ||||||||||||||||||
NANO-X IMAGING LTD.(*) | — | — | — | 49,678 (USD 45.66 | ) | 2,607,466 | 129,534 | |||||||||||||||||
| (* | W 4,000 million in |
| (2) | The market value of investments in listed associates as of December 31, 2023 and 2022 are as follows: |
(In millions of won, except for share data) | ||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
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 | 1,887 | 22,033,898 | 41,578 | 2,960 | 22,033,898 | 65,220 | |||||||||||||||||
| Konan Technology Inc. | 32,600 | 2,359,160 | 76,909 | 28,250 | 1,179,580 | 33,323 | ||||||||||||||||||
12. | Investments in Associates and Joint Ventures, Continued |
| (3) | The condensed financial information of material associates as of and for the years ended December 31, 2023, 2022 and 2021 are as follows: |
(In millions of won) | ||||||||||||
Korea IT Fund | SK China Company Ltd.(*) | SK South East Asia Investment Pte. Ltd.(*) | ||||||||||
As of December 31, 2023 | ||||||||||||
| 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 | |||||||||
2023 | ||||||||||||
| Revenue | W | 33,017 | 70,126 | 76,686 | ||||||||
| Profit (loss) for the year | 16,330 | 87,462 | (66,169 | ) | ||||||||
| Other comprehensive income (loss) | 5,316 | (56,660 | ) | 2,779 | ||||||||
| Total comprehensive income (loss) | 21,646 | 30,802 | (63,390 | ) | ||||||||
(In millions of won) | ||||||||||||
Korea IT Fund | SK China Company Ltd.(*) | SK South East Asia Investment Pte. Ltd.(*) | ||||||||||
As of December 31, 2022 | ||||||||||||
| Current assets | W | 98,132 | 1,223,426 | 146,589 | ||||||||
| Non-current assets | 414,804 | 2,050,001 | 3,034,335 | |||||||||
| Current liabilities | — | 76,654 | 488,132 | |||||||||
| Non-current liabilities | — | 276,525 | — | |||||||||
2022 | ||||||||||||
| Revenue | W | 19,916 | 62,334 | 72,658 | ||||||||
| Profit (loss) for the year | 7,505 | (11,681 | ) | (17,504 | ) | |||||||
| Other comprehensive income (loss) | (11,779 | ) | 58,034 | (34,220 | ) | |||||||
| Total comprehensive income (loss) | (4,274 | ) | 46,353 | (51,724 | ) | |||||||
12. | Investments in Associates and Joint Ventures, Continued |
(In millions of won) | KEB HanaCard Co., Ltd. (*) | Korea IT Fund | SK China Company Ltd. (*) | SK South East Asia Investment Pte. Ltd. (*) | ||||||||||||
As of December 31, 2021 | ||||||||||||||||
Current assets | ￦ | 9,130,044 | 117,172 | 1,124,219 | 133,110 | |||||||||||
Non-current assets | 465,333 | 419,632 | 1,849,102 | 2,853,184 | ||||||||||||
Current liabilities | 1,281,783 | — | 53,199 | 412,962 | ||||||||||||
Non-current liabilities | 6,284,587 | — | 316,470 | — | ||||||||||||
2021 | ||||||||||||||||
Revenue | ￦ | 1,270,568 | 58,741 | 80,241 | 9,945 | |||||||||||
Profit (loss) for the year | 250,484 | 50,107 | 933,475 | (188,678 | ) | |||||||||||
Other comprehensive income (loss) | 909 | (6,847 | ) | 326,661 | 304,700 | |||||||||||
Total comprehensive income | 251,393 | 43,260 | 1,260,136 | 116,022 | ||||||||||||
(In millions of won) | SK hynix Inc. (*) | KEB HanaCard Co., Ltd. (*) | Korea IT Fund | SK China Company Ltd. (*) | SK South East Asia Investment Pte. Ltd. (*) | |||||||||||||||
As of December 31, 2020 | ||||||||||||||||||||
Current assets | ￦ | 16,570,953 | 7,910,517 | 107,652 | 380,413 | 797,045 | ||||||||||||||
Non-current assets | 54,602,900 | 298,438 | 402,812 | 1,706,634 | 1,672,412 | |||||||||||||||
Current liabilities | 9,072,360 | 897,594 | — | 51,025 | 67 | |||||||||||||||
Non-current liabilities | 10,192,396 | 5,531,968 | — | 308,606 | — | |||||||||||||||
2020 | ||||||||||||||||||||
Revenue | ￦ | 31,900,418 | 1,231,815 | 52,330 | 107,791 | — | ||||||||||||||
Profit (loss) for the year | 4,758,914 | 154,521 | 36,615 | 20,369 | (158,680 | ) | ||||||||||||||
Other comprehensive income (loss) | (107,378 | ) | (4,283 | ) | 9,647 | 42,921 | (390,851 | ) | ||||||||||||
Total comprehensive income (loss) | 4,651,536 | 150,238 | 46,262 | 63,290 | (549,531 | ) | ||||||||||||||
| (3) | The condensed financial information of material associates as of and for the years ended December 31, 2023, 2022 and 2021 are as follows, Continued: |
(In millions of won) | ||||||||||||||||
HanaCard Co., Ltd.(*) | Korea IT Fund | SK China Company Ltd.(*) | SK South East Asia Investment Pte. Ltd.(*) | |||||||||||||
As of December 31, 2021 | ||||||||||||||||
| Current assets | W | 9,130,044 | 117,172 | 1,124,219 | 133,110 | |||||||||||
| Non-current assets | 465,333 | 419,632 | 1,849,102 | 2,853,184 | ||||||||||||
| Current liabilities | 1,281,783 | — | 53,199 | 412,962 | ||||||||||||
| Non-current liabilities | 6,284,587 | — | 316,470 | — | ||||||||||||
2021 | ||||||||||||||||
| Revenue | W | 1,270,568 | 58,741 | 80,241 | 9,945 | |||||||||||
| Profit (loss) for the year | 250,484 | 50,107 | 933,475 | (188,678 | ) | |||||||||||
| Other comprehensive income (loss) | 909 | (6,847 | ) | 326,661 | 304,700 | |||||||||||
| Total comprehensive income | 251,393 | 43,260 | 1,260,136 | 116,022 | ||||||||||||
(In millions of won) | SK hynix Inc. (*) | KEB HanaCard Co., Ltd. (*) | Korea IT Fund | SK China Company Ltd. (*) | SK South East Asia Investment Pte. Ltd. (*) | |||||||||||||||
As of December 31, 2019 | ||||||||||||||||||||
Current assets | ￦ | 14,457,602 | 7,974,407 | 113,233 | 615,028 | 81,065 | ||||||||||||||
Non-current assets | 50,331,892 | 207,284 | 378,691 | 1,442,748 | 1,797,239 | |||||||||||||||
Current liabilities | 7,874,033 | 1,015,657 | — | 59,395 | 94 | |||||||||||||||
Non-current liabilities | 8,972,266 | 5,537,850 | — | 215,354 | — | |||||||||||||||
2019 | ||||||||||||||||||||
Revenue | ￦ | 26,990,733 | 1,236,678 | 70,565 | 116,269 | — | ||||||||||||||
Profit for the year | 2,016,391 | 56,281 | 53,867 | 23,474 | 1,190 | |||||||||||||||
Other comprehensive income (loss) | 94,023 | (4,458 | ) | 6,132 | (15,093 | ) | 97,508 | |||||||||||||
Total comprehensive income | 2,110,414 | 51,823 | 59,999 | 8,381 | 98,698 | |||||||||||||||
| (*) | The financial information of |
| (4) | There are no material joint ventures as of December 31, 2023, 2022 and 2021. |
12. | Investments in Associates and Joint Ventures, Continued |
| (5) | Reconciliations of financial information of material associates to carrying amounts of investments in associates in the consolidated financial statements as of December 31, 2023 and 2022 are as follows: |
(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 | |||||||||||||||
(In millions of won) | ||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||
Net assets | Ownership interests (%) | Net assets attributable to the ownership interests | Cost-book value differentials | Carrying amount | ||||||||||||||||
| Korea IT Fund | W | 512,936 | 63.3 | 324,860 | — | 324,860 | ||||||||||||||
| SK China Company Ltd. | 2,920,248 | 27.3 | 796,387 | 83,140 | 879,527 | |||||||||||||||
| SK South East Asia Investment Pte. Ltd.(*) | 1,787,685 | 20.0 | 357,537 | — | 357,537 | |||||||||||||||
(In millions of won) | Dogus Planet, Inc. | Finnq Co., Ltd. | ||||||
As of December 31, 2020 | ||||||||
Current assets | ￦ | 55,951 | 26,781 | |||||
Cash and cash equivalents | 9,083 | 23,936 | ||||||
Non-current assets | 30,408 | 8,530 | ||||||
Current liabilities | 46,186 | 7,367 | ||||||
Accounts payable, other payables and provisions | 28,145 | 5,094 | ||||||
Non-current liabilities | 10,031 | 879 | ||||||
2020 | ||||||||
Revenue | ￦ | 177,084 | 3,937 | |||||
Depreciation and amortization | (4,642 | ) | (4,417 | ) | ||||
Interest income | 1,878 | 29 | ||||||
Interest expense | (555 | ) | (51 | ) | ||||
Profit (loss) for the year | 7,030 | (19,426 | ) | |||||
Total comprehensive loss | (1,659 | ) | (19,426 | ) | ||||
| (*) |
(In millions of won) | Dogus Planet, Inc. | Finnq Co., Ltd. | ||||||
As of December 31, 2019 | ||||||||
Current assets | ￦ | 59,632 | 42,995 | |||||
Cash and cash equivalents | 13,422 | 40,619 | ||||||
Non-current assets | 25,247 | 11,389 | ||||||
Current liabilities | 52,238 | 6,756 | ||||||
Accounts payable, other payables and provisions | 35,459 | 5,062 | ||||||
Non-current liabilities | 800 | 1,099 | ||||||
2019 | ||||||||
Revenue | ￦ | 136,777 | 1,968 | |||||
Depreciation and amortization | (5,487 | ) | (4,769 | ) | ||||
Interest income | 1,455 | 12 | ||||||
Interest expense | (92 | ) | (198 | ) | ||||
Profit (loss) for the year | 9,294 | (17,079 | ) | |||||
Total comprehensive income (loss) | 9,294 | (17,361 | ) | |||||
(In millions of won) | December 31, 2021 | |||||||||||||||||||
Net assets | Ownership interests (%) | Net assets attributable to the ownership interests | Cost-book value differentials | Carrying amount | ||||||||||||||||
KEB HanaCard Co., Ltd. | ￦ | 2,029,007 | 15.0 | 304,351 | 45,515 | 349,866 | ||||||||||||||
Korea IT Fund | 536,804 | 63.3 | 339,976 | — | 339,976 | |||||||||||||||
SK China Company Ltd.(*1) | 2,603,336 | 27.3 | 709,961 | 83,793 | 793,754 | |||||||||||||||
SK South East Asia Investment Pte. Ltd.(*1) | 1,743,908 | 20.0 | 348,782 | — | 348,782 | |||||||||||||||
(In millions of won) | December 31, 2020 | |||||||||||||||||||
Net assets | Ownership interests (%) | Net assets attributable to the ownership interests | Cost-book value differentials | Carrying amount | ||||||||||||||||
SK hynix Inc.(*1,2) | ￦ | 51,883,236 | 20.1 | 11,082,048 | 1,169,813 | 12,251,861 | ||||||||||||||
KEB HanaCard Co., Ltd. | 1,779,393 | 15.0 | 266,909 | 48,021 | 314,930 | |||||||||||||||
Korea IT Fund | 510,464 | 63.3 | 323,294 | — | 323,294 | |||||||||||||||
SK China Company Ltd.(*1) | 1,725,949 | 27.3 | 470,687 | 84,446 | 555,133 | |||||||||||||||
SK South East Asia Investment Pte. Ltd.(*1) | 1,559,951 | 20.0 | 311,990 | — | 311,990 | |||||||||||||||
Net assets of these entities represent net assets excluding those attributable to their non-controlling interests. |
2021 | ||||||||||||||||||||||||||||
(In millions of won) | Beginning balance | Acquisition and Disposal | Share of profits (losses) | Other compre- hensive income (loss) | Other increase (decrease) | Spin-off | Ending balance | |||||||||||||||||||||
Investments in associates: | ||||||||||||||||||||||||||||
SK China Company Ltd.(*1) | ￦ | 555,133 | — | 274,066 | 95,696 | (131,141 | ) | — | 793,754 | |||||||||||||||||||
Korea IT Fund(*1) | 323,294 | — | 31,734 | (4,336 | ) | (10,716 | ) | — | 339,976 | |||||||||||||||||||
KEB HanaCard Co., Ltd. | 314,930 | — | 35,057 | (121 | ) | — | — | 349,866 | ||||||||||||||||||||
SK Telecom CS T1 Co., Ltd.(*2) | 53,010 | 4,888 | (8,769 | ) | (575 | ) | — | (48,554 | ) | — | ||||||||||||||||||
NanoEnTek, Inc.(*2) | 43,190 | — | 1,836 | (86 | ) | — | (44,940 | ) | — | |||||||||||||||||||
UniSK | 15,700 | — | 1,475 | 1,981 | — | — | 19,156 | |||||||||||||||||||||
SK Technology Innovation Company | 41,579 | — | 39,256 | 5,466 | — | — | 86,301 | |||||||||||||||||||||
SK MENA Investment B.V. | 14,043 | — | 2 | 1,298 | — | — | 15,343 | |||||||||||||||||||||
SK hynix Inc.(*1,2) | 12,251,861 | 19,482 | 1,542,757 | 197,473 | (170,937 | ) | (13,840,636 | ) | — | |||||||||||||||||||
SK Latin America Investment S.A. | 13,930 | — | (49 | ) | 123 | — | — | 14,004 | ||||||||||||||||||||
Grab Geo Holdings PTE. LTD.(*2) | 30,063 | — | — | — | — | (30,063 | ) | — | ||||||||||||||||||||
SK South East Asia Investment Pte. Ltd. | 311,990 | — | (18,218 | ) | 55,010 | — | — | 348,782 | ||||||||||||||||||||
Pacific Telecom Inc. | 39,723 | — | 1,598 | 2,468 | — | — | 43,789 | |||||||||||||||||||||
S.M. Culture & Contents Co., Ltd. | 62,248 | 144 | (2,484 | ) | 353 | — | — | 60,261 | ||||||||||||||||||||
Contents Wavve Co., Ltd.(*2) | 75,803 | 100,000 | (20,716 | ) | — | — | (155,087 | ) | — | |||||||||||||||||||
Hello Nature Co., Ltd.(*2,3) | 11,969 | 9,980 | (10,899 | ) | (1 | ) | (1,730 | ) | (9,319 | ) | — | |||||||||||||||||
Digital Games International Pte. Ltd. | 6,449 | — | (4,529 | ) | 288 | — | — | 2,208 | ||||||||||||||||||||
Invites Healthcare Co., Ltd. | 25,536 | 7,000 | (5,968 | ) | (94 | ) | — | — | 26,474 | |||||||||||||||||||
Nam Incheon Broadcasting Co., Ltd.(*1) | 10,902 | — | 1,759 | — | (136 | ) | — | 12,525 | ||||||||||||||||||||
NANO-X IMAGING LTD.(*2) | 28,484 | (47 | ) | (2,049 | ) | — | 2,437 | (28,825 | ) | — | ||||||||||||||||||
Home Choice Corp. | 3,585 | — | (533 | ) | — | — | — | 3,052 | ||||||||||||||||||||
Carrot General Insurance Co., Ltd.(*4) | 13,469 | 12,289 | (6,666 | ) | (358 | ) | (8,734 | ) | (10,000 | ) | — | |||||||||||||||||
Bertis Inc.(*2) | — | 15,739 | (423 | ) | — | — | (15,316 | ) | — | |||||||||||||||||||
UT LLC(*2) | — | 86,319 | (7,773 | ) | — | — | (78,546 | ) | — | |||||||||||||||||||
SPARKPLUS Co., Ltd.(*2) | — | 34,166 | — | — | — | (34,166 | ) | — | ||||||||||||||||||||
12CM JAPAN and others(*2,5) | 65,750 | 9,038 | (2,869 | ) | 7,693 | (1,624 | ) | (5,383 | ) | 72,605 | ||||||||||||||||||
| 14,312,641 | 298,998 | 1,837,595 | 362,278 | (322,581 | ) | (14,300,835 | ) | 2,188,096 | ||||||||||||||||||||
2021 | ||||||||||||||||||||||||||||
(In millions of won) | Beginning balance | Acquisition and Disposal | Share of profits (losses) | Other compre- hensive income (loss) | Other increase (decrease) | Spin-off | Ending balance | |||||||||||||||||||||
Investments in joint ventures: | ||||||||||||||||||||||||||||
Dogus Planet, Inc.(*2) | ￦ | 15,071 | — | (6,990 | ) | (1,447 | ) | — | (6,634 | ) | — | |||||||||||||||||
Finnq Co., Ltd. | 13,342 | — | (5,969 | ) | (118 | ) | — | — | 7,255 | |||||||||||||||||||
NEXTGEN BROADCAST SERVICES CO, LLC(*2) | 5,850 | 9,048 | (1,276 | ) | — | 892 | (14,514 | ) | — | |||||||||||||||||||
NEXTGEN ORCHESTRATION, LLC(*2) | 1,600 | — | — | — | 142 | (1,742 | ) | — | ||||||||||||||||||||
Techmaker GmbH(*2) | 5,609 | — | (94 | ) | 145 | — | (5,660 | ) | — | |||||||||||||||||||
WAVVE Americas Inc. (Formerly, Korea Content Platform, Inc.)(*2) | — | 30,191 | (14 | ) | — | 598 | (30,775 | ) | — | |||||||||||||||||||
UTC Kakao-SK Telecom ESG Fund | — | 2,000 | — | — | — | — | 2,000 | |||||||||||||||||||||
| 41,472 | 41,239 | (14,343 | ) | (1,420 | ) | 1,632 | (59,325 | ) | 9,255 | |||||||||||||||||||
￦ | 14,354,113 | 340,237 | 1,823,252 | 360,858 | (320,949 | ) | (14,360,160 | ) | 2,197,351 | |||||||||||||||||||
12. | Investments in Associates and Joint Ventures, Continued |
| (6) | Details of the changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2023 and 2022 are as follows: |
(In millions of won) | 2023 | |||||||||||||||||||||||
Beginning balance | Acquisition and Disposal | Share of profit (loss) | Other compre- hensive income (loss) | Other increase (decrease) | Ending balance | |||||||||||||||||||
Investments in associates: | ||||||||||||||||||||||||
| SK China Company Ltd. | W | 879,527 | — | 24,054 | (6,591 | ) | — | 896,990 | ||||||||||||||||
| Korea IT Fund(*1) | 324,860 | — | 10,343 | 3,366 | (2,165 | ) | 336,404 | |||||||||||||||||
| UniSK(*1) | 20,839 | — | 2,079 | 102 | (735 | ) | 22,285 | |||||||||||||||||
| SK Technology Innovation Company | 69,375 | — | (178 | ) | 1,212 | — | 70,409 | |||||||||||||||||
| SK MENA Investment B.V. | 14,296 | — | 335 | 241 | — | 14,872 | ||||||||||||||||||
| SK Latin America Investment S.A. | 11,961 | — | 1,974 | 672 | — | 14,607 | ||||||||||||||||||
| SK South East Asia Investment Pte. Ltd. | 357,537 | — | (12,881 | ) | 10,626 | — | 355,282 | |||||||||||||||||
| Citadel Pacific Telecom Holdings, LLC(*1) | 48,542 | — | 2,628 | 637 | (5,906 | ) | 45,901 | |||||||||||||||||
| SM. Culture & Contents Co., Ltd.(*2) | 59,611 | (679 | ) | 593 | 808 | (18,755 | ) | 41,578 | ||||||||||||||||
| Nam Incheon Broadcasting Co., Ltd.(*1) | 13,575 | — | 905 | — | (136 | ) | 14,344 | |||||||||||||||||
| Home Choice Corp. | 4,456 | — | (1,241 | ) | — | — | 3,215 | |||||||||||||||||
| Konan Technology Inc. | 8,366 | (44 | ) | (2,100 | ) | 127 | — | 6,349 | ||||||||||||||||
| CMES Inc. | 900 | — | — | — | — | 900 | ||||||||||||||||||
| SK telecom Japan Inc.(*3) | — | — | — | — | 1,239 | 1,239 | ||||||||||||||||||
| 12CM JAPAN and others(*1,4) | 69,734 | 8,706 | 5,108 | (2,264 | ) | (142 | ) | 81,142 | ||||||||||||||||
| 1,883,579 | 7,983 | 31,619 | 8,936 | (26,600 | ) | 1,905,517 | ||||||||||||||||||
Investments in joint ventures: | ||||||||||||||||||||||||
| UTC Kakao-SK Telecom ESG Fund | 5,710 | 4,000 | (215 | ) | — | — | 9,495 | |||||||||||||||||
| 5,710 | 4,000 | (215 | ) | — | — | 9,495 | ||||||||||||||||||
| W | 1,889,289 | 11,983 | 31,404 | 8,936 | (26,600 | ) | 1,915,012 | |||||||||||||||||
| (*1) | Dividends received from the associates are deducted from the carrying amount for the year ended December 31, |
| (*2) |
| (*3) | The Group |
| (* | The acquisition for the year ended December 31, W 520 million of investment in Covet Co., Ltd., andW 28 million of investment in F&U Credit information Co., Ltd. The disposal for the year ended December 31, |
2020 | ||||||||||||||||||||||||||||
(In millions of won) | Beginning balance | Acquisition and Disposal | Share of profits (losses) | Other compre- hensive income (loss) | Other increase (decrease) | Business Combina- tion | Ending balance | |||||||||||||||||||||
Investments in associates: | ||||||||||||||||||||||||||||
SK China Company Ltd. | ￦ | 568,459 | — | 3,752 | (17,078 | ) | — | — | 555,133 | |||||||||||||||||||
Korea IT Fund(*1) | 311,552 | — | 23,189 | 6,110 | (17,557 | ) | — | 323,294 | ||||||||||||||||||||
KEB HanaCard Co., Ltd. | 294,756 | — | 20,671 | (497 | ) | — | — | 314,930 | ||||||||||||||||||||
SK Telecom CS T1 Co., Ltd.(*2) | 60,305 | — | (7,282 | ) | (13 | ) | — | — | 53,010 | |||||||||||||||||||
NanoEnTek, Inc.(*2) | 42,127 | 143 | 830 | 90 | — | — | 43,190 | |||||||||||||||||||||
UniSK(*1) | 14,342 | — | 1,403 | 168 | (213 | ) | — | 15,700 | ||||||||||||||||||||
SK Technology Innovation Company | 43,997 | — | 184 | (2,602 | ) | — | — | 41,579 | ||||||||||||||||||||
SK MENA Investment B.V. | 14,904 | — | — | (861 | ) | — | — | 14,043 | ||||||||||||||||||||
SK hynix Inc.(*1,2) | 11,425,325 | — | 995,117 | (22,481 | ) | (146,100 | ) | — | 12,251,861 | |||||||||||||||||||
SK Latin America Investment S.A. | 13,698 | — | (40 | ) | 272 | — | — | 13,930 | ||||||||||||||||||||
