SK TELECOM CO LTD — Annual Report 2009

Dec 4, 2009

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December 4, 2009

VIA EDGAR

Securities and Exchange Commission 100 F Street, NE Washington, D.C. 20549

Attention:
Re: SK Telecom Co., Ltd. Form 20-F for the year ended December 31, 2008

Dear Mr. Spirgel:

Reference is made to your letter, dated November 6, 2009, regarding the annual report of SK Telecom Co., Ltd. (the “Company”) on 20-F for the fiscal year ended December 31, 2008 (the “Annual Report”) filed pursuant to the requirements of the Securities Exchange Act of 1934, as amended. We would like to thank you for your review of the Annual Report.

We set forth in this letter our responses to the numbered comments in your letter. For your convenience, we have included the text of the staff’s comments in bold and keyed our responses accordingly. Page and paragraph references are to the Annual Report, and capitalized terms used herein without definition have the meanings ascribed to them in the Annual Report.

Form 20-F for Fiscal Year Ended December 31, 2008

| 1. |
| --- |
| In 2009, with the adoption of SFAS 160, Non-controlling Interests in Consolidated Financial
Statements , and the required retrospective presentation, there will be no GAAP difference for
any year related to this item and as such there will not be a reconciling item. |

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| 2. | We note your response to our comment 5. Please confirm that in future filings you will
include this table to help investors understand the tax effect on the different components of
GAAP reconciliation. |
| --- | --- |
| | In our future filings, we will include the table included in our response, dated October 16,
2009, to help investors understand the tax effect on the different components of GAAP
reconciliation. |
| 3. | Please explain to us why the amount of the adjustment for the effect of changes in tax law of
30,066 on page F-86 does not equal the tax effect from statutory rate change on reconciling
item of 39,764, appearing in your response to comment 5. |
| | As disclosed in the second paragraph of footnote 33 a, Income Taxes , on page F-78, the amount of W 30,066 million on page F-86 was recorded to reflect the GAAP difference in recognizing the
effect of enacted tax rate changes on deferred tax items recorded net in shareholders’ equity.
Under U.S. GAAP, the effect of such enacted rate changes is recorded in net income in the period
of enactment of the new tax law, whereas under Korean GAAP the effects of the tax rate change on
items recorded in shareholders’ equity are adjusted directly in shareholders’ equity. As such,
the adjustment of W 30,066 million on net income represented the effect of enacted changes in
tax rates related to items recorded directly in shareholders’ equity under Korean GAAP, which
was recorded in net income under US GAAP. |
| | On the other hand, the W 39,764 million appearing in our response to the previous comment 5
represents the effects of the enacted tax rate change on the deferred tax provision for items
reconciling Korean GAAP net income to U.S. GAAP net income for the current year as well as the
accumulated GAAP net income differences from prior periods. |
| | As such, the referred two adjustments above were recorded for different reasons and are not
intended to agree each other. |
| 4. | Please refer to the information provided in response to comment 5 and explain to us why you
are deducting the net loss attributable to minority interests in your calculation of the
amount of taxable U.S. GAAP adjustments. |
| | Under Korean GAAP, the Company’s reported net income included the net loss attributable to
minority interests but, under U.S. GAAP (prior to the adoption of SFAS 160, Non-controlling
Interests in Consolidated Financial Statement ,), net income does not include any income
attributable to minority interests as explained in our response to your prior comment 1. The
add-back of the net loss attributed to minority interests was made to reconcile the net income
based on Korean GAAP, the starting point, to net income based on U.S. GAAP and all adjustments
with income tax effect have been calculated based on the amount attributed to majority interest.
Therefore, the net loss attributable to minority interests added back was not considered in our
calculation of the amount of taxable U.S. GAAP adjustments. |

