Edgar Filing: SK TELECOM CO LTD

(As of December 31, 2008)

Number of
Persons

Members

Number of
Persons

Chairman

Executive Directors

Independent Non-executive Directors

Shin Bae Kim

Sung Min Ha

Rak Yong Uhm, Jae Ho Cho

Form 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF APRIL 2009

SK Telecom Co., Ltd.

(Translation of registrant’s name into English)

11, Euljiro2-ga, Jung-gu
Seoul 100-999, Korea
(Address of principal executive offices)

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

Form 20-F þ Form 40-F o

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

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

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

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

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes o No þ

If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-

ANNUAL REPORT

(From January 1, 2008 to December 31, 2008)

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

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

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON A NON-CONSOLIDATED BASIS IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN KOREA, OR KOREAN GAAP, WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

Contents


I. Overview
II. Business
III. Financial Information
IV. Auditor’s Opinion
V. Management Structure
VI. Shares
VII. Employees
VIII. Transactions with Related Parties
IX. Other Relevant Matters

Attachment: Korean GAAP Consolidated Financial Statements


I.		OVERVIEW


1.		Corporate Purpose of SK Telecom Co., Ltd. (the “Company”)

Business Objectives

1. Information and communication business

2. Handset sales and lease business

3. New media business

4. Advertisement business

5. Communication sales business

6. Personal property and real property lease business

7. Research and technology development related to Clause 1 through 4

8. Overseas business and trading business related to Clause 1 through 4

9. Manufacturing and distribution business related to Clause 1 through 4

10. Tourism

11. Electronic financial business

12. Motion picture business(Production, Importation, Distribution, Screening)

13. Any business or undertaking incidental or conducive to the attainment of the objects above


2.		Company History


A.		Changes Since Incorporation

	(1)		Date of Incorporation

			— March 29, 1984 (date of shareholders’ meeting for the incorporation): Incorporated as Korea Mobile Communications Service Co., Ltd. (Authorized capital: Won 500 million / Paid-in capital: Won 250 million)

	(2)		Location of Headquarters

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

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

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

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

			— 11, Euljiro 2-ga, Jung-gu, Seoul (December 13, 2004)


B.		Mergers

	(1)		Target: Shinsegi Communication Co., Ltd.

			— Date: January 13, 2002

			— Registration: January 16, 2002

	(2)		Target: SK IMT Co., Ltd.

			— Date: May 1, 2003

			— Registration: May 7, 2003


C.		Significant Recent Business Events

	(1)		Issuance and offering of unguaranteed bonds

			In accordance with the resolution of the board of directors dated October 23, 2008, the Company issued on January 22, 2009, unguaranteed bonds with face amounts of Won 40 billion and Yen 3 billion, respectively. The Won-denominated bonds have an annual interest rate of 5.54% and will be repaid in full at their maturity on January 22, 2016. The Yen-denominated bonds have a floating

interest rate of 3-month Euro Yen libor +2.70% and will be repaid in full at maturity on January 22, 2012.

	(2)		Retirement of treasury stock

			In accordance with the resolution of the board of directors dated October 23, 2008, the Company acquired 448,000 shares (total acquisition cost: Won 92,475,473,000) of treasury stock on the open market from December 2, 2008 to January 7, 2009, and cancelled such treasury stock with its retained earnings on January 9, 2009. As the result of such retirement of treasury stock, the total number of outstanding shares decreased to 80,745,711.


3.		Information Regarding Shares


A.		Total number of shares


(As of December 31, 2008)		(Unit: shares)


	Share type
Classification	Common shares		—		Total		Remarks
I. Total number of issuable shares		220,000,000		—		220,000,000		—
II. Total number of shares issued to date		89,278,946		—		89,278,946		—
III. Total number of shares retired to date		8,085,235		—		8,085,235		—
1. Capital reduction		—		—		—		—
2. Share cancellation		8,085,235		—		8,085,235		—
3. Redeemed shares		—		—		—		—
4. Others		—		—		—		—
IV. Total number of shares (II-III)		81,193,711		—		81,193,711		—
V. Number of treasury shares		8,669,508		—		8,669,508		—
VI. Number of shares outstanding (IV-V)		72,524,203		—		72,524,203		—


*		On January 9, 2009, the Company used retained earnings to cancel 448,000 shares of its treasury stock. As the result of such retirement of treasury stock, the total number of outstanding shares decreased to 80,745,711.


B.		Capital Stock and Price per Share


(As of December 31, 2008)		(Unit: Won, shares)

Capital (total face value)

Price per share

Capital amount

Total amount

Capital/

in financial

Total number of

of distributed

Par value

Total number of

Number of distributed

statements

issued shares

shares

per share

issued shares

shares

Classification

Type

(a)

(IV. of A.×b)

(VI. of A.×b )

(b)

(a / IV. of A.)

(a / VI. of A.)

Registered

Common shares

44,639,473,000

40,596,855,500

36,262,101,500

500

549.8

615.5

Total

44,639,473,000

40,596,855,500

36,262,101,500

500

549.8

615.5


C.		Acquisition and Disposition of Treasury Shares


	(1)		Status of Acquisition and Disposition of Treasury Shares


(Unit: shares)
		Amount at the						Retirement		Amount at the end of
Acquisition method	Type of share	beginning of period		Acquisition (+)		Disposition (-)		(-)		period
Direct acquisition pursuant to Article 189-2 (1) of the relevant Act ⁽¹⁾	Common share		4,644,354		268,800		208,326		—		4,704,828
	Preferred share		—		—		—		—		—
Direct acquisition based on reasons other than those stipulated in Article 189-2 (1) of the relevant Act	Common share		77,970		—		—		—		77,970
	Preferred share		—		—		—		—		—
Sub-total	Common share		4,722,324		268,800		208,326		—		4,782,798	⁽²⁾
Sub-total	Preferred share		—		—		—		—		—
Indirect acquisition through trust and other agreements	Common share		3,886,710		—		—		—		3,886,710
Indirect acquisition through trust and other agreements	Preferred share		—		—		—		—		—
Total	Common share		8,609,034		268,800		208,326		—		8,669,508
Total	Preferred share		—		—		—		—		—


Notes:

(1)		The “relevant Act” in the above table is the Korean Securities and Exchange Act.

(2)		Of the 4,782,798 shares of treasury stock directly acquired based on reasons other than those provided in Article 189-2 (1) of the relevant Act, 1,324,744 shares were deposited with the Korea Securities Depository as of December 31, 2008 for any exchange of the Company’s overseas exchangeable bonds.


D.		Employee Stock Ownership Program


(1)		Transactions with the Employee Stock Ownership Program

The Company lent purchase funds for employee stock ownership to the Employee Stock Ownership Program, and the Employee Stock Ownership Program re-lent the amount to the Company’s employees in accordance with its internal allotment standards.


(Unit: in thousands of Won)
Classification	Loan Date	Amount		Repayment Condition	Remarks
5th	1999.08.23		118,577,755	8-year installment repayment plan following a three-year grace period		—
8th(1)	2007.12.26		31,017,043	5-year installment repayment plan following a two-year grace period		—
8th(2)	2008.1.23		29,676,039	5-year installment repayment plan following a two-year grace period		—

—

The loan is deducted from wages for each individual to repay the Employee Stock Ownership Program, and is subsequently repaid to the Company.

(As of December 31, 2008)


(Unit: in thousands of Won)
		Amount
		2008		Accumulated Repayment Amount
Classification	Initial Loan	Repayment Amount		(Including 2008 Repayment)		Balance
5th	118,577,754		1,931,212		116,706,722		1,871,032
8th(1)	31,017,043		1,653,764		1,653,764		59,039,318
8th(2)	29,676,039		1,653,764		1,653,764		59,039,318
Total	179,270,836		3,584,976		118,360,486		60,910,350


(2)		Voting Rights of the Employee Stock Ownership Program

During a designated period, to be 7 days or longer, each individual member of the Program may exercise his voting rights with respect to items set out in the shareholders’ meeting agenda through a written power of attorney to a designated proxy.


(3)		Shareholdings of the Employee Stock Ownership Program

(Unit: shares)

Account

Balance at the

Balance at the end

Classification

classification

Types of share

beginning of period

of period

5th

Member Account

Common share

139,338

114,168

8th(1)

171,871

369,887

8th(2)

208,326

Total

519,535

484,055


*		As the relevant law requires an immediate transfer of the shares directly purchased by the employees to the account of the individual purchasers, the Company transfers and holds the employees’ stocks in separate individual accounts within the program once the number of shares for each individual member is determined.


4.		Status of Voting Rights


(As of December 31, 2008)		(Unit: shares)
Classification		Number of shares		Remarks
Total outstanding shares (A)	Common share		81,193,711	—
Total outstanding shares (A)	Preferred share		—	—
Number of shares without voting right (B)	Common share		8,669,508	Treasury shares
Number of shares without voting right (B)	Preferred share		—	Treasury shares
Shares with restricted voting right under the Korean Securities and Exchange Act and other laws (C)	—		—	—
Shares with reestablished voting right (D)	—		—	—
The number of shares with exercisable voting right (E = A - B - C + D)	Common share		72,524,203	—
	Preferred share		—	—


5.		Dividends and Others


(Unit: in millions of Won except per share data)
Classification		2008		2007		2006
Par value per share			500		500		500
Current net income			1,277,658		1,642,451		1,446,598
Net income per share			17,559		22,607		19,734
Income available for distribution as dividend			1,205,981		1,570,827		1,574,716
Total cash dividend			681,996		682,379		582,386
Total stock dividend			—		—		—
Percentage of cash dividend to available income (%)			53.4		41.5		40.3
Cash dividend yield ratio (%)	Common share		4.5		3.8		3.6
Cash dividend yield ratio (%)	Preferred share		—		—		—
Stock dividend yield ratio (%)	Common share		—		—		—
Stock dividend yield ratio (%)	Preferred share		—		—		—
Cash dividend per share	Common share		9,400		9,400		8,000
Cash dividend per share	Preferred share		—		—		—
Stock dividend per share	Common share		—		—		—
Stock dividend per share	Preferred share		—		—		—


II.		BUSINESS

1.		Business Summary

A.		Industry Status

(1)		Characteristics of the Industry

As of December 31, 2008, the number of domestic mobile phone subscribers reached 45.6 million and with a 93.8% penetration rate, and the Korean mobile communication market can be considered to have reached its maturation stage. However, considering the number of European countries with penetration rates exceeding 90%, additional future growth of the domestic market may be possible.

The Korean mobile communications market continues to improve with the help of advances in network-related technology evidenced by the world’s first commercialization of CDMA2000 1x, CDMA 1x EV-DO, and the development of highly advanced handsets that enables the provision of convergence services for multimedia contents, mobile commerce, telematics, satellite DMB, digital home services and other related contents.


(2)		Industry Growth


		(Unit: 1,000 persons)
		As of December 31,
Classification		2008		2007		2006		2005		2004
Penetration rate (%)			93.8		89.8		83.2		79.4		75.9
Number of subscribers	SK Telecom		23,032		21,968		20,271		19,530		18,783
	Others (KTF, LGT)		22,575		21,529		19,926		18,812		17,803
	Total		45,607		43,497		40,197		38,342		36,586


(Source: Korea Communications Commission website)


(3)		Market Characteristics

The Korean mobile communication market includes the entire population of Korea with mobile communication service needs, and almost every Korean is considered a potential user. Although demand has primarily been in the domestic market, as the business territory expands to overseas market, the size of overseas sales is expected to grow in the near future. Seasonal and economic fluctuations have much less impact on the Korean mobile communication market compared to other industries.


B.		Company Status

(1)

Market Share

* Historical market share of the Company

(Unit: %)

As of December 31,

Classification

2008

2007

2006

Mobile communication services

50.5

50.4

* Comparative market share

(As of December 31, 2008)

(Unit: %)

Classification

SK Telecom

KTF

LG Telecom

Market share

50.5

31.5

18.0


(Source: Korea Communications Commission website)


(2)		New Business Contents and Prospects

N/A

Major Products

Status of Major Products


(Unit: in millions of Won, %)
Business field	Sales type	Item	Major trademarks	Sales amount (ratio)
Information and communication	Services	Mobile communication	June, NATE and others		11,492,832 (98.4	%)

		Others	Others		181,830 (1.6	%)


B.		Price Trend of Major Products


(Unit: Won)
Item		2008		2007		2006
Mobile phone (Based on standard call charge)	Basic fee (per month)		13,000		13,000		13,000
Mobile phone (Based on standard call charge)	Service fee (per 10 seconds)		20		20		20


3.		Investment Status

Investments in Progress

(Unit: in 100 millions of Won)

Business field

Classification

Investment
period

Subject of
investment

Investment
effect

Total
investments

Amount
already
invested

Future
investment

Network/Common

Upgrade/
New installation

2008

Network, systems and others

Capacity increase and quality improvement; systems improvement

19,700

19,186

—


*		“Amount already invested” is the cumulative amount expended in 2008


B.		Future Investment Plan

(Unit: in 100 millions of Won)

Expected investment amount

Expected investment for each year

Business field

Asset type

Amount

2009

2010

Investment effect

Network/Common

Network, systems and others

To be determined

Upgrades to the existing services and provision of new services

Total

—


4.		Revenues


			(Unit: in millions of Won)
Business field	Sales type	Item		2008		2007		2006
Information and communication	Services	Mobile communication	Export		—		—		—
			Domestic		11,492,832		11,083,821		10,497,773
			Subtotal		11,492,832		11,083,821		10,497,773

	—	Others	Export		5,855		4,101		31,105
			Domestic		175,975		197,979		122,164
			Subtotal		181,830		202,080		153,269

Total			Export		5,855		4,101		31,105
			Domestic		11,668,807		11,281,800		10,619,937
			Total		11,674,662		11,285,901		10,651,042


5.		Derivatives and Others

Derivatives Contracts

In order to hedge risks related to fluctuations in currency exchange rates or interest rates, the Company enters into currency exchange swap contracts and interest rate swap contracts. The income or loss generated from the derivatives contracts are recognized as the gains/losses for the current period or other comprehensive income/loss, in accordance with Korean GAAP. Fair value of our derivatives is calculated using our transaction bank’s valuations.


(1)		FX Swap

	a)		Purpose of Contracts: Currency Exchange or Interest Rate Risk Hedging

	b)		Contract Terms

	—		Currency swap contract applying cash flow hedge accounting

The Company has entered into a fixed-to-fixed cross currency swap contracts with three banks including Citibank in order to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling US$ 300,000,000 issued on April 1, 2004. As of December 31, 2008, in connection with unsettled foreign currency swap contracts to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won 9,627 million (excluding

		tax effect totaling Won 3,256 million and foreign exchange translation gain arising from unguaranteed U.S. dollar denominated bonds totaling Won 32,460 million) was accounted for as accumulated other comprehensive loss.

		The Company has entered into a floating-to-fixed cross currency swap contract with Calyon to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated long-term borrowings with face amounts totaling US$ 100,000,000 borrowed on October 10, 2006. As of December 31, 2008, in connection with unsettled cross currency interest rate swap contracts to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won 3,515 million (excluding tax effect totaling Won549 million and foreign exchange translation loss arising from U.S. dollar denominated long-term borrowings totaling Won30,950 million) was accounted for as accumulated other comprehensive loss.

		In addition, the Company has entered into a floating-to-fixed cross currency swap contract with two banks including HSBC in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen dominated bonds with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of December 31, 2008, in connection with unsettled cross currency interest rate swap contracts to which the cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to Won 1,044 million (net of tax effect totaling Won1,232 million and foreign exchange translation loss arising from unguaranteed Japanese yen dominated bonds totaling Won70,168 million) was accounted for as accumulated other comprehensive income.

		In addition, the Company has entered into a floating-to-fixed cross currency swap contract with two banks including DBS in order to hedge the foreign currency risk and interest rate risk of U.S. dollar denominated bonds with face amounts totaling US$ 150,000,000 issued on November 20, 2008. As of December 31, 2008, in connection with unsettled cross currency interest rate swap contracts to which the cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to Won 3,565 million (net of tax effect totaling Won1,006 million and foreign exchange translation gain arising from U.S. dollar denominated bonds totaling Won 28,518 million) was accounted for as accumulated other comprehensive income.

—

Currency swap contract to which the fair value hedge accounting is applied

The Company has entered into a fixed-to-fixed cross currency swap contract with 10 banks including Hana Bank in order to hedge the foreign exchange risk of U.S. dollar denominated equity securities of China Unicom. In connection with unsettled foreign currency swap contracts to which the fair value accounting is applied, a loss on valuation of currency swap of Won190,359 million and Won12,646 million for the years ended December 31, 2008 and 2007 was charged to current operations.

	—		Currency swap contract to which the hedge accounting is not applied

	The Company has entered into a fixed-to-fixed cross currency swap contract with Credit Suisse First Boston International in order to hedge the foreign currency risk of unguaranteed U.S. dollar dominated convertible bonds with face amounts of US$ 100,000,000 issued on May 27, 2004. In connection with unsettled cross currency swap contracts to which no hedge accounting is applied, a gain on valuation of currency swap of Won 31,361 million and a loss on valuation of currency swap of Won623 million for the year ended December 31, 2008 and 2007 were charged to current operations.

	In addition, the Company has entered into fixed-to-fixed cross currency swap contract with three banks including Morgan Stanley to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling US$400,000,000 issued on July 20, 2007. In connection with unsettled foreign currency swap contracts to which the hedge accounting is not applied, a gain on valuation of currency swap of Won233,056 million and Won7,316 million for the years ended December 31, 2008 and 2007, respectively, were charged to current operations.


(2)		Interest Rate Swap

	a)		Purpose of Contracts: Interest Rate Risk Hedging

	b)		Contract Terms

—

Interest rate swap contract to which the cash flow hedge accounting is applied

		The Company has entered into a floating-to-fixed interest rate swap contract with Shinhan Bank to hedge the interest rate risk of floating rate discounted bill with fact amounts totaling Won200,000 million borrowed on June 29, 2006. As of December 31, 2008, in connection with unsettled interest rate swap contracts to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won3,686 million (net of tax effect totaling Won1,040 million) was accounted for as accumulated other comprehensive loss.

		In addition, the Company has entered into a floating-to-fixed interest rate swap contract with three banks including Nonghyup Bank in order to hedge the interest rate risk of long-term floating rate borrowings with face amounts of Won 500,000 million borrowed between July 28, 2008 and August 13, 2008. As of December 31, 2008, in connection with unsettled interest rate swap contracts to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won 22,443 million (net of tax effect totaling Won 6,330 million) was accounted for as accumulated other comprehensive loss.


6.		R&D Investments


(Unit: in thousands of Won)
Category		2008			2007			2006			Remarks
Raw material			89,176			96,217			184,969			—
Labor			38,062,791			39,388,760			33,986,701			—
Depreciation			138,511,764			129,208,262			134,461,257			—
Commissioned service			85,836,738			90,363,645			83,751,223			—
Others			34,539,984			37,609,969			35,680,197			—
Total R&D costs			297,040,453			296,666,853			288,064,347			—
Accounting	Sales and administrative expenses		293,443,380			288,519,863			277,807,352			—
Accounting	Development expenses (Intangible assets)		3,597,072			8,146,990			10,256,995			—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)			2.54	%		2.63	%		2.70	%		—


7.		Other Matters

Summary of External Financing

* Domestic financing


(Unit: in millions of Won)
	Beginning		New		Reduction from		Ending
Source of financing	balance		financing		repayment		balance		Remarks
Bank		200,000		500,000		—		700,000		—
Insurance company		—		—		—		—		—
Merchant banking		—		—		—		—		—
Loan specialty financial company		—		—		—		—		—
Mutual savings bank		—		—		—		—		—
Other financial institutions		—		—		—		—		—
Total financing from financial institutions		200,000		500,000		—		700,000		—
Corporate bond (public offering)		1,704,166		770,070		300,000		2,174,236	Issuance of CB and exchange rate adjustment
Corporate bond (private		—		—		—		—		—


(Unit: in millions of Won)
	Beginning		New		Reduction from		Ending
Source of financing	balance		financing		repayment		balance		Remarks
placement)
Paid-in capital increase (public offering)		—		—		—		—		—
Paid-in capital increase (private placement)		—		—		—		—		—
Asset —backed securitization (public offering)		—		—		—		—		—
Asset —backed securitization (private placement)		—		—		—		—		—
Others		—		1,150,000		995,300		154,700	Issuance of CP
Total financing from capital market		1,704,166		1,920,070		1,295,300		2,328,936		—
Borrowings from shareholder, officer and affiliated company		—		—		—		—		—
Others		—		—		—		—		—
Total		1,904,166		2,420,070		1,295,300		3,028,936		—

* Overseas financing


(Unit: in millions of Won)
					Reduction in
	Beginning		New		repayment and		Ending
Financing source	balance		financing		others		balance		Remarks
Financial institutions		93,820		31,930		—		125,750	Exchange rate adjustment
Overseas securities (Corporate bonds)		656,740		412,135		—		1,068,875	Issuance of Floating Rate Note and exchange rate adjustment
Overseas securities (shares and others)		268,415		—		—		268,415		—
Asset —backed securitization		—		—		—		—		—


(Unit: in millions of Won)
					Reduction in
	Beginning		New		repayment and		Ending
Financing source	balance		financing		others		balance		Remarks
Others		—		—		—		—		—
Total		1,018,975		444,065		—		1,463,040		—


B.		Credit Ratings

(1)

Corporate Bonds


	Subject of		Credit rating entity
Credit rating date	valuation	Credit rating	(Credit rating range)	Evaluation classification
June 13, 2006	Corporate bond	AAA	Korea Information Services, Inc.	Regular valuation
June 21, 2006	Corporate bond	AAA	Korea Ratings	Regular valuation
June 22, 2006	Corporate bond	AAA	Korea Investors Service, Inc.	Regular valuation
September 1, 2006	Corporate bond	AAA	Korea Information Services, Inc.	Current valuation
September 1, 2006	Corporate bond	AAA	Korea Ratings	Current valuation
September 1, 2006	Corporate bond	AAA	Korea Investors Service, Inc.	Current valuation
October 27, 2006	Corporate bond	AAA	Korea Information Services, Inc.	Current valuation
October 27, 2006	Corporate bond	AAA	Korea Ratings	Current valuation
May 29, 2007	Corporate bond	AAA	Korea Ratings	Regular valuation
June 14, 2007	Corporate bond	AAA	Korea Information Services, Inc.	Regular valuation
June 27, 2007	Corporate bond	AAA	Korea Investors Service, Inc.	Regular valuation
November 5, 2007	Corporate bond	AAA	Korea Ratings	Current valuation
November 5, 2007	Corporate bond	AAA	Korea Information Services, Inc.	Current valuation
November 5, 2007	Corporate bond	AAA	Korea Investors Service, Inc.	Current valuation
February 20, 2008	Corporate bond	AAA	Korea Ratings	Current valuation
February 21, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Current valuation
February 21, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Current valuation
June 3, 2008	Corporate bond	AAA	Korea Ratings	Regular valuation
June 17, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Regular valuation
June 30, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Regular valuation
October 20, 2008	Corporate bond	AAA	Korea Ratings	Current valuation
October 20, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Current valuation
October 20, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Current valuation


*		Rating definition: “AAA” — The certainty of principal and interest payment is at the highest level with extremely low investment risk, and is stable in that there is no influence of any environmental change under reasonable expectation conditions.


(2)		Commercial Paper (“CP”)


	Subject of		Credit rating entity	Evaluation
Credit rating date	valuation	Credit rating	(Credit rating range)	classification
January 3, 2006	CP	A1	Korea Information Services, Inc.	Regular valuation
January 4, 2006	CP	A1	Korea Ratings	Regular valuation
June 13, 2006	CP	A1	Korea Information Services, Inc.	Current valuation
June 21, 2006	CP	A1	Korea Ratings	Current valuation
June 22, 2006	CP	A1	Korea Investors Service, Inc.	Current valuation
September 1, 2006	CP	A1	Korea Ratings	Regular valuation
December 27, 2006	CP	A1	Korea Information Services, Inc.	Regular valuation
December 27, 2006	CP	A1	Korea Investors Service, Inc.	Regular valuation
May 29, 2007	CP	A1	Korea Ratings	Current valuation
June 14, 2007	CP	A1	Korea Information Services, Inc.	Current valuation
June 27, 2007	CP	A1	Korea Investors Service, Inc.	Current valuation
November 5, 2007	CP	A1	Korea Ratings	Regular valuation
November 5, 2007	CP	A1	Korea Information Services, Inc.	Regular valuation
November 5, 2007	CP	A1	Korea Investors Service, Inc.	Regular valuation
June 3, 2008	CP	A1	Korea Ratings	Current valuation
June 16, 2008	CP	A1	Korea Information Services, Inc.	Current valuation
June 17, 2008	CP	A1	Korea Investors Service, Inc.	Current valuation


*		Rating definition: “A1” — Timely repayment capability is at the highest level with extremely low investment risk, and is stable in that there is no influence of any environmental change under reasonable expectation conditions.


(3)		International Credit Ratings


		Credit rating	Credit rating company
Date of credit rating	Subject of valuation	of securities	(Credit rating range)	Evaluation type
July 9, 2007	Global Bonds	A	Fitch (England)	Current valuation
July 9, 2007	Global Bonds	A2	Moody’s (U.S.A.)	Current valuation
July 9, 2007	Global Bonds	A	S&P (U.S.A.)	Current valuation


III.		FINANCIAL INFORMATION

Summary Financial Statements (Consolidated)


	(Unit: in millions of Won)
	As of or for the year ended December 31,
Classification	2008		2007		2006		2005		2004
Current assets		5,422,447		4,813,072		4,663,962		4,598,580		4,390,692
• Quick assets		5,387,473		4,766,020		4,644,184		4,590,796		4,338,371
• Inventory		34,974		47,052		19,778		7,784		52,321
Non-current assets		17,051,224		14,235,863		11,576,006		10,106,193		9,892,665
• Investments		4,025,429		5,446,711		3,236,783		1,989,934		1,665,841
• Property and Equipment		7,437,689		4,969,353		4,507,335		4,663,369		4,703,922
• Intangible assets		3,978,145		3,433,962		3,518,411		3,452,889		3,522,903
• Other non-current assets		1,609,961		385,836		313,477		—		—
Total assets		22,473,671		19,048,935		16,239,968		14,704,772		14,283,358
Current liabilities		4,628,821		3,016,874		3,208,416		2,863,373		3,066,893
Non-current liabilities		6,020,410		4,344,428		3,548,464		3,513,860		4,010,721
Total liabilities		10,649,231		7,361,302		6,756,880		6,377,233		7,077,614
Capital Stock		44,639		44,639		44,639		44,639		44,639
Capital surplus		2,958,854		2,956,106		2,950,327		2,954,840		2,968,301
Capital adjustment		(-)2,159,389		(-)2,072,723		(-)2,019,567		(-)2,048,515		(-)2,058,292
Accumulated other comprehensive income		356,192		1,591,258		490,010		—		—
Retained earnings		9,448,185		8,914,970		7,847,434		7,267,649		6,152,898
Minority interest		1,175,959		11,687,633		170,245		—		—
Total stockholders’ equity		11,824,440		19,048,935		9,483,088		8,327,540		7,205,743
Operating revenue		14,020,984		11,863,357		11,027,977		10,721,820		10,570,615
Operating income		1,752,468		2,101,955		2,621,132		2,670,616		2,439,749
Income from continuing operation before income tax		1,258,738		2,285,765		2,021,578		2,561,567		2,123,176
Net income		972,338		1,562,265		1,449,552		1,868,307		1,493,414
Net income attributable to majority interests		1,215,719		1,648,876		1,451,491		1,872,978		1,491,479
Number of Consolidated Companies		35		26		18		17		11


*		See the attached Korean GAAP Consolidated Financial Statements.

Summary Financial Statements (Non-consolidated)


	(Unit: in millions of Won)
	As of and for the year ended December 31,
Classification	2008		2007		2006		2005		2004
Current assets		3,990,503		4,094,059		4,189,325		4,172,485		3,854,345
• Quick assets		3,976,576		4,075,378		4,172,887		4,166,500		3,843,384
• Inventory		13,927		18,681		16,438		5,985		10,961
Non-current assets		14,626,992		14,038,451		11,624,728		10,349,191		10,166,360
• Investments		5,668,127		5,940,045		3,547,942		2,366,760		2,112,488
• Property and Equipment		4,698,214		4,594,413		4,418,112		4,595,884		4,605,253
• Intangible assets		2,941,592		3,174,942		3,405,158		3,386,547		3,448,619
• Other non-current assets		1,319,059		329,051		253,516		—		—
Total assets		18,617,495		18,132,510		15,814,053		14,521,676		14,020,705
Current liabilities		3,412,490		2,484,548		2,985,620		2,747,268		2,859,711
Non-current liabilities		4,475,998		4,221,016		3,522,006		3,516,528		4,033,902
Total liabilities		7,888,488		6,705,564		6,507,626		6,263,796		6,893,613
Capital Stock		44,639		44,639		44,639		44,639		44,639
Capital surplus		2,957,095		2,954,829		2,962,699		2,966,198		2,983,166
Capital adjustment		(-)2,147,530		(-)2,072,486		(-)2,019,568		(-)2,022,817		(-)2,057,422
Accumulated other comprehensive income		373,784		1,594,099		473,904		—		—
Retained earnings		9,501,018		8,905,865		7,844,753		7,269,861		6,156,708
Minority interest		10,729,007		11,426,946		9,306,427		8,257,881		7,127,091
Total stockholders’ equity		11,674,662		11,285,900		10,650,952		10,161,129		9,703,681
Operating revenue		2,059,896		2,171,543		2,584,370		2,653,570		2,359,581
Operating income		1,506,076		2,316,112		2,021,643		2,554,613		2,115,778
Income from continuing operation before income tax		1,277,658		1,642,451		1,446,598		1,871,380		1,494,852


IV.		AUDITOR’S OPINION


1.		Auditor


Year ended December 31,
2008	2007	2006
Deloitte Anjin LLC	Deloitte Anjin LLC	Deloitte Anjin LLC


2.		Audit Opinion


Term	Auditor’s opinion	Issues noted
Year ended December 31, 2008	Appropriate	—
Year ended December 31, 2007	Appropriate	—
Year ended December 31, 2006	Appropriate	—


3.		Remuneration for Independent non-executive Auditors for the Past Three Fiscal Years


A.		Audit Contracts


(Unit: in thousands of Won)
Term	Auditors	Contents	Fee	Total hours
Year ended December 31, 2008	Deloitte Anjin LLC	Semi-annual review	1,310,097	13,346
		Quarterly review
		Non-consolidated financial statements audit
		Consolidated financial statements audit
Year ended December 31, 2007	Deloitte Anjin LLC	Semi-annual review	1,066,318	11,468
		Quarterly review
		Non-consolidated financial statements audit
		Consolidated financial statements audit
Year ended December 31, 2006	Deloitte Anjin LLC	Semi-annual review	656,000	7,637
		Quarterly review
		Non-consolidated financial statements audit
		Consolidated financial statements audit


B.		Non-Audit Services Contract with External Auditors


(Unit: in thousands of Won)
			Service
Term	Contract date	Service provided	duration	Fee
Year ended December 31, 2008	November 20, 2007	Set up services for agency tax manual	60 days	48,000
	March 3, 2008	Tax adjustment for fiscal year 2007	10 days	33,000
	May 15, 2008	Tax consulting	5 days	7,500
	June 24, 2008	Foreign tax consulting re indirect taxes	4 days	6,000
	August 13, 2008	Tax consulting	10 days	9,400
	November 1, 2008	Tax consulting	4 days	5,000
	November 19, 2008	Tax consulting	10 days	10,800
	November 19, 2008	Review of deferred corporate income tax for 1Q and 2Q	10 days	18,000
	December 24, 2008	Review of deferred corporate income tax for 3Q	3 days	6,000
	December 24, 2008	Tax consulting	3 days	3,600
	December 24, 2008	Tax consulting	3 days	3,000
Year ended December 31, 2007	March 20, 2007	Tax adjustment for fiscal year 2006	10 days	30,000
	September 28, 2007	Tax consulting for denial of deductions for corporate income tax	1 day	2,000
	September 28, 2007	Review of deferred corporate income tax for 1Q and 2Q	6 days	10,000
	September 28, 2007	Tax consulting	5 days	9,000
	December 31, 2007	Review of deferred corporate income tax for 3Q	2 days	5,000
	December 31, 2007	Tax consulting	3 days	3,000
Year ended December 31, 2006	January 1, 2006	Tax consulting service for fiscal year 2006	25 days	20,000
	February 7, 2006	Tax training for employees of authorized exclusive dealers	50 days	45,000
	March 13, 2006	Tax adjustment for fiscal year 2005	29 days	27,000
	April 30, 2006	Tax consulting	7 days	45,000
	July 26, 2006	Financial consulting	7 days	40,000
	October 13, 2006	Evaluation of and preparation of recommendations for improvement of subsidiaries’ financial system infrastructure	10 days	49,500
	November 13, 2006	Preparation of responses to the U.S. SEC’s comments on the Company’s Form 20-F for 2005	10 days	25,500


V.		MANAGEMENT STRUCTURE


1.		Summary of Management Structure


A.		Board of Directors


(1)		Authority of the Board of Directors

Authority of the board of directors under Article 7 of the Regulations of the Board of Directors

	—		Convocation of shareholders’ meeting and submission of agenda

	—		Prior approval of financial statements

	—		Decisions on issuance of new shares

	—		Long-term borrowings, issuance of corporate bonds and redemptions

	—		Capital transfer of reserves

	—		Appointment of the representative director and decisions on co-representatives

	—		Establishment, transfer or closure of branches

	—		Enactment of and revision to the Regulations for the Board of Directors

	—		Annual business plan and budgeting

	—		Approval of investments of Won 50 billion or greater or investments that become Won 50 billion or greater as a result of budget increases

	—		Investments with planned budget increases of Won 50 billion or greater

	—		Investments and joint ventures of Won 50 billion or greater (For new investments and new joint ventures, Won 30 billion or above)

	—		Establishment of subsidiaries

	—		Guarantees of Won 50 billion or greater

	—		Transactions undertaken with related parties equal to or above the lesser of an amount equivalent to 10% of capital or Won 10 billion, and any material changes to such transactions in accordance with the Korean Anti-trust and Fair Trade Act

	—		In relation to transactions undertaken with related parties, approval of material changes to disclosed matters pursuant to the Korean Anti-trust and Fair Trade Act

	—		Investment by the company or any of its subsidiaries in foreign corporations or entities, or other foreign assets, equal to or greater than the amount equivalent to 5% of the company’s equity capital according to its latest balance sheet

	—		Enactment of and amendment to the Company’s Management Procedures

	—		Other matters considered necessary by the Board of Directors and those requiring Board of Directors’ approval under applicable laws

Reporting items under Article 7.2 of the Regulations of the Board of Directors

—

The representative director must report the following to the Board of Directors within two months after the date of occurrence:

	•		Results for the six months ended June 30^th of each year

	•		Execution of investments between Won 5 billion and Won 50 billion

	•		New investments and joint ventures under Won 50 billion

	•		Acquisition of non-operational fixed assets

	•		Disposition of fixed assets of Won 50 billion or above

	•		Matters related to guarantees of under Won 50 billion

	•		Internal trading not subject to approval by independent non-executive directors

	•		Matters delegated to the representative director that the Board of Directors requests to be reported


(2)		Publication of Information on Director Candidates Prior to the Shareholders’ Meeting for the Election of Directors and Shareholders’ Nomination

	a)		On February 17, 2009, in the notice of the annual general meeting of shareholders, information on Jae Won Chey, Man Won Jung, Hyun Chin Lim, candidates for the Board of Directors, was publicly disclosed.

	b)		There was no nomination by the shareholders.