Grab Geo Holdings PTE. LTD.(*2) | 31,269 | — | (425 | ) | (781 | ) | — | — | 30,063 | |||||||||||||||||||
SK South East Asia Investment Pte. Ltd. | 250,034 | 119,770 | 11,250 | (69,064 | ) | — | — | 311,990 | ||||||||||||||||||||
Pacific Telecom Inc.(*1) | 40,016 | — | 2,307 | (1,621 | ) | (979 | ) | — | 39,723 | |||||||||||||||||||
S.M. Culture & Contents Co., Ltd. | 63,469 | (162 | ) | (813 | ) | (246 | ) | — | — | 62,248 | ||||||||||||||||||
Contents Wavve Co., Ltd.(*2) | 83,640 | — | (7,837 | ) | — | — | — | 75,803 | ||||||||||||||||||||
Hello Nature Co., Ltd.(*2,3) | 13,620 | 9,980 | (11,118 | ) | (79 | ) | (434 | ) | — | 11,969 | ||||||||||||||||||
Digital Games International Pte. Ltd. | — | 8,810 | (2,038 | ) | (323 | ) | — | — | 6,449 | |||||||||||||||||||
Invites Healthcare Co., Ltd. | — | 28,000 | (2,645 | ) | 181 | — | — | 25,536 | ||||||||||||||||||||
Nam Incheon Broadcasting Co., Ltd. | — | — | 676 | — | — | 10,226 | 10,902 | |||||||||||||||||||||
NANO-X IMAGING LTD.(*2,4) | — | 28,515 | (747 | ) | — | 716 | — | 28,484 | ||||||||||||||||||||
Home Choice Corp. | — | — | 174 | — | — | 3,411 | 3,585 | |||||||||||||||||||||
Carrot General Insurance Co., Ltd. (*5) | 6,459 | 31 | (6,188 | ) | (33 | ) | 13,200 | — | 13,469 | |||||||||||||||||||
12CM JAPAN and others(*2,6) | 58,884 | (1,508 | ) | (2,134 | ) | (2,302 | ) | 12,810 | — | 65,750 | ||||||||||||||||||
| 13,336,856 | 193,579 | 1,018,286 | (111,160 | ) | (138,557 | ) | 13,637 | 14,312,641 | ||||||||||||||||||||
12. | Investments in Associates and Joint Ventures, Continued |
| (6) | Details of the changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2023 and 2022 are as follows, Continued: |
2020 | ||||||||||||||||||||||||||||
(In millions of won) | Beginning balance | Acquisition and Disposal | Share of profits (losses) | Other compre- hensive income (loss) | Other increase (decrease) | Business Combina- tion | Ending balance | |||||||||||||||||||||
Investments in joint ventures: | ||||||||||||||||||||||||||||
Dogus Planet, Inc.(*2) | ￦ | 15,921 | — | 3,453 | (4,303 | ) | — | — | 15,071 | |||||||||||||||||||
Finnq Co., Ltd. | 22,880 | — | (9,538 | ) | — | — | — | 13,342 | ||||||||||||||||||||
NEXTGEN BROADCAST SERVICES CO, LLC(*2) | 7,961 | — | (1,769 | ) | — | (342 | ) | — | 5,850 | |||||||||||||||||||
NEXTGEN ORCHESTRATION, LLC(*2) | 1,646 | — | 57 | — | (103 | ) | — | 1,600 | ||||||||||||||||||||
Techmaker GmbH(*2) | — | 5,609 | — | — | — | — | 5,609 | |||||||||||||||||||||
| 48,408 | 5,609 | (7,797 | ) | (4,303 | ) | (445 | ) | — | 41,472 | |||||||||||||||||||
￦ | 13,385,264 | 199,188 | 1,010,489 | (115,463 | ) | (139,002 | ) | 13,637 | 14,354,113 | |||||||||||||||||||
| includes a portion of shares in Start-up Win-Win Fund for W 550 million and a portion of SK-KNET Youth Startup Investment Cooperative forW 4,400 million for the year ended December 31, 2023. |
(In millions of won) | 2022 | |||||||||||||||||||||||
Beginning balance | Acquisition and Disposal | Share of profit (loss) | Other compre- hensive income (loss) | Other increase (decrease) | Ending balance | |||||||||||||||||||
Investments in associates: | ||||||||||||||||||||||||
| SK China Company Ltd. | W | 793,754 | — | (19,395 | ) | 105,168 | — | 879,527 | ||||||||||||||||
| Korea IT Fund(*1) | 339,976 | — | 4,753 | (7,459 | ) | (12,410 | ) | 324,860 | ||||||||||||||||
| HanaCard Co., Ltd. | 349,866 | (368,389 | ) | 17,749 | 774 | — | — | |||||||||||||||||
| UniSK | 19,156 | — | 2,424 | (741 | ) | — | 20,839 | |||||||||||||||||
| SK Technology Innovation Company | 86,301 | — | (22,923 | ) | 5,997 | — | 69,375 | |||||||||||||||||
| SK MENA Investment B.V. | 15,343 | — | (2,059 | ) | 1,012 | — | 14,296 | |||||||||||||||||
| SK Latin America Investment S.A. | 14,004 | — | (2,083 | ) | 40 | — | 11,961 | |||||||||||||||||
| SK South East Asia Investment Pte. Ltd. | 348,782 | — | (6,975 | ) | 15,730 | — | 357,537 | |||||||||||||||||
| Citadel Pacific Telecom Holdings, LLC | 43,789 | — | 2,890 | 1,863 | — | 48,542 | ||||||||||||||||||
| SM. Culture & Contents Co., Ltd. | 60,261 | 37 | (756 | ) | 69 | — | 59,611 | |||||||||||||||||
| Digital Games International Pte. Ltd. | 2,208 | (1,757 | ) | (562 | ) | 111 | — | — | ||||||||||||||||
| Invites Genomics Co., Ltd.(*2) (Formerly, Invites Healthcare Co., Ltd.) | 26,474 | — | (11,759 | ) | (74 | ) | (14,641 | ) | — | |||||||||||||||
| Nam Incheon Broadcasting Co., Ltd.(*1) | 12,525 | — | 1,186 | — | (136 | ) | 13,575 | |||||||||||||||||
| Home Choice Corp. | 3,052 | — | 1,403 | 1 | — | 4,456 | ||||||||||||||||||
| Konan Technology Inc. | 3,639 | 5,451 | (710 | ) | (14 | ) | — | 8,366 | ||||||||||||||||
| CMES Inc.(*3) | — | — | — | — | 900 | 900 | ||||||||||||||||||
| 12CM JAPAN and others(*4) | 68,966 | 1,873 | 1,245 | — | (2,350 | ) | 69,734 | |||||||||||||||||
| 2,188,096 | (362,785 | ) | (35,572 | ) | 122,477 | (28,637 | ) | 1,883,579 | ||||||||||||||||
Investments in joint ventures: | ||||||||||||||||||||||||
| Finnq Co., Ltd. | 7,255 | (3,840 | ) | (3,617 | ) | 202 | — | — | ||||||||||||||||
| UTC Kakao-SK Telecom ESG Fund | 2,000 | 4,000 | (290 | ) | — | — | 5,710 | |||||||||||||||||
| 9,255 | 160 | (3,907 | ) | 202 | — | 5,710 | ||||||||||||||||||
| W | 2,197,351 | (362,625 | ) | (39,479 | ) | 122,679 | (28,637 | ) | 1,889,289 | |||||||||||||||
| (*1) | Dividends received from the associates are deducted from the carrying amount for the year ended December 31, |
| (*2) |
The Group recognized |
| (* | As the Group obtained significant influence over the investee, |
(In millions of won) | Unrecognized loss | Unrecognized change in equity | ||||||||||||||
2021 | Cumulative loss | 2021 | Cumulative loss | |||||||||||||
Wave City Development Co., Ltd. | ￦ | 6,143 | 8,543 | — | — | |||||||||||
Daehan Kanggun BcN Co., Ltd. and others | (5,167 | ) | 5,780 | — | (124 | ) | ||||||||||
￦ | 976 | 14,323 | — | (124 | ) | |||||||||||
12. | Investments in Associates and Joint Ventures, Continued |
| (6) | Details of the changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2023 and 2022 are as follows, Continued: |
| (*4) | The acquisition for the year ended December 31, 2022 includes W 2,000 million of cash investment in Smart SKT Infinitum Game Fund,W 4,000 million of cash investment in KB ESG Fund of three telecommunications companies andW 12 million of cash investment in SK Venture Capital, LLC. The disposal for the year ended December 31, 2022 includesW 4,850 million relating to disposal of the part of shares of Start-up Win-Win Fund andW 1,080 million relating to disposal of the part of shares of Daekyo Wipoongdangdang Contents Korea Fund. In addition, dividends amounting toW 1,290 million received from Start-up Win-Win Fund deducted from the carrying amount for the year ended December 31, 2022. |
| (7) | The Group discontinued the application of equity method to the following investees due to their carrying amounts being reduced to zero. The details of cumulative unrecognized equity method losses as of December 31, 2023 are as follows: |
(In millions of won) | Unrecognized loss | Unrecognized change in equity | ||||||||||||||
2023 | Cumulative loss | 2023 | Cumulative loss | |||||||||||||
| Invites Genomics Co., Ltd. (Formerly, Invites Healthcare Co., Ltd.) | W | 7,844 | 7,844 | 1,179 | 1,179 | |||||||||||
| Daehan Kanggun BcN Co., Ltd. and others | — | 5,780 | — | (124 | ) | |||||||||||
| W | 7,844 | 13,624 | 1,179 | 1,055 | ||||||||||||
13. | Property and Equipment |
| (1) | Property and equipment as of December 31, 2023 and 2022 are as follows: |
(In millions of won) | ||||||||||||||||
December 31, 2023 | ||||||||||||||||
Acquisition cost | Accumulated depreciation | Accumulated impairment loss | Carrying amount | |||||||||||||
| Land | W | 1,248,200 | — | — | 1,248,200 | |||||||||||
| Buildings | 1,775,563 | (1,001,721 | ) | (450 | ) | 773,392 | ||||||||||
| Structures | 941,868 | (705,388 | ) | (1,601 | ) | 234,879 | ||||||||||
| Machinery | 37,688,793 | (29,796,000 | ) | (2,139 | ) | 7,890,654 | ||||||||||
| Other | 1,757,617 | (1,271,597 | ) | (863 | ) | 485,157 | ||||||||||
| Right-of-use assets | 2,549,003 | (933,567 | ) | (3,485 | ) | 1,611,951 | ||||||||||
| Construction in progress | 761,963 | — | — | 761,963 | ||||||||||||
| W | 46,723,007 | (33,708,273 | ) | (8,538 | ) | 13,006,196 | ||||||||||
13. | Property and Equipment, Continued |
(In millions of won) | ||||||||||||||||
December 31, 2022 | ||||||||||||||||
Acquisition cost | Accumulated depreciation | Accumulated impairment loss | Carrying amount | |||||||||||||
| Land | W | 1,005,857 | — | — | 1,005,857 | |||||||||||
| Buildings | 1,736,257 | (950,582 | ) | (450 | ) | 785,225 | ||||||||||
| Structures | 935,276 | (668,019 | ) | (1,601 | ) | 265,656 | ||||||||||
| Machinery | 37,100,715 | (29,185,881 | ) | (1,934 | ) | 7,912,900 | ||||||||||
| Other | 1,771,890 | (1,273,655 | ) | (841 | ) | 497,394 | ||||||||||
| Right-of-use assets | 2,555,685 | (766,350 | ) | (3,206 | ) | 1,786,129 | ||||||||||
| Construction in progress | 1,069,331 | — | — | 1,069,331 | ||||||||||||
| W | 46,175,011 | (32,844,487 | ) | (8,032 | ) | 13,322,492 | ||||||||||
December 31, 2021 | ||||||||||||||||
(In millions of won) | Acquisition cost | Accumulated depreciation | Accumulated impairment loss | Carrying amount | ||||||||||||
Land | ￦ | 972,800 | — | — | 972,800 | |||||||||||
Buildings | 1,692,239 | (897,336 | ) | (450 | ) | 794,453 | ||||||||||
Structures | 922,637 | (629,757 | ) | (1,601 | ) | 291,279 | ||||||||||
Machinery | 35,770,485 | (27,771,040 | ) | (1,518 | ) | 7,997,927 | ||||||||||
Other | 1,718,337 | (1,230,128 | ) | (493 | ) | 487,716 | ||||||||||
Right-of-use | 2,229,945 | (669,389 | ) | (1,223 | ) | 1,559,333 | ||||||||||
Construction in progress | 767,751 | — | — | 767,751 | ||||||||||||
￦ | 44,074,194 | (31,197,650 | ) | (5,285 | ) | 12,871,259 | ||||||||||
December 31, 2020 | ||||||||||||||||
(In millions of won) | Acquisition cost | Accumulated depreciation | Accumulated impairment loss | Carrying amount | ||||||||||||
Land | ￦ | 1,039,323 | — | — | 1,039,323 | |||||||||||
Buildings | 1,747,445 | (888,389 | ) | (450 | ) | 858,606 | ||||||||||
Structures | 913,102 | (594,098 | ) | (1,601 | ) | 317,403 | ||||||||||
Machinery | 36,152,031 | (27,761,449 | ) | (14,370 | ) | 8,376,212 | ||||||||||
Other | 2,047,405 | (1,391,201 | ) | (2,588 | ) | 653,616 | ||||||||||
Right-of-use | 1,961,346 | (489,311 | ) | — | 1,472,035 | |||||||||||
Construction in progress | 659,882 | — | — | 659,882 | ||||||||||||
￦ | 44,520,534 | (31,124,448 | ) | (19,009 | ) | 13,377,077 | ||||||||||
| (2) | Changes in property and equipment for the years ended December 31, |
(In millions of won) | ||||||||||||||||||||||||||||
2023 | ||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Depreciation | Impairment | Ending balance | ||||||||||||||||||||||
| Land | W | 1,005,857 | 12 | (388 | ) | 242,719 | — | — | 1,248,200 | |||||||||||||||||||
| Buildings | 785,225 | 1,083 | (294 | ) | 41,516 | (54,138 | ) | — | 773,392 | |||||||||||||||||||
| Structures | 265,656 | 1,632 | (198 | ) | 6,446 | (38,657 | ) | — | 234,879 | |||||||||||||||||||
| Machinery | 7,912,900 | 553,541 | (7,267 | ) | 1,734,474 | (2,302,789 | ) | (205 | ) | 7,890,654 | ||||||||||||||||||
| Other | 497,394 | 554,595 | (1,205 | ) | (476,097 | ) | (89,506 | ) | (24 | ) | 485,157 | |||||||||||||||||
| Right-of-use assets | 1,786,129 | 345,761 | (86,069 | ) | (23,436 | ) | (410,032 | ) | (402 | ) | 1,611,951 | |||||||||||||||||
| Construction in progress | 1,069,331 | 1,554,922 | (26 | ) | (1,862,264 | ) | — | — | 761,963 | |||||||||||||||||||
| W | 13,322,492 | 3,011,546 | (95,447 | ) | (336,642 | ) | (2,895,122 | ) | (631 | ) | 13,006,196 | |||||||||||||||||
(In millions of won) | ||||||||||||||||||||||||||||||||||||
2021 | ||||||||||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Deprecia- tion(*1) | Impairment(*2) | Business combina- tion(*3) | Spin-off | Ending balance | ||||||||||||||||||||||||||||
Land | ￦ | 1,039,323 | 634 | (21,557 | ) | 24,789 | — | — | — | (70,389 | ) | 972,800 | ||||||||||||||||||||||||
Buildings | 858,606 | 3,919 | (9,706 | ) | 47,612 | (55,818 | ) | — | 639 | (50,799 | ) | 794,453 | ||||||||||||||||||||||||
Structures | 317,403 | 2,482 | (6,124 | ) | 16,546 | (37,968 | ) | — | — | (1,060 | ) | 291,279 | ||||||||||||||||||||||||
Machinery | 8,376,212 | 593,225 | (44,477 | ) | 1,816,003 | (2,394,351 | ) | (1,054 | ) | — | (347,631 | ) | 7,997,927 | |||||||||||||||||||||||
Other | 653,616 | 830,277 | (2,286 | ) | (607,271 | ) | (180,980 | ) | (495 | ) | 193 | (205,338 | ) | 487,716 | ||||||||||||||||||||||
Right-of-use | 1,472,035 | 672,723 | (60,159 | ) | (9,610 | ) | (433,970 | ) | (1,223 | ) | 507 | (80,970 | ) | 1,559,333 | ||||||||||||||||||||||
Construction in progress | 659,882 | 1,695,316 | (1,071 | ) | (1,554,047 | ) | — | — | — | (32,329 | ) | 767,751 | ||||||||||||||||||||||||
￦ | 13,377,077 | 3,798,576 | (145,380 | ) | (265,978 | ) | (3,103,087 | ) | (2,772 | ) | 1,339 | (788,516 | ) | 12,871,259 | ||||||||||||||||||||||
(In millions of won) | ||||||||||||||||||||||||||||||||
2022 | ||||||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Depreciation | Impairment | Business combination(*) | Ending balance | |||||||||||||||||||||||||
| Land | W | 972,800 | 79 | (175 | ) | 30,364 | — | — | 2,789 | 1,005,857 | ||||||||||||||||||||||
| Buildings | 794,453 | 1,071 | (638 | ) | 36,219 | (54,463 | ) | — | 8,583 | 785,225 | ||||||||||||||||||||||
| Structures | 291,279 | 2,288 | (32 | ) | 10,422 | (38,301 | ) | — | — | 265,656 | ||||||||||||||||||||||
| Machinery | 7,997,927 | 560,889 | (49,586 | ) | 1,696,447 | (2,292,358 | ) | (419 | ) | — | 7,912,900 | |||||||||||||||||||||
| Other | 487,716 | 780,382 | (938 | ) | (672,199 | ) | (105,730 | ) | (391 | ) | 8,554 | 497,394 | ||||||||||||||||||||
| Right-of-use assets | 1,559,333 | 720,932 | (65,961 | ) | (27,579 | ) | (403,794 | ) | (3,133 | ) | 6,331 | 1,786,129 | ||||||||||||||||||||
| Construction in progress | 767,751 | 1,564,345 | (1,709 | ) | (1,261,937 | ) | — | — | 881 | 1,069,331 | ||||||||||||||||||||||
| W | 12,871,259 | 3,629,986 | (119,039 | ) | (188,263 | ) | (2,894,646 | ) | (3,943 | ) | 27,138 | 13,322,492 | ||||||||||||||||||||
(*) | Includes |
(In millions of won) | ||||||||||||||||||||||||||||||||
2020 | ||||||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Deprecia- tion(*1) | Impairment(*2) | Business combina- tion(*3) | Ending balance | |||||||||||||||||||||||||
Land | ￦ | 981,389 | 525 | (20,415 | ) | 37,532 | — | — | 40,292 | 1,039,323 | ||||||||||||||||||||||
Buildings | 867,408 | 3,034 | (21,811 | ) | 48,160 | (55,215 | ) | — | 17,030 | 858,606 | ||||||||||||||||||||||
Structures | 347,069 | 2,542 | (4,417 | ) | 9,167 | (36,995 | ) | — | 37 | 317,403 | ||||||||||||||||||||||
Machinery | 7,924,392 | 553,052 | (32,369 | ) | 2,180,445 | (2,419,522 | ) | (1,745 | ) | 171,959 | 8,376,212 | |||||||||||||||||||||
Other | 731,066 | 945,499 | (6,486 | ) | (817,819 | ) | (203,376 | ) | — | 4,732 | 653,616 | |||||||||||||||||||||
Right-of-use | 1,326,628 | 736,157 | (163,217 | ) | — | (436,231 | ) | — | 8,698 | 1,472,035 | ||||||||||||||||||||||
Construction in progress | 755,508 | 1,625,218 | (16,162 | ) | (1,709,735 | ) | — | — | 5,053 | 659,882 | ||||||||||||||||||||||
￦ | 12,933,460 | 3,866,027 | (264,877 | ) | (252,250 | ) | (3,151,339 | ) | (1,745 | ) | 247,801 | 13,377,077 | ||||||||||||||||||||
14. | Investment Property |
| (1) | Investment property as of December 31, |
(In millions of won) | ||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||
Acquisition cost | Accumulated depreciation | Carrying amount | Acquisition cost | Accumulated depreciation | Carrying amount | |||||||||||||||||||
| Land | W | 14,199 | — | 14,199 | 6,115 | — | 6,115 | |||||||||||||||||
| Buildings | 27,462 | (17,220 | ) | 10,242 | 21,490 | (14,606 | ) | 6,884 | ||||||||||||||||
| Right-of-use assets | 16,975 | (6,604 | ) | 10,371 | 17,057 | (4,919 | ) | 12,138 | ||||||||||||||||
| W | 58,636 | (23,824 | ) | 34,812 | 44,662 | (19,525 | ) | 25,137 | ||||||||||||||||
(In millions of won) | ||||||||||||
December 31, 2021 | ||||||||||||
Acquisition cost | Accumulated depreciation | Carrying amount | ||||||||||
Land | ￦ | 6,071 | — | 6,071 | ||||||||
Buildings | 21,021 | (13,668 | ) | 7,353 | ||||||||
Right-of-use | 12,577 | (2,967 | ) | 9,610 | ||||||||
￦ | 39,669 | (16,635 | ) | 23,034 | ||||||||
| (2) | Changes in Investment property for the |
(In millions of won) | ||||||||||||||||
2023 | ||||||||||||||||
Beginning balance | Transfer | Depreciation | Ending balance | |||||||||||||
| Land | W | 6,115 | 8,084 | — | 14,199 | |||||||||||
| Buildings | 6,884 | 5,343 | (1,985 | ) | 10,242 | |||||||||||
| Right-of-use assets | 12,138 | 473 | (2,240 | ) | 10,371 | |||||||||||
| W | 25,137 | 13,900 | (4,225 | ) | 34,812 | |||||||||||
(In millions of won) | ||||||||||||||||
2022 | ||||||||||||||||
Beginning balance | Transfer | Depreciation | Ending balance | |||||||||||||
| Land | W | 6,071 | 44 | — | 6,115 | |||||||||||
| Buildings | 7,353 | 564 | (1,033 | ) | 6,884 | |||||||||||
| Right-of-use assets | 9,610 | 4,124 | (1,596 | ) | 12,138 | |||||||||||
| W | 23,034 | 4,732 | (2,629 | ) | 25,137 | |||||||||||
| (3) | The Group recognized lease income of W 6,202 million and |
| (4) | The fair value of investment property is W 70,138 million and |
15. |
| (1) |
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Land, buildings and structures | ￦ | 1,392,925 | 1,269,753 | |||||
Others | 166,408 | 202,282 | ||||||
￦ | 1,559,333 | 1,472,035 | ||||||
(In millions of won) | 2021 | 2020 | 2019 | |||||||||
Depreciation of right-of-use | ||||||||||||
Land, buildings and structures | ￦ | 338,304 | 347,166 | 359,755 | ||||||||
Others | 95,666 | 89,065 | 89,062 | |||||||||
￦ | 433,970 | 436,231 | 448,817 | |||||||||
Interest expense on lease liabilities(*) | ￦ | 23,998 | 22,976 | 25,981 | ||||||||
| Expenses related to short-term leases(*) | 25,435 | 20,193 | 19,098 | |||||||||
Expenses related to leases of low-value assets except for short-term leases(*) | 3,772 | 3,297 | 2,550 | |||||||||
