Edgar Filing: SK TELECOM CO LTD

Counterparty

Contract Contents

Contract Period

Telecommunication service providers

Interconnection among telecommunication service providers

Interconnection among telecommunication service providers

Provision of electric facilities

From Dec. 2004 until terminated

Use of electricity poles

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

UNDER THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF JUNE 2012

COMMISSION FILE NUMBER 333-04906

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 x Form 40-F ¨

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

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

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

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

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 ¨ No x

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

QUARTERLY BUSINESS REPORT

(From January 1, 2012 to March 31, 2012)

THIS IS A SUMMARY OF THE QUARTERLY BUSINESS 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 CONSOLIDATED BASIS IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS ADOPTED FOR USE IN KOREA, OR K-IFRS, 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.

I. COMPANY OVERVIEW

1. Company Overview

Starting in the first quarter of 2011, SK Telecom Co., Ltd. (the “Company”) prepares and reports its financial statements under the International Financial Reporting Standards as adopted for use in Korea (“K-IFRS”). The transition date of the Company and its consolidated subsidiaries to K-IFRS is January 1, 2010 and the adoption date is January 1, 2011. The Company’s quarterly business report for the quarter ended March 31, 2012 includes the following consolidated subsidiaries:


Name	Date of Establishment	Principal Business	Total Asset as of Dec. 31, 2011 (millions of Won)		Material Subsidiary*

SK Telink Co., Ltd.	Apr. 9, 1998	Telecommunication and satellite broadcasting services		420,829	Material

SK Communications Co., Ltd.	Sep. 19, 1996	Internet portal and other Internet information services		314,700	Material

PAXNet Co., Ltd.	May 18, 1999	Database and online information services		33,949

Loen Entertainment, Inc.	Jul. 7, 1982	Music and audio publication		157,104	Material

Stonebridge Cinema Fund	Sep. 30, 2005	Investment partnership		18,506

Commerce Planet Co., Ltd.	Jul. 1, 1997	Information technology and computer services		49,729

SK Broadband Co., Ltd.	Sep. 26, 1997	Multimedia and IP TV services		3,314,479	Material

Broadband D&M Co., Ltd.	Feb. 5, 1998	Management of telecommunication facilities		11,872

Broadband Media Co., Ltd.	Aug. 25, 2005	Telemarketing services		89,915	Material

Broadband CS Co., Ltd.	Oct. 1, 1998	Call center operation		6,948

K-net Culture and Contents Venture Fund	Nov. 24, 2008	Investment partnership		48,057

2nd Benex Focus Investment Fund	Dec. 12, 2008	Investment partnership		21,663

Open Innovation Fund	Dec. 22, 2008	Investment partnership		44,716

PS&Marketing Corporation	Apr. 3, 2009	Resale of telecommunication services		289,062	Material

Service Ace Co., Ltd.	Jul. 1, 2010	Call center operation and telemarketing services		43,447

Service Top Co., Ltd.	Jul 1, 2010	Call center operation and telemarketing services		37,165

Network O&S Co., Ltd.	Jul. 1, 2010	Wireless telecommunication services		80,249	Material

Service In Co., Ltd.	Apr. 4, 2011	Internet services		3,247

BNCP Co., Ltd.	Dec. 7, 2009	Software development		28,631


Name	Date of Establishment	Principal Business	Total Asset as of Dec. 31, 2011 (millions of Won)		Material Subsidiary*

SK Planet Co., Ltd.	Oct. 5,2011	Platform service		1,677,730	Material

SK Telecom China Holdings Co., Ltd.	Jul. 12, 2007	Investment		36,810

Sky Property Mgmt., Ltd.	Jun. 20, 2007	Real estate rental		820,639	Material

Shenzhen E-eye High Tech Co., Ltd.	Apr. 1, 2000	Telematics services		23,569

SK China Real Estate Co., Limited	Mar. 19, 2009	Real estate investment		295

SKT Vietnam PTE., Ltd.	Apr. 5, 2000	Wireless telecommunication services		42,539

SKT Americas, Inc.	Dec. 29, 1995	Management consulting and investment		42,681

YTK Investment Ltd.	Jul. 1, 2010	Investment		51,218	Material

Atlas Investment	Jun. 24, 2011	Investment		50,643	Material

Technology Innovation Partners, LP	Jun. 24, 2011	Investment		0

SK Telecom China Fund I L.P.	Sep. 14, 2011	Investment		687

*	Material Subsidiary means a subsidiary with total assets of Won 50 billion or more as of the end of the latest fiscal year.

A. Corporate Legal Business Name: SK Telecom Co., Ltd.

B. Date of Incorporation: March 29, 1984

C. Location of Headquarters

(1) Address: 11 Euljiro 2-ga, Jung-gu, Seoul, Korea

(2) Phone: +82-2-6100-2114

(3) Website: http://www.sktelecom.com

D. Major Businesses

(1) Wireless Business

The Company provides wireless telecommunications services, characterized by its competitive strengths in handheld device, affordable pricing, network coverage and an extensive contents library. With the commencement of services employing LTE technology, the Company expects to be able to provide its wireless subscribers with access to high-quality video contents and services, interactive multimedia games and other new services. In 2012, we plan to achieve new growth by focusing on data services as LTE service expands. Having reached one million LTE subscribers as of January 31, 2012 for the first time in Korea, the Company is solidifying its leadership position in LTE services based on its technology and network operating expertise. The Company also plans to improve the profitability of its wireless business through efficient capital expenditures and marketing and enhancement of marketing network and products. In the business-to-business area, the Company plans to develop and commercialize industry-specific solutions focused on healthcare and education through strategic alliances.

(2) Fixed-line Business

SK Broadband is engaged in providing telecommunications, broadcasting and new media services and various other services that are permitted to be carried out by SK Broadband under relevant regulations, as well as business activities that are directly or indirectly related to providing those services. With the adoption of K-IFRS in 2011, our broadband and fixed-line services segment also includes the following services provided by certain other subsidiaries of SK Telecom subject to consolidation under K-IFRS: multimedia services and IP TV services (Broadband Media Co., Ltd.); telemarketing services (Broadband CS Co., Ltd.); and telecommunications-related construction and lease services (Broadband D&M Co., Ltd.).

(3) Other Businesses

The Company is pursuing customer satisfaction by providing the best service and generating new values in diverse areas in contents delivery, location based service, media, mobile commerce and advertisement. In contents delivery service, the Company provides high-quality digital contents in its leading mobile contents marketplace, T store, which had more than 10 million subscribers and plans to expand globally.

In the location based service business, users of the Company’s T map service surpassed 10 million in 2011. T map provides real time traffic information and various local information. In the media business, the Company provides “hoppin” service that enables subscribers to access various multimedia contents through personal computers, mobile and other digital devices. In the commerce and advertising area, the Company’s 11 Street provides platform service that connects various sellers and purchasers on-line, which continues to increase its market share. In addition, the Company pursues new business opportunities in comprehensive advertising service comprising on-line and wireless, such as its “T ad” service.

SK Communications provides integrated portal services through NATE, social networking services through Cyworld and instant messaging services through NATE-ON. Key sources of revenue for SK Communications are display advertising, search engine-based advertising, and contents and other services. Display advertising consists of image, video and Flash-based multimedia advertising carried on NATE, Cyworld and NATE-ON and aims to give greater exposure to the advertiser’s brand name to the public. The increased effectiveness of on-line media as an advertising outlet has resulted in greatly expanded advertiser base, and the increasing variety in the format of advertising have all contributed to the growth of display advertising. Search engine-based advertising refers to the type of advertising that embeds advertisements within search results produced by searches of certain keywords on the NATE portal site. Search engine-based advertising has a certain appeal to small and medium-sized advertisers. Contents and other services include sales of on-line items to be used on Cyworld, contents sales and providing certain types of services. Revenues from contents and other services are generated through sales of on-line digital items through fixed-line Cyworld services and revenues generated by usage of mobile Cyworld services, which are shared with mobile phone service operators, as well as revenues from NATE-ON instant messaging, custom decorations for mobile phones, cartoon strips, fortunetelling, games and other contents services. In addition, SK Communications receives revenue from its services agreement with SK Telecom in connection with operation of WAP wireless NATE services. Service In Co., Ltd. is engaged in Internet service, database and on-line information service, data processing, Internet contents services, telemarketing and other computer services.

See “II. Business Overview” for more information.

E. Credit Ratings

(1) Corporate Bonds


Credit rating date	Subject of rating	Credit rating	Credit rating entity (Credit rating range)	Rating classification

February 20, 2008	Corporate bond	AAA	Korea Ratings	Current rating

February 21, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating

February 21, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Current rating

June 3, 2008	Corporate bond	AAA	Korea Ratings	Regular rating

June 17, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating

June 30, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Regular rating

October 20, 2008	Corporate bond	AAA	Korea Ratings	Current rating

October 20, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating

October 20, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Current rating

January 13, 2009	Corporate bond	AAA	Korea Ratings	Current rating

January 13, 2009	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating

January 13, 2009	Corporate bond	AAA	Korea Information Services, Inc.	Current rating

February 23, 2009	Corporate bond	AAA	Korea Ratings	Current rating

February 23, 2009	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating

February 23, 2009	Corporate bond	AAA	Korea Information Services, Inc.	Current rating

June 24, 2009	Corporate bond	AAA	Korea Information Services, Inc.	Regular rating

June 26, 2009	Corporate bond	AAA	Korea Ratings	Regular rating

June 30, 2009	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating

June 22, 2010	Corporate bond	AAA	Korea Ratings	Regular rating

June 29, 2010	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating

June 29, 2010	Corporate bond	AAA	NICE Investors Service Co, Ltd.	Regular rating

May 27, 2011	Corporate bond	AAA	Korea Ratings	Regular rating

June 13, 2011	Corporate bond	AAA	NICE Investors Service Co, Ltd.	Regular rating

June 23, 2011	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating

December 12, 2011	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating

December 13, 2011	Corporate bond	AAA	NICE Investors Service Co, Ltd.	Current rating

December 16, 2011	Corporate bond	AAA	Korea Ratings	Current rating

*	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”)


Credit rating date	Subject of rating	Credit rating	Credit rating entity (Credit rating range)	Rating classification

June 3, 2008	CP	A1	Korea Ratings	Current rating

June 16, 2008	CP	A1	Korea Information Services, Inc.	Current rating

June 17, 2008	CP	A1	Korea Investors Service, Inc.	Current rating

October 20, 2008	CP	A1	Korea Ratings	Regular rating

October 20, 2008	CP	A1	Korea Investors Service, Inc.	Regular rating

October 20, 2008	CP	A1	Korea Information Services, Inc.	Regular rating

June 24, 2009	CP	A1	Korea Information Services, Inc.	Current rating

June 26, 2009	CP	A1	Korea Ratings	Current rating

June 30, 2009	CP	A1	Korea Investors Service, Inc.	Current rating

December 15, 2009	CP	A1	Korea Ratings	Regular rating

December 30, 2009	CP	A1	Korea Investors Service, Inc.	Regular rating

December 30, 2009	CP	A1	Korea Information Services, Inc.	Regular rating

June 22, 2010	CP	A1	Korea Ratings	Current rating

June 29, 2010	CP	A1	Korea Investors Service, Inc.	Current rating

June 29, 2010	CP	A1	NICE Investors Service Co, Ltd.	Current rating

December 16, 2010	CP	A1	Korea Ratings	Regular rating

December 27, 2010	CP	A1	Korea Investors Service, Inc.	Regular rating

December 29, 2010	CP	A1	NICE Investors Service Co, Ltd.	Regular rating

May 27, 2011	CP	A1	Korea Ratings	Current rating

June 13, 2011	CP	A1	NICE Investors Service Co, Ltd.	Current rating

June 23, 2011	CP	A1	Korea Investors Service, Inc.	Current rating

December 12, 2011	CP	A1	Korea Investors Service, Inc.	Regular rating

December 13, 2011	CP	A1	NICE Investors Service Co, Ltd.	Regular rating

December 16, 2011	CP	A1	Korea Ratings	Regular rating

*	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


Date of credit rating	Subject of rating	Credit rating of securities	Credit rating company (Credit rating range)	Rating type

February 13, 2012	Offshore Convertible Bonds	A-	Fitch (England)	Current rating

February 15, 2012	Offshore Convertible Bonds	A3	Moody’s (U.S.A.)	Current rating

February 14, 2012	Offshore Convertible Bonds	A-	S&P (U.S.A.)	Current rating

2. Company History

March 2008: Purchased shares of SK Broadband Co., Ltd. (formerly Hanaro Telecom)

May 2009: Participated in the public share offering of SK Broadband Co., Ltd.

September 2009: Acquired leased line and related other business of SK Networks Co., Ltd.

February 2010: Purchased shares of Hana Card Co., Ltd.

October 2011: SK Planet Co., Ltd. was spun off from the Company.

February 2012: Purchased shares of SK Hynix Inc. (formerly, Hynix Semiconductor Inc.)

A. 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. Significant Changes in Management

At the Extraordinary General Meeting of Shareholders held on August 31, 2011, Jun Ho Kim was elected as an inside director and Jin Woo So resigned from the Board to transfer to an affiliate of the Company. At the 28th General Shareholders’ Meeting held on March 23, 2012, (1) Young Tae Kim and Dong Seob Jee were elected as inside directors, (2) Hyun Chin Lim was re-elected as an independent director, and (3) Hyun Chin Lim was re-elected as a member of the audit committee.

C. Change in Company Name

On September 22, 2008, SK Broadband, one of our material consolidated subsidiaries, changed its name to SK Broadband Co., Ltd. from Hanaro Telecom Co., Ltd. to facilitate the sharing of SK Group’s corporate culture and brand. Similarly, on September 22, 2008, Broadband Media Co., Ltd., another of our material consolidated subsidiaries, changed its name to Broadband Media Co., Ltd. from Hanaro Media Co., Ltd. On March 23, 2012, SK Hynix Inc., which became our subsidiary in February 2012, changed its name to SK Hynix Inc. from Hynix Semiconductor Inc. in accordance with a resolution at its annual shareholders’ meeting.

D. Mergers, Acquisitions and Restructuring

[SK Telecom]

(1) Spin-off

In accordance with the resolution of the Company’s board of directors on July 19, 2011 and the resolution of the shareholders’ meeting on August 31, 2011, the Company spun off its platform business and established SK Planet Co., Ltd. effective as of October 1, 2011. The registration of the spin-off was completed on October 5, 2011. Set forth below are important details of the spin-off.


Description		Detail

Method of Spin-off		Simple vertical spin-off

Resulting Companies		SK Telecom Co., Ltd. (Surviving Company) SK Planet Co., Ltd. (Spin-off Company)

Effective Date		October 1, 2011

Set forth below is summary of financial position before and after the spin-off. (in millions of Won)


Description	Before spin-off (As of September 30, 2011)		After spin-off (As of October 1, 2011)
Description	SK Telecom Co., Ltd.		SK Telecom Co., Ltd.		SK Planet Co., Ltd.

Total Assets		19,400,114		19,084,651		1,545,537

Total Liabilities		7,673,828		7,358,365		315,463

Total Shareholders’ Equity		11,726,286		11,726,286		1,230,074

Schedule of spin-off


Category		Date

Board resolution on spin-off		July 19, 2011

Record Date for Determination of Shareholders for the Shareholders’ Meeting for Spin-off		August 4, 2011

Shareholders’ Meeting for Approval of Spin-off Plan		August 31, 2011

Date of Spin-off		October 1, 2011

Shareholders’ Meeting for Report of Spin-off or Inaugural Meeting of Shareholders		October 4, 2011

Registration of Spin-off		October 5, 2011
Others	Notice of closure of shareholders register	July 20, 2011
	Period of closure of shareholders register	August 5, 2011~August 8, 2011
	Public notice of shareholders’ meeting	August 10, 2011 and August 12, 2011
	Dispatch of notice of shareholders’ meeting	August 12, 2011

•

Changes in shareholding, including majority shareholder

•

Not applicable because the spin-off is a simple vertical spin-off.

•

Appraisal rights of shareholders

•

Not applicable because the spin-off is a simple vertical spin-off.

•

Protection of creditors

•

In accordance with Article 530-1 Paragraph 1, both SK Telecom and SK Planet will be jointly and severally liable for the payment of all obligations of SK Telecom incurred prior to the spin-off.

•

Allocation of new shares

•

In accordance with Articles 530-2 through 530-12, the spin-off is a simple vertical spin-off and all shares of SK Planet were allocated to SK Telecom.

(2) Acquisition of Shares of Hynix Semiconductor

In accordance with the resolution of the Company’s board of directors on November 14, 2011, the Company purchased 146,100,000 shares of Hynix Semiconductor Inc. (aggregate purchase price of Won 3,374,726 million) on February 14, 2012 in order to acquire the control of Hynix Semiconductor. The Company has a 21.05% equity interest in Hynix Semiconductor after the purchase.

[SK Telink Co., Ltd.]

(1) Merger

On July 22, 2010, the board of directors approved the merger of TU Media Corp. into SK Telink Co., Ltd. effective as of November 1, 2010. In connection with this merger, SK Telink issued 256,763 shares of its common stock.

[SK Communications Co., Ltd.]

(1) Merger

On June 25, 2007, the board of directors resolved to cause SK Communications Co., Ltd. to merge into Empas Corp., effective as of November 1, 2007. We believe this merger helped to strengthen our competitiveness in the portal services market. In the merger, one share of the former SK Communications was converted into 3.5732182 shares of Empas.

(2) Spin off

On August 6, 2008, the board of directors resolved to spin off its video education business to create Etoos Co., Ltd., effective as of November 1, 2008. The spin off was intended to help the Company to better focus on its core businesses and to give each of our business divisions greater autonomy in making operational decisions based on technical expertise specific to the respective business division.

(3) Disposition and acquisition of businesses

1. Disposition of publishing business division

On April 10, 2009, SK Communications sold its publishing business division to Etoos for Won 4,785 million in accordance with the resolution of its board of directors of March 5, 2009.

2. Acquisition of the “KUKU” division

On July 1, 2009, SK Communications purchased the “KUKU” division from SK I-Media Co., Ltd. for a purchase price of Won 1,157 million, in accordance with the June 25, 2009 resolution of its board of directors.

3. Disposition of the Spicus division

Pursuant to the July 23, 2009 resolution of its board of directors, SK Communications sold the Spicus division, its telephone English education division, to Spicus Inc., a subsidiary of Altos Ventures on August 1, 2009 for a purchase price of Won 1,493 million.

(4) Disposition of shares

1. Disposition of shares of Etoos

SK Communications sold all of its shares in Etoos to Cheong Sol pursuant to a resolution of its board of directors of October 19, 2009 and, as consideration, received Won 50,000 million principal amount of convertible bonds. Pursuant to a resolution of its board of directors of July 23, 2010, SK Communications converted Won 25 billion principal amount, out of a total of Won 50 billion principal amount, of convertible bonds of Etoos into 701,000 shares of Etoos (15.58%). Pursuant to a resolution of its board of directors of January 13, 2012, SK Communications sold Won 20 billion principal amount, out of the remaining Won 25 billion principal amount, of convertible bonds of Etoos Education Co., Ltd. to Shinhan Private Equity Fund No. 2 at a price of Won 19 billion.

2. Disposition of shares of SK i-Media

Pursuant to a resolution of its board of directors of October 17, 2011, SK Communications sold all shares of SK i-Media Co., Ltd. held by it to LK Media Tech Co., Ltd. at a price of Won 1 million.

3. Disposition of shares of U-Land, an overseas entity

Pursuant to a resolution of its board of directors of December 21, 2011, SK Communications sold all of its 29.85% interest in U-Land, an overseas entity, to SK Planet Co., Ltd. at a price of Won 10 million.

E. Other Important Matters related to Management Activities

[SK Telecom]

(1) Bank loans

On February 14, 2012, the Company borrowed Won 2.5 trillion in a syndicated loan from a syndicate of Korean banks including Kookmin Bank and Woori Bank in order to finance the purchase of Hynix shares. Won 2 trillion of the loan matures in three years and Won 0.5 trillion of the loan matures in one year.

[SK Broadband]

SK Broadband, a material consolidated subsidiary of ours, acquired subscriberships of regional cable and other service providers on several different occasions. Such acquisitions were intended to secure a stable subscriber base for our broadband Internet service and, at the same time, increase the service coverage area. Because such acquisitions were conducted on a relatively small scale and involved purchase of subscriberships, we did not believe such acquisitions rose to the level of purchasing an entire business line from another company or likely to have a material impact on our business, and therefore we believed that such acquisitions did not require resolution of our shareholders.

[SK Communications Co., Ltd.]

(1) Leak of personal information

In July 2011, a leak of personal information of subscribers of Nate and Cyworld websites operated by SK Communications Co., Ltd., the Company’s consolidated subsidiary, occurred. Two lawsuits (total claim of Won 9 million) demanding compensation for damages from the leak were filed and five payment orders (total payment amount of Won 7 million) were issued by the courts against SK Communications in connection with the leak.

3. Total Number of Shares

A. Total number of shares


(As of March 31, 2012)	(Unit: shares)
Classification	Share type						Remarks
Classification	Common shares		—		Total		Remarks

I. Total number of authorized 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		8,533,235		—		8,533,235		—

a. reduction of capital		—		—		—		—

b. retirement with profit		8,533,235		—		8,533,235		—

c. redemption of redeemable shares		—		—		—		—

d. others		—		—		—		—

IV. Total number of shares (II-III)		80,745,711		—		80,745,711		—

V. Number of treasury shares		11,050,712		—		11,050,712		—

VI. Number of shares outstanding (IV-V)		69,694,999		—		69,694,999		—

On July 20, 2011, the Company publicly disclosed its plan to repurchase treasury stock. The Company repurchased 1.4 million shares of treasury stock from July 25, 2011 to September 30, 2011 through the Korea Exchange. For more information on the repurchase of treasury stock, please see public disclosures made on July 20, 2011 and October 5, 2011.

B. Treasury Stock

(1) Acquisitions and Dispositions of Treasury Stocks


(As of March 31, 2012)								(Unit: Shares)
Acquisition methods			Type of shares	At the beginning of period		Changes						At the end of period
Acquisition methods			Type of shares	At the beginning of period		Acquired (+)		Disposed (-)		Retired (-)		At the end of period
Acquisition pursuant to the Financial Investment Services and Capital Markets Act of Korea (“FSCMA”)	Direct acquisition	Direct acquisition from market	Common shares		7,086,028		—		—		—		7,086,028
		Direct acquisition from market	Preferred shares		—		—		—		—		—
		Tender offer	Common shares		—		—		—		—		—
		Tender offer	Preferred shares		—		—		—		—		—
		Appraisal rights of dissenting shareholder	Common shares		—		—		—		—		—
		Appraisal rights of dissenting shareholder	Preferred shares		—		—		—		—		—
		Sub-total	Common shares		7,086,028		—		—		—		7,086,028

			Preferred shares		—		—		—		—		—

	Acquisition through trust and other agreements	Held by trustee	Common shares		—		—		—		—		—
		Held by trustee	Preferred shares		—		—		—		—		—
		Held in actual stock	Common shares		3,886,710		—		—		—		3,886,710
		Held in actual stock	Preferred shares		—		—		—		—		—
		Sub-total	Common shares		3,886,710		—		—		—		3,886,710

			Preferred shares		—		—		—		—		—

Other acquisition			Common shares		77,974		—		—		—		77,974
Other acquisition			Preferred shares		—		—		—		—		—
Total			Common shares		11,050,712		—		—		—		11,050,712

			Preferred shares		—		—		—		—		—

*	Among 11,050,712 shares directly acquired by the Company, 2,308,406 shares were deposited with the Korea Securities Depository as of March 31, 2012 for issuance upon conversion of the overseas convertible bonds.

4. Status of Voting Rights


(As of March 31, 2012)				(Unit: shares)
Classification		Number of shares		Remarks

Total shares (A)	Common share		80,745,711	—

	Preferred share		—


Number of shares without voting rights (B)	Common share		11,050,712	Treasury shares
Number of shares without voting rights (B)	Preferred share		—	Treasury shares

Shares with restricted voting rights under the Korean law (C)	—		—	—

Shares with reestablished voting rights (D)	—		—	—

The number of shares with exercisable voting right s (E = A - B - C + D)	Common share		69,694,999	—
	Preferred share		—	—

5. Dividends and Others

A. Dividends

(1)

Distribution of cash dividends was approved during the 26th General Meeting of Shareholders held on March 12, 2010.

•

Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.

(2)

Distribution of interim dividends of Won 1,000 was approved during the 318th Board of Directors’ Meeting on July 22, 2010.

(3)

Distribution of cash dividends was approved during the 27th General Meeting of Shareholders held on March 11, 2011.

•

Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.

(4)

Distribution of interim dividends of Won 1,000 was approved during the 330th Board of Directors’ Meeting on July 28, 2011.

(5)

Distribution of cash dividends was approved during the 28th General Meeting of Shareholders held on March 23, 2012.

•

Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.

B. Dividends for the Last 3 Fiscal Years


		(Unit: in millions of Won, except per share value)


Classification		As of and for the quarter ended March 31, 2012		As of and for the year ended December 31, 2011		As of and for the year ended December 31, 2010
Par value per share (Won)			500		500		500
Net income			344,972		1,694,363		1,947,008
Net income per share (Won)			4.950		24,002		27,063

Total cash dividend			—		656,533		669,534

Total stock dividends			—		—		—

Percentage of cash dividend to available income (%)			—		38.7		34.4
Cash dividend yield ratio (%)	Common share		—		6.6		5.4
Cash dividend yield ratio (%)	Preferred share		—		—		—
Stock dividend yield ratio (%)	Common share		—		—		—
Stock dividend yield ratio (%)	Preferred share		—		—		—
Cash dividend per share (Won)	Common share		—		9,400		9,400
Cash dividend per share (Won)	Preferred share		—		—		—
Stock dividend per share (share)	Common share		—		—		—
Stock dividend per share (share)	Preferred share		—		—		—

•

Prepared based on non-consolidated financial statements. Net income per share means basic net income per share.

*	Total cash dividend of Won 669,534 million for the year ended December 31, 2010 includes the total interim dividend amount of Won 72,345 million, and the cash dividend amount per share of Won 9,400 includes the interim cash dividend amount of Won 1,000.

*	Total cash dividend of Won 656,533 million for the year ended December 31, 2011 includes the total interim dividend amount of Won 71,095 million, and the cash dividend amount per share of Won 9,400 includes the interim cash dividend amount of Won 1,000.

II. BUSINESS

Each company in consolidated entity is separate as a legal entity providing independent services and products. The business is majorly distinguished as a wireless telecommunication business consisting of mobile phone, wireless data, information telecommunication, a fixed line telecommunication business consisting of PSTN, high speed Internet, data and network lease service etc. and other telecommunication business composing of Internet portal service, game etc.

1. Business Overview

[Wireless Business]

A. Industry Characteristics

As of March 31, 2012, the number of domestic mobile phone subscribers reached 52.71 million and, with more than 100% penetration rate, the Korean mobile communication market can be considered to have reached its maturation stage. However, the penetration rate is expected to increase further due to increased use of mobile phones by corporate users resulting from the rapid growth of smartphone markets, as well as the increasing popularity of high-tech mobile devices based on wireless data services such as tablet PC.

The Korean mobile communications market continues to improve in the quality of services with the help of advances in network-related technology and the development of highly advanced handsets including various smartphones which enable the provision of convergence services for multimedia contents, mobile commerce, telematics, satellite Digital Multimedia Broadcasting (“DMB”), digital home services, connected workforce services and other related services. In addition, through HSPA+ network commercialized in October 2010 and the LTE network introduced in July 2011, the B2B business directly resulting in the enhancement of productivity, such as the corporate “connected workforce” business, is expected to grow rapidly.

B. Growth Potential


								(Unit: 1,000 persons)
Classification		As of March 31, 2012		As of December 31,
Classification		As of March 31, 2012		2011		2010		2009		2008
Number of subscribers	SK Telecom		26,556		26,553		25,705		24,270		23,032
	Others (KT, LGU+)		26,153		25,954		25,062		23,675		22,575

	Total		52,709		52,507		50,767		47,944		45,607

(Source: Korea Communications Commission website)

C. Domestic and Overseas Market Conditions

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. Sales revenue related to data services is expected to increase due to the increasing popularity of smartphones and wireless Internet. Business-to-business segment that creates added values by adding additional solutions and applications is also growing. Seasonal and economic fluctuations have much less impact on the Korean mobile communication market compared to other industries.

Historical market share of the Company:

(Unit: %)

Classification

As of March 31,
2012

As of December 31,

2011

2010

2009

Mobile communication services

50.4

50.6

Comparative market share:

(As of March 31, 2012)

(Unit: %)

Classification

SK Telecom

LGU+

Market share

50.4

31.5

18.1

(Source: Korea Communications Commission website)

D. Business Overview and Competitive Strengths

The Company is seeking to transform itself from a telecommunication service provider into a comprehensive information and communication technology (“ICT”) service provider. It has continued to expand the scope of its services and achieved strong growth in subscribers amid fierce competition and rate cuts. In the first quarter of 2012, on a non-consolidated basis, the Company recorded revenue of Won 3.02 trillion, operating income of Won 460 billion and net income of Won 340 billion. On a consolidated basis, the Company’s revenue increased 2.0% to Won 3.99 trillion in the first quarter of 2012 from the corresponding period of the previous year, primarily due to an increase in the number of 3G smartphone subscribers and LTE subscribers. The Company’s consolidated operating income amounted to Won 450 billion, impacted by an increase in capital expenditures due to an increase in data traffic, as well as an increase in frequency expenses.

The number of subscribers as of March 31, 2012 was 26.56 million, an increase of 3,000 from the previous quarter. In particular, the number of smartphone subscribers as of March, 31 of 2012 was 12.76 million, an increase of 7.4 million from the previous quarter, including 1.77 million LTE subscribers, solidifying the Company’s market leadership. The Company upgraded the quality of smartphone services by providing commercial LTE services, which enable streaming service of high-quality videos, high-definition video conference calls and wireless on-line gaming services. The Company also plans to enhance customer satisfaction by improving network quality.

SK Telink, a subsidiary of the Company, plans to expand its operations to the mobile virtual network operator (“MVNO”) business based on its technical expertise and know-how obtained in its international telecommunications business. SK Telink plans to launch its pre-paid MVNO service in June 2012 and post-pay service in January 2013. An MVNO leases the networks of a mobile network operator (“MNO”) and provides wireless telecommunication services under its own brand and fee structure, without owning telecommunication networks or frequencies.

[Fixed Line Business]

A. Industry Characteristics

The Korean telecommunications industry is currently characterized by the introduction of smartphones, tablet computers and other devices with enhanced mobility and the advent of cloud computing, mobile offices and other information and communications technology. In addition, mergers among fixed-line operators and wireless operators have accelerated the convergence within the telecommunications sector, creating a market structure in which groups with both fixed-line and wireless capabilities compete for greater market share to secure a more solid footing in the market. Spurred on by the introduction of various bundled products , growth in the subscriber base for IPTV services and a paradigm shift in the voice telephone market towards Internet-based telephone services, the broadband and fixed-line telecommunications market is playing a key role in the accelerated consolidation of the service providers as well as heightened competition in a growing market. The increased usage of smartphones and tablet PCs, as well as the commercialization of the fourth generation LTE network, has greatly increased the demand for wireless data transmissions, thereby putting into greater relief the importance of fixed-line networks.

We believe the transition to digital TV services will accelerate in 2012 when analog open air TV broadcast will terminate. We expect stronger competition in new services such as smart TVs and various convergence products, such as smartphones and N Screen services employing tablet computers.

B. Growth Potential


(Unit: 1,000 persons)
Classification		As of March 31, 2012		As of December 31,
Classification		As of March 31, 2012		2011		2010
Fixed Line Subscribers	High Speed Internet		17,963		17,860		17,224
	Fixed Line		18,560		18,633		19,273
	IPTV (real-time)		4,958		3,591		2,740

(Source: Korea Communications Commission website)

C. Cyclical Nature and Seasonality

High-speed Internet, fixed-line telephone and IPTV services are generally not sensitive to cyclical economic changes. Demand for these services also does not show seasonal fluctuations.

We expect that the accelerated transition to digital TV services as a result of the termination of terrestrial analog TV broadcast, as well as the entrance of Google Inc. and Apple Inc. into the television market, would present opportunities by expanding the market size and increasing consumers’ interests. Risk factors include a competitor’s convergence service comprising both IPTV and satellite TV service, which is aimed at expanding the subscriber base.

Historical market share of the Company:


(Unit: %)
Classification	As of March 31, 2012		As of December 31,
Classification	As of March 31, 2012		2011		2010

High Speed Internet (include Resale)		23.6		23.5		23.2

Fixed Line (include VOIP)		15.0		14.6		13.7

IPTV (real-time)		19.9		24.6		26.8

(Source: Korea Communications Commission website)

D. Business Overview and Competitive Strengths

SK Broadband, which in 1999 became the first company in the world to commence commercial ADSL services, has strengthened its co-marketing efforts with SK Telecom. The co-marketing efforts and the enhanced competitiveness of the bundled products have resulted in expanded subscriber base across all of our businesses, including broadband Internet, telephone and IPTV. In particular, we have positioned ourselves to focus on corporate customer services as one of the key strategic areas for mid- to long-term growth, and our efforts to exploit new information and communications technology based businesses have led to revenue growth and strengthening of our competitiveness in the emerging business-to-business market.

SK Telink, a material consolidated subsidiary of ours, provides international telecommunications service. SK Telink has been able to establish itself as a market leader as a result of its affordable pricing, proactive marketing and the quality of its services. It launched a mobile phone-based international calling service under the brand name “00700” in 1998, creating a new niche market within the long-distance telephony market that was otherwise dominated by existing service providers. In 2003, SK Telink was designated a common carrier for international calling services, which allowed us to expand our international calling services to fixed-line international calling services. In addition, in 2011, we were again ranked first in the three major independent customer satisfaction surveys, including the Korea Nation Customer Satisfaction Index, after having been ranked first in 2010. The revenue from our international calling services in 2011 was Won 416.5 billion. SK Telink plans to strengthen its existing business, including international and long-distance calling services, while satisfying customers’ diverse needs for new services such as the VOIP and value-added services.

[Other Business]

A. Industry Characteristics

As the number of smartphone subscribers in Korea exceeds 23 million, 92% of total economically active population uses smartphones. The growth in smartphones and other mobile devices has made a service provider with strong platform business the leader in ICT market. Platform business acts as an intermediary among various customer groups and thereby generating new values, attracting subscribers and users and creating an ecosystem with certain lock-in effects. A platform can exist in various forms, including technological standard (iOS, Android OS), subscriber-based service platforms (Facebook, Twitter) or a marketplace (Amazon, T store). Platform business is evolving and expanding globally.

Platform business has strong growth potential due to its connectivity with related services and ease of global expansion. Apple has become the world’s leading smartphone producer based on its innovative design and the competitive strength of its AppStore platform. Google has created a new ecosystem of long-tail advertisement by attracting millions of third parties to its advertising platform, as well as showing strong growth in mobile markets with its competitive platform based on Android OS. Facebook has grown significantly into a platform business by introducing platforms such as Facebook Connect, Social Graph and Like.

B. Growth Potential

The Company expects that the scope and value generated by the platform business, including application and content marketplaces and N-screen services, will increase, as smartphones and tablet PCs become more popular and the bandwidth and speed of network infrastructure improve.


<Global Smartphone and Tablet Sales Forecast>													(in million units)
Classification	2008		2009		2010		2011		2012		2013		2014		2015

Smartphone		252		285		269		366		455		555		670		774

Tablet		—		—		18		70		108		160		223		294

(Source: Gartner, April 2011)


<Korea Smartphone and Tablet Subscriber Forecast>							(in ten thousand subscribers)
Classification	2010		2011		2012		2013		2014		2015

Smartphone		733		1,883		2,706		3,324		3,820		4,213

Tablet		18		180		383		563		744		982

(Source: Korea Communications Commission, December 2010)

As the wireless network evolves to the fourth generation (4G) LTE, business opportunities for the platform business are growing, which include multimedia streaming, N-screen service based on cloud technology and high-definition location based services. Since the platform business realizes profit by connecting with advertisement or commerce after building a critical mass of subscriber and traffic base, recent growth in advertisement and commerce markets is expected to present an opportunity for platform businesses.

C. Domestic and Overseas Market Conditions

(1) Competition

•

Application Marketplace

The growth of application marketplaces, which started with Apple’s App Store, provides the platform businesses with new opportunities for revenue generation. The competitive paradigm is shifting from a competition among platform operators toward a competition among ecosystems that include application developers as well as platform operators.


<Growth of Global Application Marketplace>
Classification	2008		2009		2010		2011		2012

Revenue (in US$ million)		807		4,002		6,107		10,108		15,805

Downloads (in millions)		505		2,516		4,501		8,001		14,001

(Source: Korea Electronics Technology Institute, February 2010)


<Global Competitive Environment among Application Marketplaces, May 2011>
Classification	App Store	Android Market	Ovi Store	GetJar

Operator	Apple	Google	Nokia	GetJar

Time launched	July 2008	October 2008	May 2009	2004

Available Applications	425,000	238,000	84,000	68,000

Cumulative Downloads (in billions)	15.0	5.0	1.8	0.6

(Source: ComScore, Distismo, June 2011)

•

Commerce Markets

The Company expects that on-line commerce market will continue to grow due to growth potential of Internet shopping population and strengthening of on-line business models by off-line operators.


<Size of Korea Commerce Market>					(unit: Won trillion)
Classification	2010		2011(F)		2012(F)		2014(F)

Total Commerce Markets		197.0		223.0		238.0		252.0

Online Commerce		24.8		29.6		34.1		45.2

Department Stores and Supermarkets		57.2		60.1		63.7		75.1

TV home shopping		5.2		5.9		6.3		7.2

Convenience Stores		7.0		7.8		8.8		11.2

Small Stores		101.0		103.3		119.2		113.3

(Source: National Statistical Office, 2010)

Korean advertisement market is expected to grow from Won 7.4 trillion in 2010 to Won 10.0 trillion in 2015. In particular, mobile advertisement is expected to grow rapidly to Won 0.8 trillion in 2015, primarily due to the popularity of smartphones and convergence with location based advertisement.