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| 5. | Regarding the table provided in your response to comment 5, please explain to us why you are
deducting 17,077 from the total GAAP adjustments on net income when the original GAAP
adjustment on page F-86 is also a deduction. Also, explain why the amount is only 17,077. |
| --- | --- |
| | The W 17,077 million adjustment is related to a gain on a currency swap of SK Broadband Co.,
Ltd. (“SK Broadband”), a consolidated subsidiary under Korean GAAP, and a equity method
investee under U.S. GAAP as disclosed in footnote 33 t, Scope of Consolidations , on page F-84.
This adjustment for the gain would normally create a deferred tax liability. However, since SK
Telecom does not believe it will realize the associated net deferred tax assets from its
investment in SK Broadband, the deferred tax liability is effectively not recognized and as such
an adjustment to the table in our response to the prior comment 5 is necessary. The remaining
amounts of the original GAAP adjustment on page F-86 are captured in the table provided in our
response to the previous comment 5 in the “Total GAAP adjustments on net income” of W 100,528
million. |
| 6. | We note your response to our comment 13. Please confirm to us that in future filings you will
expand your disclosure to explain the relationships between these entities and the impact
these relationships have on the accounting. Also explain to us how you calculated the U.S.
GAAP equity method adjustments using the ownership percentage provided to us in your response,
and disclose in sufficient detail. Include an explanation of your treatment of SK C&C’s
ownership interest in SK Telecom when calculating the equity method adjustment amounts for
your investment in SK C&C. |
| | During 2009 SK Telecom’s ownership interest in SK C&C has been reduced down to 9% from 30% as of
December 31, 2008. As such, we do not expect the disclosure relating to impact of SK C&C’s
ownership interest in SK Telecom to be material going forward. |
| | However, we hereby confirm that in future filings, if we assess that such disclosure is
material, we will expand our disclosure to explain the relationships between the entities of SK
C&C, SK Holdings, and SK Telecom and the impact these relationships have on the accounting
considering our response to your prior comment 13. |
| | We owned 30% of SK C&C, as of December 31, 2008, but our investment in SK C&C was reduced by SK
C&C’s indirect reciprocal holding of SK Telecom via SK Holdings when calculating the equity
method adjustment amounts. Please note that we have disclosed the condensed financial
information of SK C&C in footnote 33 v on page F-85 which SK Telecom had used in applying equity
method of accounting for its ownership interest of 30% in SK C&C. The referred condensed
financial information of SK C&C presents SK C&C’s financial information under U.S. GAAP
excluding the effects of the reciprocal interest in SK Telecom. We then applied 30% to the
financial information of SK C&C on F-85 to compute SK Telecom’s income from investment in SK
C&C. As a result of this calculation method, the Company excludes SK C&C’s indirect reciprocal
holding of SK Telecom via SK Holdings. |
| | Included in the table below is the net income of SK C&C taken from the condensed financial
information on F-85. The Company calculates the equity method adjustments as follows (In
millions of Korean won): |

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Net income adjustments:

Net income of SK C&C on page F-85(Note A)	1,055,570		161,820
Our ownership interests in SK C&C	30	%	30	%
Equity in earnings based on the ownership percentage	316,671		48,546
Equity in earnings already recorded under Korean
GAAP on page F-38 (Note B)	(230,252	)	—
Dividend income already recognized under Korean
GAAP (Note C)	—		(1,800	)
Other	(2,634	)	899
Net income adjustment for U.S. GAAP purposes
on page F-86	83,785		47,645

| (Note A) Net income of SK C&C on page F-85 excludes SK C&C’s interests of SK Telecom
results via SK Holdings. |
| --- |
| (Note B) As previously disclosed within note a on page F-38 and in footnote 33 v, Reclassification of Investment in Equity Securities of SK C&C , the Company reclassified its
investment in SK C&C from an equity method investment to an available-for-sale security
during the fourth quarter of 2007 under Korean GAAP. Accordingly, the Company had recorded
equity in earnings from the SK C&C investment for the first three quarters of 2007 and only
the fourth quarter income was additionally recorded for U.S. GAAP purposes as SK C& C
remained an equity method investee under U.S. GAAP. |
| (Note C) As noted above, the Company’s investment in SK C&C has been reclassified to
available-for-sale security and the dividend income has already been recognized under
Korean GAAP in 2008. Accordingly, the amount was deducted from the net income adjustment
related to the SK C&C investment. |

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Shareholders’ equity adjustments:

Shareholder’s equity of SK C&C on page F-85	2,001,110		2,218,482
Our ownership interests in SK C&C	30	%	30	%
Shareholder’s equity based on the ownership percentage	600,333		665,544
Differences between the acquisition cost and fair
value of net asset of equity method investee at
acquisition date	4,058		4,058
Carrying value of the equity investment under U.S. GAAP	604,391		669,602
Carrying value of the investment under Korean GAAP on
page F-27	(1,037,604	)	(676,716	)
Shareholder’s equity adjustment for U.S. GAAP purpose
on page F-87	(433,213	)	(7,114	)

| | After further consideration we recognize that our disclosures related to this matter could have
been made clearer. In our future filings we will disclose that SK C&C’s summarized financial
information is presented in U.S. GAAP instead of netting the effects of the reciprocal
investment in the summarized financial information. We will then describe the adjustments made
to our investment in SK C&C to remove the effect of the reciprocal interests of SK C & C’s
ownership interest in SK Telecom through SK C&C’s ownership in SK Holdings. |
| --- | --- |
| 7. | Regarding the condensed financial information of SK C&C Co., Ltd. presented within footnote
33v, please disclose the accounting principle (U.S.GAAP or Korean GAAP) under which this
information was prepared and advise us. Please provide a similar clarification with respect to
the information presented within footnote 33t. |
| | Both the condensed financial information of SK C&C Co., Ltd. presented within footnote 33v and
the information presented within footnote 33t were prepared under U.S. GAAP. In future
filings, we will make a reference to applicable accounting principles under which information is
prepared. |
| 8. | We note your response to our previous comment 14. However, since you reported equity in loss
of unconsolidated businesses in 2008, we remain unclear why your reported provision for income
taxes on page F-100 is less than the amount reported in 2008 on page F-92. It seems the gross
income tax amount disclosed on page F-92 should be less since it should be reduced by the
benefit from this loss from the equity method investments. Please advise us and clarify your
disclosures. |
| | The Company has evaluated the available evidence about future taxable income and other possible
sources of realization of deferred tax assets. We believe that it is more likely than not that
we will be unable to realize the deferred tax assets related to a significant portion of losses
from our equity method investments during 2008 and a valuation allowance has been established
against such portion. Accordingly, tax benefits were not recognized in most instances of equity
losses and therefore the
reported provision for income taxes on page F-100 is less than the amount reported in 2008 on
page F-92. |

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| | In addition, as noted in our previous response, in future filings we will exclude the income
taxes netted against equity earnings of the equity method investments from the disclosure so
that the amounts on page F-100 and on page F-92 will agree. |
| --- | --- |
| 9. | In addition, please explain to us why the sum of your income tax provision reported under
Korean GAAP and the income tax adjustment reported within the net income reconciliations on
page F-86 do not equal the income tax provision amounts reported on page F-100. |
| | The Company believes the sum of its income tax provision under Korean GAAP and the income tax
adjustments within the net income reconciliation on page F-86 would not equal the income tax
provision under U.S. GAAP reported on F-100 due to the (1) difference in scope of consolidations
under Korean GAAP and U.S. GAAP and (2) income tax effect related to the disposition of the
Company’s investment in Helio LLC (“Helio”). The following is a reconciliation of the income tax
provision for the year ended December 31, 2008 under from Korean GAAP to U.S. GAAP (In millions
of Korean won): |

Income tax for continuing operation under Korean GAAP on page F-7	298,850
Income tax provision difference related to:
Scope difference (Note A)	52,200
Income tax benefit from Helio investment (Note B)	(109,579	)
Income tax adjustments on the reconciliation page F-86;
FIN 48 effect	(2,778	)
Tax effect of the reconciling items	(46,947	)
Effect of changes in tax law	(30,066	)
Income tax netted with equity in earnings (Note C)	(29,186	)
Income tax provision under U.S. GAAP on page F-100	132,494

(Note A) As disclosed in footnote 33t, Scope of Consolidations , on page F-84, the Company noted: “Under Korean GAAP, entities of which the Company or a controlled subsidiary owns more than 30% of the total outstanding voting stock and is the largest stockholder are consolidated. However, U.S. GAAP generally requires that any entity of which the Company owns 20 to 50 % of total outstanding voting stock be not consolidated if control does not exist; rather that entity should be accounted for under the equity method of accounting.” Entities subject to the explained scope difference include SK Broadband and the adjustment of 52,200 primarily pertained to the increased depreciation expense of SK Broadband due to the purchase price allocation under Korean GAAP, which reduced the tax basis. Since SK Broadband is