1) | Details of the right-of-use assets as of December 31, 2023 and 2022 are as follows: |
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Right-of-use assets: | ||||||||
| Land, buildings and structures | W | 1,376,721 | 1,546,918 | |||||
| Others | 235,230 | 239,211 | ||||||
| W | 1,611,951 | 1,786,129 | ||||||
| 2) | Details of amounts recognized in the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021 as a lessee are as follows: |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021(*1) | ||||||||||
| Depreciation of right-of-use assets(*1): | ||||||||||||
| Land, buildings and structures | W | 346,931 | 346,499 | 338,304 | ||||||||
| Others(*2) | 63,101 | 57,295 | 95,666 | |||||||||
| W | 410,032 | 403,794 | 433,970 | |||||||||
| Interest expense on lease liabilities | W | 46,595 | 29,996 | 23,998 | ||||||||
| (*1) | Includes amounts related to discontinued operations. |
| (*2) | Others include the amount reclassified as research and development expenses related to the lease contract for research and development facilities. |
| 3) | The total cash outflows due to lease payments for the years ended December 31, 2023, 2022 and 2021 amounted to W 474,410 million,W 449,196 million andW 484,879 million, respectively. The amount for the year ended December 31, 2021 |
15. | Leases, Continued |
| (2) |
| 1) | Finance lease |
(In millions of won) | |||||||
Amount | |||||||
Less than 1 year | |||||||
1 ~ 2 years | |||||||
2 ~ 3 years | |||||||
3 ~ 4 years | |||||||
4 ~ 5 years | |||||||
| Undiscounted lease payments | W | 17,286 | |||||
| Unrealized finance income | 360 | ||||||
Net investment in the lease | |||||||
16,926 | |||||||
| 2) | Operating lease |
(In millions of won) | |||||||
Amount | |||||||
Less than 1 year | |||||||
1 ~ 2 years | |||||||
2 ~ 3 years | |||||||
| W | 288,714 | ||||||
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Goodwill related to merger of Shinsegi Telecom, Inc. | ￦ | 1,306,236 | 1,306,236 | |||||
Goodwill related to acquisition of SK Broadband Co., Ltd. | 764,082 | 764,082 | ||||||
Goodwill related to acquisition of Life & Security Holdings Co., Ltd.(*) | 0 | 1,176,274 | ||||||
Other goodwill(*) | 2,175 | 110,932 | ||||||
￦ | 2,072,493 | 3,357,524 | ||||||
16. | Goodwill |
| (1) | Goodwill as of December 31, 2023 and 2022 are as follows: |
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Goodwill related to merger of Shinsegi Telecom, Inc. | W | 1,306,236 | 1,306,236 | |||||
| Goodwill related to acquisition of SK Broadband Co., Ltd. | 764,082 | 764,082 | ||||||
| Other goodwill | 4,691 | 4,691 | ||||||
| W | 2,075,009 | 2,075,009 | ||||||
| (2) | Details of the impairment testing of Goodwill as of December 31, 2023 is as follows: |
| (*1) | Goodwill related to merger of Shinsegi Telecom, Inc. |
| (*2) | Goodwill related to acquisition of SK Broadband Co., Ltd. |
| (3) | Details of the changes in goodwill for the years ended December 31, |
(In millions of won) | ||||||||
2023 | 2022 | |||||||
| Beginning balance | W | 2,075,009 | 2,072,493 | |||||
| Acquisition(*) | — | 2,516 | ||||||
| Ending balance | W | 2,075,009 | 2,075,009 | |||||
(In millions of won) | ||||||||
2021 | 2020 | |||||||
Beginning balance | ￦ | 3,357,524 | 2,949,530 | |||||
Acquisition(*) | 111,928 | 408,531 | ||||||
Impairment loss | 0 | (519) | ||||||
Other | (43 | ) | (18 | ) | ||||
Spin-off | (1,396,916 | ) | — | |||||
Ending balance | ￦ | 2,072,493 | 3,357,524 | |||||
| (*) | It consists of goodwill recognized as |
17. | Intangible Assets |
| (1) | Intangible assets as of December 31, |
(In millions of won) | December 31, 2023 | |||||||||||||||
Acquisition cost | Accumulated amortization | Accumulated impairment | Carrying amount | |||||||||||||
| Frequency usage rights(*1) | W | 3,564,907 | (1,958,301 | ) | — | 1,606,606 | ||||||||||
| Land usage rights | 57,106 | (56,519 | ) | — | 587 | |||||||||||
| Industrial rights | 97,993 | (34,141 | ) | (17,698 | ) | 46,154 | ||||||||||
| Development costs | 14,815 | (14,766 | ) | — | 49 | |||||||||||
| Facility usage rights | 159,891 | (145,578 | ) | — | 14,313 | |||||||||||
| Customer relations | 505,063 | (231,913 | ) | — | 273,150 | |||||||||||
| Club memberships(*2) | 121,895 | — | (24,709 | ) | 97,186 | |||||||||||
| Other(*3) | 4,851,168 | (4,020,886 | ) | (7,190 | ) | 823,092 | ||||||||||
| W | 9,372,838 | (6,462,104 | ) | (49,597 | ) | 2,861,137 | ||||||||||
(In millions of won) | December 31, 2022 | |||||||||||||||
Acquisition cost | Accumulated amortization | Accumulated impairment | Carrying amount | |||||||||||||
| Frequency usage rights(*1) | W | 3,767,590 | (1,499,158 | ) | (186,000 | ) | 2,082,432 | |||||||||
| Land usage rights | 59,389 | (58,165 | ) | — | 1,224 | |||||||||||
| Industrial rights | 94,238 | (30,068 | ) | (12,378 | ) | 51,792 | ||||||||||
| Development costs | 14,497 | (14,213 | ) | — | 284 | |||||||||||
| Facility usage rights | 157,651 | (142,654 | ) | — | 14,997 | |||||||||||
| Customer relations | 505,063 | (204,882 | ) | — | 300,181 | |||||||||||
| Club memberships(*2) | 116,401 | — | (24,430 | ) | 91,971 | |||||||||||
| Other(*3) | 4,627,565 | (3,839,030 | ) | (6,506 | ) | 782,029 | ||||||||||
| W | 9,342,394 | (5,788,170 | ) | (229,314 | ) | 3,324,910 | ||||||||||
(In millions of won) | December 31, 2021 | |||||||||||||||
Acquisition cost | Accumulated amortization | Accumulated impairment | Carrying amount | |||||||||||||
Frequency usage rights(*1) | ￦ | 7,221,735 | (4,476,046 | ) | (186,000 | ) | 2,559,689 | |||||||||
Land usage rights | 48,318 | (45,586 | ) | — | 2,732 | |||||||||||
Industrial rights | 92,332 | (36,342 | ) | (36 | ) | 55,954 | ||||||||||
Development costs | 34,393 | (34,193 | ) | 0 | 200 | |||||||||||
Facility usage rights | 156,062 | (138,188 | ) | — | 17,874 | |||||||||||
Customer relations | 507,581 | (180,324 | ) | — | 327,257 | |||||||||||
Club memberships(*2) | 113,300 | — | (24,806 | ) | 88,494 | |||||||||||
Brands(*2) | 0 | — | — | 0 | ||||||||||||
Other(*3) | 4,347,971 | (3,524,002 | ) | (6,400 | ) | 817,569 | ||||||||||
￦ | 12,521,692 | (8,434,681 | ) | (217,242 | ) | 3,869,769 | ||||||||||
(In millions of won) | �� | December 31, 2020 | ||||||||||||||
Acquisition cost | Accumulated amortization | Accumulated impairment | Carrying amount | |||||||||||||
Frequency usage rights(*1) | ￦ | 6,210,882 | (4,079,729 | ) | (198,388 | ) | 1,932,765 | |||||||||
Land usage rights | 50,503 | (45,783 | ) | — | 4,720 | |||||||||||
Industrial rights | 116,889 | (45,300 | ) | (147 | ) | 71,442 | ||||||||||
Development costs | 67,989 | (54,771 | ) | (3,854 | ) | 9,364 | ||||||||||
Facility usage rights | 159,865 | (137,985 | ) | — | 21,880 | |||||||||||
Customer relations | 1,091,146 | (171,283 | ) | — | 919,863 | |||||||||||
Club memberships(*2) | 139,349 | — | (32,484 | ) | 106,865 | |||||||||||
Brands(*2) | 374,096 | — | — | 374,096 | ||||||||||||
Other(*3) | 4,604,077 | (3,586,596 | ) | (22,282 | ) | 995,199 | ||||||||||
￦ | 12,814,796 | (8,121,447 | ) | (257,155 | ) | 4,436,194 | ||||||||||
| (*1) | The |
| (*2) | Club memberships |
| (*3) | Other intangible assets primarily consist of computer software and others. |
17. |
| (2) | Changes in intangible assets for the years ended December 31, |
(In millions of won) | ||||||||||||||||||||||||||||||||||||
2021 | ||||||||||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Amorti- zation (*1) | Reversal (Impairment) (*2) | Business Combina- tion(*3) | Spin-off | Ending balance | ||||||||||||||||||||||||||||
Frequency usage rights | ￦ | 1,932,765 | 1,145,999 | — | — | (519,075 | ) | 0 | — | — | 2,559,689 | |||||||||||||||||||||||||
Land usage rights | 4,720 | 175 | (76 | ) | — | (2,087 | ) | — | — | — | 2,732 | |||||||||||||||||||||||||
Industrial rights | 71,442 | 5,158 | (8 | ) | 390 | (6,377 | ) | (36 | ) | — | (14,615 | ) | 55,954 | |||||||||||||||||||||||
Development costs | 9,364 | 1,279 | (150 | ) | — | (3,210 | ) | 0 | — | (7,083 | ) | 200 | ||||||||||||||||||||||||
Facility usage rights | 21,880 | 1,690 | (21 | ) | 328 | (6,003 | ) | — | — | 0 | 17,874 | |||||||||||||||||||||||||
Customer relations | 919,863 | 4,854 | (461 | ) | — | (53,342 | ) | — | 4,705 | (548,362 | ) | 327,257 | ||||||||||||||||||||||||
Club memberships | 106,865 | 6,518 | (9,925 | ) | — | — | 653 | — | (15,617 | ) | 88,494 | |||||||||||||||||||||||||
Brands | 374,096 | — | — | — | — | — | — | (374,096 | ) | 0 | ||||||||||||||||||||||||||
Other | 995,199 | 80,713 | (4,580 | ) | 276,890 | (421,213 | ) | (111 | ) | 5,059 | (114,388 | ) | 817,569 | |||||||||||||||||||||||
￦ | 4,436,194 | 1,246,386 | (15,221 | ) | 277,608 | (1,011,307 | ) | 506 | 9,764 | (1,074,161 | ) | 3,869,769 | ||||||||||||||||||||||||
(In millions of won) | ||||||||||||||||||||||||||||
2023 | ||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Amortization | Impairment (*1) | Ending balance | ||||||||||||||||||||||
| Frequency usage rights | W | 2,082,432 | — | — | — | (475,826 | ) | — | 1,606,606 | |||||||||||||||||||
| Land usage rights | 1,224 | 155 | (15 | ) | 40 | (817 | ) | — | 587 | |||||||||||||||||||
| Industrial rights | 51,792 | 4,563 | (350 | ) | — | (4,530 | ) | (5,321 | ) | 46,154 | ||||||||||||||||||
| Development costs | 284 | — | — | — | (234 | ) | (1 | ) | 49 | |||||||||||||||||||
| Facility usage rights | 14,997 | 1,884 | (16 | ) | 981 | (3,533 | ) | — | 14,313 | |||||||||||||||||||
| Customer relations | 300,181 | — | — | — | (27,031 | ) | — | 273,150 | ||||||||||||||||||||
| Club memberships | 91,971 | 7,619 | (2,174 | ) | 65 | — | (295 | ) | 97,186 | |||||||||||||||||||
| Other | 782,029 | 91,848 | (1,752 | ) | 294,567 | (339,478 | ) | (4,122 | ) | 823,092 | ||||||||||||||||||
| W | 3,324,910 | 106,069 | (4,307 | ) | 295,653 | (851,449 | ) | (9,739 | ) | 2,861,137 | ||||||||||||||||||
| (*1) |
The Group recognized the difference between recoverable amount and the carrying amount of intangible assets amounting to |
(In millions of won) | ||||||||||||||||||||||||||||||||
2022 | ||||||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Amortization | Impairment (*1) | Business combination (*2) | Ending balance | |||||||||||||||||||||||||
| Frequency usage rights | W | 2,559,689 | — | — | — | (477,257 | ) | — | — | 2,082,432 | ||||||||||||||||||||||
| Land usage rights | 2,732 | — | — | — | (1,508 | ) | — | — | 1,224 | |||||||||||||||||||||||
| Industrial rights | 55,954 | 13,428 | (823 | ) | (103 | ) | (4,324 | ) | (12,343 | ) | 3 | 51,792 | ||||||||||||||||||||
| Development costs | 200 | — | — | — | (573 | ) | — | 657 | 284 | |||||||||||||||||||||||
| Facility usage rights | 17,874 | 1,396 | (2 | ) | 252 | (4,523 | ) | — | — | 14,997 | ||||||||||||||||||||||
| Customer relations | 327,257 | — | — | — | (27,076 | ) | — | — | 300,181 | |||||||||||||||||||||||
| Club memberships | 88,494 | 9,926 | (7,113 | ) | — | — | (725 | ) | 1,389 | 91,971 | ||||||||||||||||||||||
| Other | 817,569 | 108,144 | (380 | ) | 189,075 | (342,776 | ) | (16 | ) | 10,413 | 782,029 | |||||||||||||||||||||
| W | 3,869,769 | 132,894 | (8,318 | ) | 189,224 | (858,037 | ) | (13,084 | ) | 12,462 | 3,324,910 | |||||||||||||||||||||
(In millions of won) | ||||||||||||||||||||||||||||||||
2020 | ||||||||||||||||||||||||||||||||
Beginning balance | Acquisition | Disposal | Transfer | Amortization (*1) | Impairment (*1,2) | Business Combination(*3) | Ending balance | |||||||||||||||||||||||||
Frequency usage rights | ￦ | 2,647,501 | — | — | — | (516,348 | ) | (198,388 | ) | — | 1,932,765 | |||||||||||||||||||||
Land usage rights | 7,349 | 550 | (100 | ) | — | (3,079 | ) | — | — | 4,720 | ||||||||||||||||||||||
Industrial rights | 66,824 | 1,836 | (513 | ) | 8,281 | (4,825 | ) | (161 | ) | — | 71,442 | |||||||||||||||||||||
Development costs | 11,146 | 1,141 | (294 | ) | 3,302 | (4,644 | ) | (1,287 | ) | — | 9,364 | |||||||||||||||||||||
Facility usage rights | 25,832 | 1,810 | (3 | ) | 434 | (6,193 | ) | — | — | 21,880 | ||||||||||||||||||||||
Customer relations | 591,371 | 2,014 | (1,604 | ) | 491 | (52,849 | ) | — | 380,440 | 919,863 | ||||||||||||||||||||||
Club memberships | 80,410 | 11,821 | (35,432 | ) | 544 | — | (323 | ) | 49,845 | 106,865 | ||||||||||||||||||||||
Brands(*4) | 374,096 | — | — | — | — | — | — | 374,096 | ||||||||||||||||||||||||
Other | 1,061,563 | 112,011 | (13,729 | ) | 272,433 | (430,719 | ) | (6,410 | ) | 50 | 995,199 | |||||||||||||||||||||
￦ | 4,866,092 | 131,183 | (51,675 | ) | 285,485 | (1,018,657 | ) | (206,569 | ) | 430,335 | 4,436,194 | |||||||||||||||||||||
| (*1) |
The Group recognized the difference between recoverable amount and the carrying amount of intangible assets amounting to |
(*2) | Includes assets acquired from the acquisition of |
17. | Intangible Assets, Continued |
| (3) | Research and development expenditures recognized as expense for the years ended December 31, |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021(*) | ||||||||||
| Research and development costs expensed as incurred | W | 369,507 | 340,864 | 406,672 | ||||||||
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Research and development costs expensed as incurred(*) | ￦ | 406,672 | 416,445 | 391,327 | ||||||||
| (*) | Includes amounts related to discontinued operations. |
| (4) | Details of frequency usage rights as of December 31, |
(In millions of won) | |||||||||||||||||||||||||
As of December 31, 2023 | |||||||||||||||||||||||||
Amount | Description | Commencement of amortization | Completion of amortization | ||||||||||||||||||||||
800MHz license | 109,789 | LTE service | |||||||||||||||||||||||
1.8GHz license | 308,534 | LTE service | |||||||||||||||||||||||
2.6GHz license | 364,250 | LTE service | |||||||||||||||||||||||
2.1GHz license | W-CDMA and LTE service | ||||||||||||||||||||||||
3.5GHz license | 592,154 | 5G service | |||||||||||||||||||||||
| W | 1,606,606 | ||||||||||||||||||||||||
18. | Borrowings and Debentures |
| (1) | Short-term borrowings as of December 31, 2023 and 2022 are as follows: |
(In millions of won) | ||||||||||||||||||||
Lender | Annual interest rate (%) | Maturity | December 31, 2023 | December 31, 2022 | ||||||||||||||||
| BNK Securities. Co., Ltd. | — | — | W | — | 100,000 | |||||||||||||||
| KEB Hana Bank | — | — | — | 30,000 | ||||||||||||||||
| Hana Financial Investment Co., Ltd. | — | — | — | 4,642 | ||||||||||||||||
| DB Financial Investment Co., Ltd. | — | — | — | 2,785 | ||||||||||||||||
| Shinhan Securities Co., Ltd. | — | — | — | 5,571 | ||||||||||||||||
| W | — | 142,998 | ||||||||||||||||||
(In millions of won) | ||||||||||||
Lender | Annual interest rate (%) | December 31, 2021 | December 31, 2020 | |||||||||
Short-term borrowings | Citibank | 2.45 | ￦ | — | 50,000 | |||||||
| KEB Hana Bank(*1,3) | FTP 1M +1.01 | — | 27,000 | |||||||||
| KEB Hana Bank(*2,3) | 6M financial I (bank) + 1.59 | — | 5,000 | |||||||||
| Shinhan Bank(*2,3) | 6M financial I (bank) + 1.35 | — | 15,000 | |||||||||
| Hana Financial Investment Co., Ltd. | 4.20 | 4,642 | 4,642 | |||||||||
| DB Financial Investment Co., Ltd. | 4.00 | 2,785 | 2,785 | |||||||||
| Shinhan Financial Investment Co., Ltd. | 4.20 | 5,571 | 5,571 | |||||||||
￦ | 12,998 | 109,998 | ||||||||||
(In millions of won and thousands of other currencies) | ||||||||||||||||
Lender | Annual interest rate (%) | Maturity | December 31, 2021 | December 31, 2020 | ||||||||||||
Korea Development Bank(*1) | 3M CD + 0.61 | Dec. 20, 2021 | ￦ | — | 12,250 | |||||||||||
Korea Development Bank(*1,2) | 3M CD + 0.71 | Dec. 21, 2022 | 12,500 | 25,000 | ||||||||||||
Korea Development Bank(*3) | 1.87 | Feb. 10, 2026 | 50,000 | — | ||||||||||||
Credit Agricole CIB(*1,4) | 3M CD + 0.82 | Dec. 14, 2023 | 25,000 | 37,500 | ||||||||||||
Export Kreditnamnden(*5) | 1.70 | Apr. 29, 2022 | 6,746 (USD 5,690) | | 18,726 (USD 17,211) | | ||||||||||
Shinhan Bank and others(*6) | 3.20 | Oct. 5, 2025 | — | 1,950,000 | ||||||||||||
UBS(*6) | 0.00 | Mar. 28, 2025 | | — | 617 (CHF 500) | | ||||||||||
FAE(*6) | 0.00 | May 7, 2025 | — | 617 (CHF 500 | ) | |||||||||||
Mizuho bank, Ltd. | 1.35 | May 20, 2024 | 100,000 | — | ||||||||||||
DBS bank Ltd. | 1.32 | May 28, 2024 | 200,000 | — | ||||||||||||
| 394,246 | 2,044,710 | |||||||||||||||
Less present value discount | (59 | ) | (15,786 | ) | ||||||||||||
| 394,187 | 2,028,924 | |||||||||||||||
Less current installments | (41,065 | ) | (49,663 | ) | ||||||||||||
￦ | 353,122 | 1,979,261 | ||||||||||||||
18. |
| (2) | Long-term borrowings as of December 31, |
(In millions of won) | ||||||||||||||||
Lender | Annual interest rate (%) | Maturity | December 31, 2023 | December 31, 2022 | ||||||||||||
| Korea Development Bank(*1) | 1.87 | Feb. 10, 2026 | W | 28,125 | 40,625 | |||||||||||
| Credit Agricole CIB(*2) | 3M CD + 0.82 | Dec. 14, 2023 | — | 12,500 | ||||||||||||
| Mizuho bank, Ltd. | 1.35 | May. 20, 2024 | 100,000 | 100,000 | ||||||||||||
| DBS bank Ltd. | 1.30 | May. 28, 2024 | 200,000 | 200,000 | ||||||||||||
| DBS bank Ltd. | 2.65 | Mar. 10, 2025 | 200,000 | 200,000 | ||||||||||||
| Credit Agricole CIB | 3.30 | Apr. 29, 2024 | 50,000 | 50,000 | ||||||||||||
| Mizuho Bank, Ltd. | 3.29 | Nov. 27, 2023 | — | 100,000 | ||||||||||||
| Nonghyup Bank(*3) | MOR + 1.36 | Nov. 17, 2024 | 40,000 | 40,000 | ||||||||||||
| Credit Agricole CIB | 4.89 | Nov. 28, 2025 | 50,000 | 50,000 | ||||||||||||
| Mizuho Bank, Ltd.(*2) | 3M CD + 1.05 | Jul. 25, 2025 | 50,000 | — | ||||||||||||
| 718,125 | 793,125 | |||||||||||||||
| Less: present value discount | (47 | ) | (13 | ) | ||||||||||||
| 718,078 | 793,112 | |||||||||||||||
| Less: current portions | (402,500 | ) | (124,987 | ) | ||||||||||||
| W | 315,578 | 668,125 | ||||||||||||||
| (* | The long-term borrowings are to be repaid by installments on an annual basis from 2022 to 2026. |
| (*2) | 3M CD rates are 3.83% and 3.98% as of December 31, 2023 and 2022, respectively. |
| (*3) | 6M MOR rates are 3.85% and 4.35% as of December 31, 2023 and 2022, respectively. |
18. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, |
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||