(3)		Significant Activities of the Board of Directors


Meeting	Date	Agenda	Approval
289^th (the first meeting of 2008)	January 31, 2008	— Financial statements for the year ended December 31, 2007	Approved as proposed
		— Annual business report for the year ended December 31, 2007	Approved as proposed
		— Incorporation of an entity for Convergence Business in USA	Approved as proposed
290^th (the second meeting of 2008)	February 19, 2008	— Convocation of the 24^th General Meeting of Shareholders	Approved as proposed
290^th (the second meeting of 2008)	February 19, 2008	— Issuance of Corporate Bond	Approved as proposed
291^st (the third meeting of 2008)	March 14, 2008	— Election of the representative director	Approved as proposed
291^st (the third meeting of 2008)	March 14, 2008	— Election of committee members	Approved as proposed
292^nd (the fourth meeting of 2008)	March 28, 2008	— Incorporation of “SK Marketing & Company” (provisional name)	Approved as proposed
		— Capital investment in TU Media Co., Ltd.	Approved as proposed
		— Amendment of internal regulations	Approved as proposed
		— The Participation in the Capital Increase of Cyworld China (Holdings) Limited	Approved as proposed


Meeting	Date	Agenda		Approval
293^rd (the fifth meeting of 2008)	May 30, 2008	—	Appointment of Independent Non-executive Director Nomination Committee Member	Approved as proposed
		—	Establishment of Corporate Citizenship Committee and Appointment of Committee Members	Amended and approved
		—	Contract with TU Media Co., Ltd. regarding satellite utilization fees	Approved as proposed
294^th (the sixth meeting of 2008)	June 11, 2008	—	Sale of SK C&C Co., Ltd Shares	Approved as proposed
295^th (the seventh meeting of 2008)	July 18, 2008	—	Investment in a Beijing office building	Approved as proposed
		—	Investment in Beijing U-City business	Approved as proposed
		—	Interim Dividend	Approved as proposed
		—	Asset Management Transaction with Affiliated Company (SK Securities)	Approved as proposed
		—	Long-term Debt Financing	Approved as proposed
296^th (the eighth meeting of 2008)	August 21, 2008	—	Transaction with SK Networks Co. Ltd. in 2008	Approved as proposed
296^th (the eighth meeting of 2008)	August 21, 2008	—	Investments in additional WCDMA Equipment and in Marketing Activities for 2008	Approved as proposed
297^th (the ninth meeting of 2008)	September 25, 2008	—	Incorporation of SK Telecom’s Affiliate Company for Sales	Approved as proposed
		—	Asset Management Transaction with Affiliated Company (SK Securities)	Approved as proposed
		—	Issuance of Corporate Bonds	Approved as proposed
298^th (the tenth meeting of 2008)	October 23, 2008	—	Transfer of MelOn Business Segment and capital investment in LOEN Entertainment Co., Ltd.	Approved as proposed
		—	Acquisition of Treasury Stocks for Cancellation	Approved as proposed
		—	Long-term Financing Plan	Approved as proposed
299^th (the eleventh meeting of 2008)	December 19, 2008	— —	Asset Management Transaction with Affiliated Company (SK Securities) Contract to use SK Brand	Approved as proposed Approved as proposed
299^th (the eleventh meeting of 2008)	December 19, 2008	— —		Approved as proposed Approved as proposed
300^th (the first meeting of 2009)	January 22, 2009	—	Financial Statements for the year ended December 31, 2008	Approved as proposed
		—	Annual Business Report for the year ended December 31, 2008	Approved as proposed
		—	Annual Business Plan and Budgeting for FY 2009	Approved as proposed
		—	Issuance of Corporate Bonds	Approved as proposed


Meeting	Date	Agenda		Approval
301^st (the second meeting of 2009)	February 17, 2009	—	Convocation of the 25^th General Meeting of Shareholders	Approved as proposed
301^st (the second meeting of 2009)	February 17, 2009	—	Partnership Agreement with Offshore Private Equity Fund	Approved as proposed
302^nd (the third meeting of 2009)	March 13, 2009	—	Election of the Representative Director	Approved as proposed
		—	Revision to the Regulations for the Board of Directors	Approved as proposed
		—	Appointment of Chairman of the Board of Directors	Approved as proposed
		—	Long-term Financing Plan for Foreign Currency	Approved as proposed
		—	Issuance of Offshore Exchangeable Bonds and Transfer of Treasury Shares in relation thereto	Approved as proposed
		—	Asset Management Transaction with Affiliated Company (SK Securities)	Approved as proposed


(4)		Committee Structure and Activities of the Committees of the Board of Directors

Independent Non-executive Director Nomination Committee

—

Organization


*		The Independent Non-executive Director Nomination Committee is a committee established under the provisions of the Articles of Incorporation.

—

Activities


			D.S. Shim	H.J. Lim
			(100%)*	(100%)*
Date	Details	Approval	Vote
Feb. 19, 2008	— 24^th General Meeting of Shareholders: Nomination of Independent Non-executive Director Candidates: Rak Yong Uhm, Jay Young Chung, Jae Ho Cho	Approved	For	For

July 18, 2008	— Proposal to nominate Shin Bae Kim as the Chairman of the Committee	Approved	For	For


*		Attendance Rate for the Board of Directors’ Meetings

Compensation Review Committee

—

Organization


(As of December 31, 2008)
Number of Persons	Members
Number of Persons	Executive Directors	Independent non-executive Directors
5 persons	—	Hyun Chin Lim, Dal Sup Shim, Rak Yong Uhm, Jay Young Chung, Jae Ho Cho


*		The Compensation Review Committee is a committee established by the resolution of the Board of Directors.

—

Activities

Y.W.

D.S.

H.J.

R.Y.

J.Y.

J.H.

Kim

Shim

Lim

Uhm

Chung

Cho

(100%)*

Date

Details

Approval

Vote

March 27, 2008

— Appointment of Chairman of the Committee

Approved

For

April 25, 2008

— Discussion of Committee operation procedures

—

Resigned

—


*		Attendance Rate for the Board of Directors’ Meetings

Capex Review Committee

—

Organization


(As of December 31, 2008))
Number of Persons	Members
Number of Persons	Executive Directors	Independent non-executive Directors
5 persons	Young Ho Park, Sung Min Ha	Rak Yong Uhm, Dal Sup Shim, Jay Young Chung


*		The Capex Review Committee is a committee established by the resolution of the Board of Directors.

—

Activities


			R.Y.	D.S.	J.Y.
			Uhm	Shim	Chung
			(100%)*	(100%)*	(100%)*
Date	Details	Approval	Vote
April 26, 2008	— Appointment of Chairman of the Committee	Approved	For	For	For


*		Attendance Rate for the Board of Directors’ Meetings

Corporate Citizenship Committee

—

Organization

(As of December 31, 2008)


Number of Persons	Members
Number of Persons	Executive Directors	Independent Non-executive Directors
5 persons	Young Ho Park, Sung Min Ha	Rak Yong Uhm, Hyun Chin Lim, Jay Young Chung


*		The Corporate Citizenship Committee is a committee established by the resolution of the Board of Directors.

—

Activities


			R.Y.	H.J.	J.Y.
			Uhm	Lim	Chung
			(100%)*	(100%)*	(100%)*
Date	Details	Approval	Vote
Sep. 10, 2008	— Appointment of Chairman of the Committee	Approved	For	For	For


*		Attendance Rate for the Board of Directors’ Meetings

Audit Committee: See “B. Audit System” below.


*		The Audit Committee is a committee established under the provisions of the Articles of Incorporation.


B.		Audit System

(1)

Establishment and Organization of the Audit Committee

The Audit Committee is composed of three or more directors. However, independent non-executive directors must account for 2/3 or more, and the members are elected by the resolution of the Board of Directors each year.

	b)		The Audit Committee is convened when deemed necessary by the chairman or is requested by two or more of the committee members.

	c)		The quorum for resolution is majority attendance with majority consent of the attending members.


(2)		Authority of the Audit Committee

Includes authority to inquire on the subsidiary companies, right to investigate the business operations and asset conditions, and right to request for a business status report pursuant to the Audit Committee Regulations.


(3)		Members of the Audit Committee

Audit Committee Members are directors Dal Sup Shim, Hyun Chin Lim and Jae Ho Cho.


(4)		Major Activities of the Audit Committee


Meeting	Date	Agenda		Approval	Remarks
The first meeting of 2008	January 31, 2008	—	Audit Report on Internal Monitoring System	Approved as proposed	—
		—	2007 Management Audit Results and 2008 Management Audit Plan	—
		—	Financial Statements for 24^th Fiscal Year	—
		—	Business Report for 24^th Fiscal Year	—
		—	2008 Transactions Plan with SK C&C	—
		—	Evaluation of Internal Accounting Controls	—
The second meeting of 2008	February 18, 2008	—	Results Reports on Review of Internal Accounting Management System for 24^th Fiscal Year	—	—
		—	Reports on 2007 Korean GAAP Audit	—
		—	Auditor’s Report for Fiscal Year 2007	Approved as proposed
		—	Evaluation of Internal Accounting Management System Operation	Approved as proposed
		—	Issuance of Corporate Bond	—
The third meeting of 2008	March 27, 2008	—	Nomination of the Chairman of the Committee	Approved as proposed	—
		—	2008 2Q Transaction with SK C&C Co., Ltd.	Approved as proposed
		—	Planning for Amendment to Internal Accounting Rules	—


Meeting	Date	Agenda		Approval	Remarks
The fourth meeting of 2008	May 29, 2008	—	Construction of Mobile Phone Facilities for 2008	Approved as proposed	—
		—	Purchase of Mobile Phone Relay Device for 2008	Approved as proposed
		—	Agency Agreement with SK Marketing & Company for 2008	Approved as proposed
		—	B2B Agreement with TU Media Co., Ltd.	Approved as proposed
		—	Auditor Fees for 2008	Approved as proposed
		—	Renewal of Service Contract with Auditor for 2008	Approved as proposed
		—	Planning for Fiscal Year 2008 Audit	—
The fifth meeting of 2008	June 11, 2008	—	2008 3Q Transactions with SK C&C Co., Ltd.	Approved as proposed	—
The sixth meeting of 2008	June 26, 2008	—	Report on Results for Fiscal Year 2008 US GAAP Audit	—	—
The seventh meeting of 2008	July 17, 2008	—	Interim Closing of Accounts for Six Months ended 2008	—	—
		—	Planning of Interim Dividends
		—	Planning of Asset Management Transactions with Affiliated Company (SK Securities)
The eighth meeting of 2008	August 20, 2008	—	Purchase of Mobile Phone Relay Device for 2008	Approved as proposed	—
		—	Construction of Mobile Phone Facilities for 2008	Approved as proposed
		—	Report on Korean GAAP Review of the Financial Statements for the First Half of 2008	—
		—	Evaluation of Internal Accounting Controls	—
		—	Management Audit Results for the First Half of 2008	—
The ninth meeting of 2008	September 24, 2008	—	Service Contract with SKTA	Approved as proposed	—
		—	Purchase of Mobile Phone Relay Device for 2008	Approved as proposed
		—	Construction of Mobile Phone Facilities for 2008	Approved as proposed
		—	2008 4Q Transaction with SK C&C Co., Ltd.	Approved as proposed
		—	Planning of Asset Management Transactions with Affiliated Company (SK Securities)	—
		—	Plans for Issuance of Corporate Bonds	—
The tenth meeting of 2008	October 22, 2008	—	Plans for Acquisition of Treasury Stock for Cancellation	—	—
The tenth meeting of 2008	October 22, 2008	—	Long-term Financing Plan	—	—


Meeting	Date	Agenda		Approval	Remarks
The eleventh meeting of 2008	November 20, 2008	—	Purchase of Mobile Phone Relay Device for 2008	Approved as proposed	—
		—	Pursuit of Integrated Loyalty Marketing	Approved as proposed
		—	Mobile Cyworld Service ASP Contract	Approved as proposed
		—	Increased Auditor Fees for 2008	Approved after amendment
		—	Status of Purchase Process of Phone Relay Device	—
		—	Summary and Status of CP	—
		—	Shareholder Return Policy for 2009	—
The twelfth meeting of 2008	December 18, 2008	—	2009 1Q Transactions with SK C&C Co., Ltd.	Approved as proposed	—
		—	Outdoor Media Advertisement Agency	Approved as proposed
		—	Service Contracts for Handset A/S Operation	Approved as proposed
		—	Lease of Telecommunication Equipment	Approved as proposed
		—	Service Contract with SKT China Holding Co.	Approved as proposed
		—	Service Contract with SKTA	Approved as proposed
		—	Renewal of IT SM Contract	Approved as proposed
		—	Planning of Asset Management Transaction with Affiliated Company (SK Securities)	—
The first meeting of 2009	January 21, 2009	—	Plans for Issuance of Corporate Bonds	—	—
		—	B2B contract with TU Media	Approved as proposed
		—	Internal Auditor’s Report on Internal Monitoring System	Approved as proposed
		—	Management Audit Results for the Second Half of 2008	—
		—	Evaluation of Internal Accounting Controls	—
The second meeting of 2009	February 16, 2009	—	Reports on 2008 Korean GAAP Audit	—	—
		—	Report on Review of Internal Accounting Management System	—
		—	2009 Management Audit Plan	—
		—	Auditor’s Report for Fiscal Year 2008	Approved as proposed
		—	Evaluation of Internal Accounting Management System Operation	Approved as proposed
		—	Appointment of Auditor for FY 2009-2011	Approved as proposed
		—	Construction of Mobile Phone Facilities for 2009	Approved as proposed


Meeting	Date	Agenda		Approval	Remarks
The third meeting of 2009	March 13, 2009	—	Purchase of Mobile Phone Relay Device for 2009	Approved as proposed	—
		—	Construction of Mobile Phone Facilities for 2009	Approved as proposed
		—	2009 2Q Transactions with SK C&C Co., Ltd.	Approved as proposed
		—	Long-term Financing Plan for Foreign Currency	—
		—	Issuance of Offshore Exchangeable Bonds and Transfer of Treasury Shares	—
		—	Asset Management Transaction with Affiliated Company (SK Securities)	—


C.		Exercise of Voting Rights by the Shareholders

(1)

Use of the Cumulative Voting System

	a)		Pursuant to the Articles of Incorporation, the cumulative voting system was first introduced in the General Meeting of Shareholders in 2003.

	b)		Articles of Incorporation

	—		Article 32 (3) (Election of Directors): Cumulative voting under Article 382-2 of the Commercial Code will not be applied for the election of directors.

	—		Article 4 of the 12^th Supplement to the Articles of Incorporation (Interim Regulation): Article 32 (3) of the Articles of Incorporation shall remain effective until the day immediately preceding the date of the general shareholders’ meeting of 2003.


(2)		Use of Written or Electronic Voting System

N/A


(3)		Minority Shareholder Rights

N/A


D.		Compensation of Officers and Others


(1)		Compensation of Directors (including Independent Non-executive Directors) and Members of the Audit Committee

(Unit: in millions of Won)

Total amount

approved by the

Total

Meeting of

Average payment

Classification

payment

Shareholders

per person

Remarks

Executive directors

4,482

12,000

1,581

—

Independent Non-executive directors

480

Including members of the Audit Committee


(2)		Granting and Exercise of Stock Options (As of December 31, 2008)

N/A


E.		Directors’ and Officers’ Insurance


2.		Affiliated Companies

(1)

Summary of Corporate Group

—

Name: SK Group


(2)		Capital Investments between Affiliated Companies

(As of December 31, 2008)

* Based on common shares

Invested companies

Investing company

Corporation

Energy

Networks

Telecom

Chemicals

SKC

E&C

Shipping

SK Corporation

33.40

39.98

23.09

42.50

72.13

SK Energy

SK Networks

0.02

17.71

SK Telecom

SK Chemicals

58.03

SKC

10.16

SK E&C

SK Shipping

SK Securities

Walkerhill

SK C&C

30.78

Daehan City Gas

SK Telink

SK E&S

iHQ

SK D&D

(As of December 31, 2008)

* Based on common shares

Invested companies

Investing company

Corporation

Energy

Networks

Telecom

Chemicals

SKC

E&C

Shipping

SK Communications

Solmics Co., Ltd.

SK Broadband

Broadband D&M

SK Marketing & Company

SK Gas

Ulreung Mineral Co., Ltd.

Total affiliated companies

30.78

33.40

39.98

23.09

42.50

58.05

100.00


	Invested companies
	SK						SK			SK			SK
Investing companies	Securities			Walkerhill			E&S			Gas			C&C			K-Pover			DOPCO			CCES
SK Corporation								51.00	%		45.53	%					65.00	%
SK Energy																				38.28	%
SK Networks		22.71	%		50.37	%								15.00	%					4.61	%
SK Telecom														30.00	%
SK Chemicals					0.25	%
SKC		12.41	%		7.50	%
SK E&C
SK Shipping
SK Securities
Walkerhill
SK C&C
Daehan City Gas
SK Telink
SK E&S																							100.00	%
iHQ
SK D&D
SK Communications
Solmics Co., Ltd.
SK Broadband
Broadband D&M
SK Marketing & Company
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		35.12	%		58.12	%		51.00	%		45.53	%		45.00	%		65.00	%		42.89	%		100.00	%


	Invested companies
	YN			Daehan			Daehan			SK			SK			SK			Busan			Jeonnam
Investing companies	Energy			City Gas			Engineering			Sci-tech			NJC			Telink			City Gas			City Gas
SK Corporation
SK Energy
SK Networks
SK Telecom																	90.77	%
SK Chemicals											50.00	%		60.00	%
SKC
SK E&C
SK Shipping
SK Securities
Walkerhill
SK C&C
Daehan City Gas								100.00	%
SK Telink
SK E&S		100.00	%		47.62	%														40.00	%		100.00	%
iHQ
SK D&D
SK Communications
Solmics Co., Ltd.
SK Broadband
Broadband D&M
SK Marketing & Company
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		100.00	%		47.62	%		100.00	%		50.00	%		60.00	%		90.77	%		40.00	%		100.00	%

Invested companies

Gangwon

Cashbag

Chungnam

MRO

Investing companies

City Gas

GBES

Service

City Gas

Wyverns

Infosec

Korea

SK Telesys

SK Corporation

SK Energy


	Invested companies
							OK
	Gangwon						Cashbag			Chungnam			SK						MRO
Investing companies	City Gas			GBES			Service			City Gas			Wyverns			Infosec			Korea			SK Telesys
SK Networks																				51.00	%
SK Telecom														99.99	%
SK Chemicals
SKC																	20.63	%					77.13	%
SK E&C
SK Shipping
SK Securities
Walkerhill
SK C&C																	48.14	%
Daehan City Gas
SK Telink
SK E&S		100.00	%		100.00	%					100.00	%
iHQ
SK D&D
SK Communications
Solmics Co., Ltd.
SK Broadband
Broadband D&M
SK Marketing & Company								100.00	%
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		100.00	%		100.00	%		100.00	%		100.00	%		99.99	%		68.77	%		51.00	%		77.13	%


	Invested companies
										F&U
							Encar			Credit									SK			SK
Investing companies	Innoace			AirCROSS			network			Info.			Paxnet			TU Media			D&D			Utis
SK Corporation
SK Energy								87.50	%
SK Networks		43.08	%
SK Telecom		14.25	%		100.00	%					50.00	%		59.74	%		44.15	%
SK Chemicals																							60.00	%
SKC
SK E&C																				44.98	%
SK Shipping
SK Securities											40.00	%
Walkerhill

Invested companies

F&U

Encar

Credit

Investing companies

Innoace

AirCROSS

network

Info.

Paxnet

TU Media

D&D

Utis

SK C&C

Daehan City Gas

SK Telink

SK E&S

iHQ

SK D&D

SK Communications

Solmics Co., Ltd.

SK Broadband

Broadband D&M

SK Marketing & Company

SK Gas

Ulreung Mineral Co., Ltd.

Total affiliated companies

57.33

100.00

87.50

90.00

59.74

44.15

44.98

60.00

Invested companies

Loen

SK Mobile

Investing companies

CTA

Entertainment

Independence

Petrochemical

Energy

SKC Media

iHQ

Media

SK Corporation

SK Energy

33.67

100.00

88.34

SK Networks

SK Telecom

63.48

37.09

SK Chemicals

SKC

11.66

100.00

SK E&C

SK Shipping

SK Securities

Walkerhill

SK C&C

67.78

Daehan City Gas

SK Telink

SK E&S

iHQ

52.52

SK D&D

SK Communications

Solmics Co., Ltd.

SK Broadband


	Invested companies
	SK			Loen						SK			SK Mobile									CU
Investing companies	CTA			Entertainment			Independence			Petrochemical			Energy			SKC Media			iHQ			Media
Broadband D&M
SK Marketing & Company
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		33.67	%		63.48	%		67.78	%		100.00	%		100.00	%		100.00	%		37.09	%		52.52	%


	Invested companies
				NTREEV			SK			SK									SKC Air			SKN
Investing companies	I Film Co.			Soft			I-Media			Communications			Ecolgreen			I Platform			Gas			Service
SK Corporation
SK Energy
SK Networks														55.00	%		66.67	%					100.00	%
SK Telecom					63.70	%					64.82	%
SK Chemicals
SKC																				80.00	%
SK E&C
SK Shipping
SK Securities
Walkerhill
SK C&C
Daehan City Gas
SK Telink											0.89	%
SK E&S
iHQ		45.00	%
SK D&D
SK Communications								100.00	%
Solmics Co., Ltd.
SK Broadband
Broadband D&M
SK Marketing & Company
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		45.00	%		63.70	%		100.00	%		65.71	%		55.00	%		66.67	%		80.00	%		100.00	%


	Invested companies
	Nuri			Commerce			Reviden			Solmics						SK			Hanaro			Broadband
Investing companies	Solution			Planet			Asset			Co., Ltd.			Mecharonics			Broadband			Dream			Media
SK Corporation
SK Energy
SK Networks
SK Telecom					100.00	%											43.42	%
SK Chemicals
SKC											48.70	%
SK E&C								99.00	%
SK Shipping
SK Securities
Walkerhill
SK C&C		46.32	%
Daehan City Gas
SK Telink
SK E&S
iHQ
SK D&D								1.00	%
SK Communications
Solmics Co., Ltd.														48.66	%
SK Broadband																				36.03	%		100.00	%
Broadband D&M
SK Marketing & Company
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		46.32	%		100.00	%		100.00	%		48.70	%		48.66	%		43.42	%		36.03	%		100.00	%

Invested companies

Broadband

Miracle

Investing companies

D&M

Seoul CS

Kyoungki CS

Busan CS

Kwangju CS

SK Corporation

SK Energy

SK Networks

SK Telecom

SK Chemicals

SKC


	Invested companies
	Broadband			Broadband			Broadband			Broadband			Broadband			Broadband			Broadband			Miracle
Investing companies	D&M			CS			TS			Seoul CS			Kyoungki CS			Busan CS			Kwangju CS			IT
SK E&C
SK Shipping
SK Securities
Walkerhill
SK C&C
Daehan City Gas
SK Telink
SK E&S
iHQ
SK D&D
SK Communications
Solmics Co., Ltd.
SK Broadband		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%
Broadband D&M																							100.00	%
SK Marketing & Company
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%		100.00	%

Invested companies

Marketing

Ulreung

Namwon

DOP

Mineral

Ulreung Deep

Sarang Electric

Investing companies

Company

UB Care

Service

Co., Ltd.

Water

Commerce

Power

Incyto

SK Corporation

SK Energy

50.00

SK Networks

100.00

SK Telecom

50.00

SK Chemicals

43.97

SKC

100.00

SK E&C

4.90

SK Shipping

SK Securities

Walkerhill

SK C&C

Daehan City Gas


	Invested companies
	SK
	Marketing									Ulreung									Namwon
	&						DOP			Mineral			Ulreung Deep			WS			Sarang Electric
Investing companies	Company			UB Care			Service			Co., Ltd.			Water			Commerce			Power			Incyto
SK Telink
SK E&S								95.10	%
iHQ
SK D&D																				100.00	%
SK Communications
Solmics Co., Ltd.
SK Broadband
Broadband D&M
SK Marketing & Company
SK Gas											80.36	%
Ulreung Mineral Co., Ltd.														100.00	%
Total affiliated companies		100.00	%		43.97	%		100.00	%		80.36	%		100.00	%		100.00	%		100.00	%		100.00	%

Invested companies

Jeju United

Cross M

MKS

Investing companies

Insight

Guarantee

Etoos

—

SK Corporation

SK Energy

100.00

SK Networks

SK Telecom

SK Chemicals

SKC

SK E&C

SK Shipping

SK Securities

Walkerhill

SK C&C

Daehan City Gas

SK Telink

SK E&S

iHQ

SK D&D

99.00

SK Communications

100.00

Solmics Co., Ltd.