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| accounted for under the equity method accounting under U.S. GAAP, such tax benefit was not
recorded as a reduction of tax provision but recorded as equity in earnings to the extent
of the Company’s ownership interests. |
| --- |
| (Note B) As disclosed on page F-25 and noted in our response to your prior comment 4, the
Company disposed its investment in Helio whose results of operations have been classified
as discontinued operations in accordance with Korean GAAP while its operational results
were presented as continued operations for U.S. GAAP purposes. Under Korean GAAP, the
Company reported the results of Helio’s operations, net of income tax, presented as a
single item between income tax expense from continuing operation and net income. However,
Helio operated at a loss and the income tax benefit was recognized as unrealized equity in
losses of Helio and was realized as a result of the disposal under Korean GAAP as seen on
page F-25, which was then reversed in the reconciliation above to arrive at the provision
for income taxes under U.S. GAAP as the operation result of Helio is still presented as
continuing operations for U.S. GAAP purposes. |
| (Note C) In our response to your prior comment 14, we noted that the amount represented
income tax expense netted with equity earnings of the equity method investments for 2008. |

| | In future filings, we will enhance our disclosure in conjunction with tax related amounts and
reconcile such amounts between disclosures as applicable. |
| --- | --- |
| 10. | We note your explanation for the shareholders’ equity adjustments in your response to comment
3 and the goodwill reconciliation appearing within your response to comment 15. Explain to us
the difference in the adjustment amount identified as “Reversal of accumulated goodwill
amortization for subsidiaries” in the reconciliation provided in your response to comment 15
and the amount of the reversal of amortization of goodwill in 2008, appearing in the
reconciliation provided in your response to comment 3. |
| | The difference in the amount of W 1,015,231 million identified as “Reversal of amortization of
goodwill”, appearing in our response to your prior comment 3, and the amount of W 982,458
million identified as “Reversal of accumulated goodwill amortization for subsidiaries” within
our response to your prior comment 15 is due to the following items (In millions of Korean won): |

| Reversal of amortization of goodwill included as a
shareholders’ equity adjustment | 1,015,231 | |
| --- | --- | --- |
| ( Less ) the accumulated amortization of goodwill related to equity
method investee (Note A) | (44,509 | ) |
| ( Add ) goodwill amortization attributed to minority interest (Note B) | 11,736 | |
| Reversal of accumulated goodwill amortization for subsidiaries
adjusted within the goodwill reconciliation | 982,458 | |

| (Note A) The reversal of amortization of goodwill of 1,015,231 includes amounts related to
both equity method investees and subsidiaries. Accumulated amortization of 44,509 was
related to equity method investees, not subsidiaries, under U.S. GAAP, and as such the
amortization was recorded in equity in earnings of unconsolidated businesses but does not
affect balance of goodwill. |
| --- |
| (Note B) The amount of 11,736 represents the reversal of goodwill amortization attributed
to minority interests, which increases the goodwill amount and minority interests but would
not affect shareholders’ equity as amortization of goodwill was not recorded under U.S.
GAAP. |

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| 11. |
| --- |
| The difference in the amount of W 1,012,861 million identified as “Increase of goodwill due to
the additional equity investment in subsidiaries”, appearing in our response to your prior
comment 15, and the amount of W 1,031,781 million identified as “Additional equity investment in
subsidiaries disclosed in footnote 33i” within our response to your prior comment 9 is due to
the following items added to either of the above amounts (In millions of Korean won): |