Purpose | Maturity | Annual interest rate (%) | December 31, 2023 | December 31, 2022 | ||||||||||||
| Unsecured corporate bonds | Operating and refinancing fund | 2032 | 3.45 | W | 90,000 | 90,000 | ||||||||||
| Unsecured corporate bonds | Operating fund | 2023 | 3.03 | — | 230,000 | |||||||||||
| Unsecured corporate bonds | 2033 | 3.22 | 130,000 | 130,000 | ||||||||||||
| Unsecured corporate bonds | 2024 | 3.64 | 150,000 | 150,000 | ||||||||||||
| Unsecured corporate bonds | Refinancing fund | 2024 | 2.82 | 190,000 | 190,000 | |||||||||||
| Unsecured corporate bonds | Operating and refinancing fund | 2025 | 2.49 | 150,000 | 150,000 | |||||||||||
| Unsecured corporate bonds | 2030 | 2.61 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | Operating fund | 2025 | 2.66 | 70,000 | 70,000 | |||||||||||
| Unsecured corporate bonds | 2030 | 2.82 | 90,000 | 90,000 | ||||||||||||
| Unsecured corporate bonds | Operating and refinancing fund | 2025 | 2.55 | 100,000 | 100,000 | |||||||||||
| Unsecured corporate bonds | Operating fund | 2035 | 2.75 | 70,000 | 70,000 | |||||||||||
| Unsecured corporate bonds | 2026 | 2.08 | 90,000 | 90,000 | ||||||||||||
| Unsecured corporate bonds | 2036 | 2.24 | 80,000 | 80,000 | ||||||||||||
| Unsecured corporate bonds | 2026 | 1.97 | 120,000 | 120,000 | ||||||||||||
| Unsecured corporate bonds | 2031 | 2.17 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | Refinancing fund | 2027 | 2.55 | 100,000 | 100,000 | |||||||||||
| Unsecured corporate bonds | Operating and refinancing fund | 2032 | 2.65 | 90,000 | 90,000 | |||||||||||
| Unsecured corporate bonds | Refinancing fund | 2027 | 2.84 | 100,000 | 100,000 | |||||||||||
| Unsecured corporate bonds | 2023 | 2.81 | — | 100,000 | ||||||||||||
| Unsecured corporate bonds | 2028 | 3.00 | 200,000 | 200,000 | ||||||||||||
| Unsecured corporate bonds | 2038 | 3.02 | 90,000 | 90,000 | ||||||||||||
| Unsecured corporate bonds | Operating and refinancing fund | 2023 | 2.33 | — | 150,000 | |||||||||||
| Unsecured corporate bonds | 2038 | 2.44 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | Operating fund | 2024 | 2.09 | 120,000 | 120,000 | |||||||||||
| Unsecured corporate bonds | 2029 | 2.19 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | 2039 | 2.23 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | Operating and refinancing fund | 2024 | 1.49 | 60,000 | 60,000 | |||||||||||
| Unsecured corporate bonds | 2029 | 1.50 | 120,000 | 120,000 | ||||||||||||
| Unsecured corporate bonds | 2039 | 1.52 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | 2049 | 1.56 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | Operating fund | 2024 | 1.76 | 70,000 | 70,000 | |||||||||||
| Unsecured corporate bonds | 2029 | 1.79 | 40,000 | 40,000 | ||||||||||||
| Unsecured corporate bonds | 2039 | 1.81 | 60,000 | 60,000 | ||||||||||||
| Unsecured corporate bonds | Operating and refinancing fund | 2023 | 1.64 | — | 170,000 | |||||||||||
| Unsecured corporate bonds | Operating fund | 2025 | 1.75 | 130,000 | 130,000 | |||||||||||
| Unsecured corporate bonds | 2030 | 1.83 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | 2040 | 1.87 | 70,000 | 70,000 | ||||||||||||
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||||
Purpose | Maturity | Annual interest rate (%) | December 31, 2021 | December 31, 2020 | ||||||||||||||
Unsecured corporate bonds | Operating fund | 2021 | 4.22 | ￦ | — | 190,000 | ||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2022 | 3.30 | 140,000 | 140,000 | |||||||||||||
Unsecured corporate bonds | 2032 | 3.45 | 90,000 | 90,000 | ||||||||||||||
Unsecured corporate bonds | Operating fund | 2023 | 3.03 | 230,000 | 230,000 | |||||||||||||
Unsecured corporate bonds | 2033 | 3.22 | 130,000 | 130,000 | ||||||||||||||
Unsecured corporate bonds | 2024 | 3.64 | 150,000 | 150,000 | ||||||||||||||
Unsecured corporate bonds | Refinancing fund | 2021 | 2.66 | — | 150,000 | |||||||||||||
Unsecured corporate bonds | 2024 | 2.82 | 190,000 | 190,000 | ||||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2022 | 2.40 | 100,000 | 100,000 | |||||||||||||
Unsecured corporate bonds | 2025 | 2.49 | 150,000 | 150,000 | ||||||||||||||
18. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2023 and 2022 are as follows, Continued: |
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||
Purpose | Maturity | Annual interest rate (%) | December 31, 2023 | December 31, 2022 | ||||||||||||
| Unsecured corporate bonds | Refinancing fund | 2025 | 1.40 | 140,000 | 140,000 | |||||||||||
| Unsecured corporate bonds | 2030 | 1.59 | 40,000 | 40,000 | ||||||||||||
| Unsecured corporate bonds | 2040 | 1.76 | 110,000 | 110,000 | ||||||||||||
| Unsecured corporate bonds | 2024 | 1.17 | 80,000 | 80,000 | ||||||||||||
| Unsecured corporate bonds | 2026 | 1.39 | 80,000 | 80,000 | ||||||||||||
| Unsecured corporate bonds | 2031 | 1.80 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds | 2041 | 1.89 | 100,000 | 100,000 | ||||||||||||
| Unsecured corporate bonds | 2024 | 2.47 | 90,000 | 90,000 | ||||||||||||
| Unsecured corporate bonds | 2026 | 2.69 | 70,000 | 70,000 | ||||||||||||
| Unsecured corporate bonds | 2041 | 2.68 | 40,000 | 40,000 | ||||||||||||
| Unsecured corporate bonds | 2025 | 3.80 | 240,000 | 240,000 | ||||||||||||
| Unsecured corporate bonds | 2027 | 3.84 | 70,000 | 70,000 | ||||||||||||
| Unsecured corporate bonds | 2042 | 3.78 | 40,000 | 40,000 | ||||||||||||
| Unsecured corporate bonds | 2025 | 4.00 | 300,000 | 300,000 | ||||||||||||
| Unsecured corporate bonds | 2027 | 4.00 | 95,000 | 95,000 | ||||||||||||
| Unsecured corporate bonds | 2024 | 4.79 | 100,000 | 100,000 | ||||||||||||
| Unsecured corporate bonds | 2025 | 4.73 | 110,000 | 110,000 | ||||||||||||
| Unsecured corporate bonds | 2027 | 4.74 | 60,000 | 60,000 | ||||||||||||
| Unsecured corporate bonds | 2032 | 4.69 | 40,000 | 40,000 | ||||||||||||
Unsecured corporate bonds | 2026 | 3.65 | 110,000 | — | ||||||||||||
| Unsecured corporate bonds | 2028 | 3.83 | 190,000 | — | ||||||||||||
| Unsecured corporate bonds | 2026 | 3.72 | 80,000 | — | ||||||||||||
| Unsecured corporate bonds | 2028 | 3.80 | 200,000 | — | ||||||||||||
| Unsecured corporate bonds | 2030 | 3.96 | 70,000 | — | ||||||||||||
| Unsecured corporate bonds | 2026 | 4.54 | 115,000 | — | ||||||||||||
| Unsecured corporate bonds | 2028 | 4.68 | 100,000 | — | ||||||||||||
| Unsecured corporate bonds | 2030 | 4.72 | 50,000 | — | ||||||||||||
| Unsecured corporate bonds | 2033 | 4.72 | 30,000 | — | ||||||||||||
| Unsecured corporate bonds(*1) | Operating fund | 2023 | 2.93 | — | 80,000 | |||||||||||
| Unsecured corporate bonds(*1) | Refinancing fund | 2024 | 2.09 | 160,000 | 160,000 | |||||||||||
| Unsecured corporate bonds(*1) | Operating and refinancing fund | 2024 | 1.71 | 100,000 | 100,000 | |||||||||||
| Unsecured corporate bonds(*1) | 2026 | 1.86 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds(*1) | Refinancing fund | 2023 | 1.48 | — | 100,000 | |||||||||||
| Unsecured corporate bonds(*1) | Operating and refinancing fund | 2025 | 1.64 | 100,000 | 100,000 | |||||||||||
| Unsecured corporate bonds(*1) | Refinancing fund | 2025 | 1.41 | 160,000 | 160,000 | |||||||||||
| Unsecured corporate bonds(*1) | 2024 | 1.69 | 100,000 | 100,000 | ||||||||||||
| Unsecured corporate bonds(*1) | 2025 | 2.58 | 100,000 | 100,000 | ||||||||||||
| Unsecured corporate bonds(*1) | 2032 | 2.92 | 50,000 | 50,000 | ||||||||||||
| Unsecured corporate bonds(*1) | Operating and refinancing fund | 2025 | 4.21 | 50,000 | — | |||||||||||
| Unsecured corporate bonds(*1) | 2026 | 4.28 | 100,000 | — | ||||||||||||
| Unsecured corporate bonds(*1) | 2028 | 4.37 | 90,000 | — | ||||||||||||
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||||
Purpose | Maturity | Annual interest rate (%) | December 31, 2021 | December 31, 2020 | ||||||||||||||
Unsecured corporate bonds | 2030 | 2.61 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | Operating fund | 2025 | 2.66 | 70,000 | 70,000 | |||||||||||||
Unsecured corporate bonds | 2030 | 2.82 | 90,000 | 90,000 | ||||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2025 | 2.55 | 100,000 | 100,000 | |||||||||||||
Unsecured corporate bonds | 2035 | 2.75 | 70,000 | 70,000 | ||||||||||||||
Unsecured corporate bonds | Operating fund | 2021 | 1.80 | — | 100,000 | |||||||||||||
Unsecured corporate bonds | 2026 | 2.08 | 90,000 | 90,000 | ||||||||||||||
Unsecured corporate bonds | 2036 | 2.24 | 80,000 | 80,000 | ||||||||||||||
Unsecured corporate bonds | 2021 | 1.71 | — | 50,000 | ||||||||||||||
Unsecured corporate bonds | 2026 | 1.97 | 120,000 | 120,000 | ||||||||||||||
Unsecured corporate bonds | 2031 | 2.17 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | Refinancing fund | 2022 | 2.17 | 120,000 | 120,000 | |||||||||||||
Unsecured corporate bonds | 2027 | 2.55 | 100,000 | 100,000 | ||||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2032 | 2.65 | 90,000 | 90,000 | |||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2022 | 2.63 | 80,000 | 80,000 | |||||||||||||
Unsecured corporate bonds | Refinancing fund | 2027 | 2.84 | 100,000 | 100,000 | |||||||||||||
Unsecured corporate bonds | 2021 | 2.57 | — | 110,000 | ||||||||||||||
Unsecured corporate bonds | 2023 | 2.81 | 100,000 | 100,000 | ||||||||||||||
Unsecured corporate bonds | 2028 | 3.00 | 200,000 | 200,000 | ||||||||||||||
Unsecured corporate bonds | 2038 | 3.02 | 90,000 | 90,000 | ||||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2021 | 2.10 | — | 100,000 | |||||||||||||
Unsecured corporate bonds | 2023 | 2.33 | 150,000 | 150,000 | ||||||||||||||
Unsecured corporate bonds | 2038 | 2.44 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | Operating fund | 2022 | 2.03 | 180,000 | 180,000 | |||||||||||||
Unsecured corporate bonds | 2024 | 2.09 | 120,000 | 120,000 | ||||||||||||||
Unsecured corporate bonds | 2029 | 2.19 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | 2039 | 2.23 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2022 | 1.40 | 120,000 | 120,000 | |||||||||||||
Unsecured corporate bonds | 2024 | 1.49 | 60,000 | 60,000 | ||||||||||||||
Unsecured corporate bonds | 2029 | 1.50 | 120,000 | 120,000 | ||||||||||||||
Unsecured corporate bonds | 2039 | 1.52 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | 2049 | 1.56 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | Operating fund | 2022 | 1.69 | 230,000 | 230,000 | |||||||||||||
Unsecured corporate bonds | 2024 | 1.76 | 70,000 | 70,000 | ||||||||||||||
Unsecured corporate bonds | 2029 | 1.79 | 40,000 | 40,000 | ||||||||||||||
Unsecured corporate bonds | 2039 | 1.81 | 60,000 | 60,000 | ||||||||||||||
Unsecured corporate bonds | Operating and refinancing fund | 2023 | 1.64 | 170,000 | 170,000 | |||||||||||||
Unsecured corporate bonds | Operating fund | 2025 | 1.75 | 130,000 | 130,000 | |||||||||||||
Unsecured corporate bonds | 2030 | 1.83 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds | 2040 | 1.87 | 70,000 | 70,000 | ||||||||||||||
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||||
Purpose | Maturity | Annual interest rate (%) | December 31, 2021 | December 31, 2020 | ||||||||||||||
Unsecured corporate bonds | Refinancing fund | 2025 | 1.40 | 140,000 | 140,000 | |||||||||||||
Unsecured corporate bonds | 2030 | 1.59 | 40,000 | 40,000 | ||||||||||||||
Unsecured corporate bonds | 2040 | 1.76 | 110,000 | 110,000 | ||||||||||||||
Unsecured corporate bonds | Refinancing fund | 2024 | 1.17 | 80,000 | — | |||||||||||||
Unsecured corporate bonds | 2026 | 1.39 | 80,000 | — | ||||||||||||||
Unsecured corporate bonds | 2031 | 1.80 | 50,000 | — | ||||||||||||||
Unsecured corporate bonds | 2041 | 1.89 | 100,000 | — | ||||||||||||||
Unsecured corporate bonds | Refinancing fund | 2024 | 2.47 | 90,000 | — | |||||||||||||
Unsecured corporate bonds | 2026 | 2.69 | 70,000 | — | ||||||||||||||
Unsecured corporate bonds | 2041 | 2.68 | 40,000 | — | ||||||||||||||
Unsecured corporate bonds(*1) | Operating and refinancing fund | 2021 | 1.77 | — | 120,000 | |||||||||||||
Unsecured corporate bonds(*1) | Operating fund | 2022 | 2.26 | 150,000 | 150,000 | |||||||||||||
Unsecured corporate bonds(*1) | Operating and refinancing fund | 2022 | 2.70 | 140,000 | 140,000 | |||||||||||||
Unsecured corporate bonds(*1) | 2021 | 2.59 | — | 70,000 | ||||||||||||||
Unsecured corporate bonds(*1) | 2023 | 2.93 | 80,000 | 80,000 | ||||||||||||||
Unsecured corporate bonds(*1) | Refinancing fund | 2022 | 2.00 | 50,000 | 50,000 | |||||||||||||
Unsecured corporate bonds(*1) | 2024 | 2.09 | 160,000 | 160,000 | ||||||||||||||
Unsecured corporate bonds(*1) | Operating and refinancing fund | 2022 | 1.71 | 80,000 | 80,000 | |||||||||||||
Unsecured corporate bonds(*1) | 2024 | 1.71 | 100,000 | 100,000 | ||||||||||||||
Unsecured corporate bonds(*1) | 2026 | 1.86 | 50,000 | 50,000 | ||||||||||||||
Unsecured corporate bonds(*1) | Refinancing fund | 2023 | 1.48 | 100,000 | 100,000 | |||||||||||||
Unsecured corporate bonds(*1) | Operating and refinancing fund | 2025 | 1.64 | 100,000 | 100,000 | |||||||||||||
Unsecured corporate bonds(*1) | Refinancing fund | 2025 | 1.41 | 160,000 | 160,000 | |||||||||||||
Unsecured corporate bonds(*1) | Refinancing fund | 2024 | 1.69 | 100,000 | — | |||||||||||||
Private placement corporate bonds(*2) | Operating fund | 2023 | — | — | 6,292 | |||||||||||||
Private placement corporate bonds(*2) | Operating fund | 2023 | — | — | 6,222 | |||||||||||||
Private placement corporate bonds(*2) | Operating fund | 2023 | — | — | 6,168 | |||||||||||||
Private placement corporate bonds(*2) | Operating fund | 2023 | — | — | 6,100 | |||||||||||||
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||||
Purpose | Maturity | Annual interest rate (%) | December 31, 2021 | December 31, 2020 | ||||||||||||||
Unsecured global bonds | Operating fund | 2027 | 6.63 | 474,200 (USD 400,000 | ) | 435,200 (USD 400,000 | ) | |||||||||||
Unsecured global bonds | 2023 | 3.75 | 592,750 (USD 500,000 | ) | 544,000 (USD 500,000 | ) | ||||||||||||
Unsecured global bonds(*1) | Refinancing fund | 2023 | 3.88 | 355,650 (USD 300,000 | ) | 326,400 (USD 300,000 | ) | |||||||||||
Floating rate notes(*3) | Operating fund | 2025 | 3M LIBOR + 0.91 | | 355,650 (USD 300,000 | ) | 326,400 (USD 300,000 | ) | ||||||||||
| 8,448,250 | 8,606,782 | |||||||||||||||||
Less discounts on bonds | (21,567 | ) | (27,039 | ) | ||||||||||||||
| 8,426,683 | 8,579,743 | |||||||||||||||||
Less current installments of bonds | (1,389,259 | ) | (889,574 | ) | ||||||||||||||
￦ | 7,037,424 | 7,690,169 | ||||||||||||||||
18. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2023 and 2022 are as follows, Continued: |
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||
Purpose | Maturity | Annual interest rate (%) | December 31, 2023 | December 31, 2022 | ||||||||||||
| Unsecured corporate bonds(*1) | Facility fund | 2026 | 4.87 | 100,000 | — | |||||||||||
| Unsecured corporate bonds(*1) | 2028 | 5.00 | 60,000 | — | ||||||||||||
| Unsecured global bonds | Operating fund | 2027 | 6.63 | | 515,760 (USD 400,000 | ) | | 506,920 (USD 400,000) | | |||||||
| Unsecured global bonds | 2023 | 3.75 | — | | 633,650 (USD 500,000) | | ||||||||||
| Unsecured global bonds(*1) | Refinancing fund | 2023 | 3.88 | — | | 380,190 (USD 300,000) | | |||||||||
| Unsecured global bonds(*1) | 2028 | 4.88 | | 386,820 (USD 300,000 | ) | — | ||||||||||
| Floating rate notes(*2) | Operating fund | 2025 | SOFR rate + 1.17 | | 386,820 (USD 300,000 | ) | | 380,190 (USD 300,000) | | |||||||
| Convertible bonds(*3) | Operating fund | 2028 | — | | 3,868 (USD 3,000 | ) | — | |||||||||
| Convertible bonds(*3) | 2028 | — | | 3,868 (USD 3,000 | ) | — | ||||||||||
| Convertible bonds(*3) | 2028 | — | | 2,579 (USD 2,000 | ) | — | ||||||||||
| Convertible bonds(*3) | 2028 | — | | 10,444 (USD 8,100 | ) | — | ||||||||||
| Convertible bonds(*3) | 2028 | — | | 20,824 (USD 16,150 | ) | — | ||||||||||
| Convertible bonds(*3) | 2028 | — | | 9,993 (USD 7,750 | ) | — | ||||||||||
| Convertible bonds(*3) | 2028 | — | | 10,315 (USD 8,000 | ) | — | ||||||||||
| 8,351,291 | 8,385,950 | |||||||||||||||
| Less: discounts on bond | (25,648 | ) | (19,256 | ) | ||||||||||||
| 8,325,643 | 8,366,694 | |||||||||||||||
| Less: current portions of bonds | (1,219,344 | ) | (1,842,599 | ) | ||||||||||||
| W | 7,106,299 | 6,524,095 | ||||||||||||||
| (*1) | Unsecured corporate bonds were issued by SK Broadband Co., Ltd., a subsidiary of the Parent Company. |
| (*2) | Interest rates applied are SOFR rate 5.38% as of December 31, 2023 and LIBOR rate (3 month) 4.75% + 0.91% as of December 31, 2022. |
18. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2023 and 2022 are as follows, Continued: |
| (* | Convertible bonds were issued by SAPEON Inc., a subsidiary of the Parent Company, and the conditions for issuing convertible bonds and changes are as follows: |
| As of December 31, 2023, the conditions for issuing convertible bonds are as follows: |
(In millions of won and thousands of U.S. dollars) | ||||||||||||||||||||
Series | ||||||||||||||||||||
1 | 2 | 3 | 4 | 5 | ||||||||||||||||
| Total amount of convertible bonds authorized | | 3,868 (USD 3,000 | ) | | 3,868 (USD 3,000 | ) | | 2,579 (USD 2,000 | ) | | 10,444 (USD 8,100 | ) | | 20,824 (USD 16,150 | ) | |||||
| Coupon rate | | 0% (However, if not converted, 4% from January 1, 2025, to three years from the issue date, and 8% thereafter until the maturity of the convertible bonds) | | |||||||||||||||||
| Repayment of interest and principal | | Lump-sum repayment at maturity with accrued interest added to the issued amount | | |||||||||||||||||
| Convertible period | Until the maturity date or the mandatory conversion date | |||||||||||||||||||
| Type of shares to be issued upon conversion | | Registered common stock or securities identical to subsequent investments | | |||||||||||||||||
| Conversion ratio | 100% | |||||||||||||||||||
| Conversion price (In U.S. dollars) | USD 410.22 per share | |||||||||||||||||||
| Early redemption right | | Exercisable from January 1, 2025, in case of non-fulfillment of certain conditions | | |||||||||||||||||