SK Broadband

Broadband D&M


	Invested companies
	Jeju United			Cross M			MKS
Investing companies	FC			Insight			Guarantee			Etoos			—	—	—	—
SK Marketing & Company					100.00	%
SK Gas
Ulreung Mineral Co., Ltd.
Total affiliated companies		100.00	%		100.00	%		99.00	%		100.00	%


VI.		SHARES

Distribution of Shares

Shareholdings of the Largest Shareholder and Related Persons


(As of December 31, 2008)									(Unit: shares, %)
			Number of shares owned (equity rate)
			Beginning				Increase		Decrease		Ending
		Types of	Number of		Ownership		Number		Number		Number of		Ownership		Cause of
Name	Relationship	shares	shares		ratio		of shares		of shares		shares		ratio		change
SK Corporation	Largest Shareholder	Common stock		17,663,127		21.75		1,085,325		—		18,748,452		23.09	Purchase of Common stock of the Company from SK Networks
Tae Won Chey	Officer of affiliated company	Common stock		100		0.00		—		—		100		0.00		—
Shin Won Chey	Officer of affiliated company	Common stock		0		0.00		500		—		500		0.00	Open market purchase
Shin Bae Kim	Director	Common stock		1,270		0.00		—		—		1,270		0.00		—
Bang Hyung Lee	Officer of affiliated company	Common stock		400		0.00		—		200		200		0.00	Open market sale
Sung Min Ha	Director	Common stock		738		0.00		—		—		738		0.00		—
Total		Common stock		17,665,635		21.75		1,085,325		200		18,751,260		23.09		—
		Preferred stock		—		—		—		—		0		0.00
		Total		17,665,635		21.75		1,085,325		—		18,751,260		23.09


Largest Shareholder: SK Corporation		Number of Related Persons: 5


B.		Shareholders with More than 5% Shareholding


(As of December 31, 2008)						(Unit: shares, %)
		Common share				Preferred share				Sub-total
		Number of		Ownership		Number of		Ownership		Number of		Ownership
Rank	Name (title)	shares		ratio		shares		ratio		shares		ratio
1	SK Corporation		18,748,452		23.09		—		—		18,748,452		23.09
2	Citibank ADR		17,008,755		20.95		—		—		17,008,755		20.95
3	SK Telecom		8,669,508		10.68		—		—		8,669,508		10.68
Total			44,426,715		54.72		—		—		44,426,715		54.72


C.		Shareholder Distribution


(As of December 31, 2008)
	Number of				Number of
Classification	shareholders		Ratio (%)		shares		Ratio (%)		Remarks
Total minority shareholders		23,685		99.95		31,279,161		38.52		—
Minority shareholders (corporate)		1,110		4.68		12,849,333		15.82		—
Minority shareholders (individual)		22,575		95.27		18,429,828		22.69		—
Largest Shareholder and Related Persons		6		0.01		18,751,260		23.09		—
Major shareholders		—		—		—		—		—
Other shareholders		10		0.04		49,914,550		61.47		—
Other shareholders (corporate)		8		0.03		32,088,119		39.52		—
Other shareholders (individual)		2		0.00		17,826,431		21.95		—
Total		23,695		100.00		81,193,711		100.00		—


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

Domestic Securities Market


						(Unit: Won, shares)
		December		November		October		September		August		July
Types		2008		2008		2008		2008		2008		2008
Common stock	Highest		224,000		232,000		230,000		210,500		205,000		195,500
Common stock	Lowest		201,000		201,000		185,500		200,000		188,500		178,000
Monthly transaction volume			7,036,880		6,509,801		10,063,707		8,495,764		6,354,641		5,910,740


B.		Overseas Securities Market


New York Stock Exchange						(Unit: US$, ADR)
		December		November		October		September		August		July
Types		2008		2008		2008		2008		2008		2008
Depository Receipt	Highest		18.80		19.24		19.92		20.82		22.29		22.20
Depository Receipt	Lowest		15.11		14.83		14.01		18.68		19.60		19.97
Monthly transaction volume			50,873,000		36,884,100		59,291,300		33,989,886		46,673,046		25,823,710


VII.		EMPLOYEES


(As of December 31, 2008)									(Unit: persons, in millions of Won)
	Number of employees
	Office								Average				Average
	managerial		Production						service		Total half		wage per
Classification	positions		positions		Others		Total		year		year wage		person		Remarks
Male		3,815		—		—		3,815		10.7		248,348		64		—
Female		596		—		—		596		8.8		30,970		50		—
Total		4,411		—		—		4,411		10.5		279,318		62		—


VIII.		TRANSACTIONS WITH RELATED PARTIES

1.		Transactions with the Largest Shareholder or Related Persons

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

(Year Ended December 31, 2008)

(Unit: in millions of Won)

Name
(Corporate

Account

Change details

Accrued

name)

Relationship

category

Beginning

Increase

Decrease

Ending

interest

Remarks

SK Wyverns

Affiliated company

Long-term and short-term loans

4,132

—

575

3,557

372

—


B.		Equity Investments


(Year Ended December 31, 2008)								(Unit: in millions of Won)
			Details
Name (Corporate name)	Relationship		Types of Investment	Beginning		Increase		Decrease		Ending		Note
SK Broadband	Affiliated company		Common share		116,525		1,093,104		—		1,209,629		—
SK M&C	Affiliated company		Common share		—		190,000		—		190,000		—
TU Media	Affiliated company		Common share		96,979		55,000		—		151,979		—
LOEN Entertainment	Affiliated company		Common share		27,874		30,000		—		57,874		—
OK Cashbag Service	Affiliated company		Common share		316		—		316		—		—
Wave City		—	Common share		—		1,967		—		1,967		—
SK TELECOM (CHINA) HOLDING Co., LTD		—	Common share		19,070		4,223		—		23,293		—
TR Entertainment		—	Common share		—		10,953		—		10,953		—
Cyworld China Holdings		—	Common share		—		10,272		—		10,272		—
SKT Global Investment		—	Common share		—		26,044		—		26,044		—


(Year Ended December 31, 2008)							(Unit: in millions of Won)
		Details
Name (Corporate name)	Relationship	Types of Investment	Beginning		Increase		Decrease		Ending		Note
SKT HOLDINGS AMERICA Inc.	—	Common share		4,050		8,940		—		12,990		—
SKT USA Holdings	—	Common share		336,625		107,875		444,500		—		—
Magic Grid	—	Common share		—		8,494		—		8,494		—
Sk Mobile	—	Common share		9,160		2,004		3,166		7,998		—
SKY Property Mgmt., Ltd.	—	Common share		—		283,368		—		283,368		—
SK China Company	—	Common share		3,196		2,963		—		6,159		—
PR MAX	—	Common share		—		7,127		—		7,127		—
Virgin Mobile USA, Inc.	—	Common share		—		62,096		—		62,096		—
Total				613,795		1,904,430		447,982		2,070,243		—


C.		Transfer of Business

(Unit: in thousands of Won)

Name

Details

(Corporate
Name)

Relationship

Transferred
Business

Purpose of Transfer

Date of
Transfer

Amount of
Transfer

Loen Entertainment

Affiliated Company

MelOn Business

To facilitate growth of MelOn business through separate management

Oct. 24, 2008

24,333,022

Total

24,333,022


2.		Transactions with Shareholders (excluding the Largest Shareholder and Related Persons), Officers, Employees and other Interested Parties

Provisional Payment and Loans (including loans on marketable securities)

* Agents

(Unit: in millions of Won)

Name

(Corporate

Account

Change details

Accrued

name)

Relationship

category

Beginning

Increase

Decrease

Ending

interest

Remarks

Hong Eun and others

Agency

Long-term and
short-term loans

114,959

335,386

295,544

154,801

—

* Overseas investment companies

(Unit: in million Won)

Name
(Corporate

Account

Change details

Accrued

name)

Relationship

category

Beginning

Increase

Decrease

Ending

interest

Remarks

DSS Mobile Com. (India)

Overseas Investment company

Long-term loans

18,887

—

18,887

—

Payment guarantee


B.		Equity Investments


					(Unit: in millions of Won)
		Details
Name (Corporate name)	Relationship	Types of Investment	Beginning		Increase		Decrease		Ending		Remarks
Mobinex, Inc.	—	Common Share		—		1,894		—		1,894		—
Dreamer-i	—	Common Share		—		4,499		—		4,499		—
Alereon, Inc.	—	Common Share		—		3,060		—		3,060		—
Biogenics	—	Common Share		—		1,000		—		1,000		—
Benex Digital Contents	—	—		—		5,000		—		5,000		—
Benex Focus Investment No. 2	—	—		—		20,000		—		20,000		—
K-Net Culture Contents Investment	—	—		—		5,900		—		5,900		—
Open Innovation Fund	—	—		—		20,000		—		20,000		—
Translink Capital	—	—		798		688		—		1,486		—
SGI Investment	—	—		1,172		376		—		1,548		—
Century-on IT Investment	—	—		1,930		—		1,930		—		—
Total				3,900		62,417		1,930		64,387		—


IX.		OTHER RELEVANT MATTERS

1.		Developments in the Items mentioned in prior Reports on Important Business Matters

A.		Status and Progress of Major Management Events


Date of Disclosure	Title	Report	Reports status
October 26, 2001	Resolution on trust agreement for the acquisition of treasury shares and others	1. Signatories: Shinhan Bank, Hana Bank, Chohung Bank, Korea Exchange Bank 2. Contract amount: Won 1,300 billion 3. Purpose: to increase shareholder value	1.	On December 24, 2003, cash surplus amount from the existing trust agreement was partially reduced (Won 318 billion).
			2.	On September 24, 2004, the Board of Directors extended the term of the specified monetary trust agreement for 3 years.
			3.	On October 16, 2007, the Board of Directors extended the term of the specified monetary trust agreement for 3 years.
			4.	As of December 31, 2008, the balance of specified monetary trust for treasury shares was Won 982 billion.


2.		Summary Minutes of the General Meeting of Shareholders


Date	Agenda			Resolution
24th Fiscal Year Meeting of Shareholders (March 14, 2008)	1. Approval of the Financial Statements for the year ended December 31, 2007			Approved (Cash dividend, Won 8,400 per share)
	2.	Amendment to Articles of Incorporation		Approved
	3.	Approval of Remuneration Limit for Directors		Approved (Won 12 billion)
	4.	Election of Directors
		—	Election of executive directors	Approved (Shin Bae Kim, Young Ho Park)
		—	Election of independent non-executive directors	Approved (Rak Yong Uhm, Jay Young Chung)
		—	Election of independent non-executive directors as Audit Committee member	Approved (Jae Ho Cho)
25th Fiscal Year Meeting of Shareholders (March 13, 2009)	1. Approval of the financial statements for the year ended December 31, 2008			Approved (Cash dividend, Won 8,400 per share)
	2.	Approval of Remuneration Limit for Directors		Approved (Won 12 billion)
	3. Amendment to Company Regulation on Executive Compensation			Approved
	4.	Election of Directors
		—	Election of executive directors	Approved (Jae Won Chey, Man Won Jung)
		—	Election of independent non-executive directors	Approved (Hyun Chin Lim)
		—	Election of independent non-executive directors as Audit Committee member	Approved (Hyun Chin Lim)


3.		Contingent Liabilities

A.		Material Legal Proceedings

(1)		Action for Monetary Damages

	a)		Parties to the litigation: G.Mate Inc. (plaintiff) vs. the Company (defendant)

	b)		Overview: G.Mate alleged that the Company had engaged G.Mate to develop and deliver certain PDA units, but that the Company subsequently refused to take delivery of such units. G.Mate sought approximately Won 4 billion in damages.

	c)		Progress: An initial mediation process, which was requested by G.Mate, was terminated in January 2007 and an action for monetary damages was brought before the Seoul Central District Court, to which seven creditors of G.Mate, including DNF Consulting Co., Ltd., requested intervenient participation as successors to part of the claim. On December 4, 2008, the trial court awarded the plaintiffs a total of Won 420 million in damages, to which all of plaintiff, defendant and successors appealed, and the case is currently pending before the Seoul High Court.

	d)		Impact on business: In the event that the case is decided against the Company, there is a risk that the Company will be obligated to pay up to an aggregate of Won 4 billion in damages. However, the actual results of the litigation and actual impact on the Company’s operations and finances may differ depending on future events.


(2)		Action for Monetary Damages

	a)		Parties to the litigation: Misook Peon, et al. (plaintiffs, eight in total) vs. the Company (defendant)

	b)		Overview: The plaintiffs, who use the Company’s mobile telephone services, alleged that the reason a large wireless internet surcharge was imposed on them was because the Company violated its duty to clearly explain contractual provisions. The plaintiffs are seeking damages.

	c)		Progress: On October 4, 2007, the trial court awarded the plaintiffs a total of Won 3,707,479 in damages. The Company appealed, and on January 13, 2009, the appeals court denied the plaintiffs’ claim. The plaintiffs’ have since appealed the decision on February 2, 2009.

	d)		Impact on business: In the event that the case is decided against the Company, there is a risk that the National Council of the Green Consumers Network in Korea will bring an additional lawsuit based on this decision by recruiting other plaintiffs. However, the actual results of the litigation and actual impact on the Company’s operations and finances may differ depending on future events.


(3)		Action for Monetary Damages

	a)		Parties to the litigation: KT Corporation (plaintiff) vs. the Company (defendant)

	b)		Overview: KT Corporation alleged that the Company unreasonably delayed KT Corporation’s request for connection to MSC/HLR, and sought damages for the extra connection fees incurred.

	c)		Progress: The plaintiff brought an action against the Company in May 2008 and the lawsuit is currently pending.

	d)		Impact on business: In the event that the case is decided against the Company, there is a risk that the Company will be obligated to pay up to Won 44.3 billion in damages (excluding interest). However,

the actual results of the litigation and actual impact on the Company’s operations and finances may differ depending on future events.


(4)		Actions for the Cancellation of Key Communication Business Licenses and Allotment of Satellite DMB Frequency

	a)		Parties to the litigation: Korea Multinet (plaintiff) vs. MIC (defendant, the Company is participating in the action on behalf of MIC)

	b)		Overview: Korea Multinet brought an administrative action against MIC to cancel the Company’s key communication business licenses and the allotment of the Company’s satellite DMB frequency.

	c)		Progress: The Seoul Administrative Court dismissed the claim in July 2006. Korea Multinet appealed to the Seoul Appellate Court, but withdrew its claim on December 17, 2008, and the case was closed.

Forward-Looking Statement Disclaimer

The material above contains forward-looking statements. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. These statements are based on current plans, estimates and projections, and therefore you should not place undue reliance on them. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results or performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. We do not make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events. Additional information concerning these and other risk factors are contained in our latest annual report on Form 20-F and in our other filings with the U.S. Securities and Exchange Commission.

SK TELECOM CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008
AND INDEPENDENT AUDITORS’ REPORT

Independent Auditors’ Report

English Translation of a Report Originally Issued in Korean

To the Board of Directors and Stockholders of
SK Telecom Co., Ltd.

We have audited the accompanying consolidated balance sheets of SK Telecom Co., Ltd. and subsidiaries (the “Company”) as of December 31, 2006, 2007 and 2008, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2008 (all expressed in Korean won). These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the auditing standards generally accepted in the Republic of Korea. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2006, 2007 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the Republic of Korea.

Our audits also comprehended the translation of the Korean won amounts into U.S. dollar amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 2(a) to the accompanying consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers of the financial statements.

Accounting principles and auditing standards and their application in practice vary among countries. The accompanying consolidated financial statements are not intended to present the financial position, results of operations, changes in stockholders’ equity and cash flows in accordance with accounting principles and practices generally accepted in countries other than the Republic of Korea. In addition, the procedures and practices utilized in the Republic of Korea to audit such financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying consolidated financial statements are for use by those knowledgeable about Korean accounting procedures and auditing standards and their application in practice.

March 20, 2009

Notice to Readers

This report is effective as of March 20, 2009, the auditors’ report date. Certain subsequent events or circumstances may have occurred between the auditors’ report date and the time the auditors’ report is read. Such events or circumstances could significantly affect the accompanying financial statements and may result in modifications to the auditors’ report.

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006, 2007 AND 2008


							Translation into
							U.S. dollars
	Korean won						(Note 2)
	December 31,		December 31,		December 31,		December 31,
	2006		2007		2008		2008
	(In millions)						(In thousands)
ASSETS
CURRENT ASSETS :
Cash and cash equivalents, net of government subsidy of nil, W142 million and W127 million as of December 31, 2006, 2007 and 2008 (Notes 2, 13 and 29)	W	485,972	W	885,847	W	1,011,340	$	801,379
Short-term financial instruments (Notes 21 and 22)		98,085		148,103		368,490		291,989
Short-term investment securities (Notes 2 and 4)		665,647		736,643		372,913		295,494
Accounts receivable — trade, net of allowance for doubtful accounts of W106,737 million, W93,551 million and W150,320 million as of December 31, 2006, 2007 and 2008 (Notes 2, 13 and 24)		1,800,606		1,774,935		1,900,002		1,505,548
Short-term loans, net of allowance for doubtful accounts of W9,629 million, W6,845 million and W7,599 million as of December 31, 2006, 2007 and 2008 (Notes 2, 6 and 13)		69,745		84,570		119,087		94,364
Accounts receivable — other, net of allowance for doubtful accounts of W31,233 million, W28,649 million and W30,357 million as of December 31, 2006, 2007 and 2008 and present value discount of W27,314 million as of December 31, 2008 (Notes 2, 13 and 24)		1,305,284		948,322		1,346,056		1,066,605
Inventories (Notes 2, 3 and 23)		19,778		47,052		34,974		27,713
Prepaid expenses		116,727		108,552		127,432		100,976
Current deferred income tax assets, net (Notes 2 and 17)		49,940		36,383		27,786		22,017
Currency swap (Notes 2 and 27)		16,660		—		8,236		6,526
Advanced payments and other		35,518		42,665		106,131		84,098


Total Current Assets		4,663,962		4,813,072		5,422,447		4,296,709


NON-CURRENT ASSETS :
Property and equipment, net (Notes 2, 7, 12, 22, 23 and 24)		4,507,335		4,969,354		7,437,689		5,893,573
Intangible assets, net (Notes 2, 8 and 12)		3,518,411		3,433,962		3,978,145		3,152,254
Long-term financial instruments (Note 21)		10,445		15,535		114		90
Long-term investment securities (Notes 2 and 4)		2,475,418		5,058,519		3,105,295		2,460,614
Equity securities accounted for using the equity method (Notes 2 and 5)		750,921		350,966		898,512		711,975
Long-term loans, net of allowance for doubtful accounts of W19,117 million, W23,079 million and W26,376 million as of December 31, 2006, 2007 and 2008 (Notes 2 and 6)		18,569		84,906		155,360		123,106
Long-term accounts receivable — other, net of present value discount of W45,464 million as December 31, 2008 (Note 2)		—		—		572,139		453,359
Guarantee deposits (Notes 13 and 24)		139,619		148,987		239,480		189,762
Long-term currency swap (Notes 2 and 27)		—		13,057		494,711		392,006
Long-term interest rate swap (Notes 2 and 27)		—		3,170		—		—
Non-current deferred income tax assets (Notes 2 and 17)		2,655		7,286		4,948		3,921
Other		152,633		150,121		164,831		130,611


Total Non-Current Assets		11,576,006		14,235,863		17,051,224		13,511,271


TOTAL ASSETS	W	16,239,968	W	19,048,935	W	22,473,671	$	17,807,980

(Continued)

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 2006, 2007 AND 2008


										Translation into
										U.S. dollars
	Korean won									(Note 2)
	December 31,			December 31,			December 31,			December 31,
	2006			2007			2008			2008
	(In millions)									(In thousands)
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES :
Accounts payable (Notes 13 and 24)	W	1,221,704		W	1,252,734		W	1,268,750		$	1,005,349
Short-term borrowings (Notes 21 and 22)		58,344			24,616			627,657			497,351
Income taxes payable		336,536			319,108			328,403			260,224
Dividend payable		268			308			227			180
Accrued expenses (Notes 2 and 26)		375,063			436,008			861,836			682,913
Withholdings		339,144			226,407			315,537			250,029
Current portion of long-term debt, net (Notes 2, 8, 9, 10 and 12)		797,042			634,990			936,009			741,687
Current portion of subscription deposits (Note 11)		17,576			7,564			8,281			6,562
Currency swap (Notes 2 and 27)		—			12,646			190,359			150,839
Current deferred income tax liabilities (Notes 2 and 17)		—			4			—			—
Advanced receipts and other		62,739			102,489			91,762			72,711


Total Current Liabilities		3,208,416			3,016,874			4,628,821			3,667,845


NON-CURRENT LIABILITIES :
Bonds payable, net (Notes 2, 9 and 22)		1,995,323			2,348,661			4,074,392			3,228,520
Long-term borrowings (Notes 10 and 22)		293,026			323,421			856,471			678,662
Subscription deposits (Note 11)		21,140			6,425			4,796			3,800
Long-term payables — other, net of present value discount of W42,461 million, W27,886 million and W15,416 million as of December 31, 2006, 2007 and 2008 (Notes 2 and 8)		517,539			422,114			304,584			241,350
Obligations under carital Lease (Notes 2, 12 and 22)		1,860			712			139,273			110,359
Accrued severance indemnities, net (Note 2)		22,284			44,322			53,815			42,643
Non-current deferred income tax liabilities, net (Notes 2 and 17)		532,639			1,044,758			408,755			323,895
Long-term currency swap (Notes 2 and 27)		112,970			110,911			23,947			18,975
Long-term interest swap (Notes 2 and 27)		454			—			33,499			26,544
Guarantee deposits received and other (Notes 2, 21, 24 and 26)		51,229			43,104			120,878			95,783


Total Non-Current Liabilities		3,548,464			4,344,428			6,020,410			4,770,531


Total Liabilities		6,756,880			7,361,302			10,649,231			8,438,376


STOCKHOLDERS’ EQUITY :
Capital stock (Notes 1 and 14)		44,639			44,639			44,639			35,372
Capital surplus (Note 14)		2,966,399			2,956,106			2,958,854			2,344,575
Capital adjustments :
Treasury stock (Notes 1 and 16)		(2,014,927	)		(2,041,483	)		(2,055,620	)		(1,628,859	)
Loss on disposal of treasury stock (Notes 16 and 17)		(7,887	)		(94	)		—			—
Other capital adjustment (Notes 2, 5 and 17)		(12,826	)		(31,146	)		(103,769	)		(82,226	)
Accumulated other comprehensive income (loss) (Note 18) :
Unrealized gains on valuation of long-term investment securities, net (Notes 2, 4 and 17)		429,228			1,624,613			407,842			323,171
Equity in other comprehensive gain(loss) of affiliates, net (Notes 2, 5 and 17)		107,324			1,727			(68,763	)		(54,487	)
Gain (loss) on valuation of currency swap, net (Notes 2, 17 and 27)		(16,487	)		(11,816	)		8,544			6,770
Gain (loss) on valuation of interest swap, net (Notes 2, 17 and 27)		(329	)		2,298			(26,129	)		(20,704	)
Foreign-based operations’ translation adjustment (Note 2)		(29,726	)		(25,564	)		34,698			27,494
Retained earnings (Note 15)		7,847,434			8,914,970			9,448,185			7,486,676
Minority interest in equity of consolidated subsidiaries (Note 2)		170,246			253,383			1,175,959			931,822


Total Stockholders’ Equity		9,483,088			11,687,633			11,824,440			9,369,604


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	W	16,239,968		W	19,048,935		W	22,473,671		$	17,807,980

See accompanying notes to non-consolidated financial statements.

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


										Translation into
										U.S. dollars
	Korean won									(Note 2)
	2006			2007			2008			2008
	(In millions except for per share data)									(In thousands except
										for per share data)

OPERATING REVENUE (Notes 2, 24 and 31)	W	11,027,977		W	11,863,357		W	14,020,984		$	11,110,130


OPERATING EXPENSES (Note 24):
Labor cost		(491,839	)		(544,713	)		(731,418	)		(579,571	)
Commissions paid		(3,293,197	)		(4,055,147	)		(4,884,819	)		(3,870,697	)
Depreciation and amortization (Notes 7 and 8)		(1,553,635	)		(1,821,972	)		(2,599,791	)		(2,060,056	)
Network interconnection		(1,014,913	)		(1,078,714	)		(1,327,417	)		(1,051,836	)
Leased line		(412,902	)		(410,408	)		(521,118	)		(412,930	)
Advertising		(307,190	)		(312,604	)		(363,412	)		(287,965	)
Research and development (Note 2)		(211,961	)		(218,652	)		(226,714	)		(179,647	)
Rent		(206,708	)		(234,006	)		(290,655	)		(230,31	)
Frequency usage		(158,958	)		(166,395	)		(163,938	)		(129,903	)
Repair		(150,848	)		(168,633	)		(226,858	)		(179,761	)
Provision for bad debts (Note 2)		(61,457	)		(48,835	)		(62,973	)		(49,899	)
Cost of goods sold (Note 2)		(121,381	)		(239,146	)		(233,200	)		(184,786	)
Other		(421,856	)		(462,177	)		(636,203	)		(504,123	)


Sub-total		(8,406,845	)		(9,761,402	)		(12,268,516	)		(9,721,487	)


OPERATING INCOME (Note 31)		2,621,132			2,101,955			1,752,468			1,388,643


OTHER INCOME:
Interest income (Note 4)		79,969			93,838			136,006			107,770
Dividends		20,351			21,119			52,477			41,582
Rent		—			17,367			19,295			15,289
Commissions (Note 24)		33,226			32,196			17,148			13,588
Reversal of allowance for doubtful accounts		789			614			2,084			1,651
Foreign exchange and translation gains (Note 2)		4,412			12,091			478,39			379,076
Equity in earnings of affiliates (Notes 2 and 5)		45,787			247,382			24,894			19,726
Gain on disposal of investment assets		27,490			3,721			17,409			13,795
Gain on disposal of property and equipment and intangible assets		4,507			9,776			10,000			7,924
Gain on transactions and valuation of currency swap (Notes 2 and 27)		16,660			10,799			265,142			210,097
Gain on transactions and valuation of interest swap (Notes 2 and 27)		—			—			2			2
Gain on conversion of convertible bonds (Note 4)		—			373,140			—			—
Gain on repayment of bonds		—			6,160			—			—
Other		51,667			33,681			34,233			27,126


Sub-total		284,858			861,884			1,057,084			837,626

(Continued)

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


										Translation into
										U.S. dollars
	Korean won									(Note 2)
	2006			2007			2008			2008
	(In millions except for per share data)									(In thousands except
										for per share data)
OTHER EXPENSES:
Interest and discounts		(239,138	)		(238,958	)		(366,022	)		(290,033	)
Donations		(103,348	)		(72,849	)		(100,224	)		(79,417	)
Foreign exchange and translation losses (Note 2)		(4,139	)		(12,966	)		(161,788	)		(128,200	)
Loss on valuation of short-term investment securities (Notes 2 and 4)		—			(1,203	)		(8,358	)		(6,623	)
Equity in losses of affiliates (Notes 2 and 5)		(211,464	)		(175,474	)		(54,268	)		(43,002	)
Impairment loss on investment securities (Notes 2 and 4)		(27,696	)		(5,466	)		(223,207	)		(176,868	)
Loss on disposal of investment assets		(6,096	)		(1,190	)		(12,148	)		(9,626	)
Loss on disposal of property, equipment and intangible assets		(17,148	)		(30,680	)		(70,314	)		(55,716	)
Impairment loss on assets (Note 2)		(7,030	)		(10,634	)		(14,754	)		(11,691	)
Loss on transactions and valuation of currency swap (Notes 2 and 27)		(9,258	)		(33,876	)		(441,207	)		(349,609	)
Loss on transactions and valuation of interest swap (Notes 2 and 27)		—			—			(48	)		(38	)
External research and development cost (Note 2)		(67,021	)		(74,388	)		(72,993	)		(57,839	)
Special severance indemnities (Note 2)		(144,021	)		—			—			—
Other		(48,053	)		(20,390	)		(25,488	)		(20,196	)


Sub-total		(884,412	)		(678,074	)		(1,550,819	)		(1,228,858	)


INCOME FROM CONTINUING OPERATION BEFORE INCOME TAX		2,021,578			2,285,765			1,258,733			997,411

INCOME TAX FOR CONTINUING OPERATION (Notes 2 and 17)		572,026			694,487			298,850			236,807

PREACQUISITION NET LOSS OF SUBSIDIARIES		—			21,088			32,664			25,883

LOSS FROM DISCONTINUED OPERATION (Note 2)		—			(50,101	)		(20,209	)		(16,013	)


NET INCOME	W	1,449,552		W	1,562,265		W	972,338		$	770,474


ATTRIBUTABLE TO :
Majority interests	W	1,451,491		W	1,648,876		W	1,215,719		$	963,327
Minority interests		(1,939	)		(86,611	)		(243,381	)		(192,853	)


	W	1,449,552		W	1,562,265		W	972,338		$	770,474


NET INCOME PER SHARE FROM CONTINUING OPERATION
(In Korean won and U.S. dollars) (Notes 2 and 19)	W	19,801		W	23,143		W	16,453		$	13.04


NET INCOME PER SHARE
(In Korean won and U.S. dollars) (Notes 2 and 19)	W	19,801		W	22,696		W	16,707		$	13.24


DILUTED NET INCOME PER SHARE FROM CONTINUING OPERATION
(In Korean won and U.S. dollars) (Notes 2 and 19)	W	19,523		W	22,813		W	16,309		$	12.92


DILUTED NET INCOME PER SHARE
(In Korean won and U.S. dollars) (Notes 2 and 19)	W	19,523		W	22,375		W	16,559		$	13.12

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


									Accumulated
									other									Total
	Common		Capital			Capital			comprehensive			Retained			Minority			stockholders’
	stock		surplus			adjustments			income			earnings			interest			equity

(In millons of Korean won)
Balance, January 1, 2006	W	44,639	W	2,954,840		W	(2,043,625	)	W	(4,890	)	W	7,267,649		W	108,927		W	8,327,540
Cumulative effect of change in accounting policies (Note 2)		—		15,025			(15,025	)		—			—			—			—

Adjusted balance, January 1, 2006		44,639		2,969,865			(2,058,650	)		(4,890	)		7,267,649			108,927			8,327,540
Cash dividends (Note 20)		—		—			—			—			(588,914	)		—			(588,914	)
Interim dividends (Note 20)		—		—			—			—			(73,714	)		—			(73,714	)
Net income		—		—			—			—			1,451,491			(1,939	)		1,449,552
Conversion of convertible bonds (Notes 9 and 16)		—		(3,733	)		—			—			—			—			(3,733	)
Transfer of stock option from capital adjustments to capital surplus (Notes 2 and 14)		—		234			(234	)		—			—			—			— —
Difference between the acquisition cost and the net book value incurred from the capital transactions between companies under common control (Note 2)		—		—			(1,095	)		—			—			—			(1,095	)
Equity in capital surplus changes of affiliates		—		33			—			—			—			—			33
Equity in other capital adjustment changes of affiliates		—		—			48			—			—			—			48
Treasury stock (Note 16)		—		—			32,178			—			—			—			32,178
Loss on disposal of treasury stock (Notes 16 and 17)		—		—			(7,887	)		—			—			—			(7,887	)
Unrealized gain on valuation of long-term investment securities (Notes 2 and 4)		—		—			—			471,321			—			—			471,321
Equity in other comprehensive income changes of affiliates, net (Notes 2 and 5)		—		—			—			45,956			—			—			45,956
Foreign-based operations’ translation adjustment (Note 2)		—		—			—			(19,737	)		—			—			(19,737	)
Gain on valuation of currency swap (Notes 2 and 27)		—		—			—			(2,311	)		—			—			(2,311	)
Gain on valuation of interest rate swap (Notes 2 and 27)		—		—			—			(329	)		—			—			(329	)
Acquisition and retirement of treasury stock		—		—			—			—			(209,078	)		—			(209,078	)
Increase in minority interest in equity of consolidated subsidiaries		—		—			—			—			—			63,258			63,258


Balance, December 31, 2006	W	44,639	W	2,966,399		W	(2,035,640	)	W	490,010		W	7,847,434		W	170,246			9,483,088


Balance, January 1, 2007	W	44,639	W	2,950,327		W	(2,019,568	)	W	490,010		W	7,847,434		W	170,246		W	9,483,088
Cumulative effect of change in accounting policies (Note 2)		—		16,072			(16,072	)		—			—			—			—

Adjusted balance, January 1, 2007		44,639		2,966,399			(2,035,640	)		490,010			7,847,434			170,246			9,483,088
Cash dividends (Note 20)		—		—			—			—			(508,672	)		—			(508,672	)
Interim dividends (Note 20)		—		—			—			—			(72,668	)		—			(72,668	)
Net income		—		—			—			—			1,648,876			(86,611	)		1,562,265
Conversion of convertible bonds (Notes 9 and 16)		—		(11,116	)		—			—			—			—			(11,116	)
Transfer of stock option from capital adjustments to capital surplus (Notes 2 and 14)		—		3,247			(3,247	)		—			—			—			—
Difference between the acquisition cost and the net book value incurred from the capital transactions between companies under common control (Note 2)		—		—			(30,086	)		—			—			—			(30,086	)
Equity in capital surplus changes of affiliates		—		(2,424	)		—			—			—			—			(2,424	)
Equity in other capital adjustment changes of affiliates							15,013												15,013
Treasury stock (Note 16)		—		—			(26,556	)		—			—			—			(26,556	)
Loss on disposal of treasury stock (Notes 16 and 17)		—		—			7,793			—			—			—			7,793
Unrealized gain on valuation of long-term investment securities (Notes 2 and 4)		—		—			—			1,195,385			—			—			1,195,385
Equity in other comprehensive income changes of affiliates, net (Notes 2 and 5)		—		—			—			(105,597	)		—			—			(105,597	)
Foreign-based operations’ translation adjustment (Note 2)		—		—			—			4,162			—			—			4,162
Gain on valuation of currency swap (Notes 2 and 27)		—		—			—			4,671			—			—			4,671
Gain on valuation of interest rate swap (Notes 2 and 27)		—		—			—			2,627			—			—			2,627
Increase in minority interest in equity of consolidated subsidiaries		—		—			—			—			—			169,748			169,748


Balance, December 31, 2007	W	44,639	W	2,956,106		W	(2,072,723	)	W	1,591,258		W	8,914,970		W	253,383		W	11,687,633

(Continued)

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


								Accumulated
								other									Total
	Common		Capital		Capital			comprehensive			Retained			Minority			stockholders’
	stock		surplus		adjustments			income			earnings			interest			equity

(In millons of Korean won)

Balance, January 1, 2008	W	44,639	W	2,924,960	W	(2,041,577	)	W	1,591,258		W	8,914,970		W	253,383		W	11,687,633
Cumulative effect of change in accounting policies (Note 2)		—		31,146		(31,146	)		—			—			—			—

Adjusted balance, January 1, 2008		44,639		2,956,106		(2,072,723	)		1,591,258			8,914,970			253,383			11,687,633
Cash dividends (Note 20)		—		—		—			—			(609,711	)		—			(609,711	)
Interim dividends (Note 20)		—		—		—			—			(72,793	)		—			(72,793	)
Net income		—		—		—			—			1,215,719			(243,381	)		972,338
Conversion of convertible bonds (Notes 9 and 16)		—		1,544		—			—			—			—			1,544
Difference between the acquisition cost and the net book value incurred from the capital transactions between companies under common control (Note 2)		—		—		(75,329	)		—			—			—			(75,329	)
Equity in capital surplus changes of affiliates		—		481		—			—			—			—			481
Equity in other capital adjustment changes of affiliates		—		—		2,706			—			—			—			2,706
Treasury stock (Note 16)		—		723		(14,137	)		—			—			—			(13,414	)
Loss on disposal of treasury stock (Notes 16 and 17)		—		—		94			—			—			—			94
Unrealized gain on valuation of long-term investment securities (Notes 2 and 4)		—		—		—			(1,216,771	)		—			—			(1,216,771	)
Equity in other comprehensive income changes of affiliates, net (Notes 2 and 5)		—		—		—			(70,490	)		—			—			(70,490	)
Foreign-based operations’ translation adjustment (Note 2)		—		—		—			60,262			—			—			60,262
Gain on valuation of currency swap (Notes 2 and 27)		—		—		—			20,360			—			—			20,360
Gain on valuation of interest rate swap (Notes 2 and 27)		—		—		—			(28,427	)		—			—			(28,427	)
Increase in minority interest in equity of consolidated subsidiaries		—		—		—			—			—			1,165,957			1,165,957


Balance, December 31, 2008	W	44,639	W	2,958,854	W	(2,159,389	)	W	356,192		W	9,448,185		W	1,175,959		W	11,824,440


(In thousands of U.S. dollars) (Note 2 a)
Balance, January 1, 2008	$	35,372	$	2,317,718	$	(1,617,731	)	$	1,260,902		$	7,064,160		$	200,778		$	9,261,199
Cumulative effect of change in accounting policies (Note 2)		—		24,680		(24,680	)		—			—			—			—

Adjusted balance, January 1, 2008		35,372		2,342,398		(1,642,411	)		1,260,902			7,064,160			200,778			9,261,199
Cash dividends (Note 20)		—		—		—			—			(483,131	)		—			(483,131	)
Interim dividends (Note 20)		—		—		—			—			(57,680	)		—			(57,680	)
Net income		—		—		—			—			963,327			(192,853	)		770,474
Conversion of convertible bonds (Notes 9 and 16)		—		1,223		—			—			—			—			1,223
Difference between the acquisition cost and the net book value incurred from the capital transactions between companies under common control (Note 2)		—		—		(59,690	)		—			—			—			(59,690	)
Equity in capital surplus changes of affiliates		—		381		—			—			—			—			381
Equity in other capital adjustment changes of affiliates						2,143												2,143
Treasury stock (Note 16)		—		573		(11,201	)		—			—			—			(10,628	)
Loss on disposal of treasury stock (Notes 16 and 17)		—		—		74			—			—			—			74
Unrealized gain on valuation of long-term investment securities (Notes 2 and 4)		—		—		—			(964,161	)		—			—			(964,161	)
Equity in other comprehensive income changes of affiliates, net (Notes 2 and 5)		—		—		—			(55,856	)		—			—			(55,856	)
Foreign-based operations’ translation adjustment (Note 2)		—		—		—			47,751			—			—			47,751
Gain on valuation of currency swap (Notes 2 and 27)		—		—		—			16,133			—			—			16,133
Gain on valuation of interest rate swap (Notes 2 and 27)		—		—		—			(22,525	)		—			—			(22,525	)
Increase in minority interest in equity of consolidated subsidiaries		—		—		—			—			—			923,897			923,897


Balance, December 31, 2008	$	35,372	$	2,344,575	$	(1,711,085	)	$	282,244		$	7,486,676		$	931,822		$	9,369,604

See accompanying notes to consolidated financial statements.