Additional equity investment in subsidiaries disclosed in footnote 33i	1,031,781
( Less ) additional equity investment of our equity method investee (Note A)	(30,379	)
( Add ) increase of goodwill due to U.S. GAAP adjustment (Note B)	11,459
Increase of goodwill due to the additional equity investment in subsidiaries	1,012,861

| (Note A) The following has been disclosed within footnote 33 i, Additional Equity
Investments in Subsidiaries : “Under Korean GAAP, when additional interest is acquired after
acquiring a majority interest in a subsidiary, the differences between the Company’s
acquisition cost of the additional interest and the corresponding carrying amount of the
acquired additional interest in a subsidiary is presented as an adjustment to capital
surplus. Under U.S. GAAP, the cost of an additional interest would be allocated based on
the fair value of net assets at the time the additional interest is acquired, with excess
allocated to goodwill”. |
| --- |
| Based on such GAAP differences, the Company accounted for 30,379 above as an equity
transaction under Korean GAAP primarily resulting from additional equity investments in TU
Media Corp. and recorded the amount in shareholders’ equity. However, as noted in footnote
33t on page F-84, the investment in TU Media Corp. is accounted for under the equity method of
accounting under U.S. GAAP. Therefore, the amount would not affect Company’s goodwill under
U.S. GAAP and was deducted from the reconciliation above. Please refer to (Note a) of our
response to your prior comment 9. |
| (Note B) As explained in (Note A) above, under Korean GAAP the acquired additional interest
in a subsidiary was recorded at carrying amount but under U.S. GAAP identifiable net assets
were recorded at their fair value at the date of the acquisition of additional interest. As
mentioned on (Note d) of our response to your prior comment 15, the amount of 11,459
represents the addition to goodwill to reflect such GAAP difference in measurement of the
acquired additional interest (net assets). |

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| 12. | Please explain to us where the additional goodwill discussed in Note b of your response to
comment 9 appears in your calculation of the amount of goodwill under U.S. GAAP provided in
response to comment 15. |
| --- | --- |
| | We respectfully inform the Staff that we demonstrated in Note b of our response to your prior
comment 9 that the amount of W 34,091 million represented the goodwill recognized for the
additional interests acquired by SK Broadband in its subsidiary. As noted in our response to
your comment 5 above, the investment in SK Broadband is accounted for under the equity method of
accounting under U.S. GAAP and therefore the additional goodwill on SK Broadband would not have
appeared on our goodwill reconciliation under U.S. GAAP provided in our response to your prior
comment 15. |
| 13. | We note in Note c in your response to comment 15 that the amount of goodwill under U.S. GAAP
includes minority interest. Please explain why you have assigned goodwill to what appears to
be the portion of a less than wholly owned investee not held by the Company. |
| | SK Telecom holds a majority ownership interest of 65.71% of SK Communications Co. Ltd. (“SK
Communications”) as of December 31, 2008. During fiscal 2007, Empas Corp. (“Empas”) was fully
acquired by SK Communications. |
| | The amount of goodwill under U.S. GAAP recorded by SK Telecom represents the entire goodwill
recorded by SK Communications as a result of the acquisition of Empas. Goodwill is comprised
not only of the portion related to its ownership portion of 65.71% of SK Communications but also
the portion related to the non-controlling interest of 34.29% since SK Communications is
consolidated and the acquisition of Empas occurred after SK Communications became a subsidiary
of SK Telecom. |
| 14. | The reconciliation of goodwill based on U.S. GAAP and goodwill based on Korea goodwill you
provide in your response to our comment 15 would help clarify and summarizes for investors the
differences in these two amounts. Please confirm to us that you will include this
reconciliation in future filings. |
| | We hereby confirm that we will include the reconciliation of goodwill based on U.S. GAAP and
goodwill based on Korean GAAP in future filings. |

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We acknowledge that we are responsible for the adequacy and accuracy of the disclosure in our filings with the U.S. Securities and Exchange Commission (the “Commission”), that staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings, and that we may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United Sates.

We hope that foregoing is responsive to your inquiries. Please direct any further questions or comments to the Company’s Investor Relations Department, to the attention of Kyung-hwan Chung at +82-2-6100-1635 (fax: +82-2-6100-7827), or the Company’s outside counsel, Cleary Gottlieb Steen & Hamilton LLP, to the attention of Jinduk Han at (852) 2532-3723 (fax: 852-2160-1023) or Dong Chul Kim at (852) 2532-3728 (fax: 852-2160-1063).

Sincerely,
/s/ Dong-Hyun Jang
Dong-Hyun Jang
Chief Financial Officer

cc:
Melissa Kindelan Staff Accountant Division of Corporation Finance
Jinduk Han Partner Cleary Gottlieb Steen & Hamilton LLP

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