(In millions of won and thousands of U.S. dollars) | ||||
Series | ||||
6 | 7 | |||
| Total amount of convertible bonds authorized | 9,993 (USD 7,750) | 10,315 (USD 8,000) | ||
| Coupon rate | 0% (However, if not converted, 4% from January 1, 2025, to three years from the issue date, and 8% thereafter until the maturity of the convertible bonds) | |||
| Repayment of interest and principal | Lump-sum repayment at maturity with accrued interest added to the issued amount | |||
| Convertible period | Until the maturity date or the mandatory conversion date | |||
| Type of shares to be issued upon conversion | Registered common stock or securities identical to subsequent investments | |||
| Conversion ratio | 100% | |||
| Conversion price (In U.S. dollars) | USD 410.22 per share | |||
| Early redemption right | Exercisable from January 1, 2025, in case of non-fulfillment of certain conditions | |||
18. | Borrowings and Debentures, Continued |
| (3) | Debentures as of December 31, 2023 and 2022 are as follows, Continued: |
| (*3) | Convertible bonds were issued by SAPEON Inc., a subsidiary of the Parent Company, and the conditions for issuing convertible bonds and changes are as follows, Continued: |
2 ) | The carrying amount of changes in the liability component (present value of non-convertible bonds) of the convertible bonds for the year ended December 31, |
(In millions of won and thousands of U.S. dollars) | ||||
| Beginning balance | — | |||
| Issuance of | 54,284 (USD 41,932 | ) | ||
| Amortization based on effective interest rate | 4,951 (USD 4,007 | ) | ||
| Ending balance | 59,235 (USD 45,939 | ) | ||
19. | Long-term Payables |
| (1) |
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Payables related to acquisition of frequency usage rights | ￦ | 1,611,010 | 1,141,723 | |||||
Other | — | 631 | ||||||
￦ | 1,611,010 | 1,142,354 | ||||||
As of December 31, |
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Long-term payables – other | W | 1,290,225 | 1,690,470 | |||||
| Present value discount on long-term payables – other | (29,772 | ) | (52,129 | ) | ||||
| Current portion of long-term payables – other | (367,770 | ) | (398,874 | ) | ||||
| Carrying amount as of December 31 | W | 892,683 | 1,239,467 | |||||
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Long-term payables — other | ￦ | 2,090,715 | 1,626,040 | |||||
Present value discount on long-term payables — other | (80,882 | ) | (59,717 | ) | ||||
Current installments of long-term payables — other | (398,823 | ) | (424,600 | ) | ||||
Carrying amount at December 31 | ￦ | 1,611,010 | 1,141,723 | |||||
| (2) | The sum of portions repaid among the principal to W |
(In millions of won) | ||||||||
Amount | ||||||||
Less than 1 year | 369,150 | |||||||
1~3 years | ||||||||
| 738,300 | ||||||||
| 182,775 | ||||||||
| W | 1,290,225 | |||||||
20. | Provisions |
(In millions of won) | ||||||||||||||||||||||||||||||||||||||||
2021 | As of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||
Beginning balance | Increase | Utilization | Reversal | Other | Business Combination | Spin-off | Ending balance | Current | Non-current | |||||||||||||||||||||||||||||||
Provision for restoration | ￦ | 113,653 | 12,648 | (6,283 | ) | (440 | ) | 172 | — | (5,019 | ) | 114,731 | 59,204 | 55,527 | ||||||||||||||||||||||||||
Emission allowance | 7,424 | 1,368 | (1,091 | ) | (5,816 | ) | — | — | — | 1,885 | 1,885 | — | ||||||||||||||||||||||||||||
Other provisions | 29,800 | 1,655 | (18,909 | ) | (1,820 | ) | — | 385 | (732 | ) | 10,379 | 567 | 9,812 | |||||||||||||||||||||||||||
￦ | 150,877 | 15,671 | (26,283 | ) | (8,076 | ) | 172 | 385 | (5,751 | ) | 126,995 | 61,656 | 65,339 | |||||||||||||||||||||||||||
(In millions of won) | ||||||||||||||||||||||||||||||||
2023 | As of December 31, 2023 | |||||||||||||||||||||||||||||||
Beginning balance | Increase | Utilization | Reversal | Other | Ending balance | Current | Non-current | |||||||||||||||||||||||||
| Provision for restoration | W | 115,089 | 8,041 | (2,397 | ) | (714 | ) | 5 | 120,024 | 37,073 | 82,951 | |||||||||||||||||||||
| Emission allowance | 2,186 | 2,404 | (635 | ) | (2,773 | ) | — | 1,182 | 1,182 | — | ||||||||||||||||||||||
| Other provisions | 1,823 | — | (1,005 | ) | (108 | ) | (492 | ) | 218 | — | 218 | |||||||||||||||||||||
| W | 119,098 | 10,445 | (4,037 | ) | (3,595 | ) | (487 | ) | 121,424 | 38,255 | 83,169 | |||||||||||||||||||||
(In millions of won) | ||||||||||||||||||||||||||||||||||||
2020 | As of December 31, 2020 | |||||||||||||||||||||||||||||||||||
Beginning balance | Increase | Utilization | Reversal | Other | Business Combination | Ending balance | Current | Non-current | ||||||||||||||||||||||||||||
Provision for restoration | ￦ | 102,519 | 15,616 | (3,610 | ) | (1,492 | ) | (6 | ) | 626 | 113,653 | 42,348 | 71,305 | |||||||||||||||||||||||
Emission allowance | 5,257 | 7,400 | — | (5,233 | ) | — | — | 7,424 | 7,424 | — | ||||||||||||||||||||||||||
Other provisions(*) | 57,385 | 3,250 | (30,861 | ) | (1,904 | ) | (199 | ) | 2,129 | 29,800 | 19,591 | 10,209 | ||||||||||||||||||||||||
￦ | 165,161 | 26,266 | (34,471 | ) | (8,629 | ) | (205 | ) | 2,755 | 150,877 | 69,363 | 81,514 | ||||||||||||||||||||||||
(In millions of won) | ||||||||||||||||||||||||||||||||||||
2022 | As of December 31, 2022 | |||||||||||||||||||||||||||||||||||
Beginning balance | Increase | Utilization | Reversal | Other | Business combination | Ending balance | Current | Non-current | ||||||||||||||||||||||||||||
| Provision for restoration | W | 114,731 | 6,823 | (5,679 | ) | (1,767 | ) | (10 | ) | 991 | 115,089 | 36,998 | 78,091 | |||||||||||||||||||||||
| Emission allowance | 1,885 | 2,719 | — | (2,418 | ) | — | — | 2,186 | 2,186 | — | ||||||||||||||||||||||||||
| Other provisions | 10,379 | 4,071 | (9,509 | ) | (3,080 | ) | (38 | ) | — | 1,823 | 499 | 1,324 | ||||||||||||||||||||||||
| W | 126,995 | 13,613 | (15,188 | ) | (7,265 | ) | (48 | ) | 991 | 119,098 | 39,683 | 79,415 | ||||||||||||||||||||||||
21. | Defined Benefit Liabilities (Assets) |
| (1) | Details of defined benefit liabilities (assets) as of December 31, |
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2021 | |||||||
| Present value of defined benefit obligations | W | 1,121,679 | 1,038,320 | |||||
| Fair value of plan assets | (1,292,416 | ) | (1,214,007 | ) | ||||
| Defined benefit assets(*) | (170,737 | ) | (175,748 | ) | ||||
| Defined benefit liabilities | — | 61 | ||||||
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Present value of defined benefit obligations | ￦ | 1,035,016 | 1,278,550 | |||||
Fair value of plan assets | (1,040,286 | ) | (1,127,163 | ) | ||||
Defined benefit assets(*) | (18,427 | ) | (3,557 | ) | ||||
Defined benefit liabilities | 154,944 | |||||||
| (*) | Since the Group entities neither have legally enforceable right nor intention to settle the defined benefit obligations of Group entities with defined benefit assets of other Group entities, defined benefit assets of Group entities have been separately presented from defined benefit liabilities. |
21. | Defined Benefit Liabilities (Assets), Continued |
| (2) | Principal actuarial assumptions as of December 31, |
December 31, | December 31, | |||||||||||||
Discount rate for defined benefit obligations | ||||||||||||||
| Expected rate of salary increase | ||||||||||||||
| (3) | Changes in present value of defined benefit obligations for the years ended December 31, |
(In millions of won) | ||||||||
2023 | 2022 | |||||||
| Beginning balance | W | 1,038,320 | 1,035,016 | |||||
| Current service cost | 132,465 | 134,847 | ||||||
| Interest cost | 54,032 | 32,572 | ||||||
| Remeasurement | ||||||||
| - Demographic assumption | 810 | (28,222 | ) | |||||
| - Financial assumption | (24,953 | ) | (84,532 | ) | ||||
| - Adjustment based on experience | 18,814 | 2,369 | ||||||
| Business combinations(*1) | — | 29,357 | ||||||
| Benefit paid | (99,396 | ) | (79,117 | ) | ||||
| Others(*2) | 1,587 | (3,970 | ) | |||||
| Ending balance | W | 1,121,679 | 1,038,320 | |||||
(In millions of won) | For the year ended December 31 | |||||||
2021 | 2020 | |||||||
Beginning balance | ￦ | 1,278,550 | 1,136,787 | |||||
Current service cost(*1) | 186,395 | 193,078 | ||||||
Past service cost | — | 815 | ||||||
Interest cost(*1) | 28,617 | 25,958 | ||||||
Remeasurement - Demographic assumption | (794 | ) | 2,071 | |||||
- Financial assumption | (29,399 | ) | (18,266 | ) | ||||
- Adjustment based on experience | 5,773 | 17,364 | ||||||
Business combinations | — | 1,742 | ||||||
Benefit paid | (114,897 | ) | (76,987 | ) | ||||
Spin-off | (318,476 | ) | — | |||||
Others(*2) | (753 | ) | (4,012 | ) | ||||
Ending balance | ￦ | 1,035,016 | 1,278,550 | |||||
| (*1) | Includes |
| (*2) | Others include changes of liabilities due to employee’s transfers among affiliates for the years ended December 31, |
| (4) | Changes in fair value of plan assets for the years ended December 31, 2023 and 2022 are as follows: |
(In millions of won) | ||||||||
2023 | 2022 | |||||||
| Beginning balance | W | 1,214,007 | 1,040,286 | |||||
| Interest income | 62,058 | 32,910 | ||||||
| Remeasurement | (2,140 | ) | (18,622 | ) | ||||
| Contributions | 108,224 | 215,254 | ||||||
| Benefit paid | (90,452 | ) | (83,123 | ) | ||||
| Business combinations(*1) | — | 26,618 | ||||||
| Others(*2) | 719 | 684 | ||||||
| Ending balance | W | 1,292,416 | 1,214,007 | |||||
21. | Defined Benefit Liabilities (Assets), Continued |
| (4) | Changes in fair value of plan assets for the years ended December 31, |
(In millions of won) | For the year ended December 31 | |||||||
2021 | 2020 | |||||||
Beginning balance | ￦ | 1,127,163 | 965,654 | |||||
Interest income(*) | 24,550 | 21,057 | ||||||
Remeasurement | (3,798 | ) | (1,385 | ) | ||||
Contributions | 152,208 | 213,298 | ||||||
Benefit paid | (100,511 | ) | (68,084 | ) | ||||
Business combinations | 0 | 485 | ||||||
Spin-off | (157,522 | ) | 0 | |||||
Others | (1,804 | ) | (3,862 | ) | ||||
Ending balance | ￦ | 1,040,286 | 1,127,163 | |||||
(*1) | Includes |
| (*2) | Others include changes in assets due to |
| (5) | Total cost of defined benefit plan, which is recognized in profit and loss |
(In millions of won) | For the year ended December 31 | |||||||
2021 | 2020 | |||||||
Current service cost(*) | ￦ | 186,395 | 193,078 | |||||
Past service cost | 0 | 815 | ||||||
Net interest cost(*) | 4,067 | 4,901 | ||||||
￦ | 190,462 | 198,794 | ||||||
(In millions of won) | ||||||||
2023 | 2022 | |||||||
| Current service cost | W | 132,465 | 134,847 | |||||
| Net interest income | (8,026 | ) | (338 | ) | ||||
| W | 124,439 | 134,509 | ||||||
| (6) | Details of plan assets as of December 31, |
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Equity instruments | W | 72,619 | 17,716 | |||||
| Debt instruments | 162,374 | 174,385 | ||||||
| Short-term financial instruments, etc. | 1,057,423 | 1,021,906 | ||||||
| W | 1,292,416 | 1,214,007 | ||||||
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Equity instruments | ￦ | 25,083 | 15,770 | |||||
Debt instruments | 228,534 | 228,839 | ||||||
Short-term financial instruments, etc. | 786,669 | 882,554 | ||||||
￦ | 1,040,286 | 1,127,163 | ||||||
| (7) | Sensitivity analysis |
(In millions of won) | ||||||||||||||||
0.5% Increase | 0.5% Decrease | 0.5% Increase | 0.5% Decrease | |||||||||||||
Discount rate | ￦ | (43,702) | 47,870 | W | (37,694 | ) | 40,345 | |||||||||
Expected salary increase rate | 47,552 | (43,940 | ) | 40,624 | (38,319 | ) | ||||||||||
21. | Defined Benefit Liabilities (Assets), Continued |
| (8) | Defined contribution plan |
22. | Derivative Instruments |
| (1) | Currency and interest rate swap contracts under cash flow hedge accounting as of December 31, |
(In millions of won and thousands of U.S. dollars) | ||||||||
Borrowing date | Hedging Instrument (Hedged item) | Hedged risk | Duration of contract | |||||
institution 2007 | contract | |||||||
Fixed-to-fixed (U.S. dollar denominated bonds face value of USD 400,000) | Foreign currency risk | Morgan Stanley and four other banks | Jul. 20, 2007 ~ Jul. 20, 2027 | |||||
2020 | ||||||||
Floating-to-fixed (U.S. dollar-denominated bonds face value of USD 300,000) | Foreign currency risk and Interest rate risk | Citibank | Mar. 4, 2020 ~ Jun. 4, 2025 | |||||
2023 | Fixed-to-fixed (U.S. dollar denominated bonds face value of USD 300,000) | Foreign currency risk | ||||||
Shinhan Bank, Korea Development Bank and J.P. Morgan | ||||||||
| (2) | SK Broadband Co., Ltd., a subsidiary of the Parent Company, entered into Total Return Swap(TRS) contract amounting to W 20,631 million for Long-term derivative financial assets were measured using the discounted present value methods |
| (3) | In relation to the business acquisition by SK Broadband Co., Ltd. for the year ended December 31, 2020 the Parent Company has entered into a shareholders’ agreement with the shareholders of the acquirees. Pursuant to the agreement, when certain conditions are met within a period of time subsequent to the merger, the shareholders of the acquirees can exercise their drag-along rights and require the Parent Company to sell its shares in SK Broadband Co., Ltd. Should the shareholders exercise their drag-along rights, the Parent Company also can exercise its call options over the shares held by those shareholders. The Group recognized a long-term derivative financial liability of 295,876 million ( W 302,593 million andW for the rights prescribed in the shareholders’ agreement as of December 31, |
22. | Derivative Instruments, Continued |
Significant unobservable inputs | Correlations between inputs and fair value measurements | |
| Fair value of SK Broadband Co., Ltd.’s common stock | The estimated fair value of derivative financial liabilities would decrease (increase) if the fair value of common stock would increase (decrease) | |
| Volatility of stock price | The estimated fair value of derivative financial liabilities would decrease (increase) if the volatility of stock price increase (decrease) | |
| (4) | The 9,524 million as of December 31, 2021), as of December 31, 2022, respectively, for subscription right and contingent subscription right. There is no balance for derivative financial assets as of December 31, 2023, as the exercise period expired without the exercise of subscription rights and contingent subscription rights for the year ended December 31, 2023.W 13,136W 15,477 million as of December 31, 2021) andW 8,083 million ( |
| (5) | The Parent Company has entered into the agreement with HAEGIN Co., Ltd., whereby the Parent Company has been granted contingent subscription right to acquire HAEGIN Co., Ltd.‘s common stock for the year ended December 31, 2022. The Parent Company is able to exercise the right in accordance with the agreement when certain conditions are met and recognized long-term derivative financial assets of W 2,323 million andW 6,895 million as of December 31, 2023 and 2022, respectively, for the contingent subscription right. The fair value of HAEGIN Co., Ltd.‘s common stock was estimated using 5-year projected cash flows discounted at 13% (12% in 2022) per annum. Meanwhile, if the fair value of HAEGIN Co., Ltd.‘s common stock, significant unobservable input used in the fair value measurement, increases (decreases), the estimated fair value of derivative financial asset would increase (decrease). If the volatility of stock price, significant unobservable input used in the fair value measurement, increases (decreases), the estimated fair value of derivative financial asset would increase (decrease). |
22. | Derivative Instruments, Continued |
| (6) | The fair value of derivative financial instruments to which the Group applies cash flow ing is recorded in the consolidated financial statements as |
(In millions of won and thousands of U.S. dollars) | ||||||||
Hedging instrument (Hedged item) | Cash flow hedge | Fair value | ||||||
Non-current assets: | ||||||||
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000) | W | 80,426 | 80,426 | |||||
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000) | 35,784 | 35,784 | ||||||
| W | 116,210 | 116,210 | ||||||
Non-current liabilities: | ||||||||
Fixed-to-fixed cross currency swap (U.S dollar denominated bonds face value of USD 300,000) | W | (9,212 | ) | (9,212 | ) | |||
| W | (9,212 | ) | (9,212 | ) | ||||
(In millions of won and thousands of U.S. dollars) | ||||||||
Hedging instrument (Hedged item) | Cash flow hedge | Fair value | ||||||
Current assets: | ||||||||
Fixed-to-fixed | ￦ | 427 | 427 | |||||
Non-current assets: | ||||||||
Fixed-to-fixed | ￦ | 74,555 | 74,555 | |||||
Fixed-to-fixed | 75,069 | 75,069 | ||||||
Fixed-to-fixed | 30,150 | 30,150 | ||||||
Floating-to-fixed cross currency interest rate swap (U.S dollar denominated bonds face value of USD 300,000) | 2,460 | 2,460 | ||||||
￦ | 182,661 | 182,661 | ||||||
Current liabilities: | ||||||||
Floating-to-fixed | ￦ | (52) | (52) | |||||
Non-current liabilities: | ||||||||
Floating-to-fixed | ￦ | (59) | (59) | |||||
￦ | (111 | ) | (111 | ) | ||||
(7) | The fair value of derivatives held for trading is recorded in the consolidated financial statements as derivative financial assets, long-term derivative financial assets and long-term derivative financial liabilities. As of December 31, |
(In millions of won) | ||||||||
Held for trading | Fair value | |||||||
Current assets: | ||||||||
| Contract for difference settlement | W | 8,974 | 8,974 | |||||
Non-current assets: | ||||||||
| Contingent subscription right | 2,323 | 2,323 | ||||||
| Contract for difference settlement | 21,027 | 21,027 | ||||||
| W | 32,324 | 32,324 | ||||||
Non-current liabilities: | ||||||||
| Drag-along and call option rights | W | (295,876 | ) | (295,876 | ) | |||
| (295,876 | ) | (295,876 | ) | |||||
(In millions of won) | ||||||||
Held for trading | Fair value | |||||||
Current assets: | ||||||||
Contingent subscription right | ￦ | 9,524 | 9,524 | |||||
Subscription right | 15,477 | 15,477 | ||||||