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


										In thousands
										of U.S. dollars
	In millions of Korean won									(Note 2 a)
	2006			2007			2008			2008
CASH FLOWS FROM OPERATING ACTIVITIES :
Net income	W	1,449,552		W	1,562,265		W	972,338		$	770,474


Expenses not involving cash payments :
Provision for severance indemnities		47,370			44,233			93,094			73,767
Depreciation and amortization		1,698,364			1,971,327			2,759,276			2,186,431
Allowance for doubtful accounts		86,321			58,272			73,325			58,102
Foreign currency translation loss		1,106			9,411			132,162			104,724
Loss on valuation of short-term investment securities		—			1,203			8,358			6,623
Equity in losses of affiliates		211,464			175,474			54,268			43,002
Impairment loss on investment securities		27,696			5,466			223,207			176,868
Loss on disposal of investment assets		6,096			1,190			12,148			9,626
Loss on disposal of property, equipment and intangible assets		17,148			30,680			70,314			55,716
Loss on disposal of consolidated subsidiaries		—			—			724			574
Impairment loss on assets		7,030			10,634			14,754			11,691
Loss on transaction and valuation of currency swap		9,258			33,876			441,207			349,609
Loss on transaction of interest rate swap		—			—			48			38
Amortization of discounts on bonds and other		51,077			47,640			46,586			36,915
Loss from discontinued operation		—			50,101			20,209			16,013

Sub-total		2,162,930			2,439,507			3,949,680			3,129,699


Income not involving cash receipts :
Foreign translation gain		924			5,373			428,575			339,600
Reversal of allowance for doubtful accounts		789			614			2,084			1,651
Equity in earnings of affiliates		45,787			247,382			24,894			19,726
Gain on valuation of trading securities		—			128			—			—
Gain on disposal of investment assets		27,490			3,721			17,409			13,795
Gain on disposal of consolidated subsidiaries		1,556			—			—			—
Gain on disposal of property, equipment and intangible assets		4,507			9,776			10,000			7,924
Gain on transactions and valuation of currency swap		16,660			10,799			265,142			210,097
Gain on transactions of interest rate swap		—			—			2			2
Gain on conversion of convertible bond		—			373,140			—			—
Gain on repayment of bonds		—			6,160			—			—
Gain on disposal of other non-current assets and other		3,075			13,623			6,036			4,782

Sub-total		100,788			670,716			754,142			597,577


Changes in assets and liabilities related to operating activities :
Accounts receivable — trade		(161,914	)		43,020			72,097			57,129
Accounts receivable — other		57,253			372,778			(383,668	)		(304,016	)
Inventories		(9,145	)		(8,895	)		(66,166	)		(52,429	)
Prepaid expenses		61,148			67,669			8,841			7,006
Advanced payments and other		5,865			(16,248	)		(59,552	)		(47,189	)
Long-term accounts receivables — other		—			—			514			407
Accounts payable		161,611			(33,475	)		(104,300	)		(82,647	)
Income taxes payable		(44,637	)		(21,791	)		118,011			93,511
Accrued expenses		37,985			(9,723	)		405,084			320,986
Withholdings		123,003			(111,918	)		70,400			55,784
Current portion of subscription deposits		885			(8,220	)		(1,113	)		(882	)
Advance receipts and other		21,585			21,832			(20,367	)		(16,138	)
Deferred income taxes		(76,423	)		121,681			(194,865	)		(154,410	)
Dividends received from affiliates		1,318			2,184			1,214			962
Severance indemnity payments		(262,948	)		(13,732	)		(107,037	)		(84,815	)
Deposits for group severance indemnities and other		162,545			(14,518	)		(610,031	)		(483,384	)

Sub-total		78,131			390,644			(870,938	)		(690,125	)


Net Cash Provided by Operating Activities		3,589,825			3,721,700			3,296,938			2,612,471

(Continued)

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


										In thousands
										of U.S. dollars
	In millions of Korean won									(Note 2 a)
	2006			2007			2008			2008

CASH FLOWS FROM INVESTING ACTIVITIES :
Cash inflows from investing activities:
Decrease (increase) in short-term investment securities, net	W	80,061		W	28,852		W	—		$	—
Decrease (increase) in short-term financial instruments, net		4,470			—			174,441			138,226
Collection of short-term loans		96,892			119,608			215,074			170,423
Decrease (increase) in long-term investment securities, net		—			—			—			—
Decrease (increase) in long-term financial instruments		2			2,118			16,159			12,804
Collection of long-term loans		654			3,652			10,646			8,436
Proceeds from sales of long-term investment securities		305,953			4,804			386,740			306,450
Proceeds from sales of equity securities accounted for using the equity method		80,014			20,258			8,292			6,571
Proceeds from disposal of consolidated subsidiary		39,062			—			—			—
Decrease in guarantee deposits		71,164			32,594			26,361			20,888
Decrease in other non-current assets		19,940			30,444			40,913			32,419
Proceeds from disposal of property and equipment		14,353			30,429			45,533			36,080
Proceeds from disposal of intangible assets		1,630			6,739			9,496			7,525
Cash inflows from transaction of currency swap		—			17,242			727			576


Sub-total		714,195			296,740			934,382			740,398


Cash outflows from investing activities:
Decrease (increase) in short-term financial instruments, net	W	10,091		W	7,822		W	—		$	—
Decrease (increase) in short-term investment securities, net		—			—			40			32
Increase in short-term loans		92,753			104,674			239,414			189,710
Decrease (increase) in long-term financial instruments					652			6,086			4,823
Acquisition of long-term investment securities		1,127,396			371,394			31,420			24,897
Increase in long-term loans		12,623			100,006			35,290			27,964
Acquisition of equity securities accounted for using the equity method		244,333			76,629			601,066			476,281
Increase in equity of consolidated subsidiaries		27,406			12,514			1,093,104			866,168
Increase in guarantee deposits		30,290			31,056			57,287			45,394
Increase in other non-current assets		132,349			78,853			96,303			76,308
Acquisition of property and equipment		1,498,142			1,804,148			2,236,930			1,772,528
Acquisition of intangible assets		73,964			115,102			149,341			118,337
Cash outflows from transaction of currency swap		—			8,769			263,495			208,792


Sub-total		3,249,347			2,711,619			4,809,776			3,811,234


Net Cash Used in Investing Activities		(2,535,152	)		(2,414,879	)		(3,875,394	)		(3,070,836	)

(Continued)

SK TELECOM CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


										In thousands
										of U.S. dollars
	In millions of Korean won									(Note 2 a)
	2006			2007			2008			2008

CASH FLOWS FROM FINANCING ACTIVITIES :
Cash inflows from financing activities:
Issuance of bonds payable	W	384,990		W	761,117		W	1,307,679		$	1,036,196
Proceeds from short-term borrowings		51,230			35,946			472,958			374,769
Proceeds from long-term borrowings		294,800			—			510,577			404,578
Increase in guarantee deposots received and other		3,370			2,327			4,532			3,591
Proceeds from disposal of treasury stock		—			45,133			42,246			33,475
Cash inflows from transaction of currency swap		—			2,901			—			—
Increase in equity of consolidated subsidiaries		19,050			4,677			64,402			51,032


Sub-total		753,440			852,101			2,402,394			1,903,641


Cash outflows from financing activities:
Repayment of current portion of long-term debt		815,287			907,176			558,107			442,240
Repayment of short-term borrowings		—			86,561			—			—
Repayment of long-term borrowings		404			93,336			193,400			153,250
Repayment of bonds payable		1,230			61,306			—			—
Payment of dividends		662,815			581,309			682,504			540,811
Decrease in subscription deposits		2,630			14,714			—			—
Cash outflows from transaction of currency swap		—			11,838			—			—
Acquisition and retirement of treasury stock		209,078			118,512			63,538			50,347
Decrease in equity of consolidated subsidiaries		—			6,607			24,863			19,701
Other		14,374			11,997			10,567			8,374

Sub-total		1,705,818			1,893,356			1,532,979			1,214,723


Net Cash Used in Financing Activities		(952,378	)		(1,041,255	)		869,415			688,918


THE EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES (Note 2)		(9,317	)		6,097			37,371			29,613


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS DUE TO CHANGES IN CONSOLIDATED SUBSIDIARIES		14,568			102,079			36,413			28,853


PREACQUISITION CASH FLOWS OF SUBSIDIARIES		—			(11,396	)		17,250			13,669


INCREASE IN CASH AND CASH EQUIVALENTS DUE TO MERGER		—			50,448			—			—


CASHFLOWS FROM DISCONTINUED OPERATION (Note 2)		—			(12,777	)		(256,515	)		(203,261	)


NET INCREASE IN CASH AND CASH EQUIVALENTS		107,546			400,017			125,478			99,427


CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR (Note 29)		378,426			485,972			885,989			702,052


CASH AND CASH EQUIVALENTS AT END OF THE YEAR (Note 29)	W	485,972		W	885,989		W	1,011,467		$	801,479

See accompanying notes to consolidated financial statements.

SK TELECOM CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008


1.		GENERAL

SK Telecom Co., Ltd. (“SK Telecom”) was incorporated in March 1984 under the laws of Korea to engage in providing cellular telephone communication services in the Republic of Korea. SK Telecom Co., Ltd. and its subsidiaries (the “Company”) mainly provide wireless telecommunications in the Republic of Korea and recently acquired foreign wireless telecommunications operators in Vietnam, Mongolia, and the United States of America. The Company’s common shares and depositary receipts (DRs) are listed on the Stock Market of Korea Exchange (formerly “Korea Stock Exchange”) and the New York and London Stock Exchanges, respectively. As of December 31, 2008, the Company’s total issued shares are held by the following:


			Percentage of
	Number of shares		total shares issued (%)

SK Group		18,748,452		23.09
POSCO		2,341,569		2.88
Institutional investors and other minority stockholders		51,395,994		63.30
Treasury stock		8,707,696		10.73

		81,193,711		100.00


2.		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Company have been prepared in conformity with accounting principles generally accepted in the Republic of Korea. Significant accounting policies followed in preparing the accompanying consolidated financial statements are summarized as follows:

	a.		Basis of Presentation

			The Company maintains its official accounting records in Korean won and prepares statutory consolidated financial statements in Korean language (Hangul) in conformity with the accounting principles generally accepted in the Republic of Korea (“Korean GAAP”). Certain accounting principles applied by the Company that conform with financial accounting standards and accounting principles in the Republic of Korea may not conform with accounting principles generally accepted in other countries. Accordingly, these consolidated financial statements are intended for use by those who are informed about Korean accounting principles and practices. The accompanying consolidated financial statements have been condensed, restructured and translated into English with certain expanded descriptions from the Korean language financial statements. Certain information included in the Korean language financial statements, but not required for a fair presentation of the Company’s financial position, results of operations, changes in stockholders’ equity or cash flows, is not presented in the accompanying consolidated financial statements.

			The accompanying consolidated financial statements are stated in Korean won, the currency of the country in which the Company is incorporated and operates. The translation of Korean won amounts into U.S. dollar amounts is included solely for the convenience of readers of financial statements and has been made at the rate of W1,262.00 to US$1.00, the Noon Buying Rate in the City of New York for cable transfers in Korean won as certified for customs purposes by the Federal Reserve Bank of New York on the last business day of the period ended December 31, 2008. Such translations into U.S. dollars should not be construed as representations that the Korean won amounts could be converted into U.S. dollars at that or any other rate.

	b.		Principles of Consolidation

			The consolidated financial statements include the accounts of SK Telecom and the following controlled subsidiaries as of December 31, 2006, 2007 and 2008. Controlled subsidiaries include (a) majority-owned entities by SK Telecom or its controlled subsidiaries and (b) other entities where SK Telecom or its controlled subsidiaries own more than 30% of total outstanding common stock and is the largest stockholder. Meanwhile, if the total assets of the controlled subsidiaries at the beginning of fiscal year were less than W7 billion, those investee are excluded and accounted for using equity method in accordance with Korean GAAP. All significant intercompany balances and transactions have been eliminated in the consolidation procedures.


	Year of		Ownership Percentage (%)
Subsidiary	Establishment	Primary business	2006		2007		2008

SK Broadband Co., Ltd (formerly hanarotelecom incorporated)	1997	Telecommunication services		4.8		4.8		43.42
SK Communications Co., Ltd.	1999	Internet website services		87.08		65.71		65.71
SK Telink Co., Ltd.	1998	Telecommunication services		90.77		90.77		90.77
SK Wyverns Baseball Club Co., Ltd.	2000	Business related sports		99.99		99.99		99.99
PAXNet Co., Ltd.	1999	Internet website services		59.74		59.74		59.74
F&U Credit information Co., Ltd. (formerly Global Credit & information Corp)	1998	Credit and collection services		50.00		50.00		50.00
Loen Entertainment, Inc. (formerly Seoul Records, Inc.)	1982	Release of music disc		60.00		60.00		63.48
TU Media Corp.	2003	Satellite broadcasting services		29.58		32.70		44.15
IHQ, Inc.	1962	Business related entertainment		34.08		37.09		37.09
Ntreev Soft Co., Ltd.	2003	Game software		51.00		66.70		63.70
Commerce Planet Co., Ltd.	1997	Online shopping mall operation agency		—		100.00		100.00
The First Music Investment Fund of SK-PVC	2005	Investment association		99.00		99.00		99.00
The Second Music Investment Fund of SK-PVC	2005	Investment association		99.00		99.00		99.00
SK-KTB Music Investment Fund	2005	Investment association		99.00		99.00		99.00
IMM Cinema Fund	2005	Investment association		60.84		72.24		72.24
Michigan Global Cinema Fund	2006	Investment association		36.36		45.45		45.45
SK i-media Co., Ltd.	2006	Game software		60.00		60.00		100.00
CU Media, Inc (formerly YTN Media, Inc)	2000	Broadcasting services		51.42		51.42		52.52
Konan Technology	1999	Multimedia contents		7.51		29.49		29.49
Broadband Media Co., Ltd. (formerly hanaromedia incorporated)	1997	Multimedia contents		—		—		100.00
HanaroDream Incorporated	2001	Internet website services		—		—		36.03
Broadband D&M Co., Ltd. (formerly hanaro Realty Development & Management Co., Ltd.)	1998	Facilities Maintenance		—		—		100.00
Broadband CS Co., Ltd. (formerly hanaro Customer Service, Inc.)	1998	Telemarketing Service		—		—		100.00
Etoos Co., Ltd.	2008	Internet Education Service		—		—		100.00
K-net Culture and Contents Venture Fund	2008	Investment association		—		—		59.00
Benex Digital Cultural Contents Fund	2008	Investment association		—		—		39.84
Benex Focus Limited Partnership II	2008	Investment association		—		—		66.67
Open Innovation Fund	2008	Investment association		—		—		98.52
SK Telecom China Co., Ltd.	2002	Telecommunication services		100.00		100.00		100.00
ULand Company Ltd.	2004	Telecommunication services		100.00		100.00		100.00
SKT Vietnam PTE., Ltd.	2000	Telecommunication services		73.32		73.32		73.32
SKT Americas, Inc. (formerly SK Telecom International Inc.)	1995	Internet website services		100.00		100.00		100.00
SK Telecom Advanced Tech & Service Center	2006	Mobile handset services		100.00		100.00		100.00
Cyworld China Holdings Limited	2006	Internet website services		—		100.00		100.00
SK Telecom China Holdings Co., Ltd.	2007	Internet website services		—		100.00		100.00
Centurion IT Investment Association	2001	Investment association		37.50		—		—
SK Telecom USA Holdings, Inc.	2005	Telecommunication services		100.00		100.00		—
Helio, Inc & LLC	2005	Mobile handset services		48.08		64.86		—
AirCross Co., Ltd.	2000	Advertising agency		38.10		100.00		—
SK Cyberpass, Inc.	2001	International telephone call services		70.54		70.54		—

			Effective July 1, 2006, IHQ, Inc. and its subsidiary, CU Media, Inc. (formerly YTN Media, Inc) were included in the consolidation of the accompanying financial statements as the Company owned more than 30% of total outstanding common stock and became the largest stockholder.

			During the year ended December 31, 2007, TU Media Corp., Commerce Planet Co., Ltd., Michigan Global Cinema Fund and Konan Technology became the controlled subsidiaries of the Company, as the Company owns majority ownership interest or more than 30% of total outstanding common stock and is the largest stockholder other than Konan Technology. Konan Technology is owned by SK Communications Co., Ltd. by 29.49% as of December 31, 2008. As SK Communications Co., Ltd. has call option to acquire all other stockholders’ common stocks and the call option are exercisable at little or no economic cost, which is regarded de facto control of Konan Technology, Konan Technology was included in consolidation even though the Company’s ownership interest is below 30%.

			Effective January 1, 2007, Ntreev Soft Co., Ltd. and SK i-media Co., Ltd. were included in the consolidation of the accompanying consolidated financial statements as their total assets at the beginning of that fiscal year were more than W7 billion, in accordance with Korean GAAP.

			Effective January 1, 2007, Centurion IT investment Association was excluded in the consolidation of the accompanying consolidated financial statements as it was dissolved on February 28, 2008. It was accounted for using the equity method of accounting from January 1, 2007.

			Effective April 1, 2008, the Company acquired additional 91,406,249 common shares of SK Broadband Co., Ltd. (formerly hanarotelecom incorporated) which increased the Company’s ownership from 4.6% to 43.4%. As a result, SK Broadband Co., Ltd. and its subsidiaries, Broadband Media Co., Ltd., Hanaro Dream Incorporated, Broadband D&M Co., Ltd. and Broadband CS Co., Ltd., were included in the consolidation of accompanying financial statements as the Company owned more than 30% of total outstanding common stock and became the largest stockholder.

			For the year ended December 31, 2008, Etoos Co., Ltd, a newly established by SK Communications was included in the consolidation.

			During the year ended December 31, 2008, Benex Digital Cultural Contents Fund, Benex Focus Limited Partnership II, K-net Culture and Contents Venture Fund and Open Innovation Fund became the controlled subsidiaries of the Company, as the Company owns majority ownership interest or more than 30% of total outstanding common stock and is the largest stockholder.

			Effective January 1, 2008, SK Telecom Advanced Tech & Service Center, Cyworld China Holdings Limited and SK Telecom China Holdings Co., Ltd. were included in the consolidation of accompanying financial statements as its total assets at the beginning of that fiscal year were more than W7 billion, in accordance with Korean GAAP.

			For the year ended December 31, 2008, SK Telecom USA Holdings, Inc. which was incorporated to manage the Company’s investment to Helio LLC in 2005 was fully liquidated. Meanwhile, for the year ended December 31, 2008, the equity interest in Helio held by SK Telecom USA Holding, Inc. were exchanged into the equity interest in Virgin mobile USA Inc. As a result, Helio Inc & LLC was excluded from the consolidation.

			Effective January 1, 2008, SK Cyberpass, Inc. was excluded from the consolidation as its total assets at the beginning of that fiscal year were less than W7 billion, in accordance with Korean GAAP.

			Effective January 1, 2008, Aircross Co., Ltd. was excluded from the consolidation as it was liquidated in March 2009.

	c.		Use of Estimates

			The preparation of consolidated financial statements in conformity with Korean GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the consolidated balance sheets, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

	d.		Cash Equivalents

			Cash equivalents are highly liquid investments and short term financial instruments, which are readily convertible without significant transaction cost, do not have significant risk from changes in interest rates, and with original maturities of three months or less.

	e.		Allowance for Doubtful Accounts

			Allowance for doubtful accounts is provided based on the estimated collectability of individual accounts and historical bad debt experience.

			Details of changes in the allowance for doubtful accounts receivable — trade for 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006			2007			2008

Beginning balance	W	133,499		W	106,737		W	93,551
Write-offs		(90,780	)		(90,475	)		(59,552	)


Net		42,719			16,262			33,999

Provision for doubtful accounts receivable—trade		61,457			48,835			62,973
Provision for doubtful accounts receivable—trade for the discontinued operation		—			22,604			5,511
Increase (decrease) due to the changes in consolidated subsidiaries		2,561			5,850			47,837


End of year	W	106,737		W	93,551		W	150,320

	f.		Inventories

			Inventories are stated at the acquisition cost using the following methods:


Assets		Methods
E-commerce inventories		Moving average method
Replacement units for wireless telecommunication facilities and supplies for sales promotion		Moving average method
Wireless device		FIFO
Books and CDs		FIFO

During the year, perpetual inventory systems are used to value inventories, which are adjusted to physical inventory counts performed at the end of the year. When the market value of inventories is less than the acquisition cost, carrying amount is reduced to the market value and any difference is charged to current operations as operating expenses. A valuation loss of W168 million and W584 million was recorded for the years ended December 31, 2006, 2007, respectively, and a reversal of allowance for inventory valuation loss of W168 million was recorded for the year ended December 31, 2008.

	g.		Securities (excluding securities accounted for using the equity method of accounting)

			Debt and equity securities are initially recorded at their acquisition costs (fair value of consideration paid) including incidental cost incurred in connection with acquisition of the related securities and classified into trading, available-for-sale and held-to-maturity (debt only) securities depending on the acquisition purpose and nature. The acquisition cost of the equity securities acquired by exercising a conversion right is the carrying amount of the convertible bonds exchanged. However, if those newly acquired equity securities are marketable securities in an active trading market, the acquisition cost of such equity securities is the market value of those equity securities at the acquisition date and the difference between the market value of the newly acquired equity securities and the carrying amount of the exchanged convertible bonds is charged to the current operation as gain or loss on conversion.

			Trading securities are stated at fair value with gains or losses on valuation reflected in current operations.

			Securities classified as available-for-sale are reported at fair value. Unrealized gains or losses on valuation of available-for-sale securities are included in accumulated other comprehensive income (loss) and the unrealized gains or losses are reflected in net income when the securities are sold or if there is an objective evidence of impairment such as bankruptcy of investees. Equity securities are stated at acquisition cost if fair value cannot be reliably measured.

			Held-to-maturity securities are presented at acquisition cost after premiums or discounts are amortized or accreted, respectively. The Company recognizes write-downs resulting from declines in the fair value below its book value on the balance sheet date if there is objective evidence of impairment. The related write-downs are recorded as a loss on impairment of investment securities.

			Trading securities are presented in the current asset section of the balance sheet, and available-for-sales and held-to-maturity securities are presented in the current asset section of the balance sheet if their maturities are within one year; otherwise such securities are recorded in the non-current section of the balance sheet.

	h.		Equity Securities Accounted for Using the Equity Method of Accounting

			Investment securities of affiliated companies, in which the Company has the ability to exercise significant influence, are carried using the equity method of accounting, whereby the Company’s initial investment is recorded at cost and the carrying value is subsequently increased or decreased to reflect the Company’s portion of stockholders’ equity of the investee. Differences between the acquisition cost and net asset fair value of the investee are amortized over 5 to 20 years using the straight-line method. When applying the equity method of accounting, unrealized inter-company gains and losses are eliminated. In addition, the Company provides for additional losses for those investments accounted for using the equity method that are reduced to zero to the extent that the Company has other investment assets related to the equity method investees.

			Assets and liabilities of foreign-based companies accounted for using the equity method are translated at current rate of exchange at the balance sheet date while profit and loss items in the statement of earnings are translated at average rate and capital account at historical rate. The translation gains and losses arising from collective translation of the foreign currency financial statements of foreign-based companies are offset and the balance is remained as accumulated other comprehensive income (loss) in the Company’s stockholders’ equity.

			Under the equity method of accounting, the Company does not record its share of losses of an affiliate when such losses would make the Company’s investment in such entity less than zero unless the Company has guaranteed obligations of the investee or is otherwise committed to provide additional financial support. The Company provides for additional losses for these investments accounted for using the equity method that are reduced to zero to the extent that the Company has other investment assets related to the equity method investees. In addition, when the Company’s share of equity interest in the equity method investees increases as a result of capital transactions of the investees with (or without) consideration, the increase in the Company’s proportionate shares in the investees are treated as goodwill or negative goodwill and when the Company’s share of equity interest in the equity method investees decrease as a result of capital transactions of the investees with (or without) consideration, the decrease in the Company’s proportionate shares in the investees are accounted for as gain or loss on disposal.

	i.		Troubled Debt Restructuring

			In case that contractual terms such as the face amount, interest rate, or maturity are changed to alleviate the debtor’s burdens in accordance with an agreement between the creditor and the debtor, initiation of corporate reorganization procedures under court trustee or under debtor’s management, the Company recognizes the restructured receivables at present value of the expected future cash flows discounted by the reasonable interest rate and amortizes the difference between principal amount and present value to interest income using the effective interest rate method.

	j.		Valuation of Long-term Accounts Receivable — Other

			Long-term accounts receivable are stated at the present value of the expected future cash flows. Imputed interest amounts are recorded in present value discount accounts which are deducted directly from the related nominal receivable balances. Such imputed interest is included in operations using the effective interest rate method over the collection period.

	k.		Property and Equipment

			Property and equipment are stated at cost less accumulated depreciation. Major renewals and betterments, which prolong the useful life or enhance the value of assets, are capitalized; expenditures for maintenance and repairs are charged to expense as incurred.

			Depreciation is computed using the declining balance method (except for buildings and structures acquired on or after January 1, 1995 which are depreciated using straight-line method) over the estimated useful lives of the related assets as follows:


Assets	Depreciation method	Useful lives (years)
Buildings and structures	Declining balance method (straight-line method)	15~50
Machinery	Declining balance method	3~9
Other	Declining balance method	3~5

Interest expenses and other financing charges for borrowings related to the manufacture or construction of property and equipment are charged to current operations as incurred.

	l.		Intangible Assets

			Intangible assets are stated at cost less amortization computed using the straight-line method over 2 to 20 years.

			The Company capitalizes the cost of internal-use software which has a useful life in excess of one year. Capitalized internal-use software costs are amortized using the straight-line method over 5 years and are recorded in intangible assets.

	m.		Government Subsidy

			Government subsidy, which is used for the acquisition of certain assets, is accounted for as a deduction from the acquisition cost of the acquired assets. Such subsidy amount is offset against the depreciation or amortization of the acquired assets during such assets’ useful life. Government subsidy, which is required to be repaid, is recorded as a liability in the balance sheet. Government subsidy with no repayment obligation, which is used to purchase a designated asset or to develop a certain technology, is presented as a deduction of the related asset and is amortized against the depreciation or amortization expense of the related asset. Government subsidy, contributed to compensate for specific expenses, is offset against the related expenses as incurred.

	n.		Impairment Losses

			When the recoverable amount of assets (that are not recorded at fair value) including investment assets (except for trading and available-for-sale investments in listed companies), property and equipment, and intangible assets are significantly less than the carrying value due to obsolescence, physical damage, decline in market value or other causes, the carrying value is reduced to the recoverable amount and any difference is charged to current operation as an impairment losses.

	o.		Convertible Bonds and Bonds with Stock Purchase Warrants

			The proceeds from issuance of convertible bonds are allocated between the conversion rights or warrant rights and the debt issued; the portion allocable to the conversion rights is accounted for as capital surplus with a corresponding conversion right adjustment which is deducted from the related bonds. Such conversion right adjustment is amortized to interest expense using the effective interest rate method over the redemption period of the convertible bonds. The portion allocable to the conversion rights is measured by deducting the present value of the debt at time of issuance from the gross proceeds from issuance of convertible bonds, with the present value of the debt being computed by discounting the expected future cash flows (including call premium, if any) using the effective interest rate applied to ordinary or straight debt of the Company at the issuance date.

	p.		Discounts on Bonds

			Discounts on bonds are amortized to interest expense using the effective interest rate method over the redemption period of the bonds.

	q.		Valuation of Long-term Payables

			Long-term payables resulting from long-term installment transactions are stated at present value of the expected future cash flows. Imputed interest amounts are recorded in present value discount accounts which are deducted directly from the related nominal payable balances. Such imputed interest is included in operations using the effective interest rate method over the redemption period.

	r.		Provisions, Contingent Liabilities and Contingent Assets

			The Company recognizes a provision when i) it has a present obligation as a result of a past event, ii) it is probable that a disbursement of economic resources will be required to settle the obligation, and iii) a reliable estimate can be made of the amount of the obligation (see Note 26). When a possible range of loss in connection with a probable loss contingency as of the balance sheet date is estimable with reasonable certainty, and some amount within that range appears at the time to be a better estimate than any other amount within the range, the Company accrues such amount. When no amount within the range appears to be a better estimate than any other amount, the minimum amount in that range is recorded.

			The Company does not recognize the following contingent obligations as liabilities:

	•		Possible obligations related to past events, for which the existence of a liability can only be confirmed upon occurrence of uncertain future event or events outside the control of the Company.

	•		Present obligations arising from past events or transactions, for which i) a disbursement of economic resources to fulfill such obligations is not probable or ii) a disbursement of economic resources is probable, but the related amount cannot be reasonably estimated.

			In addition, the Company does not recognize potential assets related to past events or transactions, for which the existence of an asset or future benefit can only be confirmed upon occurrence of uncertain future event or events outside the control of the Company.

	s.		Accrued Severance Indemnities

			In accordance with the policies of the Company, all employees with more than one year of service are entitled to receive severance indemnities, based on length of service and rate of pay, upon termination of their employment. Accruals for severance indemnities are recorded to approximate the amount required to be paid if all employees were to terminate at the balance sheet date.

			SK Telecom and certain domestic subsidiaries have deposits with insurance companies to fund the portion of the employees’ severance indemnities which is in excess of the tax deductible amount allowed under the Corporate Income Tax Law, in order to take advantage of the additional tax deductibility for such funding. Such deposits with outside insurance companies, where the beneficiaries are their employees, totaling W28,868 million, W45,878 million and W68,559 million as of December 31, 2006, 2007 and 2008, respectively, are deducted from accrued severance indemnities.

			In accordance with the Korean National Pension Fund Law, SK Telecom and its domestic subsidiaries transferred a portion of its accrued severance indemnities to the National Pension Fund through March 1999. Such transfers, amounting to W91 million, W86 million and W28 million as of December 31, 2006, 2007 and 2008, respectively, are deducted from accrued severance indemnities.