<Korea Advertising Market by Media>			(unit: Won trillion)
Classification	2001		2005		2010		2015(F)

Total Advertisement Market		5.5		6.3		7.4		10.0

TV, Radio, Newspaper, Magazine		4.4		4.5		4.3		4.9

Internet		0.1		0.6		1.5		2.3

Mobile						0.3		0.8

Others (including cable television)		0.9		1.2		1.6		2.0

(Source: Frost & Sullivan, 2010, Korea Communications Commission, 2010)

•

Media Contents Market

Due to an increase in the number of devices owned by each user and an increase in network speed, each user can now enjoy music or video files anywhere and anytime by storing them in cloud servers, which is called N screen service. Users can recommend music to other users through social networking services and this is expected to become a distribution model for digital media contents. Various service providers are competing in this market expecting a strong growth in on-line and mobile video market.

Internet portal service providers provide more or less identical types of services, including search, social networking sites, email service, news and other contents. However, for each type of service, a small number of service providers with specialized expertise are enjoying relatively large market shares. However, the portal services market has a relatively light entry barrier and there is increased competition from new entrants. In addition, the ease of access to services provided by competitive foreign providers is also adding to a strongly competitive market environment.

(2) Market Share

Our “CyWorld” service is the largest social networking website in Korea, with 26.11 million cumulative subscribers, 16.24 million net subscribers and a page view of 1.7 billion as of March 2012. Our “Nate-On” service had the largest market share of 70.9% in the instant messenger market in Korea with 10.2 million net users as of March 2012. Our “Nate” search portal service ranked third among search engines in Korea with a market share of 2.3% as of March 2012. (Source: Korean Click, company data).

D. Business Overview and Competitive Strengths

Based on the digital content marketplace (T store), commerce marketplace (11 Street) and location-based service (T map), the Company plans to expand its platform ecosystem focusing on “Open & Collaboration” motto. It seeks to increase its enterprise value by expanding into media platform and advertisement platform.

•

Digital Content Marketplace

T store, launched in September 2009, reached 13.68 million subscribers and cumulative downloads of 720 million as of March 2012, solidifying its leadership position in the Korean application market and plans to widen its services to tablets and navigation devices.

•

Commerce (Open Market)

11 Street, a marketplace, has continued its growth through effective marketing and customer satisfaction. Despite its later entry into the online commerce market (launched in 2008) which was already divided between Auction and G-Market, it has succeeded in growing to a comparable size with Auction vying for the second position. Future growth plans include new commerce and overseas joint ventures based on 11 Street’s business expertise.

•

Location-based Service

T map provides map, local information, real-time traffic information and navigation services. With unique visitors of 4.32 million per month as of March 31, 2012, T map is one of the leading location based service platforms in Korea. The Company plans to further develop T map platform by initiating open services, providing services to more diverse types of devices and providing local services.

•

Media Platform

The Company’s media platform business has started with “hoppin” service, which provides N-screen media service enabling subscribers to enjoy contents through a number of devices. Hoppin is expanding its services to more types of smartphones and tablets. The Company plans to develop Hoppin service into a media platform acting as an intermediary of various N-screen services. It also plans to provide media platform services in global markets.

•

Web Search through Nate.com

The Company’s web search service provided through Nate.com plans to enhance competitiveness by adding social search function. In addition, Cyworld plans to establish a worldwide service for global users.

•

Mobile Social Networking Service

In the first quarter 2012, SK Planet, a subsidiary of the Company, acquired Mad Smart Co., Ltd., which provides “tic-toc” service, in order to expand its business to mobile communication and social networking services. Mobile social networking service, still in its early stage of development, presents ample opportunities for new businesses and is expected to grow rapidly in the future. SK Planet plans to create synergies from the acquisition by combining its know-how in platform service and the strengths of “tic-toc” in social networking services.

2. Major Products & Services

A. Updates on Major Products and Services


			(Unit: in thousands of Won, %)
Business fields	Major companies	Item	Major trademarks	Sales amount (ratio)
Mobile	SK Telecom Co., Ltd., PS&Marketing Corporation, Service Ace Co., Ltd., Service Top Co. Ltd., Network O&S Co., Ltd.	Mobile Phone Service, Wireless Data Service, Information Telecommunication Service	T, NATE and others		3,222,915,848	(81%)

Fixed Line	SK Broadband Co., Ltd., Broadband D&M Co., Ltd., Broadband Media Co., Ltd., Broadband CS Co., Ltd., SK Telink Co., Ltd.	Fixed-line Phone, High Speed Internet, Data and Network Lease Service	B tv, 00700 international call and others		535,996,050	(13%)

Other	SK Planet Co., Ltd , Commerce Planet Co., Ltd , SK Communications Co., Ltd., PAXNet Co., Ltd., Loen Entertainment, Inc., SKT Americas, Inc., SK Telecom China Holdings Co., Ltd.	Internet Portal Service, Game Service	11^th Street, T-Store, T-map, NATE, Cyworld and others		226,656,807	(6%)


Total					3,985,568,705	(100%)

B. Price Fluctuation Trend of Major Products and Services

[Mobile Business]

Previously, based on the Company’s Basic Plan for monthly subscription, the basic service fee was Won 13,000 per month and the usage fee was Won 20 per 10 seconds and based on the Company’s Standard Plan, basic service fee was Won 12,000 per month and the usage fee was Won 18 per 10 seconds. As of March 31, 2012, based on the Company’s Standard Plan, basic service fee was Won 11,000 per month and the usage fee was Won 1.8 per 1 second.

[Fixed Line Business]

SK Broadband provides broadband Internet access service, telephony, TV, corporate data services and other services for both individual and corporate customers. For the quarter ended March 31, 2012, broadband Internet and TV services comprised 47.0% of SK Broadband’s revenue, telephony service 24.9%, corporate data services 19.6% and other telecommunications services 8.5%.

[Other Business]

SK Communications’ display advertisements are priced at Won 15 to 70 million per day. Search advertisements are priced variably depending on the search keyword using cost per click and cost per time methods. Cyworld revenues are generated through sale of cyber items at a price of Won 300 to 700 per item per week.

3. Investment Status

[Mobile Business]

A. Investment 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

2012

Network,
systems and
others

Capacity increase and quality improvement; systems improvement

To be
determined

4,820

To be
determined

Total

—

To be
determined

4,820

To be
determined

B. Future Investment Plan

(Unit: in 100 millions of Won)

Expected investment amount

Expected investment for each year

Investment effect

Business field

Asset type

Amount

2012

2013

2014

Network/Common

Network,
systems and
others

23,000

To be
determined

Upgrades to the existing
services and provision
of new services

Total

23,000

To be
determined

Upgrades to the existing
services and provision
of new services

[Fixed Line Business]

A. Investment 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

High-speed Internet

Upgrade/
New installation

2012

Backbone
and
subscriber
network /
others

Expand subscriber
networks and facilities

387

107

To be
determined

Telephone

Television

131

Corporate Data

Increase leased-line
and integrated
information system

130

Others

Expand networks

Total

387

4. Revenues


						(Unit: in millions of Won)
Business field	Sales type	Item		For the quarter ended March 31, 2012		For the year ended December 31, 2011		For the year ended December 31, 2010
Mobile	Services	Mobile communication	Export		8,379		1,331		599
			Domestic		3,214,537		13,100,614		12,919,663

			Subtotal		3,222,916		13,101,945		12,920,262

Fixed Line	Services	Fixed line, B2B data, High speed Internet, TV	Export		7,209		28,070		30,883
			Domestic		528,787		2,134,498		2,196,424

			Subtotal		535,996		2,162,568		2,227,307

Other	Services	Display and Search ad., Content	Export		442		12,036		12,000
			Domestic		226,215		711,729		439,726

			Subtotal		226,657		723,765		451,726

Total			Export		16,029		41,437		43,482
			Domestic		3,969,539		15,946,841		15,555,813

			Total		3,985,569		15,988,278		15,599,295


							(Unit: in thousands of Won)
For the quarter ended March 31, 2012	Wireless		Fixed		Other		Sub total		Internal transaction		After consolidation

Total revenue		3,442,511,586		690,664,846		400,488,770		4,533,665,202		-548,096,497		3,985,568,705


Internal revenue		219,595,738		154,668,795		173,831,964		548,096,497		-548,096,497		—

External revenue		3,222,915,848		535,996,050		226,656,807		3,985,568,705		—		3,985,568,705

Operating income (loss)		459,432,534		-1,341,845		-5,774,690		452,315,999		—		452,315,999

Net profit (loss)		344,914,154		-18,476,142		-244,976		326,193,036		-25,812,203		300,380,833

Total asset		23,537,231,130		3,442,233,461		3,294,059,817		30,273,524,408		-3,726,622,809		26,546,901,599


Total liabilities		11,642,534,707		2,152,590,940		819,822,185		14,614,947,832		-460,036,340		14,154,911,492

5. Derivative Transactions

(1) Currency swap contract applying cash flow risk hedge accounting

The Company has entered into a currency and interest rate swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated floating rate long-term borrowings with face amounts totaling US$100,000,000 borrowed on October 10, 2006. As of March 31, 2012, in connection with this unsettled currency and interest rate swap contract, an accumulated loss on valuation of derivatives amounting to Won 3,317,536,000 (excluding tax effect totaling Won 559,011,000 and foreign exchange translation loss arising from U.S. dollar denominated long-term borrowings totaling Won 18,980 million) was accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a currency and interest rate swap contract with two banks including HSBC in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen denominated bonds (56-2) with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of March 31, 2012, in connection with this unsettled currency and interest rate swap contracts, an accumulated gain on valuation of derivatives amounting to Won 2,711,443,000 (excluding tax effect totaling Won 862,401,000 and foreign exchange translation loss arising from unguaranteed Japanese yen denominated bonds totaling Won 68,536,652,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency swap contract with six 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, and has applied cash flow risk hedge accounting to this foreign currency swap contract starting from May 12, 2010. Accordingly, as of March 31, 2012, in connection with this unsettled foreign currency swap contract, an accumulated loss on valuation of currency swap of Won 50,902,415,000 that has accrued since May 12, 2010 (excluding tax effect totaling Won 16,251,159,000 and foreign exchange translation gain arising from unguaranteed U.S. dollar denominated bonds totaling Won 2,363,941,000) was accounted for as accumulated other comprehensive loss. Meanwhile, a gain on valuation of currency swap of Won 129,806,021,000 incurred prior to the date of applying cash flow risk hedge accounting was charged to current operations.

The Company has entered into a currency and interest rate swap contract with two banks including DBS in order to hedge the foreign currency risk and the interest rate risk of floating rate foreign currency bonds with face amounts totaling US$220,000,000 issued on April 29, 2009, and has applied cash flow risk hedge accounting to this swap contract starting from October 14, 2011. Accordingly, as of March 31, 2012, in connection with this unsettled currency and interest rate swap contract, an accumulated loss on valuation of derivatives of Won 938,665,000 that has accrued since October 14, 2011 (excluding tax effect totaling Won 299,679,000 and foreign exchange translation gain arising from this floating rate foreign currency bonds totaling Won 4,434,269,000) was accounted for as accumulated other comprehensive loss.

The Company has entered into a currency and interest rate swap contract with two banks including DBS in order to hedge the foreign currency risk and the interest rate risk of floating rate foreign currency bonds with face amounts totaling US$250,000,000 issued on December 15, 2011. As of March 31, 2012, in connection with this unsettled currency and interest rate swap contract, an accumulated gain on valuation of derivatives of Won 6,279,558,000 (excluding tax effect totaling Won 2,004,819,000 and foreign exchange translation gain arising from this floating rate foreign currency bonds totaling Won 5,116,051,000) was accounted for as accumulated other comprehensive gain.

The Company has entered into a currency and interest rate swap contract with United Overseas Bank in order to hedge the foreign currency risk and the interest rate risk of floating rate foreign currency bonds with face amounts totaling SGD 65,000,000 issued on December 15, 2011. As of March 31, 2012, in connection with this unsettled currency and interest rate swap contract, an accumulated loss on valuation of derivatives of Won 278,165,000 (excluding tax effect totaling Won 88,807,000 and foreign exchange translation loss arising from this floating rate foreign currency bonds totaling Won 1,319,602,000) was accounted for as accumulated other comprehensive loss.

(2) The fair values of the derivative instruments described above as of March 31, 2012 are recognized as derivative assets or derivative liabilities under current assets, non-current assets or current liabilities on the Company’s balance sheet. Details are as follows:

(Unit: Won in thousands)

Category

Subject of Risk

Hedge

Contract Period

Fair Value of Derivative Instruments

Designated as
Hedging
Instrument

Not
Designated
as Hedging
Instrument

Total

Currency Swap
(Current Asset)

Unguaranteed Japanese Yen-denominated Bonds (face amount of JPY 12,500,000,000)

From Nov. 13, 2007 to

Nov. 13, 2012

70,385,694

—

70,385,694

Currency Swap
(Non-current Assets)

Floating-rate Long-term Borrowing (principal amount of USD 100,000,000)

From Oct. 10, 2006 to

Oct. 10, 2013

15,103,453

—

15,103,453

Unguaranteed Foreign Currency Bonds (face amount of USD 400,000,000)

From Jul. 20, 2007 to

Jul. 20, 2027

60,288,506

—

60,288,506

Floating-rate Foreign Currency Bonds (face amount of USD 250,000,000)

From Dec. 15, 2011 to

Dec. 12, 2014

3,168,327

—

3,168,327

Floating-rate Foreign Currency Bonds (face amount of SGD 65,000,000)

From Dec. 15, 2011 to

Dec. 12, 2014

952,631

—

952,631

(Unit: Won in thousands)

Category

Subject of Risk

Hedge

Contract Period

Fair Value of Derivative Instruments

Designated as
Hedging
Instrument

Not
Designated
as Hedging
Instrument

Total

Conversion Right
(Non-current Asset)

Convertible Bonds (Available-for-sale Securities)(*) (face amount of Won 50,000,000 thousand)

From Sep. 1, 2009 to

Aug. 31, 2014

—

974,723

Total derivative assets:

149,898,611

974,723

150,873,334

Currency Swap
(Current Liability)

Floating-rate Foreign Currency Bonds (face amount of USD 220,000,000)

From Apr. 29, 2009 to

Apr. 29, 2012

5,672,614

—

5,672,614

Total derivative liabilities:

5,672,614

—

5,672,614

(*)	The fair value of Won 974,723,000 of the conversion rights of the convertible bonds held by SK Communications, a subsidiary of the Company, was recognized as non-current derivative asset.

6. Major Contracts

[SK Telecom]

Category

Vendor

Start Date

Completion

Date

Contract

Title

Contract Amount
(Won in 100 million)

Service

SK Planet Co., Ltd.

January 1, 2012

December 31, 2012

B2B contents contract for 2012 with SK Planet
(T-map, T-Gift, Nate FZ, T-Cloud)

6,167

Subtotal

6,167

[SK Broadband]

SK Broadband enters into contracts to use telecommunications facilities, including the use of line conduits and interconnection among telecommunication service providers.


Counterparty	Contract Contents	Contract Period	Note

Seoul City Railway	Use of telecommunication line conduits	From Jan. 2009 to Dec. 2012	Use of railway telecommunication conduit

Seoul Metro	Use of telecommunication line conduits	From May 2010 to May 2013	Use of railway telecommunication conduit

Busan Transportation Corporation	Use of telecommunication line conduits	From July 2009 to July 2012	Use of railway telecommunication conduit

Gwangju City Railway	Use of telecommunication line conduits	From Sep. 2010 to Dec. 2012	Use of railway telecommunication conduit

[SK Planet]

Note. The agreements with SK Communications Co., Ltd. have been transferred from SK Telecom to SK Planet in connection with the spin-off of SK Planet on Oct. 5, 2011.

[SK Communications]


Counterparty	Purpose	Contract Period	Contract Amount

Overture Korea	Agency agreement for search advertisement	—	Amount determined based on the number of clicks

SK Construction Co., Ltd.	Construction of Pangyo Office Building	23 months	Won 61.9 billion

SK Planet Co., Ltd.	Operation of shopping business at nate.com website	From Jul. 1, 2011 to Dec. 31, 2013	Minimum guarantee of Won 18.4 billion for the period from Jul. 1, 2011 to Dec. 31, 2011; Amounts for 2012 and 2013 are to be determined depending on the NATE shopping revenues and other factors.

Daum Communications	Business and service cooperation regarding search advertisement	—	Revenues are allocated in accordance with certain set percentages.

Note. The agreements with SK Planet Co., Ltd. have been transferred from SK Telecom to SK Planet in connection with the spin-off of SK Planet on Oct. 5, 2011.

7. R&D Investments


					(Unit: in million Won)
Category		For the quarter ended March 31, 2012			For the year ended December 31, 2011			For the year ended December 31, 2010			Remarks

Raw material			5			45			41			—

Labor			20,545			48,656			49,441			—

Depreciation			36,810			149,850			143,131			—

Commissioned service			1,568			40,257			98,545			—

Others			8,175			57,118			64,755			—


Total R&D costs			67,103			295,927			355,913			—


Accounting	Sales and administrative expenses		66,544			289,979			352,186			—
Accounting	Development expenses (Intangible assets)		559			5,948			3,727			—

R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)			1.69	%		1.85	%		2.28	%

8. Other information relating to investment decisions

[SK Telecom]

A. Trademark Policies

The Company manages its corporate brand and other product brands such as “T” in a comprehensive way to protect and increase their value.

The Company’s ‘Brand Management Council’ in charge of overseeing its systematic corporate branding operates full time to execute decisions involving major brands and operates ‘Brandnet’, an intranet system to manage corporate brands which provides solutions including licensing of the brands and downloading of the Company logos.

B. Business-related Intellectual Properties

The Company holds 3,419 Korean registered patents, 228 U.S. registered patents, 107 Chinese registered patents(all including patents held jointly with other companies) and more patents with other countries. The Company holds 811 Korean registered trademarks and owns intellectual property rights to the design of alphabet “T”. The designed alphabet “T” is registered in all business categories for trademarks (total of 45) and is being used as the primary brand of the Company.

[SK Broadband]

SK Broadband holds 320 Korean registered patents relating to high-speed Internet, telephone and IPTV service. In addition, SK Broadband has applied for a patent relating to two-way broadcasting system. SK Broadband also holds a number of trademarks and service marks relating to its service and brand.

[SK Planet]

As of March 31, 2012, SK Planet held 1,733 Korean registered patents, 91 registered design marks, 739 registered trademarks and one copyright (including those held jointly with other companies). It also holds 20 U.S. registered patents, 30 Chinese registered patents, 8 Japanese registered patents, 13 E.U. registered patents (all including patents held jointly with other companies) and more patents with other countries.

[SK Communications]

As of March 31, 2012, SK Communications held 58 Korean registered patents, 26 registered design rights and 694 registered trademarks.

III. FINANCIAL INFORMATION

Summary Financial Information (Consolidated)


							(Unit: in thousand Won)
Classification/Fiscal Year	As of March 31, 2012			As of December 31, 2011			As of December 31, 2010
Current Assets		5,555,731,817			6,117,478,958			6,653,991,923
• Cash and Cash Equivalent		1,769,391,447			1,650,793,876			659,404,935
• Accounts Receivable – Trade		1,744,497,858			1,823,169,889			1,949,397,279
• Accounts Receivable – Other		741,298,879			908,836,454			2,531,847,155
• Others		1,300,543,633			1,734,678,739			1,513,342,554
Non-Current Assets		20,991,169,782			18,248,557,471			16,478,397,157
• Long Term Investment		1,466,734,560			1,537,945,216			1,680,582,091
• Investments in Associates		4,685,821,635			1,384,605,401			1,204,691,805
• Property and Equipment		8,696,455,542			9,030,998,201			8,153,412,683
• Intangible Assets		2,940,927,120			2,995,803,300			1,884,955,652
• Goodwill		1,740,203,341			1,749,932,878			1,736,649,137
• Others		1,461,027,584			1,549,272,475			1,818,105,789

Total Assets		26,546,901,599			24,366,036,429			23,132,389,080

Current Liabilities		6,582,580,262			6,673,589,809			6,202,170,452
Non-Current Liabilities		7,572,331,230			4,959,737,573			4,522,219,358

Total Liabilities		14,154,911,492			11,633,327,382			10,724,389,810

Controlling Shareholders’ Equity		11,342,733,441			11,661,880,863			11,329,990,900
Capital		44,639,473			44,639,473			44,639,473
Share Premium		(290,688,346	)		(285,347,419	)		(78,952,875	)
Retained Earnings		11,359,342,076			11,642,525,267			10,721,249,327
Reserves		229,440,238			260,063,542			643,054,975
Non-controlling Interests		1,049,256,666			1,070,828,184			1,078,008,370

Total Stockholders’ Equity		12,391,990,107			12,732,709,047			12,407,999,270

Number of Companies Consolidated		30			31			32


Classification/Fiscal Year	For the quarter ended March 31, 2012			For the year ended December 31, 2011			For the year ended December 31, 2010
Revenue		3,985,568,705			15,988,277,642			15,599,162,033
Operating Income (or Loss)		452,315,999			2,131,457,658			2,285,911,094
Income (or Loss) From Continuing Operation Before Income Tax		381,984,403			2,182,858,121			2,318,090,573
Consolidated Total Net Income		300,380,834			1,582,073,280			1,766,834,754
Net Income (or Loss) Attributable to Controlling Interests		306,424,089			1,612,889,086			1,841,612,790
Net Income (or Loss) Attributable to Non-controlling Interests		(6,043,255	)		(30,815,806	)		(74,778,036	)
Net Income Per Share (Won)		4,397			22,848			25,598
Diluted Net Income Per Share (Won)		4,300			22,223			24,942

Summary Financial Information (Non-Consolidated)


							(Unit: in thousand Won)
Classification/Fiscal Year	As of March 31, 2012			As of December 31, 2011			As of December 31, 2010
Current Assets		3,615,332,854			3,948,077,706			5,316,976,799
• Cash and Cash Equivalent		1,163,682,631			895,557,654			357,469,908
• Accounts Receivable – Trade		1,287,862,447			1,282,233,900			1,453,060,673
• Accounts Receivable – Other		526,980,498			774,221,266			2,499,969,010
• Others		636,807,278			996,064,886			1,006,477,208
Non Current Assets		19,491,357,493			16,572,449,699			14,410,149,512
• Long Term Investment		1,265,922,974			1,312,437,834			1,517,029,011
• Investments in Associates		7,956,912,187			4,647,505,583			3,584,394,790
• Property and Equipment		6,026,043,707			6,260,168,675			5,469,747,495
• Intangible Assets		2,334,965,118			2,364,795,182			1,424,968,542
• Goodwill		1,306,236,299			1,306,236,299			1,308,422,097
• Others		601,277,208			681,306,126			1,105,587,577

Total Assets		23,106,690,347			20,520,527,405			19,727,126,311

Current Liabilities		5,087,269,776			4,467,005,877			4,561,013,611
Non Current Liabilities		6,324,291,206			4,087,219,816			3,585,155,050

Total Liabilities		11,411,560,982			8,554,225,693			8,146,168,661

Capital		44,639,473			44,639,473			44,639,473
Share Premium		(236,016,201	)		(236,016,201	)		(24,643,471	)
Retained Earnings		11,592,034,419			11,837,184,788			10,824,355,758
Reserves		294,471,674			320,493,652			736,605,890

Total Shareholders’ Equity		11,695,129,365			11,966,301,712			11,580,957,650


Classification/Fiscal Year	For the quarter ended March 31, 2012		For the year ended December 31, 2011		For the year ended December 31, 2010
Revenue		3,016,446,714		12,575,129,190		12,550,496,552
Operating Income (or Loss)		457,701,670		2,086,648,941		2,355,027,851
Income (or Loss) From Continuing Operation Before Income Tax		433,836,583		2,274,421,557		2,503,637,367
Net Income (or Loss)		344,971,971		1,694,363,093		1,947,007,919
Net Income Per Share (Won)		4,950		24,002		27,063
Diluted Net Income Per Share (Won)		4,835		23,343		26,366

3. K-IFRS preparation, impact to financial statements, changes in accounting principle implemented

•

Transition to K-IFRS

The Company prepares its financial statements in accordance with K-IFRS starting from the fiscal year 2011 which commenced on January 1, 2011. The Company’s financial statements in previous periods were prepared in accordance with Korean GAAP. The Company’s financial statements for the fiscal year 2010 presented for comparison were prepared in accordance with K-IFRS with January 1, 2010 as the transition date and pursuant to K-IFRS 1101 “First-time Adoption of Korean International Financial Reporting Standards.”

IV. AUDITOR’S OPINION

1. Auditor (Consolidated)


Quarter ended March 31, 2012	Year ended December 31, 2011	Year ended December 31, 2010

KPMG Samjong Accounting Corp.	Deloitte Anjin LLC	Deloitte Anjin LLC

2. Audit Opinion (Consolidated)


Term	Auditor’s opinion	Issues noted

Quarter ended March 31, 2012	—	—

Year ended December 31, 2011	Unqualified	—

Year ended December 31, 2010	Unqualified	—

3. Auditor (Non-Consolidated)


Quarter ended March 31, 2012	Year ended December 31, 2011	Year ended December 31, 2010

KPMG Samjong Accounting Corp.	Deloitte Anjin LLC	Deloitte Anjin LLC

4. Audit Opinion (Non-Consolidated)


Term	Auditor’s opinion	Issues noted

Quarter ended March 31, 2012	—	—

Year ended December 31, 2011	Unqualified	—

Year ended December 31, 2010	Unqualified	—

5. Remuneration for Independent Auditors for the Past Three Fiscal Years

A. Audit Contracts

(Unit: in thousands of Won / hour)

Term

Auditors

Contents

Fee

Total
hours

Year ended

December 31, 2012

KPMG Samjong Accounting Corp.

Semi-annual review

1,220,000

16,160

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Year ended

December 31, 2011

Deloitte Anjin LLC

Semi-annual review

1,364,000

14,033

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Year ended December 31, 2010

Deloitte Anjin LLC

Semi-annual review

1,563,770

16,810

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

IFRS-based financial statements review

English financial statements review and other audit task

B. Non-Audit Services Contract with External Auditors

(Unit: in thousands of Won)

Term

Contract date

Service provided

Service
duration

Fee

Quarter ended March 31, 2012

—

Year ended December 31, 2011

April 11, 2011

Tax consulting

30 days

45,000

April 28, 2011

Tax consulting

30 days

45,000

Year ended December 31, 2010

July 20,2010

Management consulting

4 days

5,000

July 28, 2010

Tax consulting

15 days

18,000

July 28, 2010

Tax consulting

5 days

6,600

July 28, 2010

Tax consulting

30 days

40,000

July 28, 2010

Tax consulting

20 days

23,100

December 23, 2010

Tax consulting

3 days

7,700

December 23, 2010

Tax consulting

20 days

24,600

December 29, 2010

Tax consulting

15 days

17,000

6. Change of Independent Auditors

Starting from 2012, the Company changed its independent auditors to KPMG Samjong Accounting Corp. from Deloitte Anjin LLC due to the expiration of the audit contract with Deloitte Anjin LLC.

V. MANAGEMENT DISCUSSION AND ANALYSIS

Omitted in quarterly and half-year reports in accordance with Korean disclosure rules.

VI. CORPORATE ORGANIZATION INCLUDING BOARD OF DIRECTORS AND AFFILIATED COMPANIES

1. Board of Directors

A. Overview of Board of Directors Composition

The Company’s Board of Directors is comprised of eight members: five independent directors and three inside directors. Within the Board, there are five Committees: Independent Director Nomination Committee, Audit Committee, Compensation Committee, CapEx Review Committee, and Corporate Citizenship Committee.


The number of persons	Inside directors	Independent directors

8	Sung Min Ha, Young Tae Kim, Dong Seob Jee	Dal Sup Shim, Rak Yong Uhm, Hyun Chin Lim, Jay Young Chung, Jae Ho Cho

At the 28th General Shareholders’ Meeting held on March 23, 2012, Young Tae Kim and Dong Seob Jee were elected as inside directors, Hyun Chin Lim was re-elected as an independent director, and Hyun Chin Lim was re-elected as a member of the audit committee.

B. (1) Significant Activities of the Board of Directors


Meeting	Date	Agenda	Approval
339th (the 1st meeting of 2012)	February 9, 2012	• Financial Statements as of and for the year ended December 31, 2011	Approved as proposed
		• Annual Business Report as of and for the year ended December 31, 2011	Approved as proposed
		• Management Plan for 2012	Approved as proposed
		• Transaction of goods, services and assets with SK Planet	Approved as proposed
		• Report for Internal Accounting Management System	—
		• Report for Subsequent Events following 4Q 2011	—

340th (the 2nd meeting of 2012)	February 23, 2012	• Convocation of the 28^th Annual General Meeting of Shareholders	Approved as proposed
340th (the 2nd meeting of 2012)	February 23, 2012	• Result of Internal Accounting Management System Evaluation	—


Meeting	Date	Agenda	Approval
341th (the 3rd meeting of 2012)	March 23, 2012	• Election of Chairman of the Board of Directors	Approved as proposed
		• Amendment to the Company’s internal rules	Approved as proposed
		• Election of committee members	Approved as proposed
		• Asset Management Transaction with Affiliated Company (SK Securities)	Approved as proposed
		• Donation to Happiness Sharing Institute	Approved as proposed

342th (the 4th meeting of 2012)	April 26, 2012	• Adoption of internal compliance rules and the appointment of chief compliance officer	Approved as proposed
		• Amendment of board regulations	Approved as proposed
		• Issuance of overseas bonds	Approved as proposed
		• Report for Subsequent Events following 1Q 2012	—

*	The line items that do not show approval are for reporting purpose only.

C. Committees within Board of Directors

(1) Committee Structure (As of April 30, 2012)

a) Compensation Review Committee

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

b) Capex Review Committee

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

c) Corporate Citizenship Committee

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

d) Independent Director Nomination Committee

*	Under the Korean Commercial Code, a majority of the members of the Independent Director Nomination Committee should be independent directors.

e) Audit Committee

*	The Audit Committee is a committee established under the provisions of the Articles of Incorporation and Korean Commercial Code.

2. Audit System

The Company’s Audit Committee consists of four independent directors, Dal Sup Shim, Hyun Chin Lim, Jae Ho Cho and Jay Young Chung.

Major activities of the Audit Committee are as follows.


Meeting	Date	Agenda	Approval	Remarks

The first meeting of 2012	February 1, 2012	• Preparation for audit report for the 28^th Annual General Meeting of Shareholders	—

The second meeting of 2012	February 8, 2012	• Business-to-business contract with SK Telink	Approved as proposed
		• Construction of Mobile Phone Facilities for 2012	Approved as proposed
		• Construction of Network Facilities for 2012	Approved as proposed
		• Evaluation of Internal Accounting Controls based on the Opinion of the Members of the Audit Committee	Approved as proposed
		• 2^nd half 2011 Management Audit Results and Management Audit Plan for 2012	—
		• Reports on Internal Accounting Management System	—

The third meeting of 2012	February 22, 2012	• Reports on 2011 IFRS Audit	—
		• Report on Review of 2011 Internal Accounting Management System	—
		• Evaluation of Internal Accounting Management System Operation	Approved as proposed
		• Auditor’s Report for Fiscal Year 2011	Approved as proposed
		• Agenda and Document Review for the 28^th Annual General Meeting of Shareholders	Approved as proposed
		• Purchase of Mobile Phone Relay Devices for 2012	Approved as proposed
		• Purchase of Mobile Phone Transmission Devices for 2012	Approved as proposed
		• 2012 IT SM contract	Approved as proposed
		• Engagement of Independent Auditing Firm for 2012 to 2014	Approved as proposed

The fourth meeting of 2012	March 22, 2012	• 2012 2Q Transactions with SK C&C Co., Ltd.	Approved as proposed
The fourth meeting of 2012	March 22, 2012	• Asset Management Transaction with Affiliated Company (SK Securities)	—

The fifth meeting of 2012	April 26, 2012	• Election of Chairman — Jae Ho Cho	Approved as proposed
		• Remuneration of outside auditor for the Fiscal Year 2012	Approved as proposed
		• Outside auditor service plan for the Fiscal Year 2012	Approved as proposed
		• Audit plan for the Fiscal Year 2012	—
		• Purchase of maintenance, repair and operations items from Happy Narae Co., Ltd.	Approved as proposed

The sixth meeting of 2012	May 23, 2012	• Construction of Mobile Phone Facilities for 2012	Approved as proposed
		• Construction of Network Facilities for 2012	Approved as proposed
		• Service contract for handset customer service for 2012	Approved as proposed

*	The line items that do not show approval are for reporting purpose only.

3. Shareholders’ Exercises of Voting Rights

A. Voting System and Exercise of Minority Shareholders’ Rights

Pursuant to the Articles of Incorporation as shown below, the cumulative voting system was first introduced in the General Meeting of Shareholders in 2003.


Articles of Incorporation		Description
Article 32 (3) (Election of Directors)		Cumulative voting under Article 382-2 of the Korean 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.

Also, neither written or electronic voting system nor minority shareholder rights is applicable.

4. Affiliated Companies

A. Capital Investments between Affiliated Companies


(As of March 31, 2012)
Investing company	Invested companies
Investing company	SK Corporation			SK Innovation			SK Energy			SK Global Chemical			SK Telecom			SK Networks			SKC			SK E&C			SK Shipping			SK Securities
SK Corporation					33.4	%								25.2	%		39.1	%		42.5	%		40.0	%		83.1	%
SK Innovation								100/0	%		100/0	%
SK Energy
SK Global Chemical
SK Networks																													22.7	%
SK Telecom
SK Chemicals																	0.02	%					25.4	%
SKC
SK E&C
SK Gas
SK C&C		31.8	%
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet
SK Hynix
Hynix Engineering

Total affiliated companies		31.8	%		33.4	%		100/0	%		100.0	%		25.2	%		39.2	%		42.5	%		65.4	%		83.1	%		22.7	%


Investing company	Invested companies
Investing company	SK E&S			SK Gas			DOPCO			CCE			YN Energy			Ko-one Energy Service(formerly, Daehan City Gas)			SK Sci-tech			SK Telink			Busan City Gas			Jeonnam City Gas
SK Corporation		94.1	%
SK Innovation								41.0	%
SK Energy
SK Global Chemical
SK Networks
SK Telecom																							83.5	%
SK Chemicals					45.5	%														50.0	%
SK C
SK E&C
SK Gas
SK C&C		5.9	%
SK E&S											100.0	%		100.0	%		82.2	%								40.0	%		100.0	%
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet
SK Hynix
Hynix Engineering

Total affiliated companies		100.0	%		45.5	%		41.0	%		100.0	%		100.0	%		82.2	%		50.0	%		83.5	%		40.0	%		100.0	%


	Invested companies
Investing company	Gangwon City Gas			JBES			M & Service			SK Wyverns			Infosec			Happynarae (formerly, MRO Korea)			SK Telesys			Encar network			F&U Credit Info			Paxnet
SK Corporation
SK Innovation																	42.5	%
SK Energy																							0.0	%
SK Global Chemical
SK Networks
SK Telecom											100.0	%					42.5	%								50.0	%
SK Chemicals
SK C																				47.5	%
SK E&C
SK Gas																	5.0	%
SK C&C														100.0	%		5.0	%					91.7	%
SK E&S		100.0	%		100.0	%
SK Communications
SK Broadband
SK D&D
SK Marketing & Company								100.0	%
SK Lubricant
SK Shipping
SK Planet																													59.7	%
SK Hynix
Hynix Engineering

Total affiliated companies		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		95.0	%		47.5	%		91.7	%		50.0	%		59.7	%


	Invested companies
Investing company	SK D&D			Natruck			Loen Entertainment			Independence			SK Mobile Energy			SK Petrochemical			SK Communications			SKN Internet			SKC Air Gas			SKN service
SK Corporation
SK Innovation														100.0	%
SK Energy					92.4	%
SK Global Chemical																	100.0	%
SK Networks																							100.0	%					85.0	%
SK Telecom
SK Chemicals
SK C																										80.0	%
SK E&C		45.0	%
SK Gas
SK C&C											100.0	%
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet								67.6	%											64.6	%
SK Hynix
Hynix Engineering

Total affiliated companies		45.0	%		92.4	%		67.6	%		100.0	%		100.0	%		100.0	%		64.6	%		100.0	%		80.0	%		85.0	%


Investing company	Invested companies
Investing company	Commerce Planet			Real Vest			SKC Solmics Co., Ltd.			SK Broadband			SK M&C			Broadband Media			Broadband D&M			Broadband CS			UBcare			PyongTaek Energy Service
SK Corporation
SK Innovation														50.0	%
SK Energy
SK Global Chemical
SK Networks
SK Telecom											50.6	%		50.0	%
SK Chemicals																										44.0	%
SK C								53.7	%
SK E&C					100.0	%
SK Gas
SK C&C
SK E&S																													100.0	%
SK Communications
SK Broadband																	100.0	%		100.0	%		100.0	%
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet		100.0	%
SK Hynix
Hynix Engineering

Total affiliated companies		100.0	%		100.0	%		53.7	%		50.6	%		100.0	%		100.0	%		100.0	%		100.0	%		44.0	%		100.0	%


	Invested companies
Investing company	WS Commerce			Incyto			Namwon Sarang Electric Power			Jeju United FC			MKS Guarantee			PS&Marketing			SK Forest			Green Biro			SK Lubricants			Zicos
SK Corporation
SK Innovation																										100.0	%
SK Energy											100.0	%
SK Global Chemical
SK Networks		100.0	%
SK Telecom																	100.0	%
SK Chemicals
SK C					100.0	%
SK E&C																				100.0	%
SK Gas																							100.0	%
SK C&C
SK E&S
SK Communications
SK Broadband
SK D&D								100.0	%					100.0	%
SK Marketing & Company
SK Lubricant																													100.0	%
SK Shipping
SK Planet
SK Hynix
Hynix Engineering

Total affiliated companies		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%


Investing company	Invested companies
Investing company	SK Seentec			Daejeon Pure Water			Gwangju Pure Water			SKW			Television Media Korea			Network O&S			Service Ace			Service Top			SK Pinx			U base Manufacturing Asia
SK Corporation
SK Innovation
SK Energy
SK Global Chemical
SK Networks																										100.0	%
SK Telecom																	100.0	%		100.0	%		100.0	%
SK Chemicals		100.0	%
SK C											65.0	%
SK E&C					32.0	%		42.0	%
SK Gas
SK C&C
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant																													100.0	%
SK Shipping
SK Planet														51.0	%
SK Hynix
Hynix Engineering

Total affiliated companies		100.0	%		32.0	%		42.0	%		65.0	%		51.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%


Investing company	Invested companies
Investing company	Natruck Friends			Ulsan Aromatics			SK Biofarm			Service In			SKC Lighting			Gimcheon Energy			SKSM			PMP			LC&C			Speed Motor
SK Corporation								100.0	%
SK Innovation
SK Energy		50.0	%
SK Global Chemical					50.0	%
SK Networks																										79.6	%		100.0	%
SK Telecom
SK Chemicals
SK C														65.0	%
SK E&C
SK Gas
SK C&C
SK E&S																	50.0	%					100.0	%
SK Communications											100.0	%
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping																				100.0	%
SK Planet
SK Hynix
Hynix Engineering

Total affiliated companies		50.0	%		50.0	%		100.0	%		100.0	%		65.0	%		50.0	%		100.0	%		100.0	%		79.6	%		100.0	%


Investing company	Invested companies
Investing company	SK Planet			Highway Star			SK Hynix			Hynix Engineering			HYSTEC			HYLogitec			Hynix Human Resources			QRT Semiconductor			Silicon File			Ami Power
SK Corporation
SK Innovation
SK Energy					100.0	%
SK Global Chemical
SK Networks
SK Telecom		100.0	%					21.1	%
SK Chemicals
SK C
SK E&C
SK Gas
SK C&C
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet
SK Hynix											99.6	%		99.6	%		99.6	%		99.6	%					29.7	%		99.6	%
Hynix Engineering																							100.0	%

Total affiliated companies		100.0	%		100.0	%		21.1	%		99.6	%		99.6	%		99.6	%		99.6	%		100.0	%		29.7	%		99.6	%

VII. SHAREHOLDERS INFORMATION

1. Shareholdings of the Largest Shareholder and Related Persons

A. Shareholdings of the Largest Shareholder and Related Persons


(As of March 31, 2012)					(Unit: Shares, %)
Name	Relationship	Type of share	Number of shares owned and ownership ratio
			Beginning of Period				End of Period
			Number of shares		Ownership ratio		Number of shares		Ownership ratio
SK Corporation	Largest Shareholder	Common share		20,363,452		25.22		20,363,452		25.22
Tae Won Chey	Officer of affiliated company	Common share		100		0.00		100		0.00
Shin Won Chey	Officer of affiliated company	Common share		2,000		0.00		2,000		0.00
Sung Min Ha	Officer of affiliated company	Common share		738		0.00		738		0.00
Bang Hyung Lee*	Officer of affiliated company	Common share		200		0.00		0		0.00

Total-		Common share		20,366,490		25.22		20,366,290		25.22

*	Resigned on January 31, 2012.