Total return swap | 4,682 | 4,682 | ||||||
Non-current assets: | ||||||||
Total return swap | ￦ | 5,250 | 5,250 | |||||
￦ | 34,933 | 34,933 | ||||||
Non-current liabilities: | ||||||||
Share option | ￦ | (321,025) | (321,025 | ) | ||||
23. | Share Capital and Capital Surplus and Others |
| (1) | Details of share capital as of December 31, |
(In millions of won, except for share data) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Number of authorized shares | 670,000,000 | 670,000,000 | ||||||
| Par value (in Won) | 100 | 100 | ||||||
| Number of issued shares | 218,833,144 | 218,833,144 | ||||||
| Share capital: | ||||||||
| Common share(*1) | W | 30,493 | 30,493 | |||||
(In millions of won, except for share data) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Number of authorized shares(*1) | 670,000,000 | 220,000,000 | ||||||
Par value (in won)(*1) | 100 | 500 | ||||||
Number of issued shares | 218,833,144 | 80,745,711 | ||||||
Share capital: | ||||||||
Common share(*2) | ￦ | 30,493 | 44,639 | |||||
| (*1) |
| (2) |
(In shares) | ||||||||
2021 | 2020 | |||||||
Issued shares at January 1 | 80,745,711 | 80,745,711 | ||||||
Retirement of treasury shares(*1) | (8,685,568 | ) | 0 | |||||
Stock split(*2) | 288,240,572 | 0 | ||||||
Spin-off(*3) | (141,467,571 | ) | 0 | |||||
Issued shares at December 31 | 218,833,144 | 80,745,711 | ||||||
Surviving Company | Spin-off Company | |||||||
| Company name | SK Telecom Co., Ltd. | SK Square Co., Ltd. | ||||||
Common shares (in shares) | 0.6073625 | 0.3926375 | ||||||
| (3) | Details of shares outstanding as of December 31, |
(In shares) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Issued shares | Treasury shares | Outstanding shares | Issued shares | Treasury shares | Outstanding shares | |||||||||||||||||||
| Shares outstanding | 218,833,144 | 6,133,414 | 212,699,730 | 218,833,144 | 801,091 | 218,032,053 | ||||||||||||||||||
(In shares) | 2021 | 2020 | ||||||||||||||||||||||
Issued shares | Treasury shares | Outstanding shares | Issued shares | Treasury shares | Outstanding shares | |||||||||||||||||||
Shares outstanding | 218,833,144 | 1,250,992 | 217,582,152 | 80,745,711 | 9,418,558 | 71,327,153 | ||||||||||||||||||
| (4) | Details of capital surplus and others as of December 31, |
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Paid-in surplus | ￦ | 1,771,000 | 2,915,887 | |||||
Treasury shares(Note 24) | (57,314 | ) | (2,123,661 | ) | ||||
Hybrid bonds(Note 25) | 398,759 | 398,759 | ||||||
Share option(Note 26) | 47,166 | 1,481 | ||||||
Others(*) | (13,783,337 | ) | (515,263 | ) | ||||
￦ | (11,623,726 | ) | 677,203 | |||||
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Paid-in surplus | W | 1,771,000 | 1,771,000 | |||||
| Treasury shares (Note 24) | (301,981 | ) | (36,702 | ) | ||||
| Hybrid bonds (Note 25) | 398,509 | 398,759 | ||||||
| Share option (Note 26) | 9,818 | 2,061 | ||||||
| Others(*) | (13,705,990 | ) | (13,702,235 | ) | ||||
| W | (11,828,644 | ) | (11,567,117 | ) | ||||
| (*) | 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. |
24. | Treasury Shares |
| (1) | Treasury shares as of December 31, |
(In millions of won, except for the number of shares) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Number of shares | 6,133,414 | 801,091 | ||||||
| Acquisition cost | W | 301,981 | 36,702 | |||||
24. | Treasury Shares, Continued |
(In millions of won, except for share data) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Number of shares | 1,250,992 | 9,418,558 | ||||||
Acquisition cost | ￦ | 57,314 | 2,123,661 | |||||
| (2) | Changes in treasury shares for the years ended December 31, |
(In shares) | ||||||||
2023 | 2022 | |||||||
| Treasury shares as of January 1 | 801,091 | 1,250,992 | ||||||
| Acquisition (*1) | 5,773,410 | — | ||||||
| Disposal (*2) | (441,087 | ) | (449,901 | ) | ||||
| Treasury shares as of December 31 | 6,133,414 | 801,091 | ||||||
(In shares) | ||||||||
2021 | 2020 | |||||||
Treasury shares at January 1 | 9,418,558 | 7,609,263 | ||||||
Acquisition(*1) | 288,000 | 1,809,295 | ||||||
Disposal(*2) | (626,740 | ) | 0 | |||||
Retirement of treasury shares(*3) | (8,685,568 | ) | 0 | |||||
Stock split(*4) | 1,577,000 | 0 | ||||||
Spin-off(*5) | (719,955 | ) | 0 | |||||
Disposal(*6) | (303 | ) | 0 | |||||
Treasury shares at December 31 | 1,250,992 | 9,418,558 | ||||||
| (*1) | The Parent Company acquired |
| (*2) | The Parent Company distributed r e nded December 31, |
25. | Hybrid Bonds |
| Hybrid bonds classified as equity as of December 31, 2023 and 2022 are as follows: |
(In millions of won) | ||||||||||||||||||||||
Type | Issuance date | Maturity(*1) | Annual interest rate(%)(*2) | December 31, 2023 | December 31, 2022 | |||||||||||||||||
| Series 3 hybrid bonds | Unsecured subordinated bearer bond | June 5, 2023 | | June 5, 2083 | | 4.95 | W | 400,000 | — | |||||||||||||
Series 2-1 hybrid bonds | Unsecured subordinated bearer bond | June 7, 2018 | | June 7, 2078 | | 3.70 | — | 300,000 | ||||||||||||||
| Series 2-2 hybrid bonds | Unsecured subordinated bearer bond | June 7, 2018 | | June 7, 2078 | | 3.65 | — | 100,000 | ||||||||||||||
| Issuance costs | (1,491 | ) | (1,241 | ) | ||||||||||||||||||
| W | 398,509 | 398,759 | ||||||||||||||||||||
(In millions of won) | ||||||||||||||||||
Type | Issuance date | Maturity(*1) | Annual interest rate(%)(*2) | December 31, 2021 | December 31, 2020 | |||||||||||||
Series 2-1 hybrid bonds | Unsecured subordinated bearer bond | June 7, 2018 | June 7, 2078 | 3.70 | ￦ | 300,000 | 300,000 | |||||||||||
Series 2-2 hybrid bonds | Unsecured subordinated bearer bond | June 7, 2018 | June 7, 2078 | 3.65 | 100,000 | 100,000 | ||||||||||||
Issuance costs | (1,241 | ) | (1,241 | ) | ||||||||||||||
| ￦ | 398,759 | 398,759 | ||||||||||||||||
| (*1) | The Parent Company has a right to extend the maturity without any notice or announcement. |
| (*2) | Annual interest rate is determined as yield rate of 5-year national bond plus premium. According to thestep-up clause, additional premium of 0.25% and 0.75%, respectively, after 10 years and 25 years from the issuance date are applied. |
26. |
| 26.1 | Share-based payment arrangement of the Parent Company |
| (1) | The terms and conditions related to the grants of the |
Parent Company | ||||||||||||||||
1-1 | 1-2 | 1-3 | 2 | 3 | 4 | 5(*2) | 6(*2) | |||||||||
Grant date | March 24, 2017 | February 20, 2018 | February 22, 2019 | March 26, 2019 | March 26, 2020 | March 25, 2021 | ||||||||||
Types of shares to be issued | Registered common shares | |||||||||||||||
Grant method | Reissue of treasury shares, cash settlement | |||||||||||||||
Number of shares (in shares)(*1) | 67,320 | 67,320 | 67,320 | 4,124 | 12,685 | 5,266 | 381,937 | 94,657 | ||||||||
Exercise price (in won)(*1) | 49,350 | 53,298 | 57,562 | 50,824 | 53,052 | 50,862 | 38,452 | 50,276 | ||||||||
Exercise period | Mar. 25, 2019 ~ Mar. 24, 2022 | Mar. 25, 2020 ~ Mar. 24, 2023 | Mar. 25, 2021 ~ Mar. 24, 2024 | Feb. 21, 2020 ~ Feb. 20, 2023 | Feb. 23, 2021 ~ Feb. 22, 2024 | Mar. 27, 2021 ~ Mar. 26, 2024 | Mar. 27, 2023 ~ Mar. 26, 2027 | Mar. 26, 2023 ~ Mar. 25, 2026 | ||||||||
Vesting conditions | 2 years’ service from the grant date | 3 years’ service from the grant date | 4 years’ service from the grant date | 2 years’ service from the grant date | 2 years’ service from the grant date | 2 years’ service from the grant date | 3 years’ service from the grant date | 2 years’ service from the grant date | ||||||||
Share appreciation rights of SK Telecom Co., Ltd.(*3) | Share appreciation rights of SK Square Co., Ltd.(*3) | |||||||
Grant date | January 1, 2021 | |||||||
Grant method | Cash settlement | |||||||
Number of shares (in shares)(*1) | 224,692 | 145,247 | ||||||
Exercise price (in won)(*1) | 50,276 | |||||||
Exercise period | Jan. 1, 2023 ~ Mar. 28, 2024 | |||||||
Vesting conditions | 2 years’ service from the grant date | |||||||
| 1) |
Series | ||||||||||
1-3 | 3 | 4 | 5 | 6 | ||||||
| Grant date | March 24, 2017 | February 22, 2019 | March 26, 2019 | March 26, 2020 | March 25, 2021 | |||||
| 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) | 67,320 | 8,907 | 5,266 | 376,313 | 87,794 | |||||
| Exercise price (in won) | 57,562 | 53,052 | 50,862 | 38,452 | 50,276 | |||||
| Exercise period | Mar. 25, 2021 ~ Mar. 24, 2024 | Feb. 23, 2021 ~ Feb. 22, 2024 | Mar. 27, 2021 ~ Mar. 26, 2024 | Mar. 27, 2023 ~ Mar. 26, 2027 | Mar. 26, 2023 ~ Mar. 25, 2026 | |||||
Vesting conditions | 4 years’ service from the grant date | 2 years’ service from the grant date | 2 years’ service from the grant date | 3 years’ service from the grant date | 2 years’ service from the grant date | |||||
Series | ||||
7-1 | 7-2 | |||
| Grant date | 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) | 295,275 | 109,704 | ||
| Exercise price (in won) | 56,860 | 56,860 | ||
| Exercise period | Mar. 26, 2025 ~ Mar. 25, 2029 | Mar. 26, 2024 ~ Mar. 25, 2027 | ||
| Vesting conditions | 2 years’ service from the grant date | 2 years’ service from the grant date | ||
| (*) | The remaining parts of |
26. | Share-based payment Arrangement, Continued |
| 26.1 | 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: |
| 2) | Cash-settled share-based payment arrangement |
Granted in 2021 | Granted in 2022 | |||||
Share appreciation rights of SK Telecom Co., Ltd.(*) | Share appreciation rights of SK Square Co., Ltd.(*) | Share appreciation rights of SK Telecom Co., Ltd. | ||||
| Grant date | January 1, 2021 | January 1, 2022 | ||||
| Grant method | Cash settlement | |||||
| Number of shares (in share) | 183,246 | 118,456 | 338,525 | |||
| Exercise price (in won) | 50,276 | 56,860 | ||||
| Exercise period | Jan. 1, 2023 ~ Mar. 28, 2024 | Jan. 1, 2024 ~ Mar. 25, 2025 | ||||
| Vesting conditions | 2 years’ service from the grant date | 2 years’ service from the grant date | ||||
| (*) | Parts of the grant that have not met the vesting conditions have been forfeited for the year ended December 31, |
| 3) |
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 W 10,813 million, and the amount calculated according to the adjustment rate based on the share price on the expiration date and the cumulative increase rate ofKOSPI200 will be paid in shares. |
26. | Share-based payment Arrangement, Continued |
| 26.1 | Share-based payment arrangement of the Parent Company, Continued |
| (1) | Share compensation expense for share-based payment arrangements with cash alternatives recognized for the year ended December 31, |
(In millions of won) | compensation expense | ||||||
Share compensation expense | |||||||
| As of December 31, 2022 | |||||||
| For the year ended December 31, 2023 | 2,171 | ||||||
| In subsequent periods | 504 | ||||||
| W | 158,254 | ||||||
| (3) | 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 won) | Parent Company | |||||||||||||||||||||||||||||||
1-1 | 1-2 | 1-3 | 2 | 3 | 4 | 5 | 6 | |||||||||||||||||||||||||
Risk-free interest rate | 1.86 | % | 1.95 | % | 2.07 | % | 2.63 | % | 1.91 | % | 1.78 | % | 1.52 | % | 1.55 | % | ||||||||||||||||
Estimated option’s life | 5 years | 6 years | 7 years | 5 years | 5 years | 5 years | 7 years | 5 years | ||||||||||||||||||||||||
Share price (Closing price on the preceding day)(*) | 52,500 | 52,500 | 52,500 | 48,700 | 51,800 | 50,600 | 34,900 | 49,800 | ||||||||||||||||||||||||
Expected volatility | 13.38 | % | 13.38 | % | 13.38 | % | 16.45 | % | 8.30 | % | 7.70 | % | 8.10 | % | 25.70 | % | ||||||||||||||||
Expected dividends | 3.80 | % | 3.80 | % | 3.80 | % | 3.70 | % | 3.80 | % | 3.90 | % | 5.70 | % | 4.00 | % | ||||||||||||||||
Exercise price(*) | 49,350 | 53,298 | 57,562 | 50,824 | 53,052 | 50,862 | 38,452 | 50,276 | ||||||||||||||||||||||||
Per-share fair value of the option(*) | 5,403 | 4,048 | 3,096 | 4,798 | 1,720 | 1,622 | 192 | 8,142 | ||||||||||||||||||||||||
(In won) | ||||||||
Share appreciation rights of SK Telecom Co., Ltd. | Share appreciation rights of SK Square Co., Ltd. | |||||||
Risk-free interest rate | 1.71 | % | 1.71 | % | ||||
Estimated option’s life | 3.25 years | 3.25 years | ||||||
Share price on the remeasurement date | 57,900 | 66,400 | ||||||
Expected volatility | 26.00 | % | 26.00 | % | ||||
Expected dividends | 3.40 | % | 0.00 | % | ||||
Exercise price(*) | 50,276 | 50,276 | ||||||
Per-share fair value of the option | 10,646 | 20,321 | ||||||
| Share-based payment arrangement with cash alternatives |
(In won) | Series | |||||||||||||||||||||||||||
1-3 | 3 | 4 | 5 | 6 | 7-1 | 7-2 | ||||||||||||||||||||||
| Risk-free interest rate | 3.52 | % | 3.49 | % | 3.52 | % | 3.14 | % | 3.18 | % | 3.15 | % | 3.14 | % | ||||||||||||||
| Estimated option’s life | 7 years | 5 years | 5 years | 7 years | 5 years | 7 years | 5 years | |||||||||||||||||||||
| Share price on the remeasurement date | 50,100 | 50,100 | 50,100 | 50,100 | 50,100 | 50,100 | 50,100 | |||||||||||||||||||||
| Expected volatility | 16.80 | % | 16.80 | % | 16.80 | % | 16.80 | % | 16.80 | % | 16.80 | % | 16.80 | % | ||||||||||||||
| Expected dividends yield | 6.60 | % | 6.60 | % | 6.60 | % | 6.60 | % | 6.60 | % | 6.60 | % | 6.60 | % | ||||||||||||||
| Exercise price | 57,562 | 53,052 | 50,862 | 38,452 | 50,276 | 56,860 | 56,860 | |||||||||||||||||||||
| Per-share fair value of the option | 63 | 310 | 1,157 | 11,648 | 3,400 | 2,466 | 1,974 | |||||||||||||||||||||
26. | Share-based payment Arrangement, Continued |
| 26.1 | 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 grant date and the inputs used in the model are as follows, Continued: |
| 1) | Share-based payment arrangement with cash alternatives, Continued |
(In won) | Series | |||||||||||||||||||
1-3 | 3 | 4 | 5 | 6 | ||||||||||||||||
| Risk-free interest rate | 2.07 | % | 1.91 | % | 1.78 | % | 1.52 | % | 1.55 | % | ||||||||||
| Estimated option’s life | 7 years | 5 years | 5 years | 7 years | 5 years | |||||||||||||||
| Share price (Closing price on the preceding day) | 52,500 | 51,800 | 50,600 | 34,900 | 49,800 | |||||||||||||||
| Expected volatility | 13.38 | % | 8.30 | % | 7.70 | % | 8.10 | % | 25.70 | % | ||||||||||
| Expected dividends yield | 3.80 | % | 3.80 | % | 3.90 | % | 5.70 | % | 4.00 | % | ||||||||||
| Exercise price | 57,562 | 53,052 | 50,862 | 38,452 | 50,276 | |||||||||||||||
| Per-share fair value of the option | 3,096 | 1,720 | 1,622 | 192 | 8,142 | |||||||||||||||
| 2) | Cash-settled share-based payment arrangement |
(In won) | Granted in 2021 | Granted in 2022 | ||||||||||
Share appreciation rights of SK Telecom Co., Ltd. | Share appreciation rights of SK Square Co., Ltd. | Share appreciation rights of SK Telecom Co., Ltd. | ||||||||||
| Risk-free interest rate | 3.52 | % | 3.52 | % | 3.37 | % | ||||||
| Estimated option’s life | 3.25 years | 3.25 years | 3.25 years | |||||||||
| Share price on the remeasurement date | 50,100 | 52,600 | 50,100 | |||||||||
| Expected volatility | 16.80 | % | 30.90 | % | 16.80 | % | ||||||
| Expected dividends yield | 6.60 | % | 0.00 | % | 6.60 | % | ||||||
| Exercise price | 50,276 | 50,276 | 56,860 | |||||||||
| Per-share fair value of the option | 1,387 | 4,706 | 949 | |||||||||
| 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 grant date | 48,500 | |||
| Expected volatility | 18.67 | % | ||
| Expected dividends yield | 4.90 | % | ||
| Per-share fair value of the option | 27,525 | |||
26. | Share-based payment Arrangement, Continued |
| 26.2 | 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) | 14,500 | 35,100 | 6,450 | |||
| Exercise price (in U.S. dollars) | 100.0 | |||||
| Exercise period(*) | Jan. 4, 2024 ~ Jan. 4, 2032 | Apr. 1, 2024 ~ Apr. 1, 2032 | Feb. 1, 2025 ~ Feb. 1, 2033 | |||
| Vesting conditions | 2 years’ service from the commencement date, 50% 3 years’ service from the commencement date, 25% 4 years’ service from the commencement date, 25% | |||||
| (*) | The exercise periods vary as vesting periods for each share-based payment arrangement are different. The exercise period was disclosed based on the vesting period with the highest number of grants. |
| (2) | Share compensation expense for share-based payment arrangements for the year ended December 31, 2023 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, 2022 | W | — | ||
| For the year ended December 31, 2023 | 2,555 | |||
| In subsequent periods | 1,312 | |||
| W | 3,867 | |||
| (3) | SAPEON Inc., a subsidiary of the Parent Company, used binomial option pricing model in the measurement of the fair value of the share options at grant date and the inputs used in the model are as follows: |
(In U.S. dollars) | ||||||||||||
1-1 | 1-2 | 2 | ||||||||||
| Risk-free interest rate | 4.18 | % | 4.16 | % | 4.67 | % | ||||||
| Estimated option’s life | 5.18 years | 5.42 years | 5.55 years | |||||||||
| Underlying share price | 107.8 | 107.8 | 118.1 | |||||||||
| Expected volatility | 43.50 | % | 43.00 | % | 43.00 | % | ||||||
| Expected dividends yield | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
| Exercise price | 100.0 | 100.0 | 100.0 | |||||||||
| Per-share fair value of the option | 50.7 | 51.4 | 61.4 | |||||||||
27. | Retained Earnings |
| (1) | Retained earnings as of December 31, |
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Appropriated: | ||||||||
| Legal reserve | W | 22,320 | 22,320 | |||||
| Reserve for business expansion | 9,831,138 | 9,631,138 | ||||||
| Reserve for technology development | 4,565,300 | 4,365,300 | ||||||
| 14,396,438 | 13,996,438 | |||||||
| Unappropriated | 8,381,223 | 8,444,953 | ||||||
| W | 22,799,981 | 22,463,711 | ||||||
(In millions of won) | December 31, 2021 | December 31, 2020 | ||||||
Appropriated: | ||||||||
Legal reserve | ￦ | 22,320 | 22,320 | |||||
Reserve for business expansion | 11,631,138 | 11,631,138 | ||||||
Reserve for technology development | 4,365,300 | 4,365,300 | ||||||
| 15,996,438 | 15,996,438 | |||||||
Unappropriated | 6,418,583 | 6,963,155 | ||||||
￦ | 22,437,341 | 22,981,913 | ||||||
| (2) | Legal reserve |
28. | Reserves |
| (1) | Details of reserves, net of taxes, as of December 31, |
(In millions of won) | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Valuation gain on FVOCI | W | 176,208 | 173,281 | |||||