			Effective March 31, 2006, SK Telecom changed its policy for the severance indemnities applicable to those employees who joined SK Telecom before or on December 31, 2002 from cumulative method, where employees are entitled to get paid more than one month of salary for each year depending on the length of service, to simple multiplier method, where employees are paid one month of salary for each year regardless of their service period in accordance with the resolution of SK Telecom’s joint labor-management conference held on March 16, 2006. As a result of such policy change, SK Telecom distributed early settlements to those eligible employees on their accumulated severance indemnities as of March 31, 2006 on a mandatory basis, and paid the additional bonuses of W125,890 million for those employees who received the mandatory distribution for their early settlement as compensation for those employees.

			The Company recorded such compensation costs as special severance indemnities in other expenses for the year ended December 31, 2006. In addition, SK Telecom executed the early retirement program and the related special bonus of W18,131 million were paid to eligible employees and accounted for as special severance indemnities in other expenses for the year ended December 31, 2006.

			Changes in accrued severance indemnities for 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006			2007			2008

Beginning net balance	W	71,284		W	22,284		W	44,322
Provision		47,370			44,233			93,094
Payments to employees		(262,948	)		(13,732	)		(107,037	)
Net increase due to the changes in consolidated subsidiaries		4,010			6,291			44,718
Changes in deposits for severance indemnities		162,568			(14,754	)		(21,282	)


Ending net balance	W	22,284		W	44,322		W	53,815


Ending balance :
Accrued severance indemnities	W	51,243		W	90,286			122,402
Deposits with insurance companies		(28,868	)		(45,878	)		(68,559	)
National Pension Fund		(91	)		(86	)		(28	)


Net balance	W	22,284		W	44,322		W	53,815

	t.		Accounting for Leases

			A lease is classified as a finance lease or an operating lease depending on the extent of transfer to the Company of the risks and rewards incidental to ownership. If a lease meets any one of the following criteria, it is accounted for as a finance lease:

	•		The lease transfers ownership of the asset to the lessee by the end of the lease term;

	•		The lessee has the option to purchase the asset at a bargain price and it is certain that the option will be exercised;

	•		The lease term is for the major part (75% or more) of the economic life of the asset even if title is not transferred;

	•		At the date of lease commencement, the present value of the minimum lease payments amounts to at least substantially all (90% or more) of the fair value of the leased asset; or

	•		The leased assets are of such a specialized nature that only the lessee can use them without major modifications.

			All other leases are treated as operating leases.

			Assets and liabilities related to finance leases are recorded as property and equipment and obligations under finance leases, respectively, and the related interest is calculated using the effective interest rate method and charged to expense. For operating leases, the future minimum lease payments are expensed ratably over the lease term while contingent rentals are expensed as incurred.

	u.		Research and Development Costs

			The Company charges substantially all research and development costs to expense as incurred. The Company incurred internal research and development costs of W211,961 million, W218,652 million and W226,714 million for the years ended December 31, 2006, 2007 and 2008, respectively, and external research and development costs of W67,021 million, W74,388 million and W72,993 million for the years ended December 31, 2006, 2007 and 2008, respectively.

	v.		Foreign-based Operations’ Translation Adjustment

			In translating the foreign currency financial statements of the Company’s overseas subsidiaries into Korean won, the Company presents the translation gain or loss as a foreign-based operations’ translation adjustment in the accumulated other comprehensive income (loss) section of the balance sheet. The translation gain or loss arises from the application of different exchange rates; the year-end rate for balance sheet items except stockholders’ equity, the historical rate for stockholders’ equity and the daily average rate for statement of income items.

	w.		Accounting for Foreign Currency Transactions and Translation

			SK Telecom and its domestic subsidiaries maintain their accounts in Korean won. Transactions in foreign currencies are recorded in Korean won based on the prevailing rate of exchange at the dates of transactions. As allowed under Korean GAAP, monetary assets and liabilities denominated in foreign currencies are translated in the accompanying consolidated financial statements at the Base Rates announced by Seoul Money Brokerage Services, Ltd. on the balance sheet dates, which, for U.S. dollars, were W929.60=US$1, W938.20=US$1 and W1,257.50=US$1 at December 31, 2006, 2007 and 2008, respectively. The resulting gains and losses arising from the translation or settlement of such assets and liabilities are included in current operations.

	x.		Derivative Instruments

			The Company records rights and obligations arising from derivative instruments as assets and liabilities, which are stated at fair value. The gains and losses that result from the change in the fair value of derivative instruments are reported in current earnings. However, for derivative instruments designated as hedging the exposure of variable cash flows, the effective portions of the gains or losses on the hedging instruments are recorded as accumulated other comprehensive income (loss) and credited/charged to operations at the time the hedged transactions affect earnings, and the ineffective portions of the gains or losses are credited/charged immediately to operations.

	y.		Revenue Recognition

			The Company recognizes revenue when they are realized or realizable and earned. Revenues are realized or realizable and earned when the Company has persuasive evidence of an arrangement, the goods have been delivered or the services have been rendered to the customer, sales price is fixed or determinable and collectability is reasonably assured.

			The revenue of the Company is principally derived from telecommunication service including data services and wireless device sales. Telecommunication service consists of fixed monthly charges, usage-related charges and non-refundable activation fees. Fixed monthly charges are recognized in the period earned. Usage-related charges are recognized at the time services are rendered. Non-refundable activation fees are recognized when the activation service was performed.

			Meanwhile, the Company recognizes sales revenues on a gross basis when the Company is the primary obligator in the transactions with customers and if the Company merely acts an agent for the buyer or seller from whom it earns a commission, then sales revenues are recognized on a net basis.

			SK Telecom’s subsidiaries also sell products and merchandises to customers and these sales are recognized at the time products and merchandises are delivered.

	z.		Income Taxes

			Income tax expense is determined by adding or deducting the total income tax and surtaxes to be paid for the current period and the changes in deferred income tax assets and liabilities.

			Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profits. Deferred tax liabilities are generally recognized for all taxable temporary differences with some exceptions and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. The carrying amount of deferred tax assets is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. Deferred income tax assets and liabilities are classified into current and non-current based on the classification of related assets or liabilities for financial reporting purposes.

	aa.		Net Income Per Share

			Net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per share of common stock is calculated by dividing adjusted net income by adjusted weighted average number of shares outstanding during the period, taking into account the dilutive effect of stock option and convertible bonds.

	ab.		Handset Subsidies to Long-term Mobile Subscribers

			Effective April 1, 2008, the Telecommunication Business Act was revised to allow wireless carriers to provide handset subsidies to customers without any restrictions. As a result, the Company provides lump-sum handset subsidies to customers who agree to use the Company’s service for the predetermined service period and the subsidies are charged to commission paid as the related payments are made. In case where the customers agree to use the Company’s service for the predetermined service period and purchase handsets on installment basis, the subsidies are paid every month over the installment period and the Company provides provision for handset subsidies estimated to be paid based on the historical experience (See note 26).

	ac.		Use of Estimates

			The Company’s management makes reasonable estimates and assumptions in preparing the financial statements in conformity with accounting principles generally accepted in the Republic of Korea. These estimates and assumptions can change according to additional experiences, changes in circumstances, new information and other and could differ from actual results.

	ad.		Reclassification

			Certain reclassifications have been made in prior periods financial statements to conform to classifications used in the current period. Such reclassifications did not have an effect on the previously reported net assets as of December 31, 2007 and 2006 or net income for the years then ended.

	ae.		Adoption of New Statements of Korea Accounting Standards (“SKAS”)

			On January 1, 2006, the Company adopted SKAS No. 18 through No. 20. The adoption of such accounting standards did not have an effect on the consolidated financial position of the Company as of December 31, 2006 or the consolidated net income of the Company for the year ended December 31, 2006.

On January 1, 2007, the Company adopted SKAS No. 11, and No. 21 through No. 23, and No. 25. The adoption of such accounting standards did not have an effect on the consolidated financial position of the Company as of December 31, 2007 or consolidated net income of the Company for the year ended December 31, 2007. Details of primary change due to such adoption of SKASs are as follows:

	•		Pursuant to adoption of SKAS No. 21, “Preparation and Presentation of Financial Statements”, certain amounts classified as capital adjustments through 2006 are classified as accumulated other comprehensive income (loss); such amounts include unrealized gain/loss on available-for-sale securities, equity in capital adjustments of affiliates and gain/loss on valuation of derivative instruments. In addition, certain amounts classified as investment assets through 2006 are classified as other non-current assets; such amounts include long-term loans, guarantee deposits, long-term deposits and others. The accompanying consolidated balance sheets as of December 31, 2005 and 2006, which are comparatively presented, were reclassified in accordance with SKAS No. 21.

	•		Pursuant to adoption of SKAS No. 25, “Consolidated Financial Statements”, net income is allocated to majority interest and minority interest. In addition, when a subsidiary is purchased during the year, statement of income of the subsidiary is included in the consolidation as though it had been acquired at the beginning of the year, and pre-acquisition earnings are presented as deduction at the bottom of the consolidated statements of income. The accompanying consolidated statements of income for the years ended December 31, 2005 and 2006, which are comparatively presented, were reclassified in accordance with SKAS No. 25. In addition, in connection with the Company’s adoption of SKAS No. 25, the Company also begun to present pre-acquisition cash flows of subsidiaries as a separate deduction (addition) at the bottom of the Company’s consolidated statements of cash flows.

	•		There is no significant change due to the adoption of SKAS No.11, No.22 and No.23.

			The amended SKAS No. 25, “Consolidated Financial Statements”, which is effective December 29, 2008, clarifies that when the parent’s ownership interest in a subsidiary is increased after control is obtained, the difference between the consideration for additional acquisition of interest and portion of net asset of subsidiary, which had been previously recognized as capital surplus, should be recognized as other capital adjustment if the difference is negative amount and there is no related capital surplus earned at previous transaction. As the amended SKAS No. 25, “Consolidated Financial Statements” is applied retroactively during the year ended December 31, 2008, the 2006 and 2007 financial statements presented comparatively are restated, which results in the increase in capital surplus by W16,072 million and W31,146 million as of December 31, 2006 and 2007, respectively, and the decrease in other capital adjustment by W16,072 million and W31,146 million as of December 31, 2006 and 2007, respectively.

	af.		Discontinued Operation

			When a subsidiary is disposed during the year, the results of its operations in the consolidated income statement are treated as discontinued operation and should be presented as a single item between income tax expenses for continuing operation and net income.

			On August 22, 2008, the Company disposed its investment in Helio LLC which was incorporates to provide cellular telephone communication service in the US to Virgin Mobile USA in accordance with the agreement entered into on June 27, 2008. As a result, on the operation of Helio LLC was presented as discontinued operation.

And, the details from discontinued operation for the years ended December 31, 2007 and 2008 are as following (In millions of Korean won) :


	2006		2007			2008
Revenue	W	—	W	154,805		W	116,607
Operating Expense		—		(446,348	)		(230,478	)
Other Income (expense)		—		(603	)		(15,917	)
Income tax benefit		—		—			109,579
Preacquisition net loss for subsidiary		—		242,045			—

Net loss		—	W	(50,101	)	W	(20,209	)

Cash flows from discontinued operation for the years ended December 31, 2007 and 2008 are as following (In millions of Korean won)


	2006		2007			2008

Operating Activities	W	—	W	(38,749	)	W	(213,899	)
Investing Activities		—		(1,832	)		(51,631	)
Financing Activities		—		27,804			9,015


Net	W	—	W	(12,777	)	W	(256,515	)

Meanwhile, total assets and liabilities related to discontinued operation as of December 31, 2007 totaled W224,583 million and W160,968 million, respectively.


3.		INVENTORIES

Inventories as of December 31, 2006, 2007 and 2008 consist of the following (In millions of Korean won):


	2006			2007			2008

Merchandise	W	1,167		W	42,787		W	17,032
Finished goods		2,282			4,054			4,079
Semi-finished goods		41			706			509
Raw materials		313			165			13
Supplies		16,782			3,733			14,105


Total		20,585			51,445			35,738
Less allowance for valuation loss		(807	)		(4,393	)		(764	)


Net	W	19,778		W	47,052		W	34,974


4.		INVESTMENT SECURITIES

	a.		Short-term Investment Securities

			Short-term investment securities as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	Acquisition cost		Fair value
	at December 31,		at December 31,		Carrying amount
	2008		2008		2006		2007		2008

Trading securities(Note)	W	376,563	W	367,001	W	665,312	W	635,434	W	367,001
Current portion of long-term investment securities		7,545		5,912		335		101,209		5,912

Total	W	384,108	W	372,913	W	665,647	W	736,643	W	372,913


(Note)		The Company’s trading securities are all beneficiary certificates as of December 31, 2008, and the difference between the fair value and acquisition cost was recorded in other expenses as loss on valuation of short-term investment securities.

	b.		Long-term Investment Securities

			Long-term investment securities as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006			2007			2008
Available-for-sale equity securities	W	1,011,971		W	4,689,905		W	3,102,833
Available-for-sale debt securities		1,463,636			469,729			8,261
Held-to-maturity securities		146			94			113

Total		2,475,753			5,159,728			3,111,207
Less current portion		(335	)		(101,209	)		(5,912	)

Long-term portion	W	2,475,418		W	5,058,519		W	3,105,295

b-(1). Available-for-sale Equity Securities

Available-for-sale equity securities as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won, except for share data):


	December 31, 2008
	Number		Ownership	Acquisition				Carrying amount
	of shares		percentage (%)	cost		Fair value		2006		2007		2008
(Investments in listed companies)
Digital Chosunilbo Co., Ltd.		2,890,630	7.8	W	5,781	W	5,636	W	5,897	W	8,629	W	5,636
SK Broadband Co., Ltd. (formerly hanarotelecom incorporated)		—	—		—	(note a)			88,581		116,525		—
KRTnet Corporation		234,150	4.4		1,171		1,098		2,517		2,470		1,098
POSCO		2,481,310	2.8		332,662		942,898		766,725		1,426,753		942,898
DAEA TI Co., Ltd. (formerly Comas Interactive Co., Ltd.)		99,120	0.2		1,695		89		83		228		89
Extended Computing Environment Co., Ltd.		133,333	3.0		10		40		876		905		40
nTels Co., Ltd.		205,200	6.2		34		504		34		1,525		504
Qualcomm Inc.		55,805	0.1		2,756		2,514		—		2,060		2,514
China Unicom Ltd. (note b)		899,745,075	3.8		1,333,009		1,357,648		—		1,936,840		1,357,648
LG Powercomm Co., Ltd. (note c)		6,066,666	4.6		241,243		39,433		80,370		89,422		39,433
ZeroOne Interactive Co.,Ltd.(note d)		—	—		—		—		3,845		2,770		—
T-Entertainment Co., Ltd.		1,026,695	6.2		2,500		1,355		—		1,817		1,355
HB Entertainment Co., Ltd.		—	—		—		—		1,137		—		—
De Chocolate E&TF Co., Ltd.		709,219	2.7		1,000		660		—		—		660
C.C.S. Inc.		29,696	0.6		414		249		—		—		249
Medifron DBT Co., Ltd.		170,525	0.9		328		246		—		—		246

sub-total					1,922,603		2,352,370		950,065		3,589,944		2,352,370


(Investments in non-listed companies)
SK C&C Co., Ltd. (note e)		6,000,000	30.0		501,652		676,716		—		1,037,604		676,716
Eonex Technologies Inc.		144,000	12.3		3,600	(note f)			4,593		4,593		—
The Korea Economic Daily		2,585,069	13.8		13,964	(note g)			13,964		13,964		13,964
Dreamline Corp.		1,520,373	8.9		16,160		8,519	(note h)			—		8,519
Cheongsol		216,400	7.1		4,494	(note g)			5,000		5,000		4,494
Other					148,928	(note f, g)			34,333		20,611		24,329

sub-total					688,798				57,890		1,081,772		728,022


(Investments in funds)
Others					22,441	(note f)			4,016		18,189		22,441

sub-total					22,441				4,016		18,189		22,441

Total				W	2,633,842			W	1,011,971	W	4,689,905	W	3,102,833


(note a)		In the first quarter of 2008, the Company acquired additional 91,406,249 shares of SK Broadband Co., Ltd. (formerly hanarotelecom incorporated) common stock which increased the Company’s ownership from 4.6% to 43.4%. As the Company’s ownership in such investees increased to more than 20% and the Company can exercise significant influence, the investment in common stock of SK Broadband Co., Ltd. was included in the consolidation of accompanying financial statement.

(note b)		In accordance with the resolution of the Company’s board of directors on August 20, 2007, convertible bonds of China Unicom Ltd. were converted into common stock and reclassified to available-for sale equity securities from available-for-sale debt securities. And, the related gain on conversion of convertible bonds of W373,140 million was recorded during the year ended December 31, 2007.

(note c)		As the common stocks of LG Powercomm Co., Ltd. were listed on the stock Market of Korea Exchange during the year ended December 31, 2008, the Company recorded the investment at its market value as of December 31, 2008. In addition, as the difference between the market value and carrying value of the investments is material and the market value is significantly less than the acquisition cost over the long-term period, the Company recorded W201,243 million of impairment loss on investment securities during the year ended December 31, 2008.

(note d)		During the year ended December 31, 2008, SK-KTB Music Investment Fund, a subsidiary of the Company, sold 2,472,999 common shares of ZeroOne Interactive Co.,Ltd.

(note e)		The investment in common stock of SK C&C Co., Ltd. was reclassified to available-for-sale securities from equity securities accounted for using the equity method during the year ended December 31, 2007, as SK C&C Co., Ltd. became the ultimate parent company of the Company. The Company recorded its investments in common stock of SK C&C Co., Ltd. at its fair value, which was estimated with the assistance of an outside professional valuation company using the present value of expected future cash flows and the unrealized gain on valuation of investments totals W501,155 million (net of tax effect of W190,093 million) and W250,413 million (net of tax effect of W79,947 million) as of December 31, 2007 and 2008, respectively.

(note f)		Due to the impairment of the investment of Eonex Technologies Inc. and others, the Company recorded W17,486 million of impairment loss during the year ended December 31, 2008.

(note g)		As a reasonable estimate of fair value could not be made, the investment is stated at acquisition cost.

(note h)		The Company recorded its investment in common stock of Dreamline Corp. at its fair value (W5,603 per share) estimated using market approach and income approach valuation method and related unrealized losses on valuation of the investment are included in accumulated other comprehensive loss.

	b-(2).		Available-for-sale Debt Securities

			Available-for-sale debt securities as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):



		Acquisition
		cost
		at December
		31,			Carrying amount
	Maturity	2008			2006			2007			2008

Public bonds	(note a)	W	1,260		W	51,313		W	51,353		W	1,260
Currency stabilization bonds	(note b)		—			49,894			49,713			—
Closed beneficiary certificates	Oct. 20, 2009		3,501			—			4,788			3,551
Bond-type beneficiary certificates	(note c)		3,000			5,072			360,641			1,868
Convertible bonds of China Unicom Ltd.	Jul. 5, 2009		—			1,276,703			—			—
Convertible bonds of Eonex Technologies, Inc.	Oct. 11, 2008		—			1,000			1,000			—
Convertible bonds of Empas Corp.	Oct. 18, 2009		—			78,670			—			—
Others			2,134			984			2,234			1,582


Total			9,895			1,463,636			469,729			8,261
Less current portion of available-for-sale debt securities			(7,544	)		(256	)		(101,209	)		(5,911	)


Long-term available-for-sale debt securities		W	2,351		W	1,463,380		W	368,520		W	2,350

The Interest income incurred from available-for-sale debt securities for the years ended December 31, 2006, 2007 and 2008 were W7,991 million, W4,800 million and W5,226 million, respectively.


(note a)		The maturities of public bonds as of December 31, 2008 are within 1 year for W159 million, within 5 years for W1,089 million and over 5 years for W12 million.

(note b)		Currency stabilization bonds were fully redeemed at their maturities for the year ended December 31, 2008.

(note c)		The maturities of bond-type beneficiary certificates as of December 31, 2008 are within 1 year.

	b-(3).		Held-to-maturity Securities

			Held-to-maturity securities as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


		Acquisition cost
		at December 31,		Carrying amount
	Maturity	2008		2006			2007		2008

Public bonds	(note a)	W	113	W	146		W	94	W	113
Less current portion of held-to-maturity securities					(79	)		—		(1	)


Long-term held-to-maturity securities				W	67		W	94	W	112

The Interest income incurred from held-to-maturity securities for the years ended December 31, 2006, 2007 and 2008 were W8 million, W25 million and W3 million, respectively.


(note a)		The maturities of public bonds as of December 31, 2008 are within 1 year for W1 million, within 5 years for W51 million and within 10 years for W61 million.

	b-(4).		Changes in Unrealized Gains (Losses) on Valuation on Long-term Investment Securities

			The changes in unrealized gains (losses) on valuation on long-term investment securities for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	For the year ended December 31, 2006
	Beginning balance			Increase/ (decrease)			Transferred to realized gain (loss)			Minority interest in equity of consolidated subsidiaries			Ending balance

Digital Chosunilbo Co., Ltd.	W	14		W	102		W	—		W	—		W	116
SK Broadband Co., Ltd. (formerly hanarotelecom incorporated)		(65,237	)		32,141			—			—			(33,096	)
KRTnet Corporation		1,475			(129	)		—			—			1,346
POSCO		168,563			265,500			—			—			434,063
Comas Interactive Co., Ltd. (Formerly INNOTG Co., Ltd.)		(1,611	)		—			—			—			(1,611	)
Extended Computing Environment Co., Ltd.		—			866			—			—			866
ZeroOne Interactive Co.,Ltd.		—			(655	)		—			71			(584	)
HB Entertainment Co., Ltd.		56			(1,272	)		—			795			(421	)
LG Powercomm Co., Ltd.		(163,113	)		3,240			—			—			(159,873	)
Eonex Technologies Inc.		2,011			—			—			—			2,011
Public bonds		—			(4	)		—			—			(4	)
Currency stabilization bonds		(217	)		906			(677	)		—			12
Convertible bonds of China Unicom Ltd.		—			319,648			—			—			319,648
Convertible bonds of Empas Corp.		—			33,820			—			(4,218	)		29,602

Sub-total		(58,059	)		654,163			(677	)		(3,352	)		592,075
Less tax effect (note a)		15,966			(179,894	)		186			895			(162,847	)


Total	W	(42,093	)	W	474,269		W	(491	)	W	(2,457	)	W	429,228


	For the year ended December 31, 2007
	Beginning balance			Increase/ (decrease)			Transferred to realized gain (loss)			Minority interest in equity of consolidated subsidiaries			Ending balance

Digital Chosunilbo Co., Ltd.	W	116		W	2,731		W	—		W	—		W	2,847
SK Broadband Co., Ltd. (formerly hanarotelecom incorporated)		(33,096	)		27,944			—			—			(5,152	)
KRTnet Corporation		1,346			(46	)		—			—			1,300
POSCO		434,063			660,028			—			—			1,094,091
DAEA TI Co., Ltd. (Formerly Comas Interactive Co., Ltd.)		(1,611	)		145			—			—			(1,466	)
Extended Computing Environment Co., Ltd.		866			29			—			—			895
nTels Co., Ltd.		—			1,490			—			—			1,490
Qualcomm Inc. Ltd.		—			(696	)		—			—			(696	)
China Unicom Ltd.		—			599,012			—			—			599,012
ZeroOne Interactive Co.,Ltd.		(584	)		(1,147	)		—			189			(1,542	)
T-Entertainment Co., Ltd.		—			(682	)					74			(608	)
HB Entertainment Co., Ltd.		(421	)		421			—			—			—
LG Powercomm Co., Ltd.		(159,873	)		9,053			—			—			(150,820	)
SK C&C Co., Ltd.		—			691,248			—			—			691,248
Eonex Technologies Inc.		2,011			—			—			—			2,011
Public bonds		(4	)		(201	)		—			—			(205	)
Currency stabilization bonds		12			(247	)		—			—			(235	)
Convertible bonds of China Unicom Ltd.		319,648			208,095			(527,743	)		—			—
Convertible bonds of Empas Corp.		29,602			—			(29,602	)		137			137
Beneficiary certificates		—			9,256			—			46			9,302

Sub-total		592,075			2,206,433			(557,345	)		446			2,241,609
Less tax effect (note a)		(162,847	)		(607,406	)		153,270			(13	)		(616,996	)


Total	W	429,228		W	1,599,027		W	(404,075	)	W	433		W	1,624,613


	For the year ended December 31, 2008
	Beginning balance			Increase/ (decrease)			Transferred to realized gain (loss)			Minority interest in equity of consolidated subsidiaries			Ending balance
Available-for-sales securities:
Digital Chosunilbo Co., Ltd.	W	2,847		W	(2,992	)	W	—		W	—		W	(145	)
SK Broadband Co., Ltd. (formerly hanarotelecom incorporated)		(5,152	)		—			5,152			—			—
KRTnet Corporation		1,300			(1,373	)		—			—			(73	)
POSCO		1,094,091			(483,855	)		—			—			610,236
DAEA TI Co., Ltd. (Formerly Comas Interactive Co., Ltd.)		(1,466	)		(140	)		—			—			(1,606	)
Extended Computing Environment Co., Ltd.		895			(865	)		—			—			30
nTels Co., Ltd.		1,490			(1,020	)		—			—			470
Qualcomm Inc. Ltd.		(696	)		454			—			—			(242	)
China Unicom Ltd.		599,012			(998,891	)		—			—			(399,879	)
ZeroOne Interactive Co.,Ltd.		(1,542	)		—			1,730			(188	)		—
T-Entertainment Co., Ltd.		(608	)		(462	)		—			50			(1,020	)
De Chocolate E&TF Co., Ltd.		—			(341	)		—			214			(127	)
C.C.S. Inc.		—			(44	)		—			25			(19	)
Medifron DBT Co., Ltd.		—			(83	)		—			47			(36	)
Dreamline Corp.		—			(9,162	)		—			5,184			(3,978	)
Saeronet Broadcasting Co., Ltd.		—			(81	)		—			46			(35	)
LG Powercomm Co., Ltd.		(150,820	)		150,459			—			204			(157	)
SK C&C Co., Ltd.		691,248			(360,888	)		—			—			330,360
Eonex Technologies Inc.		2,011			(2,011	)		—			—			—
Public bonds		(205	)		205			—			—			—
Currency stabilization bonds		(235	)		235			—			—			—
Convertible bonds of Empas Corp.		137			—			—			—			137
Beneficiary certificates		9,302			(10,656	)		133			985			(236	)

Sub-total		2,241,609			(1,721,511	)		7,015			6,567			533,680
Less tax effect (note a)		(616,996	)		492,830			(1,453	)		(219	)		(125,838	)


Total	W	1,624,613		W	(1,228,681	)	W	5,562		W	6,348		W	407,842


(note a)		Represents adjustments to reflect the tax effect of temporary differences directly charged or credited to unrealized gains (losses) on valuation of long-term investment securities, which are other comprehensive income (loss) items, in accordance with SKAS No. 16 “Income Taxes”, which is effective January 1, 2005.


5.		EQUITY SECURITIES ACCOUNTED FOR USING THE EQUITY METHOD

Equity securities accounted for using the equity method as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won, except for share data):


			December 31, 2008
	Number		Ownership		Acquisition		Net asset				Carrying amount
	of shares		percentage (%)		cost		value				2006		2007		2008

SK Marketing & Company Co., Ltd.		5,000,000		50.0	W	190,000	W	96,798		(note n)	W	—	W	—	W	96,798
AirCross Co., Ltd.		1,575,000		100.0		2,440		7,289		(note d)		1,477		—		7,289
SK C&C Co., Ltd.		—		—		—		—		(note a)		268,278		—		—
STIC Ventures Co., Ltd.		—		—		—		—		(note b)		8,611		—		—
TU Media Corp.		—		—		—		—		(note c)		7,214		—		—
Harex Info Tech, Inc.		225,000		21.2		3,375		245				1,805		1,118		596
SK Mobile		—		20.0		4,930		2,110		(note e)		4,666		3,273		2,111
Skytel Co., Ltd.		1,951,777		29.3		2,159		13,858				5,823		7,743		13,858
SK China Company Ltd.		94,960		29.7		6,159		4,556				—		137		3,577
Helio, LLC & Helio, Inc.		—		—		—		—		(note f)		80,130		—		—
TR Entertainment		13,542,553		42.2		10,953		2,770		(note o)		—		—		9,626
Virgin Mobile USA, Inc.		—		16.6		72,496		(57,084	)	(note p)		—		—		62,096
SK Telecom China Holding Co., Ltd.		—		—		—		—		(note u)		—		19,070		—
SK USA, Inc.		49		49.0		3,184		5,249				3,016		3,141		5,249
Korea IT Fund		190		63.3		190,000		210,735		(note g)		193,061		210,568		210,735
Michigan Global Cinema Fund		—		—		—		—		(note h)		3,773		—		—
Centurion IT Investment Association		—		—		—		—		(note i)		—		2,463		—
3rd Fund of Isu Entertainment		25		31.3		2,500		1,882				2,419		2,028		1,882
Magic Tech Network		4,500		30.0		8,494		2,162		(note g)		—		—		7,725
SK Telecom Global Investment B.V.		18,000		100.0		26,044		31,807		(note r)		—		—		31,807
SKY Property Mgmt. Ltd.		22,980		60.0		283,368		287,006		(note s)		—		—		287,006
CDMA Mobile Phone Center		—		50.0		161,256		67,139				84,689		66,001		67,139
Wave City Development Co., Ltd.		380,000		19.0		1,967		1,908		(note t)		—		—		1,908
SK Cyberpass, Inc.		33,196		84.9		6,372		3,809		(note m)		1,780		—		4,068
E-Eye High Tech		—		65.5		20,952		11,121		(note u)		—		—		19,801
Cyworld Japan Co., Ltd.		1,250,000		100.0		10,584		1,169				4,362		4,091		3,690
Cyworld Incorporated		9,500,000		100.0		9,071		—				3,592		2,672		2,672
Prmaxsoftware tech.Co.,Ltd.		—		89.3		7,128		7,127		(note v)		—		—		7,127
Mobile Money Ventures, LLC		—		50.0		8,821		5,283		(note w)		—		—		5,283
SK Telecom Holdings America, Inc.		100		100.0		12,990		12,990				—		4,050		12,990
Benex Movie Expert Fund		810		46.6		8,100		8,045		(note x)		—		—		8,045
Empas Corp.		—		—		—		—		(note j)		36,474		—		—
SK i-media Co., Ltd.		—		—		—		—		(note k)		11,312		—		—
Ntreev Soft Co., Ltd.		—		—		—		—		(note k)		4,800		—		—
Konan Technology		—		—		—		—		(note k)		4,037		—		—
Other investment in affiliates						44,183						19,602		24,611		25,434


Total					W	1,097,526					W	750,921	W	350,966	W	898,512


(note a)		For the year ended December 31, 2007, the Company’s shares of SK C&C Co., Ltd. were increased to 6,000,000 shares from 300,000 shares as a result of SK C&C Co., Ltd.’s 20 to 1 stock split. In addition, the investment in common stock of SK C&C Co., Ltd. was reclassified to available-for-sale equity securities, as SK C&C Co., Ltd. became the ultimate parent company of the Company by increasing its ownership interest in SK Holdings Co., Ltd., a split-off company from SK Corporation Co., Ltd. to 25.42% as of December 31, 2007.

(note b)		For the year ended December 31, 2007, the Company disposed all of its 1,600,000 shares of STIC Ventures Co., Ltd.

(note c)		TU Media Corp. was newly included in consolidation effective April 1, 2007 as the Company’s ownership interest increased to 32.7% and is the largest stockholder of TU Media Corp.

(note d)		For the year ended December 31, 2007, the Company acquired additional 975,000 shares of AirCross Co., Ltd. from WiderThan Co., Ltd. and others, which increased the Company’s ownership interest from 38.1% to 100.0%. Accordingly AirCross Co., Ltd. was newly included in consolidation in 2007. However, for the year ended December 31, 2008, AirCross Co., Ltd. Was excluded from the consolidation and accounted for using the equity method as it was fully liquidated during March 2009.

(note e)		On March 31, 2006, the Company acquired 42.5% interests of common stock of SK Mobile from Pantech Co., Ltd. and others.