B. Overview of the Largest Shareholder

SK Corporation is a holding company and as of March 31, 2012, has eight subsidiaries: SK Innovation Co., Ltd., SK Telecom Co., Ltd., SK Networks Co., Ltd., SKC Co., Ltd., SK Shipping Co., Ltd., SK E&C Co., Ltd., SK E&S Co., Ltd. and SK Biofarm Co., Ltd. SK Biofarm Co., Ltd. spun off from SK Corporation on April 1, 2011.

Details of SK Corporation’s subsidiaries are as follows:


							(Unit: in millions of Won)

Affiliates	Share Holdings			Book Value (million Won)		Industry	Description
SK Innovation Co., Ltd.		33.4	%		3,944,657	Energy and Petrochemical	Publicly Listed
SK Telecom Co., Ltd.		25.2	%		3,091,125	Telecommunication	Publicly Listed
SK Networks Co., Ltd.		39.1	%		1,165,759	Trading, Energy Sale	Publicly Listed
SKC Co., Ltd.		42.5	%		254,632	Synthetic Resin Manufacturing	Publicly Listed
SK E&C Co., Ltd.		40.0	%		485,171	Construction	Privately Held
SK Shipping Co., Ltd.		83.1	%		607,643	Ocean Freight	Privately Held
SK E&S Co., Ltd.		94.1	%		1,026,307	Gas Company Holdings and Power Generation	Privately Held
SK Biofarm Co., Ltd.		100.00	%		228,702	Biotechnology	Privately Held

*	The above share holdings are based on common stock holdings as of March 31, 2012.

SK Corporation is a publicly listed company and is required to submit a report of its significant business activities in accordance with Article 161 of the Financial Investment Services and Capital Markets Act. Also as a holding company, SK Corporation is required to report key management activities of its subsidiaries in accordance with Article 8 of KOSPI Market Disclosure Regulation.

The rule is applicable to subsidiaries whose book value of the holding company’s shareholding exceeds 10% of its total assets based on the financial statements as of December 31, 2011. SK Innovation Co., Ltd., SK Telecom Co., Ltd. and SK Networks Co., Ltd. are three such subsidiaries.

On August 1, 2011, SK E&S Co., Ltd. acquired K-Power Co., Ltd. SK E&S that is engaged in distribution of gas and energy business plans to create synergy by merging with K-Power that is engaged in power generation and plans to seek new growth opportunities in overseas gas business and power generation.

2. Changes in shareholdings of the Largest Shareholder

Changes in shareholdings of the largest shareholder are as follows.


(As of March 31, 2012)						(Unit: Shares, %)

Largest Shareholder	Date of the change in the largest shareholder/ Date of change in shareholding	Shares Held		Holding Ratio		Remarks

SK Corporation	March 7, 2008		18,751,260		23.09	Purchased 1,085,325 shares from SK Networks on March 7, 2008
	March 13, 2009		18,751,360		23.22	At the 25^th General Meeting of Shareholders, elected the CEO, Man Won Jung (who owned 100 shares of the Company stock)
	December 30, 2009		18,755,260		23.23	Man Won Jung, the CEO, purchased 3,900 shares.
	May 26, 2010		18,756,760		23.23	Man Won Jung, the CEO, purchased 1,500 shares
	July 20, 2010		18,756,860		23.23	Man Won Jung, the CEO, purchased 100 shares
	September 17, 2010		18,757,360		23.23	Dal Sup Shim, an Independent Director, purchased 500 shares
	March 11, 2011		18,750,490		23.22	Man Won Jung, SK Telecom’s CEO, resigned Shin Bae Kim, SK C&C’s CEO, resigned
	April. 5, 2011		18,749,990		23.22	Dal Sup Shim, an Independent Director, disposed 500 shares
	July 8, 2011		18,749,990		23.22	Shin Won Chey, SKC’s Chairman, purchased 500 shares
	August 5, 2011		18,750,490		23.22	Shin Won Chey, SKC’s Chairman, purchased 500 shares
	August 23, 2011		18,751,490		23.22	Shin Won Chey, SKC’s Chairman, purchased 500 shares
	December 21, 2011		20,366,490		25.22	SK Corporation purchased 1,615,000 shares
	January 31, 2012		20,366,290		25.22	Bang Hyung Lee, an officer of an affiliated company with 200 shares, resigned

*	Shares held are the sum of shares held by SK Corporation and its related parties.

3. Distribution of Shares

A. Shareholders with ownership of 5% or more and others


(As of December 31, 2011)		(Unit: shares, %)

Rank	Name (title)	Common share
Rank	Name (title)	Number of shares		Ownership ratio

1	Citibank ADR		21,711,446		26.89

2	SK Corporation		20,363,452		25.22

3	SK Telecom		11,050,712		13.69

Shareholdings under the Employee Stock Ownership Program *			290,155		0.36

*	As of March 31, 2012

B. Shareholder Distribution

(As of December 31, 2011)

(Unit: shares, %)

classification

Number of
shareholders

Ratio (%)

Number of
shares

Ratio (%)

Remarks

Total minority shareholders

40,558

99.98

24,843,976

30.76

—

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

A. Domestic Securities Market


												(Unit: Won, shares)
Types		March 2012		February 2012		January 2012		December 2011		November 2011		October 2011

Common stock	Highest		146,000		145,500		143,000		156,000		165,000		161,500
Common stock	Lowest		131,500		136,000		134,500		145,000		148,000		140,500

Monthly transaction volume			4,037,305		3,970,688		4,221,433		5,442,574		5,958,443		4,319,905

B. Foreign Securities Market


New York Stock Exchange											(Unit: US$, ADR)
Types		March 2012		February 2012		January 2012		December 2011	November 2011		October 2011

Depository Receipt	Highest		14.60		14.45		14.08	15.41		15.99		18.83
Depository Receipt	Lowest		13.51		13.40		12.90	14.14		13.53		15.21
Monthly transaction volume			40,978,400		30,905,000		30,029,400	49,489,960		44,012,672		36,305,704

VIII. EMPLOYEES AND MANAGEMENT COMPENSATION

EMPLOYEES


(As of March 31, 2012)										(Unit: persons, in millions of Won)
Classification	Number of employees							Average service year		Aggregate wage for the quarter ended March 31, 2011		Average wage per person		Remarks
Classification	Regular employees		Contract employees		Others		Total	Average service year		Aggregate wage for the quarter ended March 31, 2011		Average wage per person		Remarks

Male		3,363		40		—	3,403		13.1		64,905		19		—

Female		509		70		—	579		10.7		8,135		14		—


Total		3,872		110		—	3,982		12.7		73,040		18		—

2. Management Compensation

A. Amount Approved at the Shareholders’ Meeting


			(Unit: Won million)
Classification	Number of Directors		Aggregate Amount Approved

Directors		8		12,000

2. Amount Paid


					(Unit: Won million)
Classification	Number of Directors		Aggregate Amount Paid		Average Amount Paid Per Director

Insider Directors		3		8,452		2,817

Independent Directors		1		22		22

Audit Committee Members		4		81		20


Total		8		8,555		1,069

IX. TRANSACTIONS WITH PARTIES WITH INTERESTS

1. Loans to the Largest Shareholder and Related Persons

(As of March 31, 2012)

(Unit: in millions of Won)

Name (Corporate name)

Relationship

Account category

Change details

Accrued
interest

Remarks

Beginning

Increase

Decrease

Ending

SK Wyverns

Affiliated company

Long-term and

short-term loans

1,832

—

1,832

—

2. Transfer of Assets to/from the Largest Shareholder and Other Transactions

A. Investment and Disposition of Investment

None.

B. Transfer of Assets

(Units: in millions of Won)

Name (Corporate Name)

Relationship

Details

Remarks

Transferred
Objects

Purpose of

Transfer

Date of
Transfer

Amount
Transferred
From Largest
Shareholder

Amount
Transferred
to Largest
Shareholder

Encar Network Co., Ltd.

Affiliated Company

Used car sale

Sale of assets

not in use

March 14, 2012

—

Total

—

3. Transactions with Parties with Interests (excluding the Largest Shareholder and Related Persons)

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

(Unit: in millions of Won)

Name (Corporate name)

Relationship

Account category

Change details

Accrued
interest

Remarks

Beginning

Increase

Decrease

Ending

Midus and others

Agency

Long-term and

short-term loans

118,919

48,808

51,956

115,771

—

(Unit: in millions of Won)

Name (Corporate name)

Relationship

Account category

Change details

Accrued
interest

Remarks

Beginning

Increase

Decrease

Ending

Daehan Kanggun BcN Co., Ltd.

Investee

Long-term loans

22,102

—

22,102

—

X. OTHER INFORMATION RELATING TO THE PROTECTION OF INVESTORS

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

A. Status and Progress of Major Management Events

None.

B. Summary Minutes of the General Meeting of Shareholders


Date	Agenda	Resolution

24^th 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 inside directors	Approved (Shin Bae Kim, Young Ho Park)
	• Election of independent directors	Approved (Rak Yong Uhm, Jay Young Chung)
	• Election of independent directors as Audit Committee member	Approved (Jae Ho Cho)

25^th 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 inside directors	Approved (Jae Won Chey, Man Won Jung)
	• Election of independent directors	Approved (Hyun Chin Lim)
	• Election of independent directors as Audit Committee member	Approved (Hyun Chin Lim)

26^th Fiscal Year Meeting of Shareholders (March 12, 2010)	1. Approval of the financial statements for the year ended December 31, 2009	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 inside directors	Approved (Ki Haeng Cho)
	• Election of independent directors	Approved (Dal Sup Shim)
	• Election of independent directors as Audit Committee member	Approved (Dal Sup Shim, Jay Young Chung)

27^th Fiscal Year Meeting of Shareholders (March 11, 2011)	1. Approval of the financial statements for the year ended December 31, 2010	Approved (Cash dividend, Won 8,400 per share)
	2. Approval of Remuneration Limit for Directors	Approved
	3. Amendment to Company Regulation on Executive Compensation	Approved (Won 12 billion)
	4. Election of Directors
	• Election of inside directors	Approved (Sung Min Ha, Jin Woo So)
	• Election of independent directors	Approved (Rak Young Uhm, Jay Young Chung, Jae Ho Cho)
	• Election of independent directors as Audit Committee member	Approved (Jay Young Chung, Jae Ho Cho)

1^st Extraordinary Meeting of Shareholders (August 31, 2011)	1. Approval of the Spin-off Plan	Approved (Spin-off of SK Planet)
	2. Election of Directors	Approved (Jun Ho Kim)

28^th Fiscal Year Meeting of Shareholders (March 23, 2012)	1. Approval of the financial statements for the year ended December 31, 2011	Approved (Cash dividend, Won 8,400 per share)
	2. Amendment to Articles of Incorporation	Approved
	3. Election of Directors
	• Election of inside directors	Approved (Young Tae Kim)
	• Election of inside directors	Approved (Dong Seob Jee)
	• Election of independent directors	Approved (Hyun Chin Lim)
	4. Election of an independent director as Audit Committee member	Approved (Hyun Chin Lim)
	5. Approval of Remuneration Limit for Directors	Approved (Won 12 billion)

2. Contingent Liabilities

[SK Telecom]

A. Material Legal Proceedings

(1) Claim for Copyright License Fees regarding “Coloring” Services

On May 7, 2010, Korea Music Copyright Association (“KOMCA”) filed a lawsuit with the court demanding that the Company pay KOMCA license fees for the Company’s “Coloring” services. The court rendered a judgment against the Company ordering the Company to pay Won 570 million to KOMCA, which was affirmed by the appellate court on October 26, 2011. The Company appealed to the Supreme Court on November 8, 2011. The Company plans to vigorously defend itself in the Supreme Court by supplementing legal analysis relating to the interpretation of legal actions. While the Company does not expect immediate impact on its business and financial condition from the litigation because the judgment amount is Won 570 million and the final outcome of the litigation has not been decided, the Company may be required to pay on-going license fees in the future if it loses in the final judgment.

*	Actual impact on the Company’s business and financial condition from the litigation may be different from the Company’s expectation stated above.

B. Other Matters

(1) Pledged Assets and Covenants

In 2011, SK Broadband, a consolidated subsidiary of the Company, pledged its real estate and short term financial instruments as collateral for one year in connection with the borrowing by Broadband Media, another consolidated subsidiary. As of March 31, 2012, the amount of real estate provided as collateral was as follows: Won 65 billion to Hana Bank, Won 78 billion to IBK Capital and Won 52 billion to Kookmin Bank; the amount of short term financial instruments provided as collateral was as follows: Won 60 billion to Korea Exchange Bank, Won 35 billion to Hana Bank, Won 39 billion to National Agricultural Cooperative Federation and Won 20 billion to Woori Bank.

In addition, in 2011, SK Broadband, a consolidated subsidiary of the Company, pledged its real estate as collateral for one year in connection with the borrowing by Broadband CS, another consolidated subsidiary. As of March 31, 2012, the amount of real estate provided as collateral was Won 16.9 billion to Kookmin Bank.

SK Broadband, a consolidated subsidiary of the Company, has also provided “geun” mortgage amounting to Won 15.3 billion to others, including Ilsan Guksa, on a part of its buildings in connection with the leasing of the buildings.

In 2011, PS & Marketing, a consolidated subsidiary of the Company, entered into a loan agreement to borrow up to Won 60 billion of working capital from Shinhan Bank. In connection with the loan agreement, it pledged Won 78 billion of its inventories to Shinhan Bank as collateral.

As of March 31, 2012, SKY Property Mgmt, Ltd. pledged CNY800 million of its buildings and land-use rights as collateral to Korea Exchange Bank and China Merchants Bank in connection with a long-term borrowing of CNY560 million. In the first quarter of 2012, SKY Property Mgmt, Ltd. newly borrowed long-term loans of US$30 million and HKD 234 million from Standard Chartered Bank (HK) Ltd. and pledged its interests in its subsidiary, Shanghai Fujita Tianshan Housing Development Co., Ltd., as collateral.

(2) Payment Guarantee by the Company

The Company is participating in the tactical aeronautics project of the Defense Acquisition Program Administration of Korea (the “DAPA”), together with Joint Defense Corporation. The Company has guaranteed the payment of Won 4.2 billion that the DAPA has prepaid to Joint Defense Corporation.

[SK Broadband]

A. Material Legal Proceedings

(1) SK Broadband as the Plaintiff


			(Unit: thousand won)

Description of Proceedings	Date of Commencement of Proceedings	Amount of Claim	Status

Claim for Cancellation of Korea Fair Trade Commission’s Penalty Reassessment	September 2009	1,810,000	Pending before Supreme Court

Claim relating to Gangamgu District Office Cable-Burying Project	March 2010	345,271	Pending before Supreme Court

Administrative Proceeding relating to Gangnamgu District Office	April 2010	703,440	Pending before Administrative Court

Claim for Sales Price by Sambo Motors	April 2011	321,200	Pending before Appellate Court

Damages Claims against Golden Young and Others	April 2011	454,267	Pending before District Court

Damages Claim relating to Hyundai Construction	December 2010	561,282	Pending before Appellate Court

Other claims and proceedings	—	240,814


Total	—	4,436,275	—

(2) SK Broadband as the Defendant


				(Unit: thousand won)

Description of Proceedings	Date of Commencement of Proceedings	Amount of Claim		Status

Damage Claim by Sun Technology and One Other	October 2011		1,006,429	Pending before Appellate Court

Claim for Return of Unfair Benefit from One Call	October 2010		471,302	Pending before Appellate Court

Damages Claim from Jin Man Cho and One Other	January 2011		200,000	Pending before Appellate Court

Claim for Commission by i-Media Valley and Five Other Companies	July 2010		313,764	Pending before Appellate Court

Claim for Commission by Vialty and Four Other Companies	November 2010		125,000	Pending before District Court

Damage Claim by On-nuri Co., Ltd.	December 2011		101,000	Pending before District Court

Damage Claim by Mac Telecom and Five Other Companies	January 2012		606,000	Pending before District Court

Other claims and proceedings	—		62,309	—


Total	—		2,885,804	—

The management believes that the final results of the litigations listed above would not have a material impact on the company’s financial statements. In addition, in 2011, SK Broadband partly lost in a litigation relating to the leak of personal information at the district court, which ordered SK Broadband to pay damages of Won 4,469 million (out of the plaintiffs’ claims of Won 24,689 million), and recognized such damage order as other accounts payable.

(3) Broadband Media as the Defendant


Description of Proceedings	Date of Commencement of Proceedings	Amount of Claim		Status

Claim for Commission by i-Media Valley and Five Other Companies	July 2010		300,868	Pending before Appellate Court


Total	—		300,868	—

[SK Communications]

A. Material Legal Proceedings

As of March 31, 2012, the aggregate amount of claim was Won 4,187 million. The management cannot reasonably forecast the outcome of the pending cases.

3. Status of sanctions, etc.

[SK Telecom]

Due to the Company’s ineffective measures taken with respect to phone numbers that are used for sending illegal unsolicited bulk messages, the Korea Communications Commission, on April 8, 2009, ordered the Company to improve its work procedures.

On September 2, 2009, the Korea Communications Commission ordered the Company to improve its work procedures in a case relating to the obstruction of subscribers’ utilization of wireless Internet services. The Company completed the improvement of the procedures in consultation with the Korea Communications Commission by December 2009.

On October 13, 2009, the Korea Communications Commission imposed on the Company a fine of Won 140 million and a newspaper notice order in a case relating to the subscription for mobile telephone services using national identification numbers of the deceased and the Company’s failure to verify the required documents. The Company implemented the improved work procedures to strengthen identification process at the time of subscription for mobile telephone services in January 2010.

On June 10, 2010, the Korea Communications Commission imposed on the Company a fine of Won 2 billion and issued a correction order for hurting subscribers’ interests relating to USIM uses. The Company paid the fine and completed the improvement of the procedures in consultation with the Korea Communications Commission by September 2010.

On September 24, 2010, the Korea Communications Commission imposed on the Company a fine of Won 12.9 billion and issued a correction order for providing discriminatory subsidy to subscribers. The Company paid the fine and completed the improvement of the procedures in consultation with the Korea Communications Commission by January 2011.

On December 2, 2010, the Korea Communications Commission imposed on the Company a fine of Won 6.2 billion and issued a correction order in a case relating to the obstruction of subscribers’ utilization of wireless Internet services. The Company paid the fine and completed the improvement of the procedures in consultation with the Korea Communications Commission by March 2011.

On September 19, 2011, the Korea Communications Commission imposed on the Company a fine of Won 6.86 billion and issued a correction order for providing discriminatory subsidy to subscribers. The Company paid the fine and expects to complete the improvement of the procedures in consultation with the Korea Communications Commission by January 2012.

In addition, on January 21, 2009, the Company was sanctioned for unfair business practices with a fine of Won 1,268 million by the Fair Trade Commission of Korea along with a correctional order of its policy of restricting certain rate plan subscribers from using third party portal contents. The Company has paid the fine and has taken efforts to educate applicable divisions of the issue and to improve the level of the voluntary compliance program to comply with fair trade laws to prevent a repeat of the same violation.

On April 8, 2010, the Company received a correctional order from the Fair Trade Commission of Korea for a violation of the Act on Fair Labeling and Advertising relating to 11^th Street (the Company’s online shopping mall). In response thereto, the Company has been taking efforts to prevent a repetitive violation including thorough pre-review of the advertisement and marketing activities of 11^th Street and appropriate education for relevant employees.

On April 22, 2011, the Company received a correctional order from the Fair Trade Commission of Korea for violation of Article 21 of the Electronic Commerce Act and was imposed a fine of Won 5 million. The Company paid the fine and filed a suit disputing the order of the Fair Trade Commission. The suit is currently pending.

On November 11, 2011, the Company received a correctional order from the Fair Trade Commission of Korea for violation of Article 23 of the Fair Trade Act relating to the transfer of patented technology necessary for the supply of relay facilities. The Company has corrected the procedures before receiving the correctional order.

On March 14, 2012, the Company received a correctional order from the Fair Trade Commission of Korea for an alleged violation of Article 23 of the Fair Trade Act relating to the handset subsidy practice and distribution of handsets and was imposed a fine of Won 20.69 billion. The Company plans to review its legal options after receiving an official statement from the Fair Trade Commission.

On February 6, 2012, the Company received three penalty points and was imposed a fine of Won 3 million from the Korea Exchange for a violation of Article 35 of Korea Exchange’s disclosure rules. The Company paid the fine and has been taking efforts to prevent a repetitive violation.

A Trial of a former director of the Company is pending with respect to the Company’s past transactions.

[SK Broadband]

(1) Violation of Accounting Rules

•

Date: January 20, 2012

•

Subject Company: SK Broadband

•

Sanction: SK Broadband was imposed a fine of Won 54 million from the Korea Communications Commission.

•

Reason and the Relevant Law: Business report for 2010 violated accounting rules under Article 49 of the Telecommunication Business Act.

•

Status of Implementation: Paid the fine.

•

Company’s Plan: Will improve accounting management system.

(2) Violation of the Telecommunication Business Act

•

Date: November 23, 2011

•

Subject Company: SK Broadband

•

Sanction: SK Broadband was imposed a fine of Won 30 million from the Korea Communications Commission.

•

Reason and the Relevant Law: Violated Telecommunication Business Act by allocating “060” number without prior review and charging fees for the service usage.

•

Status of Implementation: Paid the fine, stopped the prohibited practice, improved operating procedures and reported the results.

•

Company’s Plan: Will improve operating procedures.

(3) Violation of the Act on Facilitation of the Use of Information Network and Protection of Information

•

Date: July 14, 2011

•

Subject: SK Broadband and a former officer of SK Broadband

•

Sanction: SK Broadband was imposed a fine of Won 15 million and the former officer was imposed a fine of Won 5 million.

•

Reason and the Relevant Law: Violated Articles 24 and 62 of the Act on Facilitation of the Use of Information Network and Protection of Information by providing subscribers’ personal information to telemarketers without subscribers’ consents.

•

Status of Implementation: Paid the fine.

•

Company’s Plan: Provide education to officers and employees and strengthen internal regulations.

(4) Violation of the Telecommunication Business Act

•

Date: February 21, 2011

•

Subject Company: SK Broadband

•

Sanction: SK Broadband was imposed a correction order and a fine of Won 3.2 billion from the Korea Communications Commission.

•

Reason and the Relevant Law: Improperly discriminated subscribers with respect to the fee reduction in the process of acquiring high-speed Internet subscribers. Violated Article 50 of the Telecommunication Business Act and Article 42 of the Enforcement Decree.

•

Status of Implementation: Paid the fine, stopped the prohibited practice, published the sanction on newspapers, improved operating procedures and amended the terms of services.

•

Company’s Plan: Continue to monitor marketing networks, improve marketing procedures, distribute incentive items directly and reduce incentive items.

(5) Violation of the Act on Facilitation of the Use of Information Network and Protection of Information

•

Date: June 10, 2010

•

Subject Company: SK Broadband

•

Sanction: SK Broadband was imposed a fine of Won 10 million.

•

Reason and the Relevant Law: Violated Articles 49 and 62 of the Act on Facilitation of the Use of Information Network and Protection of Information by providing subscribers’ personal information to telemarketers without subscribers’ consents.

•

Status of Implementation: Paid the fine.

•

Company’s Plan: Provide education to officers and employees and strengthen internal regulations.

[SK Communications]

On July 31, 2008, SK Communications was imposed a fine of Won 125 million by the Fair Trade Commission of Korea in connection with the preparation for the Fair Trade Commission’s field inspection. SK Communications has paid the fine and has taken efforts to prevent a repeat of the same violation, including education of the relevant personnel.

4. Important Matters That Occurred After March 31, 2012

[SK Communications]

SK Communication is pursuing a public sale of its equity shares of Etoos Education (15.58%) and remaining convertible bonds in the principal amount of Won 5 billion, as disclosed on February 24, 2012.

5. Use of Proceeds

A. Use of Proceeds from Public Offerings

(Unit: Won million )

Classification

Closing Date

Proceeds

Use of Proceeds
disclosed in the
Prospectus

Actual Use of

Proceeds

Reasons for
Change

Bonds (series 61-1)

December 27, 2011

110,000

Working Capital

—

Bonds (series 61-2)

December 27, 2011

190,000

Working Capital

—

B. Use of Proceeds from Private Offerings

(Unit: Won million )

Classification

Closing Date

Proceeds

Planned Use of Proceeds

Actual Use of

Proceeds

Reasons for
Change

Convertible Bonds

April 7, 2009

437,673

Refinancing of convertible bonds issued in May 2004

Refinancing and working capital

—

Floating Rate Notes

December 15, 2011

347,088

Refinancing of floating rate notes issued in April 2009

Refinancing and working capital

—

SK TELECOM CO., LTD.

Condensed Consolidated Interim Financial Statements

(Unaudited)

March 31, 2012

(With Independent Auditors’ Review Report Thereon)

Contents


	Page

Independent Auditors’ Review Report		1

Condensed Consolidated Statements of Financial Position		3

Condensed Consolidated Statements of Income		5

Condensed Consolidated Statements of Comprehensive Income		6

Condensed Consolidated Statements of Changes in Equity		7

Condensed Consolidated Statements of Cash Flows		9

Notes to the Condensed Consolidated Interim Financial Statements		11

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To The Board of Directors and Shareholders

SK Telecom Co., Ltd.:

Reviewed financial statements

We have reviewed the accompanying condensed consolidated interim financial statements of SK Telecom Co., Ltd. and its subsidiaries (the “Group”), expressed in Korean won, which comprise the condensed consolidated statement of financial position as of March 31, 2012, the related condensed consolidated statements of income, comprehensive income, changes in equity and cash flows for the three-month period ended March 31, 2012 and notes, comprising a summary of significant accounting policies and other explanatory information.

We did not review the financial statements of SK Broadband Co., Ltd., a domestic subsidiary, two other domestic subsidiaries and an associate, whose financial statements constitute 25.5% of consolidated total assets as of March 31, 2012 and 15.2% of consolidated total operating revenue for the three-month period ended March 31, 2012. Those financial statements were reviewed by other auditors whose reports have been furnished to us, and our report, insofar as it relates to the amounts included for those subsidiaries, is based solely on the reports of those other auditors.

Management’s responsibility for the Condensed Interim Financial Statements

Management is responsible for the preparation and fair presentation of these condensed consolidated interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed consolidated interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to issue a report on these condensed consolidated interim financial statements based on our review.

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

Conclusion

Based on our review and the reports of other auditors, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements referred to above are not presented fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

The accompanying condensed consolidated interim financial statements as of March 31, 2012 and December 31, 2011 and for the three-month periods ended March 31, 2012 and 2011 have been translated into United States dollars solely for the convenience of the reader. We have reviewed the translation and, in our opinion, the condensed consolidated interim financial statements expressed in Korean won have been translated into dollars on the basis set forth in note 2 to the condensed consolidated interim financial statements.

Other Considerations

The condensed consolidated statements of income, comprehensive income, changes in equity and cash flows of the Group for the three-month period ended March 31, 2011 were reviewed by other auditors and their report thereon, dated May 27, 2011, stated that nothing has come to their attention that causes them to believe that the condensed consolidated interim financial statements referred to above were not presented fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

In addition, the condensed consolidated statement of financial position of the Group as of December 31, 2011, and the related condensed consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors and their report thereon, dated March 13, 2012, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2011, presented for comparative purposes, is not different from that audited by other auditors in all material respects.

The procedures and practices utilized in the Republic of Korea to review such consolidated interim financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying condensed consolidated financial statements are for use by those knowledgeable about Korean auditing standards and their application in practice.

KPMG Samjong Accounting Corp.

Seoul, Korea

May 16, 2012

This report is effective as of May 16, 2012, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Financial Position

As of March 31, 2012 and December 31, 2011


			Korean won				Translation into U.S. dollars (note 2)
	Note		March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
			(In millions)				(In thousands)
Assets
Current Assets:
Cash and cash equivalents		28,29	(Won)	1,769,391		1,650,794	$	1,563,896		1,459,072
Short-term financial instruments		5,28,29,31		567,513		979,564		501,603		865,798
Short-term investment securities		8,28,29		163,713		94,829		144,700		83,815
Accounts receivable - trade, net		6,28,29,30		1,744,498		1,823,170		1,541,893		1,611,428
Short-term loans, net		6,28,29,30		96,802		100,429		85,559		88,765
Accounts receivable - other, net		6,28,29,30		741,299		908,836		655,205		803,285
Prepaid expenses				107,440		118,200		94,962		104,472
Derivative financial assets		19,28,29		70,386		148,038		62,211		130,845
Inventories, net		7,31		184,070		219,590		162,693		194,087
Advanced payments and other		6,8,28,29,30		110,619		74,029		97,771		65,432

Total Current Assets				5,555,731		6,117,479		4,910,493		5,406,999


Non-Current Assets:
Long-term financial instruments		5,28,29,31		7,631		7,628		6,745		6,742
Long-term investment securities		8,28,29		1,466,735		1,537,945		1,296,389		1,359,329
Investments in associates		9		4,685,822		1,384,605		4,141,614		1,223,798
Property and equipment, net		10,30,31		8,696,456		9,030,998		7,686,455		7,982,144
Investment property		11		265,085		271,086		234,298		239,602
Goodwill		12		1,740,203		1,749,933		1,538,097		1,546,697
Intangible assets		13		2,940,927		2,995,803		2,599,370		2,647,873
Long-term loans, net		6,28,29,30		91,258		95,565		80,660		84,466
Long-term accounts receivable – other		6,28,29		2,837		5,393		2,508		4,767
Long-term prepaid expenses		31		556,623		567,762		491,977		501,823
Guarantee deposits		6,28,29,30		234,585		245,218		207,340		216,739
Long-term derivative financial assets		19,28,29		80,488		105,915		71,140		93,614
Deferred tax assets		26		199,278		227,578		176,134		201,147
Other non-current assets		6,28,29		23,242		23,128		20,543		20,442

Total Non-Current Assets				20,991,170		18,248,557		18,553,270		16,129,183

Total Assets			(Won)	26,546,901		24,366,036	$	23,463,763		21,536,182

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Financial Position, Continued

As of March 31, 2012 and December 31, 2011


			Korean won						Translation into U.S. dollars (note 2)
	Note		March 31, 2012			December 31, 2011			March 31, 2012			December 31, 2011
			(In millions)						(In thousands)
Liabilities and Equity
Current Liabilities:
Short-term borrowings		14,28,29	(Won)	1,139,571			700,713		$	1,007,222			619,333
Accounts payable - trade		28,29,30		148,816			195,391			131,532			172,698
Accounts payable - other		28,29,30		1,817,571			1,507,877			1,606,480			1,332,754
Withholdings		28,29		627,979			496,860			555,046			439,155
Accrued expenses		28,29,31		864,786			744,673			764,350			658,187
Income tax payable		26		347,662			293,725			307,285			259,612
Unearned revenue				275,873			290,791			243,834			257,019
Derivative financial liabilities		19,28,29		5,673			4,645			5,014			4,106
Provisions		16		632,736			657,198			559,251			580,872
Current portion of long-term debt, net		14,15,17,28,29		606,889			1,662,841			536,405			1,469,720
Advanced receipt and other		30		115,024			118,876			101,665			105,068

Total Current Liabilities				6,582,580			6,673,590			5,818,084			5,898,524


Non-Current Liabilities:
Debentures, net		14,28,29		3,942,317			3,229,009			3,484,459			2,853,994
Long-term borrowings		14,28,29		2,373,127			323,852			2,097,514			286,240
Long-term payables - other		15,28,29,30		710,310			847,496			627,815			749,068
Long-term unearned revenue				200,837			212,172			177,512			187,530
Finance lease liabilities		17,28,29		36,553			41,940			32,308			37,069
Defined benefit obligation		18		93,135			85,941			82,319			75,960
Long-term provisions		16		143,251			142,361			126,614			125,827
Other non-current liabilities		28,29,30		72,801			76,966			64,345			68,029

Total Non-Current Liabilities				7,572,331			4,959,737			6,692,886			4,383,717


Total Liabilities				14,154,911			11,633,327			12,510,970			10,282,241


Equity
Share capital		1,20		44,639			44,639			39,455			39,455
Share premium		20,21		(290,688	)		(285,347	)		(256,928	)		(252,207	)
Retained earnings		22		11,359,342			11,642,525			10,040,076			10,290,371
Reserves		23		229,440			260,064			202,793			229,860

Equity attributable to owners of the Parent Company				11,342,733			11,661,881			10,025,396			10,307,478
Non-controlling interests				1,049,257			1,070,828			927,397			946,462

Total Equity				12,391,990			12,732,709			10,952,793			11,253,941


Total Liabilities and Equity			(Won)	26,546,901			24,366,036		$	23,463,763			21,536,182

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Income

For the three-month periods ended March 31, 2012 and 2011


			Korean won						Translation into U.S. dollars (note 2)
	Note		2012			2011			2012			2011
			(In millions except for per share data)						(In thousands except for per share data)
Operating revenue:		4,30
Revenue			(Won)	3,969,973			3,901,012		$	3,508,903			3,447,951
Other operating income		24		15,596			7,849			13,785			6,938

Sub-total				3,985,569			3,908,861			3,522,688			3,454,889


Operating expense:		30
Labor cost				355,533			313,585			314,241			277,166
Commissions paid				1,418,911			1,360,036			1,254,120			1,202,082
Depreciation and amortization				588,919			575,146			520,523			508,349
Network interconnection				296,151			318,741			261,757			281,723
Leased line				118,935			113,894			105,122			100,667
Advertising				69,903			55,275			61,784			48,856
Rent				106,876			99,271			94,464			87,742
Cost of goods sold				271,436			186,474			239,912			164,817
Other operating expenses		24		306,589			272,101			270,981			240,498

Sub-total				3,533,253			3,294,523			3,122,904			2,911,900


Operating income		4		452,316			614,338			399,784			542,989

Finance income		25		68,205			268,851			60,284			237,627
Finance costs		25		(110,954	)		(103,477	)		(98,068	)		(91,459	)
Losses related to investments in affiliates, net		1,9		(27,583	)		(10,811	)		(24,379	)		(9,556	)

Income before income tax				381,984			768,901			337,621			679,601

Income tax expense		26		81,603			231,633			72,126			204,731

Net income for the period		4	(Won)	300,381			537,268		$	265,495			474,870

Attributable to :
Owners of the Parent Company				306,424			542,534			270,836			479,525
Non-controlling interests				(6,043	)		(5,266	)		(5,341	)		(4,655	)

Basic earnings per share		27	(Won)	4,397			7,631		$	3.89			6.74

Diluted earnings per share		27	(Won)	4,312			7,302		$	3.81			6.45

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Comprehensive Income

For the three-month periods ended March 31, 2012 and 2011


			Korean won						Translation into U.S. dollars (note 2)
	Note		2012			2011			2012			2011
			(In millions)						(In thousands)
Net income for the period			(Won)	300,381			537,268		$	265,495			474,870

Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets		23		(14,232	)		(85,330	)		(12,579	)		(75,420	)
Net change in other comprehensive income of investments in associates		9,23		6,435			(3,808	)		5,688			(3,365	)
Gains (losses) on valuation of derivatives		19,23		(17,981	)		38,570			(15,892	)		34,090
Foreign currency translation differences for foreign operations		23		(10,319	)		(13,408	)		(9,121	)		(11,851	)
Actuarial losses on defined benefit obligations		18,22		(3,691	)		(3,593	)		(3,263	)		(3,175	)