| Other comprehensive income of investments in associates and joint ventures | 182,702 | 173,477 | ||||||
| Valuation gain (loss) on derivatives | (1,488 | ) | 14,463 | |||||
| Foreign currency translation differences for foreign operations | 29,794 | 30,012 | ||||||
| W | 387,216 | 391,233 | ||||||
(In millions of won) | December 31, 2021 | December 31, 2020 | ||||||
Valuation gain on FVOCI | ￦ | 633,240 | 438,979 | |||||
Other comprehensive gain (loss) of investments in associates and joint ventures | 53,770 | (392,333 | ) | |||||
Valuation gain on derivatives | 33,918 | 17,615 | ||||||
Foreign currency translation differences for foreign operations | 14,310 | (24,122 | ) | |||||
￦ | 735,238 | 40,139 | ||||||
28. | Reserves, Continued |
| (2) | Changes in reserves for the years ended December 31, |
(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, 2022 | W | 633,240 | 53,770 | 33,918 | 14,310 | 735,238 | ||||||||||||||
| Changes, net of taxes | (459,959 | ) | 119,707 | (19,455 | ) | 15,702 | (344,005 | ) | ||||||||||||
| Balance as of December 31, 2022 | W | 173,281 | 173,477 | 14,463 | 30,012 | 391,233 | ||||||||||||||
| Changes, net of taxes | 2,927 | 9,225 | (15,951 | ) | (218 | ) | (4,017 | ) | ||||||||||||
| Balance as of December 31, 2023 | W | 176,208 | 182,702 | (1,488 | ) | 29,794 | 387,216 | |||||||||||||
(In millions of won) | ||||||||||||||||||||
Valuation gain (loss) on financial assets at FVOCI | Other comprehensive income(loss) of investments in associates and joint ventures | Valuation gain (loss) on derivatives | Foreign currency translation differences for foreign operations | Total | ||||||||||||||||
Balance at January 1, 2020 | ￦ | (47,086 | ) | (278,142 | ) | (920 | ) | (3,428 | ) | (329,576 | ) | |||||||||
Changes, net of taxes | 486,065 | (114,191 | ) | 18,535 | (20,694 | ) | 369,715 | |||||||||||||
Balance at December 31, 2020 | ￦ | 438,979 | (392,333 | ) | 17,615 | (24,122 | ) | 40,139 | ||||||||||||
Changes, net of taxes | 194,261 | 446,103 | 16,303 | 38,432 | 695,099 | |||||||||||||||
Balance at December 31, 2021 | ￦ | 633,240 | 53,770 | 33,918 | 14,310 | 735,238 | ||||||||||||||
| (3) | Changes in valuation gain |
(In millions of won) | ||||||||
2023 | 2022 | |||||||
| Balance as of January 1 | W | 173,281 | 633,240 | |||||
| Amount recognized as other comprehensive income for the year, net of taxes | (18,883 | ) | (490,959 | ) | ||||
| Amount reclassified to retained earnings, net of taxes | 21,810 | 31,000 | ||||||
| Balance as of December 31 | W | 176,208 | 173,281 | |||||
(In millions of won) | ||||||||
2021 | 2020 | |||||||
Balance at January 1 | ￦ | 438,979 | (47,086 | ) | ||||
Amount recognized as other comprehensive income for the year, net of taxes | 627,833 | 486,440 | ||||||
Amount reclassified to retained earnings, net of taxes | (12,429 | ) | (375 | ) | ||||
Changes from spin-off, net of taxes | (421,143 | ) | 0 | |||||
Balance at December 31 | ￦ | 633,240 | 438,979 | |||||
| (4) | Changes in valuation gain (loss) on derivatives for the years ended December 31, |
(In millions of won) | ||||||||
2023 | 2022 | |||||||
| Balance as of January 1 | W | 14,463 | 33,918 | |||||
| Amount recognized as other comprehensive income for the year, net of taxes | (18,725 | ) | (25,630 | ) | ||||
| Amount reclassified to profit, net of taxes | 2,774 | 6,175 | ||||||
| Balance as of December 31 | W | (1,488 | ) | 14,463 | ||||
29. | Other Operating Income and Expenses |
(In millions of won) | ||||||||
2021 | 2020 | |||||||
Balance at January 1 | ￦ | 17,615 | (920 | ) | ||||
Amount recognized as other comprehensive income for the year, net of taxes | 9,731 | 15,414 | ||||||
Amount reclassified to profit, net of taxes | 6,572 | 3,121 | ||||||
Balance at December 31 | ￦ | 33,918 | 17,615 | |||||
(In millions of won) | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Other Operating Income: | ||||||||||||
| Gain on disposal of property and equipment and intangible assets | W | 21,898 | 15,985 | 39,136 | ||||||||
| Others(*) | 28,468 | 40,274 | 76,627 | |||||||||
| W | 50,366 | 56,259 | 115,763 | |||||||||
Other Operating Expenses: | ||||||||||||
| Communication | W | 32,238 | 31,881 | 32,462 | ||||||||
| Utilities | 511,240 | 401,025 | 350,678 | |||||||||
| Taxes and dues | 29,009 | 49,445 | 33,935 | |||||||||
| Repair | 431,964 | 435,572 | 425,606 | |||||||||
| Research and development | 369,507 | 340,864 | 347,711 | |||||||||
| Training | 39,286 | 39,632 | 31,761 | |||||||||
| Bad debt for accounts receivable – trade | 37,906 | 27,053 | 29,402 | |||||||||
| Travel | 22,499 | 15,684 | 7,813 | |||||||||
| Supplies and other | 130,330 | 113,839 | 101,656 | |||||||||
| Loss on disposal of property and equipment and intangible assets | 9,369 | 20,465 | 28,158 | |||||||||
| Impairment loss on property and equipment and intangible assets | 10,369 | 17,027 | 3,135 | |||||||||
| Donations | 14,766 | 13,125 | 12,800 | |||||||||
| Bad debt for accounts receivable – other | 5,256 | 3,011 | 3,995 | |||||||||
| Others(*) | 7,534 | 20,353 | 22,475 | |||||||||
| W | 1,651,273 | 1,528,976 | 1,431,587 | |||||||||
| (*) | See note 4 (2). |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Finance Income: | ||||||||||||
| Interest income | W | 70,055 | 58,472 | 36,708 | ||||||||
| Gain on sale of accounts receivable – other | — | 1,043 | 27,725 | |||||||||
| Dividends | 43,014 | 2,552 | 12,039 | |||||||||
| Gain on foreign currency transactions | 19,065 | 21,283 | 10,987 | |||||||||
| Gain on foreign currency translations | 1,199 | 2,095 | 7,505 | |||||||||
| Gain relating to financial instruments at FVTPL | 115,043 | 94,393 | 60,169 | |||||||||
| W | 248,376 | 179,838 | 155,133 | |||||||||
Finance Costs: | ||||||||||||
| Interest expense | W | 389,813 | 328,307 | 279,737 | ||||||||
| Loss on sale of accounts receivable – other | 65,027 | 61,841 | — | |||||||||
| Loss on foreign currency transactions | 21,693 | 19,485 | 12,270 | |||||||||
| Loss on foreign currency translations | 1,227 | 3,814 | 6,764 | |||||||||
| Loss relating to financial instruments at FVTPL | 49,641 | 41,597 | 16,833 | |||||||||
| Loss on disposal of investment assets | — | 1,283 | — | |||||||||
| W | 527,401 | 456,327 | 315,604 | |||||||||
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Other Operating Income: | ||||||||||||
Gain on disposal of property and equipment and intangible assets | ￦ | 39,136 | 34,625 | 7,755 | ||||||||
Others(*) | 76,627 | 61,126 | 87,828 | |||||||||
￦ | 115,763 | 95,751 | 95,583 | |||||||||
Other Operating Expenses: | ||||||||||||
Communication | ￦ | 32,462 | 34,462 | 32,986 | ||||||||
Utilities | 350,678 | 336,187 | 315,129 | |||||||||
Taxes and dues | 33,935 | 34,577 | 38,688 | |||||||||
Repair | 425,606 | 399,376 | 368,620 | |||||||||
Research and development | 347,711 | 353,198 | 324,052 | |||||||||
Training | 31,761 | 33,384 | 32,581 | |||||||||
Bad debt for accounts receivable — trade | 29,402 | 45,002 | 25,376 | |||||||||
Travel | 7,813 | 7,534 | 20,717 | |||||||||
Supplies and other | 101,656 | 105,333 | 104,943 | |||||||||
Loss on disposal of property and equipment and intangible assets | 28,158 | 25,633 | 23,821 | |||||||||
Impairment loss on property and equipment and intangible assets | 3,135 | 200,705 | 42,823 | |||||||||
Donations | 12,800 | 16,051 | 16,782 | |||||||||
Bad debt for accounts receivable — other | 3,995 | 6,640 | 3,594 | |||||||||
Others(*) | 22,475 | 60,280 | 60,176 | |||||||||
￦ | 1,431,587 | 1,658,362 | 1,410,288 | |||||||||
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Finance Income: | ||||||||||||
Interest income | ￦ | 36,708 | 37,030 | 48,605 | ||||||||
Gain on sale of accounts receivable — other | 27,725 | 22,605 | 15,855 | |||||||||
Dividends | 12,039 | 1,170 | 10,011 | |||||||||
Gain on foreign currency transactions | 10,987 | 9,029 | 8,836 | |||||||||
Gain on foreign currency translations | 7,505 | 7,888 | 4,064 | |||||||||
Gain relating to financial instruments at FVTPL | 60,169 | 62,963 | 34,321 | |||||||||
￦ | 155,133 | 140,685 | 121,692 | |||||||||
Finance Costs: | ||||||||||||
Interest expense | ￦ | 279,737 | 288,972 | 306,665 | ||||||||
Loss on sale of accounts receivable — other | 0 | 0 | 5,823 | |||||||||
Loss on foreign currency transactions | 12,270 | 11,053 | 10,038 | |||||||||
Loss on foreign currency translations | 6,764 | 8,973 | 4,242 | |||||||||
Loss on disposal of long-term investment securities | 0 | 98 | 0 | |||||||||
Loss relating to financial instruments at FVTPL | 16,833 | 13,847 | 8,144 | |||||||||
￦ | 315,604 | 322,943 | 334,912 | |||||||||
| (2) | Details of interest income included in finance income for the years ended December 31, |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021(*) | ||||||||||
| Interest income on cash equivalents and financial instruments | W | 44,921 | 27,991 | 16,141 | ||||||||
| Interest income on loans and others | 25,134 | 30,481 | 27,709 | |||||||||
| W | 70,055 | 58,472 | 43,850 | |||||||||
(In millions of won) | 2021 | 2020 | 2019 | |||||||||
| Interest income on cash equivalents and financial instruments(*) | ￦ | 16,141 | 24,378 | 29,854 | ||||||||
Interest income on loans and others(*) | 27,709 | 25,979 | 33,725 | |||||||||
￦ | 43,850 | 50,357 | 63,579 | |||||||||
| (*) | Includes amounts related to discontinued operations. |
| (3) | Details of interest expenses included in finance costs for the years ended December 31, |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021(*) | ||||||||||
| Interest expense on borrowings | W | 29,917 | 25,736 | 66,188 | ||||||||
| Interest expense on debentures | 247,105 | 217,475 | 224,144 | |||||||||
| Others | 112,791 | 85,096 | 52,010 | |||||||||
| W | 389,813 | 328,307 | 342,342 | |||||||||
(In millions of won) | 2021 | 2020 | 2019 | |||||||||
Interest expense on borrowings(*) | ￦ | 66,188 | 116,397 | 104,991 | ||||||||
Interest expense on debentures(*) | 224,144 | 225,309 | 224,765 | |||||||||
Others(*) | 52,010 | 57,470 | 76,331 | |||||||||
￦ | 342,342 | 399,176 | 406,087 | |||||||||
| (*) | Includes amounts related to discontinued operations. |
30. | Finance Income and Costs, Continued |
| (4) | Finance income and costs by category of financial instruments for the years ended December 31, |
(In millions of won) | ||||||||
2021 | ||||||||
Finance income(*) | Finance costs(*) | |||||||
Financial Assets: | ||||||||
Financial assets at FVTPL | ￦ | 149,590 | 67,503 | |||||
Financial assets at FVOCI | 3,413 | 142,015 | ||||||
Financial assets at amortized cost | 48,940 | 12,262 | ||||||
Derivatives designated as hedging instrument | 0 | 600 | ||||||
| 201,943 | 222,380 | |||||||
Financial Liabilities: | ||||||||
Financial liabilities at FVTPL | 0 | 8,036 | ||||||
Financial liabilities at amortized cost | 607 | 355,011 | ||||||
| 607 | 363,047 | |||||||
￦ | 202,550 | 585,427 | ||||||
| Finance income and costs |
(In millions of won) | ||||||||
2023 | ||||||||
Finance income | Finance costs | |||||||
Financial Assets: | ||||||||
| Financial assets at FVTPL | W | 127,001 | 114,668 | |||||
| Financial assets at FVOCI | 39,681 | — | ||||||
| Financial assets at amortized cost | 69,373 | 22,795 | ||||||
| Derivatives designated as hedging instrument | 2,480 | — | ||||||
| 238,535 | 137,463 | |||||||
Financial Liabilities: | ||||||||
| Financial liabilities at FVTPL | 6,717 | — | ||||||
| Financial liabilities at amortized cost | 3,124 | 389,938 | ||||||
| 9,841 | 389,938 | |||||||
| W | 248,376 | 527,401 | ||||||
(In millions of won) | ||||||||
2020 | ||||||||
Finance income(*1) | Finance costs(*1) | |||||||
Financial Assets: | ||||||||
Financial assets at FVTPL(*2) | ￦ | 180,254 | 10,894 | |||||
Financial assets at FVOCI | 993 | 44,832 | ||||||
Financial assets at amortized cost(*2) | 46,135 | 24,601 | ||||||
Derivatives designated as hedging instrument | — | 1,867 | ||||||
| 227,382 | 82,194 | |||||||
Financial Liabilities: | ||||||||
Financial liabilities at FVTPL | — | 12,115 | ||||||
Financial liabilities at amortized cost | 6,434 | 400,678 | ||||||
Derivatives designated as hedging instrument | 7,380 | 2,206 | ||||||
| 13,814 | 414,999 | |||||||
￦ | 241,196 | 497,193 | ||||||
(In millions of won) | ||||||||
2022 | ||||||||
Finance income | Finance costs | |||||||
Financial Assets: | ||||||||
| Financial assets at FVTPL | W | 104,068 | 103,292 | |||||
| Financial assets at FVOCI | 1,495 | 1,283 | ||||||
| Financial assets at amortized cost | 45,008 | 23,094 | ||||||
| Derivatives designated as hedging instrument | — | 146 | ||||||
| 150,571 | 127,815 | |||||||
Financial Liabilities: | ||||||||
| Financial liabilities at FVTPL | 18,432 | — | ||||||
| Financial liabilities at amortized cost | 10,835 | 328,512 | ||||||
| 29,267 | 328,512 | |||||||
| W | 179,838 | 456,327 | ||||||
(In millions of won) | ||||||||
2019 | ||||||||
Finance income(*1) | Finance costs(*1) | |||||||
Financial Assets: | ||||||||
| Financial assets at FVTPL(*2) | ￦ | 79,529 | 13,577 | |||||
Financial assets at FVOCI | 9,924 | — | ||||||
| Financial assets at amortized cost(*2) | 52,543 | 17,488 | ||||||
| 141,996 | 31,065 | |||||||
Financial Liabilities: | ||||||||
Financial liabilities at FVTPL | 56 | 43 | ||||||
Financial liabilities at amortized cost | 103 | 406,206 | ||||||
Derivatives designated as hedging instrument | — | 641 | ||||||
| 159 | 406,890 | |||||||
￦ | 142,155 | 437,955 | ||||||
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Financial Assets: | ||||||||||||
Financial assets at FVOCI | ￦ | 920,871 | 579,678 | (17,943 | ) | |||||||
Derivatives designated as hedging instrument | 15,427 | 24,320 | 41,305 | |||||||||
| 936,298 | 603,998 | 23,362 | ||||||||||
Financial Liabilities: | ||||||||||||
Derivatives designated as hedging instrument | 706 | (5,182 | ) | (624 | ) | |||||||
￦ | 937,004 | 598,816 | 22,738 | |||||||||
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
| Accounts receivable — trade(*) | ￦ | 31,546 | 48,625 | 28,841 | ||||||||
| Other receivables(*) | 6,001 | 10,559 | 5,802 | |||||||||
￦ | 37,547 | 59,184 | 34,643 | |||||||||
30. | Finance Income and Costs, Continued |
| (4) | Finance income and costs by category of financial instruments for the years ended December 31, 2023, 2022 and 2021 are as follows. Bad debt expense (reversal of loss allowance) for accounts receivable – trade, loans and receivables are presented and explained separately in notes 6 and 35., Continued |
| 1) | Finance income and costs, Continued |
(In millions of won) | ||||||||
2021 | ||||||||
Finance income(*) | Finance costs(*) | |||||||
Financial Assets: | ||||||||
| Financial assets at FVTPL | W | 149,590 | 67,503 | |||||
| Financial assets at FVOCI | 3,413 | 142,015 | ||||||
| Financial assets at amortized cost | 48,940 | 12,262 | ||||||
| Derivatives designated as hedging instrument | — | 600 | ||||||
| 201,943 | 222,380 | |||||||
Financial Liabilities: | ||||||||
| Financial liabilities at FVTPL | — | 8,036 | ||||||
| Financial liabilities at amortized cost | 607 | 355,011 | ||||||
| 607 | 363,047 | |||||||
| W | 202,550 | 585,427 | ||||||
| (*) | Includes amounts related to discontinued operations. |
| 2) | Other comprehensive income (loss), net of tax |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Financial Assets: | ||||||||||||
| Financial assets at FVOCI | W | (18,842 | ) | (491,853 | ) | 920,871 | ||||||
| Derivatives designated as hedging instrument | (11,520 | ) | (21,548 | ) | 15,427 | |||||||
| (30,362 | ) | (513,401 | ) | 936,298 | ||||||||
Financial Liabilities: | ||||||||||||
| Derivatives designated as hedging instrument | (5,940 | ) | 182 | 706 | ||||||||
| W | (36,302 | ) | (513,219 | ) | 937,004 | |||||||
30. | Finance Income and Costs, Continued |
| (5) | Details of impairment losses for financial assets for the years ended December 31, 2023, 2022 and 2021 are as follows: |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021(*) | ||||||||||
| Accounts receivable – trade | W | 37,906 | 27,053 | 31,546 | ||||||||
| Other receivables | 5,256 | 3,011 | 6,001 | |||||||||
| W | 43,162 | 30,064 | 37,547 | |||||||||
| (*) | Includes amounts related to discontinued operations. |
31. | Income Tax Expense |
| (1) | Income tax expenses for the years ended December 31, |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
Current tax expense: | ||||||||||||
| Current year | W | 273,936 | 274,902 | 319,539 | ||||||||
| Current tax of prior years(*) | (11,590 | ) | 73,477 | 705 | ||||||||
| 262,346 | 348,379 | 320,244 | ||||||||||
Deferred tax expense: | ||||||||||||
| Changes in net deferred tax assets | 79,896 | (60,058 | ) | 331,704 | ||||||||
Income tax expense | ||||||||||||
| Tax expense of continuing operation | 342,242 | 288,321 | 446,796 | |||||||||
| Tax expense of discontinued operation | — | — | 205,152 | |||||||||
| W | 342,242 | 288,321 | 651,948 | |||||||||
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Current tax expense: | ||||||||||||
Current year | ￦ | 319,539 | 286,717 | 105,859 | ||||||||
Current tax of prior years(*) | 705 | 14,536 | (6,855 | ) | ||||||||
| 320,244 | 301,253 | 99,004 | ||||||||||
Deferred tax expense: | ||||||||||||
Changes in net deferred tax assets | 331,704 | 75,249 | 201,264 | |||||||||
Income tax expense | ||||||||||||
Tax expense of continuing operation | 446,796 | 221,262 | 262,940 | |||||||||
Tax expense of discontinued operation | 205,152 | 155,240 | 37,328 | |||||||||
￦ | 651,948 | 376,502 | 300,268 | |||||||||
| (*) | Current tax of prior years are mainly composed of the income tax refund due to a change in the interpretation of the tax authority in relation to the income tax previously recognized by the Group. |
| (2) | The difference between income taxes computed using the statutory corporate income tax rates and the recorded income taxes for the years ended December 31, |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021(*) | ||||||||||
| Income taxes at statutory income tax rate | W | 382,517 | 329,580 | 834,146 | ||||||||
| Non-taxable income | (3,091 | ) | (14,969 | ) | (13,924 | ) | ||||||