(note f)		In the first quarter of 2005, the Company incorporated SK Telecom USA Holdings, Inc. with an initial investment of US$83 million in order to invest and manage Helio, LLC, a joint venture company in the United States of America, which was established in order to provide wireless telecommunication service in the United States of America. Through December 31, 2007, the Company additionally invested in Helio, LLC and the Company’s ownership interest increased to 64.9%. As a result, Helio, LLC became subsidiary and included in consolidation effective November 1, 2007.

(note g)		The investment in Korea IT Fund was reclassified to equity securities accounted for using the equity method for the year ended December 31, 2006 as the Company has ability to exercise significant influence on the investee. In accordance with the Agreement of Korea IT Fund, the Company has voting rights of 14.3%, while the Company invested 63.3% of total capital contribution and has profit sharing rights of 63.3%.

(note h)		As TU Media Corp. became a subsidiary of the Company during the year ended December 31, 2007, TU Media Corp.’s ownership interest in Michigan Global Cinema Fund added to the Company’s ownership interest in Michigan Global Fund for the calculation of controlling ownership interest. As a result, Michigan Global Cinema Fund was newly included in consolidation effective April 1, 2007.

(note i)		Centurion IT Investment Association was deconsolidated as it was dissolved on February 2008; instead, it was accounted for using the equity method for the year ended December 31, 2007.


(note j)		Empas Corp. was merged into SK Communications Co., Ltd. during the year ended December 31, 2007.

(note k)		Through the year ended December 31, 2006, these investees were excluded from consolidation and accounted for using the equity method even though the Company’s ownership interest is over majority because their total assets at the beginning of the fiscal year were less than W7 billion in accordance with Korean GAAP. However, as the investees’ total assets as of December 31, 2006 increased to more than W7 billion, these investees were included in consolidation effective January 1, 2007.

(note l)		Even though the Company’s ownership interest is over majority, these investees are excluded from the consolidation and accounted for using the equity method as their total assets at the beginning of the fiscal year were less than W7 billion, in accordance with Korean GAAP.

(note m)		Through the year ended December 31, 2006, SK Cyberpass, Inc. was excluded from consolidation and accounted for using the equity method even though the Company’s ownership interest is over majority because its total assets at the beginning of the fiscal year were less than W7 billion in accordance with Korean GAAP. As its total assets as of December 31, 2006 increased to more than W7 billion, these investees were included in consolidation effective January 1, 2008. But, as its total assets as of December 31, 2007 declined to below W7 billion, it was accounted for using the equity method again in 2008.

(note n)		For the year ended December 31, 2008, the Company acquired 5,000,000 shares of SK Marketing & Company Co., Ltd. As a result, the Company holds 50.0% ownership in SK Marketing & Company Co. Ltd.

(note o)		For the year ended December 31, 2008, the Company acquired 13,542,553 shares of TR Entertainment. As a result, the Company holds 42.2% ownership in TR Entertainment.

(note p)		For the year ended December 31, 2008, the Company acquired 16.6% ownership in Virgin Mobile USA Inc. The company is expected to exercise significant influence to Virgin Mobile USA Inc. as the Company has the right to nominate the director for the Virgin Mobile USA Inc. even though its ownership percentage is below 20.0%

(note q)		For the year ended December 31, 2008, the Company acquired 4,500 shares of Magic Tech Network. As a result, the Company holds 30.0% ownership in Magic Tech Network.

(Note r)		For the year ended December 31, 2008, the Company established in SKT Global Investment B.V. and holds 100% ownership for the investee. However, SKT Global Investment B.V. is accounted for using the equity method as its capital stock as of incorporation is less W7 billion.

(Note s)		For the year ended December 31, 2008, the Company acquired 22,980 shares of SKY Property Mgmt Ltd. As a result, the Company holds 60.0% ownership for the investee. However, SKT Global Investment B.V. is included in the equity securities accounted for using the equity method as its capital as of incorporation is less W7 billion.


(Note t)		For the year ended December 31, 2008, the Company acquired 380,000 shares of Wave City Development Co., Ltd. As a result, the Company holds 19.0% ownership for the investee. The Company is expected to exercise significant influence to Wave City Development Co., Ltd. as the Company have the right to nominate the director for the Wave City Development Co., Ltd. even though its ownership percentage is less than 20.0%.

(Note u)		E-Eye High Tech whose total assets are less W7 billion as of December 31, 2007 is included in the equity securities accounted for using the equity method as SK Telecom China Holding Co., Ltd., a subsidiary of the Company and parent company of E-Eye High Tech, is included in the consolidation for the year ended December 31, 2008 as its total assets as of December 31, 2007 was over W7 billion.

(Note v)		For the year ended December 31, 2008, the Company acquired 89.3% of equity interest in Prmaxsoftware tech.Co.,Ltd. which is accounted for using the equity method as their total assets at the beginning of the fiscal year were less than W7 billion.

(Note w)		SKT America, Inc. (formerly SK Telecom International Inc.), a wholly-owned subsidiary of the Company, acquired 50.0% of equity interest in Mobile Money Ventures, LLC for the year ended December 31, 2008.

(Note x)		For the year ended December 31, 2008, the Company acquired 810 shares of Benex Movie Expert Fund. As a result, the Company holds 46.6% ownership for the investee.

Details of changes in investments in affiliates accounted for using the equity method for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


		For the year ended December 31, 2006
									Equity in capital surplus
						Equity in			and other						Other
		Beginning				earnings			comprehensive			Dividend			increase			Ending
		balance		Acquisition		(losses)			income			received			(decrease)			balance

Pantech Co., Ltd.	(note a)	W	55,732	W	—	W	(55,902	)	W	170		W	—		W	—		W	—
SK C&C Co., Ltd.	(note b)		168,244		—		37,825			63,199			(990	)		—			268,278
STIC Ventures Co., Ltd.			8,379		—		845			(613	)		—			—			8,611
TU Media Corp.			32,343		—		(25,129	)		—			—			—			7,214
AirCross Co., Ltd.			966		—		511			—			—			—			1,477
WiderThan Co., Ltd.	(note c)		11,503		—		—			—			—			(11,503	)		—
IHQ, Inc.			14,755		—		(1,346	)		84			—			(13,493	)		—
Harex Info Tech, Inc.			2,530		—		(725	)		—			—			—			1,805
SK Mobile			—		10,322		(5,520	)		(136	)		—			—			4,666
Skytel Co., Ltd.	(note b)		4,786		—		1,970			(605	)		(328	)		—			5,823
SK China Company Ltd.			485		—		(380	)		(105	)		—			—			—
Helio, LLC & Helio, Inc.	(note d)		102,272		76,933		(88,309	)		—			—			(10,766	)		80,130
SK USA, Inc.			3,279		—		7			(270	)		—			—			3,016
Korea IT Fund	(note e)		—		—		2,339			722			—			190,000			193,061
Michigan Global Cinema Fund			4,000		—		(227	)		—			—			—			3,773
3rd Fund of Isu Entertainment			2,500		—		(81	)		—			—			—			2,419
SKT-HP Ventures, LLC	(note f)		5,290		—		—			—			—			(5,290	)		—
CDMA Mobile Phone Center	(note g)		40,810		76,039		(21,474	)		—			—			(10,686	)		84,689
Empas Corp.			—		37,092		(1,369	)		751			—			—			36,474
SK i-media Co., Ltd.			—		12,000		(636	)		(52	)		—			—			11,312
Cyworld Japan Co., Ltd.			726		6,118		(2,549	)		67			—			—			4,362
Etoos Group Inc.	(note h)		2,586		—		(259	)		—			—			(2,327	)		—
Cyworld Incorporated			524		8,547		(5,358	)		(121	)		—			—			3,592
Other investments in affiliates			10,169		17,282		90			(640	)		—			3,318			30,219


		W	471,879	W	244,333	W	(77,368	)	W	62,451		W	(1,318	)	W	139,253		W	750,921


(note a)		Pantech Co., Ltd. suffered a significant loss due to deterioration of its liquidity during the fourth quarter of 2006, which resulted in the Company’s investments in Pantech Co., Ltd. to be reduced to zero. Equity in losses of affiliates that exceeded the carrying amount was W43,543 million for the year ended December 31, 2006.

(note b)		The Company received dividends from SK C&C Co., Ltd. and Skytel Co., Ltd. and the corresponding amount was deducted from its equity method securities.

(note c)		The Company sold all of investments in equity securities of WiderThan Co., Ltd. for the year ended December 31, 2006 and recognized gains on disposal of investment in equity securities of W21,780 million.


(note d)		Other decrease in investments in equity securities of Helio, Inc. represents losses from disposal of investments in equity securities of Helio, Inc. amounting to W1,991 million resulting from the dilution of the Company’s ownership as a result of the fact that investee sold its unissued shares to third parties directly, and translation loss of W8,776 million incurred from translating the foreign currency financial statements of Helio, Inc. into Korean won.

(note e)		Other increase in investments in Korea IT Fund is the carrying amount transferred from available-for-sale equity securities.

(note f)		Investment was fully liquidated due to dissolution of SKT-HP Ventures, LLC for the year ended December 31, 2006.

(note g)		For the year ended December 31, 2006, SLD received a cash distribution of W5,978 million from CDMA Mobile Phone Center, and such reimbursement decreased SLD’s investment in CDMA Mobile Phone Center. The amount was equivalent to the depreciation from the contributed machinery provided to CDMA Mobile Phone Center as an in-kind contribution from SLD. In addition, translation loss of W4,708 million incurred from translating the foreign currency financial statements of SLD Telecom PTE Ltd. into Korean won and such translation loss was accounted for as a decrease in the investment in CDMA Mobile Phone Center.

(note h)		For the year ended December 31, 2006, Etoos Group Inc. was merged into SK Communications Co., Ltd., the Company’s subsidiary.


		For the year ended December 31, 2007
									Equity in capital surplus and
						Equity in			other						Other
		Beginning				earnings			comprehensive			Dividend			increase			Ending
		balance		Acquisition		(losses)			income			received			(decrease)			balance

SK C&C Co., Ltd.	(notes a and d)	W	268,278	W	—	W	230,252		W	4,381		W	(1,260	)	W	(501,651	)	W	—
STIC Ventures Co., Ltd.			8,611		—		—			(238	)		—			(8,373	)		—
TU Media Corp.	(note b)		7,214		—		(5,879	)		—			—			(1,335	)		—
AirCross Co., Ltd.	(note c)		1,477		—		(95	)		—			—			(1,382	)		—
Harex Info Tech, Inc.			1,805		—		(687	)		—			—			—			1,118
SK Mobile			4,666		—		(1,678	)		285			—			—			3,273
Skytel Co., Ltd.	(note d)		5,823		—		2,562			12			(654	)		—			7,743
SK China Company Ltd.			—		—		54			83			—			—			137
Helio, Inc. & Helio, LLC	(note e)		80,130		18,527		(116,725	)		(38	)		—			18,106			—
SK USA, Inc.			3,016		—		96			29			—			—			3,141
Korea IT Fund			193,061		—		14,383			3,124			—			—			210,568
Michigan Global Cinema Fund	(note f)		3,773		—		—			—			—			(3,773	)		—
3rd Fund of Isu Entertainment	(note g)		2,419		—		(891	)		—			—			500			2,028
Centurion IT Investment Association			—		—		35			777			—			1,651			2,463
CDMA Mobile Phone Center	(note h)		84,689		12,094		(20,651	)		—			—			(10,131	)		66,001
Empas Corp.	(note i)		36,474		—		(6,397	)		24			—			(30,101	)		—
SK i-media Co., Ltd.	(note j)		11,312		—		—			—			—			(11,312	)		—
Cyworld Japan Co., Ltd.			4,362		—		(391	)		120			—			—			4,091
Cyworld Incorporated	(note k)		3,592		—		(4,052	)		—			—			—			2,672
SK Telecom China Holding Co., Ltd.			—		19,070		—			—			—			—			19,070
Ntreev Soft Co., Ltd.	(note j)		4,800		—		—			—			—			(4,800	)		—
Konan Technology	(note l)		4,037		—		(109	)		8			—			(3,936	)		—
SK Cyberpass, Inc.	(note j)		1,780		—		—			—			—			(1,780	)		—
Cyworld Europe GmbH	(note m)		512		3,696		(4,208	)		—			—			—			—
Cyworld China (Holdings) Ltd.	(note m)		—		8,467		(8,467	)		—			—			—			—
Other investment in affiliates	(note m)		19,090		14,775		(5,244	)		176			(268	)		132			28,661

		W	750,921	W	76,629	W	71,908		W	8,744		W	(2,182	)	W	(558,185	)	W	350,966


(note a)		The investment in SK C&C Co., Ltd. was reclassified to available-for-sale security during the fourth quarter of 2007 as it became the ultimate parent company of the Company.

(note b)		TU Media Corp. was included in the consolidation of accompanying consolidated financial statements effective April 1, 2007, as the Company acquired additional equity of TU Media Corp. in February 2007.

(note c)		AirCross Co., Ltd. was included in the consolidation of accompanying consolidated financial statements effective April 1, 2007, as the Company acquired additional equity of AirCross Co., Ltd. in March 2007.


(note d)		The Company received dividends from SK C&C Co., Ltd. and Skytel Co., Ltd.; the corresponding amount was deducted from its equity method securities.

(note e)		Helio, Inc. & Helio LLC was included in the consolidation of accompanying consolidated financial statements effective November 2007, as the Company acquired additional equity of Helio, LLC during the fourth quarter of 2007.

(note f)		As TU Media Corp. who had certain ownership interest of Michigan Global Cinema Fund became a subsidiary of the Company in February 2007, the Company became the largest stockholder owning more than 30% of total outstanding common stock of Michigan Global Cinema Fund and included Michigan Global Cinema Fund in the consolidation of accompanying consolidated financial statements effective April 1, 2007.

(note g)		Other increase in investments in equity securities of 3rd Fund of Isu Entertainment resulted from additional investment by TU Media Corp.

(note h)		For the year ended December 31, 2007, SKT Vietnam PTE Ltd. (formerly SLD Telecom PTE Ltd.) received a cash distribution of W10,728 million from CDMA Mobile Phone Center, and such reimbursement decreased SKT Vietnam PTE Ltd’s investment in CDMA Mobile Phone Center. The amount was equivalent to the depreciation from the contributed machinery provided to CDMA Mobile Phone Center as an in-kind contribution from SKT Vietnam PTE Ltd. In addition, translation gain of W597 million incurred from translating the foreign currency financial statements of SKT Vietnam PTE Ltd. into Korean won and such translation gain was accounted for as an increase in the investment in CDMA Mobile Phone Center.

(note i)		Other decrease in investments in equity securities of Empas Corp. resulted from the merger between Empas Corp. and SK Communications Co., Ltd.

(note j)		SK i-media Co., Ltd., Ntreev Soft Co., Ltd. and SK Cyberpass, Inc. were newly included in the consolidation of the accompanying financial statements as their total assets at the beginning of 2007 increased to more than W7 billion, in accordance with Korean GAAP.

(note k)		Equity in losses of affiliates amounting to W3,133 million resulted from the additional recognition of equity losses for short-term loans provided for by SK Communications Co., Ltd.

(note l)		Konan Technology which was a subsidiary of Empas Corp. was included in the consolidation of accompanying consolidated financial statements as SK Communications Co., Ltd. merged with Empas Corp. for the year ended December 31, 2007.

(note m)		As carrying amounts of equity securities accounted for using the equity method of Cyworld Europe GmbH, Cyworld China (Holdings) Ltd. and Cyworld Vietnam became nil, the equity method accounting was discontinued. Unrecognized losses because of the discontinuance of the equity method were W3,164 million as of December 31, 2007.


		For the year ended December 31, 2008
									Equity in capital surplus and
						Equity in			other						Other
		Beginning				earnings			comprehensive			Dividend			increase			Ending
		balance		Acquisition		(losses)			income			received			(decrease)			balance

SK Marketing & Company Co., Ltd.		W	—	W	190,000	W	7,410		W	(100,612	)	W	—		W	—		W	96,798
AirCross Co., Ltd.	(Note a)		—		—		2,261			—			—			5,028			7,289
Harex Info Tech, Inc.			1,118		—		(522	)		—			—			—			596
SK Mobile	(Note c)		3,273		2,004		—			—			—			(3,166	)		2,111
Skytel Co., Ltd.			7,743		—		5,189			2,140			(1,214	)		—			13,858
SK China Company Ltd.			137		2,963		164			313			—			—			3,577
TR Entertainment			—		10,953		(2,108	)		781			—			—			9,626
Virgin Mobile USA Inc.			—		29,693		(8,896	)		(1,504	)		—			42,803			62,096
SK Telecom China Holding Co., Ltd.	(Note d)		19,070		—		—			—			—			(19,070	)		—
SK USA, Inc.			3,141		—		911			1,197			—			—			5,249
Korea IT Fund			210,568		—		4,771			(4,604	)		—			—			210,735
Centurion IT Investment Association	(Note e)		2,463		—		—			—			—			(2,463	)		—
3rd Fund of Isu Entertainment			2,028		—		(146	)		—			—			—			1,882
Magic Tech Network			—		8,494		(1,233	)		464			—			—			7,725
SK Telecom Global Investment B.V.			—		26,044		125			5,638			—			—			31,807
SKY Property Mgmt. Ltd.			—		283,368		(1,998	)		5,636			—			—			287,006
CDMA Mobile Phone Center	(Note f)		66,001		13,629		(25,766	)		—			—			13,275			67,139
Wave City Development Co., Ltd.			—		1,967		(59	)		—			—			—			1,908
SK Cyberpass, Inc.	(Note b)		—		3,444		(1,584	)		980			—			1,228			4,068
Shenzhen E-Eye High Tech			—		—		(1,151	)		—			—			20,952			19,801
Cyworld Japan Co., Ltd.			4,091		—		(539	)		138			—			—			3,690
Cyworld Incorporated			2,672		—		—			—			—			—			2,672
Prmaxsoftware tech.Co.,Ltd.			—		7,127		—			—			—			—			7,127
Mobile Money Ventures,LLC.	(Note g)		—		8,821		(4,189	)		—			—			651			5,283
SK Telecom Hodlings America, Inc.			4,050		8,940		—			—			—			—			`12,990
Benex Movie Expert Fund			—		8,100		(55	)		—			—			—			8,045
Other investment in affiliates			24,611		7,010		(1,959	)		1,112			—			(5,340	)		25,434

		W	350,966	W	612,557	W	(29,374	)	W	(88,321	)	W	(1,214	)	W	53,898		W	898,512


(note a)		Aircross Co., Ltd. was included in the equity securities accounted for using equity method as it was fully liquidated in March 2009.

(note b)		SK Cyberpass, Inc was included in the equity securities accounted for using equity method as its total assets at the beginning of 2008 decreased to less than W7 billion.


(note c)		Other decrease in investments in equity securities of SK Mobile represent disposal of part of the equity shares.

(note d)		Other decreases in investments in equity securities of SK Telecom China Holding Co., Ltd. resulted from the fact that SK Telecom China Holding Co., Ltd. is included in consolidation for the year ended December 31, 2008.

(note e)		Other decrease in investments in Centurion IT Investment Association represents the collection of the Company’s investment from the full liquidation of Centurion IT Investment Association.

(note f)		Translation gain of W13,275 million incurred from translating the foreign currency financial statements of SKT Vietnam PTE Ltd. into Korean won and such translation gain was accounted for as an increase in the investment in CDMA Mobile Phone Center.

(note g)		The amount represent translation gain of W651 million incurred from translating the foreign currency financial statements of SKT Americas, Inc. (formerly SK Telecom International inc.) into Korean won and such translation gain was accounted for as an increase in the investment in Mobile Money Ventures, LLC.

Details of changes in the differences between the acquisition cost and net asset value of equity method investees at the acquisition date for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	For the year ended December 31, 2006
	Beginning								Ending
	balance		In(De)crease			Amortization			balance

Pantech Co., Ltd.	W	793	W	—		W	(793	)	W	—
SK C&C Co., Ltd.		4,870		—			(406	)		4,464
TU Media Corp.		993		—			(209	)		784
IHQ, Inc.		6,267		(5,533	)		(734	)		—
Harex Info Tech, Inc.		1,402		—			(351	)		1,051
SK Mobile		—		3,192			(3,192	)		—
Helio, Inc.		—		38			—			38
Empas Corp.		—		24,159			(1,208	)		22,951
Etoos Group Inc.		1,581		(1,553	)		(28	)		—
Other investments in affiliates		—		12,531			(1,086	)		11,445


Total	W	15,906	W	32,834		W	(8,007	)	W	40,733


	For the year ended December 31, 2007
	Beginning								Ending
	balance		In(De)crease			Amortization			balance
SK C&C Co., Ltd.	W	4,464	W	(4,160	)	W	(304	)	W	—
TU Media Corp.		784		(732	)		(52	)		—
IHQ, Inc.		—		—			—			—
Harex Info Tech, Inc.		1,051		—			(350	)		701
SK Mobile		—		—			—			—
Helio, Inc.		38		—			(38	)		—
Empas Corp.		22,951		(18,924	)		(4,027	)		—
Etoos Group Inc.		—		—			—			—
Ntreev Soft Co., Ltd.		1,785		(1,785	)		—			—
Konan Technology		3,859		(3,859	)		—			—
Other investments in affiliates		5,801		2,899			(1,770	)		6,930


Total	W	40,733	W	(26,561	)	W	(6,541	)	W	7,631


	For the year ended December 31, 2008
	Beginning								Ending
	balance		In(De)crease			Amortization			balance
Harex Info Tech, Inc.	W	701	W	—		W	(351	)	W	350
TR Entertainment		—		8,066			(1,210	)		6,856
Virgin Mobile USA Inc.		—		126,363			(7,183	)		119,180
Skytel Co., Ltd.		—		(1,387	)		1,387			—
SK China Company Ltd.		—		107			—			107
Magic Tech Network		—		6,181			(618	)		5,563
SK Cyberpass Inc.		—		304			(46	)		258
Shenzhen E-Eye High Tech		—		10,851			(2,171	)		8,680
Other investments in affiliates		6,930		(1,893	)		(1,601	)		3,436


Total	W	7,631	W	148,592		W	(11,792	)	W	144,431

Details of changes in unrealized intercompany gains incurred from sales of assets for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	For the year ended December 31, 2006
	Beginning							Ending
	balance		Increase		Decrease			balance
Pantech Co., Ltd.	W	—	W	271	W	(271	)	W	—
SK China Company Ltd.		1,086		—		—			1,086
Cyworld Japan Co., Ltd.		2,526		681		(570	)		2,637
Cyworld Incorporated		—		1,888		(94	)		1,794
Other investments in affiliates		—		892		(104	)		788


Total	W	3,612	W	3,732	W	(1,039	)	W	6,305


	For the year ended December 31, 2007
	Beginning							Ending
	balance		Increase		Decrease			balance
SK China Company Ltd.	W	1,086	W	—	W	—		W	1,086
Cyworld Japan Co., Ltd.		2,637		—		(2,227	)		410
Cyworld Incorporated		1,794		—		(378	)		1,416
Other investments in affiliates		788		2,552		(385	)		2,955


Total	W	6,305	W	2,552	W	(2,990	)	W	5,867


	For the year ended December 31, 2008
	Beginning							Ending
	balance		Increase		Decrease			balance
SK China Company Ltd.	W	1,086		—		—		W	1,086
Cyworld Japan Co., Ltd.		410		—		(410	)		—
Cyworld Incorporated		1,416		—		—			1,416
Other investments in affiliates		2,955		57		(192	)		2,820


Total	W	5,867	W	57	W	(602	)	W	5,322

The condensed financial information of the investees as of and for the year ended December 31, 2008 are as follows (In millions of Korean won):


	Total		Total				Net
	assets		liabilities		Revenue		income (loss)
SK Marketing & Company Co., Ltd.	W	593,884	W	400,287	W	133,271	W	14,823
AirCross Co., Ltd.		7,402		114		24,352		2,261
Harex Info Tech, Inc.		2,241		1,082		2,798		(812	)
Skytel Co., Ltd.		50,653		3,448		39,815		14,409
SK China Company Ltd.		16,449		1,101		11,632		(1,222	)
TR Entertainment		7,521		956		6,383		(2,129	)
SK USA, Inc.		12,028		1,316		9,710		1,860
Korea IT Fund		332,724		—		19,742		7,534
3rd Fund of Isu Entertainment		6,012		—		305		(390	)
Magic Tech Network		10,194		2,986		556		(2,049	)
SK Telecom Global Investment B.V.		31,845		39		286		125
SKY Property Mgmt. Ltd.		656,923		178,581		9,448		(3,330	)
CDMA Mobile Phone Center		451,998		317,719		73,803		(51,532	)
Wave City Development Co., Ltd.		27,413		17,371		523		(311	)
SK Cyberpass, Inc.		8,850		4,361		22,031		(2,454	)
Shenzhen E-Eye High Tech		17,557		579		5,965		1,462
Cyworld Japan Co., Ltd.		1,931		221		194		(868	)
Cyworld Incorporated		2,737		13,673		57		(5,821	)
Money Mobile USA, Inc.		12,404		1,838		—		(8,378	)
Virgin Mobile USA Inc.		480,661		825,373		479,739		(10,345	)
Benex Movie Expert Fund		17,428		146		82		(119	)


6.		LOANS TO EMPLOYEES

Short-term and long-term loans to employees as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006		2007		2008

Loans to employees’ stock ownership association	W	7,526	W	34,817	W	74,878
Loans to employees for housing and other		4,580		15,231		15,488


	W	12,106	W	50,048		90,366

On December 26, 2007 and January 23, 2008, we loaned W 31.0 billion and W 29.7 billion, respectively, to our employee stock ownership association to help fund the employee stock ownership association’s acquisition of our treasury shares. Such loans will be repaid over a period of five years, beginning on the second anniversary of each loan date.


7.		PROPERTY AND EQUIPMENT

Property and equipment as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	Useful lives
	(years)	2006			2007			2008
Land		W	473,109		W	454,916		W	756,348
Buildings and structures	15-50		1,502,755			1,510,199			1,925,563
Machinery	3-9		11,380,257			12,909,629			18,572,546
Other	3-5		1,004,196			1,028,442			1,135,325
Construction in progress			132,831			308,955			356,150


Total			14,493,148			16,212,141			22,745,932
Less accumulated depreciation			(9,985,813	)		(11,242,431	)		(15,305,773	)
Accumulated impairment			—			—			(2,197	)
Government subsidy			—			(356	)		(273	)


Property and equipment, net		W	4,507,335		W	4,969,354		W	7,437,689

		The government’s declared standard value of land owned as of December 31, 2006, 2007 and 2008 are W519,234 million, W561,326 million and W895,866 million, respectively.

		Details of changes in property and equipment for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	For the year ended December 31, 2006
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance

Land	W	466,562	W	115	W	(645	)	W	7,077		W	—		W	473,109
Buildings and structures		1,151,094		4,664		(849	)		14,262			(55,947	)		1,113,224
Machinery		2,479,623		65,819		(8,571	)		1,014,646			(1,152,632	)		2,398,885
Other		301,781		839,284		(17,308	)		(636,866	)		(97,605	)		389,286
Construction in progress		264,309		588,260		—			(719,738	)		—			132,831


	W	4,663,369	W	1,498,142	W	(27,373	)	W	(320,619	)	W	(1,306,184	)	W	4,507,335


	For the year ended December 31, 2007
			Other
	Beginning balance		increase (decrease)		Acquisition		Disposal			Transfer			Depreciation			Ending balance

Land	W	473,109	W	—	W	471	W	(20,362	)	W	1,698		W	—		W	454,916
Buildings and structures		1,113,224		5		4,998		(3,488	)		7,779			(56,438	)		1,066,080
Machinery		2,398,885		282,925		106,524		(8,420	)		1,333,354			(1,312,840	)		2,800,428
Other		389,286		19,008		1,034,181		(14,273	)		(964,200	)		(125,027	)		338,975
Construction in progress		132,831		5,941		669,793		(893	)		(498,717	)		—			308,955


Total	W	4,507,335	W	307,879	W	1,815,967	W	(47,436	)	W	(120,086	)	W	(1,494,305	)	W	4,969,354


	For the year ended December 31, 2008
	Beginning balance		Other increase (decrease)			Acquisition		Disposal			Transfer			Depreciation			Ending balance

Land	W	454,916	W	294,629		W	141	W	(3,394	)	W	10,056		W	—		W	756,348
Buildings and structures		1,066,080		319,266			10,984		(2,900	)		28,692			(67,310	)		1,354,812
Machinery		2,800,428		1,675,918			358,052		(55,090	)		1,600,116			(1,804,916	)		4,574,508
Other		338,975		(950	)		1,138,814		(29,633	)		(928,313	)		(123,022	)		395,871
Construction in progress		308,955		61,155			728,939		(13,461	)		(729,438	)		—			356,150


Total	W	4,969,354	W	2,350,018		W	2,236,930	W	(104,478	)	W	(18,887	)	W	(1,995,248	)	W	7,437,689

Other increase (decrease) resulted from merger and the changes in consolidated subsidiaries.


8.		INTANGIBLE ASSETS

Intangible assets as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	December 31, 2008								Carrying amounts
	Acquisition cost		Accumulated amortization			Accumulated Impairment			2006		2007		2008

Goodwill	W	2,998,512	W	(1,093,395	)	W	(5,378	)	W	1,775,695	W	1,684,357	W	1,899,739
Frequency use rights		1,385,120		(541,349	)		—			1,076,833		960,302		843,771
Software development costs		270,638		(232,872	)		(3,193	)		45,653		19,837		34,573
Customer relationships		504,156		(68,621	)		—			—		25,139		435,535
Other		1,628,458		(861,947	)		(1,984	)		620,230		744,327		764,527


	W	6,786,884	W	(2,798,184	)	W	(10,555	)	W	3,518,411	W	3,433,962	W	3,978,145

Details of changes in intangible assets for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	For the year ended December 31, 2006
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Impairment			Ending balance

Goodwill	W	1,868,932	W	1,672	W	—		W	44,947	W	(139,806	)	W	(50	)	W	1,775,695
Frequency use rights		1,184,292		687		—			—		(108,146	)		—			1,076,833
Software development costs		65,991		1,946		—			9,340		(31,624	)		—			45,653
Other		333,674		69,659		(1,250	)		330,866		(112,604	)		(115	)		620,230


	W	3,452,889	W	73,964	W	(1,250	)	W	385,153	W	(392,180	)	W	(165	)	W	3,518,411


	For the year ended December 31, 2007
	Beginning balance		Other increase (decrease)		Acquisition		Disposal			Transfer		Amortization			Impairment			Ending balance

Goodwill	W	1,775,695	W	59,460	W	958	W	(124	)	W	6,092	W	(157,724	)	W	(—	)	W	1,684,357
Frequency use rights		1,076,833		—		—		—			—		(116,531	)		—			960,302
Software development costs		45,653		1,881		3,294		(5,673	)		1,679		(26,930	)		(67	)		19,837
Customer relationships		—		33,152		—		—			629		(8,642	)		—			25,139
Other		620,230		85,983		110,850		(5,750	)		129,729		(196,569	)		(146	)		744,327


Total	W	3,518,411	W	180,476	W	115,102	W	(11,547	)	W	138,129	W	(506,396	)	W	(213	)	W	3,433,962


	For the year ended December 31, 2008
	Beginning balance		Other increase (decrease)		Acquisition		Disposal			Transfer		Amortization			Impairment			Ending balance

Goodwill	W	1,684,357	W	481,106	W	1,305	W	(55	)	W	1,197	W	(267,078	)	W	(1,093	)	W	1,899,739
Frequency use rights		960,302		—		—		—			—		(116,531	)		—			843,771
Software development costs		19,837		4,950		16,356		(1	)		10,769		(14,713	)		(2,625	)		34,573
Customer relationships		25,139		479,017		—		—			—		(68,621	)		—			435,535
Other		744,327		16,255		131,680		(10,809	)		180,673		(297,085	)		(514	)		764,527


Total	W	3,433,962	W	981,328	W	149,341	W	(10,865	)	W	192,639	W	(764,028	)	W	(4,232	)	W	3,978,145

		Other increase (decrease) resulted from merger and change in consolidated subsidiary.