				(39,788	)		(67,569	)		(35,167	)		(59,721	)

Total comprehensive income			(Won)	260,593			469,699		$	230,328			415,149

Total Comprehensive Income Attributable to:
Owners of the Parent Company				271,631			477,908			240,084			422,404
Non-controlling interests				(11,038	)		(8,209	)		(9,756	)		(7,255	)

			(Won)	260,593			469,699			230,328			415,149

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Changes in Equity

For the three-month periods ended March 31, 2012 and 2011

(In millions of won)


	Controlling Interest
	Share capital		Share premium			Retained earnings			Reserves			Sub-total			Non-controlling interest			Total equity
Balance, January 1, 2011	(Won)	44,639		(78,953	)		10,721,249			643,056			11,329,991			1,078,008			12,407,999
Cash dividends		—		—			(597,198	)		—			(597,198	)		—			(597,198	)
Total comprehensive income
Net income		—		—			542,534			—			542,534			(5,266	)		537,268
Other comprehensive loss		—		—			(3,810	)		(60,817	)		(64,627	)		(2,942	)		(67,569	)
Changes in subsidiaries		—		6,452			—			—			6,452			65			6,517

Balance, March 31, 2011	(Won)	44,639		(72,501	)		10,662,775			582,239			11,217,152			1,069,865			12,287,017


Balance, January 1, 2012		44,639		(285,347	)		11,642,525			260,064			11,661,881			1,070,828			12,732,709
Cash dividends		—		—			(585,438	)		—			(585,438	)		(1,956	)		(587,394	)
Total comprehensive income
Net income		—		—			306,424			—			306,424			(6,043	)		300,381
Other comprehensive loss		—		—			(4,169	)		(30,624	)		(34,793	)		(4,995	)		(39,788	)
Changes in subsidiaries		—		(5,341	)		—			—			(5,341	)		(8,577	)		(13,918	)

Balance, March 31, 2012	(Won)	44,639		(290,688	)		11,359,342			229,440			11,342,733			1,049,257			12,391,990

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2012 and 2011

(In thousands of U.S. dollars) (note 2)


	Controlling Interest
	Share capital		Share premium			Retained earnings			Reserves			Sub-total			Non-controlling interest			Total equity
Balance, January 1, 2011	$	39,455		(69,783	)		9,476,091			568,371			10,014,134			952,809			10,966,943
Cash dividends		—		—			(527,840	)		—			(527,840	)		—			(527,840	)
Total comprehensive income
Net income		—		—			479,525			—			479,525			(4,655	)		474,870
Other comprehensive loss		—		—			(3,367	)		(53,754	)		(57,121	)		(2,600	)		(59,721	)
Changes in subsidiaries		—		5,702			—			—			5,702			58			5,760

Balance, March 31, 2011	$	39,455		(64,081	)		9,424,409			514,617			9,914,400			945,612			10,860,012


Balance, January 1, 2012		39,455		(252,207	)		10,290,371			229,860			10,307,479			946,462			11,253,941
Cash dividends		—		—			(517,446	)		—			(517,446	)		(1,729	)		(519,175	)
Total comprehensive income
Net income		—		—			270,836			—			270,836			(5,341	)		265,495
Other comprehensive loss		—		—			(3,685	)		(27,067	)		(30,752	)		(4,415	)		(35,167	)
Changes in subsidiaries		—		(4,721	)		—			—			(4,721	)		(7,580	)		(12,301	)

Balance, March 31, 2012	$	39,455		(256,928	)		10,040,076			202,793			10,025,396			927,397			10,952,793

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Cash Flows

For the three-month periods ended March 31, 2012 and 2011


			Korean won						Translation into U.S. dollars (note 2)
	Note		2012			2011			2012			2011
			(In millions)						(In thousands)
Cash flows from operating activities:
Cash generated from operating activities
Net income for the period			(Won)	300,381			537,268		$	265,495			474,870
Adjustments for income and expenses		32		825,200			724,483			729,362			640,342
Changes in assets and liabilities related to operating activities		32		144,288			297,982			127,530			263,375

Sub-total				1,269,869			1,559,733			1,122,387			1,378,587
Interest received				30,335			40,880			26,812			36,132
Dividends received				22,333			26,473			19,740			23,399
Interest paid				(97,361	)		(101,287	)		(86,054	)		(89,524	)
Income tax paid				(4,008	)		(19,220	)		(3,543	)		(16,988	)

Net cash provided by operating activities				1,221,168			1,506,579			1,079,342			1,331,606


Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net				403,106			10,608			356,289			9,376
Decrease in short-term investment securities, net				—			65,000			—			57,451
Collection of short-term loans				54,153			48,962			47,864			43,276
Proceeds from disposal of long-term investment securities				28,780			220,379			25,438			194,784
Proceeds from disposal of investments in associates				1,850			2,257			1,635			1,995
Proceeds from disposal of property and equipment				2,137			2,445			1,889			2,161
Proceeds from disposal of intangible assets				1,792			596			1,584			526
Collection of long-term loans				3,416			5,514			3,019			4,873
Decrease of deposits				3,378			—			2,985			—
Proceeds from disposal of other non-current assets				41			145			37			129
Proceeds from disposal of a subsidiary				88,602			—			78,312			—

Sub-total				587,255			355,906			519,052			314,571
Cash outflows for investing activities:
Increase in short-term investment securities, net				45,000			—			39,774			—
Increase in short-term loans				49,466			88,303			43,721			78,048
Increase in long-term loans				793			2,086			701			1,844
Increase in long-term financial instruments, net				3			—			3			—
Acquisition of long-term investment securities				16,228			232,485			14,344			205,484
Acquisition of investments in associates				3,068,050			29,411			2,711,729			25,995
Acquisition of property and equipment				530,977			285,856			469,310			252,657
Acquisition of intangible assets				32,706			17,040			28,907			15,060
Increase in deposits				6,375			—			5,634			—
Increase in other non-current assets				—			—			—			—
Decrease in cash due to the exclusion from scope of consolidation				11,867			—			10,489			—

Sub-total				3,761,465			655,181			3,324,611			579,088

Net cash used in investing activities			(Won)	(3,174,210	)		(299,275	)	$	(2,805,559	)		(264,517	)

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Condensed Consolidated Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011


		Korean won						Translation into U.S. dollars (note 2)
	Note	2012			2011			2012			2011
		(In millions)						(In thousands)
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings		(Won)	642,989			407,951		$	568,313			360,572
Issuance of debentures			318,696			49,798			281,683			44,014
Proceeds from long-term borrowings			2,054,944			12,162			1,816,284			10,750
Cash inflows from settlement of derivatives			1,517			—			1,340			—
Increase in cash from the consolidated capital transaction			—			7,589			—			6,708

Sub-total			3,018,146			477,500			2,667,620			422,044
Cash outflows for financing activities:
Repayment of short-term borrowings			202,317			250,717			178,820			221,599
Repayment of current portion of long-term debt			95,446			180,239			84,361			159,306
Repayment of debentures			634,398			502,160			560,719			443,839
Repayment of long-term borrowings			2,693			7,458			2,381			6,592
Cash outflows from settlement of derivatives			3,157			15,690			2,790			13,869
Payment of finance lease liabilities			4,993			—			4,413			—
Distribution to non-controlling interests			1,025			—			906			—

Sub-total			944,029			956,264			834,390			845,205

Net cash provided by (used in) financing activities			2,074,117			(478,764	)		1,833,230			(423,161	)


Net increase in cash and cash equivalents			121,075			728,540			107,013			643,928
Cash and cash equivalents at beginning of the period			1,650,794			659,405			1,459,072			582,822
Effects of exchange rate changes on cash and cash equivalents			(2,478	)		(2,919	)		(2,189	)		(2,580	)

Cash and cash equivalents at end of the period		(Won)	1,769,391			1,385,026		$	1,563,896			1,224,170

See accompanying notes to the condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

1.	Reporting Entity

(1) General

SK Telecom Co., Ltd. (“the Parent Company”) was incorporated in March 1984 under the laws of Republic of Korea (“Korea”) to engage in providing cellular telephone communication services in Korea. The Parent Company mainly provides wireless telecommunications in Korea. The Parent Company’s common shares and depositary receipts (DRs) are listed on the Stock Market of Korea Exchange, the New York Stock Exchange and the London Stock Exchange. As of March 31, 2012, the Parent Company’s total issued shares are held by the following:


	Number of shares		Percentage of total shares issued (%)
SK Holdings Co., Ltd.		20,363,452		25.22
Tradewinds Global Investors, LLC		4,050,518		5.02
POSCO Corp.		2,341,569		2.90
Institutional investors and other minority stockholders		42,939,460		53.17
Treasury stock		11,050,712		13.69

Total number of shares		80,745,711		100.00

These condensed consolidated interim financial statements comprise the Parent Company and its subsidiaries (together referred to as the “Group” and individuals as “Group entities”).

(2) List of subsidiaries

The list of subsidiaries as of March 31, 2012 and December 31, 2011 is as follows:

Ownership(%)

Subsidiary

Location

Primary business

March 31,
2012

December 31,
2011

SK Telink Co., Ltd.

Korea

Telecommunication service

83.5

SK Communications Co., Ltd.

Korea

Internet website services

64.6

PAXNet Co., Ltd.

Korea

Internet website services

59.7

Loen Entertainment, Inc.

Korea

Release of music disc

67.6

Stonebridge Cinema Fund

Korea

Investment association

57.0

Ntreev Soft Co., Ltd.

Korea

Game software production

—

63.7

Commerce Planet Co., Ltd.

Korea

Online shopping mall
operation agency

100.0

SK Broadband Co., Ltd.

Korea

Telecommunication
services

50.6

Broadband D&M Co., Ltd.

Korea

Base station maintenance
service

100.0

Broadband Media Co., Ltd.

Korea

Multimedia TV portal
service

100.0

Broadband CS Co., Ltd.

Korea

Customer Q&A and
Service

100.0

K-net Culture and Contents Venture Fund

Korea

Investment association

59.0

Benex Focus Limited Partnership II

Korea

Investment association

66.7

Open Innovation Fund

Korea

Investment association

98.9

PS&Marketing Corporation

Korea

Communications device
retail business

100.0

Service Ace Co., Ltd.

Korea

Customer center
management service

100.0

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

1.	Reporting Entity, Continued

(2) List of subsidiaries, Continued

Ownership(%)

Subsidiary

Location

Primary business

March 31,
2012

December 31,
2011

Service Top Co., Ltd.

Korea

Customer center management service

100.0

Network O&S Co., Ltd.

Korea

Base station maintenance service

100.0

BNCP Co., Ltd.

Korea

Internet website services

100.0

Service-In Co., Ltd.

Korea

Database & on-line information service

100.0

SK Planet Co., Ltd.

Korea

Telecommunication service and new media business

100.0

SK Telecom China Holdings Co., Ltd.

China

Equity investment

100.0

SKY Property Mgmt. Ltd.

China

Real Estate Investment

60.0

Shenzhen E-eye High Tech Co., Ltd.

China

Manufacturing

65.5

SK China Real Estate Co., Ltd.

Hong Kong

Real Estate Investment

99.4

SKT Vietnam PTE. Ltd.

Singapore

Telecommunication service

73.3

SKT Americas, Inc.

USA

Information gathering and consulting

100.0

YTK Investment Ltd.

Cayman

Investment Association

100.0

Atlas Investment

Cayman

Investment Association

100.0

Technology Innovation Partners, LP

Cayman

Investment Association

100.0

SK Telecom China Fund I L.P.

Cayman

Investment Association

100.0

In accordance with the accounting policy relating to the scope of consolidation, small-sized subsidiaries including IM Shopping Inc. were excluded from the list of subsidiaries as the effects on the financial statements are not material considering both individual and overall quantitative and qualitative effects, although the Company has ownership interests of more than 50% on those subsidiaries.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

1.	Reporting Entity, Continued

(3) Financial information of subsidiaries

Financial information of subsidiaries as of and for the three-month period ended March 31, 2012 is as follows:


(In millions of won)
Subsidiary	Total assets		Total liabilities		Total equity			Revenue		Net income (loss)
SK Telink Co., Ltd.	(Won)	408,480		214,669		193,811			87,213		5,211
SK Communications Co., Ltd.		315,501		86,634		228,867			51,903		(4,663	)
PAXNet Co., Ltd.		33,820		11,199		22,621			9,464		121
Loen Entertainment, Inc.		167,057		55,734		111,323			43,992		6,990
Stonebridge Cinema Fund		20,862		190		20,672			53		2,665
Commerce Planet Co., Ltd.		35,362		36,765		(1,403	)		12,615		(126	)
SK Broadband Co., Ltd.		2,939,424		1,563,454		1,375,970			552,668		5,887
Broadband D&M Co., Ltd.		11,566		6,805		4,761			10,065		319
Broadband Media Co., Ltd.		76,973		349,590		(272,617	)		17,895		(5,787	)
Broadband CS Co., Ltd.		7,101		18,675		(11,574	)		18,764		180
K-net Culture and Contents Venture Fund		45,306		—		45,306			—		(235	)
Benex Focus Limited Partnership II		21,453		249		21,204			—		(377	)
Open Innovation Fund		44,483		383		44,100			—		(184	)
PS&Marketing Corporation		288,497		149,505		138,992			321,041		(6,051	)
Service Ace Co., Ltd.		42,579		17,953		24,626			35,301		2,884
Service Top Co., Ltd.		35,829		20,768		15,061			33,759		1,323
Network O&S Co., Ltd.		42,315		21,426		20,889			35,688		1,786
BNCP Co., Ltd.		27,977		9,857		18,120			8,867		886
Service-In Co., Ltd.		3,147		682		2,465			2,487		(22	)
SK Planet Co., Ltd.		1,558,494		301,754		1,256,740			244,583		2,913
SK Telecom China Holdings Co., Ltd.		34,546		1,233		33,313			5,521		233
SKY Property Mgmt. Ltd.(*1)		812,058		314,432		497,626			15,505		605
Shenzhen E-eye High Tech Co., Ltd.		23,017		2,147		20,870			1,929		1,262
SKT Vietnam PTE. Ltd.		41,312		9,580		31,732			—		(595	)
SKT Americas, Inc.		36,481		846		35,635			2,536		(5,238	)
YTK Investment Ltd.		50,530		—		50,530			—		—
Atlas Investment(*2)		49,143		672		48,471			—		(964	)

(*1)	The financial information of Sky Property Mgmt. Ltd. includes the financial information of SK China Real Estate Co., Ltd., a subsidiary of Sky Property Mgmt. Ltd.

(*2)	The financial information of Atlas Investment includes financial information of Technology Innovation Partners, L.P. and SK Telecom China Fund I L.P., subsidiaries of Atlas Investment.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

1.	Reporting Entity, Continued

(3) Financial information of subsidiaries, Continued

Financial information of subsidiaries as of and for the year ended December 31, 2011 is as follows:


(In millions of won)
Subsidiary	Total assets		Total liabilities		Total equity			Revenue		Net income (loss)
SK Telink Co., Ltd.	(Won)	420,829		228,687		192,142			419,131		35,269
SK Communications Co., Ltd.		319,948		84,282		235,666			260,573		(5,041	)
PAXNet Co., Ltd.		33,949		11,461		22,488			33,004		(2,347	)
Loen Entertainment, Inc.		157,104		48,386		108,718			167,273		21,398
Stonebridge Cinema Fund		18,506		196		18,310			21		1,069
Ntreev Soft Co., Ltd.		37,529		17,304		20,225			56,029		8,707
Commerce Planet Co., Ltd.		49,729		51,057		(1,328	)		75,038		(556	)
SK Broadband Co., Ltd.		3,318,699		1,945,825		1,372,874			2,285,845		19,272
Broadband D&M Co., Ltd.		11,872		7,399		4,473			46,433		(49	)
Broadband Media Co., Ltd.		89,915		356,816		(266,901	)		66,526		(32,214	)
Broadband CS Co., Ltd.		6,948		18,744		(11,796	)		74,104		63
K-net Culture and Contents Venture Fund		48,057		16		48,041			—		(113	)
Benex Focus Limited Partnership II		21,663		285		21,378			—		(10,358	)
Open Innovation Fund		44,716		432		44,284			—		(427	)
PS&Marketing Corporation		289,062		143,883		145,179			1,078,925		(31,820	)
Service Ace Co., Ltd.		43,447		21,669		21,778			130,102		1,365
Service Top Co., Ltd.		37,165		23,255		13,910			123,366		1,829
Network O&S Co., Ltd.		80,249		61,555		18,694			199,653		5,646
BNCP Co., Ltd.		28,631		11,397		17,234			17,860		1,877
Service-In Co., Ltd.		3,247		759		2,488			6,225		(12	)
SK Planet Co., Ltd.		1,677,730		423,903		1,253,827			279,466		11,014
SK Telecom China Holdings Co., Ltd.		36,810		2,442		34,368			26,944		(232	)
SKY Property Mgmt. Ltd.(*1)		820,639		317,038		503,601			51,204		6,386
Shenzhen E-eye High Tech Co., Ltd.		23,569		3,744		19,825			14,703		2,007
SKT Vietnam PTE. Ltd.		42,539		9,769		32,770			5,519		205
SKT Americas, Inc.		42,681		1,280		41,401			18,468		(14,604	)
YTK Investment Ltd.		51,218		—		51,218			—		—
Atlas Investment(*2)		50,643		530		50,113			—		(2,056	)

(*1)	The financial information of Sky Property Mgmt. Ltd. includes the financial information of SK China Real Estate Co., Ltd., a subsidiary of Sky Property Mgmt. Ltd.

(*2)	The financial information of Atlas Investment includes financial information of Technology Innovation Partners, L.P. and SK Telecom China Fund I L.P., subsidiaries of Atlas Investment.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

1.	Reporting Entity, Continued

(4) Changes in subsidiaries

There are no subsidiaries that were newly acquired during the three-month period ended March 31, 2012 and the list of subsidiary that is newly excluded during the same period is as follows:


Subsidiary		Reason
Ntreev Soft Co., Ltd.		The Parent Company sold its investment during the period.

The Parent Company sold 2,064,970 shares (ownership interest of 63.7%) of investment in the above subsidiary to NCsoft Corporation and recognized gain on disposal of (Won) 66,006 million during the three- month period ended March 31, 2012.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

2.	Basis of Preparation

The accompanying consolidated financial statements are stated in Korean won, the functional currency of the Parent Company and the currency of the primary economic environment in which the Group 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 (Won)1,131.40 to USD 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 three-month period ended March 31, 2012. Such translations into U.S. dollars do not comply with K-IFRS and should not be construed as representations that the Korean won amounts could be converted into U.S. dollars at that or any other rate.

(1) Statement of compliance

These condensed consolidated interim financial statements were prepared in accordance with K-IFRS No. 1034 Interim Financial Reporting. They do not include all of the disclosures required for full annual financial statements.

(2) Use of estimates and judgments

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

In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as of and for the year ended December 31, 2011.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

3.	Significant Accounting Policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as of and for the year ended December 31, 2011.

4.	Operating Segments

The Group’s segments are classified at the business unit level, at which the Group generates separately identifiable revenue and costs, and the related information is reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The Group’s reportable segments are: 1) cellular services, which include cellular voice service, wireless data service and wireless internet services, 2) fixed-line telecommunication services, which include telephone services, internet services, and leased line services and 3) other, which include the Group’s Internet portal services, game development and other operations.

(1) Details of the segments as of and for the three-month period ended March 31, 2012 are as follows:


(In millions of won)
	Cellular services		Fixed-line Telecommunication services			Other			Subtotal		Consolidation adjustments			Consolidated amount
Total sales	(Won)	3,442,512		690,665			400,488			4,533,665		(548,096	)		3,985,569
Internal sales		219,596		154,669			173,831			548,096		(548,096	)		—
External sales		3,222,916		535,996			226,657			3,985,569		—			3,985,569
Operating income (loss)		459,433		(1,342	)		(5,775	)		452,316		—			452,316
Net income (loss)		319,102		(18,476	)		(245	)		300,381		—			300,381
Total assets		23,537,231		3,442,233			3,294,060			30,273,524		(3,726,623	)		26,546,901
Total liabilities		11,642,535		2,152,591			819,822			14,614,948		(460,037	)		14,154,911

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(2) Details of the segments as of and for the three-month period ended March 31, 2011 are as follows:


(In millions of won)
	Cellular services		Fixed-line Telecommunication services			Other		Subtotal		Consolidation adjustments			Consolidated amount
Total sales	(Won)	3,433,060		666,566			154,456		4,254,082		(345,221	)		3,908,861
Internal sales		198,386		123,403			23,432		345,221		(345,221	)		—
External sales		3,234,674		543,163			131,024		3,908,861		—			3,908,861
Operating income		595,952		7,235			11,151		614,338		—			614,338
Net income (loss)		550,772		(19,428	)		5,924		537,268		—			537,268
Total assets		19,959,640		3,529,803			1,536,786		25,026,229		(2,089,010	)		22,937,219
Total liabilities		8,242,458		2,246,844			369,500		10,858,802		(208,600	)		10,650,202

The Group principally operates wireless and fixed-line business in its domestic market in Korea, therefore does not generate geographical information.

5.	Restricted Deposits

Deposits which are restricted in use as of March 31, 2012 and December 31, 2011 are summarized as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Short-term financial instruments(*1)	(Won)	232,903		232,462
Long-term financial instruments(*2)		7,589		7,589

	(Won)	240,492		240,051

(*1)	Short-term financial instruments include financial instruments restricted in use in relation to the various charitable contributions and payment guarantee for borrowings which are non-cancellable until maturity.

(*2)	Long-term financial instruments include charitable contributions which are non-cancellable until maturity.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

6.	Trade and Other Receivables

(1) Details of trade and other receivables as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012
	Gross amount		Allowances for impairment			Carrying amount
Current assets:
Accounts receivable - trade	(Won)	1,986,825		(242,327	)		1,744,498
Short-term loans		98,789		(1,987	)		96,802
Accounts receivable - other		804,216		(62,917	)		741,299
Accrued income		27,706		(142	)		27,564
Others		954		—			954

		2,918,490		(307,373	)		2,611,117
Non-current assets:
Long-term loans		122,108		(30,849	)		91,258
Long-term accounts receivable - other		2,837		—			2,837
Guarantee deposits		234,584		—			234,585
Long-term accounts receivable - trade		12,989		—			12,989

		372,518		(30,849	)		341,669

Total	(Won)	3,291,008		(338,222	)		2,952,786

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

6.	Trade and Other Receivables, Continued


(In millions of won)
	December 31, 2011
	Gross amount		Allowances for impairment			Carrying amount
Current assets:
Accounts receivable - trade	(Won)	2,063,611		(240,441	)		1,823,170
Short-term loans		102,693		(2,264	)		100,429
Accounts receivable - other		953,821		(44,985	)		908,836
Accrued income		21,989		(142	)		21,847
Others		462		—			462

		3,142,576		(287,832	)		2,854,744
Non-current assets:
Long-term loans		126,553		(30,988	)		95,565
Long-term accounts receivable - other		5,393		—			5,393
Guarantee deposits		245,218		—			245,218
Long-term accounts receivable - trade		12,471		—			12,471

		389,635		(30,988	)		358,647

Total	(Won)	3,532,211		(318,820	)		3,213,391

(2)

The movement in allowance for doubtful accounts in respect of trade and other receivables during the three-month periods ended March 31, 2012 and 2011 was as follows:


(In millions of won)
	For the three-month period ended
	March 31, 2012			March 31, 2011
Balance at January, 1	(Won)	318,820			327,382
Increase of bad debt		26,944			20,933
Reversal of allowance for doubtful accounts		(5,654	)		(1,305	)
Write-off		(4,806	)		(174	)
Others(*)		2,918			(213	)

Balance at March, 31	(Won)	338,222			346,623

(*)	Others include collection of receivables written-off, net exchange difference and changes in consolidation scope.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(3)

Details of trade and other receivables, overdue but not impaired, and impaired accounts receivable as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012						December 31, 2011
	Accounts receivable - trade			Other receivables			Accounts receivable - trade			Other receivables
Accounts receivable	(Won)	1,382,415			901,861			1,417,574			1,287,607
Overdue but not impaired accounts receivable		64,723			4,862			34,030			32,144
Impaired accounts receivable		552,676			384,471			624,478			136,378

		1,999,814			1,291,194			2,076,082			1,456,129
Allowance for doubtful accounts		(242,327	)		(95,895	)		(240,441	)		(78,379	)

	(Won)	1,757,487			1,195,299			1,835,641			1,377,750

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

6.	Trade and Other Receivables, Continued

The Group establishes allowance for doubtful accounts based on the likelihood of recoverability of accounts receivable based on the aging of accounts receivables at the end of the period, past customer default experience and their credit status, and economic and industrial factors.

(4)

The aging of overdue but not impaired accounts receivable as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012				December 31, 2011
	Accounts receivable - trade		Accounts receivable - other		Accounts receivable - trade		Accounts receivable - other
Less than 1 month	(Won)	20,486		1,228		9,125		15,384
1 ~ 3 months		13,664		370		8,063		3,147
3 ~ 6 months		13,691		2,154		4,124		713
More than 6 months		16,882		1,110		12,718		12,900

	(Won)	64,723		4,862		34,030		32,144

7.	Inventories

Details of Inventories as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012							December 31, 2011
	Acquisition cost		Write-down of inventory			Carrying amount		Acquisition cost		Write-down of inventory			Carrying amount
Merchandise	(Won)	179,685		(3,543	)		176,142		216,452		(4,551	)		211,901
Finished goods		3,506		(508	)		2,998		3,371		(547	)		2,824
Work in process		603		—			603		286		—			286
Raw materials and supplies		4,381		(54	)		4,327		4,630		(51	)		4,579

Total	(Won)	188,175		(4,105	)		184,070		224,739		(5,149	)		219,590

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

8.	Investment Securities

(1) Details of short-term investment securities as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Beneficiary certificates(*)	(Won)	153,097		91,539
Current portion of long-term investment securities		10,616		3,290

	(Won)	163,713		94,829

(*)	The distributions arising from beneficiary certificates as of March 31, 2012 were accounted for as accrued income.

(2)

Details of long-term available-for-sale financial assets as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012			December 31, 2011
Equity securities:
Marketable equity securities	(Won)	1,108,970			1,100,847
Unlisted equity securities		69,937			97,397
Equity investments		217,463			281,877

		1,396,370			1,480,121

Debt securities:
Public bonds(*1)		421			413
Investment bonds(*2)		80,560			60,701

		80,981			61,114

Total		1,477,351			1,541,235
Less current portion of long-term investment securities		(10,616	)		(3,290	)

Long-term investment securities	(Won)	1,466,735			1,537,945

(*1)	Details of maturity for the public bonds as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Less than 1 year	(Won)	45		45
1 ~ 5 years		376		368

	(Won)	421		413

(*2)

The Group classified convertible bonds of NanoEnTek, Inc. (carrying amount as of March 31, 2012: (Won) 15,977 million), which were acquired during the year ended December 31, 2011, as financial assets at fair value through profit or loss. The difference between acquisition cost and fair value is accounted for as finance income (loss).

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

9.	Investments in Associates

(1)

Investments in associates accounted for using the equity method as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won, except for share data)
	March 31, 2012							December 31, 2011
	Number of shares		Ownership (%)	Acquisition cost		Carrying amount		Carrying amount
SK Marketing & Company Co., Ltd.		5,000,000	50.0	(Won)	190,000		131,223		128,320
SK China Company Ltd.		720,000	22.5		49,529		47,809		48,488
SK USA, Inc.		49	49.0		3,184		4,569		4,534
Benex Sector Limited Partnership IV		2,500	49.7		25,000		24,140		24,907
F&U Credit information Co., Ltd.		300,000	50.0		2,410		4,148		3,565
Korea IT Fund(*1)		190	63.3		190,000		226,975		230,980
JYP Entertainment Corporation		691,680	25.5		4,150		4,150		4,008
Konan Technology		78,550	29.5		13,456		4,284		4,760
Etoos Co., Ltd.(*2)		701,000	15.6		18,993		12,258		13,928
BMC Digital Culture and Contents Venture Fund		100	39.8		10,000		8,430		8,415
Wave City Development Co., Ltd.(*2)		382,000	19.1		1,967		—		1,124
IBKC-bmc Cultural Contents Fund		—	25.0		2,500		2,325		2,326
Hanhwa No.2 Daisy Entertainment Investment Fund		—	20.0		2,000		1,157		1,165
BMC Movie Expert Fund		135	46.6		13,500		14,268		13,926
HanaSK Card Co., Ltd.		57,647,058	49.0		400,000		401,410		396,553
Television Media Korea Ltd.(*3)		18,564,000	51.0		18,568		14,603		15,262
Candle Media Co., Ltd. (formerly PREGM Co., Ltd.)		11,010,280	28.9		26,334		11,804		11,814
NanoEnTek, Inc.(*2)		1,807,130	9.3		11,000		9,769		10,470
UNISK(Beijing) Information Technology Co., Ltd.		49	49.0		3,475		6,120		5,886
PT. Melon Indonesia		4,900,000	49.0		6,492		5,123		5,326
Packet One Network		1,151,556	28.2		137,751		98,981		103,408
Mobile Money Venture, LLC		—	50.0		12,762		952		982
SK Technology Innovation Company		—	49.0		85,873		73,478		75,974
LightSquared Inc.(*2)		3,387,916	3.3		72,096		—		49,441
SK hynix Inc.(*4)		146,100,000	21.1		3,374,726		3,344,805		—
SK MENA Investment B.V.(*5)		—	32.1		14,485		14,485		—
TR Entertainment and others					278,675		218,556		219,043

				(Won)	4,968,926		4,685,822		1,384,605

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

9.	Investments in Associates, Continued

(*1)	Investment in Korea IT Fund was classified as investment in associates as the Group has less than 50% of voting rights, and therefore does not have control over Korea IT Fund under the agreement.

(*2)

The Group classified the investments in Etoos Co., Ltd., Wave City Development Co., Ltd., NanoEnTek, Inc., and LightSquared Inc., as investments in associates as the Group can exercise significant influence on these investees through participation of their board of directors even though the Group has less than 20% of equity interests in those investees.

(*3)	The Group classified the investments in Television Media Korea Ltd. as investments in associates as the entity is considered a joint venture.

(*4)	The Group acquired 146,100,000 shares (ownership interest of 21.1%) of SK hynix Inc. through purchase of existing shares and subscription of new shares at February 14, 2012.

(*5)	The Group acquired 32.1% of ownership interest of SK MENA Investment B.V. during the three-month period ended March 31, 2012.

(2)

The market price of investments in listed associates as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won, except for share and per share data)
	March 31, 2012						December 31, 2011
	Market value per share		Number of shares		Market price		Market value per share		Number of shares		Market price
Candle Media Co., Ltd. (formerly PREGM Co., Ltd.)	(Won)	1,175		11,010,280		12,937		1,435		11,010,280		15,800
NanoEnTek, Inc.		3,935		1,807,130		7,111		4,160		1,807,130		7,518
SK hynix Inc.		29,250		146,100,000		4,273,425		—		—		—

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

9.	Investments in Associates, Continued

(3)

The condensed financial information of the investees as of and for the three-month periods ended March 31, 2012 and 2011 is as follows:


(In millions of won)
	As of and for the three-month period ended March 31, 2012
	Total assets		Total liabilities		Total equity			Revenue		Net income (loss) for the period
SK Marketing & Company Co., Ltd.	(Won)	691,993		429,546		262,447			155,853		4,178
SK China Company, Ltd.		227,290		14,176		213,114			8,684		(1,829	)
SK USA, Inc.		20,788		11,463		9,325			4,080		(2,312	)
Benex Sector Limited Partnership IV		48,759		423		48,336			407		(16	)
F&U Credit information Co., Ltd.		13,470		6,006		7,464			15,366		1,377
Korea IT Fund		358,538		—		358,538			—		63
JYP Entertainment Corporation		16,470		12,454		4,016			3,889		904
Konan Technology		14,710		4,461		10,249			1,373		(1,636	)
Etoos Co., Ltd.		97,569		77,666		19,903			23,789		(2,662	)
BMC Digital Culture and Contents Venture Fund		21,317		157		21,160			199		38
Wave City Development Co., Ltd.		123,969		132,163		(8,194	)		—		(435	)
IBKC-bmc Cultural Contents Fund		9,359		61		9,298			51		(7	)
Hanhwa No.2 Daisy Entertainment Investment Fund		5,834		50		5,784			11		(42	)
BMC Movie Expert Fund		30,794		145		30,649			879		734
HanaSK Card Co., Ltd.		10,719,220		9,991,725		727,495			254,708		10,227
Television Media Korea Ltd.		33,072		4,910		28,162			2,685		(1,273	)
Candle Media Co., Ltd. (formerly PREGM Co., Ltd.)		27,925		7,566		20,359			3,515		(204	)
NanoEnTek, Inc.		49,736		21,485		28,251			2,768		(959	)
UNISK(Beijing) Information Technology Co.,Ltd.		22,392		9,986		12,406			4,932		596
PT. Melon Indonesia		11,097		988		10,109			195		(317	)
Packet One Network		274,774		186,074		88,700			29,256		(12,593	)
Mobile Money Venture, LLC		2,095		207		1,888			46		(27	)
SK Technology Innovation Company		149,956		—		149,956			—		(1,433	)
LightSquared Inc.		4,484,505		3,125,885		1,358,620			8,343		(162,631	)
SK hynix Inc.(*)		19,264,360		9,366,111		9,898,249			2,388,389		(271,223	)
SK MENA Investment B.V.		44,380		1		44,379			—		5

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

9.	Investments in Associates, Continued

(*)

Financial information of SK hynix Inc. used when applying the equity method represents financial information after the acquisition date, February 14, 2012 and revenue and net loss for the period recognized from the acquisition date to March 31, 2012 are (Won) 1,436,477 million and (Won) 183,976 million, respectively.