| Non-deductible expenses | 15,725 | 24,679 | 15,329 | |||||||||
| Tax credit and tax reduction | (64,829 | ) | (10,300 | ) | (62,075 | ) | ||||||
| Changes in unrecognized deferred taxes | 14,354 | 21,057 | (68,589 | ) | ||||||||
| Changes in tax rate | 3,444 | (42,307 | ) | (36,193 | ) | |||||||
| Income tax refund and others | (5,878 | ) | (19,419 | ) | (16,746 | ) | ||||||
| Income tax expense | W | 342,242 | 288,321 | 651,948 | ||||||||
| (*) | The aggregated amount of profit before income tax from continuing and discontinued operations. |
31. | Income Tax Expense, Continued |
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Income taxes at statutory income tax rate | ￦ | 834,146 | 505,824 | 308,913 | ||||||||
Non-taxable income | (13,924 | ) | (41,084 | ) | (92,666 | ) | ||||||
Non-deductible expenses | 15,329 | 31,882 | 14,630 | |||||||||
Tax credit and tax reduction | (62,075 | ) | (48,774 | ) | (32,877 | ) | ||||||
Changes in unrecognized deferred taxes | (68,589 | ) | (69,776 | ) | 83,940 | |||||||
Changes in tax rate | (36,193 | ) | 24,537 | 4,050 | ||||||||
Income tax refund and others | (16,746 | ) | (26,107 | ) | 14,278 | |||||||
Income tax expense | ￦ | 651,948 | 376,502 | 300,268 | ||||||||
| (3) | Deferred taxes directly charged to (credited from) equity for the years ended December 31, |
(In millions of won) | ||||||||||||
2023 | 2022 | 2021 | ||||||||||
| Valuation gain (loss) on financial assets measured at fair value | W | 12,977 | 167,249 | (208,490 | ) | |||||||
| Share of other comprehensive gain (loss) of investment in associates and joint ventures | 292 | (2,972 | ) | (34 | ) | |||||||
| Valuation gain (loss) on derivatives | 5,631 | 7,649 | (5,709 | ) | ||||||||
| Remeasurement of defined benefit liabilities (assets) | (2,672 | ) | (20,867 | ) | (3,780 | ) | ||||||
| Gain (loss) on disposal of treasury shares and others | (53 | ) | (28,108 | ) | 26,970 | |||||||
| W | 16,175 | 122,951 | (191,043 | ) | ||||||||
(In millions of won) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Valuation gain (loss) on financial assets measured at fair value | ￦ | (208,490 | ) | (166,612 | ) | 2,983 | ||||||
Share of other comprehensive income (loss) of associates and joint ventures | (34 | ) | (14 | ) | 2,279 | |||||||
Valuation loss on derivatives | (5,709 | ) | (6,886 | ) | (16,083 | ) | ||||||
Remeasurement of defined benefit liabilities | (3,780 | ) | (164 | ) | 22,733 | |||||||
Gain on disposal of treasury shares and others | 26,970 | 0 | 0 | |||||||||
￦ | (191,043 | ) | (173,676 | ) | 11,912 | |||||||
| (4) | Details of the changes in deferred tax assets (liabilities) for the years ended December 31, |
(In millions of won) | ||||||||||||||||
2023 | ||||||||||||||||
Beginning | Deferred tax expense (income) | Directly charged to (credited from) equity | Ending | |||||||||||||
Deferred tax assets (liabilities) related to temporary differences: | ||||||||||||||||
| Loss allowance | W | 75,042 | 73 | — | 75,115 | |||||||||||
| Accrued interest income | (7,903 | ) | 1,064 | — | (6,839 | ) | ||||||||||
| Financial assets measured at fair value | (10,171 | ) | (5,332 | ) | 12,977 | (2,526 | ) | |||||||||
| Investments in subsidiaries, associates and joint ventures | 16,846 | 5,792 | 292 | 22,930 | ||||||||||||
| Property and equipment and intangible assets | (352,605 | ) | (66,808 | ) | — | (419,413 | ) | |||||||||
| Provisions | 1,629 | (310 | ) | — | 1,319 | |||||||||||
| Retirement benefit obligation | 30,619 | (15,517 | ) | (2,672 | ) | 12,430 | ||||||||||
| Valuation gain on derivatives | 12,768 | 1,271 | 5,631 | 19,670 | ||||||||||||
| Gain (loss) on foreign currency translation | 20,633 | 34 | — | 20,667 | ||||||||||||
| Incremental costs to acquire a contract | (722,900 | ) | 4,689 | — | (718,211 | ) | ||||||||||
| Contract assets and liabilities | 4,279 | 13,286 | — | 17,565 | ||||||||||||
| Right-of-use assets | (431,397 | ) | 41,534 | — | (389,863 | ) | ||||||||||
| Lease liabilities | 428,648 | (40,557 | ) | — | 388,091 | |||||||||||
| Others | 85,716 | (81,397 | ) | (53 | ) | 4,266 | ||||||||||
| (848,796 | ) | (142,178 | ) | 16,175 | (974,799 | ) | ||||||||||
Deferred tax assets related to unused tax loss carryforwards and tax credit carryforwards: | ||||||||||||||||
| Tax loss carryforwards | 2,007 | 5,143 | — | 7,150 | ||||||||||||
| Tax credit | 89,883 | 57,139 | — | 147,022 | ||||||||||||
| 91,890 | 62,282 | — | 154,172 | |||||||||||||
| W | (756,906 | ) | (79,896 | ) | 16,175 | (820,627 | ) | |||||||||
31. | Income Tax Expense, Continued |
| (4) | Details of the changes in deferred tax assets (liabilities) for the years ended December 31, 2023 and 2022 are as follows, Continued: |
(In millions of won) | (In millions of won) | (In millions of won) | ||||||||||||||||||||||||||||||||||||||||||
2021 | 2022 | |||||||||||||||||||||||||||||||||||||||||||
Beginning | Deferred tax expense (income) | Directly charged to (credited from) equity | Business combinations | Spin-off | Ending | Beginning | Deferred tax expense (income) | Directly charged to (credited from) equity | Business combinations | Ending | ||||||||||||||||||||||||||||||||||
Deferred tax assets (liabilities) related to temporary differences: | Deferred tax assets (liabilities) related to temporary differences: | |||||||||||||||||||||||||||||||||||||||||||
Loss allowance | ￦ | 91,285 | (8,397 | ) | 0 | 0 | (5,531 | ) | 77,357 | W | 77,357 | (2,315 | ) | — | — | 75,042 | ||||||||||||||||||||||||||||
Accrued interest income | (1,631 | ) | (2,022 | ) | 0 | 0 | 3,487 | (166 | ) | (166 | ) | (5,057 | ) | — | (2,680 | ) | (7,903 | ) | ||||||||||||||||||||||||||
Financial assets measured at fair value | (81,055 | ) | (6,765 | ) | (208,490 | ) | 0 | 138,482 | (157,828 | ) | (157,828 | ) | (19,592 | ) | 167,249 | — | (10,171 | ) | ||||||||||||||||||||||||||
Investments in subsidiaries, associates and joint ventures | (1,673,906 | ) | (281,035 | ) | (34 | ) | 0 | 1,923,158 | (31,817 | ) | (31,817 | ) | 51,635 | (2,972 | ) | — | 16,846 | |||||||||||||||||||||||||||
Property and equipment and intangible assets | (511,862 | ) | (42,456 | ) | 0 | (1,023 | ) | 249,374 | (305,967 | ) | (305,967 | ) | (46,895 | ) | — | 257 | (352,605 | ) | ||||||||||||||||||||||||||
Provisions | 6,294 | (1,436 | ) | 0 | 0 | (660 | ) | 4,198 | 4,198 | (2,569 | ) | — | — | 1,629 | ||||||||||||||||||||||||||||||
Retirement benefit obligation | 102,285 | (3,563 | ) | (3,780 | ) | 0 | (42,610 | ) | 52,332 | 52,332 | (875 | ) | (20,867 | ) | 29 | 30,619 | ||||||||||||||||||||||||||||
Valuation gain on derivatives | 14,767 | 210 | (5,709 | ) | 0 | (2,932 | ) | 6,336 | 6,336 | (1,217 | ) | 7,649 | — | 12,768 | ||||||||||||||||||||||||||||||
Gain or loss on foreign currency translation | 21,774 | (396 | ) | 0 | 0 | 0 | 21,378 | |||||||||||||||||||||||||||||||||||||
| Gain (loss) on foreign currency translation | 21,378 | (745 | ) | — | — | 20,633 | ||||||||||||||||||||||||||||||||||||||
Incremental costs to acquire a contract | (807,831 | ) | 53,492 | 0 | 0 | 4,468 | (749,871 | ) | (749,871 | ) | 26,971 | — | — | (722,900 | ) | |||||||||||||||||||||||||||||
Contract assets and liabilities | (2,606 | ) | 405 | 0 | 0 | 0 | (2,201 | ) | (2,201 | ) | 6,480 | — | — | 4,279 | ||||||||||||||||||||||||||||||
Right-of-use | (372,297 | ) | (35,851 | ) | 0 | 0 | 18,646 | (389,502 | ) | (389,502 | ) | (41,895 | ) | — | — | (431,397 | ) | |||||||||||||||||||||||||||
Lease liabilities | 362,476 | 38,600 | 0 | 0 | (19,539 | ) | 381,537 | 381,537 | 47,111 | — | — | 428,648 | ||||||||||||||||||||||||||||||||
Others | 120,514 | (95,537 | ) | 26,970 | (135 | ) | 16,669 | 68,481 | 68,481 | 41,691 | (28,108 | ) | 3,652 | 85,716 | ||||||||||||||||||||||||||||||
| (2,731,793 | ) | (384,751 | ) | (191,043 | ) | (1,158 | ) | 2,283,012 | (1,025,733 | ) | (1,025,733 | ) | 52,728 | 122,951 | 1,258 | (848,796 | ) | |||||||||||||||||||||||||||
Deferred tax assets related to unused tax loss carryforwards and tax credit carryforwards: | Deferred tax assets related to unused tax loss carryforwards and tax credit carryforwards: | |||||||||||||||||||||||||||||||||||||||||||
Tax loss carryforwards | 88,223 | 7,915 | 0 | 0 | (96,138 | ) | 0 | — | 2,007 | — | — | 2,007 | ||||||||||||||||||||||||||||||||
Tax credit | 39,583 | 45,132 | 0 | 0 | (155 | ) | 84,560 | 84,560 | 5,323 | — | — | 89,883 | ||||||||||||||||||||||||||||||||
| 127,806 | 53,047 | 0 | 0 | (96,293 | ) | 84,560 | 84,560 | 7,330 | — | — | 91,890 | |||||||||||||||||||||||||||||||||
￦ | (2,603,987 | ) | (331,704 | ) | (191,043 | ) | (1,158 | ) | 2,186,719 | (941,173 | ) | W | (941,173) | 60,058 | 122,951 | 1,258 | (756,906 | ) | ||||||||||||||||||||||||||
(In millions of won) | ||||||||||||||||||||
2020 | ||||||||||||||||||||
Beginning | Deferred tax expense (income) | Directly charged to (credited from) equity | Business combinations | Ending | ||||||||||||||||
Deferred tax assets (liabilities) related to temporary differences: | ||||||||||||||||||||
Loss allowance | ￦ | 88,913 | 1,326 | — | 1,046 | 91,285 | ||||||||||||||
Accrued interest income | (2,039 | ) | 435 | — | (27 | ) | (1,631 | ) | ||||||||||||
Financial assets measured at fair value | 98,101 | (17,586 | ) | (166,612 | ) | 5,042 | (81,055 | ) | ||||||||||||
Investments in subsidiaries, associates and joint ventures | (1,613,048 | ) | (60,844 | ) | (14 | ) | — | (1,673,906 | ) | |||||||||||
Property and equipment and intangible assets | (371,489 | ) | (47,468 | ) | — | (92,905 | ) | (511,862 | ) | |||||||||||
Provisions | 2,543 | 3,751 | — | — | 6,294 | |||||||||||||||
Retirement benefit obligation | 100,194 | 1,873 | (164 | ) | 382 | 102,285 | ||||||||||||||
Valuation gain on derivatives | 17,507 | 4,146 | (6,886 | ) | — | 14,767 | ||||||||||||||
Gain or loss on foreign currency translation | 22,005 | (231 | ) | — | — | 21,774 | ||||||||||||||
Incremental costs to acquire a contract | (829,055 | ) | 21,224 | — | — | (807,831 | ) | |||||||||||||
Contract assets and liabilities | (28,030 | ) | 25,424 | — | — | (2,606 | ) | |||||||||||||
Right-of-use | (390,936 | ) | 18,639 | — | — | (372,297 | ) | |||||||||||||
Lease liabilities | 385,394 | (22,918 | ) | — | — | 362,476 | ||||||||||||||
Others | 64,620 | (30,310 | ) | — | 86,204 | 120,514 | ||||||||||||||
| (2,455,320 | ) | (102,539 | ) | (173,676 | ) | (258 | ) | (2,731,793 | ) | |||||||||||
Deferred tax assets related to unused tax loss carryforwards and tax credit carryforwards: | ||||||||||||||||||||
Tax loss carryforwards | 91,136 | (2,913 | ) | — | — | 88,223 | ||||||||||||||
Tax credit | 9,380 | 30,203 | — | — | 39,583 | |||||||||||||||
| 100,516 | 27,290 | — | — | 127,806 | ||||||||||||||||
￦ | (2,354,804 | ) | (75,249 | ) | (173,676 | ) | (258 | ) | (2,603,987 | ) | ||||||||||
31. | Income Tax Expense, Continued |
| (5) | Details of temporary differences, unused tax loss carryforwards and unused tax credits carryforwards which are not recognized as deferred tax assets (liabilities), in the consolidated statements of financial position as of December 31, |
(In millions of won) | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
Loss allowance | ￦ | 85,998 | 102,085 | |||||
Investments in subsidiaries, associates and joint ventures | (176,520 | ) | 8,365 | |||||
Other temporary differences | 61,368 | 68,415 | ||||||
Unused tax loss carryforwards | 347,889 | 1,042,063 | ||||||
Unused tax credit carryforwards | 34 | 1,037 | ||||||
The amount of unused tax loss carryforwards which are not recognized as deferred tax assets as of December 31, 2023 are expiring within the following periods:
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
F-106 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-107
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the
Details of dividend declared in Parent Company for the years ended December 31,
Dividends yield ratios for the years ended December 31,
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
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 The Group’s financial assets consist of cash and cash equivalents, financial instruments, long-term investment securities, accounts receivable F-110 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The Group Monetary assets and liabilities denominated in foreign currencies as of December 31,
In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign As of December 31, 10 % would have increased (decreased) the Group’s
The interest rate risk of the Group arises from borrowings, debentures and long-term payables 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. F-111 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
As of December 31, If the interest rate increases (decreases) 1%p with all other variables held constant, profit before income tax and equity for the year ended December 31, 2023 would change by W 900 million in relation to the floating-rate borrowings As of December 31,
Non-derivative financial liabilities The Derivatives SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
(iii) Price fluctuations risk As of December 31, 2023, the Group holds equity instruments in an active trading market, exposing it to price fluctuation risk. Assuming all other variables remain constant, the impact on the Group’s profit before income tax and equity resulting from a 10% fluctuation in the per-share stock price of the equity securities for the year ended December 31, 2023 is as follows. (In millions of won)
The maximum credit exposure as of December 31,
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. To manage credit risk, the Group evaluates the credit worthiness of each customer or counterparty considering the party’s financial information, its own trading records and other factors. Based on such information, the Group establishes credit limits for each customer or counterparty. (i) Accounts receivable The Group establishes a loss allowance in respect of accounts receivable for the year ended December 31, F-113 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The credit risk arises from debt investments included in Most of the Group’s debt investments are considered to have a low risk of default and the borrower has a strong capacity to meet its contractual cash flow obligations in the near term. Thus, the Group measured the loss allowance for the debt investments at an amount equal to 12-month expected credit losses.Meanwhile, the Group monitors changes in credit risk at each reporting date. The Group recognized the loss allowance at an amount equal to lifetime expected credit losses when the credit risk on the debt investments is assumed to have increased significantly if it is more than 30 days past due. The Group’s maximum exposure to credit risk is equal to each financial asset’s carrying amount. The gross carrying amounts of each financial asset except for the accounts receivable
Changes in the loss allowance for the debt investments for the year ended December 31,
F-114
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The Group deposits W 12-month expected loss basis and reflects the short maturities of the exposures. The Group considered that its cash and cash equivalents have low credit risk based on the credit ratings of the counterparties assigned by external credit rating agencies.
The Group’s approach to managing liquidity is to ensure that it will always maintain sufficient cash and cash equivalents balances and have enough liquidity through various committed credit lines. The Group maintains enough liquidity within credit lines through active operating activities. Contractual maturities of financial liabilities as of December 31,
The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at different amounts. As of December 31,
F-115
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
The Group manages its capital to ensure that it will be able to continue as a The Group monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total liabilities divided by total equity from the consolidated financial statements. Debt-equity ratio as of December 31,
F-116 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
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 December 31,
F-117 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
Carrying amounts of financial instruments recognized of which offset agreements are applicable as of December 31,
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
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
The Parent Company considers registered directors
Compensation for the key management includes salaries, non-monetary salaries and F-119 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-120 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
F-122 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
F-123 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
SK Broadband Co., Ltd., a subsidiary of the Parent Company, has pledged its properties as collateral for leases on buildings in the amount of
As of December 31,
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
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. SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
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 W 330,032 million andW 5,733 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 depositingW 330,032 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. forW 31,563 million, and HanaCard Co., Ltd. is obligated to acquire the Parent Company’s common shares from July 27, 2022 to January 31, 2024, after depositingW 68,437 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.
F-126 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
F-128
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
F-130 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31, 2023, 2022 and 2021
Non-current assets held for sale as of December 31, 2023 and 2022 are as follows:
F-131 SK TELECOM CO., LTD. and Subsidiaries Notes to the Consolidated Financial Statements For the years ended December 31,
The details of profit or loss from discontinued operations for the
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