		The book value and residual useful lives of major intangible assets as of December 31, 2008 are as follows (In millions of Korean won):


	Amount		Description	Residual useful lives
Goodwill	W	1,434,898	Goodwill related to merger of Shinsegi Telecomm, Inc.	11 years and 3 months
²		29,956	Goodwill related to merger of Empas Corp.	3 years and 10 months
²		378,084	Goodwill related to acquire of SK Broadband Co., Ltd.	19 years and 3 months
IMT license		772,762	Frequency use rights relating to W-CDMA service	(note a)
WiBro license		65,699	WiBro service	(note b)
DMB license		5,310	DMB service	7 years and 6 months
Customer relationships		435,535	Customer relationships related to acquisition of SK Broadband Co., Ltd.	4 years and 9 months


(note a)		With its application for a license to provide IMT services, the Company has a commitment to pay W1,300,000 million to the Ministry of Information Communication (“MIC”). SK IMT Co., Ltd., which was merged into SK Telecom on May 1, 2003, paid W650,000 million in March 2001 and SK Telecom is required to pay the remainder over 10 years with an annual interest rate equal to the 3-year-maturity government bond rate minus 0.75% (4.54% as of December 31, 2008). The future payment obligations are W130,000 million in 2009, W150,000 million in 2010 and W170,000 million in 2011. On December 4, 2001, SK IMT Co., Ltd. received the IMT license from MIC, and recorded the total license cost (measured at present value) as an intangible asset. Amortization of the IMT license commenced when the Company started its commercial IMT service in December 2003, using the straight-line method over the estimated useful life (13 years) of the IMT license which expires in December 2016. The Company determined the IMT license has a finite life, considering that renewal cost is expected to be substantial. As of December 31, 2008, the present value discount related to the current portion and long-term portion of payments to be made to MIC amounts to W805 million and W15,416 million, respectively.

(note b)		The Company purchased the WiBro license from MIC on March 30, 2005. The license period is seven years from the purchase date. Amortization of the WiBro license commenced when the Company started its commercial WiBro services on June 30, 2006 using the straight line method over the remaining useful life.


9.		BONDS PAYABLE

Bonds as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won and thousands of U.S. dollars and thousands of Japanese yen):


		Annual
	Maturity	Interest
	year	rate (%)	2006			2007			2008

Domestic general bonds	2006	5.0-6.0	W	—		W	—		W	—
²	2007	5.0-6.0		700,000			—			—
²	2008	5.0		300,000			300,000			—
²	2009	5.0		300,000			300,000			300,000
²	2010	4.0~6.77		200,000			200,000			250,000
²	2011	3.0		200,000			200,000			200,000
² (note a)	2012	3 month Euro Yen Libor+0.55		—			104,166			174,236
²	2013	4.0~6.92		200,000			200,000			450,000
²	2014	5.0		—			200,000			200,000
²	2015	5.0		—			—			200,000
²	2016	5.0		200,000			200,000			200,000
²	2018	5.0		—			—			200,000
Unsecured private bonds	2008	6.07-6.14		—			30,000			—
² (note b)	2009	6.51-7.48		—			34,584			23,205
²	2009	6.45		—			30,000			30,000
² (note b)	2010	6.50-7.07		—			36,250			28,182
Unsecured public bonds	2008	5.50		—			50,000			—
²	2010	6.30-6.81		—			110,000			110,000
²	2011	9.08		—			—			25,000
Debentures (notes c and e)	2009	6.08		—			—			96,172
² (notes c and f)	2010	8.75~9.25		—			—			80,000
² (notes c and f)	2011	6.65~9.20		—			—			315,718
Dollar denominated bonds (US$300,000)	2011	4.25		278,880			281,460			377,250
Dollar denominated bonds (US$500,000) (notes c and g)	2012	7.0		—			—			656,251
Dollar denominated bonds (US$400,000)	2027	6.63		—			375,280			503,000
Floating rate notes (US$150,000) (note a)	2010	3-month LIBOR rate +3.05		—			—			188,625
Private bonds (¥125,000)	2007	4.65		684			—			—
Convertible bonds (SK Telecom) (note d)	2009	—		356,356			268,415			268,415
Convertible bonds (IHQ, Inc.)	2008	—		18,356			—			—
Convertible bonds (YTN Media, Inc.)	2007	1.0		1,000			—			—
Bond with stock purchase warrant (SK Communications Co., Ltd.)	2007	4.65		684			—			—


Sub total				2,755,960			2,920,155			4,876,054
Less discounts on bonds				(39,422	)		(46,557	)		(77,182	)
Less conversion right adjustments				(46,079	)		(19,665	)		(5,733	)
Less warrant right adjustments				(23	)		—			—
Add long-term accrued interest				23,854			17,256			17,256


Net				2,694,290			2,871,189			4,810,395
Less portion due within one year				(698,967	)		(522,528	)		(736,003	)


Long-term portion			W	1,995,323		W	2,348,661		W	4,074,392


(note a)		The 3-months Euro Yen LIBOR rate and the 3-month Libor rate as of December 31, 2008 are 0.83% and 1.425%, respectively.

(note b)		These bonds are scheduled to repay in 3 years with a two-year grace period.

(note c)		These bonds are debentures of SK Broadband Co.,Ltd. which was newly included in consolidation of accompanying consolidated financial statements for the year ended December 31, 2008.

(note d)		The principal amount of these convertible bonds denominated in U.S. dollar as of December 31, 2006, 2007 and 2008 are US$304,240,000, US$229,160,000 and US$229,160,000, respectively.

(note e)		SK Broadband Co., Ltd. is required to keep the debt ratio lower than 400% and prohibited from disposing or leasing of its property and equipment more than W1,000 billion in each fiscal year in accordance with the covenant provision of related borrowings.

(note f)		SK Broadband Co., Ltd. is required to keep the debt ratio lower than 1,000% and prohibited from disposing or leasing of its property and equipment more than 20 times of its stockholders’ equity in each fiscal year in accordance with covenant provision of related borrowings.

(note g)		SK Broadband Co., Ltd. is required to propose tender offer to purchase its outstanding bonds at 101% of principal if investors other than foreign majority shareholders acquire more than 45% equity interest in SK Broadband Co., Ltd., and its credit rating is down-graded by designated credit rating agency (S&P, Moody’s) due to such change in management right.

		All of the above bonds will be paid in full at maturities except for bonds of mentioned at the above note b.

		Convertible Bonds Issued by SK Telecom

		On May 27, 2004, the Company issued zero coupon convertible bonds with a maturity of five years in the principal amount of US$329,450,000 for US$324,923,469, with an initial conversion price of W235,625 per share of the Company’s common stock, which was greater than market value at the date of issuance. Subsequently, the initial conversion price was changed to W203,516 per share in accordance with anti-dilution protection. The Company may redeem the principal amount after 3 years from the issuance date if the market price exceeds 130% of the conversion price during a predetermined period. On the other hand, the bond holders may redeem their notes at 103.81% of the principal amount on May 27, 2007 (3 years from the issuance date). The conversion right may be exercised during the period from July 7, 2004 to May 13, 2009 and the number of common shares to be converted as of December 31, 2008 is 1,324,744 shares. Effective July 1, 2008, the conversion price was changed from W204,636 to W203,516 and the number of shares to be converted was changed from 1,317,494 shares to 1,324,744 shares due to the payment of interim dividends in accordance with the resolution of the Company’s board of directors of July 18, 2008.

		Conversion of notes to common shares may be prohibited under the Telecommunications Law or other legal restrictions which restrains foreign governments, individuals and entities from owning more than 49% of the Company’s voting stock, if this 49% ownership limitation is violated due to the exercise of conversion rights. In this case, the Company will pay a bond holder as cash settlement determined at the average price of one day after a holder exercises its conversion right or the weighted average price for the following five business days. The Company intends to sell treasury shares held in trust by the Company that corresponds to the number of shares of common stock that would have been delivered in the absence of the 49% foreign shareholding restrictions. The Company entered into an agreement with Credit Suisse First Boston International to reduce the effect of fluctuation with respect to cash settlement payments that may be more or less than the proceeds from sales of treasury shares held in trust. Unless either previously redeemed or converted, the notes are redeemable at 106.43% of the principal amount at maturity.

		During the year ended December 31, 2006, the convertible bonds with a principal amount of US$25,210,000 were converted into 136,613 shares of treasury stock (see Note 16), and the principal amount of the convertible bonds decreased from US$329,450,000 to US$304,240,000. In addition, the consideration for conversion right (capital surplus) decreased by W3,733 million (net of tax effect of W1,416 million).

		During the year ended December 31, 2007, the conversion rights for the convertible bond with a principal amount of US$75,080,000 were exercised. The Company paid W42,962 million in cash to bond holders with a principal amount of US$36,260,000 without delivering the Company’s common stocks due to the 49% ownership limitation as explained above and the convertible bonds with principal amount of US$38,820,000 were converted into 216,347 shares of treasury stock (see Note 16). Therefore, the principal amount of the convertible bonds decreased from US$304,240,000 to US$229,160,000. In addition, the consideration for conversion right (capital surplus) decreased by W11,116 million (net of tax effect of W4,216 million). In 2008, no conversion right was exercised.

		Convertible Bonds and Bonds with Stock Purchase Warrants Issued by Subsidiaries

		In 2005, IHQ, Inc. (“IHQ”) and YTN Media, Inc. (“YTN”) which were consolidated effective July 1, 2006, issued convertible bonds with the principal amount of US$18,000,000 and W1,000 million, respectively. As of December 31, 2006, IHQ’s convertible bonds are convertible into IHQ’s common stock at W7,359 (convertible rate of exchange: 1,034.70 = US$1) per share during the period from May 15, 2006 to November 15, 2008. Unless converted, these bonds are redeemable for cash at 104.57% of the principal amount at maturity. During the year ended December 31, 2007, all convertible bonds were converted into common stocks, therefore no convertible bonds are remained as of December 31, 2008.

		As SK Communications Co., Ltd. merged with Etoos Group on May 1, 2006, bonds with stock purchase warrants with the principal amount of ¥125,000,000 were transferred to the Company. During the year ended December 31, 2007, these bonds were all redeemed at maturity, accordingly no bonds with stock purchase warrants are remained as of December 31, 2008.


10.		LONG-TERM BORROWINGS

Long-term borrowings as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won, thousands of U.S. dollars and thousands of Japanese yen):


	Final	Annual interest
Lender	maturity year	rate (%) (note a)	2006			2007			2008

Shinhan Bank (note b)	2011	91 days CD yield + 0.25	W	200,000		W	200,000		W	200,000
Korea Development Bank	2011	91 days CD yield + 1.02		—			—		W	100,000
Citibank	2011	91 days CD yield + 1.20		—			—		W	100,000
Nonghyup	2011	91 days CD yield + 1.30		—			—		W	100,000
Hana Bank	2011	91 days CD yield + 1.50		—			—		W	150,000
Nonghyup	2011	91 days CD yield + 1.50		—			—		W	50,000
Shinhan Bank	2011	4.36		—		W	762		W	635
Korea Development Bank	2011	5.79		—			—		W	16,253
Kookmin Bank	2012	5.91		—			—		W	11,860
Korea Development Bank	2013	5.91		—			—		W	10,577
Small Business Corporation	2009	5.25		—		W	156		W	31
Calyon Bank	2013	6M Libor + 0.29	US$	50,000		US$	50,000		US$	50,000
DBS Bank	²	²	US$	25,000		US$	25,000		US$	25,000
SMBC	²	²	US$	25,000		US$	25,000		US$	25,000
Earthlink, Inc.	2010	10		—		US$	30,000			—
Industrial Bank of Korea	2008	3.50 ~ 3.90	¥	8,880		¥	—			—
²	2009	3.11	¥	9,100			—			—
²	2010	2.50 ~ 4.00	W	—		W	641		W	384
Resona Bank	2010	1.85	¥	—		¥	98,573			—


Total			W	200,000		W	201,559		W	739,740
			US$	100,000		US$	130,000		US$	100,000
			¥	17,980		¥	98,573			—


Equivalent in Korean won			W	293,101		W	324,346		W	865,490
Less portion due within one year				(75	)		(925	)		(9,019	)


Long-term portion			W	293,026		W	323,421		W	856,471


(note a)		At December 31, 2008, the 91-day CD yield and the 6M LIBOR rate are 3.93% and 1.75%, respectively.

(note b)		This long-term a borrowings is classified as long-term borrowing as the borrowing is to be rolled-over exceeding 1 year from December 31, 2008 in accordance with the loan agreement.

The repayment schedule of long-term borrowings at December 31, 2008 is as follows (In millions of Korean won and thousands of denominated in Yen):


			Long-term borrowing
	Long-term		in foreign currencies
	borrowing in		Foreign		Korean won
Year ending December 31,	Korean won		currencies		equivalent		Total

2009	W	9,019		—		—	W	9,019
2010		12,599		—		—		12,599
2011		710,856		—		—		710,856
2012		5,503		—		—		5,503
2013 and thereafter		1,763	US$	100,000	W	125,750		127,513


Total	W	739,740	US$	100,000	W	125,750	W	865,490


11.		SUBSCRIPTION DEPOSITS

		The Company receives facility guarantee deposits from subscribers of cellular services at the subscription date. The Company has no obligation to pay interest on these deposits and returns all amounts to subscribers upon termination of the subscription contract.

		Long-term subscription guarantee deposits by service type held as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won, except deposit per subscriber amounts):


	Deposit per
Service type	subscriber		2006		2007		2008

Cellular	W	200,000	W	21,140	W	6,425	W	4,796

		The Company offers existing and new cellular subscribers the option of obtaining credit insurance from Seoul Guarantee Insurance Company (“SGIC”) in lieu of the facility deposit. Existing subscribers who elect this option are refunded their subscription deposits. As a result of this arrangement, the balance of facility guarantee deposits has been decreasing.

		Subscription deposits payable in current liabilities section represents payable to subscribers who cancelled services.


12.		LEASES

During the year ended December 31, 2005, the Company acquired certain computer equipment and software from SK C&C Co., Ltd. and succeeded SK C&C Co., Ltd. in certain capital lease agreements between SK C&C Co., Ltd. and HP Financial Service. YTN Media, Inc., which was consolidated effective July 1, 2006, acquired certain broadcasting equipment from HYOSUNG CAPITAL Co., Ltd. under certain finance lease agreements. The acquisition cost of such leased broadcasting equipment, computer equipment and software totaled W265,625 million as of December 31, 2008. Depreciation expense for the year ended December 31, 2008 was W45,807 million. The Company’s minimum future lease payments as of December 31, 2008 are as follows (In millions of Korean won):


	Annual lease
Year ending December 31,	payments		Interest		Principal

2009	W	74,741	W	12,951	W	61,791
2010		74,650		8,401		66,249
2011		49,260		3,625		45,635
2012		28,147		758		27,388


Total	W	226,798	W	25,735		201,063

Less portion due within one year						(61,790	)


Finance lease liabilities					W	139,273

The Company leased certain machinery and equipment under an operating lease and the Company’s minimum future lease payments as of December 31, 2008 are as follows (In millions of Korean won):


Year ending December 31,	Minimum Lease Payments

2009	W	672,837
2010		460,046
2011		436,425
2012		410,590
2013 and thereafter		—


Total	W	1,979,898


13.		ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The details of monetary assets and liabilities denominated in foreign currencies (except for bonds payable and long-term borrowings denominated in foreign currencies described in Notes 9 and 10) as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won, thousands of U.S. dollars, thousands of HK dollars, thousands of Japanese yen, thousands of Singaporean dollars, thousands of Euros, thousands of Great Britain pounds, thousands of Swiss francs, thousands of Chinese Yuan, thousands of Vietnam dongs, thousands of Canadian dollars and thousands of France francs):


	Foreign currencies						Korean won equivalent
	2006		2007		2008		2006		2007		2008

Cash and cash equivalents	US$	1,330	US$	357,413	US$	7,269	W	1,236	W	335,325	W	9,140
²	EUR	2	EUR	117	EUR	85		2		162		152
²		—		—	JPY	1,313		—		—		18
Accounts receivable — trade	US$	30,849	US$	26,818	US$	35,837		28,677		25,161		45,066
²	¥	800	¥	41,307		—		6		344		—
²	EUR	248	EUR	248	EUR	187		303		343		332
		—	CNY	5,620	CNY	5,620		—		722		1,035
Short-term loans		—	US$	2,419	US$	2,168		—		2,270		2,726
Accounts receivable — other	US$	1,657	US$	965	US$	2		1,541		905		3
²		—		—	CNY	7,888		—		—		1,452
Guarantee deposits	US$	17	US$	12	US$	8		16		11		9
²	¥	21,536	¥	16,912	¥	17,397		168		141		242


Total assets							W	31,949	W	365,384	W	60,175


	Foreign currencies						Korean won equivalent
	2006		2007		2008		2006		2007		2008

Accounts payable — trade		—	US$	27,904	US$	22,295	W	—	W	26,179	W	28,036
²		—	¥	1,251	¥	1,251		—		10		17
²		—		—	FRF	11,474		—		—		3
Accounts payable — other	US$	36,373	US$	22,596	US$	31,605		33,812		21,199		39,744
²	¥	19,956	¥	16,954	¥	112,370		156		141		1,566
²	HK$	190	HK$	248	HK$	41		23		30		7
²	GBP	48	GBP	931	GBP	38		88		1,745		70
²	SG$	6	SG$	27	SG$	1		4		18		1
²	EUR	813	EUR	588	EUR	1,116		993		812		1,983
²	CHF	250	CHF	250		—		190		208		—
²	CA$	2		—		—		1		—		—
²	FRF	11	FRF	11		—		2		2		—


Total liabilities							W	35,269	W	50,344	W	71,427


14.		CAPITAL STOCK AND CAPITAL SURPLUS

The Company’s outstanding capital stock consists entirely of common stock with a par value of W500. The number of authorized, issued and outstanding common shares as of December 31, 2006, 2007 and 2008 are as follows:


	2006		2007		2008

Authorized shares		220,000,000		220,000,000		220,000,000
Issued shares		81,193,711		81,193,711		81,193,711
Outstanding shares, net of treasury stock		72,667,459		72,584,677		72,486,015

Significant changes in common stock and capital surplus in 2006, 2007 and 2008 are as follows (In millions of Korean won, except for share data):


	Number of					Capital
	shares issued			Common stock		surplus

At December 31, 2005		82,276,711			44,639		2,969,865
Retirement of treasury stock (note a)		(1,083,000	)		—		—
Conversion of convertible bonds (note b)		—			—		(3,733	)
Transfer of stock options from capital adjustment (note c)		—			—		234
Equity in capital surplus changes of affiliates		—			—		33


At December 31, 2006		81,193,711			44,639		2,966,399
Conversion of convertible bonds (note d)		—			—		(11,116	)
Transfer of stock options from capital adjustment (note e)		—			—		3,246
Equity in capital surplus changes of affiliates		—			—		(2,423	)


At December 31, 2007		81,193,711			44,639		2,956,106
Decrease of conversion of convertible bonds due to change in statutory tax rates		—			—		1,544
Gain on disposal of treasury stock (note f)		—			—		722
Equity in capital surplus changes of affiliates		—			—		482


At December 31, 2008		81,193,711		W	44,639	W	2,958,854


(note a)		The Company retired 491,000 shares and 592,000 shares of treasury stock on August 17, 2006 and September 29, 2006, respectively, and reduced retained earnings before appropriation in accordance with Korean Commercial Code.

(note b)		For the year ended December 31, 2006, the convertible bonds with principal amount of US$25,210,000 were converted into 136,163 shares of the Company’s common stock. Such conversion was settled by the Company by using its treasury stocks. Related to this conversion transaction, the capital surplus amount decreased by W3,733 million.

(note c)		For the year ended December 31, 2006, the exercisable period for the stock options representing 43,390 shares, of which recognized compensation costs were W234 million, expired and the related stock options of W234 million in capital adjustments were transferred to capital surplus.

(note d)		For the year ended December 31, 2007, the convertible bonds with principal amount of US$38,820,000 were converted into 216,347 shares of the Company’s common stock. Such conversion was settled by the Company by using its treasury stocks (see note 16). Related to this conversion transaction, the capital surplus amount decreased by W11,116 million.

(note e)		For the year ended December 31, 2007, the exercisable period for the stock options representing 65,730 shares, for which the Company recognized compensation costs of W3,246 million, expired and the related stock options of W3,246 million in capital adjustments were transferred to capital surplus.


(note f)		On January 23, 2008, treasury stock of 208,326 shares with carrying value totaling W49,401 million were sold to the employees’ stock ownership association. As a result of these transactions, tax effect of accumulated temporary differences related to the sold treasury stocks exceeded loss on disposal of treasury stock.


15.		RETAINED EARNINGS

Retained earnings as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006		2007		2008

Appropriated	W	6,679,235	W	7,335,037	W	8,295,037
Unappropriated		1,168,199		1,579,933		1,153,148


	W	7,847,434	W	8,914,970	W	9,448,185

The details of appropriated retained earnings as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006		2007		2008

Legal reserve	W	22,320	W	22,320	W	22,320
Reserve for improvement of financial structure		33,000		33,000		—
Reserve for loss on disposal of treasury stock		477,182		255,984		255,984
Reserve for research and manpower development		880,595		872,595		872,595
Reserve for business expansion		5,266,138		6,151,138		6,344,138
Reserve for technology development		—		—		800,000


	W	6,679,235	W	7,335,037	W	8,295,037

	a.		Legal Reserve

			The Korean Commercial Code requires the Company to appropriate as a legal reserve at least 10% of cash dividends for each accounting period until the reserve equals 50% of outstanding capital stock. The legal reserve may not be utilized for cash dividends, but may only be used to offset a future deficit, if any, or may be transferred to capital stock.

	b.		Reserve for Improvement of Financial Structure

			Through 2006, the Financial Control Regulation for Listed Companies in Korea required that at least 10% of net income (net of accumulated deficit), and an amount equal to net gain (net of related income tax, if any) on the disposal of property and equipment should be appropriated as a reserve for improvement of financial structure until the ratio of stockholders’ equity to total assets reached 30%. However, this regulation was nullified during the year ended December 31, 2007 and no such requirement exists as of December 31, 2007 and 2008.

	c.		Reserves for Loss on Disposal of Treasury Stock and Research and Manpower Development

			Reserves for loss on disposal of treasury stock and research and manpower development were appropriated in order to recognize certain tax deductible benefits through the early recognition of future expenditures for tax purposes. These reserves will be reversed from appropriated retained earnings in accordance with the relevant tax laws. Such reversal will be included in taxable income in the year of reversal.

	d.		Reserve for Business Expansion and Technology Development

			The reserve for business expansion and technology development are voluntary and were approved by the board of directors and stockholders.


16.		TREASURY STOCK

		Upon issuance of stock dividends and new common stock, and the merger with Shinsegi Telecomm, Inc. and SK IMT Co., Ltd., the Company acquired fractional shares totaling 77,970 shares for W6,110 million through 2005. In addition, the Company acquired 8,584,445 shares of treasury stock in the market or through the trust funds for W2,040,995 million through 2005 in order to stabilize the market price of its stock. Meanwhile, the Company retired 1,083,000 shares of common stock in accordance with Korean Commercial law, which were acquired by the Company in 2006 at W209,077 million. As a result, retained earnings decreased by W209,077 million. In addition, the loss on disposal of treasury stock decreased by W337 million for the year ended December 31, 2007 to reflect the tax effect of change in accumulated temporary differences related to treasury stocks based on the prior year tax return.

		In addition, during the year ended December 31, 2006 and 2007, the convertible bonds with a principal amount of US$25,210 thousand and US$75,080 thousand were converted into 136,163 shares and 216,347 shares of common stock, respectively. Such conversion was settled by the Company by using its treasury stock with carrying value totaling W32,178 million and W51,199 million, which resulted in loss on disposal of treasury stock of W7,887 million and gain on disposal of treasury stock of W1,414 million, respectively.

		From November 9, 2007 through December 31, 2007, the Company acquired 471,000 shares of treasury stock for W118,511 million in order to stabilize the market price of its stock in accordance with a resolution of the board of directors on November 2, 2007. In addition, on December 26, 2007 and January 23, 2008, treasury stock of 171,871 shares and 208,326 shares with carrying value totaling W40,756 million and W49,401 million, respectively, were sold to the employees’ stock ownership association. As a result of these transactions, loss on disposal of treasury stock decreased by W6,042 million for the year ended December 31, 2007 and increased by W7,155 million for the year ended December 31, 2008.

		Meanwhile, from December 2, 2008 through December 30, 2008, the Company acquired 306,988 shares of treasury stock for W63,538 million in order to retire them with retained earnings in accordance with a resolution of Board of Directors on October 23, 2008.


17.		INCOME TAXES

Income tax expenses for the years ended December 31, 2006, 2007 and 2008 consist of the following (In millions of Korean won) :


	2006			2007		2008

Currently	W	615,959		W	572,806	W	493,714
Changes in net deferred tax liabilities		(43,933	)		121,681		(194,864	)


Income tax expenses	W	572,026		W	694,487	W	298,850

The difference between income taxes computed using the statutory corporate income tax rates and the recorded income taxes for the years ended December 31, 2006, 2007 and 2008 is attributable to the following (In millions of Korean won):


	2006			2007			2008

Income taxes at statutory income tax rate of 25% in 2006, 2007 and 2008	W	505,394		W	571,441		W	314,683
Resident surtax payable		50,539			57,144			31,468
Tax credit for investments, technology and human resource development		(110,785	)		(105,819	)		(98,551	)
Special surtax for agriculture and fishery industries		20,183			17,855			17,528
Additional income tax (tax refund) for prior periods		—			8,148			(60,130	)
Goodwill amortization not deductible for tax purpose		38,447			35,382			35,382
Undistributed earnings (unrecognized deficit) of subsidiaries		1,496			5,326			3,196
Other permanent differences		24,717			3,664			18,045
Increase (decrease) in valuation allowance		42,035			101,346			37,229


Recorded income taxes	W	572,026		W	694,487		W	298,850


Effective tax rate		28.30	%		30.38	%		23.74	%

The tax effects of each type of temporary difference that gave rise to a significant portion of the deferred tax assets and liabilities at December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006			2007			2008
Current :
Allowance for doubtful accounts	W	21,701		W	17,289		W	33,073
Accrued interest income		(1,605	)		(2,073	)		(2,902	)
Accrued interest expense		—			—			21,856
Net operating loss carryforwards		1,121			5,406			7,606
Tax credit carryforwards		19			—			570
Other		28,704			15,756			(32,417	)


Net deferred tax assets — current		49,940			36,378			27,786


Non-Current :
Depreciation		(51,437	)		(42,671	)		(9,491	)
Loss on impairment of investment securities		33,269			41,105			99,149
Equity in losses (gains) of affiliates, net		3,968			(52,313	)		(3,458	)
Unrecognized deficit (undistributed earnings) of subsidiaries		34,005			86,497			(59,826	)
Tax free reserve for research and manpower development		(211,215	)		(151,259	)		(80,707	)
Tax free reserve for loss on disposal of treasury stock		(70,395	)		(70,396	)		—
Loss on valuation of foreign currency swap		6,188			6,188			(36,332	)
Loss on valuation of interest swap		125			(871	)		7,370
Loss on valuation of foreign currency swap (accumulated other comprehensive income)		6,668			6,668			(1,490	)
Gain on conversion of convertible bond		—			(102,613	)		(82,091	)
Consideration for conversion right		(17,086	)		(12,870	)		(11,325	)
Equity in other comprehensive income of affiliates, net		(34,077	)		7,879			22,960
Unrealized loss (gain) on valuation of long-term investment securities (accumulated other comprehensive income)		(163,992	)		(617,020	)		(123,636	)
Loss (Gain) on foreign currency translation		—			—			(34,773	)
Net operating loss carryforwards		66,319			183,053			137,348
Tax credit carryforwards		48			35,399			39,345
Other		8,801			28,864			86,061


Total deferred tax liabilities		(388,811	)		(654,360	)		(50,896	)
Valuation allowance for :
Depreciation		183			236			(11,686	)
Net operating loss carryforwards		(60,142	)		(182,726	)		(137,348	)
Equity in losses of affiliates and unrecognized deficit of subsidiaries		(73,082	)		(161,081	)		(87,314	)
Loss (Gain) on foreign currency translation		—			—			(34,773	)
Loss on impairment of investment securities		—			—			(18,387	)
Other		(8,132	)		(39,541	)		(63,403	)


Net deferred tax liabilities — non-current	W	(529,984	)	W	(1,037,472	)	W	(403,807	)

The net operating loss carryforwards and tax credit carryforwards of the Company’s certain subsidiaries which are expected to Reutilized as of December 31, 2008 which are expected to Reutilized will expire as follows (In millions of Korean won):


	Net operating loss		Tax credit
Year ending December 31,	carryforwards		Carryforwards
2009	W	4	W	570
2010		—		514
2011		—		328
2012		—		223


Total	W	4	W	1,635

Deferred tax assets (liabilities) added to (deducted from) capital surplus or accumulated other comprehensive income as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006			2007			2008

Consideration for conversion right	W	(17,086	)	W	(12,870	)	W	(11,325	)
Gain on disposal of treasury stock		(38,341	)		(36,339	)		(28,368	)
Equity in capital adjustments of affiliates		—			—			4,677
Stock option		—			(99	)		—
Unrealized loss (gain) on valuation of long-term investment securities, net		(162,847	)		(616,996	)		(125,620	)
Equity in other comprehensive income of affiliates, net		(41,403	)		(716	)		(12,438	)
Loss on valuation of foreign currency swap		6,668			6,668			4,032
Loss (gain) on valuation of interest rate swap		125			(871	)		7,370
Foreign-based operations’ translation adjustment		(22	)		(32	)		193
Retained Earnings		—			30			30


Total	W	(252,906	)	W	(661,225	)	W	(161,449	)


18.		COMPREHENSIVE INCOME

Details of comprehensive income for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006						2007						2008
	Profit and						Profit and						Profit and
	loss effect			Tax effect			loss effect			Tax effect			loss effect			Tax effect

Net income	W	1,449,552					W	1,562,265					W	972,338
Other comprehensive income (loss):
Unrealized gain on valuation of long-term investment securities, net		471,321			W(178,814	)		1,195,385			W(454,149	)		(1,216,771	)	W	491,376
Equity in other comprehensive income of affiliates, net		45,956			(17,282	)		(105,597	)		40,687			(70,490	)		(11,722	)
Foreign-based operations translation adjustment		(19,737	)		(24	)		4,162			(10	)		60,262			226
Gain (loss) on valuation of currency swap, net		(2,311	)		1,291			4,671			—			20,360			(2,636	)
Gain (loss) on valuation of interest rate swap, net		(329	)		125			2,627			(996	)		(28,427	)		8,241

Sub-total		494,900			W(194,704	)		1,101,248			W(414,468	)		(1,235,066	)	W	485,485


Comprehensive income	W	1,944,452					W	2,663,513					W	(262,728	)


Attributable to :

Majority interests	W	1,946,391					W	2,750,124					W	(19,347	)
Minority interests		(1,939	)					(86,611	)					(243,381	)

	W	1,944,452					W	2,663,513					W	(262,728	)


19.		NET INCOME PER SHARE

		Net income from continuing operation per share and net income per share for the years ended December 31, 2006, 2007 and 2008 are computed as follows (In millions of Korean won, except for share data):

		Net income from continuing operation per share


	2006		2007		2008

Net income from continuing operation attributable to the majority interests	W	1,451,491	W	1,681,369	W	1,197,182
Weighted average number of common shares outstanding		73,305,026		72,650,909		72,765,557


Net income per share	W	19,801	W	23,143	W	16,453

Net income from continuing operation attributable to the majority interests for the years ended December 31, 2006, 2007 and 2008 are computed as follows (In millions of Korean won):


	2006		2007		2008

Net income attributable to the majority interests	W	1,451,491	W	1,648,876	W	1,215,719
The majority interests’ portion of net loss(income) from discontinued operation attributable to the majority interests		—		32,493		(18,537	)


Net income from continuing operation attributable to the majority interests		1,451,491		1,681,369		1,197,182

Net income per share


	2006		2007		2008

Net income attributable to the majority interests	W	1,451,491	W	1,648,876	W	1,215,719
Weighted average number of common shares outstanding		73,305,026		72,650,909		72,765,557


Net income per share	W	19,801	W	22,696	W	16,707

The weighted average number of common shares outstanding for 2006, 2007 and 2008 is calculated as follows:


					Weighted	Weighted
		Number of			number of	number
	Date	shares			days	of shares

For 2006 :
At January 1, 2006	—		82,276,711		365/365		82,276,711
Treasury stock, at the beginning of the year	—		(8,662,415	)	365/365		(8,662,415	)
Retirement of treasury stock	(note a)		(1,083,000	)	—		(373,546	)
Conversion of convertible bonds	(note b)		136,163		—		64,276


Total			72,667,459				73,305,026


For 2007 :
At January 1, 2007	—		81,193,711		365/365		81,193,711
Treasury stock, at the beginning of the year	—		(8,526,252	)	365/365		(8,526,252	)
Acquisition of treasury stock	(note c)		(471,000	)	28/365		(36,337	)
Conversion of convertible bonds	(note d)		216,347		29/365		16,962
Disposal of treasury stock			171,871		6/365		2,825


Total			72,584,677				72,650,909


For 2008 :
At January 1, 2008			81,193,711		366/366		81,193,711
Treasury stock, at the beginning of the year			(8,609,034	)	366/366		(8,609,034	)
Acquisition of treasury stock	(note c)		(306,988	)	—		(14,924	)
Disposal of treasury stock			208,326		344/366		195,804


Total			72,486,015				72,765,557


(note a)		The Company retired treasury stocks which were acquired on two different dates during the year ended December 31, 2006, and weighted number of shares was calculated considering each transaction date.