(In millions of won)
	As of and for the year ended December 31, 2011
	Total assets		Total liabilities		Total equity		Revenue		Net income (loss) for the period
SK Marketing & Company Co., Ltd.	(Won)	753,508		496,867		256,641		652,749		21,543
SK China Company, Ltd.		281,579		58,124		223,455		43,526		4,542
SK USA, Inc.		20,184		10,932		9,252		10,623		(2,133	)
Benex Sector Limited Partnership IV		50,357		478		49,879		—		(1,717	)
F&U Credit information Co., Ltd.		13,511		7,303		6,208		50,554		110
Korea IT Fund		364,706		—		364,706		—		10,502
JYP Entertainment Corporation		17,467		14,424		3,043		17,722		407
Konan Technology		15,507		3,622		11,885		11,790		651
Etoos Co., Ltd.		69,994		67,889		2,105		107,174		(743	)
BMC Digital Culture and Contents Venture Fund		21,288		166		21,122		187		(621	)
Wave City Development Co., Ltd.		129,768		123,882		5,886		431		(1,399	)
IBKC-bmc Cultural Contents Fund		9,387		82		9,305		638		106
Hanhwa No.2 Daisy Entertainment Investment Fund		5,877		51		5,826		92		(1,518	)
BMC Movie Expert Fund		30,068		153		29,915		4,690		1,019
HanaSK Card Co., Ltd.		9,810,720		9,094,326		716,394		849,719		25,593
Television Media Korea Ltd.		34,606		5,150		29,456		4,919		(6,481	)
Candle Media Co., Ltd. (formerly PREGM Co., Ltd.)		25,978		5,588		20,390		27,494		(5,650	)
NanoEnTek, Inc.		52,649		20,379		32,270		13,088		(8,809	)
UNISK(Beijing) Information Technology Co., Ltd.		20,401		8,388		12,013		16,028		1,202
PT. Melon Indonesia		12,112		1,242		10,870		803		(1,860	)
Packet One Network		269,362		197,049		72,313		99,918		(72,307	)
Mobile Money Venture, LLC		2,191		227		1,964		6,294		1,189
SK Technology Innovation Company		159,745		4,695		155,050		—		(11,556	)
LightSquared Inc.		4,647,136		3,125,885		1,521,251		33,374		(669,558	)

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

9.	Investments in Associates, Continued

(4)

Details of changes in investments in associates accounted for using the equity method for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended March 31, 2012
	Beginning balance		Acquisition		Disposal			Share of profits (losses)			Other comprehensive income			Impairment loss			Other increase (decrease)			Ending balance
SK Marketing & Company Co., Ltd.	(Won)	128,320		—		—			3,149			(246	)		—			—			131,223
SK China Company, Ltd.		48,488		—		—			(614	)		(65	)		—			—			47,809
SK USA, Inc.		4,534		—		—			(988	)		1,024			—			—			4,570
Benex Sector Limited Partnership IV		24,907		—		—			(8	)		(759	)		—			—			24,140
F&U Credit information Co., Ltd.		3,565		—		—			583			—			—			—			4,148
Korea IT Fund		230,980		—		—			(4,787	)		782			—			—			226,975
JYP Entertainment Corporation		4,008		—		—			200			(58	)		—			—			4,150
Konan Technology		4,760		—		—			(477	)		—			—			—			4,283
Etoos Co., Ltd.		13,928		—		—			(1,670	)		—			—			—			12,258
BMC Digital Culture and Contents Venture Fund		8,415		—		—			15			—			—			—			8,430
Wave City Development Co., Ltd.		1,124		—		—			(1,124	)		—			—			—			—
IBKC-bmc Cultural Contents Fund		2,326		—		—			(2	)		—			—			—			2,324
Hanhwa No.2 Daisy Entertainment Investment Fund		1,165		—		—			(8	)		—			—			—			1,157
BMC Movie Expert Fund		13,926		—		—			342			—			—			—			14,268
HanaSK Card Co., Ltd.		396,553		—		—			4,406			452			—			—			401,411
Television Media Korea Ltd.		15,262		—		—			(659	)		—			—			—			14,603
Candle Media Co., Ltd. (formerly PREGM Co., Ltd.)		11,814		—		—			400			(410	)		—			—			11,804
NanoEnTek, Inc.		10,470		—		—			(788	)		87			—			—			9,769
UNISK(Beijing) Information Technology Co., Ltd.		5,886		—		—			507			(274	)		—			—			6,119
PT. Melon Indonesia		5,326		—		—			(77	)		(126	)		—			—			5,123
Packet One Network		103,408		—		—			(5,248	)		821			—			—			98,981
Mobile Money Venture, LLC		982		—		—			(16	)		—			—			(13	)		953
SK Technology Innovation Company		75,974		—		—			(1,451	)		(1,045	)		—			—			73,478
LightSquared Inc.		49,441		—		—			(10,571	)		1,513			(40,383	)		—			—
SK hynix Inc.		—		3,374,726		—			(34,588	)		4,668			—			—			3,344,806
SK MENA Investment B.V.		—		14,485		—			—			—			—			—			14,485
TR Entertainment and others		219,043		1,502		(1,850	)		268			10			—			(418	)		218,555

	(Won)	1,384,605		3,390,713		(1,850	)		(53,206	)		6,374			(40,383	)		(431	)		4,685,822

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

9.	Investments in Associates, Continued


(In millions of won)
	For the three-month period ended March 31, 2011
	Beginning balance		Acquisition		Disposal			Share of profits (losses)			Other comprehensive income			Other increase (decrease)			Ending balance
SK Marketing & Company Co., Ltd.	(Won)	117,905		—		—			(86	)		—			—			117,819
SK China Company, Ltd.		46,573		—		—			(215	)		(1,310	)		—			45,048
SK USA, Inc.		5,972		—		—			(376	)		(149	)		—			5,447
Benex Sector Limited Partnership IV		24,953		—		—			(159	)		(217	)		—			24,577
F&U Credit information Co., Ltd.		4,529		—		—			159			—			—			4,688
Korea IT Fund		226,633		—		—			6,013			1,144			—			233,790
JYP Entertainment Corporation		4,150		—		—			172			—			—			4,322
Konan Technology		4,410		—		—			(201	)		—			—			4,209
Etoos Co., Ltd.		14,339		—		—			(770	)		—			—			13,569
BMC Digital Culture and Contents Venture Fund		8,925		—		—			(303	)		—			—			8,622
Wave City Development Co., Ltd.		1,392		—		—			(17	)		—			—			1,375
IBKC-bmc Cultural Contents Fund		2,292		—		—			10			—			—			2,302
Hanhwa No.2 Daisy Entertainment Investment Fund		2,008		—		—			(550	)		—			—			1,458
BMC Movie Expert Fund		13,977		—		—			(348	)		—			—			13,629
HanaSK Card Co., Ltd.		386,417		—		—			(2,037	)		153			—			384,533
Television Media Korea Ltd.		18,568		—		—			(97	)		—			—			18,471
Candle Media Co., Ltd. (formerly PREGM Co., Ltd.)		19,313		—		—			(422	)		8			—			18,899
NanoEnTek, Inc.		—		11,000		—			—			—			—			11,000
UNISK(Beijing) Information Technology Co.,Ltd.		4,714		—		—			159			(120	)		—			4,753
PT. Melon Indonesia		6,210		—		—			2			26			—			6,238
Packet One Network		116,160		—		—			(6,859	)		(577	)		—			108,724
Mobile Money Venture, LLC		3,206		—		—			(219	)		—			(87	)		2,900
SK Technology Innovation Company		25,052		—		—			(347	)		(692	)		—			24,013
Lightsquared Inc.		72,096		—		—			(4,528	)		(1,153	)		—			66,415
BNCP Co., Ltd.		—		18,411		—			—			—			—			18,411
SK Wyverns Baseball Club Co., Ltd. and others		74,898		—		(2,187	)		139			(921	)		(277	)		71,652

	(Won)	1,204,692		29,411		(2,187	)		(10,880	)		(3,808	)		(364	)		1,216,864

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

9.	Investments in Associates, Continued

(5)

As the Group discontinued the application of the equity method due to the carrying amount of the Group’s share being reduced to zero, the unrecognized accumulated equity losses as of March 31, 2012 are as follows:


(In millions of won)


	Unrealized loss		Unrealized change in equity
SK Wyverns Baseball Club Co., Ltd.	(Won)	1,099		—
ULand Company Limited		496		50
Cyworld Holdings Hong Kong and others		2,937		333

	(Won)	4,532		383

There is no unrealized change in equity which has not been recognized for the three-month period ended March 31, 2012.

10.

Property and Equipment

(1)

Property and equipment as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)


	March 31, 2012										December 31, 2011
	Acquisition cost		Accumulated depreciation			Accumulated impairment loss			Carrying amount		Carrying Amount
Land	(Won)	730,591		—			—			730,591		730,361
Buildings		1,516,967		(539,104	)		—			977,863		989,079
Structures		585,853		(293,343	)		—			292,510		301,115
Machinery		21,412,457		(16,123,068	)		(1,818	)		5,287,571		5,493,572
Other		1,674,866		(931,063	)		(12	)		743,791		711,461
Construction in progress		667,559		—			(3,429	)		664,130		805,410

	(Won)	26,588,293		(17,886,578	)		(5,259	)		8,696,456		9,030,998

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(2)

Changes in property and equipment for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended March 31, 2012
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Impairment			Change of consolidation scope			Ending balance
Land	(Won)	730,361		1		—			229			—			—			—			730,591
Buildings		989,079		259		—			1,793			(13,268	)		—			—			977,863
Structures		301,115		8		(1	)		132			(8,744	)		—			—			292,510
Machinery		5,493,572		20,853		(2,393	)		202,538			(426,999	)		—			—			5,287,571
Other		711,461		411,481		(728	)		(346,612	)		(30,257	)		—			(1,554	)		743,791
Construction in progress		805,410		98,375		—			(236,226	)		—			(3,429	)		—			664,130

	(Won)	9,030,998		530,977		(3,122	)		(378,146	)		(479,268	)		(3,429	)		(1,554	)		8,696,456

10.

Property and Equipment, Continued


(In millions of won)
	For the three-month period ended March 31, 2011
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance
Land	(Won)	707,970		—		(50	)		(2,303	)		—			705,617
Buildings		1,018,508		10,909		(20	)		(925	)		(12,172	)		1,016,300
Structures		242,125		25		—			1,060			(7,836	)		235,374
Machinery		5,167,143		3,439		(2,578	)		264,218			(416,640	)		5,015,582
Other		570,187		238,762		(717	)		(171,056	)		(24,402	)		612,774
Construction in progress		447,480		32,721		—			(35,332	)		—			444,869

	(Won)	8,153,413		285,856		(3,365	)		55,662			(461,050	)		8,030,516

11.

Investment Property

(1)

Investment property as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012							December 31, 2011
	Acquisition cost		Accumulated depreciation			Carrying amount		Carrying amount
Land	(Won)	23,193		—			23,193		23,153
Buildings		291,083		(49,191	)		241,892		247,933

	(Won)	314,276		(49,191	)		265,085		271,086

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(2)

Changes in investment property for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended March 31, 2012
	Beginning balance		Transfer			Depreciation			Ending balance
Land	(Won)	23,153		40			—			23,193
Buildings		247,933		(4,199	)		(1,842	)		241,892

	(Won)	271,086		(4,159	)		(1,842	)		265,085


(In millions of won)
	For the three-month period ended March 31, 2011
	Beginning balance		Transfer		Depreciation			Ending balance
Land	(Won)	29,179		1,798		—			30,977
Buildings		168,128		272		(2,511	)		165,889

	(Won)	197,307		2,070		(2,511	)		196,866

11.

Investment Property, Continued

(3)

Details of fair value of investment property as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012				December 31, 2011
	Carrying amount		Fair value		Carrying amount		Fair value
Land	(Won)	23,193		40,609		23,153		40,540
Buildings		241,892		268,175		247,933		272,794

	(Won)	265,085		308,784		271,086		313,334

The fair value of investment property was appraised on the basis of market price by an independent appraisal company.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

12.

Goodwill

(1)

Goodwill as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Goodwill related to acquisition of Shinsegi Telecomm, Inc.	(Won)	1,306,236		1,306,236
Goodwill related to acquisition of SK Broadband Co., Ltd.		358,443		358,443
Other goodwill		75,524		85,254

	(Won)	1,740,203		1,749,933

(2)

Details of changes in goodwill for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Beginning balance	(Won)	1,749,933			1,736,649
Decrease upon disposal of business		(9,684	)		—
Other decrease(*)		(46	)		(92	)

	(Won)	1,740,203			1,736,557

(*)	Other decrease represents effects of exchange rate change in relation to the foreign subsidiaries.

13.

Intangible Assets

(1)

Intangible assets as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012										December 31, 2011
	Acquisition cost		Accumulated depreciation			Accumulated impairment			Carrying amount		Carrying amount
Frequency use rights	(Won)	2,837,385		(975,166	)		—			1,862,219		1,889,102
Land use right		38,956		(20,761	)		—			18,195		19,327
Industrial right		88,168		(26,662	)		—			61,506		59,473
Development costs		171,865		(146,205	)		(6,526	)		19,134		20,961
Facility usage right		138,765		(71,209	)		—			67,556		69,491
Customer relations		124,181		(3,600	)		—			120,581		141,819
Memberships(*1)		118,849		—			—			118,849		117,711
Other(*2)		2,256,420		(1,579,298	)		(4,235	)		672,887		677,919

	(Won)	5,774,589		(2,822,901	)		(10,761	)		2,940,927		2,995,803

(*1)	Memberships are classified as intangible assets with indefinite useful life and are not amortized.

(*2)	Other intangible assets consist of computer software and usage rights to a research facility which the Group built and donated to a university which in turn the Group is given rights-to-use for a definite number of years.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(2)

Details of changes in intangible assets for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended March 31, 2012
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Change of consolidation scope			Ending balance
Frequency use rights	(Won)	1,889,102		16,659		—			—		(43,542	)		—			1,862,219
Land use right		19,327		613		(80	)		—		(1,665	)		—			18,195
Industrial right		59,473		2,946		—			310		(1,175	)		(48	)		61,506
Development costs		20,961		58		—			—		(1,885	)		—			19,134
Facility usage right		69,491		131		(38	)		—		(2,028	)		—			67,556
Customer relations		141,819		61		—			—		(21,299	)		—			120,581
Memberships		117,711		2,028		(106	)		—		—			(784	)		118,849
Other		677,919		18,219		(1,568	)		53,126		(73,100	)		(1,709	)		672,887

	(Won)	2,995,803		40,715		(1,792	)		53,436		(144,694	)		(2,541	)		2,940,927

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

13.

Intangible Assets, Continued


(In millions of won)
	For the three-month period ended March 31, 2011
	Beginning balance		Acquisition		Disposal			Transfer			Amortization			Impairment			Ending balance
Frequency use rights	(Won)	709,043		—		—			(469	)		(33,211	)		—			675,363
Land use right		17,551		262		—			—			(1,315	)		—			16,498
Industrial right		60,740		338		—			323			(914	)		—			60,487
Development costs		26,470		594		(510	)		—			(2,275	)		—			24,279
Facility usage right		73,760		86		(3	)		24			(1,979	)		(777	)		71,111
Customer relations		226,940		38		—			—			(23,073	)		—			203,905
Membership		111,736		1,851		(39	)		—			—			—			113,548
Other		658,716		13,871		(34	)		41,672			(83,747	)		(162	)		630,316

	(Won)	1,884,956		17,040		(586	)		41,550			(146,514	)		(939	)		1,795,507

(3)

The carrying amount and residual useful lives of major intangible assets as of March 31, 2012 are as follows:


(In millions of won)
	Amount		Description	Residual useful lives
W-CDMA license	(Won)	461,726	Frequency use rights relating to W-CDMA service	(*1)
W-CDMA license		77,477	Frequency use rights relating to W-CDMA service	(*2)
800MHz license		375,032	Frequency use rights relating to CDMA and LTE service	(*3)
1.8GHz license		928,203	Frequency use rights relating to LTE service	(*4)
Wibro license		294	WiBro service	(*5)
Wibro license		16,463	WiBro service	(*6)
DMB license		3,024	DMB service	4 years and 3 months
Customer relationships related to acquisition of SK Broadband Co., Ltd.		110,981	Customer relationships	1 year and 6 months

(*1)

The Group purchased the W-CDMA license from Korea Communication Commission (“KCC”) on December 4, 2001. Amortization of the W-CDMA license commenced once the Group began its commercial W-CDMA services on December 29, 2003 under a straight-line basis over the remaining useful life of the license. The W-COMA license will expire in December 2016.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

13.

Intangible Assets, Continued

(*2)

The Group purchased the additional W-CDMA license from KCC in May 2010. Amortization of the additional W-CDMA license commenced once the Group started its related commercial W-CDMA services on October 7, 2010, under a straight-line basis over the remaining useful life of the W-CDMA license. The additional W-COMA license will expire in December 2016.

(*3)

The Group purchased 800MHz license from KCC in June 2011. Amortization of the 800MHz license commenced once the Group started its related commercial CDMA and LTE services on July 1, 2011, under a straight-line basis over the remaining useful life of the 800MHz license. The 800MHz license will expire in June 2021.

(*4)

The Group purchased 1.8GHz license from KCC in December 2011. Amortization of the 1.8GHz license will commence when the Group starts its related commercial LTE services in the second half of year 2012, under a straight-line basis over the remaining useful life of the 1.8GHz license. The 1.8GHz license will expire in December 2021.

(*5)	The Group purchased a WiBro license from KCC on March 30, 2005. The license period is 7 years from the purchase date. Amortization of the WiBro license commenced when the Group started its commercial WiBro services on June 30, 2006, under a straight line basis over the remaining useful life.

(*6)	The Group additionally purchased Wibro license in March 2012. Amortization of this WiBro license commenced when the Group started its commercial WiBro services on March 30, 2012, under a straight line basis over the remaining useful life. This Wibro license will expire in March 2019.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

14.

Borrowings and Debentures

(1)

Short-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(In millions of won and thousands of U.S. dollars)

Lender

Annual
interest
rate (%)

March 31,
2012

December 31,
2011

Commercial Paper

Woori Bank, etc.

3.78~3.85

(Won)

200,000

Short-term borrowings (Korean won)

Kookmin Bank, etc.

4.29~8.03

902,592

394,033

Short-term borrowings (Foreign currency)

SK China Company, Ltd.

—

36,979

(USD 32,500

)

106,680

(USD 92,500

)

(Won)

1,139,571

700,713

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

14.

Borrowings and Debentures, Continued

(2)

Long-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won, thousands of U.S. dollars, thousands of Chinese yuan and thousands of Hong Kong dollars)

Lender	Annual interest rate (%)	Maturity	March 31, 2012			December 31, 2011
Bank of Communications(*1,2)	6M Libor + 0.29	Oct. 10, 2013	(Won)	34,134 (USD 30,000	)		34,599 (USD 30,000	)
Bank of China(*1)	6M Libor + 0.29	Oct. 10, 2013		22,756 (USD 20,000	)		23,066 (USD 20,000	)
DBS Bank(*1)	6M Libor + 0.29	Oct. 10, 2013		28,445 (USD 25,000	)		28,833 (USD 25,000	)
SMBC(*1)	6M Libor + 0.29	Oct. 10, 2013		28,445 (USD 25,000	)		28,833 (USD 25,000	)
China Merchants Bank	5.35	Jan. 27, 2018		65,076 (CNY 360,000	)		65,893 (CNY 360,000	)
Korea Exchange Bank	5.18	Jan. 28, 2015		30,730 (CNY 170,000	)		31,116 (CNY 170,000	)
Hana Bank HK(*3)	3M Libor + 3.2	Mar. 3, 2014		85,335 (USD 75,000	)		86,498 (USD 75,000	)
SCB Bank HK(*3)	3M Libor + 3.3	Nov. 3, 2014		34,134 (USD 30,000	)		—
SCB Bank HK(*3)	3M Libor + 3.3	Nov. 3, 2014		34,291 (HKD 234,000	)		—
Kookmin Bank and 13 others	4.48	Feb. 14, 2015		2,000,000			—
Kookmin Bank	3.55	Jun. 15, 2012		988			1,977
Korea Development Bank	3.55	Jun. 17, 2013		4,407			5,288
Korea Development Bank	3.55	Jun. 16, 2014		7,414			8,237
Shinhan Bank	3.55	Jun. 15, 2015		10,273			10,273
Kookmin Bank	3.55	Jun. 15, 2016		9,749			9,749

Sub-total				2,396,177			334,362
Less present value discount on long-term borrowings				(12,673	)		—

				2,383,504			334,362
Less current portion of long-term borrowings				(10,377	)		(10,510	)

Long-term borrowings			(Won)	2,373,127			323,852

(*1)	As of March 31, 2012, 6M Libor rate is 0.73%.

(*2)	As of March 31, 2012, the Group’s lender is Bank of Communications as Credit Agricole transferred the loans to Bank of Communications during the three-month period ended March 31, 2012.

(*3)	As of March 31, 2012, 3M Libor rate is 0.47%.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

14.

Borrowings and Debentures, Continued

(3) Debentures as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won, thousands of U.S. dollars, thousands of Japanese Yen, and thousands of Singapore dollars)
	Purpose	Maturity	Annual interest rate (%)	March 31, 2012			December 31, 2011
Unsecured private bonds	Refinancing	2016	5.00	(Won)	200,000			200,000
Unsecured private bonds	fund	2013	4.00		200,000			200,000
Unsecured private bonds		2014	5.00		200,000			200,000
Unsecured private bonds(*1)		2012	3M Euro Yen Libor + 0.55		172,593 (JPY 12,500,000	)		185,645 (JPY 12,500,000	)
Unsecured private bonds	Other fund	2015	5.00		200,000			200,000
Unsecured private bonds		2018	5.00		200,000			200,000
Unsecured private bonds		2013	6.92		250,000			250,000
Unsecured private bonds		2016	5.54		40,000			40,000
Unsecured private bonds		2012	3M Euro Yen Libor + 2.50		—			44,555 (JPY 3,000,000	)
Unsecured private bonds		2016	5.92		230,000			230,000
Unsecured private bonds		2012	3M Euro Yen Tibor + 2.50		—			74,258 (JPY 5,000,000	)
Unsecured private bonds	Operating	2016	3.95		110,000			110,000
Unsecured private bonds	fund	2021	4.22		190,000			190,000
Unsecured private bonds(*2)		2014	4.86		50,000			50,000
Unsecured private bonds(*2)		2015	4.62		50,000			50,000
Unsecured private bonds(*3)		2013	3.99		150,000			150,000
Unsecured private bonds(*3)		2014	4.53		290,000			290,000
Unsecured private bonds(*3)		2014	4.40		100,000			100,000
Unsecured private bonds(*3)		2015	4.09		110,000			—
Unsecured private bonds(*3)		2015	4.14		110,000			—
Unsecured private bonds(*3)		2017	4.28		100,000			—
Foreign global bonds		2027	6.63		455,120 (USD 400,000	)		461,320 (USD 400,000	)
Foreign global bonds		2012	7.00		—			576,650 (USD 500,000	)
Exchangeable bonds(*6,7)	Refinancing fund	2014	1.75		401,619 (USD 332,528	)		397,886 (USD 332,528	)
Floating rate notes(*4)		2012	3M Libor + 3.15		250,316 (USD 220,000	)		253,726 (USD 220,000	)
Floating rate notes(*4)		2014	3M Libor + 1.60		284,450 (USD 250,000	)		288,325 (USD 250,000	)
Floating rate notes(*5)		2014	SOR rate + 1.20		58,793 (SGD 65,000	)		57,618 (SGD 65,000	)

Sub-total					4,402,891			4,799,983
Less discounts on bonds					(37,879	)		(39,095	)

					4,365,012			4,760,888
Less current portion of bonds payable					(422,695	)		(1,531,879	)

				(Won)	3,942,317			3,229,009

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

14.

Borrowings and Debentures, Continued

(*1)	As of March 31, 2012, 3M EURO Yen Libor rate is 0.19%.

(*2)	Unsecured private bonds were issued by SK Telink Co., Ltd., a subsidiary of the Parent Company.

(*3)

According to covenant provision of the related borrowings, SK Broadband Co., Ltd., a subsidiary of the Parent Company, is required to maintain its debt ratio lower than 1,000 percent and cannot dispose of its property and equipment more than twenty times of equity or (Won) 10 trillion in any given fiscal year.

(*4)	As of March 31, 2012, 3M Libor rate is 0.47%.

(*5)	As of March 31, 2012, SOR rate is 0.36%.

(*6)

As of March 31, 2012, exchangeable bonds are classified as financial liabilities at fair value through profit or loss. As of December 31, 2011, the exchangeable bonds were classified as current as the bond holders would be eligible to redeem their notes at 100% of the principal amount on April 7, 2012. However, as of March 31, 2012, the exchangeable bonds are reclassified as non-current liabilities as the bond holders have not exercised and have lost their early redemption right.

(*7)

On April 7, 2009, the Group issued exchangeable bonds with a maturity of five years in the principal amount of USD 332,528,000 for USD 326,397,463 with a coupon rate of 1.75%. As of March 31, 2012, fair value of the exchangeable bonds is USD 352,978,472. The exchange price could be adjusted and the exchange price is (Won) 199,280 with the exchange rate of (Won) 1,383.40 per USD 1.

The Group may redeem the principal amount after 3 years from the issuance date if the market price exceeds 130% of the exchange price during a predetermined period. On the other hand, the bond holders may redeem their notes at 100% of the principal amount on April 7, 2012 (3 years from the issuance date). The exchange right may be exercised during the period from May 18, 2009 to March 24, 2014 and the number of common shares that can be exchanged as of March 31, 2012 is 2,308,406 shares.

Exchange 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 Group’s voting stock. If such 49% ownership limitation is violated due to the exercise of exchange rights, the Group will pay the bond holder a cash settlement which will be determined at the average price of one day after a holder exercises its exchange right or the weighted average price for the following five or twenty business days. Unless either previously redeemed or exchanged, the notes are redeemable at 100% of the principal amount at maturity.

In accordance with a resolution of the Board of Directors on February 9, 2012, the exchange price has changed from (Won) 209,853 to (Won) 199,280 and the number of common shares that can be exchanged was changed from 2,192,102 shares to 2,308,406 shares due to the payment of periodic dividends. During the three-month period ended March 31, 2012, no exchange was made.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

14.

Borrowings and Debentures, Continued

(4)

Details of issuance or repayments of borrowings and debentures for the three-month period ended March 31, 2012 are as follows:


(In millions of won, thousands of U.S. dollars, thousands of Japanese Yen, and thousands of Hong Kong dollars)
	Lender	Annual interest rate (%)	Maturity		Coupon value			Carrying amount
January 1, 2012					(Won)	5,835,058			5,795,962
Issues:
Short-term borrowings	Kookmin Bank and other	4.29~6.50		2013		642,989			642,989
Long-term borrowings	Kookmin Bank and other	4.48		2015		2,000,000			2,000,000
	SCB Bank HK	3M Libor + 3.3		2014		34,134 (USD 30,000	)		34,134 (USD 30,000	)
	SCB Bank HK	3M Libor + 3.3		2014		34,291 (HKD 234,000	)		34,291 (HKD 234,000	)
Fees, etc.	—	—		—		—			(12,673	)
Debentures		4.09		2015		110,000			109,581
		4.14		2015		110,000			109,576
		4.28		2017		100,000			99,605
Repayments:
Short-term borrowings	Hana Bank and other	4.94~6.87		—		(202,317	)		(202,317	)
Long-term borrowings	Korea Development Bank and other	3.55		—		(2,693	)		(2,693	)
Unsecured private bonds		3M Euro Yen Libor + 2.50		2012		(44,555 (JPY 3,000,000	) )		(44,555	)
Unsecured private bonds		3M Euro Yen Libor + 2.50		2012		(74,258 (JPY 5,000,000	) )		(74,258	)
Foreign global bond		7.00		2012		(576,650 (USD 500,000	) )		(576,650	)
Other:
Foreign translation gain (loss) and others(*)						(27,359	)		(24,904	)

March 31, 2012					(Won)	7,938,640			7,888,088

(*)	Foreign translation gain (loss) and others represent changes from foreign translation gain (loss) of foreign currency borrowings and debentures and amortization of bond discount.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

15.

Long-term Payables - other

(1)

Long-term payables as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)

	March 31, 2012		December 31, 2011
Payables related to acquisition of W-CDMA licenses	(Won)	705,491		840,974
Other (*)		4,829		6,522

Total	(Won)	710,310		847,496

(*)	Other consists of vested compensation claims of employees who have rendered long-term service.

(2)

As of March 31, 2012 and December 31, 2011, long-term payables consist of payables related to acquisition of W-CDMA licenses for 2.1GHz, 800MHZ, 1.8GHz and 2.3GHz frequency and other details are as follows:


(In millions of won)
	2.1GHz			800MHz			1.8GHz			2.3GHz			Total
Period of repayment		2012~2014			2013~2015			2012~2021			2014~2016
Coupon rate(*1)		3.58	%		3.51	%		3.00	%		3.00	%
Annual effective interest rate(*2)		5.89	%		5.69	%		5.25	%		5.80	%
Nominal value	(Won)	52,600			208,250			746,250			8,650			1,015,750
Present value discount on long-term payments - other		(3,237	)		(11,060	)		(66,797	)		(641	)		(81,735	)

Present value of long-term payables – other at the time of acquisition		49,363			197,190			679,453			8,009			934,015
Nominal value		52,600			208,250			746,250			—			1,007,100
Present value discount on long-term payables - other		(3,237	)		(11,060	)		(66,797	)		—			(81,094	)
Current portion of long-term payables - other		(17,533	)		—			(74,625	)		—			(92,158	)
Accumulated amortization of present value discount at December 31, 2011		2,065			1,925			3,136			—			7,126
Carrying amount as of December 31, 2011		33,895			199,115			607,964			—			840,974
Increase		—			—			—			8,650			8,650
Present value discount on long-term payables - other		—			—			—			(641	)		(641	)
Amortization of present value discount on long-term payables - other		68			964			876			1			1,909
Less current portion of long-term payables - other		(16,812	)		(65,466	)		(63,123	)		—			(145,401	)

Carrying amount at March 31, 2012	(Won)	17,151			134,613			545,717			8,010			705,491

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

15.

Long-term Payables - other, Continued

(*1)	The Group applied an annual interest rate equal to the previous year average lending rate of public funds financing account less1%.

(*2)	The Group estimated the discount rate based on its credit ratings and corporate bond yield rate as there is no market interest rate available for long-term account payable-other.

(2)

The repayment schedule of long-term payables - other as of March 31, 2012 is as follows:


(In millions of won)
	Amount
2013	(Won)	161,575
2014		164,458
2015		146,925
2016 and thereafter		450,633

	(Won)	923,591

16.

Provisions

Change

in provisions for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended March 31, 2012									As of March 31, 2012
	Beginning balance		Increase		Utilization			Ending balance		Current		Non- current
Provision for handset subsidy	(Won)	762,238		169,931		(195,806	)		736,363		627,946		108,417
Provision for point programs		639		24		—			663		—		663
Provision for restoration		36,378		2,688		(288	)		38,778		4,738		34,040
Provision for warranty		154		—		(23	)		131		—		131
Provision for sales return		81		15		(44	)		52		52		—
Other provisions		69		—		(69	)		—		—		—

	(Won)	799,559		172,658		(196,230	)		775,987		632,736		143,251

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011


(In millions of won)
	For the three-month period ended March 31, 2011									As of March 31, 2011
	Beginning balance		Increase		Utilization			Ending balance		Current		Non-current
Provision for handset subsidy	(Won)	732,042		200,315		(213,463	)		718,894		633,447		85,447
Provision for point programs		87		—		—			87		—		87
Provision for restoration		32,522		832		—			33,354		—		33,354
Provision for warranty		140		—		(3	)		137		—		137
Provision for sales return		48		—		(17	)		31		31		—
Other provisions		11		1		(2	)		10		10		—

	(Won)	764,850		201,148		(213,485	)		752,513		633,488		119,025

16.

Provisions, Continued

The Group has provided handset subsidy for the subscribers who purchase handsets on an installment basis and recognized provision for handset subsidy in accordance with the payment duration as of period end.

17.

Finance Lease Liabilities

(1)

The Group has leased certain telecommunication equipment under the finance lease agreement with Cisco Capital Korea. Finance lease liabilities as of March 31, 2012, December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Finance Lease Liabilities
Current portion of long-term finance lease liabilities	(Won)	28,415		31,308
Long-term finance lease liabilities		36,553		41,940

	(Won)	64,968		73,248

(2)

The Group’s related interest and principal as of March 31, 2012, December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012					December 31, 2011
	Minimum lease payment		Present value			Minimum lease payment		Present value
Less than 1 year	(Won)	29,404		28,415			34,198		31,308
1~5 years		40,004		36,553			44,119		41,940

Subtotal		69,408		64,968			78,317		73,248

Current portion of long-term finance lease liabilities				(28,415	)				(31,308	)

Long-term finance lease liabilities				36,553					41,940

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

18.

Defined Benefit Liabilities

(1)

Details of defined benefit liabilities as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012			December 31, 2011
Present value of defined benefit obligations	(Won)	195,667			188,120
Fair value of plan assets		(102,532	)		(102,179	)

	(Won)	93,135			85,941

(2)

Principal actuarial assumptions as of March 31, 2012 and December 31, 2011 are as follows:


	March 31, 2012	December 31, 2011
Discount rate for defined benefit obligations	3.95%~6.15%	4.11%~6.15%
Inflation rate	3.00%	3.00%
Expected rate of return on plan assets	3.50%~7.00%	2.00%~8.11%
Expected rate of salary increase	2.00%~6.98%	3.50%~5.62%

18.

Defined Benefit Liabilities, Continued

Discount rate for defined benefit obligation is determined based on the Group’s credit ratings and yield rate of corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of return on plan assets represent weighted average rate of market value of the individual assets on the plan. Expected rate of return on plan assets is determined based on the historical yield rate and current market conditions. Expected rate of salary increase is determined based on the Group’s historical promotion index, inflation rate and salary increase ratio in accordance with salary agreement. Inflation rate is determined based on inflation data declared by Bank of Korea.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(3)

Changes in defined benefit obligations for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Beginning balance	(Won)	188,120			160,363
Current service cost		19,367			15,588
Interest cost		2,005			2,133
Actuarial gain or loss		5,488			3,248
Benefit paid		(15,862	)		(9,301	)
Others(*)		(3,451	)		807

Ending balance	(Won)	195,667			172,838

(*)	Others include effects of changes in consolidation scope of (-) (Won) 4,185 million in relation to the disposal of Ntreev Soft Co., Ltd. and transfer to construction in progress during the three-month period ended March 31, 2012

(4)

Changes in plan assets for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Beginning balance	(Won)	102,179			92,493
Expected return on plan assets		949			1,056
Actuarial gain or loss		243			(323	)
Contributions by employer directly to plan assets		1,388			—
Benefit paid		(2,229	)		(3,386	)
Others		2			(49	)

Ending balance	(Won)	102,532			89,791

(5)

Expenses recognized in profit and loss for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Current service cost	(Won)	19,367			15,588
Interest cost		2,005			2,133
Expected return on plan assets		(949	)		(1,056	)

	(Won)	20,423			16,665

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

18.

Defined Benefit Obligation, Continued

(6)

Details of plan assets as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Equity instruments	(Won)	98		—
Debt instruments		25,925		12,455
Short-term financial instruments, etc.		76,509		89,724

	(Won)	102,532		102,179

Actual return on plan assets for the three-month periods ended March 31, 2012 and 2011 amounted to (Won) 1,191 million and (Won) 733 million, respectively.

19.

Derivative Instruments

(1) Currency swap contracts under cash flow hedge accounting

The Group has entered into a floating-to-fixed cross currency swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated long-term borrowings with face amounts totaling USD 100,000,000 borrowed on October 10, 2006. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied since May 12, 2010, an accumulated loss on valuation of derivatives amounting to (Won) 3,318 million (net of tax effect totaling (Won) 559 million and foreign currency translation loss arising from U.S. dollar denominated long-term borrowings totaling (Won) 18,980 million) is accounted for as accumulated other comprehensive loss.

In addition, the Group 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 its unguaranteed Japanese yen denominated bonds with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to (Won) 2,711 million (net of tax effect totaling (Won) 862 million and foreign currency translation loss arising from unguaranteed Japanese yen denominated bonds totaling (Won) 68,537 million) is accounted for as accumulated other comprehensive income.

In addition, the Group has entered into a fixed-to-fixed cross currency swap contract with Morgan Stanley and five other banks to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling USD 400,000,000 at annual fixed interest rate of 6.63% issued on July 20, 2007. As of March 31, 2012, in connection with unsettled foreign currency swap contract to which cash flow hedge accounting is applied since May 12 2010, an accumulated loss on valuation of derivatives amounting to (Won) 50,902 million (net of tax effect totaling (Won) 16,251 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling (Won) 2,364 million) is accounted for as other comprehensive loss. In connection with the currency swap contract, gain on valuation of currency swap which was incurred before application of hedge accounting, amounting to (Won) 129,806 million was recognized in profit or loss.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

19.

Derivative Instruments, Continued

In addition, on October 14, 2011, the Group has entered into a floating-to-fixed cross currency swap contract with DBS and Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of its unguaranteed U.S. dollar denominated bonds with face amounts totaling USD 220,000,000 issued on April 29, 2009. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to (Won) 939 million (net of tax effect totaling (Won) 300 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling (Won) 4,434 million) is accounted for as other comprehensive loss.

In addition, the Group has entered into a floating-to-fixed cross currency swap contract with DBS Bank and Citi Bank to hedge the foreign currency risk and the interest rate risk of its U.S. dollar denominated bonds with face amounts totaling USD 250,000,000 issued on December 15, 2011. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to (Won) 6,280 million (net of tax effect totaling (Won) 2,005 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling (Won) 5,116 million) is accounted for as accumulated other comprehensive income.

In addition, the Group has entered into a floating-to-fixed cross currency swap contract with United Overseas Bank to hedge the foreign currency risk and the interest rate risk of its Singapore dollar denominated bonds with face amounts totaling SGD 65,000,000 issued on December 15, 2011. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to (Won) 278 million (net of tax effect totaling (Won) 89 million and foreign currency translation loss arising from unguaranteed Singapore dollar denominated bonds totaling (Won) 1,320 million) is accounted for as accumulated other comprehensive income.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(2)

As of March 31, 2012, fair values of above derivatives recorded in assets or liabilities and details of derivative instruments are as follows:


(In millions of won, thousands of U.S. dollars, Japanese yen, and Singapore dollars)

					Fair value
	Hedged item	Amount		Duration of Contract	Designated as Cash Flow Hedge		Not Designated		Total
Current assets:
Floating-to-fixed cross currency swap	Japanese yen denominated bonds	JPY	12,500,000	Nov. 13, 2007~ Nov. 13, 2012	(Won)	70,386		—		70,386
Non-current assets:
Floating-to-fixed cross currency swap	U.S. dollar denominated long-term borrowings	USD	100,000	Oct. 10, 2006~ Oct. 10, 2013		15,103		—		15,103
Fix-to-fixed cross currency swap	U.S. dollar denominated bonds	USD	400,000	Jul. 20, 2007~ Jul. 20, 2027		60,289		—		60,289
Floating-to-fixed cross currency swap	U.S. dollar denominated bonds	USD	250,000	Dec. 15, 2011~ Dec. 12, 2014		3,168		—		3,168
Floating-to-fixed cross currency swap	Singapore dollar denominated bonds	SGD	65,000	Dec. 15, 2011~ Dec. 12, 2014		953		—		953
Convertible option	Convertible bonds(*)	KRW	50,000	Sep. 01, 2009~ Aug. 31, 2014		—		974		974

Total assets					(Won)	149,899		974		150,873

Current liabilities:
Floating-to-fixed interest rate swap	U.S. dollar denominated bonds	USD	220,000	Apr. 29, 2009~ Apr. 29, 2012		5,673		—		5,673

Total liabilities					(Won)	5,673		—		5,673

(*)	Fair value of the conversion option of convertible bonds held by SK Communications Co., Ltd., a subsidiary, amounting to (Won)975 million was accounted for as non-current derivative financial assets.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

20.

Share Capital and Share Premium

The Parent Company’s outstanding share capital consists entirely of common stock with a par value of (Won) 500. The number of authorized, issued and outstanding common shares and share premium as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won, except for share data)

	March 31, 2012			December 31, 2011
Authorized shares	(Won)	220,000,000			220,000,000
Issued shares(*1)		80,745,711			80,745,711
Share capital
Common stock		44,639			44,639
Share premium:
Paid-in surplus		2,915,887			2,915,887
Treasury stock		(2,410,451	)		(2,410,451	)
Loss on disposal of treasury stock		(18,855	)		(18,855	)
Others(*2)		(777,269	)		(771,928	)

	(Won)	(290,688	)		(285,347	)

(*1)

During the years ended December 31, 2003, 2006 and 2009, the Parent Company retired 7,002,235 shares, 1,083,000 shares and 448,000 shares, respectively, of treasury stock which reduced its retained earnings before appropriation in accordance with the Korean Commercial Law. As a result, the Parent Company’s outstanding shares have decreased without change in the share capital.

(*2)	Others represent effects of changes in consolidation scope due to the disposal of Ntreeve Soft Co., Ltd.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

21.

Treasury Stock

Through 2009, the Parent Company acquired 8,400,712 shares of treasury stock in the open market for (Won) 1,992,083 million to provide stock dividends, issue new stocks, merge with Shinsegi Telecom, Inc. and SK IMT Co., Ltd., increase shareholder value, and to stabilize its stock prices when needed.

In addition, the Parent Company acquired 1,250,000 shares of treasury stock for (Won) 210,356 million from July 26, 2010 to October 20, 2010 and 1,400,000 shares of treasury stock for (Won) 208,012 million from July 21, 2011 to September 28, 2011, in accordance with the resolution of the Board of Directors on July 22, 2010 and July 19, 2011, respectively.

As a result of aforementioned treasury stock transactions, as of March 31, 2012 and December 31, 2011, the Parent Company has 11,050,712 shares of treasury stock at (Won) 2,410,451 million.

22.

Retained Earnings

(1)

Retained earnings as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)

	March 31, 2012		December 31, 2011
Appropriated:
Legal reserve	(Won)	22,320		22,320
Reserve for research & manpower development		220,000		535,595
Reserve for business expansion		9,106,138		8,009,138
Reserve for technology development		1,901,300		1,524,000

		11,249,758		10,091,053
Unappropriated		109,584		1,551,472

	(Won)	11,359,342		11,642,525

(2)

Legal reserve

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

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(3)

Reserve for research & manpower development

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

23.

Reserves

(1) Details of reserves as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012			December 31, 2011
Net change in fair value of available-for-sale financial assets	(Won)	341,650			354,951
Net change in other comprehensive income of associates		(87,213	)		(93,598	)
Losses on valuation of derivatives		(41,271	)		(25,099	)
Foreign currency translations differences for foreign operations		16,274			23,810

	(Won)	229,440			260,064

23.

Reserves, Continued

(2)

Change in reserves for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)

	Net change in fair value of available-for- sale financial assets			Net change in other comprehensive income of investment in associates			Losses on valuation of derivatives			Foreign currency translation differences for foreign operations			Total
Balance at January 1, 2011	(Won)	793,645			(91,413	)		(56,862	)		(2,314	)		643,056
Changes		(112,722	)		(3,810	)		50,221			(9,679	)		(75,990	)
Tax effect		27,380			(630	)		(11,577	)		0			15,173

Balance at March 31, 2011		708,303			(95,853	)		(18,218	)		(11,993	)		582,239

Balance at January 1, 2012		354,951			(93,598	)		(25,099	)		23,810			260,064
Changes		(17,436	)		6,317			(20,745	)		(7,536	)		(39,400	)
Tax effect		4,135			68			4,573			—			8,776

Balance at March 31, 2012	(Won)	341,650			(87,213	)		(41,271	)		16,274			229,440

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

24.

Other Operating Income and Expenses

Details of other operating income and expenses for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Other Operating Income:
Reversal of allowance for doubtful accounts	(Won)	5,654		1,305
Gain on disposal of property and equipment and intangible assets		1,010		1,102
Others		8,932		5,442

	(Won)	15,596		7,849

Other Operating Expenses:
Communication expenses	(Won)	17,327		13,382
Utilities		44,451		39,220
Taxes and dues		31,121		10,983
Repair		60,780		64,397
Research and development		66,544		59,365
Training		6,076		5,121
Bad debt for accounts receivable - trade		7,257		17,218
Travel		7,084		6,536
Supplies and others		21,894		21,068
Loss on disposal of property and equipment and intangible assets		1,994		2,011
Loss on impairment of property and equipment and intangible assets		3,429		939
Loss on disposal of other investment assets		—		149
Loss on impairment of other investment assets		1		—
Donations		12,908		23,981
Bad debt for accounts receivable - other		19,687		3,715
Others		6,036		4,016

	(Won)	306,589		272,101

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

25.

Finance Income and Costs

(1)

Details of finance income and costs for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Finance Income:
Interest income	(Won)	32,396		48,647
Dividends		22,333		20,675
Gain on foreign currency transactions		1,953		1,373
Gain on foreign currency translation		819		24,240
Gain on valuation of financial asset at fair value through profit or loss		—		2,776
Gain on disposal of long-term investment securities		6,412		158,674
Reversal of loss on impairment of investment assets		—		10
Gain on valuation of derivatives		—		1,263
Gain on settlement of derivatives		4,292		—
Gain on valuation of financial liability at fair value through profit or loss		—		11,193

	(Won)	68,205		268,851

Finance Costs:
Interest expense	(Won)	97,035		80,944
Loss on foreign currency transactions		1,182		2,500
Loss on foreign currency translation		859		1,204
Loss on valuation of financial asset at fair value through profit or loss		640		—
Loss on disposal of long-term investment securities		7,505		—
Loss on valuation of derivatives		—		15,697
Loss on settlement of derivatives		—		3,132
Loss on valuation of financial liability at fair value through profit or loss		3,733		—

	(Won)	110,954		103,477

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(2)

Details of interest income included in finance income for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Interest income on cash equivalents and deposits	(Won)	20,789		13,499
Interest income on installment receivables and others		11,607		35,148

	(Won)	32,396		48,647

25.

Finance Income and Costs, Continued

(3)

Details of interest expense included in finance costs for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Interest expense on bank overdrafts and borrowings	(Won)	15,547		18,217
Interest expense on debentures		52,355		54,091
Interest on finance lease liabilities		811		1,343
Others		28,322		7,293

	(Won)	97,035		80,944

(4)

Details of impairment losses for financial assets for the three-month periods ended March 31, 2012 and 2011 are as follows.


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Bad debt for accounts receivable - trade	(Won)	7,257		17,218
Bad debt for accounts receivable - other		19,687		3,715

	(Won)	26,944		20,933

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

26.

Income Tax Expense

Income tax expense was recognized as current tax expense adjusted to changes in estimates related to prior periods, deferred tax expenses by origination and reversal, temporary differences, and income tax recognized in other comprehensive income. Difference between the average effective tax rate for the three-month periods ended March 31, 2012 and 2011 was caused mainly by the tax effect for changes in estimates related to prior periods.

27.

Earnings per Share

(1)

Basic earnings per share

1) Basic earnings per share for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In millions of won, except for share data)	For the three-month period ended
	March 31, 2012		March 31, 2011
Net income for the period	(Won)	306,424		542,534
Weighted average number of common shares outstanding		69,694,999		71,094,999

Basic earnings per share (In Won)	(Won)	4,397		7,631

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

27.

Earnings per Share, Continued

The weighted average number of common shares outstanding for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In shares)	Number of shares			Weighted number of days		Weighted number of shares
Outstanding common shares at January 1, 2012		80,745,711			91/91		80,745,711
Effect of treasury stock		(11,050,712	)		91/91		(11,050,712	)

Number of shares at March 31, 2012		69,694,999					69,694,999


(In shares)	Number of shares			Weighted number of days		Weighted number of shares
Outstanding common shares at January 1, 2011		80,745,711			90/90		80,745,711
Effect of treasury stock		(9,650,712	)		90/90		(9,650,712	)

Number of shares at March 31, 2011		71,094,999					71,094,999

(2)

Diluted earnings per share

Diluted earnings per share for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In millions of won, except for share data)	For the three-month period ended
	March 31, 2012		March 31, 2011
Diluted net income for the period	(Won)	310,486		535,042
Diluted weighted average number of common shares outstanding		72,003,405		73,272,388

Diluted earnings per share (In Won)	(Won)	4,312		7,302

Adjusted net income for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Net income	(Won)	306,424		542,534
Effect of exchangeable bonds		4,062		(7,492	)

Adjusted net income	(Won)	310,486		535,042

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

27.

Earnings per Share, Continued

Adjusted weighted average number of common shares outstanding for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In shares)
	For the three-month period ended
	March 31, 2012		March 31, 2011
Weighted average number of common shares outstanding		69,694,999		71,094,999
Effect of exchangeable bonds(*)		2,308,406		2,177,389

Adjusted weighted average number of common shares outstanding		72,003,405		73,272,388

(*)	Effect of exchangeable bonds represents weighted average number of common shares outstanding in respect of the exchangeable common shares of exchangeable bonds, which could be exchanged to treasury stock

28.

Categories of Financial Instruments

(1)

Financial assets by categories as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012
	Financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Derivative financial instruments designated as hedged item		Total
Cash and cash equivalents	(Won)	—		—		1,769,391		—		1,769,391
Financial instruments		—		—		575,144		—		575,144
Short-term investment securities		—		163,713		—		—		163,713
Long-term investment securities(*1)		15,977		1,450,758		—		—		1,466,735
Accounts receivable - trade		—		—		1,757,487		—		1,757,487
Loans and receivables(*2)		—		—		1,195,299		—		1,195,299
Derivative financial assets(*3)		974		—		—		149,899		150,873

	(Won)	16,952		1,614,471		5,297,321		149,899		7,078,643

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

28.

Categories of Financial Instruments, Continued


(In millions of won)
	December 31, 2011
	Financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Derivative financial instruments designated as hedged item		Total
Cash and cash equivalents	(Won)	—		—		1,650,794		—		1,650,794
Financial instruments		—		—		987,192		—		987,192
Short-term investment securities		—		94,829		—		—		94,829
Long-term investment securities(*1)		16,617		1,521,328		—		—		1,537,945
Accounts receivable - trade		—		—		1,835,641		—		1,835,641
Loans and receivables(*2)		—		—		1,377,750		—		1,377,750
Derivative financial assets(*3)		1,018		—		—		252,935		253,953

	(Won)	17,635		1,616,157		5,851,377		252,935		7,738,104

(*1)	The entire amount of long-term investment securities was designated as financial assets at fair value through profit or loss as the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(*2)

Details of loans and receivables as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Short-term loans	(Won)	96,802		100,429
Accounts receivable - other		741,299		908,836
Accrued income		27,564		21,847
Other current assets		954		462
Long-term loans		91,258		95,565
Long-term accounts receivable - other		2,837		5,393
Guarantee deposits		234,585		245,218

	(Won)	1,195,299		1,377,750

(*3)

Derivative financial assets classified as financial assets at fair value through profit or loss is the fair value of conversion right of convertible bonds held by SK Communications Co., Ltd., a subsidiary of the Parent Company.

28.

Categories of Financial Instruments, Continued

(2)

Financial liabilities by categories as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012
	Financial liabilities at fair value through profit or loss		Financial liabilities measured at amortized cost		Derivative financial instruments designated as hedged item		Total
Accounts payable - trade	(Won)	—		148,816		—		148,816
Derivative financial liabilities		—		—		5,673		5,673
Borrowings		—		3,523,075		—		3,523,075
Debentures(*1)		401,619		3,963,393		—		4,365,012
Accounts payable - other and others(*2)		—		3,651,202		—		3,651,202

	(Won)	401,619		11,286,486		5,673		11,693,778

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011


(In millions of won)	December 31, 2011
	Financial liabilities at fair value through profit or loss		Financial liabilities measured at amortized cost		Derivative financial instruments designated as hedged item		Total
Accounts payable - trade	(Won)	—		195,391		—		195,391
Derivative financial liabilities		—		—		4,645		4,645
Borrowings		—		1,035,074		—		1,035,074
Debentures(*1)		397,886		4,363,002		—		4,760,888
Accounts payable - other and others(*2)		—		3,312,642		—		3,312,642

	(Won)	397,886		8,906,109		4,645		9,308,640

(*1)	The entire amount of debentures was designated as financial liabilities at fair value through profit or loss as the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured.

(*2)	Details of accounts payable and other payables as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Accounts payable - other	(Won)	1,817,571		1,507,458
Withholdings		9,491		10,835
Accrued expenses		864,786		744,673
Current portion of long-term payables - other		173,816		120,452
Long-term payables - other		710,310		847,496
Finance lease liabilities		36,553		41,940
Other non-current liabilities		38,675		39,788

	(Won)	3,651,202		3,312,642

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

29.

Financial Risk Management

(1)

Financial risk management

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

The Group’s financial assets under financial risk management consist of cash and cash equivalents, financial instruments, financial assets available-for-sale, trade and other receivables. Financial liabilities consist of trade and other payables, borrowings, and debentures.

1) Market risk

(i) Currency risk

The Group is exposed to currency risk mainly on exchange fluctuations on recognized assets and liabilities. The Group manages currency risk by currency forward, etc. if needed to hedge currency risk on business transactions. Currency risk occurs on forecasted transaction and recognized assets and liabilities which are denominated in a currency other than the functional currency of the Group.

Monetary foreign currency assets and liabilities as of March 31, 2012 are as follows:


(In millions of won, thousands of U.S. dollars, thousands of Euros, thousands of Japanese Yen, thousands of other currencies)
	Assets				Liabilities
	Foreign currencies		Won translation		Foreign currencies		Won translation
USD		83,032	(Won)	94,513		1,522,685	(Won)	1,735,163
EUR		321		481		1,674		2,533
JPY		152,973		2,112		12,542,732		173,183
CNY		—		—		530,002		95,634
HKD		—		—		234,245		34,327
Others		26		29		64,488		58,332

			(Won)	97,135			(Won)	2,099,172

In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures. (Refer to Note 19)

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

As of March 31, 2012, effects on income (loss) before income tax as a result of change in exchange rate by 10% are as follows:


(In millions of won)
	If increased by 10%			If decreased by 10%
USD	(Won)	(54,676	)		54,676
EUR		(242	)		242
JPY		144			(144	)
CNY		(9,563	)		9,563
HKD		(3,433	)		3,433
Others		1			(1	)

	(Won)	(67,769	)		67,769

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

29.

Financial Risk Management, Continued

(1) Financial risk management, continued

(ii)

Equity price risk

The Group has equity securities which include listed and non-listed securities for its liquidity and operating purpose. As of March 31, 2012, available-for-sale equity instruments measured at fair value amount of (Won) 1,270,097 million.

(iii)

Interest rate risk

Since the Group’s interest bearing assets are mostly fixed-interest bearing assets, as such, the Group’s revenue and operating cash flow are not influenced by the changes in market interest rates. However, the Group still has interest rate risk arising from borrowings and debentures.

Accordingly, the Group performs various analysis of interest rate risk, which includes refinancing, renewal, alternative financing and hedging instrument option, to reduce interest rate risk and to optimize its financing.

The Group’s interest rate risk arises from floating-rate borrowings and payables. As of March 31, 2012, floating-rate borrowings and debentures amount to (Won) 3,651,953 million and the Group has entered into interest rate swaps to hedge interest rate risk related to floating-rate borrowings and debentures. (Refer to Note 19) If interest rate only increases (decreases) by 1%, income before income taxes for the three-month period ended March 31, 2012 would have been decreased (increased) by (Won) 3,829 million due to the interest expense from floating-rate borrowings and bons payables.

Credit risk

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

For the three-month period ended March 31, 2012, the Group has no trade and other receivables or loans which have indications of significant impairment loss or are overdue for a prolonged period. As a result, the Group believes that the possibility of default is remote. Also, the Group’s credit risk can rise due to transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivates. To minimize such risk, the Group has a policy to deal with high credit worthy financial institutions. The amount of maximum exposure to credit risk of the Group is the carrying amount of financial assets as of March 31, 2012.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

In addition, the aging of trade and other receivables that are over due at the end of the reporting period but not impaired is stated in Note 6 and the analysis of financial assets that are individually determined to be impaired at the end of the reporting period is stated in Note 25.

29.

Financial Risk Management, Continued

Liquidity risk

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

Contractual maturities of financial liabilities as of March 31, 2012 are as follows:


(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Accounts Payable - trade	(Won)	148,816		148,816		148,816		—		—
Derivative financial liabilities		5,673		5,673		5,673		—		—
Borrowings		3,523,075		4,534,341		1,962,039		2,504,325		67,977
Debentures(*1)		4,365,012		5,366,008		603,839		3,557,744		1,204,425
Accounts payable - other and others(*2)		3,651,202		3,653,748		2,870,461		541,313		241,974

	(Won)	11,693,778		13,708,586		5,590,828		6,603,382		1,514,376

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

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

(*1)

Includes estimated interest to be paid and excludes discounts on bonds.

(*2)

Excludes discounts on accounts payable-other and others.

(2)

Capital management

The Group manages its capital to ensure that it will be able to continue as a business while maximizing the return to shareholders through the optimization of its debt and equity balance. The overall strategy of the Group is the same as that of the group as of and for the year ended 31 December 2011.

The Group monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total debt divided by total equity; the total debt and equity is extracted from the financial statements.

Debt-equity ratio as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012			December 31, 2011
Liabilities	(Won)	14,154,911			11,633,327
Equity		12,391,990			12,732,709

Debt-equity ratio		114.23	%		91.37	%

29.

Financial Risk Management, Continued

(3)

Fair value

Fair value of the financial instruments that are traded in an active market is measured based on the quoted market price at the end of the reporting date. Disclosed market price of the financial assets held by the Group is the bid price.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

Fair value of the financial instruments that are not traded in an active market is determined using the valuation method. The Group uses the various valuation methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period. Fair value of financial instruments such as long-term liabilities is measured using the various methods including estimated discounted cash flow method.

Fair values of accounts receivable – trade, and accounts payable - trade are considered to be carrying amount less impairment and fair value of financial liabilities for the disclosure purpose is estimated by discounting contractual future cash flows using the current market interest rate used for the similar financial instruments by the Group.

Interest rates used by the Group for the fair value measurement as of March 31, 2012 are as follows:


		Interest rate
Derivative instruments		3.19%~5.07%
Borrowings and debentures		4.09%

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

29.

Financial Risk Management, Continued

Fair value and carrying amount

Carrying amount and fair value of financial assets and liabilities are as follows:


(In millions of won)
	March 31, 2012				December 31, 2011
	Carrying amount		Fair value		Carrying amount		Fair value
Assets carried at fair value
Financial assets at fair value through profit or loss	(Won)	16,952		16,952		17,635		17,635
Derivative financial assets		149,899		149,899		252,935		252,935
Available-for-sale financial assets		1,270,097		1,270,097		1,129,928		1,129,928

	(Won)	1,436,948		1,436,948		1,400,498		1,400,498

Assets carried at amortized cost
Cash and cash equivalents		1,769,391		1,769,391		1,650,794		1,650,794
Available-for-sale financial assets		344,374		344,374		486,229		486,229
Accounts receivable – trade and others		2,952,786		2,952,786		3,213,391		3,213,391
Financial instruments		575,144		575,144		987,191		987,191

	(Won)	5,641,695		5,641,695		6,337,605		6,337,605

Liabilities carried at fair value
Financial liabilities at fair value through profit or loss		401,619		401,619		397,886		397,886
Derivative financial liabilities		5,673		5,673		4,645		4,645

	(Won)	407,292		407,292		402,531		402,531

Liabilities carried at amortized cost
Accounts payable - trade		148,816		148,816		195,391		195,391
Borrowings		3,523,075		3,558,187		1,035,075		1,035,075
Debentures		3,963,393		4,149,147		4,363,002		4,562,156
Accounts payable - other and others		3,651,202		3,651,202		3,312,642		3,312,642

	(Won)	11,286,486		11,507,352		8,906,110		9,105,264

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

Fair value hierarchy

The different levels have been defined as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

Level 3: inputs for the asset or liability that are not based on observable market data

(unobservable inputs)

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

29.

Financial Risk Management, Continued

(3) Fair value, continued

The table below analyzes financial instruments carried at fair value, by fair value hierarchy as of March 31, 2012.


(In millions of won)
	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss	(Won)	—		15,977		975		16,952
Available-for-sale financial assets		1,108,970		27,697		133,430		1,270,097
Derivative financial assets		—		149,899		—		149,899
Financial liabilities at fair value through profit or loss		401,619		—		—		401,619
Derivative financial liabilities		—		5,673		—		5,673

There have been no transfers from Level 2 to Level 1 in 2012 and changes of financial assets classified as Level 3 for the three-month period ended March 31, 2012 are as follows:


(In millions of won)
	Balance at January 1		Profit(loss) for the period			Other comprehensive income			Disposal			Balance at March 31
Financial assets at fair value through profit or loss	(Won)	1,018		(43	)		—			—			975
Available-for-sale financial assets		197,019		—			(49,505	)		(14,084	)		133,430

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

30.

Transactions with Related Parties

Transactions among consolidated entities have been eliminated upon the consolidation and significant related party transactions of the Group for the three-month periods ended March 31, 2012 and 2011, and account balances as of March 31, 2012 and December 31, 2011 are as follows:

(1)

Transactions


(In millions of won)
	Purchases of property and equipment				Commissions paid and other expenses				Commissions earned and other income
	For the three-month period ended March 31
	2012		2011		2012		2011		2012		2011
Parent Company:
SK Holdings Co., Ltd.	(Won)	—		—		7,766		7,432		100		78
Associates:		—		—		—		—		—		—
SK Marketing & Company Co., Ltd.		24		8		32,173		30,411		2,754		2,347
F&U Credit information Co., Ltd.		—		—		13,195		10,139		365		420
SK Wyverns Baseball Club Co., Ltd.		—		—		9,416		9,794		—		13
HanaSK Card Co., Ltd.		135		2		76,898		44,313		47,679		17,873
HappyNarae Co., Ltd.(*)		44		235		964		932		5		10
SK China Company, Ltd.		—		—		3,821		—		73		—
Others		154		—		802		5,371		8		228
Others:
SK C&C Company Limited		56,228		26,005		76,542		68,397		3,364		4,009
SK Innovation Co., Ltd.		3		—		185		208		868		825
M&Service Co., Ltd.		14		2		3,455		2,813		529		6
SK Engineering and Construction Co., Ltd.		54,750		9,792		5,369		5,673		1,602		1,569
SKC Ltd.		—		—		—		—		246		352
SK Telesys Co., Ltd.		13,969		17,236		4,733		6,413		83		37,315
SK Networks Company Limited		1,923		178		301,960		280,025		4,713		4,409
SK Networks Service		—		—		15,664		11,061		51		130
SK Networks Internet, Inc.		—		—		1,024		—		—		—
SK Pinx Co., Ltd.		—		—		501		465		3		4
Infosec Co., Ltd.		102		—		1,980		—		18		—
SK Shipping Co., Ltd.		—		—		600		—		685		831
SK Securities Co., Ltd.		—		—		—		—		780		—
Others		46		270		3,097		23,122		1,487		808

	(Won)	127,392		53,728		560,145		506,569		65,413		71,227

(*)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the three-month period ended March 31, 2012.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

30.

Transactions with Related Parties, Continued

(2)

Account balances


(In millions of won)
	March 31, 2012
	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Parent Company:
SK Holdings Co., Ltd.	(Won)	133		—		40		—
Associates:
SK Marketing & Company Co., Ltd.		6,237		—		15,866		10
F&U Credit information Co., Ltd.		23		—		3,795		—
SK Wyverns Baseball Club Co., Ltd.		—		—		121		—
Wave City Develkpment Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		7,757		14		4,726		—
SK China Company, Ltd.		—		—		36,979		219
Television Media Korea Ltd.		—		—		949		—
HappyNarae Co., Ltd.(*1)		1		—		541		—
Others		4		10		701		—
Others:
SK C&C Company Limited		1,313		438		96,975		3,585
SK Innovation Co., Ltd.		734		91		—		—
M&Service Co., Ltd.		749		—		1,876		—
SK Engineering and Construction Co., Ltd.		1,065		—		22,414		82
SKC Ltd.		57		—		—		—
SK Telesys Co., Ltd.		150		—		17,512		—
SK Networks Company Limited		694		1,013		174,125		896
SK Networks Service		10		—		2,708		—
SK Energy Co., Ltd.		188		—		2,732		—
SK Securities Co., Ltd.		—		—		660		—
SKY Investment Co., Ltd.(*2)		14,519		—		—		—
Others		524		—		1,847		429

	(Won)	72,570		1,566		384,567		5,221

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(*1)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the three-month period ended March 31, 2012.

(*2)	The amount represents remaining balance of the loans to SKY Investment Co., Ltd. as of March 31, 2012.

30.

Transactions with Related Parties, Continued


(In millions of won)
	December 31, 2011
	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Parent Company:
SK Holdings Co., Ltd.	(Won)	147		—		—		—
Associates:
SK Marketing & Company Co., Ltd.		9,876		—		36,901		10
F&U Credit information Co., Ltd.		—		—		3,736		—
SK Wyverns Baseball Club Co., Ltd.		3,812		—		—		—
Wave City Develkpment Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		8,683		14		2,358		—
Daehan Kanggun BcN Co., Ltd.		20,562		—		—		—
HappyNarae Co., Ltd.(*)		1		—		1,768		—
Others		69		—		1,539		222
Others:
SK C&C Company Limited		3,330		—		172,047		3,585
SK Innovation Co., Ltd.		954		91		2		—
M&Service Co., Ltd.		644		—		4,679		—
SK Engineering and Construction Co., Ltd.		1,271		—		39,215		82
SKC Ltd.		184		—		—		—
SK Telesys Co., Ltd.		132		—		65,619		—
SK Mobile energy Co., Ltd.		1		—		71		—
SK Networks Company Limited		24,403		5,513		158,884		896
SK Networks Service		6		—		4,754		—
SK Shipping Co., Ltd.		365		—		—		—
Others		5,088		—		10,876		433

	(Won)	117,940		5,618		502,449		5,228

(*)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the three-month period ended March 31, 2012.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

(3)

Compensation for the key management

The Parent Company considers registered directors who have substantial roles and responsibility in planning, operating, and controlling of the business as key management. The considerations given to such key management for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended
	March 31, 2012		March 31, 2011
Salaries	(Won)	7,991		7,156
Provision for retirement benefits		565		517

	(Won)	8,556		7,673

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

31.

Commitments and Contingencies

(1)

Collateral assets and commitments

SK Broadband Co., Ltd., a subsidiary of the Parent Company, agreed to provide guarantees for Broadband Media Co., Ltd.’s loans as of March 31, 2012. For the guarantee, SK Broadband Co., Ltd. has provided its properties as collaterals as follows: (Won) 65,000 million to Hana Bank, (Won) 78,000 million to IBK Capital and (Won) 52,000 million to Kookmin Bank, respectively. SK Broadband Co., Ltd., has also provided its short-term financial instruments as collaterals as follows: (Won) 60,000 million to Korea Exchange Bank, (Won) 35,000 million to Hana Bank, (Won) 39,000 million to Nonghyup and (Won) 20,000 million to Woori Bank, respectively.

SK Broadband Co., Ltd. has provided guarantees for loans of Broadband CS Co., Ltd. For the guarantee, SK Broadband Co., Ltd. has pledged its properties as collateral in the amount of (Won) 16,900 million to Kookmin Bank as of March 31, 2012.

SK Broadband Co., Ltd. has pledged its properties as collateral for leases on buildings in the amount of (Won) 15,300 million as of March 31, 2012.

PS & Marketing Corporation, a subsidiary of the Parent Company, has obtained a line of credit for (Won) 60,000 million from Shinhan Bank for operational purposes. In relation to the line of credit, PS & Marketing Corporation pledged (Won) 78,000 million of inventory as collateral to Shinhan Bank as of March 31, 2012.

As of March 31, 2012, SKY Property Mgmt. Ltd., a subsidiary, has pledged CNY 800 million of building and land use right (long-term prepaid expenses) as collateral for its long-term borrowing amounting to CNY 560 million to Korea Exchange Bank and China Merchants Bank. In relation to the newly obtained long-term borrowings of USD 30 million and HKD 234 million during the three-month period ended March 31, 2012, the Parent Company has provided interest in SHANGHAI FUJITA TIANSHAN HOUSING DEVELOPMENT CO., LTD., a subsidiary, as collateral to Standard Chartered Bank (HK) Ltd.

(2)

Guarantee provided

As of March 31, 2012, the Parent Company has participated in “Tactical Airship” program of the Defense Acquisition Program Administration with Joint Defense Corporation. For an advance receipt amounting to (Won) 4,200 million, which Joint Defense Corporation received from the Defense Acquisition Program Administration, the Parent Company provides payment guarantees to the Defense Acquisition Program Administration.

(3)

Contingencies

As of March 31, 2012, the Group has recorded a provision in the amount of (Won) 4,469 million as SK Broadband Co., Ltd., a subsidiary, have partially lost the first trial relating to the violation of customer’s privacy (plaintiff’s claims of (Won) 24,689 million) during the year ended December 31, 2011.

As of March 31, 2012, the claim amount of pending litigations of SK Communications Co., Ltd., a subsidiary, amounts to (Won) 4,187 million and the ultimate result of these litigations cannot be reasonably estimated.

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

32.

Statements of Cash Flows

(1)

Adjustments for income and expenses from operating activities for the three-month periods ended March 31, 2012 and 2011 are as follows:


	Korean won
	2012			2011
	(In millions)
Interest income	(Won)	(32,396	)		(48,647	)
Dividend		(22,333	)		(20,675	)
Gain on foreign currency translation		(819	)		(24,240	)
Gain on valuation of financial assets at fair value through profit or loss		—			(2,776	)
Gain on valuation of financial liabilities at fair value through profit or loss		—			(11,193	)
Gain on disposal of long-term investments assets		(6,412	)		(158,674	)
Reversal of impairment loss on long-term investments securities		—			(10	)
Gain on valuation of derivatives		—			(1,263	)
Gain on settlement of derivatives		(4,292	)		—
Losses related to investments in affiliates		27,583			10,811
Gain on disposal of property and equipment and intangible assets		(1,010	)		(1,102	)
Reversal of allowance for doubtful accounts		(5,654	)		(1,305	)
Other income		(2,193	)		(2,242	)
Interest expenses		97,035			80,944
Loss on foreign currency translation		859			1,204
Loss on valuation of financial assets at fair value through profit or loss		640			—
Loss on valuation of financial liabilities at fair value through profit or loss		3,733			—
Loss on disposal of long-term investments securities		7,505			—
Loss on valuation of derivatives		—			15,697
Loss on settlement of derivatives		—			3,132
Income tax expense		81,604			231,633
Provision for retirement benefits		20,423			16,665
Depreciation and amortization		625,804			610,075
Bad debt for accounts receivable - trade		7,257			17,218
Loss on disposal of property and equipment and intangible assets		1,994			2,011
Impairment loss on property, equipment and intangible assets		3,429			939
Bad debt for accounts receivable - other		19,687			3,715
Other expenses		2,756			2,566

	(Won)	825,200			724,483

SK TELECOM CO., LTD.

Notes to the Condensed Consolidated Interim Financial Statements

For the three-month periods ended March 31, 2012 and 2011

32.

Statements of Cash Flows, Continued

(2)

Changes in assets and liabilities from operating activities for the three-month periods ended March 31, 2012 and 2011 are as follows:


	Korean won
	2012			2011
	(In millions)
Accounts receivable - trade	(Won)	67,254			49,224
Accounts receivable - other		181,448			661,808
Accrued income		(5,653	)		(17,356	)
Advance payments		(13,865	)		(67,315	)
Prepaid expenses		12,324			26,943
Proxy paid V.A.T.		(311	)		(27,983	)
Inventories		17,128			(19,578	)
Guarantee deposits		12,775			(650	)
Accounts payable - trade		(44,706	)		30,362
Accounts payable - other		(274,740	)		(497,734	)
Advanced receipts		(188	)		1,586
Withholdings		117,747			76,573
Deposits received		(3,089	)		2,493
Accrued expenses		129,735			(23,720	)
Advanced V.A.T.		13,488			101,696
Unearned revenue		(26,245	)		(18,271	)
Provisions		(28,679	)		(19	)
Long-term provisions		3,718			158
Plan assets		841			3,386
Retirement benefit payment		(15,862	)		(9,301	)
Others		1,168			25,680

	(Won)	144,288			297,982

(3)

Significant non-cash transactions for the three-month periods ended March 31, 2012 and 2011 are as follows:


	Korean won
	2012		2011
	(In millions)
Transfer of other tangible assets to construction in progress	(Won)	367,439		245,444
Transfer of construction in progress to property and equipment and investment in associates		603,665		280,775
Transfer of inventories to tangible assets account		18,344		13,790
Accounts payable - other related to acquisition of tangible assets and others		8,009		16,357
Write-off of accounts receivable-trade and others		4,807		174

SK TELECOM CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

March 31, 2012

(With Independent Auditors’ Review Report Thereon)

Contents


	Page

Independent Auditors’ Review Report		1

Condensed Separate Statements of Financial Position		3

Condensed Separate Statements of Income		5

Condensed Separate Statements of Comprehensive Income		6

Condensed Separate Statements of Changes in Equity		7

Condensed Separate Statements of Cash Flows		9

Notes to the Condensed Separate Interim Financial Statements		11

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To The Board of Directors and Shareholders

SK Telecom Co., Ltd.:

Reviewed financial statements

We have reviewed the accompanying condensed separate interim financial statements of SK Telecom Co., Ltd. (the “Company”), expressed in Korean won, which comprise the condensed separate statement of financial position as of March 31, 2012, the related condensed separate statements of income, comprehensive income, changes in equity and cash flows for the three-month period ended March 31, 2012 and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the Condensed Interim Financial Statements

Management is responsible for the preparation and fair presentation of these condensed separate interim financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) No.1034 Interim Financial Reporting, and for such internal controls as management determines necessary to enable the preparation of condensed separate interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to issue a report on these condensed separate interim financial statements based on our review.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not presented fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

The accompanying condensed separate interim financial statements as of March 31, 2012 and December 31, 2011 and for the three-month periods ended March 31, 2012 and 2011 have been translated into United States dollars solely for the convenience of the reader. We have reviewed the translation and, in our opinion, the condensed separate interim financial statements expressed in Korean won have been translated into dollars on the basis set forth in note 2 to the condensed separate interim financial statements.

Other Considerations

The condensed separate statements of income, comprehensive income, changes in equity and cash flows for the Company for the three-month period ended March 31, 2011 were reviewed by other auditors and their report thereon, dated May 27, 2011, stated that nothing has come to their attention that causes them to believe that the condensed separate interim financial statements referred to above were not presented fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

In addition, the condensed separate statement of financial position of the Company as of December 31, 2011, and the related condensed separate statements of income, comprehensive income, changes in equity and cash flows for the year then ended, which are not accompanying this report, were audited by other auditors and their report thereon, dated March 13, 2012, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2011, presented for comparative purposes, is not different from that audited by other auditors in all material respects.

The procedures and practices utilized in the Republic of Korea to review such separate interim financial statements may differ from those generally accepted and applied in other countries. Accordingly, this report and the accompanying condensed separate financial statements are for use by those knowledgeable about Korean review standards and their application in practice.

KPMG Samjong Accounting Corp.

Seoul, Korea

May 16, 2012

This report is effective as of May 16, 2012, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SK TELECOM CO., LTD.