(note b)		Treasury stocks were used to settle the conversion of the convertible bonds on several different dates during the year ended December 31, 2006, and weighted number of shares was calculated considering each transaction date.

(note c)		The Company acquired treasury stocks on many different dates for the years ended December 31, 2007 and 2008, and weighted number of shares was calculated considering each transaction date.

(note d)		Treasury stocks were used to settle the conversion of the convertible bonds on several different dates during the year ended December 31, 2007, and weighted number of shares was calculated considering each transaction date.

		Diluted net income from continuing operation per share and diluted net income per share amounts for the years ended December 31, 2006, 2007 and 2008 are computed as follows (In millions of Korean won, except for share data):

		Diluted net income from continuing operation per share


	2006		2007		2008

Adjusted net income from continuing operation attributable to the majority interests	W	1,464,768	W	1,694,171	W	1,208,332
Adjusted weighted average number of common shares outstanding		75,025,926		74,263,655		74,090,301


Net income per share	W	19,523	W	22,813	W	16,309

Diluted net income per share


	2006		2007		2008

Adjusted net income attributable to the majority interest	W	1,464,768	W	1,661,678	W	1,226,869
Adjusted weighted average number of common shares outstanding		75,025,926		74,263,655		74,090,301


Diluted net income per share	W	19,523	W	22,375	W	16,559

		The numerator and denominator of basic and diluted income per share for the years ended December 31, 2006, 2007 and 2008 are as follows:

		Diluted net income per share


	Net income
	(in millions of		Average weighted		Per-share amount
	Korean won)		number of shares		(in Korean won)

For 2006
Basic net income per share	W	1,451,491		73,305,026	W	19,801

Effect of stock option (note a)		—		—
Effect of convertible bonds (note b)		13,277		1,720,900


Diluted net income per share	W	1,464,768		75,025,926	W	19,523


For 2007
Basic net income per share	W	1,648,876		72,650,909	W	22,696

Effect of stock option (note a)		—		—
Effect of convertible bonds (note b)		12,802		1,612,746


Diluted net income per share	W	1,661,678		74,263,655	W	22,375

Net income

(in millions of

Average weighted

Per-share amount

Korean won)

number of shares

(in Korean won)

For 2008

Basic net income per share

1,215,719

72,765,557

16,707

Effect of stock option (note a)

—

Effect of convertible bonds (note b)

11,150

1,324,744

Diluted net income per share

1,226,869

74,090,301

16,559


(note a)		For the years ended December 31, 2006, 2007 and 2008, the outstanding stock options did not have a dilutive effect because the exercise price exceeded the average market price of common stock for the years ended December 31, 2006, 2007 and 2008, respectively.

(note b)		The effect of convertible bonds is increase in net income related to interest expenses that would not have incurred, and increase in the weighted average number of common shares outstanding related to common shares that would have been issued, assuming that the conversion of convertible bonds were made at the beginning of the period.

Net income from discontinued operation per share for the years ended December, 31, 2006, 2007 and 2008 are computed as follows (In Korean won):


	2006		2007			2008
Net income(loss) attributable to the majority interest	W	—	W	(447	)	W	254


20.		DIVIDEND DISCLOSURE

Details of dividends which were declared for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won, except for share data):


Fiscal year	Dividend type	Number of shares outstanding		Face value		Dividend ratio			Dividends

2006	Cash dividends (interim)		73,713,657	W	500		200	%	W	73,714
	Cash dividends (year-end)		72,667,459	W	500		1,400	%		508,672


	Total								W	582,386


2007	Cash dividends (interim)		72,667,459	W	500		200	%	W	72,668
	Cash dividends (year-end)		72,584,677	W	500		1,680	%		609,711


	Total								W	682,379


2008	Cash dividends (interim)		72,793,003	W	500		200	%	W	72,793
	Cash dividends (year-end)		72,524,203	W	500		1,680	%		609,203


	Total								W	681,996

Dividends payout ratios for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won and %):


	2006			2007			2008

Dividends	W	582,386		W	682,379		W	681,996
Net income attributable to the majority interest		1,451,491			1,648,876			1,215,719


Dividends payout ratio		40.12	%		41.38	%		56.10	%

Dividends yield ratios for the years ended December 31, 2006, 2007 and 2008 are as follows (In Korean won and %):


	2006			2007			2008

Dividend per share	W	8,000		W	9,400		W	9,400
Stock price at the year-end		222,500			249,000			209,000


Dividends yield ratio		3.60	%		3.78	%		4.49	%


21.		RESTRICTED DEPOSITS

At December 31, 2008, the Company has guarantee deposits restricted for their checking accounts totaling W75 million, and deposits restricted for charitable trust for the benefit of the public amounting to W10,000 million of which maturity is February 8, 2009.

At December 31, 2008, certain short-term and long-term bank deposits totaling W112,658 million are secured for payment guarantee of short-term borrowings, accounts payable, operating lease and other.


22.		COMMITMENTS AND CONTINGENCIES

	a.		SK Broadband Co., Ltd., a subsidiary of the Company, agreed to provide guarantees for loans of Broadband Media Co., Ltd. For the guarantee, SK Broadband Co., Ltd. has provided its properties as collaterals of W52,000 million to Korea Exchange Bank, W52,000 million to Woori Bank, W26,000 million to ABN AMRO Bank, W39,000 million to Kookmin Bank and W26,000 million to Korean Federation of Community Credit Cooperatives, respectively, and its short-term financial instruments as collaterals of W11,200 million to Korean Federation of Community Credit Cooperatives, respectively, W15,000 million to Hana Bank, W10,000 million to Nonghyup Agricultural Cooperative Federation, W35,000 million to Korea Exchange Bank, W20,000 million to Kookmin Bank, and W10,000 million to Woori Bank, respectively, as of December 31, 2008.

			SK Broadband Co., Ltd. has provided guarantees for loans of Broadband CS Co., Ltd., Broadband Seoul CS Co., Ltd., Broadband Metropolitan CS Co., Ltd., Broadband Gwangju CS Co., Ltd., and Broadband Busan CS Co, Ltd. For the guarantee, the Company has provided its properties as collaterals of W32,500 million to Kookmin Bank as of December 31, 2008.

			SK Broadband Co., Ltd.’s board of directors resolved to provide its time deposit up to W20,000 million as collateral in order to encourage members of Employee Stock Purchase Association (ESPA) to contribute money to the ESPA, which will be used to purchase the Company’s shares in the market. In accordance with such resolution, the Company has pledged its time deposit of W8,565 million as of December 31, 2008

			In addition, SK Broadband Co., Ltd. has provided its buildings as mortgage of W26,300 million for leasing of office.

Broadband CS Co., Ltd., a subsidiary of the Company, has provided guarantees for loans of Broadband Seoul CS Co., Ltd., Broadband Metropolitan CS Co., Ltd., Broadband Gwangju CS Co., Ltd., and Broadband Busan CS Co., Ltd. For the guarantee, Broadband CS Co., Ltd. has provided its properties as collaterals of W6,500 million to Kookmin Bank as of December 31, 2008

CU Media Inc., a subsidiary of the Company, has provided its land and building with carrying amount of W8,030 million and short-term financial instrument W1,053 million as collateral to Woori Bank for its short and long-term borrowings as of December 31, 2008. In addition, CU Media Inc., has provided to a blank note as collateral Hyosung Capital Co., Ltd. for its capital lease.

TU Media Corp., a subsidiary of the Company, has provided its broadcasting devices with carrying amount of W43,267 million as collateral to Korea Development Bank for its bond payables as of December 31, 2008. In addition, TU Media Corp., has provided its short-term financial instrument of W30 million as collateral to Hana Bank for the guarantee of wire transfer.

Commerce Planet Co., Ltd., a subsidiary of the Company, has provided its short-term financial instrument of W20 million as collateral to LG Household and Healthcare, Ltd. for payment guarantee as of December 31, 2008.

PAXNet Co., Ltd., a subsidiary of the Company, has provided its short-term financial instrument of W1,400 million as collateral to Korea Investment Mutual Savings Bank in connection with its security-backed loan business as of December 31, 2008.

Broadband D&M Co., Ltd. has provided its buildings as mortgage of W1,791 million for leasing of office as of December 31, 2008. In addition, note receivables indorsed by Broadband D&M Co., Ltd., which has not matured as of December 31, 2008, totaled W1,087 million.

One hundred and one notes received before May 13, 1999 have been misplaced as of December 31, 2008 by IHQ, Inc., a subsidiary of the Company, and it is in the process of obtaining a court judgment to void the misplaced notes.

As of December 31, 2008, customers of SK Broadband Co., Ltd. filed a lawsuit of W23,031 million against SK Broadband Co., Ltd. for violating customers’ privacy. The ultimate outcome of the lawsuit cannot presently be determined.


23.		INSURANCE

At December 31, 2008, certain of the Company’s assets are insured with local insurance companies as follows (In millions of Korean won and thousands of U.S. dollars):


Asset	Risk	Book value		Coverage

Inventories and property and equipment	Fire and comprehensive liability			US$	56,115
		W	5,647,251	W	9,502,686


24.		TRANSACTIONS WITH AFFILIATED COMPANIES

Significant related party transactions for the years ended December 31, 2006, 2007 and 2008, and account balances as of December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


Description	2006		2007		2008

Transactions
SK Corporation :
Purchases of property and equipment	W	2,158	W	—	W	—
Commissions paid and other expense		40,694		—		177
Commission income and other income		13,877		829		313
SK Energy Co., Ltd. :
Purchases of property and equipment		—		—		3,001
Commissions paid and other expense		—		30,281		17,895
Commission income and other income		—		17,250		8,898
SK Engineering & Construction Co., Ltd. :
Purchases of property and equipment		235,872		307,702		256,548
Commissions paid and other expense		7,086		16,147		17,025
Commission income and other income		2,385		2,908		2,705
SK Networks Co., Ltd. :
Purchases of property and equipment		9,249		39,415		28,972
Commissions paid, leased line and other expense		490,437		710,228		753,036
Sales of handsets and other income		11,897		15,754		32,052
SK Telesys Co., Ltd. :
Purchases of property and equipment		231,233		264,150		270,133
Commissions paid and other expenses		6,567		13,027		9,078
Commission income and other income		2,170		2,687		1,967
SKC :
Commissions paid and other expenses		21		21		26
Commission income and other income		1,155		1,135		1,005
Innoace Co., Ltd. :
Purchases of property and equipment		23,986		23,694		27,153
Commissions paid and other expenses		7,447		9,839		9,389
Commission income and other income		218		242		269
SK C&C Co., Ltd. :
Purchases of property and equipment		215,820		205,677		232,238
Commissions paid and other expenses		287,647		251,401		273,279
Commission income and other income		8,795		9,470		12,681
SK Networks Service :
Commissions paid and other expenses		—		—		20,599
WALKERHILL Inc. :
Commissions paid and other expenses		—		—		17,881
Commission income and other income		—		—		983
OK Cashbag Service Co., Ltd. :
Purchases of property and equipment		—		—		1,906
Commissions paid and other expenses		—		—		9,978
Commission income and other income		—		—		417
SK Mobile Energy., Ltd. :
Purchases of property and equipment		—		—		4,167
Commission income and other income		—		—		23


Description	2006		2007		2008
Infosec Co., Ltd. :
Purchases of property and equipment		—		—		1,270
Commissions paid and other expenses		—		—		3,076
Commission income and other income		—		—		11
TU Media Corp. (note a) :
Purchases of property and equipment		573		—		—
Commissions paid and other expenses		1,798		—		—
Commission income and other income		57,866		—		—
AirCross Co., Ltd. :
Commissions paid and other expenses		19,494		—		9,158
Commission income and other income		616		—		375
Pantech Co., Ltd. :
Commissions paid and other expenses		400		—		—
Commission income and other income		16,605		—		—
Helio, Inc. & Helio, LLC :
Commissions paid and other expenses		1,087		—		—
Commission income and other income		18,243		—		—
SK Marketing & Company Co., Ltd. :
Commissions paid and other expenses		—		—		49,826
Commission income and other income		—		—		6,769
JYP Entertainment Corp. :
Commissions paid and other expenses		1,010		1,248		3,655
Commission income and other income		108		—		84
SK China Company Ltd. :
Commissions paid and other expenses		—		—		5,826
SK Telecom China Holdings Co., Ltd. :
Commissions paid and other expenses		—		7,655		—
SK USA, Inc. :
Commissions paid and other expenses		2,303		2,617		3,032
CDMA Mobile Phone Center :
Commission income and other income		7,643		16,564		20,627
WS Entertainment :
Commissions paid and other expenses		295		1,081		—
Commission income and other income		6		—		—
Others :
Commissions paid and other expenses		—		4,444		896
Commission income and other income		1,006		—		468

Balances
SK Engineering & Construction Co., Ltd. :
Accounts receivable — trade and other	W	258	W	310	W	203
Accounts payable		1,635		8,870		1,164
Guarantee deposits received		942		1,135		1,076
SK Networks Co., Ltd. :
Accounts receivable — trade and other		780		2,182		1,069
Guarantee deposits		113		113		330
Accounts payable		71,160		71,311		71,795
Guarantee deposits received		3,123		3,432		3,963
SK Corporation :
Accounts receivable — trade and other		5,058		775		46
Guarantee deposits		291		—		—
Accounts payable		7,999		—		—
Guarantee deposits received		6,465		—		—


Description	2006		2007		2008
SK Energy Co., Ltd. :
Accounts receivable — trade and other		—		2,959		109
Guarantee deposits		—		134		—
Accounts payable		—		4,404		3,548
Guarantee deposits received		—		248		—
SK Telesys Co., Ltd. :
Accounts receivable — trade and other		34		31		486
Accounts payable		51,663		30,205		20,533
SKC :
Accounts receivable — trade and other		121		71		81
Innoace Co., Ltd. :
Accounts receivable — trade and other		—		26		10
Accounts payable		13,574		7,223		4,315
Guarantee deposits received		2,291		2,291		2,444
SK C&C Co., Ltd. :
Accounts receivable — trade and other		—		411		2,477
Guarantee deposits		—		—		140
Accounts payable		88,056		135,297		93,680
Guarantee deposits received		346		346		24
WALKERHILL Inc. :
Accounts receivable — trade and other		—		—		529
Guarantee deposits		—		—		900
Accounts payable		—		—		4,011
TU Media Corp. (note a) :
Accounts payable		886		—		—
Guarantee deposits received		3,016		—		—
AirCross Co., Ltd. :
Accounts receivable — trade and other		—		—		57
Accounts payable		3,513		—		397
Guarantee deposits received		226		—		276
Pantech Co., Ltd. :
Accounts payable		440		—		—
ifilm Co.,Ltd. :
Accounts receivable — trade and other		—		5,724		—
SK China Company Ltd. :
Accounts payable		—		—		1,428
CDMA Mobile Phone Center :
Accounts receivable — trade and other		27,063		38,756		80,734
Accounts payable		67		65		87
SK Marketing & Company Co., Ltd. :
Accounts receivable — trade and other		—		—		1,704
Accounts payable		—		—		22,866
Guarantee deposits received		—		—		248
Others :
Accounts receivable — trade and other		—		1,255		830
Accounts payable		588		413		774
Guarantee deposits received		—		—		133


(note a)		These companies were included in the consolidation from the year ended December 31, 2007 or 2008, accordingly transactions and balances with the Company are eliminated.


25.		COMPENSATION FOR THE KEY MANAGEMENT

The Company considers registered directors who have substantial roles and responsibility for planning, operating, and controlling of the business as key management, and the considerations given to the key management for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006		2007		2008
Payee (including outside directors)	12 registered directors		8 registered directors		7 registered directors
Payroll	W	4,472	W	4,786	W	4,405
Severance indemnities		935		722		556

Total	W	5,407	W	5,508	W	4,961

In addition, on March 8, 2002, the Company granted stock options to its eight key members of the management, representing 15,110 shares at an exercise price of W267,000 per share. The stock options fully vested after three years from the date of grant and are exercisable for two years upon vesting. During the first quarter of 2007, the exercisable period elapsed and these stock options representing 15,110 shares have expired.


26.		PROVISION

	a.		Provision for point program

			The Company, for its marketing purposes, grants Rainbow Points and Point Box Points (the “Points”) to its subscribers based on their usage of the Company’s services. Points’ provision was provided based on the historical usage experience and the Company’s marketing policy. Such provision as of December 31, 2006, 2007 and 2008 totaled W52,593 million, W27,668 million and W24,889 million was recorded as accrued expenses or other non-current liabilities in accordance with the expected points’ usage duration since balance sheet date.

			Details of change in the provisions for such points for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006			2007			2008

Beginning balance	W	52,172		W	52,593		W	27,668
Increase (provision)		10,757			15,137			12,430
Decrease (used and reversal)		(10,336	)		(40,062	)		(15,209	)


Ending Balance	W	52,593		W	27,668		W	24,889

Points expire after 5 years; thus, all unused points are expired on their fifth anniversary. The expected year when unused points as of December 31, 2008 are expected to be used and the respective estimated monetary amount to be paid in a given year are as follows (In millions of Korean won):


Expected year	Estimated amount to be paid
of the usage (note a)	In nominal value (note a)		Current value

2009	W	11,185	W	10,502
2010		7,307		6,442
2011		4,791		3,967
2012		3,156		2,453
2013		2,089		1,525


Ending balance	W	28,528	W	24,889


(note a)		The above expected year of the usage and the current value of the estimated amount to be paid are estimated based on the historical usage experience.

	b.		Provision for handset subsidy

			The Company provides provision for handset subsidies to be provided to the subscribers who purchase handsets on installment basis [refer to Note 2.(ab)]. Such provision was recorded as accrued expenses or other non-current liabilities in accordance with the expected points when the subsidies are paid. Details of change in the provision for handset subsidies for the year ended December 31, 2008 are as follows (In millions of Korean won):


	2008

Beginning balance	W	—
Increase (Provision)		433,276
Decrease (subsidy payment)		(93,580	)


Ending balance	W	339,696

The estimated monetary amount to be paid in a given year is as follows (In millions of Korean won):


Expected payment	Estimated amount to be paid
for the year ended December 31,	in nominal value		Current value

2009	W	294,937	W	286,441
2010		57,272		53,255


Ending balance	W	352,209	W	339,696


27.		DERIVATIVE INSTRUMENTS

	a.		Currency swap contract to which the cash flow hedge accounting is applied

			The Company has entered into a fixed-to-fixed cross currency swap contract with Citibank, BNP Paribas and Credit Suisse First Boston International to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling US$300,000,000 at annual fixed interest rate of 4.25% issued on April 1, 2004. As of December 31, 2008, in connection with unsettled foreign currency swap contract to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to W9,627 million (excluding tax effect totaling W3,256 million and foreign exchange translation loss arising from unguaranteed U.S. dollar denominated bonds totaling W32,460 million) was accounted for as accumulated other comprehensive loss.

			In addition, the Company has entered into a fixed-to-fixed cross currency swap contract with DBS Bank and other six banks to hedge the foreign currency risk of U.S. dollar denominated bonds with face amounts totaling US$500,000,000 at annual fixed interest rate of 7.0% issued on February 1, 2005. As of December 31, 2008, in connection with unsettled foreign currency swap contract to which the cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to W17,077 million (excluding foreign exchange translation loss arising from U.S. dollar denominated bonds totaling W159,650 million) was accounted for as accumulated other comprehensive gain.

			In addition, the Company has entered into a floating-to-fixed cross currency swap contract with Calyon bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated long-term borrowings with face amounts totaling US$100,000,000 borrowed on October 10, 2006. As of December 31, 2008, in connection with unsettled cross currency interest rate swap contract to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to W3,515 million (net of tax effect totaling W549 million and foreign exchange translation loss arising from U.S. dollar denominated long-term borrowings totaling W30,950 million) was accounted for as accumulated other comprehensive loss.

			In addition, the Company has entered into a floating-to-fixed cross currency swap contract with HSBC and SMBC Bank to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen denominated bonds with face amounts totaling JPY12,500,000,000 issued on November 13, 2007. As of December 31, 2008, in connection with unsettled cross currency interest rate swap contract to which the cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to W1,044 million (net of tax effect totaling W1,232 million and foreign exchange translation loss arising from unguaranteed Japanese yen denominated bonds totaling W70,168 million) was accounted for as accumulated other comprehensive income.

			In addition, the Company has entered into a floating-to-fixed cross currency swap contract with DBS and Calyon bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated bonds with face amounts totaling US$150,000,000 borrowed on November 20, 2008. As of December 31, 2008, in connection with unsettled cross currency interest rate swap contract to which the cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to W3,565 million (net of tax effect totaling W1,006 million and foreign exchange translation gain arising from U.S. dollar denominated bonds totaling W28,518 million) was accounted for as accumulated other comprehensive income.

	b.		Interest rate swap contract to which the cash flow hedge accounting is applied

			The Company has entered into a floating-to-fixed interest rate swap contract with Shinhan Bank to hedge the interest rate risk of floating rate discounted bill with face amounts totaling W200,000 million borrowed on June 29, 2006. As of December 31, 2008, in connection with unsettled interest rate swap contract to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to W3,686 million (net of tax effect totaling W1,040 million) was accounted for as accumulated other comprehensive income.

			In addition, the Company has entered into a floating-to-fixed interest rate swap contract with Nonghyup Bank and other two banks to hedge the interest rate risk of long-term floating rate borrowings with face amounts totaling W500,000 million borrowed on July 28, 2008 between August 13, 2008. As of December 31, 2008, in connection with unsettled interest rate swap contract to which the cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to W22,443 million (net of tax effect totaling W6,330 million) was accounted for as accumulated other comprehensive income.

	c.		Currency swap contract to which the fair value hedge accounting is applied

			The Company has entered into a fixed-to-fixed cross currency swap contract with Hana Bank and other nine banks to hedge the foreign currency risk of U.S. dollar denominated equity securities of China Unicom. In connection with unsettled foreign currency swap contract to which the fair value hedge accounting is applied, loss on valuation of currency swap of W190,359 million and W12,646 million for the years ended December 31, 2008 and 2007 was charged to current operations.

	d.		Currency swap contract to which the hedge accounting is not applied

			The Company has entered into a fixed-to-fixed cross currency swap contract (contract amount: US$100 million) with Credit Suisse First Boston International to hedge foreign currency risk of unguaranteed U.S. dollar denominated convertible bonds with face amounts of US$329,450,000 issued on May 27, 2004. In connection with unsettled fixed-to-fixed cross currency swap contract to which the hedge accounting is not applied, gain on valuation of currency swap of W31,361 million and loss on valuation of currency swap of W623 million for the year ended December 31, 2008 and 2007 were charged to current operations.

			In addition, the Company has entered into fixed-to-fixed cross currency swap contract with Morgan Stanley Bank and two other banks to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling US$400,000,000 issued on July 20, 2007. In connection with unsettled foreign currency swap contract to which the hedge accounting is not applied, gain on valuation of currency swap of W233,056 million and W7,316 million for the years ended December 31, 2008 and 2007, respectively, were charged to current operations.

As of December 31, 2008, fair values of above derivatives recorded in assets or liabilities and details of derivative instruments are as follows (In thousands of U.S. dollars, H.K. dollars, Japanese yen and millions of Korean won):


					Fair value
					Designated		Designated
				Duration	as cash		as fair		Not
Type	Hedged item	Amount		of contract	flow hedge		value hedge		designated		Total

Current assets:
Fix-to-fixed cross currency swap	U.S. dollar denominated convertible bond	US$	100,000	May 27, 2004 ~ May 27, 2009	W	—	W	—	W	8,236	W	8,236

Non-current assets:
Fix-to-fixed cross currency swap	U.S. dollar denominated bonds	US$	300,000	Mar. 23, 2004 ~ Apr. 1, 2011		19,576		—		—		19,576
Fix-to-fixed cross currency swap	U.S. dollar denominated bonds	US$	400,000	Jul. 20, 2007 ~ Jul. 20, 2017		—		—		240,372		240,372
Floating-to-fixed cross currency interest rate swap	Japanese yen denominated bonds	JPY	12,500,000	Nov. 13, 2007 ~ Nov. 13, 2012		69,981		—		—		69,981
Floating-to-fixed cross currency interest rate swap	U.S. dollar denominated long-term borrowings	US$	100,000	Oct. 10, 2006 ~Oct. 10, 2013		26,886		—		—		26,886
Fix-to-fixed cross currency swap	U.S. dollar denominated bonds	US$	500,000	Feb. 1, 2005 ~Feb. 1, 2012		137,896		—		—		137,896


Total assets					W	254,339	W	—	W	248,608	W	502,947


Current liabilities:
Fix-to-fixed cross currency swap	U.S. dollar denominated China Unicom Equity Securities	HK$	10,940,900	Sep. 11, 2008 ~ Sep. 16, 2009	W	—	W	190,359	W	—	W	190,359

Non-current liabilities:
Fix-to-fixed cross currency swap	U.S. dollar denominated bonds	US$	150,000	Nov 20, 2008 ~ Nov 20, 2010		23,947		—		—		23,947
Floating-to-fixed cross currency interest rate swap	Long-term borrowings	W	500,000	July 28, 2008 ~ August 13, 2009		28,774		—		—		28,774
Floating-to-fixed Interest rate swap	Long-term floating rate discounted bill	W	200,000	Jun. 29, 2006 ~ Jun. 29, 2010		4,725		—		—		4,725


Total liabilities					W	57,446	W	190,359	W	—	W	247,805

28. MERGERS AND ACQUISITIONS

	a.		Merger with Empas, Inc.

			In order to maximize management synergy effect, enhance management effectiveness and corporate value, SK Communications Co., Ltd., a subsidiary of the Company, merged with Empas, Inc. on November 1, 2007 with the resolution of its board of directors of June 25, 2007.

			Empas, Inc. issued new stocks to stockholders of SK Communications Co., Ltd. The exchange ratio of common stocks between SK Communications Co., Ltd. and Empas, Inc. was 1 to 3.5732182. While the legal acquirer was Empas, Inc. and the legal acquiree was SK Communications Co., Ltd., the merger was accounted for purchase method where SK Communications Co., Ltd., the legal acquiree, purchased Empas Corporation, the legal acquirer, as the former stockholders of SK Communications Co., Ltd. obtained the majority voting rights of the merging company. Details of the goodwill generated from the merger are as follows:


Description	In millions of Korean won

Fair value of acquired assets	W	101,613
Fair value of assumed liabilities		(56,872	)
Convertible bond issued by the acquirer		44,850
Deferred tax asset on temporary differences		3,991

Fair value of net assets	W	93,582


Consideration for merger
Fair value of stock issued	W	57,703
Carrying amount of equity method securities purchased prior to merger		30,101
Convertible bond issued by the acquirer prior to merger		44,850


Total		132,654


Goodwill	W	39,072


29.		CONSOLIDATED STATEMENTS OF CASH FLOWS

		The consolidated statements of cash flows are prepared using indirect method.

		Significant non-cash transactions for the years ended December 31, 2006, 2007 and 2008 are as follows (In millions of Korean won):


	2006		2007		2008

Conversion of convertible bonds	W	29,528	W	5,654	W	—
Retirement of treasury stocks		209,077		—		—
Write-offs of accounts receivable		90,780		67,313		37,079
Acquisition of property and equipment asset through financial lease contract		—		—		76,364
Transfer from inventory to property and equipment tangible assets		—		—		46,749
Acquisition of machinery by accounts payable		—		—		39,640
Increase in assets due to merger		10,196		101,613		—
Increase in liabilities due to merger		9,851		56,872		—
Increase (Decrease) in assets due to the change in consolidated subsidiaries		93,581		541,809		2,923,398
Increase (Decrease) in liabilities due to the change in consolidated subsidiaries		33,904		489,288		1,543,098

Cash and cash equivalents in the consolidated balance sheets is as follows (In millions of Korean won):


	2006		2007			2008

Cash and cash equivalents	W	485,972	W	885,988		W	1,011,467
Government subsidy		—		(141	)		(127	)

	W	485,972	W	885,847		W	1,011,340


30.		SUBSEQUENT EVENT

	a.		Issuance of unguaranteed bonds

			On January 22, 2009 the Company issued unguaranteed bonds with face amount of W40 billion and JPY 3 billion, respectively, in accordance with the resolution of board of directors dated October 23, 2008, The bonds bear an annual rate of 5.54% and 3-month Euro Yen Libor+2.50%, respectively, and will be repaid in full at their maturities, on January 22, 2016 and January 22, 2012, respectively.

			In addition, on March 5, 2009, the Company issued unguaranteed bonds with face amount of W230 billion and JPY 5 billion, respectively, in accordance with the resolution of board of directors dated January 22, 2009. The bonds bear an annual rate of 5.92% and 3-month Euro Yen Tibor+2.50%, respectively, and will be repaid in full at their maturities, on March 5, 2016 and March 5, 2012, respectively.

	b.		Retirement of treasury stock.

			In accordance with the resolution of board of directors dated October 23, 2008, the Company acquired 448,000 shares treasury stocks for W92,476 million from December 2, 2008 through January 7, 2009 and retired those stocks with the Company’s retained earnings on January 9, 2009.

	c.		Unguaranteed convertible bonds denominated in U.S dollar

			The Company decided to issue convertible bonds with a maturity of April 7, 2014 in the principal amount of US$332,528,000, to refund its outstanding convertible bonds of US$229,160,000, which will mature at May 27, 2009, in accordance with the resolution of board of directors dated on March 13, 2009. The convertible bonds will bear annual interest rate of 1.75% and the conversion right could be exercised during the period from May 28, 2009 to March 24, 2014


31.		SEGMENT INFORMATION

		Through 2007, the Company had one reportable operating segment, cellular telephone communication service. In 2008, the Company acquired SK Broadband Co., Ltd., a fixed-line telephone service provider and included it in the consolidation. As a result, the Company has two operating segments, cellular telephone communication services and fixed-line telecommunication service from 2008. Cellular telephone communication services include cellular voice service, wireless data service and wireless internet services. Fixed-line telecommunication services include telephone services, internet services, and leased line services. Internet portal services and game manufacturing, etc. are included in other segment.

		Details of each segment for the years ended 2008 are as follows (in millions of Korean won):


	Cellular
	telephone		Fixed-line
	telecommunication		telecommunication							Consolidating			Consolidated
	service		service		Other			Sub-total		adjustments			amount
Total sales		11,674,662		2,132,455		847,397			14,654,514		(633,530	)		14,020,984
Internal sales		127,301		59,753		446,476			633,530		(633,530	)		—
Net sales		11,547,361		2,072,702		400,921			14,020,984		—			14,020,984
Operating income		2,256,613		99,359		(603,504	)		1,752,468		—			1,752,468
Property and equipment and intangible assets		7,639,806		3,148,683		627,345			11,415,834		—			11,415,834
Depreciation		1,943,422		535,169		280,685			2,759,276		—			2,759,276

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


SK Telecom Co., Ltd. (Registrant)


By:	/s/ Tae Jin Park
	(Signature)
	Name:	Tae Jin Park
	Title:	Senior Vice President

Date: April 23, 2009