Condensed Separate Statements of Financial Position

As of March 31, 2012 and December 31, 2011


			Korean won				Translation into U.S. dollars (note 2)
	Note		March 31, 2012		December 31, 2011		March 31, 2012		December 31, 2011
			(In millions)				(In thousands)
Assets
Current Assets:
Cash and cash equivalents		25,26	(Won)	1,163,683		895,558	$	1,028,533		791,548
Short-term financial instruments		4,25,26		205,000		627,500		181,191		554,623
Short-term investment securities		6,25,26		154,263		90,573		136,347		80,054
Accounts receivable - trade, net		5,25,26,27		1,287,862		1,282,234		1,138,291		1,133,316
Short-term loans, net		5,25,26,27		85,786		88,236		75,822		77,988
Accounts receivable - other, net		5,25,26,27		526,980		774,221		465,777		684,304
Prepaid expenses				68,610		79,668		60,644		70,415
Derivative financial assets		16,25,26		70,386		83,708		62,211		73,987
Inventories, net				3,250		8,407		2,872		7,431
Advanced payments and other		5,25,26		49,513		17,972		43,763		15,885

Total Current Assets				3,615,333		3,948,077		3,195,451		3,489,551


Non-Current Assets:
Long-term financial instruments		4,25,26		7,569		7,569		6,690		6,690
Long-term investment securities		6,25,26		1,265,923		1,312,438		1,118,900		1,160,012
Investments in subsidiaries and associates		7		7,956,912		4,647,506		7,032,802		4,107,748
Property and equipment, net		8,27		6,026,044		6,260,169		5,326,183		5,533,117
Investment property		9		31,185		30,699		27,563		27,133
Goodwill		10		1,306,236		1,306,236		1,154,531		1,154,531
Intangible assets		11		2,334,965		2,364,795		2,063,784		2,090,150
Long-term loans, net		5,25,26,27		72,295		75,282		63,899		66,538
Long-term accounts receivable - other		5,25,26		2,837		5,393		2,508		4,767
Long-term prepaid expenses				19,729		20,939		17,438		18,507
Guarantee deposits		5,25,26,27		141,199		155,389		124,800		137,343
Long-term derivative financial assets		16,25,26		79,513		104,897		70,278		92,714
Deferred tax assets		23		245,946		280,380		217,382		247,817
Other non-current assets				1,004		758		887		670

Total Non-Current Assets				19,491,357		16,572,450		17,227,645		14,647,737

Total Assets			(Won)	23,106,690		20,520,527	$	20,423,096		18,137,288

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Financial Position, Continued

As of March 31, 2012 and December 31, 2011


	Note		Korean won						Translation into U.S. dollars (note 2)
	Note		March 31, 2012			December 31, 2011			March 31, 2012			December 31, 2011
			(In millions)						(In thousands)
Liabilities and Equity
Current Liabilities:
Short-term borrowings		12,25,26	(Won)	500,000			—		$	441,930			—
Accounts payable - other		25,26,27		1,720,371			1,361,473			1,520,568			1,203,353
Withholdings		25,26		438,693			330,674			387,744			292,269
Accrued expenses		15,25,26		587,959			468,313			519,674			413,923
Income tax payable		23		325,604			277,836			287,788			245,568
Unearned revenue				269,310			282,890			238,034			250,036
Derivative financial liabilities		16,25,26		5,673			4,645			5,014			4,106
Provisions		14		632,213			656,597			558,788			580,340
Current portion of long-term debt, net		12,13,25,26		568,097			1,044,519			502,118			923,209
Advanced receipt and other				39,350			40,059			34,780			35,407

Total Current Liabilities				5,087,270			4,467,006			4,496,438			3,948,211


Non-Current Liabilities:
Debentures, net		12,25,26		2,985,547			2,590,630			2,638,808			2,289,756
Long-term borrowings		12,25,26		2,101,107			115,330			1,857,086			101,936
Long-term payables - other		13,25,26		705,491			840,974			623,555			743,304
Long-term unearned revenue				200,836			212,171			177,511			187,530
Defined benefit obligation		15		32,654			26,740			28,862			23,634
Long-term provisions		14		135,313			134,264			119,598			118,671
Other non-current liabilities		25,26,27		163,343			167,110			144,372			147,702

Total Non-Current Liabilities				6,324,291			4,087,219			5,589,792			3,612,533

Total Liabilities				11,411,561			8,554,225			10,086,230			7,560,744


Equity
Share capital		1,17		44,639			44,639			39,455			39,455
Share premium		17,18		(236,016	)		(236,016	)		(208,605	)		(208,605	)
Retained earnings		19		11,592,034			11,837,185			10,245,744			10,462,422
Reserves		20		294,472			320,494			260,272			283,272

Total Equity				11,695,129			11,966,302			10,336,866			10,576,544

Total Liabilities and Equity			(Won)	23,106,690			20,520,527		$	20,423,096			18,137,288

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Income

For the three-month periods ended March 31, 2012 and 2011


			Korean won						Translation into U.S. dollars (note 2)
	Note		2012			2011			2012			2011
			(In millions except for per share data)						(In thousands except for per share data)
Operating revenue:		27
Revenue			(Won)	3,007,439			3,129,950		$	2,658,157			2,766,440
Other operating income		21		9,008			2,198			7,962			1,943

Sub-total				3,016,447			3,132,148			2,666,119			2,768,383


Operating expense:		27
Labor cost				169,735			177,462			150,022			156,851
Commissions paid				1,271,355			1,239,915			1,123,700			1,095,912
Depreciation and amortization				400,956			413,655			354,389			365,614
Network interconnection				225,750			242,494			199,532			214,331
Leased line				107,436			97,853			94,958			86,488
Advertising				36,198			35,388			31,994			31,278
Rent				80,888			79,100			71,494			69,913
Cost of goods sold				61,945			40,910			54,751			36,159
Other operating expenses		21		204,482			207,391			180,734			183,305

Sub-total				2,558,745			2,534,168			2,261,574			2,239,851


Operating income				457,702			597,980			404,545			528,532

Finance income		22		52,113			251,532			46,060			222,319
Finance costs		22		(84,365	)		(60,595	)		(74,566	)		(53,558	)
Gain on disposal of investments in subsidiaries and associates		7		80,483			122			71,135			107
Impairment loss on investments in associates		7		(72,096	)		—			(63,723	)		—

Income before income tax				433,837			789,039			383,451			697,400

Income tax expense		23		88,865			228,367			78,544			201,844


Net income for the period			(Won)	344,972			560,672		$	304,907			495,556

Basic earnings per share		24	(Won)	4,950			7,886		$	4.38			6.97

Diluted earnings per share		24	(Won)	4,847			7,550		$	4.28			6.67

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Comprehensive Income

For the three-month periods ended March 31, 2012 and 2011


	Note		Korean won						Translation into U.S. dollars (note 2)
	Note		2012			2011			2012			2011
			(In millions)						(In thousands)
Net income for the period			(Won)	344,972			560,672		$	304,907			495,556

Other comprehensive income(loss)
Net change in fair value of available-for-sale financial assets		20		(11,699	)		(85,356	)		(10,340	)		(75,443	)
Gains (losses) on valuation of derivatives		16,20		(14,323	)		38,720			(12,660	)		34,223
Actuarial losses on defined benefit obligations		15,19		(4,684	)		(4,079	)		(4,140	)		(3,605	)

				(30,706	)		(50,715	)		(27,140	)		(44,825	)

Total comprehensive income			(Won)	314,266			509,957		$	277,767			450,731

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Changes in Equity

For the three-month periods ended March 31, 2012 and 2011


(In millions of won)	Share capital		Share Premium											Retained earnings			Reserves			Total equity
	Share capital		Paid-in surplus		Treasury stock			Loss on disposal of treasury stock			Other			Retained earnings			Reserves			Total equity
Balance, January 1, 2011	(Won)	44,639		2,915,887		(2,202,439	)		(15,875	)		(722,216	)		10,824,356			736,606			11,580,958
Cash dividends		—		—		—			—			—			(597,198	)		—			(597,198	)
Total comprehensive income
Net income		—		—		—			—			—			560,672			—			560,672
Other comprehensive loss		—		—		—			—			—			(4,079	)		(46,636	)		(50,715	)

Balance, March 31, 2011	(Won)	44,639		2,915,887		(2,202,439	)		(15,875	)		(722,216	)		10,783,751			689,970			11,493,717


Balance, January 1, 2012		44,639		2,915,887		(2,410,451	)		(18,855	)		(722,597	)		11,837,185			320,494			11,966,302
Cash dividends		—		—		—			—			—			(585,439	)		—			(585,439	)
Total comprehensive income
Net income		—		—		—			—			—			344,972			—			344,972
Other comprehensive loss		—		—		—			—			—			(4,684	)		(26,022	)		(30,706	)

Balance, March 31, 2012	(Won)	44,639		2,915,887		(2,410,451	)		(18,855	)		(722,597	)		11,592,034			294,472			11,695,129

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Changes in Equity, Continued

For the three-month periods ended March 31, 2012 and 2011


(In thousands of U.S. dollars) (Note 2)
	Common stock		Share Premium											Retained earnings			Reserves			Total equity
	Common stock		Paid-in surplus		Treasury stock			Loss on disposal of treasury stock			Other			Retained earnings			Reserves			Total equity
Balance, January 1, 2011	$	39,455		2,577,238		(1,946,649	)		(14,031	)		(638,339	)		9,567,223			651,057			10,235,954
Cash dividends		—		—		—			—			—			(527,840	)		—			(527,840	)
Total comprehensive income
Net income		—		—		—			—			—			495,556			—			495,556
Other comprehensive loss		—		—		—			—			—			(3,605	)		(41,220	)		(44,825	)

Balance, March 31, 2011	$	39,455		2,577,238		(1,946,649	)		(14,031	)		(638,339	)		9,531,334			609,837			10,158,845


Balance, January 1, 2012		39,455		2,577,238		(2,130,503	)		(16,665	)		(638,675	)		10,462,422			283,272			10,576,544
Cash dividends		—		—		—			—			—			(517,445	)		—			(517,445	)
Total comprehensive income
Net income		—		—		—			—			—			304,907			—			304,907
Other comprehensive loss		—		—		—			—			—			(4,140	)		(23,000	)		(27,140	)

Balance, March 31, 2012	$	39,455		2,577,238		(2,130,503	)		(16,665	)		(638,675	)		10,245,744			260,272			10,336,866

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows

For the three-month periods ended March 31, 2012 and 2011


			Korean won						Translation into U.S. dollars (note 2)
	Note		2012			2011			2012			2011
			(In millions)						(In thousands)
Cash flows from operating activities:
Cash generated from operating activities
Net income for the period			(Won)	344,972			560,672		$	304,907			495,556
Adjustments for income and expenses		29		557,635			506,785			492,872			447,927
Changes in assets and liabilities related to operating activities		29		211,427			407,037			186,872			359,764

Sub-total				1,114,034			1,474,494			984,651			1,303,247
Interest received				20,621			35,993			18,226			31,814
Dividends received				25,167			26,472			22,244			23,398
Interest paid				(59,468	)		(62,177	)		(52,562	)		(54,956	)
Income tax paid				(1,972	)		(12,431	)		(1,743	)		(10,988	)

Net cash provided by operating activities				1,098,382			1,462,351			970,816			1,292,515


Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term investment securities, net				—			65,000			—			57,451
Decrease in short-term financial instruments, net				422,500			16,000			373,431			14,142
Collection of short-term loans				51,956			46,288			45,922			40,912
Proceeds from disposal of long-term investment securities				469			214,497			414			189,585
Proceeds from disposal of investments in subsidiaries and associates				88,602			1,757			78,312			1,553
Proceeds from disposal of property and equipment				450			343			398			303
Proceeds from disposal of intangible assets				1,577			3			1,394			3
Collection of long-term loans				2,811			3,341			2,484			2,953
Proceeds from disposal of other non-current assets				—			119			—			104

Sub-total				568,365			347,348			502,355			307,006
Cash outflows for investing activities:
Increase in short-term investment securities, net				45,000			—			39,774			—
Increase in short-term loans				48,808			87,643			43,139			77,464
Acquisition of long-term investment securities				9,469			215,006			8,369			190,035
Acquisition of investments in subsidiaries and associates				3,066,547			11,000			2,710,401			9,722
Acquisition of property and equipment				486,802			271,735			430,265			240,175
Acquisition of intangible assets				15,939			3,508			14,087			3,101
Increase in long-term loans				—			90			—			80
Increase in other non-current assets				246			—			218			—

Sub-total				3,672,811			588,982			3,246,253			520,577

Net cash used in investing activities			(Won)	(3,104,446)			(241,634)		$	(2,743,898)			(213,571)

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011


		Korean won					Translation into U.S. dollars (note 2)
	Note	2012		2011			2012		2011
		(In millions)					(In thousands)
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings		(Won)	500,000		—		$	441,930		—
Proceeds from long-term borrowings			1,986,800		—			1,756,054		—
Cash inflows from settlement of derivatives			1,517		—			1,342		—

Sub-total			2,488,317		—			2,199,326		—
Cash outflows for financing activities:
Repayment of current portion of long-term debt			92,158		170,000			81,455		150,256
Repayment of debentures			118,813		332,160			105,014		293,583
Cash outflows from settlement of derivatives			3,157		15,690			2,790		13,868

Sub-total			214,128		517,850			189,259		457,707

Net cash provided by (used in) financing activities			2,274,189		(517,850	)		2,010,067		(457,707	)


Net increase in cash and cash equivalents			268,125		702,867			236,985		621,237
Cash and cash equivalents at beginning of the period			895,558		357,470			791,548		315,954
Effects of exchange rate changes on cash and cash equivalents			—		(5	)		—		(5	)

Cash and cash equivalents at end of the period		(Won)	1,163,683		1,060,332		$	1,028,533		937,186

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

1.	Reporting Entity

SK Telecom Co., Ltd. (“the Company” or “the Parent Company”) was incorporated in March 1984 under the laws of Republic of Korea (“Korea”) to engage in providing cellular telephone communication services in Korea. The Parent Company mainly provides wireless telecommunications in Korea. The Parent Company’s common shares and depositary receipts (DRs) are listed on the Stock Market of Korea Exchange, the New York Stock Exchange and the London Stock Exchange. As of March 31, 2012, the Parent Company’s total issued shares are held by the following:


	Number of shares		Percentage of total shares issued (%)
SK Holdings Co., Ltd.		20,363,452		25.22
Tradewinds Global Investors, LLC		4,050,518		5.02
POSCO Corp.		2,341,569		2.90
Institutional investors and other minority stockholders		42,939,460		53.17
Treasury stock		11,050,712		13.69

Total number of shares		80,745,711		100.00

2.	Basis of Preparation

The accompanying separate financial statements are stated in Korean won, the functional currency of the Company and the currency of the primary economic environment 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 (Won) 1,131.40 to USD 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 three-month period ended March 31, 2012. Such translations into U.S. dollars do not comply with K-IFRS and should not be construed as representations that the Korean won amounts could be converted into U.S. dollars at that or any other rate.

(1)

Statement of compliance

These condensed separate interim financial statements were prepared in accordance with K-IFRS No. 1034 Interim Financial Reporting. They do not include all of the disclosures required for full annual financial statements.

These condensed interim financial statements are separate interim financial statements prepared in accordance with K-IFRS No. 1027 Consolidated and Separate Financial Statements presented by a parent, an investor in an associate or a venturer in a jointly controlled entity, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

2.	Basis of Preparation, Continued

(2)

Use of estimates and judgments

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

In preparing these condensed separate interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as of and for the year ended December 31, 2011.

3.	Significant Accounting Policies

The accounting policies applied by the Company in these condensed separate interim financial statements are the same as those applied by the Company in its separate financial statements as of and for the year ended December 31, 2011.

4.	Restricted Deposits

Deposits which are restricted in use as of March 31, 2012 and December 31, 2011 are summarized as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Short-term financial instruments (*)	(Won)	70,000		70,000
Long-term financial instruments (*)		7,569		7,569

	(Won)	77,569		77,569

(*)	These financial instruments include financial instruments restricted in use in relation to the various charitable contributions which are non-cancellable until maturity.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

5.	Trade and Other Receivables

(1)

Details of trade and other receivables as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012
	Gross amount		Allowances for impairment			Carrying amount
Current assets:
Accounts receivable - trade	(Won)	1,407,362		(119,500	)		1,287,862
Short-term loans		86,912		(1,126	)		85,786
Accounts receivable - other		571,784		(44,804	)		526,980
Accrued income		5,110		—			5,110

		2,071,168		(165,430	)		1,905,738
Non-current assets:
Long-term loans		95,865		(23,570	)		72,295
Long-term accounts receivable - other		2,837		—			2,837
Guarantee deposits		141,199		—			141,199

		239,901		(23,570	)		216,331

Total	(Won)	2,311,069		(189,000	)		2,122,069


(In millions of won)	December 31, 2011
	Gross amount		Allowances for impairment			Carrying amount
Current assets:
Accounts receivable - trade	(Won)	1,400,758		(118,524	)		1,282,234
Short-term loans		89,387		(1,151	)		88,236
Accounts receivable - other		802,581		(28,360	)		774,221
Accrued income		5,278		—			5,278

		2,298,004		(148,035	)		2,149,969
Non-current assets:
Long-term loans		98,886		(23,604	)		75,282
Long-term accounts receivable - other		5,393		—			5,393
Guarantee deposits		155,389		—			155,389

		259,668		(23,604	)		236,064

Total	(Won)	2,557,672		(171,639	)		2,386,033

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

5.	Trade and Other Receivables, Continued

(2)

The movement in allowance for doubtful accounts in respect of trade and other receivables during the three-month periods ended March 31, 2012 and 2011 was as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Balance at January, 1	(Won)	171,639			210,996
Increase of bad debt		16,249			15,053
Reversal of allowance for doubtful accounts		(4,301	)		—
Write-off		(256	)		(174	)
Collection of receivables written-off		5,669			2,615

Balance at March, 31	(Won)	189,000			228,490

(3)

Details of trade and other receivables, overdue but not impaired, and impaired accounts receivable as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012						December 31, 2011
	Accounts receivable - trade			Other receivables			Accounts receivable - trade			Other receivables
Accounts receivable	(Won)	1,002,186			799,713			944,177			1,072,199
Overdue but not impaired accounts receivable		33,716			—			24,880			—
Impaired accounts receivable		371,460			103,994			431,701			84,715

		1,407,362			903,707			1,400,758			1,156,914
Allowance for doubtful accounts		(119,500	)		(69,500	)		(118,524	)		(53,115	)

	(Won)	1,287,862			834,207			1,282,234			1,103,799

The Company establishes allowance for doubtful accounts based on the likelihood of recoverability of accounts receivable based on the aging of accounts receivables at the end of the period, past customer default experience and their credit status, and economic and industrial factors.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

5.	Trade and Other Receivables, Continued

(4)

The aging of overdue but not impaired accounts receivable as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Less than 1 month	(Won)	7,844		4,229
1 ~ 3 months		6,343		6,979
3 ~ 6 months		7,140		3,336
More than 6 months		12,389		10,336

	(Won)	33,716		24,880

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

6.	Investment Securities

(1)

Details of short-term investment securities as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Beneficiary certificates (*)	(Won)	145,387		90,287
Current portion of long-term investment securities		8,876		286

	(Won)	154,263		90,573

(*)	The distributions arising from beneficiary certificates as of March 31, 2012, were accounted for as accrued income.

(2)

Details of long-term available-for-sale financial assets as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012			December 31, 2011
Equity securities:
Marketable equity securities	(Won)	1,107,426			1,095,747
Unlisted equity securities		15,900			15,903
Equity investments		126,505			175,466

		1,249,831			1,287,116

Debt securities:
Public bonds (*1)		401			401
Investment bonds (*2)		24,567			25,207

		24,968			25,608

Total		1,274,799			1,312,724
Less current portion of long-term investment securities		(8,876	)		(286	)

Long-term investment securities	(Won)	1,265,923			1,312,438

(*1)	Details of maturity for the public bonds as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Less than 1 year	(Won)	45		45
1 ~ 5 years		356		356

	(Won)	401		401

(*2)

The Company classified convertible bonds of NanoEnTek, Inc. (carrying amount as of March 31, 2012: (Won) 15,977 million), which were acquired during the year ended December 31, 2011, as financial assets at fair value through profit or loss. The difference between acquisition cost and fair value is accounted for as finance income (loss).

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

7.	Investments in Subsidiaries and Associates

(1)

Investments in subsidiaries and associates as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Investments in subsidiaries	(Won)	3,375,231		3,382,939
Investments in associates		4,581,681		1,264,567

	(Won)	7,956,912		4,647,506

(2)

Details of investments in subsidiaries as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012						December 31, 2011
	Number of shares		Ownership (%)		Carrying amount		Carrying amount
SK Telink Co., Ltd.		1,082,272		83.5	(Won)	144,740		144,740
Ntreev Soft Co., Ltd.(*)		—		—		—		7,708
SK Broadband Co., Ltd.		149,638,354		50.6		1,242,247		1,242,247
PS&Marketing Corporation		46,000,000		100.0		213,934		213,934
Service Ace Co., Ltd.		4,385,400		100.0		21,927		21,927
Service Top Co., Ltd.		2,856,200		100.0		14,281		14,281
Network O&S Co., Ltd.		3,000,000		100.0		15,000		15,000
SK Planet Co., Ltd.		60,000,000		100.0		1,234,884		1,234,884
SK Telecom China Holdings Co., Ltd.		—		100.0		29,116		29,116
SKY Property Mgmt. Ltd.		22,980		60.0		264,850		264,850
SKT Vietnam PTE. Ltd.		180,476,700		73.3		26,264		26,264
SKT Americas, Inc.		122		100.0		65,379		65,379
YTK Investment Ltd.		—		100.0		52,123		52,123
Atlas Investment		—		100.0		50,486		50,486

					(Won)	3,375,231		3,382,939

(*)	During the three-month period ended March 31, 2012, the Company sold 2,064,970 shares (ownership interest of 63.7%) of investment in Ntreev Soft Co., Ltd. to NCsoft Corporation and recognized gain on disposal of (Won) 80,483 million.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

7.	Investments in Subsidiaries and Associates, Continued

(3)

Details of investments in associates as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012						December 31, 2011
	Number of shares		Ownership percentage (%)		Carrying amount		Carrying amount
SK Marketing & Company Co., Ltd.		5,000,000		50.0	(Won)	112,531		112,531
SK China Company Ltd.		720,000		22.5		47,830		47,830
SK USA, Inc.		49		49.0		5,498		5,498
HappyNarae Co., Ltd. (*1)		680,000		42.5		12,250		12,250
F&U Credit information Co., Ltd.		300,000		50.0		4,481		4,481
Korea IT Fund (*2)		190		63.3		220,957		220,957
Wave City Development Co., Ltd. (*3)		382,000		19.1		1,532		1,532
HanaSK Card Co., Ltd.		57,647,058		49.0		400,000		400,000
Daehan Kanggun BcN Co., Ltd.		1,461,486		29.0		8,340		8,340
NanoEnTek, Inc.(*3)		1,807,130		9.3		11,000		11,000
Health Connect Co., Ltd.		141,000		49.5		1,410		1,410
UNISK (Beijing) Information Technology Co.,Ltd.		49		49.0		4,247		4,247
TR Entertainment		—		42.2		7,560		7,560
SK Industrial Development China Co., Ltd.		—		35.0		83,691		83,691
Packet One Network		1,151,556		28.2		137,751		137,751
SK Technology Innovation Company		9,800		49.0		85,873		85,873
Lightsquared Inc.(*3,4)		3,387,916		3.3		—		72,097
SK hynix Inc.(*5)		146,100,000		21.1		3,374,726		—
SK MENA Investment B.V.(*6)		—		32.1		14,485		—
SK Wyverns Baseball Club Co., Ltd. and others						47,519		47,519

					(Won)	4,581,681		1,264,567

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(*1)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the three-month period ended March 31, 2012.

(*2)	Investment in Korea IT Fund was classified as investments in associates as the Company only has less than 50% of voting rights, and therefore does not have control over Korea IT Fund under the agreement.

(*3)	Investments in these associates were classified as investments in associates as the Company has the ability to exercise significant influence on these associates through participation on their board of directors.

(*4)	The Company recognized impairment loss of (Won) 72,097 million during the three-month period ended March 31, 2012.

(*5)	The Company acquired 146,100,000 shares (ownership interest of 21.1%) of SK hynix Inc. through purchase of existing shares and subscription of new shares at February 14, 2012.

7.	Investments in Subsidiaries and Associates, Continued

(*6)	The Company acquired 32.1% of ownership interest of SK MENA Investment B.V. during the three-month period ended March 31, 2012.

(4)

The market price of investments in listed subsidiaries as of March 31, 2012 and December 31, 2011 are as follows:

(In millions of won, except for share data)

March 31, 2012

December 31, 2011

Market
value per
share

Number of
shares

Market
price

Market
value per
share

Number of
shares

Market
price

SK Broadband Co., Ltd.

(Won)

3,480

149,638,354

520,741

3,460

149,638,354

517,749

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

8.	Property and Equipment

(1)

Property and equipment as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012							December 31, 2011
	Acquisition cost		Accumulated depreciation			Carrying amount		Carrying amount
Land	(Won)	409,427		—			409,427		409,696
Buildings		1,080,258		(413,952	)		666,306		676,095
Structures		585,696		(293,306	)		292,390		300,995
Machinery		15,605,494		(12,149,080	)		3,456,414		3,581,275
Other		1,493,692		(818,917	)		674,775		640,317
Construction in progress		526,732		—			526,732		651,791

	(Won)	19,701,299		(13,675,255	)		6,026,044		6,260,169

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

8.	Property and Equipment, Continued

(2)

Changes in property and equipment for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended March 31, 2012
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance
Land	(Won)	409,696		1		—			(270	)		—			409,427
Buildings		676,095		258		—			53			(10,100	)		666,306
Structures		300,995		8		(1	)		131			(8,743	)		292,390
Machinery		3,581,275		2,707		(377	)		177,255			(304,446	)		3,456,414
Other		640,317		405,401		(606	)		(347,537	)		(22,800	)		674,775
Construction in progress		651,791		78,427		—			(203,486	)		—			526,732

	(Won)	6,260,169		486,802		(984	)		(373,854	)		(346,089	)		6,026,044


(In millions of won)
	For the three-month period ended March 31, 2011
	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance
Land	(Won)	402,702		—		(50	)		509			—			403,161
Buildings		686,645		10,909		(20	)		3,019			(9,253	)		691,300
Structures		242,004		25		—			1,061			(7,836	)		235,254
Machinery		3,240,001		1,340		(157	)		230,392			(303,586	)		3,167,990
Other		521,499		233,450		(567	)		(170,980	)		(19,208	)		564,194
Construction in progress		376,896		26,011		—			(28,536	)		—			374,371

	(Won)	5,469,747		271,735		(794	)		35,465			(339,883	)		5,436,270

9.	Investment Property

(1)

Investment property as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012							December 31, 2011
	Acquisition cost		Accumulated depreciation			Carrying amount		Carrying amount
Land	(Won)	9,270		—			9,270		9,001
Buildings		44,792		(22,877	)		21,915		21,698

	(Won)	54,062		(22,877	)		31,185		30,699

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

9.	Investment Property, Continued

(2)

Changes in investment property for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended March 31, 2012
	Beginning balance		Transfer		Depreciation			Ending balance
Land	(Won)	9,001		269		—			9,270
Buildings		21,698		541		(324	)		21,915

	(Won)	30,699		810		(324	)		31,185


(In millions of won)	For the three-month period ended March 31, 2011
	Beginning balance		Transfer			Depreciation			Ending balance
Land	(Won)	9,508		(507	)		—			9,001
Buildings		25,291		(1,350	)		(1,206	)		22,735

	(Won)	34,799		(1,857	)		(1,206	)		31,736

(3)

Details of fair value of investment property as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012				December 31, 2011
	Carrying amount		Fair value		Carrying amount		Fair value
Land	(Won)	9,270		53,277		9,001		51,731
Buildings		21,915		22,326		21,698		21,679

	(Won)	31,185		75,603		30,699		73,410

The fair value of investment property was appraised on the basis of market price by an independent appraisal company.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

10.

Goodwill

Goodwill as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Goodwill related to acquisition of Shinsegi Telecomm, Inc.	(Won)	1,306,236		1,306,236

11.

Intangible Assets

(1)

Intangible assets as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)	March 31, 2012							December 31, 2011
	Acquisition cost		Accumulated depreciation			Carrying amount		Carrying amount
Frequency use rights	(Won)	2,837,385		(975,166	)		1,862,219		1,889,103
Land use right		29,273		(17,811	)		11,462		12,740
Industrial right		30,527		(20,023	)		10,504		8,328
Development costs		124,545		(124,004	)		541		1,185
Facility usage right		38,289		(23,696	)		14,593		15,058
Memberships (*1)		80,580		—			80,580		80,606
Other (*2)		1,395,277		(1,040,211	)		355,066		357,775

	(Won)	4,535,876		(2,200,911	)		2,334,965		2,364,795

(*1)	Memberships are classified as intangible assets with indefinite useful life and are not amortized.

(*2)	Other intangible assets consist of computer software and usage rights to a research facility which the Company built and donated to a university which in turn the Company is given rights-to-use for a definite number of years.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(2)

Details of changes in intangible assets for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended March 31, 2012
	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Ending balance
Frequency use rights	(Won)	1,889,102		16,659		—			—		(43,542	)		1,862,219
Land use right		12,740		—		(80	)		—		(1,197	)		11,463
Industrial right		8,328		2,934		—			—		(758	)		10,504
Development costs		1,185		—		—			—		(644	)		541
Facility usage right		15,058		131		(38	)		—		(558	)		14,593
Memberships		80,607		—		(27	)		—		—			80,580
Other		357,775		4,225		(1,431	)		28,519		(34,023	)		355,065

	(Won)	2,364,795		23,949		(1,576	)		28,519		(80,722	)		2,334,965

11.

Intangible Assets, Continued


(In millions of won)
	For the three-month period ended March 31, 2011
	Beginning balance		Acquisition		Disposal			Transfer			Amortization			Ending balance
Frequency use rights	(Won)	709,043		—		—			(469	)		(33,211	)		675,363
Land use right		11,130		260		—			—			(948	)		10,442
Industrial right		14,748		331		—			323			(847	)		14,555
Development costs		4,898		—		—			—			(944	)		3,954
Facility usage right		16,702		86		(3	)		24			(555	)		16,254
Membership		90,108		—		—			—			—			90,108
Other		578,340		2,831		—			38,464			(70,586	)		549,049

	(Won)	1,424,969		3,508		(3	)		38,342			(107,091	)		1,359,725

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(3)

The carrying amount and residual useful lives of frequency usage rights as of March 31, 2012 are as follows:


(In millions of won)
	Amount		Description	Residual useful lives
W-CDMA license	(Won)	461,726	Frequency use rights relating to W-CDMA service		(*1)
W-CDMA license		77,477	Frequency use rights relating to W-CDMA service		(*2)
800MHz license		375,032	Frequency use rights relating to CDMA and LTE service		(*3)
1.8GHz license		928,203	Frequency use rights relating to LTE service		(*4)
Wibro license		294	WiBro service		(*5)
Wibro license		16,463	WiBro service		(*6)
DMB license		3,024	DMB service		4 years and 3 months

	(Won)	1,862,219

(*1)

The Company purchased the W-CDMA license from Korea Communication Commission (“KCC”) on December 4, 2001. Amortization of the W-CDMA license commenced once the Company began its commercial W-CDMA services on December 29, 2003 under a straight-line basis over the remaining useful life of the license. The W-COMA license will expire in December 2016.

(*2)

The Company purchased the additional W-CDMA license from KCC in May 2010. Amortization of the additional W-CDMA license commenced once the Company started its related commercial W-CDMA services on October 7, 2010, under a straight-line basis over the remaining useful life of the W-CDMA license. The additional W-COMA license will expire in December 2016.

(*3)

The Company purchased 800MHz license from KCC in June 2011. Amortization of the 800MHz license commenced once the Company started its related commercial CDMA and LTE services on July 1, 2011, under a straight-line basis over the remaining useful life of the 800MHz license. The 800MHz license will expire in June 2021.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

11.

Intangible Assets, Continued

(*4)

The Company purchased 1.8GHz license from KCC in December 2011. Amortization of the 1.8GHz license will commence when the Company starts its related commercial LTE services in the second half of year 2012, under a straight-line basis over the remaining useful life of the 1.8GHz license. The 1.8GHz license will expire in December 2021.

(*5)	The Company purchased a WiBro license from KCC on March 30, 2005. The license period is 7 years from the purchase date. Amortization of the WiBro license commenced when the Company started its commercial WiBro services on June 30, 2006, under a straight line basis over the remaining useful life.

(*6)	The Company additionally purchased Wibro license in March 2012. Amortization of this WiBro license commenced when the Company started its commercial WiBro services on March 30, 2012, under a straight line basis over the remaining useful life. This Wibro license will expire in March 2019.

12.

Borrowings and Debentures

(1)

Short-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(In millions of won)

Lender

Annual interest
rate (%)

Maturity

March 31,
2012

December 31,
2011

Kookmin Bank and Woori Bank

4.29

Feb. 14, 2013

(Won)

500,000

—

(2)

Long-term borrowings as of March 31, 2012 and December 31, 2011 are as follows:

(In millions of won and thousands of U.S. dollars)

Lender

Annual interest
rate (%)

Maturity

March 31,
2012

December 31,
2011

Bank of Communications (*1,2)

6M Libor + 0.29

Oct. 10, 2013

(Won)

34,134

(USD 30,000

)

34,599

(USD 30,000

)

Bank of China (*1)

6M Libor + 0.29

Oct. 10, 2013

22,756

(USD 20,000

)

23,066

(USD 20,000

)

DBS Bank (*1)

6M Libor + 0.29

Oct. 10, 2013

28,445

(USD 25,000

)

28,833

(USD 25,000

)

SMBC (*1)

6M Libor + 0.29

Oct. 10, 2013

28,445

(USD 25,000

)

28,832

(USD 25,000

)

Kookmin Bank and 13 others

4.48

Feb. 14, 2015

2,000,000

—

2,113,780

115,330

Less present value discount on long-term borrowings

(12,673

)

—

(Won)

2,101,107

115,330

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(*1)	As of March 31, 2012, 6M Libor rate is 0.73%.

(*2)	As of March 31, 2012, the Company’s lender is Bank of Communications as Credit Agricole transferred the loans to Bank of Communications during the three-month period ended March 31, 2012.

12.

Borrowings and Debentures, Continued

(3)

Debentures as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won, thousands of U.S. dollars, thousands of Japanese Yen, thousands of other currencies)

	Purpose	Maturity		Annual interest rate (%)	March 31, 2012			December 31, 2011
Unsecured private bonds	Refinancing fund		2016	5.00	(Won)	200,000			200,000
Unsecured private bonds			2013	4.00		200,000			200,000
Unsecured private bonds			2014	5.00		200,000			200,000
Unsecured private bonds (*1)			2012	3M Euro Yen Libor + 0.55		172,593 (JPY 12,500,000	)		185,645 (JPY 12,500,000	)
Unsecured private bonds	Other fund		2015	5.00		200,000			200,000
Unsecured private bonds			2018	5.00		200,000			200,000
Unsecured private bonds			2013	6.92		250,000			250,000
Unsecured private bonds			2016	5.54		40,000			40,000
Unsecured private bonds			2012	3M Euro Yen Libor + 2.50		—			44,555 (JPY 3,000,000	)
Unsecured private bonds			2016	5.92		230,000			230,000
Unsecured private bonds			2012	3M Euro Yen Tibor + 2.50		—			74,258 (JPY 5,000,000	)
Unsecured private bonds	Operating fund		2016	3.95		110,000			110,000
Unsecured private bonds			2021	4.22		190,000			190,000
Foreign global bonds			2027	6.63		455,120 (USD 400,000	)		461,320 (USD 400,000	)
Exchangeable bonds (*4,5)	Refinancing fund		2014	1.75		401,619 (USD 332,528	)		397,886 (USD 332,528	)
Floating rate notes (*2)	Operating fund		2012	3M Libor + 3.15		250,316 (USD 220,000	)		253,726 (USD 220,000	)
Floating rate notes (*2)			2014	3M Libor + 1.60		284,450 (USD 250,000	)		288,325 (USD 250,000	)
Floating rate notes (*3)			2014	SOR rate + 1.20		58,793 (SGD 65,000	)		57,619 (SGD 65,000	)

Sub-total						3,442,891			3,583,334
Less discounts on bonds						(34,649	)		(37,329	)

						3,408,242			3,546,005
Less current portion of bonds						(422,695	)		(955,375	)

					(Won)	2,985,547			2,590,630

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(*1)	As of March 31, 2012, 3M EURO Yen Libor rate is 0.19%.

(*2)	As of March 31, 2012, 3M Libor rate is 0.47%.

(*3)	As of March 31, 2012, SOR rate is 0.36%.

(*4)

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

12.

Borrowings and Debentures, Continued

(*5)

On April 7, 2009, the Company issued exchangeable bonds with a maturity of five years in the principal amount of USD 332,528,000 for USD 326,397,463 with a coupon rate of 1.75%. As of March 31, 2012, fair value of the exchangeable bonds is USD 352,978,472. The exchange price could be adjusted and the exchange price is (Won) 199,280 with the exchange rate of (Won) 1,383.40 per USD 1.

The Company may redeem the principal amount after 3 years from the issuance date if the market price exceeds 130% of the exchange price during a predetermined period. On the other hand, the bond holders may redeem their notes at 100% of the principal amount on April 7, 2012 (3 years from the issuance date). The exchange right may be exercised during the period from May 18, 2009 to March 24, 2014 and the number of common shares that can be exchanged as of March 31, 2012 is 2,308,406 shares.

Exchange 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 such 49% ownership limitation is violated due to the exercise of exchange rights, the Company will pay the bond holder a cash settlement which will be determined at the average price of one day after a holder exercises its exchange right or the weighted average price for the following five or twenty business days. Unless either previously redeemed or exchanged, the notes are redeemable at 100% of the principal amount at maturity.

(4)

Details of issuance or repayments of borrowings and debentures for the three-month period ended March 31, 2012 are as follows:


(In millions of won, thousands of Japanese yen)

Lender	Annual interest rate (%)		Maturity		Coupon value			Carrying amount
January 1, 2012					(Won)	3,698,663			3,661,334
Issues:
Short-term borrowings		4.29		2013		500,000			500,000
Long-term borrowings		4.48		2015		2,000,000			2,000,000
Commissions and others		—		—		—			(12,673	)
Repayments:
Unsecured private bonds		3M Euro Yen		2012		(44,555	)		(44,555	)
Unsecured private bonds		Libor + 2.50		2012		(JPY 3,000,000	)
Unsecured private bonds		3M Euro Yen		2012		(74,258	)		(74,258	)
		Libor + 2.50		2012		(JPY 5,000,000	)
Other:
Foreign translation gain (loss) and others(*)						(23,179	)		(20,499	)

March 31, 2012					(Won)	6,056,671			6,009,349

(*)	Foreign translation gain (loss) and others represent changes from foreign translation gain (loss) of foreign currency borrowings and debentures and amortization of bond discount.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

13.

Long-term Payables - other

(1)


(In millions of won)
	2.1GHz			800MHz			1.8GHz			2.3GHz			Total
Period of repayment		2012~2014			2013~2015			2012~2021			2014~2016
Coupon rate (*1)		3.58	%		3.51	%		3.00	%		3.00	%
Annual effective interest rate (*2)		5.89	%		5.69	%		5.25	%		5.80	%
Nominal value	(Won)	52,600			208,250			746,250			8,650			1,015,750
Present value discount on long-term payables - other		(3,237	)		(11,060	)		(66,797	)		(641	)		(81,735	)

Present value of long-term payables – other at the time of acquisition		49,363			197,190			679,453			8,009			934,015
Nominal value		52,600			208,250			746,250			—			1,007,100
Present value discount on long-term payables - other		(3,237	)		(11,060	)		(66,797	)		—			(81,094	)
Current portion of long-term payables - other		(17,533	)		—			(74,625	)		—			(92,158	)
Accumulated amortization of present value discount at December 31, 2011		2,065			1,925			3,136			—			7,126
Carrying amount as of December 31, 2011		33,895			199,115			607,964			—			840,974
Increase		—			—			—			8,650			8,650
Present value discount on long-term payables - other		—			—			—			(641	)		(641	)
Amortization of present value discount on long-term payables - other		68			964			876			1			1,909
Less current portion of long-term payables - other		(16,812	)		(65,466	)		(63,123	)		—			(145,401	)

Carrying amount at March 31, 2012	(Won)	17,151			134,613			545,717			8,010			705,491

(*1)	The Company applied an annual interest rate equal to the previous year average lending rate of public funds financing account less 1%.

(*2)	The Company estimated the discount rate based on its credit ratings and corporate bond yield rate as there is no market interest rate available for long-term account payable-other.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

13.

Long-term Payables - other, Continued

(2)

The repayment schedule of long-term payables - other as of March 31, 2012 is as follows:


(In millions of won)	Amount
2013	(Won)	161,575
2014		164,458
2015		146,925
2016 and thereafter		450,633

	(Won)	923,591

14.

Provisions

Change in provisions for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended March 31, 2012									As of March 31, 2012
	Beginning balance		Increase		Utilization			Ending balance		Current		Non-current
Provision for handset subsidy	(Won)	762,238		169,931		(195,806	)		736,363		627,946		108,417
Provision for restoration		28,623		2,606		(66	)		31,163		4,267		26,896

	(Won)	790,861		172,537		(195,872	)		767,526		632,213		135,313


(In millions of won)	For the three-month period ended March 31, 2011									As of March 31, 2011
	Beginning balance		Increase		Utilization			Ending balance		Current		Non-current
Provision for handset subsidy	(Won)	732,042		200,315		(213,463	)		718,894		633,447		85,447
Provision for restoration		27,740		741		—			28,481		—		28,481

	(Won)	759,782		201,056		(213,463	)		747,375		633,447		113,928

The Company has provided handset subsidy for the subscribers who purchase handsets on an installment basis and recognized provision for handset subsidy in accordance with the payment duration as of period end.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

15.

Defined Benefit Liabilities

(1)

Details of defined benefit liabilities as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012			December 31, 2011
Present value of defined benefit obligations	(Won)	100,946			95,359
Fair value of plan assets		(68,292	)		(68,619	)

	(Won)	32,654			26,740

(2)

Principal actuarial assumptions as of March 31, 2012 and December 31, 2011 are as follows:


	March 31, 2012			December 31, 2011
Discount rate for defined benefit obligations		4.53	%		4.53	%
Inflation rate		3.00	%		3.00	%
Expected rate of return on plan assets		3.67	%		4.74	%
Expected rate of salary increase		6.10	%		5.62	%

Discount rate for defined benefit obligation is determined based on the Company’s credit ratings and yield rate of corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of return on plan assets represent weighted average rate of market value of the individual assets on the plan. Expected rate of return on plan assets is determined based on the historical yield rate and current market conditions. Expected rate of salary increase is determined based on the Company’s historical promotion index, inflation rate and salary increase ratio in accordance with salary agreement. Inflation rate is determined based on inflation data declared by Bank of Korea.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(3)

Changes in defined benefit obligations for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Beginning balance	(Won)	95,359			105,966
Current service cost		7,220			7,465
Interest cost		1,044			1,425
Actuarial gain or loss		6,458			3,777
Benefit paid		(9,530	)		(5,017	)
Others (*)		395			220

Ending balance	(Won)	100,946			113,836

(*)	Others include transfer to construction in progress.

(4)

Changes in plan assets for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Beginning balance	(Won)	68,619			84,584
Expected return on plan assets		618			974
Actuarial gain or loss		239			(302	)
Benefit paid		(1,184	)		(2,793	)

Ending balance	(Won)	68,292			82,463

15.

Defined Benefit Liabilities, Continued

(5)

Expenses recognized in profit and loss for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012			March 31, 2011
Current service cost	(Won)	7,220			7,465
Interest cost		1,044			1,425
Expected return on plan assets		(618	)		(974	)

	(Won)	7,646			7,916

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(6)

Details of plan assets as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Equity instruments	(Won)	39		—
Debt instruments		16,441		—
Short-term financial instruments, etc.		51,812		68,619

	(Won)	68,292		68,619

Actual return on plan assets for the three-month periods ended March 31, 2012 and 2011 amounted to (Won) 857 million and (Won) 672 million, respectively.

16.

Derivative Instruments

(1)

Currency swap contracts under cash flow hedge accounting

The Company has entered into a floating-to-fixed cross currency swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated long-term borrowings with face amounts totaling USD 100,000,000 borrowed on October 10, 2006. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to (Won) 3,318 million (net of tax effect totaling (Won) 559 million and foreign currency translation loss arising from U.S. dollar denominated long-term borrowings totaling (Won) 18,980 million) is 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 its unguaranteed Japanese yen denominated bonds with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to (Won) 2,711 million (net of tax effect totaling (Won) 862 million and foreign currency translation loss arising from unguaranteed Japanese yen denominated bonds totaling (Won) 68,537 million) is accounted for as accumulated other comprehensive income.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

16.

Derivative Instruments, Continued

In addition, the Company has entered into a fixed-to-fixed cross currency swap contract with Morgan Stanley and five other banks to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling USD 400,000,000 at annual fixed interest rate of 6.63% issued on July 20, 2007. As of March 31, 2012, in connection with unsettled foreign currency swap contract to which cash flow hedge accounting is applied since May 12, 2010, an accumulated loss on valuation of derivatives amounting to (Won) 50,902 million (net of tax effect totaling (Won) 16,251 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling (Won) 2,364 million) is accounted for as other comprehensive loss. In connection with the currency swap contract, gain on valuation of currency swap which was incurred before application of hedge accounting, amounting to (Won) 129,806 million was recognized in profit or loss.

In addition, on October 14, 2011, the Company has entered into a floating-to-fixed cross currency swap contract with DBS and Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of its unguaranteed U.S. dollar denominated bonds with face amounts totaling USD 220,000,000 issued on April 29, 2009. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to (Won) 939 million (net of tax effect totaling (Won) 300 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling (Won) 4,434 million) is accounted for as other comprehensive loss.

In addition, the Company has entered into a floating-to-fixed cross currency swap contract with DBS Bank and Citi Bank to hedge the foreign currency risk and the interest rate risk of its U.S. dollar denominated bonds with face amounts totaling USD 250,000,000 issued on December 15, 2011. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to (Won) 6,280 million (net of tax effect totaling (Won) 2,005 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling (Won) 5,116 million) is accounted for as accumulated other comprehensive income.

In addition, the Company has entered into a floating-to-fixed cross currency swap contract with United Overseas Bank to hedge the foreign currency risk and the interest rate risk of its Singapore dollar denominated bonds with face amounts totaling SGD 65,000,000 issued on December 15, 2011. As of March 31, 2012, in connection with unsettled cross currency interest rate swap contract to which cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to (Won) 278 million (net of tax effect totaling (Won) 89 million and foreign currency translation loss arising from unguaranteed Singapore dollar denominated bonds totaling (Won) 1,320 million) is accounted for as accumulated other comprehensive income.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

16.

Derivative Instruments, Continued

(2)

As of March 31, 2012, fair values of above derivatives recorded in assets or liabilities and details of derivative instruments are as follows:

(In millions of won, thousands of U.S. dollars, Japanese yen, and Singapore dollars)

Fair value

Hedged item

Amount

Duration of
Contract

Designated as
Cash Flow
Hedge

Current assets:

Floating-to-fixed cross currency swap

Japanese yen denominated bonds

JPY

12,500,000

Nov. 13, 2007 ~
Nov. 13, 2012

(Won)

70,386

Non-current assets:

Floating-to-fixed cross currency swap

U.S. dollar denominated long-term borrowings

USD

100,000

Oct. 10, 2006 ~
Oct. 10, 2013

15,103

Fix-to-fixed cross currency swap

U.S. dollar denominated bonds

USD

400,000

Jul. 20, 2007 ~
Jul. 20, 2027

60,289

Floating-to-fixed cross currency swap

U.S. dollar denominated bonds

USD

250,000

Dec. 15, 2011 ~
Dec. 12, 2014

3,168

Floating-to-fixed cross currency swap

Singapore dollar denominated bonds

SGD

65,000

Dec. 15, 2011 ~
Dec. 12, 2014

953

Total assets

(Won)

149,899

Current liabilities:

Floating-to-fixed interest rate swap

U.S. dollar denominated bonds

USD

220,000

Apr. 29, 2009 ~
Apr.29, 2012

5,673

Total liabilities

(Won)

5,673

17.

Share Capital and Share Premium

The Company’s outstanding share capital consists entirely of common stock with a par value of (Won) 500. The number of authorized, issued and outstanding common shares and share premium as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won, except for share data)
	March 31, 2012			December 31, 2011
Authorized shares	(Won)	220,000,000			220,000,000
Issued shares (*)		80,745,711			80,745,711
Share capital
Common stock		44,639			44,639
Share premium:
Paid-in surplus		2,915,887			2,915,887
Treasury stock		(2,410,451	)		(2,410,451	)
Loss on disposal of treasury stock		(18,855	)		(18,855	)
Others		(722,597	)		(722,597	)

	(Won)	(236,016	)		(236,016	)

(*)

During the years ended December 31, 2003, 2006 and 2009, the Company retired 7,002,235 shares, 1,083,000 shares and 448,000 shares, respectively, of treasury stock which reduced its retained earnings before appropriation in accordance with the Korean Commercial Law. As a result, the Company’s outstanding shares have decreased without change in the share capital.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

There were no changes in share capital for the three-month period ended March 31, 2012 and for the year ended December 31, 2011.

18.

Treasury Stock

Through 2009, the Company acquired 8,400,712 shares of treasury stock in the open market for (Won) 1,992,083 million to provide stock dividends, issue new stocks, merge with Shinsegi Telecom, Inc. and SK IMT Co, Ltd., increase shareholder value and to stabilize its stock prices when needed.

In addition, the Company acquired 1,250,000 shares of treasury stock for (Won) 210,356 million from July 26, 2010 to October 20, 2010 and 1,400,000 shares of treasury stock for (Won) 208,012 million from July 21, 2011 to September 28, 2011, in accordance with the resolution of the Board of Directors on July 22, 2010 and July 19, 2011, respectively.

As a result of aforementioned treasury stock transactions, as of March 31, 2012 and December 31, 2011, the Company has 11,050,712 shares of treasury stock at (Won) 2,410,451 million.

19.

Retained Earnings

(1)

Retained earnings as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Appropriated:
Legal reserve	(Won)	22,320		22,320
Reserve for research & manpower development		220,000		535,595
Reserve for business expansion		9,106,138		8,009,138
Reserve for technology development		1,901,300		1,524,000

		11,249,758		10,091,053
Unappropriated		342,276		1,746,132

	(Won)	11,592,034		11,837,185

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(2)

Legal reserve

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

(3)

Reserve for research & manpower development

20.

Reserves

(1)

Details of reserves as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012			December 31, 2011
Net change in fair value of available-for-sale financial assets	(Won)	340,918			352,616
Losses on valuation of derivatives		(46,446	)		(32,122	)

	(Won)	294,472			320,494

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(2)

Change in reserves for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	Loss on valuation of available-for-sale financial assets			Loss on valuation of derivatives			Total
Balance at January 1, 2011	(Won)	803,075			(66,469	)		736,606
Changes		(112,735	)		50,296			(62,439	)
Tax effect		27,379			(11,576	)		15,803

Balance at March 31, 2011		717,719			(27,749	)		689,970

Balance at January 1, 2012		352,616			(32,122	)		320,494
Changes		(15,433	)		(18,896	)		(34,329	)
Tax effect		3,735			4,572			8,307

Balance at March 31, 2012	(Won)	340,918			(46,446	)		294,472

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

21.

Other Operating Income and Expenses

Details of other operating income and expenses for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Other Operating Income:
Reversal of allowance for doubtful accounts	(Won)	4,301		—
Gain on disposal of property and equipment and intangible assets		231		115
Others		4,476		2,083

	(Won)	9,008		2,198

Other Operating Expenses:
Communication expenses		16,171		13,681
Utilities		32,000		27,770
Taxes and dues		27,410		7,421
Repair		39,237		41,914
Research and development		43,745		57,736
Training		4,759		4,204
Bad debt for accounts receivable - trade		290		11,528
Supplies and others		11,201		12,384
Loss on disposal of property and equipment and intangible assets		762		565
Donations		12,269		23,280
Bad debt for accounts receivable - other		15,959		3,525
Others		679		3,383

	(Won)	204,482		207,391

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

22.

Finance Income and Costs

(1)

Details of finance income and costs for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Finance Income:
Interest income	(Won)	20,991		43,015
Dividends		25,167		26,472
Gain on foreign currency transactions		1,150		1,235
Gain on foreign currency translation		43		7,083
Gain on valuation of financial asset at fair value through profit or loss		—		2,776
Gain on disposal of long-term investment securities		470		158,495
Gain on valuation of derivatives		—		1,263
Gain on settlement of derivatives		4,292		—
Gain on valuation of financial liability at fair value through profit or loss		—		11,193

	(Won)	52,113		251,532

Finance Costs:
Interest expense		71,002		55,083
Loss on foreign currency transactions		1,375		2,208
Loss on foreign currency translation		110		173
Loss on disposal of long-term investment securities		7,505		—
Loss on settlement of derivatives		—		3,131
Loss on valuation of financial asset at fair value through profit or loss		640		—
Loss on valuation of financial liability at fair value through profit or loss		3,733		—

	(Won)	84,365		60,595

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(2)

Details of interest income included in finance income for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Interest income on cash equivalents and deposits	(Won)	12,425		10,340
Interest income on installment receivables and others		8,566		32,675

	(Won)	20,991		43,015

22.

Finance Income and Costs, Continued

(3)

Details of interest expense included in finance costs for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Interest expense on bank overdrafts and borrowings	(Won)	3,465		9,728
Interest expense on debentures		40,902		41,428
Others		26,635		3,927

	(Won)	71,002		55,083

(4)

Details of impairment losses for financial assets for the three-month periods ended March 31, 2012 and 2011 are as follows.


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Bad debt for accounts receivable - trade	(Won)	290		11,528
Bad debt for accounts receivable - other		15,959		3,525

	(Won)	16,249		15,053

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

23.

Income Tax Expense

24.

Earnings per Share

(1)

Basic earnings per share

Basic earnings per share for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In millions of won, except for share data)	For the three-month period ended
	March 31, 2012		March 31, 2011
Net income for the period	(Won)	344,972		560,672
Weighted average number of common shares outstanding		69,694,999		71,094,999

Basic earnings per share (In Won)	(Won)	4,950		7,886

24.

Earnings per Share, Continued

The weighted average number of common shares outstanding for the three-month periods ended March 31, 2012 and 2011are calculated as follows:


	Number of shares			Weighted number of days		Weighted number of shares
Outstanding common shares at January 1, 2012		80,745,711			91/91		80,745,711
Effect of treasury stock		(11,050,712	)		91/91		(11,050,712	)

Number of shares at March 31, 2012	(Won)	69,694,999					69,694,999

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011


	Number of shares			Weighted number of days		Weighted number of shares
Outstanding common shares at January 1, 2011		80,745,711			90/90		80,745,711
Effect of treasury stock		(9,650,712	)		90/90		(9,650,712	)

Number of shares at March 31, 2011	(Won)	71,094,999					71,094,999

(2)

Diluted earnings per share

Diluted net income per share for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In millions of won, except for share data)	For the three-month period ended
	March 31, 2012		March 31, 2011
Diluted net income for the period	(Won)	349,034		553,180
Diluted weighted average number of common shares outstanding		72,003,405		73,272,388

Diluted net income per share (In Won)	(Won)	4,847		7,550

Adjusted net income for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In millions of won)	For the three-month period ended
	March 31, 2012		March 31, 2011
Net income	(Won)	344,972		560,672
Effect of exchangeable bonds		4,062		(7,492	)

Adjusted net income	(Won)	349,034		553,180

Adjusted weighted average number of common shares outstanding for the three-month periods ended March 31, 2012 and 2011 are calculated as follows:


(In shares)	For the three-month period ended
	March 31, 2012		March 31, 2011
Weighted average number of common shares outstanding		69,694,999		71,094,999
Effect of exchangeable bonds (*)		2,308,406		2,177,389

Adjusted weighted average number of common shares outstanding		72,003,405		73,272,388

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

24.

Earnings per Share, Continued

(*)	Effect of exchangeable bonds represents weighted average number of common shares outstanding in respect of the exchangeable common shares of exchangeable bonds, which could be exchanged to treasury stock.

25.

Categories of Financial Instruments

(1)

Financial assets by categories as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)

	March 31, 2012
	Financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Derivative financial instruments designated as hedged item		Total
Cash and cash equivalents	(Won)	—		—		1,163,683		—		1,163,683
Financial instruments		—		—		212,569		—		212,569
Short-term investment securities		—		154,263		—		—		154,263
Long-term investment securities (*1)		15,977		1,249,946		—		—		1,265,923
Accounts receivable - trade		—		—		1,287,862		—		1,287,862
Loans and receivables (*2)		—		—		834,207		—		834,207
Derivative financial assets		—		—		—		149,899		149,899

	(Won)	15,977		1,404,209		3,498,321		149,899		5,068,406

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011


(In millions of won)

	December 31, 2011
	Financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Derivative financial instruments designated as hedged item		Total
Cash and cash equivalents	(Won)	—		—		895,558		—		895,558
Financial instruments		—		—		635,069		—		635,069
Short-term investment securities		—		90,573		—		—		90,573
Long-term investment securities (*1)		16,617		1,295,821		—		—		1,312,438
Accounts receivable - trade		—		—		1,282,234		—		1,282,234
Loans and receivables (*2)		—		—		1,103,799		—		1,103,799
Derivative financial assets		—		—		—		188,605		188,605

	(Won)	16,617		1,386,394		3,916,660		188,605		5,508,276

25.

Categories of Financial Instruments, Continued

(*1)	The entire amount of long-term investment securities was designated as financial assets at fair value through profit or loss as the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured.

(*2)	Details of loans and receivables as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Short-term loans	(Won)	85,786		88,236
Accounts receivable - other		526,980		774,221
Accrued income		5,110		5,278
Long-term loans		72,295		75,282
Long-term accounts receivable - other		2,837		5,393
Guarantee deposits		141,199		155,389

	(Won)	834,207		1,103,799

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(2)

Financial liabilities by categories as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012
	Financial liabilities at fair value through profit or loss		Financial liabilities measured at amortized cost		Derivative financial instruments designated as hedged item		Total
Derivative financial liabilities	(Won)	—		—		5,673		5,673
Borrowings		—		2,601,107		—		2,601,107
Debentures(*1)		401,619		3,006,623		—		3,408,242
Accounts payable – other and others(*2)		—		3,299,802		—		3,299,802

	(Won)	401,619		8,907,532		5,673		9,314,824


(In millions of won)
	December 31, 2011
	Financial liabilities at fair value through profit or loss		Financial liabilities measured at amortized cost		Derivative financial instruments designated as hedged item		Total
Derivative financial liabilities	(Won)	—		—		4,645		4,645
Borrowings		—		115,330		—		115,330
Debentures(*1)		397,886		3,148,118		—		3,546,004
Accounts payable – other and others(*2)		—		2,901,123		—		2,901,123

	(Won)	397,886		6,164,571		4,645		6,567,102

25.

Categories of Financial Instruments, Continued

(*1)	The entire amount of debentures was designated as financial liabilities at fair value through profit or loss as the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(*2)	Details of accounts payable and other payables as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)
	March 31, 2012		December 31, 2011
Accounts payable - other	(Won)	1,720,371		1,361,473
Withholdings		18		18
Accrued expenses		587,959		468,313
Current portion of long-term payables - other		145,401		89,144
Long-term payables - other		705,491		840,974
Other non-current liabilities		140,562		141,201

	(Won)	3,299,802		2,901,123

26.

Financial Risk Management

(1)

Financial risk management

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

The Company’s financial assets under financial risk management consist of cash and cash equivalents, financial instruments, available-for-sale financial assets, trade and other receivables. Financial liabilities consist of trade and other payables, borrowings, and debentures.

1) Market risk

(i) Currency risk

The Company is exposed to currency risk mainly on exchange fluctuations on recognized assets and liabilities. The Company manages currency risk by currency forward, etc. if needed to hedge currency risk on business transactions. Currency risk occurs on forecasted transaction and recognized assets and liabilities which are denominated in a currency other than the functional currency of the Company.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

26.

Financial Risk Management, Continued

Monetary foreign currency assets and liabilities as of March 31, 2012 are as follows:


(In millions of won, thousands of U.S. dollars, thousands of Euros, thousands of Japanese Yen, thousands of other currencies)

	Assets				Liabilities
	Foreign currencies		Korean won equivalent		Foreign currencies		Korean won equivalent
USD		10,087	(Won)	11,501		1,325,680	(Won)	1,508,359
EUR		320		480		1,674		2,533
JPY		152,973		2,112		12,542,182		173,175
SGD		1		1		64,485		58,328
Others		1		1		250		41

			(Won)	14,095			(Won)	1,742,436

In addition, the Company has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures. (Refer to Note 16)

As of March 31, 2012, effects on income (loss) before income tax as a result of change in exchange rate by 10% are as follows:


(In millions of won)
	If increased by 10%			If decreased by 10%
USD	(Won)	(40,561	)		40,561
EUR		(242	)		242
JPY		145			(145	)
SGD		(1	)		1
Others		(4	)		4

	(Won)	(40,663	)		40,663

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

(ii) Equity price risk

The Company has equity securities which include listed and non-listed securities for its liquidity and operating purpose. As of March 31, 2012, available-for-sale equity instruments measured at fair value amounts to (Won) 1,245,481 million.

(iii) Interest rate risk

Since the Company’s interest bearing assets are mostly fixed-interest bearing assets, as such, the Company’s revenue and operating cash flow are not influenced by the changes in market interest rates. However, the Company still has interest rate risk arising from borrowings and debentures.

Accordingly, the Company performs various analysis of interest rate risk, which includes refinancing, renewal, alternative financing and hedging instrument option, to reduce interest rate risk and to optimize its financing.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

26.

Financial Risk Management, Continued

The Company’s interest rate risk arises from floating-rate borrowings and payables. As of March 31, 2012, floating-rate borrowings and debentures amount to (Won) 3,379,932 million and the Company has entered into interest rate swaps to hedge interest rate risk related to floating-rate borrowings and debentures. (Refer to Note 16) If interest rate only increases (decreases) by 1%, income before income taxes for the three-month period ended March 31, 2012 would have been decreased (increased) by (Won) 3,151 million due to the interest expense from floating-rate borrowings and debentures.

Credit risk

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

For the three-month period ended March 31, 2012, the Company has no trade and other receivables or loans which have indications of significant impairment loss or are overdue for a prolonged period. As a result, the Company believes that the possibility of default is remonte. Also, the Company’s credit risk can rise due to transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivates. To minimize such risk, the Company has a policy to deal with high credit worthy financial institutions. The amount of maximum exposure to credit risk of the Company is the carrying amount of financial assets as of March 31, 2012.

In addition, the aging of trade and other receivables that are over due at the end of the reporting period but not impaired is stated in Note 5 and the analysis of financial assets that are individually determined to be impaired at the end of the reporting period is stated in Note 22.

Liquidity risk

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

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

Contractual maturities of financial liabilities as of March 31, 2012 are as follows:


(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Derivative financial liabilities	(Won)	5,673		5,673		5,673		—		—
Borrowings		2,601,107		2,879,489		612,040		2,267,449		—
Debentures (*1)		3,408,242		4,297,017		562,244		2,530,348		1,204,425
Accounts payable - other and others (*2)		3,299,802		3,372,502		2,465,508		608,494		298,500

	(Won)	9,314,824		10,554,681		3,645,465		5,406,291		1,502,925

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

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

26.

Financial Risk Management, Continued

(*1)	Includes estimated interest to be paid and excludes discounts on bonds.

(*2)	Excludes discounts on accounts payable-other and others.

(2)

Capital management

The Company manages its capital to ensure that it will be able to continue as a business while maximizing the return to shareholders through the optimization of its debt and equity balance. The overall strategy of the Company is the same as that of the Company as of and for the year ended 31 December 2011.

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

Debt-equity ratio as of March 31, 2012 and December 31, 2011 are as follows:


(In millions of won)

	March 31, 2012			December 31, 2011
Liability	(Won)	11,411,561			8,554,225
Equity		11,695,129			11,966,302

Debt-equity ratio		97.58	%		71.49	%

(3)

Fair value

Fair value of the financial instruments that are not traded in an active market is determined using the valuation method. The Company uses the various valuation methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period. Fair value of financial instruments such as long-term liabilities is measured using the various methods including estimated discounted cash flow method.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

Interest rates used by the Company for the fair value measurement as of March 31, 2012 are as follows:


		Interest rate
Derivative instruments		3.19%~5.07%
Borrowings and Debentures		4.09%

26.

Financial Risk Management, Continued

Fair value and carrying amount

Carrying amount and fair value of financial assets and liabilities are as follows:


(In millions of won)

	March 31, 2012				December 31, 2011
	Carrying amount		Fair value		Carrying amount		Fair value
Assets carried at fair value
Financial assets at fair value through profit or loss	(Won)	15,977		15,977		16,617		16,617
Derivative financial assets		149,899		149,899		188,605		188,605
Available-for-sale financial assets		1,245,481		1,245,481		1,273,132		1,273,132

	(Won)	1,411,357		1,411,357		1,478,354		1,478,354

Assets carried at amortized cost
Cash and cash equivalents		1,163,683		1,163,683		895,558		895,558
Available-for-sale financial assets		158,728		158,728		113,262		113,262
Accounts receivable – trade and others		2,122,069		2,122,069		2,386,033		2,386,033
Financial instruments		212,569		212,569		635,069		635,069

	(Won)	3,657,049		3,657,049		4,029,922		4,029,922

Liabilities carried at fair value
Financial liabilities at fair value through profit or loss		401,619		401,619		397,886		397,886
Derivative financial liabilities		5,673		5,673		4,645		4,645

	(Won)	407,292		407,292		402,531		402,531

Liabilities carried at amortized cost
Borrowings		2,601,107		2,646,596		115,330		115,330
Debentures		3,006,623		3,179,676		3,148,118		2,985,078
Accounts payable - other and others		3,299,802		3,299,802		2,901,123		2,901,123

	(Won)	8,907,532		9,126,074		6,164,571		6,001,531

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

Fair value hierarchy

The different levels have been defined as follows:

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

•

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

•

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

26.

Financial Risk Management, Continued

The table below analyzes financial instruments carried at fair value, by fair value hierarchy as of March 31, 2012.


(In millions of won)

	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss	(Won)	—		15,977		—		15,977
Available-for-sale financial assets		1,107,427		25,387		112,667		1,245,481
Derivative financial assets		—		149,899		—		149,899
Financial liabilities at fair value through profit or loss		401,619		—		—		401,619
Derivative financial liabilities		—		5,673		—		5,673

There have been no transfers from Level 2 to Level 1 in 2012 and changes of financial assets classified as Level 3 for the three-month period ended March 31, 2012 are as follows:


(In millions of won)
	Balance at January 1		Other comprehensive income			Disposal			Balance at March 31
Available-for-sale financial assets	(Won)	162,098		(35,345	)		(14,086	)		112,667

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

27.

Transactions with Related Parties

(1)

As of March 31, 2012, the parent company and subsidiaries of the Company are as follows:


Type	Company	Ownership percentage ( %)	Types of business

Parent Company	SK Holdings Co., Ltd.	25.2(*1)	Holding company

Subsidiaries	SK Telink Co., Ltd.	83.5	Telecommunication service

	SK Communications Co., Ltd.	64.6(*2)	Internet website services

	PAXNet Co., Ltd.	59.7(*2)	Internet website services

	Loen Entertainment, Inc.	67.6(*2)	Release of music disc

	Stonebridge Cinema Fund	45.6	Investment association

	Commerce Planet Co., Ltd.	100.0(*2)	Online shopping mall operation agency

	SK Broadband Co., Ltd.	50.6	Telecommunication services

	Broadband D&M Co., Ltd.	100.0(*2)	Base station maintenance service

	Broadband Media Co., Ltd.	100.0(*2)	Multimedia TV portal service

	Broadband CS Co., Ltd.	100.0(*2)	Customer Q&A and Service

	K-net Culture and Contents Venture Fund	59.0(*2)	Investment association

	Benex Focus Limited Partnership II	66.7(*2)	Investment association

	Open Innovation Fund	98.9(*2)	Investment association

	PS&Marketing Corporation	100.0	Retail

	Service Ace Co., Ltd.	100.0	Customer center management service

	Service Top Co., Ltd.	100.0	Customer center management service

	Network O&S Co., Ltd.	100.0	Base station maintenance service

	BNCP Co., Ltd.	100.0(*2)	Software development and distribution service

	Service-In Co., Ltd.	100.0(*2)	Data base and internet website service

	SK Planet Co., Ltd.	100.0	Telecommunication service and new media business

	SK Telecom China Holdings Co., Ltd.	100.0	Equity investment (Holding company)

	SKY Property Mgmt. Ltd.	60.0	Equity investment

	Shenzhen E-eye High Tech Co., Ltd.	65.5(*2)	GPS manufacturing and selling

	SK China Real Estate Co., Ltd.	99.4	Equity investment

	SKT Vietnam PTE. Ltd.	73.3	Telecommunication service

	SKT Americas, Inc.	100.0	Telecommunication service

	YTK Investment Ltd.	100.0	Investment

	Atlas Investment	100.0	Investment

	Technology Innovation Partners, LP.	100.0(*2)	Investment

	SK Telecom China Fund I L.P.	100.0(*2)	Investment

(*1)	The ownership percentage represents parent company’s ownership over the Company.

(*2)	The ownership percentage represents subsidiaries’ ownership over their subsidiaries, in which the Company has no direct investment.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

27	Transactions with Related Parties, Continued

(2)

Transactions


(In millions of won)	Purchases of property and equipment				Commissions paid and other expenses				Commissions earned and other income
	For the three-month period ended
	March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011		March 31, 2012		March 31, 2011
Parent Company:
SK Holdings Co., Ltd.	(Won)	—		—		6,230		6,256		99		76
Subsidiaries:
SK Telink Co., Ltd.		—		—		9,945		25,113		11,699		18,263
SK Communications Co., Ltd.		—		—		—		2,254		1,696		2,120
Loen Entertainment, Inc.		—		—		3		9,838		964		950
Ntreev Soft Co., Ltd. (*1)		—		—		—		—		—		2,996
Commerce Planet Co., Ltd.		—		—		—		41,999		3		2,383
SK Broadband Co., Ltd.		355		—		87,099		51,466		27,127		19,960
PS&Marketing Corporation		—		—		64,404		63,467		735		622
Service Ace Co., Ltd.		—		—		34,363		28,171		2,078		2,777
Service Top Co., Ltd.		—		—		33,202		27,448		1,661		1,611
Network O&S Co., Ltd.		—		—		26,017		18,879		587		567
SK Planet Co., Ltd.		—		—		130,634		—		13,543		—
SK Telecom China Holdings Co., Ltd.		—		—		—		4,520		—		—
SKT Americas, Inc.		—		—		—		3,308		—		—
Others		—		—		277		251		29		45
Associates:
SK Marketing & Company Co., Ltd.		24		—		24,077		27,382		2,000		2,182
F&U Credit information Co., Ltd.		—		—		12,674		9,742		341		383
SK Wyverns Baseball Club Co., Ltd.		—		—		9,400		9,794		—		13
HanaSK Card Co., Ltd.		—		2		76,253		44,313		47,677		17,793
HappyNarae Co., Ltd. (*2)		3		166		429		588		—		3
Others		—		—		4,460		4,164		—		1
Others:
SK C&C Company Limited		52,072		25,576		63,631		62,684		1,255		1,324
SK Innovation Co., Ltd.		—		—		185		—		825		—
M&Service Co., Ltd.		—		—		156		2,369		223		4
SK Engineering and Construction Co., Ltd.		42,882		8,023		81		83		1,569		951
SK Telesys Co., Ltd.		12,344		9,017		462		2,257		31		37,208
SK Networks Company Limited		—		168		83,481		86,246		4,153		4,132
SK Networks Service		—		—		6,718		3,167		—		78
Others		4		271		2,493		23,636		1,984		1,641

	(Won)	107,684		43,223		676,674		559,395		120,279		118,083

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

27.

Transactions with Related Parties, Continued

(*1)	The Company sold its investment during the three-month period ended March 31, 2012.

(*2)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the three-month period ended March 31, 2012.

(3)

Account balances


(In millions of won)	March 31, 2012
	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Parent Company:
SK Holdings Co., Ltd.	(Won)	133		—		—		—
Subsidiaries:
SK Telink Co., Ltd.		3,952		—		23,232		3,281
SK Communications Co., Ltd.		2,120		—		3,218		5,524
Loen Entertainment, Inc.		580				21		—
Commerce Planet Co., Ltd.		—		—		42		—
SK Broadband Co., Ltd.		4,560		1,151		28,189		39,944
PS&Marketing Corporation		319		—		112,097		6,276
Service Ace Co., Ltd.		—		—		16,172		3,997
Service Top Co., Ltd.		569		—		11,782		3,367
Network O&S Co., Ltd.		263		—		3,425		165
SK Planet Co., Ltd.		26,462		—		23,175		66,829
SK Vietnam PTE. Ltd.		3,737		—		—		—
Others		—		—		54		150
Associates:
SK Marketing & Company Co., Ltd.		819		—		9,705		—
F&U Credit information Co., Ltd.		23		—		3,795		—
SK Wyverns Baseball Club Co., Ltd.		—		—		105		—
Wave City Develkpment Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		7,718		—		4,380		—
HappyNarae Co., Ltd. (*)		—		—		402		—
Others		2		10		332		—
Others:
SK C&C Company Limited		1,288		—		85,733		197
SK Innovation Co., Ltd.		714		91		—		—
M&Service Co., Ltd.		402		—		399		—
SK Engineering and Construction Co., Ltd.		1,064		—		16,235		82
SK Telesys Co., Ltd.		140		—		12,359		—
SK Networks Company Limited		—		1,013		27,273		696
SK Networks Service		—		—		2,688		—
Others		478		—		1,796		47

	(Won)	93,755		2,265		386,609		130,555

(*)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the three-month period ended March 31, 2012.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

27.

Transactions with Related Parties, Continued

(3)

Account balances, Continued


(In millions of won)	December 31, 2011
	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Parent Company:
SK Holdings Co., Ltd.	(Won)	146		—		—		—
Subsidiaries:
SK Telink Co., Ltd.		2,664		—		7,749		3,281
SK Communications Co., Ltd.		1,221		—		2,508		5,524
Loen Entertainment, Inc.		472		—		764		—
Ntreev Soft Co., Ltd.(*1)		1,629		—		—		—
Commerce Planet Co., Ltd.		1		—		363		—
SK Broadband Co., Ltd.		7,244		982		78,286		40,401
PS&Marketing Corporation		371		—		40,311		6,249
Service Ace Co., Ltd.		735		—		13,213		3,997
Service Top Co., Ltd.		438		—		14,733		2,462
Network O&S Co., Ltd.		575		—		50,210		170
SK Planet Co., Ltd.		85,902		—		177,809		66,805
SK Telecom China Holdings Co., Ltd.		3,788		—		—		—
SKT Americas, Inc.		—		—		4,062		—
Others		—		—		591		150
Associates:
SK Marketing & Company Co., Ltd.		262		—		22,977		—
F&U Credit information Co., Ltd.		—		—		3,736		—
SK Wyverns Baseball Club Co., Ltd.		3,812		—		—		—
Wave City Develkpment Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		8,627		—		1,600		—
HappyNarae Co., Ltd. (*2)		—		—		1,057		—
Daehan Kanggun BcN Co., Ltd.		20,562		—		—		—
Others		—		—		1,060		—
Others:
SK C&C Company Limited		2,452		—		89,784		197
SK Innovation Co., Ltd.		940		91		2		—
M&Service Co., Ltd.		332		—		2,346		—
SK Engineering and Construction Co., Ltd.		486		—		27,808		83
SK Telesys Co., Ltd.		106		—		35,371		—
SK Networks Company Limited		696		4,613		29,296		696
SK Networks Service		—		—		3,530		—
Others		2,141		—		1,322		—

	(Won)	184,014		5,686		610,488		130,015

(*1)	The Company sold its investment during the three-month period ended March 31, 2012.

(*2)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the three-month period ended March 31, 2012.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

27.

Transactions with Related Parties, Continued

(4)

Compensation for the key management

The Company considers registered directors who have substantial roles and responsibility in planning, operating, and controlling of the business as key management. Considerations given to key management for the three-month periods ended March 31, 2012 and 2011 are as follows:


(In millions of won)
	For the three-month period ended
	March 31, 2012		March 31, 2011
Salaries	(Won)	7,991		7,156
Provision for retirement benefits		565		517

	(Won)	8,556		7,673

28.

Commitments and Contingencies

As of March 31, 2012, the Company has participated in “Tactical Airship” program of the Defense Acquisition Program Administration with Joint Defense Corporation. For an advance receipt amounting to (Won) 4,200 million, which Joint Defense Corporation received from the Defense Acquisition Program Administration, the Company provides payment guarantees to the Defense Acquisition Program Administration.

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

29.

Statements of Cash Flows

(1)

Adjustments for income and expenses from operating activities for the three-month periods ended March 31, 2012 and 2011 are as follows:


	Korean won
	2012			2011
	(In millions)
Interest income	(Won)	(20,991	)		(43,015	)
Dividends		(25,167	)		(26,472	)
Gain on foreign currency translation		(43	)		(7,083	)
Gain on valuation of financial assets at fair value through profit or loss		—			(2,776	)
Gain on valuation of financial liabilities at fair value through profit or loss		—			(11,193	)
Gain on disposal of long-term investments securities		(470	)		(158,495	)
Gain on valuation of derivatives		—			(1,263	)
Gain on settlement of derivatives		(4,292	)		—
Gain on disposal of investments in associates		(80,483	)		(122	)
Gain on disposal of property and equipment and intangible assets		(231	)		(115	)
Reversal of allowance for doubtful accounts		(4,301	)		—
Other income		(2,131	)		(2,220	)
Interest expenses		71,002			55,083
Loss on foreign currency translation		110			173
Loss on valuation of financial assets at fair value through profit or loss		640			—
Loss on valuation of financial liabilities at fair value through profit or loss		3,733			—
Loss on disposal of long-term investments securities		7,505			—
Loss on settlement of derivatives		—			3,131
Income tax expense		88,865			228,367
Provision for retirement benefits		7,646			7,916
Impairment loss on investment in associates		72,096			—
Depreciation and amortization		427,135			448,180
Bad debt for accounts receivable - trade		290			11,528
Loss on disposal of property and equipment and intangible assets		762			565
Bad debt for accounts receivable - other		15,959			3,525
Other expenses		1			1,071

	(Won)	557,635			506,785

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the three-month periods ended March 31, 2012 and 2011

29.

Statements of Cash Flows, Continued

(2)

Changes in assets and liabilities from operating activities for the three-month periods ended March 31, 2012 and 2011 are as follows:


	Korean won
	2012			2011
	(In millions)
Accounts receivable - trade	(Won)	(1,727	)		104,268
Accounts receivable - other		250,337			393,964
Advance payments		(9,574	)		(59,696	)
Prepaid expenses		12,268			28,773
Inventories		5,158			(4,857	)
Long-term accounts receivables - other		2,556			280,356
Guarantee deposits		14,247			3,903
Accounts payable - other		(227,014	)		(435,664	)
Advanced receipts		(709	)		(7,952	)
Withholdings		108,020			141,380
Deposits received		(1,637	)		(330	)
Accrued expenses		116,378			(3,955	)
Unearned revenue		(24,915	)		(18,189	)
Provisions		(28,651	)		(19,301	)
Long-term provisions		5,037			6,325
Plan assets		1,184			2,793
Retirement benefit payment		(9,530	)		(5,017	)
Others		(1	)		236

	(Won)	211,427			407,037

(3)

Significant non-cash transactions for the three-month periods ended March 31, 2012 and 2011 are as follows:


	Korean won
	2012		2011
	(In millions)
Transfer of other property and equipment to construction in progress	(Won)	367,293		245,321
Transfer of construction in progress to property and equipment		570,779		273,857
Accounts payable - other related to acquisition of tangible assets and others		8,010		—
Write-off of accounts receivable-trade and others		256		174

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/ Soo Cheol Hwang

(Signature)

Name: Soo Cheol Hwang

Title: Senior Vice President

Date: June 29, 2012